Bajaj Auto

Q4FY10 Post Result Conference Call Transcript Representative: Mr. Kevin Dsa Vice President-Finance PL Rep.: Surjit Arora 91-22-6632 2235 Date: 14th May, 2010 Moderator Ladies and gentlemen good morning and welcome to the Bajaj Auto Q 4 FY 10 post results conference call hosted by Prabhudas Lilladher. As a reminder all participants lines will be in the listen only mode and there will be an opportunity for you to ask questions at the end of todays presentation. If you should need any assistance during the conference, please signal an operator by pressing * and then 0 on your touchtone phone . Please note that this call is being recorded. Joining us on the call today from Prabhudas Lilladher is Ms. Amisha Vora and Mr. Dilip Bhat, Joint Managing Directors. We have with us Mr. Kevin Dsa, Vice President Finance, Bajaj Auto along with Mr. Surjit Arora from Prabhudas Lilladher. I would now like to hand over the conference to Mr Arora. Thank you and over to you Sir. Mr. Surjit Arora - Prabhudas Lilladher Good morning everyone and welcome to this Q4 FY10 conference call for Bajaj Auto. I would like to take this opportunity to thank Mr. Dsa for taking out his time for this call. Kevin Sir, can we start with the Q&A session? Mr. Kevin Dsa Vice President-Finance, Bajaj Auto Sure please Mr. Surjit Arora - Prabhudas Lilladher Moderator, can we have the Q&A session please. Moderator Yes Sir. Ladies and gentlemen we will now begin the question and answer session. At this time if you would like to ask a question please press * then 1 on your touchtone phone. If you wish to withdraw your question from the question queue then press * and then 2. Participants are requested to use only handsets while asking a question. The first question is from the line of Binay Singh from Morgan Stanley. Please go ahead. Binay Singh Morgan Stanley Good morning Sir. I want to ask two questions. Firstly could you give us the exports in the rupees terms for the quarter and the full year and the similar number for spare parts? Mr. Kevin Disa Vice President Finance, Bajaj Auto For the quarter you are talking about in terms of rupees exports it is about Rs 823 crores and in spares revenues exports is Rs36 crores as against the Rs37 crores of the Q3. This again is on exports.

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Binay Singh Morgan Stanley Okay and the spare part number for the quarter and the full year? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto For the full year it is Rs838 crores and for the quarter it is Rs216 crores Binay Singh Morgan Stanley And lastly on the other expenses there has been a dip on in the percentage of sales and one of the reasons attributed was lower sales and promotion cost. It is because we had no key launch during the quarter and should this inch up going forward given that fact that this quarter we have a 150 cc Discover launch and the RE series 3-wheeler launch Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No. what we have done is as a strategy we have very clearly focused on the EBITDA margins. As we saw the material cost going up, we decided to curtail a lot of expenses that have been incurred on administration and again on the internal cost. So we saw the Pulsar 135cc being launched in December end and January as well as the Discover 100cc which was launched earlier. What we saw was the vehicles were flying through the roof and there was just no point in spending money when the vehicles were doing so very well. So we saw the whole of the last quarter Pulsar 135cc, Pulsar 150cc, Discover 100cc were all out of stock at the plant and very nominal stock was at the dealerships. Because of this what we did is we curtailed completely the costs and you see we were hardly any advertisement or promotion costs and we were hardly present in the TV and the press channels. Again interest subventions, BAFL support etc was completely withdrawn. Binay Singh Morgan Stanley Okay and how should we see these costs in the coming quarter? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto It is very difficult to talk quarter on quarter because that is something I would like you to avoid. For us what we look at a business at least in a 1 year to 2 year horizon. To benchmark every quarter, how much it is going to be there in each itemised expenditure it is very difficult to focus and very wrong on me to give guidance on the matter. All I would say is that if you look at the last years the total cost of this thing by large I would estimate it to go up by 5 or 10% for the year as a whole. Binay Singh Morgan Stanley Okay, thanks. Moderator Thank you Mr. Singh. The next question is from the line of Jairam Nathan from Kotak. Please go ahead.

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Jairam Nathan - Kotak Thank you for taking my call. If I look at your domestic realization for your sales it has been declining sequentially and probably year on year it is not a fair comparison but it was declining substantially on a year to year basis going forward. Now do you see that impacting margins or and how should we think of the trend going forward? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto In fact if I look at the realization in the Q 3 and Q4 on a total basis realization has gone up from 39,000 to 40,000 from Q 3 to Q 4. Jairam Nathan - Kotak Yeah Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Not the 39000 to 40000 can be attributed to the fact that in the Q 3 we sold about 103,000 100cc Platina whereas if you look at in Q 4 we sold about 83,000 100cc Platina. What you saw in Q 4 the Pulsar family going up from 135,000 numbers to a 186,000 numbers. Jairam Nathan - Kotak Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So for me I dont see any realization drop coming down. Secondly if you look at the sales in Pantnagar, the Pantnagar which is exempt from the excise duty gives you higher realization Jairam Nathan - Kotak Yes Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So again the 579,000 odd vehicles that we manufactured in Pantnagar over a 181,000 came in the fourth quarter. And as you go forward with the Pantnagar production going up.this quarter for example you see Pantnagar being closer to 70,000 units and all going well you should see by Q3FY11, the Pantnagar plant crossing 100,000 vehicles per month Jairam Nathan - Kotak Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto In which case you are talking of higher realization than a falling realization

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Jairam Nathan - Kotak Okay. And the other question I have on the industry is what it your viewwe heard Rajiv is talking about some kind of some slowdown in the month already what is your estimate for the full year that the industry will grow. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Full year it is around 12 14% is my own personal assessment and I think that is the assessment that by and large is being shared by the competition and by the industry as such. Last years growth rate of about 28% is a factor of low base effect; I would believe it is a pent up demand of the previous year that has also played a role. But given the base effect and given that where we are today I would say that 12% growth for the industry is reasonable estimate to expect and I would say that 12% has got a potential for a upside. Jairam Nathan - Kotak Okay, thanks a lot Kevin. Moderator Thank you Mr. Nathan. Participants who wish to ask a question may kindly press * and then 1 now. The next question is from the line of Mr. Prashant Poddar from Invesco. Please go ahead. Prashant Poddar Invesco Good morning Sir. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Good morning. Hi Prashant Prashant Poddar Invesco Just 2 questions Sir. One is related to the sales target that the company has given sort of 4 million vehicles, what would be the figures that we are looking at? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto See the figures that we have given of 4 million that you are talking about of which 3.6 million is going to be motorcycles and 400,000 will be 3 wheelers. Within this the domestic and exports I would put the export figure a little over 1 million and we are on track on that and the first month of April has been good, exports for the month of May and June are already on track for over a million vehicles and this is the internal figure that we are driving to us. Prashant Poddar Invesco And the domestic bike, the current rate is quite behind the target

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah. But that is something that we are talking about because we have seen the growth taking place that will happen in June, July, August, September in the festive season. So our estimate is based on the fact that we expect a reasonably good monsoon, we expect the country not to have any other blips, not other outside environment and so in this steady environment if the industry grows by 12 to 14% then we believe that we are on track by achieving those numbers. Prashant Poddar Invesco Okay. The second question is related to the raw materials. The 3 key raw material steel, aluminium and tyres and the other raw materials what are the contracts that we typically you sign in and two is what is the inventory that we have holding currently. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto As far as the process of ordering for steel is concerned we order on behalf of the vendors. No steel is directly procured by the company and on the basis of steel that we order for supply to our vendor that is how the component price is determined. And as far as steel is concerned we believe the prices are rock bottom; we like to negotiate as long a period as possible but at that time the steel manufacturers do not like to go that way. Currently for last 3 quarters we have taken a shorter term contract because we believe that the rise cannot be sustainable. So the current contract that we have entered into which was entered into on the 1st of April upto 30th June is for three months which is a higher rate than what we had negotiated for January to March. As far as aluminium is concerned it is more of a quantity based situation rather than a period based situation like steel. So the aluminium that we have imported in this quarter is going to be almost at the same price as what we had done for the earlier quarter. So as far as aluminium is concerned quarter 1 will not see any increase. Steel will see an increase. Prashant Poddar Invesco What is the order of increase? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I wont be able to share that. Prashant Poddar Invesco Okay, but is it higher Mr. Kevin Dsa Vice President - Finance, Bajaj Auto It is higher. Prashant Poddar Invesco And tyres do you think further increases would be there?

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I would not see much of a further increase of tyres; since I am recorded I wouldnt like to make this statement but basically what you see in this tyre industry is little bit of cartelization that takes place. So when we saw the demand for 2 wheelers going through the roof in Q 3 and Q 4 I believe that we had to pay amount that was much more than justified. As you go forward with what Rajiv had mentioned very clearly that demand is more or less equal to supply there is no strain on the production process over 1 2 components have to stabilise with the negative buyers. Prashant Poddar Invesco Okay. Last question. What is the kind of EBITDA margin range that you think you will be able to do in the next year? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Next year I think it will get around close to 20%. Prashant Poddar Invesco Thank you very much Moderator Thank you Mr. Poddar. The next question is from the line of Saurab Das from Sundaram BNP Paribas please go ahead. Saurab Das Sundaram BNP Paribas Thank you Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you Saurab Das Sundaram BNP Paribas Just a few questions. First question on our star product Discover 100 M which is doing phenomenally well. Traditionally we have been associated as more of an urban player and close to 65% of the sales is coming from that market. But with Discover 100M have you seen a shift and increase in the market share in rural areas as well. If you can broadly give some and if you can give rural urban split as of now what it could be and how do you see that trend going forward? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto See, for me, the way I look at it, I am saying as my own individual that it is not so much of a rural urban type of a situation; it is more a situation that in the last 2 years if at all one had to look at it I really did not have a bike that appealed to the commuter. Saurab Das Sundaram BNP Paribas Right 6

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto You see in the year 2006- 07 there was Discover 100cc, earlier Discover was there which was Saurab Das Sundaram BNP Paribas 110cc, yeah Mr. Kevin Dsa Vice President - Finance, Bajaj Auto On which we imposed XCD and the XCD did not take off for the various reasons. So effectively what happened is that we did not have a bike for a commuter. We had the bike that was the Platina that was the lower end and then you had the Pulsar that is the higher end Saurab Das Sundaram BNP Paribas Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So for me it is not much of a rural and urban situation but for me it is more a bike which is available say for a pure simple commuter whether in rural India or whether in urban India. By bringing in the Discover 100cc what we have seen is the surge that is taking place in our volume numbers is by and large uniform across all regions Saurab Das Sundaram BNP Paribas Okay. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Because I have a commuter coming back into my kitty. Saurab Das Sundaram BNP Paribas Sure, but has that been slightly different in terms of trends for instance Pulsar although it is a travellers bike but largely appealing to a lot of urban youth kind of segment Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Saurab Das Sundaram BNP Paribas But in terms of 100 M what we try to draw a parallel to a Splendor, it is pitted against that kind of a bike, which is again having a strong brand franchisee in the rural areas. So I just wanted to find out that have we been able to break through that.I mean if you could just give us a sense of the buyer profile, you mentioned 50-50 but is it largely similar to that kind of a segment which Splendor caters to?

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Splendor caters to a particular segment whereas we push the Discover..for me what I believe is that Discover is an extremely strong brand and as compared to lets say Platina. Saurab Das Sundaram BNP Paribas True Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So when you are talking of Platina benchmarking itself against Splendor the Platina can only sell if it is priced 4000 rupees lower than the Splendor. But if I have to take market and market share away in that segment then with the Discover brand I can do the same by actually pricing it higher than the Splendor. And thats why we are trying to leverage brands in order to get market shares and margins because gaining market share can always be done by way of a price but it doesnt give you profits. Saurab Das Sundaram BNP Paribas True Mr. Kevin Dsa Vice President - Finance, Bajaj Auto It is through building 2, 3 solid brands that is very clearly focused for what it stands for is what we love to see. Saurab Das Sundaram BNP Paribas Great. And finally on our consolidated numbers, I see that it is roughly a 100 crores kind of loss which we see on the share of associates and subsidiaries Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Saurab Das Sundaram BNP Paribas So if you could broadly break them up into KTM and Indonesia and what kind of investments have been made in KTM and Indonesia Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah. So if you look at the total figures that is shown over there, the consolidated profit which is about 1700 crores has come down to 1595 crores. Saurab Das Sundaram BNP Paribas Thats right.

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Now if we look at the line that is shown very clearly over there is share on profits on investments or subsidiary associates the 103 crores that is there; it is a separate line in the accounts that is purely KTM. Saurab Das Sundaram BNP Paribas Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Now, Indonesia on a stand alone basis as against a loss of 41 crores in the last year has the loss of Rs11 crores in the current year. Saurab Das Sundaram BNP Paribas Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Now because of the consolidation from my sales has to be netted out with its purchase, in the consolidation the impact of Indonesia is 4 crores Saurab Das Sundaram BNP Paribas Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Stand alone basis 11 crores loss over there but on the consolidation basis we adjust the stock, etc the loss is of about Rs4 5 cores so 102 plus 5, 107 which is the figure that will come in between the 2 associate companies. Saurab Das Sundaram BNP Paribas Okay. And which means that we are very close to break even at Indonesia so Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I wont put it that way because to be fair if you look at Indonesias last year loss of 41 crores it included the foreign exchange valuation loss of 11crores. So if I minus that then it comes down closer to about 31 crores or 30 crores, in the current year 11 cores it includes the reversal of that into a valuation of gain of 17 crores. Saurab Das Sundaram BNP Paribas Oh, okay

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So net rate I would say if you remove these two entries I would say they are about actually 25 or 30 crores loss between the two years. Saurab Das Sundaram BNP Paribas Got it. And what kind of investments have been done in Indonesia? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Indonesia, we have invested a 138 crores, cumulative Saurab Das Sundaram BNP Paribas Cumulative. And in FY10? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto FY10 I think it was about 18 crores. Saurab Das Sundaram BNP Paribas Thats it. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah. And in KTM the total investment including the investment of a tranche that was done was taken up from 31.4% to 35.67% in the first week of April the total investment in KTM is 830 crores Saurab Das Sundaram BNP Paribas But in terms of investments into the company? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto 830 crores Saurab Das Sundaram BNP Paribas But any advances or Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No, nothing

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Saurab Das Sundaram BNP Paribas And just finally on the small car, first of all whether it would be in a separate subsidiary or in the parent and what kind of investment do we envisage for that in FY 11 given that we are talking about FY 12 launch Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah, FY 11 the capex that we are looking at is about 250 crores. A part of it maybe for the car project but right now the car project on 2011 that we are talking about, a lot of it is going into pure research and development stage and the tooling, etc has yet to be put into these figures. Saurab Das Sundaram BNP Paribas Okay. And regarding the holding structure? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Holding structure at this particular point of time we have no views to share with you and thats why the structure as such how it is going to be worked out there is nothing that I can share right now with you. Saurab Das Sundaram BNP Paribas Right. Since the engine is being developed indigenously by Bajaj I was just wondering whether the Nissan is fitting in the overall scheme Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The Nissan, what I have understood, the MD also mentioning is the entire backroom work etc will be done by Bajaj. The engineering, the manufacturing, the development everything will be done by the Bajaj and the front end will be with the foreign partner.

Saurab Das Sundaram BNP Paribas Okay. When you mean the front end- distribution and branding or Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I would say a combination of distribution and branding and branding could be definitely zone wise, territory wise, geographical wise Saurab Das Sundaram BNP Paribas Great. Thanks and all the very best Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thanks so much 11

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Moderator Thank you Mr. Das. Next call is from the line of Mr. Promod Kumar, JM Financial. Please go ahead Promod Kumar JM Financial Yeah. Good morning Sir. Congratulations on very good set of number Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you Promod. Promod Kumar JM Financial I think Saurab asked quite a lot of my questions. I have a few questions pertaining to our Pantnagar operations. If you could just break up the production capacity for us in terms of what it is currently in terms of 70,000 and what will it look like when it moves to 100,000. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto We are looking at; currently the install capacity is about 1.2 million. The fourth quarter we have achieved 60000 numbers per month. The first quarter for the current year will be at about 70,000 numbers per month and gradually moving to about 120,000 numbers a month in the later part of the current financial year. The production right now, we are facing the production constraints in Pantnagar only driven by the poor power supply to our vendors. Promod Kumar JM Financial Okay. And if I were to break it up because you have recently moved Pulsar 135cc there and now you are planning to Discover 150cc out of there Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Promod Kumar JM Financial You have already being doing Paltina and Discover 100cc there. So roughly what could be the contribution from each model Sir and also how will that shape up as we move to 120,000? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto What we wile be doing in any case will be depending on the tooling and depending on the line to use and maximise the Pantnagar capacity to its fullest. All overflow will come to Waluj or to Chakan. Promod Kumar JM Financial Okay. But incrementally I can expect that fair amount of Discover 150 may be done out of Pantnagar itself

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yes. Promod Kumar JM Financial And that brings me to my second question Sir, is that the factored in the kind of very aggressive pricing or rather very attractive pricing which you have done for Discover 150cc? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I wont say that. What we would be doing is like what I mentioned to you in the past is when we sit down and make our projections and profitability what we like to ensure is that each division, each unit, each brand should give the profit that it is attributed to it. So if we talk of a premium segment which is the Pulsar segment where we are leaders we expect to get margins at least 3 to 4% higher than the competition and in keeping with the premium range Promod Kumar JM Financial Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto When you talk of the commuter segment you have a different profit setup in your mind Promod Kumar JM Financial Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So as far as we look at it the Discover 150cc and the Discover 100cc will give us reasonably good double digit EBITDA margins even at 46000 rupees Promod Kumar JM Financial Even at Rs 46,000. so it will not be margins diluted as compared to Discover 135cc Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Definitely not Promod Kumar JM Financial And Discover 135cc will be phased out gradually? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto That let the customer decide

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Promod Kumar JM Financial But we are not going to take off the shelf Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No Promod Kumar JM Financial Okay. I think thats a good move. So that we are leaving the choice to the customer Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yes Promod Kumar JM Financial So there is no product discontinuation from our side Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No Promod Kumar JM Financial And even on Platina 125cc are there been any changes after the launch revamped prices; are we taking up the prices further Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No price change Promod Kumar JM Financial And even to pass on any of the commodity pleasure. I believe Platina you have increased the prices recently Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thats a negligible amount 500 rupees Promod Kumar JM Financial But no price increase in the near term, right. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No

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Promod Kumar JM Financial Okay sounds good and best of luck, Sir. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you Moderator Thank you Mr. Kumar. Participants who wish to ask a question may kindly press * and then 1. the next question is from the line of Mr. Kaushal Maroo from Religare Capital Market, please go ahead Mr. Kaushal Maroo Religare Capital Market Thank you and congratulations on a great set of numbers Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you so much Mr. Kaushal Maroo Religare Capital Market Question is regarding on the exports front. In the last con call you said that 70% of exports expected for this year is hedged but now the exports going out of the roof would that 70% figure be revised downwards Mr. Kevin Dsa Vice President - Finance, Bajaj Auto It has gone upto 80% Mr. Kaushal Maroo Religare Capital Market It has gone upto 80% Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah. Because what we do is we look at our export numbers there so when we had started the budget even in the month of April we start the exercise in the month of February and then when we set the target we always make sure that month of month about 80% of exports are covered. So today for example the entire projected exports for the year have been covered and the cover is almost today about 80% of the amount. What could happen is that the cover that we have taken in a particular month, the exports in that month maybe higher. In which case for that month I may have to receive the spot rate. 20% today is remaining uncovered. The average cover today is above Rs46.9/$ or in that range and the balance 20% I am not really so concerned because that have a natural hedge against my imports

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Mr. Kaushal Maroo Religare Capital Market Okay and Kevin what kind of pricing power do we have in these export markets? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I dont know. What we do is in terms of pricing the policy what we do is we review the prices once in 6 months; we dont go about jacking up the prices or dropping the prices on a regular basis because the customer opens a letter of credit and has a firm order etc but in case for example I would say a 10 to 15 $ increase across any of the products is not much of a challenge. Mr. Kaushal Maroo Religare Capital Market Okay. Thank you Kevin Moderator Thank you Mr. Maroo. The next question is from the line of Mr. Aniket Matre from IDFC Securities. Please go ahead Mr. Aniket Matre IDFC Securities Thanks and Good morning. This is Aniket here. There is a question on 3 wheelers Sir, in the month of April we have done about a very strong set of 3 wheeler numbers. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Mr. Aniket Matre IDFC Securities But domestic was lower and the exports were significantly higher. So can we see this similar trend going forward or will the domestic improve? How will it be? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No, it is like this Maroo, what we basically see is that capacity for us is limited at Waluj. The capacity is 31,000 to 32,000 and by a stretch we do it to 33,000 to 35,000. This is by a stretch Mr. Aniket Matre IDFC Securities Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So what we do is we try to make sure that balance the exports and the local needs on that basis Mr. Aniket Matre IDFC Securities Hmm 16

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So if you see the third, fourth quarter we had very good domestic sales so some of the exports were shifted to the next quarter. Mr. Aniket Matre IDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Now traditionally you will see if historically also the first quarter that is April June quarter is always low for the domestic market. Thats when exports have been encouraged and the entire demands are being met. So its more of a balancing situation that takes place Mr. Aniket Matre IDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto But what I can assure is that on a continuous basis for the next few months or for the whole year you will be seeing 3 wheelers being in the range of about 35000 Mr. Aniket Matre IDFC Securities 35,000 on an average per month? Between that fluctuations will take place on domestic and exports but depending on the need and depending on the capacities. Mr. Aniket Matre IDFC Securities Got it. Can you please repeat your export revenue numbers? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Export revenue numbers for the year I will give you Mr. Aniket Matre IDFC Securities For the quarter? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto For the quarter for the vehicle exports was at Rs823 crores and to this you will have to add 36 crores of spare parts. Mr. Aniket Matre IDFC Securities Okay, sure. And just one last question on your staff cost. since your VRS is now over, the expense on it is now over can we see a stable 90 cross kind of quarterly rate in this year going forward 17

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto We have a bit of a blip. First of all let me explain to you the fourth quarter fall Mr. Aniket Matre IDFC Securities Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The fourth quarter is purely on the account of the actuarial valuation of gratuity Mr. Aniket Matre IDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Now what happens is as on 31st December the whole of last 9 months the tenure bond was about 7.2 7.3% when the interest rates were low Mr. Aniket Matre IDFC Securities Correct Mr. Kevin Dsa Vice President - Finance, Bajaj Auto On 31st of March the interest rate for the tenure bond went upto 8.2% and thats what the actuarial valuation takes it at 8.2% so automatically my actual valuation of gratuity comes down Mr. Aniket Matre IDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So thats the reason between the third quarter and fourth quarter coming lower. Mr. Aniket Matre IDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto On a logical basis that you see you will always see the first quarter being higher because annual repayments have been made, performance awards have been given and therefore in this quarter based on what the company has performed I expect the management to reward its employees in a better manner.

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Mr. Aniket Matre IDFC Securities Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So first quarter you will see a surge after which you will see it tapering off in a normal course. So between last year employees cost and the current year employee cost you could consider a 10% for the whole year and close it. Mr. Aniket Matre IDFC Securities Okay. Thanks a lot Sir. Moderator Thanks Mr. Mahtre. The next question is from the line of Mr. Aditya Makhariya from JP Morgan. Please go ahead. Mr. Aditya Makhariya JP Morgan Hi Kevin. Just one question. We are scaling up the Pantnagar to 1.2 million and obviously we benefit from our lower excise and to indigenise also you will benefit so in terms of the guidance why are we yet at 20% I mean in the will we not get benefit from that? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto We will get benefit but see what is happening is my profit projection includes a huge amount of profits coming from the other lines of business as well. Unlike competition where it is a single line and profit margin being uniform across thats why it is much easier for us to say that there is a direct correlation with production at Pantnagar and the profits. In our case there is a significant amount coming from the 3 wheeler business which is not made at Pantnagar which is a high profit content Mr. Aditya Makhariya JP Morgan Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto 3 wheelers has you definitely know an impact on the account of emission norms, impact on steel and the upgradation cost that is taking place. Secondly the exports dont come out from Pantnagar Mr. Aditya Makhariya JP Morgan Hmm

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The Chakan plant makes the Pulsars. All these as a combination give a much, much more higher margin in absolute percentage and in the absolute amount and in percentage than the Pantnagar. So while it is accretive to the margins I am saying that it may not be big enough to nullify the projections that I am giving. Mr. Aditya Makhariya JP Morgan Okay. Even if the product next year is high like you said the 135 Pulsar Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yes Mr. Aditya Makhariya JP Morgan Okay, thanks Moderator Thank you Mr. Makhariya. The next question is from Promod Kumar from JM Financial. Please go ahead Mr. Promod Kumar JM Financial Thanks a lot Sir. Sir, this pertains to more to on the longer term in terms of looking at the way our export exposure is increasing and given how the currency is fluctuating is there any chance that in 1 or 2 years we take a call on the assembly line somewhere in Africa specially for the 3 wheelers and the 100 cc bikes. Is that in the realms of possibility? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Let me put it in this way even today in Africa we have an assembly line that goes in kits. Mr. Promod Kumar JM Financial Yeah, it goes in kits Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The issue basically is to see what is the situation on a ground in terms of what is competition ring and what is the duty barrier. If say for example there is that this competition is also not having an assembly plant over there and there is no duty barrier coming between a SKD and the CKD then it makes no sense Mr. Promod Kumar JM Financial Okay

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto But if say for example like in Indonesia competition has already been established over there and they have a very strong vendor base, there is a very strong demand the competition is already sitting down there with their assembly pants and their own manufacturing plants it becomes necessary for us to go into that because the duty structure which is 25% comes down to 10 12%. So thats the direction we are moving in. Mr. Promod Kumar JM Financial Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto But if you go to Africa, if you go to Nigeria a) there is no ancillary industry over there. Mr. Promod Kumar JM Financial Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So you cannot just go there any buy some parts and get into assembly at that level. Mr. Promod Kumar JM Financial Thats going to be a challenge then for our export business. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Why should it be a challenge Mr. Promod Kumar JM Financial Managing the currency. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Not at all. Why do you say that managing the currency? Because for me let me put it again across as far as we are concerned all expenses are incurred in rupees. To the rupees add the desired profit margin Mr. Promod Kumar JM Financial Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto To this profit margin i then convert it into a rupee rate which I am assured of.

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Mr. Promod Kumar JM Financial Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So whatever up that rupees goes down I have taken foreign exchange cover if it goes higher its an icing on the cake, na. my expenses are in rupees, my conversion is in rupees, my profit is loaded on that and then conversion takes place then what more or less 90% I am sure of achieving. Mr. Promod Kumar JM Financial Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And thats how I price my exports. Mr. Promod Kumar JM Financial And you will be following the similar exercise in the year end in terms of seeing what is the dollar cost and everything and then deciding the export pricing. Right? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I will look at FY11-FY12 by September October itself. I dont have to wait for 31st March to cover FY11-FY 12. Mr. Promod Kumar JM Financial No, I am talking about the export pricing in the year end whatever pricing needs to take place you look at the dollar cost and then you look at what should be the price increase. So will you be doing a similar exercise this year as well or Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Its an ongoing process Mr. Promod Kumar JM Financial Yeah. Okay. Sounds good Sir, thanks a lot Moderator. Thank you Mr. Kumar. Participants who wish to ask a question may kindly press * and then 1. The next question is from the line of Mr. Pawan Kumar from HDFC Securities. Please go ahead. Mr. Pawan Kumar HDFC Securities Sir, I have a quick question here. Sir could you overall please give us a split up in the 2 wheeler industry; how much of sales is happening on cash basis and how much on finance and a similar split for Bajaj also 22

Bajaj Auto

Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I dont know about the industry parse but I can tell you about Bajaj Mr. Pawan Kumar HDFC Securities Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto If you take a domestic sale of 200 thousand numbers Bajaj Auto Finance has about 40 thousand numbers. Mr. Pawan Kumar HDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I would put the other private sector banks like HDFC; etc all put together must be doing about 10,000 numbers to 12,000 numbers. I am not considering in this because I dont know the data of say cooperative bank or some other bank or local money lending in financing; that I dont have data. The way I look at it is regulated finance is about 25% what is finance for Bajaj Auto Mr. Pawan Kumar HDFC Securities Okay. Sir, the other question is more on a strategy side. Recently there have been media reports about dropping the Bajaj name on your Discover line and Pulsar line. Whats the broad thinking that is happening here Sir? If you could throw some light there? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No. The way we are looking at it is we need to create strong brands build a premium on these brands because what I believe is that in any 2 wheeler industry the maximum amount of profits earned is purely on 2 accounts. 1) is that does the product been able to collect a premium from the competition Mr. Pawan Kumar HDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Is the customer willing to pay you 2000 rupees more than what is coming to the competition Mr. Pawan Kumar HDFC Securities Hmm

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And b) how much is the money that is spent on advertisement per vehicle as compared to the competition. You see material cost, labour cost, productivity; everything by and large is common across the industry Mr. Pawan Kumar HDFC Securities Right Sir. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Steel is same, everything is same, and all companies are running extremely efficiently so the differentiating factor for any company to have higher margins than its competition depends on two things that is purely purely brand. Mr. Pawan Kumar HDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And thats why we are saying that its much more better now to start putting in 2 strong brands like the Pulsar and the Discover which will be promoted as brands and which will enable us to get a premium on those things. Advertising Bajaj per se we can come out with once in a while Mr. Pawan Kumar HDFC Securities Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Intention is to build the brands which help you to get the premium. Mr. Pawan Kumar HDFC Securities Thats all from my end Sir. All the best Sir. Moderator Thank you Mr. Kumar. The next question is from the line of Madhusudan Bagree from Allianz. Please go ahead. Mr. Madhusudan Bagree - Allianz Hi Kevin, a couple of more questions from my side. First is can you comment on the competent situation in market and everyone is talking of a higher number than the industry growth that you are talking about. What gives thats the main question; second question is also on the Indonesian market there is quite a big battle going on over there between Yamaha and Honda and where do you fit in your scheme of things over there?

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I will answer your second question first. Indonesia is going to be a tough market. It is going to be tough for us. We are doing about 18,000 numbers; the numbers are definitely going to be a challenge. We have just introduced The Pulsar 135cc over there and we hope that Pulsar 135cc and the Pulsar family and probably a few months later the Discover we can have a range of products that we can address the market. Right now we are not a major player in that so the battle between Honda and Yamaha is effectively the two big players so we are relatively small in that. Coming to the domestic market I would say that the competitive environment is such that there are two clear areas the conservative, reliable, old, Hamara Bajaj type of market of the past has actually accrued to Hero Honda, in the motor cycles. So desh ki dhadkan for the Splendor is very apt. whereas for us what we are seeing is the higher end market which is what I would call the price point of Rs45,000 and above which is growing is where we are leaders and thats where we believe that in that growing segment we will be able to gain greater market share. If you look at the market trend that is taking place what we call the standard commuter segment which is not the Splendor but which is the CD models.that segment has actually tanked from 75% a few years back to just about 19%. Sports segment has gone up from 3% to 21%. And the mid segment even that if you break it up you will see that with the break up the maximum excitement is taking place in the Rs45,000 and above where Bajaj with Discover and Pulsar 135cc you are seeing Honda come out with their Twister, etc. thats the segment which is exciting and it is growing faster. And with us participating in that segment we believe that we are in a position to grow higher than the industry. Now each manufacture will of course have his own views on the subject but this is what I would like to share with you. Mr. Madhusudan Bagree - Allianz Thanks. Just one more question on the 3 wheeler market. Is there cyclical side which we should be thinking about going in FY11 second half? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto What I have seen in the 3 wheeler industry is that you forget the permit cycle whatsoever it does with the blips that come in but you normally see the second quarter and the fourth quarter being strong in the domestic, the first quarter and the third quarter are relatively weak. Primarily the first quarter is a lot of dependent on the government grants and by the time the budget which is being passed that doesnt take place, the first quarter is normally low and the third quarter is normally low because after Diwali most of the local money lenders go after recovery and not financing new vehicles which then really starts in the month of January. So cynically if you are talking about I would say the second and fourth quarter are very strong and the first and third quarter relatively weak. Mr. Madhusudan Bagree - Allianz Thank you Moderator Thank you Mr. Bagree. The next question is from the line of Promod Amte from RBS. Please go ahead.

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Mr. Promod Amte RBS Sir, this is with regards to the exports would you be able to give a break-up of how the FY10 has been and which are the growth countries and how they will shape up in the next year Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No, that we dont share but I can tell you that by and large the African market now forms almost 50% of the market; thats the market that is growing and what we believe is that we shouldif you see our past track record we are doubling exports every 5 years and we believe internally that exports of 1 million can be 2 million by 2015. Mr. Promod Amte RBS Okay and would you be able to give average dollar realization for you for the FY 10? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto For FY 10 it will be about Rs47 Mr. Promod Amte RBS Okay. Thanks and all the best Moderator Thank you participants who wish to ask a question may press * and then 1. The next question is from the line of Sonal Gupta from UBS. Please go ahead Mr Sonal Gupta UBS Thank you. Good morning Kevin Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Good morning Mr Sonal Gupta UBS Just a couple of questions. One is that we saw a sharp jump in export realization in this quarter. Is that primarily because we have more 3 wheelers in the mix or is there any other reason for Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Primarily the 3 wheelers or rather one is the 3 wheelers and second is if you see the third quarter my average realization would be marginally higher because of the fact that the higher we had a contract that we utilised at the full Rs47 plus in the first quarter. Not in the first quarter but in the first one or two months. In the fourth quarter my average realization is just about Rs47

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Mr Sonal Gupta UBS Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And thats the only reason but basically it is due to the 3 wheelers. Mr Sonal Gupta UBS But no pricing action you have taken on the exports side Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Export side we took up the pricing of all our products specially in Nigeria on the 1st of November Mr Sonal Gupta UBS But nothing after that? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Nothing after that Mr Sonal Gupta UBS And any pricing action on the domestic 3 wheeler side? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Domestic 3 wheeler side we took up the prices of all our products by about 2000 rupees on 1st of April. This was primarily to cover a part of the upgradation, material and machine cost. So the entire cast we have not passed it on, some of the cost has been absorbed. Mr Sonal Gupta UBS Okay. And anything on the Discover 150 cc in terms of.I mean clearly the pricing like we discussed it is very attractive but anything in terms of..do you think that the 30,000 numbers that people are talking about sorry, you have indicated is reasonable in terms of expectation? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto For me I would always say we need to wait for 3 to 4 months before we really establish whether it is a success or not. I was comfortable with the Discover 110cc and I am discomfort with the 135cc, after 4 months of launch the numbers arent there. Discover 150cc this is what our belief is; we need to validate it 3 4 months down the road. Mr Sonal Gupta UBS Okay. Thats all from my side thank you very much 27

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Moderator Thank you Mr. Gupta. The next call is from the line of Anuja Munde from Nico Asset. Please go ahead. Ms. Anuja Munde Nico Asset Hello Sir, good afternoon Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Good afternoon Ms. Anuja Munde Nico Asset Just on the export numbers could you make a break up of the 3 wheelers and 2 wheelers for the current year and the quarter? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I beg your pardon Ms. Anuja Munde Nico Asset Volume number, exports for 3 wheelers and 2 wheelers, the break-up? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The total exports was about 891 thousand vehicles of which the 3 wheelers was 165,000, 2 wheelers was 726,000. Ms. Anuja Munde Nico Asset Okay. How do you think competition is shaping up and what kind of pressures will be there from competition because you would be gaining a significant market share in the current year going by your guidances? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I dont have a view on this. The way I look at the market scenario is that you see both the major competitors Hero Honda or Bajaj, both of us are playing in the different segments. Whether it is Splendor sitting on one segment and we are sitting on the higher end of the segment. So there is no direct clash in terms of that part so really very difficult to make a statement on that Ms. Anuja Munde Nico Asset Okay. Other companies, Hero Honda, Yamaha as well as TVS are expanding capacities and they are launching newer bikes

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Correct. It is nothing new. It is a part of the entire industry and we have seen it in the last year and the year before that and we will see it in the next two years. Ms. Anuja Munde Nico Asset Okay. Thanks. That does it Moderator Thank you Ms. Munde. The next question is from the line of Supriya Madye from ICICI Securities. Please go ahead. Ms. Supriya Madye ICICI Securities Congratulations Sir for a great set of numbers Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you Ms. Supriya Madye ICICI Securities Sir I want to understand what is the cap price we have incurred for the current year for FY10 Mr. Kevin Dsa Vice President - Finance, Bajaj Auto 115 crores for FY 10 Ms. Supriya Madye ICICI Securities Yeah and 250 you have plans for the next year Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Next year. Ms. Supriya Madye ICICI Securities Any plans for FY12? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto FY 12 it is too early. Ms. Supriya Madye ICICI Securities Okay. Sir can you just give me count on the Ninja

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Ninja is more of a product that we are talking in terms of a brand, etc Ms. Supriya Madye ICICI Securities Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So a product in terms of numbers is really not very relevant. Ms. Supriya Madye ICICI Securities Any kind of a growth which you have planned for the current year, any categories on that Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No, in fact my gut feel is that the total Ninja for the whole year will not be more than 1500. Ms. Supriya Madye ICICI Securities Okay. On the balance sheet front the numbers for debt acquisition Mr. Kevin Dsa Vice President - Finance, Bajaj Auto 0 debt, 3250 crores is the surplus cash Ms. Supriya Madye ICICI Securities Okay Sir, thanks a lot. Wish you the very best Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you so much Moderator Thank you. The next question is from the line of Mitul Shah from First Global Securities. Please go ahead. Mr. Mitul Shah First Global Securities Sir, good afternoon. This question is related to exports. In exports we get gains because the rupee at around 45 and we had hedged at 47 Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Hmm

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Mr. Mitul Shah First Global Securities So this difference do we directly add to the topline in our export revenue or we subtract it from the expenses Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No, no. its part of the FOB. Mr. Mitul Shah First Global Securities So we directly add to the export revenue Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Mr. Mitul Shah First Global Securities Okay, Sir. thanks Sir. Moderator Thank you Mr. Shah. The next question is from the line of Aniket Matre from IDFC Securities. Please go ahead. Mr. Aniket Mhatre IDFC Securities. Hi, Sir. Any model launched plan that you can share with us this fiscal and also when would the bikes from the KTM be launched in export and domestic market Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The new launch right now is only the one which is the 150 that we are talking about Mr. Aniket Mhatre IDFC Securities. Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto For the information we are not sharing at this point. As far as KTM is concerned the first lot of vehicles in the CKD manufacturing at Chakan will be exported by end December beginning January Mr. Aniket Mhatre IDFC Securities. And in the domestic market? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Domestic market we may have to wait for some time 31

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Mr. Aniket Mhatre IDFC Securities. Any targets for the KTM Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No. No figures yet. Nothing to be said. Mr. Aniket Mhatre IDFC Securities. Okay, thanks a lot. Moderator Thank you Mr. Mahtre. The next question is from the line of Mr. Navin Mata from Ambit Capital. Please go ahead. Mr. Navin Mata Ambit Capital Hi Sir. Just a couple of quick questions. Any upgrades which are pending from our 2 wheeler or 3 wheeler portfolio? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto 3 wheeler the entire range has been upgraded in the last 2 months or so; you would have seen in the papers Mr. Navin Mata Ambit Capital Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto As far as 2 wheelers are concerned we have just done the Discover 100cc in last September, Pulsar 135cc in January, and this Discover 150cc in May, so I think these 3 should take us the next nine months. Mr. Navin Mata Ambit Capital Alright. And sir on the inventory side what kind of inventory are we setting up currently? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Normal 20 days. Mr. Navin Mata Ambit Capital Okay. And our capex is planned at Waluj and Chakan as well, when would that be completed? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto In terms of

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Mr. Navin Mata Ambit Capital We were talking of some brown field expansion? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto That will be at Chakan, that will be at Waluj. So that will be ready by about I would say November - December Mr. Navin Mata Ambit Capital Okay. There is no expansion at Waluj, is it? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No Waluch there is no expansion. The Waluj expansion is more in terms of the 3 wheeler which is currently 360,000 going to about 500,000 Mr. Navin Mata Ambit Capital Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And this is also a gradual thing. This is not something Mr. Navin Mata Ambit Capital Yeah Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And while we talk of the Pantnagar capacity built up there will also be a Capex will also take place at Waluj to supply kits etc to them. Mr. Navin Mata Ambit Capital Okay. Thanks a lot. Moderator Thank you Mr. Mata. Participants who wish to ask a question many kindly press * and then 1. The next question is from the line of Mr. Kaushal Maroo from Religare Capital Market. Please go ahead. Mr. Kaushal Maroo Religare Capital Market Hi Kevin. We have been having some benefits of opening up of licences for the passenger vehicles, 3 wheelers

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Hmm Mr. Kaushal Maroo Religare Capital Market So is that going to continue or we are going to see a dip on that side. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto See, the way I look at it is opening up of permits does not mean that Jitna permit khulta hai utna you get that extra sale. The more permits that open up the replacement cycle comes down. But what we are seeing today is more and more state governments actually doing away with permits. You have seen that now happening in Chennai. Mr. Kaushal Maroo Religare Capital Market Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Permits is something more I would say again.since I am recorded I would be cautious in .it is more of a situation where I would believe that the bureaucrats like to dealt away they could probably show the importance or you can understand what I am talking about. I would say that I my belief, I hope I am right; in another 2 years or 3 years this concept of permits itself maybe questioned. More and more states actually doing away with permits and let the demand decide. Mr. Kaushal Maroo Religare Capital Market Okay. Thank you Kevin Moderator Thank you Mr. Maroo. The next question is from Mr. Satish Goel, Daiwa Capital Market. Please go ahead Mr. Satish Goel Daiwa Capital Market Hi Kevin, thanks for taking the question. Just wanted a greater sense how the subventions takenis the subventions taken through the other expenses and what is how is looking at it because I understand the subventions have increased quarter and quarter Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Subventions are a part of other expenses but if you look at the line item of the balance sheet produced, printed you see general sales it will be coming in commissions being sitting down there. We offer subvention to BAFL and to banks, whoever it is who offer the products at a rate which is as a discount to their normal rates. The entire subvention amount gets charged up immediately and not apportioned over the period. In the current fourth quarter no subventions have been paid and thats why you are seeing a lot of reduction taking place in the other expenditure.

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Mr. Satish Goel Daiwa Capital Market Okay subventions will be. I mean is it paid .. It is not paid every quarter as such or Mr. Kevin Dsa Vice President - Finance, Bajaj Auto It is paid by the number of vehicles financed with them at a discounted price. Mr. Satish Goel Daiwa Capital Market In this quarter subventions were not paid but? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto We did not have an agreement with the BAFL or any bank to offer Bajaj products at lower interest rate. Mr. Satish Goel Daiwa Capital Market Okay, thanks Kevin Moderator Thanks. The next question is from the line of Alok Rawat from CLSA. Please go ahead Mr. Alok Rawat CLSA Good morning Sir Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Good morning Alok Mr. Alok Rawat CLSA Sir a couple of questions. The tax rate it has come down by a fair bit this quarter. Sir what could be the reason and where do you see it in the FY11? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I would put it at FY11, I would be conservative at 28% with a downward bias by .5% Mr. Alok Rawat CLSA Okay. And what is the reason it came down? Was it higher share of Pantnagar Mr. Kevin Dsa Vice President - Finance, Bajaj Auto It is higher share of Pantnagar.

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Mr. Alok Rawat CLSA Okay and second question slightly on the longer term do you think..would you be worried about you now have Pulsar and Discover at different price point; Pulsar from 135cc to 220cc Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Mr. Alok Rawat CLSA So over a longer period Pulsar 180cc or 220 cc buyer feeling slightly concerned that a Pulsar is being bought at a much lower price point the 135cc and so that kind of diluting the brands core image Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No. You see the Pulsar is a brand that is going for 150cc all the way upto 220cc. What we did when we started the Pulsar is that there is a huge set of youngsters in the 18 to 21year band who do not buy the Pulsar because their parents dont give them the money to buy the Pulsar presuming it to be too dangerous, the 150cc. Mr. Alok Rawat CLSA Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The 150cc customer is invariably the guy who is young, who is working probably in a BPO who doesnt have to ask his parents for funds for this. So when we launched the Pulsar 135cc all these thoughts did come into our mind are we diluting the brand, etc. so what we made sure is that the Pulsar 135cc has all the imageries and sports impact that you will consider for a premium sports bike Mr. Alok Rawat CLSA Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And one of the major considerations is for example the price. The Discover 150cc is priced at 46000 ex showroom. The Pulsar 135cc, is 135cc but the price is 51000 rupees Mr. Alok Rawat CLSA Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So its made costly. Its made upmarket and what we have seen is that 135 there is no cannabilization of 135cc and the 150cc but the customers have come is a completely younger set. 36

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Mr. Alok Rawat CLSA So it is rather expansion of market than Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah, thats right. Mr. Alok Rawat CLSA Okay, thank you Moderator Thank you Mr. Rawat. The next question is from the line of Chaityana from ShareKhan Ltd. Please go ahead Mr. Chaityana ShareKhan Ltd. Just wanted to know your thoughts on the 3 wheeler industry and Bajaj per se. Last year very good growth numbers we have seen and with lower base for next 3-4 months the growth is expected to be higher how do you see after that the growth numbers coming in and what would be the reason? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto See, for me I break the industry up into 3 categories: - one is the passenger segment and within the passenger segment the city module and I believe that that segment will continue to grow by 5 to 10% Mr. Chaityana ShareKhan Ltd. Okay Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And in that segment we have 90% market share. Market share may come down a little bit about 87 or 85% because of TVS entry into that Mr. Chaityana ShareKhan Ltd. Yeah Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Now any manufacturer at 90% market share will have to lose about 3 to 4% market share. But that segment should grow logically by 5 to 7 or 10% on a consistent basis for the next 2 to 3 years. The next segment is the cargo segment where the 3 wheeler cargo segment is definitely facing a challenge because of the structural change to the 4 wheeler segment. Now for us unfortunately or fortunately we are not a major player in that segment. So for us that may not be a big driver for growth or a pain in case that market falls. 37

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The third segment is what I would call the segment that is in urban, semi urban areas which is purely the diesel segment. I think this is where we will make significant improvement in our market share with the launch of the new products. So across the board this is what I see. On a domestic segment I would not hesitate to say a 8 to 10% growth taking place. What I see in the next 3 to 5 years is a situation where we will play a significant role because when you talk of Africa it is the same thing what you saw in India several years back where the need for cheap, economical and viable transportation is necessary. So for me my own internal assessment is 3 years down the road you should be seeing Bajaj exporting over 10,000 3-wheelers to Africa itself. Mr. Chaityana ShareKhan Ltd. You said that not being present in the 4 wheeler segment is in this particular category that hampers your growth in the cargo segment so what stops us from entering that segment Mr. Kevin Dsa Vice President - Finance, Bajaj Auto The answer to this is that we started with the project called PV1500 project which was to bring a 1 ton vehicle into the market. That was actually supposed to have been launched 6 months back. But when the whole product was ready it was again the same situation that this was an absolute need 2 product competing with the ace which meant that a) you have to offer it at a discount to what Ace is offering, spend a lot of money promoting what I would call a me too product and thats why the MD said lets go back to the drawing board and come back with something different. And thats what we are working on a platform of engines which will then be used whether for passenger transportation or for a cargo transportation and that should come out by I should say end of calendar year 2012. Mr. Chaityana ShareKhan Ltd. Okay. And do you feel the same kind of impact on the passenger 3 wheeler segment from a vehicle coming in the market from a 4 wheeler segment Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No. first of all I believe that the 4 wheeler permit cannot operate in a 3 wheeler permit. Mr. Chaityana ShareKhan Ltd. Okay. Thats it. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you Moderator. Thank you. The next question is from the line of Mahantesh Sabarad from Fortune Equity Brokers. Please go ahead.

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Mahantesh Sabarad Fortune Equity Brokers. Good after Kevin, I am Mahantesh here Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Hi, Mahantesh, long time Mahantesh Sabarad Fortune Equity Brokers. Yeah, long time. Just wanted to understand your guidance for 4 million for the next year. Can you help me break that up? I broadly understand that it is 3.6 million of motorcycles and about 0.4 of 3 wheelers. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto And that is a little over 1 million of exports. Mahantesh Sabarad Fortune Equity Brokers. Let me try to break that 3.6 million of 2 wheelers Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I cannot share that data with you. There is no way I can share it to you this way Mahantesh Sabarad Fortune Equity Brokers. Hmm Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Lets wait and watch for some time before one arrives to that. Mahantesh Sabarad Fortune Equity Brokers. Okay. But this is the understanding, right. 3.6 and 0. 4 between 2 wheelers and 3 wheelers for the next year Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Mahantesh Sabarad Fortune Equity Brokers. And broadly you also mentioned that a million of the entire thing will come from Pantnagar as well. Correct Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yes

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Mahantesh Sabarad Fortune Equity Brokers. Just another question I had on your exports you mentioned that you have hedged yourself on an average Rs46.9 to a dollar for the next year for 80% of your exports Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Mahantesh Sabarad Fortune Equity Brokers. and you had virtually the same realization for the entire year of FY10, the year gone by Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Correct Mahantesh Sabarad Fortune Equity Brokers. So how do we understand this? That is always..there is also a cost of hedging, right? So you have given me the net of that hedging Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Net realization. This is all par, plain vanilla forward covers. Mahantesh Sabarad Fortune Equity Brokers. Okay so you have tied yourself to a Rs47 to a dollar kind of Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yeah Mahantesh Sabarad Fortune Equity Brokers. So there is no really cost involved to pay over and above this? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto No, no. Mahantesh Sabarad Fortune Equity Brokers. And what are your export incentives that you have garnered for the entire year FY10 gone by? Mr. Kevin Dsa Vice President - Finance, Bajaj Auto FY10 gone by approximately Rs300 crores 40

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Mahantesh Sabarad Fortune Equity Brokers. So Rs300 crores is the incentives that you have got overall for the entire year Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yes Mahantesh Sabarad Fortune Equity Brokers. Okay. Thanks for breaking this up and good luck to you. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you Mahantesh Moderator. Thank you Mr. Sabarad. Ladies and Gentlemen due to time constraints the management would be taking one last question The last question is from the line of Mr. Navin Mata from Ambit Capital. Please go ahead Mr. Navin Mata Ambit Capital Yeah, just one more question with regards to Mr. Rajiv Bajaj comment on the retail volumes actually falling off by around 10% and how are we maintain our target of 4 million and how are we kind of Mr. Kevin Dsa Vice President - Finance, Bajaj Auto I read that article and what I can say is that I understand Mr. Navin Mata Ambit Capital Right Mr. Kevin Dsa Vice President - Finance, Bajaj Auto What I understand is what Mr Bajaj could have possibly meant. Is that the surge in retail that we saw in the fourth quarter which was absolutely berserk buying that has fallen off by 10%. Mr. Navin Mata Ambit Capital Okay

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Mr. Kevin Dsa Vice President - Finance, Bajaj Auto So the berserk sale where every company was out of stock, we couldnt produce what the market wanted in the fourth quarter of the last year that has come down by 10%. Mr. Navin Mata Ambit Capital Okay. So by and large the trend remains around that 15% or around Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Yes. Thats why I still maintained a 12 to 14% for the year is very much achievable and possible. Mr. Navin Mata Ambit Capital Alright. Thanks a lot Sir. Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you. Moderator Thank you. Ladies and Gentlemen that was the last question. I would now like to hand the floor over to Mr. Surjit Arora for his closing comments. Mr. Surjit Arora Yeah on behalf of Prabhudas Lilladher I would like to thank Mr. Kevin Dsa for his time and also the participants who have logged on to the call. Thank you and have a nice day Mr. Kevin Dsa Vice President - Finance, Bajaj Auto Thank you so much Mr. Surjit Arora Thank you Sir.

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Prabhudas Lilladher Pvt. Ltd. 3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai-400 018, India Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209 Rating Distribution of Research Coverage
70% 60% 58.3%

% of Total Coverage

50% 40% 30% 20% 10% 0% Buy Accumulate Reduce Sell 18.0% 20.9%

2.9%

PLs Recommendation Nomenclature

BUY Reduce Trading Buy : : : Over 15% Outperformance to Sensex over 12-months Underperformance to Sensex over 12-months Over 10% absolute upside in 1-month No specific call on the stock Accumulate Sell Trading Sell : : : Outperformance to Sensex over 12-months Over 15% underperformance to Sensex over 12-months Over 10% absolute decline in 1-month Rating likely to change shortly

Not Rated (NR) :

Under Review (UR) :

This document has been prepared by the Research Division of Prabhudas Lilladher Pvt. Ltd. Mumbai, India (PL) and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness of the same. Neither PL nor any of its affiliates, its directors or its employees accept any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. We may from time to time solicit or perform investment banking or other services for any company mentioned in this document. For Clients / Recipients in United States of America: All materials are furnished courtesy of Direct Access Partners LLC ("DAP") and produced by Prabhudas Lilladher Pvt. Ltd. ("PLI"). This material is for informational purposes only and provided to Qualified and Accredited Investors. You are under no obligation to DAP or PLI for the information provided herein unless agreed to by all of the parties. Additionally, you are prohibited from using the information for any reason or purpose outside its intended use. Any questions should be directed to Gerard Visci at DAP at 212.850.8888.

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