Company Products Established Founder Distribution Production plants

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1 AMTEK AUTO LIMITED Amtek Auto is one of the largest integrated manufacturer of forgings, iron & aluminium casting and precision machined components and assemblies with significant exports to leading manufacturers in the automotive industry. Background Amtek Auto Limited, promoted by Mr Arvind Dham and late Mr W L Dham along with the Haryana State Industrial Development Corporation (HSIDC), was incorporated in It is currently engaged in manufacturing of a wide range of components for automotive applications mainly for use in engine, transmission and suspension systems.the company supplies a wide variety of components and assemblies to leading global vehicle original equipment manufacturers. Its plants are located in Gurgaon (Haryana), Sohna, Bhopal, Dharuhera, Bhiwadi, Coimbatore, Ranjangaon and Mandideep (Madhya Pradesh).All the plants are accredited with TS16949 and QS9000 certifications for quality systems.the company is setting up new facilities at Bhiwadi (Rajasthan), Sanaswadi (Maharashtra) and Baddi (Himachal Pradesh). Over the years,amtek has grown through a series of acquisitions. In , it acquired a hitech company, which had state-of-the-art German & Italian presses to produce high quality forgings. In , Amtek made two important acquisitions, that of Ahmednagar Forgings Limited in Pune (Maharashtra), a manufacturer of forgings and fully machined components, and Smith Jones Inc., USA, one of the largest manufacturer of flywheel ring gears and flex plates in the US. The company s promoters own the majority stake in Amtek (at per cent).the next largest shareholders are the foreign institutional investors with per cent stake, followed by domestic financial institutions and mutual funds (20.73 per cent stake). Private corporate bodies, non-resident Indians, Indian public and others hold the residual shares. Company Products Established Founder Distribution Production plants Amtek Auto Auto 1985 Arvind Dham, India, Americas, India, USA, UK components W L Dham, Europe, HSIDC 12

2 Products The major components include connecting rods, crankshafts, stubaxles, steering knuckles, turbocharger housings, flanges, sector gears and shafts, cylinder blocks and head, differential casings, transmission covers, clutch cases, cam carriers and covers, flex plates, flywheel ring gears, strut assemblies, axle assemblies, piston cylinder modules, spindle assemblies, fuel delivery systems among others which are supplied to global automotive companies such as Land Rover, M G Rover, Saab, Perkins Engines, Dana Italia, Griggs and Stratton, CYT, CNH Global,Toyota, Cummins Aston Martin, MDM, Scania, Mulhoff, Delco Machining, Tallent Engineering, Navistar General Motors, Ford, Jaguar, Hyundai, John Deere, GWK Ltd, Ketton Machining, Davis Industries, Kawasaki, Sisu Diesel, LuK Industries, Maruti Suzuki, Fiat India, CNH New Holland, GE Transportation, Hero Honda, Hindustan Motors, Mahindra and Mahindra,Tata Motors, Sanden Corporation, LML Limited, Eicher Tractors, Honda Scooters, yamaha India, and Bajaj Auto. Financial Analysis Between 2003 and 2005, the consolidated turnover and net profit of the company and its subsidiaries grew at an impressive CAGR of 90.4 per cent and per cent respectively. Gross turnover was US$ 380 million and net profit was US$ 33.8 million on a consolidated basis in On a standalone basis, the company s turnover in 2005 was US$ million with CAGR of 25.8 per cent between 2003 and 2005, while its net profit was US$ 21.3 million, with a CAGR of 48 per cent. The company has raised debt several times in the past to fund its acquisition and expansion plans, as a result the debt equity ratio has gone up from 0.93 in 2003 to 1.3 in 2005.The return on capital employed has gone down from 12.6 per cent to 8.2 per cent in the same period. Amtek Auto s contribution in making Made in India global Amtek s globalisation strategy has been driven by multiple factors.the company has made its presence felt at the international level through its acquisitions of international companies, setting up of greenfield manufacturing facilities, exports to prestigious automotive companies, strategic joint ventures with foreign auto ancillary companies and tapping of global finance markets to fund its growth plans. 13

3 from all over Europe.A major part of this business is now being shifted to Amtek s facilities in India. 14 Amtek has been on an acquisition spree over the last few years as part of its growth strategy and has established manufacturing presence in Germany, UK and US through these acquisitions. These include: Zelter GmbH: In July 2005,Amtek acquired 70 per cent equity stake in Zelter GmbH, one of the top players in the world, engaged in manufacturing of machined turbo charger housings. Zelter has global scale manufacturing capacities at its two large state-of-the-art facilities located in Cologne in Germany and is an important tier-1 supplier to the automotive industry globally. It is a leading supplier of machined turbo charger housings to Borgwarner & Honeywell, the world leader in turbocharger housing assemblies.this acquisition has given Amtek accessibility to prestigious customers like Ford,Volkswagen, Audi, Hasenclever & Sohn, TK SteerTec, Dieckerhoff, Schubert & Sulzer, Visteon, etc. GWK Amtek Limited (formerly GWK Group Limited): Amtek acquired GWK, based in Letchworth, UK, in GWK has two modern, well-equipped plants focussing on complex machining and high-level module assembly comprising axles, system assemblies, corner modules and fuel delivery systems. Besides selling from its own plants, GWK also buys forgings and castings worth GBP 65 million Midwest Mfg. Co. USA (formerly Smith Jones Inc): Midwest, the second largest manufacturer of flywheel ring gears and flex plate assemblies in the US, supplies to large automobile manufacturers in the United States like Ford,Toyota, Honda, Kawasaki and John Deere. It also supplies to clutch assembly manufacturers like CYT, LuK, Datec, Daleo, Daco, Arvin Meritor and Daikin. It also has a substantial presence in the US automotive replacement market. It has built a strong reputation in the US market because of its timely deliveries, constant product quality improvement and price competitiveness.today, Midwest enjoys about 40 per cent share of the US ring gear market. Its manufacturing facilities are owned by its subsidiaries Midwest Mfg. Co., Kellogg IA, which manufactures only ring gears and Midwest Mfg. Co., Stanberry MO, which manufactures flywheel assemblies and flex plate assemblies. Lloyds (Brierley Hill) Limited: Lloyds, the largest flywheel and ring gear manufacturer in the UK, was acquired by Amtek in Its products include engine ring gears, timing rings and inertia rings, are supplied to global automotive engine manufacturers. To facilitate its globalisation efforts,amtek owns two holding companies,amtek Investments U.K. Limited and Amtek Investment US Inc., to make investments in the global markets on its behalf. Amtek Investment US has a wholly owned subsidiary Amtek Gears Inc., which has set up a ring gear unit at Bay City near Detroit with a capacity of 9 million fly wheel ring gears per annum.this unit, strategically located in the automotive hub of Detroit, started commercial production in April 2005 and has blue chip clients like Tesma, Unimotion Gear, General Motors, Ford, Nissan, etc.

4 Amtek has also concentrated on exports from India, currently US$ 37 million in size. It has bagged prestigious export orders from automotive giants like BSB Manufacturing, Canada, Case New Holland, Belgium, and Trans Axle Manufacturing of America, US, as part of their global sourcing plans. In 2005, additional export orders were received from Cummins Inc, USA, for ring gears and flywheel assemblies for their heavy diesel engine manufacturing operations in the US John Deere Worldwide, for the supply of 100 per cent requirement of their three agriculture equipment platforms Detroit Diesel, USA, for a long-term global sourcing contract for the supply of eight varieties of ring gears for their global engine manufacturing operations. To improve its acceptability in the global markets, Amtek has leveraged its alliances with other known international companies. One such alliance is the 50:50 joint venture entered into in 2005 with Germany-based Neumayer Tekfor GmbH for technological assistance for the manufacture and sale of high precision fractured connecting rod assemblies and modules in India. Its scope also encompasses joint business development globally, wherein Tekfor will use its global presence for marketing of Amtek's connecting rods in Europe and America. In India Maruti Udyog has already nominated this joint venture as a sole supplier for the fractured connecting rod modules for its prestigious diesel engine plant being set up at Manesar (Haryana). construction machines.the company is an supplier to Maruti Udyog Limited, Eicher, Bajaj Auto, Simpson's & Co, Case New Holland, Hindustan Motor, Escorts, John Deere, Detroit Diesel, Honda Car, Cummins and Benda Kogyo. To support its overseas and domestic expansion plans as well as reduce its high cost debt,amtek has leveraged the global finance market. In 2005 it raised US$ 60 million through a Global Depository Receipt (GDR) float, with a US$ 9 million green shoe option.with this, it became the first Indian auto-ancillary company to launch an overseas issue. In the same year, the company also raised External Commercial Borrowings (ECB) of US$ 60 million, which was however repaid out of the proceeds of the company s Foreign Currency Convertible Bonds (FCCB) issued for a sum aggregating US$ 150 million. Factors fuelling Amtek Auto s global initiatives India is steadily emerging as a global sourcing hub for engineering goods, auto parts and textiles.the potential of the auto parts sector is reflected in the performance of companies like Sundram Fasteners, Amtek Auto, Bharat Forge, MICO and Motherson Sumi.The key driver for this trend has been the Prior to this, a joint venture, Benda Amtek, was formed with Amtek India Ltd and Benda Kogyo Company Ltd, Japan in 1995 for manufacturing flywheel ring gear blanks and flywheel ring gears at its plant in Gurgaon.The product mix of Benda Amtek caters to the most of the automotive applications covering two-wheelers, passenger cars, LCVs, HCVs and others like marine engines and 15

5 Indian low cost manufacturing facilities to provide cost competition supplies to its overseas customers through its own subsidiaries.the company has positioned itself as a tier-1 vendor for global auto majors.with the growing trend towards global sourcing, the tier-1 vendor relationship with MNCs will further enhance the export potential for Amtek.The vendor development team of Amtek has been creating its own down line tier-2 and tier-3 vendors, which has enabled increasing turnover with minimum investment and higher returns. Future plans 16 low-cost and technologically qualified manpower available in India.Also India has emerged as a manufacturing hub for several sectors because of the changed perception of the Made in India brand due to the rapid emergence of India as an important player in the high-profile IT industry. Amtek has been riding on the outsourcing wave in this industry where the global OEM are increasingly looking for cheaper cost locations to manage their shrinking margin. Amtek s strategy has been to locate its plants near to its customers and reduce the lead-time for delivery.to cater to European customers, it has plants and facilities in UK and Germany, while in the US it has set-up facilities in Detroit where most automobile majors are located.to cater to its export orders, the company has invested heavily in increasing production capacities in India. Forgings capacity has gone up from 16,500 tonnes to 60,000 tonnes per annum while that of machined auto components has gone up from 7.32 million to 17.5 million between and Amtek has developed a business model where it owns front-end businesses overseas that have relationships with all of the major automobile makers globally. It has been able to leverage its Going forward,amtek has firms outsourcing orders from its overseas subsidiaries to be major contributors to its revenue. Also the export business secured through its large overseas entities which is being shifting gradually to domestic units is expected to increase profitability on a consolidated basis by way of cost saving. The company has also lined up several acquisitions in the US and Europe, which could be finalised over the next few months. Consolidated revenue from these acquisitions would be over US$ 350 million. Globalisation at a glance Global presence established through a mix of strategies followed acquisitions, joint ventures, greenfield ventures and direct exports Acquisitions in US, UK and Germany made strategically to establish presence close to customers and reduce lead times for delivery Joint ventures with prestigious companies for technological assistance as well as joint global business development Greenfield facility for manufacture of ring gears set up in Detroit, the global hub of automotive manufacturing Direct exports made to several global OEMs