The Research Report is only for reference purposes for residents in India, but not for the purposes of advising or recommending on any investment.

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1 The Research Report is only for reference purposes for residents in India, but not for the purposes of advising or recommending on any investment. Kotak Securities Limited or its affiliates are not seeking any business relationship with any viewer of this report nor does Kotak Securities or its affiliates assume any liability for acting on this report nor does it take any responsibility to update information provided in this report.

2 Minda Corp. (MDA) Automobiles Lower profitability impacts 1QFY17 results. Minda reported 1QFY17 consolidated net profit of 249 mn (+36% yoy), which was 13% below our estimates due to EBITDA margin miss in standalone business and joint ventures. Profitability in Minda Furukawa JV remained (5% EBITDA margin) weak due to pricing pressures and higher imports. Management s efforts to increase localization will lead to some improvement going ahead but achieving 8-9% EBITDA margin in FY E looks difficult at this juncture. Maintain REDUCE with target price of 110, valuing the stock at 15X June 2018E EPS. REDUCE AUGUST 12, 2016 RESULT Coverage view: Attractive Price (`): 110 Target price (`): 110 BSE-30: 28,152 Company data and valuation summary Minda Corp. Stock data Forecasts/Valuations E 2018E 52-week range (Rs) (high,low) EPS (Rs) Market Cap. (Rs bn) 23.1 EPS growth (%) Shareholding pattern (%) P/E (X) Promoters 65.2 Sales (Rs bn) FIIs 1.4 Net profits (Rs bn) MFs 3.0 EBITDA (Rs bn) Price performance (%) 1M 3M 12M EV/EBITDA (X) Absolute (20.1) (3.8) 42.1 ROE (%) Rel. to BSE-30 (21.1) (11.8) 38.9 Div. Yield (%) QFY17 results below estimates on lower profitability in standalone business and JVs Minda reported 1QFY17 consolidated EBITDA of 585 mn (+24% yoy), which was 13% below our estimates due to lower-than-expected EBITDA margin in the standalone business and joint ventures. Consolidated revenues grew by 32% yoy (KIE 36% yoy) aided by the consolidation of Minda Stoneridge and Minda VAST joint ventures (like to like revenue growth was 11-14%, as per our calculations). Consolidated EBITDA margin came in at 8.4% (up 70 bps qoq and down 50 bps yoy), which was lower than our estimate of 9.3%. The miss was led by (1) 9.8% EBITDA margin in standalone business versus our estimate of 11.5% and (2) 5% EBITDA margin in Minda Furukawa JV (KIE 6%) and 8% in Minda Stoneridge JV (KIE 10%). Due to lower profitability, Minda Furukawa JV incurred net loss this quarter. The company reported consolidated net profit of 249 mn (+36.2% yoy), which was 15% below our estimates. Expect 17% revenue CAGR over FY E; lower profitability in Furukawa JV a concern We expect the company to deliver 17% revenue CAGR over FY E (excluding impact of consolidation of JVs) led by potential market share gains across segments and new product launches. While revenue performance of Minda Furukawa will likely be muted in FY2017E, we expect revenues to grow in double digits from FY2018E led by new order wins and pickup in revenues from new products (steering roll connectors). We expect EBITDA margin of Minda Furukawa to improve to 6-7% over two years, lower than management expectations of 8-9%. Minda Stoneridge is another growth driver due to higher revenue contribution from automotive sensors, which will ramp up further over the next two to three years. We note that the company will incur capex of around 2 bn in FY2017E largely towards setting up a greenfield facility in Mexico, which will impact FCF generation this year. Lower FY E EPS estimates by 5-6%; maintain REDUCE with unchanged TP of 110 We cut our FY2017-8E EPS estimates by 5-6% as we lower our EBITDA margin estimates in the standalone business and fine-tune our estimates for other subsidiaries. While medium-term growth prospects remain strong (23% EPS CAGR over FY E), valuations offer limited upside from current levels. We maintain our REDUCE rating with unchanged target price of 110, valuing the stock at 15X June 2018E EPS. Nishit Jalan nishit.jalan@kotak.com Mumbai: Hitesh Goel hitesh.goel@kotak.com Mumbai: Kotak Institutional Equities Research kotak.research@kotak.com Mumbai: For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

3 Automobiles Minda Corp. Key takeaways from the conference call Minda Furukawa JV. Revenues increased by 3% yoy to 1.05 bn in 1QFY17 ( 910 mn in 4QFY16) while profitability remained weak with EBITDA margin of around 5%. We build in 6% yoy revenue growth in FY2017E (unchanged) as there are no new models where the company will commence supplies this year. Minda Furukawa has received order for one new Maruti model (this order will have double-digit EBITDA margin and will contribute to revenues in FY2018E) and is also making efforts to win business for other new launches of Maruti. The management is hopeful of increase in market share with Maruti to 21% in FY2018 from 18% currently. We expect 22% yoy revenue growth in FY2019E as we build in 100 bps market share gain with Maruti. Higher import content (60% of total) continues to impact profitability; the management expects to increase localization by 5-7% over the next one to two years. The company is also undertaking other efforts to improve EBITDA margin to 8-9% over the next 2-3 quarters. We build in 6%/6.8% EBITDA margin (excluding other income) n FY E. Minda Stoneridge JV. Revenues increased by ~25% yoy to 850 mn in 1QFY17 aided by pickup in revenues from sensors and decent growth in instrument clusters segment. EBITDA margin was on the lower side in this quarter at 8% (~12% in 4QFY16) largely due to quarterly variations and will improve over the next few quarters. Two-wheeler locksets segment. Minda has increased its market share with Honda Motorcycles to 21% from 17% earlier. The company has received orders from Royal Enfield, which will start contributing to revenues by end-fy2017. After-markets segment revenues increased by 26% yoy to 650 mn in 1QFY17. The company has guided towards capex of 2 bn in FY2017E; this will be largely on account of (1) EUR19 mn on Mexico facility to supply plastic components to Audi and other OEMs; the company expects incremental revenues of EUR20 mn in FY2018E and (2) expansion of die-casting facility where the company has received orders for export of compressor housings to global suppliers (Borg Warner). The company maintained its revenue growth guidance of 35% in FY2017E. Commissioning of new die casting facility and Mexico facility will contribute to revenues largely from FY2018E. Increase in R&D expenses led to lower tax rate in the standalone entity in 1QFY17. 2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

4 Minda Corp. Automobiles Exhibit 1: Minda Corp s standalone 1QFY17 results were below estimates on lower-than-expected EBITDA margin Minda Corporation standalone results, March fiscal year-end, 1QFY17 ( mn) (%chg.) 1QFY17 1QFY17E 1QFY16 4QFY16 1QFY17E 1QFY16 4QFY16 FY2017E Net sales from operations 1,779 1,895 1,575 1, (0.8) Other operating income (6.7) (2.1) Net sales 1,806 1,925 1,604 1,820 (6.2) 12.6 (0.8) 8,166 Raw materials (1,121) (1,165) (998) (1,090) (3.8) (5,063) Staff costs (251) (260) (213) (250) (3.5) (1,086) Other expenses (257) (280) (215) (289) (8.1) 19.7 (10.9) (1,125) Total expenses (1,629) (1,705) (1,425) (1,629) (4.5) 14.3 (0.0) (7,274) EBITDA (19.5) (0.8) (7.3) 892 Depreciation (48) (50) (45) (48) (5.0) 5.3 (1.5) (209) EBIT (23.7) (2.9) (9.2) 684 Other income Interest expense (12) (8) (14) (6) 53.8 (14.6) (48) Profit before tax (24.5) (5.2) (11.2) 685 Tax expense (26) (50) (44) (41) (47.6) (40.0) (35.8) (185) Profit after tax (15.1) 11.0 (1.7) 500 Adj PAT (15.1) 11.0 (1.7) 500 # of shares EPS (Rs/share) (15.1) 11.0 (1.7) 2.4 Tax rate (%) As a % of revenues Raw material Staff costs Other expenses EBITDA margin (%) EBIT Margin KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

5 Automobiles Minda Corp. Exhibit 2: Minda Corp s consolidated 1QFY17 results were below estimates on weak performance of standalone and Minda Furukawa JV Minda Corporation consolidated results, March fiscal year-end, 1QFY17 ( mn) (%chg.) 1QFY17 1QFY17E 1QFY16 4QFY16 1QFY17E 1QFY16 4QFY16 FY2017E Net sales from operations 6,910 7,130 5,216 6, Other operating income (32.5) (60.6) Net sales 6,954 7,200 5,281 6,447 (3.4) ,268 Raw materials (4,234) (4,370) (3,309) (3,909) (3.1) (19,073) Staff costs (1,249) (1,230) (861) (1,154) (5,373) Other expenses (886) (930) (649) (890) (4.7) 36.5 (0.4) (3,988) Total expenses (6,369) (6,530) (4,819) (5,953) (2.5) (28,433) EBITDA (12.6) ,834 Depreciation (213) (200) (151) (188) (903) EBIT (20.7) ,931 Other income Interest expense (89) (75) (87) (42) (383) Extraordinary income/(losses) (100.0) Profit before tax (27.1) 16.3 (6.8) 1,726 Share of profit of associates 3 Minority interest 3 (35) (17) 10 (135) Tax expense (79) (116) (62) (93) (32.0) 27.0 (15.5) (432) Profit after tax (15.4) 22.9 (5.8) 1,160 Adj PAT (15.4) ,160 # of shares EPS (Rs/share) (15.4) Tax rate (%) As a % of revenues Raw material Staff costs Other expenses EBITDA margin (%) EBIT Margin KOTAK INSTITUTIONAL EQUITIES RESEARCH

6 Minda Corp. Automobiles Exhibit 3: We expect Minda to deliver 16% revenue CAGR over FY E (after excluding consolidation impact of JVs) Revenue break-up across segments, March fiscal year-ends, E ( mn) Revenue CAGR (%) E 2018E 2019E 2020E E Revenues (Rs mn) Standalone business 5,842 6,039 6,368 6,933 8,034 9,168 10,328 11, wheeler lock kits for OEM 2,399 2,718 3,230 3,653 4,100 4, Locksets for after-market 1,141 1,090 1,282 1,474 1,740 1,983 2,221 2, Die casting (Products sold outside group) 1,008 1,101 1,304 1,597 1,896 2, Exports ,007 1,108 1,219 Others ,002 1,083 Minda SAI 3,624 4,413 5,088 5,430 6,041 6,801 7,751 8, Minda Furukawa 1,848 4,387 4,668 5,693 8,144 10, Minda KTSN 4,048 4,548 4,515 3,950 4,148 5,184 5,703 6,273 (0.8) 12.3 PT Minda Automotive Indonesia 1, ,014 1, Minda Vietnam Automotive Minda Automotive Soluction (Replacement) 1,642 1,597 1,938 2,221 2,615 3,020 3,386 3, Minda Schenk 8,368 Minda Stoneridge 1,385 3,486 4,100 4,863 5, Minda VAST 1,166 2,727 3,075 3,465 3, Panalfa ,004 1,124 Revenues 23,525 16,794 21,076 26,460 33,606 39,134 45,899 53,175 Less: Eliminations 2,176 1,152 1,744 2,302 2,650 2,939 3,225 3,542 Other operating income Consolidated net revenues 21,736 15,939 19,706 24,455 31,268 36,538 43,051 50, Domestic 8,657 10,568 13,000 18,644 25,116 29,150 34,984 41, Exports ,007 1,108 1, Overseas entities (Largely Europe) 12,417 4,548 5,834 4,939 5,235 6,381 6,959 7,592 (31.5) 11.3 Revenues by business segment (Rs mn) Safety security & restraint systems 5,764 6,681 7,913 9,007 11,813 13,521 15,210 16, Driver information & telematics systems 4,056 4,644 7,116 11,201 14,995 17,489 21,761 26, Interior systems 11,529 4,317 4,303 3,950 4,148 5,184 5,703 6,273 (38.9) 12.3 Contribution to revenues (%) Safety security & restraint systems Driver information & telematics systems Interior systems Notes: (a) revenue CAGR is impacted by sell-off of Minda Schenk. (b) FY E revenue CAGR is after adjustments for the consolidation impact of Minda Stoneridge (from Oct. 2015) and Minda VAST (from June 2015) KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

7 Automobiles Minda Corp. Exhibit 4: We expect Minda to gain market share across most segments; profitability of Minda Furukawa likely to improve Key assumptions, March fiscal year-ends, E E 2017E 2018E 2019E 2020E Domestic market share (%) Passenger vehicle wiring harness With Maruti Suzuki Two-wheeler locksets Four-wheeler locksets Revenue from new products (Rs mn) Steering roll connectors (part of Minda Furukawa) ,520 1,702 Automotive sensors (part of Minda Stoneridge) ,143 1,715 2,401 EBITDA margin (excluding other income) of key subsidiaries/jvs (%) Minda SAI Minda Furukawa Minda KTSN PT Minda Automotive Indonesia Minda Vietnam Automotive Minda Automotive Soluction (Replacement) Minda Stoneridge Minda VAST Notes: (a) FY2015 EBITDA margin of Minda Furkawa includes forex gains of Rs90 mn. Exhibit 5: We cut our FY E consolidated EPS estimates by 5-6% Earnings revision table, March fiscal year-ends, E ( mn) New estimates Old estimates % change 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E Standalone Net sales 8,166 9,320 10,498 8,040 9,124 10, EBITDA 892 1,022 1, ,055 1,185 (4.1) (3.1) (3.0) Margin (%) Adj net profit (3.9) (4.0) (3.7) Standalone EPS (3.9) (4.0) (3.7) Consolidated Net sales 31,268 36,538 43,051 31,192 35,907 42, EBITDA 2,834 3,399 4,115 2,909 3,450 4,203 (2.6) (1.5) (2.1) Margin (%) Adj net profit 1,160 1,449 1,857 1,227 1,552 1,949 (5.5) (6.6) (4.7) Consolidated EPS (Rs) (5.5) (6.6) (4.7) 6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

8 Minda Corp. Automobiles Exhibit 6: We expect standalone net profit to grow at 12% CAGR over FY E Standalone financial summary, March fiscal year-ends, E ( mn) E 2018E 2019E 2020E Profit model (Rs mn) Net sales 4,842 5,597 5,982 6,168 6,491 7,047 8,166 9,320 10,498 11,657 EBITDA ,022 1,149 1,277 Other income Interest and finance charges (130) (130) (138) (112) (78) (40) (48) (44) (31) (19) Depreciation (119) (143) (168) (217) (174) (185) (209) (252) (288) (318) Pre-tax profits Extraordinary items (23) (22) Income tax (103) (15) (83) (94) (140) (186) (185) (210) (239) (270) Net profits Adjusted net profit Earnings per share (Rs) Balance sheet (Rs mn) Total equity 1,842 2,676 2,897 3,068 3,315 3,654 4,018 4,432 4,904 5,436 Total borrowings 487 1,083 1, Current liabilities 1,096 1,081 1,123 1, ,283 1,427 1,620 1,808 1,997 Other liabilities Total liabilities and equity 3,471 4,979 5,136 5,290 4,917 5,608 6,066 6,523 7,033 7,603 Cash Total fixed assets 1,017 1,132 1,475 1,423 1,281 1,359 1,850 1,897 1,910 1,991 Investments ,035 1,763 1,855 2,005 2,005 2,005 2,005 2,005 Current assets 1,396 2,031 2,311 1,773 1,608 1,666 1,861 2,128 2,398 2,669 Other long-term assets Total assets 3,471 4,979 5,136 5,290 4,917 5,608 6,066 6,523 7,033 7,603 Free cash flow (Rs mn) Operating cash flow, excl. working capital ,007 Working capital (156) (545) (259) 625 (142) 331 (51) (75) (82) (82) Capital expenditure/acquisitions (176) (277) (514) (201) (205) (263) (700) (300) (300) (400) Investments (178) (288) (293) (728) (91) (150) Free cash flow 222 (320) (279) (43) Ratios (%) EBITDA margin Gross margin Debt/equity (X) Net debt/equity (X) (0.0) (0.1) (0.1) Core RoAE Core RoACE KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

9 Automobiles Minda Corp. Exhibit 7: We expect consolidated net profit to grow at 23% CAGR over FY E Consolidated financial summary, March fiscal year-ends, E ( mn) E 2018E 2019E 2020E Profit model (Rs mn) Net sales 7,322 13,855 21,736 15,939 19,706 24,455 31,268 36,538 43,051 50,048 EBITDA 758 1,349 1,087 1,257 1,855 2,233 2,834 3,399 4,115 4,768 Other income Interest and finance charges (174) (268) (424) (275) (395) (334) (383) (349) (322) (254) Depreciation (172) (455) (771) (478) (603) (745) (903) (1,023) (1,135) (1,259) Pre-tax profits ,085 1,328 1,726 2,188 2,841 3,437 Extraordinary items (176) (30) Income tax (105) (138) (175) (172) (272) (366) (432) (547) (710) (859) Share of JVs Minority interest (2) (30) (135) (192) (274) (358) Net profits ,073 1,160 1,449 1,857 2,219 Adjusted net profit ,160 1,449 1,857 2,219 Earnings per share (Rs) Balance sheet (Rs mn) Total equity 2,693 3,530 3,462 3,894 4,666 5,674 6,698 7,992 9,674 11,695 Minority interest ,237 1,596 Total borrowings 2,046 4,759 5,319 5,523 5,018 5,430 5,630 5,130 4,730 3,730 Current liabilities 2,127 3,211 3,596 3,451 4,022 5,611 6,834 7,668 8,975 10,420 Other liabilities Total liabilities and equity 6,951 11,922 12,729 13,122 14,216 17,708 20,290 22,111 24,972 27,797 Cash Total fixed assets 2,646 4,978 5,342 5,418 5,861 7,318 8,815 8,992 9,657 10,198 Investments Current assets 3,612 5,580 6,583 6,765 7,423 9,184 10,875 12,616 14,725 17,032 Other long-term assets Total assets 6,951 11,922 12,729 13,122 14,216 17,708 20,289 22,111 24,972 27,797 Cash flow (Rs mn) Operating cash flow, excl. working capital 676 1,082 1, ,427 2,613 2,526 2,993 3,567 4,080 Working capital (66) (1,314) (617) (326) (88) (172) (469) (906) (803) (861) Capital expenditure/acquisitions (187) (1,565) (1,150) (321) (455) (2,201) (2,400) (1,200) (1,800) (1,800) Investments (118) 249 Free cash flow 424 (1,797) (472) (343) ,419 Ratios (%) EBITDA margin Gross margin Debt/equity (X) Net debt/equity (X) RoAE RoACE KOTAK INSTITUTIONAL EQUITIES RESEARCH

10 Disclosures "I, Nishit Jalan, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report." Kotak Institutional Equities Research coverage universe Distribution of ratings/investment banking relationships 70% Percentage of companies covered by Kotak Institutional Equities, within the specified category. 60% 50% 40% 30% 20% 10% 0% 35.0% 30.0% 22.2% 12.8% 2.2% 3.3% 2.2% 0.0% BUY ADD REDUCE SELL Percentage of companies within each category for which Kotak Institutional Equities and or its affiliates has provided investment banking services within the previous 12 months. * The above categories are defined as follows: Buy = We expect this stock to deliver more than 15% returns over the next 12 months; Add = We expect this stock to deliver 5-15% returns over the next 12 months; Reduce = We expect this stock to deliver -5-+5% returns over the next 12 months; Sell = We expect this stock to deliver less than -5% returns over the next 12 months. Our target prices are also on a 12-month horizon basis. These ratings are used illustratively to comply with applicable regulations. As of 30/06/2016 Kotak Institutional Equities Investment Research had investment ratings on 180 equity securities. Source: Kotak Institutional Equities As of June 30, 2016 Ratings and other definitions/identifiers Definitions of rating BUY. We expect this stock to deliver more than 15% returns over the next 12 months. ADD. We expect this stock to deliver 5-15% returns over the next 12 months. REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months. SELL. We expect this stock to deliver <-5% returns over the next 12 months. Our target prices are also on a 12-month horizon basis. Other definitions Coverage view. The coverage view represents each analyst s overall fundamental outlook on the Sector. The coverage view will consist of one of the following designations: Attractive, Neutral, Cautious. Other ratings/identifiers NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. CS = Coverage Suspended. Kotak Securities has suspended coverage of this company. NC = Not Covered. Kotak Securities does not cover this company. RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. NA = Not Available or Not Applicable. The information is not available for display or is not applicable. NM = Not Meaningful. The information is not meaningful and is therefore excluded. KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

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Associates of Kotak Securities Limited may have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. Subject Company has been client during twelve months preceding the date of distribution of the research report. A graph of daily closing prices of securities is available at and (Choose a company from the list on the browser and select the"three years" icon in the price chart). Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai CIN: U99999MH1994PLC134051, Telephone No.: , Fax No.: Website: SEBI Registration No: NSE INB/INF/INE , BSE INB /INF , MSEI INE /INB /INF , Research Analyst INH , AMFI ARN 0164 and PMS INP NSDL: IN-DP-NSDL CDSL: IN-DP-CDSL Compliance Officer Details: Mr. Manoj Agarwal. Call: , or ks.compliance@kotak.com. 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They represent early notations and responses by analysts to recent events. Data in the notes may not have been verified by us and investors should not act upon any data or views in these notes. Most First Cut notes, but not necessarily all, will be followed by final research reports on the subject. There could be variance between the First cut note and the final research note on any subject, in which case the contents of the final research note would prevail. We accept no liability for the contents of the First Cut Notes.