Pirelli in India September 2005 1 Pirelli in

Pirelli in India September 2005 1

Pirelli in India A Federal Republic larger than Europe with. . . • Enormous distances • Largely unpaved roads • Non electrified railways (three gauges) • Geographical Obstacles • Periodical difficult climate conditions Difficult and costly transportation across the territory September 2005 2

Pirelli in India AUTOMOTIVE MARKET EVOLUTION 1990’s AND EARLY 2000’s FUTURE TREND Poor road conditions Vehicle overloading Low speeds New infrastructures (golden quadrilateral) High speeds Protected market (high import duties and excise) Open market (WTO) The market is increasingly demanding for higher quality and more performing products September 2005 3

Pirelli in India THE “GOLDEN QUADRILATERAL” 5, 846 km of four/six lane expressways connecting Delhi, Mumbai, Kolkata and Chennai A 6 billion USD project boosting the Indian automotive and construction industries, and sustaining the Country’s economic growth September 2005 4

Pirelli in India INDIAN AUTOMOTIVE SECTOR A STEADY DOUBLE DIGIT GROWTH: PASSENGER CAR/VAN PRODUCTION (2004) 1, 080, 000 units +20% (2004 vs. 2003) TRUCK/BUS VEHICLES PRODUCTION (2004) 188, 000 units +25% (2004 vs. 2003) September 2005 5

Pirelli in India TYRE MARKET EVOLUTION Indian tyre Producers are facing new challenges: • Growing quality standards and performance required by the market • Growing risk of foreign competition as market barriers are being lowered in accordance with WTO directives Most Producers are looking for technology updates to face these challenges, i. e. technology agreements or JV’s with Western and Japanese Companies Consolidation process among producers is likely September 2005 6

Pirelli in India ATTRACTIVE POINTS • Highly skilled technicians and open minded managers with international background • English widely spoken at all levels • Weak cultural barriers (as compared to China) • English common law • Biggest Democracy in the world, stable Government • GDP now growing 7% per year • Interest rates are lowering (7. 5% against 16%in the ’ 90 s) • High internal transportation costs • Difficult to import used machinery • Living conditions not easy in developing areas for Europeans September 2005 7

Pirelli in India PIRELLI’s TECHNOLOGY IN EMERGING COUNTRIES Car + Light t. Truck. Motorcycles Steelcord September 2005 8

Pirelli in India THANK YOU. . . September 2005 9