Aditya Birla Nuvo Limited

Initiating Coverage Research Analyst

Nitesh Goenka

Phone No: 033-30512178 ngoenka@microsec.in

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Microsec Research

24 February 2011

We rate Aditya Birla Nuvo Ltd. a BUY. ABNL is a USD3.5 billion, diversified conglomerate having a portfolio of manufacturing as well as service sector businesses under its umbrella ranging from textiles to financial services. Aditya Birla Nuvo, through its subsidiaries and joint ventures, has made successful forays into life insurance, telecom, business process outsourcing (BPO), IT services, asset management and financial services. As per our estimates the company is expected to show incremental growth with a Net Profit of around INR 6 billion in FY2011 after posting a small profit of INR1.5 billion in FY2010. We expect the price to book value of ABNL for its FY 2012E to be 1.19x. Applying SOTP (sum of the parts) method towards its FY2012 earnings, we value the company at INR1,001, an upside of 34.1%. Investment Rationale

Focus on growing businesses: ABNL is focusing on tapping growth opportunities across businesses. The Company is looking forward to grow in segments such as life insurance, financial services and carbon black.

Expansion/Diversification: The Company has been on an expansion plan for the past two years and may continue doing the same. There may be some acquisitions in order to expand inorganically. The diversified portfolio of the business decreases the risk component.

Listing of businesses: The Company may evaluate value creation in IT-ITes & Finance business on attaining the right size by listing its different business (such as Aditya Birla Finance). This may give a sudden boost to the inherent value of different parts of the companies businesses.

Exhibit 1. ABNL – Historical Financials and Projections [INR Millions]

Source: Company, Microsec Research

Aditya Birla Nuvo Ltd. (ABNL)

BUY

Promoter and

Promoter Group, 51.05

Non-Institutions

& GDR, 19.73

Mututal Funds, 0.98

Other Institutions,

28.24

Shareholding (As on 31 December 2010

Current Market Price (INR) 746.4052 Week High / Low(INR) 965/ 704 Target Price (INR) 1,001Upside 34.1%Market Cap (In INR Mn) 8,472.36

Market Data

BSE Code 500303NSE Code ABIRLANUVOBloomberg Ticker ABNL INReuters Ticker ABRL.BOFace Value (INR) 10.00Equity Share Capital (In INR Mn) 1,136 5 Yr Average P/E 44.4xBeta vs Sensex 0.93Average Monthly Volume (Mn) 0.11

STOCK SCAN

Sector - Diversified

Particulars FY2008 FY2009 FY2010 FY2011E FY2012ENet Sales 113,738 143,155 155,052 183,412 234,406 Growth (%) 41.5% 25.9% 8.3% 18.3% 27.8%EBITDA 11,529 8,674 16,862 25,452 32,969 EBITDA Margin (%) 10.1% 6.1% 10.9% 13.9% 14.1%Net Profit 1,508 (4,357) 1,546 6,013 10,311 Net Profit Margin (%) 1.3% NA 1.0% 3.3% 4.4%Net Profit Growth (%) -46.3% -388.9% -135.5% 288.9% 71.5%EPS (INR) 16 (46) 15 53 91 BVPS (INR) 424 604 531 535 626

P/E 88.8 NA 60.5 14.1 8.2 P/BV 3.29 0.74 1.71 1.39 1.19 RoE (%) 3.7% -7.6% 2.8% 2.8% 4.5%EV/EBITDA 16.6 13.4 9.5 6.0 4.6

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Microsec Research

24 February 2011

Table of Contents

SL Content Page No 1 Cover page 1-1

2 Investment Rationale 2-2

3 Company Overview 4-5

4 Key Management 5-5

5 Business Segments and Analysis 6-12

6 SWOT Analysis 13-13

7 Valuation 14-14

8 Key Risks 14-14

9 Financial Performance 15-17

10 Notes 18-18

11 Microsec Research and Disclaimer 19-20

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Company Overview

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ABNL is part of USD30 Billion Aditya Birla Group. Operating in 27 countries across six continents with over 60% of revenue flowing from its overseas operations, Aditya Birla Group is in the league of fortune 500. ABNL manufactures viscose filament yarn, linen yarn & fabric, fertilisers, carbon black, insulators and branded apparel.

Aditya Birla Nuvo ranks as:

• India's second largest producer of viscose filament yarn (VFY) • The country's largest premium branded apparel company • The second largest producer of carbon black in India • Largest manufacturer of linen fabric in India • India’s largest and the world’s fourth largest producer of insulators

Aditya Birla Nuvo’s joint ventures and subsidiary companies include:

• Idea Cellular Limited, among top three cellular operators in India in terms of revenue market share.

• Birla Sun Life Insurance, among top six private life insurance companies in India • Birla Sun Life Asset Management, among top five asset management companies in India • Aditya Birla Minacs Worldwide Limited, among the top ten BPO players in India by

revenue size

Key Management

Board of directors:

• Mr. Kumar Mangalam Birla, Chairman • Mrs. Rajashree Birla • Mr. B. L. Shah • Mr. P. Murari (independent) • Mr. B. R. Gupta (independent) • Ms.Tarjani Vakil (independent) • Mr. S. C. Bhargava (independent) • Mr. G. P. Gupta (independent) • Dr. Rakesh Jain, Managing Director • Mr. Pranab Barua, Whole Time Director

Managing director:

• Dr. Rakesh Jain

Chief financial officer:

• Mr. Sushil Agarwal

Business heads:

• Dr. Rakesh Jain (fertilisers, insulators, BPO & IT) • Mr. Ajay Srinivasan (financial services) • Mr. Pranab Barua (garments, textiles) • Dr. Santrupt Misra (carbon black) • Mr. Sanjeev Aga (telecom) • Mr. Lalit Naik (viscose filament yarn)

Mr. Kumar Mangalam Birla, Chairman

Vision (Aditya Birla Group): “Our Goal is to become a

USD65 Billion Group by 2015 from USD30 Billion today. We

expect our company to contribute significantly to this

growth and earnings.”

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Business Segments and Analysis

Financial Services:

ABNL’s financial services vertical includes several businesses such as

• Life Insurance • Asset Management • NBFC • Private Equity • Broking • Wealth Management • General Insurance Advisory

Life Insurance:

Birla Sun Life Insurance Company (BSLI) is a joint venture between the Aditya Birla Group and Sun Life Financial Inc, a financial services organisation based in Canada. BSLI offers solutions that include protection, health, wealth with protection, children and retirement needs, and has a pan-India reach with 600 branches. The company is having more than two million customer base, BSLI is ranked among the top six private life insurance companies in India. With more than 150,000 direct selling agents, BSLI has made its reach to several rural areas as well.

Currently, BSLI manages more than INR 191 billion of assets. Its AUM saw a rise of more than 75% in FY10 over FY09.

Particulars (INR Billion) 2008-09 2009-10 2010-11E 2011-12EFirst Year Premium 28.21 29.60 31.30 32.98 Renewal Premium 17.51 25.46 33.90 47.17 Total Gross Premium 45.72 55.06 65.20 80.15

ABNL holds 74% share in BSLI. The company has been into losses since past decade. However, in FY11 the company has started reaping the benefits and showing positive results.

Particulars (INR Million) Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10Revenue from Operations 11,463 14,696 17,594 10,951 14,170 12,548 EBIT (1,249) (1,400) (513) 118 225 1,288 Capital Infusion 1,250 1,000 1,750 - - -

We expect the life insurance business, health insurance business of BSLI to grow and reap positive results going forward.

Asset Management:

Birla Sun Life Asset Management Company Limited (BSAMC) ranked 5th among the 43 asset management companies in India, with 8.5% market share as on December 2010. The total average AUM of BSAMC is INR 615 billion in Q3FY2011. In 9M, BSAMC’s y-o-y revenue grew by 50% and net profit grew by 138%. BSAMC also won ‘Asset Management Co. of the year 2010' award by The Asset magazine, Hong Kong, for the second year in a row.

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Particulars (INR billion) 2008-09 2009-10 2010-11EEquity 46.1 110.5 137.1 Debt and Liquid 424.9 512.9 587.9

Domestic 471.0 623.4 725.0 Offshore (All Equity) 12.7 24.2 29.5 PMS 2.9 3.7 2.9 Real Estate Fund - - 12.7

Total 486.5 651.3 770.1

Average Assets under Management

BSAMC, with a distribution network of 105 branches and over 33,000 financial advisors is targeting to be among the top 3 players going forward.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 1,780 2,930 4,080 6,177 EBIT 158 700 1,170 1,771 Net Profit 79 484 960 1,453

The average AUM of the Indian mutual fund industry grew by 52% from INR 4,929 billion in March 2009 to INR 7,475 billion in March 2010, driven by higher inflows into liquid funds and mark-to-market gains in equity funds. Looking at the growth potential we see that the total AUM of BSAMC may show a growth of more than 18% in FY2011 over FY2010.

NBFC:

Aditya Birla Finance Limited (ABFL) provides loan against securities (LAS), IPO financing and corporate bill discounting services. It also introduced new products such as Loan against Share for Individuals, ESOP Financing, and Bond Financing etc. to cater to the needs of different customer segments.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 1,203 728 1,368 1,642 EBIT 437 457 568 689 Net Profit 296 300 379 460

Credit penetration in India, currently is around 60% of GDP. This is lower compared to other emerging and developed economies. Also, according to RBI, the credit outstanding is expected to grow at a CAGR of around 20% for next three years. The Government is also thinking of providing banking licenses to NBFC’s. This could be a significant growth opportunity for NBFCs. The net work of Aditya Birla Finance is at INR 5 billion.

Private Equity:

The private equity arm within ABNL is growing strong with a fund of INR 8.8 billion as on 31 December 2010. The fund proposes to target substantial minority stakes, while investing primarily in unlisted, mid-cap, high growth, India-centric companies.

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Broking:

Aditya Birla Money Limited (ABML), aka Apollo Sindhoori Capital Investments Ltd. Was acquired by ABNL in March 2009. It is yet to complete its existence for two years within the group and has shown an increase in the revenues by 34% in FY2010.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 833 1,124 1,340 1,625 EBIT 40 205 251 305 Net Profit 12 127 156 189

In FY2010, ABML’s net income from operations increased from INR 833 million to INR 1.12 billion supported by 55% rise in equity broking volumes and 45% rise in commodity broking volumes. During the same period, its net profit increased from INR 12 million to INR 129 million. Also, the number of clients increased from 1.96 lacs in March 2009 to over 2.2 lacs in March 2010.

ABML is focusing on strengthening the five pillars of business (as mentioned by the company) – Brand, Product, Distribution, Operations, Service and People. It also plans to augment its research and product offerings to match the best in the industry. It will increase its footprint mainly through business partners. Additional branches are being added in Western and Northern India for broking.

Wealth Management:

Aditya Birla Money Mart Limited (ABMM), formerly known as Birla Sun Life Distribution Company Limited, is associated to the Mutual Fund distribution segment. It provides investment solutions such as private equity, Gold SIP, alternative investments, structured products and real estate broking services. It also launched online platform ‘MF Insta-Invest’ enabling the customers to transact mutual fund through online mode.

Its net income from operations increased from INR 241 million to INR 591 million. However, bottom-line was strained due to business building costs, this includes investments in the people, process and technology related infrastructure coupled with reduction in margins due to removal of entry load. Its net loss grew from INR 110 million to INR 115 million.

ABML and ABMM incurred an exceptional loss of INR 1.03 billion (total) in Q2FY2011. This loss has been accounted and written off within the same period. However, the same has been mitigated by prudent actions taken by the management towards these divisions.

General Insurance Advisory:

Aditya Birla Insurance Brokerss Limited (ABIBL) is supported by the reinsurance and retail broking segments. In FY2010, the net income from operations of ABIBL grew by 25% from INR 165 million to INR 206 million. Profitability was lower due to capping of health insurance brokerage. Net profit decreased from INR 48 million to INR 37 million.

Going forward, margins for general insurance brokers may remain under pressure due to hardening of rates following higher losses incurred by insurance companies and restrictions imposed by the reinsurers.

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Microsec Research

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Telecom:

ABNL is having a 25.37% stake in Idea Cellular Limited with a total holding of 46.96% within the Aditya Birla Group.

In FY2010, Idea registered a 22% upsurge in revenues from INR 101.3 billion to INR 124 billion. Cash profit grew by 32% to INR 30.9 billion. Net profit grew from INR 8.8 billion to INR 9.54 billion even after absorbing a drop of 23% in average realized rate per minute due to competitive pressure and the gestating impact of seven new service areas launched during that year.

Idea - Particulars (INR billion) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 101.3 124.0 145.7 174.8 EBITDA 30.5 36.2 43.0 51.6 EBIT 16.5 16.1 15.7 18.8 Net Profit 8.8 9.5 10.3 12.4

ABNL's share (INR billion) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 28.92 33.31 39.45 56.35 EBIT 4.75 4.31 3.72 5.17 Subscriber base of Ida cellular is increasing at the growth rate of the market. There has not been an increase in the market share of Idea cellular.

Idea Cellular Sep-09 Dec-09 Mar-10 Jun-10 Sep-10Wireless Subscriber Base (million) 51.45 57.61 63.82 68.89 74.21 Revenue Market Share 12.10% 12.70% 12.60% 13.00% 12.80%

Idea also holds 16% stake in the world’s largest tower company, Indus Towers, a joint venture with Bharti Infratel Ltd. and Vodafone Essar Ltd. Idea’s rigorous marketing plans and activities with a brand ambassador such as Abhishek Bachhchan looks promising. However, they will have to provide Good quality of services to the users in order to minimize churning due to MNP.

46.96%

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IT-ITeS:

ABNL holds 88.28% stake in Aditya Birla Minacs Worldwide Limited (ABM).

In FY2010, ABM’s net income from operations remained flat at INR 940 million; it posted net profit at INR 100 million in 2009-10 vis-à-vis loss of INR 70 million incurred in 2008-09. ABM is now focusing upon robust sales pipeline, improving seats utilisation, off-shoring support functions to low cost locations, increasing share of high margin KPO segment and reduction in overheads. The demand for the IT-ITeS industry services has flattened, However, due to its global footprint, we believe, ABM will be able to capture a decent market share for off-shore services.

Fashion and Lifestyle:

Madura Garments, a Fashion and Lifestyle division of the company is the largest premium branded apparel player in India.

• Its premium brands are Louis Philippe, Van Heusen and Allen Solly.

• Its mass brand is Peter England.

• Other international apparel and accessory brands retailed by Madura Garments is Armani Collezioni, Hugo Boss, Versace Collection, Adidas, Puma, Samsonite and many more under the brand ‘The Collective’.

• It caters to menswear, womenswear and kidswear segments under family store format ‘PEOPLE’.

• It also manufactures and exports apparels on a contract basis for global brands.

• It also has a strategic distribution tie up with leading international brand Esprit.

Madura Garments retails branded apparels and accessories through 506 exclusive brand outlets spanning across 9.5 lacs square feet which contributes approximately 45% of its revenues. Also, through 100 departmental stores and more than 1,000 MBO’s (wholesale channels) it generates another 45% revenues.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 11,158 12,506 18,436 23,337 EBITDA (1,584) (38) 1,280 1,620 EBIT (2,285) (811) 832 884 In FY2010, Net income from operations of Madura Garments grew by 12% year on year, supported by a 15% sales growth from retail channel. The branded apparels segment now contributes more than 90% of total revenues of Madura Garments, while the contract exports segment contributed the balance. Domestic apparel market is expected to grow from USD 26 billion in 2009 to USD 37 billion in 2014, a CAGR of 28%.

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Manufacturing:

ABNL’s manufacturing vertical includes several businesses such as

• Carbon Black • Agri-Business • Rayon • Insulators • Textiles

Carbon Black:

Hi-Tech Carbon, the carbon black division of ABNL, is the second largest carbon black manufacturing company in India with a market share of 38%. It has increased its capacity of carbon black by 85,000 MTPA and power plant by 23 MW in May 2010, bringing the total capacity of carbon black to 315,000 MTPA and installed power plant capacity to 75 MW. The company is also planning to augment its capacity further by 85,000 MTPA at Patalganga in the second phase.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ECapacity (MTPA) 230,000 230,000 315,000 400,000Production (MT) 202,076 233,370 279,583 357,500Net Income from Operations 10,956 11,609 15,474 19,487 EBITDA 497 2,526 2,430 5,023 EBIT 242 2,273 2,167 4,481 In FY2010, Hi-tech Carbon’s EBITDA grew from INR 497 million to INR 2526 million supported by higher sales volumes and energy sales. Higher profitability during part of the year is reflective more of one time input price advantage. This price advantage may not be enjoyed in the future as we see the price of CBFS rising.

We do envisage a higher local demand as Government has also imposed anti-dumping duty ranging from USD 84 per MT to USD 423 per MT on import of carbon black from various countries to support domestic carbon black industry.

The Aditya Birla group has entered into a definitive agreement to acquire the Atlanta-based Columbian Chemicals Company. This will increase the groups carbon black production to approximately 2 million tons. “Our vision has been to be a premium carbon black player, global in size and reach. The acquisition of Columbian Chemicals, which takes us closer to our vision, is a perfect fit for Birla Carbon. Their assets and the expertise of the team will provide a stronger platform for higher growth and ongoing success” said Mr. Kumar Mangalam Birla. There is no direct involvement of ABNL to this acquisition, however, there may exist a synergy benefit in technology and raw material procurement.

Agri-Business:

Indo-Gulf Fertilisers, the agri-business division of ABNL, achieved its highest ever production and sales volumes led by higher per day productivity in FY2010. ‘Birla Shaktiman’ Urea holds a leadership position among the private players in the target markets of Uttar Pradesh, Bihar, Jharkhand and West Bengal with a market share between 10%-20% as per Department of Fertilizers. Indo-Gulf also markets seeds and agro-chemicals in an effort to provide complete agri-solutions to the farmers.

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There has been a decline in the revenues due to higher subsidy arrears received in 2008-09 and lower revenue from agri-products trading. However, we believe that higher subsidy on Urea may be augmented under new policy, which will increase the margins of the company.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 12,498 10,216 12,317 13,760 EBITDA 2,285 1,553 2,962 3,733 EBIT 2,097 1,365 1,661 2,094 Rayon:

Indian Rayon, the rayon manufacturing unit of ABNL, has a Viscose Filament Yarn (VFY) capacity of 16,400 MTPA and caustic soda capacity of 91,250 MTPA. Indian Rayon is planning to expand its caustic soda capacity by 45,625 MTPA bring it to 136,875 MTPA.

In FY2010, the net income from operations of the VFY segment of Indian Rayon grew by 8%. Caustic soda sales volumes grew by 15%. ECU realisation decreased by 19% due to lower caustic soda prices. In the same period, Indian Rayon achieved highest ever EBITDA at INR 1550 million led by higher VFY realization and lower wood–pulp and sulphur prices, absorbing impact of lower ECU realisation in the chemical segment.

Insulators:

Aditya Birla Insulators is India’s largest and world’s fourth largest manufacturer of insulators. In FY2010 it expanded its capacity by 10,000 MTPA to reach a level of 48,760 MTPA.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 4,248 4,284 5,161 6,151 EBITDA 1,226 1,157 1,657 2,331 EBIT 1,082 977 1,230 1,732 We see that there is a growth within the power sector globally. This may be a trigger factor for the company to perform at a better rate than the past performance, as insulator business is directly proportional to the power sector.

Textiles:

Jayashree Textiles, the textile manufacturing division of ABNL, had 32 exclusive outlets of Linen Fabric at the end of March 2010.

Particulars (INR million) 2008-09 2009-10 2010-11E 2011-12ENet Income from Operations 5,732 5,765 7,732 8,605 EBITDA 542 694 1,064 1,594 EBIT 327 468 907 1,359 In FY2010, net income from operations of Jaya Shree Textiles grew marginally to INR 5765 million. Linen yarn witnessed robust demand leading to increase in volumes. We see that there has been a rise in the disposable income in India. This will give a rise in the buying power leading to sales in textiles segment. Jayashree Textiles is planning to increase the number of retail showrooms going forward.

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SWOT Analysis

SWOT

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Valuations

At the CMP of INR 746.4, ABNL looks inexpensive. We expect a consolidated net profit of INR 10.3 billion in FY2012. The different businesses have been valued on price to earnings basis while Life Insurance business has been valued according to NBAP method.

We value the stock on a SOTP basis with a price target of INR1,001.

SOTP Valuation Break-up:

Key Risks

• External Risks

o Foreign Exchange Fluctuation Risk: The Company is having decent exports, with payments and receipts in other currencies. There is a foreign exchange risk factor.

o Interest Rate Risk: A hike in the interest rates may lead to higher interest payment outflows.

o Raw Material Costs: The increasing cost of raw materials may put pressure on the margins.

• Internal Risks

o Employee Attrition: Employee attrition may lead to loss of knowledge also known as knowledge risk.

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Financials

Income Statement (INR Million) 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11E 2011-12ELife Insurance (Premium Income) 12,338 17,352 32,231 44,143 52,927 56,856 73,400 Other Financial Services 710 1,375 1,975 2,496 4,109 6,192 8,739 Telecom 3,883 14,218 21,356 28,918 33,308 39,450 56,352 IT-ITeS 2,491 11,091 16,775 17,772 15,303 16,679 19,026 Fashion & Lifestyle 6,206 8,304 10,258 11,158 12,506 18,436 23,337 Carbon Black 5,642 7,389 8,638 10,956 11,609 15,474 19,487 Agri-business 3,794 7,854 7,875 12,498 10,216 12,317 13,760 Rayon Yarn 3,856 4,415 4,760 5,371 5,377 5,500 6,038 Insulators 2,492 2,253 3,989 4,248 4,284 5,161 6,151 Textiles (Spun Yarn & Fabrics) 5,277 6,250 6,003 5,732 5,765 7,732 8,605 Others / Inter-Segment Elimination (35) (100) (122) (138) (352) (384) (491)

Net Revenues (Incl. Other Opr. Income) 46,654 80,401 113,738 143,155 155,052 183,412 234,406

Add : Investment Income /(Loss) on Policyholders’ Fund

3,255 1,949 4,873 (6,707) 40,032 10,416 11,979

Net Income From Operations 49,908 82,350 118,611 136,448 195,083 193,829 246,385 EBITDA 6,249 11,633 11,529 8,674 16,862 25,452 32,969 Less: Depreciation and Amortisation 2,250 4,228 5,249 6,956 8,665 9,661 10,627 EBIT 4,000 7,405 6,280 1,718 8,197 15,791 22,342 Less: Interest and Finance Charges 1,171 3,865 4,760 7,210 6,621 5,387 6,961 Earnings before Tax 2,829 3,540 1,520 (5,493) 1,576 10,405 15,382 Less : Provision for Taxation (Net) 941 1,119 1,259 811 1,140 3,121 4,614 Net Profit/(Loss) before Minority Interest 1,888 2,421 262 (6,303) 436 7,283 10,767 Less : Minority Interest & share in (Profit)/Loss of Associates

(153) (388) (1,246) (1,946) (1,110) 240 456

Net Profit/(Loss) 2,040 2,809 1,508 (4,357) 1,546 7,043 10,311 Less : Exceptional Item - - - - - 1,030 - Net Profit After Extraordinary Item 2,040 2,809 1,508 (4,357) 1,546 6,013 10,311

Source: Company Filings, Microsec Research

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Balance Sheet (INR Million) Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11E Mar-12ESOURCES OF FUNDS:

Share Capital 1,601 933 1,450 1,205 1,286 1,391 1,391 Share Warrants & Outstandings 243 11 3,801 3,844 1,567 1,462 1,462 Total Reserves* 42,926 67,872 100,183 139,632 208,413 214,426 224,737

Total 44,769 68,816 105,434 144,681 211,267 217,280 227,591 Minority Interest 432 1,433 1,744 1,793 1,858 1,452 1,452 Secured Loans 15,252 40,800 44,635 50,470 46,241 48,211 49,466 Unsecured Loans 8,395 13,816 21,844 38,397 28,145 35,679 42,018

Total Debts 24,078 56,049 68,223 90,660 76,244 85,342 92,936 Total Liabilities 68,847 124,864 173,657 235,341 287,511 302,622 320,527

APPLICATION OF FUNDS :Gross Block 51,486 91,477 111,074 134,556 144,601 168,445 193,527

Less: Accumulated Depreciation 21,995 31,567 35,299 40,870 50,123 59,783 70,410 Less: Impairment of Assets - - - - - - -

Net Block 29,492 59,910 75,775 93,687 94,479 108,662 123,117 Capital Work in Progress 1,698 3,815 4,413 7,259 4,329 4,954 5,670

Investments* 29,169 45,434 73,202 110,824 169,565 163,738 163,848 Current Assets, Loans & Advances

Inventories 5,514 5,584 8,347 8,348 9,027 10,210 11,873 Sundry Debtors 5,184 9,907 11,957 13,546 11,701 14,343 15,733 Cash and Bank 1,541 8,159 7,940 15,344 7,948 13,399 13,500 Other Current Assets 683 1,055 1,381 1,841 2,089 2,763 3,515 Loans and Advances 7,338 9,642 17,333 17,300 24,649 33,370 45,515

Total Current Assets 20,258 34,346 46,957 56,378 55,414 74,085 90,136 Less : Current Liabilities and Provisions

Current Liabilities 9,296 16,079 22,931 29,126 32,148 43,840 56,335 Provisions 788 765 1,498 1,483 1,721 2,347 3,017

Total Current Liabilities 10,083 16,844 24,429 30,609 33,869 46,188 59,351 Net Current Assets 10,175 17,502 22,529 25,769 21,545 27,898 30,785

Deferred Tax Assets / Liabilities (1,687) (1,796) (2,262) (2,198) (2,406) (2,630) (2,892) Total Assets 68,847 124,864 173,657 235,341 287,511 302,622 320,527

Source: Company Filings, Microsec Research *Total Reserves and Investments also includes Policy holders funds

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Abbridged Cash Flow (INR Millions) Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11E Mar-12EProfit Before Tax 2,829 3,540 1,520 (5,493) 1,576 10,405 15,382 Adjustment 14,791 23,027 39,423 36,298 67,940 15,047 17,587 Depreciation 2,251 4,235 5,252 6,959 8,818 9,661 10,627 Interest Expeses 1,171 3,865 4,760 6,382 6,018 5,387 6,961 Changes In working Capital (516) (2,471) (4,602) 6,678 (42) (679) (2,523) Trade & Other receivables 1,866 (6,403) (8,744) 1,334 (2,152) (2,418) (1,127) Inventories (1,182) 137 (2,763) (18) (685) (1,184) (1,663) Trade & Other payables (1,200) 3,795 6,905 5,361 2,794 12,318 13,164

CF after changes in WC 17,104 24,096 36,341 37,483 69,473 24,773 30,446 Tax Paid (939) (928) (972) (2,003) (1,685) (3,121) (4,614)

Cash From Operating Activities 16,165 23,168 35,370 35,480 67,789 21,652 25,831 Cash Flow from Investing Activities (21,622) (48,252) (52,941) (74,318) (59,943) (18,642) (25,908)

Purchase of Fixed Assets (4,126) (13,875) (21,930) (23,435) (13,709) (24,470) (25,797) Purchase of Investment (15,900) (30,698) (31,007) (42,236) (44,005) - (110) Sale of Investments - - - - - 5,827 -

Cash from Financing Activities 6,007 31,702 17,353 46,238 (15,233) 2,441 178 Incr/(Dec) in Loan Funds 7,106 24,283 11,856 25,056 (15,161) 7,828 7,138 Interest Paid (1,112) (3,683) (4,621) (5,543) (6,540) (5,387) (6,961)

Net Cash Inflow / Outflow 550 6,618 (219) 7,400 (7,387) 5,451 101 Opening Cash & Cash Equivalents 887 1,541 8,159 7,940 15,344 7,948 13,399

Closing Cash & Cash Equivalent 1,541 8,159 7,940 15,344 7,948 13,399 13,500

Source: Company Filings, Microsec Research

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Notes

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M icrosec Research: Phone No.: 91 33 30512100 Email: microsec_research@microsec.in

Ajay Jaiswal: President, Investment Strategies, Head of Research: ajaiswal@microsec.in

Fundamental Research Name Sectors Designation Email IDNitin Prakash Daga IT, Telecom & Entertainment AVP-Research npdaga@microsec.inNaveen Vyas Midcaps,Market Strategies AVP-Research nvyas@microsec.inNitesh Goenka BFSI, Metal and Mining Sr. Research Analyst ngoenka@microsec.inAbhisek Sasmal BFSI Research Analyst asasmal@microsec.inSutapa Roy Economy Research Analyst s-roy@microsec.inGargi Deb Agriculture & Pharma Executive Research gdeb@microsec.in

Technical & Derivative ResearchVinit Pagaria Derivatives & Technical VP vpagaria@microsec.inRanajit Saha` Technical Research Sr. Manager rksaha@microsec.inInstitutional DeskRajiv Lilaramani Institutional Equities Sr. Manager rlilaramani@microsec.inDhruva Mittal Institutional Equities Manager dmittal@microsec.in

PM S Division Siddharth Sedani PMS Research AVP ssedani@microsec.inSarmistha Rudra PMS Technical Research Analyst srudra@microsec.in

Research: Financial Planning Division Shrivardhan Kedia FPD Products Manager Research skedia@microsec.in

Research-Support Subhabrata Boral Research Support Executive sboral@microsec.in

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24 February 2011

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