shalimar research15july2013

7/28/2019 Shalimar Research15July2013

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Capacity Utilisation Schedule of Greenfield South Indian PlantCapacity Utilisation Schedule of Greenfield South Indian PlantCapacity Utilisation Schedule of Greenfield South Indian PlantCapacity Utilisation Schedule of Greenfield South Indian Plant(((( FY14 to FY17 with ~Revenue Contribution each Fiscal))))

Replacement Value of Tangible Fixed AssetsReplacement Value of Tangible Fixed AssetsReplacement Value of Tangible Fixed AssetsReplacement Value of Tangible Fixed Assets(((( Freehold Land Asset Value + Production Capacities' Value))))

Replacement Value v/s Co.'s MCAP & EVReplacement Value v/s Co.'s MCAP & EVReplacement Value v/s Co.'s MCAP & EVReplacement Value v/s Co.'s MCAP & EV(((( Pure E.V. considered after including Off-BalanceSheet Debts))))

Peer Valuation Co. Trading at 67.8 % Discount An Anomaly Peer Valuation Co. Trading at 67.8 % Discount An Anomaly Peer Valuation Co. Trading at 67.8 % Discount An Anomaly Peer Valuation Co. Trading at 67.8 % Discount An Anomaly (((( Asian Paints, Berger Paints, Kansai Nerolac & Akzo Nobel))))

Conservative Financial ForecastConservative Financial ForecastConservative Financial ForecastConservative Financial Forecast(((( FY14e, FY15e, FY16e alongwith Key Assumptions))))

ConclusionConclusionConclusionConclusion(((( Rare Undervalued Consumer Discretionary Play Time to Have a Serious

Relook))))

Overview of Company & Industry Overview of Company & Industry Overview of Company & Industry Overview of Company & Industry (((( Marketshare of Key Players, Segmentation of Industry & Co.'s Offerings))))

Important Data PointsImportant Data PointsImportant Data PointsImportant Data Points(((( Co.'s Past Decade's Financial Performance alongwith

Segmentwise Breakup of Revenues))))

Key MonitorablesKey MonitorablesKey MonitorablesKey Monitorables

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Key Investment Arguments In Favour of Shalimar Paints Ltd. :

INR 397.37 cr.397.37 cr.397.37 cr.397.37 cr.being the Value of Tangible Fixed & Net Current Assets of the Company

v/s current MarketCap of the Company at INR 185 cr.185 cr.185 cr.185 cr.

INR 287.58 cr.287.58 cr.287.58 cr.287.58 cr.being the Value of Tangible Fixed Assets of the Company


INR 177.58 cr.177.58 cr.177.58 cr.177.58 cr.being the Value of Freehold Land Assets of the Company


INR 259.37 cr. being the Liquidation Value ( Orderly ) of the Company as at 31 st March 2013


[ i.e., if the company had to sell-off in entirety, then, this is the value of cash ( 259.37 cr. )that will be in hands of shareholders of thecompany after selling all the assets at current market value and paying off all the debt/liabilities as at 31 st March 2013 ]

111 Years' Long continuous existence imparts strong Brand Credibility

Huge Spare Freehold Land in Possession of the Company by virtue of its Long Existence with onespare land parcel ( 1 acre ) at a prime location in Gurgaon (Sector 32)

India's Fifth Largest Branded Paint Company and One of the World's Oldest Organised Paint Company

Credible Promoters in the form of Jhunjhnuwalas ( Ovolo Group, Hong Kong ) & Jindals ( Jindal Stainless, India ) with High Promoter Holding ( 62.36 % ) & nil Pledge

Change in Management with key ex- Ingersoll Rand, Blue Dart honchos inducted at Top Most Level(CEO, MD, etc.) w.e.f. March'2013


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Clear Growth Visibility because of Operationalisation of maiden Paint Manufacturing Plant in South India(Tamil Nadu)

Minimum 18.49 % CAGR in Revenues visible over next 3 yearsto take FY16e Revenues to INR 882 cr.

All the current Manufacturing Plants of the company operating at ~ 90 % capacity utilisation sincelast few years.

Capacities getting enhanced by 56 % in FY14 Single Largest Addition in Company's History

Post 2HFY14, company to have Manufacturing Presence across India ( East, West, North & South ) which islikely to kick-in extensive operational efficiencies

Gross Undervaluation v/s All Peers ( Asian Paints, Berger Paints, Kansai Nerolac, Akzo Nobel ) An Anomaly,when gets corrected, could lead to substantial Rerating of the company on the bourses

( Trading at average 67.8 % Discount to All Peers )

Trading at :0.340.340.340.34 x Mcap/Sales TTM,

0.580.580.580.58 x EV/Sales TTM,

8.138.138.138.13 x EV/EBITDA TTM

limiting Downsides Considerably with ample upside triggers already in place

Key Investment Arguments Against Shalimar Paints Ltd. :

External Risks in the form of Slowdown in Indian Industrial Activity as well as slowing Indian ConsumerDiscretionary Spends likely to take a toll on both, Industrial Paints as well as Decorative Paints Sales. Recent

severe Rupee Depreciation threatens to put pressure on Paint companies' margins as 35 % of the RawMaterials are imported. Amidst these gloomy backdrop, Indian Paint Companies are today experiencing oneof the worst phase in last decade.


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Greenfield Project Commencement Risk in the form of company's maiden South Indian plant which isscheduled to get operational in Q2FY14. This is one of the largest greenfield capacity being set-up by thecompany in its history which is l ikely to increase its production capacities by ~56 %. Financial closure for thisproject was already achieved in Q3FY13 and construction work started in Q4FY13. Any delay incommencement of this facility beyond Q3FY14 could put undue pressure on company's finances.

Lumpiness in Quarterly Earnings as Q1FY14 & Q2FY14 could see dismal margin performance because of initial costs associated with greenfield manufacturing facility coming up in South India. Also, marginperformance in whole FY14 could also remain subdued because of relatively higher finance and depreciationcosts associated with the said South-based facility. However, if the company manages to turn out a stableEBITDA & PAT margin performance for FY14, then, it could very well be taken positively by the marketparticipants.

Loss of Marketshare to competitors ; although, is highly unlikely, but still is a remote possibility. So far, sincelast decade, company has gradually lost its marketshare from 4.3 % in 2003 to current 3.1 % mainly becauseof lack of manufacturing presence in fastest growing paint consuming region 'South India'.

Till date, South & West India is catered by only single manufacturing plantof the company based in West Indiawhich itself is operating at ~ 90 %capacity utilisation since last many years. This results in lowermarketshare for the company in both the regions viz., South & West India.

Notable here is that industry derives 60 % of its revenues from these two regions whereas company derivesonly 34 % of its revenues from South & West India mainly because of capacity constraints and lack of dedicated region-specific manufacturing presence.

Hence, with operationalisation of South Indian manufacturing plant of the company from Q2FY14, its

marketshare in both the regions ( South & West ) is likely to enhance significantly as from Q4FY14 onwards, oncethe new plant gets stabilised, South region will get catered to by the dedicated manufacturing plant basedthere, whereas, production of West India based plant which is so far getting diverted to address South Indianmarket will get freed up to cater to home market thereby making the company stronger in the strongest salesregions of the industry viz., South & West India.

Relatively Weak Profit Margins . Company operates at one of the lowest EBITDA margins amongst all thepeers. To cite -- average FY13 EBITDA Margins of all the four peers is 11.78 % v/s Company's FY13 EBITDAMargin of 7.17 % ( margin partially impacted by the fire accident at one of company's plant in Q4FY13 ).

The main reasons for this is company's relatively lower scale of operation, lack of manufacturing presenceacross all sales regions of India, particulary South India as also higher contribution from low margin IndustrialPaints segment. With operationalisation of South Indian plant in Q2FY14, majority of these issues should getaddressed, but, it will take atleast two more years for margins to show any significant improvement. However,the 67.78 % discount at which company is trading at v/s all its peers, more than captures such relatively weakoperational parameters and the discount deserves to narrow down to atleast 50 % even after taking intoconsideration all the negative facts.


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Why Shalimar Paints Ltd. [ NSE SHALPAINTS ; BSE 509874 ] deserves to be a part of one's core portfolio :

(1) In today's market, it is rare to find high 'Capital Preservation' safety alongwith considerablescope of 'Capital Appreciation' in a single company and that too at a market value which is lowerthan the Replacement Value of company's Tangible Fixed Assets .

Shalimar Paints Ltd. is such a company that deserves a closer look by any prudent fund manager as itoffers all the required elements together i.e.,

a credible & thoroughly Professional Management ,

111 Years' Long Continuous Existence with Stable Growth track-record,

High Promoter Shareholding with nil Pledge

Consumer Discretionary Play being the 5 th Largest Paint Company of India ,

Reasonable Scale of Operation which should approach INR 594 cr. in FY14

and still available at a valuation which can only be termed as'Gross Undervaluation' mainly because of its undiscovered nature on the bourses and markets nothaving discounted the recent developments ongoing within the company which make it the mostcompelling relook candidate in its 111 years' long existence history.

(2) Investment Argument for Shalimar Paints Ltd. mainly hinges on five strong pillars viz., :

Recent Senior Level Management changesenacted within the company wherein top-notchmanagers who are well recognised in their respective field in India are brought-in atseniormost level. They include former Ingersoll Rand Vice President, Blue Dart Express ' HRVice President, etc.

Judicious Capacity Expansionsenacted by the company in the past, majorly from internal

accruals as also potential for further augmentation of Capacities at minimal cost because of the Huge Land Bankat all existing manufacturing facilities ( current capacities sit on only35 % of the land in possession of the company ) .

Operationalisation of maiden manufacturing plant in South India (Chennai) which ensures aminimum 18.49 % CAGR in revenues over next 3 years with improving EBITDA Margins,

Replacement Cost of only Tangible Fixed Assets(at current Market Value) of the company at INR

287.58 cr.287.58 cr.287.58 cr.287.58 cr. which is considerably higher than company's current marketcap on thebourses that stands at just INR 184.65 cr. (as on 12 th July 2013)


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Company trading at 67.78 % discount to its peersbased on all valuation multiples ( EV/Sales,EV/EBITDA, P/B, P/E )

(3) Without wasting any further time, let's start straightaway. However, before starting, its necessary tohave a brief overview of the company and its operating industry which we will do it below :

[ For detailed overview of the industry as also company alongwith various important data points like company's last

decade's financial performance, break-up of company's revenues between Decorative & Industrial segments, etc. please

refer page 28-32 of this Research Note. ]

As stated before, Shalimar Paints is one of the Oldest Paint Companies of the World and first Organised Large-Scale Paint Manufacturing Company of India currently occupying fifthlargest position in India's Organised Paint Industry behind Asian Paints, Berger Paints, Kansai Nerolacand Akzo Nobel. In particular sub-segments like High Performance Coatings (Industrial Paints),

Shalimar enjoys 3 rd largest position in India. Company has its wide product offerings across both thesegments of the industry viz., Decorative Paints & Industrial Paints.

As at FY13, Shalimar enjoys an overall 3.1 % marketshare of India's Organised PaintIndustry while in particular sub-segments, especially of Protective Coatings (Industrial Paints), itsmarketshare is higher at 9 % just behind Berger & Asian Paints. Similarly, in particular geographicalpockets, like North-East India , Shalimar's marketshare is substantially higher at 10.5 % .

Since last two years, company has become quite aggressive in forging partnerships with

Global Paint majors like Rudolf Hensel ( tie-up done in FY12 ) and Valspar Corporation ( tie-up done in

FY13 ) which depicts company's willingness to remain ahead of its peers in Industrial Paints

segment. On similar lines, over last two years, company has also expanded its geographical presenceand started selling its products in Bangladesh and Nepal.

In India, Company has a strong pan-India sales & distribution network consisting of 3Regional Distribution Centres, 58 Sales Offices and 6200 dealers. Sales in Decorative segment aremostly Retail that are made through Dealers while Sales in Industrial Segment are mostly directmade to end-customer which include OEM, Public & Private sector enterprises.

(4) Company has strong and credible promoters in the form of :

Mr. Girish Jhunjhnuwala an NRI businessman who recently, in December 2012, won oneof Hongkong's highest business honor 'Owner OperatorAward' at 2012 DHL/SCMP Hongkong Business Awards, &

Mr. Ratan Jindal MD & Promoter of Jindal Stainless Ltd ., India's Largestintegrated Stainless Steel Manufacturing Company enjoying50 % marketshare of Indian Stainless Steel Flat market.

Combined promoters' shareholding in the company stands at 62.36 % with each of the promotergroup i.e. Jhunjhnuwala and Jindals holding 31.18 % each.


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(5) Now, after having a brief overview above ( for detailed overview & data points refer page 28-32 of this Note ) let's startwith our main contention as to why in company's 111 years long existence history, it is today that itdeserves the most serious relook of any prudent fund manager. The main factor responsible for thisis the recent senior-level management changes enacted by the promoters of the company thatsignify will and vision to see the company chart an aggressive growth path in the most professional way in foreseeable future .

C.E.O.is now changed and a new dynamic CEO & MD is brought-in who has a good pasttrack-record of spearheading India Growth Strategy for a recognised MNC like Ingersoll Rand ,

Chief People Officer a post non-existent, uptill now in the company -- is now created toinduct the most professional talent in the company which signifies the recognition by thepromoters, of most important asset for any company its employees -- ; and who isbrought-in for this post - one of the most recognised HR managers of India who hasheaded HR Dept. of Blue Dart Express in the past and made it amongst India's top 10 Preferred Employers ,

Chief Technology Officer again a post non-existent, uptill now in the company is createdto innovate and adopt the best Technology which signifies the recognition by the promoters,of the most important tool for success of any company the R&D --; and who is brought-infor this post, one of India's well recognised scientist , a PhD, in the field of Surface Science& Technology

Chief Financial Officer again a post non-existent, uptill now in the company ( as the

finances were so far handled by GM Finance ) is created to handle in the most efficient waythe finances of the company which signifies the recognition by the promoters, of the mostimportant goal of any company the profitability --.

It is worthwhile to note here that in 111 years' long history of the company, this is the first time such a drastic and thoroughly professional senior level management is put up at the helm . Let'shave a look at key persons inducted as also their brief background as well as past accomplishments :

Appointed From Background Accomplishments

Sameer Nagpal( Managing Director

& CEO )

April 2013April 2013April 2013April 2013 21 Years of work career with 15 years

at Carrier Corporation and 3 years

each at Ingersoll Rand & Zicom.

In his previous stint before Shalimar,

was responsible for formulating entry

and growth strategies for expanding

Was part of Ingersoll's esteemed

global'Code Standards &

Advocacy' committee and was

the leader of Ingersoll's cross-

functional global team comprising

of members from India, China,


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Ingersoll Rand's footprint in India. He

was also responsible for identifying

key vertical markets and driving

Ingersoll Rands growth in them

through customized products and

solutions development.

He Successfully launched Ingersoll's

'Trane' brand of air-conditioners &

security products in India and was

Head of that division from inception

till joining Shalimar.

Europe & US.

Was an active member

of various industry bodies like

ISHRAE (Indian Society of

Heating, Refrigerating and

Air-Conditioning), ASHRAE

(American Society of Heating,

Refrigerating and Air-

Conditioning) and FSAI (Fire and

Security Association of India).

Barttanu Das( Chief People Officer )

January 2013 January 2013 January 2013 January 2013 23 Years of work career with 6 years

at Blue Dart Express and 16 years at

NTPC.

In his previous stint at Blue Dart

Express he transformed entire HR

function and made the company

achieve India's Top 10 preferred

employer status.

Is regarded as one of the best

HR managers of India and under

his ledership, Blue Dart was

recipient of multiple HR awards.

Is a regular guest speaker atmany distinguished HRD forums

like World HRD Congress, AIMA,

NHRDN, etc.

Dr. B. K. Mishra( Chief Technology Officer )

March 2013March 2013March 2013March 2013 18 Years of work career with 4 years

each at Dulux, BARC and Clariant and5 years at India Glycols.

In his previous stint at India Glycols,

was responsible for R&D and Quality

Control.

Was a Scientist in Bhabha Atomic

Research Centre and iswellknown in India in the field of

Surface Science & Technology .

Has 30 publications and 8

patents to his credit and has

also co-authored or edited

various chapters in journals and

books.


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Deepak Khetan( Chief Financial Officer )

January 2013 January 2013 January 2013 January 2013 19 Years of work career with 4 years

at Jindal Praxair, 6 years at Xchanging

Group and 3 years at Metecno Group.

In his previous stint at Metecno group,

was Executive Director Finance.

(6) Second and most important thing that deserves our recognition is the judicious capacity expansions enacted by the company in the past without burdening the balance sheet ( majorly from internal

accruals ) and the fact that company today sits on the potential of augmenting existing capacities with

minimal costs involved as all its capacities today sit on just 35 % of the land currently in possessionof the company.Company, by virtue of its long existence history, has huge land banks at each of theexisting manufacturing locations which puts it in a sweet spot of potential expansion withoutincurring additional cost on land, which is already scarce today and is available at exuberant pricesin the vicinity.

Company has 3 manufacturing plants currently under operation at :

Howrah ( in East India ) ,

Nashik (in West India), &

Sikandrabad ( in North India )

consistently operating at ~90 % capacity utilisation since last many years. Over last 10

years, company has judiciously enacted gradual increase in capacities at each of the plant because of which the totalcapacity now stands increased from 39,200 MT p.a. in 2004 to 63,200 MT p.a. as at March'2013.

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

Mfg.Capacity( in MT p.a. )

63,200 61,000 57,000 54,500 48,000 48,000 43,000 43,000 39,200 39,200

It is worthwhile to note here that all these capacity expansions are done majorly from internal accruals

without burdening the balance sheet. Mentioned below is past 10 Years' Debt on books of the company :


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Howrah Nashik Sikandrabad

Land in Possession of theCompany 1,45,000 sq.mtr. 49,800 sq.mtr. 41,242 sq.mtr.

Land Currently in Use by theCompany 40,600 sq.mtr. 22,900 sq.mtr. 16,080 sq.mtr.

% of Spare Land Available

forCapacity Augmentation 72 % 54 % 61 %

(8) Third and most important thing which provides ample future growth visibility for the company issetting up of a greenfield paint manufacturing plant at Chinnapuliyur Village, Gummidipoondi inTamilnadu which is expected to begin commercial run from Q2FY14. This is company's first manufacturing facility in South India and will enable it to have presence across India with its other 3manufacturing facilities being already operational in East, West and North India respectively. Let'sfirst have a look at the manufacturing capacities of various products in this plant before discussingany further :

Product Capacity

Industrial Paints 1200 KL per month

Solvent Based Decorative Paints 950 KL per month

Water Based Emulsion Paints 550 KL per month

Distemper Paint 300 KL per month

Total 3000KL per month

Four things need to be noted here :

(a) This will be the single largest capacity addition in the history of the company over last two decades as even in 2003, when Sikandrabad plant was acquired by thecompany, the capacity addition was only to the tune of 20 % whereas with theoperationalisation of this greenfield plant, the company's production capacity will get enhanced by ~56 % .

(b) At peak capacity utilisation, which is expected to be reached within 3 years of operation, theplant can generate revenues of ~ 335 cr. which will ensure sustained revenue growthmomentum for the company for next 3 years.


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(c) The plant will enable the company to cater to fastest growing Paints Market viz., 'South' inmore efficient way and free-up the capacities of Nashik Plant to cater exclusively toWestern market . Till now, Southern market is served from Nashik plant by the company.

(d) This will enable significant savings in transportation costs which will enable EBITDA marginimprovement from FY15 onwards.

(9) To understand importance of setting up of this manufacturing presence in South India better, let'shave an overview of regionwise sales-breakup of Industrial Paints segment as well as DecorativePaints segment of the company and pitch it against the regionwise sales-breakup of the industry.Also, post that, we will study the production capacity of each of the company's manufacturing plant regionwise as also the breakup of dedicated industrial paints production in each plant to assess

correctly the implications of operationalisation of South region manufacturing plant on financials of the company :

25%

27%32%

16%

Industrial Paints Industry( India )

North

South

East

West

24%

29%30%

17%

Shalimar Paints Ltd.

North

South

East

West

Regionwise Distribution ofIndustrial Paints Sales of

Industry v/s Shalimar

( Industrial Paints Sales )


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Regionwise Production Capacity at each Manufacturing Plant of the company and break-up of Industrial Paints & Decorative Paints Production in each plant :

East Region

(Howrah)

West Region

(Nashik)

North Region

(Sikandrabad)

Annual Production Capacity 21,200 MT 23,000 MT 19,000 MT

~Minimum Annual RevenueGeneration Potential at Peak Capacity

210 cr. 225 cr. 185 cr.

~Production - Decorative Paints(FY13)

70 % 60 % 90 %

~Production Industrial Paints(FY13)

30 % 40 % 10 %

Sales Region Catered Mostly East India West & South India Mostly North India

35%

20%14%

31%

Shalimar Paints Ltd.

North

South

East

West

27%

29%

31%

13%

Decorative Paints Industry( India )

North

South

East

West

South & West Market for DecorativePaints getting addressed

by only Single Plant in West at Nashikresulting in lower marketshare

( Decorative Paints Sales )

Regionwise Distribution ofDecorative Paints Sales of

Industry v/s Shalimar


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Six Things need to be noted from above :

(a) As can be seen from the regionwise sales breakup of Industrial paints of the company, it verywell matches up with the industry trend. This is because, company has focussed heavily onIndustrial Paints segment over last many years and so diverted the limited capacities

available towards serving Industrial customers as they are being directly catered to bythe company and often result into long term association.

(b) However, if one observes regionwise sales break-up of Decorative Paints of the company, itis in sharp contrast to the industry trend wherein :

industry derives majority of its sales from Western & Southern Region( 60 % )( 60 % )( 60 % )( 60 % )

whereas

company derives majority of its revenues from Northern & Eastern Region( 66 % )( 66 % )( 66 % )( 66 % ).

This is because :

Company serves Western & Southern market from its Single Plant based at Nashik in West Indiawhich results in lower sales in both the regions ( as capacities are limited in Nashik Plant )

Company dedicates only 60 % of the available capacities at Nashik Plant towards production of Decorative Paints while dedicating remaining capacities to serve rising Industrial Paints demand in both the regions(West & South) as it can't afford to loose Industrial customers which are long term sticky customers offering a goodstability to revenues of the company.

(c) This deviation from normal industry trend puts the company in a sweet spot as it is alreadystrong in otherwise perceived to be weak regions of East & North India and Southernregion is proving to be the fastest growing region for most of the organised players since lastfew years ;so, with the dedicated manufacturing facility in South India from 2HFY14, company will beable to cater exclusively to r ising demand there in a more effective way with the Westernplant capacity getting diverted to serve the home market thereby making the company stronger in the strongest sales regions of the industry viz., South & West .

(d) Decorative Paints is traditionally a low-volume-high-margin business, so, with the expected~210 cr. p.a. revenue potential from Decorative Paints capacity of Southern plant andfreeing up of ~90 cr. Decorative Paints revenue potential of Western Plant capacity whichis otherwise diverted to serve Southern Market, the company will experience significantgrowth in Revenues over next 3 years coupled with improvement in EBITDA margins.

(e) Southern plant will have 40 % capacity dedicated to Industrial Paints, so, it will have similarproduction ratio as Nashik plant at 60:40 between Decorative & Industrial, and, with the

said 40 % dedicated capacity, Shalimar will emerge as a stronger player in Industrial segmenttoo which will enable it to maintain current sales ratio of 67:33 between Decorative &Industrial.


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Conservative Capacity Utilisation schedule for Southern Plant of the company can be arrived as :

Fiscal Year CapacityUtilisation

~RevenueContribution

South India Plant (Tamilnadu)

Location - Chinnapuliyur Village, Gummidipoondi Village, District - Tiruvallur

Production Capacity = 36,000 MT p.a.

Dedicated Decorative Paints Capacity = 60 %

Dedicated Industrial Paints Capacity = 40 %

~Minimum Annual Revenue Generating Potential at Peak Capacity = ` 335 cr.

FY14 12 % ` 38 cr.

FY15 35 % ` 115 cr.

FY16 65 % ` 210 cr.

FY17 90 % ` 290 cr.

(10) Fourth and most important thing which no prudent fund manager can ignore with respect toShalimar Paints Ltd. is the Replacement Value of Tangible Fixed Assetsin possession of the company.

When we invest in a company, we are actually investing into its business. Hence, it is most proper forus to look for any investment as if we are the suitor or acquirer of that business and assess as towhat value we can extract from such acquisition. Such an approach enables us to arrive at correctvaluations for any company and also limits our downsides considerably as we are knowing the valueof the hard assets in possession of the company and therefore if the company had to sell-off inentirety tomorrow, this is the minimum value we will get.

While calculating the Minimum Replacement Value of Tangible Fixed Assets of Shalimar Paints Ltd.,we have made two considerations :

First, we have calculated the bare minimum value of Freehold Land Assets in possession of the company byconsidering the lowest 5 Years' average price per square meter at each of the exact location where company'srespective land asset is located. Alongside, we have also stated the current market value of respective landasset by considering the price per square meter at respective location as at 25 th June 2013.

Second, we have considered the Minimum Cost that is required to be incurred for setting up the saidquantum and nature of production capacities that company has as on date plus that is likely to becommissioned in Q2FY14.

Calculation Starts

from Next Page


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Location Freehold Area inPossession of the

Company

Last 5 Years' AverageRate Per Square Meter

of the Location

Bare Minimum Valueof Land in Possession

of the Company[ Area x 5 Yrs. Avg.

Rate ]

~Current Market RatePer Square Meter ofthe Location as at

25th June 2013

Market Value ofLand in Possessionof the Company asat 25th June 2013

[ Area x Current Market Rate ]

West Bengal

[ Goaberia, PO. Danesh

Shaikh Lane, Howrah,

West Bengal ]

1,45,000 sq.mtr.1,45,000 sq.mtr.1,45,000 sq.mtr.1,45,000 sq.mtr. ` 5920 per sq.mtr. ` 85.84 cr. ` 7480 per sq.mtr. ` 108.46 cr.

Maharashtra

[ Gonde Dumala,

Igatpuri, Nashik,

Maharashtra ]

49,800 sq.mtr.49,800 sq.mtr.49,800 sq.mtr.49,800 sq.mtr. ` 3210 per sq.mtr. ` 15.98 cr. ` 4840 per sq.mtr. ` 24.12 cr.

Uttar Pradesh

[ Sikandrabad Industrial

Area, Sikandrabad,

Dist. Bulandsahar,Uttar Pradesh ]

41,242 sq.mtr.41,242 sq.mtr.41,242 sq.mtr.41,242 sq.mtr. ` 2780 per sq.mtr. ` 11.46 cr. ` 3830 per sq.mtr. ` 15.81 cr.

Tamil Nadu

[ Chinnapuliyur Village,

Gummidipoondi,

District Tiruvallur,

Tamil Nadu ]

32,800 sq.mtr.32,800 sq.mtr.32,800 sq.mtr.32,800 sq.mtr. At Book Value (i.e.

Purchase Price) since

Land purchased by the

company in 2009

` 2.02 cr. ` 730 per sq.mtr. ` 2.39 cr.

Gurgaon

[ Plot No. 75, Sector 32,

Gurgaon ]

4050 sq.mtr.4050 sq.mtr.4050 sq.mtr.4050 sq.mtr. ` 36,900 persq.mtr.

` 14.94 cr. ` 66,170 persq.mtr.

` 26.80 cr.

Total ` 130.24cr. ` 177.58cr.

Bare Minimum Valueof Land in Possession

of the Company

Market Value of Landin Possession of the

Company as at25 th June 2013


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Manufacturing Plant Location Production Capacity at the Plant Minimum Cost Required to be Incurred foBuilding Respective Capacities

West Bengal

[ Goaberia, P.O. Danesh Shaikh Lane, Howrah,

West Bengal ]

21,200 MT p.a. ` ` ` ` 23 cr.

Maharashtra

[ Gonde Dumala, Igatpuri, Nashik, Maharashtra ]

23,000 MT p.a. ` ` ` ` 26 cr.

Uttar Pradesh

[ Sikandrabad Industrial Area, Sikandrabad,

Dist. Bulandsahar, Uttar Pradesh ]

19,000 MT p.a. ` ` ` ` 19 cr.

Tamil Nadu

[ Chinnapuliyur Village, Gummidipoondi,

District Tiruvallur, Tamil Nadu ]

36,000 MT p.a. ` ` ` ` 42 cr.

Total ` 110 cr.

Bare MinimumReplacement Value

of Company's Tangible Fixed Assets

= 240.24cr.

Replacement Valueat Current Market Rate

of Company's Tangible Fixed Assets

= 287.58cr.Bare Minimum Value of

Land in Possession of the

Company

Minimum Cost Required forSetting Up the Production

Capacities

130.24 cr.130.24 cr.130.24 cr.130.24 cr. 110 cr.110 cr.110 cr.110 cr.

Market Value of Land inPossession of the Company

Minimum Cost Required forSetting Up the Production

Capacities

177.58 cr.177.58 cr.177.58 cr.177.58 cr. 110 cr.110 cr.110 cr.110 cr.

Minimum CostRequired for SettingUp the Production

Capacities

+ +


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Eight things need to be noted from above :

(a) Company is in possession of large :

~36 acres ( 145 thousand sq.mtr. to be precise ) land at Howrah since 1902,

~12 acres ( 49.8 thousand sq.mtr. to be precise ) land at Nashik since 1992,

~10 acres ( 41.24 thousand sq.mtr. to be precise ) land at Sikandrabad since 2003 ,~8 acres land near Chennai (Gummidipoondi) since 2009.

All these locations are used to set-up manufacturing facilities & R&D Labs (Nashik & Howrah) of the company.

(b) In addition, company has in its possession, at a prime location in Gurgaon (Sector 32) , a~1 acre plot ( 4050 sq.mtr. to be precise ) which is a freehold plot allotted to the company in2008-09 by Haryana Urban Development Authority (HUDA). This plot sits in the books of

company's 100 % owned subsidiary Shalimar Adhunik Nirman Ltd'.

The location of this plot (Sector 32) is today one of the most sought after property locationsof Gurgaon and we have only considered in our calculations, the basic land value and not itsdevelopment potential. In case the company decides to develop this plot in future, it couldeasily fetch the company minimum 55 cr. based on current market trends in the vicinity.

(c) The revaluation of Fixed Assets was done the last time in the year 1995 by the companywhen only Howrah and Nashik lands were under company's possession.

(d) We have not included the Value of Raw Materials, Finished Goods, etc. which are partof Inventories of the company ; average value of which at any given date is always greaterthan 60 cr. ( at lower of cost or net realisable value ) .

To draw a comparison, Consortium of Banks which have granted the company CreditFacilities as at FY12, as part of their hypothecation agreement, have valued entire stock of raw materials, finished goods, stocks in process, consumable stores and spare parts, billsreceivable and book debts and all other moveables of the Companys factories, premisesand godowns situated at Howrah, Nashik and Sikandrabad (U.P.) and various places locatedthroughout the country at 247.76 cr.247.76 cr.247.76 cr.247.76 cr. . This valuation does not include the valuations of Freehold Land at each of the manufacturing location as also the Plant & Machineries at allthe manufacturing locations.

(e) For conservative assessment, we have also not included here the Replacement Value of Intangible Assets of the company, especially the 111 year old brand 'Shalimar', theextensive pan-India Sales & Distribution Network, R&D potential, etc.. Just to make a note, abrand with an existing strong ground network which has the potential to generate average715 cr. revenue over next 3 years is seldom valued below three digits .

(f) For arriving at 'Last 5 Years' Average Rate Per Sq. Mtr.' in our calculation, we have relied onthe past 5 years deal records provided by the respective professional real estate consultant


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dealing in respective area. We have picked the lowest rate deal done each year and thenarrived at average calculation.

(g) In case of Tamil Nadu ( Chinnapuliyur Village ) where the company purchased the land only in2009, we, as a prudent conservative policy, have decided to consider the company's purchase price as 'Last 5 Years' Average Rate Per Sq. Mtr.' and have ignored theappreciation in land value over last four years.

(h) For the current market rate per sq.mtr., we have picked the rate of last best deal done on orbefore 25 th June 2013 in the location concerned. Except Tamil Nadu ( Chinnapuliyur Village ) where last deal data was available only of five months before, we were able to garner themost up-to-date data till date.

(i) For calculation of 'Minimum Cost' required for building production capacities alreadyexistent with the company, we have considered the bare minimum cost that any entity would need to incur to set-up such large paint manufacturing capacities.

Now, since we have already arrived at minimum Replacement Value as also Replacement Value atcurrent market rate, it is the right time to pitch those values against current Market Capitalisation commanded by thecompany on the bourses as also its current as well as expected Enterprise Value :

( fig. In ` cr. ) FY13 FY14e FY15e FY16e

Market Capitalisation( as at 12

thJuly 2013 )

184.65 184.65 184.65 184.65

Enterprise Value( considering the debt as on books )

257.59 292.59 307.59 317.59

Pure Enterprise Value( considering the debt as on books + off-balance sheet

debts )

309.65 344.65 359.65 369.65

Minimum Replacement Value of TangibleFixed Assets

240.24240.24240.24240.24

Replacement Value of Tangible Fixed Assetsat Current Market Rate

287.58287.58287.58287.58

Six Things needs to be noted from above :

(a) Market Capitalisation is counted based on the Market Price of the company's share as at 12 th

July 2013 ( INR 97.6 ).


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(b) We have considered in our calculation, two 'Enterprise Values' one which is widelyconsidered across financial community by including only debt standing on books (balancesheet) of the company.

(c) Second EV which is termed as 'Pure Enterprise Value' -- in addition to including debt onbooks, also takes into consideration debt which is standing out of the books ( off-balance-sheetdebt )of the company like LCs, guarantees, etc.. This 'Pure EV' is more the true reflection of the enterprise value of the company rather than only 'EV' as we can't arrive at the realvaluation of any company in isolation of its off-balance-sheet debts.

(d) Current FY13 'Pure EV' of 309.65 cr. implies that at current market price (CMP), afterdeducting minimum Replacement Value of Tangible Fixed Assets of the company, we arepaying only 69.41 cr. which is compelling considering the fact that only inventories, debtorsand other current assets on the books of the company are worth more than 150 cr. .

Here, if we take into consideration the value of intangible assets of the company which is inthe form of multi-year financial as well as manyears of investment in setting up of largedistribution platform, branding, client-relationships, etc., then it effectively means that CMPoffers tremendous value-extracting opportunity for any acquirer.

(e) We have assumed a net debt addition of 35 cr. in FY14, 15 cr. in FY15 and 10 cr. in FY16because of which, with MCAP remaining constant, 'Pure EV' of the company increases

proportionately for FY14e, FY15e and FY16e.

(f) Even at FY16e 'Pure EV' of 369.65 cr., we are currently paying just 129.41 cr. for CurrentAssets and Intangible Assets in possession of the company which signifies grossundervaluation for a company of FY 16 e scale operation of 882882882882 cr.

(11) Another aspect, apart from 'Tangible Fixed Assets Replacement Value' theory ( discussed above ) which suggests gross undervaluation of Shalimar Paints Ltd., is its relative undervaluation vis-a-visits peers .

As stated before, Shalimar Paints Ltd. is the fifth largest paint company of India behind Asian Paints,Berger Paints, Kansai Nerolac & Akzo Nobel. Fortunately, all of the top 5 paint companies of India arepublicly traded entities and therefore we are able to chart a detailed 'Peer Valuation Matrix' by takinginto consideration varied valuation multiples like 'EV/Sales. EV/EBITDA, MCAP/Sales, Price/Book and

Price/Earnings. Before discussing any further, let's first have a look at valuation multiples commandedby all the listed paint companies of India including Shalimar Paints :


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As at 12 th July 2013 EV/Sales( FY13 )

EV/EBITDA( FY13 )

Mcap/Sales( FY13 )

Price/Earnings( FY13 )

Price/Book( FY13 )

Asian Paints( CMP = 4824 )

4.17 26.43 4.21 41.54 13.67

Berger Paints( CMP = 235 )

2.53 22.83 2.43 37.32 8.57

Kansai Nerolac( CMP = 1164 )

2.19 18.61 2.18 29.01 4.89

Akzo Nobel( CMP = 1105 )

2.33 27.58 2.36 24.73 4.86

Shalimar Paints( CMP = 97.60 )

0.580.580.580.58

[ Off-BalnceSheet Debts

Included ]

8.138.138.138.13

[ Off-BalnceSheet Debts

Included ]

0.340.340.340.34 16.7616.7616.7616.76 2.562.562.562.56

It will be interesting to note here the discount at which Shalimar is trading at vis-a-vis each of its peer :

Shalimar Paints' EV/Sales EV/EBITDA Mcap/Sales P/E P/B

Discount to Asian Paints 86.09 % 69.23 % 91.92 % 59.65 % 81.27 %

Discount to Berger Paints77.08 % 64.38 % 86.01 % 55.09 % 70.12 %

Discount to Kansai Nerolac 73.51 % 56.31 % 84.40 % 42.22 % 47.64 %

Discount to Akzo Nobel 75.10 % 70.52 % 85.59 % 32.23 % 47.32 %


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( fig. In ` cr. ) FY14e FY15e FY16e

Net Revenue 594 716 882

EBITDA 43.1 53.7 71.4

PAT 13.2 19.2 30.6

EPS ( in ` ) 6.98 10.15 16.19

We have taken the most conservative approach in forecasting the financials ; considering thefact that we are facing one of the worst slowdown in industrial activity which could hamper Industrial Paints Sales

growth as also we are in the midst of visible slowdown in consumer discretionary spending which could again limit thegrowth in Decorative Paints Sales.

Key Assumptions FY14e FY15e FY16e

YoY Growth in Existing Operations( minus contribution from new South India Plant )

5 % 8 % 12 %

Utilisation Assumed from new South India Plant 12 % 35 % 65 %

Debt( including off-balancesheet debt )

173 cr. 188 cr. 198 cr.

Depreciation Costs Considered 5.1 cr.

( 32.81 % YoY increaseover FY13 )

6 cr.

( 9.1 % YoY increase overFY14 )

6.8 cr.


Interest Cost Considered 19.2 cr.


20.3 cr.


20.8 cr.


Tax rate Assumed 30 % 30 % 30 %


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To explain in detail :

In current gloomy economy backdrop, for FY14e, we have assumed only 5 % YoY growth from company'sexisting operations ( minus new South India Plant ) and only 12 % Utilisation of new plant based in South thatwill get commissioned in Q2FY14. Adding both up, i t takes us to a moderate 12.03 % YoY revenue growthfor the company in FY14.

With regards to EBITDA margin performance for FY14, we have assumed higher initial costs on account of commercialisation of South India plant in Q2FY14 as also severe Rupee Depreciation likely to put pressureon overall EBITDA margins.

Taking all these into consideration, we have assumed only 7.25 % EBITDA margin for FY14, which,although seems marginally higher than 7.17 % EBITDA margin of FY13, but is considerably lower thanFY12's margin of 7.81 % and -- FY10-FY12 -- 3 Years' Average EBITDA Margin of 7.60 % . FY13's EBITDAmargin had suffered because of the fire accident faced by the Nashik plant in Q4FY13 and therefore is notstrictly comparable.

PAT for FY14 is arrived at after considering higher depreciation costs on account of commercialisation of South based plant as also higher interest costs as the plant is to be funded in the debt:equity ratio of 1.5:1 ( project cost = ~50 cr. ).

FY15 should see some revival in Industrial activity as also consumer sentiment should also be far betterthan current one. But, still, to be on a conservative side, we have assumed only 8 % YoY growth minuscontribution from South India plant and a modest 35 % utilisation of South India plant in the fiscal whichtakes us to the company comfortably achieving 20.53 % YoY growth in revenues in FY15.

In case of EBITDA, we have again assumed only partial absorption of costs of South India plant andtherefore factored in only 25 basis points improvement in EBITDA margin for FY15 ( from 7.25 % to 7.50

% ). PAT for FY15 is arrived at after considering higher depreciation costs and higher interest costs ( as debt

taken for financing setting up of new plant is unlikely to be paid back till FY17 ) .

FY16 should be a much better year for the company as South India plant will be fully operational,company's sales network in Southern and Western regions should have been fully enhanced and macro

situation should be much better. Still, for FY16, we have assumed only a 12 % YoY growth in revenues from existing operations ( minus South India plant ) with Southern plant turning out a utilisation of 65 % which should take the overall revenue growth of the company for FY16 to 23.18 %

EBITDA for FY16 should be far better as operational efficiencies should fully kick-in by then and thereforewe have assumed a 60 basis points improvement in EBITDA margins for the year ( from 7.50 % to 8.10 % ) .PAT should also be better as interest costs and depreciation costs should stabilise by then and debtburden should start easing out by then.


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It is worthwhile to note here that in the above assumptions, we have considered almost all thenegative aspects whereas any possible positive aspects like higher utilisation of Southern plant, new managementpushing for aggressive sales growth, professional management instilling cost efficiences thereby improving margins,etc., are totally ignored and we have preferred to remain the most pessimistic possible to enable us to limitthe downsides to our investments considerably.

So, now, let's convert our pessimistic financial assumptions into valuation multiples to check whetherShalimar Paints is undervalued in real sense or not :

FY14e FY15e FY16e

EV/Sales 0.58 0.50 0.41

EV/EBITDA 7.99 6.69 5.17

MCAP/Sales 0.31 0.25 0.20

Price/Book 2.31 1.98 1.71

Price/Earning 13.98 9.61 6.02

In above,

(a) We have considered 'Pure EV' in EV/Sales & EV/EBITDA calculations and therefore includedall possible off-balance sheet debts,

(b) We have assumed net debt addition of 35 cr. for FY14, 15 cr. for FY15 and 10 cr. for FY16.

(c) We have assumed nil equity dilution till FY16

( Note Compay has not diluted its equity since last two decades ) .

Conclusion :

To conclude, an Indian Consumer Discretionary company available at :

53.5 % discount to its Tangible Fixed & Current Assets Replacement Value ,

35.8 % discount to its Tangible Fixed Assests Replacement Value,

3.9 % premium to its current Freehold Land Assets Value ,


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67.8 % valuation discount to all its peers,

0.58 x EV/Sales TTM,

8.13x EV/EBITDA TTM,

0.34 x Mcap/Sales TTM,

inspite of it having :

India's Fifth Largest Paint Company status,

111 Years' Long Continuous Existence History,

One of the most Credible & Professional Management Change at the top w.e.f. March'2013,

20 % + p.a. Revenue Growth Visibility over next 3 Years,

Huge Spare Land Bank at each of the ManufacturingLocations offering potential of significant future capacityadditions at minimal costs and time

is an anomaly which has to correct sooner rather than later.

Markets might prefer to give some time for the new management to deliver as also for the greenfield maidenSouth Indian plant to start contributing in any meaningful way ;

but, one thing is crystal clear that, on whiff of first signof any of these event materialising, the rerating of this company is bound to be sharp and significant .

This is because, in today's market, where almost all consumer plays are richly vlaued, this is one of the rareconsumer discretionary company with FY14e Scale of Operation of INR 594 cr. and FY16e Scale of Operation of INR 882 cr. ; is trading at steep discount to even its inherent value i.e. Value of its Fixed & Current

Assets.

Disclaimer :Disclaimer :Disclaimer :Disclaimer :

This Research Note should only be taken as a direction for further research and should, in no way, beconstrued as an advice to Buy/Sell concerned Company. While preparing this note, we have used all publiclyavailable information as also information from other sources which are thought of as most reliable. However,although we have tried to be as genuine and as accurate as possible in publishing the data(s), still, reader of this noteis advised to cross-check the information and we should not in any way be held liable for any incorrect information.Its safe to assume that we have the concerned company as part of our portfolio and so the views expressed in thisnote should be seen in that backdrop. The reader assumes the entire risk of any use made of this note and weshould, in no way, be held liable for any loss arising out of the contents or action taken by the reader because of thisnote. This Research Note should not be interpreted as a recommendation of any kind but is only for the informationpurpose.


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Overview of the Company & Industry

Shalimar Paints bears the distinction of being one of the Oldest Paint Companies of the World and is currentlythe fifth largest Paint company of India.

Indian Paint Industry is today worth INR 275 bn. with ~69 % coming from organised segment and rest comingfrom unorganised segment. India has one of the lowest per-capita consumption of paints at just 1.5 kg. ( World

Average = 8 kg. ) because of which Indian Paint Industry is projected to sustain its growth momentum to reach~460 bn. by 2016. Organised segment is a very concentrated one with top 5 companies cornering ~90 %marketshare.

52%

16%

15%

6%3%

8%Akzo Nobel

AsianPaints

KansaiNerolac

BergerPaints

Shalimar PaintsOthers

Indian Paint Industry can be further subdivided into two segments viz.,

Decorative (Architectural), &

Industrial :

Marketshare of Top 5 Companiesin Indian Paint Industry


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Now, after having a brief overview of the industry, let's straightaway understand Shalimar's offerings andpositioning in the industry.

52%

16%

15%

6%3%

8% Akzo Nobel

AsianPaints

KansaiNerolac

Berger

Paints

Shalimar PaintsOthers


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Shalimar PaintsPresent in

All the Segments

Shalimar PaintsPresent in

All 3 Segments

Shalimar PaintsPresent to a

Limited Extent

Shalimar Paintswill Enter in FY14


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As can be seen from the first 'Marketshare' section, Shalimar Paints enjoys a 3.1 % marketshare of India'sOrganised Paint Segment. It has its presence across both the segments of paint industry viz., Decorative &Industrial.

In Decorative segment, company has its products across all categories and price-points viz., Economy, Mid-Range and Premium with larger contribution from Economy & Mid-Range price-points.

In Industrial segment, Company has major presence in non-automotive category with it being the 3 rd largestplayer in High Performance Coatings enjoying an overall 9 % marketshare of India's Protective Coatingsmarket ( just behind Berger & Asian Paints ) .

Important Data Points

Now, after having an overview of company's business, let's have a look at company's financial performanceover last decade as also its segmentwise breakup.

Depicted below is past 10 Years' Sales, EBITDA & PAT performance of Shalimar Paints Ltd. :

( fig. in ` cr. ) FY13* FY12 FY11 FY10 FY09 FY08 FY07 FY06 FY05 FY04

Net Sales *530.18 486.44 407.16 365.56 330.88 300.13 256.49 217.29 189.91 115.68

EBITDA *38.05 38 29.77 28.13 19.87 23.83 16.11 10.8 7.91 5.33

PAT 11.02 14.46 11.66 10 3.56 9.58 4.74 3.41 1.98 1.49

*There was a major fire incident on 4 th January 2013 at company's Nashik plant because of which the plant had to remain out of operation for

around one month which resulted in ~18 cr. loss in revenues for Q4FY13. EBITDA margins for Q4FY13 were also partly impacted because of

this accident.

Mentioned below is the break-up of revenues between Decorative & Industrial Segments of Shalimar PaintsLtd. for last seven years starting from FY06 till FY12. FY13 breakup data is still awaited :


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Key Monitorables :

Company's AR'2013 :

Company's Annual Report'2013 will be key monitorable to check for any future direction, newly appointedmanagement provides for the company.

Operationalisation of South India Plant :

Company has to commission its greenfield manufacturing facility in South India before the start of 2HFY14.Capacity Utilisation at the plant for FY14 as also capitalisation of initial expenses associated with it will be keymonitorable aspects.

Branding Initiatives :

So far, the company has focussed only on contractor-pulling as its main penetration tool. On advertising front,company has focussed majorly on local print/radio advertising and that too on a limited extent. Now, with newdynamic management at the helm as also maiden South India plant getting operational thereby company havingmanufacturing presence across India, branding will be key to success and therefore will be key monitorable aspect.

Gurgaon Project Development :

Company has in its possession a freehold one acre plot at Sector 32, Gurgaon which was acquired with an aimto develop it in future. Market Value of this plot has aready reached ~26 cr. with its development potential pegged atminimum ~55 cr.. Whether the new management takes some initiatives to develop this property so as to monetize itsidle Gurgaon land asset will be key monitorable.

New Operational Areas :

Any possible foray within the non-explored sub-segments of Indian Paint Industry as also allied activities willbe key monitorable.

Management of Debt :

Compay's overall debt positioning (on- & off B.S.) will be an ongoing monitorable aspect. FY14 will be verycrucial for this as although South India plant will get operational in this fiscal, its cash generation will start reflecting inreal sense only from FY15. FY14 will also see one of the worst phase as far as business environment is concerned andso how the company manages its debt in this crucial year will be key monitorable aspect.


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EBITDA Margin :

Although EBITDA margins are expected to be under pressure in FY14 because of tough business environment,initial operationalisation costs of South India plant, severe Rupee Depreciation, company building up talent pool totransform its HR into thoroughly professional one, etc. ; but, still, how much these factors pressurise EBITDA marginswill be key monitorable.

Raising of Funds via Equity :

So far, since last two decades, company has refrained from diluting its equity and has not raised any majorfunds via equity route. Considering the fact that company has tiny equity capital of just INR 3.79 cr., new managementmight prefer to raise some resources via equity route for company's aggressive future growth. Such moves, if any, willbe key monitorable.

Disclaimer :Disclaimer :Disclaimer :Disclaimer :

This Research Note should only be taken as a direction for further research and should, in no way, beconstrued as an advice to Buy/Sell concerned Company. While preparing this note, we have used all publiclyavailable information as also information from other sources which are thought of as most reliable. However,although we have tried to be as genuine and as accurate as possible in publishing the data(s), still, reader of this noteis advised to cross-check the information and we should not in any way be held liable for any incorrect information.Its safe to assume that we have the concerned company as part of our portfolio and so the views expressed in thisnote should be seen in that backdrop. The reader assumes the entire risk of any use made of this note and weshould, in no way, be held liable for any loss arising out of the contents or action taken by the reader because of thisnote. This Research Note should not be interpreted as a recommendation of any kind but is only for the informationpurpose.

shalimar research15july2013

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