crisil_21st_february_2011.pdf

7/24/2019 CRISIL_21st_February_2011.pdf

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Kirloskar Ferrous Industries Ltd

Enhancing investment decisions

Init iating coverage


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Explanation of CRISIL Fundamental and Valuation (CFV) matrix

The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process

Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental

grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The

valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to

grade 1 (strong downside from the CMP).

CRISIL

Fundamental Grade

Assessment CRISIL

Valuation Grade

Assessment

5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)

4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)

3/5 Good fundamentals 3/5 Align (+-10% from CMP)

2/5 Moderate fundamentals 2/5 Downside (negative 10-25% from CMP)

1/5 Poor fundamentals 1/5 Strong downside (


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CRISIL Equities | 1

February 21, 2011

Fair Value Rs 42CMP Rs 25

Fundamental Grade 4/5 (Strong fundamentals)

Valuation Grade 5/5 (CMP has strong upside)

Industry Information technology

Polaris Software LimitedBusiness momentum remains intact

Fundamental Grade 3/5 (Good fundamentals)

Valuation Grade 5/5 (CMP has strong upside)

Industry Auto Components

Kirloskar Ferrous Industries LtdIntegrating backwards to move forward

Kirloskar Ferrous Industries Ltd (KFIL) manufactures pig iron and ferrous

castings (foundry). Castings are primarily used in commercial vehicles, tractors

and diesel engines. CRISIL Equities expects the company to benefit from

growth in the commercial vehicle sector. We assign KFIL a fundamental grade

of 3/5, indicating that its fundamentals are good relative to other listedsecurities in India.

Backward integration to lower costs as well as improve productivityThe planned backward integration of the pig iron manufacturing process by

setting up a sinter plant will lower KFILs iron ore cost by Rs 750-800 per

tonne. Also, the sinter plant is expected to improve productivity on account of

better-sized iron ore lumps (sinter) that will result in better processing of input

materials. CRISIL Equities expects sales volumes of pig iron to grow at a 6%

CAGR during FY10-FY13.

Long-standing relationship with OEMs; castings volume up by 10.2%KFIL enjoys a long-standing relationship with OEMs for supply of castings and

also benefits from pig iron backward integration and a captive power plant in

Hospet. The industry is witnessing increasing demand and lower capacity

addition. KFILs Hospet plant is operating close to its full capacity. However,

the Solapur plant, which added capacity in 2008, is still operating at lower

capacity as casting designs are still in the approval stage from OEMs. We

expect volumes to grow 10.2% during FY10-13 as the operating rate of

Solapur plant improves to 85% from 39.5% in FY10.

In a cyclical industry, exposed to input cost fluctuationsEnd-user industries for both pig iron and castings such as automobiles and

tractors are highly susceptible to economic cycles, changes in interest rates

and varying demand patterns. KFIL is also exposed to fluctuations in prices ofkey input materials such as iron ore and coke. Further, KFILs limited

bargaining power with OEMs restricts its ability to pass on the rise in costs.

Expect three-year revenue CAGR of 18%We expect KFILs revenues to register a three-year CAGR of 18% to Rs 13 bn

in FY13 largely due to the 18% growth in pig iron revenues (which comprise

~54% of overall revenues) and 16.5% growth in casting revenues. PAT is

expected to grow at a three-year CAGR of 9% to Rs 640 mn.

Valuations the current price has strong upsideCRISIL Equities has used the EV/EBITDA method to value KFIL and arrived at a

fair value of Rs 42 per share. Considering the capital intensive nature of the

business, low bargaining power and volatility in raw material prices, we have

assigned EV/EBITDA of 3.5x.

KEY FORECAST(Rs mn) FY09 FY10 FY11E FY12E FY13E

Operating income 6,999 8,083 11,003 11,983 13,302

EBITDA 614 950 920 1,183 1,278

Adj Net income 55 467 392 577 640

EPS-Rs 0.4 3.4 2.9 4.2 4.7

EPS growth (%) (83.8) 517.3 (20.0) 47.1 10.9

PE (x) 27.2 9.8 8.7 5.9 5.4

P/BV (x) 0.5 1.4 1.0 0.9 0.8

RoCE(%) 12.4 21.3 16.2 18.9 18.8

RoE(%) 1.9 15.0 11.5 15.3 15.1

EV/EBITDA (x) 2.6 4.7 3.2 2.4 1.6

CMP: Current Market Price

Source: Company, CRISIL Equit ies estimate

CFV MATRIX

KEY STOCK STATISTICSNIFTY/ SENSEX 5519/18438

BSE ticker KIRLFER

Face value (Rs per share) 5

Shares outstanding (mn) 137.3

Market cap (Rs mn)/(US$ mn) 3432/76

Enterprise value (Rs mn)/(US$ mn) 3,329/74

52-week range (Rs) (H/L) 43/23

Beta 1.45

Free float (%) 41%

Avg daily volumes (30-days) 38077

Avg daily value (30-days) (Rs mn) 1.1

SHAREHOLDING PATTERN

PERFORMANCE VIS--VIS MARKETReturns

1-m 3-m 6-m 12-mKFIL -8% -21% -33% -20%

NIFTY -8% -14% 0% 16%

ANALYTICAL CONTACTChetan Majithia (Head) [email protected]

Nivedita Joshi [email protected]

Vishal Rampuria [email protected]

Client servicing desk

+91 22 3342 3561 [email protected]

1 2 3 4 5

1

2

3

4

5

Valuation Grade

FundamentalGrade

PoorFundamentals

ExcellentFundamentals

S

trong

Do

wnside

S

trong

U

pside

59.1% 59.1% 59.0% 59.0%

6.3% 6.8% 7.5% 7.5%

34.6% 34.1% 33.5% 33.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-10 Jun-10 Sep-10 Dec-10Promoter FII DII Others


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CRISIL Equities | 2


Table: 1 Kirloskar Ferrous Industries Ltd: Business environment

Product/ Segment Pig iron Castings

Revenue contribution(FY10)

53.8% 32.5%

Revenue contribution

(FY13)

57.5% 33.3%

Location of manufacturingfacility

Manufacturing facility in Hospet,

Karnataka

Manufacturing facility in Hospet, Karnataka and Solapur,

Maharashtra

Geographic presence Caters to all regions except eastern India

Industry growthexpectations

Tractor industry to grow at CAGR of 9% over five years

Auto industry is expected to grow at CAGR of 15% over the next four to five years

Earth moving material handling industry to report 30% CAGR over next five years

Sales growth

(FY07-FY10 3-yr CAGR)

12.9% 16.5%

Sales forecast

(FY10-FY13 3-yr CAGR)

18.1% 16.5%

Demand drivers The government's increased focus on agricultural sector and infrastructure development

Increasing rural income, increased focus on mechanisation of agriculture and ease in

availability of credit facility to farmers are the factors driving demand for tractors; strong

growth in the medium and heavy commercial vehicles industry

Indias position as a low-cost auto hub will enable India to gain sizeable market share in the

global auto components manufacturing industry

India is Asia's fourth largest exporter and expected to top the world in car volumes by 2050;

by then the number of vehicles on road will be 611 mn

Key competitors Tata Metaliks, Sathavahana Ispat,Visa Steel, Usha Ispat, Sesa Goa,

Neco, Dempo, KISCO

(Kudremukh), SLR Steel

Tata Metaliks, Hinduja Foundries, Nelcast, Carnation

Industries, Simplex Castings, Nelcast, Magna Electro

Castings, Ghatge Patil, Amtek, Ashok Iron works

Key risks

Economic slowdown can affect end-users (auto, tractor manufacturers) capex plans, which in

turn is likely to affect allied manufacturers like KFIL

Subject to volatility in raw material prices and foreign exchange as it imports 60% of its

coke requirements

Client concentration in castings business (M&Ms tractor segment)

Source: Company, CRISIL Equit ies


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CRISIL Equities | 3


Grading Rationale

Rising demand for pig iron to benefit KFIL

CRISIL Research expects the demand for pig iron to grow at 10% CAGR over the

next two to three years on the back of strong growth in end-user industries such

as steel (CAGR of 11%, FY10-FY12) and auto (including the tractor segment,

which is expected to grow at CAGR of 15% over the next five years). Pig iron is

primarily used to manufacture castings, which are used to manufacture auto

components (engine parts, brakes, etc). KFIL supplies ~90% of its pig iron

produce to local foundries (castings manufacturer) and local steel millers, and

the balance ~10% is consumed in-house (by its castings division).

Figure 1: Pig iron demand grows at 10% CAGR Figure 2: Break-up of pig iron end-user demand

Source: CRISIL Research Source: CRISIL Research

Backward integration to cut costs

KFIL plans to incur a capex of Rs 850 mn to set up a sinter plant to lower pig

iron manufacturing costs. The sinter plant, which is expected to be operational

in 2QFY12, will enable the company to manufacture pig iron by utilising iron ore

fines instead of iron ore lumps which are more expensive. We expect sinter to

meet 60% of its iron ore requirement. The price differential between iron ore

lumps and iron ore fines (after taking into account conversion cost of iron ore

fines to sinter/iron lumps) is Rs 750-800 per tonne. CRISIL Equities expects the

full benefit of the sinter plant in FY13 as the company ramps up its sinter plant

operations.

Iron ore FY11E FY12E FY13E

% of iron ore lumps 100% 54% 38%

Market price of iron ore lumps (Rs per tonne) 3,638 3,720 3,869

Market price of iron ore fines (Rs per tonne) - 2,820 2,969

Blended cost (Rs per tonne) 3,638 3,309 3,315

Cost saving (Rs mn) - 411 554

% saving - 11% 14%


4,6324,909

5,2025,722

6,294

500

1,500

2,500

3,500

4,500

5,500

6,500

FY08 FY09 FY10 FY11E FY12E

(in 000 tonnes) Automobile,

21%

Pipes &fittings, 18%

Pumps, 15%

Engines &

compressors,11%

Textiles, 9%

Fans, 6%

Others, 20%

The castings industry

accounts for nearly 65-

70% of pig iron

production, the balance

is consumed by the steel-

making industry

To manufacture a tonne

of pig iron, 1.8-1.9

tonnes of iron ore lumps

are required


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CRISIL Equities | 4


a n d i m p r o v e p r o d u c t i v i t y

Backward integration is also likely to improve productivity. This is because the

size and shape of sinter creates efficient space in the mini blast furnace (MBF)

and increases production. Utilisation of sinter in the MBF is likely to increase per

day production by nearly 10-15% from 520 tonnes per day. CRISIL Equities

expects volumes to increase at a CAGR of 6% during FY10-13.

Figure 3: Pig iron volumes to grow at CAGR of 6% (FY10-FY13)

Source: CRISIL Equities

The change in process or material mix (usage of sinter) results in creation of

efficient space in the MBF, which increases productivity and leads to additional

cost benefits. This is because of better chemical reaction in the MBF and more

space to blow hot blasts (hot air). Efficient usage of hot blast enables reduction

in consumption of coke which is expensive. Expected reduction in coke

consumption is nine kgs per tonne of pig iron manufactured. CRISIL Equities

expects reduction in coke consumption to lead to cost savings of Rs 80-180 per

tonne.

KFIL has been continuously improving its manufacturing process to reduce

operational costs. Pig iron manufacturing is an energy-intensive process. To

manufacture pig iron from iron ore lumps/fines, coke is burned as a fuel to heat

the furnace along with blasts of hot air. The temperature requirement is 1500

degree celsius. KFIL increased temperate in MBF from 700 degree celsius in

FY07 to 1100 degree celsius in FY10 by replacing metallic gas heaters with

stoves. Additional energy released through stoves enabled the company to

reduce coke input/output ratio from 0.81 (800 kgs) in FY08 to 0.76 (~760 kgs)

in FY10.

Exposed to volatility in raw material costs

KFIL procures iron ore lumps for producing pig iron from the open market, which

exposes it to fluctuations in iron ore prices. The price fluctuation of another key

raw material coke also impacts the companys profitability. KFIL is largely

dependent on imports and, hence, is also exposed to volatility in foreign

213

146

227 234248 270

0

50

100

150

200

250

300

FY08 FY09 FY10 FY11E FY12E FY13E

(in 000 tonnes)

60% of coke consumed

is imported, the balance

is sourced locally from

players like Gujarat NRE


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CRISIL Equities | 5


exchange. However, timely hedging measures are taken by the company to

minimise exchange fluctuations. Increase in raw material prices is passed on

with a lag of two to three months. In the meantime, the demand-supply

scenario of raw material could change, impacting realisations and, hence,

profitability. This was the scenario in 2QFY11. KFIL was holding a high cost

inventory; however, a decline in input costs impacted realisations and, hence,

profitability.

Figure 4: Coke prices soared... Figure 5: ... so did price of iron ore fines


Quarterly financials

(Rs mn) Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11

Net sales 1,769 2,059 2,583 2,246 2,812

Change (q-o-q) 80% 16% 25% -13% 25%

EBITDA margin 15.7% 9.3% 9.3% 11.1% 5.1%

Adj PAT margin 9.1% 6.3% 4.4% 5.6% 1.6%


Power from waste heat meets 50% of its needs

KFIL uses waste heat gas generated during the production of pig iron to

generate power. This helps the company to lower the per unit cost of power by

Rs 4.3 as the cost of power generated through waste heat recovery comes to

around Rs 1 per unit, while the state grid power costs Rs 5.3 per unit. The

company has set up three steam turbines with combined cogeneration capacity

of 12 MW of power at its Hospet facility. Post installation of the sinter plant, the

companys power requirements will go up by 2 MW to 18 MW at the Hospet

plant. The Solapur plant will continue to depend on state grid power, which is

expensive at Rs 6.3 per unit.

Power requirements (MW)

Plant-wise Captive generation State grid Total

Hospet 9.0 7.0 16.0

Solapur - 7.0 7.0

Total power consumed 23.0


200

220

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Apr-09

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Apr-10

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Sep-10

Oct-10

(US$ per tonne)

Coke prices (China - Spot price)

-

20

4060

80

100

120

140

160

180

200

Apr-08

Jun-08

Aug-08

Oct-08

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High

5MW power capacity set

up in 2009 is entitled to

carbon credits


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CRISIL Equities | 6


The captive power capacity can satisfy 75% of the Hospet plants requirements;

however, it is not running at full capacity owing to limited access to waste gas.

Hence, KFIL sources about 44% of its power requirements from the state grid in

Hospet. After the commissioning of the sinter plant, the Hospet plants

dependence on state grid power will come down to 33% as the waste gas

generated in the sinter plant will also be utilised to generate power. Waste heat

utilisation will not only reduce dependence on the high-cost and erratic power

supply from the state grid but also take care of waste disposal. It will also entitle

the company to earn carbon credits whose sales are earnings accretive.

Currently, the company has not earned carbon credits but has registered itself

for carbon credit benefits, which are likely to accrue in the years to come.

CRISIL Equities has not factored in the benefits of the same owing to difficulty of

arriving at the carbon credits earned and realised (earned carbon credits can be

sold within three years, value is realised upon sale).

High LCV and MCV demand to boost casting sales

Castings manufactured by KFIL are mainly used in commercial vehicles (light

and medium), tractors and diesel engines. KFIL derives 30% of its revenues

from the castings business where it supplies its products to OEMs of light

commercial vehicles (LCM) and medium commercial vehicles (MCV). Production

of commercial vehicles (CV) is expected to grow at 17% CAGR from FY10-FY15,

while the tractor industry is expected to grow at 9% CAGR during the same

period. Expanding economic activity and increasing passenger traffic are

expected to keep up sales of CVs. Robust growth in CVs and tractor industry

augurs well for KFILs castings revenue growth.

Figure 6: Strong growth in CV industry... Figure 7: ... boosts KFILs castings volumes


CRISIL Research expects LCV growth to be driven by the non-bulk segment

(includes consumer durables, express cargo, handsets, etc.), which is expected

to register a strong 10-12% growth over the next five years. CRISIL Equities

expects KFILs overall castings sales volumes to grow at CAGR of 10.2% over

the next three years on the back of strong growth in the commercial vehicles

industry and initiatives taken by the company to improve efficiency.

297337

458 468

347

483

565

662

774

906

1,060

-

200

400

600

800

1,000

1,200

FY05

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

FY13E

FY14E

FY15E

(in 000)

27 36

50

39

5058

64 66

0

10

20

30

40

50

60

70

FY06

FY07

FY08

FY09

FY10

FY11E

FY12E

FY13E

(in 000 tonnes)

CV industry trails economic

growth and handles more

than 50% of freight

movement domestically with

0.98 times correlation to

aggregate GDP


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CRISIL Equities | 7


Investing further to improve operational efficiency

KFILs castings have faced high rejection rates in the past. To bring down the

rejection rate, KFIL began to focus on improving operational efficiency in this

business by adopting a new technology (such as replacing old moulding lines

with new semi-automated moulding lines). An automated process (less manual

work) reduces error, enhances efficiency and helps maintain consistency in the

product quality. Efforts to streamline the operations have made the business

profitable. To further bring down rejection rates in order to increase sales

volume and thereby earnings, the company is investing Rs 150 mn to set up a

fettling capacity unit (it gives high lustre and an even texture, which are critical

for ensuring that casting parts work properly) in the Hospet plant.

Compared to the Solapur plant, the Hospet plant relies more on manual

operations and relatively old technologies (old moulding lines). The plant (with

60,000 tonnes capacity) is also operating at optimum levels. Thus, to increase

sales volumes in the Hospet plant, KFIL is focused on bringing down rejection

rates.

Figure 8: Increased efficiency reduces total rejection rate


In 2009, a new high pressure moulding line with latest technology was installed

in the Solapur plant. This has resulted in the plant operating with less man

power and overall increase in productivity. Apart from this, KFILs revenues

could get a boost as the Solapur plant has an additional advantage of machine

shop facility for producing machined castings as per customer requirements.

KFIL is further focusing on better management of assets in Solapur to increase

volumes through increased order inflows. Hence, it is increasing the production

of moulds and cores - vital for castings manufacturing. The company plans to

quicken the process of the moulding line, whereby it will be able to process 100

moulds per hour instead of 80. With reduction in cycle time, the Solapur plants

productivity is expected to increase by 10,000 tonnes per annum. The move to

increase volumes by focusing on increasing efficiency will entail an investment of

Rs 250 mn.

11.2%10.5%

7.9%

11.0%

10.3% 10.4%

7.6%

7.8%

8.2%

9.1%

9.3%

11.5%

8.6%

14.6%14.5%

12.6%

13.9%

9.1%

6.8%7.6% 7.3%

6.8%5.2%

4.8%

4.8%

4.5%

2%

4%

6%

8%

10%

12%

14%

16%

FY06

FY07

FY08

FY09

FY10

Apr-10

May-10

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10

Nov-10

(Rejection rate)

Hospet Solapur

Improvement in

manufacturing process to

aid volume growth at the

Hospet plant

Reduced cycle time will

enhance Solapur plants

productivity by 10,000

tonnes per annum


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CRISIL Equities | 8


Backward integration in castings business

KFIL has an integrated jobbing foundry castings manufactured with linkage to

molten (liquid metal) pig iron. As the company utilises molten metal (pig iron

manufactured in-house), it saves on power cost, which other foundries (who

purchase pig iron lumps and melt them) have to incur. Apart from cost savings,

integrated operations also led to product efficiency. Since the company uses

liquid metal to manufacture castings in the Hospet plant, its products require

less machining work at the customers end, unlike that of other foundry

manufacturers (castings manufactured using pig iron lumps). Machining is done

to give a product the desired efficiency. Minimal machine work indicates

efficiency of the product manufactured by KFIL on account of which it is a

preferred supplier of castings for critical parts like engine.

KFIL is one the few players that manufacture high-end castings (Hinduja

Foundries, Nelcast, DCM Engineering, etc.) used in the auto industry, especially

commercial vehicles light and medium and tractor segments.

Long-standing relationship with OEMs

With its expertise in manufacturing castings, KFIL is continuously working on

developing cost-effective and efficient products. Owing to the companys ability

to customise the product as per clients requirements, it has become a preferred

supplier and is often considered as an integral part of an OEMs value chain.

KFIL enjoys a long-term and healthy relationship with major auto manufacturers

like Mahindra and Mahindra (commercial as well as tractor segments), Tata

Motors, TAFE, Carraro, Toyota Kirloskar Motors Ltd, etc. The company is a single

source supplier to major auto manufacturers providing castings specifically for

engines, tractors and multi-utility vehicles.

Figure 9: Share of Mahindra (a key client of KFIL) in sales


14.1%18.3% 18.0%

36.6%

48.9% 48.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

FY08 FY09 FY10

% of overall business % of castings business

KFIL is expected to

benefit from the 17%

CAGR in commercial

vehicle auto industry as

it is a preferred supplier

of castings for engine

critical components

Mahindra and Mahindra

accounts for nearly 15-

20% of the companys

total sales and 50% of

the castings division


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CRISIL Equities | 9


Auto manufactures on expansion spree: Auto manufacturers have lined up

new launches in the commercial vehicle segment. For example, Mahindra is

going to launch Navistar. Additionally, auto majors such as Daimler and Volvo

are expanding their scale to meet increasing demands for commercial vehicles

following an improvement in economic activity. The new launches and expected

robust growth in the CV industry augur well for KFILs revenue growth,

especially for the castings business, supported by established relationship with

OEMs.

but limited bargaining power

KFIL has established a healthy relationship with OEMs on account of its ability to

cater to clients requirements but has limited bargaining power. This is because

jobbing foundry (castings business) has low entry barriers as technology and

productivity are not thrust areas. Its a highly competitive market dominated by

unorganised players. Design capabilities, mould and core making facilities are

the characteristics that can create entry barriers. However, OEMs develop their

own designs, which are given to casting manufacturers who concentrate on

efficiency of the product manufactured. Since OEMs prefer to have multiple

vendors to reduce the supplier concentration risk, castings manufacturers have

to operate in a competitive environment (pricing as well as order booking).

Limited bargaining power restricts KFIL from entering into back-to-back

contracts and fluctuations in raw material prices are not fully covered. KFIL

receives monthly orders from OEMs to supply castings and pricing is determined

by taking into account the then prevailing raw material prices. However,

castings manufacturers hold inventory of three months in case of imported raw

materials like coke used in pig iron manufacturing. Any sharp movement in raw

material prices during the quarter impacts margins of players like KFIL. During

2QFY11, KFIL reported lower margins on account of a decline in prices of

imported inventory in hand. Castings manufacturers like KFIL are trying to

negotiate pricing contracts with OEMs to include any increase in input costs

which also includes additives, and processing cost of raw materials to get a full

cover against increase in input costs. The move is considered positive and the

company expects to get price increase from auto manufacturers.


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CRISIL Equities | 10


Key risks

Exposed to cyclicality of end-user industries

End-user industries such as automobiles and tractors are highly susceptible to

economic cycles, changes in interest rates and varying demand patterns. The

first two can hamper the consumers ability to spend or result in postponement

of consumption. This has a negative impact on the business (revenues) of

industries like auto. Lower cash inflows impact the auto manufacturers capex

plans and, hence, demand for components. Poor monsoon could hamper

investment ability of farmers, which in turn will impact tractor sales volumes.

Ex p o s e d t o f l u c t u a t i o n i n i n p u t c o s t s

KFIL procures iron ore from the open market for production of pig iron, which

exposes it to fluctuations in iron ore prices. The upcoming sinter plant will

enable the company to reduce cost of raw materials as the company will be able

to replace high-cost iron ore lumps with iron ore fines. Note, iron ore fine prices

are relatively cheaper but linked to movement in iron ore prices. Thus, KFIL will

be in a position to reduce cost but will remain exposed to volatility in iron ore

prices.

The other key raw material that has a significant bearing on the companys

profitability is coke. Of the total coke required to manufacture pig iron, 60% is

imported and the balance is sourced domestically. Since it imports a key input

material, KFIL is also exposed to volatility in foreign exchange. Increase in

material cost is normally passed on to end-users. Meanwhile, as the demand

outlook changes, realisations get impacted and affect profitability. A similar

scenario was witnessed in 1HFY11. KFIL had procured inventory at a high cost in

the beginning of the year. However, input prices declined and so did realisations

(pricing linked to input costs), which reduced profitability sharply during

1HFY11. The pig iron division is more susceptible to fluctuations in raw material

prices as the demand-supply scenario determines realisations and as there is no

chance to negotiate pricing as in the case of castings.

High rejection rate due to old technology in Hospet

KFILs castings plant in Hospet uses the old moulding technology which involves

more manual work compared to the semi-automated Solapur plant. The

company needs to cut down on manual errors to reduce its current 8-9%

rejection rate and increase volumes. Hence, it is planning to modernise the

Hospet plant with a fettling capacity, the benefits of which are likely to flow in

from FY12 onwards.

The pig iron divisions

produce is largely soldthrough a dealer-

distributor network.

Commission paid is Rs

100-120 per tonne of


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Financial Outlook

Growth across offerings

On the back of strong growth in the commercial vehicle industry and

productivity improvement, pig iron and castings divisions revenues are expected

to grow at CAGR 18.1% and 16.5%, respectively.

Figure10: Sales grow at two-year CAGR of ~18% Figure 11: Pig iron revenues grow at a faster rate


Figure 12: Pig iron revenue growth trend Figure 13:Volumes drive castings revenues


Sharp movement in input costs to impactprofitability

Realisations or saleable price of pig iron and castings is vulnerable to any sharp

movement in raw material prices. However, there is a lag effect of at least a

quarter. During 1HFY11, KFIL was holding a high-cost coke inventory (about

US$ 510 per tonne) which declined to US$ 450 per tonne at the beginning of

2QFY11 and affected KFILs realisations. Since realisations are linked to spot

coke prices, KFIL witnessed a sharp decline in profits of nearly 50% in 2QFY11.

Coke prices have once again started moving up but this time KFIL is holding a

low-cost inventory and is likely to reap the benefits of the same.

7,285 6,999 8,083 11,003 11,983 13,302

39%

-4%

15%

36%

9%11%

-20%

-10%

0%

10%

20%

30%

40%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000


(Rs mn)

Revenues Y-o-Y growth (RHS)

50.7% 50.5% 53.8% 56.2% 56.0% 57.5%

35.5% 35.3% 32.5%33.2% 34.1% 33.3%

0.7% 0.8% 0.6%0.0% 0.0% 0.0%

13.1% 13.4% 13.2% 10.6% 10.0% 9.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Pig iron Castings Investmen tcastings Others

3,684 3,532

4,342

5,745

6,266

7,158

22.1%

-4.1%

22.9%

32.3%

9.1%

14.2%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


(Rs mn)

Revenues % growth (RHS)

1,657

2,579 2,4692,620

3,398

3,817

4,14855.6%

-4.3%

6.1%

29.7%

12.3%8.7%

-5%

5%

15%

25%

35%

45%

55%

65%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

FY07 FY08 FY09 FY10 FY11E FY12E FY13E

(Rs mn)

Revenues % growth (RHS)

PAT to grow at CAGR of

9% during FY10-FY13


14/24



In the recent past, profitability was impacted on account of rising raw material

prices and the economic slowdown that impacted growth in demand from end-

user industries. However, KFIL could withstand the difficult situation on account

of timely measures (check on costs), long-standing relationship with OEMs,

which assured orders, with revival in demand and due to low gearing.

Figure 14: Margins vulnerable to raw material price movement

Source: Company, CRISIL Equities

Figure 15: RoCE and RoE to improve over a period of time

Source: Company, CRISIL Equities

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


EBITDA margin PAT margin

0%

5%

10%

15%

20%

25%


ROE ROCE

In FY09, margins

dropped on account of

high-cost inventory

along with rupee

depreciation

Increase in productivity,

check on costs along withexpected improvement in

realisations to result in

higher RoE and RoCE.


15/24



Management Overview

CRISIL's fundamental grading methodology includes a broad assessment of

management quality, apart from other key factors such as industry and business

prospects, and financial performance.

Experienced management

KFIL has an experienced management headed by Mr R. V. Gumaste, managing

director. Mr Gumaste, B.Tech in metallurgical engineering, joined KFIL in 1993

as chief of pig iron production. He has been associated with the group for nearly

30 years and with the company for more than 15 years. The promoters have

sound business knowledge and the independent directors also have in-depth

experience of more than two decades in similar lines of business. Strong

management set-up with domain expertise and group support enabled the

company turn around its operations in 2003.

Gradual increase in capacity

KFILs management has been quick in identifying new growth avenues and

capitalising on them. The company started operations with an installed capacity

of 120,000 tpa (tonnes per annum) of pig iron in 1994 and gradually increased it

to 360,000 tpa. It also increased its foundry capacity from 37,500 tpa in 1994 to

102,000 tpa today.

Professional set-up and a strong second line

KFILs management has adopted a professional approach towards management.

The company has inducted various professionals from the industry at the senior

and mid-management levels to prepare for the next level of growth. From the

annual reports, we understand that board members Mr Atul Chandrakant

Kirloskar and Mr Sanjay C. Kirloskar are from the promoter family, and are

professionals backed by strong business acumen.

An experienced

management with a

belief in gradual and

steady growth


16/24



Corporate Governance

CRISILs fundamental grading methodology includes a broad assessment of

corporate governance and management quality, apart from other key factors

such as industry and business prospects, and financial performance. In this

context, CRISIL Equities analyses the shareholding structure, board composition,typical board processes, disclosure standards and related-party transactions.

Any qualifications by regulators or auditors also serve as useful inputs while

assessing a companys corporate governance.

Overall, corporate governance at KFIL meets the regulatory requirements

supported by reasonably good board practices and an independent board.

Board composition

KFILs board consists of eight members, of whom five are independent directors,

which meets the requirement under Clause 49 of SEBIs listing guidelines. The

directors have strong industry experience and are highly qualified. Most of the

directors are formidable names in their business lines. Given their background,

we believe the board is experienced. The independent directors have a fairly

good understanding of the companys business and its processes. The

attendance of directors in the board meetings has been fairly good showing their

interest in the company. The independent directors on the board are:

Mr A. R. Jamenis, who has been associated with Kirloskar Group for about

37 years. Prior to being an independent director, he served as MD of KFIL

(1998-2003).

Mr S. N. Inamdar is a leading advocate of the Bombay High Court and has

38 years of experience as an income tax consultant. He has also served as

the president of the Chamber of Income Tax Consultants.

Mr C. V. Tikekar has been on the companys board since 1993. He joined

the group after retiring from Tata Engineering Company Ltd (38 years

experience in various capacities such as chief metallurgist, in charge of

foundries, etc.) and played a vital role in the planning, installing and

commissioning of the plant in Hospet.

Mr S. G. Chitnis retired as vice chairman of Kirloskar Pneumatic Company

Ltd after turning it around in two years. He has over 38 years of experience

in manufacturing, research and development and marketing.

Mr A. N. Alawani has been associated with the Kirloskar Group for more than 30

years. Before joining KFIL (2006), he was a director-finance of Kirloskar Oil

Engines Ltd. Besides his core expertise in finance and taxation, he is well

experienced in import-export and labour matters.

Boards processes

The companys quality of disclosure can be considered good judged by the level

of information and details furnished in the annual report, websites and other

publicly available data. The company has all the necessary committees audit,

remuneration and investor grievance - in place to support corporate governance

practices. The audit committee is chaired by Mr Inamdar.

Corporate governance

practices conform to

regulatory norms


17/24



Valuation Grade: 5/5

We have valued KFIL using the EV/EBITDA method and arrived at a fair value of

Rs 42 per share. Consequently, we initiate coverage on KFIL with a valuation

grade of 5/5 indicating that the market price of Rs 25 per share has strong

upside from the current levels.

Considering the capital intensive nature of the business, low bargaining power

and volatility in raw material prices, we have assigned EV/EBITDA of 3.5x.

One-year forward P/E band One-year forward EV/EBITDA band

Source: Company, CRISIL Equities Source: Company, CRISIL Equities

P/E premium / discount to NIFTY P/E movement


0

20

40

60

80

100

120

Jun-06

Sep-06

Jan-07

Apr-07

Jul-07

Nov-07

Feb-08

May-08

Aug-08

Dec-08

Mar-09

Jun-09

Oct-09

Jan-10

Apr-10

Jul-10

Nov-10

Feb-11

(Rs)

KFIL 4x 8x 12x 14x 16x

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Jun-06

Sep-06

Jan-07

Apr-07

Jul-07

Nov-07

Feb-08

May-08

Aug-08

Dec-08

Mar-09

Jun-09

Oct-09

Jan-10

Apr-10

Jul-10

Nov-10

Feb-11

(Rs mn)

EV 2x 4x 5x 6x

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

J

un-06

S

ep-06

J

an-07

A

pr-07

Jul-07

N

ov-07

F

eb-08

M

ay-08

A

ug-08

D

ec-08

M

ar-09

J

un-09

O

ct-09

J

an-10

A

pr-10

Jul-10

N

ov-10

F

eb-11

Premium/Discount to NIFTY Median

-20

0

20

40

60

80

100

120

Jun-06

Sep-06

Jan-07

Apr-07

Jul-07

Nov-07

Feb-08

May-08

Aug-08

Dec-08

Mar-09

Jun-09

Oct-09

Jan-10

Apr-10

Jul-10

Nov-10

Feb-11

1yr Fwd PE (x) Median PE

+1 std dev

-1 std dev

We assign a fair value of

Rs 42 per share and

initiate coverage with a

valuation grade of 5/5


18/24



Peer comparison

Mcap (Rs mn) as on Feb 21, 2011

KFIL 3,432

Hinduja Foundries Ltd. 2,460

Carnation Industries Ltd. 60

Magna Electro Castings Ltd. 332

Nelcast Ltd. 1,480

Simplex Castings Ltd. 515

Sathavahana Ispat Ltd. 1,570

EBITDA margin (%) FY08 FY09 FY10 9MFY11

KFIL 10.8% 8.8% 11.8% 8.1%

Hinduja Foundries Ltd 10.6% 7.8% 13.9% 10.7%

Carnation Industries Ltd 3.9% 7.2% 6.7% -8.4%

Magna Electro Castings Ltd 19.9% 13.4% 25.6% 24.2%

Nelcast Ltd 13.3% 10.5% 9.3% 6.3%

Simplex Castings Ltd 11.3% 12.8% 14.4% 15.1%

Sathavahana Ispat Ltd 21.7% 10.6% 16.3% 16.0%

Net margin (%) FY08 FY09 FY10 9MFY11

KFIL 6.7% 1.1% 6.1% 3.4%

Hinduja Foundries Ltd 3.2% -2.9% 0.1% 1.4%

Carnation Industries Ltd 0.0% 0.8% 1.0% -8.3%

Magna Electro Castings Ltd 6.8% 1.8% 7.5% 7.7%

Nelcast Ltd 6.4% 1.2% 2.0% 23.4%

Simplex Castings Ltd 3.9% 4.5% 5.7% 6.4%

Sathavahana Ispat Ltd 8.3% 2.3% 6.2% 8.0%

RoE (%) FY08 FY09 FY10

KFIL 10.8% 8.8% 11.8%

Hinduja Foundries Ltd 11.3% -5.7% -0.3%

Carnation Industries Ltd -2.0% 3.7% -1.1%

Magna Electro Castings Ltd 21.1% 7.5% 15.3%

Nelcast Ltd 26.5% 2.5% 4.4%

Simplex Castings Ltd 19.6% 21.0% 20.5%

Sathavahana Ispat Ltd 27.1% 8.7% 13.3%

EV/EBITDA FY08 FY09 FY10

KFIL 6.7 2.6 4.7

Hinduja Foundries Ltd. 8.8 13.7 10.6

Carnation Industries Ltd. 11.1 6.5 6.5

Magna Electro Castings Ltd. 5.5 3.1 5.4

Nelcast Ltd. 5.5 13.5 18.8

Simplex Castings Ltd. 5.1 2.8 4.7

Sathavahana Ispat Ltd. 3.8 2.5 8.1Source: CRISIL Equit ies


19/24



Company Overview

Incorporated in 1991, a Kirloskar Group company, KFIL is promoted by Kirloskar

Oil Engines Ltd and Shivaji Works Ltd. It manufactures pig iron and ferrous

castings (foundry). Pig iron is primarily used by automobiles, tractors, textiles,

pump, diesel engine industries and secondary steel mills. Only 10-12% of pig

iron manufactured is used in-house to manufacture castings, which are used in

automobiles, tractors, diesel engines and locomotive industries.

KFIL entered into a one-time settlement with financial institutions for the

repayment of high-cost loans in 2003 as a part of the debt restructuring

programme. A strong management along with domain expertise and group

support enabled the company turn around its operations. The accumulated

losses were completely wiped out in 2007. It declared its maiden dividend in

2008 and since then has been consistently paying dividends.

Business segmentsContribution to revenues

FY08 FY09 FY10

Pig iron 50.7% 50.5% 53.8%

Castings (foundry) 35.5% 35.3% 32.5%

Product details and customer profileBusiness segment Product type Key customers

Castings

(Grey iron, SG iron)

Cylinder blocks Auto:Mahindra & Mahindra Ltd, Tata Motors Ltd, Toyota Kirloskar Auto Parts, EicherMotors LtdCylinder heads

Housings Tractor:Mahindra & Mahindra Ltd, Escorts Ltd, Carraro India Pvt. Ltd, TAFE

Auto parts Engine: Kirloskar Oil Engines Ltd, Simpson & Co. Ltd

Pig iron Foundry grade Electro Steel Castings, Texmo Industries, Rajkot Eng. Association, Laxmi MachineWorks, Punjab Tractors Ltd, Sriram Piston & Rings Ltd, Kapilansh Dhatu Udyog Ltd,

Ghatge Patil Industries Ltd, Prashant Castings Ltd, Indo Shell Mould Ltd

Basic grade

SG grade

Manufacturing facility

The companys manufacturing facilities are located in Hospet, Karnataka and

Solapur, Maharashtra; they have a combined capacity of 360,000 tonnes per

annum (tpa) of pig iron and 102,000 tpa of castings. It also has three steam

turbines with a combined capacity of 12 MW. In FY10, KFIL installed stoves for

mini blast furnace-2 to increase productivity and reduce coke consumption.

During the last fiscal year, the company installed a high pressure moulding line

in order to improve the technology for its castings plant in Solapur. The

operations of the foundry in Solapur (based on old technology) have been

reduced and will be completely phased out in FY11 in line with KFILs plans to

transition to new technology for manufacturing castings. The company has

decided to close down the investment castings division, which contributed

merely 1% to total revenues.


20/24



Details of installed capacities and utilisation rate

SegmentInstalled capacity (MT) Capacity utilisation rate

2008 2009 2010 2008 2009 2010

Pig iron 240,000 240,000 360,000 108.3% 78.9% 75.9%

Castings 84,000 112,000 102,000 60.9% 37.5% 51.8%

Future plans

KFIL has planned a capital expenditure of Rs 2 bn to increase the high-margin

castings divisions manufacturing capacity by 90,000 tpa by the beginning of

FY13 to cater to rising demand from the automobile and tractor sectors. The

two-phased expansion will be primarily funded through internal accruals and the

company will resort to external funding only if necessary. We have not factored

in the capex plan as the funding is not yet finalised. KFIL is looking to fund its

expansion plans by exercising one of the three options:

Internal accruals: With increase in realisations, cash flows are expected to

increase that could part-fund capex plans.

Warrant conversion: Promoters hold 60% stake in the company and are

willing to pump in more funds through warrant conversions to increase

capacity.

Borrowings: Being near debt-free leaves room to increase the gearing. However,

as a group policy, KFIL prefers to fund capex through internal accruals and

warrant conversion.

Milestones

1991 Incorporated as Kirloskar Ferrous Industries Ltd

1994 Commissioned mini blast furnace-I and 3.5 MW power plant-1, using blast furnace gas

1995 Commissioned foundry and installed mini blast furnace-2

1997 Installed another 3.5 MW power plant

2003 Turnaround year

Entered into one-time settlement with financial institutions for the repayment of high-cost loans

2007

Raised Rs 2.27 bn through rights issue: Equity share of Rs 5 at a premium of Rs 30

Acquisition of Solapur plant from Kirloskar Oil Engines Ltd

Commissioned hot blast stoves project for mini blast furnace -1

2008 Declared maiden dividend of 15%

2009

Awarded certificate of merit by the Ministry of Power

New moulding line was set up at Solapur plant at an investment of ~ Rs 1,095 mn.

2010

Commissioned new turbo blower for increased power generation

Commissioned hot blast stoves for mini blast furnace II


21/24



Annexure: Financials

Source: CRISIL Equit ies

Income statement Balance Sheet

(Rs mn) FY09 FY10 FY11E FY12E FY13E (Rs mn) FY09 FY10 FY11E FY12E FY13E

Operating income 6,999 8,083 11,003 11,983 13,302 Liabilities

EBITDA 614 950 920 1,183 1,278 Equity share capital 686 686 686 686 686

EBITDA margin 8.8% 11.8% 8.4% 9.9% 9.6% Reserves 2,287 2,579 2,878 3,316 3,803

Depreciation 230 260 301 329 340 Minorities - - - - -

EBIT 383 691 619 855 938 Net worth 2,973 3,266 3,564 4,003 4,489

Interest 222 14 44 81 80 Convertible debt - - - - 1

Operating PBT 162 677 575 773 858 Other debt 189 63 753 743 733

Other income 4 2 20 101 112 Total debt 189 63 753 743 734

Exceptional inc/(exp) 24 23 - - - Deferred tax liability (net) 315 319 319 319 319

PBT 190 703 595 875 970 Total liabilities 3,477 3,648 4,636 5,065 5,542

Tax provision 110 212 202 297 330 Assets

Minority interest - - - - - Net fixed assets 2,633 2,796 3,195 3,467 3,327

PAT (Reported) 79 491 392 577 640 Capital WIP 662 584 584 584 584

Less: Exceptionals 24 23 - - - Total fixed assets 3,295 3,380 3,779 4,051 3,911

Adjusted PAT 55 467 392 577 640 Investments 0 0 0 0 0

Current assets

Ratios Inventory 577 1,427 1,357 1,477 1,640

FY09 FY10 FY11E FY12E FY13E Sundry debtors 692 889 1,245 1,356 1,505

Growth Loans and advances 377 356 549 599 665

Operating income (%) (3.9) 15.5 36.1 8.9 11.0 Cash & bank balance 127 167 1,264 1,394 2,066

EBITDA (%) (21.8) 54.9 (3.2) 28.6 8.0 Marketable securities - - - - -

Adj PAT (%) (88.8) 743.6 (16.0) 47.1 10.9 Total current assets 1,773 2,839 4,414 4,827 5,876

Adj EPS (%) (88.8) 743.6 (16.0) 47.1 10.9 Total current liabilities 1,612 2,582 3,568 3,824 4,257

Net current assets 160 257 846 1,003 1,619

Profitability Intangibles/Misc. expenditure 21 11 11 11 11

EBITDA margin (%) 8.8 11.8 8.4 9.9 9.6 Total assets 3,477 3,648 4,636 5,065 5,541

Adj PAT Margin (%) 0.8 5.8 3.6 4.8 4.8

RoE (%) 1.9 15.0 11.5 15.3 15.1 Cash flow

RoCE (%) 12.4 21.3 16.2 18.9 18.8 (Rs mn) FY09 FY10 FY11E FY12E FY13E

RoIC (%) 10.0 15.6 14.7 23.7 25.6 Pre-tax profit 166 679 595 875 970

Total tax paid (24) (208) (202) (297) (330)

Valuations Depreciation 230 260 301 329 340

Price-earnings (x) 27.2 9.8 8.7 5.9 5.4 Working capital changes 64 (57) 508 (26) 55Price-book (x) 0.5 1.4 1.0 0.9 0.8 Net cash from operations 436 674 1,201 879 1,035

EV/EBITDA (x) 2.6 4.7 3.2 2.4 1.6 Cash from investments

EV/Sales (x) 0.2 0.6 0.3 0.2 0.2 Capital expenditure (809) (334) (700) (600) (200)

Dividend payout ratio (%) 148.5 48.1 20.5 20.5 20.5 Investments and others - - - - -

Dividend yield (%) 7.8 5.2 2.3 3.4 3.8 Net ca sh from investme nts (809) (334) (700) (600) (200)

Cash from financing

B/S ratios Equity raised/(repaid) 10 0 - - -

Inventory days 35 77 51 52 52 Debt raised/(repaid) 149 (126) 690 (10) (10)

Creditors days 82 116 113 113 113 Dividend (incl. tax) (118) (236) (94) (139) (154)

Debtor days 35 41 40 40 40 Others (incl extraordinaries) 24 62 - - -

Working capital days 3 3 (5) (12) (11) Net cash from financing 65 (300) 596 (149) (164)

Gross asset turnover (x) 1.9 1.8 2.2 2.1 2.2 Change in cash position (308) 40 1,097 131 671

Net asset turnover (x) 3.2 3.0 3.7 3.6 3.9 Closing cash 127 167 1,264 1,394 2,066

Sa les/opera ting asse ts (x) 2.3 2.4 3.1 3.1 3.3

Current ratio (x) 1.1 1.1 1.2 1.3 1.4 Quarterly financialsDebt-equity (x) 0.1 0.0 0.2 0.2 0.2 (Rs mn) Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11

Net debt/equity (x) 0.0 (0.0) (0.1) (0.2) (0.3) Net Sales 2,059 2,583 2,246 2,812 2,840

Interest coverage 1.7 50.7 14.0 10.5 11.7 Change (q-o-q) 16% 25% -13% 25% 1%

EBITDA 191 241 248 144 248

Per share Change (q-o-q) -31% 26% 3% -42% 72%

FY09 FY10 FY11E FY12E FY13E EBITDA margin 9.3% 9.3% 11.1% 5.1% 8.7%

Adj EPS (Rs) 0.4 3.4 2.9 4.2 4.7 PAT 129 114 126 44 99

CEPS 2.1 5.3 5.0 6.6 7.1 Adj PAT 129 114 126 44 99

Book value 21.7 23.8 26.0 29.2 32.7 Change (q-o-q) -20% -12% 11% -65% 125%

Dividend (Rs) 0.9 1.7 0.6 0.9 1.0 Adj PAT margin 6.3% 4.4% 5.6% 1.6% 3.5%

Actual o/s shares (mn) 137.3 137.3 137.3 137.3 137.3 Adj EPS 0.9 0.8 0.9 0.3 0.7


22/24



Focus Charts

Changing revenue mix Revenue and growth trend


EBITDA and PAT margin trend RoE and RoCE trend


Quarterly sales and EBITDA margin trend Shareholding pattern over the quarters


50.7% 50.5% 53.8%56.2% 56.0% 57.5%

35.5% 35.3% 32.5%33.2% 34.1% 33.3%

0.7% 0.8% 0.6%0.0% 0.0% 0.0%

13.1% 13.4% 13.2% 10.6% 10.0% 9.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Pig iron Castings Investmen tcastings Others

7,285 6,999 8,083 11,003 11,983 13,302

39%

-4%

15%

36%

9%11%

-20%

-10%

0%

10%

20%

30%

40%

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000


(Rs mn)

Revenues Y-o-Y growth (RHS)

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


EBITDA margin PAT margin

0%

5%

10%

15%

20%

25%


ROE ROCE

1,4

92

1,5

34

1,6

59

1,7

69

2,0

59

2,5

83

2,2

46

2,8

12

2,8

40

-7.1%

12.0%

12.7%

15.7%

9.3%

9.3%

11.1%

5.1%

8.7%

-10%

-5%

0%

5%

10%

15%

20%

-

500

1,000

1,500

2,000

2,500

3,000

Q3FY09

Q4FY09

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

(Rs mn)

Sales EBITDA margin (RHS)

59.1% 59.1% 59.0% 59.0%

6.3% 6.8% 7.5% 7.5%

34.6% 34.1% 33.5% 33.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-10 Jun-10 Sep-10 Dec-10

Promoter FII DII Others


23/24

CRISIL Independent Equity Research Team

Mukesh Agarwal Director +91 (22) 3342 3035 [email protected]

Tarun Bhatia Director, Capital Markets +91 (22) 3342 3226 [email protected] Majithia Head, Equities +91 (22) 3342 4148 [email protected]

Sudhir Nair Head, Equities +91 (22) 3342 3526 [email protected]

Nagarajan Narasimhan Director, Research +91 (22) 3342 3536 [email protected]

Ajay D'Souza Head, Research +91 (22) 3342 3567 [email protected]

Aparna Joshi Head, Research +91 (22) 3342 3540 [email protected]

Manoj Mohta Head, Research +91 (22) 3342 3554 [email protected]

Sridhar C Head, Research +91 (22) 3342 3546 [email protected]

CRISILs Equity Offerings

The Equity Group at CRISIL Research provides a wide range of services including:

Independent Equity Research

IPO Grading

White Labelled Research

Valuation on companies for use of Institutional Investors, Asset Managers, Corporate

Other Services by the Research group include

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Customised Research on Market sizing, Demand modelling and Entry strategies

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24/24

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Email : [email protected] I Phone : 9920807575

To know more about CRISIL IER, please contact our team members:

Sagar Sawarkar Senior Manager, Business Development


Regional Contacts:

Head Office: CRISIL House, Central Avenue, Hiranandani Business Park,Powai, Mumbai - 400 076Phone : 91-22-3342 3000

Vinaya Dongre Head, Business Development


Kolkata

Priyanka Agarwal - Manager, Business Development


New Delhi

Vipin Saboo - Manager, Business Development


Ahmedabad / Mumbai / Pune

Vishal Shah - Manager, Business Development


Bengaluru / Chennai

Anand Krishnamoorthy - Manager, Business Development


Hyderabad

Kaliprasad Ponnuru - Manager, Business Development


crisil_21st_february_2011.pdf

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