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TataChemicalsOverseassubsidiarydisappoints;cashflowstoremainstressed

FERTILISER:QuarterlyUpdate 11February2013

PhillipCapital (India) Pvt. Ltd.

Results disappoint: Tata Chemicals topline has been inline with estimates;

howeverEbitda

disappointed

significantly

(almost

by

about

18%).

Key

reasons

for

divergenceare1/largestquarterly lossofRs620mn inBMGLsubsidiary(this is

despite consolidation of British salt) and 2/lower than estimated profits in

domestic fertilizers. Unfavorable prices/cost pressures in Africa and lower

demand intheUKhalvedmarginsqoqto7%.AsaresultoverallEbitdadegrew

19%qoqtoRs5.1bn.Thelongtermforexrevaluationfurtherstressedtheweak

EbitdabyaboutRs810mn.ThefallinEbitdawaslargelymadeupbyhigherother

income(inclRs1.3bnonaccountofforexgains;adjforcomparison)and lower

tax;whichcurtailedfurtherfallinreportedPATtoRs2.24bn(degrew13%qoq).

However,theadj.PATofRs1.33bn,degrew40%qoq;muchbelowourest.

BMGLanddomestic fertilizer;marginwoesenlarged inQ3:Domestic fertilizer

division

continues

to

be

under

stress;

with

overall

Ebitda/mt

at

Rs

2247/mtagainstaverageof8qtravgof Rs2,700/mt;a fallofabout 20%.We expect in

P&K, Tata Chem to have earned wafer thin margins of about US$ 20~25/mt.

Furtherexpensivefeedandunfavourablerealizations,pressuredAfricasodaash

operations and that of UK has been under stress due to stiff competition. We

dontseethewoesforthetwinassetsreversinganytimesoon.

Q3review&outlookofkeybusinessesacrossgeography

Tata Chem (domestic): Weak INR and easing feed costs helped post 8% gr in

chemical EBIT qoq. Fertiliser margins were pressured by weak P&K margins.

HelpedbyweakINR,weexpectchem.marginstoremainhealthyinthenearterm

BMGL: Cost pressures, stiff competition, weather related uncertainty could

continuetoexertpressureonoperations/results

GCIP:With

utilization

rates

already

at

97%;

the

growth

seems

to

be

tapering

off.

Likely lower realizations in FY14% (down by 2~3%) and likely increase in

feedcosts (shale gas prices expected to rise) we expect margins to remain

subdued.WealsohighlightmarginsforGCIPhavecomeofffrom30%inQ2FY12

toabout24%atpresent.WeexpectEbitdatolikelyshrinkthanrise

IMACID:Onalowerbase,weexpectresultstoimprovebutbelikelysubdued

Rallis:Competition,costpressuresonaweakdemandbackgroundhavehardhit

thenumbers,weexpectmarginstoimprovesomewhatinFY14E

Others:LossesincreasedfromRs37mntoRs170mnqoq

Cutestimates, downgrade to Neutral:Wecutourestimatessignificantlygoing

by 1/muted growth in GCIP 2/persisting margin pressures (for P&K) and

lengthened

working

capital

cycle

led

by

delayed

subsidy

reimbursements

and

3/no firm timelines on addressing operational issues in BMGL. While volumes

couldpullbackinH1FY14E;thesustenanceofmarginsremainsuncertain.Wesee

heightened need for cash, given scheduled debt repayments, capex funding

(Babrala,TripuraandGabonUreaprojects)andlengthenedworkingcapitalcycle

followingdelayedsubsidyreimbursementsfromthegovernment. Thisdoesraise

prospectsofmonetizinginvestments(mktvalueoflistedinvtisRs40/sh;valueof

unlisted investmentcouldalmostequal itscurrentdebtofRs70bn) inbridging

the resourcedeficit.However,consideringtheneartermheadwindsthatcloud

earningsoutlook,wedowngradeourratingtoNeutralandlowerPTtoRs385(Rs

400earlier).

Downgradeto

Neutral

TTCHIN|CMPRS355TARGETRS385(+9%)

CompanyData

O/SSHARES(MN): 255

MARKETCAP(RSBN): 90

MARKETCAP(USDBN): 1.7

52 WKHI/LO(RS): 382/299

LIQUIDITY3M(USDMN): 4.3

FACEVALUE(RS): 10

ShareHoldingPattern,%

PROMOTERS: 31.1

FII/NRI: 15.9

FI/MF

:

28.5NONPROMOTERCORP.HOLDINGS: 3.0

PUBLIC&OTHERS: 21.6

PricePerformance,%

1mth 3mth 1yr

ABS 5.7 11.2 2.4

RELTOBSE 4.3 7.8 7.6

PriceVs.Sensex(Rebasedvalues)

80

100

120

140

Apr10 J a n11 Oct11 J ul12

TataChem BSESensex

Source:PhillipCapitalIndiaResearch

OtherKeyRatios

Rsmn FY12 FY13E FY14E

NetSales 136,551 153,111 153,396

EBITDA 21,527 18,856 21,956

NetProfit 8,37 6 3,931 7,773

EPS,Rs 32.9 34.3 35.1

PER,X

10.8 11.5 10.1EV/EBIDTA,x 6.4 8.2 6.7

EV/NetSales,x 1.0 1.0 1.0

ROE,% 13.2 12.2 11.5

Source:PhillipCapitalIndiaResearchEst.

GauriAnand(+912266679943)[email protected]

SaurabhRathi(+912266679951)[email protected]

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11February2013/INDIAEQUITYRESEARCH/TATACHEMICALSQUARTERLYUPDATE

Quarterlyresults

Rsmn Q2FY13 Q3FY12 Q3FY13 yoy% QoQ% 9MFY12 9MFY13 yoy%

NetSales 41,655 37,939 41,705 9.9 0.1 102,574 113,569 10.7

(Inc)/Decinstock (2,221) (222) 2,918 1417.2 231.4 5,732 1,266 122.1

As%ofSales 5 1 7 6 1

RawMaterialConsumed 11,027 12,365 13,356 8.0 21.1 31,721 30,627 3.4

As%

of

Sales

26

33 32

31

27

Costoftradedgoods 8,656 5,243 2,943 43.9 66.0 17,055 14,109 17.3

As%ofSales 21 14 7 17 12

EmployeeExpenses 2,811 2,535 2,796 10.3 0.5 7,085 8,415 18.8

As%ofSales 7 7 7 7 7

Power&Fuel 4,063 3,793 4,529 19.4 11.5 10,697 12,208 14.1

As%ofSales 10 10 11 10 11

Freight&forwarding charges 4,308 3,553 4,157 17.0 3.5 9,984 12,196 22.2

As%ofSales 10 9 10 10 11

OtherExpenses 6,709 3,989 5,908 48.1 11.9 11,167 18,852 68.8

As%ofSales 16 11 14 11 17

TotalExpenditure 35,353 32,541 36,606 12.5 3.5 85,781 97,672 13.9

EBITDA 6,303 5,398 5,099 5.5 19.1 16,793 15,897 5.3

EBIDTA% 15 14 12

Depreciation 1402 1228 1378 12.2 1.7 3,727 4,147 11.3

EBIT

4,901

4,170 3,72110.8

24.1 13,066

11,749

10.1

EBIT% 12 11 9 13 10

Interestexpenses 1144 1111 1184 6.6 3.5 3,062 3,572 16.7

Exceptional items 124 468 813 73.6 558.2 1,017 1,553 52.6

OtherIncome 760 613 1730 182.2 127.5 2,224 3,326 49.5

PBT 4,393 3,204 3,454 7.8 21.4 11,211 9,950 11.2

TotalTax 1158 645 733 13.6 36.8 2,636 2,341 11.2

Taxrate% 26 20 21 24 24

PAT 3,235 2,559 2,722 6.3 15.9 8,574 7,609 11.3

ShareofProfitsinAssoc 1 22 8 62.4 1540.0 22 20

Minorityint 667 300 473 57.8 29.1 1,560 1,705 9.3

RPAT 2,568 2,238 2,241 0.1 12.7 6,992 5,884 15.8

APAT 2,253 2,441 1,331 45.5 40.9 7,080 5,660 20.1

OPM% 15.1 14.2 12.2 16.4 14.0

NPM% 5.4 6.4 3.2 6.9 5.0

AEPS 8.8 9.6 5.2 45.5 40.9 27.8 22.2 20.0

Source:Company,PhillipCapitalIndiaResearch

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TataChems30.6%stakeinEPMMiningisvaluedatRs8bnorRs32/shEPMMining(EPM)EPMisaUS$200mnmarketcapcompanyfocusedondevelopinga

premiumspecialtypotashfertilizer(namedSulfateofPotash) inUtah,USA.Itclaimsto

control102,000acresofbrinedepositwitharesourcepotentialof100mmtatdepthof

only 300 feet. According to EPM, its likely to be on of the lowest cost producer as it

wouldprocessnaturalSOPbysolarevaporationmethod.GiventhenaturalSOP(priced

atUS$

675/mt)

is

at

about

40%

premium

to

MOP

(priced

at

US$

475/mt),

the

profits

are

likelytobemuchhigher.

EPMhascommenceddrillingandawaits43101filingforresourceconfirmationwhichit

hasfiledthismonth.EPMexpectstaxbreaksfortheprojectongroundsthatitwouldbe

abletogenerateemployment,notwithstanding thetaxbenefitsitestimatesNPVofUS$

527 mn (10% discount rate) with commercial production in 2016. Tata Chem has

invested about Rs 800 mn (US$ 16 mn) for 30.6% stake in EPM Mining. We work the

valueofTataChemsinvestmentinEPMMiningatUS$158mnorRs8bn.

AboutSOPSulfateofPotash (SOP) isapremiumproductforchloridesensitivecrops.

Thisisahighvaluefertilizerthathasworldwidedemandofmorethan6mmtandisused

mainly on high value specialty crops like Citrus fruits, Strawberries, Peaches, some

vegetables,tobacco

and

cotton.

EPMminingdetails

NameoftheProduct SulfateofPotash

ResourceEstimate inmmt 100

EPMMIniingMarketCap US$mn 200

Estimatedrealisation/costs

MOP $/mt 475

SOP $/mt 675

Costofproduction $/mt 130

EstRevin2016 US$mn 621

EstEbitdain2016 US$mn 276

ProjectedNAV(@10%discount) US$mn 527

TataChem'sholding

inEPMMining mnsh 37

in

EPM

Mining

%

stake

30.60%

Investedamount US$mn 16

ValueinEPM(30.6%stake) US$mn 158

Source:EPMMiningVenturesInc.Presentation

DerivationofPriceTargetDeepValue

FigsinRs.Mn. FY14E Comments

Fert&Chembusiness 142,712 Valuedat6.5xfY14Eebitda

InvestmentsQuoted 9,680 quotedinvtassumedat30%discounttocmp

Investmentsunquoted 2,586

Valueoffirm 154,978

Add:CashFY14E 5,028

Less:DebtFY14E 61,339

Enterprise value 98,667 30%stakeinepmmining

TargetPrice

Rs.

385

CMPRs. 355

Upsidefromcurrentlevels % 9


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Segmentalbreakup

Rsmn Q2FY13 Q3FY12 Q3FY13 yoy% QoQ% 9MFY12 9MFY13 yoy%

Revenues

InorganicChemicals 19,102 16,670 19,252 15.5 0.8 48,237 57,005 18.2

Fertilisers 17,229 17,287 18,431 6.6 7.0 41,916 42,638 1.7

OtherAgriInputs(Rallis) 5,378 4,168 4,266 2.3 20.7 12,757 14,087 10.4

Others

257

176

214

21.816.6 527

706 34.0

Total 41,966 38,300 42,162 10.1 0.5 103,437 114,435 10.6

Less:Intersegmentrevenue 311 361 458 26.8 47.2 862 867 0.5

Netsales/incomefromoperations 41,655 37,939 41,705 9.9 0.1 102,574 113,569 10.7

EBIT

InorganicChemicals 3,278 2,609 2,706 3.7 17.5 9,229 9,496 2.9

Fertilisers 1,663 1,672 1,153 31.0 30.7 4,110 3,096 24.7

OtherAgriInputs(Rallis) 998 230 422 82.9 57.8 1,629 1,831 12.4

Others (37) (254) (170) 33.2 356.5 556 340 38.7

Total 5,902 4,257 4,110 3.4 30.4 14,413 14,083 2.3

As%ofSales

InorganicChemicals 45.9 43.9 46.2 47.0 50.2

Fertilisers 41.4 45.6 44.2 40.9 37.5

OtherAgri

Inputs

(Rallis)

12.9

11.0 10.2 12.4

12.4

Others

PBIT%


Fertilisers 9.7 9.7 6.3 9.8 7.3

OtherAgriInputs(Rallis) 18.6 5.5 9.9 12.8 13.0

Others 14.5 144.7 79.3 105.5 48.2

As%ofPBIT


Fertilisers 28.2 39.3 28.1 28.5 22.0

OtherAgriInputs(Rallis) 16.9 5.4 10.3 11.3 13.0

Others 0.6 6.0 4.1 3.9 2.4

Source:Company,

PhillipCapital

India

Research

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TCL'sOverseasoperationalperformancereview

Q1FY13 Q2FY13 Q3FY13 Comments

GCIP

NetSales(Rsmn) 6,690 6,450 6,900 Capacityexpansions supportstoplinegr.

EBIT(Rsmn) 1,780 1,510 1,630 I mprovesonalowerbase

EBIT% 27 23 24

SalesVolumes

(000

Mt)

575 566 629

RealisationRs/Mt 11,635 11,396 10,970 Changeinproductmix;lowersrealisation

Re/USD 54.2 55.2 54.2

RealisationUS$/Mt 215 206 203

EBIT/Mt(INR) 3,096 2,668 2,591

EBIT/Mt(US$) 57 48 48

BMGL

NetSales(Rsmn) 5,810 5,790 5,560 Revenuedegrewledbylowerrealisations

EBIT(Rsmn) 740 750 370 CostpressurespullsmarginsdowninKenya

EBIT% 13 13 7

SalesVolumes(000Mt) 299 289 288 Kenyaproductiondegrewalmost20%;howeverhigherinventoryhelpsreportsflatsalesvol.qoq

RealisationRs/Mt 19431 20035 19306

Re/USD 54.2 55.2 54.2

RealisationUS$/Mt 358 363 357 Changeinproductmix;lowersrealisation

EBIT/Mt

(INR)

2475 2595 1285

EBIT/Mt(US$) 46 47 24

IMACID(Rsmn)

NetSales 420 1,740 2,030 Volumesimproveonalowerbase,howeverlowerrealisationshurttoplinegrowth

EBIT 100 100 80

EBIT% 24 6 4

APAT 120 70 60


Operatingmarginsperformance(%) Salesvol.('000mt)

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

Q1FY09

Q2FY09

Q3FY09

Q4FY09

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

TCL consl. EBIT margins Fert. Div. margins

Chem. Div. margins

0

500

1,000

1,500

2,000

2,500

Q1FY09

Q2FY09

Q3FY09

Q4FY09

Q1FY10

Q2FY10

Q3FY10

Q4FY10

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Soda Ash Urea DAP/NPK Salt


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Financials

IncomeStatement

Y/EMar,Rsmn FY12 FY13E FY14E FY15E

Netsales

136,551

153,111

153,396 157,295

Growth,% 23 12 0 3

Totalincome 136,551 153,111 153,396 157,295

Operatingexpenses 115,024 134,254 131,440 134,883

EBITDA(Core) 21,527 18,856 21,956 22,412

Growth,% 15.5 (12.4) 16.4 2.1

Margin,% 15.8 12.3 14.3 14.2

Depreciation 5,087 5,521 5,457 5,557

EBIT 16,440 13,335 16,499 16,855

Growth,% 15.5 (12.4) 16.4 2.1

Margin,% 15.8 12.3 14.3 14.2

Interestpaid 4,270 5,740 5,674 4,715

OtherNonOperatingIncome 3,188 3,939 1,170 1,170

Non

recurring

Items

1,524

1,553

0 0Pretaxprofit 13,834 10,010 11,994 13,309

Taxprovided 3,439 3,619 3,423 3,765

NetProfit 8,376 7,869 7,773 8,747

Growth,% 23.3 4.6 2.1 10.9

NetProfit(adjusted) 8,376 8,759 8,943 9,917

Unadj.shares(m) 255 255 255 255

Wtdavgshares(m) 255 255 255 255

BalanceSheet

Y/EMar,Rsmn FY12 FY13E F Y14E FY15E

Cash&bank 16,780 4,881 5,02 8 2,830

Debtors 23,107 27,266 27,317 28,011

Inventory 18,634 20,230 19,806 20,325

Loans&advances 8,555 8,555 8,55 5 8,555

Totalcurrentassets 67,076 60,932 60,706 59,722

Investments 6,097 6,097 6,09 7 6,097

Grossfixedassets 100,211 105,703 113,593 118,777

Less:Depreciation 56,267 61,788 67,245 72,802

Add:CapitalWIP 5,492 7,890 5,18 4 5,921

Netfixedassets 49,436 51,805 51,532 51,896

Noncurrentassets 65,594 63,587 63,587 63,587

Totalassets 189,546 183,765 183,266 182,645

Currentliabilities 42,943 29,002 28,722 29,301

Provisions 15,439 12,962 13,190 13,422

Totalcurrentliabilities 58,382 41,964 41,913 42,723

Noncurrent

liabilities

64,131

69,351

62,357 53,407

Totalliabilities 122,513 111,314 104,270 96,130

Paidupcapital 2,548 2,548 2,54 8 2,548

Reserves&surplus 61,632 66,596 72,344 79,064

Shareholdersequity 68,661 74,572 81,231 87,951

Totalequity&liabilities 189,546 183,765 183,266 182,645

Source:Company,PhillipCapitalIndiaResearchEstimates

CashFlow

Y/EMar,Rsmn FY12 FY13E FY14E F Y15E

Pretax

profit

13,834

9,982 11,994 13,309

Depreciation 5,087 5,52 1 5,4 57 5,5 57

Chginworkingcapital 4,719 20,168 322 403

Totaltaxpaid 3,808 3,619 3,423 3,765

Otheroperatingactivities 4,700 4,70 0 4,7 00 4,7 00

Cashflowfromoperatingactivities 15,094 3,585 19,051 19,400

Capitalexpenditure 9,619 7,890 5,184 5,921

Chgininvestments 1,618 0 0 0

Cashflowfrominvestingactivities 11,236 7,890 5,184 5,921

Freecashflow 3,858 11,475 13,867 0

Debtraised/(repaid) 6,116 5,220 6,994 8,950

Dividend(incl.tax) 2,905 2,90 5 3,1 95 3,1 95

Otherfinancingactivities 9,930 9,930 9,930 9,930

Cash

flow

from

financing

activities

2,512

3,290

13,615

16,483Netchgincash 1,346 14,765 251 3,004

ValuationRatios&PerShareData

FY12 FY13E F Y14E FY15E

EPS,Rs 32.9 34.3 35.2 34.3

BVPS,Rs 269.4 292.6 318.8 345.2

DPS,Rs 10.0 10.0 11.0 11.0

Returnonassets(%) 7.6 5.4 6.6 6.9

Returnonequity(%) 13.2 12.2 11.5 10.3

ReturnonInvestedcapital(%) 29.1 17.7 19.9 20.3

RoIC/Costofcapital(x) 3.2 1.9 2.2 2.3

RoIC Costofcapital(%) 19.9 8.6 10.9 11.5

Returnoncapitalemployed(%) 9.4 6.6 7.8 8.1

Costofcapital(%) 9.2 9.1 9.0 8.9

RoCE Costofcapital(%) 0.3 (2.6) (1.2) (0.8)

Assetturnover(x) 2.5 2.3 1.9 2.0

Sales/Totalassets(x) 0.8 0.8 0.8 0.9

Sales/NetFA(x) 2.9 3.0 3.0 3.0

Workingcapital/Sales(x) 0.1 0.2 0.2 0.2

Receivabledays 61.8 65.0 65.0 65.0

Inventorydays 49.8 48.2 47.1 47.2

Payabledays 46.6 50.0 50.0 50.0

Currentratio(x) 1.6 2.1 2.1 2.0

Quickratio(x) 1.1 1.4 1.4 1.3

Interestcover(x) 3.9 2.3 2.9 3.6

Dividendcover(x) 3.3 3.4 3.2 3.1

PER(x)

10.8

11.5 10.1 9.1

Price/Book(x) 1.3 1.2 1.1 1.0

EV/EBIT(x) 6.4 8.2 6.7 6.2

EV/NOPLAT(x) 7.6 10.1 7.9 7.5

EV/CE 0.9 1.0 0.9 0.9

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RecommendationHistory

Recommendation Target,Rs CMP,Rs Date

Neutral 385 355 11/02/13

Buy 400 307 01/06/12

Buy 428 363 14/02/12

Neutral 400 351 28/01/11

Buy

450

390

01/11/10

Neutral 375 349 5/8/2010

Neutral 340 305 2/2/2010

Neutral 287 258 14/09/09

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ManagementVineetBhatnagar(ManagingDirector) (9122)23002999

SajidKhalid(HeadInstitutionalEquities) (9122)66679972

JigneshShah(HeadEquityDerivatives) (9122)66679735

ResearchAutomobiles,ITServices

DeepakJain (9122)66679758

NehaGarg (9122)66679996

VarunVijayan (9122)66679992

Banking,NBFCs

ManishAgarwalla (9122)66679962

SachitMotwani,FRM (9122)66679953

Consumer,Media,Telecom

NaveenKulkarni,CFA,FRM (9122)66679947

EnnetteFernandes (9122)66679764

VivekanandSubbaraman (9122)66679766

Cement

VaibhavAgarwal

(9122)

6667

9967

Economics

AnjaliVerma (9122)66679969

Engineering,CapitalGoods

AnkurSharma (9122)66679759

JisharThoombath (9122)66679986

Metals

DhawalDoshi (9122)66679769

DharmeshShah (9122)66679974

Infrastructure

VibhorSinghal (9122)66679949

RaheelArathodi (9122)66679768

Oil&Gas,

FertiliserGauriAnand (9122)66679943

SaurabhRathi (9122)66679951

Retail,RealEstate

AbhishekRanganathan, CFA (9122)66679952

NehaGarg (9122)66679996

Midcaps

KapilBagaria (9122)66679965

RaheelArathodi (9122)66679768

Technicals&Quant

NeppolianPillai (9122)66679989

ShikhaKhurana (9122)66679948

Sr.ManagerEquitiesSupport

RosieFerns (9122)66679971

Sales&DistributionKinshukTiwari (9122)66679946

PawanKakumanu (9122)66679934

ShubhangiAgrawal (9122)66679964

DipeshSohani (9122)66679756

SunilKamath(SalesTrader) (9122)66679747

ChetanSavla(SalesTrader) (9122)66679745

RajeshAshar(SalesTrader) (9122)66679746

MayurShah(Execution) (9122)66679945

GurudattUchil(Execution) (9122)66679750

ContactInformation(RegionalMemberCompanies)

SINGAPORE

PhillipSecuritiesPteLtd

250NorthBridgeRoad,#0600RafflesCityTower,

Singapore179101

Tel:(65)

6533

6001

Fax:

(65)

6535

3834

www.phillip.com.sg

MALAYSIA

PhillipCapitalManagementSdnBhd

B36BlockBLevel3,MeganAvenueII,

No.12,JalanYapKwanSeng,50450KualaLumpur

Tel(60)

32162

8841

Fax

(60)

32166

5099

www.poems.com.my

HONGKONG

PhillipSecurities(HK)Ltd

11/FUnitedCentre95QueenswayHongKong

Tel(852)22776600Fax:(852)28685307

www.phillip.com.hk

JAPAN

PhillipSecuritiesJapan,Ltd

42NihonbashiKabutocho,Chuoku

Tokyo1030026

Tel:(81)336662101Fax:(81)336640141

www.phillip.co.jp

INDONESIA

PTPhillipSecuritiesIndonesia

ANZTowerLevel23B,JlJendSudirmanKav33A,

Jakarta10220,Indonesia

Tel(62)2157900800Fax:(62)2157900809

www.phillip.co.id

CHINA

PhillipFinancialAdvisory(Shanghai)Co.Ltd.

No550YanAnEastRoad,OceanTowerUnit2318

Shanghai200001

Tel(86)2151699200Fax:(86)2163512940

www.phillip.com.cn

THAILAND

PhillipSecurities(Thailand)PublicCo.Ltd.

15thFloor,VorawatBuilding, 849SilomRoad,

Silom,Bangrak,Bangkok10500Thailand

Tel(66)222680999 Fax:(66)222680921

www.phillip.co.th

FRANCE

King&ShaxsonCapitalLtd.

3rdFloor,35RuedelaBienfaisance

75008ParisFrance

Tel(33)145633100Fax:(33)145636017

www.kingandshaxson.com

UNITEDKINGDOM

King&ShaxsonLtd.

6thFloor,CandlewickHouse,120CannonStreet

London,EC4N6AS

Tel(44)2079295300Fax:(44)2072836835

www.kingandshaxson.com

UNITEDSTATES

PhillipFuturesInc.

141W

Jackson

Blvd

Ste

3050

TheChicagoBoardofTradeBuilding

Chicago,IL60604USA

Tel(1)3123569000Fax:(1)3123569005

AUSTRALIA

PhillipCapitalAustralia

Level37,

530

Collins

Street

Melbourne,Victoria3000,Australia

Tel:(61)396298380 Fax:(61)396148309

www.phillipcapital.com.au

SRILANKA

AshaPhillipSecuritiesLimited

Level4,

Millennium

House,

46/58

Navam

Mawatha,

Colombo2,SriLanka

Tel:(94)11 2429100Fax:(94)112429199

www.ashaphillip.net/home.htm

INDIA

PhillipCapital(India)PrivateLimited

No.1,CBlock,2nd

Floor,ModernCenter,JacobCircle,K.K.Marg,MahalaxmiMumbai400011

Tel:(9122)23002999Fax:(9122)66679955www.phillipcapital.in

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DisclosuresandDisclaimers

PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives and Private Client Group. This

reporthasbeenpreparedby Institutional EquitiesGroup.Theviewsandopinionsexpressed inthisdocumentmayormaynotmatchormaybecontraryattimes

withtheviews,estimates,rating,targetpriceoftheotherequityresearchgroupsofPhillipCapital(India)Pvt.Ltd.

ThisreportisissuedbyPhillipCapital (India)Pvt.Ltd.whichisregulatedbySEBI.PhillipCapital (India)Pvt.Ltd.isasubsidiaryofPhillip(Mauritius)Pvt.Ltd.References

to"PCIPL"inthisreportshallmeanPhillipCapital(India)Pvt.Ltdunlessotherwisestated.ThisreportispreparedanddistributedbyPCIPLforinformationpurposes

onlyandneithertheinformation containedhereinnoranyopinionexpressedshouldbeconstruedordeemedtobeconstruedassolicitationorasofferingadvicefor

thepurposesofthepurchaseorsaleofanysecurity,investment orderivatives.Theinformation andopinionscontainedintheReportwereconsideredbyPCIPLtobe

validwhenpublished.Thereportalsocontainsinformation providedtoPCIPLbythirdparties.Thesourceofsuchinformationwillusuallybedisclosedinthereport.

WhilstPCIPLhastakenallreasonablestepstoensurethatthisinformationiscorrect,PCIPLdoesnotofferanywarrantyastotheaccuracyorcompleteness ofsuch

information. AnypersonplacingrelianceonthereporttoundertaketradingdoessoentirelyathisorherownriskandPCIPLdoesnotacceptanyliabilityasaresult.

Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication to future

performance.

Thisreportdoesnothaveregardtothespecificinvestmentobjectives,financialsituationandtheparticular needsofanyspecificpersonwhomayreceivethisreport.

Investorsmustundertakeindependentanalysiswiththeirownlegal,taxandfinancialadvisorsandreachtheirownregardingtheappropriateness ofinvestinginany

securitiesorinvestment strategiesdiscussedorrecommendedinthisreportandshouldunderstandthatstatementsregardingfutureprospectsmaynotberealized.

Innocircumstances itbeusedorconsideredasanoffertosellorasolicitationofanyoffertobuyorselltheSecuritiesmentionedinit.Theinformationcontainedin

theresearchreportsmayhavebeentakenfromtradeandstatisticalservicesandothersources,whichwebelievearereliable.PhillipCapital (India)Pvt.Ltd.oranyof

its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions

expressedreflectjudgmentsatthisdateandaresubjecttochangewithoutnotice

Important:These

disclosures

and

disclaimers

must

be

read

in

conjunction

with

the

research

report

of

which

it

forms

part.

Receipt

and

use

of

the

research

report

is

subjecttoallaspectsofthesedisclosures anddisclaimers.Additional informationaboutthe issuersandsecuritiesdiscussed inthisresearchreport isavailableon

request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the

researchanalystspersonalviewsaboutallofthesubject issuersand/orsecurities,thattheanalysthavenoknownconflictofinterestandnopartoftheresearch

analystscompensation was, isorwillbe,directlyor indirectly,relatedtothespecificviewsorrecommendations contained inthis researchreport.TheResearch

Analystcertifiesthathe/sheorhis/herfamilymembersdoesnotownthestock(s)coveredinthisresearchreport.

Independence: PhillipCapital(India)Pvt.Ltd.hasnothadan investment bankingrelationshipwith,andhasnotreceivedanycompensationforinvestmentbanking

servicesfrom,thesubjectissuersinthepasttwelve(12)months,andPhillipCapital(India)Pvt.Ltddoesnotanticipatereceivingorintendtoseekcompensationfor

investment bankingservicesfromthesubjectissuersinthenextthree(3)months.PhillipCapital(India)Pvt.Ltdisnotamarketmakerinthesecurities mentionedin

thisresearchreport,althoughitoritsaffiliatesmayholdeitherlongorshortpositionsinsuchsecurities.PhillipCapital(India)Pvt.Ltddoesnotholdmorethan1%of

thesharesofthecompany(ies)coveredinthisreport.

SuitabilityandRisks:Thisresearchreportisforinformationalpurposesonlyandisnottailoredtothespecificinvestmentobjectives,financialsituationorparticular

requirements ofanyindividualrecipienthereof.Certainsecuritiesmaygiverisetosubstantialrisksandmaynotbesuitableforcertaininvestors.Eachinvestormust

makeits

own

determination

as

to

the

appropriateness

of

any

securities

referred

to

in

this

research

report

based

upon

the

legal,

tax

and

accounting

considerations

applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be

positivelyoradverselyaffectedbychangesinforeignexchangeorinterestrates,aswellasbyotherfinancial,economicorpoliticalfactors.Pastperformanceisnot

necessarilyindicativeoffutureperformance orresults.

Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be

reliable,butneitherPCIPL northe researchanalystrepresents orguaranteesthatthe information contained herein isaccurateorcompleteand it should not be

relieduponassuch.Opinionsexpressedhereinarecurrentopinionsasofthedateappearingonthismaterialandaresubjecttochangewithoutnotice.Furthermore,

PCIPLisundernoobligation toupdateorkeeptheinformationcurrent.

Copyright:ThecopyrightinthisresearchreportbelongsexclusivelytoPCIPL.Allrightsarereserved.Anyunauthorized useordisclosure isprohibited.Noreprintingor

reproduction, inwholeor inpart, ispermittedwithoutthePCIPLspriorconsent,exceptthatarecipientmayreprintitforinternalcirculationonlyandonlyif it is

reprintedinitsentirety.

Caution: Riskof loss intrading incanbesubstantial. Youshouldcarefullyconsiderwhethertrading isappropriate foryou in lightofyourexperience,objectives,

financialresources andotherrelevantcircumstances.

PhillipCapital(India)Pvt.Ltd.

2ndFloor,CBlock,ModernCentre,Mahalaxmi,Mumbai 400011

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