ess dee final v3 - bombay stock exchange · fmcg sectors. ess dee aluminum’s acquisition of india...

Company Overview Ess Dee Aluminium Ltd (EDAL) is India’s largest manufacturer of aluminium foil and foil products catering to the packaging needs of the pharmaceutical and FMCG sectors. Ess Dee Aluminum’s acquisition of India Foils Ltd has catapulted it into the leadership position in the specialty aluminium foil packaging sector. The company has manufacturing facilities at Daman and Goa for manufacturing aluminium foils and Poly Vinyl Films based packaging products catering to the pharmaceutical industry. The company has a wholly owned subsidiary, Flex Art Foils Pvt Ltd which is in the business of printing aluminium foil packaging products. Flex Art Foils has four units across the country located in close proximity to the pharmaceutical manufacturing hubs which enables the company to meet the needs of its customers more efficiently.

Key Business Highlights Strong growth prospects of the Pharma & FMCG sectors The Indian Pharmaceutical Industry ranks 14th in the global league table, with sales of almost USD 19 billion in March 2009 (Source: Department of Pharmaceuticals, Third Round Up of Developments in the Pharmaceutical Sector – July, 2009). The size of the Indian Pharma industry is expected to rise to USD 50 million by 2020, emerging among the top 10 markets.

Assured Supply of Raw Materials The Company imports its entire Aluminium requirement from Gulf Aluminium Rolling Mill Company (GARMO). GARMO’s proximity to Aluminium Bahrain (ALBA), which is one of the world’s largest smelters, ensures timely delivery of appropriate grades of aluminium, thereby enabling EDAL to comfortably meet its delivery commitments.

Plant location proximity to the client sites The company has set up five printing units located in major pharma manufacturing bases like Baddi in Himachal Pradesh, Goa, Daman and Sikkim. Close proximity to the customer ensures lowest lead time to delivery, low inventory cost, higher customization and low freight cost for the company.

Foray into Anti-Counterfeit packaging Around 35 per cent of pharmaceutical drugs in India are counterfeit or spurious, affecting USD 20 million of brands in the domestic market. EDAL has recently forayed into anti-counterfeit packaging technology, owing to the huge potential it provides.

Key Risks The volatility in the prices of aluminium may have an adverse impact

on the financial performance of the company.

The company is dependent on one supplier for sourcing its raw material. Any imbalance on that front will hamper its performance.

Valuations The stock is currently trading at a P/E multiple of 14.2x on its FY10 EPS of Rs. 36.7 and 10.3x EV/EBITDA multiple based on FY10 EBITDA of Rs. 158 crores.

July 27, 2010

BSE Code 532787BSE ID ESSDEEHigh/Low 1Y (Rs.) 535 / 263Avg. vol (3m) 36,206 Market Cap (Rs Cr) 1,486 Net IB Debt (Rs Cr) 163 Enterprise value(Rs Cr) 1,649

Shareholding % Mar-10 Jun-10Promoters 59.41 59.41MFs/ Fis/ Banks 11.06 11.29FIIs 12.25 15.46Public & Others 17.28 13.84

Stock Chart ( Relative to Sensex)

Stock Perfm.(%) 1M 6M 1YrAbsolute 0.8 45.4 64.5Rel. to Sensex -2.0 34.4 46.9

Financials (Rs.Cr) 03/08 03/09 03/10Revenue 317 452 588 y-o-y 89.4% 42.5% 30.3%EBITDA 88 7 158 y-o-y 88.4% -91.9% 2095.2%PAT 73 (24) 102 EPS (Dil.) 27.0 (8.6) 36.7y-o-y 52.7% PL LPEBITDA Margin 27.9% 1.6% 26.8%PAT Margin 23.2% -5.3% 17.4%D/E(x) 0.27 0.38 0.42 P/E(x) 19.4x NA 14.2xEV/EBITDA(x) 18.3x 225.5x 10.3xROCE 18.0 NA 23.0ROE 19.7 NA 23.8

50

100

150

200

27-Jul-09 27-Jan-10 27-Jul-10Ess Dee Sensex

Financial Year ends at March 31 Qtry Fin 06/09 09/09 12/09 03/10Revenue 130 142 158 159PAT 18 24 31 29EPS 6.3 8.7 11.2 10.5All figures in Rs. crores except for per share data

Packaging

Ess Dee Aluminium Ltd. CMP Rs. 523

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Ess Dee Aluminium Ltd.

Business Description

Ess Dee Aluminium Ltd. (EDAL), promoted by Mr. Sudip Dutta (current CMD), was incorporated as a private limited company in February 2004, and was subsequently converted into a public limited company in June 2006. EDAL is primarily into the business of cold rolling aluminium sheets into strips or blister packaging (thickness of 20-40 microns) and also providing PVC based packaging products to the pharmaceutical industry. EDAL is DMF-registered with the US FDA (i.e. it is an approved vendor for primary packaging), which makes the company’s packaging acceptable to pharmaceutical companies for their exported products. EDAL sources its entire aluminium foil stock (thickness: 300 microns) from Gulf Aluminium Rolling Mill Co. (GARMCO), Bahrain, and converts it to strip or blister packaging foil of 20-40 microns thickness by using the cold-rolling process. The company also manufactures PVC films (100-800 microns) from PVC granules, which it sources from Reliance Industries. From April 1, 2005 onwards, EDAL amalgamated Atlanta Vinyl Pvt. Ltd., a group company manufacturing PVC films, with itself. Effective March 31, 2006, another group company, Flex Art Foils Pvt. Ltd. (FAFPL), became a 100 per cent subsidiary of EDAL. Through its wholly owned subsidiary, FAFPL, EDAL is also in the business of customized printing of aluminium foil for pharmaceutical companies. FAFPL has four printing units located at Daman, Baddi, Goa, and Vasai, which are located in close proximity to the pharmaceutical manufacturing hubs, thereby providing better logistics as well as tax advantages. EDAL exports its products to South America, the Middle East and Africa and with its expansion plans well in place; the company is also looking at entering new markets. Acquisition of India Foils EDAL acquired India’s oldest aluminium foil manufacturer, India Foils in FY09, with a combined manufacturing capacity of 37,000 MTPA. IFL has three operational units at Kamarhatti, Hoera and Taratala. IFL’s units are strategically located on the eastern coast near Flex Art’s units of Baddi and Sikkim, thereby reducing lead time and transportation cost. Further, the company plans to leverage on these units to service Pharma markets in Nepal and Bangladesh. EDAL has planned a gradual ramp up of these facilities, with utilisation levels expected to pick up by FY12. This will ensure incremental volumes translating into incremental profits.

Ess Dee Aluminum’s Product Profile Product End User Sector Application Light- Ultra Light Gauge Foil (6-12 µ) Food & FMCG Packaging Contraceptive, Confectioneries,

Beverages, Personal care products. Medium Gaug Foil (18-45 µ) Pharma & FMCG Packaging Pharma strip pack foil, Alu-alu pack

foil, lids for foods & beverages etc. Heavy Gauge Foil (50 µ & Above) Pharma Packaging Suppositories for pharma incl.

veterinary applications PVC Film Pharma & FMCG Packaging Used for packing stable products

PVdC Coated PVC Film Pharma & FMCG Packaging Used for packing sensitive to mid-sensitive products

Source: Company RHP

EDAL is the leading manufacturer and supplier of primary packaging materials to the pharmaceutical, food and FMCG sectors

EDAL manufactures products under aluminium foil, PVC and aluminium foil based flexible laminate categories

Acquisition of India Foils to benefit in the long term

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Business Model

EDAL -I –DAMAN

FOIL ROLLING

FOIL

FOIL STOCK, GARMCO

EDAL II-DAMAN & IFLPharma

Coater/Laminator

STOCK

FAFPLBADDI

FAFPLGOA

FAFPLDAMAN

FAFPLSIKKIM

EDAL II-DAMANExtruder, Laminator,

Coater, electronic eng.film blowing,9 clr printing

IFLRolling, Coating,

Laminator,printing

plain

FAFPLVASAI

LAM

INATE

CUSTOMERS

Pharma

EDAL-GOAPVC CALENDERING

PVdC COATING

THERM

OFO

RMIN

GFILM

SRESIN

PLAIN & PROPRIETORY PRTD DESIGNS

Customer

EDAL-HUB & SPOKE BUSINESS MODEL

Source: Company RHP EDAL operates with the ‘Hub and Spoke’ business model with main aluminium foil rolling and converting units based in Daman from where printers stock is supplied to its five facilities in Daman, Goa, Baddi, Sikkim and Vasai, which are at the heart of pharma production centers. All its facilities are CGMP (Current Good Manufacturing Practices) compliant. The manufacturing process involves cold rolling of aluminium “foil stock” to aluminium foil, which is further converted into “printers stock” through the process of lamination for strip pack or coating for blister pack. EDAL also manufactures thermoforming poly vinyl chloride films (Rigid PVC films) as well as PVdC coated PVC barrier thermoforming films for blister packaging. EDAL has a strong customer base comprising of global pharma, food and FMCG companies. EDAL is currently exporting to countries like Chile, Ghana, Costa Rica, Nigeria, Kenya and Colombia. The company is looking for opportunities to expand its exports to other countries in South America, Africa and Middle East.

The company is looking to expand its reach in the markets of South America, Africa and the Middle East

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Manufacturing Process for Blister/Aluminium foil

Source: Company RHP Revenue Composition The aluminium printing division of the company managed by its subsidiary, Flex Art Foils Pvt Ltd contributed 20 per cent to the FY09 consolidated revenue of the company. The share of the subsidiary in total revenues garnered has been declining since FY08. In FY07, the subsidiary accounted for 41 per cent of the total revenues.

Revenue Composition

68 87 8999

230

363

0

100

200

300

400

FY07 FY08 FY09

In R

s. C

rore

Aluminium Foil Print Aluminium foil and PVC

Source: Company Annual Report

Aluminum Foil Stock

FOIL (required micron)

Aluminum Foil

Laminated or Lacquer Coated Aluminum foil (Printer Stock)

Slitting Printing PrintingCylinders

Cold Rolling

Separation & Annealing

Lamination with LDPE Film/Coating with HSL

solution printer coating & trimming

Inspection Rewinding

Packing

Dispatch

Aluminum Foil Stock

FOIL (required micron)

Aluminum Foil

Laminated or Lacquer Coated Aluminum foil (Printer Stock)

Slitting Printing PrintingCylinders

Cold Rolling

Separation & Annealing

Lamination with LDPE Film/Coating with HSL

solution printer coating & trimming

Inspection Rewinding

Packing

Dispatch

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Growth Drivers

High entry barriers deter competition ensuring long term client association: Ess Dee Aluminum’s manufacturing facilities are certified with some of the most stringent regulatory and quality standards in the industry. These stringent norms are of utmost importance while meeting the packaging requirements of pharma and FMCG companies. Over the years, EDAL has built an impeccable track record of performance on all parameters, which in turns guarantees it the status of a preferred supplier. This also safeguards its market share from new entrants, who find it difficult to gain a foothold in these sectors due to the absence of a robust track record. The company also boasts of its ability to meet aggressive customer demands. The company was able to supply new packaging material to its pharma clients within 48 hours, as its client had a 72 hour deadline to supply drugs to counter the bird-flu.

Strong growth prospects of the Pharma & FMCG sectors: The Indian Pharmaceutical Industry ranks 14th in the global league table, with sales of almost USD 19 billion in March 2009 (Source: Department of Pharmaceuticals, Third Round Up of Developments in the Pharmaceutical Sector – July, 2009). The size of the Indian Pharma industry is expected to rise to USD 50 million by 2020, which will make India a significant player among the top 10 global markets.

Growth in key industries

Source: Investor Presentation

EDAL enjoys status of a preferred supplier

Stringent regulatory and quality standards in the industry act as an entry barrier

Pharma, Food and FMCG industry taken together are poised to grow at a CAGR of 15-20 per cent in the next 4-5 years

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Low per capita Consumption: The per capita consumption of aluminium in the Indian market is very low compared to other developed markets and this provides a huge potential for consumption in the coming years.

Aluminium per capita use

30

25

15

10

30.8

0

5

10

15

20

25

30

35

USA Europe Japan Taiwan China India

Per C

apita

con

sum

ptio

n


Plant locations proximity to major client manufacturing sites: EDAL has a network of 11 plants spread across the nation. The company has set up five printing units located in major pharma manufacturing bases like Baddi in Himachal Pradesh, Goa, Daman and Sikkim. This close proximity to the customer ensures lowest lead time to delivery, low inventory cost, higher customisation and low freight cost for the company. The interdependence with the customers became evident, when three key customers moved to Sikkim recently; EDAL was also invited to start a facility in Sikkim which has begun its operations. Further, with addition of IFL’s manufacturing facility in West Bengal to EDAL's existing ‘hub-and-spoke’ model, the company is able to optimally utilise the capacity of the IFL facility at West Bengal by catering to the printing facilities located at Sikkim and Baddi.

Foray into Anti-Counterfeit packaging: Around 35 per cent pharmaceutical drugs in India are counterfeit or spurious, affecting USD 20 million of brands in the domestic market. EDAL has recently forayed into anti-counterfeit packaging technology, based on the huge potential it provides. These include products such as aluminium strip pack foil, child resistant laminates, laminates for oral rehydration salts, cough lozenges, antacids and anti TB kits.

Assured Supply of Raw Materials: The Company imports its entire Aluminium requirement from Gulf Aluminium Rolling Mill Company (GARMCO). GARMCO’s proximity to Aluminium Bahrain (ALBA), which is one of the world’s largest smelters, ensures timely delivery of appropriate grades of aluminium, thereby enabling EDAL to comfortably meet its delivery commitments.

Pricing power: Packaging forms a miniscule part (2 to 5 per cent) of the final product cost and given the criticality of packaging in delivery and branding of the product, the price hikes made by the company can be easily absorbed by the clients on the back of a rise in raw material cost (aluminium). Moreover, EDAL gets purchase orders from customers one month in advance and simultaneously places an order with GARMCO. In case of volatility in aluminium prices, the company has the liberty to pass on the price hike on to its customers.

It is estimated that close to 35 per cent drugs in India are counterfeit

Ess Dee has an assured supply of Aluminium foil stock from GARMCO, Bahrain

Aluminium per capita consumption in India is miniscule compared to other developed markets

EDAL enjoys a status of a preferred supplier with all its plants in close proximity to the pharma manufacturing hubs

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New Business Initiatives

Funds raised through QIP: EDAL has raised Rs 86 crores from a QIP issue for the expansion of its existing aluminium foil mills, possible acquisition, addition of flexible and pharmaceutical printing process lines, as well as to cater to the long term working capital and capital expenditure requirement of itself and its subsidiaries.

Launch of anti-counterfeit packaging: EDAL launched the first of its kind anti-

counterfeit technology, which led to visible results in the sales volumes of its clients, within three months of its introduction.

Key Risks

Dependency on GARMCO for raw material: The company is dependent on a single supplier (GARMCO, based in Bahrain) for its entire aluminium foil stock. Any imbalance on that front will hamper its performance and ability to service its clients.

Volatility in raw material price: Aluminium is the key raw material for EDAL. Any

volatility observed in the prices of Aluminium at LME (London Metal Exchange) may have an adverse impact on the financial performance of the company.

India Foils profitability: India Foils (IFL) has been making losses for the past ten years and was unable to pass on the raw material price hike to its clients. Since IFL’s acquisition, Ess Dee Aluminium was able to improve the financial performance of IFL considerably. In FY10, net losses for IFL have come down to Rs 1.8 crore from Rs 160 crore for FY09. Keeping IFL profitable will remain one of the key challenges for EDAL.

Ess Dee has raised Rs 86 crore from QIP

Ess Dee is dependent on a single supplier and is exposed to volatility in the price of aluminium

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Profitability EDAL’s consolidated total revenue for FY10 increased by 30 per cent to Rs 588.5 crore from Rs 451.5 crore in FY09 while the bottom line is back into profit at Rs 102.2 crore. The revenue from IFL was consolidated in EDAL’s books from November 19, 2008. On a standalone basis, EDAL’s sales of aluminium foil volume increased by 18.84 per cent in Fiscal 2010. For the period FY07-10, EDAL’s revenue registered a CAGR of 52 per cent.

Revenue growth trend

167

317

452 588

28%

89%

42%

30%

0%10%20%30%40%50%60%70%80%90%

0

100

200

300

400

500

600

FY07 FY08 FY09 FY10

Gro

wth

(%)

Rs.

in c

rore

s

Total Revenue YoY Growth

Source: Company Financials, ICRA Online Research Margins back to average levels EDAL’s EBITDA margin shows an improving trend since FY09 on the back of robust operating profitability registered in FY10. The EBITDA margin witnessed a rise from 1.6 per cent in FY09 to 26.8 per cent during FY10. The cost control measures taken by the company are evident, as selling and administration expenses fell by 68 per cent in FY10.

Margin Trend

1547

88

7

158

1446

85

-3

140

24.1%

28.0% 27.9%

1.6%

26.8%

23.0%

27.3%26.8%

-0.7%

23.8%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

-100

0

100

200

300

400

500

FY06 FY07 FY08 FY09 FY10

Margins (%

)Rs. i

n Cr

ores

EBITDA EBIT EBITDA Margin EBIT Margin

Source: Company Financials, ICRA Online Research

EDAL’s revenue has grown at a CAGR of 52 per cent for the period 2007-10

EBITDA margin came back to average level on the back of robust operating profitability registered in FY10

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Input Cost The cost of goods sold witnessed an increase of 26 per cent to Rs 378.8 crore in FY10 compared to Rs 300.6 crore in the corresponding previous twelve month period. The increase was in line with the increase in turnover.

Input cost Particulars FY07 FY08 FY09 FY10 Cost of Raw material 118.4 216.4 287.7 389.8

% to sales 70.7% 68.3% 63.7% 66.2% Stock in Trade (11.3) (8.5) 12.9 (11.0) Total Cost of Goods Sold 107.1 207.8 300.6 378.8

% to sales 64.0% 65.6% 66.6% 64.4% Source: Company Financials, ICRA Online Research EDAL is a large consumer of aluminium foil. Aluminium prices are dependent on global prices of the metal as reported on the International Metal exchanges like the LME which vary depending upon the demand supply scenario.

Competitor Analysis We have compared EDAL with other packaging companies. EDAL is trading at a premium to its peer average, being the largest in a highly fragmented sector. The peer group is trading at an average P/E multiple of 12.2x for FY10. Ess Dee has reported better EBIT margins and EPS for FY10 as compared to the peer average.

Particulars Year End CMP M Cap Revenue

EBIT Margin EPS P/E EV/EBITDA

Ess Dee Mar-10 523 1,486 588 23.8% 36.7 14.2x 10.3x

Bilcare Mar-10 464 1,051 564 24.6% 33.2 14.0x 10.6x

Parekh Aluminex Mar-10 298 7,692 421 19.6% 35.8 8.3x 5.2x Source: Company Financials, BSE, Capitaline, ICRA Online Research Market cap and Revenue in Rs. crores @P/E and EV/EBITDA is based on FY10 EPS and EBITDA

COGS increased by 26 per cent in FY10 on the back of proportionate rise in the turnover

Ess Dee is trading at a premium to its peer group average of 12.2x for FY10

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Industry Overview Packaging Industry The Packaging industry plays a unique role amongst all major industries by creating wealth through a wide range of manufacturing activities and also by way of preserving the wealth or value created by many other industries. The Indian packaging industry is currently estimated at USD 14 billion and is growing at 14-15 per cent annually. Apart from the huge value addition and employment opportunities, packaging serves the economy by helping preservation of the quality and lengthening the shelf life of innumerable products like milk and biscuits, drugs and medicines. Effective and innovative packaging can be used to preserve processed and semi-processed foods like fruits and vegetables, edible oils, electronic goods etc. It is also used for domestic appliances and industrial machinery and other hardware needing transportation.

Aluminium based Flexible Packaging The discovery of aluminium foil, and its flexibility was a milestone in the field of packaging development. This completed the search for a technically customised packaging solution for all types of products. Aluminium flexible packaging constitutes 4-5 per cent of the total Pharma packaging industry and 8-9 per cent of the total FMCG packaging industry. Pharmaceutical Packaging in India The Indian Pharma foil packaging industry is highly fragmented, with the organized sector catering to only about 40 per cent of the market, while the balance 60 per cent requirement for aluminium foil is met through imports. The major players in the organized sector are Ess Dee Aluminium, Indal (a subsidiary of Hindalco which got merged with the parent) and Bilcare, while the unorganized sector is comprised of smaller players, such as PG Foils, Amco Vinyl, Gujarat Foils, etc.

Pharmaceutical packaging industry

Strip pack foil50.0%

Normal Aluminum foil

12.5%

PVC based packaging

20.0%

PVdC-coated packaging

12.5%Alu-Alu

packaging5.0%

Source: Company Pharmaceutical packaging occupies a considerable portion of the overall drugs and pharmaceutical market in India and is growing steadily, and at the same pace of the industry. Pharmaceutical packaging consists of various types of glass, pet bottles, strip and blister packs, injectibles, ampoules, bulk packs, etc. Besides an increase in medication

The Indian packaging industry is currently estimated at USD 14 billion

The organized players in the packaging sector add upto only 40 per cent

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consumption, the adoption of stricter regulations and standards governing the production, storage, distribution and labeling of pharmaceuticals will boost global growth opportunities for packaging products and accessories. Historically, pharmaceutical packaging requirements focused exclusively on preserving the quality of enclosed medication. These requirements are now being extended to cover such criteria as the prevention of product tampering and counterfeiting, the assurance of product dispensing accuracy and the promotion of patient compliance with product dosage schedules. Currently, the demand for blister and strip packaging is around 1,500 tonnes per month (including the demand of 300 tonnes per month for value-added products). Moreover, the demand for packaging is shifting to the organised sector. Thus, with a vertically integrated facility in place and with the huge capacity expansion being carried out, EDAL plans to capitalise on the available domestic market opportunity. The food and grocery segment is grossly under represented and offers strong growth potential in the coming years. According to the HUL’s report on Food & Beverages, packaged foods are valued at USD 13 billion, forming a small chunk of 5 per cent of the USD 255 billion food consumption in India. This data gives a clear view on the upside potential that packaging companies have in the packaging the food segment in the domestic market, where packaged food is currently growing at a CAGR of 23 per cent. In addition to this, the FMCG segment is aligning its products with special emphasis on packaging to build brand equity and good recall value.

Food and Beverages (Aggregate revenue growth)

19.5

23.1

29.2

20.9

0

5

10

15

20

25

30

35

FY06 FY07 FY08 FY09

YoY

Gro

wth

(%)


Packaged foods are worth USD 13 billion forming a small chunk of only 5 per cent to the total food consumption in India

Besides an increase in medication consumption, the adoption of stricter regulations and standards will boost sales

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Industry Growth Trends Urbanisation: Modern technology is now an integral part of a nation’s society today with high-end package usage increasing rapidly. As consumerism is rising, rural India is also slowly changing into more of an urban society. The liberalisation of the Indian economy, coupled with globalisation and the influx of the multi-nationals, has improved the quality of all types of primary and secondary packaging. Also industrialization and expected emergence of the organized retail industry is fuelling the growth of the packaging industry. Increasing Health Consciousness: As people are becoming more health conscious, there is a growing trend towards well-packed, branded products rather than the loose and unpackaged formats. Today a common man is conscious about the food intake he consumes in day-to-day life. Low Purchasing Power resulting in Purchase of Small Packets: India being a growing country, purchasing power capacity of Indian consumers is lower; as a result goods come in small and affordable packages. Apart from the normal products packed in flexible packaging, the use of flexible aluminium in India includes some novel applications not usually seen in the developed world. Products like toothpaste, toothpowder, and fairness creams in laminated pouches are highly innovative and are not used elsewhere. Changing Food Habits amongst Indians: Changing lifestyles and lesser time to spend in the kitchen is resulting in more incidence of packaged food, resulting in explosive growth of ready to eat and pre-cooked meals. Indians are trying out newer cuisines and also purchasing similar food items for their homes.

Changing consumption patterns of urban India, while unique requirements of rural India, give rise to innovative packaging requirements

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Summary Financials Profit & Loss Statement Particulars (Rs Crores) FY06 FY07 FY08 FY09 FY10 Net Sales 62.5 167.4 316.9 451.5 588.5 Other Operating Income 0.0 0 0 0.0 0.0 Total Revenue 62.5 167.4 316.9 451.5 588.5 Growth (%) 167.9% 89.4% 42.5% 30.3% Cost of Good Sold -37.0 (107.1) (207.8) (300.6) (378.8) Gross Profit 25.4 60.3 109.1 150.9 209.6 Growth (%) 137.1% 80.9% 38.3% 38.9% Employee Costs -2.3 (6.3) (9.8) (14.7) (24.4) Other Expenditure -8.1 (7.0) (10.9) (129.0) (27.7) EBITDA 15.0 46.9 88.4 7.2 157.6 Growth (%) 212.2% 88.4% -91.9% 2095.2% Depreciation -0.7 (1.2) (3.5) (10.4) (17.4) EBIT Profit 14.4 45.7 84.9 -3.2 140.2 Growth (%) 217.9% 85.8% PL LP Net Interest expense -3.6 (6.5) (7.6) (15.3) (20.0) Other Income(expense) 1.1 3.3 8.0 4.4 15.6 Exceptional Items 0.0 0.0 0.0 0.0 0.0 PBT 11.8 42.5 85.3 -14.1 135.8 Growth (%) 259.3% 100.6% PL LP Income Tax -2.0 (5.2) (11.8) (25.6) (33.8) Profit after Tax 9.8 37.3 73.4 -39.8 102.0 Growth (%) 281.2% 97.0% PL LP Extra Ordinary Items & Others 0.0 0.0 0.0 15.8 0.2 Net Profit 9.8 37.3 73.4 -24.0 102.2 Basic EPS 13.0 17.7 27.02 (8.6) 36.7 Diluted EPS 13.0 17.7 27.02 (8.6) 36.7 DPS 0.0 2.0 2.0 2.0 40.0 Equity Capital 7.5 26.4 27.8 27.8 27.8 Face value 10.0 10 10 10 10 Ratio Analysis Particulars (Rs Crores) FY06 FY07 FY08 FY09 FY10 Margins Gross Margin (%) 40.7% 36.0% 34.4% 33.4% 35.6% EBITDA Margin (%) 24.1% 28.0% 27.9% 1.6% 26.8% EBIT Margin (%) 23.0% 27.3% 26.8% -0.7% 23.8% Net Profit Margin (%) 15.7% 22.3% 23.2% -5.3% 17.4% Valuation EPS 13.0 17.7 27.0 (8.6) 36.7 BVPS 32.8 84.3 133.7 119.6 154.4 P/E (x) 40.2 29.6 19.4 NA 14.2 P/BV (x) 15.9 6.2 3.9 4.4 3.4 EV/ EBITDA (x) 107.7 34.5 18.3 225.5 10.3 EV/ Sales (x) 25.9 9.7 5.1 3.6 2.8 Profitability ROCE (%) 21.2% 16.7% 18.0% NA 23.0% RONW (%) 39.6% 16.7% 19.7% NA 23.8% Solvency Ratio Deb/ Equity Ratio (x) 1.7 0.2 0.3 0.4 0.4 Interest Cover (x) 4.0 7.1 11.1 NA 7.0 Turnover Ratio Inventory T/o Days 210 90 64 51 47 Debtors T/o Days 159 111 127 168 191 Creditors T/o Days NA 30 42 63 96 Other Ratios Dividend Payout (%) 0% 20% 20% 20% 400% Dividend Yield (%) 0.0% 0.4% 0.4% 0.4% 7.6%

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Balance Sheet Particulars (Rs Crores) FY06 FY07 FY08 FY09 FY10 Sources of Funds Equity Capital 7.5 26.4 27.8 27.8 27.8 Reserves & Surplus 17.2 196.3 344.1 305.0 401.8 Shareholders Fund 24.7 222.7 371.9 332.8 429.6 Long Term Debt 43.1 50.6 100.0 126.8 178.7 Deferred Tax Liability, Net 2 2.02 4.5 29.93 35.35 Minority Interest 0.0 0.0 0.0 125.5 125.3 Total 69.3 275.3 476.4 615.1 768.9 Application of Funds Fixed Assets 20.3 34.4 94.1 261.6 269.6 Capital Work-in-Progress 4.6 37.1 61.8 0.0 108.8 Investments 0.1 51.6 31.9 0.0 0.0 Current Assets Inventory 21.7 31.9 41.6 43.6 54.6 Sundry Debtors 27.5 75.8 147.6 274.4 350.1 Loans& Advances 5.6 18.4 130.9 68.4 95.5 Cash & Bank Balance 4.2 57.0 19.4 12.4 15.8 Other Current Assets 0.0 0.0 0.0 0.0 0.0 Total Current Assets 59.0 183.1 339.6 398.8 516.0 Current Liabilities Sundry Creditors * 0.0 17.9 30.4 74.2 127.9 Provisions 0.0 13.0 20.5 109.6 136.1 Other Current Liabilities 14.6 0.0 0.0 0.0 0.0 Total Current Liabilities 14.6 30.9 50.9 183.8 264.0 Net Current Assets 44.4 152.2 288.7 215.0 252.0 Goodwill & misc expenditure 0.0 0.0 0.0 138.5 138.5 Total 69.3 275.3 476.4 615.1 768.9 Cash Flow Particulars (Rs Crores) FY06 FY07 FY08 FY09 FY10 CF from Operating Activities Profit Before Tax 11.8 42.5 85.3 (14.1) 135.8 Depreciation, amortization & Impairment 0.9 1.2 3.5 10.4 17.4 Direct Taxes paid (2.4) (4.7) (9.3) (21.3) (28.4) Others 0.0 6.5 7.7 202.0 12.5 Change in Working Cap (36.7) (61.2) (180.6) 66.6 (33.6) CF- Operating Activities (26.4) (15.7) (93.4) 243.6 103.8 CF from Investing Activities Change in Fixed Assets (17.7) (47.9) (87.9) (439.1) (132.4) Change in Investments (0.0) (51.5) 19.7 31.8 - Others (0.0) - - 124.1 0.2 CF- Investment Activities (17.8) (99.5) (68.1) (283.2) (132.2) CF from Financing Activities Increase in Equity 6.0 166.9 82.3 - - Changes in Minority Interest - - - - - Changes in Borrowings 32.8 7.5 49.3 26.9 51.8 Dividend Paid - Others 15.2 (6.4) (7.6) 5.7 (20.0) CF- Financing Activities 48.0 168.0 124.0 32.6 31.8 Net Change in Cash 3.8 52.8 (37.5) (7.1) 3.5 Opening Cash & Bank Balance 0.4 4.16 57.0 19.4 12.4 Closing Cash & Bank Balance 4.2 57.0 19.4 12.4 15.8

* *Sundry Creditors detail not available for FY06

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