moti - 2014 11 - jain 2qfy15

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11 November 2014 2QFY15 Results Update | Sector: Agri

Jain Irrigation

Atul Mehra ([email protected]); +91 22 3982 5417

Niket Shah ([email protected]); +91 22 3982 5426

BSE SENSEX S&P CNX CMP: INR88 TP: INR120 Buy27,910 8,363Bloomberg JI IN

Equity Shares (m) 443.1M.Cap. (INR b) / (USD b) 39.9/0.6

2-Week Range (INR) 133/56

1, 6, 12 Rel. Per (%) 11/-16/-37

Financials & Valuation (INR Million)

Y/E MAR 2015E 2016E 2017E

Net Sales 64,388 76,059 90,055

EBITDA 8,471 10,664 12,626

dj PAT 1,424 3,487 5,252

EPS (INR) 3.1 7.5 11.4

Gr. (%) 113.5 144.9 50.6

BV/Sh(INR) 49.0 55.6 65.8

RoE (%) 6.4 14.4 18.7

RoCE (%) 10.1 13.8 16.7

P/E (x) 28.4 11.6 7.7

P/BV (x) 1.8 1.6 1.3

n Results below expectations: Jain (JI) reported overall revenue of INR12.7b (est.

INR13.3b), as against INR12.1b in 2QFY14, marking a YoY growth of 4.4%. EBITDAstood at INR1.6b (est. INR1.7b) in 2QFY15, with EBITDA margin at 12.4% YoY (est.12.8%). Interest costs were flat YoY and stood at INR1.1b in 2QFY15, as againstINR1.1b in 2QFY14. Forex loss for the quarter stood at INR254m due to MTMimpact of INR depreciation on forex loans. PAT for the quarter stood at INR(-235m) (est. INR8m), against INR(-807m) in 2QFY14, impacted by forex loss.

n Domestic MIS reports strong growth, exports and PE pipes drag growth lower: Segmental performance during 2Q was mixed, with major positives being 1)overall Micro Irrigation (MIS) grew by 29.6%, domestic MIS grew by 67.6%, withinwhich retail business grew by 37% and project business grew by 184%, 2) workingcapital trajectory for domestic MIS continued to progress well with sequential

decline in receivable days by 32 days (from 242 to 211 days), 3) PVC pipe businessbounced back in terms of growth, up 21.5% YoY. In terms of negatives, 1) MISexport performance was worse-than-expected, with a decline of 64% YoY, 2) PEpipe business declined by 55.5%, 3) fruit processing revenue declined by 12.2%and 4) MIS working capital up 20 days (QoQ) due to a decline in payable days.Going forward, MIS margins will be positively impacted by decline in crude relatedpolymer prices and recent price hikes (~5%) allowed in Maharashtra and Gujarat.

n Food processing stake sale on cards: JIs board has approved subsidiarizing thefood processing unit into a 100% subsidiary, which is a step in the right direction,as this can now be followed by a stake sale and an eventual demerger.Management highlighted the process of subsidiarizing can take up to four monthsfrom now; and is actively evaluating fund raising in this entity through a 25% stakesale. Stake sale will ensure accelerated debt reduction for the parent entity andentry of an external investor will strengthen the overall focus on the business.

n Maintain Buy: We expect strong free cash generation over FY14-17E led bydomestic MIS business, which should aid to reduce the debt-equity from 1.8x inFY14 to 1x in FY17E. We cut the earnings estimates for FY15E and FY16E by 28%and 15% respectively to reflect the sharp de-growth in PE pipes and MIS exports.We maintain Buy, with a revised target price of INR120 (16x FY16E EPS of INR7.5).

Investors are advised to refer through disclosures made at the end of the Research Report.

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Jain Irrigation

Results below expectationsn JI reported overall revenue of INR12.7b (est INR13.3b) as against INR12.1b in

2QFY14 marking a YoY growth of 4.4%.n EBITDA stood at INR1.6b (est INR1.7b) in 2QFY15 with EBITDA margins at 12.4%

YoY (est 12.8%).n Interest costs were flat YoY and stood at INR1,152m in 2QFY15 as against

INR1,153m in 2QFY14.n Forex loss for the quarter stood at INR254m due to MTM impact of INR

depreciation on forex loans.n PAT for the quarter stood at INR-235m (est INR8m) as against INR-807m in

2QFY14 impacted by forex loss.n Going forward, MIS margins will be positively impacted by decline in polymer

prices and recent price hikes (~5%) allowed in Maharashtra and Gujarat.

Exhibit 1: Revenue growth at 4.4%

Source: Company, MOSL

Exhibit 2: EBITDA growth at 3%


Exhibit 3: PAT lower due to forex loss


Food processing stake sale on cardsn JIs board has approved subsidiarizing the food processing unit into a 100%

subsidiary, which is a step in the right direction as this can now be followedup by stake sale and an eventual demerger.

n Management highlighted the process of subsidiarizing can take up to fourmonths from now; and is actively evaluating fund raising in this entitythrough a 25% stake sale. Stake sale will ensure accelerated debt reductionfor the parent entity and entry of an external investor will strengthen theoverall focus on the business.

14,094 12,171 13,746

18,333

15,53412,702

11.5

22.326.6 9.0

10.2 4.4

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

Consolidated Revenue (INR m) Growth (YoY) %

2,0861,523 1,710

2,562

2,006 1,572

14.8

12.5 12.4

14.0

12.912.4

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

EBITDA Margins (%)

-603 -807

259 753

203-235

23.8

-280.5-155.2

39.4NM NM

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

PAT Growth (%)

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Domestic MIS business posts strong 68% growth led by projects businessn Domestic MIS business grew by 68% led by strong growth in the project business

which grew by 184% YoY from INR466m to INR1,322m and healthy growth inretail business which grew by 37% this quarter from INR1,589m to INR2,177m.

n Growth in retail MIS business seen in all geographies (Maharashtra by 31%,North East by 43% and Gujarat by 25%).

n Exports declined sharply by 64% YoY from INR878m to INR318m as one largeorder amounting to INR1.25b from Africa executed during the previous yearwhich no longer recurs in FY15.

n Going forward, management is confident of posting 15-20% growth in MISbusiness in FY15 with retail contributing INR13b, projects contributing INR4band exports contributing the balance INR2.5b to INR3.0b.

n NBFC-Sustainable Agro Finance (SAFL) has disbursed loan of INR0.4b in 1HFY15.Loan Book of SAFL stood at INR1.3b as on 1HFY15.

Exhibit 4: MIS business growth by segment MIS business contribution by segmentSegment 2QFY14 2QFY15 YoY Segment 2QFY14 2QFY15 YoY

Retail 1,589 2,177 37% Retail 54% 57% 3%

Project 466 1,322 184% Project 16% 35% 19%

Export 878 318 -64% Export 30% 8% -22%

Total 2,933 3,817 30% Total 100% 100% 0%


Most of government subsidy receivables have been recoveredn Government subsidy receivables have been reduced from INR9.7b in FY12 to

INR2.6b in 2QFY15. This has been led shift in favor of business to moreprogressive states like Maharashtra, Gujarat and Rajasthan.

n Management believes government subsidy receivables will further decline toless than INR2.0b in FY15. This is despite higher growth for the MIS business.

n Further, if we adjust for project receivable days, retail receivable days for1HFY15 stand at 170 days. Management is targeting retail receivable days of 135for FY16.

n However, in the project business, receivables increased by INR0.4b QoQ.Milestone based payments in project business will help reduce receivable daysto be less than 200 days receivables by the end of FY15 as against 365 dayscurrently. Hence, on a blended basis receivable days will decline to 180 for FY15.

Exhibit 5: Break-up of MIS receivablesMIS -Receivables FY12 FY13 FY14 1QFY15 2QFY15

Dealer 2.5 1.7 2.2 2.1 1.7

Institutional 1.8 1.1 1.3 1.2 1.2

Project 3.1 2.4 3.4 4.0 4.4

Govt. Subsidy 9.7 7.1 3.9 3.4 2.6

Export 0.6 0.4 1.0 0.8 0.6

Total 17.7 12.7 11.9 11.5 10.5Source: Company, MOSL

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MIS working capital improvement on trackn Receivable days in MIS business reduced from 279 days in 2QFY14 (243 days in

1QFY15) to 211 days in 2QFY15.n Inventory days in MIS business reduced from 113 days to 102 days YoY.n Net working capital reduced from 317 days to 255 days in MIS business.n Management is confident about the new MIS business model and lower project

receivables and expects receivables to decline to < 180 days by FY15 end.n Cash based model is now operational in Maharashtra, Karnataka and Madhya

Pradesh. By end of FY15, most of the retail business will be cash based.n Target for MIS gross receivables is 180 days in FY15, 120 days in FY16.

Exhibit 6: MIS strong domestic growth, exports declined


Exhibit 7: MIS net working capital days decline 62 days YoY


Exhibit 8: MIS inventory days decreased by 9 days YoY


Exhibit 9: MIS receivable days decreased by 68 days YoY


3,855 2,933

4,074 6,225 4,248 3,801

16.5 17.2

25.7 24.8

10.2

29.6

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

MIS revenue (INR M) Growth (YoY %)

296 317 306

255 235 255

1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15

Net Working Capital

116113 113

98

103 102


Inventory days308

279 265 257 243211


Debtor days (Gross)

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PVC piping business growth recovers; PE pipes reports weak performancen PVC piping business grew by 21.5% YoY from INR1.1b in 2QFY14 to INR1.3b in

2QFY15. PE piping segment revenues declined by 55.5% YoY.n PE sheets business recorded also reported weak performance with -30% growth.n Inventory days in piping business reduced from 60 days to 37 days.n Receivable days in piping business reduced from 58 days to 49 days.n Net working capital remained negative at -11 days in piping business.

Exhibit 10: PVC Piping revenue growth bounces back


Exhibit 11: Piping net working capital days negative


Exhibit 12: Piping inventory days down 23 days YoY


Exhibit 13: Piping receivable days down 9 days YoY


Exhibit 14: PE piping revenues decline 55% YoY


Exhibit 15: PVC Sheets revenues decline 30% YoY


3,2471,089 1,976

2,440 2,5781,323

36.5

1.6 3.0-8.3 -20.6

21.5

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

PVC Pipes Revenue (INR m) Growth (YoY %)

-11

-16

-7-8

-20

-11


Net Working Capital

58 6054

35 37 37


Inventory days67

58

3951 44 49


Debtor days (Gross)

752 1,688 1,479 1,259 696753

-3.3

197.7

95.9

22.8-7.5 -55.4

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

PE Piping Revenue Growth (YoY %)

342 539 604 676 407 377-17

65

22

117

19.1

-30.0

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

PVC Sheets revenue Rev. YoY

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Food processing business reports mixed performancen Fruit processing reported mixed performance with onion business posting

strong 40% growth while fruit processing revenues declined 12% YoY.n Inventory days in Food processing business reduced from 315 days to 276 days

in 2QFY15. Receivable days in Food processing business increased from 66 daysto 102 days. Net working capital increased from 155 days to 195 days.

n Management is confident of concluding stake sale in food processing business inFY15 and has thus approved subsidarization this business this quarter.

Exhibit 16: Dehydrated Onions growth trend


Exhibit 17: Fruit processing growth trend

Source: Company, MOSLExhibit 18: FP inventory days down 39 days YoY


Exhibit 19: FP receivable days up 36 days YoY


Exhibit 20: FP net working capital days increased by 40 days YoY


495 439 172 920 652 616

74.9

8.9 -29.5

19.3 31.740.4

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

2 Q F Y 1 5

Onion Dehydration revenue (INR m) Rev. YoY

881 913 963 1,946 1300 802

-16.3

50.7 49.139.6

47.6

-12.2

1 Q F Y 1 4

2 Q F Y 1 4

3 Q F Y 1 4

4 Q F Y 1 4

1 Q F Y 1 5

Fruit Processing revenue (INR m) Rev. YoY

345315

286

190

264 276


Inventory days

66 6648

88 87

102


Debtor days (Gross)

162 155135

78

176 195


Net Working Capital

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Net working capital on an improvement trajectoryn On a consolidated (C/L) basis net working capital reduced from 174 days to 158

days in 2QFY15 (145 days in 1QFY15).

Exhibit 21: C/L inventory days declined by 14 days YoY


Exhibit 22: C/L receivable days declined by 26 days YoY


Exhibit 23: C/L net working capital days declined by 16 days YoY


Consolidated debt to reduce by INR3b annuallyn Consolidated Net debt for 2QFY15 stood at INR42.4b as against INR39.8b in

1QFY15, marking an increase of INR2.6b on a QoQ basis.

n

Increase in debt sequentially was primarily seasonal as higher inventory needsto be stocked for the fruit processing business in 1H.

n On a YoY basis debt was flat at INR42.4b vs INR41.9b.n Interest costs were flat YoY and stood at INR1,152m as against INR1,153m.n Management is targeting to reduce debt by atleast INR3b in FY15 by improving

working capital efficiency. Capex for FY15 is expected to be INR2.0b.

137 135 126104

119 121


Inventory days

137 141123 129 122 115


Debtor days (Gross)

162 174 161142 145

158


Net Working Capital

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Story in charts

Exhibit 29: JI is the market leader in MIS business in India


Exhibit 30: MIS penetration in India is lowest in world


Exhibit 31: Gross debtors set to decline


Exhibit 32: Hence, debt to equity to decline from 1.8x to 1.3x


Exhibit 33: Food processing is another key opportunity for JI


Exhibit 34: RoE to improve to 13.8% in FY16E


55%

20%25%

Jain Irrigation Netafim Others

Market share o f key p layers in micro irrigation systems in India

90%78%

65%55% 52%

10%3%

Israel Russia Spain US Brazil China India

MIS penetration across countries (%)

255316

369343 329

257

180150

FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E

Gross Sundry Debtors

34,442 35,654

38,60135,651

33,183

2.01.6 1.8 1.6 1.3

FY12 FY13 FY14 FY15E FY16E

Net Debt ( INR m) Net DER (x)

14.0

10.8 10.0 10.1

13.8

FY12 FY13 FY14 FY15E FY16E

RoCE (%)

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Jain Irrigation

Jain Irrigation: an investment profile Company descriptionEstablished in 1986, JI is a transnational organizationheadquartered at Jalgaon, Maharashtra, India. JIemploys over 5,000 associates and manufactures a

number of products, including drip and sprinklerirrigation systems, PVC & PE piping systems, plasticsheets, green houses, bio-fertilizers, solar productsincluding water-heating systems, photovoltaicappliances and solar pumps. JI processes fruits andvegetables into aseptic concentrates, frozen fruits anddehydrated vegetables, respectively. It has 21manufacturing plants spread over 5 continents and itsproducts are supplied to 110 countries through 3,000dealers and distributors worldwide.

Key investments argumentsn JIs management has moved away from doing

business in TN, Karnataka and AP due to substantialdelays in payments. As a result, revenuecontribution from these states has declined from21% in FY12 to 8% in FY14 and is further slated todecline to 3% of total MIS revenue in FY16E.

n JI is focusing on NBFC-based model whereinpayment to dealers will be made instantly by the

farmer and farmers financiers.

n Thus, we expect gross debtor days in MISbusiness to decline from 257 days in FY14 to 150days in FY16.

n The new government at the Center can possibly

replicate GGRC model across other states whichcan be a game changer event for MIS players likeJI.

Key investments risks n High receivables.n Increase in raw material price.n Reduction/removal of subsidy provided for micro

irrigation equipments.

Valuation and viewn We expect strong free cash generation over

FY14-17E led change in business model fordomestic MIS, which should aid to reduce thedebt-equity from 1.8x in FY14 to 1.0x in FY17E.We cut our earnings estimates for FY15E andFY16E by 28% and 15% respectively to reflectsharp de-growth in PE pipes and MIS exports. Wemaintain Buy, with a revised TP of INR120 (16xFY16E EPS of INR7.5).

Target price and recommendationCurrent Target Upside Reco.Price (INR) Price (INR) (%)

88 120 36.4 Buy

EPS: MOSL forecast v/s consensus (INR)MOSL Consensus Variation

Forecast Forecast (%)

FY15 3.1 3.8 -18.2

FY16 7.5 6.5 16.3

Shareholding pattern (%)Sep-14 Jun-14 Sep-13

Promoter 28.7 28.7 27.5

DII 3.3 3.5 0.8

FII 48.0 51.0 52.7

Others 20.1 16.8 19.1

Note: FII Includes depository receipts

Stock performance (1-year)

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Financials and valuations

Income statement (INR Million)Y/E March 2014 2015E 2016E 2017ENet Sales 58,281 64,388 76,059 90,055

Change (%) 16.1 10.5 18.1 18.4EBITDA 7,700 8,471 10,664 12,626

EBITDA Margin (%) 13.2 13.2 14.0 14.0Depreciation 2,045 2,455 2,563 2,692EBIT 5,654 6,016 8,101 9,934Interest 4,676 4,534 3,969 3,639Other Income 463 193 228 270Extraordinary items 2,300 254 0 0PBT -860 1,421 4,360 6,565Tax -462 213 872 1,313

Tax Rate (%) 53.7 15.0 20.0 20.0Reported PAT -398 1,208 3,488 5,252Adjusted PAT 667 1,424 3,488 5,252

Change (%) 34.9 113.5 144.9 50.6

Min. Int. & Assoc. Share 0 0 0 0Adj Cons PAT 667 1,424 3,487 5,252

Balance sheet (INR Million) Y/E March 2014 2015E 2016E 2017EShare Capital 925 925 925 925Reserves 20,831 21,714 24,768 29,479Net Worth 21,755 22,639 25,693 30,404Debt 40,583 37,583 34,583 31,583Deferred Tax 1,412 1,412 1,412 1,412Total Capital Employed 63,955 61,838 61,893 63,604Gross Fixed Assets 41,514 44,621 46,921 49,221

Less: Acc Depreciation 13,742 16,197 18,760 21,452Net Fixed Assets 27,771 28,423 28,160 27,768Capital WIP 807 0 0 0Investments 14 14 14 14Current Assets 52,258 52,334 56,850 64,054

Inventory 18,364 20,268 23,598 27,957Debtors 17,994 16,917 17,279 18,882Cash & Bank 1,968 1,918 1,386 1,179Loans & Adv, Others 13,932 13,230 14,587 16,037

Curr Liabs & Provns 18,089 20,127 24,325 29,427Curr. Liabilities 17,473 19,503 23,527 28,445Provisions 617 624 798 982

Net Current Assets 34,169 32,207 32,524 34,627

Total Assets 63,955 61,839 61,893 63,604E: MOSL Estimates

RatiosY/E March 2014 2015E 2016E 2017E

Basic (INR)EPS 1.4 3.1 7.5 11.4Cash EPS 5.9 8.4 13.1 17.2Book Value 47.0 49.0 55.6 65.8DPS 0.6 0.7 0.9 1.1Payout (incl. Div. Tax.) -68.0 26.9 12.4 10.3Valuation(x)P/E 60.7 28.4 11.6 7.7Cash P/E 14.9 10.4 6.7 5.1Price / Book Value 1.9 1.8 1.6 1.3EV/Sales 1.4 1.2 1.0 0.8EV/EBITDA 10.3 9.0 6.9 5.6Dividend Yield (%) 0.7 0.8 1.0 1.3Profitability Ratios (%)RoE 3.1 6.4 14.4 18.7

RoCE 10.0 10.1 13.8 16.7Turnover Ratios (%)Asset Turnover (x) 0.9 1.0 1.2 1.4Debtors (No. of Days) 109.7 95.1 82.2 75.8Inventory (No. of Days) 115.0 114.9 113.2 113.3Creditors (No. of Days) 96.9 98.5 102.2 105.0Leverage Ratios (%)Net Debt/Equity (x) 1.8 1.6 1.3 1.0

Cash flow statement (INR Million) Y/E March 2014 2015E 2016E 2017EOP/(Loss) before Tax -860 1,675 4,360 6,565

Depreciation 2,045 2,455 2,563 2,692Others 0 0 0 0Interest 4,676 4,340 3,741 3,369Direct Taxes Paid 41 213 872 1,313(Inc)/Dec in Wkg Cap -1,551 1,912 -850 -2,310CF from Op. Activity 5,731 9,915 8,942 9,003(Inc)/Dec in FA & CWIP -2,615 -2,300 -2,300 -2,300(Pur)/Sale of Invt -407 0 0 0Others 138 193 228 270CF from Inv. Activity -2,885 -2,107 -2,072 -2,030Inc/(Dec) in Net Worth 0 0 0 0Inc / (Dec) in Debt 1,216 -3,000 -3,000 -3,000Interest Paid -4,638 -4,534 -3,969 -3,639

Divd Paid (incl Tax) -265 -325 -433 -541CF from Fin. Activity -3,202 -7,859 -7,402 -7,180Inc/(Dec) in Cash -356 -50 -532 -207Add: Opening Balance 2,324 1,968 1,918 1,386Closing Balance 1,968 1,918 1,386 1,179

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Jain Irrigation Disclosures This research report has been prepared by MOSt to provide information about the company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). Thisreport is for personal information of the select recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement toinvest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has beenfurnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take intoaccount the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitablefor their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, andinvestors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

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Disclosu re of Interest Statement JAIN IRRIGATION SYSTEMS LTD Analyst ownership of the stock No

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For U.K.This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (FinancialPromotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity towhich this document relates is only available to investment professionals and will be engaged in only with such persons.

For U.S.Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States.In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable statelaws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described hereinare not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutionalinvestors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to majorinstitutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, asamended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has

entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to beexecuted within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a researchanalyst account.

For SingaporeMotilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial AdvisorsRegulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singaporeto accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Ano sh K opp ikar Kadam bari Balachand ran Email : [email protected] Email : [email protected] : (+65)68189232 Contact : (+65) 68189233 / 65249115Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities LtdMotilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025

Phone: +91 22 3982 5500 E-mail: [email protected]

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