Infrastructure - PL by icestar


                                                                                     Sector Insight Series 

November 11, 2011                                                                    Ernst  &  Young  (E&Y), in association with Prabhudas  Lilladher, had conducted a
                                                                                     conference on India Infrastructure.
Rupa Shah

                                                                                                                                                                                                   Sector Update                                                                 We had organized a ‘Sector Insight series ‐ Part 2’ on Infrastructure to understand
+91-22-66322244                                                                      the opportunities ahead and to gauge the current situation. The helpful insights
                                                                                     were provided by Mr.  Sushi  Shyamal  (Partner  ‐  Infrastructure,  E&Y) in separate
                                                                                     sessions on Airports, Roads and Urban Infrastructure.

                                                                                         Airports ‐ Past was eventful, so is the future: The key focus here was on lack of
PL Construction Index v/s Sensex                                                         a common governing act or an agreement on pricing. India is the 9th largest
                    PL Construction Index                      Sensex
                                                                                         Aviation market in the world at present and is expected to be in the top five by
    110                                                                                  2020. The overall projected investment opportunity is pegged at US$150bn and
    100                                                                                  the target is to handle about 280m pax by 2020. However, the golden past,
      90                                                                                 when India created world class airports, especially in the last four years, seems
      80                                                                                 like a difficult proposition in the future. This is on account of lack of pricing
                                                                                         policies in place and failure of real estate play around assets.
      50                                                                                 Roads  ‐  All  is  well: Roads would still be the most endearing asset from the




                                                                                         perspective of private sector investment in the years to come, as only 2.1m kms

                                                                                         (50%) has been upgraded till now. The immediate opportunity on plate is
                                                                                         around 9000kms which will throw open investment opportunities of nearly
Source: Bloomberg 
                                                                                         US$20bn. However, aggressive bidding by some small players, high cost of
                                                                                         funding, high fund requirement and current liquidity crunch in India has led to
                                                                                         some uncertainty over the prospects. Considering the high inflation, a hike in
Stock Performance                                                                        the toll rates if permitted, would be the key upside for operational projects.
(%)                  1M                               6M                  12M 
Sensex               8.2                             (5.2)               (16.1)          Urban Infrastructure ‐ What is it and where will opportunities lie?: India will no
Construction Index (4.1) 
                                                   (16.3)                (43.2)          longer reside in its villages, as the urban population is increasing by 3% p.a.
                                                                                         Contrary to the popular belief, the bulk of urban population growth is likely to
Ashoka Buildcon                  (3.9)            (12.4)                (23.4)           occur in smaller cities and towns of less than 500,000 people. It is expected that
Era Infra                        (0.3)            (17.8)                (35.0)           urbanization will occur at five times the number by which GDP would have
Gayatri Projects                   1.1            (32.4)                (64.5)
                                                                                         multiplied by 2030. This will open up investment opportunities of US$700bn.
GMR Infra                          0.8            (31.5)                (51.9)
                                                                                         Key big sectors in this are Solid  Waste  Management  (SWM) and Water 
Hind. Construction               (0.2)            (16.4)                (56.6)
IL&FS Transp.                      2.4               1.7                (35.4)
IRB Infra                          1.0               3.6                (35.5)       Inference: India will continue with its growth; however, currently we need to endure
IVRCL Asset                      17.9             (45.0)                (69.3)       the current slowdown which has been reflected in the dismal performance over the
IVRCL Infra                        0.1            (49.2)                (73.5)
                                                                                     past 5-6 quarters. Thus, there has been an underperformance of companies like
Larsen & Toubro                  (2.5)             (9.7)                (35.4)
                                                                                     IVRCL,  NCC,  GMR,  GVK and the likes in the markets. We feel that amidst
Nagarjuna Const.                 (6.7)            (45.8)                (65.6)
                                                                                     opportunities, construction and asset owners will continue to struggle due to
Patel Eng.                       (0.6)            (34.5)                (74.3)
                                                                                     difficulties like increased cost of financing and consequently, would have lower
Punj Lloyd                         1.7            (11.0)                (56.2)
Reliance Infra                   16.3             (22.7)                (55.9)       ROEs. Hence, the incremental cash generation would not support future financing of
Sadbhadv Eng.                      5.2               4.2                 (5.2)       projects and the takers would be fewer. Companies with a stronger balance sheet
                                                                                     and healthy operating portfolios like IRB, Ashoka Buildcon, L&T and RInfra could sail
                                                                                     through. The others would have to part away with their stakes in the current assets
                                                                                     or raise further equity. This proposition, however, seems like an uphill battle.

    Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that
    the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.
    Please refer to important disclosures and disclaimers at the end of the report

                    Airports‐ Monopoly in the past, struggling at present 

                    Key Issues 

                    This segment lacks ‘Model Concession’ agreements, as in roads BOT, which governs
                    the pricing and restricts the upsides/downsides of a project. India has airports which
                    are comparable to the best in the world in terms of facilities, ambience and
                    passenger handling capacity. However, the brunt of this asset creation is borne by
                    the travellers (high airport charges). Levy and periodic increase in development fees
                    has led to an increase in pricing for the end users and no respite is seen in the near
                    future. However, Mr. Shyamal opines that, like the customers, the airport owners
                    too are sensitive to further increase in ADF/UDF and hence, he does not expect any
                    drastic increase in the same.

                    Failure of real estate monetization around the assets was the biggest dampener to
                    the airport owners, since while bidding funds, all these factors were also considered
                    in the project viability. Mr. Shyamal believes that the revenue share offered by the
                    bidders was not solely dependent on the real estate play and the present sorry state
                    of the asset owners is due to the lack of policy measures and increase in project
                    costs to make Indian airports one of the best in the world.

                    New airports, especially in cities where an existing one is already operational, will be
                    a greater risk to the bidders as the passenger mix, frequency of flying from that
                    destination and protection from differences in costing and pricing will be the key
                    issues. Thus, the IRR threshold would be higher than that of the older ones.

                    Key Opportunities 

                    Civil aviation market is expected to witness a growth of more than 16% during 2010-
                    13 and will handle 280m passengers by 2020. For this, MOCA is estimating an
                    expenditure of US$14bn in the near future to develop airport infrastructure in India.
                    Significant value is yet to be created in operational projects in terms of an increase in
                    non-aero revenues, real estate development and rationalization of pricing policies.

                    India has 81 domestic airports; of which, 45 are operational. Development of non-
                    metro airports will be a key in the future.


                    Airports will continue to face glitches in terms of regulatory changes until a proper
                    framework is formed for its functioning and determining threshold returns. Thus,
                    companies like GMR will have to bear the brunt of lower real estate returns and
                    higher operating costs. Amongst all asset classes, Airports will continue to remain a
                    ‘high‐ risk, high‐return’ game.

November 11, 2011                                                                                          2

                    Airport Opportunities Scenario 

                    With growing traffic at some of the metros like Bengaluru, there arises a need for
                    capacity expansion at the existing airport or a need for another airport in the same
                    state or town. However, this is one of the few examples of a prime metro but other
                    states are not yet in such a dire situation. Thus, the new Greenfield airports are likely
                    to come up in Tier 2 and 3 cities where there is ready traffic available. This could be
                    the states of increased urbanisation or emerging trade centres. However, substantial
                    work has been done in revamping Tier 2 airports and thus, we expect a slower
                    activity in the coming months.

                    Exhibit 1: Greenfield Airports on Radar 
                    Locations                                 Status                                Exp Investment (Rs bn)
                    Navi Mumbai                               Bidding process yet to begin                            100
                    Greater Noida, UP                         Clearances awaited form GoUP                             NA
                    Mopa, Goa                                 Bidding process yet to begin                             10
                    Kannur, Kerala                            Bidding process yet to begin                             10
                    Ludhiana, Punjab                          Awarded to Bengal Aerotropolis                           20
                    Shimoga, Karnataka                        Awarded to Maytas-NCC-Vienna                              1
                    Gulbarga, Karnataka                       Awarded to Maytas-NCC-Vienna                              1
                    Hassan, Karnataka                         Awarded to Jupiter Aviation                               6

                    Source: Industry 

                    Exhibit 2: International Players Active / Interested in India 

                                                TAV, Turkey


                                                                  Players in                            Airports
                              ASA Mexico                            India                              Company
                                                                                                      South Africa


                    Source: Industry 

November 11, 2011                                                                                                       3

                                                    Roads present a hazy picture, opportunities galore 

                                                    Key Concerns 

                                                    Irrigational bidding has led to a belief and trend that the lowest bidder wins a project
                                                    which is nearly unviable in terms of a financial payback. Balance sheets do not
                                                    support the financing of these projects, leading to lack of execution, post winning
                                                    the project.

                                                    The above problem is aggravated by high cost of funding and lowered traffic growth
                                                    as compared to the estimates, leading to single digit or negative IRRs. Also, there are
                                                    many projects on sale but the buyers are few and no deal has happened in the
                                                    immediate past.

                                                    Key Opportunities 
  Exhibit 3: India Road Length by Category 
                                                    Mr. Shyamal believes that the traffic growth has followed a ‘hockey-stick’ trend,
            6% of roads carry 80% of traffic        wherein the traffic in the initial years would be lower than expectation and
                   2.0%4.0%                         eventually reach the target during the life of the BOT. Also, if the inflation remains
                                National Highways   high, the asset owners will be compensated with a toll hike to mitigate the funding
                 Total          State Highways
   20.0%        Length
               4.2m kms         Rural Roads
                                                    India has network of 4.2km, of which, only 6% comprises of State and National
                                Other PWD Roads
                                                    highways. Thus, the future opportunity in terms of rural roads and PWD works is yet
                       61.0%    Other Roads         to come.
  Source: MORTH                                     Inference 

                                                    Roads will continue to be the most active asset class in the future to come, Though
                                                    the model of routing equity commitments through EPC margins looks lucrative, the
                                                    process of asset creation/construction has taken a back seat on account of financial
                                                    crunch. As the P/E deals dry up there could be some distress asset sale to peers who
                                                    have a strong balance sheet and are ready to take a risk. Companies like IVRCL assets
                                                    and NCC are already looking for buyers and any deals in this would help ease the
                                                    future financing needs. On the other hand, companies who have strong operational
                                                    current portfolio like IRB, ITNL, Ashoka Buildcon, L&T and RInfra would continue to
                                                    win projects without any major financing hitches. Post the NHDP programme, there
                                                    lays an extended opportunity in rural roads development. Thus, with a slight
                                                    improvement in the financial liquidity situation, the execution is expected to


November 11, 2011                                                                                                                         4

Abounding Opportunities 

With the completion of GQ, NHDP 3 & 5 phases are currently in the awarding phase. From FY12 till date, around 4000kms of road projects have been awarded and the target is
to award around 7000kms. Also, 1,800 km worth of roads are under process. For current project in the size of Rs15-40bn, the numbers of players active are in the range of 7-8,
while in projects lower than this, number of players have increased to 25. However, with MCA in place, the bidding process has become more transparent, but tight
competition continues to exist. NHAI is also contemplating a makeover of the highways by setting up food courts, complexes, multiplexes, ATMs and amusement parks every
50 km on major routes to help unwind and rejuvenate the frequent travellers.

Exhibit 4: NHDP ‐ Current Status 
                                                                                                                                                                                Total by 
In kms                        Phase 1  Phase 1 & 2     NHDP Ph 3     NHDP Ph 5    NHDP Ph 6           NHDP Ph 7    SARDP NE   NHDP Ph 4 NHDP Total     Port Conn       Others
Type of Projects                    GQ         NSEW         4 lane      6 Lane Expressway      Ring Road/Bypass    NE Roads     2 laning
Total Length                    5,846          7,300       12,109        6,500        1,000                  700        388      14,799       48,254          380       1,390    50,024
Already Implemented             5,828          5,810        2,555          652                                                                14,845          327        945     16,117
Under Implementation                26          994         6,256        2,004            0                  43         114       1,230       10,553              57     431     11,041
Balance length for Award             0          420         3,380         3,863       1,000                  659        276      13,577       22,899              0       20     22,919
                                                       Greenfield + Secondary
Opportunity                   Secondary Sale                                          Primarily Greenfield                                 Primarily Greenfield
Source: NHAI 
                                                                                    Immediate                                                               45% to be
                                                                                   Opportunity:                                                             awarded
                                                                                     9,000 kms

November 11, 2011                                                                                                                                                                      5 

Exhibit 5: Bids in early 2011 
Project                                                                    Kms             PC (Rs bn)    Differential between L1 & L2 (as a % of PC)               No of Bids 
Ahmedabad- Vadodara                                                        102                   21.2                                          59%                        19
Kota-Jhalawar                                                               90                    5.3                                            4%                       20
Beawar-Pali-Pindwara                                                       244                   23.8                                          12%                        19
Nagpur-Wainganga                                                            45                    4.8                                            0%                       15
Tindivanam-Krishnagiri                                                     178                    6.1                                            4%                       NA
Barwa -Panagarh                                                            122                   16.5                                            0%                       NA
Jabalpur-Lakhnadon                                                          74                   7.76                                          24%                          4
Aurang-Orissa Border                                                       150                   10.2                                            9%                       10
Jabalpur-Rewa                                                              210                   19.1                                            2%                       NA
Kishangarh-Ahmedabad                                                       556                   53.8                                            2%                       11
Hospet-AP Border                                                            95                    9.1                                          32%                        10
Shivpuri-Dewas                                                             330                   28.1                                          27%                        14
Gwalior-Shivpuri                                                           125                   10.5                                          21%                        15

Source: NHAI, Industry 

Last 2-3 years have seen very aggressive bidding in the BOT sector on account of the trend of easy financing by banks and the model of recovering equity through EPC margins.
With tightening of the monetary situation, recent bids have come to normalcy to some extent as the asset owners don’t have easy access to funds and the current projects are
under tremendous pressure. However, collaboration by smaller players with International counterparts can again intensify the pricing and thus, make bigger projects very

Exhibit 6: Recent Bids 
Project                                                             Kms                   PC  (Rs bn)      Differential between L1 & L2 (as a % of PC)             No of Bids 
Vijayawada-Machilipatnam                                              63                         6.5                                               1%                       3
Patna-Buxar                                                          125                        11.3                                                                        1
Angul-Sambalpur                                                      153                        12.2                                               2%                       7
Birmitrapur-Barkote                                                  128                         7.8                                                                        1
Meerut-Bulandshahr                                                    63                         2.1                                               2%                       6
Lucknow- Sultanpur                                                   124                        10.1                                                                        5
Rohtak-Jind                                                           53                         2.8                                             66%                        6

Source: NHAI, Industry 

November 11, 2011                                                                                                                                                           6 

Exhibit 7: P/E deals in the past 
Company                                   Acquirer                                              Stake                                    Size (Rs bn)                      Date 
Soma                                      JP Morgan                                                NA                                              5                     Aug 11
HCC                                       Xander                                                14.5%                                            2.4                      Jul 11
Isolux                                    Morgan Stanley                                        49.0%                                              9                     Apr 11
KMC                                       3i                                                       NA                                              5                     Mar 11
Sadbhav                                   NVP-Xander                                            22.2%                                              4                     Aug 10
TRIL                                      Actis                                                 35.0%                                           3.45                     Apr 09
Total                                                                                                                                          28.85                             

Source: E&Y Research, Industry Reports 

Companies, which are currently struggling with unavailable projects which were won 2-3 years back, are bearing the brunt of highly leveraged balance sheets and negative
cash flows. This is making further cash generation and servicing of debt a highly risky preposition. Though there has not been a major incident of NPA in banks for BOT Road
sector, we expect further need for cash to be imperative, triggering a stake sale situation. While the P/E transactions in the last two years were very handsomely dealt with,
the current situation will not be an easy ride. Companies like IVRCL Assets, and NCC are currently looking out for equity partners, while companies like Reliance Infra and ILFS
could be amongst the few interested parties on the buyer’s side.

November 11, 2011                                                                                                                                                             7 

                    Urban Infrastructure – Ignored; thus, a restricted territory  

                    Key Concerns 

                    There is a lack of awareness among the city municipalities and state ministries about
                    SWM and its success. Over 25% of the Municipal solid waste is not collected and 70%
                    of the Indian cities lack adequate capacity to transport it.

                    India has 16% of the world population, of which, only 4% of them have an access to
                    fresh drinking water. The situation is much grimmer in the villages, but in its urban
                    counterparts, on account of increasing population, the water supply hours have
                    decreased on an average since1980s.

                    Lack of interest from municipalities, lower tariffs, limited budgetary allocation,
                    regulatory regime and subsidies has led to a perception amongst private players that
                    ‘Water Supply’ is a high-risk sector in terms of financial viability. Also, banks have
                    been reluctant in providing long-term finance for urban infra projects.

                    Key Opportunities 

                    There have been some successes, especially in the Tier-2 cities, where some projects
                    are awarded and are doing well on PPP basis. There is also a huge opportunity from
                    Indian corporates in the areas of Industrial and Power plants water treatment.

                    According to a study, by 2030, India’s two-third population will reside in the urban
                    areas and there will be a demand for better living conditions, throwing an
                    opportunity of US$700bn for creation/modernization of world class Urban


                    Building of Urban Infrastructure was always perceived to be the job of the town
                    head and the lack of it is currently accepted. The dismal condition in the SWM and
                    WS sectors can improve only if the finances of municipalities improve or PPP is the
                    only way out. This sector remains highly fragmented with major dominance by
                    unlisted smaller players; however in listed space players like SPML, Ion Exchange and
                    A2Z Infra are active and would benefit in future projects. In larger urban infra
                    projects like Metro’s and Monorails players like L&T and RInfra has its sheer
                    dominance. However, as Urbanisation process increases, this sector looks the most
                    promising space in future.

November 11, 2011                                                                                       8

                                              Urban India Growing... 

                                              India has nearly 600m people living in cities, which is nearly twice the population of
                                              USA. Going forward it is estimated that 68 cities will have population of 1m plus,
                                              which is currently at 42. Thus, we expect a need for improvement of facilities to be a
                                              necessity and not a luxury.

                                              Exhibit 8: Growth of Urban India 

                                                                         Urban Population (m)
                                                                         Urban Population as a % to Total Population (RHS)

                                                 600                                                                                  50%
                                                 500                                                                                  40%
                                                 100                                                                                  10%

                                                   0                                                                                  0%
                                                              1951                    1991          2001              2021E

                                              Source: McKinsey Global Institute 

                                              Investment in this sector has been on a very shaky note till now, where urban roads
                                              would be given the maximum preference as in the past. The Government has also
                                              placed emphasis on development of Urban Infrastructure with Water and Waste
                                              Services exceeding 70% of the planned expenditure.

                                              Today water supply and treatment (WS&T) market is estimated to be around
                                              US$12bn, where the Government is contributing to about 50%. Moreover, this
                                              market is growing at a rate of 15-20% every year. However, with increasing
                                              population and lower capex on water supply, the per capita availability of water is
                                              expected to decline.

Exhibit 9: Projected Water Demand in India                           Exhibit 10: Per Capital annual availability of Water in India 

         1,600                                                                1,800
         1,400                                                                1,600
         1,200                                                                1,400
         1,000                                                                1,200


          400                                                                   400
          200                                                                   200
            0                                                                     0
                  2010            2025E          2050E                                       2005                      2025E

Source: Secondary Research                                           Source: Secondary Research 

November 11, 2011                                                                                                                           9

                            Exhibit 11: Relative Sector Share in Investment Requirements 
                                                   Solid Waste   Street Lighting       Others
                              Traffic Support         Mgmt            1%                8%
                                   Infra                1%
                                    3%        Building
                                 Strom Water
                                     Drain                                                         Urban Roads
                                       5%                                                             44%
                                      6%      Water Supply

                                                   Redevelopment              Urban Transport
                                                        10%                        11%

              30                                                                   Electronic
                                                                 Biomedical          Waste
              25                                                   Waste              5%
    (Rs bn)

              15                                        Waste

               0                                                                                 Solid Waste
                    2008   2013E                                                                     70%

Source: Industry 

                            However, SWM, which has given least share, would have to be done with earlier.
                            This industry has the benefit of the least raw material cost and integrated logistics.
                            The revenues realisation per tonne is Rs1,300/tonne and thus, has a sale potential of
                            Rs70bn p.a.

                            Currently projects are awarded to private parties in the area of collection and
                            transportation sectors; however, on a smaller scale. Many of these projects are
                            awarded in Tier 2 & 3 cities where a tipping fee is paid for collection and dumping
                            the garbage. Some of the PPP in WS&T and SWM awarded are given in the next

November 11, 2011                                                                                                10

Exhibit 12: Contact Works in SWM 
Sr. No  Project                     Project Type             Capacity TPD       State               Awarded to 
1       Deonar                      ISWM                     2000               Mah                 UPL
2       Mulund                      Biomethanization         500                Mah                 UPL
3       Kanjurmarg                  ISWM                     4000               Mah                 Antony Waste Handling Cell
4       Coimbatore                  Processing & Landfill    500                TN                  UPL
5       Rajkot                      Waste Processing         300                Guj                 Hanjer Bio-tech Energies
6       Surat                       Waste Processing         500                Guj                 Hanjer Bio-tech Energies
7       Pune                        Waste Processing         1200               Mah                 Hanjer Bio-tech Energies
8       Nagpur                      Waste Processing         600                Mah                 Hanjer Bio-tech Energies
9       Jawaharnagar                ISWM                     3000               AP                  Ramky Eviro Engineers
10      Kanpur                      Collection & ISWM        1500               UP                  A2Z Infra
11      Indore                      Collection               500                MP                  A2Z Infra
12      Patna                       Collection               600                Bihar               A2Z Infra
13      Meerut                      Collection & ISWM        600                UP                  A2Z Infra
14      Varanasi                    Collection & ISWM        600                UP                  A2Z Infra
15      Delhi                       WTE                      2000               Delhi               Jindal
16      Chennai                     ISWM                     2000               TN                  Hydroair

Source: Industry 

Exhibit 13: PPP in Water 
Sr. No  Project                Operator                     Size             Duration    Scope 
1       Tirupur                IL&FS                        185 mld          30 Years    BOOT Industrial + domestic water
2       Chandrapur             Gurukripa                    3 Lakh ppl       10 Years    O&M of City
3       Latur                  SPML,Uphos,Hydro Comp        3.5 Lakh ppl     10 Years    O&M of City
4       KUWASIP                Veolia                       18000 conn       3.5 Years   Upgradation & O and M
5       Nagpur                 Veolia                       10000 conn       5 Years     Upgradation & O and M
6       Salt Lake              JUSCO                        14 mld           30 Years    BOT (WS & S)
7       Haldia                 JUSCO                        230 mld          25 Years    BOT
8       Madurai                Hydro Comp                   10000 conn       7.2 Years   Upgradation & O and M
9       Mysore                 JUSCO                        9 Lakh popul     6 Years     Upgradation & O and M
10      Chennai Desal          IVRCL-Befasa                 100 mld          25 Years    Bulk Water BOT
11      Bhiwandi               SPML,Uphos,Hydro Comp        6 lakh Popul     30 Years    Bilk Water +Mgmt
12      Nagpur                 Veolia-Vishvaraj             240000 cm pd     15 Years    DBO new water prod plant
13      Aurangabad             SPML-Vatech                  11 Lakh popul    20 Years    Upgradation & O and M
14      Goa                    SPML                         100mld           5 Years     DBOT of STP
15      Mumbai Airport         Aquatech International       1000 cm pa
16      Bhavnagar              Jindal Aquasource            45 mld           30 Years    BOOT STP
17      Sitargang              Jindal Aquasource            8000 cmpd        30 Years    BOT CEPT
18      Naya Raipur            Jindal Aquasource                                         Water Supply BOT
19      Dewas                  Welspun- MSK                 23mld            30 Years    Industrial Raw Water Supply
20      Sonia Vihar            Degremont                    635mld           10 Years    Bulk Water DBOT
21      Chembarambakkam        Degremont                    560mld           7 Years     Bulk Water DBOT

Source: Industry 

November 11, 2011                                                                                                                11


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Rating Distribution of Research Coverage                                                      

     % of Total Coverage

                           30%   21.8%
                           10%                                                    2.0%
                                  Buy         Accumulate          Reduce          Sell

PL’s Recommendation Nomenclature                                                          

BUY                               :     Over 15% Outperformance to Sensex over 12-months         Accumulate           :   Outperformance to Sensex over 12-months

Reduce                            :     Underperformance to Sensex over 12-months                Sell                 :   Over 15% underperformance to Sensex over 12-months

Trading Buy                       :     Over 10% absolute upside in 1-month                      Trading Sell         :   Over 10% absolute decline in 1-month

Not Rated (NR)                    :     No specific call on the stock                            Under Review (UR)    :   Rating likely to change shortly 

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We may from time to time solicit or perform investment banking or other services for any company mentioned in this document.

For Clients / Recipients in United States of America: 

All materials are furnished courtesy of Direct Access Partners LLC ("DAP") and produced by Prabhudas Lilladher Pvt. Ltd. ("PLI"). This material is for informational
purposes only and provided to Qualified and Accredited Investors. You are under no obligation to DAP or PLI for the information provided herein unless agreed to by
all of the parties. Additionally, you are prohibited from using the information for any reason or purpose outside its intended use. Any questions should be directed to
Gerard Visci at DAP at 212.850.8888.

November 11, 2011                                                                                                                                                              12

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