Powergrid awards accelerate; likely to meet 11th Plan target of INR550b

24 November 2011

Update | Sector: Capital Goods

T&D Equipment

Competitive intensity to restrict margins of equipment suppliers; maintain Neutral



Powergrid's YTD FY12 project awards at INR79b, up 41% YoY; expect momentum to continue. 12th Plan

capex target at INR1t+, ~2x the 11th Plan capex.

Competitive intensity remains high. Transformer segment sees worst of it, with prices declining by 35-40%

in past two years.

Ordering to improve in next few quarters, but profitability to remain under pressure. Maintain Neutral on

T&D equipment suppliers.



Powergrid's YTD FY12 project awards at INR79b,

up 41% YoY; expect momentum to continue for the

rest of the year:

Power Grid Corporation of India's

(Powergrid) project awards in YTD FY12 (April - October)

totaled INR79b, up 41% YoY. After a lull in the beginning

of the year, ordering has picked up lately, with orders worth

INR40b placed in October alone. In the last one month,

Powergrid has further approved investments worth INR39b,

which will ensure healthy ordering towards the year-end.

We expect Powergrid to place orders of over INR150b in

FY12, which will result in total awards of ~INR550b during

the 11th Five Year Plan. This represents an impressive

growth of ~3x over the 10th Five Year Plan.

Ambitious targets for 12th Five Year Plan:

Powergrid

plans to install ~65,000 circuit km (ckm) of transmission

lines during the 12th Plan, nearly twice the likely installation

in the 11th Plan (~30,000ckm, target of 37,000ckm) with a

targeted capex INR1t+, ~2x the 11th Plan capex. While

the target appears ambitious, it will be necessary to meet

growing transmission needs in the country, especially after

commissioning of 80-100GW of generation projects under

construction.

Competitive intensity remains high; but unlikely to

deteriorate further



Aggressive bidding by Chinese and Korean players, who

together commanded ~60% of the EHV transformer/

reactor market during FY08-11, beat down prices by

30-40% over the last 2-3 years. Recent trends suggest

that pricing in the segment has bottomed out and should

not deteriorate further because of non-sustainability of

very low prices. Increasing thrust by Powergrid on local

manufacturing and decreasing proportion of mandatory

import content will benefit domestic players.

We expect competitive intensity in the tower segment to

remain high, though smaller players that were aggressive

in FY08-10 appear to be focusing more on execution.

The big-7 players commanded ~70% of the market over

FY08-10, which increased to 96% in YTD FY12.



Powergrid now excludes switchgear from substation

package ordering. We believe this has reduced entry

barriers for non-T&D equipment manufacturing

companies in bidding for substation execution business,

thereby enhancing competitive intensity in a segment

otherwise dominated by MNCs.

Our view:

Competitive intensity in the Indian T&D

equipment sector remains high, which continues to impact

pricing. We believe that low product prices coupled with

rising input costs will keep margins under pressure in the

near term. Stocks of T&D equipment suppliers are trading

at significant discount to their long-term average valuations,

implying significant risk to near-term earnings. We believe

that while ordering will improve in the next few quarters,

profitability will remain under pressure. We remain

Neutral

on the T&D equipment sector, with preference for

Siemens

over

ABB

Crompton Greaves.

Quarterly project awards by Powergrid (INR b)

Pow ergrid Quarterly orders (INR b)

Source: Powergrid/MOSL

Dhirendra Tiwari

(Dhirendra.Tiwari@MotilalOswal.com) +91 22 3982 5127

Deepak Narnolia

(Deepak.Narnolia@MotilalOswal.com) +91 22 3982 5126

Capital Goods | Update

Powergrid's project awards likely to accelerate during the rest of the year

During FY12 YTD (April - October), Powergrid has awarded total projects worth INR79b,

up 41% YoY. After a lull in the beginning of the year, ordering has picked up lately, with

orders worth INR40b placed in October alone. Almost all projects slated for commissioning

in the 11th Plan period have been tendered out. Generally project awards accelerate in the

fourth quarter of every year. Over the past three years, the fourth quarter constituted 46-

65% of the total project awards. In 4QFY11, project awards accelerated exponentially

(up 60% YoY), and constituted 65% of the total awards during the year. During the current

year, orders picked up sharply in 2QFY12.

In the last one month, Powergrid has further approved investments worth INR39b, which

will ensure meaningful acceleration in order awards in the remainder of FY12. Last year

saw one of the largest orders worth INR55b for 6GW HVDC line (consortium of ABB

Zurich, ABB India and BHEL is L1). We expect Powergrid to place orders of over INR150b

in FY12. This will put the value of total awards at ~INR550b during the 11th Five Year

Plan, which is equal to Powergrid's target investment under the plan period. This also

represents an impressive growth of ~3x over the 10th Five Year Plan.

Monthly trend in Powergrid's project awards (up to October 2011)

Value

No. of contracts

Order awards picking

up as the year is closing

Source: Powergrid/MOSL

Share of transformers/reactors in project awards has declined

Transmission towers, substations and transformers constituted ~79% of the project awards

in FY11 and 71% in FY12 YTD. Transformer/reactor awards were INR10.2b (down

57%) in FY11 and INR9.3b in FY12 YTD. The share of transformers/reactors in order

value has decreased substantially after peaking in FY10 (20%). This is partially due to

decreasing prices, which have declined by over 35% since the beginning of FY09 due to

increasing competitive intensity.

Segment-wise project awards (INR b)

Segment

Transmission Line

Substation

Transformer

Reactor

Insulator

Conductor

Others

RE Works

Total

FY09

47.4

24.8

10.6

2.5

3.9

37.0

3.2

15.2

144.7

FY10

44.0

20.6

11.3

12.8

9.6

14.8

3.6

2.7

119.4

FY11

65.4

41.0

7.6

2.6

FY12 YTD

25.9

20.7

8.4

0.9

3.3

3.0

29.8

17.9

3.7

2.9

0.0

153.5

79.7

Source: Powergrid/MOSL

24 November 2011

Capital Goods | Update

Segment-wise order awards (FY11)

FY11

Conductor

19%

Tower

Package/

Transmission

Line 36%

Others 2%

Segment-wise order awards (FY12 YTD)

FY12 YTD

Conductor

22%

Others 4%

Tower Package/

Transmission Line

34%

Insulator 2%

Reactor 2%

Transformer 5%

Insulator

Reactor

Transformer

11%

Substation

26%

Source: Powergrid/MOSL

Substation 27%

Transformer market: Expect prices to stabilize after steep fall over past

two years

The transformers/reactors segment saw total order inflow of INR10.2b during YTD FY12.

We expect orders to accelerate in the remainder of FY12.

The 765kV (EHV) segment accounted for 74% and 61% of the total value of transformer/

reactor orders awarded in FY11 and FY12 YTD, respectively, up from 32% in FY10. The

EHV segment comprises of ~30% of total transformer capacity proposed in the 11th Plan

and ~40% in the 12th Plan.

Chinese and Korean players together commanded over 60% of the EHV transformer/

reactor market over FY08-10. Hyosung, a leading Korean player, bagged 1/3rd of the

Powergrid orders over FY08-10 while Baoding bagged slightly less than 10% of the orders.

TBEA bagged 14% of the orders over the same period. In FY11, the combined share of

Chinese/Korean players in the EHV transformer/reactor market was 58%. Decreasing

level of proportionate mandatory import content will benefit domestic players.

TRIL the new entrant in 765kV transformers:

Recently, Transformers and Rectifiers

(India) Limited (TRIL), one of India's larger transformer manufacturers, bagged an

order worth INR2.04b for 765kV transformers from Powergrid, in a consortium with

ZTR of Ukraine. TRIL is the second Indian company after Crompton Greaves to receive

765kV transformer orders.

Break-up of EHV transformer/reactor market

Orders worth INR28b

Orders worth INR6b

Hyundai Eng., 12%

Orders worth INR6b

TBEA, 19%

TRIL- one more new

domestic player in

EHV transformer market

CGL, 28%

CGL, 36%

ABB, 11%

ABB, 3%

Hyosung, 33%

Baoding, 27%

Baoding, 9% Areva, 1%

FY08-10

FY11

Areva, 3%

Hyosung, 18%

TRIL, 56%

CGL, 30%

Areva, 14%

FY12YTD

Source: Powergrid/MOSL

24 November 2011

Capital Goods | Update

We believe prices in the 765kV (EHV) segment have bottomed out and should not

deteriorate further because of the following:



Aggressive bidding by Chinese/Korean players as an entry strategy does not appear

sustainable. Chinese/Korean players have quoted 25-30% lower prices than

competitors in the past, resulting in transformer prices (765kV range, per MVA) tumbling

by over 35% since the beginning of 2009. This, coupled with cost increases, has hit

industry profitability hard. We believe that such low prices are not sustainable and

prices will revert to normalized levels once demand picks up. Recently, in an investor

conference call, Areva T&D stated that competition from overseas suppliers is receding.



Powergrid's increasing thrust on local manufacturing will compel Chinese/Korean

players to set up manufacturing capacity in India. Recently TBEA announced its plan

to set up a manufacturing plant in Gujarat. We believe the trend will limit the price war

in the transformer market, as it will provide a level playing field to domestic players.

Competitive intensity in 400kV remains unchanged:

Competitive intensity in the

400kV segment remains very high. Despite intense pricing pressure and lower profitability,

the segment has seen the entry of new players in the recent past. Vijai Electricals and

Siemens, which had relatively insignificant market share in FY08-10, have made strong

inroads, with each of them bagging over 30% of orders in FY11. Given the lack of technology

barriers and overcapacity in the market, we expect competitive intensity to remain high.

Break-up of sub-EHV transformer/reactor market

Total: 9.6b

Others, 6%

Siemens, 6%

Total: 4.0b

Total: 3.3b

Vijai, 6%

CGL regains its

market share in FY12 YTD

which had declined

meaningfully in FY11

Vijai, 31%

Siemens, 29%

CGL, 34%

Siemens, 31%

BHEL, 36%

CGL, 19%

Areva, 18%

FY08-10

BHEL, 6%

Areva, 13%

FY11

BHEL, 7%

ABB, 11%

FY12 YTD

Source: Powergrid/MOSL

CGL, 48%

Substation package market: Exclusion of switchgear to benefit non-

equipment manufacturers

In the substation segment, the share of 765kV orders declined to 61% in FY11 from 79%

in FY10 and 64% in FY09. FY11 saw the biggest ever tender from Powergrid to the

BHEL-ABB consortium. The total order value was INR53b, of which BHEL's share is

~INR16b and ABB India's share is ~INR7b. The LOA is expected to be placed before

the end of FY12. Traditionally, due to requirement of high system reliability and technology

barriers, multinationals like Siemens, ABB and Areva have led the EHV substation market.

The substation package, which consists of civil, mechanical and electrical works, is going

through a change in the mix of competing players. Earlier, apart from the integrated MNCs

based in India, equipment players had larger presence than EPC players in substation

24 November 2011

Capital Goods | Update

orders. However, Powergrid has recently eased its requirements for substation package,

leading to increased share of EPC players. Powergrid has started to exclude switchgear

from substation package ordering. We believe this has reduced entry barriers for non-

T&D equipment manufacturing companies in bidding for substation execution business.

Recently, Jyoti Structures and Techno Electric Engineering have bagged large orders in

the EHV substation space. In FY12 YTD, the combined share of these non-equipment

manufacturing EPC players has gone up significantly to over 60% while Crompton Greaves

bagged the remaining orders.

Break-up of EHV substation market

Others, 6%

Siemens, 28%

Share of non-equipment

manufacturer increased

significantly in FY12

YTD driven by easing

norms of Powergrid

Areva, 25%

FY09

FY10

ABB, 72%

Siemens, 10%

Areva, 8%

ABB, 5%

FY11

Siemens, 75%

ABB - BHEL HVDC,

76%

Techno Electric,

20%

L&T, 22%

Jyoti , 19%

Areva, 9%

CGL, 11%

ABB, 14%

FY12 YTD

Source: Powergrid/MOSL

Note 1: HVDC orders' LOA yet to be placed

Note 2: FY11 includes HVDC order worth INR23b (excludes INR30b share of ABB AB, Sweden)

Tower package market: Competitive intensity to remain high

Competitive intensity in the transmission tower segment continues to be very high. The

market for towers is overcrowded because of limited design content and is dominated by

civil construction. Order awards are based on strong prequalification norms both on net

worth and project execution track records. On the positive side, foreign players continue

to keep their distance from the segment.

Competitive intensity is likely to remain high in the tower segment, though smaller players

like EMCO, ICOMM, A2Z, Rajit Singh, etc, who were aggressive in FY08-10, have been

focusing more on execution. Gammon (formerly Associated Transrail) and EMC's JVs

have gained significantly over the years. The big-7 players including Gammon and EMC's

JVs commanded ~70% of the market over FY08-10, which increased to 76% in FY11

and further to 89% in FY12 YTD. IVRCL, EMCO and SPIC's JVs are conspicuous by

their absence while Gammon and EMC have gained significantly by winning big orders in

Chhattisgarh and Tuticorin, respectively.

Given the large number of players and peak competitive intensity, we do not expect too

many new players to enter, though the year saw two new players - NCC and Simplex

Projects. Ordering activity has picked up in 2QFY12 and Powergrid has awarded orders

worth INR25b in the tower segment during YTD FY12. We expect ordering to accelerate

in the remainder of FY12. Strong volumes should drive growth of integrated companies.

24 November 2011

Capital Goods | Update

Tower segment competitive landscape

Contrator name

Jyoti Structure

Tata Projects

Gammon India

Kalpatru

KEC

L&T

FY08-10

11,699

10,423

9,963

8,376

8,065

7,263

7,044

4,834

3,714

3,569

3,494

2,421

2,034

1,717

1,604

417

Value (INR m)

FY11

689

13,344

4,055

7,234

7,420

3,885

13,485

3,596

6,268

714

721

361

2,417

461

1,819

626

25,875

100

FY12

2,148

1,114

6,161

1,856

669

1,873

9,146

FY08-10

% Share

FY11

FY12

Share of bigger players

rising as small players

focusing more on execution

JV Of EMC & Others

EMCO

IVRCL

JV of SPIC & Others

ICOMM Tele

A2Z

Ranjit Singh and JV

Bajaj Electrical

Aravali Infra Power

Shyama Power

JV of NCC & others

Simplex Projects

Others

Total

4,768

91,405

1,203

65,392

100

Source: Powergrid/MOSL

Expect Powergrid to achieve 11th Plan ordering target, but miss

commissioning target

We expect Powergrid to achieve its 11th Plan capex target of INR550b, though it may

miss commissioning target due to delay in implementation of generation capacity additions

(inter-regional transmission capacity, targeted to reach 37GW by end-FY12, stood at 22GW

as at end-FY11). Despite significant slippage in capacity additions during the 11th Plan

(52GW expected to be achieved v/s initial target of 78GW), Powergrid is able to make up

for the capex largely due to incremental capex towards transmission projects linked to

generation capacities being set up by private sector entities, which were not part of the

original estimates. Also, ~40% of Powergrid's capex is towards system strengthening, not

completely linked to generation capacity additions. During FY08-11, Powergrid's capex

stood at INR373b (68% of the targeted expenditure over the 11th Plan).

To achieve its capex target of INR550b during the 11th five-year plan, Powergrid needs

capex of INR157b during FY12, which appears feasible, given the orders placed so far

(INR79b).

Investment by Powergrid on various Transmission Projects (INR b)

120

106

Powergrid needs to do capex

of INR157b (INR79b already

done) to meet its 11th plan

target of INR550b

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

Source: Powergrid/MOSL

24 November 2011

Capital Goods | Update

Powergrid aims at doubling investment in 12th Plan; EHV segment to grow

faster

Powergrid plans to install ~65,000 circuit km (ckm) of transmission lines during the 12th

Plan (2012-2017), nearly twice the likely installation in the 11th Plan. The company's

target for the 11th Plan was 37,000ckm against which it is likely to achieve 28,000-30,000ckm

due to delays in commissioning of certain projects. The targeted capex under the 12th

Plan is INR1t+, ~2x the 11th Plan capex. This is being driven by investments in HSTCs

(largely for private IPP projects), system strengthening, etc.

12th plan investment will be driven by investment in HSTC's system strengthing

Targeted investment under 5-year plans (INR b)

1,000

550

189

9th Plan

10th Plan

11th Plan (E)

12th Plan (E)

Source: Powergrid/MOSL

Plan-wise 765kV substation capacity share to rise from 30% to 40%

Capacity

(MVA)

765kV

400kV

230/220kV

Total

At the end of the plan period

10th Plan 11th Plan (E) 12th Plan (E)

2,000

92,942

156,497

251,439

53,000

145,000

230,000

428,000

163,000

225,000

325,000

713,000

Plan-wise addition

10th Plan 11th Plan (E) 12th Plan (E)

2,000

32,562

40,134

74,696

51,000

52,058

73,503

176,561

110,000

80,000

95,000

285,000

Source: CEA

Powergrid: 12th plan capacity addition (physical)

Transmission lines (ckm)

+ 600kV / 800kV HVDC

765 kV AC

400 kV AC

New Substations (Nos.)

765 / 400 kV

400/200/132 kV

1200/400 kV

Transformation capacity (MVA)

765 / 400 kV

400/200/132 kV

54,000 - 66,000

4,000-6,000

25,000-30,000

75-90

25-30

50-60

1-2

130,000-150,000

90,000 - 100,000

40,000 - 50,000

Source: Powergrid

24 November 2011

Capital Goods | Update

Valuation and view: Prefer SIEM over ABB / CRG

Competitive intensity in the Indian T&D equipment sector remains high, which continues

to impact pricing. We believe that low product prices coupled with rising input costs will

keep margins under pressure in the near term. Stocks of T&D equipment suppliers are

trading at significant discount to their long-term average valuations, implying significant

risk to near-term earnings. We believe that while ordering will improve in the next few

quarters, profitability will remain under pressure. We remain

Neutral

on the T&D equipment

sector, with preference for

Siemens

over

ABB

Crompton Greaves.

Comparative valuation

M-Cap

Rating

ABB#

BHEL

BGR Energy

Crompton

Cummins

L&T

Siemens##

Neutral

Buy

Neutral

USD

2.5

12.4

0.4

1.5

1.8

14.5

4.6

CMP

587

256

247

115

335

1,191

682

627

301

266

138

441

1,666

792

3.0

23.1

44.7

14.3

21.3

69.7

25.1

32.0

22.0

EPS (INR)

FY11 FY12E FY13E

9.0

26.3

36.4

8.0

19.1

78.7

31.7

36.3

28.8

P/E (x)

FY11

FY12

64.9

9.7

6.8

14.3

17.6

15.1

21.5

12.1

13.7

FY13

20.9 196.7

30.1

11.1

33.3

5.5

11.2

24.5

89.7

39.4

39.3

35.6

8.0

15.7

17.1

27.2

13.7

18.0

EV/EBITDA (x)

FY11

FY12

35.3

5.8

5.9

8.1

11.9

12.8

11.1

6.8

8.9

FY13

17.0

4.7

6.2

9.0

11.3

8.6

6.1

7.3

FY11

2.6

31.4

38.9

27.8

35.5

18.3

23.2

31.9

42.0

28.0 141.4

8.5

6.6

7.4

3.8

10.3

13.7

13.3

17.3

11.1

5.1

10.9

13.8

16.1

8.3

11.2

RoE (%)

FY12

7.6

28.8

25.2

12.8

28.9

17.3

25.7

29.4

37.9

FY13

15.9

27.3

19.7

17.4

34.5

16.4

27.0

26.1

33.7

INR/Sh INR/Sh

Thermax

Neutral

1.1

438 472

Havells

Buy

1.0

395 499

# Year end December; ## Year end September

24 November 2011

Capital Goods | Update

Appendix

Key orders during FY12 YTD

Month

Oct-11

Sep-11

Jun-11

Category

Substation

Contractor name

Jyoti Structures

Project details

Substation package for 765/400 KV Jabalpur pooling station and

extension of 400KV Jabalpur sub-station associated with transmission

system for generation projects in Orissa

ACSR Zebra conductor and ACSR Bersmis conductor packages

associated with transmission system for phase-1 generation projects

in Orissa

Tower packages for 765 KV DC and SC transmission lines associated

with transmission system for IPPS in Chattisgarh

765KV SC Gwalior-Jaipur transmission line and 765KV SC Jaipur

Bhiwani transmission line associated with transmission system

associated with phase-1 generation projects in orissa

Invitation to bids for conductor packages for 400KV DC Kishanganj-

Patna transmission line under transmission system for transfer of

INR m

1,128

Oct-11

Conductor

Sterlite Technologies

1,125

Jul-11

Oct-11

Tower Package/

Transmission Line

Tower Package/

Transmission Line

Conductor

Tower Package/

Transmission Line

Conductor

Others

Transformer

Substation

Tata Projects

Gammon India

1,114

1,110

Aug-11

Sterlite Technologies

1,108

Sep-11

Oct-11

Aug-11

Sep-11

Electrical

Company

power from generation projects in Sikkim

Manufacturing Tower package associated with transmission system of MB power

(mp) Ltd generation project (1200MW) coming up in MP

Conductor packages for 765KV DC Raipur pooling station-Wardha

transmission line associated with Chhattisgarh phase

Conductor packages for 765KV DC Raipur pooling station-Wardha

transmission line associated with Chhattisgarh transmission system

Conductor packages for 765KV DC Raipur pooling station-Wardha

transmission line associated with Chhattisgarh transmission system

1,099

1,058

1,057

1,046

1,045

Gammon India

Gupta Power Infrastructure

Apar Industries

ZTE Corporation

DWDM/SDH telecom equipment package for augmentation of backbone

and access network

JV Of CGL, India & CG, 765KV transformer 765KV Raigarh (Tamnar) pooling station associated

Hungary

with establishment of pooling stations at Champa and Raigarh (Tamnar)

for IPP generation projects in Chhattisgarh

Extension of 765KV Satna S/S, extension of 765KV Gwalior S/S

extension of 400KV bassi S/S under transmission system associated

with Rihand-3, Vindhyachal

Invitation to bids for conductor packages for 400KV DC Kishanganj-

Patna transmission line under transmission system for transfer of

power from generation projects in Sikkim

Tower packages 765 KV DC and SC transmission lines associated

with transmission system for IPPs in Chattisgarh

Sep-11

Conductor

Larsen & Tubro

1,027

Aug-11

Tower Package/

Transmission Line

Apar Industries

1,020

Jul-11

Gammon India

1,009

24 November 2011

Motilal Oswal Sector Gallery

Disclosures

This report is for personal information of the authorized 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

to invest 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 been

furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates

or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt

or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

The information contained herein is based on publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, MOSt and/or its

affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or

employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report . MOSt or any of its affiliates

or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness

for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision

based on this report or for any necessary explanation of its contents.

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest

Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Disclosure of Interest Statement

1. Analyst ownership of the stock

2. Group/Directors ownership of the stock

3. Broking relationship with company covered

4. Investment Banking relationship with company covered

Companies where there is interest

None

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or

will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible

for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to

law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

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 (Financial

Promotion) 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 to

which this document relates is only available to investment professionals and will be engaged in only with such persons.

For U.S.

MOSt is not a registered broker-dealer in the United States (U.S.) and, therefore, is not subject to U.S. rules. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange

Act of 1934, as amended (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.,

Motilal Oswal has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo").

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 institutional

investors"). 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 major

institutional investors and will be engaged in only with major institutional investors.

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, Marco

Polo 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 research analyst account.

Motilal Oswal Securities Ltd

3rd Floor, Hoechst House, Nariman Point, Mumbai 400 021

Phone: (91-22) 39825500 Fax: (91-22) 22885038. E-mail: reports@motilaloswal.com