HAVELLS FY16
Havells’ (HAVL) FY16 annual report highlights a shift in its focus back to
domestic operations with a stake sale in the Sylvania business. On a
standalone basis, revenue growth was merely 3.8% (five-year low),
primarily due to benign commodity prices. Further, pre-tax earnings
and EBITDA growth (at 10.1% and 7%, respectively, for FY16) have been
slowing over the past five years. Earnings to cash flow conversion
declined to 90% in FY16 (FY15: 94%) on rising inventory levels. Cash
flows are further supported by the continued practice of receivables
factoring / channel financing (FY16: INR8.1b). Adjusted for this, ROIC
and ROCE stood at 32% and 18%, respectively (v/s 28% and 14%,
respectively, in FY15). Cash and investments increased to INR16.2b
(FY15:INR7.8b), generating a yield of 4.4%. HAVL, in our view, will be
among the key beneficiaries of GST due to a shift in trade from
unorganized to organized.
The
ART
of annual report analysis
EBITDA growth decelerates (to
7% ) for fifth consecutive year
Cash conversion cycle adjusted
for receivable factoring stood at
102 days v/s reported 47 days
A
NNUAL
R
EPORT
T
HREADBARE
24 June 2016
Adjusted ROIC nearly halves to 32% v/s
reported: 58%
Stake sale in Sylvania frees up capital employed and
managerial bandwidth:
In FY16, HAVL, through its subsidiary
Havells Holding, disposed 80% of its stake in Havells Malta
(holding co. for Sylvania) and Havells Exim for
INR10.9b
,
recognizing a gain of INR7.2b on a consolidated basis. This will
help in freeing up of the managerial bandwidth and capital
employed.
EBITDA growth decelerates for fifth consecutive year:
Over
the past five years, HAVL’s standalone revenue and EBITDA
growth has been declining. In FY16, revenue grew by a mere
3.8% to INR54.4b, while EBITDA growth also decelerated to
7%. EBITDA margin increased to 13.8% (FY15: 13.3%),
primarily on account of gross margin expansion of 230bp,
partially offset by an increase in operating and administrative
as well as employee expenses.
Cash conversion cycle supported by receivables factoring:
Adjusted for receivables factoring, cash conversion cycle
doubled to 102 days (FY15: 94 days) v/s the reported 47 days
(FY15: 39days). The increase in cash conversion cycle can be
ascribed to a rise in inventory days to 85 days (FY15:79 days)
due to increasing finished goods inventory.
Adjusted ROIC nearly halves v/s reported:
Adjusted for
receivables discounting, ROIC stood at 32% vs the reported
58%, while ROCE stood at 18% vs the reported 22%.
FCF falling on account of working capital changes and capex:
Standalone adjusted FCF increased to INR3.6b (FY15: INR3.2b),
but is down from its high of INR5.0b in FY14. The deterioration
is primarily on account of (a) higher capex for its water heater
plant and (b) an increase in working capital requirements.
Stock Info
Bloomberg
CMP (INR)
Equity Shares (m)
52-Week Range (INR)
M.Cap. (INR b)/(USD b)
1,6,12 Rel. Perf. (%)
HAVL IN
366
623.9
378/233
228.3/3.4
-7/16/29
Financial summary (INR b)
Y/E Mar
Net Sales
EBITDA
Adj PAT
Adj EPS (INR)
EPS Gr. (%)
BV/Sh (INR)
Payout (%)
P/E (x)
P/BV (x)
E: MOSL Estimates
2016
77.1
8.0
4.8
7.8
-6.0
41.0
60.3
47.3
9.0
2017E
63.3
9.0
6.5
10.4
34.1
45.5
56.2
35.2
8.1
2018E
74.5
11.3
8.0
12.9
23.7
51.4
54.5
28.5
7.1
Shareholding pattern (%)
As on
Promoter
DII
FII
Others
Mar-16
61.6
4.2
25.6
8.6
Note: FII Includes depository receipts
Dec-15
61.6
4.1
25.1
9.1
Mar-15
61.6
2.6
26.0
9.8
Auditor’s name
V.R. Bansal & Associates, Chartered Accountants
S. R. Batliboi & Co LLP, Chartered Accountants
Note : Based on standalone financials unless specified
ART will present a threadbare portrait of annual reports - statistical, strategic and structured. We believe ART's wide canvas - from accounting and auditing issues to
operating performance to management insights to governance matters - will help readers paint a clearer picture of the stock's investment worthiness.
Sandeep Ashok Gupta
(s.gupta@motilaloswal.com); +91 22 3982 5544
Somil Shah
(Somil.Shah@motilaloswal.com); +91 22 3312 4975 /
Mehul Parikh
(Mehul.Parikh@motilaloswal.com); +9122 3010 2492
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

ART
|
Havells FY16
ART #1
ACCOUNTING & KEY FINANCIAL INSIGHTS
Focus shifts to Indian operations; divests stake in Sylvania
Sale of Sylvania frees cash
and management
bandwidth
In FY16, HAVL, through its wholly owned subsidiary Havells Holding, disposed
80% of its stake in Havells Malta (Sylvania) to an affiliate of Shanghai Feilo
Acoustics Co (SFAL) for a consideration of INR10.1b, recognizing a profit of
INR7.2b in P&L.
The company has retained stake in the US, Brazil, Chile and Thailand operations
of Sylvania.
HAVL has a put option to sell the balance 20% stake to SFAL or its associates
after 18 months from the closing date of the transaction until five years. SFAL
also has a call option to buy these 20% shares within five years of the closure
date.
Further, HAVL has sold its 80% stake in Havells Exim Limited, Hong Kong, to a
subsidiary of SFAL for a consideration of INR0.8b, recognizing a profit of
INR0.5b.
SFAL has committed to buy the balance 20% stake for a consideration of
EUR2.6m after 18 months from the closing date of the transaction until five
years.
We believe this will help HAVL to free up capital and managerial bandwidth to
focus on its Indian operations, which are conducted on a standalone basis.
We have analyzed the standalone financials of the company (see Exhibit 2),
which is the primary continuing business.
Exhibit 1: Exceptional gains recognized on sale of subsidiaries
(INR
b)
Particulars
Havells Malta
Havells Exim
Restructuring cost incurred
Total
Sale consideration
10.1
0.8
10.9
Profit on sale
7.0
0.5
-0.3
7.2
Source: Company Annual Report, MOSL
Growth decelerates; ceasing of royalty payouts cushion earnings from FY17
Over the past five years, HAVL’s (standalone) revenue growth has been
declining. In FY16, revenue grew by a mere 3.8% to INR54.4b (FY15: 11% to
INR52.4b), primarily as a drop in copper prices by ~19% offset higher volume
growth in the cable business.
Standalone EBITDA and PBT growth has also decelerated over the past five
years. EBITDA growth reduced to 7% in FY16 from 33.8% in FY11, and PBT
growth (adjusted for exceptional gain) was a mere 10.1%, down from a high of
30.2% in FY14.
EBITDA margin increased from 13.3% in FY15 to 13.8% in FY16, primarily on
gross margin expansion of 230bp, partially offset by an increase in operating &
administrative as well as employee expenses.
HAVL has been consistently spending 3% of its standalone revenue on
advertisement and sales promotion. Further, HAVL has also been paying ~0.7%
of its standalone revenue to its parent entity as trademark & royalty charges.
24 June 2016
2

ART
|
Havells FY16
Management has guided that trademark & royalty payments will not be made
from FY17 onward, which should boost its profitability.
Exhibit 2: Standalone operating performance: Commodity price decline leads to lower revenue growth
Particulars
Net Revenue (Operations)
Raw Materials Consumed
Gross Margin
Operating and Administrative
Expenses
Personnel Cost
EBITDA
FY12
(INR b)
36.2
22.9
13.2
7.3
1.4
4.6
%
100
63.4
36.6
20.1
3.9
12.6
FY13
(INR b)
%
42.2
100
26.5
62.8
15.7
37.2
8.4
2.0
5.3
19.8
4.8
12.7
FY14
(INR b)
47.2
29.0
18.2
9.3
2.5
6.4
%
100
61.5
38.5
19.7
5.2
13.6
FY15
(INR b)
52.4
31.8
20.6
10.5
3.1
7.0
%
100
60.7
39.3
20.0
6.0
13.3
FY16
(INR b)
%
54.4
100
31.7
58.4
22.6
41.6
11.4
3.8
7.5
21.0
6.9
13.8
Source: Company Annual Report, MOSL
Exhibit 3: Revenue growth showing downtrend…
Revenue Growth
25.5%
16.9%
11.7%
11.0%
3.8%
Exhibit 4: …so does EBITDA and PBT growth
EBITDA Growth
33.8%
20.7%
22.3%
17.4%
20.0%
9.0%
10.1%
7.0%
FY16
Normalised PBT Growth
30.2%
FY12
FY13
FY14
FY15
FY16
FY12
FY13
FY14
FY15
Source: Company Annual Report, MOSL
Source: Company Annual Report, MOSL
Exhibit 5: Expenses for brand building remain high (INR b)
Advertisement and sales promotion
3.1%
3.1%
2.4%
2.9%
% of revenue
3.2%
Exhibit 6: Considerable savings from next year (INR b)
Trademark and royalty fees to Related party
% of revenue
1.0%
1.0%
0.9%
0.8%
0.7%
1.1
FY12
1.3
FY13
1.1
FY14
1.5
FY15
1.8
FY16
0.4
FY12
0.4
FY13
0.4
FY14
0.4
FY15
0.4
FY16
Source: Company Annual Report, MOSL
Source: Company Annual Report, MOSL
Significant contribution from cable and wires business with lower margins
On a standalone basis, the cables and wires business contributes 41% of
revenues, but has comparatively lower EBIT margin of 14%, dragging HAVL’s
overall EBIT margin. Prices of cables and wires are dependent on commodity
prices, leaving little pricing power in the hands of manufacturers and thus
commoditizing the product.
Switchgear, which continues to contribute 24-26% of the revenue mix, has been
able to expand EBIT margin to 39% (FY15: 34%).
During FY16,revenue growth has declined for all segments, except Lightning and
fixtures.
3
24 June 2016

ART
|
Havells FY16
Exhibit 7: Revenue growth decelerates for three segments (%)
Revenue Growth
Swtichgear
Cables and wires
Consumer durables
Lighting and fixtures
FY12
22.0
29.3
21.9
24.7
FY13
20.3
6.2
38.0
20.0
FY14
13.1
13.8
8.1
8.3
FY15
4.9
13.7
20.5
2.8
FY16
0.6
0.8
11.0
8.2
Source: Company Annual Report, MOSL
Exhibit 8: Cables and wires drags EBIT margin (%)
Revenue Contribution
Swtichgear
Cables and wires
Consumer durables
Lighting and fixtures
Standalone EBIT (%)
FY12
25
44
16
15
Revenue Contribution
FY13
FY14
FY15
26
26
24
40
41
42
19
18
20
16
15
14
FY16
24
41
21
15
FY12
36
8
28
24
11
EBIT Margin
FY13
FY14
FY15
34
33
34
9
11
12
25
27
25
24
25
27
11
12
12
FY16
39
14
25
24
12
Source: Company Annual Report, MOSL
Exhibit 9: Cables and wires contributes 41% of revenues mix
15%
Exhibit 10: Copper prices decline ~19% in FY16 (USD/t)
6,500
24%
Swtichgear
Cables and wire
6,000
5,500
5,000
4,500
21%
Consumer Durables
41%
Lighting and Fixtures
Source: Company Annual Report, MOSL
Source: Bloomberg, MOSL
Tax rate to rise on expiry of benefits
Tax rate for Indian
operations to remain at
~28%, according to
management
The company was eligible for deductions under section 80-IC of Income Tax, for
units located in special category of states – Haridwar (Uttarakhand) and Baddi
(Himachal Pradesh). Further, it was exempted from excise duty on goods sold
from these units.
Tax benefits for some units located in Baddi expired in FY15 and also for some in
Haridwar in FY16. Hence, the tax rate for the Indian business rose steeply from
20% in FY14 to ~28% in FY15. Further, HAVL’s all units will be out of tax
exemptions by FY19-20.
In FY16, HAVL’s effective tax rate declined to 21.8%, primarily on account of gain
of INR2b on buyback of subsidiaries’ shares attracting nil tax as per income tax
books. However, higher book profit led to the company paying MAT. As at end-
FY16, HAVL has a MAT credit entitlement of INR326.9m.
Management has guided for a tax rate of ~28% over the next two years.
Although HAVL’s tax rate will increase, it should have a lower cash flow impact,
as the higher tax rate (above MAT rate of ~20%) would be compensated by the
MAT credit entitlement available with the company.
24 June 2016
4

ART
|
Havells FY16
Exhibit 11: Exceptional gain leads to lower effective tax in FY16
Effective Tax Rate (Reported)
Effective Tax Rate adjusted*
28.1%
27.9%
21.8%
18.3%
18.8%
19.6%
FY12
FY13
FY14
FY15
FY16
*for exceptional gain of INR2,024m on buyback;
Source: Company Annual Report, MOSL
Exhibit 12: MAT credit available will be utilized to reduce cash tax paid (INR m)
Higher tax rate will have
lower cash flow impact due
to MAT credit
Particulars
MAT credit entitlement (closing)
Addition/ (utilization) (derived)
FY12
336.7
127.6
FY13
460.7
124.0
FY14
564.9
104.2
FY15
100.9
-464.0
FY16
326.9
226.0
Source: Company Annual Report, MOSL
Exhibit 13: Plants located in special states have lower excise duty rates (INR b)
Tax Rates
Revenue
Excise duty
Excise duty as a % of revenue
FY12
38.3
2.1
5.6%
FY13
45.1
2.8
6.2%
FY14
50.3
3.1
6.2%
FY15
55.6
3.2
5.7%
FY16
58.3
4.0
6.8%
Source: Company Annual Report, MOSL
Cash conversion cycle primary supported by receivables discounting
HAVL reported a cash conversion cycle of 47 days v/s 39 days in FY15. The
increase was primarily attributable to higher inventory days (85 days v/s 79
days), mainly on account of an increase in finished goods inventory.
The company’s superior cash conversion cycle v/s peers like V-Guard and Surya
Roshni is primarily on account of receivables discounting. HAVL has discounted
receivables worth INR8b (FY15: INR7.9b) on a recourse basis, wherein it assumes
first loss default liability of INR1.3b (FY15: INR1.1b) disclosed as part of
contingent liabilities.
Extract from Annual Report:
Companies in the sector do not have bad debts of more than 1% of revenue
(refer exhibit 16 for details). We thus believe that on a logical basis one should
consider the entire amount of receivables discounting as the off-balance sheet
exposure, and factor that when looking at adjusted debtors and debt.
24 June 2016
5

ART
|
Havells FY16
Adjusted for debtor discounting/channel financing, the cash conversion cycle
doubles to 102 days (FY15: 94 days) compared to the reported 47 days (FY15: 39
days).
Exhibit 14: Contingent liability on financing arrangements (INR b)
Particulars
Receivable buyout facility
Channel financing facility
Total
Contingent liability
0.8
0.4
1.2
Amount outstanding (FY16)
4.4
3.7
8.1
Source: Company Annual Report, MOSL
Exhibit 15: HAVL’s cash conversion cycle superior than peers on receivables discounting (days)
Particulars
Inventory Days
Receivable Days
Payable Days
Advance from Customer
Advance from Supplier
Reported Cash
conversion cycle (Days)
Bill Discounting Days
Acceptances
Adjusted Cash
Conversion Cycle
Receivable Days +
Bills discounting days
FY12
89
14
77
4
3
25
44
26
95
58
Havells (Standalone)
FY13 FY14 FY15
90
85
79
13
10
9
65
53
48
4
4
2
2
1
1
36
51
13
100
64
39
53
1
93
63
39
52
3
94
61
V-Guard
FY16
85
10
48
1
1
47
54
1
102
64
FY12
78
51
39
0
5
95
1
14
110
52
FY13
73
47
47
0
6
79
3
25
107
50
FY14
82
49
55
0
7
83
8
32
123
57
FY15
73
48
52
0
7
76
9
28
113
57
FY12
69
43
11
-
-
101
-
-
101
43
Surya Roshni
FY13
61
46
12
-
-
95
-
-
95
46
FY14
66
55
15
-
-
106
-
-
106
55
FY15
73
65
25
-
-
113
-
-
113
65
Source: Company Annual Report, MOSL
Exhibit 16: Bad debt remains low for the industry
Bad debts have been
historically low for the
industry
Bad debt as % of revenue
Havells (Standalone)
V-Guard
Surya Roshni
FY12
0.1%
0.2%
0%
FY13
0.1%
0.2%
0%
FY14
0.1%
0.4%
0%
FY15
0.1%
0.4%
0%
FY16
0.2%
DNA
DNA
Source: Company Annual Report, MOSL
Cash conversion cycle doubles & ROIC nearly halves on adj receivable
discounting
Adjusted for the above, ROCE stood at 18% as against the reported 22%, and
ROIC stood at 32% as against the reported 58%.
Under the Indian Accounting Standard, de-recognition norms of financial assets
are stringent, requiring factoring arrangements (where risks and rewards or
control are retained) may not qualify for de-recognition. This consequently
requires companies to recognize debtors in their books, while the money
received from banks will be treated as debt. This may lead to an increase in
capital employed and debtor days, thereby adversely impacting ROCEs as the
company adopts new accounting norms from FY17.
24 June 2016
6

ART
|
Havells FY16
Exhibit 17: ROCE improves, while ROE declines
AdjustedROE
31%
21%
18%
28%
21%
Adjusted ROCE
32%
24%
Adjusted ROIC
29%
21%
32%
20%
18%
17%
18%
16%
FY12
FY13
FY14
FY15
FY16
Source: Company Annual Report, MOSL
Exhibit 18: Adj. ROCE lower by 4%
Reported ROCE*
21%
21%
23%
Adjusted ROCE
20%
22%
Exhibit 19: Adj. ROIC halves
Reported ROIC*
54%
Adjusted ROIC
58%
47%
18%
17%
18%
16%
18%
31%
46%
52%
28%
FY13
32%
29%
FY15
32%
FY12
FY13
FY14
FY15
FY16
FY12
FY14
FY16
*Excluding exceptional item On standalone basis
Source: Company Annual Report, MOSL
Higher capex and rising working capital requirements drag FCF
Standalone adjusted FCF increased to INR3.6b in FY16 (from INR3.2b in FY15),
but was down from a high of INR5.0b in FY14. The deterioration is primarily on
account of (a) higher capex for its water heater plant and (b) an increase in
working capital requirements.
The rise in working capital requirement is mainly due to higher inventories and
higher provisions on account income tax taxation and sales incentives payable.
Exhibit 20: Standalone: Adjusted cash conversion declines
Adjusted Pre-tax CFO to EBITDA
97%
111%
94%
90%
46%
FY12
FY13
FY14
FY15
FY16
Source: Company Annual Report, MOSL
24 June 2016
7

ART
|
Havells FY16
Exhibit 21: High working capital requirements drag CFO (INR b)
Particulars
PBT
Add/Less: Non-cash adjustments
Add/Less: Non-Operating adjustments
Less: Direct Taxes Paid
Operating Profit Before Working Capital Changes
Inventories
Trade Receivables
Loans and Advances
Other Current Assets
Trade Payables
Current Liabilities and Provisions
Working capital changes
Cash Generated from Operations (Reported)
Bills Discounted
Acceptances
Adjusted Cash flow from operations
Less: Financial Cost
Adj. Cash Flow from Operations post Interest
Less: Capital Expenditure
Adj. free cash flows post interest
FY12
3.7
0.5
0.5
(0.7)
4.0
(1.7)
(0.3)
0.2
0.0
1.0
0.4
(0.4)
3.6
1.6
0.7
1.3
(0.4)
0.9
(1.4)
(0.4)
FY13
4.6
0.6
0.3
(0.9)
4.5
(0.4)
0.3
(0.0)
(0.0)
(1.4)
0.9
(0.7)
3.8
1.5
(2.0)
4.2
(0.2)
4.0
(1.2)
2.8
FY14
6.0
0.7
(0.1)
(1.1)
5.5
(0.2)
(0.1)
(0.0)
(0.0)
0.4
1.0
1.1
6.5
0.3
0.2
6.0
(0.1)
5.9
(0.9)
5.0
FY15
6.5
0.9
(0.2)
(1.5)
5.6
(0.1)
0.0
(0.2)
0.0
(0.6)
1.1
0.4
6.0
0.9
0.0
5.0
(0.2)
4.9
(1.7)
3.2
FY16
9.1
0.9
(2.4)
(1.4)
6.2
(0.9)
(0.3)
(0.1)
(0.0)
0.4
0.1
(0.9)
5.2
0.2
(0.3)
5.3
(0.1)
5.3
(1.7)
3.6
Note : On standalone basis; Source: Company Annual Report, MOSL
Cash and investment at 62% of net worth, generating 4.4% yield
Cash and investments increased by INR8.4b to INR16.2b (63% of net worth),
mainly on account of a gain of INR10.9b (received in Dec’15) on the sale of its
80% stake in Havells Malta and Havells Exim.
HAVL distributed an interim (special) dividend of INR2.3b, taking total dividend
for FY16 to INR4.5b (FY15: INR2.3b).
80% of cash is held in fixed deposits. Average pre-tax yield on these cash and
investments stood at 4.4% (FY15:4.5%).
Exhibit 22: Substantial cash held in FDs (INR b)
Current Accounts
Fixed Deposits
53%
FY15
4.5%
FY16
4.4%
Others
% of net worth
63%
Yield on Investment
FY12
0.8%
FY13
0.8%
FY14
4.2%
43%
24%
2.3
FY12
33%
8.8
4.7
1.4
FY13
5.3
FY14
7.8
4.6
FY15
16.2
12.9
FY16
Source: Company Annual Report, MOSL
24 June 2016
8

ART
|
Havells FY16
ART #2
GOVERNANCE MATTERS
Related party transactions remain elevated
HAVL paid INR1,184m to promoter entities in FY16 (FY15: INR1,096m). Of this,
INR400m was toward trademark fee and royalty charges, which are likely to
cease from FY17 and thus boost EBITDA margins by ~70bp.
FY15
153
193
400
7
38
58
248
1,096
17.0%
FY16
150
193
400
6
113
84
237
1,184
16.6%
Exhibit 23: Related party transactions (INR m)
Particulars
Commission on sales
Rent/Usage Charges Paid
Trade mark fees and Royalty
Reimbursement of Expenses received
Dividend paid
CSR Contribution
Managerial Remuneration
Total
% of PBT
Source: Company Annual Report, MOSL
Exhibit 24: Managerial Remuneration at 3% of PBT (INR m)
Particulars
Mr Qimat Rai Gupta
FY15
96.4
82.6
52.4
12.2
4.2
247.8
4%
FY16
-
124.8
57.5
49.9
5.1
237.3
3%
Managerial
Remuneration stood
at 3% of PBT
Mr Anil Rai Gupta
Mr Rajesh Kumar Gupta
Mr Ameet Kumar Gupta
Mr Sanjay Gupta
Total
As % of PBT
Source: Company Annual Report, MOSL
Directors regular in attending board meetings
HAVL is regular in calling board meetings as per the prescribed laws. Nine board
meetings were held in FY16.
All directors are generally regular in attending board meetings, except two
directors.
Exhibit 25: Directors’ attendance in board meetings
Name of the Director
Mr Anil Rai Gupta
Mr Surjit Kumar Gupta
Mr Ameet Kumar Gupta
Mr Rajesh Kumar Gupta
Mr Avinash Parkash Gandhi
Mr Sunil Behari Mathur
Mr Vijay Kumar Chopra
Mr Surender Kumar Tuteja
Dr. Adarsh Kishore
Mrs Pratima Ram
Mr T. V. Mohandas Pai
Mr Puneet Bhatia
Category
Attended
(out of 9 held)
Executive Chairman and Managing Director
9
Non-Executive
8
Executive Whole-time Director
9
Executive Whole-time Director (Finance) and Group CFO
9
Independent Director
8
Independent Director
8
Independent Director
9
Independent Director
9
Independent Director
9
Independent Director
8
Non-Executive Non-Independent
3
Non-Executive Non-Independent
4
Source: Company Annual Report, MOSL
24 June 2016
9

Disclosures
This document has been prepared by MotilalOswal Securities Limited (hereinafter referred to as 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
ART
|
Havells FY16
affiliated company(ies). This report is for personal information of the selected recipient/s 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 MotilalOswal 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 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 into account 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 suitable for 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, and investors 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.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors
on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and
interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt
generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates
may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment
decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.
MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies
mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an
advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent
conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research
separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
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. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a
subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the
document. While we would endeavor 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 it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation
for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research 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.
MotilalOswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against MotilalOswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and
adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to
SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of MotilalOswal Securities Limited -Click
here to access detailed report
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
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee
HAVELLS INDIA
No
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
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 Hong Kong:This
report is distributed in Hong Kong by MotilalOswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 MotilalOswal Securities (SEBI Reg No. INH000000412) has an
agreement with MotilalOswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to
SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,
products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in
Hong Kong.
Regional Disclosures (outside India)
For U.S
MotilalOswal 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 state laws 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 herein are 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 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. 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., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, MotilalOswal
Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed 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 research analyst account.
For Singapore
MotilalOswal 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 Advisors Regulations and is a
subsidiary of MotilalOswal Securities Limited in India. This research is distributed in Singapore by MotilalOswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to 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 MotilalOswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232
Office Address:21 (Suite 31),16 CollyerQuay,Singapore 04931
KadambariBalachandran
kadambari.balachandran@motilaloswal.com
(+65) 68189233 / 65249115
24 June 2016
MotilalOswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
MotilalOswal Securities Ltd
10