01 JULY, 2009

INITIATING COVERAGE

JAIN IRRIGATION SYSTEMS LTD.
CMP : Rs. 643.00 BUY

RESEARCH
COMPANY DETAILS

COMPANY OVERVIEW Jain Irrigation Systems Ltd., is India's biggest and World's second largest manufacturer of micro irrigation system and is thus the best play on the government's increased thrust on agriculture and irrigation. The company has other businesses, which includes piping and agro-processing, have been exhibiting strong historical growth and are set for strong growth in the future, driven by increasing investments in infrastructure and consumer spending. Management: Anil Jain has been JISL's MD since 1993 and heads all its businesses, including all its subsidiaries. The founder, Bhavarlal Jain, is the Chairman of the company. Plants located all across the world: The Jalgaon plant remains the company's largest facility in India, manufacturing micro-irrigation systems, pipes, plastic sheets and agro-processing. The acquisitions of Terra Agro, and Parle Bisleri's plants added facilities in Coimbatore and Chittoor for manufacturing MIS systems and food processing equipments, respectively. Subsequent to recent acquisitions, the company has facilities in Israel, US, Latin America and South America.

BSE Code NSE Symbol Bloomberg Code Market Cap (Rs. Crs) Free Float (%) 52-wk H/L (Rs.) Avg. Daily Volume Face Value Beta

500219 JISLJALEQS JI IN 4701 67.6 689 / 229 23695 Rs. 10 0.6

SHARE HOLDING Promoter FIIs Non Promoter Corp. Financial Institution Others 32.4 47.71 9.76 5.77 4.37

FINANCIAL HIGHLIGHTS FY09 Consolidated (Rs Crores) Share Capital Debt 163 1274 2913 228 30.8

VALUATION & RECOMMENDATION At CMP of Rs. 640, stock trades at forward P/E of 10.4x and 7.3x based on consolidated expected EPS of Rs. 62 and Rs. 87 for FY11E and FY12E respectively. We believe, given Jain's positioning in the agri infrastructure space and potential of its food processing business, that the stock is reasonably valued at this point of time. Risk to our recommendation, however, would come from slowdown in MIS, margin compression due to high resin prices, delay in Government subsidy and unfavorable weather (inadequate monsoon due to El-nino effect, etc.) disrupting raw material inputs for food processing activities. Infusion of capital from IFC augurs well for the company and it can provide further support to the company to expand its business overseas as well as in executing World Bank funded irrigation projects.

Net Sales PAT EPS(Rs)

Share Price graph in last 1 year (Rs.)

ANALYST Kinshuk Acharya kinshuk@eurekasecurities.com
092315 49900 / 91-33-3918 0387

EUREKA RESEARCH

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

INVESTMENT RATIONALE • Leading player in Indian Micro Irrigation Space: A large untapped irrigation market (67% of cultivated land is still rain-fed), coupled with the government's subsidy for micro-irrigation projects (projected at US$15bn in the Eleventh Five-Year Plan), offers a huge growth opportunity for makers of micro-irrigation systems. As the company enjoys 55% market share in this segment, it is expected that conservatively the company will have an opportunity of at least US$5 bn over FY07-12. The company, with its strong relationships with farmers and strong R&D capabilities is well placed to exploit this opportunity. Furthermore, the company's overseas acquisitions should offer access to new technology and markets. We estimate a 50% CAGR in revenues over FY07-10 for the micro-irrigation segment. • Enhancement of subsidy share by some of the states like AP, MP, UP, Karnataka etc., would provide extra impetus in enhancing the usage of MIS/SIS system in the coming years. • Other businesses verticals likely to show strong performance in the future: The piping segment (which contributed 33% of FY09 revenues) should clock 30-35% CAGR growth over the next 2-3 years, driven by investments in infrastructure, telecom and city gas distribution. • Dehydrated Vegetables and Fruit Processing would be a major growth driver: Agro-processing is still a nascent industry in India, with the country processing only ~2% of its produce, however, JISL has focused primarily on the overseas market with over 75% of its Food Processing sales arising from exports. With increasing consumer awareness of health foods, there is huge potential for growth in the agri-processing business in the domestic market.(16% of JISL's FY09 revenues). We expect JISL's sales from Food Processing to grow by over 25-30% going ahead with healthy and sustainable margins of 16-17%. • Key risks: Any change in government policy or deceleration in implementation of projects could temper growth. The company is vulnerable to increase in raw material prices such as polymers and raisins and PVC granules etc., all of which are crude derivatives. With the expectation that the crude prices are going to be increasing here onwards, there can be pressure on the operating profit margin of the company going forward if it is unable to pass on the raw material price increase fully to its end consumers. BUSINESS SEGMENTS All of JISL's businesses micro-irrigation (contributing ~42% of FY09 revenues), piping (~33%), agro-processing (~16%) and plastics (~7%) are poised to see strong growth, though the plastics segment could see some deceleration on account of the housing slowdown in the US. Subsequent to recent acquisitions, the share of micro-irrigation is likely to increase in the next few years.

Revenue Contribution FY09 EUREKA RESEARCH 2

Revenue Contribution FY08
www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

MICRO-IRRIGATION PRESENTS A HUGE OPPORTUNITY The company received 42% of its revenue from micro irrigation segment in FY09 compared to 35% in FY08. JISL is one of the few organized players in the micro-irrigation market (including drip and sprinkler systems) in India. In the past, demand for micro-irrigation systems has stagnated on account of: a) lack of capital; b) lack of incentive for farmers, since water/ power are free; and c) low awareness of the cost benefits of micro-irrigation. JISL, with its extensive dealer network has sought to deal with the third challenge. Through its efforts at training and educating farmers (JISL organizes visits to its model farms at Jalgaon), the company has managed to create demand and sustain growth. The government's recent focus on micro-irrigation and the subsidy plan proposed is likely to do away with the first challenge. In effect, the domestic micro-irrigation market is poised to see tremendous growth, and JISL, thanks to its existing relationships with farmers and dominant market share, is well placed to benefit from this. JISL has sought to bolster its presence in the overseas markets also and has acquired several companies over the past few years.
TARGET CAPACITY Eurodrip Chaplin Watermatics DATE Feb-06 May-06 PARTICULARS Greece based, Acquired 7.5% stake, Access to US, Turkey, Jordon, Egypt, Greece US-based, Acquired 100% stake. JISL entry in world's largest market, Strong franchise Access to US, Mexico, Europe and Africa. Extensive distribution and product line. Execution of turnkey projects US based, Acquired 100% stake. Strengthens presence in the US (2nd largest) Strong brand equity Strong franchise Possibility of cross border trade Widest product offerings (Agri, landscape, Turf, Mining, etc.) strong R&D INVESTMENT DETAILS Acquired for :£3.5m FY04 revenues :35m Consideration :US$6.8m FY-07 Revenues : US$10m Revenue potential : US$25m

Acuarius Brands

FY-07

Consideration : US$21.5m FY-07 revenues : US$30m Revenue potential : US$50m

NaanDan Irrigation, Israel

May-07

Israel based, Acquired 51.% stake JISL becomes Consideration : US$21.5m the second largest global players in the FY-07 revenues : US$75 m micro-irrigation system. Expertise in the large Revenue potential : US$100 m scale agro-products Presence in France, Italy, Mexico, Brazil, Chile, Spain and Australia Strong R&D Possibility of cross border trade

EUREKA RESEARCH

3

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

THE STRUCTURE OF THE COMPANY AFTER ACQUISITION HAS BEEN PRESENTED BELOW

Source: Company

GROWTH DRIVERS IN THE MIS SEGMENT With agricultural growth decelerating to 1.6% in FY'09 vs 6.5% during the 1960s, the government's focus has recently shifted towards improving agricultural productivity. Existing methods of irrigation (including canal irrigation) have been found to be wasteful and micro irrigation is now seen as the best solution. The total irrigation potential from surface and ground water sources would be around 140mn hectares (MHa). Out of the total sown land, over 71 MHa is rain fed while the immediate MI potential that can be created through major and medium irrigation projects is 69 MHa, and surface water based minor irrigation projects is over 17.5MHa. Out of 69 mha (million hectares) under irrigation in India, it is estimated that only ~3mha is under micro-irrigation as depicted in the following flow diagram, which signifies there exists huge scope for further Micro Irrigation in India. JISL is the leading player among the organized players accounting for a sizeable chunk of the MI market.

EUREKA RESEARCH

4

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

SCOPE & OPPORTUNITIES OF MIS IN INDIA Bharat Nirman targets to cover over 10MHa new area under irrigation by 2010. It also proposes to bring in another 5MHa land under irrigation though improved utilisation of the existing potential. During the Tenth Plan, the overall public investment on irrigation was Rs96,720 cr creating an additional 8.8MHa potential. The Eleventh Plan proposes an estimated outlay of about Rs2,10,000 cr on irrigation, with the potential of creating additional 14MHa and most of the funds (Rs1,72,000cr) would be earmarked upon by the State Governments.

Source: Company

COMPONENTS UNDER XI PLAN Completion of ongoing Major and Medium Irrigation projects Minor irrigation schemes - Surface Water - Ground Water Enhancing utilization of completed projects - ERM of major and medium projects - Repair, renovation and restoration of water bodies/ERM of minor irrigation schemes Ground Water development in area with utilized ground water potential(for benefit of small & marginal farmers and Tribals & Dalits TOTAL 1.0 Mha 1.0 Mha 1.0 Mha 1.8 Mha

TARGET 4.2 Mha 2.8 Mha

2.1 Mh

1.0 Mha 10 Mha

To facilitate irrigation growth, the government has taken certain affirmative steps, which will bring about a radical change in the Irrigation sector going ahead. The government is extending subsidies to the farmers to promote the use of Sprinklers and Drips for irrigation purposes. Micro Irrigation is a Centrally Sponsored Scheme under which out of the total cost of the MI System: • 40% would be borne by the Central Government • 10% would be borne by the State Government • The rest would be borne by the beneficiary

EUREKA RESEARCH

5

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

MICRO IRRIGATION STATEW WISE SUBSIDY AVAILABILITY STATES Maharashtra Gujarat Andhra Pradesh Tamil Nadu Karnataka Madhya Pradesh Chattisgarh Punjab Bihar Himachal Pradesh Rajasthan Kerala Uttar Pradesh Uttarkhand
Source: Company

GOVERNMENT SUBSIDIES DRIP 50% 50% 70% 50% 75% 70% 70% 75% 60% 50% 70% 50% 75% 50% SPRINKLER 50% 50% 70% 50% 50% 70% 70% 75% 60% 50% 70% 50% 75% 50%

JAIN IRRIGATION MARKET SHARE 65% 30% 35% 60% 60% 60% 50% 50% 60% 50% 50% 50% 50% 50%

Apart from the initiative taken by the Central government, certain States are also pushing the farmers to understand the benefits of MI Systems. States like Andhra Pradesh and Uttar Pradesh etc.,have taken specific steps to promote MI Systems. Originated in Maharashtra, the concept is now widely being accepted in South India. It is gaining momentum in the Central and Northern regions of India as well. JISL has witnessed over 100% growth in Madhya Pradesh and similar results are being witnessed in Punjab and Haryana, among other States. Besides concentrating on the geographical reach, JISL is also expanding the crop coverage from fruits to cotton, chilly, vegetables, etc. As for the equipment, over 2/3rds of the parts need replacement in 5-7 years and the remaining steel parts need replacement in 10-20 years. Hence, the replacement demand is still quite low. Nonetheless, there is an over 95% virgin market to be tapped, which offers significant potential for future growth. For instance the company currently gets almost 40% of the total Revenue from Maharashtra, while AP is the 2nd largest state for the Company after Maharashtra in revenue share, however, there is still enough growth potential in these states available for the next 3-4 years. TN and Gujarat are the fastest growing States after Maharashtra & AP and Gujarat has the highest potential among all the progressive agriculture states. Punjab, even though on a smaller base, is the fastest growing State in North-East Region. Recently UP has announced Rs. 400 crore for MI Project and as presented in the earlier table, some of the States under specific schemes are extending 30% subsidy as their share as against normal 10%.

TN-IAMWARM Jain Irrigation has bagged the prestigious TN-IAMWARM (Irrigated Agriculture Modernisation and Water bodies Restoration and Management) order of the World Bank valued Rs 77.80 crore covering 22,345 hectare (ha) to be executed during the current calendar year. The company would supply and install drip and sprinkler irrigation systems in over 22,345 ha covering 25 basins. In addition to supply and servicing of drip and sprinkler irrigation systems, Jains will be involved in promoting crop diversification and enhancing farm incomes through value-chain building in specific crops.

EUREKA RESEARCH

6

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

REGIONS

CURRENT REVENUE SHARE

STATES

HISTORICAL GROWTH (last 2 yrs.)

EXPECTED GROWTH (next 3 yrs.)

Western

55%

Southern

40%

North East

5%

MH GUJ MP & CG AP TN OS PUN & HP RAJ OS*

85% 128% 149% 48% 98% 23% 221% 80% 94%

50 - 60% 60 - 80% 80 - 100% 50 - 60% 60 - 80% 50 - 60% 80 - 100% 80 - 100% 100 - 200%
Source: Company

* North-East Other States (OS) includes UP & Bihar

A government-appointed task force has proposed to bring 14 mha under micro-irrigation during the Eleventh Five-Year Plan (FY07-12) at an estimated cost of US$15bn and a subsidy plan under which, 50% of the equipment cost would be funded by the government and the balance by the farmer (institutional credit access provided for). We estimate a market opportunity of US$5bn (assuming 5mha comes under micro-Irrigation, with every 1mha translating into a US$1bn market opportunity). As mentioned earlier, JISL, with a market share of 55% in micro-irrigation in FY'09, established relationships with farmers in high-growth areas (including Maharashtra and Andhra Pradesh) and an extensive dealer network (1,685 outlets currently), is ideally placed to benefit from this opportunity. DEALER NETWORK
STATE Plant 4 2 1 3 10 Offices 15 1 3 4 5 3 22 15 69 Depot 9 3 2 1 3 5 4 11 38 Dealers 730 124 158 133 57 25 283 175 1,685 CONTINENT Plant 1 2 2 6 2 13 Offices 2 5 3 7 1 3 21 Distributors 150 16 253 200 257 15 5 891
Source: Company

Maharashtra Madhya Pradesh Karnataka Gujarat Tamil Nadu Rajasthan Andhra Pradesh Other States TOTAL

Australia Middle East Europe South America North America Africa Asia TOTAL

In terms of industry size, the company is suitably poised to reap the benefit of the huge opportunity that exist in the micro irrigation as an industry as depicted by the following table: CURRENT / EXPECTED INDUSTRY SIZE
REVENUE (YEARLY) JAIN INDUSTRY ANNUAL POTENTIAL (in next 2-3 years) US$ 207 MILLION US$ 410 MILLION US$ 1-2 BILLION AREA COVERED (AVERAGE) 310k Hectors 600k Hectors 1 - 2 Mha

Total potential for the irrigated area is about Rs. 2,613 bn (~US$ 67 bn)
Source: Company

EUREKA RESEARCH

7

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

GLOBAL SCENARIO Globally too, the penetration of MI is about 14% with the American region leading the way with over 13.3MHa area under MI. Europe comes in second, with 10.1MHa area under MI. The Asian region with maximum arable land of over 194MHa is the most under-utilised in terms of MI, with only 6.8 Mha area under MI. (Area in Million Hectares)
Proportion of Available Irrigated Area 7 = 6/3 36% 47% 4% 18% 42% 14%

Region 1 Americas Europe Asia Africa Ocenia World Total

No. of Countries 2 2 35 46 53 5 174

Available Irrigated Area 3 41.9 25.2 194 12.5 2.6 276.1

Sprinkler Irrigated Area 4 13.3 10.1 6.8 1.9 0.9 32.9

Drip Irrigated Area 5 1.9 1.8 1.8 0.4 0.2 6.1

Total Micro Irrigated Area 6 = 4+5 15.2 11.9 8.6 2.3 1.1 39.1

Global coverage of Sprinkler and Drip Irrigated Areas is 33 Mha & 6 Mha, respectively. Area under Drip Irrigation increased almost six fold during last 20 years from1.1 Mha in 1986 to 6.1 Mha at present. The driver, so far, for such growth has been the conversion of Gravity/Sprinkler farmers to drip irrigation farmers. However along with the trend of this conversion continuing in the international market, scope for Replacement Market would also act as a growth driver in the future.

PRICE & REALIZATION MECHANISM OF MIS FROM FARMERS The average cost of Drip Irrigation System is in the range of Rs. 40,000-50,000/ Ha depending on the location, and assistance of a maximum 50% is provided to the beneficiary. The average cost of Sprinkler Irrigation System is lower at Rs13,500-17,500/ Ha depending on the Sprinkler system. Financial assistance up to 50% is provided in case of Sprinkler Systems subject to a maximum limit of Rs7,500. The difference is primarily due to the movable characteristics of Sprinkler Irrigation Systems, which can actually cover more than a hectare area by moving around the sprinkler. JISL is actively involved in providing MI systems to the farmers. The Central and State government subsidies are directly given to JISL. The money is usually received in 90-180 days but usually there some procedural issues that could delay it. But, till date importantly, there have been no bad debts in this regard. The farmers usually contribute through their own savings or through loans from banks and the company receives the money almost immediately after the system is installed.

EUREKA RESEARCH

8

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

MICRO IRRIGATION SUBSIDY ADMINISTRATION & CASH-TO-CASH CYCLE Collection Cycle:
Average Cost (per Hector) Drip & Sprinkler UD$ 1000

Subsidy 50% (Federal 40% & State 10%)

Farmers' Contribution 50% (Cash Contribution/ Loan from Banks)

Get Collected in 90-180 Days

Get Collected 5-10% Advance and the Balance on Installation

Source: Company

Subsidy Administration

Subsidy Disbursement

Source: Company Presentation

EUREKA RESEARCH

9

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

IN-HOUSE R&D AND TECHNOLOGY TRANSFER SUPPORT GROWTH The company's recent foray into new crops such as cotton (on which yields have improved 2-3 times during the past season) has been supported by technology transfer from its recent acquisitions, including that of the Israel-based Naan Dan Irrigation. This new technology and in-house innovations would enable the company to foray into newer crops (including potato, oilseeds and chillies) and regions (including Chhattisgarh and Rajasthan). Product innovations should also help the company maintain margins in the face of spiralling raw-material prices (eg, polymer, which accounts for more than 50% of costs), without raising prices for farmers. States having micro irrigation projects in the process of implementation
STATES Andhra Pradesh Chandigarh Tamil Nadu Rajasthan STATES Proposes to cover 0.2 mha under micro irrigation: Budgeted Outlay Rs 11.7 bn Bring more land under micro irrigation: Budgeted outlay Rs 250 mn Modernisation of Irrigation facilities (including micro irrigation systems) over 5 year period: Outlay of Rs 254 bn Proposes to cover 0.6-0.7 mha under micro irrigation: Budgeted Outlay Rs 20 bn

Financial Performance Analysis-MIS Segment
Rs. Cr. Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 24305 327.7 127 134828.2 52252.62 39% 20.5 6% 200.7 82575.6 106.4 32 43777 Q4FY08 16090 241.3 92.8 149968.9 57675.57 38% 17.4 7% 148.5 92293.35 75.4 31% 46861.4 -7% 41% 35% 18% YOY GROWTH 51% 36% 37% -10% -9% FY09 60302 951.5 348.4 157789 57776 37% 65 7% 603.1 100013 283.4 30% 46997 FY08 41339 619.9 227.6 149955.2 55056.97 37% 49.5 8% 392.3 94898.28 178.1 29% 43082.8 9% 59% 54% 31% YOY GROWTH 46% 53% 53% 5% 5%

Despite significant slowdown in FY09, the company has managed to increase the volume of sale significantly in FY09. Major growth for the company came from Andhra Pradesh growing at 69%, Tamil Nadu 280%, Uttar Pradesh 620% and Karnataka at 65% respectively. The margin for this segment improved by 100 bp for the full year, due to change in product mix of value added products and lower raw material prices. PIPING BUSINESS The piping segment contributes 38% of revenues and is exposed to growing end-markets such as telecom infrastructure, gas distribution and public investments in rural and urban infrastructure. Poly-ethylene (PE) pipes find extensive use in gas distribution, telecom infrastructure, and water supply and sewage systems. PE pipes score over metal pipes because the former have lower friction and are easier to install while costing the same. The company has expanded its product range in

EUREKA RESEARCH

10

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

this business to include PVC pipes, HDPE pipes, cable-duct pipes and gas pipes. The piping segment has also historically supported production of micro-irrigation systems, for which pipes constitute 27% of raw-material costs. JISL has traditionally been in the PVC Pipes business, which were primarily used by the farmers for irrigation purposes and some portion was utilised for the drinking water supply schemes. Over the past three years however, this Segment has evolved with different applications for the pipes ranging from being used in the city gas distribution networks, for sewage and waste disposal, telecom cables, etc. Some of JISL's esteemed clients include Vodafone, Bharti, Gujarat Gas Company and IGL, among others.

GROWTH DRIVER IN PIPING SEGMENT So far rapidly growing GDP and the infrastructure boom have fueled growth of the Piping Segment, which has clocked 3040% growth over the past 2-3 years. Earlier, JISL was restricted to a max of 300mm diameter pipes but, now the company manufactures even 1+ meter diameter pipes depending on the application. Although at a nascent stage, this business is rapidly gaining momentum in the Exports market. After gaining a foothold in manufacturing and inventing newer applications, JISL is poised for implementing turnkey water projects. With the rise in urban population, some state governments have plans to implement 24/7 pressurised water in the big cities. This project requires an entire system from pumps to filtration to nodal pipelines up to the domestic consumer as well as metering and monitoring. JISL has implemented a pilot project at couple of locations, response from which has been encouraging. Management believes that implementation of such projects is likely to create a significant business opportunity in future. JISL has recently signed an MoU for co-operating and working together with Mekorot, the National Water Company of Israel for the development of water infrastructure projects in India the details of which has been discussed in detail later in this report. This affirms the vast potential which can be exploited domestically and along with an experienced player like Mekorot, we believe JISL will be able to tap this market successfully. However, for the time being there is a status co in this venture, as in the wake of the global recession, the company is giving more focus in its existing line of business. JISL is also planning to launch piping products for plumbing applications as well as pipes for home drainage. The company commands a leading position in supplying pipes for city gas distribution companies. Currently, only 5-7 cities are covered under city gas distribution and the soaring oil prices have prompted expansion of the city gas distribution network across cities. This expansion is likely to result in significant demand over the next few years. Domestically, JISL competes with Finolex, Supreme and Duraline in the Pipes Segment. But, the market is large enough to accommodate all the players, thus eliminating threat from competition. The company expects a CAGR of 40% in this segment's revenues over FY08-11E. We believe growth in demand for HDPE & MDPE pipes could accelerate further, driven by public investments in water distribution systems, sewage systems and urban infrastructure, and private investment in telecom infrastructure and gas distribution systems. Orders from existing clients (among them Indraprastha Gas and Airtel) and new project wins (including the water distribution project in Karnataka) should continue to drive the momentum. The company's foray in the water project

EUREKA RESEARCH

11

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

execution segment in JV with Mekorot, would also contribute significantly to the volume growth in this segment. In addition, infrastructure investments in Africa and the Middle East would also bring about significant growth in export revenues. While EBITDA margins in this segment have hovered around 10-12% in the last few years, this segment could see potential margin expansion of 100bps over the next few years. In the 11th 5 year plan over US$ 42 bn has been allocated for infrastructure development and this would drive as the growth driver for the company going forward. Financial Performance Analysis-Pipe Segment
Performance Analysis - PVC Pipes In Rs. Crore Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 20024 127.9 15.6 63873.35 7790.651 12% 4.3 3% 112.3 56082.7 11.3 9% 5643.228 Q4FY08 13426 94.5 10 70385.82 7448.235 11% 3.9 4% 84.5 62937.58 6.1 6% 4543.423 24% 85% 33% 10% YOY GROWTH 49% 35% 56% -% 5% FY09 65758 413.5 44.6 62882 6782.4 11% 12.7 3% 368.9 56100 31.9 8% 4851.1 FY08 46221 289.6 33.2 62655.5 7182.882 11% 10.1 3% 256.4 55472.62 23.1 8% 4997.728 -3% 38% 44% 26% YOY GROWTH 42% 43% 34% 0% -6%

The company registered a revenue growth of 84% from Maharashtra region, 2.3 times from Karnataka 47% from Tamil Nadu and 86% from Madhya Pradesh.
Performance Analysis - PVC Pipes In Rs. Crore Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 10016 93 15.5 92851.44 15475.24 17% 3.8 4% 77.5 77376.2 11.7 13% 11681.31 Q4FY08 11770 121.2 21.2 102973.7 18011.89 17% 3.3 3% 100 84961.77 17.8 15% 15123.19 -23% -34% -23% 15% YOY GROWTH -15% -23% -27% -10% -14% FY09 30983 333.7 55.6 107704 17945 17% 13.6 4% 278.1 89759 42 13% 13556 FY08 36837 373 56.6 101256.9 15364.99 15% 10.1 3% 316.4 85891.9 47.8 13% 12976.08 4% -12% -12% 35% YOY GROWTH -16% -11% -2% 6% 17%

The PE pipe division underperformed significantly as a result of slowdown in telecom sector for duct application, which declined by 57% in Q4FY09. During same period last year, Alcatel bought large quantities for export market. However, water distribution application which grew by 57% during Q4FY09 has helped to bridge part of the deceleration.

EUREKA RESEARCH

12

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

For the full year duct application declined by 59%, while Water and Gas application grew by 65% and 2% respectively. Moreover, High polymer prices and slowdown in infra structural sector resulted into sever under performance of the division during FY09.

AGRO PROCESSING BUSINESS Leveraging its strong relationships with farmers, the company entered the processed fruits and vegetables business about a decade ago. Currently, mangoes contribute a large share of fruit processing revenues, with Coke being the largest client. JISL has been aggressive in pursuing inorganic growth in this segment. The acquisition of Parle Bisleri's facility in February 2006 made JISL the largest fruit processor in the country. With the acquisition of US-based Cascade Specialties in Nov-06, the company's total onion dehydrating capacity increased to 25000 MTs and enabled JISL to become the third largest onion dehydrator in the world. The company is looking to foray into newer fruits and vegetables, including citrus fruits, green peas and carrots. The company is also engaged in other businesses including bio-tech tissue culture (for fruits, vegetables and flowers). While this business is small (contributing <15% of JISL's sales during FY08), it has significant scope for growth, with demand from both domestic and overseas markets expected to be healthy. In the Dehydrated Vegetables Segment, JSIL is primarily focused on the Onion Dehydration market, which is growing at 7-8% pa. India currently is second next to the US in Onion Dehydration capacity. The world-over, Onion Dehydration capacity stands at around 1,75,000MT while JSIL ranks third with a total capacity of about 25,000MT. Acquisition of controlling stake in Cascade Specialties has given JISL access to the largest market in the world ie., the US. JSIL has already rationalised operations in India at two locations from the earlier five locations. This has in turn improved the company's efficiency levels in the Segment. India is the second largest producer of fruits after China. Although, India accounts for around 10% of the total global fruits production, fruit processing has been limited to a mere 2% of the production. Hence, realising the opportunity, JISL has rationalised its operations and has already put up significant capacities. During FY2007, the Fruit Processing Segment registered volume growth of over 100%, which signifies the potential of this Segment. The domestic fruit juice and nectar business is growing at a CAGR of around 25%, which offers a good potential for JISL. Also, there is a rapid growing demand for Mango, Pomegranate and other fruit juices from the overseas market providing a sizeable opportunity. Currently, the company supplies bulk fruit juices under the brand name, Farm Fresh. This business fetches healthy Margins of 16-17%, which are sustainable going ahead. India is lacking in Cold Supply Chain for transportation of fruits and vegetables. By virtue of its perishable nature, some output is always lost during normal transportation. But, JISL has developed its own cold supply chain for its Food Processing business.

Agro-processing: expect rapid growth to continue JISL's agro-prrocessing revenues registered a 35% CAGR (JISL ex-acquisitions) over FY03-09. The company expects to register a growth of 40%+ in the domestic market and 25%+ in the overseas market in the next 3 years. The company has aggressively pursued growth in this business; for instance, its acquisition of the US based Cascade Specialities in November 2006 has made JISL the world's third largest manufacturer of dehydrated onions. With India being the world's second largest producer of fruits and vegetables, yet processing only 2% of all its produce (vs 50-80% in Brazil, Malaysia, Israel and the US), this market has huge scope for growth.

EUREKA RESEARCH

13

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

Currently for FY10, the company has an order book position of Rs. 278 crore including Rs. 75 crore order for dehydrated onion. Coca Cola is one of the most important customer of the company and an order worth Rs. 158 crore has been placed with the company for FY 10, compared to Rs. 80 crore order placed by the company in FY09. The company plans to expand its product portfolio (which currently includes processed mangoes, pomegranates and guava) to oranges and other citrus fruits.
Performance Analysis - Fruit Pulp & Puree In Rs. Crore Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 8839 59.9 16.6 67767.85 18780.41 28% 5.5 9% 43.3 48987.44 11.1 19% 12557.98 Q4FY08 17777 71.7 16.9 40333.01 9506.666 24% 5.2 7% 54.8 30826.35 11.7 16% 6581.538 91% -5% -21% 6% YOY GROWTH -50% -16% -2% 68% 98% FY09 35733 218.3 56.7 61092 15868 26% 13.9 6% 161.6 45224 42.8 20% 11978 FY08 39021 167.1 44.7 42823.1 11455.37 27% 10.4 6% 122.4 31367.73 34.4 21% 8815.766 36% 24% 32% 34% YOY GROWTH -8% 31% 27% 43% 39%

There has been a significant de-growth that happened in terms of volume during FY09, mainly because of the fact that many of the American and European customers deferred their delivery during the period in question. However, as per the management there has not been any cancellation of the orders so far. Thus, the volume off take would be higher in the current fiscal going forward. However, the company managed to get higher realization to the extent of 43% in FY09, mainly because of the fact that the company was able to pass on the higher mango prices to the customers and because of the rupee depreciation. Rupee depreciation also helped in maintaining margin for the company in this segment.
Performance Analysis - Dehydrated Onions / Veg In Rs. Crore Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 4146 48.4 13 116739 31355.52 27% 3 6% 35.4 85383.5 10 21% 24119.63 Q4FY08 3889 42.4 12.3 109025.5 31627.67 29% 2.3 5% 30.1 77397.79 10 24% 25713.55 -6% 0% 18% 30% YOY GROWTH 7% 14% 6% 7% -1% FY09 11514 133.4 46.3 115859 40212 35% 10.1 8% 87.1 75647 36.2 27% 31440 FY08 8803 88 19.2 99965.92 21810.75 22% 6 7% 68.8 78155.17 13.1 15% 14881.29 111% 176% 27% 68% YOY GROWTH 31% 52% 141% 16% 84%

EUREKA RESEARCH

14

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

Dehydrated onions and vegetable witnessed a 31% growth in volume terms and 52% in value terms in FY09. Revenue Growth from Europe has been 27% and from Other Countries 65% for the 4th Quarter. EBITDA margin dropped by 300 bp in Q4FY09 on account of higher onion price, which the company was unable to pass on completely, to its end consumers. For the full year the company saw a revenue growth of 54% from the US, 46% from Europe and 21% from Australia. EBITDA margin improved by 12% compared to last fiscal due to higher sales realization, better cost absorption and rupee depreciation.

Plastic sheets could face headwinds in the near-term The plastic sheets business (including PVC and PC sheets), which contributed ~7% of revenues during FY09, is levered to the building and construction industry and derives most of its revenues from exports. With the US contributing 65% of JISL's PVC sheet revenues, we expect a 12% annualised decline in this division's revenues over FY09-10E. This would also reduce the segment's contribution to the company's revenues to 5-7% by FY10. However, the company is looking for other markets such as Australia, New Zealand, etc. for its future growth. This, however, is likely to be time consuming and may not provide any respite to the company in the short run. Moreover, the recent housing data that are coming out of the US is also showing marginal growth () this might indicate that some stability may be returning in the US housing market, if that is the case indeed, then it augers well for this division of the company going forward.
Performance Analysis - PVC Sheets In Rs. Crore Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 2855 28.4 6.3 99474.61 22066.55 22% 1.7 6% 22.1 77408.06 4.7 17% 16462.35 Q4FY08 3935 35.9 7 91232.53 17789.07 19% 2.2 6% 28.9 73443.46 4.8 13% 12198.22 35% -2% -24% -23% YOY GROWTH -27% -21% -10% 9% 24% FY09 11534 116.6 20. 101092 17860 18% 4.8 4% 96 83232 15.8 14% 13699 FY08 14435 132.1 26.5 91513.68 18358.16 20% 6.3 5% 105.6 73155.52 20.4 15% 14063.04 -3% -22% -9% -24% YOY GROWTH -20% -12% -22% 10% -3%

As is evident from the above table, slow down in the US and European housing market has taken its toll on the business for the company with sales volume and total revenue dropping by 20% and 12% respectively for FY09. Though in the last quarter softening polymer prices and rupee depreciation resulted into margin improvements, higher average polymer price for the whole year and volume de-growth resulted into overall contraction in margins for FY09.

EUREKA RESEARCH

15

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

Performance Analysis - Polycarbonate Sheets In Rs. Crore Sales Qty. (in tonnes) Revenue Contribution Revenue / tonne (in Rs.) Contribution / tonne (in Rs.) Contribution / Revenue Fixed Cost Fixed Cost / Revenue Variable Cost Variable Cost / Tonne EBIDTA EBIDTA margin EBIDTA / tonne Q4FY09 696 14.6 1.9 209770.1 27298.85 13% 0.4 3% 12.7 182471.3 1.5 10% 21551.72 Q4FY08 854 15.8 1.2 185011.7 14051.52 8% 0.5 3% 14.6 170960.2 0.7 4% 8196.721 163% 114% -13% -20% YOY GROWTH -19% -8% 58% 13% 94% FY09 2704 56.1 7.6 207470 28107 14% 1.3 2% 48.5 179364 6.3 11% 23299 FY08 3002 57.2 4.8 190539.6 15989.34 8% 1.3 2% 52.4 174550.3 3.6 6% 11992.01 94% 75% -7% 0% YOY GROWTH -10% -2% 58% 9% 76%

Margin has improved mainly on account of higher sales realization in export market.

IFC FINANCING · Equity IFC has infused $15 Mn in Equity shares of the company. The pricing of the allotment has been as per DIP guidelines in the range of Rs. 350 Rs. 375. This would means that IFC would get 2 mn shares leading to a 2.69% stake for IFC · Debt IFC has already lent $30 Mn in the last 24 months and would lend $30 Mn further in 2 tranches over 8 year tenure. The interest cost for these loans would be at the rate of 200 bp over Libor. This is considerably lower compared than the existing rate of about libor+6% in the international market. These funds would be used for strengthening of Balance Sheet and for expansion of existing business. Another great advantage of having IFC as a share holder is that the company would not only receive expertise in water related project execution, it would also be able to secure some of the orders for projects executed by World bank funding. One such example would be the orders worth Rs. 77.8 crore that the company bagged for TN-IAMWARM project funded by World Bank. Similar projects that are funded by World Bank abroad (for example in South Africa etc.,) could also come the company's way going forward. The company has plans to invest Rs. 190 crore in FY10 for capacity expansion. Of this about 65% of the total fund to be utilized in expanding the MIS/SIS division and the rest of it will go in augmenting capacity of Piping and Agro Processing Division.
FY06 Capital Expenditure (Rs. Mn) Debt / Equity 1128 3.1 FY07 2563 2.8 FY08 2000 1.5 FY09 3000 1 FY10 1900 0.8 FY11E 2000 0.7 FY12E 1500 0.6

EUREKA RESEARCH

16

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

BUSINESS OVERVIEW AND LATEST DEVELOPMENTS Micro-irrigation systems Last year JISL acquired controlling stake of 69.75% in Switzerland-based Thomas Machines S. A. (TM). TM is a manufacturer of specialist machines and equipments including drip irrigation lines, quality control and test equipment, automation equipment, laser machine centers and laser products. TM also holds valuable IPRs and cutting edge technology in both irrigation and composite pipes business. This acquisition will help JISL build its capabilities and help it gain foothold in new generation drip lines including 'Precision Irrigation' products. All these acquisitions have provided access to overseas markets and new technology that can be transferred and used effectively in the domestic market. Anecdotal evidence suggests that JISL has gained traction in new markets including Punjab, Haryana, Uttar Pradesh and Delhi, thanks to new products and technology. Furthermore, we believe the company has been financially prudent in its pursuit of inorganic growth. The company paid 4-5x EBITDA for its acquisitions which according to JISL are about half the multiple paid by John Deere for its acquisition of Plastro.

Plastic sheets: US housing slowdown could be a drag JISL manufactures both poly-vinyl chloride (PVC) and polycarbonate (PC) sheets in India, with an installed capacity of ~37,000 mtpa. It is expected that the plastics segment's contribution to JISL's revenues will fall from the current ~7% to 5% by FY10E. Almost all of its plastic sheets revenues are derived from exports. However, the company is trying to enter new markets such as Australia, New Zealand etc. to enhance its geographical diversification and reduce its dependence on USA for the revenue generation of this segment.

PVC sheets are used in signages, displays and increasingly in construction, in place of lumber. PVC sheets are beginning to find use in windows, sidings and roofing. PC sheets are used in building, construction, advertising signs and displays. The PC sheets business currently contributes ~2% (fallen from 5% for FY08) of revenues and we expect modest growth in this business in the near term.

EUREKA RESEARCH

17

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

PROVISIONS MADE IN THE BUDGET 2008-09 In the budget the allocation for micro-irrigation spends has been reduced from Rs. 5.5 bn to Rs5bn. However, that ignores the 129% increase in allocation to other Plan programmes that directly benefit the company's micro-irrigation systems (MIS) business. Strong growth in public sector expenditure on irrigation and infrastructure would support our expectation of 35% CAGR in revenues. Micro-irrigation: During 2008-09, we estimate Rs17.5bn public spending on micro-irrigation, under the following schemes.
Programme In Rs. Crore Micro Irrigation Outlay under AIBP Command Area Development Rain-fed Area Development National Food Security Mission (Rs. 48.8 bn plan) Rashtriaya Krishi Vikas Yojna (Rs 250 bn plan) 58.8 15% Estimated Outlay (Rs. Bn) 5 6.8 3.5 9.8 Estimated Share of MIS Outlay 100% 30% 20% 10% Subsidized MIS equipment to the extent of 50% State initiatives for development of integrated irrigation projects(funded by world bank) Opportunity for makers of sprinklers, mainly through support measures to grow more than one crop Opportunity for makers of sprinklers, mainly through programme target to improve productivity of crops Permits states to draw on funds to offer a higher subsidy (>10% provided currently) on MIS equipment sales Details

In the interim budget presented in February 09, Rs. 4 bn has been allocated for Micro irrigation Scheme and Rs. 11 bn for national food security mission, to be spent in FY09-10. JISL MoU with Israeli water management firm Mekorot to bring huge synergies JISL announced an MoU with Mekorot last year, a leading Israel based water management company. The two companies are looking to jointly bid for water management projects in India, which we believe represent a potential US$35bn opportunity. This tie-up should support JISL's growth in the piping segment, in which we expect a revenue CAGR of 35% CAGR over FY07-10. Water management presents a large business opportunity. The allocated spend on water supply and sanitation in the Eleventh Five- Year Plan and proposed waste treatment and desalination projects offer a US$35bn business opportunity. JISL indicated that project announcements in this space should begin over the next 3-12 months (notably from Maharashtra, Gujarat, Tamil Nadu, Madhya Pradesh and Karnataka). Mekorot brings proven technical expertise. Mekorot (FY06 revenues: US$700m revenues) manages more than 70% of all water supply in Israel. The company brings to the table a proven technology that is also low-costan important competitive advantage in bidding for government projects. We believe the two companies are likely to bid for projects on an equal-share basis (~50:50), with JISL offering business development and execution capabilities and Mekorot, the requisite technology. Water supply remains a focus area in the eleventh five-year plan. The Planning Commission proposes an allocated spend of US$35bn during FY07-12 on water supply projects in urban and rural areas. Of the total budgeted spend, 51% would come from the central government and the rest from the states. According to JISL, many state governments and municipalities are currently evaluating water supply projects and are likely to invite bids and award projects over the next 12 months. We believe Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh, Karnataka, Madhya Pradesh and Chattisgarh would be the forerunners. Waste water treatment projects are witnessing momentum. JISL expects near-term opportunities to arise from expansion plans for water treatment facilities in JNNURM (Jawaharlal Nehru National Urban Renewal mission) funded

EUREKA RESEARCH

18

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

cities such as Mumbai, Pune and Bangalore. The company estimates the potential opportunity from these projects at US$1.2bn.
Existing Capacity Mumbai Pune Bangalore 1000 MLD Proposed Capacity 4500 MLD 160 MLD 1250 MLD

MoU offers JISL access to proven technology. JISL had earlier acquired (in May 2007) a majority stake in Israel-based NaanDan Irrigation, which offered the company access to improved micro-irrigation technology and strengthened its position as a leading player in the MIS business. Similarly, we believe that JISL's tie-up with Mekorot and access to proven technology should enable the company to position itself as a strong player in the water management business.
High Synergies Expected Out of JISL & Mekorot JV Entity Mekorot JISL MoU Capabilities Proven track record: Runs approx. 3000 installations, provides 70% of water supply in Israel, Offers viable and cost effective technologies Is in a position to leverage its long standing relatioships with several government entitiies Company is likely to bid on equal share basis (50:50) for projects

Piping segment should benefit from implementation of water projects. JISL manufactures HDPE (hidensity polyethylene) pipes, which should increasingly find use in water supply projects. Implementation of such turnkey water management projects supports our revenue CAGR forecast of 35% during FY07-10. Capacity Utilization and Expansion Operating Capacities are about 70-80% of the Installed Capacities & Utilization is around 80-90% of that Capacity expansion across major Business Unit under implementation. Plan to set-up regionalize manufacturing facilities for better market servicing has been envisaged. New Capex to Turnover Ratio Expected to be 1:5 post FY'09.

EUREKA RESEARCH

19

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

Financial Performance JISL has been on a strong growth trajectory over the past few years and has delivered a 40% CAGR growth in consolidated Revenues over FY2006-08. Also, acquisition of loss-making companies and successfully integrating these companies resulted in PAT growing at a CAGR of 48% in the mentioned period. The company's OPMs have however, been fluctuating primarily due to the integration of new businesses and increase in the raw material prices. JISL has nevertheless managed to maintain its OPMs at 14-15%. Going forward, we expect that on account of better product mix and scale of economies the operating margin would increase to 16%-17%.

EUREKA RESEARCH

20

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

EUREKA RESEARCH

21

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

FINANCIALS PROFIT & LOSS A/C (CONSOLIDATED)
In Rs. Crore Sales Operating Income Other Income Interest Depreciation PBT Tax PAT Less : Pre-operative Loss Less : Minority PAT after MI EPS (in Rs.) 2008 2216 344 40 133 57 194 54 140 4 3 134 4 228 30.8 6 329 43.5 9 466 61.6 12 660 87.4 2009E 2913 477 30 128 90 290 58 232 2010E 3776 631 30 132 110 419 84 335 2011E 4862 823 30 139 121 593 119 474 2012E 6332 1082 30 143 129 841 168 673

BALANCE SHEET (CONSOLIDATED)
In Rs. Crore Equity Share Capital Share Warrants Reserves Minority Interest Net Worth Borrowing Sources GFA less : dep NFA CWP Investments Current Assets - Inventory - Debtors - Deferred tax assets/(liabilities) - Loans & advances Cash & Bank Balances Current Liabilities - Liabilities - Provisions USES FY08 161 36 680 65 941 1275 2216 1381 486 895 120 64 1770 809 656 5 300 104 737 675 62 2216 994 69 1226 1274 2500 1676 575 1101 75 64 2476 1132 917 7 420 124 1340 1227 113 2500 1320 75 1559 1309 2868 1891 685 1206 60 64 3209 1467 1189 10 544 216 1888 1729 159 2868 1716 84 1964 1429 3393 2091 806 1285 35 64 4133 1889 1531 12 700 307 2431 2227 204 3393 2279 96 2540 1429 3969 2241 934 1307 25 64 5383 2460 1994 16 912 356 3166 2900 266 3969 FY09E 163 FY10E 164 FY11E 164 FY12E 164

EUREKA RESEARCH

22

www.eurekasecurities.com

JAIN IRRIGATION SYSTEMS LTD. INITIATING COVERAGE
01 JULY 2009

BASIC RATIOS
In Rs. EPS Growth in EPS % Cash EPS Book Value per share Dividend per share Profitability Ratios FY 08 ROE ROCE Turnover Ratios FY 08 Debtors (days of sales) Inventory (days of sales) Creditors (days of total expenditure) NWC (days of sales) Valuations FY 08 P/E Cash P/E P/BV EV/Sales EV/EBIDTA Leverage Ratio FY 08 Debt/Equity 1.5 FY 09E 1.0 FY 10E 0.8 FY 11E 0.7 FY 12E 0.6 36.05 27.95 6.47 2.7 15.4 FY 09E 20.8 18.8 3.9 2.0 11.6 FY 10E 14.7 12.2 3.1 1.6 9.0 FY 11E 10.4 8.4 2.5 1.2 7.0 FY 12E 7.3 5.9 1.9 0.9 5.3 152 133 132 170 FY 09E 115 142 184 142 FY 10E 115 142 201 128 FY 11E 115 142 201 128 FY 12E 115 142 202 128 16% 23% FY 09E 25% 19% FY 10E 27% 22% FY 11E 30% 26% FY 12E 34% 29% FY08 19.42 44.1 18 108.16 2.2 FY09E 30.8 58.4 34.0 165.7 3.1 FY10E 43.5 41.4 52.5 206.2 5.2 FY11E 61.6 41.5 75.9 259.8 7.4 FY12E 87.4 41.8 109.3 335.9 10.5

DISCLAIMER : The information in this report has been obtained from sources, which Eureka Research believes to be reliable, but we do not hold ourselves responsible for its completeness in accuracy. All estimates and opinions in this report constitute our judgement as of this date and are subject to change without notice. Eureka Research will not be responsible for the consequence of reliance upon our opinion or statement contained herein or for any omission. Any feedback can be mailed to the following ID. Analyst Email Phone : : : Kinshuk Acharya kinshuk@eurekasecurities.com 092315 49900 / 91-33-3918 0387

Registered Office : 7 Lyons Range, 2nd Floor, Room No. 1, Kolkata - 700001 Corporate Office : B3/4, Gillander House, 8 N S Road, 3rd Floor, Kolkata - 700001 Phone : 91-33-2210 7500 / 01 / 02, Fax: 91-33-2210 5184 e: helpdesk@eurekasecurities.com Mumbai Office : 909 Raheja Chamber, 213 Nariman Point, Mumbai-400021 Phone : 91-22-2202 5941 / 5942 e: mumbai@eurekasecurities.com

EUREKA RESEARCH

23

www.eurekasecurities.com