MARG Ltd. - Today & the Road Ahead

VISION:

Creating Landmarks and Building Values.

Big dreams rooted in practicality are what help us translate our dreams into reality. We are conscious

of the fact that every project we deliver has an obvious impact on the economy, infrastructure and

society. We believe ours is a never ending journey of innovation and learning and the body of

knowledge from each project we work on is invaluable in our evolution. And as we create landmarks,

we never lose focus on building values.

MISSION:

"Truthfully assist governments, corporates, societies and individuals in building structures and spaces

that will inspire them to give their best. “Harnessing the power of the human spirit concurrently with

superior technology to optimize value for our clients seeking to be driven by our conscience in every

aspect of our business."

At MARG we believe in making commitments based on our conviction and seeing them through ‘no

matter what’. The primary goal of MARG is to increase stakeholder value. And to us the most

important stakeholders are shareholders who own our business, employees who work with us and

clients or customers who purchase our products and services.

CORE VALUES:

Distinctive Quality:

A top class performance, highly sensitive to the time frame and a focus on continuous improvement.

Creativity and innovation:

No barriers on possibility.

Character:

Honesty and integrity in all spheres of our activity resulting into a transparent and open culture of

work with complete accountability in execution of tasks.

Team work:

A perfect blend of individual energies, deep respect for individual esteem, interdependence and a

willingness to subdue individual agenda to the team’s agenda.

Positive attitude:

Positive energies channelized for committed performance for the present and the future.

Company Overview

Inception - Incorporated in 1994, promoted by Mr. GRK Reddy, a first generation entrepreneur

Business Verticals

o Infrastructure - Marine Infrastructure, Urban & Industrial Infrastructure

o Engineering, Procurement & Construction (EPC)

o Real Estate - Commercial & Residential

Strategy - Region Development

o Setup growth drivers (eg. port/SEZ/ airport) in a region and spur economic activity

o Stimulate demand for residential, physical, social and commercial infrastructure

o Absorb the demand thus created by harnessing internal capabilities of the business

verticals

o Create widespread economic impact in the surrounding regions

Stages of the company’s growth

o Stage 1 (1994 - 2005) - Contracting & Real Estate Company

o Stage 2 (2006 - 2010) - Infrastructure foray: Marine Infrastructure, Urban & Industrial

Infrastructure, EPC

o Stage 3 (2011 - 2014) - Region Developer with diversified infrastructure capabilities

Last reported financials (FY 2010-11)

o Standalone Financials

Income - Rs. 1085.1 cr

PBDIT - Rs. 129.37 cr

PAT - Rs. 59.87 cr

o Consolidated Financials

Income - Rs. 941.84 cr

PBDIT - Rs. 160.29 cr

PAT - Rs. 18.23 cr

Snapshot of Business Verticals

1. Marine Infrastructure & Services

a. Karaikal Port

i. Commissioned in April 2009

ii. Owned and operated by Karaikal Port Pvt Ltd (KPPL), a subsidiary of MARG.

iii. Project Cost - Rs.3,300 cr (in three phases)

iv. Planned Capacity - 47 MMTPA (million metric tonnes per annum)

v. Cargo Handled - Coal (Primary), Fertilizer, Agro, General Cargo, Project Cargo,

Raw Sugar, Containers

vi. Value Proposition - Higher operational efficiency (vessel turnaround, discharge

rates) and logistics cost advantages as compared to Chennai, Tuticorin ports

vii. Key Investors - IDFC, Ascent Capital

b. Marine Services - Dredging & Logistics

i. Currently catering to the requirements of Karaikal Port

ii. External opportunities may be tapped going forward

c. Project Pipeline - Mugaiyur Ship Repair Yard

i. Project Cost - Rs.3,300 cr (in three phases)

ii. Current Status -

1. Formal approval received form Govt of Tamil Nadu

2. Port limits notified

3. Land acquisition, feasibility study, master plan, DPR initiated

2. Urban & Industrial Infrastructure

a. MARG Swarnabhoomi - The Land of New Thinking

i. A city of sustainable innovation built on close networking of academia-research-

industry in a pristine location

ii. Key Constitutents

1. Education - Primary, Secondary & Higher Education, Design &

Architecture, Music Academy, Finishing School, Vocational Training

2. Research - Ready-to use Labs, Bio - IT, Incubation spaces, Built-to-suit

campuses

3. Innovation - Space for applied research, industrial collaborations

4. Industry - Engineering & Multi-Services SEZs

5. Living - 7,000 Residential Units backed by supporting physical and social

infrastructure

iii. Value Proposition - Unique ecosystem suited for R&D, driven by Industry -

Institute (including Virginia Tech) linkages

3. EPC

a. Operates under the brand name MARG Foundation India

b. Stages of Growth

i. Started by catering to MARG’s internal projects

ii. Developed internal capabilities

iii. Leveraged capabilities thus built in bidding for external contracts

iv. Revenue from external customers has grown to 47% as opposed to 17% in the

previous financial year

v. Sector Presence - Marine construction, Integrated urban construction, Industrial

construction, High-rise & low-rise buildings

vi. Currently the primary revenue driver; trend expected to continue going

forward even though share of revenue may drop as asset-based revenues kick

in.

4. Real Estate

a. Residential Segment

i. Operates under the brand name MARG ProperTies

ii. Over 4 million sq ft of residential space in various stages of development

iii. Primarily focuses on the high-demand mid and affordable segment

iv. Predominantly a Chennai based player

v. Professionally managed, process driven, customer oriented organization

b. Commercial Segment

i. Currently developing a multi-use commercial building (mall + multiplex + hotel +

service apartments) - 'MARG Junction', spread over 1.8 million sq ft

ii. Deals for 35% of the leasable space finalized as of FY2010-11.

iii. Brands signed include PVR, Shoppers Stop, HyperCity, Rayban, Hewlett Packard

Other Projects

1. Airports at Bellary and Bijapur in Karnataka in the pre-development stage

2. PURA Projects - ‘Provision of Urban Amenities in Rural Areas’, a flagship program of the

Ministry of Rural Development (MoRD),

a. Development of a package of urban facilities - Clean water supply to the households,

storm-water drainage, well-maintained village streets, sanitation & sewerage network,

and solid waste management.

b. New economic activities and job-oriented skill development, thereby enhancing the

livelihood of the rural population

c. MARG, in consortium with National Agro Foundation (NAF), bagged 2 pilot projects in

Karaikal District and Lathur Block

d. Karaikal PURA - Outlay of Rs. 93 crores, covering cluster of 8 villages & 31,000

population and an area of 30 sqkm.

e. Lathur PURA - Outlay of Rs. 100 crores (under active consideration of the state &

central governments),to benefit over 50,000 population, in 11 villages spread across

120 sqkm.

As of Dec. 2011

MARINE INFRASTRUCTURE & SERVICES OF MARG GROUP (MARINE VERTICAL)

MARG Group has taken a strategic interest in marine infrastructure domain, considering this

as a key core sector for building India’s economic strength. Karaikal Port is the first PPP

venture of the group which is now in the 3rd year of successful operations. Marine Vertical of

MARG Group is now spearheading into other related ventures, which will achieve forward and

backward integration in the marine domain.

Key initiatives of the vertical are-

A. KARAIKAL PORT

MARG Karaikal Port is a premier, hi-tech, all weather port on the South East coast of India.

Karaikal Port has a sizable primary hinterland because of its strategic location. It is the only

all weather, deep water, multi-commodity port between Chennai port and Tuticorin port and

is strategically located at the middle of this 680 km coastline.

Awarded under BOT basis by the Government of Puducherry, MARG Karaikal Port is in the

process of completing 2nd phase of expansion leading to a 28 MMTPA capacity by end 2011.

The port will then have 5 berths including fully mechanized coal berths, depth upto 16.5 mtrs,

liquid cargo handling capabilities and specialized warehouses for agro products. In 3rd phase

of expansion, port envisages a capacity of 50 MMTPA by 2018.

MARG Karaikal Port advantages:

Multi-cargo port: handling a diverse set of cargo ranging from of cargo like coal, fertilizer,

cement, raw sugar, project cargo, gypsum, containers, steel pipes, scarp, bagged sugar,

construction material etc.

Discharge capacity in excess of 30,000 TPD

Railway evacuation at 6 rakes per day

Well connected by road and rail to central Tamil Nadu and other southern states of the

country

Benefits to the local economy - all round industrial development of the region

Quality Assured: ISO 9001, 14011 OHSAS 18001 certified operations with comprehensive

single window services

Connectivity: Karaikal Port is well connected through road and rail to the Central Tamil

Nadu and other southern states of the country. The port offers a clear advantage, both in

terms of distance and accessibility to the hinterland.

End-to-End Logistics Solutions

MARG Karaikal Port has the distinction of pioneering unique end-to-end offerings in the form

of customized total logistics solutions to large volume port users. The end-to-end logistics

solution is an industry first in the Indian ports sector and offers the customers turnkey

logistics benefits that can isolate them from the many complexities, price fluctuations and

uncertainties that tend to affect international supply chain systems in today's world. Under

this end-to-end model, MARG Karaikal port will take over the logistics either partly or fully

between the overseas origin of the cargo and the domestic destination thereby freeing the

customers from having to deal with a multitude of different agencies, governments and

contractors.

Potential for Port Based Industries

MARG Karaikal Port's strategic location close to the economically vibrant Central Tamil Nadu

region and the ready availability of vital resources such as ample land and manpower

provides a compelling combination for the development of an industrial hub and keeping

this in mind, the port has taken on an active role in promoting and facilitating investments

by port based industries in and around Karaikal. As part of these efforts, MARG Karaikal Port

assists potential investors in selection of plant location, development of support facilities and

transport links to the port.

MARG Karaikal Port has bagged the prestigious "Emerging Port of the year 2011" award at

South East CEO Conclave held on 27th July 2011.

The company has also attracted Private Equity Investment from two major PE firms and rated

“BBB” an investible grade rating by CARE.

B. MARG INTERNATIONAL DREDGING PTE LTD

As part of backward integration effort, MARG has ventured into dredging and established a

dredging division through incorporation of its Singapore based subsidiary 'MARG

International Dredging Pte Ltd', in 2009, which is an asset owning company.

Backward Integration benefits:

Further to being a Port developer, a logical business orientation for MARG was to start

dredging operations and procuring assets of its own so as to complete the project on a

turnkey basis and also to reduce the cost of the project substantially. This backward

integration is also meant to reduce dependency on the market for completion of the project

and keep costs in check.

Today, this model is a widely accepted norm. Having own assets helps Port operations in

terms of maintenance post the project completion.

Dredging Operations:

More than 20 million m3 of dredging for Phase 1 and Phase 2 of Karaikal Port has been

done. In addition dredging work for other Ports is being developed and MARG is expanding

its dredging business in Indian subcontinent and beyond with major projects already awarded

being Taipei Port project, Taiwan and Mahe fishing harbour project. Presently MARG has two

dredgers – Cutter Suction Dredger 'MARG Cauvery' and Trailer Suction Hopper Dredger

'MARG Vaigai'.

MARG Cauvery is an all-welded steel non-propelled cutter section dredger suitable for

harbour dredging. The dredger was built in 2007 at China. The dredger is fitted with spuds

for positioning during the dredging operations. For slurry, the capacity is 2000m3/h over a

distance of 3,000 m through 750 mm nominal diameter discharge pipes. The cutter is spiral

type with cutting teeth fitted on the edges.

MARG Vaigai is a Trailer Suction Hopper Dredger suitable for harbour and sea dredging. The

dredger was built in the year 2006 by Zhoushan Zhaobao Ship building & Repairing Co. Ltd.

at China. It has an overall length of 105.6 m and hopper capacity of 5399.86 m3. Its Full Load

Displacement is 10872 MT and it has a speed of 11 Knots.

MARG plans to expand its dredging fleet based upon the future requirement to one more

cutter suction dredger and another trailer suction hopper dredger.

C. MARG LOGISTICS PRIVATE LIMITED (MLPL)

MARG Logistics, a fully owned subsidiary of MARG Ltd, presently offers total integrated

logistics services to the EXIM customers of Karaikal Port and is committed to achieve

customer satisfaction by maximizing operational efficiency and providing precise and time

sensitive services. This is a forward integration initiative.

MARG Logistics assures optimum value addition to the customer supply chain by continuous

research in cost reduction and augmenting service levels. It presently offers stevedoring &

transportation services for customers of MARG Karaikal Port.

Stevedoring Services

MARG Logistics offers a complete range of stevedoring services at MARAG Karaikal port

which is standardized to international levels. With state-of-the-art cargo handling equipment

and excellent infrastructure, MARG Logistics has broken national records for peak cargo

discharge rate of 55,912 MT of coal in 24 hours (through conventional handling) for MV

Christiana on 12.03.2011.

Road Logistics

MARG Logistics started its road transportation service as a value addition to ensure that

cargo importers are confident about timely evacuation & movement of cargo from port to

their locations. This was done to cater to the logistical challenges and unavailability of trucks

in and around Karaikal region.

In a short span of time, MARG Logistics has transported more than 2.50 Lakh MT of cargo for

major cement, sugar & paper manufacturing companies and has earned their confidence

through smooth and streamlined operations, high quality service and customer orientation.

MARG logistics is poised to increase the customer base for forward movement and is also

tapping return cargo transportation which predominately is the export movement from

various customer locations. It aspires to join hands with leading Logistics service providers for

expanding the network and optimizing logistics costs.

D. MUGAIYUR PORT

MARG Group is developing a Greenfield Shipyard cum Minor Port near Mugaiyur in

Kancheepuram District of Tamil Nadu. The project is conceptualized as an integrated facility

offering a multi-commodity clean cargo port and a ship repair yard at a single location.

Situated along the East Coast of India just south of Chennai, the port offers a unique mix of

strategic location, access to virgin markets and excellent growth prospects.

The project is envisaged as a full-fledged ship repair yard for handling a variety of ship repair

tasks ranging from minor afloat repairs to complex repairs requiring dry dockings with a

Panamax capable dry docking facility and slipway along with a multi-commodity clean cargo

port facility equipped with modern facilities to cater to the maritime transport needs of a fast

growing hinterland region.

The proposed captive shipyard cum minor port has been formally notified as a Minor Port by

the Government of Tamil Nadu in 2009 and the waterfront land area has been handed over

to the company by Tamil Nadu Maritime Board (TNMB) on a 30 year lease period. Currently

detailed project report and other pre-development activities are being carried out for

obtaining various regulatory approvals for the project.

Swarnbhoomi - 'The Land of New Thinking'

MARG is developing two Special Economic Zones (catering to Engineering & Multi-Services

industries) spread over 612 acre, as a part of MARG Swarnabhoomi - 'The Land of New Thinking',

under its wholly-owned subsidiary-New Chennai Township Pvt Ltd (NCTPL). MARG Swarnabhoomi is

located on the scenic East Coast Road, midway between Chennai and Puducherry.

Infrastructure @ MARG Swarnabhoomi

6 acres of water bodies

Green eco-system: 19,000 planted trees

18 kms of heavy duty roads ready, as per

highway standards, with storm water

drains,3 km of covered pathway

3 Rain water harvesting structures with a

total area of 31,000 m² and a cumulative

capacity of 1,37,000 m³, enough to take

care of water needs of MARG

Swarnabhoomi for 2 years

State-of-the-art, air-conditioned

Convention Centre with seating capacity

of 4,000

Million Square feet

Light Engineering SEZ 2.88

Multi Services SEZ 4.5

Science Park 1.30

Knowledge Hub 0.45

Innovation Hub 2.45

Multi-Services Spaces 0.3

Residential Hub 14.66

Total 22.04

Industries @ MARG Swarnabhoomi

Engineering SEZ

2 Lakh sq.ft. of industry facilities completed, 1.3 Lakh sq.ft. under construction

Industry majors like Grundfos, Virgo, Polyhose & Van Spall operational

Other industry majors coming up at MARG Swarnabhoomi include Eswari Electricals for

distribution facility, Twin Disc for marine transmision devices, TVS Kwik Patch for auto

components & Techpro for water treatment plant equipments

Multi services SEZ

In the Multi-services zone, a Science Park facility is being setup, in which construction of

Phase-I of Wet Laboratory building is currently underway and it would be ready for

occupation by March, 2012. Clients signed on include Strand Genomics, Incogene, Biozeen,

Symphony, Micro Labs, Laxai Avanti and Biophenolika. Several other leaders in the

biotechnology and life sciences space are in the pipeline.

The Department ofBiotechnology (DBT), Government of India has approved the

Biotechnology Incubation Center (BTIC) that is being set up under association with ICRISAT.

The Incubation Center shall be functional in Q3 2011-12

Education @ MARG Swarnabhoomi

1 lakh sq ft of educational facilities operational

Swarnabhoomi Academy of Music (SAM) into its 3rd year of operations with 33 students

and International faculties from the US

225 first generation students from LKG to VIIIth standard availing affordable CBSE based

education at MARG Navajyothi Vidyalaya

60 students attending Architecture & Design course at MARG Institute of Design &

Architecture Swarnabhoomi (MIDAS) with a unique practical & live experience

Rural BPO and Employability & learning Centre with over 150 people operational

The Company has signed an MoU with Virginia Tech, USA to set up a centre of higher

education in the advanced engineering space within the SEZ (subject to the foreign

universities bill being passed).

Besides, nearly 7 acres of land have been earmarked for setting up Dhyaan Dhaam (an Art of

Living centre). All of these initiatives serve to position MARG Swarnabhoomi as a one-of-a-

kind holistic knowledge hub

Homes @ MARG Swarnabhoomi

Specially designed homes with a sea view, sense of light and sense of space

Cumulative 7000 homes launched, the biggest such launch in South India covering 7.6 million

sq. ft. of land

Homes starting at just Rs.9 lakh

Land to construction cost ratio at MARG Swarnabhoomi is 20:80 whereas in the cities it is just

the reverse

MARG Swarnabhoomi's FY2010-11 revenue stood at Rs 198 crores; revenue increased by 32% Y-o-Y.

PURA Projects- A Social Innovation Initiative

PURA, acronym for ‘Provision of Urban Amenities in Rural Areas’, is a flagship program of the Ministry

of Rural Development (MoRD), Government of India. PURA encompasses development of a package

of urban facilities by selected private developer within 3 years, main components being clean water

supply to the households, storm-water drainage, well-maintained village streets, sanitation &

sewerage network, and solid waste management. This is integrated with new economic activities and

job-oriented skill development, thereby enhancing the livelihood of the rural population. The selected

private developer will further maintain the facilities & services for the next 10 years, and to develop

local capacity for sustaining it thereafter

PURA Pilot Project Details

MARG, in consortium with National Agro Foundation (NAF), bagged 2 pilot projects (out of

11 selected projects) through competitive bidding process involving 94 private entities.

MARG’s projects will cover total of 19 villages, and benefit over 80,000 rural population.

The first pilot, in Karaikal District of Puducherry UT, is under implementation, at an outlay of

Rs. 93 crores, covering cluster of 8 villages & 31,000 population and an area of 30 sqkm.

MARG will endeavour to distribute 100 litres of water per day per capita, improve street

network of ~110 km, construct over 100 community toilets, collect & treat over 10 metric

tonnes of organic waste per day, and will impart job-oriented training to over 4000 youth.

The 2nd pilot project implementation at Lathur Block, Kancheepuram district of Tamil Nadu,

with an estimated project outlay of Rs. 100 crores, is under active consideration of the state

& central governments. This project is structured to benefit over 50,000 population, in a

cluster of 11 villages spread across 120 sqkm.

PURA focuses on social innovations that directly improve the living standard of BPL and

socially backward strata of the community. It is an innovative business model that combines

profit (Add-On projects) with social good (MoRD & Non-MoRD projects), making it as a high-

yield corporate social business (CSB), designed to provide a guaranteed return of 15% on

capital invested by the private developer. MoRD provides sufficient funds in advance, by way

of grants, so as to mitigate project delays & overruns.

Case Questions:

MARG, as an acronym for Models for Accelerate Regional Growth, truly embodies the theme for

development for the entire nation. Group has successfully embarked on the sunrise niche marine

infrastructure domain, along with harnessing resources for the relentless urbanization wave. MARG

Group’s next growth inflection point is ‘Turnover of US$ 1 billion’, which is now our goal to be

achieved by end of FY14. This will be through a mix of creating infrastructure triggers, catalyzing

social innovations, managing research & innovation centers and integrating economic & social

clusters.

Our present strategic direction can be visualized through the following vision statement-

The Vision – Short Term

To reach the league of billion dollar companies (turnover) by 2014

Strategic Issues to be addressed

1. Region Development Strategy

a. How should MARG go about positioning itself as a Region Developer?

b. How should the positioning be articulated differently to the various stakeholders -

employees, customers, investors etc?

2. Diversification

a. New sectors.. Does Marg need to enter new areas to achieve the billion dollar vision?

3. EPC as the key but secondary revenue driver

a. What strategic decisions are needed for EPC to provide the engine for growth to the

group?

4. People Strategy

a. What sort of organization structure would best suit MARG, keeping in mind its

strategy and nature of business?

5. Market Perception

Some information on the above options will be provided for the second stage of submissions after

the executive summaries are received. Additional information can be found in

http://www.marggroup.com

We would like the participants to undertake a completely fresh thinking & review the future

challenges & consequent opportunities which MARG can exploit. Hence we look forward to at least 5

radically different mix of strategic options which we may like to evaluate at the end of the contest.