Sagar Cements Limited -...

SAGAR CEMENTS LIMITED

1

Sagar Cements Ltd (Sagar) is southern based cement manufacturing company with a cement capacity of 5.75 MT and clinker capacity of 3.80 MT in Mattampally, Gudipadu and Bayyavaram. All its products are being sold under the brand “Sagar”. The company has a well spread out distribution network of 2150 dealer / stockist aiding cement sales in multiple territories like Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, Maha-rashtra, and Orissa. However, company is expected to earn ~85% of its FY19 revenues from south India. Limestone requirement of the plant is met from the company's captive mine located, adjacent to the plant.

Well poised in high growth market of Andhra Pradesh (AP) & Telangana - Sagar Ce-ments, with a grinding capacity of 5.25 mn tones is a dominant player in south India with presence across all five key states – AP, Telangana, Tamil Nadu, Kerala and Karna-taka. It continue to earn nearly ~83% of its revenue from AP & Telangana (57% of FY18 Volume), Karnataka (13% of FY18 Volume) & Tamil Nadu (13% of FY18 Volume). In addition, it has also expanded its geographic wings to Maharashtra, Odisha & Kerala.

Expanding market presence & Cost saving initiative - Apart from AP & Telangana, Com-pany has expanded its presence in the Karnataka, Tamil Nadu, Kerala, Maharashtra and Orissa, which are historically lucrative markets owing to favorable demand-supply dy-namics. Recently, company had commissioned solar power plant of 1.25 MW & 8.8 MW waste heat recovery plant (WHR) at Mattampally. As per management, this will reduce the power cost by ~INR 5-6 crore per quarter. Further with grinding capacity expansion in Vizag to 1.5 MT would help to reduce the freight cost and lead distance. Sagar’s freight cost which ranges between ~INR 750-800 per ton, is expected to come down to INR 700-750 per ton by FY18-19 owing to the anticipated benefits of reduced lead dis-tance.

Adequate Limestone reserves - Around 1.5 tonnes of limestone is required to manufac-ture 1 tonne of cement. Sagar’s limestone mine is close to its plant. The mine has re-serves of more than 600 mt, which can serve Sagar’s requirements for the next 70 years. Sagar Cement (R) Ltd & Sadguru Cement, too, has limetone reserves of 174.7 mt & around 60 mt respectively. Sagar’s manufacturing facilities are located with proximity to coal mines (Major Fuel) and ports (less than 150 kms from the plant). We expect raw material costs to reduce going forward.

Outlook & Valuation - Sagar generates ~50% of its sales from Andhra Pradesh and Tel-angana. Sagar has been diversifying its market reach by entering into new regions, focus on improving P&F cost (WHRS capacity augmented to 8.8MW), 18MW CPP addition at its Mattampally plant (expected to start by March 2019E) coupled with rationalization of lead distance post the grinding unit capacity enhancement at Bayyavaram which will go a long way in improving the operating performance in the medium term. At CMP Sagar is trading at $52 FY20E EV/T. We maintain BUY rating on the stock with a Target Price of INR 962/share (valuing at average of FY21E EV/EBITDA of 9.0x & EV/Ton of USD $35).

Financials : (Consolidated) (In Rs Cr.)

RATING: BUY

Target: 962

Upside: 33.9%

CMP : 718.1 (As on 15/03/2019)

Reuter Code : SGRC.NS

Bloomberg Code : SGC IN

Market Data

Face Value (Rs) 10.0

Equity Share Capital (cr) 20.4

Share Outstanding (cr) 2.0

Market Cap (Rs cr) 1,464.9

Book Value / share 382.0

Daily Avj. Volume 11,148

52 W High 1074.0

52 W Low 528.2

Shareholding %

Promoter 50.1

Foreign 3.6

Institutions 14.4

Public & Others 32.0

Sensex and Stock Movement

Source - DSPL Research

FY2018 FY2019 (E) FY2020 (E) FY2021 (E)

Total Revenue 1,038 1,217 1,405 1,677

EBDITA 159 136 169 215

PAT 26 1 11 24

Basic EPS (INR) 12.9 0.6 5.2 11.8

EV/EBITDA (x) 14.3 14.4 12.4 10.4

Dinesh Gupta +91 22 30272867 [email protected]

Lohit Bharambe +91 22 30272868 [email protected]

Sagar Cements Limited

mailto:[email protected]

mailto:[email protected]


2

Sagar Cements Ltd (Sagar) is southern based cement manufacturing company with a cement capacity of

5.75 MT and clinker capacity of 3.80 MT in Mattampally, Gudipadu and Bayyavaram. All its products are

being sold under the brand “Sagar”. The company has a well spread out distribution network of 2150 deal-

er / stockist aiding cement sales in multiple territories like Telangana, Andhra Pradesh, Tamil Nadu, Karna-

taka, Maharashtra, and Orissa. However, company is expected to earn ~85% of its FY19 revenues from south India.

Limestone requirement of the plant is met from the company's captive mine located, adjacent to the plant.

The company manufactures various varieties of cement such as ordinary Portland cement (OPC) of 53

grade, 43 grade, Portland Pozzalona cement (PPC) and sulphate resistant cement (SRC) to suit different

needs of customers.

Capacity in million MT Clinker Cement

Sagar Cements –Mattampally, Nalgonda, Telangana 2.80 3.00

SC (R) – Gudipadu, Anantapur, Andhra Pradesh 1.00 1.25

Sagar Cements –Bayyavaram. Vizag, Andhra Pradesh - 1.50

Total 3.80 5.75

Sagar Cements Limited, Mattampally

Capacity (in MTPA) 3.00

Location Mattampally , Telangana

Markets Catered AP, Telangana, Odisha, Maharashtra

Limestone Reserves > 600 mn Tonnes

Sagar Cements (R) Limited, Gudipadu

Capacity (in MTPA) 1.25

Location Gudipadu , AP

Markets Catered AP , Karantaka , TN

Limestone 174.7 mn Tonnes (20 Yrs Lease)

Captive Power Plant 25 MW

Sagar Cements Limited, Bayyavaram

Capacity - Grinding (in MTPA)

1.50

Location Vizag , AP

Markets Catered Visakhapatnam, Vizag, Srikakulam and

parts of Odisha

Source – Company, DSPL Research


3

Name Designation

O Swaminath Reddy Chairman & Independent Non Executive Director

S Anand Reddy Managing Director

S Sreekanth Reddy Joint Managing Director

Eric Fernand Pascal Cesar Bertrand Director

K Thanu Pillai Director

Mrs. S Rachana Director

T Nagesh Reddy Nominee Director

V H Ramakrishnan Independent Director

K Haresh Babu Vice President - Finance

K Prasad Chief Financial Officer

R Soundararajan Company Secretary

Key Management


Institutional Investors (%) Mar-18 Jun-18 Sep-18 Dec-18

HDFC TRUSTEE CO.LTD. A/C.HDFC BAL. ADV. FUND 6.94 6.40 6.40 6.40

IDFC STERLING VALUE FUND 4.39 4.64 4.79 4.86

ICG Q LIMITED 1.62 1.62 1.62 1.62

KITARA INDIA MICRO CAP GROWTH FUND 1.84 1.84 1.84 1.84

BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD. 1.57 1.57 1.57 1.58

Source – BSE, DSPL Research


4

Investment Rationale

Well poised in high growth market of Andhra Pradesh (AP) & Telangana

Sagar Cements with a grinding capacity of 5.25 mn tones is a dominant player in south India with presence

across all five key states – AP, Telangana, Tamil Nadu, Kerala and Karnataka. It continue to earn nearly

~83% of its revenue from AP & Telangana (57% of FY18 Volume), Karnataka (13% of FY18 Volume) &

Tamil Nadu (13% of FY18 Volume). In addition, it has also expanded its geographic wings to Maharashtra,

Odisha & Kerala.

South India has witnessed a subdued demand over five year owing to surplus capacities. However demand

has picked up in second half of FY18 owing to strong growth in AP & Telangana and a revival in Tamil Na-

du. The company’s key focus regions of AP/Telangana witnessed demand growth of 19.4% YoY in FY18 and

42.8% YoY in YTD FY19 due to low-cost housing, road construction, irrigation projects and development of

infrastructure in Amaravati.

Source – Company, Frost & Sullivan report, DSPL Research


5

Source – Company, Frost & Sullivan report, DSPL Research

We expect demand to remain strong in the company’s key market, given the government’s focus on infra-

structure development with the formation of a new state - Telangana. In addition we expect southern region

to grow steadily at 7-8% with prices to remain range bound over next few years.

Expanding market presence & Cost saving initiative

Sagar enhanced its existing capacities at Gudipadu and Bayyavaram in FY19 to 1.25 MT and 1.5 MT re-

spectively. Further, company recently acquired 65% stake in Satguru Cements Pvt Ltd and announced capac-

ity addition at Jajpur Odisha (1.5mt grinding unit) at a cost of INR 300 crore and integrated cement plant

with clinker and grinding capacity of 0.7 MT and 1 MT respectively in Dhar, Madhya Pradesh at a cost of

INR 426 crores, both the projects are expected to be completed by March 2021. These additional capacity

would take the grinding capacity from 5.75 MT currently to 8.25 MT. Apart from AP & Telangana, Company

has expanded its presence in the Karnataka, Tamil Nadu, Kerala, Maharashtra and Orissa, which are histor-

ically lucrative markets owing to favorable demand-supply dynamics.



Recently, company had commissioned solar power plant of 1.25 MW & 8.8 MW waste heat recovery plant

(WHR) at Mattampally. As per management, this will reduce the power cost by ~INR 5-6 crore per quarter.

Further with grinding capacity expansion in Vizag to 1.5 MT would help to reduce the freight cost and lead

distance. Sagar’s freight cost which ranges between ~INR 750-800 per ton, is expected to come down to

INR 700-750 per ton by FY18-19 owing to the anticipated benefits of reduced lead distance. Sagar’s plants

are located close to major markets in the South and select markets in Maharashtra and Odisha with average

lead distance below 400 kms. Further, commissioning of captive power plant by June 2019 at Mattampally

will enable the company to save ~INR 15 crore annually. We expect this acquisition and capacity addition

to generated significant synergies by reducing average lead distance and improving margins.

Source – Company, Google Map, DSPL Research

Adequate Limestone reserves Around 1.5 tonnes of limestone is required to manufacture 1 tonne of cement. Sagar’s limestone mine is

close to its plant. The mine has reserves of more than 600 mt, which can serve Sagar’s requirements for next

70 years. Sagar Cement (R) Ltd & Sadguru Cement, too, has limetone reserves of 174.7 mt & around 60 mt

respectively. Sagar’s manufacturing facilities are located with proximity to coal mines (Major Fuel) and ports

(less than 150 kms from the plant). We expect raw material costs to reduce going forward.

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Financial Analysis

Sagar’s consolidated sales volume has grown by 19.7% CAGR during FY16-18 to 2.7 mt, which aided its

revenue to grow at 17.4% CAGR during FY16-18 despite subdued realisation. A decent demand environ-

ment in AP/Telangana, Karnataka and Odisha markets aided volume growth. Utilisation at Mattampally,

BMM Cement & Gudipadu units stood at 59%, 54% & 81% in Q3 FY19, respectively. Further, in FY18-21E,

we expect volume CAGR of 17.2% in FY18-21E mainly led by capacity expansion of ~4.0 MT with focus on

improving margin per ton, we expect realisation per tonne to increase gradually. Consequently, revenues are

expected to grow at 17.3% CAGR during FY18-21E and sales volume to increase to 4.4 mt by FY 21E from

2.7 mt in FY 18.

Op. EBITDA is expected to grow at a 3 year CAGR of 10.6% to INR 214.6 crore by FY21E on the back of savings in freight and power costs and we expect EBITDA margin to improve to ~12.2% by FY21E from 10.3% in 9M FY19. We expect the company to report a PAT of INR 27.1 crores and EPS of INR 13.3 in FY21E.



8


Outlook & Valuation

Sagar generates ~50% of its sales from Andhra Pradesh and Telangana. Sagar has been diversifying its

market reach by entering into new regions, focus on improving P&F cost (WHRS capacity augmented to

8.8MW), 18MW CPP addition at its Mattampally plant (expected to start by March 2019E) coupled with ra-

tionalization of lead distance post the grinding unit capacity enhancement at Bayyavaram which will go a

long way in improving the operating performance in the medium term. At CMP Sagar is trading at $52

FY20E EV/T. We maintain BUY rating on the stock with a Target Price of INR 962/share (valuing at average

of FY21E EV/EBITDA of 9.0x & EV/Ton of USD $35).

13.6%14.6%

10.5%11.4%

12.2%

-0.5%

2.5%

0.1%0.8%

1.4%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

FY2017 FY2018 FY2019E FY2020E FY2021E

Op. EBITDA & PAT Margin (%)

Op. EBITDA PAT


9

Industry Overview:

India is the second largest producer as well as a consumer in the world for Cement led by enormous growth

in the infrastructure & Construction Sector. The government has been striving to improve India’s competitive-

ness across segments, by introducing schemes like – Smart City, AMRUT, Housing for All, etc., which will

make cities environmentally and economically viable. The government has provided incentives for rural de-

velopment and also allowed 100% FDI in the construction development and industrial parks. The concretiza-

tion of dirt roads to cemented road in rural and semi-urban areas and introduction of metro projects in de-

veloping cities will contribute to the growth of cement industry.

In volume terms, India’s cement demand was around 7% of the global cement demand in 2017.Overall in-

stalled cement capacity in India is estimated at ~444 million tonnes in FY2018. Out of total cement capac-

ity in the country, 34.9% capacity is concentrated in South India, followed by 20.9% in North India. Majority

of the cement installed plant capacities are in clusters (Sirohi, Satna, Gulbarga and Nalgonda) across India

where limestone availability (essential raw material) is high. This is a general practice adopted to overcome

high logistics cost of transporting end product over long distances. India’s overall cement capacity utilisation

stood at 67% in FY2018 against 65% in FY2017. The demonetisation exercise impacted the demand from

rural and retail real estate segment during H2FY17. But the same has evidently recovered during FY18.

Source – Penna Cement DRHP, Frost & Sullivan Report, DSPL Research


10

In FY2018, all India cement demand is estimated to have increased to 296 million tonnes up by 6.2% as

compared to FY2017. The growth momentum is expected to continue given the ongoing & planned infra-

structure projects and the overall cement demand is projected to reach 440 million tonnes by FY2023E.

Housing segment is the key contributor to the cement demand with ~ 65% share and demand expected to

rise by ~8% CAGR in FY2018-FY2023E. Going forward, increasing population and rapid urbanisation

would drive the demand for housing segment. Infrastructure segment is the second largest contributor with

14% share and is expected to grow by ~ 10.5%-11.0% CAGR during FY2018-FY2023E.

Cement is a high-volume and low-value commodity which is an indispensable for building & construction

work. The various types of cement grades produced in India include PPC (Portland Pozzolana Cement), OPC

(Ordinary Portland Cement), PSC (Portland Slag Cement), White Cement, Oil Well Cement, Rapid Harden-

ing Cement, conforming to the Bureau of Indian Standards specifications.


PPC accounted for 64% of the overall cement consumption in FY2018 and is widely preferred for the hous-

ing and infrastructure projects such as underground structures, hydro-power stations and bridges. PPC is ex-

pected to grow 9.5-10% CAGR during FY2018-FY2023E. PSC accounted for 8% of demand share in

FY2018 and has a very niche market and is mainly used for mass concrete structural applications such as

marine onshore and offshore areas, dams, and industrial projects. PSC is expected to grow at a CAGR of 8-

8.5% during FY2018-FY2023E. OPC accounted for 28% of the total cement consumption in FY2018 and

is mainly preferred in precast concrete products, reinforced buildings, reservoirs and pavements. OPC

growth rate is expected to remain at 4% CAGR during FY2018-FY2023E.



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Source – DSPL Research

Financial (INR Cr) - Consolidated

Profit & Loss Statement FY2018 FY2019E FY2020E FY2021E Balance Sheet FY2018 FY2019E FY2020E FY2021E

Total Revenue 1,038.1 1,217.3 1,405.1 1,676.7 Share Capital 20.4 20.4 20.4 20.4

Raw Material Cost 145.1 219.1 245.9 285.0 Reserves and Surplus 758.8 760.0 770.7 794.8

Gross Profit 893.0 998.2 1,159.2 1,391.7 Shareholders Fund 779.2 780.4 791.1 815.2

Gross Profit Margin (%) 86.0% 82.0% 82.5% 83.0% Minority Interest - - - -

Employee Cost 51.3 60.9 67.4 80.5 Total Loan 445.0 556.0 706.0 856.0

Other Manufacturing Cost 690.4 809.5 931.6 1,106.6 Deferred Tax Liailities 40.3 40.3 40.3 40.3

Operating EBITDA 151.3 127.8 160.2 204.6 Total Liabilities 1,264.5 1,376.7 1,537.4 1,711.5

Op. EBITDA Margin (%) 14.6% 10.5% 11.4% 12.2% Net Fixed Assets 1,139.2 1,228.0 1,358.8 1,481.5

Other Income 7.3 8.5 9.1 10.1 Deferred Tax Assets 31.88 31.88 31.88 31.88

Deperication 53.6 61.2 69.2 77.2 Goodwill 38.73 38.73 38.73 38.73

EBIT 105.0 75.1 100.1 137.4 Investments - - - -

EBIT Margin 10.1% 6.2% 7.1% 8.2% Sundry Debtors 92.6 103.4 115.5 133.2

Finance Cost 59.3 73.4 84.7 102.7 Cash & Bank 58.1 60.0 65.8 82.1

Exceptional Item Loans & Advances - - - -

PBT 45.7 1.7 15.4 34.7 Inventories 94.9 106.7 119.3 137.8

Tax 19.4 0.5 4.7 10.6 Other Current Assets 115.2 135.1 155.9 186.1

PAT 26.3 1.2 10.7 24.1 Total Current Assets 360.8 405.2 456.6 539.2

Sundry Creditors 136.8 156.7 177.1 206.7

Provision 6.2 7.3 8.4 10.0

Share O/S (in cr) 2.0 2.0 2.0 2.0 Other Current Liabilities 163.1 163.1 163.1 163.1

Basic EPS (INR) 12.9 0.6 5.2 11.8 Total Current liabilities & Provision 306.1 327.1 348.6 379.9

Diluted EPS (INR) 12.9 0.6 5.2 11.8 Net Assets 54.7 78.1 108.0 159.3

Cash EPS (INR) 39.2 30.6 39.2 49.7 Total Assets 1,264.5 1,376.7 1,537.4 1,711.5

Cashflow Statement FY2018 FY2019E FY2020E FY2021E Ratios Analysis FY2018 FY2019E FY2020E FY2021E

PBT 26.3 1.2 10.7 24.1 Per Share Value

Depreciation & Amortization 53.6 61.2 69.2 77.2 EPS (Rs) 12.9 0.6 5.2 11.8

Finance Cost 59.3 73.4 84.7 102.7 BVPS (Rs) 382.0 382.5 387.8 399.6

Others 13.2 0.5 4.7 10.6 DPS (Rs) 4.0 - - -

(Incr)/Decr in Working Capital 12.0 (21.5) (24.1) (35.1) Turnover Ratio

Tax Paid (14.4) (0.5) (4.7) (10.6) Inventory Days 36 30 29 28

Cash Flow from Operating 150.0 114.3 140.5 169.0 Debtors Days 30 29 28 27

(Incr)/ Decr in Gross PP&E (196.5) (150.0) (200.0) (200.0) Creditors Days 50 44 43 42

Others 2.5 - - - Cash Conversion Cycle 17 16 14 13

Cash Flow from Investing (194.0) (150.0) (200.0) (200.0) Asset Turnover Ratio 0.7 0.7 0.7 0.8

Proceeds from issue of Shares & Warrants - - - - Profitabiliy Ratio

(Decr)/Incr in Debt (7.9) 111.0 150.0 150.0 EBITDA Margin 15.3% 11.2% 12.1% 12.8%

Interest Paid (59.0) (73.4) (84.7) (102.7) PAT margin 2.5% 0.1% 0.8% 1.4%

Others - - - - ROA 1.7% 0.1% 0.6% 1.2%

Dividend Paid (9.8) - - - ROE 3.4% 0.2% 1.4% 3.0%

Cash Flow from Financing (76.7) 37.6 65.3 47.3 ROCE 8.3% 5.5% 6.5% 8.0%

Incr/(Decr) in Balance Sheet Cash (120.8) 1.9 5.8 16.2 Solvency Ratio

Cash and cash equivalents op. bal 161.8 41.0 42.9 48.7 Debt / Equity Ratio 0.6 0.7 0.9 1.1

Other Bank Balances 17.1 17.1 17.1 17.1 Current Ratio 0.8 0.7 0.6 0.7

Cash and cash equivalents cl. Bal 58.1 60.0 65.8 82.1 Quick Ratio 0.5 0.4 0.4 0.4

Interest Coverage Ratio 2.7 1.9 2.0 2.1

Valuation Ratios

PE (x) 71.7 1,222.7 137.1 60.8

P/B (x) 2.4 1.9 1.9 1.8

EV/EBITDA (x) 14.3 14.4 12.4 10.4

Mcap/Sales (x) 1.8 1.2 1.0 0.9

Earning Yield (%) 1.4% 0.1% 0.7% 1.6%

Dividend Yield (%) 0.4% 0.0% 0.0% 0.0%

Free Cash Flow Yield (%) -5.6% -7.4% -9.8% -9.1%

13

DISCLOSURE

We/I, Dineshkumar Gupta, M. Sc & Lohit Bharambe, BE, PGPM, as author / the name subscribed to this report, hereby certify that all of the views expressed in this research report reflect my / our personal views about the subject or securities and no part of my / our compensation was / is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.. We / I or my / our relative(s) or Research Entity does not have any financial interest in the subject company other than disclosed.

Investment Rating

Expected return (Over 1 year)

Buy > 15%

Hold > -10% to 15%

Sell < -10%

Not Rated We have forward looking estimates for the stock but we refrain

from assigning recommendation

Business activity of the research entity Stock Broker, Merchant Banker, Depository Participant, Mutual Fund Distribu-tor

Disciplinary history of the research entity Nil

Terms & Conditions for offering Research Report by research entity On principal, we do not sell our research reports. The Research Report should be kept confidential. The Research Report is published with honesty and in good faith. The Research Report is prepared after thorough analysis of the Stock Market. Research analyst or research entity shall effectively address conflict of interest which may affect the impartiality of its research analysis and research report and shall make appropriate disclosures to address the same. Research analyst or research entity or any employees will not engage in insider trading or front running or front running of its own research report. Research analyst or research entity shall comply with all regulatory requirements applicable to the conduct of its business activities. Research analyst or research entity or its employees engaged in research analysis shall observe high professional standard while preparing research report.

Details of associate of research entity

Dalgreen Agro Pvt. Ltd. Visual Estates Pvt. Ltd. DSPL Investments Pvt. Ltd. Chanda Bharech Beneficiary Trust

VSN Enterprises

Dalmia Investmart Pvt. Ltd.

Dalmia Devcon Pvt. Ltd.

Narain Prasad Dalmia HUF

Damia Devcon Pvt. Ltd. Namtech Commercial LLP.

Dalmia Janakalyan Kosh

Sweta Beneficiary Trust

Suryakant Dalmia HUF Mount Intra Finance Pvt. Ltd. Vaishnawi Housing Pvt. Ltd.

Avni Beneficiary Trust Dalmia Securities Pvt. Ltd. Employees Gratu-

ity Fund

Mount Intra Properties LLP Advay Beneficiary Trust Mount Intra Finance Private Limited Employ-

ees Gratuity Fund

DISCLOSURE OF INTEREST: Whether the research analyst or his relative or research entity or his associate has any financial interest in the subject com-pany and the nature of such financial interest. □ Yes √ No

Whether the research analyst or research entity or its associates or relatives, have actual / beneficial ownership of one per cent or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report;

□ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation from the subject compa-ny in the past twelve months; □ Yes √ No

Whether the research analyst or research entity or its associates have managed or co-managed public offering of securi-ties for the subject company in the past twelve months; □ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; □ Yes √ No

Whether the research analyst or research entity or its associates 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 twelve months;

□ Yes √ No

Whether the research analyst or research entity or its associates have received any compensation or other benefits from the subject company or third party in connection with the research report; □ Yes √ No

Whether the research analyst has served as an officer, director or employee of the subject company; □ Yes √ No

Whether the research analyst or research entity has been engaged in market making activity for the subject company. □ Yes √ No

Other Material Conflict of Interest, if any NIL

The definition of the terms used in making recommendations are available at http://www.dalmiasec.com/Pdf/Abbreviation.pdf. These terms have been consistently used throughout the Re-search Reports contained herein.

Trading Rating Expected return (less than1 year)

Buy > 5%

Hold > -5% to 5%

Sell < - 5%

http://www.dalmiasec.com/Pdf/Abbreviation.pdf

14

DISCLAIMER

DISCLAIMER

This report has been prepared by M/s Dalmia Securities Pvt. Ltd. (hereinafter referred as DSPL, SEBI Registered Research Ana-lyst) and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such infor-mation has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and DSPL is not soliciting any action based upon it. Before acting on any advice or recommen-dation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. DSPL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the loss-es or the damages sustained due to the investments made or any action taken on basis of this report, including but not restrict-ed to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. Past performance is not a guide for future performance. Investors are advised to see Risk Disclosure Document of each product before investing. DSPL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the rec-ommendations 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.

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