Indian Engineering Industry

8/3/2019 Indian Engineering Industry

1/17

1

July 2011

QUARTERLY PERFORMANCEANALYSIS OF COMPANIES

(April June 2011)

INDIAN ENGINEERING INDUSTRY

Cygnus Business Consulting & Research Pvt. Ltd.Plot No: 8-3-948/949, 1st Floor, Solitaire Plaza,

Behind Image Hospital, Ameerpet, Hyderabad - 500 073.

Tel: +91-40-23430202-05, Fax: +91-40-23430201, E-mail: [email protected]

Website:www.cygnusindia.com

Disclaimer: All information contained in this report has been obtained from sources believed to be accurate by CygnusBusiness Consulting & Research Pvt. Ltd. (Cygnus). While reasonable care has been taken in its preparation, Cygnus makesno representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. Theinformation contained herein may be changed without notice. All information should be considered solely as statements of

opinion and Cygnus will not be liable for any loss incurred by users from any use of the publication or contents

ISIEmergingMarketsPDF in-isb from 202.174.120.67 on 2011-10-25 23:31:31 EDT. DownloadPDF.

Downloaded by in-isb from 202.174.120.67 at 2011-10-25 23:31:31 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.


2/17

QPAC-Indian Engineering Industry- April June 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2011 2

EXECUTIVE SUMMARY.........................................................................................................3

INDUSTRY ANALYSIS ............................................................................................................4

OUTLOOK FOR THE SECTOR.............................................................................................7

INTER-FIRM COMPARISON..................................................................................................8

COMPANY ANALYSIS ..........................................................................................................11

1. ABB Ltd............................................................................................................................11

2. Alfa Laval (India) Ltd. .......................................................................................................11

3. BEML ...............................................................................................................................12

4. BHEL ...............................................................................................................................12

5. Crompton Greaves Ltd. ....................................................................................................13

6. Cummins India..................................................................................................................13

7. Elecon Engineering Co. Ltd. .............................................................................................14

8. Ingersoll-Rand (India) Ltd. ................................................................................................14

9. KSB Pumps Ltd. ...............................................................................................................15

10. Larsen & Tourbo Ltd. .....................................................................................................15

11. Siemens Ltd.....................................................................................................................16

12. Thermax Ltd. ..................................................................................................................16

SOURCES & METHODS FOR COMPANY PROJECTIONS...............................................17

CONTENTS




3/17



EXECUTIVE SUMMARY

India's engineering industry is highly competitive with a number of players in each segment. Theengineering sector has been growing, driven by growth in end user industries and the new projects being

taken up in the power, railways, infrastructure development, and private sector investments fieldsamongst others. A key driver for increased engineering exports is the trend towards shifting of globalmanufacturing bases to countries like India that offer lower costs and good engineering talent. In such ascenario, India, driven by the engineering sector, will emerge as a key global manufacturing hub.

The engineering sector is the largest segment of the overall Indian industrial sector. The engineeringindustry accounts for 12% of India's GDP. The demand from this sector depends largely on GDPgrowth, which in turn is a function of expenditure in core segments like power, railways, andinfrastructure development, private sector investments, and the speed at which projects are implemented.

The power sector is the largest contributor to the revenues of engineering companies. Infrastructure isanother key area of operation. This industry is totally based upon the order book condition; it ultimatelydefines the future scenario of the industry. As per Engineering Exports Promotion Council (EEPC)

India's engineering exports are likely to touch US$76 billion in 2011-12, an increase of about 27% year-on-year, mainly due to increasing demand from new markets in Latin America. During AMJ11, thesector's shipments grew by 94% year-on-year to US$23 billion. In 2010-11, engineering exports registeredtheir highest ever growth of about 85% to US$60.1 billion.

In AMJ11 quarter, engineering sector has performed well. For AMJ11, the industrys top-line is estimatedto reach Rs276522.65m from Rs224819.04m in AMJ10. The operating profit is estimated to haveincreased to Rs33619.38m from Rs29062.01m, an increase of 15.68% and net profit in AMJ11 isestimated to have around 15% growth to reach Rs22550.72m from Rs19584.21m in AMJ10. In AMJ11quarter, BSE Sensex has reached to 18,845.87 from 19,135.96 points, a decline of 1.52%.

Growth is being driven largely Thermax, BHEL, L & T and also by all companies. They are expected to

post 1QFY12 revenue growth of 31%, 26% and 25% y-o-y respectively. Its sales registered the stronggrowth rate and to reach Rs10346.14m, Rs83173.10m and Rs98566.38m in AMJ11. Siemens is estimatedto have registered the next leading growth rate in its sales revenue growth of 23%. Cummins andIngersoll-Rand have registered growth rate of 21% and 21% and to reach Rs11228.07m and Rs1272.80m.

This growth is due to the order books of the capital goods companies reaching peak levels; that the orderexecution is the key to growth.

The engineering sector is the largest segment of the overall Indian industrial sector. India has a strongengineering and capital goods base. The Indian engineering industry has been witnessing significant levelof capability enhancement over the years. As export markets open up, this will help India develop astrong presence in global engineering exports. Power sector contributes the largest to the engineeringcompanies revenues. Major players in this sector like BHEL derive 75% of their revenues from supplying

equipments to the power sector. With development in associated sectors like automotive, one of thelargest evolving markets for engineering and industrial goods, and a well developed technical humanresources pool, India is poised to make significant strides in all segments of engineering.




4/17



INDUSTRY REVENUE

220000

240000

260000

280000

AMJ 10(A) AMJ 11(E)

Rsm

20

21

22

23

%

Sales(LHS)

Growth(RHS)

Operating profit & OPM

28000

30000

32000

34000

AMJ 10(A) AMJ 11(E)

Rsm

10

11

12

13

14

%

Operating Profit(LHS)

OPM(RHS)

Net profit & NPM

18000

20000

22000

24000

AMJ 10(A) AMJ 11(E)

Rsm

6

7

8

9

10

%

Net Prof it(LHS)

NPM(RHS)

Source: BSE India; Cygnus Research

INDUSTRY ANALYSIS

The Indian Engineering sector comprises of heavyengineering and light engineering sectors. Boilers,

industrial machinery and electric generators appear to bethe most attractive segments from the perspective of sizeand growth. Given the focus on the development ofpower infrastructure, these segments are expected to seesustained growth. The sector is expected to see strongrevenue growth Y-o-Y on the back of strong order bookflows in early 2011, primarily in Thermax, BHEL and L& T. It is expected that Bharat Heavy Electricals Ltd(BHEL) and Thermax to be the top performers in thisquarter. BHEL continues to top conviction list, givenstrong revenue visibility. The order books of most of thecapital goods companies reaching peak levels that order

execution will be the key to future growth. The share ofprivate sector in the outstanding investment is risingsteadily from 39% in 2004 to 58% in 2010. Order bookfor the sector stood at Rs3, 235 billion, up 29% YoY.

Note: The aggregate consists of the followingcompanies: ABB, Alfa Laval, BEML, BHEL,Compton Greaves, Cummins, Elecon Engineering,Ingersoll Rand, Larsen & Toubro Ltd, Thermax Ltd,

Siemens Ltd & K S B pumps Ltd.

Industry Aggregate (Rs in m)

AMJ 11 (E)

Net Sales 276522.65Change (%) 23%

EBITDA 33619.38

Change (%) 16%

Depreciation 4723.06

Change (%) 38%

Interest 1790.37

Change (%) 16%

Other Income 5423.92

Change (%) 13%

PBT 32529.87

Tax Effective tax rate 30.68%

Reported PAT 22550.72

Change % (Reported PAT) 15%

Market Cap(Rs in bn) 2953.04

Source: Cygnus Research




5/17



The industry is bound to gain momentum in the coming quarters on account of various governmentreforms in power and infrastructure. Apart from the power segment, the capital goods industry is yet tosee considerable increase in order flows from other segments. Order inflow for capital goods companiesthat are reliant on the power sector is expected to be much better than companies that are reliant on

industrial capex for the next 12 months at least. Net sales value of the major companies is estimated tohave increased in AMJ11 compared to AMJ10.

Power sector contributes the largest to the engineering companies' revenues. For instance, ABB andBHEL derive 60% and 75% of their revenues from supplying equipments to the power sector. With thegovernment planning to add large-scale generation capacities in the eleventh (2007-12) five-year plan, thepotential seems huge for the two engineering majors. This is because, apart from the investment ingeneration capacity buildup, an equivalent amount is likely to be spent in the transmission anddistribution space as well.

The top line growth of capital goods and engineering companies is expected to improve in Q1FY2011-12over that in FY2010-11. The top line growth in the quarter will be on the back of improving orderexecution, better industrial capital expenditure (capex) cycle and favourable base effect. For the quarter

under review, the cumulative top line of the capital goods and engineering companies will grow by 20-25% year on year. This cumulative top line growth will mainly be driven by strong growth registered bylarge companies like Bharat Heavy Electricals Ltd (BHEL), while most of the companies are still expectedto witness single-digit growth only.

Cost StructureThe operating profit of the industry is estimatedto have 16% in AMJ11, compared to AMJ10.Raw material cost, which constituted 46.67% oftotal sales in AMJ11, The next leading cost ispurchase of traded goods, which constituted9.64%. The staff cost of the industry isestimated to decrease during AMJ11 by 5.48%,compared to AMJ10. The other expenditure ofthe company is estimated to have 25.42%. Indiaenjoys a cost-advantage in casting and forging,as manufacturing costs in India are 25-30%lower than western countries.

ExportsThe Indian Engineering Industry, because of its technological strength in the field has advantage overother developing countries in exports. This clearly indicates the current trend for increase in outsourcingby international manufacturers of engineering products from India. Exports of engineering goods fromIndia have also been growing rapidly, 40% of exports are from small and medium enterprises. A keydriver for increased engineering exports is the trend towards shifting of global manufacturing bases to

countries like India that offer lower costs and good engineering talent. This trend is expected to continueand boost exports of engineering goods from India over the next 5 years. Capital goods account for 37%of exports in the sector. Engineering exports include transport equipment, capital goods, othermachinery/equipment and light engineering products like castings, forgings and fasteners.

As per Engineering Exports Promotion Council (EEPC) India's engineering exports are likely to touchUS$76 billion in 2011-12, an increase of about 27% year-on-year, mainly due to increasing demand fromnew markets in Latin America. During AMJ11, the sector's shipments grew by 94% year-on-year toUS$23 billion. In 2010-11, engineering exports registered their highest ever growth of about 85% toUS$60.1 billion. The government plans to replace the DEPB with an alternate Duty Drawback scheme.

The DEPB, which was to end on June 30, was extended till September so that there could be smoothtransition to the Duty Drawback scheme. The Commerce Ministry is looking at increasing the country'sengineering exports to US$125 billion by 2013-14.

Cost Structure as a % of Sales

AMJ11(E) AMJ 10(A)

(Inc)/dec in stock in trade 0.63 -4.41

Raw materials 46.67 46.46

Purchase of Traded Goods 9.64 11.58

Staff cost 5.48 7.04

Other expenditure 25.42 26.41Depreciation 1.71 1.52

Interest 0.65 0.69

Tax 3.61 4





6/17



EEPC India, apex body of engineering exporters, has started off a series of 22 Buyer-Seller Meets (BSMs)across seven locations, including New Delhi, Kolkata, Chennai, Mumbai, Bangalore, Ludhiana and

Ahmedabad in March 2010. In the first BSM series, nearly 100 Indian companies in the engineeringsector had direct business talks with their counterparts from USA, Canada, Europe and CIS countries.

Besides, 30 buyers from USA, Canada, Turkey, France, Slovenia, Spain, Bulgaria, Spain, Armenia andUkraine and others attended the meet.

Growing DemandCapacity creation and transformation in sectors such asinfrastructure, power, mining, oil & gas, refinery, steel, automotive,consumer durables are driving growth in the engineering industry.

The framework below captures some of the key factors that arecontributing to domestic and international demand for engineeringgoods from India. Restructuring of the state electricity boards indifferent states, growth of private sector players and focus oncapacity creation have driven growth in the power sector.

The demand from this sector depends largely on GDP growth, which in turn is a function of expenditurein core segments like power, railways, and infrastructure development, private sector investments and thespeed at which projects are implemented. The power sector is the largest contributor to the revenues ofengineering companies. Engineering majors like BHEL and ABB Ltd. derive a significant chunk of theirrevenues (69% and 60%, respectively) through the supply of equipment to the power sector.Infrastructure is another key area of operation.

Engineering Services Outsourcing (ESO)The Engineering Services Outsourcing (ESO) sector is another sector with great potential. ESO includesproduct design, research and development and other technical services across sectors like automotive,aerospace, hi-tech/telecom, utilities and construction/industrial machinery.

According to NASSCOM, the global engineering services market in 2020 is estimated to touch US$1,100billion, of which the outsourced component is estimated to reach around US$200 billion. As per thereport, India may capture around 25% of the global ESO pie, worth around US$40 billion by 2020. Atpresent the ESO market is around US$15 billion, with India enjoying 12% share. The engineering serviceslandscape in India has evolved significantly over the last four years, reflecting maturity, diversification andenhanced verticalisation to partner with global corporations, as per the NASSCOM.

Chennai is fast emerging a hub in engineering design, R&D and product development for a number ofglobal players. Companies across sectors- automobile, telecom, infrastructure, wind energy have set uptheir centers in the city encouraged by the good eco-system, talent pool and growing number of originalequipment manufacturers (OEMs).

Government InitiativesIndian service providers have invested considerably in increasing their global footprint to provide servicesto geographically distributed customers. They have established sales teams in North America and Europeand delivery centres in China and Japan for closer interaction with customers in the former and to co-ordinate efforts with existing manufacturing facilities in the latter. Within India, companies have begun tomove to tier-2 cities to take advantage of lower costs of operations and to access a large graduating poolof engineers. The miscellaneous mechanical and engineering industries sector-wise foreign directinvestments (FDI) inflows from April 2000 to January 2010 was calculated at US$891.49m, as per theDepartment of Industrial Policy and Promotion (DIPP). The Government has announced a series ofpolicy initiatives and programmes - a special incentive package for investments in manufacturing, settingup a National Electronics Mission and an Electronics Development Fund - in the field of information

and communication technology (ICT).

Growth segments Machine tools Fluid-moving equipment Boilers Textile Machinery sector Bearings Material Handling Systems




7/17



OUTLOOK FOR THE SECTOR

The engineering sector is the largest segment of the overall Indian industrial sector. The sector can becategorized into heavy engineering and light engineeringsegments. Heavy engineering segment forms the

majority of the engineering sector in India. India has a strong engineering and capital goods base. Theimportant groups within the engineering industry include machinery and instruments, primary and semifinished iron and steel, steel bars and rods, non-ferrous metals, electronic goods and project exports.

Among the developing countries, India is a major exporter of heavy and light engineering goods,producing a wide range of items. The bulk of capital goods required for power projects, fertilizer, cement,steel and petrochemical plants and mining equipments are made in India. The country also makesconstruction machinery, equipment for irrigation projects, diesel engines, tractors, transport vehicles,cotton textile and sugar mill machinery.

The engineering industry has shown capacity to manufacture large-size plants and equipment for varioussectors like power, fertilizer and cement. Lately, air pollution control equipment is also being made in the

country. The heavy electrical industry in India meets the entire domestic demand. Capital goods sector islikely to perform in line with the Sensex growth.




8/17



INTER-FIRM COMPARISON

Operational PerformanceAs per Cygnus estimates, for the quarter ended

June 2011, Thermax, BHEL and L & T Ltd,registered high revenue growth rate by 31%,26% and 25% in sales. Growth is being drivenlargely by Thermax, BHEL and L & T. BharatHeavy Electricals would register highest salesof Rs83173.10m as against Rs66010.40m sameperiod last year, boosted by the strong demandin the power generation sector. BHEL hasposted a 19% increase in its net profit atRs7923.80m for the quarter ended June 30,2011 against Rs6676.50m in the same periodlast financial year. The companys revenues

came from the power industry. A majormilestone of the year was an order inflow ofRs604,760m despite operating under intensecompetitive pressure in domestic andinternational markets. With an order book position of over Rs16,41,450m, at the end of the fourthquarter, the company expects to achieve robust growth in 2011-12 and beyond.

For the quarter AMJ11, other companies like Siemens, Cummins and Alfa Laval are also expected toperform well. Siemens and Cummins are estimated to register sales of Rs27630.77m and Rs11228.07m, anincrease of 23% and 21% compared to AMJ10. Whereas Alfa Laval registered 20% growth compared tosame quarter last year. ABB derive 60% of their revenues from supplying equipments to the power sector.In this quarter company has performed well.

BHEL and L & Tleading performersBHEL derive 75% of their revenues from supplying equipments to the power sector. BHEL, Thermaxand L & T is expected to have performed well in AMJ11 quarter mainly because of heavy order bookposition for respective company. BHEL's order inflows from Power and Industry segments are expectedto remain robust. Net sales for this company are expected to have jumped by 26% in AMJ11 as comparedto corresponding period of last year. Companies like L & T, Siemens, Alfa Laval and Elecon Engineeringare likely to have satisfactory performance in this AMJ11 quarter as compared to corresponding period oflast year. L & T is expected to post a robust performance during the quarter; it registered 25% of growthin AMJ11.

Financial Performance

OPM & NPM margins in AMJ 11 As per Cygnus estimates, Cummins India would post highest OPM of 22% and NPM of 15.53%.EBITDA is expected at Rs2470.18m an increase around 25.08% y-o-y.The companys PAT increased by24.33% at Rs1743.53m when compared to same period last year.Bharat Heavy Electricals has continuedits streak of wining large-sized orders from private players. Most of the capital goods companies undercoverage have seen their margins improve in FY2011. BHEL would post OPM of 13.65% and NPM of9.53%. EBITDA is expected at Rs11353.13m an increase around 17.64% y-o-y. EBITDA margin isexpected to improve on the back of increased volume and lower cost inventory being used, due to stableemployment cost and lower raw material cost. The companys PAT increased by 18.68% at Rs7923.80m

when compared to same period last year.

Operational Performance-Sales Vs Growth AMJ 11 (E) AMJ 10 (A) Growth%

ABB 16532.95 14630.93 13.00

Alfa Laval 2321.53 1934.61 20.00

BEML 6058.78 5268.50 15.00

BHEL 83173.10 66010.40 26.00

Crompton 14688.30 13429.10 9.38

Cummins 11228.07 9279.40 21.00

Elecon 2916.65 2471.74 18.00

Ingersoll 1272.80 1051.90 21.00

KSB Pumps 1787.18 1527.50 17.00

L & T 98566.38 78853.10 25.00Siemens 27630.77 22464.04 23.00

Thermax 10346.14 7897.82 31.00Source: BSE India; Cygnus Research




9/17



Other companies to follow the trend are Ingersoll-Rand, Alfa-Laval and Crompton Greaves. Ingersoll isestimated to register an OPM and NPM of 16.61% and 15.78% respectively. Alfa Laval and CromptonGreaves may register NPM of 11.30% and 8.78% respectively. Siemens is estimated to register an OPMand NPM of 12% and 7.94%.

Cost Structure AMJ 11 Vs AMJ 10 (% of net sales)For engineering companies, major portion of cost comes in the form of raw material cost and otherexpenses; is very much evident from the kind of industry they operate within. Raw material is expected toremain in upswing for almost all the companies during AMJ11 compared with AMJ10. BHEL isrevamping its production processes to develop low cost and more efficient equipment as it seeks tocounter the threat of cheap imports from China. Other expenditure and staff cost come next to the rawmaterial, which are expected to be constant in the coming quarters.

Financial Performance-AMJ 11 Vs AMJ 10

ABB Alfa Lava BEML BHEL

11 (E) 10 (A) 11 (E) 10 (A) 11 (E) 10 (A) 11 (E) 10 (A)

Net Sales 16532.95 14630.93 2321.53 1934.61 6058.78 5268.50 83173.10 66010.40

OPM 7.50% 4.55% 15.00% 15.42% 3.50% 3.04% 13.65% 14.62%

NPM 4.52% 2.62% 11.30% 11.32% 2.69% 2.73% 9.53% 10.11%Source: BSE India; Cygnus Research


Crompton Cummins Elecon Ingersoll

11 (E) 10 (A) 11 (E) 10 (A) 11 (E) 10 (A) 11 (E) 10 (A)Net Sales 14688.30 13429.10 11228.07 9279.40 2916.65 2471.74 1272.80 1051.90

OPM 12.71% 15.59% 22.00% 21.28% 15.50% 15.34% 16.61% 15.70%

NPM 8.78% 10.59% 15.53% 15.11% 6.29% 5.39% 15.78% 15.33%



KSB Pumps L & T Siemens Thermax

11 (E) 10 (A) 11 (E) 10 (A) 11 (E) 10 (A) 11 (E) 10 (A)

Net Sales 1787.18 1527.50 98566.38 78853.10 27630.77 22464.04 10346.14 7897.82

OPM 11.00% 14.72% 11.00% 12.77% 12.00% 10.77% 10.74% 12.15%

NPM 7.15% 10.38% 7.03% 8.45% 7.94% 6.95% 7.62% 8.38%Source: BSE India; Cygnus Research

Cost Structure (as % of Net sales) AMJ 11 Vs AMJ 10

ABB Alfa BEML BHEL Industry10 11 10 11 10 11 10 11 10 11

Stock in trade 0.44 -3.00 5.27 4.00 -19.52 -17.50 -1.90 2.35 -4.41 0.63

Raw Materials 67.34 72.00 64.22 63.00 71.13 69.00 59.61 61.00 46.46 46.67

Staff Cost 8.40 7.00 9.82 9.00 26.96 28.00 20.27 15.00 11.58 9.64

Traded Goods 3.24 4.50 0.00 2.00 4.27 2.00 0.00 0.00 7.04 5.48

Other Expenditure 16.03 12.00 5.27 7.00 14.12 15.00 7.41 8.00 26.41 25.42

Depreciation 0.83 0.95 1.62 1.80 1.58 2.00 1.92 2.00 1.52 1.71

Interest 0.29 0.40 0.04 0.05 2.28 2.50 0.06 0.07 0.69 0.65

Tax 1.18 1.94 5.68 5.08 1.36 1.26 5.00 4.28 4.14 3.61Source: BSE India; Cygnus Research




10/17




Crompton Cummins Elecon Ingersoll Industry

10 11 10 11 10 11 10 11 10 11

Stock in trade -7.94 0.00 -5.21 -2.00 -2.36 2.00 -16.40 -0.61 -4.41 0.63

Raw Materials 53.07 56.57 64.05 60.00 70.82 65.00 78.97 64.00 46.46 46.67Staff Cost 5.41 6.25 5.71 6.00 4.84 4.50 11.33 9.00 11.58 9.64

Traded Goods 22.67 19.72 2.86 4.00 0.00 0.00 0.00 0.00 7.04 5.48


Depreciation 1.28 1.95 1.00 0.88 3.61 3.50 1.06 1.00 1.52 1.71

Interest -0.05 0.10 0.04 0.05 3.98 4.00 0.00 0.20 0.69 0.65



KSB L & T Siemens Thermax Industry

10 11 10 11 10 11 10 11 10 11Stock in trade -1.48 -3.00 -3.74 1.00 -13.48 2.00 -0.33 -0.58 -4.41 0.63

Raw Materials 48.98 55.00 21.31 21.00 53.90 55.00 62.68 59.35 46.46 46.67

Staff Cost 14.97 15.00 7.14 6.00 7.58 8.00 9.53 8.60 11.58 9.64

Traded Goods 4.02 2.00 5.63 5.00 31.06 20.00 4.12 3.87 7.04 5.48


Depreciation 3.37 3.50 1.45 1.80 1.11 1.08 1.34 1.01 1.52 1.71

Interest 0.06 0.08 1.81 1.60 -0.80 -0.75 0.07 0.03 0.69 0.65





11/17



COMPANY ANALYSIS

1. ABB Ltd.

2. Alfa Laval (India) Ltd.

(Rs m)

Quarter Full Year Ended

ItemAMJ 10

(A)AMJ 11(E)

JAS11 (P)

GrowthRate %Y o Y

Dec09(A)

Dec10 (A)

GrowthRate %

Net Sales 14630.93 16532.95 14703.84 13.00% 62914.42 63593.29 1.08%

EBITDA 665.42 1239.97 441.12 86.34% 5829.61 1559.78 -73.24%

Depreciation 121.96 157.06 147.04 28.78% 485.06 516.61 6.50%

Interest 42.93 66.13 73.52 54.05% 253.85 173.93 -31.48%

Other Income 54.63 50.00 43.00 -8.48% 183.29 133.07 -27.40%

PBT 555.16 1066.78 263.56 92.16% 5273.99 1002.31 -81.00%TAX 172.00 320.03 84.34 86.07% 1727.60 370.00 -78.58%

PAT 383.16 746.74 179.22 94.89% 3546.39 632.31 -82.17%

OPM 5% 8% 3% 9% 2%

NPM 3% 5% 1% 6% 1%

Tax Rate 31% 30% 32% 33% 37%


Note: A: Actuals; E: Estimated; P: Projected

(Rs m)


ItemAMJ 10

(A)AMJ 11(E)

JAS11 (P)

GrowthRate %Y o Y

Dec09 (A)

Dec10 (A)

GrowthRate %

Net Sales 1934.61 2321.53 2298.72 20% 8875.73 8360.34 -6%

EBITDA 298.28 348.23 551.69 17% 1885.29 1558.51 -17%

Depreciation 31.43 41.79 36.78 33% 129.57 127.10 -2%

Interest 0.71 1.16 3.45 63% 5.25 5.30 1%

Other Income 62.67 75.00 95.00 20% 121.13 231.98 92%

PBT 328.81 380.28 606.47 16% 1871.60 1658.09 -11%

TAX 109.90 117.89 194.07 7% 638.21 576.88 -10%

PAT 218.91 262.39 412.40 20% 1233.39 1081.21 -12%

OPM 15% 15% 24% 21% 19%

NPM 11% 11% 17% 14% 13%

Tax Rate 33% 31% 32% 34% 35%






12/17



3. BEML

4. BHEL

(Rs m)


ItemAMJ 10

(A)AMJ 11(E)

JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 5268.50 6058.78 5652.90 15% 28382.40 26303.70 -7%

EBITDA 160.40 212.06 169.59 32% 1374.10 2228.40 62%

Depreciation 83.00 121.18 113.06 46% 322.20 336.40 4%

Interest 120.00 151.47 113.06 26% 489.30 586.30 20%

Other Income 258.20 300.00 275.00 16% 1374.10 2228.40 62%

PBT 215.60 239.41 218.47 11% 3195.50 1867.50 -42%

TAX 71.60 76.61 65.54 7% 967.00 369.90 -62%

PAT 144.00 162.80 152.93 13% 2228.50 1497.60 -33%OPM 3% 4% 3% 5% 8%

NPM 3% 3% 3% 7% 5%

Tax Rate 33% 32% 30% 30% 20%

Source: Cygnus ResearchNote: A: Actuals; E: Estimated; P: Projected

(Rs m)


ItemAMJ 10

(A)AMJ 11(E)

JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 66010.40 83173.10 106133.13 26% 335728.10 424955.10 27%

EBITDA 9650.20 11353.13 19634.63 18% 62583.00 89627.10 43%

Depreciation 1268.90 1663.46 1857.33 31% 4580.10 5441.20 19%

Interest 38.30 58.22 63.68 52% 335.00 547.30 63%

Other Income 1634.50 1852.32 1730.00 13% 8238.60 6418.10 -22%

PBT 9977.50 11483.77 19443.62 15% 65906.50 90056.70 37%TAX 3301.00 3559.97 5833.09 8% 22800.10 29944.70 31%

PAT 6676.50 7923.80 13610.53 19% 43106.40 60112.00 39%

OPM 15% 14% 19% 19% 21%

NPM 10% 9% 13% 13% 14%

Tax Rate 33% 31% 30% 35% 33%





13/17



5. Crompton Greaves Ltd.

6. Cummins India

(Rs m)


ItemAMJ 10

(A)AMJ 11(A)

JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 13429.10 14688.30 15603.62 9% 52839.90 59514.70 13%

EBITDA 2093.70 1866.60 2457.57 -11% 8577.60 9325.10 9%

Depreciation 172.40 285.80 280.87 66% 519.00 808.90 56%

Interest -6.30 14.30 20.28 -327% 43.50 39.90 -8%

Other Income 147.80 156.60 200.00 6% 687.50 793.80 15%

PBT 2075.40 1723.10 2356.42 -17% 8702.60 9270.10 7%

TAX 653.70 432.90 706.93 -34% 2933.00 2326.80 -21%

PAT 1421.70 1290.20 1649.49 -9% 5769.60 6943.30 20%OPM 16% 13% 16% 16% 16%

NPM 10% 9% 10% 11% 12%

Tax Rate 31% 25% 30% 34% 25%


(Rs m) Quarter Full Year Ended

ItemAMJ 10

(A)AMJ 11(E)

JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 9279.40 11228.07 12878.87 21% 28990.30 40611.70 40%

EBITDA 1974.80 2470.18 2575.77 25% 5816.40 7792.10 34%

Depreciation 93.10 98.81 128.79 6% 360.80 366.40 2%

Interest 4.10 5.61 6.44 37% 20.50 19.00 -7%

Other Income 96.50 125.00 175.00 30% 674.00 617.00 -8%

PBT 1974.10 2490.76 2615.55 26% 6109.10 8023.70 31%

TAX 571.80 747.23 732.35 31% 1670.40 2113.80 27%

PAT 1402.30 1743.53 1883.19 24% 4438.70 5909.90 33%

OPM 21% 22% 20% 20% 19%

NPM 15% 15% 14% 15% 14%

Tax Rate 29% 30% 28% 27% 26%





14/17



7. Elecon Engineering Co. Ltd.

8. Ingersoll-Rand (India) Ltd.

(Rs m)


ItemAMJ 10

(A)AMJ 11

(E)JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 2471.74 2916.65 3090.03 18% 10543.11 11845.39 12%

EBITDA 379.17 452.08 417.15 19% 1574.94 1838.42 17%

Depreciation 89.22 102.08 108.15 14% 331.20 384.27 16%

Interest 98.45 116.67 108.15 19% 903.17 1206.90 34%

Other Income 0.05 25.00 15.00 - 168.32 211.01 25%

PBT 191.55 258.33 215.85 35% 903.17 1206.90 34%

TAX 58.35 74.92 64.76 28% 241.42 327.69 36%

PAT 133.20 183.42 151.10 38% 661.75 879.21 33%

OPM 15% 16% 14% 15% 16%

NPM 5% 6% 5% 6% 7%

Tax Rate 30% 29% 30% 27% 27%


(Rs m)


ItemAMJ 10

(A)AMJ 11

(E)JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 1051.90 1272.80 1396.58 21% 3810.30 4986.60 31%

EBITDA 165.20 211.41 265.35 28% 499.40 635.10 27%

Depreciation 11.10 12.73 13.97 15% 41.50 47.50 14%

Interest 0.00 2.55 2.79 - 18.50 5.30 -71%

Other Income 89.10 95.00 125.00 7% 319.70 437.00 37%

PBT 243.20 291.14 373.59 20% 759.10 1019.30 34%

TAX 81.90 90.25 112.08 10% 266.00 325.90 23%

PAT 161.30 200.89 261.51 25% 493.10 693.40 41%

OPM 16% 17% 19% 13% 13%

NPM 14% 15% 17% 12% 13%

Tax Rate 34% 31% 30% 35% 32%






15/17



9. KSB Pumps Ltd.

10. Larsen & Tourbo Ltd.

(Rs m)

Quarter Full Year EndedItem

AMJ 10(A)

AMJ 11(E)

JAS11 (P)

GrowthRate %Y o Y

Dec09 (A)

Dec10 (A)

GrowthRate %

Net Sales 1527.50 1787.18 1784.40 17% 5675.60 6151.00 8%

EBITDA 224.90 196.59 142.75 -13% 1151.90 836.50 -27%

Depreciation 51.50 62.55 53.53 21% 203.40 207.40 2%

Interest 0.90 1.43 4.46 59% 18.20 5.30 -71%

Other Income 47.30 50.00 25.00 6% 77.50 118.70 53%

PBT 219.80 182.61 109.76 -17% 1007.80 742.50 -26%

TAX 61.30 54.78 34.03 -11% 346.00 226.80 -34%

PAT 158.50 127.83 75.73 -19% 661.80 515.70 -22%OPM 15% 11% 8% 20% 14%

NPM 10% 7% 4% 12% 8%

Tax Rate 28% 30% 31% 34% 31%




ItemAMJ 10

(A)AMJ 11

(E)JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (E)

GrowthRate %

Net Sales 78853.10 98566.38 104504.51 25% 370348.00 439049.10 19%

EBITDA 10070.50 10842.30 12540.54 8% 58903.30 58846.50 0%

Depreciation 1141.50 1774.19 1567.57 55% 4146.00 5992.20 45%

Interest 1423.40 1577.06 1881.08 11% 5053.10 6473.70 28%

Other Income 2267.60 2550.00 3503.00 12% 9102.50 11948.50 31%

PBT 9773.20 10041.04 12594.89 3% 58806.70 58329.10 -1%

TAX 3111.50 3112.72 4156.31 0% 16408.70 19458.60 19%PAT 6661.70 6928.32 8438.58 4% 42398.00 38870.50 -8%

OPM 13% 11% 12% 16% 13%

NPM 8% 7% 8% 11% 9%

Tax Rate 32% 31% 33% 28% 33%






16/17



11. Siemens Ltd.

12. Thermax Ltd.

(Rs m)


ItemAMJ 10

(A)AMJ 11

(E)JAS11 (P)

GrowthRate %Y o Y

Sept 10(A)

Sept11 (E)

GrowthRate %

Net Sales 22464.04 27630.77 38568.57 23% 94000.72 122762.34 31%

EBITDA 2419.76 3315.69 5013.91 37% 12932.07 16405.70 27%

Depreciation 249.47 298.41 420.40 20% 1014.80 1333.56 31%

Interest -180.61 -207.23 -269.98 15% -670.21 -901.65 35%

Other Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00

PBT 2350.90 3224.51 4863.50 37% 12587.48 15973.79 27%

TAX 789.65 1031.84 1459.05 31% 4315.36 5161.88 20%

PAT 1561.25 2192.67 3404.45 40% 8272.12 10811.91 31%OPM 11% 12% 13% 14% 13%

NPM 7% 8% 9% 9% 9%

Tax Rate 34% 32% 30% 34% 32%




ItemAMJ 10

(A)AMJ 11

(E)JAS11 (P)

GrowthRate %Y o Y

March10 (A)

March11 (A)

GrowthRate %

Net Sales 7897.82 10346.14 12116.99 31% 31854.69 48832.34 53%

EBITDA 959.68 1111.14 1447.98 16% 3841.10 5660.87 47%

Depreciation 105.85 105.00 181.75 -1% 404.19 431.92 7%

Interest 5.59 3.00 8.48 -46% 3919.37 5729.69 46%

Other Income 139.85 145.00 155.00 4% 497.62 522.58 5%

PBT 988.09 1148.14 1412.74 16% 3919.37 5729.69 46%

TAX 326.40 360.00 452.08 10% 1356.39 1905.51 40%PAT 661.69 788.14 960.67 19% 2562.98 3824.18 49%

OPM 12% 11% 12% 12% 12%

NPM 8% 8% 8% 8% 8%

Tax Rate 33% 31% 32% 35% 33%





17/17


Cygnus Business Consulting & Research Pvt Ltd 2011 17

SOURCES & METHODS FOR COMPANY PROJECTIONS

Sources

Company annual reports

Press releases

BSE India

Research reports related to Economy, Industry and Company

Methods

Understanding companies product services

Understanding industry and economic indicators and general economic scenario

Understanding the dynamics between the companies and the industry in relation to demand and

supply, technology, regulation, inflation, etc

Understanding recent strategies and initiatives taken by companies such as product launches,

capacity additions and M&As

Making revenue projections based on the expected business strategies and financial analysis

Validating the financial projections of the company with the overall business strategy

Calculating the cost structure on the basis of sales and past and present trends in the industry

Analysing quarterly growth rates and growth rates of last 8 quarters

The cut-off date for AMJ quarter results is July 20, 2011. Quarterly performance analysis of

companies announcing their results after this date is based on Cygnus estimates.


Documents

Indian Engineering Industry