INSTITUTIONAL EQUITY RESEARCH Trident Limited (TRID IN ...backoffice.phillipcapital.in/Backoffice/Research... · Future Ready: Capex to capitalise India advantage Over past two years,

INSTITUTIONAL EQUITY RESEARCH

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Trident Limited (TRID IN)

Future ready INDIA | TEXTILE | Visit Note

21 April 2016

We visited one of Trident’s largest integrated manufacturing facilities at Budhni, Madhya Pradesh. It is among the top-five global terry-towel manufactures and has the largest capacity in India. Its towel and integrated bed-linen facility is spread over 800 acres of land, built at a capital expenditure of ~Rs 2.8bn. Its Budhni facility has a significant advantage in terms of resource availability, helping the company to capture market share. It expects its diversification into sheets to benefit from its existing relations with terry-towel customers (developed since 1998). It sees upfront capex providing high revenue growth and deleveraging opportunities. Global leadership in home textiles with modern facilities Trident delivers to more than 100 countries and supplies to 22 of the top-30 global retailers. Around 67% of its textile revenue comes from exports – with USA contributing ~30%. It has manufacturing facilities in Barnala (Punjab) and Budhni (Madhya Pradesh) with a production capacity of ~88,000 mtpa; 688 looms (largest in India) in towels and 43mn metres per annum (500 looms) in bed linen. Its large integrated facilities at Budhni help it to cater to big repeat orders in terry towels while Punjab usually caters to specialised smaller lots. It is one of the largest yarn manufacturers (550,000 spindles and 5,500 rotors) – fulfilling captive requirement, and generating additional revenue by selling the surplus in the market. It has selected best machinery from global suppliers to meet export quality requirements. The Budhni facilities score high on the environment index as they are ‘zero-liquid discharge’ with high water and energy efficiency. Its terry towel capacity at Punjab currently runs at full capacity, while its new plant at Budhni operates at ~45% utilisation. Its new bed linen capacity is operational and is likely to start contributing from 1QFY17. Strong location advantage The home textile manufacturing is labour, power, and water intensive and Trident has resource advantages at Budhni, MP. Power is available at ~Rs 5.5 per unit and quality of power is good, which reduces costs of operation. It has two lines of 220KV and there is no need to set up diesel gen-sets. It has extensive training systems for workers and has set up a large complex for employee accommodation inside the factory. It sources water (available throughout the year) from the Narmada River (50,000 KL per month) through its own pumping station. MP has one of the best textile policies with ~7% interest benefit for composite mills (additional 5% from the centre) and payment is normally made in 3-4 months. The central location also helps to manage its cotton-sourcing requirements and logistics for finished products. India gaining competitive advantage The global home-textiles market is estimated at US$ 45bn with bath products constituting 25% and bed linen ~35%. USA, Europe, and Japan are the largest consumers and India, Pakistan, and China are the largest producers. India has a significant advantage in cotton home textiles. In US’ imports of terry towels, India has ~38% market share, followed by China at ~26%, and Pakistan at ~23%. In bed linen, India has ~47% share, followed by China’s ~24%, and Pakistan at ~17%. Trident’s large capacity set up is expected to benefit from India’s growing advantage in home textile and its association with customers over one decade. Its expansion in bed linen is expected to benefit from its relationships in terry towels – considering same ‘point of sales’. Trident is targeting growth into USA, Europe, and in India’s retail market. Valuations: At CMP, it trades at 23x FY15 earnings and 8x EV/EBITDA. On 9MFY16 annualised earnings, it trades at 11x.

NOT RATED CMP Rs 51 COMPANY DATA O/S SHARES (MN) : 509 MARKET CAP (RS BN) : 267 MARKET CAP (USDMN) : 393 52 - WK HI/LO (RS) : 62 / 22 LIQUIDITY 3M (USDMN) : 0.6 PAR VALUE (RS) : 10 SHARE HOLDING PATTERN, % Dec 15 PROMOTERS : 66.6 FII / NRI : 0.9 FI / MF : 1.6 NON PRO : 5.9 PUBLIC & OTHERS : 25.1 PRICE PERFORMANCE, %

1MTH 3MTH 1YR ABS 0.0 18.5 115.7 REL TO BSE -3.9 14.5 127.0 PRICE VS. SENSEX

Source: Phillip Capital India Research KEY FINANCIALS Rs mn FY13 FY14 FY15 Net Sales 33353 38689 37536 EBIDTA 5554 7276 6606 Net Profit 501 1986 1178 EPS, Rs 1.0 3.9 2.3 PER, x 53.9 13.6 22.9 EV/EBIDTA, x 8.7 6.1 7.9 P/BV, x 3.8 2.9 1.9 ROE, % 7% 21% 8% Debt/Equity (x) 3.2 2.0 1.8

Source: PhillipCapital India Research Est. Vikram Suryavanshi (+ 9122 6667 9951) [email protected]

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Trident BSE Sensex


VISIT NOTE TRIDENT LIMITED

Future Ready: Capex to capitalise India advantage Over past two years, Trident has expanded capacity in both towels and sheets with backward integration in yarn manufacturing. It had a capex of ~Rs 2.8bn, out of which it spent Rs 1.2bn on terry towel and ~Rs 1.6bn in bed linen, including spinning capacity of 190,000 spindles for finer count. Key features of integrated facility at Budni, Madhya Pradesh § World’s largest terry-towel project at a single facility. § Fully-integrated home-textile operations with terry towel capacity of 48,000

mtpa. § Invested in modern technologies for higher productivity and efficiency. The

machines are from global technology brands like Karl Mayer, Toyota, Staubli, Benninger, Rieter, Muratec, LMW, Trutzschler, Saurer, Savio and Uster.

§ Integrated bed linen project – 500 looms capable of producing 43.2mn meters per annum.

§ One of the largest cotton-yarn spinning capacities in India with 364,000 spindles including 190,000 for higher thread count with compact-yarn spinning.

§ Zero liquid discharge plant – modern effluent treatment and reverse osmosis plants that treat and reuse effluents with 92% water recovery, which has helped rationalise water and chemical consumption, strengthening business sustainability.

Capacity addition in home textiles

Source: Company Creating global leadership in home textiles The company has moved up the value chain, with forward integration in home textiles since 1998. It has transformed itself from a yarn player to an integrated home-textile manufacturer. The revenue mix has changed from 75% yarn in 1999 to 33% yarn in FY15; it sees share of yarn revenue declining to 20% in FY18, as revenue contribution from its new capacity at Budhni increases. Revenue break-up (Rs 38bn, FY15) Revenue mix in textiles: US remain a major market

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Paper 22%

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Export72%

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• Among the top-five home textile manufacturers in the world

• Partner to 22 of top-30 global retailers such as Bed Bath and Beyond, Target, Macy’s, Wal-Mart, and JC Penney

• Distribution network in more than 100 countries for home fashion products

Trident has the largest manufacturing capacity in India for terry towels



Source: Company

Value creation through product innovation and brands The company is focusing on innovation and new product development. Its marketing and distribution network is spread over 100 countries across six continents (top brands and marquee clientele). • Trident successfully entered highly cost-conscious markets of UK, Italy, France,

Japan, Australia, South Africa, and Canada. • It ramped up business volumes in new markets within India (eastern and

central). • Increased presence on online portals, reaching direct customers in domestic and

international markets with its products available on all major e-commerce websites.

• Focus on aggressive branding strategy to percolate home textile products in the premium customer segment.

Value-creation focus

Focus on brands and product innovation Its home-textile products are sold under various brand names • Trident Everyday – for opening price point consumers • Trident Home Essentials – for consumers who do not mind spending a little extra • Trident Classic – for premium consumers • Trident Indulgence – for the luxury segment • Trident Organica – eco-friendly product range • Trident Play – youth/ sports range • Trident Bath Buddy – kid’s range • Trident Cuddlies – infants range.

Over the years, Trident has strengthened its global brand recall with improvements in production infrastructure, fibre use, and processing. Its large capacities will help to cater to diverse customers. Trident terry towel brands Bed linen brands

Source: Company

Cotton Procurement

• Log term relation with cotton suppliers

• Quality control at beginigng of value chain.

Yarn Production

• 5.5 lakh spindle for yarn production from 20 to 100 count

• Compact yarn spining technology

Design & Development

• Qualified team of designers with end to end product design capability

• Collaboration with foreign designers

Finished Product

• Focus on innovation like Air Rich, Smart Twist, Quick Dry

• 36% value added products.

It services major global retail brands like Ralph Lauren, Calvin Klein, JC Penney, IKEA, Target, Wal-Mart, Macy’s, Kohl’s, Sears, Sam’s Club, and Burlington

• Wide product range • In a good position to cross selling

because of its customer reach, competitive manufacturing, and global delivery model



Trident’s innovations

India gaining competitive advantage in home textiles India is poised to gain from the long-term growth in the global home textiles market as (1) India’s spinning capacities account for 9% of the global installed capacity, (2) it has assured availability of raw material (cotton) at much lower costs (than Pakistan and China, which are net importers), and (3) comparatively lower wages (as per data from National Bureau of Statistics, due to steep wage inflation, average wage cost in China stood at US$ 450 per month vs. US$ 200 per month in India). This has already helped India’s companies to increase their share in the global market. India’s advantage in cotton home textiles India China Pakistan Largest producer and second-largest exporter of cotton Major importer of cotton and yarn Cotton importer Exporter of cotton yarn Yuan appreciation vs. INR Energy issues Competitive cost Wage inflation Geopolitical issues Robust ecosystems for textile Rising power cost Compliance issues Government support Focus on domestic consumption Better environment and labour law Yarn capacity declining

Source: Company, PhillipCapital India Research Input cost comparison of key countries

India Bangladesh Indonesia Egypt China Pakistan Turkey Labour wages(US$ / month) 200 87 226 226 450 127 839 Power rate (US Cent / Kwh) 11.29 8.13 8.51 3.49 12.29 10.62 10.24

Source: Company, PhillipCapital India Research

In home textiles, major consuming regions are US and Europe, each constituting about one-third of world demand. India, China, and Pakistan are the biggest exporters, constituting more than 50% of world trade and more than 85% of home textile exports into the US. In European countries such as Turkey – Bangladesh and Pakistan are important players, as they enjoy duty-free status. Despite this, Indian

Home textiles include terry towels, bed sheets, top of the beds, curtains, pillows case, rugs, and carpets

The global home textiles market is estimated at around US$ 45bn (wholesale level) of which bath products/bed products have about 25%/35% share

In Europe, countries such as Turkey, Bangladesh and Pakistan enjoy duty-free status.



textile exports to Europe are growing. If the proposed India-EU Free Trade Agreement (FTA) goes through, it will provide a strong push for textile exports from India to the EU. India has signed an FTA (Free Trade Agreement) with Japan, Korea, and SAARC countries, which could be leveraged to increase Indian exports to these countries. The ‘India advantage’ is most visible in the home textiles segment, as Indian players have scale and technology to compete with large manufacturers in China and other countries. India’s share in home textiles is around 11% (more than double its share in textiles). In cotton home textiles, India’s share is even higher than China’s in many products. India’s market share has been rising constantly over the last few years. India’s increasing market share in US imports of cotton towels

Source: Company, PhillipCapital India Research India’s increasing market share in US import of cotton sheets

Source: Company, PhillipCapital India Research In the US, India is best placed among competing countries; its share of imports of cotton towels to the US has grown significantly – to ~37% in 2014 from 30% in 2009. In cotton sheets, its share has grown to 47% in 2014 vs. 27% in 2009 (source: Office of Textiles and Apparels, US).

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Domestic textiles: A brief snapshot In India, textiles account for 21% of the total employment generated in the economy. This sector provides direct employment to over 45mn people and indirect employment to another 50mn (including manpower engaged in agro-based raw material production such as cotton and related trade and handling). It contributes to around 8% of total excise revenue collection. India’s position in the global textile market • Is the world’s second-largest producer of textiles and garments with 63% market

share). • Accounts for about 14% of the world’s production of textile fibres and yarns. • Is the largest producer of jute, second largest of silk and cotton, and third largest

of cellulosic fibre. • Accounts for about 24% of the world’s spindle capacity and 8% of global rotor

capacity. Domestic: Home textiles A combination of many factors, including rising disposable in the hands of young consumers, has seen demand for home textile products growing at a healthy 30-40% per annum over the last few years. Industry sources estimate India’s home textiles market CAGR at ~11% – to touch ~US$ 10bn in 2017 on increased exports growth (8%+ CAGR to US$ 6bn). Indian home textile breakup

Source: Company, PhillipCapital India Research



About the company Mr Rajinder Gupta promoted Trident in 1990 as a yarn-spinning unit with a spindle capacity of 17,280. The company has now expanded into home textile, paper and chemicals, and energy – with a turnover of Rs 38bn in FY15. The company has 21 plants – 10 for spinning, four for terry towels, one for bed linen, three for paper and chemicals, and three for captive power. Its manufacturing units are in Barnala (Punjab) and Budni (Madhya Pradesh) with modern machinery set up in ring spinning, open-ended spinning, and yarn dying. It is one of the largest wheat-straw based manufacturers (eco-friendly technology) at 475 tonnes per day of paper capacity. Its exports of paper account for ~15% of paper revenue with customers mainly in the Middle East, Africa, and the US. Trident enjoys raw material advantage in paper over wood-pulp based manufacturers due to its location in Punjab. In chemicals, it has a sulphuric acid capacity with annual revenue of Rs 432mn in FY15. With the stabilisation of its new towel facility at Budni and recent foray into bed linen, it has become one of the largest integrated home textile producers in the world. Trident product capacities Business Products Capacity Home Textile Terry Towel 688 looms Bed Linen 500 looms Yarn 5.55 lakh spindle 5504 rotors Dyed Yarn 6825 tpa Paper & Chemicals Paper 175,000 tpa Chemicals 100,000 tpa Energy Captive Power 50 MW

Source: Company, PhillipCapital India Research Key milestones

Source: Company



Financials • FY10-15 CAGR: Revenue 16% to Rs 37.5bn. EBITDA 14% to Rs 6.6bn. Net profit

22% to Rs 1.17bn. • Over FY10-15: Margins were impacted mainly due to yarn spinning with low of

11% in FY12 and high of 18.9% in FY10. Increased revenue from home textile with forward integration should stabilise margins. Net working capital (ex-cash) as percentage of sales has remained stable at ~29%. Inventory days declined to 77 days in FY15 from 82 in FY10 while average receivables were at 25 days. It paid dividend of Rs 0.60 in FY15.

Revenue CAGR of 22% over FY09-15 EBITDA CAGR of 21% over FY09-15

Net profit trend Net working capital trend

Return ratios Balance sheet deleveraging

Source: Company

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Quarterly financials Standalone (Rs mn) Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16 Net Sales 9004 9543 9267 9660 8739 9567 8881 yoy growth 3.6% -4.5% -8.9% -1.7% -2.9% 0.3% -4.2% Other operating income 128 74 34 121 52 43 97 Total Sales 9133 9617 9301 9780 8791 9610 8978

Cost of material 5176 4995 4920 4620 4144 4406 4155 Purchase of stock in trade 185 142 98 80 26 60 26 Change in inventory -918 78 -166 85 -275 212 111 Total Raw material 4443 5215 4852 4786 3895 4678 4291 RM / Sales 49.3% 54.7% 52.4% 49.5% 44.6% 48.9% 48.3% Employee cost 1097 910 893 969 1015 1053 1049 Other expenditure 1768 1947 1972 2076 1919 2099 1908 Total Expenditure 7308 8073 7718 7831 6828 7829 7249 EBITDA 1824 1544 1583 1950 1962 1781 1728 EBITDA margins (%) 20.0% 16.1% 17.0% 19.9% 22.3% 18.5% 19.3% Other Income 16 18 15 1 17 8 37 Depreciation 809 782 793 829 814 818 813 EBIT 1032 779 806 1121 1166 971 953 Interest 581 446 496 536 445 368 230 PBT 450 333 310 585 721 603 722 Tax 128 123 69 181 112 94 112 Tax rate 28.3% 37.0% 22.1% 30.9% 15.5% 15.5% 15.5% Adjusted PAT 323 210 241 404 610 510 610 Extraordinary 0 0 0 0 0 0 0 Reported PAT 323 210 241 404 610 510 610 Equity (mn) 509 509 509 509 509 509 509 EPS (Rs) 0.63 0.41 0.47 0.79 1.20 1.00 1.20 Cash EPS (Rs) 2.2 1.9 2.0 2.4 2.8 2.6 2.8 Source: Company



Annexure

Budhni MP: Integrated township under industrial policy with manufacturing facilities for textile (towels and sheets) spread over 800 acres

Efficient plant layout in manufacturing facilities Water treatment plant



Financials Profit & Loss Y/E Mar (Rs mn) FY12 FY13 FY14 FY15 Net Revenue 27323 33353 38689 37536 yoy growth 7.7% 22.1% 16.0% -3.0% Cost of Raw material 16254 18198 19415 19712 Purchase of Stock in trade 191 226 881 505 Change in Inventory -190 -9 223 -921 Total raw material cost 16256 18416 20520 19296 RM % sales 60.7% 56.2% 56.4% 54.4% Employee cost 2015 2379 2870 3870 Other expense 6051 7005 8023 7764 Total Expenditure 24322 27799 31413 30929 EBITDA 3001 5554 7276 6606 EBITDA margins 11.0% 16.7% 18.8% 17.6% Other income 202 224 163 345 Depreciation 2075 2614 2684 3213 EBIT 1127 3164 4755 3738 Interest 1718 2353 2103 2060 EBT -591 811 2652 1678 Tax -191 310 665 500 Tax rate 32% 38% 25% 30% Current tax 0 151 556 341 Deferred tax -191 278 12 500 Other tax adj 0 -118 97 -341 PAT -400 501 1986 1178 PAT margins -1.5% 1.5% 5.1% 3.1% Share of associate 0 0 0 0 Profit after tax -400 501 1986 1178 Extraordinary -38 -7 0 0 Reported PAT -437 493 1986 1178

Source: Company



Balance Sheet Year (Rs mn) FY12 FY13 FY14 FY15 Equity (mn Shares) 306 311 311 509 Face Value (Rs) 10 10 10 10 Equity 3058 3108 3111 5086 Preference 0 0 0 0 Warrants 21 0 430 0 Reserve and Surplus 3426 3954 5768 9467 Shareholders’ Equity 6506 7063 9309 14553 Long term borrowing 12726 9492 7659 13961 Short term borrowing 7357 9674 8039 8156 Current maturity of LT borrowing 2754 3233 2925 3684 Total Debt 22837 22398 18623 25801 Deferred tax (net) 760 1070 1082 1242

Capital Employed 30102 30531 29014 41597 Gross block 33323 34056 34858 48688 Change in GB 7496 734 801 13830 Depreciation 11843 14374 16902 20049 Tangible assets 21400 19622 17912 28608 Intangible assets 79 60 44 30 CWIP 64 281 277 1993 Intangible assets under development 0 0 86 226 Non-current investment 557 620 887 117 Current investment 0 25 301 197 Current assets 10566 12262 12339 13868 Inventories 5204 6910 6429 7465 Days 71 77 65 77 Trade receivable 1919 2323 2641 2048 Days 26 26 27 21 Cash and cash equivalent 230 331 245 168 Loans and advance 3201 2661 3002 4165 Other current assets 12 36 22 22 Current Liabilities 2564 2338 2832 3442 Trade Payable 1822 1659 2210 2163 Days 25 18 22 22 Other current liabilities 693 609 383 831 Provisions 49 71 239 449 Net Working capital 8002 9924 9508 10426 Capital Employed 30102 30531 29014 41597 Source: Company



Rating Methodology We rate stock on absolute return basis. Our target price for the stocks has an investment horizon of one year. Rating Criteria Definition

BUY >= +15% Target price is equal to or more than 15% of current market price

NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%

SELL <= -15% Target price is less than or equal to -15%.

Contact Information (Regional Member Companies)

SINGAPORE: Phillip Securities Pte Ltd 250 North Bridge Road, #06-00 Raffles City Tower,

Singapore 179101 Tel : (65) 6533 6001 Fax: (65) 6535 3834

www.phillip.com.sg

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No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur Tel (60) 3 2162 8841 Fax (60) 3 2166 5099

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HONG KONG: Phillip Securities (HK) Ltd 11/F United Centre 95 Queensway Hong Kong

Tel (852) 2277 6600 Fax: (852) 2868 5307 www.phillip.com.hk

JAPAN: Phillip Securities Japan, Ltd 4-2 Nihonbashi Kabutocho, Chuo-ku

Tokyo 103-0026 Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141

www.phillip.co.jp

INDONESIA: PT Phillip Securities Indonesia ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A,

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THAILAND: Phillip Securities (Thailand) Public Co. Ltd. 15th Floor, Vorawat Building, 849 Silom Road,

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UNITED KINGDOM: King & Shaxson Ltd. 6th Floor, Candlewick House, 120 Cannon Street

London, EC4N 6AS Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835

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UNITED STATES: Phillip Futures Inc. 141 W Jackson Blvd Ste 3050

The Chicago Board of Trade Building Chicago, IL 60604 USA

Tel (1) 312 356 9000 Fax: (1) 312 356 9005

AUSTRALIA: PhillipCapital Australia Level 37, 530 Collins Street

Melbourne, Victoria 3000, Australia Tel: (61) 3 9629 8380 Fax: (61) 3 9614 8309

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SRI LANKA: Asha Phillip Securities Limited Level 4, Millennium House, 46/58 Navam Mawatha,

Colombo 2, Sri Lanka Tel: (94) 11 2429 100 Fax: (94) 11 2429 199

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INDIA: PhillipCapital (India) Private Limited No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013

Tel: (9122) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in

Management(91 22) 2483 1919

Kinshuk Bharti Tiwari (Head – Institutional Equity) (91 22) 6667 9946(91 22) 6667 9735

Research IT Services Pharma & Speciality Chem

Dhawal Doshi (9122) 6667 9769 Vibhor Singhal (9122) 6667 9949 Surya Patra (9122) 6667 9768Nitesh Sharma, CFA (9122) 6667 9965 Shyamal Dhruve (9122) 6667 9992 Mehul Sheth (9122) 6667 9996Banking, NBFCs Infrastructure StrategyManish Agarwalla (9122) 6667 9962 Vibhor Singhal (9122) 6667 9949 Naveen Kulkarni, CFA, FRM (9122) 6667 9947Pradeep Agrawal (9122) 6667 9953 Deepak Agarwal (9122) 6667 9944 Anindya Bhowmik (9122) 6667 9764Paresh Jain (9122) 6667 9948 Logistics, Transportation & Midcap TelecomConsumer & Retail Vikram Suryavanshi (9122) 6667 9951 Naveen Kulkarni, CFA, FRM (9122) 6667 9947Naveen Kulkarni, CFA, FRM (9122) 6667 9947 Media Manoj Behera (9122) 6667 9973Jubil Jain (9122) 6667 9766 Manoj Behera (9122) 6667 9973 TechnicalsPreeyam Tolia (9122) 6667 9950 Metals Subodh Gupta, CMT (9122) 6667 9762Cement Dhawal Doshi (9122) 6667 9769 Production ManagerVaibhav Agarwal (9122) 6667 9967 Yash Doshi (9122) 6667 9987 Ganesh Deorukhkar (9122) 6667 9966Economics Midcap EditorAnjali Verma (9122) 6667 9969 Amol Rao (9122) 6667 9952 Roshan Sony 98199 72726Engineering, Capital Goods Mid-Caps & Database Manager Sr. Manager – Equities SupportJonas Bhutta (9122) 6667 9759 Deepak Agarwal (9122) 6667 9944 Rosie Ferns (9122) 6667 9971Hrishikesh Bhagat (9122) 6667 9986 Oil & Gas

Sabri Hazarika (9122) 6667 9756Sales & Distribution Ashvin Patil (9122) 6667 9991 Sales Trader Zarine Damania (9122) 6667 9976Shubhangi Agrawal (9122) 6667 9964 Dilesh Doshi (9122) 6667 9747 Kishor Binwal (9122) 6667 9989 Suniil Pandit (9122) 6667 9745Bhavin Shah (9122) 6667 9974Ashka Mehta Gulati (9122) 6667 9934 ExecutionArchan Vyas (9122) 6667 9785 Mayur Shah (9122) 6667 9945

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This report does not regard the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax, and financial advisors and reach their own conclusions regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realised. Under no circumstances can it be used or considered as an offer to sell or as a solicitation of any offer to buy or sell the securities mentioned within it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which PCIL believe is reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice.

Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request.

Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst(s) have no known conflict of interest and no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific views or recommendations contained in this research report.

Additional Disclosures of Interest: Unless specifically mentioned in Point No. 9 below: 1. The Research Analyst(s), PCIL, or its associates or relatives of the Research Analyst does not have any financial interest in the company(ies) covered in

this report. 2. The Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the

company (ies)covered in this report as of the end of the month immediately preceding the distribution of the research report. 3. The Research Analyst, his/her associate, his/her relative, and PCIL, do not have any other material conflict of interest at the time of publication of this

research report. 4. The Research Analyst, PCIL, and its associates have not received compensation for investment banking or merchant banking or brokerage services or for

any other products or services from the company(ies) covered in this report, in the past twelve months. 5. The Research Analyst, PCIL or its associates have not managed or co-managed in the previous twelve months, a private or public offering of securities for

the company (ies) covered in this report. 6. PCIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in

connection with the research report. 7. The Research Analyst has not served as an Officer, Director, or employee of the company (ies) covered in the Research report. 8. The Research Analyst and PCIL has not been engaged in market making activity for the company(ies) covered in the Research report. 9. Details of PCIL, Research Analyst and its associates pertaining to the companies covered in the Research report: Sr. no. Particulars Yes/No

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by PCIL

No

2 Whether Research Analyst, PCIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by PCIL or its associates from the company(ies) covered in the Research report No 4 PCIL or its affiliates have managed or co-managed in the previous twelve months a private or public offering of securities for the

company(ies) covered in the Research report No

5 Research Analyst, his associate, PCIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve months

No

Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it, or its affiliates/employees, may have positions in, purchase or sell, or be materially interested in any of the securities covered in the report.

Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives, financial situation or particular requirements of any individual recipient hereof. Certain securities may give rise to substantial risks and may not be suitable for certain investors. Each investor must make its own determination as to the appropriateness of any securities referred to in this research report based upon the legal, tax and accounting considerations applicable to such investor and its own investment objectives or strategy, its financial situation and its investing experience. The value of any security may be positively or adversely affected by changes in foreign exchange or interest rates, as well as by other financial, economic, or political factors. Past performance is not necessarily indicative of future performance or results.



Sources, Completeness and Accuracy: The material herein is based upon information obtained from sources that PCIPL and the research analyst believe to be reliable, but neither PCIPL nor the research analyst represents or guarantees that the information contained herein is accurate or complete and it should not be relied upon as such. Opinions expressed herein are current opinions as of the date appearing on this material, and are subject to change without notice. Furthermore, PCIPL is under no obligation to update or keep the information current. Without limiting any of the foregoing, in no event shall PCIL, any of its affiliates/employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind including but not limited to any direct or consequential loss or damage, however arising, from the use of this document.

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Caution: Risk of loss in trading/investment can be substantial and even more than the amount / margin given by you. The recipient should carefully consider whether trading/investment is appropriate for the recipient in light of the recipient’s experience, objectives, financial resources and other relevant circumstances. PCIPL and any of its employees, directors, associates, group entities, or affiliates shall not be liable for losses, if any, incurred by the recipient. The recipient is further cautioned that trading/investments in financial markets are subject to market risks and are advised to seek trading/investment advice before investing. There is no guarantee/assurance as to returns or profits or capital protection or appreciation. PCIPL and any of its employees, directors, associates, group entities, affiliates are not inducing the recipient for trading/investing in the financial market(s). Trading/Investment decision is the sole responsibility of the recipient.

For U.S. persons only: This research report is a product of PhillipCapital (India) Pvt Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S.-regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances, and trading securities held by a research analyst account.

This report is intended for distribution by PhillipCapital (India) Pvt Ltd. only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by the U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated, and/or transmitted onward to any U.S. person, which is not a Major Institutional Investor.

In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, PhillipCapital (India) Pvt Ltd. has entered into an agreement with a U.S. registered broker-dealer, Decker & Co, LLC. Transactions in securities discussed in this research report should be effected through Decker & Co, LLC or another U.S. registered broker dealer. PhillipCapital (India) Pvt. Ltd. Registered office: No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013

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