RELIANCE M&A OF PIPAVAV DEFENCE AND OFFSHORE ENGG LTD

SAGAR SRIVASTAV GAURANG WARANG SURAJ UGADE VISHAL WAVAL MANDAR SHIRKE MEGHA POOJ KINJAL SHETH PRATIK SAVLA RITESH TRIPATHI JONEY THAKUR ADITYA SHETH RAHUL SIRSAT

PIPAVAV -INTRO Pipavav Shipyard was established as a wholly owned subsidiary of SKIL

Infrastructure in 1997 at Pipavav, Gujarat. Pipavav Shipyard was the first corporate shipyard to be granted clearance to

build warships and other vessels for the Indian Navy. The Company has a market capitalization ranging between USD 700 - 900

million and total enterprise value of USD 2.7 to 2.9 billion. In a short span, the company has emerged as an integrated defense, heavy

engineering and offshore oil & gas assets’ construction company, with the largest world class modern infrastructure facility in India

Pipavav Defense has one of the world's largest Infrastructure facilities - spread over 841 acres of land on the West Coast of India (Gujarat), Gulf of Cambay, with 210 acres of fully developed waterfront land and 250 acres developed for shipbuilding

RELIANCE INFRASTRUCTURE Reliance Infrastructure Ltd., is India's largest private sector enterprise power utility

and construction company. Reliance Infrastructure interests in Metro Rail, Airports, Bridges, Toll roads,

Defence.  In April 2008, Reliance Energy changed its name to Reliance Infrastructure It is part of the Reliance Anil Dhirubhai Ambani Group. The company is headed by

Anil Ambani.

Reliance Defence Reliance Defence Systems Private Limited was incorporated on December 20, 2014 Reliance Defence is a special purpose vehicle. Reliance Defense Limited, established as a wholly owned subsidiary of Reliance

Infrastructure Limited, has 11 subsidiaries in niche segments of the Defense sector. Technological tie-ups with global defense leaders

Why promoters of Pipavav sold their stakes

Pipavav raised debt of INR 5,500 crore resulting in total debt line in excess of INR 12,000 crore.

Continuous pressure from the creditors asking the company to go for CDR

Unable to bring in new investors to infuse more cash into the company

cash conversion cycle On March 26, 2015, the Company successfully implemented one

of the biggest debt restructurings in India.

REASONS FOR M&A Strategic acquisition Opportunities in the defence sector. participate in Modi’s “Make in India” campaign

Timeline March 4, 2015 -SPA is executed between the Acquirer, RInfra, the Target and the

Promoters March 11, 2015- Detailed public statement is published in newspapers March 18, 2015-Draft letter of offer (“DLOF”) is filed with SEBI April 20, 2015- CCI approves the Deal April 29, 2015 and May 11, 2015- SEBI provides its observations in relation to the

DLOF October 21, 2015 and November 7, 2015 -Letter received from GMB granting

approval for the Deal November 14, 2015 -Committee of Independent Directors of the Target issued its

recommendations in favor of the Open Offer November 20, 2015- Final Letter of Offer issued

Deal structure Under the first transaction under the SPA, the Acquirer would acquire

13 Cr equity shares of the Target, constituting 17.66% at a price of INR 63 per share for an aggregate consideration of INR 819 Cr

The Acquirer would make an offer to the public shareholders to acquire 19,14,13,630 shares of the Target, constituting 26% for a price of INR 66 per share, aggregating to INR 1263.32 Cr.

In case the shareholding of the Acquirer post the consummation of the Open Offer is less than 25.10% , the Acquirer would acquire such additional number of shares from the Promoters, such that the number of shares held by the Acquirer overall is 43.66%

Shareholding pattern

42%

12%5%

40%

promoters

DIIs

FIIs

others

Before

25%

44%

32%

After

promoters ADAG

public

• Unparalleled infrastructure

• Unique Location• Global Strategic

Alliances

• Unconfirmed/re-negotiable orders

• Hgh debt• Subsidy reversal

• CDR to provide relief

• Strategic joint venture

• Increase in FDI

• Commercial Building-competition from China

• Hydrocarbon EPC• Changes in DPP 2013

may affect the opportunities

S W

OT

SWOT – Reliance Infrastructure Strengths

The company's portfolio includes some of India's flagship infrastructure projects, such as the Mumbai and New Delhi metros.

Fitch Ratings India has awarded an 'Ind AAA' debt rating for the company. Existing distribution and sales networks

Weakness : Reliance's heavy involvement with the PPP market potentially exposes the

company to demand risks associated with external economic shocks.

Opportunities Strong population growth and a growing economy is fuelling demand for

infrastructure. Improved FDI norms

Threats Lack of widely available domestic expertise to take on large infrastructure and

civil engineering projects.

Defence sector in India The country fulfils 80 percent of its defence needs

through imports. Indian firms are reluctant to bid for government tenders Unrealistic quality demands the military reluctant to acquire weapons from Indian firms

Initiative by the government to encourage defence manufacturing Increased FDI cap to 49 percent “Make in India” campaign Estimated investment of INR 250 billion in the next 7-8 years

in this sector

How this deal will benefit defence industry

Defense sector requires deep commitment from the companies for the simple reason that it is a very specialized business and Most of the successful global players have been in this business for more than 5 decades.

Now after this deal more companies will be encouraged to invest into this sector. For instance, Mahindra and Mahindra is in talks to acquire cash-strapped ABG Shipyard, India's largest private sector shipyard.

Reliance is trying to form strategic alliance with big players in international market so as to use the technology available with these companies and it will not only Reliance but the whole Indian defense sector.

The country spends about 2.4 per of its GDP on the defense which is the ninth largest in the world.

Pipavav is one of largest shipbuilding

company of India and is known for its

expertise in making warship. The only thing missing is capital and

Government support and with after

this deal Pipavav seems to acquire

both.

Year Budget Allocation In Billion US $

2008-09 23.79

2009-10 31.93

2010-11 33.20

2011-12 37.05

2013-14 33.30

2014-15 36.30

2015-16 40.40

LUPIN AND GAVIS M&A

Introduction Founded by Dr. Desh Bandhu Gupta in 1968. Gained recognition when it became one of the world’s largest

manufacturers of tuberculosis drugs. Emerged as an out performer in the Pharma sector. Stock counted among frontline farm stock and considered for the long term

buy. Lupin is the 4thlargest player and the fastest growing Top 5 company in the

U.S.A. Grown to be one of the top ten generic company in the USA, Japan &

South African market.

LUPIN :

GAVIS

Marketer, distributor, wholesaler and business customer specializing in customer service to the pharmaceutical industry.

Launched its first product in may 2009. Produces the majority of its products in-house. Lupin acquired GAVIS for $880 million on 23rd

July, 2015.

Strategic Rationale

1 Lupin currently marketed products in the U.S. of 81increasing to 101Adds portfolio of 20+ stable, high-margin genericproductsComplements Lupin’s U.S. portfolio

Strengthenspresence in

attractive US generics market

2 Full portfolio of controlled substance products with19 products filedLeadership in niche areas such as colonoscopy prepProducts across other niche areas such as dermatology (22 filings)

U.S. platform forgrowth in high

value niche generics

3 Robust pipeline of over 130 products including 66ANDAs filed and 65+ in developmentR&D team of ~100 professionals based out of Somerset, NJ, capable of filing 20+ products per year

Significantlyenhances near term pipeline &

R&D

Strategic Rationale (cont’d)

4

Provides access to U.S. government businessAccess to high barrier-to-entry U.S. controlledsubstance marketHigh breadth of capabilities complements Lupin’sexisting infrastructure

US manufacturinginfrastructure

5 Key focus on enhancing value through stronginternal R&D and formulation capabilitiesCulture of robust compliance and quality inmanufacturing

Strong cultural fit

6 High double-digit growth and strong operatingmarginsRevenue expected to expand >3x by FY20182014 EBITDA margins of 36%

Robust financialprofile

Lupin + Gavis: Combined Pipeline

Nasal MDIOphthal3%

SolidOrals/Liquids

62%

4% 2%Ophthal5%

SolidOrals/Liquids

48%

OC11%

Controlled Subs8%

Controlled Subs11%

Injectables13%

Derma13%

Derma20%

251 products164 filings

Filed products Products in development

Price consideration

Lupin has entered into an agreement with Gavis to acquire the for a price consideration of $880 million.

This values the company at nine times its FY2014 sales of $96 million.

In June 2015, Lupin had obtained in principle nod for raising fund up to 1.17 billion$ equity share n equity linked instruments

The drug maker did not disclose the purpose of the fundraising.

Lupin’s shares closed at Rs 1,728.60 each, down 5.23 per cent on the BSE, after merger as investors remained apprehensive about the impact of the big buy on its balance sheet.

Several large overseas acquisitions by Indian firms have turned out to be a pain due to the debt piled-up to finance them.

For the financial year ended March 31, 2015, the company recorded a consolidated turnover of Rs 12,599.7 crore ($1.96 billion) and a net profit of Rs 2,403.2 crore ($375.3 million). 

Strengths of the Deal Market Access

Product Access

R&D

Manufacturing

Strengths Larger combined portfolio

Market Value of pending approvals

Higher price

Weaknesses of the Deal Lower cost of production

Hit on cash reserves

Anti-trust issue

Valuation Valuation Range: $700 to $900 millions

Lupin Ltd acquired Gavis Pharma LLC @ 9.2x of EV/Sales

% Share Holding Pattern of Lupin

46.35%

37.03%

8.12%

3.50% 3.03% 1.80%0.18%

% Share Holding of Lupin

PromotersForeignInstitutionsGeneralPublicNBanksMutualFundsFinancialInstitutionsOthersForeignPromoter

Strong Cultural Fit

Key focus on enhancing value through strong internal R&D andformulation capabilities– Established track record in R&D with 66 ANDAs filed/pending at

the FDA and an additional 20 marketed products~100 employees focused on R&DFocused on products with limited competition and high barrier-to- entry (intellectual property, technical complexity and clinical requirements)Ability to file 20+ products per year

––

–

Culture of robust compliance and quality in manufacturing– No warning letters in history of facility

Execution of M&A Strategy

Sept 2014

Ophthalmics presence

• Primary Focus US / EU /

potentially Japan

• Focus on Pediatrics,

Dermatology, GI,

Ophthalmics

• Focus on• EU (Russia & CEE)• LatAm

MedquimicaGrin Mexico

BrazilJune 2015

•Enters LatAm in •Expands LatAm

area

BiocomRussia

•Enters RussiaGenerics

• Generic assets with

complementary pipeline /

technology capabilities

• Controlled substances,

dermatology and US Govt

business access

Generics / TechnologyCapabilities Geographic Expansion Specialty / Brand

Synergistic to Lupin’s strategy

2020+

2018 Leading global generics playerSignificant Specialty businessInhalation SpecialtyVerticalDerm Specialty VerticalBiosimilars commercializationNCE’s

2016 Leading generics player with a larger specialty businessStronger geographic spreadEnhanced Generic Platforms –Derm / Controlled SubstancesAdvanced marketBiosimilar launch

Primarily a Generic / Branded Generic Business3 strong geographies

Aligned to Lupin’s Strategic Goal of transformation to Specialty Company

Thank You