Power Transmission Towers Re Initiating Coverage 10-10-2009 Q 2 Indian Stock Markets WWW - Umakant

For Private Circulation only
FIRST GLOBAL
www.firstglobal.in
India Research
Sector: Power Transmission Towers Reinitiating Coverage

Company KEC International Kalpataru Power Jyoti Structures Ticker KEC.IN / KECI.BO KPP.IN/KAPT.BO JYS.IN/JYTS.BO CMP Market Cap Market Cap Reco. (Oct. 9, '09) (Rs bn) ($ bn) 567.9 28.0 0.6 Outperform 833.5 22.1 0.5 Outperform 151.6 12.4 0.3 Outperform Relevant Index: CNX Nifty: 4,945.2 (Oct 9, 09)
Robust growth in power generation, inter-regional capacity additions, distribution reforms, & rural electrification to continue driving strong growth KEC International, Kalpataru Power and Jyoti Structures Ltd. are our top picks in this space
October 10, 2009
TO ACCESS FIRST GLOBAL RESEARCH ON BLOOMBERG, TYPE FGSL <GO> Research Contact: Associate Director, Research: Hitesh Kuvelkar Sales Offices:
India Sales: US Sales: Tel. No: +91-22-400 12 440 Tel. No: 1-212-2276611 Mob. +91 9833 732633 Email: hitesh.kuvelkar@fglobal.com
Email: indiasales@fglobal.com fgasiasales@bloomberg.net Email: us@fglobal.com Email: uk@fglobal.com
Asia & Europe Sales: Tel.: 44-207-959 5300
Research Note issued by First Global Securities Ltd., India FG Markets, Inc. is a member of FINRA/SIPC and is regulated by the Securities & Exchange Commission (SEC), US First Global (UK) Ltd. is a member of London Stock Exchange and is regulated by Financial Services Authority (FSA), UK First Global Stockbroking is a member of Bombay Stock Exchange & National Stock Exchange, India
IMPORTANT DISCLOSURES CAN BE FOUND AT THE END OF THIS REPORT
FIRST GLOBAL
India Research
www.firstglobal.in
Table of Contents
The Story Valuation & Outlook 3-4 4
Key Growth Drivers 5-8 Capacity addition in power generation on a rising trend 5 Building of transmission infrastructure to follow addition in power generation capacities 5-6 Power Grid Corporation of India Ltd. (PGCIL), the main source of equipment orders in India 6 Upgradation of system to reduce T&D losses provides ample opportunities for transmission companies 6 Integration of nations transmission network through national grid 6-7 RGGVY & R-APDRP 7 Opportunities in Railway & Telecom sectors 7 Overseas market 7-8 Possible Downside Risks Volatile raw material prices Execution delays Interest rates Competition Currency fluctuations Peer Comparison Order book Margin Analysis Capacity expansion Working capital management Return on Equity Interest cost 9 9 9 9 9 9 10-12 10 10-11 11 11-12 12 12
KEC International Ltd. - Company Analysis

Price and Rating History Chart Key Ratios KEC International Business in picture (FY09) The Company Business Highlights
13-21
15 16 17 18 19
FIRST GLOBAL
India Research
www.firstglobal.in
Financial Highlights Revenues record CAGR of 29.2% over four year period Balance sheet restructuring EBIDTA margin Debt Quarterly Results Analysis
20 20 20 20 20 21
Kalpataru Power Transmission Limited - Company Analysis

Price and Rating History Chart Key Ratios Kalpatarus Business in Pictures... (FY09) The Company Business Highlights Acquisition of JMC Projects Segments Financial Highlights Segmental revenues Order book provides good earnings visibility Quarterly Results Analysis
22-32
25 26 27 28 29-30 29 29-30 31 31 31 32
Jyoti Structures Ltd. - Company Analysis

Price and Rating History Chart Key Ratios Jyoti Structures Business in Pictures (FY09) The Company Business Highlights Financial Highlights Margins Increase in debt level due to higher working capital Quarterly Results Analysis
33-42
36 37 38 39 40 41 41 41 42
KEC International Ltd. -- Financials (Standalone) -- Earnings Model (Standalone)

Kalpataru Power Transmission -- Financials (Consolidated) -- Earnings Model (Standalone) Jyoti Structures - Financials (Standalone) - Earnings Model (Standalone)
43-49 50-56 57-63
FIRST GLOBAL
India Research
www.firstglobal.in
The Story
Over the last six years, the power transmission towers sector has been delivering pretty good returns and strong growth, driven primarily by inter-regional capacity additions, distribution reforms, rural electrification and a robust growth in power generation. The Government of Indias (GoI) Eleventh Plan has envisaged a We believe that companies capital expenditure of over Rs.6,665 bn for the countrys power possessing financial strength and project execution skills sector in order to ensure Power for All. The GoIs Common will enjoy an edge over their Minimum Program is focusing on achieving 100% village competitors and will be better electrification by the year 2009 and 100% household positioned to capitalize on the electrification by 2012. It plans to add 78,700 MW of power opportunities arising in the generation capacity in the XIth Five Year Plan, which, coupled power transmission sector with, its decision to set up transmission lines with generation capacity for effective power evacuation, has opened ample business opportunities for transmission lines companies. The planning commission has allocated a budget of Rs.3,773 bn towards power generation, Rs.1,404 bn for power transmission and Rs.1,487 bn for sub-transmission and power distribution system, in order to tackle the power deficit situation prevailing in the country. We believe that companies possessing financial strength and project execution skills will enjoy an edge over their competitors and will be better positioned to capitalize on the opportunities arising in the power transmission sector. KEC International (KEC.IN/KECI.BO), Kalpataru Power Transmission Ltd. (KPP.IN/KAPT.BO) (KPTL) and Jyoti Structures Ltd. (JYS.IN/JYTS.BO) are our top picks in this space, as we view them to be the biggest beneficiaries of the positive developments in the sector. For players such as KEC We are positive on the transmission International, which derives almost 60% of its revenues towers sector and our investment from the international market, there exist significant thesis on the top picks in this space opportunities abroad, particularly in the Middle East and is balanced between our outlook on Africa, where grid expansion and development has just the overall sector, as well as the strengths and weaknesses of each commenced and the power transmission & distribution of these players. We reinitiate (T&D) infrastructure is being ramped up. We believe that coverage on KEC International, these players will be able to sustain their growth momentum Kalpataru Power and Jyoti for the next few years, though the slow down in the Structures with a rating of international market could impact their order inflow, which Outperform might act as a hindrance to growth. We are positive on the transmission towers sector and our investment thesis on the top picks in this space is balanced between our outlook on the overall sector, as well as the strengths and weaknesses of each of these players. We reinitiate coverage on KEC International, Kalpataru Power and Jyoti Structures with a rating of Outperform.
FIRST GLOBAL
India Research
www.firstglobal.in
Comparative Valuation
Company Year EPS (Rs.) P/E (x) P/S (x) P/BV (x) EV/Sales (x) Annual Annual EV/EBITDA EBITDA ROE ROCE EPS Sales (x) (%) (%) (%) Growth Growth (%) (%) 8.7 7.1 6.4 30.5 15.6 11.4 12.6 6.4 6.2 5.3 24.2 11.2 9.6 11.1 8.9% 10.8% 11.1% 0.5% 27.4% 18.0% 81.8% 24.5% 17.0% 15.7% 13.4% 22.6% 19.2% 6.9% 7.3% 14.7% 10.3% 14.5% 7.4% 15.7% 8.2% 47.9% 27.1% 30.2% 8.1% 40.3% 15.4% 22.1% 21.6% 25.0% 32.4% 8.5% 22.7% 24.7% 24.9%
End FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY10E FY10E 11E/10E 11E/10E KEC International Ltd. Kalptaru Power Ltd. Jyoti Structures Ltd. PTC India Ltd. NTPC Tata Power Co. Ltd. Power Grid Mar 31.6 Mar 55.7 Mar 13.0 Mar Mar Mar Mar 4.88 11.1 62.2 6.03 46.8 70.7 16.9 5.28 15.5 71.8 7.37 18.0 15.0 11.7 18.0 19.0 20.9 18.7 12.1 11.8 9.0 16.7 13.7 18.1 15.3 0.7 0.5 0.6 0.2 3.6 1.4 6.2 0.5 0.4 0.4 0.2 3.0 1.1 4.7 4.1 2.2 2.4 1.2 2.8 2.7 2.9 3.3 1.9 2.0 1.1 2.5 2.5 2.6 0.8 0.8 0.7 0.1 4.3 2.1 10.3 0.6 0.6 0.5 0.1 3.6 1.7 9.0
Source: Company, FG Estimates
Valuation & Outlook

The strong and sustainable growth in the T&D sector across the world is being driven by huge spending towards transmission lines, both on account of increasing generation capacity and maintenance of existing lines, as well as distribution networks, especially in the developing countries of Asia, Africa and the Middle East. In India, the ratio of In India, the ratio of investments in power generation to T&D stands at 1:0.5, as against investments in power the global level of 1:1, thus leaving huge room for growth in the generation to T&D stands at domestic T&D sector. The Government of Indias (GoI) spending 1:0.5, as against the global on T&D in the X Five Year Plan stood at Rs.500 bn, while the XI level of 1:1, thus leaving Five Year Plan (2007-12) envisages an investment of Rs.2,891 bn huge room for growth in the in T&D, which provides huge growth opportunity for players in the domestic T&D sector power transmission sector. As per the CEA, Indias annual power shortage stands at 11% and the country has a peak shortage at 12.4%. The countrys estimated power requirements at the end of the XI Five Year Plan is 1,038 bn units, with a peak demand of 151,000 MW. The power ministry is focusing on increasing the power generation capacity and We expect the margin pressure evacuation of power from these power stations, which provides to ease, due to lower interest rates in FY10 in comparison to huge opportunities for transmission companies. Also, Indias FY09 and a decline in telecom and railway sectors are growing at a very fast pace and commodity prices. The margins the planning commission has allotted a capex of Rs.2,584 bn of companies with a higher and Rs.2,618 bn for both the sectors respectively. The proportion of fixed price development of the telecom and railways sectors will provide a contracts in their order books boost to the order book of transmission sector companies. will witness an improvement Considering the investments in transmission and distribution sector, we expect the growth of order book for the transmission EPC players in tandem with industry growth in the coming years. Further orders from other developing countries will add to the growth of integrated transmission line EPC companies. In H2FY08 and HIFY09, higher raw material prices and rising interest rates were the key concerns for power transmission companies. We expect the margin pressure to ease, due to lower interest rates in FY10 in comparison to FY09 and a decline in commodity prices. The margins of companies with a higher proportion of fixed price contracts in their order books will witness an improvement.
FIRST GLOBAL
India Research
www.firstglobal.in
Key Growth Drivers

Capacity addition in power generation on a rising trend
As per the CEA, in FY09, Indias annual power shortage stood at 11% and its peak shortage at 12.4%. In FY09, Indias total power generation was 724 bn units and the countrys expected power requirement at the end of the XI Plan is estimated to be 1,038 bn units, with a peak demand at 151,000 MW. In order to fulfil the Transmission companies will be able to capitalize on countrys estimated electricity demand requirements, the planned the opportunities to build capacity addition in the XI Five Year Plan is 78,700 MW. Four the infrastructure required UMPPs of around 4,000 MW capacity each have been awarded to to evacuate power from power project developers, which will be based on supercritical new power plants technology. The planning commission has an estimated budget of Rs.400 bn for the XI Five Year Plan for establishing merchant power plants. The total estimated investment in power generation capacity in the XI Five Year Plan is Rs.3,773 bn. Hence, transmission companies will be able to capitalize on the opportunities to build the infrastructure required to evacuate power from new power plants. The estimated budget for the XI Five Year Plan to build the required infrastructure for T&D stands at Rs.2,891 bn.
Break-up of investment in power sector in XIth Plan
22%
57% 21%
Generation
Transmission
Distribution
Source: Planning commission
Building of transmission infrastructure to follow addition in power generation capacities

With more and more power generation capacity being added, we expect the building of transmission tower infrastructure to also follow with a lag, as typically, a power project takes close to 3.5-5 years for completion, while a transmission tower is usually set up after 2-2.5 years of the financial closure. In order to evacuate power from new power plants, as well as strengthen the transmission and distribution system, the Power Ministry plans to add around 95,000 ckt km of line length and over 178,000 MVA of substation capacity to the transmission system. The Power Ministry also 5
With more and more power generation capacity being added, we expect the building of transmission tower infrastructure to also follow with a lag, as typically, a power project takes close to 3.5-5 years for completion, while a transmission tower is usually set up after 2-2.5 years of the financial closure
FIRST GLOBAL
India Research
www.firstglobal.in
plans to add 3,253,773 ckt km of line length and 214,000 MVA of substation capacity to the countrys distribution system, for which it plans to invest Rs.1,404 bn in the transmission sector and Rs.1,487 bn in the sub-transmission & power distribution system in the XI Five Year Plan. This will keep the order books of the players in the transmission sector robust for the next few years.
Power Grid Corporation of India Ltd. (PGCIL), the main source of equipment orders in India
PGCIL is the dominant player in the Indian power transmission market and undertakes a majority of the transmission projects, thereby acting as the key source for equipment orders. The companys projects include high voltage lines of 400-800 kV, 1,200 kV, 500kV Dc and 800kV DC, as well as expansion of the existing transmission line network. PGCIL has planned a capex of Rs.550 bn for XIth FYP and targeted an interregional transmission capacity of 37,700 MW by the end of the XIth FYP, which will create a significant opportunity for companies in the transmission sector. The Mundra, Sasan, Krishnapatnam and Tilaiya UMPPs have been awarded to project developers and each UMPP will entail an investment of Rs.45-50 bn for setting up a transmission system. In order to evacuate power from the Mundra UMPP, PGCIL has allocated a budget of Rs.48.24 bn for building transmission infrastructure. PGCIL has planned a capex of Rs.120 bn for FY10, out of which a major portion will be used for setting up 765kV transmission lines in order to evacuate power from the four upcoming UMPPs. Hence, the UMPPs will benefit players in the transmission sector.
Upgradation of system to reduce T&D losses provides ample opportunities for transmission companies
According to industry sources, Indias AT&C losses stand at around 32%, which the government is targeting to reduce to 15% by 2012, by consistently strengthening and improving the countrys interstate and interregional networks through the use of new technologies. However, the orders from state electricity boards (SEB) and international geographies are likely to slow down due to the uncertain global macro environment.
Integration of nations transmission network through national grid

The key growth driver for the Indian transmission tower sector has been the move to integrate the countrys transmission network through a national grid i.e., increasing the inter-regional transmission network to 37,700MW by 2012 from the current capacity of 20,800MW
The key growth driver for the Indian transmission tower sector has been the move to integrate the countrys transmission network through a national grid i.e., increasing the interregional transmission network to 37,700MW by 2012 from the current capacity of 20,800MW.
Growth in inter-regional transmission capacity (MW)

Year Total Source-CEA 2002 5,050 2005 9,450 2007 16,450 2010 21,150 2012E 37,700
FIRST GLOBAL
India Research
www.firstglobal.in
The dynamics of the power market is changing with a shift towards national transmission of power, as compared to the earlier region centric generation and consumption pattern. Earlier, the surplus available in one region was not being fully utilized in other deficit regions, as the previous plans were not for bulk inter-regional transfer. In line with the shift, new power generating capacities will be set up in locations based on their proximity to raw material sources and will distribute power to regions depending on their requirements.
RGGVY & R-APDRP

Rajiv Gandhi Grameen Vidyutikaran Yojanas (RGGVY) original estimated outlay was Rs.160 bn, though an amount of Rs.280 bn was approved for the XI Five Year Plan on January 2008. The objective of the RGGVY is rural electrification and to provide access to electricity to all rural households. The Government launched Restructured Accelerated Power Development Reforms Programme (R-APDRP) with the objective of encouraging reforms and reduction in T&D losses, and improving power supply quality for which it has planned to invest Rs. 515 bn in XIth FYP. RAPDRP provides opportunities to companies for system upgradation.
Opportunities in Railway & Telecom sectors

The Indian telecom market continues to grow at a very fast pace. The introduction of 3G networks in India and a growing customer base requires network expansion, including installation of towers. In the coming years, a huge number of new towers and large investments will be required in the Indian Telecom sector. BSNL has floated tenders worth Rs.500 bn for setting up telecom infrastructure, for which the bidding has been completed. Moreover, in order to strengthen and upgrade the countrys railway system, the total outlay for the Indian Railways, as per the XIth Plan, stands at Rs.2,618 bn. A rail freight corridor (East & West) has been planned by the Ministry of Railways, covering about 2,700 km of track at an investment of Rs.220 bn. Over the next five years, the Indian Railways is expected to complete the laying of 1,100 route kms of new lines.
Overseas market
The players in the transmission tower sector are also set to benefit from the emerging export markets, such as the Middle East and Africa, where transmission tower infrastructure is being ramped up. Africa and the Middle East continue to offer immense opportunities, on account of their need for a better power The players in the transmission transmission network, funding support from multilateral tower sector are also set to benefit agencies, huge power generation plans, and increased from the emerging export markets, spending by oil producing countries. For instance, KEC such as the Middle East and Africa, International derives about 60% of its revenues from where transmission tower exports, mainly from the Middle East and Gulf region, infrastructure is being ramped up while Africa is in the development stage and the availability of electricity in some parts of the region is in the range of 45%.
FIRST GLOBAL
India Research
www.firstglobal.in
Electrification Rates in Africa

Region Electrification Rate North Africa 27 to 99% West Africa 4 to 40% Central Africa 3 to 35% East Africa 5 to 25% Southern Africa 7 to 70% Source: Union of Producer, Transporters and Distributors of Electricity in Africa (UPDEA)
Africa has and always had massive investment potential and vast resources. Only 24% of the population in the sub-Saharan Africa has access to electricity and South Africa accounts for over half of the regions electricity production. The regions electrification programme is growing, which is creating opportunities for Indian and Chinese companies.
T&D investment over next five years
FIRST GLOBAL
India Research
www.firstglobal.in
Possible Downside Risks

Volatile raw material prices
Steel is one of the key raw materials for power transmission line companies and hence, an increase in steel prices has a negative impact on the margins of the players in the transmission sector. However, the companies are insulated to some extent from the increase in steel prices due to price variation clause, which is included in most domestic contracts.
Execution delays
A delay in the execution of transmission projects due to a delay in the corresponding generation project or delay in rural electrification on account of lack of political will to control theft and shift from providing free energy to the agriculture activity will have a direct impact on the business of transmission companies
A delay in the execution of transmission projects due to a delay in the corresponding generation project or delay in rural electrification on account of lack of political will to control theft and shift from providing free energy to the agriculture activity will have a direct impact on the business of transmission companies.
Interest rates
The transmission line industry is working capital intensive in nature. We expect an increase in the interest rates in the near future, which could adversely impact the performance of the players in the transmission companies. Due to high interest rates, the players in this space could find it difficult to meet their working capital requirements.
We expect an increase in the interest rates in the near future, which could adversely impact the performance of the players in the transmission companies
Competition
The entry of power generation and construction companies into the T&D business could result in an increase in competition in the industry. In the last two years, In the last two years, several several strong competitors, such as Reliance Infrastructure and strong competitors, such as IVRCL, have entered the T&D space, thus resulting in Reliance Infrastructure and intensifying competition and consequently, margin pressure. The IVRCL, have entered the T&D new players have adopted aggressive pricing strategies to space, thus resulting in acquire pre-qualification and/or market share, which may keep intensifying competition and the margins of the players in the sector under pressure for some consequently, margin pressure more time.
Currency fluctuations
The companies in the transmission line industry are also benefiting from opportunities in the overseas markets, such as Africa and the Middle East, where the The appreciation of the Indian transmission infrastructure is being ramped up. However, the Rupee could have an adverse appreciation of the Indian Rupee could have an adverse impact impact on the margins of these on the margins of these companies, as well as on their revenues companies, as well as on their from the International business in Rupee terms. 9
revenues from the International business in Rupee terms
FIRST GLOBAL
India Research
www.firstglobal.in
Peer Comparison
Order book Jyoti: As on August 2009, the companys order book stood at around Rs.40 bn, out of which 85%
was contributed by the domestic market. In terms of segmental performance, 72% of the companys order book comprised of transmission lines, with the balance being equally divided between substations and rural electrification (RE) orders.
KEC:
In Q2 FY10, the companys order book stood at Rs.55 bn, with 43% coming from the international market and 57% contributed by South Asia. In Q1 FY10, the company bagged orders worth Rs.7.2 bn, down 35% Y-o-Y, mainly due to lack of orders from Power Grid, as well as a delay in orders for telecom towers and related infrastructure from BSNL on account of litigation. Out of KECs total orders, 79% was for transmission, 21% for distribution and substations, and the balance came from the railway and telecom sectors. KECs order book is executable within 18 months. In Q2 FY10, the company bagged orders worth Rs.12.5 bn in the domestic and international market.
Kalpa-taru: In Q1 FY10, the company secured orders worth Rs.2.7 bn and its current order book
stands at Rs.60 bn, including overseas orders worth Rs.20 bn (33% of total order book). In Q2 FY10, the company received orders worth Rs.14 bn from Maharashtra Electricity Transmission Company Ltd. (MSETCL) and North East Transmission Company Ltd. for transmission projects. The order book of JMC Projects, a subsidiary company of KPTL, stood at around Rs.22 bn at the end of the quarter.
Peer comparison
Market cap/Order book Jyoti Structures KEC International Kalpataru Power 0.32 0.48 0.36 Sales/order book 0.43 0.62 0.54 Debt/equity 0.73 1.11 1.09
Margin Analysis
Over the period FY06-09, JSL and KEC recorded a CAGR of 35% and 25.7% respectively in revenues. In FY09, the margins of all the three players declined due to high raw material prices and forex losses. KPTLs margins declined from 17% in FY07, which was the highest among the three companies, to 10% in FY09. For FY10E, we expect JSLs margins to decline, though we estimate the margins of KEC and KPTL to improve to 8.9% and 10.8% respectively.
10
FIRST GLOBAL
India Research
www.firstglobal.in
Total revenues & EBIDTA margin

20.0% 36,000 30,000 24,000 12.0% 18,000 8.0% 12,000 4.0% 6,000 0 2006 Jyoti Structures Jyoti Structures 2007 KEC KEC 2008 2009 Kalpataru Kalpataru Total Revenue (Rs. Mn)
16.0% EBIDTA Margin (%)
0.0%
Source: FG estimates
Capacity expansion
In view of the continuous increase in the order book and in order to capitalise on opportunities arising in the transmission sector, all the companies are expanding their manufacturing capacities
In view of the continuous increase in the order book and in order to capitalise on opportunities arising in the transmission sector, all the companies are expanding their manufacturing capacities. Jyoti increased its manufacturing capacity from 95,800 MTPA in FY08 to 110,000 MTPA in FY09. The manufacturing capacity of KEC and Kalaptaru currently stands at 151,000 MTPA and 108,000 MTPA respectively.
Working capital management

The domestic transmission tower industry is highly working capital intensive in nature. Most contracts have payment terms that include retention of money till the date of expiry of the warranty period of the tower and Efficient management of working capital could make all performance guarantee money retained by the clients. Efficient the difference between management of working capital could make all the difference companies posting profits and between companies posting profits and losses in an industry losses in an industry where the where the margins are thin and highly sensitive to raw material margins are thin and highly prices. The companies are working on reducing their working sensitive to raw material prices capital intensity and their cash conversion cycle is getting smaller.
Working Capital Cycle (in Days)

Year Jyoti KEC 113 101 108 Kalpataru 139 112 135 2007 129 2008 85 2009 83 Source: FG estimates
11
FIRST GLOBAL
India Research Since most of JSLs working capital requirement is to be funded by debt, the company is more vulnerable to an increase in working capital than KEC, which will have a direct impact on its interest costs
www.firstglobal.in The working capital cycle for both, KEC and KPTL, increased in FY09. Since most of JSLs working capital requirement is to be funded by debt, the company is more vulnerable to an increase in working capital than KEC, which will have a direct impact on its interest costs.
Return on Equity
The RoE of the three companies has been on a declining trend on account of an increase in raw material prices. In FY09, JSLs RoE declined 240 bps to 20.9%, while that of KEC and KPTL fell sharply from 44.6% and 22.8% to 21.7% and 13.3% respectively. We expect the RoE of KEC, KPTIL and JSL to improve by around 2% in FY10E.
RoE
50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2007 2008 Jyoti Structures KEC 2009 Kalpataru
Note: We have not considered FY07 financials of Kalpataru Power
Interest cost
We expect JSL to fund a large part of its working capital requirement through debt. As a result, higher debt and high borrowing costs could pull down JSLs PBT margin, on account of the increase in the companys interest cost.
R oE
Interest cost (Rs. mn)

Jyoti Year Interest as a Debt Interest % of debt 329 21% 2007 1,594 464 21% 2008 2,248 683 22.5% 2009 3,036 Source: Company, FG Estimates Debt 3,863 5,918 6,218 KEC Interest 593 677 1,000 Interest as a % of debt 15% 11% 16% Debt 3,367 3,259 9,451 Kalpataru Interest as a Interest % of debt 433 13% 548 17% 1,369 14.5%
12
FIRST GLOBAL
India Research
www.firstglobal.in
KEC International Ltd. Company Analysis

Key Financials (YE Mar 31st) (Rs. mn) FY 07 Total Revenue 20,406 Revenue Growth (Y-o-Y) 18.1% EBIDTA 2,518 EBIDTA Growth (Y-o-Y) 55.2% Net Profit 1,046 Net Profit Growth (Y-o-Y) 112.3% Net Profit (Excl.Extra-ordinaries) 1,046 Net Profit Growth (Excl.Extra-ordinaries )(Y-o-Y) 112.3% Shareholders Equity 2,590 Number of Diluted shares(mn) 38 Key Operating Ratios (YE Mar 31st) FY 07 Diluted EPS (Rs) (Excl. Extra-Ordinaries) 27.8 EPS Growth (Y-o-Y) 112.3% CEPS (Rs.) (Excl. Extra-Ordinaries) 36.6 EBIDTA (%) 12.3% NPM (%) 5.1% Tax/PBT (%) 34.5% RoE (%) 46.2% RoCE (%) 22.9% Return on Op. assets (%) 12.8% Book Value per share (Rs.) 68.7 Debt/Equity (x) 1.42 Dividend Payout Ratio (%) 19.0% Free Cash Flow Analysis (YE Mar 31st) (Rs. mn) FY 07 Operating Cash flow (1,129) Total Free Cash flow (440) Valuation Ratios (YE Mar 31st) FY 07 P/E (x) P/BV (x) P/CEPS (x) EV/EBIDTA (x) Net Cash / Market Cap (%) Market Cap./ Sales (x) Div.Yield (%) FY 08 28,145 37.9% 3,543 40.7% 1,722 64.5% 1,722 64.5% 4,848 49 FY 08 34.9 25.7% 40.0 12.6% 6.1% 34.3% 44.6% 23.7% 15.4% 98.3 1.20 16.8% FY 08 (554) (1,805) FY 08 FY 09 34,274 21.8% 3,003 -15.2% 1,163 -32.5% 1,163 -32.5% 5,586 49 FY 09 23.6 -32.5% 28.2 8.8% 3.4% 34.6% 21.7% 15.5% 10.3% 113.2 1.11 24.8% FY 09 (859) 1,456 FY 09 FY 10E 41,926 22.3% 3,736 24.4% 1,560 34.2% 1,560 34.2% 6,781 49 FY 10E 31.6 34.2% 37.7 8.9% 3.7% 34.8% 24.5% 17.0% 10.6% 137.4 1.02 23.4% FY 10E 47 1,408 FY 11E 50,982 21.6% 5,040 34.9% 2,308 47.9% 2,308 47.9% 8,549 49 FY 11E 46.8 47.9% 53.8 9.9% 4.5% 35.0% 29.1% 19.7% 12.3% 173.3 0.89 23.4% FY 11E (567) 971
FY 10E FY 11E 18.0 12.1 4.1 3.3 15.1 10.6 8.7 6.4 *NM NM 0.7 0.5 1.1% 1.6% *NM-Not Meaningful 567.9 49.3 US$ bn 0.60 0.13 0.03 0.71
Market Cap. And Enterprise Value Data as on Oct 9,2009 Current Market Price (Rs.) No. of Basic Shares outstanding (mn) Market Cap Total Debt* Cash & Cash Equivalents* Enterprise Value * Debt & Cash & Cash Equivalents as of FY09; Exchange Rate:1$=INR 46.45 Rs.bn 28.0 6.22 1.37 32.9
13
FIRST GLOBAL
India Research
www.firstglobal.in
(YE Mar 31st) EBIDTA/Sales (%) Sales/Operating Assets (x) EBIDTA/Operating Assets (%) Operating Assets/ Net Assets(x) Net Earnings/ EBIDTA (%) Net Assets/ Equity (x) Return on Equity (%)
DuPont Model FY 07 FY 08 12.3% 12.6% 1.8 2.0 22.5% 25.3% 1.8 1.6 41.5% 48.6% 2.7 2.3 46.2% 44.6%
FY 09 8.8% 1.9 17.0% 1.5 38.7% 2.2 21.7% FY 09 100% 57.6% 16.8% 4.1% 12.7% 8.8% 0.7% 2.9% 5.2% 1.8% 3.4% 3.4%
FY 10E 8.9% 2.0 17.6% 1.6 41.8% 2.0 24.5% FY 10E 100% 51.6% 21.5% 3.6% 14.4% 8.9% 0.7% 2.5% 5.7% 2.0% 3.7% 3.7%
FY 11E 9.9% 2.0 20.2% 1.6 45.8% 1.9 29.1% FY 11E 100% 53.2% 17.9% 3.4% 15.6% 9.9% 0.7% 2.2% 7.0% 2.4% 4.5% 4.5%
Common Sized Profit & Loss Account (YE Mar 31st) FY 07 FY 08 Total Revenues 100% 100% Net Raw Material Consumed 45.5% 50.3% Erection and Subcontracting expenses 25.8% 22.0% Personnel expenses 4.7% 4.3% Other expenses 11.6% 10.9% EBITDA 12.3% 12.6% Depreciation and Amortization 1.6% 0.9% Interest 2.9% 2.4% PBT 7.8% 9.3% Tax 2.7% 3.2% PAT 5.1% 6.1% PAT(Excl.Extra-ordinaries) 5.1% 6.1% Source: Company Reports, FG Estimates.
Top Management Team

Designation Chairman Managing Director Director Director Director Director Director Director Additional Director Company Secretary Name H V Goenka R D Chandak S S Thakur G L Mirchandani D G Piramal S M Kulkarni A T Vaswani J M Kothary P A Makwana Ch V Jagannadha Rao Date 31/12/2005 23/02/2006 31/03/2006 29/02/2008
Capital Issue History

Share Capital Post Issue (Rs in Mn.) 0.5 360.1 376.9 493.4 Mode of Capital Raising As Per Quarterly Result Scheme of Arrangement As Per Quarterly Result Scheme of Arrangement/Amalgamation
Key Statistics
Industry: 52 Week Hi:Lo: CMP: Avg Daily Vol (20 days): Avg Daily Val (20 days):
Share holding Pattern as on 30-06-2009
Rs.571.7/110 Rs. 567.9 0.03 mn Rs.18.07 mn

Non Promote r (NonInstitut ion) 13.9%
Indian (Promoter & Group) 41.9%
KEC : Nifty:
Performance over 52 weeks: Up 93.6% Up 40.7 %
Non Promote r (Institution) 44.2%
14
FIRST GLOBAL
India Research
www.firstglobal.in
Price and Rating History Chart

Ratings Key
Positive Ratings Neutral Ratings Negative Ratings B = Buy S-OP = Sector Outperform H = Hold S = Sell A = Avoid BD = Buy at Declines M-OP = Market Outperform MP = Market Perform SS = Sell into Strength MO-UP = Moderate Underperform OP = Outperform MO-OP = Moderate Outperform SP = Sector Perform UP = Underperform S-UP = Sector Underperform
ST: Short Term
MT: Medium Term
LT: Long Term
KEC International (KECI.BO)/ (KEC.IN)

150 10-Mar-2006 =100 (LHS) 130 790 110 7-Aug-07 OP 9-May-08 MP 690 890
90 12-Apr-07 30-Apr-07 OP OP
590 (INR)
490 9-Oct-09 OP 390
70
50 290 30 7-Jan-09 MP
190
10
90 10- 17- 17- 18- 21- 24- 2- 6- 7- 10- 11- 13- 22- 25- 27- 3- 9- 18- 27- 28- 30Mar-May- Jul- Sep- Nov- Jan- Apr- Jun- Aug- Oct- Dec- Feb- Apr- Jun- Aug-Nov- Jan- Mar-May- Jul- Sep06 06 06 06 06 07 07 07 07 07 07 08 08 08 08 08 09 09 09 09 09 OP FG Reco Relative to NIFTY (LHS) KEC INTERNATIO Share Price (RHS)
Represents an Upgrade Represents a Downgrade Represents Reiteration of Existing Rating

Details of First Globals Rating System given at the end of the report 15
FIRST GLOBAL
India Research
www.firstglobal.in
Key Ratios
(YE Mar 31st) Raw Material / Sales (%) Other Income/EBT (%) EBITDA Margin (%) Tax / PBT (%) Net Profit Margin (%) RoE (%) RoCE (%) Sales/Operating Assets (x) Optg. Assets/Total Assets (x) Return on Optg. Assets (%) Total Loans / Equity (%) Interest Coverage (times) Interest / Debt (%) Growth in Gross Block (%) Sales Growth (%) Operating (EBITDA) Profit Growth (%) Net Profit Growth (%) Debtors (Days of net sales) Creditors (Days of Raw Materials) Inventory (Days of Optg. Costs) Current Ratio Net Current Assets/Capital Employed (%) Shares Outstanding (Diluted) (mn) Fully diluted EPS (Rs.) (Reported) Fully diluted EPS (Rs.) Proforma) EPS Growth (%) (Proforma) Dividend Payout (%) Fully diluted Cash EPS (Rs.) Book Value per share (Rs.) FY 07 45.5% 0.4% 12.3% 34.5% 5.1% 46.2% 22.9% 1.8 1.8 12.8% 142.1% 4.3 16.5% 3.9% 18.1% 55.2% 112.3% 159 77 31 1.3 37.1% 37.7 27.8 27.8 112.3% 19.0% 36.6 68.7 FY 08 50.3% 0.1% 12.6% 34.3% 6.1% 44.6% 23.7% 2.0 1.6 15.4% 119.5% 5.2 13.8% 11.5% 37.9% 40.7% 64.5% 183 112 30 1.5 59.3% 49.3 34.9 34.9 25.7% 16.8% 40.0 98.3 FY 09 57.6% 0.2% 8.8% 34.6% 3.4% 21.7% 15.5% 1.9 1.5 10.3% 111.3% 3.0 16.5% 20.0% 21.8% -15.2% -32.5% 194 112 26 1.3 54.0% 49.3 23.6 23.6 -32.5% 24.8% 28.2 113.2 FY 10E 51.6% 0.0% 8.9% 34.8% 3.7% 24.5% 17.0% 2.0 1.6 10.6% 102.0% 3.6 15.9% 12.8% 22.3% 24.4% 34.2% 190 108 26 1.3 55.2% 49.3 31.6 31.6 34.2% 23.4% 37.7 137.4 FY 11E 53.2% 0.0% 9.9% 35.0% 4.5% 29.1% 19.7% 2.0 1.6 12.3% 89.1% 4.4 15.8% 11.3% 21.6% 34.9% 47.9% 190 106 26 1.3 58.0% 49.3 46.8 46.8 47.9% 23.4% 53.8 173.3
16
FIRST GLOBAL
India Research
www.firstglobal.in
KEC International Business in picture(FY09)

(All figures are in Rs. Mn except where stated otherwise. All percentages are percent of revenues, unless stated otherwise)
Total Revenues (FY09) Rs.34, 274 mn Major Export MarketAfrica, Middle East. Major Domestic ClientsPGCIL, SEBs
Raw materialSteel & Zinc prices forms major cost and are prone to volatility in price movement of these commodities.
Raw Material: Rs.19, 758 mn(57.6%) Erection & Sub-contracting Expense: Rs5, 746 mn (16.8%) Personal Expenses: Rs.1, 416mn (4.1%) Other Expenses: Rs.4, 350mn (12.7%)
Designing, Fabrication, Installation and testing of electrical transmission towers.
EBIDTA Rs 3,003 mn (8.8%)
Pricing Domestic contracts have price escalation clauses International contracts are either fixed price contracts or have price escalation clauses.
Other Non-operating Income : Rs.3 mn (0.01%) Interest: Rs 1,000 mn (2.9%) Depreciation: Rs 227 mn (0.7%)
Profit before Tax: Rs.1, 778 mn (5.2%)
Competitors Kalpataru Power Jyoti Structures Ltd
Taxes: Rs.615 mn (1.8%)
Profit after Tax: Rs.1, 163mn (3.4%)
Net Profit: Rs. 1,163mn (3.4%)
Assets Rs 30,963 mn (100%)
Balance Sheet (FY09)
Liabilities Rs.30, 963 mn (100%)
Fixed Assets: Rs 5,032 mn (16.3%) Capital WIP: Rs.504 mn (1.6%) Investments: Rs 18mn (0.1%) Others: Rs 10 mn (0.03%), Loans &Advances: Rs 3,266 mn (10.5%), Debtors: Rs 18,510 mn (59.8%), Inventory: Rs 2,258 mn (7.3%) Cash: Rs 1,365 mn (4.4%)
Debt & Minority Inte: Rs 6,218 mn (20.1%) Reserves: Rs 5,092 mn (16.4%) Current Liabilities & Provisions: Rs 18,860 mn (60.9%) Equity cap incl pref cap: Rs 493 mn (1.6%) Deferred Tax Liab: Rs.298 mn (1.0%)
17
FIRST GLOBAL
India Research
www.firstglobal.in
The Company
KEC International Ltd. (KEC) was established as Kamani Engineering Corp. Ltd. in 1945 and was taken over by R.P. Goenka (RPG) Enterprises in 1982 and renamed as KEC International Ltd in 1984. KEC is mainly into the business of design, manufacture and erection of transmission towers and power transmission lines on an EPC basis. The company has now broadened its activities by diversifying into the distribution sector (through rural electrification projects), railway electrification projects, as well as providing services, such as optical fibre installations, satellite/GPRS surveys, and turnkey telecom infrastructure services. KEC is one of the largest power transmission EPC companies in the world and has operations in around 40 countries, with a strong presence in India, Middle East, Africa, and Central Asia. With the merger with RPG Transmission Ltd. with KEC in place from October 1, 2007 onwards, KEC now has three manufacturing plants at Jaipur, Nagpur and Jabalpur, with a cumulative capacity of 151,000 tonnes per annum, for transmission towers capable of carrying power ranging from 33 kV to 800 kV.
18
FIRST GLOBAL
India Research
www.firstglobal.in
Business Highlights
KECs strong presence in the international market will enable it to capitalise on the growth opportunities in the US, Middle East and South Asian markets. The huge investments being made in the railway sector will KECs strong presence in the also provide growth opportunities for the company. KECs international market will enable it to capitalise on the growth manufacturing plants are located in Jabalpur, Jaipur and Nagpur opportunities in the US, Middle for producing transmission and telecom towers. The companys East and South Asian markets. total manufacturing capacity currently stands at 151,000MT. The huge investments being KEC is experienced in supplying towers to countries such as made in the railway sector will the US and Canada and has the capability of testing towers of also provide growth up to 1,200 kv. The company has tower testing stations at opportunities for the company Jabalpur, Jaipur and Vashi and has tested 2,214 tower tests till date. KEC has also presence in telecom towers and railway electrification segments.
19
FIRST GLOBAL
India Research
www.firstglobal.in
Financial Highlights
Revenues record CAGR of 29.2% over four year period
Over the period FY05-09, KECs revenues recorded a CAGR of 29.2%. The companys order book currently stands at Rs.55 bn or 1.6 x its FY09 revenues. We expect the huge investments in the transmission and distribution segment to drive an improvement in KECs order book as well as project execution, which will result in the companys revenues recording a CAGR of 21% over the period FY09 to FY11E.
Balance sheet restructuring

KEC has restructured its balance sheet and resolved the conflict of interest between two group companies arising from being in the same line of business. In FY06, the company hived off various investments and advances that it had provided to group companies. KEC merged two companies, RPG Transmission and NITEL with itself in FY08.
EBIDTA margin
In FY09, KECs EBIDTA margin declined from 12.6% in FY08 to 8.8%, due to higher raw material prices and forex losses. We expect the companys EBIDTA The easing of commodity prices margin to improve to 8.9% in FY10E, on account of falling and the depreciated Rupee will raw material prices. The easing of commodity prices and the help the company improve its depreciated Rupee will help the company improve its EBIDTA EBIDTA margin, as a major margin, as a major portion of its order book comes from the portion of its order book comes international markets in terms of fixed priced contracts. KEC from the international markets in has been able to maintain its margins at a healthy level due to terms of fixed priced contracts its operational leverage and execution of high margin orders.
Debt
In FY09, KECs total debt increased by 5% Y-o-Y to Rs.6.2 bn, while its interest expense grew 48% Y-o-Y to Rs.1, 000 mn. The companys operations are exposed to currency risks arising from a large share of exports in its total revenues, as well as on account of counter party credit risks. Funding support from multi-lateral agencies for overseas projects, particularly in the developing countries, provides some comfort to KEC. The company incurred a capex of Rs.1.3 bn in FY09, which was funded through internal accruals.
KECs debt/equity
2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1.8 1.4 1.2 1.1
2006
2007
2008 Debt/Equity
2009
20
FIRST GLOBAL
India Research
www.firstglobal.in
Quarterly Result Analysis

(YE Mar 31st) (Rs. mn) Net Sales Revenue Raw materials/Stock Adjustments Erection & Fabrication/Sub Contracting Charges Personnel Other Expenses Total Cost EBIDTA Other Non-Operating Income Less: Depreciation EBIT Less: Interest PBT Less: Total Tax Profit After Tax Earnings Per Share (Rs.) Weighted Average No. of Shares EBITDA Margin (%) EBIT Margin (%) PBT Margin (%) NPM (%) Effective Tax Rate (%) FY10 Q1 7,266 3,246 2,222 386 555 6,410 856 0 59 797 218 579 197 382 7.75 49.3 11.8% 11.0% 8.0% 5.3% 34.0% FY09 Q1 6,002 2,997 1,141 353 895 5,387 615 0 46 569 180 389 134 255 5.17 49.3 10.2% 9.5% 6.5% 4.2% 34.4% Y-o-Y Change 21.1% 8.3% 94.7% 9.3% -38.0% 19.0% 39.2% 29.3% 40.0% 20.9% 48.9% 47.0% 49.9% FY09 Q4 11,346 6,392 2,140 323 1,394 10,249 1,097 4 79 1,022 290 733 252 480 9.73 49.4 9.7% 9.0% 6.5% 4.2% 34.5% Q-o-Q Change -36.0% -49.2% 3.8% 19.5% -60.2% -37.5% -21.9% -25.0% -22.0% -24.7% -20.9% -21.9% -20.4%
153.79 148.60 149.13 101.27 (44.07)
211.57 196.33 151.60 102.92 (44.61)
In Q1 FY10, net sales increased marginally by 21.1% Y-o-Y to Rs.7.2 bn, out of which, 65% came from international sales, while 35% was contributed by the South Asian market. The companys volume sales for the quarter came in at 32,000 MT. Out of the companys total revenues, the transmission segment contributed 87%, distribution segment 9% and the railway & telecom segment 4%. Erection and fabrication/sub contracting charges rose 94.7% Y-o-Y to Rs.2.2 bn. The EBIDTA increased by 39.2% Y-o-Y to Rs.856 mn, while the EBIDTA margin improved by 153 bps Y-o-Y to 11.8%, on account of a forex gain of Rs.199 mn. In Q1 FY10, the companys PAT increased by 49.9% Y-o-Y to Rs.382 mn, due to low interest costs and forex gain. The companys total order inflow declined 35% Y-o-Y to Rs.8 bn in Q1 FY10. KEC received orders from a JV between the Tripura government and IL&FS, the West Bengal State Electricity Board, and Chhattisgarh State Electricity Board. The company also received orders from South Africa, Peru, Australia, Middle East and Africa.
21
FIRST GLOBAL
India Research
www.firstglobal.in
Kalpataru Power Transmission Limited Company Analysis

Key Financials (YE Mar 31st) (Rs. mn) FY 08 Total Revenue 26,749 Revenue Growth (Y-o-Y) 67.4% EBIDTA 3,294 EBIDTA Growth (Y-o-Y) 21.2% Net Profit 3,294 Net Profit Growth (Y-o-Y) 21.2% Net Profit (Excl.Extra-ordinaries) 1,649 Net Profit Growth (Excl.Extra-ordinaries )(Y-o-Y) 2.3% Shareholders Equity 7,831 Number of Diluted shares(mn) 27 Key Operating Ratios (YE Mar 31st) FY 08 Diluted EPS (Rs) (Excl. Extra-Ordinaries) 62.2 EPS Growth (Y-o-Y) 2.3% CEPS (Rs.) (Excl. Extra-Ordinaries) 76.8 EBIDTA (%) 12.3% NPM (%) 6.2% Tax/PBT (%) 27.7% RoE (%) 22.8% RoCE (%) 18.5% Book Value per share (Rs.) 294.2 Debt/Equity (x) 0.6 Dividend Payout Ratio (%) 14.5% Free Cash Flow Analysis (YE Mar 31st) (Rs. mn) FY 08 Operating Cash flow 810 Total Free Cash flow (411) Valuation Ratios (YE Mar 31st) FY 08 P/E (x) P/BV (x) P/CEPS (x) EV/EBIDTA (x) Net Cash/Market Cap (%) Market Cap./ Sales (x) Div.Yield (%) FY 09 32,461 21.4% 3,298 0.1% 3,298 0.1% 1,109 -32.7% 8,698 27 FY 09 41.9 -32.7% 63.6 10.2% 3.4% 24.5% 13.3% 14.1% 327.4 1.1 21.3% FY 09 (1,891) (4,586) FY 09 FY 10E 40,576 25.0% 4,382 32.9% 4,382 32.9% 1,475 32.9% 9,936 27 FY 10E 55.7 32.9% 79.3 10.8% 3.6% 27.6% 15.7% 13.4% 374.1 1.0 14.0% FY 10E 2,265 980 FY 11E 50,720 25.0% 5,326 21.5% 5,326 21.5% 1,876 27.2% 11,547 27 FY 11E 70.7 27.1% 97.7 10.5% 3.7% 27.6% 17.3% 14.8% 434.9 1.0 14.1% FY 11E 1,282 3
Market Cap. And Enterprise Value Data as on Oct 9,2009 Current Market Price (Rs.) No. of Basic Shares (mn) Market Cap. Total Debt * Cash & Cash Equivalents * Enterprise Value * Debt & Cash & Cash Equivalents as of FY09; Exchange Rate:1$=INR 46.45 Source: Company Reports, FG Estimates. Rs.bn 22.1 9.45 0.58 31.0
22
FIRST GLOBAL
India Research
www.firstglobal.in
DuPont Model (YE Mar 31st) EBIDTA/Sales (%) Sales/Operating Assets (x) EBIDTA/Operating Assets (%) Operating Assets/ Net Assets(x) Net Earnings/ EBIDTA (%) Net Assets/ Equity (x) Return on Equity (%) FY 08 12.3% 2.5 31.1% 0.9 50.1% 1.7 22.8% FY 09 10.2% 2.0 20.8% 1.0 33.6% 2.0 13.3% FY 09 100% 50.7% 6.1% 27.1% 5.9% 89.8% 1.8% 4.2% 1.1% 5.2% 1.2% 3.4% 3.4% FY 10E 10.8% 2.0 21.7% 1.0 33.7% 2.2 15.7% FY 10E 100% 49.0% 6.1% 26.5% 7.6% 89.2% 1.5% 3.4% 0.0% 5.8% 1.4% 3.6% 3.6% FY 11E 10.5% 2.2 23.4% 1.0 35.2% 2.1 17.3% FY 11E 100% 49.0% 5.5% 27.0% 8.0% 89.5% 1.4% 3.2% 0.0% 5.9% 1.5% 3.7% 3.7%
Common Sized Profit & Loss Account (YE Mar 31st) FY 08 Total Revenues 100% Net Raw Material Consumed 48.6% Employees Emoluments 5.7% Manufacturing & Operating expenses 26.1% Administrative, Selling & Other expenses 7.3% EBITDA 87.7% Depreciation and Amortization 1.4% Interest 2.5% Non-Operating Income 0.9% PBT 9.3% Tax 2.3% PAT 6.2% PAT(Excl.Extra-ordinaries) 6.2%
Top Management Team

Designation Chairman Vice Chairman Managing Director Director Executive Director Executive Director Director Independent Director Independent Director Independent Director Director Company Secretary Deputy Managing Director Name Mofatraj P Munot Mahendra G Punatar K V Mani Parag Munot Ajay Munot Manish Mohnot Imtiaz Kanga Sajjanraj Mehta Vimal Bhandari Shitin Desai Narayan Seshadri Bajrang Ramdharani Pankaj Sachdeva

Date 31/03/1993 31/03/1994 31/01/1995 28/02/1995 31/03/1995 31/03/1996 13/04/2006 7/9/2006 Equity Capital 9.5 28.5 42.8 57.1 78 108.6 217.2 265 Reason As Per Annual Report Bonus Issue Rights Issue Bonus Issue Public Issue Shares Issued On Amalgamation Bonus Issue Equity shares issued
23
FIRST GLOBAL
India Research
www.firstglobal.in
Key Statistics
Share Holding Pattern as on 30-06-2009
Rs.852.8/227.5 Rs. 833.5 0.04 mn Rs.35.9 mn

Indian (Prom oter & Group) 63.7%
Non Prom oter (Institution) 26.5%
Performance over 52 weeks: KALPATPOWR : Nifty: Up 18.7 % Up 40.7 %
Non Prom oter (NonInstitution) 9.8%
24
FIRST GLOBAL
India Research
www.firstglobal.in

Ratings Key
B = Buy Positive Ratings Neutral Ratings Negative Ratings S-OP = Sector Outperform H = Hold S = Sell A = Avoid BD = Buy at Declines M-OP = Market Outperform MP = Market Perform SS = Sell into Strength MO-UP = Moderate Underperform OP = Outperform MO-OP = Moderate Outperform SP = Sector Perform UP = Underperform S-UP = Sector Underperform
ST: Short Term
MT: Medium Term
LT: Long Term
Kalpataru Power Ltd. (KAPT.BO)/ (KPP.IN)

775 03-Jan-2005 =100 (LHS) 2170
675
1870
575 1-Nov-07 OP 475 9-Oct-09 OP 9-Jun-06 UP 7-Jan-09 OP 175
1570
1270 (INR)
375
970
275
670
370
75
70 3- 4- 29- 28- 28- 30- 28- 25- 22- 28- 27- 24- 20- 24- 24- 22- 26- 31- 31Jan- Apr- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jul- Oct05 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 Relative to NIFTY (LHS) FG Reco KALPATARU POWER Share Price (RHS)

FIRST GLOBAL
India Research
www.firstglobal.in
Key Ratios
(YE Mar 31st) Raw Material / Sales (%) Other Income/EBT (%) EBITDA Margin (%) Tax / PBT (%) Net Profit Margin (%) RoE (%) RoCE (%) Sales/Operating Assets (x) Optg. Assets/Total Assets (x) Return on Optg. Assets (%) Total Loans / Equity (%) Interest Coverage (times) Interest / Debt (%) Growth in Gross Block (%) Sales Growth (%) Operating (EBITDA) Profit Growth (%) Net Profit Growth (%) Debtors (Days of net sales) Creditors (Days of Raw Materials) Inventory (Days of Optg. Costs) Current Ratio Net Current Assets/Capital Employed (%) Shares Outstanding (Diluted) (mn) Fully diluted EPS (Rs.) (Reported) Fully diluted EPS (Rs.) Proforma) EPS Growth (%) (Proforma) Dividend Payout (%) Fully diluted Cash EPS (Rs.) Book Value per share (Rs.) FY 08 48.6% 10.1% 12.3% 27.7% 6.2% 22.8% 18.5% 2.5 0.9 19.9% 57.3% 4.9 15.9% 39.8% 67.4% 21.2% 2.3% 126 56 42 1.6 42.2% 26.5 62.2 62.2 2.3% 14.5% 62.2 294.2 FY 09 50.7% 20.4% 10.2% 24.5% 3.4% 13.3% 14.1% 2.0 1.0 12.9% 108.9% 2.4 19.7% 29.0% 21.4% 0.1% -32.7% 159 65 41 1.7 47.6% 26.5 41.9 41.9 -32.7% 21.3% 41.9 327.4 FY 10E 49.0% 0.1% 10.8% 27.6% 3.6% 15.7% 13.4% 2.0 1.0 13.5% 101.7% 3.2 14.2% 23.0% 25.0% 32.9% 32.9% 149 59 41 1.8 50.9% 26.5 55.7 55.7 32.9% 14.0% 55.7 374.1 FY 11E 49.0% 0.0% 10.5% 27.6% 3.7% 17.3% 14.8% 2.2 1.0 14.7% 96.6% 3.3 15.1% 17.6% 25.0% 21.5% 27.2% 149 59 42 1.7 53.1% 26.5 70.7 70.7 27.1% 14.1% 70.7 434.9
26
FIRST GLOBAL
India Research
www.firstglobal.in
Kalpatarus Business in Pictures... (FY09)

Total Revenues (FY09) Rs.32, 461 mn Major Export MarketAfrica, Middle East. Major Domestic ClientsPGCIL, SEBs
Raw materialSteel & Zinc prices forms major cost and are prone to volatility in price movement of these commodities.
Raw Material: Rs.16, 453 mn(50.7%) Employees Emoluments: Rs.1, 988 mn (6.1%) Mftg & Operating Expenses: Rs.8, 805mn (27.1%) Admin, Selling &Other Expenses: Rs1, 916mn (5.9%)
Designing, Fabrication, Installation and testing of electrical transmission towers.
EBIDTA Rs 3,298 mn (10.2%) Pricing Domestic contracts have price escalation clauses International contracts- fixed price contracts/price escalation causes.
Other Non-operating Income : Rs.346 mn(1.1%) Interest: Rs 1,369 mn (4.2%) Depreciation: Rs 576 mn (1.8%)
Profit before Tax: Rs.1, 700 mn (5.2%)
Competitors KEC International Jyoti Structures Ltd
Taxes: Rs.417 mn (1.3%)
Profit after Tax before Minority Interest: Rs.1, 283mn (4.0%)
Minority Interest: Rs.173 mn (0.5%)
Net Profit: Rs.1, 109mn (3.4%)
Assets Rs 31,559 mn (100%)
Fixed Assets: Rs 5,331 mn (16.9%) Capital WIP: Rs.1,133 mn (3.6%) Investments: Rs 5mn (0.02%) Others: Rs 3,636 mn (11.5%), Loans &Advances: Rs 3,424 mn (10.8%), Debtors: Rs 14,160 mn (44.9%), Inventory: Rs 3,270 mn (10.4) Cash: Rs 583 mn (1.8%) Miscellaneous Assets: Rs 17 mn (0.1%)
27
FIRST GLOBAL
India Research
www.firstglobal.in
The Company
Kalpataru Power Transmission Limited (KPTL) is a part of the diversified Kalpataru Group and was incorporated in 1981 as HT Power Structures Pvt. Ltd. KPTL is in the business of design, testing, fabrication, erection and construction of transmission lines and substation structures on a turnkey basis across India as well as overseas. It is one of the leading companies in the field of turnkey projects for EHV transmission lines of up to 800 kv. The company also provides EPC services for distribution projects of 11/33 kv and constructs cross country pipelines, besides telecom towers. The company manufactured 98,484 MT of towers in FY09, as against 79,531 MT in FY08. KPTLs production capacity currently stands at 108,000 MT of towers and the company has an average capacity utilization rate of 96%.
28
FIRST GLOBAL
India Research
www.firstglobal.in
Business Highlights
Within four years of entering the infrastructure business in the oil & gas sector, KPTL completed over 1,200 kms of crosscountry pipelines in India. The company has invested Rs.1 bn in specialized construction equipment to enable the division to build crosscountry pipelines of any size from 12 inch to 48 inch and in the toughest of terrains. KPTL has a diversified business model and has a presence in T&D, real estate, infrastructure and biomass energy. The company has made a successful foray into international rural distribution projects in Kenya by securing orders from Kenya Power & Lighting Co. Ltd. KPTL expects to bag more rural distribution and transmission jobs from the African market.
Acquisition of JMC Projects

In FY05, KPTL acquired a 46% stake in JMC Projects for Rs.78 mn, which was subsequently increased to 53% through a right issue, warrant conversion and open market purchase. JMC Projects is an Ahmedabad-based company that is involved in the business of construction. Over the last three years, JMC Projects recorded a growth of 60% and the company had an order book of Rs.22 bn at the end of FY09.
Segments
Transmission & Distribution
The transmission tower sector is KPTLs core business and is witnessing a phenomenal growth. The thrust on building transmission infrastructure and rural electrification augurs well for the segment. The company is also witnessing a number of growth opportunities in the international market in countries such as the Middle East, North Africa, Algeria, Nigeria, Ethiopia, Libya and others, which are planning to make huge The transmission tower investments in the transmission sector. KPTL is likely to benefit sector is KPTLs core from the same due to its international presence. On the distribution business and is witnessing a front, the company is focused on rural electrification projects, phenomenal growth. The where the scope of work includes supplies of various items thrust on building required for these projects. In the last five years, the company has transmission infrastructure commissioned 4,000 kms of lines and has additional orders to and rural electrification commission lines in excess of 2,500 kms over the next 18-24 augurs well for the segment months.
29
FIRST GLOBAL
India Research
www.firstglobal.in
Infrastructure Division
KPTL has recently entered the Infrastructure business and in order to overcome pre-qualification problems and execution risks, it has entered into consortium/cooperation agreements with overseas pipeline contractors. The pipeline network available in India today is grossly inadequate to transport the products to demand centres KPTL has recently entered in an efficient, safe and environment friendly way. An estimated the Infrastructure business and in order to overcome pre7000 kms of gas pipelines and over 4000 kms of product and qualification problems and crude pipelines are estimated to be set up in the next 3-4 years, execution risks, it has entered mainly by Indian Oil Corporation Limited (IOCL), Bharat into consortium/cooperation Petroleum Corporation Ltd. (BPCL), Hindustan Petroleum agreements with overseas Corporation Ltd. (HPCL), Gujarat State Petroleum Corporation pipeline contractors Limited (GSPC), Reliance and GAIL. Besides, a number of four lanes and six lanes highways/expressways are likely to be promoted in the next 3-4 years under various National Highway Development Programmes, wherein more private participation is sought on a BOT basis. KPTL is considering entering the road sector for BOT projects on a selective basis, wherein JMC Projects will provide support as an EPC contractor.
Biomass Energy Division

KPTL has two power plants with a capacity of 7.8 MW each and generates power from nonconventional sources. The generation of biomass power is fully dependent on the availability of agriculture residue (mustard husk & cotton stalk), which is seasonal in nature. Inadequate winter rains and/or alternate use of residue can affect the adequate availability and prices of fuel to the plant. KPTL is taking appropriate steps to procure and store adequate quantity of fuel and also operates collection centres at different places. In FY09, KPTL generated 120 mn units of power at a PLF of 95%, out of which 110 mn units were exported. The companys Biomass Energy division generated revenues of Rs.480 mn in FY09.
30
FIRST GLOBAL
India Research
www.firstglobal.in
Segmental revenues
In FY09, KPTLs net sales increased by 21.4% Y-o-Y to Rs.32,461 mn. Revenues of the T&D segment grew 10.1% Y-o-Y to Rs.16,878 mn, revenues of the construction segment were up 43.1% Y-o-Y to Rs. 13,090 mn, while the biomass energy segment recorded a growth of 30% Y-o-Y to Rs.476 mn. We expect KPTL to record a CAGR of 24% in revenues over the period FY09 to FY11E to Rs.50,720 mn.
Segmental revenues (Rs. mn)

Segment Transmission & distribution division Real estate division Bio-mass energy division Infrastructure division Mining product Construction division Trading of commodity Source: Company FY09 16,878 0.6 476 1,720 30 13,090 540 % contribution 51.6% 0.0% 1.5% 5.3% 0.1% 40.0% 1.6% FY08 15,333 5.6 367 1,827 35 9,150 293 Y-o-Y Growth (%) 10.1% -89.3% 30.0% -5.9% -14.9% 43.1% 84.0%
Order book provides good earnings visibility

KPTLs order book, which will be executed within 2-3 years, currently stands at Rs.60 bn and provides good earnings visibility for the coming years. We expect the companys EBIDTA margin to improve to 10.8% and the PAT to grow by 32.9% in FY10E.
31
FIRST GLOBAL
India Research
www.firstglobal.in

YE March 31st (Rs in Mn) Net Sales Revenue Raw materials/Stock Adjustments Personnel Other Expenses Total Cost EBIDTA Other Non-Operating Income Less: Depreciation EBIT Less: Interest PBT Less: Total Tax Profit After Tax Earnings Per Share (In Rs.) Weighted average Shares Outstanding (mn) EBITDA Margin (%) EBIT Margin (%) PBT Margin (%) NPM (%) Effective Tax Rate (%) FY10 Q1 4,873 1,972 323 1,994 4,289 584 64 82 567 140 427 106 321 12.1 26.5 11.98% 11.63% 8.75% 6.58% 24.82% FY09 Q1 4,758 2,524 279 1,388 4,190 568 51 60 559 158 401 111 290 10.9 26.5 11.94% 11.74% 8.42% 6.09% 27.67% Y-o-Y Change 2.4% -21.9% 15.9% 43.7% 2.4% 2.8% 27.1% 36.4% 1.4% -11.3% 6.4% -4.5% 10.6% FY09 Q4 5,584 3,064 308 1,634 5,006 579 69 76 572 302 271 39 232 8.8 26.5 10.37% 10.24% 4.85% 4.16% 14.26% Q-o-Q Change -12.7% -35.6% 4.9% 22.0% -14.3% 0.9% -7.3% 7.1% -0.9% -53.6% 57.6% 174.4% 38.2%
4.79 -11.38 33.15 48.89 -284.55
161.9 138.5 390.7 242.5 1056.5
In Q1 FY10, KPTLs revenues increased marginally by 2.4% Y-o-Y to Rs.4.8 bn, out of which, the T&D segment contributed 78%, while the balance was contributed by the biomass energy and infrastructure division. Revenues of the T&D segment declined 6.1% Y-o-Y to Rs.3.8 bn, while revenues of the infrastructure division grew 62% Y-o-Y to Rs.949 mn.
Segmental Analysis
Segment Transmission & Distribution Real Estate division Biomass energy division Infrastructure division Source: company Revenue(Rs. mn) 3,798 0.2 125 949 % contribution 78% 0% 3% 19%
Due to decline in the commodity prices, the raw material cost declined by 21.9% Y-o-Y to Rs. 1.9 bn. Other non-operating income jumped by 27.1%Y-o-Y to Rs.64 mn and interest expenses declined by 11.3% Y-o-Y to Rs.140 mn, resulted in 10.6% Y-o-Y increase in the PAT of the company. JMC Projects, a subsidiary company of KPTL posted revenue of Rs. 2.9 bn in Q1 FY10 as against Rs. 3.1 bn in the corresponding last quarter.
32
FIRST GLOBAL
India Research
www.firstglobal.in
Jyoti Structures Ltd. Company Analysis

Key Financials (YE Mar 31st) (Rs. mn) FY 07 Total Revenue 9,708 Revenue Growth (Y-o-Y) 39.1% EBIDTA 1,254 EBIDTA Growth (Y-o-Y) 67.7% Net Profit 550 Net Profit Growth (Y-o-Y) 98.8% Net Profit (Excl.Extra-ordinaries) 550 Net Profit Growth (Excl.Extra-ordinaries )(Y-o-Y) 98.8% Shareholders Equity 2,758 Number of Diluted shares(mn) 81 Key Operating Ratios (YE Mar 31st) FY 07 Diluted EPS (Rs) (Excl. Extra-Ordinaries) 6.82 EPS Growth (Y-o-Y) 77.5% CEPS (Rs.) (Excl. Extra-Ordinaries) 7.5 EBIDTA (%) 12.9% NPM (%) 5.7% Tax/PBT (%) 37.1% RoE (%) 27.5% RoCE (%) 20.6% Return on Op. assets (%) 18.1% Book Value per share (Rs.) 33.9 Debt/Equity (x) 0.6 Dividend Payout Ratio (%) 10.3% Free Cash Flow Analysis (YE Mar 31st) (Rs. mn) FY 07 Operating Cash Flow (539) Total Free Cash Flow (757) Valuation Ratios (YE Mar 31st) FY 07 P/E (x) P/BV (x) P/CEPS (x) EV/EBIDTA (x) Net Cash / Market Cap (%) Market Cap./ Sales (x) Div.Yield (%) FY 08 13,704 41.2% 1,719 37.1% 724 31.6% 724 31.6% 3,412 81 FY 08 8.92 30.8% 9.7 12.5% 5.3% 39.8% 23.3% 19.7% 18.0% 41.8 0.7 10.5% FY 08 (491) (374) FY 08 FY 09 17,171 25.3% 1,959 14.0% 797 10.1% 797 10.1% 4,168 82 FY 09 9.76 9.5% 10.8 11.4% 4.6% 36.9% 20.9% 18.8% 16.5% 50.9 0.7 10.8% FY 09 87 (200) FY 09 FY 10E 22,241 29.5% 2,458 25.5% 1,058 32.7% 1,058 32.7% 5,091 82 FY 10E 13.0 32.7% 14.7 11.1% 4.8% 34.0% 22.6% 19.2% 17.7% 62.2 0.7 12.7% FY 10E 1,057 (102) FY 11E 29,440 32.4% 3,001 22.1% 1,378 30.2% 1,378 30.2% 6,294 82 FY 11E 16.9 30.2% 18.9 10.2% 4.7% 34.0% 23.9% 19.8% 19.1% 76.9 0.6 12.7% FY 11E 563 214
Market Cap. And Enterprise Value Data as on Oct 9,2009 Current Market Price (Rs.) No. of Basic Shares (mn) Market Cap. Total Debt Cash & Cash Equivalents * Enterprise Value * Debt & Cash & Cash Equivalents as of FY09; Exchange Rate:1$=INR 46.45 Rs.bn 12.4 3.04 0.30 15.1
33
FIRST GLOBAL
India Research
www.firstglobal.in
(YE Mar 31st) EBIDTA/Sales (%) Sales/Operating Assets (x) EBIDTA/Operating Assets (%) Operating Assets/ Net Assets(x) Net Earnings/ EBIDTA (%) Net Assets/ Equity (x) Return on Equity (%)
DuPont Model FY 07 FY 08 12.9% 12.5% 2.3 2.5 30.1% 31.1% 1.1 1.1 43.9% 42.1% 1.8 1.6 27.5% 23.3%
FY 09 11.4% 2.4 27.3% 1.1 40.7% 1.7 20.9%
FY 10E 11.1% 2.6 28.6% 1.1 43.0% 1.7 22.6% FY 10E 100% 66.0% 13.1% 2.6% 7.3% 11.1% 0.7% 3.3% 0.1% 7.2% 2.5% 4.8% 4.8%
FY 11E 10.2% 3.0 30.6% 1.0 45.9% 1.6 23.9% FY 11E 100% 66.7% 12.7% 2.7% 7.7% 10.2% 0.6% 2.7% 0.1% 7.1% 2.4% 4.7% 4.7%
Common Sized Profit & Loss Account (YE Mar 31st) FY 07 FY 08 FY 09 Total Revenues 100% 100% 100% Net Raw Material Consumed 60.6% 65.2% 64.2% Erection and Subcontracting expenses 14.8% 12.4% 12.8% Personnel expenses 2.7% 2.5% 2.5% Other expenses 8.9% 7.3% 9.1% EBITDA 12.9% 12.5% 11.4% Depreciation and Amortization 0.6% 0.5% 0.5% Interest 3.4% 3.4% 4.0% Non-Operating Income 0.1% 0.1% 0.4% PBT 9.0% 8.8% 7.4% Tax 3.3% 3.5% 2.7% PAT 5.7% 5.3% 4.6% PAT(Excl.Extra-ordinaries) 5.7% 5.3% 4.6% Source: Company Reports, FG Estimates.
Top Management Team

Designation Chairman Director Director Director Director Managing Director Whole-time Director Deputy Managing Director Company Secretary Name S D Kshirsagar A J Khan G L Valecha P A Sethi S H Mirchandani K R Thakur Prakash K Thakur Santosh V Nayak L H Khilnani
34
FIRST GLOBAL
India Research
www.firstglobal.in

Date 31/03/1990 30/11/1992 28/09/1994 27/06/2000 29/09/2003 19/11/2003 16/12/2004 18/05/2006 9/10/2006 15/12/2006 11/1/2007 21/02/2007 8/10/2007 14/11/2007 31/03/2008 8/10/2008 2/12/2008 Equity Capital 16.2 32.7 49.1 98.2 114.6 118.2 138.2 153.7 154.2 154.3 158.7 161.4 162 162.3 162.4 163.1 163.3 Reason As Per Annual Report Rights Issue Bonus Issue Rights Issue Preferential Issue Of Shares Preferential Issue Of Shares Private Placement Preferential Issue Of Shares Issued under ESOP Scheme Issued under ESOP Scheme Conversion of Warrants Equity shares issued Issued under ESOP Scheme Issued under ESOP Scheme Issued under ESOP Scheme Issued under ESOP Scheme Issued under ESOP Scheme
Key Statistics
Rs.166.9/40 151.6 0.24 mn Rs.37.7 mn
Shareholding Pattern as on Jun '09

Non Promoter (Institution) 44% Non Promoter (NonInstitution) 29%
Performance over 52 weeks: JYOTISTRUC : Nifty: Up 95.9% Up 40.7%
Indian (Promoter & Group) 27%
35
FIRST GLOBAL
India Research
www.firstglobal.in

Ratings Key
Positive Ratings Neutral Ratings Negative Ratings B = Buy S-OP = Sector Outperform H = Hold S = Sell A = Avoid BD = Buy at Declines M-OP = Market Outperform MP = Market Perform SS = Sell into Strength MO-UP = Moderate Underperform OP = Outperform MO-OP = Moderate Outperform SP = Sector Perform UP = Underperform S-UP = Sector Underperform
ST: Short Term
MT: Medium Term
LT: Long Term
Jyoti Structures Ltd. (JYS.IN)/ (JYST.BO)

3-Jan-2005 =100 (LHS) 370 300
320
31-Oct-07 OP
250 9-May-08 MP 9-Oct-09 OP
270
200 (INR)
220 12-Apr-07 OP 7-Jan-09 MP
150
170
100
120
50
70 34- 29- 28- 28- 30- 28- 25- 22- 28- 27- 24- 20- 24- 24- 22- 26- 31- 31Jan- Apr- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jul- Oct05 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 Relative to NIFTY (LHS) FG Reco JYOTI STRUCTURES Share Price (RHS)

FIRST GLOBAL
India Research
www.firstglobal.in
Key Ratios
(YE Mar 31st) Raw Material / Sales (%) Other Income/EBT (%) EBITDA Margin (%) Tax / PBT (%) Net Profit Margin (%) RoE (%) RoCE (%) Sales/Operating Assets (x) Optg. Assets/Total Assets (x) Return on Optg. Assets (%) Total Loans / Equity (%) Interest Coverage (times) Interest / Debt (%) Growth in Gross Block (%) Sales Growth (%) Operating (EBITDA) Profit Growth (%) Net Profit Growth (%) Debtors (Days of net sales) Creditors (Days of Raw Materials) Inventory (Days of Optg. Costs) Current Ratio Net Current Assets/Capital Employed (%) Shares Outstanding (Diluted) (mn) Fully diluted EPS (Rs.) (Reported) Fully diluted EPS (Rs.) Proforma) EPS Growth (%) (Proforma) Dividend Payout (%) Fully diluted Cash EPS (Rs.) Book Value per share (Rs.) FY 07 60.6% 0.9% 12.9% 37.1% 5.7% 27.5% 20.6% 2.3 1.1 18.1% 58.3% 3.8 20.5% 9.7% 39.1% 67.7% 98.8% 129 82 33 2.3 82.6% 80.7 6.8 6.8 77.5% 10.3% 7.5 33.9 FY 08 65.2% 1.3% 12.5% 39.8% 5.3% 23.3% 19.7% 2.5 1.1 18.0% 66.2% 3.7 24.2% 12.8% 41.2% 37.1% 31.6% 130 69 24 2.5 85.7% 81.2 8.9 8.9 30.8% 10.5% 9.7 41.8 FY 09 64.2% 5.8% 11.4% 36.9% 4.6% 20.9% 18.8% 2.4 1.1 16.5% 73.1% 2.9 25.8% 59.8% 25.3% 14.0% 10.1% 137 89 35 2.1 79.9% 81.7 9.8 9.8 9.5% 10.8% 10.8 50.9 FY 10E 66.0% 1.9% 11.1% 34.0% 4.8% 22.6% 19.2% 2.6 1.1 17.7% 67.6% 3.3 22.8% 23.7% 29.5% 25.5% 32.7% 119 84 34 2.3 79.2% 81.7 13.0 13.0 32.7% 12.7% 14.7 62.2 FY 11E 66.7% 1.6% 10.2% 34.0% 4.7% 23.9% 19.8% 3.0 1.0 19.1% 58.5% 3.8 22.0% 11.5% 32.4% 22.1% 30.2% 119 84 28 2.2 80.9% 81.7 16.9 16.9 30.2% 12.7% 18.9 76.9
37
FIRST GLOBAL
India Research
www.firstglobal.in
Jyoti Structures Business in Pictures (FY09)

Total Revenues (FY09) Rs.17, 171 mn Jyoti Structure provides turnkey solutions in setting up High voltage transmission towers & setting up substations.
Raw Material Steel & Zinc prices forms major cost and are prone to volatility in price movement of these commodities.
Raw Material: Rs 11,019 mn (64.2%) Erection & Subcontracting Expenses: Rs. 2,201 mn (12.8%) Personal Expenses: Rs.435mn (2.5%) Other Expenses: Rs.1, 556mn (9.1%)
EBIDTA Rs 1,959 mn (11.4%)
Pricing Domestic contracts have price escalation clauses International contracts are either fixed price contracts or have price escalation clauses.
Other Non-operating Income: Rs.73 mn (0.4%) Interest: Rs 683 mn (4.0%) Depreciation: Rs 86 mn (0.5%)
Major Clients SEBs PGCIL
Profit before Tax: 1,264 mn (7.4%)
Below Operating Line

Taxes: Rs.466 mn (2.7%)
CompetitionsKEC International Kalpataru Power RPG Transmission
Profit after Tax: Rs.797 mn (4.6%)
Net Profit: Rs. 797 mn (4.6%)
Assets Rs 12,462mn (100%)
Fixed Assets: Rs 1,167 mn (9.4%) Capital Work-In-Progress: Rs.52mn (0.4%) Investments: Rs 231 mn (1.9%) Loans &Advances: Rs 2,695 mn (21.6%), Debtors: Rs 6,548 mn (52.5%), Inventory: Rs 1,460 mn (11.7%) Cash: Rs 297 mn (2.4%), Miscellaneous Assets: Rs.12 mn (0.1%)
38
FIRST GLOBAL
India Research
www.firstglobal.in
The Company
Jyoti Structures Ltd. (JSL), incorporated in 1974, is in the business of project execution related to power transmission and comprising transmission line and sub-stations. The company manufactures, deals in various components/equipments and constructs infrastructure related to power transmission. JSL has the expertise to take on turnkey projects for transmission lines from 33 kV to 800 kV and substations of up to 400 kV, irrespective of the terrain, location and requirements of power utilities within as well as outside India. JSL has two plants located at Nasik and Raipur, for manufacturing transmission lines towers with a combined capacity of 110,000MT per annum. Both the facilities are also well equipped for microwave towers, windmill towers and railway electrification structures. The company also has inhouse tower testing facilities of up to 1,000 kv at Ghoti, Igatpuri.
39
FIRST GLOBAL
India Research
www.firstglobal.in
Business Highlights
JSL is the smallest player in our coverage universe in the transmission sector. After incurring losses incurred in the export market in 2002, the company had been focusing on the domestic market and reduced its high exposure to exports. JSL is now once again looking at export opportunities, though in a planned manner, After incurring losses incurred in and is selectively choosing international ventures. The the export market in 2002, the company had been focusing on the company is bidding for projects in the UAE, Saudi Arabia, domestic market and reduced its Ethiopia, Australia and Ghana. It has formed a joint venture high exposure to exports. JSL is (JV) - Gulf Jyoti International LLC - with the Gulf now once again looking at export Investment Corporation, Kuwait for establishing a tower opportunities, though in a planned manufacturing facility in the UAE, which will provide the manner, and is selectively company with the necessary footing for catering to the choosing international ventures demand in the export market. JSL has supplied over 650,000 MT of transmission line towers and structures to various utilities in India as well as abroad. The company has tested over 200 types of transmission line towers for various clients worldwide. The company has been on the growth trajectory since the year 2003 and is recognised for its financial performance and strong project execution capabilities. With its core competence being transmission project execution as well as towers, JSL is now tapping the growing demand in the transmission segment. JSL has entered We expect the GoIs rural electrification programme into contracts with Damodar Valley Corporation for the evacuation and expansion of the of power from the Durgapur Steel Plant and Raghunathpur thermal countrys transmission power station. The company also has a contract with Reliance network to provide huge Power Trading for setting up 400 kv transmission lines in opportunities for JSL to Maharashtra and Gujarat. We expect the GoIs rural electrification generate higher revenues programme and expansion of the countrys transmission network to provide huge opportunities for JSL to generate higher revenues. The companys robust order book position is an indication of its strong growth prospects. In order to benefit from the growth in the T&D space in Africa, where the availability of electricity in some parts of the country is in the range of 5-6%, the company has formed a joint venture, Jyoti Structures Africa (Pty.) Ltd. and signed a contract with the Republic of South Africa for 765 kv transmission line worth Rands 184 mn (Rs.930 mn). Over the period 2004-09, the companys production capacity recorded a CAGR of 16%, while production recorded a CAGR of 32%. The company recently increased its capacity from 95,800MT to 110,000MT and is expected to witness a robust order flow in the next two-three years, due to spending on the national grid by PGCIL and the governments thrust on rural electrification programmes. The companys capacity utilization increased from 41% in FY04 to 77.6% in FY09 on the increased capacity of 110,000MT and we expect the capacity utilization to be in the 80-83% range on the back of higher order intake in the coming years. The companys capacity expansion, coupled with higher capacity utilization, will result in better order intake.
40
FIRST GLOBAL
India Research
www.firstglobal.in
Around 65% of JSLs orders come from transmission projects, 15% from substations, and the rest 20% from rural electrification related distribution projects. Almost 85% of JSLs orders are from the domestic market. With a rich experience of over three decades, the company boasts of executing projects across 36 countries worldwide.
Margins
JSLs order book currently stands at Rs.40 bn, or 2.3x its FY09 revenues, and is executable in 18-24 months. We expect the companys order book execution to drive a CAGR of 30% in its total revenues from FY09 to FY11E. The companys EBIDTA margin declined from 12.9% in FY07 to 11.4% in FY09, primarily on account of an increase in Other expenses (conversion expenses and freight charges), as well as fixed price international orders.
EBIDTA margin trend

35,000 30,000 25,000 Rs. m n 20,000 15,000 10,000 5,000 0 2007 2008 Revenue 2009 2010E 2011E 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% EBIDTA M argin
EBIDTA Margin(%)
Increase in debt level due to higher working capital

In FY09, JSLs total debt stood at Rs.3 bn, primarily on account of an increase in its working capital requirements to Rs.2.4 bn. The companys incremental debt of Rs.400 mn in FY09 was mainly on account of a capex of Rs.660 mn incurred for the full year.
41
FIRST GLOBAL
India Research
www.firstglobal.in

(YE Mar 31st) (Rs. mn) Net Sales Revenue Raw materials/Stock Adjustments Erection & Fabrication/Sub Contracting Charges Personnel Other Expenses Total Cost EBIDTA Other Non-Operating Income Less: Depreciation EBIT Less: Interest PBT Less: Total Tax Profit After Tax Earnings Per Share (Rs.) Weighted Average No. of Shares EBITDA Margin (%) EBIT Margin (%) PBT Margin (%) NPM (%) Effective Tax Rate (%) FY10 Q1 4,858 3,072 764 128 354 4,319 539 8 31 517 178 339 115 224 2.74 81.7 11.10% 10.64% 6.98% 4.61% 34.02% FY09 Q1 4,016 2,643 502 103 288 3,536 480 4 17 467 134 333 128 205 2.50 82.2 11.96% 11.62% 8.29% 5.12% 38.32% Y-o-Y Change 21.0% 16.2% 52.2% 24.6% 23.0% 22.1% 12.3% 114.0% 77.7% 10.7% 32.9% 1.8% -9.6% 8.9% FY09 Q4 4,699 2,715 868 85 541 4,209 490 38 29 499 190 309 98 210 2.57 81.8 10.43% 10.61% 6.57% 4.47% 31.87% Q-o-Q Change 3.4% 13.1% -11.9% 50.2% -34.5% 2.6% 10.1% -78.8% 6.4% 3.6% -6.6% 9.9% 17.4% 6.5%
(85.38) (98.38) (131.18) (50.88) (430.07)
67.64 2.44 41.66 13.31 215.91
In Q1 FY10, JSL recorded net sales of Rs.4.8 bn, up 21% Y-o-Y, driven by the execution of a strong order book. Transmission line projects contributed 68% of the companys net sales, while 15% was contributed by substations and 17% by rural electrification projects. In terms of volumes, the company produced around 21000 MT of transmission towers in Q1 FY10, up 24% Y-o-Y. Out of JSLs total sales, 88% came from the domestic market and the balance from exports. Transmission lines constituted around 68% of the companys sales in the quarter, followed by rural electrification at around 17% and substation at about 15%. In Q1 FY10, the companys conversion cost (erection cost) increased from Rs.40 mn in Q1 FY09 to Rs.70 mn per MT, while its freight cost rose from Rs.30 mn in Q1 FY09 to Rs.50 mn. JSLs outstanding secured loans increased from Rs.3 bn in Q1 FY09 to Rs.3.5 bn in Q1 FY10 at an average interest cost of around 9.5%. The company has been sanctioned around Rs.650 crore of LC by banks at an interest cost of 7.5%. The EBIDTA margin declined 85 bps Y-o-Y to 11.1% in Q1 FY10, due to an increase in erection & fabrication/sub contracting costs. The EBIT margin declined 98 bps Y-o-Y to 10.6%, on account of an increase in depreciation. In Q1 FY10, depreciation jumped up by 77.7% to Rs.31 mn and interest expenses increased by 32.9% to Rs.178 mn, which resulted in an increase of 8.9% Y-o-Y in the PAT to Rs.224 mn. 42
FIRST GLOBAL
India Research
www.firstglobal.in
KEC International Ltd. Financials (Standalone) Earnings Model (Standalone)

(YE Mar 31st) (Rs. mn) Net Sales Revenue Raw materials/Stock Adjustments Erection & Fabrication/Sub Contracting Charges Personnel Other Expenses Total Cost EBIDTA Other Non-Operating Income Less: Depreciation EBIT Less: Interest PBT Less: Total Tax Profit After Tax Earnings Per Share (In Rs.) Weighted average Shares Outstanding (mn) EBIDTA Margin (%) EBIT (%) PBT Margin (%) NPM (%) Effective Tax Rate (%) Q1 6,002 2,997 1,141 353 895 5,387 615 0 46 569 180 389 134 255 5.17 49.3 10.2% 9.5% 6.5% 4.2% 34.4% Q2 8,060 4,820 1,281 346 1,052 7,498 562 0 55 507 233 274 96 178 3.61 49.3 7.0% 6.3% 3.4% 2.2% 35.0% Q3 8,865 5,550 1,184 394 1,010 8,137 728 0 48 680 297 383 133 250 5.06 49.3 8.2% 7.7% 4.3% 2.8% 34.8% Q4 11,346 6,392 2,140 323 1,394 10,249 1,097 4 79 1,022 290 733 252 480 9.73 49.4 9.7% 9.0% 6.5% 4.2% 34.5% FY09 34,273 19,758 5,746 1,416 4,350 31,271 3,002 4 228 2,778 1,000 1,778 616 1,163 23.6 49.3 8.8% 8.1% 5.2% 3.4% 34.6% Q1 7,266 3,246 2,222 386 555 6,410 856 0 59 797 218 579 197 382 7.75 49.3 11.8% 11.0% 8.0% 5.3% 34.0% Q2E 9,914 5,255 1,884 367 1,537 9,042 872 0 78 794 273 521 182 339 6.86 49.3 8.8% 8.0% 5.3% 3.4% 35.0% Q3E 10,904 5,779 2,126 382 1,745 10,032 872 0 80 793 277 516 181 336 6.80 49.3 8.0% 7.3% 4.7% 3.1% 35.0% Q4E 13,842 7,336 2,768 388 2,215 12,707 1,135 0 81 1,054 279 775 271 504 10.2 49.3 8.2% 7.6% 5.6% 3.6% 35.0% FY10E 41,926 21,616 9,000 1,522 6,051 38,190 3,736 0 298 3,438 1,047 2,392 831 1,560 31.6 49.3 8.9% 8.2% 5.7% 3.7% 34.8%
43
FIRST GLOBAL
India Research
www.firstglobal.in
Profit & Loss A/c

(YE Mar 31st) (Rs. mn) Total Revenue Less: Cost of Raw material (Net) Power & Fuel Manufacturing Expenses Personnel Total Operating Expenditure EBIDTA Less: Depreciation EBIT Interest Non-Operating Income Profit before tax Tax Profit after Tax Profit After Tax (Excl.Extra-ordinaries) FY 07 20,406 9,293 5,270 955 2,370 17,888 2,518 334 2,184 593 7 1,599 552 1,046 1,046 FY 08 28,145 14,155 6,180 1,209 3,058 24,602 3,543 251 3,293 677 3 2,619 897 1,722 1,722 FY 09 34,274 19,758 5,746 1,416 4,350 31,271 3,003 227 2,775 1,000 3 1,778 615 1,163 1,163 FY 10E 41,926 21,616 9,000 1,522 6,051 38,190 3,736 298 3,438 1,047 0 2,392 831 1,560 1,560 FY 11E 50,982 27,104 9,112 1,750 7,975 45,942 5,040 344 4,696 1,145 0 3,551 1,243 2,308 2,308
Common sized Profit & Loss A/c

(YE Mar 31st) Total Revenue Less: Cost of Raw Material (Net) Power & Fuel Manufacturing Expenses Personnel Total Operating Expenditure EBIDTA Less: Depreciation EBIT Interest Profit before tax Tax Profit after Tax Profit After Tax (Excl.Extra-ordinaries) FY 07 100.0% 45.5% 25.8% 4.7% 11.6% 87.7% 12.3% 1.6% 10.7% 2.9% 7.8% 2.7% 5.1% 5.1% FY 08 100.0% 50.3% 22.0% 4.3% 10.9% 87.4% 12.6% 0.9% 11.7% 2.4% 9.3% 3.2% 6.1% 6.1% FY 09 100.0% 57.6% 16.8% 4.1% 12.7% 91.2% 8.8% 0.7% 8.1% 2.9% 5.2% 1.8% 3.4% 3.4% FY 10E 100.0% 51.6% 21.5% 3.6% 14.4% 91.1% 8.9% 0.7% 8.2% 2.5% 5.7% 2.0% 3.7% 3.7% FY 11E 100.0% 53.2% 17.9% 3.4% 15.6% 90.1% 9.9% 0.7% 9.2% 2.2% 7.0% 2.4% 4.5% 4.5%
44
FIRST GLOBAL
India Research
www.firstglobal.in
Balance Sheet
(YE Mar 31st) (Rs. mn) LIABILITIES Equity Capital Reserves & Surplus Preference Share Capital Net Worth Net Deferred tax liability/(Asset) Loans Capital Employed ASSETS Gross Block Less: Depreciation Net Block Capital WIP Investments in subsidiaries Investments- Others Total Investment Others Current Assets Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Total Current Assets Less: Current Liabilities and Provisions Sundry Creditors Provisions Others Total current liabilities & provisions Capital Employed FY 07 FY 08 FY 09 FY 10E FY 11E
377 2,213 130 2,720 335 3,864 6,919
493 4,354 104 4,952 200 5,918 11,070
493 5,092 0 5,586 298 6,218 12,102
493 6,287 0 6,781 298 6,918 13,997
493 8,055 0 8,549 298 7,618 16,465
4,676 600 4,076 18 205 1 206 49
5,213 899 4,314 169 0 5 5 20
6,255 1,222 5,032 504 0 18 18 10
7,055 1,520 5,534 704 0 18 18 10
7,855 1,865 5,990 904 0 18 18 10
1,506 9,041 214 1,717 12,478
2,053 14,300 680 2,701 19,735
2,258 18,510 1,365 3,266 25,398
2,768 21,825 2,579 3,354 30,525
3,274 26,538 3,146 4,079 37,038
3,783 370 5,756 9,908 6,919
7,567 540 5,066 13,173 11,070
9,636 444 8,780 18,860 12,102
11,324 569 10,901 22,794 13,997
13,395 843 13,255 27,494 16,465
45
FIRST GLOBAL
India Research
www.firstglobal.in
Common sized Balance Sheet

(YE Mar 31st) LIABILITIES Equity Capital Reserves & Surplus Preference Share Capital Net Worth Net Deferred tax liability/(Asset) Loans Capital Employed ASSETS Gross Block Less: Depreciation Net Block Capital WIP Investments in subsidiaries Investments- Others Total Investment Others Current Assets Sundry Debtors Inventories Cash and Bank Balance Loans and Advances Total Current Assets Less: Current Liabilities and Provisions Sundry Creditors Provisions Others Total current liabilities & provisions Capital Employed FY 07 FY 08 FY 09 FY 10E FY 11E
5.4% 32.0% 1.9% 39.3% 4.8% 55.8% 100.0%
4.5% 39.3% 0.9% 44.7% 1.8% 53.5% 100.0%
4.1% 42.1% 0.0% 46.2% 2.5% 51.4% 100.0%
3.5% 44.9% 0.0% 48.4% 2.1% 49.4% 100.0%
3.0% 48.9% 0.0% 51.9% 1.8% 46.3% 100.0%
67.6% 8.7% 58.9% 0.3% 3.0% 0.0% 3.0% 0.7%
47.1% 8.1% 39.0% 1.5% 0.0% 0.0% 0.0% 0.2%
51.7% 10.1% 41.6% 4.2% 0.0% 0.1% 0.1% 0.1%
50.4% 10.9% 39.5% 5.0% 0.0% 0.1% 0.1% 0.1%
47.7% 11.3% 36.4% 5.5% 0.0% 0.1% 0.1% 0.1%
130.7% 21.8% 3.1% 24.8% 180.3%
129.2% 18.5% 6.1% 24.4% 178.3%
152.9% 18.7% 11.3% 27.0% 209.9%
155.9% 19.8% 18.4% 24.0% 218.1%
161.2% 19.9% 19.1% 24.8% 224.9%
54.7% 5.3% 83.2% 143.2% 100.0%
68.4% 4.9% 45.8% 119.0% 100.0%
79.6% 3.7% 72.6% 155.8% 100.0%
80.9% 4.1% 77.9% 162.8% 100.0%
81.4% 5.1% 80.5% 167.0% 100.0%
46
FIRST GLOBAL
India Research
www.firstglobal.in
Cash Flow Statement

(YE Mar 31st) (Rs. mn) From Operations Profit Before Tax Depreciation Less: Dividend Payout Tax Paid Operating cash flow Changes in Capital Structure Increase in Equity Share capital Increase in Share premium Increase in other reserves Increase in Pref Capital Increase in Others Inc/(Dec) in Loans Inc/(Dec) in Equity/Loans/MI Adjustments Diff.in Dep. Total Inflows CASH OUTFLOWS Working Capital Changes Inc/(Dec) in Provisions Inc/(Dec) in Current Liabilities Less: Inc/(Dec) in Inventory Inc in Debtors Inc/(Dec) in Loans & Adv. Inc/(Dec) in Working Capital Capex/Investments Inc/(Dec) in Investments Addition to Gross Block Inc/(Dec) in Capital WIP Inc/(Dec) in other assets Inc/(Dec) in Fixed assets/ Investments Inc/(Dec) in Cash/Bank Balance Total Outflows FY 07 1,599 334 198 552 1,182 FY 08 2,619 251 289 897 1,684 FY 09 1,778 227 289 615 1,102 FY 10E 2,392 298 365 831 1,493 FY 11E 3,551 344 540 1,243 2,112
0 0 0 0 126 538 664
117 (11) 719 (26) (134) 2,053 2,718
0 (45) (91) (104) 98 301 158
0 0 0 0 0 700 700
0 0 0 0 0 700 700
(3) 1,843
48 4,449
96 1,356
0 2,193
0 2,812
233 273 257 2,238 99 2,087
171 3,094 548 5,259 984 3,526
(96) 5,783 204 4,210 564 (709)
125 3,809 510 3,315 89 (20)
274 4,426 506 4,714 724 1,244
1 177 (33) 33 178 (422) 1,843
(201) 537 151 (29) 457 466 4,449
13 1,042 335 (10) 1,379 685 1,356
0 800 200 0 1,000 1,213 2,193
0 800 200 0 1,000 568 2,812
47
FIRST GLOBAL
India Research
www.firstglobal.in
Common Sized Cash Flow Statement

(YE Mar 31st) From Operations Profit Before Tax Depreciation Less: Dividend Payout Tax Paid Operating cash flow Changes in Capital Structure Increase in Equity Share capital Increase in Share premium Increase in other reserves Increase in Pref Capital Increase in Others Inc/(Dec) in Loans Inc/(Dec) in Equity/Loans/MI Adjustments Diff.in Dep. Total Inflows CASH OUTFLOWS Working Capital Changes Inc/(Dec) in Provisions Inc/(Dec) in Current Liabilities Less: Inc/(Dec) in Inventory Inc in Debtors Inc/(Dec) in Loans & Adv. Inc/(Dec) in Working Capital Capex/Investments Inc/(Dec) in Investments Addition to Gross Block Inc/(Dec) in Capital WIP Inc/(Dec) in other assets Inc/(Dec) in Fixed assets/ Investments Inc/(Dec) in Cash/Bank Balance Total Outflows FY 07 86.7% 18.1% 10.8% 30.0% 64.2% FY 08 58.9% 5.6% 6.5% 20.2% 37.8% FY 09 131.2% 16.8% 21.3% 45.4% 81.3% FY 10E 109.0% 13.6% 16.6% 37.9% 68.1% FY 11E 126.3% 12.2% 19.2% 44.2% 75.1%
0.0% 0.0% 0.0% 0.0% 6.8% 29.2% 36.0%
2.6% -0.3% 16.2% -0.6% -3.0% 46.2% 61.1%
0.0% -3.3% -6.7% -7.7% 7.2% 22.2% 11.7%
0.0% 0.0% 0.0% 0.0% 0.0% 31.9% 31.9%
0.0% 0.0% 0.0% 0.0% 0.0% 24.9% 24.9%
-0.2% 100.0%
1.1% 100.0%
7.1% 100.0%
0.0% 100.0%
0.0% 100.0%
12.7% 14.8% 13.9% 121.4% 5.4% 113.2%
3.8% 69.5% 12.3% 118.2% 22.1% 79.2%
-7.1% 426.5% 15.1% 310.5% 41.6% -52.3%
5.7% 173.7% 23.3% 151.1% 4.0% -0.9%
9.8% 157.4% 18.0% 167.6% 25.8% 44.3%
0.1% 9.6% -1.8% 1.8% 9.7% -22.9% 100.0%
-4.5% 12.1% 3.4% -0.7% 10.3% 10.5% 100.0%
1.0% 76.8% 24.7% -0.8% 101.7% 50.5% 100.0%
0.0% 36.5% 9.1% 0.0% 45.6% 55.3% 100.0%
0.0% 28.4% 7.1% 0.0% 35.6% 20.2% 100.0%
48
FIRST GLOBAL
India Research
www.firstglobal.in
Free Cash Flow

(YE Mar 31st) (Rs. mn) EBITA Less: Adjusted Taxes NOPLAT Plus: Depreciation Gross Cash flow Less: Increase in Working Capital Operating Cash flow Less: Net Capex Less: Increase in Net Other Assets FCF From Operation Less: Inc./(Dec.) in Investment FCF after Investment Total FCF FY 07 2,184 754 1,430 334 1,764 2,893 -1,129 147 -836 -440 -440 -440 -440 FY 08 3,293 1,128 2,165 251 2,415 2,970 -554 640 816 -2,010 -2,010 -1,805 -1,805 FY 09 2,775 961 1,815 227 2,042 2,901 -859 1,281 -3,595 1,456 1,456 1,456 1,456 FY 10E 3,438 1,195 2,243 298 2,541 2,494 47 1,000 -2,360 1,408 1,408 1,408 1,408 FY 11E 4,696 1,644 3,052 344 3,397 3,964 -567 1,000 -2,538 971 971 971 971
49
FIRST GLOBAL
India Research
www.firstglobal.in
Kalpataru Power Transmission Limited Financials (Consolidated) Earnings Model (Standalone)

(YE Mar 31st) (Rs. mn) Net Sales Revenue Raw materials/Stock Adjustments Personnel Other Expenses Total Cost EBIDTA Other Non-Operating Income Less: Depreciation EBIT Less: Interest Extraordinary income PBT Less: Total Tax Profit After Tax Earnings Per Share (In Rs.) Weighted average Shares Outstanding (mn) EBIDTA Margin (%) EBIT (%) PBT Margin (%) NPM (%) Effective Tax Rate (%) Q1 4,758 2,524 279 1,388 4,190 568 51 60 559 158 0 401 111 290 10.9 26.5 12.1% 12.2% 7.0% 5.2% 26.1% Q2 4,326 2,190 262 1,350 3,803 523 71 65 529 227 0 302 79 223 8.4 26.5 9.6% 10.4% 5.6% 4.8% 14.4% Q3 4,168 2,168 237 1,363 3,768 400 106 72 433 200 0 233 34 199 7.5 26.5 10.4% 10.2% 4.8% 4.2% 14.3% Q4 5,584 3,064 308 1,634 5,006 579 69 76 572 302 0 271 39 232 8.8 26.5 11.0% 11.1% 6.4% 5.0% 21.7% FY09 18,849 10,177 1,086 5,504 16,767 2,083 283 273 2,093 887 -2 1,204 262 943 35.6 26.5 12.0% 11.6% 8.8% 6.6% 24.8% Q1 4,873 1,972 323 1,994 4,289 584 64 82 567 140 0 427 106 321 12.1 26.5 10.8% 10.4% 7.8% 6.2% 20.0% Q2E 5,364 2,253 334 2,199 4,787 578 64 83 559 142 0 418 84 334 12.6 26.5 9.0% 8.6% 5.8% 4.7% 20.0% Q3E 5,126 2,204 334 2,127 4,665 461 65 84 442 143 0 299 60 239 9.0 26.5 8.4% 8.1% 6.1% 4.8% 20.0% Q4E 7,260 3,267 345 3,042 6,654 606 65 84 587 147 0 440 88 352 13.3 26.5 9.9% 9.5% 7.0% 5.5% 21.3% FY10E 22,623 9,696 1,336 9,362 20,394 2,229 258 333 2,154 571 0 1,584 337 1,246 47.0 26.5 12.1% 12.2% 7.0% 5.2% 26.1%
50
FIRST GLOBAL
India Research
www.firstglobal.in
Profit & Loss A/c

(YE Mar 31st) (Rs. mn) Total Revenue Less: Cost of Raw material (Net) Employees Emoluments Manufacturing & Operating expenses Administrative, Selling & Other expenses Total Operating Expenditure EBIDTA Less: Depreciation EBIT Interest Non-Operating Income Profit before tax Tax Profit after Tax before Minority Interest Minority Interest Profit after Tax Profit After Tax (Excl.Extra-ordinaries) FY 08 26,749 13,005 1,522 6,973 1,954 23,454 3,294 386 2,908 674 251 2,485 689 1,797 148 1,649 1,649 FY 09 32,461 16,453 1,988 8,805 1,916 29,162 3,298 576 2,722 1,369 346 1,700 417 1,283 173 1,109 1,109 FY 10E 40,576 19,882 2,475 10,753 3,084 36,194 4,382 626 3,757 1,386 1 2,372 653 1,718 243 1,475 1,475 FY 11E 50,720 24,853 2,790 13,694 4,058 45,394 5,326 715 4,611 1,603 1 3,009 829 2,180 304 1,876 1,876

(YE Mar 31st) Total Revenue Less: Cost of Raw Material (Net) Employees Emoluments Manufacturing & Operating expenses Administrative, Selling & Other expenses Total Operating Expenditure EBIDTA Less: Depreciation EBIT Interest Non-Operating Income Profit before tax Tax Profit after Tax before Minority Interest Minority Interest Profit after Tax Profit After Tax (Excl.Extra-ordinaries) FY 08 100.0% 48.6% 5.7% 26.1% 7.3% 87.7% 12.3% 1.4% 10.9% 2.5% 0.9% 9.3% 2.6% 6.7% 0.6% 6.2% 6.2% FY 09 100.0% 50.7% 6.1% 27.1% 5.9% 89.8% 10.2% 1.8% 8.4% 4.2% 1.1% 5.2% 1.3% 4.0% 0.5% 3.4% 3.4% FY 10E 100.0% 49.0% 6.1% 26.5% 7.6% 89.2% 10.8% 1.5% 9.3% 3.4% 0.0% 5.8% 1.6% 4.2% 0.6% 3.6% 3.6% FY 11E 100.0% 49.0% 5.5% 27.0% 8.0% 89.5% 10.5% 1.4% 9.1% 3.2% 0.0% 5.9% 1.6% 4.3% 0.6% 3.7% 3.7%
51
FIRST GLOBAL
India Research
www.firstglobal.in
Balance Sheet
(YE Mar 31st) (Rs. mn) LIABILITIES Equity Capital Reserves & Surplus Net Worth Minority Interest Net Deferred tax liability/(Asset) Loans Capital Employed ASSETS Gross Block Less: Depreciation Net Block Capital WIP Investments in subsidiaries Investments- Others Total Investment Others Current Assets Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Total Current Assets Less: Current Liabilities and Provisions Sundry Creditors Provisions Others Total current liabilities & provisions Miscellaneous Assets Capital Employed FY 08 FY 09 FY 10E FY 11E
265 7,566 7,831 822 210 4,467 13,330
265 8,433 8,698 947 206 9,451 19,302
265 9,671 9,936 947 206 10,081 21,170
265 11,282 11,547 947 206 11,131 23,831
5,474 1,178 4,297 80 351 5 356 2,940
7,062 1,731 5,331 1,133 (0) 5 5 3,636
8,688 2,356 6,332 407 (0) 5 5 3,636
10,213 3,071 7,142 381 (0) 5 5 3,636
2,677 9,332 1,085 1,996 15,090
3,270 14,160 583 3,424 21,436
4,113 16,564 871 2,818 24,366
5,175 20,705 398 3,427 29,704
3,617 1,023 4,820 9,461 29 13,330
5,177 1,203 5,875 12,256 17 19,302
5,875 819 6,898 13,592 17 21,170
7,393 1,039 8,622 17,054 17 23,831
52
FIRST GLOBAL
India Research
www.firstglobal.in

(YE Mar 31st) LIABILITIES Equity Capital Reserves & Surplus Net Worth Minority Interest Net Deferred tax liability/(Asset) Loans Capital Employed ASSETS Gross Block Less: Depreciation Net Block Capital WIP Investments in subsidiaries Total Investment Others Current Assets Sundry Debtors Inventories Cash and Bank Balance Loans and Advances Total Current Assets Less: Current Liabilities and Provisions Sundry Creditors Provisions Others Total current liabilities & provisions Miscellaneous Assets Capital Employed FY 08 FY 09 FY 10E FY 11E
2.0% 56.8% 58.7% 6.2% 1.6% 33.5% 100.0%
1.4% 43.7% 45.1% 4.9% 1.1% 49.0% 100.0%
1.3% 45.7% 46.9% 4.5% 1.0% 47.6% 100.0%
1.1% 47.3% 48.5% 4.0% 0.9% 46.7% 100.0%
41.1% 8.8% 32.2% 0.6% 2.6% 2.7% 22.1%
36.6% 9.0% 27.6% 5.9% 0.0% 0.0% 18.8%
41.0% 11.1% 29.9% 1.9% 0.0% 0.0% 17.2%
42.9% 12.9% 30.0% 1.6% 0.0% 0.0% 15.3%
70.0% 20.1% 8.1% 15.0% 113.2%
73.4% 16.9% 3.0% 17.7% 111.1%
78.2% 19.4% 4.1% 13.3% 115.1%
86.9% 21.7% 1.7% 14.4% 124.6%
27.1% 7.7% 36.2% 71.0% 0.2% 100.0%
26.8% 6.2% 30.4% 63.5% 0.1% 100.0%
27.8% 3.9% 32.6% 64.2% 0.1% 100.0%
31.0% 4.4% 36.2% 71.6% 0.1% 100.0%
53
FIRST GLOBAL
India Research
www.firstglobal.in
Cash Flow Statement

(YE Mar 31st) (Rs. mn) From Operations Profit Before Tax Depreciation Less: Dividend Payout Tax Paid Operating cash flow Changes in Capital Structure Increase in other reserves Increase in Others Inc/(Dec) in Loans Inc/(Dec) in Minority Interest Inc/(Dec) in Equity/Loans/MI Adjustments Diff.in Dep. Total Inflows CASH OUTFLOWS Working Capital Changes Inc/(Dec) in Provisions Inc/(Dec) in Current Liabilities Less: Inc/(Dec) in Inventory Inc in Debtors Inc/(Dec) in Loans & Adv. Inc/(Dec) in other Current Assets Inc/(Dec) in Working Capital Capex/Investments Inc/(Dec) in Investments Addition to Gross Block Inc/(Dec) in Capital WIP Inc/(Dec) in other assets Inc. in Misc. Assets Inc/(Dec) in Fixed assets/ Investments Inc/(Dec) in Cash/Bank Balance Total Outflows FY 08 2,485 386 239 689 1,944 FY 09 1,700 576 236 417 1,623 FY 10E 2,372 626 207 653 2,137 FY 11E 3,009 715 264 829 2,631
(169) 52 480 197 561
(180) (4) 4,985 125 4,925
(273) 0 630 0 357
(304) 0 1,050 0 746
(26) 2,479
(23) 6,525
0 2,493
(0) 3,376
243 2,342 787 2,333 396 142 1,072
181 2,614 592 4,828 1,363 66 4,054
(385) 1,721 843 2,404 (606) 0 1,305
221 3,242 1,062 4,141 609 0 2,349
(1,036) 1,559 29 1,109 28 1,690 (283) 2,479
(351) 1,587 1,053 696 (12) 2,973 (502) 6,525
0 1,626 (726) 0 0 900 288 2,493
0 1,525 (25) 0 0 1,500 (473) 3,376
54
FIRST GLOBAL
India Research
www.firstglobal.in

(YE Mar 31st) From Operations Profit Before Tax Depreciation Less: Dividend Payout Tax Paid Operating cash flow Changes in Capital Structure Increase in other reserves Increase in Others Inc/(Dec) in Loans Inc/(Dec) in Minority Interest Inc/(Dec) in Equity/Loans/MI Adjustments Diff.in Dep. Total Inflows CASH OUTFLOWS Working Capital Changes Inc/(Dec) in Provisions Inc/(Dec) in Current Liabilities Less: Inc/(Dec) in Inventory Inc in Debtors Inc/(Dec) in Loans & Adv. Inc/(Dec) in other Current Assets Inc/(Dec) in Working Capital Capex/Investments Inc/(Dec) in Investments Addition to Gross Block Inc/(Dec) in Capital WIP Inc/(Dec) in other assets Inc. in Misc. Assets Inc/(Dec) in Fixed assets/ Investments Inc/(Dec) in Cash/Bank Balance Total Outflows FY 08 100.2% 15.6% 9.6% 27.8% 78.4% FY 09 26.0% 8.8% 3.6% 6.4% 24.9% FY 10E 95.1% 25.1% 8.3% 26.2% 85.7% FY 11E 89.1% 21.2% 7.8% 24.6% 77.9%
-6.8% 2.1% 19.4% 8.0% 22.6%
-2.8% -0.1% 76.4% 1.9% 75.5%
-11.0% 0.0% 25.3% 0.0% 14.3%
-9.0% 0.0% 31.1% 0.0% 22.1%
-1.0% 100.0%
-0.4% 100.0%
0.0% 100.0%
0.0% 100.0%
9.8% 94.5% 31.7% 94.1% 16.0% 5.7% 43.2%
2.8% 40.1% 9.1% 74.0% 20.9% 1.0% 62.1%
-15.4% 69.0% 33.8% 96.4% -24.3% 0.0% 52.3%
6.5% 96.0% 31.5% 122.7% 18.0% 0.0% 69.6%
-41.8% 62.9% 1.2% 44.7% 1.1% 68.2% -11.4% 100.0%
-5.4% 24.3% 16.1% 10.7% -0.2% 45.6% -7.7% 100.0%
0.0% 65.2% -29.1% 0.0% 0.0% 36.1% 11.6% 100.0%
0.0% 45.2% -0.7% 0.0% 0.0% 44.4% -14.0% 100.0%
55
FIRST GLOBAL
India Research
www.firstglobal.in
Free Cash Flow

(YE Mar 31st) (Rs. mn) EBITA Less: Adjusted Taxes NOPLAT Plus: Depreciation Gross Cash flow Less: Increase in Working Capital Operating Cash flow Less: Net Capex Less: Increase in Net Other Assets FCF From Operation Less: Inc./(Dec.) in Investment FCF after Investment Total FCF FY 08 2,908 953 1,954 386 2,341 1,530 810 1,614 645 -1,449 -1,039 -411 -411 FY 09 2,722 841 1,881 576 2,457 4,349 -1,891 2,663 383 -4,937 -351 -4,586 -4,586 FY 10E 3,757 1,035 2,722 626 3,347 1,083 2,265 900 385 980 0 980 980 FY 11E 4,611 1,270 3,340 715 4,055 2,773 1,282 1,500 -221 3 0 3 3
56
FIRST GLOBAL
India Research
www.firstglobal.in
Jyoti Structures Ltd. Financials(Standalone) Earnings Model (Standalone)

(YE Mar 31st) (Rs. mn) Net Sales Revenue Raw materials/Stock Adjustments Erection & Fabrication/Sub Contracting Charges Personnel Other Expenses Total Cost EBIDTA Other Non-Operating Income Less: Depreciation EBIT Less: Interest PBT Less: Total Tax Profit After Tax Earnings Per Share (In Rs.) Weighted Average No. of Shares EBIDTA Margin (%) EBIT (%) PBT Margin (%) NPM (%) Effective Tax Rate (%) Q1 4,016 2,643 502 103 288 3,536 480 4 17 467 134 333 128 205 2.50 82.2 12.0% 11.6% 8.3% 5.1% 38.3% Q2 4,208 2,821 440 126 320 3,707 501 4 18 487 174 312 111 201 2.45 82.1 11.9% 11.6% 7.4% 4.8% 35.6% Q3 4,302 2,841 390 121 462 3,814 488 29 22 494 184 310 129 181 2.21 81.7 11.3% 11.5% 7.2% 4.2% 41.7% Q4 4,699 2,715 868 85 541 4,209 490 38 29 499 190 309 98 210 2.57 81.8 10.4% 10.6% 6.6% 4.5% 31.9% FY09 17,171 11,019 2,201 435 1,556 15,211 1,959 73 86 1,946 683 1,264 466 797 9.74 81.9 11.4% 11.3% 7.4% 4.6% 36.9% Q1 4,858 3,072 764 128 354 4,319 539 8 31 517 178 339 115 224 2.74 81.7 11.1% 10.6% 7.0% 4.6% 34.0% Q2E 5,681 3,778 699 139 415 5,030 650 8 38 621 186 435 148 287 3.54 81.2 11.5% 10.9% 7.7% 5.1% 34.0% Q3E 5,593 3,736 682 143 408 4,969 624 7 39 592 187 405 138 267 3.29 81.2 11.2% 10.6% 7.2% 4.8% 34.0% Q4E 6,109 4,093 758 162 452 5,465 645 7 39 613 189 424 144 280 3.44 81.2 10.6% 10.0% 6.9% 4.6% 34.0% FY10E 22,241 14,679 2,903 572 1,629 19,783 2,458 31 146 2,342 739 1,603 545 1,058 13.0 81.2 11.1% 10.5% 7.2% 4.8% 34.0%
57
FIRST GLOBAL
India Research
www.firstglobal.in
Profit & Loss A/c

(YE Mar 31st) (Rs. mn) Total Revenue Less: Cost of Raw material (Net) Erection and Subcontracting expenses Personnel expenses Other expenses Total Operating Expenditure EBIDTA Less: Depreciation EBIT Interest Non-Operating Income Profit before tax Tax Profit after Tax Profit After Tax (Excl.Extra-ordinaries) Source: Company Reports, FG Estimates FY 07 9,708 5,882 1,441 267 865 8454 1,254 58 1,196 329 8 875 325 550 550 FY 08 13,704 8,937 1,705 347 995 11985 1,719 67 1,652 464 15 1,203 478 724 724 FY 09 17,171 11,019 2,201 435 1,556 15211 1,959 86 1,873 683 73 1,264 466 797 797 FY 10E 22,241 14,679 2,903 572 1,629 19783 2,458 146 2,312 739 31 1,603 545 1,058 1,058 FY 11E 29,440 19,630 3,743 809 2,258 26439 3,001 166 2,835 782 34 2,088 710 1,378 1,378

(YE Mar 31st) Total Revenue Less: Cost of Raw Material (Net) Erection and Subcontracting expenses Personnel expenses Other expenses Total Operating Expenditure EBIDTA Less: Depreciation EBIT Interest Non-Operating Income Profit before tax Tax Profit after Tax Profit After Tax (Excl.Extra-ordinaries) Source: Company Reports, FG Estimates FY 07 100.0% 60.6% 14.8% 2.7% 8.9% 87.1% 12.9% 0.6% 12.3% 3.4% 0.1% 9.0% 3.3% 5.7% 5.7% FY 08 100.0% 65.2% 12.4% 2.5% 7.3% 87.5% 12.5% 0.5% 12.1% 3.4% 0.1% 8.8% 3.5% 5.3% 5.3% FY 09 100.0% 64.2% 12.8% 2.5% 9.1% 88.6% 11.4% 0.5% 10.9% 4.0% 0.4% 7.4% 2.7% 4.6% 4.6% FY 10E 100.0% 66.0% 13.1% 2.6% 7.3% 88.9% 11.1% 0.7% 10.4% 3.3% 0.1% 7.2% 2.5% 4.8% 4.8% FY 11E 100.0% 66.7% 12.7% 2.7% 7.7% 89.8% 10.2% 0.6% 9.6% 2.7% 0.1% 7.1% 2.4% 4.7% 4.7%
58
FIRST GLOBAL
India Research
www.firstglobal.in
Balance Sheet
(YE Mar 31st) (Rs. mn) LIABILITIES Equity Capital Reserves & Surplus Net Worth Net Deferred tax liability/(Asset) Loans Capital Employed ASSETS Gross Block Less: Depreciation Net Block Capital WIP Investments in subsidiaries Investments- Others Total Investment Current Assets Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Total Current Assets Less: Current Liabilities and Provisions Sundry Creditors Provisions Others Total current liabilities & provisions Miscellaneous Assets Capital Employed FY 07 FY 08 FY 09 FY 10E FY 11E
161 2,597 2,758 77 1,595 4,430
162 3,250 3,412 81 2,249 5,742
164 4,004 4,168 82 3,036 7,286
164 4,927 5,091 218 3,436 8,745
164 6,130 6,294 218 3,676 10,188
936 375 561 2 65 120 185
1,056 440 616 28 65 94 160
1,688 521 1,167 52 66 165 231
2,088 667 1,421 152 66 165 231
2,328 833 1,495 212 66 165 231
763 3,635 92 1,970 6,461
785 4,988 137 2,317 8,228
1,460 6,548 297 2,695 10,999
1,830 7,251 93 3,294 12,469
2,049 9,598 23 3,709 15,380
1,902 196 705 2,803 24 4,430
2,279 431 598 3,307 17 5,742
3,714 258 1,202 5,174 12 7,286
4,576 313 650 5,539 12 8,745
6,083 408 650 7,141 12 10,188
59
FIRST GLOBAL
India Research
www.firstglobal.in

(YE Mar 31st) LIABILITIES Equity Capital Reserves & Surplus Net Worth Net Deferred tax liability/(Asset) Loans Capital Employed ASSETS Gross Block Less: Depreciation Net Block Capital WIP Investments in subsidiaries Investments- Others Total Investment Current Assets Sundry Debtors Inventories Cash and Bank Balance Loans and Advances Total Current Assets Less: Current Liabilities and Provisions Sundry Creditors Provisions Others Total current liabilities & provisions Miscellaneous Assets Capital Employed FY 07 FY 08 FY 09 FY 10E FY 11E
3.6% 58.6% 62.3% 1.7% 36.0% 100.0%
2.8% 56.6% 59.4% 1.4% 39.2% 100.0%
2.2% 55.0% 57.2% 1.1% 41.7% 100.0%
1.9% 56.3% 58.2% 2.5% 39.3% 100.0%
1.6% 60.2% 61.8% 2.1% 36.1% 100.0%
21.1% 8.5% 12.7% 0.0% 1.5% 2.7% 4.2%
18.4% 7.7% 10.7% 0.5% 1.1% 1.6% 2.8%
23.2% 7.2% 16.0% 0.7% 0.9% 2.3% 3.2%
23.9% 7.6% 16.2% 1.7% 0.8% 1.9% 2.6%
22.9% 8.2% 14.7% 2.1% 0.6% 1.6% 2.3%
82.1% 17.2% 2.1% 44.5% 145.8%
86.9% 13.7% 2.4% 40.3% 143.3%
89.9% 20.0% 4.1% 37.0% 151.0%
82.9% 20.9% 1.1% 37.7% 142.6%
94.2% 20.1% 0.2% 36.4% 151.0%
42.9% 4.4% 15.9% 63.3% 0.5% 100.0%
39.7% 7.5% 10.4% 57.6% 0.3% 100.0%
51.0% 3.5% 16.5% 71.0% 0.2% 100.0%
52.3% 3.6% 7.4% 63.3% 0.1% 100.0%
59.7% 4.0% 6.4% 70.1% 0.1% 100.0%
60
FIRST GLOBAL
India Research
www.firstglobal.in
Cash Flow Statement

(YE Mar 31st) (Rs. mn) From Operations Profit Before Tax Depreciation Less: Dividend Payout Tax Paid Operating cash flow Changes in Capital Structure Increase in Equity Share capital Increase in Share premium Increase in other reserves Increase in Others Inc/(Dec) in Loans Inc/(Dec) in Equity/Loans/MI Adjustments Diff.in Dep. Total Inflows CASH OUTFLOWS Working Capital Changes Inc/(Dec) in Provisions Inc/(Dec) in Current Liabilities Less: Inc/(Dec) in Inventory Inc in Debtors Inc/(Dec) in Loans & Adv. Inc/(Dec) in other Current Assets Inc/(Dec) in Working Capital Capex/Investments Inc/(Dec) in Investments Addition to Gross Block Inc/(Dec) in Capital WIP Inc. in Misc. Assets Inc/(Dec) in Fixed assets/ Investments Inc/(Dec) in Cash/Bank Balance Total Outflows FY 07 875 58 57 325 552 FY 08 1,203 67 76 478 715 FY 09 1,264 86 86 466 798 FY 10E 1,603 146 134 545 1,070 FY 11E 2,088 166 175 710 1,368
8 1,025 15 (1) (14) 1,033
1 36 (31) 4 654 664
1 38 5 2 787 833
0 0 0 136 400 536
0 0 0 0 240 240
(6) 1,579
(2) 1,377
(5) 1,625
(0) 1,605
0 1,608
55 49 (450) 1,148 548 272 1,413
234 270 22 1,353 68 279 1,218
(173) 2,040 674 1,559 634 (256) 745
55 310 371 704 390 209 1,308
95 1,507 219 2,347 227 188 1,379
19 83 (13) 23 112 54 1,579
(25) 120 26 (7) 114 45 1,377
71 632 24 (5) 721 159 1,625
0 400 100 0 500 (203) 1,605
0 240 60 0 300 (70) 1,608
61
FIRST GLOBAL
India Research
www.firstglobal.in

(YE Mar 31st) From Operations Profit Before Tax Depreciation Less: Dividend Payout Tax Paid Operating cash flow Increase in Equity Share capital Increase in Share premium Increase in other reserves Increase in Others Inc/(Dec) in Loans Inc/(Dec) in Equity/Loans/MI Adjustments Diff.in Dep. Total Inflows CASH OUTFLOWS Working Capital Changes Inc/(Dec) in Provisions Inc/(Dec) in Current Liabilities Less: Inc/(Dec) in Inventory Inc in Debtors Inc/(Dec) in Loans & Adv. Inc/(Dec) in other Current Assets Inc/(Dec) in Working Capital Capex/Investments Inc/(Dec) in Investments Addition to Gross Block Inc/(Dec) in Capital WIP Inc. in Misc. Assets Inc/(Dec) in Fixed assets/ Investments Inc/(Dec) in Cash/Bank Balance Total Outflows FY 07 55.4% 3.7% 3.6% 20.6% 34.9% FY 08 87.3% 4.9% 5.5% 34.7% 51.9% FY 09 77.7% 5.3% 5.3% 28.7% 49.1% FY 10E 99.9% 9.1% 8.4% 34.0% 66.6% FY 11E 129.8% 10.3% 10.9% 44.1% 85.1%
0.5% 64.9% -0.1% -0.9% 65.4%
0.1% 2.6% 0.3% 47.5% 48.2%
0.1% 2.3% 0.1% 48.4% 51.2%
0.0% 0.0% 8.4% 24.9% 33.4%
0.0% 0.0% 0.0% 14.9% 14.9%
-0.4% 100.0%
-0.1% 100.0%
-0.3% 100.0%
0.0% 100.0%
0.0% 100.0%
3.5% 3.1% -28.5% 72.7% 34.7% 17.2% 89.5%
17.0% 19.6% 1.6% 98.3% 4.9% 20.2% 88.4%
-10.6% 125.5% 41.5% 95.9% 39.0% -15.7% 45.8%
3.5% 19.3% 23.1% 43.8% 24.3% 13.0% 81.5%
5.9% 93.7% 13.6% 145.9% 14.1% 11.7% 85.7%
1.2% 5.2% -0.8% 1.4% 7.1% 3.4% 100.0%
-1.8% 8.7% 1.9% -0.5% 8.3% 3.3% 100.0%
4.4% 38.9% 1.5% -0.3% 44.4% 9.8% 100.0%
0.0% 24.9% 6.2% 0.0% 31.1% -12.7% 100.0%
0.0% 14.9% 3.7% 0.0% 18.7% -4.4% 100.0%
62
FIRST GLOBAL
India Research
www.firstglobal.in
Free Cash Flow

(YE Mar 31st) (Rs. mn) EBITA Less: Adjusted Taxes NOPLAT Plus: Depreciation Gross Cash flow Less: Increase in Working Capital Operating Cash flow Less: Net Capex Less: Increase in Net Other Assets FCF From Operation Less: Inc./(Dec.) in Investment FCF after Investment Total FCF FY 07 1,196 444 752 58 810 1,349 -539 75 143 -757 -757 -757 -757 FY 08 1,652 657 995 67 1,062 1,553 -491 148 -265 -374 -374 -374 -374 FY 09 1,873 691 1,182 86 1,268 1,181 87 661 -374 -200 -200 -200 -200 FY 10E 2,312 786 1,526 146 1,672 615 1,057 500 660 -102 -102 -102 -102 FY 11E 2,835 964 1,871 166 2,037 1,473 563 300 49 214 214 214 214
63
FIRST GLOBAL
India Research
www.firstglobal.in
IMPORTANT DISCLOSURES
Price Target
Price targets (if any) are derived from a subjective and/or quantitative analysis of financial and nonfinancial data of the concerned company using a combination of P/E, P/Sales, earnings growth, discounted cash flow (DCF) and its stock price history.
The risk factor that may impede achievement of the price target/ investment thesis areAny change in Government Policies having impact on the Generation, Transmission or Distribution or any other activities related to the Power Sector may have an impact on power trading business activities.
Delay or indefinite deferment of spending plans by PGCIL and SEBs Extreme price movements in the steel and zinc prices effecting margins in adverse manner. Any Regulatory or other developments that could affect the sector in an adverse manner.
64
FIRST GLOBAL
India Research
www.firstglobal.in
First Globals Rating System

Our rating system consists of three categories of ratings: Positive, Neutral and Negative. Within each of these categories, the rating may be absolute or relative. When assigning an absolute rating, the price target, if any, and the time period for the achievement of this price target, are given in the report. Similarly when assigning a relative rating, it will be with respect to certain market/sector index and for a certain period of time, both of which are specified in the report.
Rating in this report is relative to: CNX Nifty Index
Positive Ratings
(i) Buy (B) This rating means that we expect the stock price to move up and achieve our specified price target, if any, over the specified time period. (ii) Buy at Declines (BD) This rating means that we expect the stock to provide a better (lower) entry price and then move up and achieve our specified price target, if any, over the specified time period. (iii) Outperform (OP) This is a relative rating, which means that we expect the stock price to outperform the specified market/sector index over the specified time period.
Neutral Ratings
(i) Hold (H) This rating means that we expect no substantial move in the stock price over the specified time period. (ii) Marketperform (MP) This is a relative rating, which means that we expect the stock price to perform in line with the performance of the specified market/sector index over the specified time period.
Negative Ratings
(i) Sell (S) This rating means that we expect the stock price to go down and achieve our specified price target, if any, over the specified time period. (ii) Sell into Strength (SS) This rating means that we expect the stock to provide a better (higher) exit price in the short term, by going up. Thereafter, we expect it to move down and achieve our specified price target, if any, over the specified time period. (iii) Underperform (UP) This is a relative rating, which means that we expect the stock price to underperform the specified market/sector index over the specified time period. (iv) Avoid (A) This rating means that the valuation concerns and/or the risks and uncertainties related to the stock are such that we do not recommend considering the stock for investment purposes.
65
FIRST GLOBAL
India Research
www.firstglobal.in
FG Markets, Inc.
90 John Street, Suite 703, New York, NY 10038
Dealing Desk (US):
FIRST GLOBAL
Nirmal, 6th Floor, Nariman Point, Mumbai - 400 021, India.
Tel. No.: +1-212-227 6611 Email: us@fglobal.com
FIRST GLOBAL (UK) Ltd.

The Cobalt Building, 19-20, Noel Street, London W1F 8GW, United Kingdom
Dealing Desk (India):

Tel. No.: +91-22-400 12 400 Email: fgindiasales@bloomberg.net
Dealing Desk (UK & Europe):

Tel. No.: +44-207-959 5300 Email: uk@fglobal.com
The information and opinions in this report were prepared by First Global Securities Ltd. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness. Any statements nonfactual in nature constitute only current opinions, which are subject to change. First Global does not undertake to advise you of changes in its opinion or information. First Global and others associated with it may make markets or specialize in, have positions in and effect transactions in securities of companies mentioned and may also perform or seek to perform investment banking services for those companies. Whilst all reasonable care has been taken to ensure the facts stated and the opinions given are fair, neither First Global (UK) Limited nor FG Markets, Inc. nor any of their affiliates shall be in any way responsible for its contents, nor do they accept any liability for any loss or damage (including without limitation loss of profit) which may arise directly or indirectly from use of or reliance on such information. First Global (or one of its affiliates or subsidiaries) or their officers, directors, analysts, employees, agents, independent contractors, or consultants may have positions in securities or commodities referred to herein and may, as principal or agent, buy and sell such securities or commodities. An employee, analyst, officer, agent, independent contractor, a director, or a consultant of First Global, its affiliates, or its subsidiaries may serve as a director for companies mentioned in this report. First Global and its affiliates may, to the extent permitted under applicable law, have acted upon or used the information prior to or immediately following its publication, provided that we could not reasonably expect any such action to have a material effect on the price. This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advisors as they believe necessary. Where an investment is denominated in a currency other than the investor's currency, changes in rates of exchange may have an adverse effect on the value, price of, or income derived from the investment. There may be instances when fundamental, technical, and quantitative opinions may not be in concert. Past performance is not necessarily a guide to future performance. Income from investments may fluctuate. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange rate fluctuations, and limited availability of information on international securities. The value of investments and the income from them may vary and you may realize less than the sum invested. Part of the capital invested may be used to pay that income. In the case of higher volatility investments, these may be subject to sudden and large falls in value and you may realize a large loss equal to the amount invested. Some investments are not readily realizable and investors may have difficulty in selling or realizing the investment or obtaining reliable information on the value or risks associated with the investment. Where a security is denominated in a currency other than sterling (for UK investors) or dollar (for US investors), changes in exchange rates may have an adverse effect on the value of the security and the income thereon. The tax treatment of some of the investments mentioned above may change with future legislation. The investment or investment service may not be suitable for all recipients of this publication and any doubts regarding this should be addressed to your broker. While First Global has prepared this report, First Global (UK) Ltd. and FG Markets, Inc. is distributing the report in the UK & US and accept responsibility for its contents. Any person receiving this report and wishing to effect transactions in any security discussed herein should do so only with a representative of First Global (UK) Ltd. or FG Markets, Inc. First Global (UK) Limited is regulated by FSA and is a Member firm of the London Stock Exchange. FG Markets, Inc. is regulated by SEC and is a member of The Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC). FG Markets, Inc., its affiliates, and its subsidiaries make no representation that the companies which issue securities which are the subject of their research reports are in compliance with certain informational reporting requirements imposed by the Securities Exchange Act of 1934. Sales of securities covered by this report may be made only in those jurisdictions where the security is qualified for sale. Additional information on recommended securities is available on request. This report may not be resold or redistributed without the prior written consent of First Global.
66

Power Transmission Towers Re Initiating Coverage 10-10-2009 Q 2 Indian Stock Markets WWW - Umakant

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Power Transmission Towers Re Initiating Coverage 10-10-2009 Q 2 Indian Stock Markets WWW - Umakant

Uploaded by

Copyright:

Available Formats

For Private Circulation only

Sector: Power Transmission Towers Reinitiating Coverage

Email: indiasales@fglobal.com fgasiasales@bloomberg.net Email: us@fglobal.com Email: uk@fglobal.com

Asia & Europe Sales: Tel.: 44-207-959 5300

IMPORTANT DISCLOSURES CAN BE FOUND AT THE END OF THIS REPORT

KEC International Ltd. - Company Analysis

Kalpataru Power Transmission Limited - Company Analysis

Jyoti Structures Ltd. - Company Analysis

KEC International Ltd. -- Financials (Standalone) -- Earnings Model (Standalone)

43-49 50-56 57-63

Source: Company, FG Estimates

Valuation & Outlook

Key Growth Drivers

Break-up of investment in power sector in XIth Plan

Source: Planning commission

Building of transmission infrastructure to follow addition in power generation capacities

Integration of nations transmission network through national grid

Growth in inter-regional transmission capacity (MW)

RGGVY & R-APDRP

Opportunities in Railway & Telecom sectors

Electrification Rates in Africa

T&D investment over next five years

Possible Downside Risks

Total revenues & EBIDTA margin

16.0% EBIDTA Margin (%)

Working capital management

Working Capital Cycle (in Days)

Note: We have not considered FY07 financials of Kalpataru Power

Interest cost (Rs. mn)

KEC International Ltd. Company Analysis

Top Management Team

Capital Issue History

Rs.571.7/110 Rs. 567.9 0.03 mn Rs.18.07 mn

Indian (Promoter & Group) 41.9%

Performance over 52 weeks: Up 93.6% Up 40.7 %

Non Promote r (Institution) 44.2%

Price and Rating History Chart

ST: Short Term

MT: Medium Term

LT: Long Term

KEC International (KECI.BO)/ (KEC.IN)

490 9-Oct-09 OP 390

Represents an Upgrade Represents a Downgrade Represents Reiteration of Existing Rating

KEC International Business in picture(FY09)

Designing, Fabrication, Installation and testing of electrical transmission towers.

EBIDTA Rs 3,003 mn (8.8%)

Profit before Tax: Rs.1, 778 mn (5.2%)

Competitors Kalpataru Power Jyoti Structures Ltd

Taxes: Rs.615 mn (1.8%)

Profit after Tax: Rs.1, 163mn (3.4%)

Net Profit: Rs. 1,163mn (3.4%)

Assets Rs 30,963 mn (100%)

Balance Sheet (FY09)

Liabilities Rs.30, 963 mn (100%)

Balance sheet restructuring

Quarterly Result Analysis

153.79 148.60 149.13 101.27 (44.07)

211.57 196.33 151.60 102.92 (44.61)

Kalpataru Power Transmission Limited Company Analysis

Top Management Team

Capital Issue History

Rs.852.8/227.5 Rs. 833.5 0.04 mn Rs.35.9 mn

Non Prom oter (Institution) 26.5%