GICS Industry: Electrical Equipment l Sub Industry: Electrical Components & Equipments l Website: www.havells.

com

Havells (India) Ltd

Key Stock Indicators
NSE Ticker: Bloomberg Ticker: Face value / Share: Div. Yield (%): HAVELLS HAVL: IN 5.0 1.0 CMP (as on 12 Jan 2011 Rs/share): 52-week range up to 12 Jan 2011 (Rs) (H/L): Market Cap as on 12 Jan 2011 (Rs mn): Enterprise Value as on 12 Jan 2011 (Rs mn): Div. Yield (%): 0.0 371 873.40/357.35 23,143 32,330 Shares outstanding (mn): Free Float (%): Average daily volumes (12 months): Beta (2 year): 62.4 38.4 411,075 1.0

Havells India Limited (HIL) was incorporated as Havells Pvt Ltd in 1983. The company went public in 1992. HIL is an electrical and power distribution equipment manufacturer having global presence. The company offers a wide range of products including geysers, motors, fans, CFL, cables and wires, capacitors, lighting, building circuit protection, industrial circuit protection and modular plate switches. HIL owns brands such as Crabtree, Sylvania, Concord, Luminance, Linolite and SLI Lighting.

Key Financial Indicators

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m.: Not meaningful

KEY HIGHLIGHTS
Diversified revenue stream HIL has diversified its business into four verticals viz cables and wires, lighting and fixtures, electrical consumer durables (fans) and switchgears. In FY10, the overall contribution on consolidated basis of lighting and fixtures to total revenues was around 58%, whereas that of cables and wires, switchgears, electrical consumer durables was around 20%, 15% and 7%, respectively. The diversity in revenues helps the company counter the impact of a slowdown in any one particular segment. Extensive distribution network HIL has an extensive, well-organised distribution network of 2,500 dealers and over 3,000 retail outlets in India. The company has opened dealer-owned branded stores under the name Galaxy. The company has already opened 47 Galaxys, which sell HILs complete product line and also facilitates personalised services and support to customers. Internationally, HIL has a network of 91 branches and representative offices in over 50 countries. Strong global presence In April 2007, HIL had acquired Sylvania to get a foothold in the international markets. Sylvania is the worlds fourth largest lightning and fixtures brand, and has a presence across five continents with a major focus in Europe and Latin America. In FY10, contribution of exports to the total revenues was ~56%, with Europe and America contributing ~71% and ~26%, respectively, of export revenues.

Mar-08 50,047.3 7.4 1,609.6 3.2 4.2 27.8 16.8 8.7 31.6 56.2 10.1

Mar-09 54,824.3 5.7 -1,601.2 -2.9 5.1 -26.6 n.m 3.6 1.6 n.m 5.9

Mar-10 54,268.3 6.5 -2,241.8 -4.1 22.8 -37.3 n.m 45.9 -2.7 n.m 9.0

Shareholding (As on December 31, 2010)

FII 16% DII 2% Others 20%

Promoter 62%

KEY RISKS

Volatility in raw material prices Foreign exchange risk, as exports contributed to 56% of revenues in FY10 Slowdown in real estate sector

Indexed price chart

(index) 180 160 140 120 100 80 60 40 20 0 Nov-10 Apr-10 Aug-10 Feb-10 Mar-10 May-10 Sep-10 Jun-10 Oct-10 Jan-10 Jul-10 ('000) 7000 6000 5000 4000 3000 2000 1000 0 Dec-10 NIFTY

Stock Performances vis--vis market

Returns (%) YTD HAVELLS NIFTY
Note: 1) YTD returns are since April 1, 2010 to Jan 12, 2011. 2) 1-m, 3-m and 12-m returns are up to Jan 12, 2011.

1-m -2 -1

3-m -11 -4

12-m 38 13

19 11

Volumes (RHS)

HAVELLS

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Havells (India) Ltd

BACKGROUND
HIL is a Noida-based company engaged in the business of electrical and power distribution equipment manufacturing. It was incorporated as Havells Pvt Ltd in 1983 and was converted into a public limited company in 1992. The company, through its subsidiaries, manufactures and distributes industrial and domestic circuit protection switchgear, cables and wires, motors, fans, power capacitors, CFL lamps, luminaries for domestic, commercial and industrial applications, modular switches and bath fittings. HILs global network consists of 91 branches and representative offices in over 50 countries across the globe. It has a distribution network of 2,500 dealers and more than 3,000 retail outlets in India, as well as 47 flagship Galaxy stores. HIL markets products under the brand names Crabtree, Sylvania, Concord, Luminance, Linolite and SLI Lighting. The company has 11 manufacturing plants in India and 8 manufacturing plants located across Europe, Latin America and Africa. In April 2007, HIL acquired Sylvania, which is in the business of manufacturing lighting products and caters mainly to the European and Latin American markets.

COMPETITIVE POSITION
Peer Comparison

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m: Not meaningful

Havells (India) Ltd Mar-10 54,268.3 6.5 -2,241.8 -4.1 22.8 -37.3 n.m 45.9 -2.7 -155.8 9.0

Whirlpool Mar-10 25,933.5 10.8 1,450.2 5.6 0.8 13.0 19.4 10.9 52.5 73.1 11.8

Lloyd Electric & Transformers & Engineering Ltd Rectifiers (India) Mar-10 Mar-10 8,187.1 5,227.1 10.0 16.5 338.1 513.4 4.1 9.8 0.7 0.3 10.9 38.6 5.9 7.9 0.5 1.3 9.9 22.1 9.1 17.7 5.2 3.8

KEI Industries Ltd. Mar-10 9,096.8 6.9 142.3 1.6 1.7 2.2 13.0 0.8 10.3 6.8 8.2

FINANCIAL PROFILE
Losses from Sylvania (subsidiary) pull down top-line and profit

Key Financial Indicators Units Revenue Rs mi ll ion Rs mi ll ion Per cent Per cent Per cent Times Per cent Per cent EBITDA ma rgins Per cent PAT PAT ma rgins EBITDA growth PAT growth Gea ring RoCE RoE

Mar-08
50,047.3 7.4 1,609.6 3.2 223.9 131.0 57.6 4.2 31.6 56.2

Mar-09
54,824.3 5.7 -1,601.2 -2.9 9.5 -16.5 n.m 5.1 1.6 n.m

Mar-10
54,268.3 6.5 -2,241.8 -4.1 -1.0 13.1 n.m 22.8 -2.7 n.m

HILs top-line fell marginally by 1% in FY10 to Rs 54.2 bn, from Rs 54.8 bn in FY09. Loss at the net level increased from Rs 1.6 bn in FY09 to Rs 2.2 bn in FY10. Decline in top-line as well as increase in loss was mainly on account of poor performance of the subsidiary Sylvania. Sylvanias reported loss stood at Euro 26.1 mn in FY10 as compared with loss of Euro 16.1 mn in FY09. Operating margin improved slightly from 5.7% in FY09 to 6.5% in FY10, mainly on account of decrease in raw material and employee costs.

Revenue growth Per cent

INDUSTRY PROFILE
Electric equipments The electrical equipment industry comprises several products such as transformers, switchgears, motors and control equipment. In 2009-10, the size of the electrical equipment industry stood at Rs 525 billion. The electrical equipment industry grew at 11.3 per cent during 2009-10. The main buyers of electrical equipment are power utilities. A typical electric equipment component has a life of 20-25 years; hence, replacement demand would incrementally add to the growth opportunities. The raw material cost of electrical equipment manufacturers is estimated at 50-60 per cent of sales. Primary raw materials include copper, aluminium and steel. A few large players dominate the electrical equipment industry. However, several other small and medium-sized players too specialise in specific product lines. In addition, there has been substantial competition from Chinese equipments manufacturers especially in the high voltage category. The electrical equipment industry is highly working-capital intensive as it takes 4-5 months to recover payments from SEBs, which are their major clients.

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Havells (India) Ltd

ANNUAL RESULTS
Income Statement (Rs million ) Net Sales Operating Income EBITDA EBITDA Margin Depreciation Interest Other Income PBT PAT PAT Margin No. of shares (Mn No.) Earnings per share (EPS) Cash flow (Rs million ) Pre-tax profit Total tax paid Depreciation Change in working capital Cash flow from operating activities Capital Expenditure Investments and others Balance sheet (Rs million ) Equity share capital Reserves and surplus Tangible net worth Deferred tax liablity:|asset| Long-term debt Short-term-debt Total debt Current liabilities Total provisions Total liabilities Gross block Net fixed assets Investments Current assets Receivables Inventories Cash Total assets Ratio Mar-08 1,980.9 -570.5 694.3 -5,197.5 -3,092.8 -9,940.9 0.0 Mar-09 801.4 -450.6 905.0 2,226.4 3,482.2 -1,656.7 31.7 Mar-10 1,612.6 -568.2 836.9 2,398.6 4,279.9 -837.8 0.0 Revenue growth (%) EBITDA growth(%) PAT growth(%) EBITDA margins(%) Tax rate (%) PAT margins (%) Dividend payout (%) Dividend per share (Rs) BV (Rs) Return on Equity (%) Return on capital employed (%) Gearing (x) Interest coverage (x) Debt/EBITDA (x) Asset turnover (x) Current ratio (x) Gross current assets (days) Mar-08 223.9 131.0 57.6 7.4 16.2 3.2 9.0 2.5 53.9 56.2 31.6 4.2 3.4 3.5 3.5 1.3 168 Mar-09 9.5 -16.5 n.m 5.7 -37.1 -2.9 -9.4 2.5 39.7 n.m 1.6 5.1 2.2 3.9 2.0 1.1 135 Mar-10 -1.0 13.1 n.m 6.5 -45.9 -4.1 -10.3 3.8 8.1 n.m -2.7 22.8 3.7 3.0 2.0 1.0 124 Mar-08 49,784.5 50,047.3 3,721.9 7.4 694.3 1,095.1 48.4 1,986.1 1,609.6 3.2 57.9 27.8 Mar-09 54,584.1 54,824.3 3,108.9 5.7 905.0 1,414.0 11.5 -1,172.1 -1,601.2 -2.9 60.2 -26.6 Mar-10 54,075.8 54,268.3 3,516.7 6.5 836.9 950.2 -117.0 -1,310.0 -2,241.8 -4.1 60.2 -37.3 Mar-08 289.6 2,830.9 3,120.5 -75.7 9,772.3 3,189.8 12,962.1 14,652.1 291.3 30,950.3 26,394.0 7,888.2 31.7 23,030.4 8,227.0 10,419.2 2,426.4 30,950.3 Mar-09 300.8 2,089.8 2,390.6 -97.2 7,895.9 4,382.4 12,278.3 13,934.3 373.3 28,879.3 28,094.3 8,664.6 0.0 20,214.7 7,573.4 7,947.4 2,472.9 28,879.3 Mar-10 311.9 174.6 486.5 266.4 7,799.3 2,867.8 10,667.1 15,551.7 321.1 27,292.8 26,010.1 8,904.3 0.0 18,388.5 6,982.2 8,245.9 1,480.1 27,292.8

Cash flow from investing activities Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries)

-9,940.9 2,600.0 12,401.5 -169.4 263.3

-1,625.0 1,552.5 -683.8 -176.0 -2,503.4

-837.8 -4,000.0 -1,611.2 -270.5 1,446.8

Cash flow from financing activities Change in cash position Opening cash Closing cash
n.m : Not meaningful;

15,095.4 2,061.7 364.7 2,426.4

-1,810.7 46.5 2,426.4 2,472.9

-4,434.9 -992.8 2,472.9 1,480.1

QUARTERLY RESULTS
Profit and loss account (Rs million) No of Months Revenue EBITDA Interes t Depreci a tion PBT PAT Sep-10 3 6,967.8 838.9 12.8 72.2 761.1 585.7 100.0 12.0 0.2 1.0 10.9 8.4 % of Rev Sep-09 % of Rev 3 5,982.3 799.2 19.0 55.2 725.0 542.0 100.0 13.4 0.3 0.9 12.1 9.1 Jun-10 3 7,177.9 802.7 38.1 67.9 696.7 533.3 100.0 11.2 0.5 0.9 9.7 7.4 % of Rev Sep-10 % of Rev 6 14,144.1 1,641.5 50.9 140.1 1,457.7 1,118.9 100.0 11.6 0.4 1.0 10.3 7.9 Sep-09 6 11,884.9 1,527.7 35.3 109.1 1,383.3 1,034.7 100.0 12.9 0.3 0.9 11.6 8.7 % of Rev

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Havells (India) Ltd

FOCUS CHARTS & TABLES
Rs mn 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jun-08 Mar-08

Quarterly sales & y-o-y growth

Dec-08

Dec-09

Sep-08

Sep-09

Mar-08

Mar-09

Dec-08

Dec-09

Sep-08

Sep-09

Mar-09

Mar-10

Sep-10

Jun-09

Jun-10

Sales

Sales growth y-o-y (RHS)

Net Profit

Net profit growth y-o-y (RHS)

Rs/share 12 10 8 6 4 2 0 Dec-07 Dec-08

EPS

Per cent 16 14 12 10 8 6 4 2 0 Dec-07 Mar-08

Movement in operating and net margins

Dec-08

Dec-09

Sep-08

Sep-09

Mar-10

Sep-10

Jun-08

Jun-09

Jun-10

Per cent 30 25 20 15 10 5 0 -5 -10 -15

Rs mn 700 600 500 400 300 200 100 0

Quarterly PAT & y-o-y growth

Per cent 500 400 300 200 100 0 -100

Mar-09

Dec-09

Sep-08

Sep-09

Mar-08

Mar-09

Mar-10

Sep-10

Jun-08

Jun-09

Jun-10

OPM

NPM

Shareholding Pattern (Per cent) Mar 2010 Jun 2010 Promoter 60.1 60.1 FII 18.2 17.7 DII 2.4 2.9 Others 19.3 19.2

Sep 2010 61.6 16.8 2.6 19.0

Board of Directors Dec 2010 Director Name 61.6 Qima t Ra i Gupta (Mr.) 16.3 2.4 Ani l Gupta (Mr.) 19.8 Avi na s h Pa rka s h Ga ndhi (Mr.) Ra jes h Gupta (Mr.) Surji t Gupta (Mr.) Ada rs h Ki s hore (Dr.) Niten Kha ra i ti La l Ma l ha n (Mr.) Suni l Beha ri Ma thur (Mr.) Surender Kuma r Tuteja (Mr.)

Designation Executive Cha i rma n & Ma na gi ng Director, Promoter-Director Promoter-Di rector, Jt.Ma na gi ng Director Non-Executive Di rector Wholetime Di rector Non-Executive Di rector, PromoterDirector Non-Executive Di rector Non-Executive Di rector Non-Executive Di rector Non-Executive Di rector

Vija y Kri s ha n Kuma r Chopra (Mr.) Non-Executive Di rector

Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please contact 'Client Servicing' at +91-22-33423561, or via e-mail: clientservicing@crisil.com.

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Mar-10

Sep-10

Jun-08

Jun-09

Jun-10