Sesa goa 2QFY2011 Result Update

2QFY2011 Result Update | Mining
October 18, 2010

Sesa Goa NEUTRAL
CMP `372
Performance Highlights Target Price -

Particulars % chg % chg Investment Period -
2QFY2011 2QFY2010 1QFY2011
(` cr) (yoy) (qoq)
Net sales 918 539 70.5 2,413 (61.9) Stock Info
EBITDA 340 153 122.5 1,460 (76.7) Sector Mining
EBITDA margin (%) 37.0 28.3 865bp 60.5 (2,349bp) Market Cap (` cr) 32,015
Net profit 385 166 131.3 1,302 (70) Beta 1.4
Source: Company, Angel Research
52 Week High / Low 495/266
Sesa Goa’s 2QFY2011 results were lower than our estimates. The top line was Avg. Daily Volume 1715008
lower by 10.3% on account of 14% lower-than-expected iron ore realisations at Face Value (`) 1
US $73/tonne. The bottom line was lower by 21.3% compared to our estimates.
BSE Sensex 20,169
Dismal operating performance: Sesa Goa’s top line increased by 70.5% yoy to Nifty 6,076
`918cr. Iron ore sales volume at 2.0mn tonnes was up by 23.7% yoy. However, Reuters Code SESA.BO
volumes were severely affected by the export restriction imposed by the Karnataka
Bloomberg Code SESA@IN
government at the end of July. Despite benchmark iron ore prices increasing by
~30% qoq, average realisations were lower by 19.1% qoq (up 48% yoy) at
US $73/tonne. Pig iron sales volume increased by 25.4% yoy to 84,000 tonnes.
Shareholding Pattern (%)
Average realisation also increased by 35.6% yoy to `25,326/tonne, flat on a qoq
Promoters 55.7
basis. In 2QFY2011, EBITDA margin declined by 2,349bp qoq to 37% because of
lower-than-expected realisations, higher export duty, increased royalty rates and MF / Banks / Indian Fls 3.4
higher freight cost per tonne. Other income decreased by 37.6% qoq to `100.4cr FII / NRIs / OCBs 27.2
(up 12.5% yoy). Lower tax rate at 4.6% v/s 22.9% in 2QFY2010 led to a 131.3% Indian Public / Others 13.7
yoy increase in the bottom line to `385cr, down 70.4% qoq.
Outlook and valuation: Sesa Goa is currently trading at 4.8x FY2011E and 4.1x
FY2012E EV/EBITDA. On a P/BV basis, the stock is trading at 2.5x FY2011E and Abs. (%) 3m 1yr 3yr
2.0x FY2012E estimates. With volume growth minimal at 8–10% due to Sensex 12.7 18.7 3.2
government policy actions, reduction in Chinese imports of iron ore and Sesa Goa 10.2 9.1 32.8
Sesa Goa’s diversification into an unrelated business through a 20% stake
purchase in Cairn, we maintain our Neutral view on the stock. Further, downside
risk to our estimates exists in case the ban on export of iron ore from Karnataka is
not revoked.

Key Financials (Consolidated)
Y/E March (` cr) FY2009 FY2010 FY2011E FY2012E
Net sales 4,918 5,798 8,648 9,233
% chg 30.6 17.9 49.2 6.8
Net profit 1,988 2,629 4,102 3,641
% chg 28.4 32.2 56.0 (11.2)
FDEPS (`) 25.3 29.5 46.1 40.9
OPM (%) 51.3 53.7 53.4 51.7
P/E (x) 14.7 12.6 8.1 9.1 Paresh Jain
P/BV (x) 6.2 3.9 2.5 2.0 Tel: 022-40403800 Ext: 348
RoE (%) 51.9 41.6 38.4 24.3 E-mail: pareshn.jain@angeltrade.com

RoCE (%) 63.9 41.7 38.7 30.9
Pooja Jain
EV/Sales (x) 5.1 4.3 2.6 2.1
Tel: 022-40403800 Ext: 311
EV/EBITDA (x) 9.9 7.9 4.8 4.1 E-mail: pooja.j@angeltrade.com

Please refer to important disclosures at the end of this report 1

Sesa Goa|2QFY2011 Result Update

Exhibit 1: 2QFY2011 performance (Consolidated)
(` cr) 2QFY11 2QFY10 yoy (%) 1HFY11 1HY10 yoy (%)
Net sales 918 539 70.5 3,331 1,550 114.9
Raw material 55 (13) (527.8) 149 114 30.5
% of net sales 6.0 (2.4) 4.5 7.3
Consumption of stores 61 53 16.8 135 106 27.3
% of net sales 6.7 9.8 4.1 6.8
Staff cost 47 33 39.5 91 73 24.9
% of net sales 5.1 6.2 2.7 4.7
Export duty 53 5 1,031.1 180 9 1,998.8
% of net sales 5.7 0.9 5.4 0.6
Other expenditure 357 305 17.0 980 648 51.4
% of net sales 38.9 56.7 29.4 41.8
Total expenditure 579 386 49.9 1,532 944 62.2
% of net sales 63.0 71.7 46.0 60.9
EBITDA 340 153 122.5 1,799 606 197.0
% of net sales 37.0 28.3 865.4 54.0 39.1 1,493.5
Interest 14 2 607.6 28 4 592.0
Depreciation 19 20 (4.0) 39 35 8.8
Other income 100 89 12.5 261 164 59.0
Exceptional items 0 0
Profit before tax 407 220 85.1 1,994 731 172.9
% of net sales 44.3 40.8 59.9 47.1
Tax 19 50 (62.5) 302 137 120.1
% of PBT 4.6 22.9 15.1 18.8
Profit after tax 385 166 131.3 1,687 589 186.5
% of net sales 41.9 30.9 50.6 38.0
EPS (`) 4.4 1.9 131.3 19.5 7.3 167.4

Exhibit 2: 2QFY2011 - Actual v/s Angel estimates
(` cr) 1QFY11A 1QFY11E Variation (%)
Net sales 918 1,024 (10.3)
EBITDA 340 533 (36.3)
EBITDA margin (%) 37.0 52.1 (1,505bp)
PBT 407 1,588 (74.4)
PAT 385 489 (21.3)

October 18, 2010 2


Volume growth affected by government actions

Sesa Goa reported 70.5% yoy increase in top line to `918cr during 2QFY2011.
Iron ore sales volume at 2.0mn tonnes increased by 23.7% yoy. While Goa
accounted for ~ 1.0mn tonnes of iron ore sales, Karnataka and Orissa accounted
for 0.5mn tonnes each. China accounted for ~75% of the sales volume and the
domestic market accounted for 8% of the sales volume. Volumes were, however,
severely affected by the temporary export restriction imposed by the Karnataka
government at the end of July.
During 2QFY2011, iron ore production fell by 3.0% yoy to 3.2mn tonnes. Average
iron ore realisations were lower by 19.1% qoq (up 48% yoy) at US $73/tonne.
Pig iron sales volume increased by 25.4% yoy to 84,000 tonnes. Average
realisation also increased by 35.6% yoy to `25,326/tonne, flat on a qoq basis.

Exhibit 3: Iron ore sales increased by 23.7% yoy Exhibit 4: Cost/tonne trending up
8.0 50 100

40 80
6.0
(US $/tonne)

60
(mn tonne)

30
4.0
(%)

20 40

2.0 20
10

0
0.0 0
1QFY10 2QFY10 3QFY10 4QFY10 1QFY11 2QFY11

Volume - LHS change (yoy) - RHS Revenue/tonne Cost/tonne EBIT/tonne

Source: Company, Angel Research Source: Company, Angel Research

EBITDA margin declines
In 2QFY2011, EBITDA margin declined by 2,349bp qoq to 37% on account of
lower-than-expected realisations, higher export duty, increased royalty rates and
higher freight cost per tonne. Freight cost per tonne increased by US $20/tonne
from Orissa and Karnataka. Other income decreased by 37.6% qoq to `100.4cr
(up 12.5% yoy). Lower tax rate at 4.6% in 2QFY2011 v/s 22.9% in 2QFY2010 led
to a 131.3% yoy increase in the bottom line to `385cr, down 70.4% qoq.

Exhibit 5: EBITDA margin tend Exhibit 6: Net profit trend
1,600 80 1,400 80
1,400
1,200
1,200 60 60
1,000
1,000
800
(%)
(` cr)

800 40
(` cr)

(%)

40
600 600
400 20 400
20
200
200
0 0
0 0
EBITDA - LHS EBITDA margin - RHS
Net profit - LHS Net margin - RHS

Source: Company, Angel Research Source: Company, Angel Research

October 18, 2010 3


Key highlights
Management reduced its sales volume guidance for FY2011 to 10% from
20–25% earlier. Due to the export ban from Karnataka, the company
witnessed sales loss of 1mn tonne during the quarter. Further, downward
revision in sales volume can be expected in case the ban on export of iron ore
from Karnataka is not revoked.
Iron ore inventory at the end of the quarter stood at 5.3mn tonnes.
Excluding the intercorporate deposit of `1,000cr, extended to Vedanta
Alumnium, the company had cash and cash equivalents of `7,575cr.
The Extra Ordinary General meeting passed a resolution to increase the
company’s investment limit up to `16,000cr and increased its borrowing limit
up to `15,000cr.
Average royalty rate charged on iron ore stood at `150–175/tonne.
Currently, Sesa Goa’s mines in Karnataka and Goa enjoy tax benefits, which
will expire by March 2011.

October 18, 2010 4


Outlook

Declining crude steel production in China…

For the first eight months of CY2010, China produced 426mn tonnes of crude
steel, up 15.6% YTD. However, over the last three months, the country has
witnessed a decline in steel production on an mom basis, with production
degrowing by 4.2%, 3.8% and 0.2% in June, July and August 2010, respectively.
Production growth, which was 20%+ yoy during the first five months of CY2010,
has also tapered off in the last three months. In August 2010, production fell by
1.3% yoy.

Exhibit 7: China steel production degrowing since June Exhibit 8: China steel production slowing annually
60 20 60 50

50 15 50 40

10 30
40 40
(mn tonnes)

(mn tonnes)
5 20
30 30
(%)

(%)
0 10
20 20
(5) 0
10 (10) 10 (10)

0 (15) 0 (20)
Jan-07 Nov-07 Sep-08 Jul-09 May-10 Jan-07 Nov-07 Sep-08 Jul-09 May-10

Chinese steel production (LHS) mom change (RHS) Chinese steel production (LHS) yoy change (RHS)

Source: Bloomberg, Angel Research Source: Bloomberg, Angel Research

…coupled with increasing domestic iron ore supplies

With iron ore prices trading above US $100/tonne, many high-cost iron ore mines
in China have started operations, thus leading to a surge in iron ore production.
For the first eight months of CY2010, domestic iron ore production increased by
28.5% to 681mn tonnes. From June–August 2010, iron ore production was at an
all-time high of ~100mn tonnes/month.

Exhibit 9: China domestic iron ore prod. – All-time high Exhibit 10: China domestic iron ore prod. up annually
120 40 120 80

100 100 60
20
80 80
(mn tonnes)

(mn tonnes)

40
60 0 60
(%)

(%)

20
40 40
(20)
20 20 0

0 (40) 0 (20)
Iron ore production (LHS) mom change (RHS) Iron ore production (LHS) yoy change (RHS)


October 18, 2010 5


…leading to reduced demand for imported ore

Demand for imported ore has been declining, as domestic Chinese iron ore
production is outpacing steel production. Consequently, imports have witnessed
successive declines over the last five months on a yoy basis. In July, August and
September 2010, imports declined by 14.7%, 11.7% and 10.2%, respectively. Iron
ore inventory at Chinese ports has also increased over the last one month from
69mn tonnes to 73.7mn tonnes.

Exhibit 11: Falling iron ore imports to China Exhibit 12: Increasing inventory at Chinese ports
70 100 80
78
60 80 76
50 74
60

(mn tonnes)
(mn tonnes)

72
40
40
(%) 70
30 68
20 66
20
64
10 0
62
0 (20) 60

Jan-07 Nov-07 Sep-08 Jul-09 May-10 Jan 1 26-Feb 16-Apr 28-May 9-Jul 20-Aug 15-Oct
2010
China Iron ore imports (LHS) yoy change (RHS) Iron ore inventory at Chinese ports


However, prices continue to remain firm in the spot market on account of supply
disruptions from India as the Karnataka government has banned iron ore exports
and the Orissa government has imposed strict restrictions to crack down illegal
mining in the state. Consequently, India’s share in total imports to China has fallen
from ~20% at the beginning of the year to 11.4% in August 2010.

Exhibit 13: Spot iron ore prices firm... Exhibit 14: ...as imports from India decline
250 16 35
14 30
200
12
25
(US $/tonne)

10
(mn tonnes)

150
20
8
(%)

100 15
6
10
50 4
2 5
0 0 0
Iron ore prices India's exports into China (LHS) % of total Chinese imports (RHS)


October 18, 2010 6


Valuation

Sesa Goa is currently trading at 4.8x FY2011E and 4.1x FY2012E EV/EBITDA. On
a P/BV basis, the stock is trading at 2.5x FY2011E and 2.0x FY2012E estimates.
With volume growth minimal at 8–10% due to government policy actions,
reduction in Chinese imports of iron ore and Sesa Goa’s diversification into an
unrelated business through a 20% stake purchase in Cairn, we maintain our
Neutral view on the stock.
Further, downside risk to our estimates exists in case the ban on export of iron ore
from Karnataka is not revoked.

Exhibit 15: Key assumptions
Earlier Revised
FY11E FY12E FY11E FY12E
Iron ore
Sales volume (mn tonnes) 25.0 27.0 22.8 24.6
Average realisation (US $/tonne) 80.0 80.0 77.5 75.0

Coke
Sales volume (tonnes) 260,000 365,000 260,000 365,000
Average realisation (US $/tonne) 398 425 398 425
Coking coal
Average cost (US $/tonne) 225 225 225 225

Pig iron
Sales volume (tonnes) 237,500 406,250 237,500 406,250
Average realisation (US $/tonne) 475 475 475 500

Royalty (US $/tonne) 4.0 4.0 4.0 4.0

Export duty (US $/tonne) 4.9 4.9 4.6 4.6

US $/` 45.6 45.0 45.6 45.0
Source: Angel Research

We have revised our estimates for FY2011E and FY2012E to factor in lower
volume growth and realisations.

Exhibit 16: Change in estimates
(` cr) Earlier estimates Revised estimates Upgrade/(downgrade) (%)
FY11E FY12E FY11E FY12E FY11E FY12E
Net sales 9,778 10,586 8,648 9,233 (11.6) (12.8)
EBITDA 5,358 5,661 4,621 4,777 (13.8) (15.6)
EBITDA margin (%) 54.8 53.5 53.4 51.7 (137bp) (173bp)
PBT 5,795 6,251 5,057 5,377 (12.7) (14.0)
PAT 4,601 4,404 4,013 3,779 (12.8) (14.2)
PAT margin (%) 47.1 41.6 46.4 40.9 (66bp) (67bp)

October 18, 2010 7


Exhibit 17: EPS – Angel forecast v/s consensus
Angel forecast Bloomberg consensus Variation
Year
(%) (%) (%)
FY2011E 46.1 49.1 (6.10)
FY2012E 40.9 55.4 (26.14)
Source: Bloomberg, Angel Research

Exhibit 18: Recommendation summary
Companies CMP Target Price Reco. Mcap Upside P/E (x) P/BV (x) EV/EBITDA (x) RoE (%) RoCE (%)
(`) (`) (` cr) FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E
SAIL 222 - Neutral 91,695 - 14.6 12.9 2.4 2.1 9.6 8.3 17.9 17.6 16.3 16.9
Tata Steel 627 702 Accumulate 55,592 12.0 8.6 7.8 1.7 1.4 6.4 5.7 21.2 19.7 13.2 14.1
JSW Steel 1,318 - Neutral 33,680 - 17.3 13.3 1.7 1.5 7.9 6.2 13.9 12.4 12.5 12.6
Bhushan Steel 515 396 Sell 10,936 (23.1) 11.3 8.7 2.6 2.0 9.2 7.5 26.0 26.1 12.6 14.0
Sesa Goa 372 - Neutral 33,134 - 8.1 9.1 2.5 2.0 4.8 4.1 38.4 24.3 38.7 30.9
NMDC 286 - Neutral 113,391 - 17.0 13.4 5.8 4.3 10.8 7.9 39.3 37.1 52.2 49.2
Hindalco 211 - Neutral 40,455 - 11.2 10.4 1.6 1.4 7.2 6.7 15.1 14.2 10.3 10.0
Nalco 408 316 Sell 26,288 (22.5) 25.8 21.8 2.4 2.2 14.9 11.6 9.7 10.7 10.7 12.5
Sterlite 176 196 Accumulate 59,203 11.2 12.3 8.9 1.4 1.2 6.6 4.5 11.6 14.2 11.1 14.1
Hindustan Zinc 1,220 - Neutral 51,549 - 12.6 9.8 2.4 1.9 7.7 5.1 20.4 21.6 20.7 22.3


Exhibit 19: EV/EBITDA band

35,000
7.0x
30,000
5.5x
25,000

20,000 4.0x
( `cr)

15,000
2.5x
10,000

5,000 1.0x

0
Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10


October 18, 2010 8


Exhibit 20: P/E band

600
12.0x
500

400 9.0x

300

(`)
6.0x
200
3.0x
100

0


Exhibit 21: P/BV band

800

700
4.0x
600

500 3.0x
(`)

400
2.0x
300

200 1.0x
100

0


October 18, 2010 9


Profit & Loss Statement (Consolidated)
Y/E March (` cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Gross sales 2,236 3,845 4,991 5,842 8,821 9,417
Less: Excise duty 60 79 73 44 173 185
Net sales 2,176 3,766 4,918 5,798 8,648 9,233
Other operating income 42 57 41 60 0 0
Total operating income 2,218 3,823 4,959 5,858 8,648 9,233
% chg 20.2 72.4 29.7 18.1 47.6 6.8
Total expenditure 1,255 1,519 2,417 2,710 4,028 4,456
Net raw materials 466 477 494 534 631 803
Other mfg costs 169 294 394 391 656 692
Personnel 64 68 77 130 118 135
Other 556 680 1,452 1,654 2,623 2,826
EBITDA 963 2,303 2,542 3,149 4,621 4,777
% chg 11.6 139.2 10.4 23.9 46.7 3.4
(% of Net sales) 43.4 60.3 51.3 53.7 53.4 51.7
Depreciation 39 50 52 75 78 111
EBIT 924 2,253 2,490 3,074 4,542 4,666
% chg 10.9 144.0 10.5 23.4 47.8 2.7
(% of Net sales) 41.6 58.9 50.2 52.5 52.5 50.5
Interest charges 3 3 4 56 47 2
Other income 45 74 224 426 561 720
(% of PBT) 4.7 3.2 8.3 12.4 11.1 13.4
Share in profit of asso. - - - - - -
Recurring PBT 966 2,325 2,710 3,445 5,057 5,384
% chg 12.5 140.7 16.6 27.1 46.8 6.5
Extra. Inc/(Expense) - - - - - -
PBT (reported) 966 2,325 2,710 3,445 5,057 5,384
Tax 315 776 715 806 910 1,777
(% of PBT) 32.6 33.4 26.4 23.4 18.0 33.0
PAT (reported) 651 1,549 1,995 2,639 4,147 3,607
Add: Earnings of asso. - - - - - -
Less: Minority interest 0 0 (7) (10) (45) 34
Extra. Expense/(Inc.) - - - - - -
PAT after MI (reported) 651 1,549 1,988 2,629 4,102 3,641
ADJ. PAT 651 1,549 1,988 2,629 4,102 3,641
% chg 13.2 137.9 28.4 32.2 56.0 (11.2)
(% of Net sales) 29.4 40.5 40.1 44.9 47.4 39.4
Basic EPS (`) 8.3 19.7 25.3 31.6 47.7 40.9
Fully Diluted EPS (`) 8.3 19.7 25.3 29.5 46.1 40.9
% chg 13.2 137.9 28.4 17.0 56.0 (11.2)

October 18, 2010 10


Balance Sheet (Consolidated)
SOURCES OF FUNDS
Equity share capital 39 39 79 83 89 89
Reserves & surplus 1,570 2,904 4,637 7,835 13,332 16,457
Shareholders’ funds 1,609 2,943 4,716 7,918 13,421 16,546
Share warrants - - - - - -
Minority interest 19 27 33 43 88 55
Total loans - - 2 1,961 44 44
Deferred tax liability 65 66 66 75 75 75
Total liabilities 1,693 3,036 4,817 9,997 13,628 16,721
APPLICATION OF FUNDS
Gross block 722 770 886 2,751 2,901 3,727
Less: Acc. depreciation 262 294 342 574 652 763
Net block 460 476 544 2,177 2,249 2,964
Capital work-in-progress 20 21 49 79 404 104
Goodwill - - - - - -
Investments 845 2,051 3,125 4,565 4,565 4,565
Current assets 630 864 1,683 4,416 7,643 10,352
Cash 21 21 18 2,392 5,444 7,965
Loans & advances 39 59 1,103 1,146 1,146 1,146
Other 569 784 562 879 1,053 1,241
Current liabilities 262 376 584 1,240 1,232 1,264
Net current assets 368 488 1,099 3,176 6,410 9,088
Mis. exp. not written off - - - - - -
Total assets 1,693 3,036 4,817 9,997 13,628 16,721
Note: Cash and bank balance include deposits

October 18, 2010 11


Cash Flow Statement (Consolidated)
Profit before tax 966 2,325 2,710 3,445 5,057 5,384
Depreciation 39 50 52 75 78 111
Change in working capital (24) (170) 314 179 (382) (156)
Less: Other income (43) (71) (221) (363) - -
Direct taxes paid 324 747 721 764 910 1,777
Cash flow from operations 614 1,387 2,134 2,571 3,844 3,563
(Inc.)/Dec. in fixed assets (112) (67) (147) (149) (476) (526)
(Inc.)/Dec. in investments (371) (1,205) (965) (3,078) - -
(Inc.)/Dec. in loans & adv.
Other income 42 69 113 (2,168) - -
Cash flow from investing (441) (1,203) (999) (5,394) (476) (526)
Issue of equity - - - 537 1,916 -
Inc./(Dec.) in loans (10) - - 2,358 (1,916) -
Dividend paid (Incl. tax) 180 184 138 206 316 515
Others - - 1,001 6 - -
Cash flow from financing (190) (184) (1,139) 2,682 (316) (515)
Inc./(Dec.) in cash (16) (0) (3) (141) 3,052 2,521
Opening cash balances 37 21 21 174 2,392 5,444
Closing cash balances 21 21 18 34 5,444 7,965

October 18, 2010 12


Key Ratios
Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Valuation ratio (x)
P/E (on FDEPS) 45.0 18.9 14.7 12.6 8.1 9.1
P/CEPS 42.4 18.3 14.4 11.4 7.9 8.8
P/BV 18.2 9.9 6.2 3.9 2.5 2.0
Dividend yield (%) 0.5 0.6 0.6 0.9 1.3 1.3
EV/Sales 12.8 7.1 5.1 4.3 2.6 2.1
EV/EBITDA 29.5 11.8 9.9 7.9 4.8 4.1
EV/Total assets 16.8 9.0 5.2 2.5 1.6 1.2
Per share data (`)
EPS (Basic) 8.3 19.7 25.3 31.6 47.7 40.9
EPS (fully diluted) 8.3 19.7 25.3 29.5 46.1 40.9
Cash EPS 8.8 20.3 25.9 32.5 47.0 42.2
DPS 2.0 2.3 2.3 3.3 5.0 5.0
Book value 20.4 37.4 59.9 95.3 150.8 186.0
DuPont analysis
EBIT margin 41.6 58.9 50.2 52.5 52.5 50.5
Tax retention ratio (%) 67.4 66.6 73.6 76.6 82.0 67.0
Asset turnover (x) 2.9 4.4 3.8 2.5 2.6 2.4
RoIC (post-tax) 82.3 172.0 142.2 101.6 114.1 81.5
Cost of debt - - - - - -
Leverage (x) - - - - - -
Operating RoE 82.3 172.0 142.2 101.6 114.1 81.5
Returns (%)
RoCE (pre-tax) 63.9 96.2 63.9 41.7 38.7 30.9
Angel RoIC (pre-tax) 129.0 264.5 198.5 136.3 150.3 130.4
RoE 47.2 68.0 51.9 41.6 38.4 24.3
Turnover ratios (x)
Asset T/o
3.4 5.1 6.0 3.2 3.1 2.8
(gross block)
Inventory (days) 247 234 213 261 285 270
Receivables (days) 43 35 28 20 22 24
Payables (days) 95 102 170 351 300 250
WC capital (days) 75 53 33 12 12 21
Solvency ratios (x)
Net debt to equity (0.5) (0.7) (0.9) (0.8) (0.8) (0.8)
Net debt to EBITDA (0.9) (0.9) (1.6) (1.9) (2.4) (2.8)
Interest coverage 311.2 819.4 583.2 55.4 97.6 2,332.9

October 18, 2010 13


Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

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document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please
refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and
its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Sesa Goa
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock Yes
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

October 18, 2010 14

Sesa goa 2QFY2011 Result Update

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