Enam havells aug2012

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Enam havells aug2012

  1. 1. ENAM Securities CMP: Rs 543 India Research Target Price: Rs 694 Potential Upside: 28% Absolute Rating: BUYHavells IndiaRelative to Sector: Outperformer MidcapsStock DataNo. of shares : 125 mnMarket cap : Rs 67.8 bn52 week high/low : Rs 616/ Rs 313Avg. daily vol. (6mth) : 349,900 sharesBloomberg code : HAVL IBReuters codeShareholding (%) : HVEL.BO Jun-12 QoQ chg A closer look…calls for a re-ratingPromoters : 61.6 0.0FIIs : 20.0 0.2MFs / UTI : 0.9 (0.1)Banks / FIs : 0.0 0.0Others : 17.5 (0.0)Relative Performance 200 Financial Summary (Consolidated) 150 Y/E N et Sales Adj. PAT Consensus EPS Change P/ E EV/ EBITDA R oE R oCE DPS 100 M arc h ( R s mn) ( R s mn) EPS* ( R s.) ( R s.) ( Y oY %) ( x) ( x) ( %) ( %) ( R s) 2011 56,126 3,071 - 25 341 - - 58 31 2.5 50 2012 65,182 3,700 - 30 20 - - 46 32 6.5 Jul-11 Jan-12 Jul-12 2013E 73,301 4,285 35 34 16 15.8 9.5 38 35 7.5 Sensex Havells India 2014E 80,692 5,188 42 42 21 13.1 8.0 35 36 8.5Source: ENAM Research, Bloomberg Source: Company, ENAM estimates; Note: CMP as on 10 August 2012Kashyap Pujara Punit ChokhaniExecutive Director – Midcaps Asst VP – Midcaps August 13 , 2012 1kashyap.pujara@enam.com (+91 22 4325 1146) punit.chokhani@enam.com (+91 22 4325 1130)
  2. 2. Investment argument… We believe valuation at 16x FY13E and 13x FY14E EPS does not fully reflect the benefits from unmatched distribution, premium branding, and scalability potential from Sylvania. We value India business at 18x FY14E EPS of Rs 35 and Sylvania at 10x FY14E EPS of Rs 7 to arrive at our SOTP-based TP of 694 (17x FY14E). Initiate coverage with BUY. India business -- pillar of strength -- should be compared to companies like Page Ind, TTK Prestige, Exide and Whirlpool given similar (1) nature of business (dealer and brand-driven), (2) return ratios, and (3) consumption plays. While Page trades at 23x FY14E (5-yr PAT CAGR of 40% with avg. RoCE of 30%), TTK trades at 22x FY14E despite higher RoCE and PAT CAGR - the street expects return ratios of TTK to moderate over the next 2 years Exide and Whirlpool are both secular stories with high return ratios but they trade at lower valuations as they are prone to business cycles (whirlpool – vulnerable to mid cycle slowdowns and Exide - exposed to cyclical auto OEM market) Given Havells standalone’s growth sustainability and return profile, we value it at 18x, which is higher than the valuation of Exide and Whirlpool but lower than that of Page and TTK Prestige Earnings: Strong track record… …India business deserves 18x 80 80 70 70 60 TTK 60 TTK 5 -yr Avg RoC E 5 -yr Avg RoC E Whirlpool Whirlpool 50 Havells 50 40 Standalone 40 Havells Page Page 30 30 Standalone Exide Exide 20 20 10 10 10 20 30 40 50 60 10 15 20 25 30 5 -yr PAT C AGR F Y1 4 E PE (x)Source: Capitaline, ENAM Research. NOTE: Whirlpool RoCE and PAT numbers are 3-year CAGR 2
  3. 3. …Investment argument Sylvania -- a potential cash cow: Management strategy to replicate India success in new geographies (emerging markets) would drive Sylvania’s earnings going forward. However, exposure to Europe would keep earnings muted in the short term. We value Sylvania at 10x FY14E EPS of Rs 7 (in line with peer average). M kt Cap Sales ( R s bn) PAT ( R s bn) EV/ EB ( x) P/ E ( x) R oE ( %)Co N ame Country Co. produc t ( R s bn) FY 13e FY 14e FY 13e FY 14e FY 12 FY 13e FY 14e FY 12 FY 13e FY 14e FY 12 FY 13e FY 14eKoninklijke Phil Holland lighting, appliances 1,310 1,658 1,729 78 95 18 7 6 (14) 15 12 (9) 9 11Foshan Elec-B China Lighting 54 23 26 3 3 14 na na 15 9 8 10 na naZumtobel Ag Austria lighting, appliances 26 88 91 2 3 6 6 5 25 17 9 4 6 11Average 13 6 5 8 14 10 SOTP valuation F Y1 4 E Comfort factors: Havells Standalone FY14E EPS (Rs) 35 Distribution and branding act as a key entry barrier for the business. It has P/E Multiple 18 16,000+ dealers across the world (6,000 in India). India is adding 700-800 dealers a year. Annual ad spends are > Rs 1 bn (3% of sales) Value Per Share (Rs) 625 Sylvania 40% profit CAGR over last 20 years on the back of product launches and FY14E EPS (Rs) 7 acquisitions. We expect 11% revenue and 18% profit CAGR over FY12-14. P/E Multiple 10 India business has been growing at 3x GDP for the last five years Value Per Share (Rs) 69 Total Value (Rs) 694 Channel financing helps to reduce working capital requirement and increase dealer loyalty in India. Note Havells is one of the few companies in its space having the ability to avail channel financing, which gives it a distinct competitive advantageSource: Bloomberg, ENAM Research 3
  4. 4. Company overview Havells consolidated – FY12 Revenue : Rs 65.2 bn EBITDA : Rs 6.7 bn PAT : Rs 3.7 bn Capital employed : Rs 20.0 bn RoCE : 30% Havells India – FY12 Sylvania – FY12 Revenue : Rs 36.2 bn Revenue : Rs 29.0 bn EBITDA : Rs 4.6 bn EBITDA : Rs 2.1 bn PAT : Rs 3.0 bn PAT : Rs 0.7 bn B2B B2C B2C Electrical cables – Lighting fixtures & lamps - 44% of sales 15% of sales Lighting fixtures & lamps - 4-year value CAGR – 14% 4-year value CAGR – 20% Contribution margin – 8% Contribution margin – 23% Europe – 62% of sales Domestic switchgears – Consumer appliances – 25% of sales 16% of sales Latin America & Asia - 4-year value CAGR – 15% 38% of sales 4-year value CAGR – 26% Contribution margin – 35% Contribution margin – 27%Source: Company, ENAM Research Refer Appendix for product details 4
  5. 5. Table of contents Slide No. India business 6 Sylvania 12 Risk factors 15 Company financials 16 Appendix 19 5
  6. 6. India BusinessGrowth in its DNA 6
  7. 7. Key strategy and strengths Havells strategy is to cater to all electrical product requirements of its customers, leveraging on the same channel/ brand DEALERS Larger product basket Focus on channel management Brand positioning to equal quality supremacy Transition from B2B to B2C segment Multiple Products, Universal Branding, One Distribution ChannelSource: ENAM Research 7
  8. 8. Distribution to PUSH… Havells has built one of the largest distribution network in the industry Dealer network ↑ 6x in 8 years Distribution network of 6,000 dealers reaching out to 1,00,000 retailers 2003 2011 Increase (x) Dealers 1,000 5,600 5.6 Successfully expanding product portfolio through the established network, Retailers 25,000 100,000 4.0 while simultaneously expanding the network itself Year Product launches Adding 700-800 dealers every year to its existing network 1976 Switchgears 1980 Electric meters Impetus on dealer growth to grow core business 1996 Cables and wires Entire business is through dealers. Personal attention and incentive 2003 Fans, lighting fittings and CFL 2006 Modular switches programs are high on agenda to motivate dealers and enhance loyalty. 2007 Power capacitors and motors Channel financing 2010 Water heaters Havells is one of the few companies in the space to offer channel financing to 2011 Small consumer appliances its dealers through banks Dealers get working capital loans from banks. Interest payable on these loans is passed on as a cash discount to the dealers by Havells Benefits of channel financing Loans have a 5% recourse on Havells but are completely insured Havells Insured 5% recourse Channel financing not only increases dealer loyalty, but also strengthens Havells’ balance sheet Cash discount Channel Financing has reduced working capital requirement of Havells Rs mn F Y0 7 F Y0 8 F Y0 9 F Y1 0 F Y1 1 F Y1 2 Dealer Interest Bank Debtors reported 310 661 867 795 1,121 1,597 D ebtors (incl. factoring) 2 ,3 0 7 3 ,0 4 6 2 ,7 5 2 3 ,6 0 6 4 ,9 5 6 6 ,7 4 0 D ebtor cycle (D ays) Reduces working capital Reported 7 12 14 12 14 16 Incl. factoring 55 54 46 56 63 68 Enhances purchasing power of dealerSource: Company, ENAM Research 8
  9. 9. …Branding to PULL The company has created a strong umbrella brand – HAVELLS -- all products are sold under this single brand. Havells has positioned itself as a premium player in the electrical consumer segment to PULL customers. A strong balance sheet enables it to build brand equity --- ad spend of more than Rs 1 bn (~3% of sales), which is difficult to replicate by other players in this space. Company-owned Havells World and dealer-run Havells Galaxy are brand initiatives of their own kind Havells World outlets are used by the company to showcase its product range, provide technical assistance to dealers, and improve visibility of its brands. Walk-in customers are diverted to dealers The company plans to increase its exclusive retail outlets (Havells Galaxy) to 200 in FY13 from 140 currently Exclusive outlets – a branding initiative Havells’ ad spend :~3% of sales 1,200 4 (Rs mn) (%) 1,000 3 800 600 2 400 1 200 0 0 FY08 FY09 FY10 FY11 FY12 Havells (LHS) Bajaj Electricals (LHS) Havells (RHS) Bajaj Electricals (RHS)Source: Company, ENAM Research 9
  10. 10. Sustainable growth… Consistent growth Stable margin 15 12 80 (x) (%) (%) 12 10 60 8 40 9 6 20 6 4 0 3 2 (20) 0 0 (40) Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Havells Sales growth as a multiple to GDP EBITDA margin Copper Real GDP (RHS) Aluminium Steel Since its listing in 1993, revenue has grown at EBIDTA margin has been in 10-13% band average multiple of 6x GDP growth. over the last decade, despite volatile raw material prices. Despite higher revenue base and sluggish economy, domestic revenue has grown at 3x GDP growth in the last 5 years. Given its strengths and strategy, we believe Havells’ domestic revenue will continue to post 15- 20% CAGR with sustainable EBIDTA margin of 12-13% over next few yearsSource: Company, Business Beacon, Bloomberg 10
  11. 11. …with strong cash flows Revenue to post 19% CAGR (FY12-14E) Channel financing- with stable margin Shrinking working capital requirement 60 13.0 6 60 (Rs bn) (%) (Days) (%) 50 12.8 4 40 40 12.6 2 20 30 12.4 0 0 20 10 12.2 (2) (20) 0 12.0 (4) (40) FY11 FY12 FY13E FY14E FY11 FY12 FY13E FY14E Revenue EBITDA margin (RHS) Wcap (days) Core RoCE (RHS) Strong cash generation 5 (Rs bn) 4 3 2 1 0 FY11 FY12 FY13E FY14E Cash Flow from operationsSource: Company, ENAM Research 11
  12. 12. SylvaniaTo replicate Havells India success story 12
  13. 13. India not enough; eyeing the globe Expansion in other geographies to address A well-structured bet scalability ceiling. Acquisition of Sylvania in 2007 – Funding (mn €) Comments EV 235 1st major step in that direction. Pension Liabilities 35 Recourse Loan on Havells India 80 Repayed € 50 mn by timely equity infusion from Sylvania business in line with domestic strategy Warbug Pincus Distribution network of over 10,000 dealers - Repaid € 23 mn in 7 tranches of € 3.3 mn Non Recourse Loan 120 Term loan of € 80 mn - Repayed € 17 mn presence across Europe, LatAm and Asia Refinanced the remaining. Current Loan of € 117 mn Sylvania is a 100-year old brand - well entrenched in the market place. This has transformed Havells into a Post acquisition, Restructured operations Sylvania slipped into enabled turnaround. global player competing with the likes of Philips, GE losses due to Euro EBIDTA margin moved and Osram zone issues from -3% to 8% 12 (%) Successfully executed turnaround 10 10 Immediately after the acquisition, Lehman and Euro 8 9 9 9 9 9 8 zone crisis (Europe- 61 % of sale) caused Sylvania to slip 8 7 8 6 into losses, thus breaching covenants 4 5 Havells restructured operations at Sylvania by 4 3 shutting plants 0 retrenching staff across Europe (3) (3) (1) outsourcing manufacturing to low cost countries (4) Havells took a restructuring charge of ~Rs 5 bn over H1FY10 9MFY10 FY10 H1FY11 9MFY11 FY11 H1FY12 9MFY12 FY12 FY09-10 Havells managed to turnaround Sylvania in FY10 Europe America Source: Company 13
  14. 14. Sylvania – Potential cash cow Roadmap Focus: To tilt sales to LatAM and Asia Europe – Focus on profitability Sales Mix F Y1 0 F Y1 2 F Y1 3 E F Y1 4 E After successfully reducing costs, focus now is Europe 71% 61% 0% 0% Latin America + Others 29% 39% 0% 0% to improve realizations to pass on costs To increase outsourcing (45% of Europe sales is outsourced from China) Refinanced debt – payment schedule LatAm and emerging markets to drive growth Euro mn FY13 FY14 FY15 FY16 FY17 Total Revenue mix shifting towards Latin America + By Sylvania 4 11 14 16 32 77 other markets. (Revenue growing at 10-12% By Havells India 40 0 0 0 0 40 Total 44 11 14 16 32 117 vs. flat growth in Europe) Plans to enter other EMs - South Africa and China A potential cash cow Opportunity to cross-sell Euro mn FY12 FY13E FY14E FY15E FY16E Havells has started exporting switchgears to PAT 10 9 12 16 21 Europe to leverage on Sylvania’s distribution (+) Depreciation 8 7 7 7 7 (-) Chng wcap 8 3 1 0 1 network (-) Capex 4 4 4 4 4 Sylvania’s range of fixtures will be introduced in FCF 6 9 14 19 23 India by a plant set up by Havells in Nirmana Cash & Bank 13 Debt Repayment 4 11 14 16 (Rajasthan) Source: Company, ENAM Research Sylvania is well poised to repay debt from its own cash flows 14
  15. 15. Risks to call Sylvania’s exposure to Europe New acquisitions Risk of inventory Sylvania generates 62% of its Havells plans to enter new emerging While working capital of the company revenue from Europe. A slowdown in markets like Africa and China is negligible (largely due to channel Europe can significantly impact through acquisitions. Failure to financing), Havells carries the risk of Sylvania’s performance. integrate these new acquisitions inventory write-downs mainly in the can impact future performance. cables and wires business (45% of domestic revenue). Key raw materials are copper and aluminum. Mitigant Mitigant Mitigant The company has been shifting its In the past 20 years, Havells has Even though this could lead to revenue mix towards Latin acquired multiple companies and quarterly lumpiness, historically, America and Asia - up from 29% of managed to scale them well as Havells has managed to maintain sales in FY10 to 39% in FY12. indicated by its 20-year PAT CAGR standalone annual margin in the of 40%. 10-13% range. 15
  16. 16. Company financials… Consolidated assumptions H avells Standalone ( R s bn) FY 11 FY 12 FY 13E FY 14E Sylvania ( Euro mn) FY 11 FY 12 FY 13E FY 14E Switc hgear ( A) 8 10 11 12 Net R evenue 450 448 452 466 Value growth (YoY) 12% 23% 12% 12% Value growth (YoY) 9% 0% 1% 3% Contribution margin (%) 34% 34% 34% 34% EBIT 18 31 28 32 Cables ( B) 14 18 21 25 EBIT margin (%) 4.0% 6.8% 6.2% 6.8% Value growth (YoY) 28% 29% 18% 18% Contribution margin (%) 7% 8% 8% 8% Lighting & Fixtures ( C) 5 6 8 9 H avells Consolidated ( R s bn) FY 11 FY 12 FY 13E FY 14E Value growth (YoY) 28% 27% 25% 25% Net R evenue 56 65 73 81 Contribution margin (%) 17% 23% 23% 23% Value growth (YoY) 9% 16% 12% 10% Consumer Durables ( D) 5 6 8 10 EBIT 5.0 6.0 6.8 7.9 Value growth (YoY) 40% 23% 25% 25% EBIT margin (%) 8.9% 9.3% 9.3% 9.7% Contribution margin (%) 26% 27% 27% 27% ( A) +( B) +( C) +( D) 32 40 47 56 Less ( Discounts, excise duty) 3 4 4 5 Net R evenue 29 36 43 51 Standalone Unallocable Exp 2 4 4 5 Standalone EBIT* 3 4 5 6 EBIT margin (%) 11% 12% 12% 11% Note: EBIT = Segmental contribution - UnallocablesSource: Company, ENAM Research 16
  17. 17. …Company financials…Profit & Loss (Rs mn) Key ratios (%)Y/E March 2011 2012 2013E 2014E Y/E March 2011 2012 2013E 2014ENet sales 56,126 65,182 73,301 80,692 Sales growth 9 16 12 10Other operating income 198 64 218 219Total inc ome 56,324 65,246 73,519 80,911 O PM 10 10 10 11 Oper. profit growth 70 15 15 14 Cost of goods sold 42,071 48,938 56,018 61,230 COGS / Net sales 75 75 76 76 Contribution (%) 25 25 24 24 Overheads/Net sales 15 15 13 14 Advt/Sales/Distrn O/H 8,484 9,671 9,854 10,999 Depreciation / G. block 3 3 3 3 Effective interest rate* 8 12 16 19O perating Prof it 5,769 6,638 7,647 8,682 Other income 39 350 155 204 Net sales/ Net working cap (x) 27 22 21 19 Net sales / Gr block (x) 2.0 2.2 2.4 2.6PBIDT 5,808 6,987 7,803 8,886 Depreciation 804 949 979 1,022 Incremental RoCE 88 80 187 85 Interest* 902 1,281 1,339 1,225 R oCE 31 32 35 36 Other pretax 0 0 0 0 Debt / equity (x) 1.7 1.0 0.5 0.4Pre-tax profit 4,102 4,758 5,485 6,638 Effective tax rate 25 22 22 22 Tax provision 1,031 1,058 1,200 1,450 R oE 58 46 38 35 (-) Minority Interests 0 0 0 0 Payout ratio (Div/NP) 10 22 22 20 Associates 0 0 0 0Adjusted PAT 3,071 3,700 4,285 5,188 EPS ( R s.) ^ 25 30 34 42E/o income / (Expense) (30) 0 0 0 EPS Growth 341 20 16 21 CEPS (Rs.) 31 37 42 50R eported PAT 3,041 3,700 4,285 5,188 DPS (Rs.) 3 7 8 9 Source: Company, ENAM Research * Interest includes bank charges 17
  18. 18. …Company financialsBalance sheet (Rs mn) Cash flow (Rs mn)Y/E March 2011 2012 2013E 2014E Y/E March 2011 2012 2013E 2014ETotal assets 18,275 20,010 20,419 23,851 Sourc es 625 2,133 95 2,373 Gross block 28,454 29,731 30,999 32,252 Cash profit 3,013 3,717 4,080 5,189 Net fixed assets 9,955 10,284 10,572 10,803 (-) Dividends 207 811 936 1,061 CWIP 249 663 250 250 Retained earnings 2,806 2,906 3,145 4,128 Investments 0 0 0 0 Issue of equity 0 0 0 0 Wkg. cap. (excl cash) 2,938 3,103 3,751 4,688 Borrowings 454 (1,273) (2,943) (696) Cash / Bank balance 1,779 2,336 2,221 4,485 Others (2,635) 500 (106) (1,059) Goodwill 3,354 3,625 3,625 3,625 Applic ations 625 2,133 95 2,373Capital employed 18,275 20,010 20,419 23,851 Capital expenditure 2,029 1,277 1,268 1,253 Equity capital 624 624 624 624 Investments 310 0 0 0 Reserves 5,920 8,930 12,282 16,410 Net current assets (2,013) (164) (649) (937) Borrowings 11,173 9,900 6,957 6,261 Change in cash 299 1,020 (524) 2,057 Deferred Tax Liability 559 556 556 556 Source: Company, ENAM Research 18
  19. 19. AppendixHavells: 20-year earnings CAGR of 40%Product portfolioNew launchesDomestic business: Segmental performanceSylvania – Product range 19
  20. 20. 20-year earnings CAGR of 40% Leveraging on strengths: consumer appliances & Transformation phase: cross selling of products Expansion of product Global foray portfolio 2010… Transformation phase: 2007 - 10Distributor to manufacturer 2003 - 07 Leveraging on a well- 1958 - 2003 Forayed into fans, lighting and In 2007, Havells acquired established distribution Sylvania – A 100-year old CFLs in 2003, positioning its network and brand, Havells lighting major in Europe to In 1958, started as a mere products in the premium successfully introduced a gain global footprint distributor of switches category range of water heaters Acquisition was an LBO, (2010) and small consumer Acquired brand “Havells” in As a result of its strong brand wherein Havells acquired a appliances (2011) in the 1971 and started and distribution network, Havells global business for Indian market. This would manufacturing switchgears garnered significant market ~Rs 16 bn with an equity drive volume in future and meters share in a short span of time investment of Rs 1.6 bn It is now bringing in lighting Post listing in 1993, it 2006 market share: ~6% in Restructured operations range from Sylvania into ventured into cable/wire fans, 3% in lightings, ~10% in post the European crisis & India manufacturing CFLs turned around Sylvania Rs mn 1993 2003 2007 2010 2013E 2 0 YR C AGR Revenue 109 2,525 15,472 51,626 73,301 38% EBITDA 14 255 1,458 3,222 7,647 37% Margin 13% 10% 9% 6% 10% PAT 5 90 1,021 696 4,285 41% Aberration: Sylvania RoCE 20% 45% 16% 34% slipped into losses due to the European crisis New product launches and acquisitions led to robust performance Source: Company, ENAM Research 20
  21. 21. Havells India – Product portfolio Domestic switchgear – MCB Peers 1 Mkt size ~ INR 16 bn Legrand (MDS & Indo Asian) Market share ~ 28% (15% in 2006) Schneider Modular Switches – Crabtree Peers Mkt size ~ INR 14 bn Matsushita/ Anchor 2 Mkt share ~ 15% (5% in 2006) Roma Legrand Industrial switchgear Peers Mkt size ~ INR 30 bn L&T 5 Market share ~ 6% (7% in 2006) Schneider, Siemens ABB Cable & Wire Peers Mkt size ~ INR 170 bn Cable Wire 2 Market share ~ 9% (6% in 2006) Polycab Finolex KEI Polycab Lighting – CFL Peers Mkt size ~ INR 20 bn Philips 3 Mkt share ~ 11% (10% in 2006) Surya Osram Lighting - Luminaires Peers Mkt size ~ INR 25 bn Philips 4 Market share ~ 11% (3% in 2006) Bajaj Crompton Wipro Electrical Consumer Durable - Fans Peers Mkt size ~ INR 35 bn Crompton 3 Mkt share ~ 15% (6% in 2006) Usha Orient Source: Company 21
  22. 22. New launches Small Domestic Appliances Peers New Mkt size ~ INR 50 bn R Recold Bajaj Recold Source: Company 22
  23. 23. Domestic business: Segmental performance Switchgears Cables & Wires 12,000 40 20,000 15 (Rs mn) (%) (Rs mn) (%) 10,000 38 16,000 12 8,000 36 12,000 9 6,000 34 8,000 6 4,000 32 4,000 3 2,000 0 30 0 0 FY07 FY08 FY09 FY10 FY11 FY12 FY07 FY08 FY09 FY10 FY11 FY12 Sales Contribution (RHS) Sales Contribution (RHS) Lighting Electrical consumer durables 8,000 30 8,000 30 (Rs mn) (%) (Rs mn) (%) 25 6,000 6,000 25 20 4,000 4,000 20 15 2,000 2,000 15 10 0 5 0 10 FY07 FY08 FY09 FY10 FY11 FY12 FY07 FY08 FY09 FY10 FY11 FY12 Sales contribution % Sales contribution % Source: Company, ENAM Research 23
  24. 24. Sylvania – Product rangeFixtures (33% of revenue) Lamps (55% of revenue) Others (12% of revenue)Architectural Industrial/ Fluorescent Energy saving/ Incandescent Halogen High density/ accent commercial (CFL/ LED) discharge (HID) Major peers Zumtobel Philips Philips Osram GE Source: Company 24
  25. 25. ENAM Securities Pvt. Ltd. Axis House, C2, Wadia International Centre, P.B Marg, Worli, Mumbai 400 025, India. Tel:- Board +91-22 4325 2525; Dealing +91-22 2438 8861 - 69; Fax:- Research +91-22 4325 1110; Dealing +91-22 4325 3500 CONFLICT OF INTEREST DISCLOSUREWe, at ENAM, are committed to providing the most honest and transparent advice to our clients. However, given the nature of the capital markets, from time to time we are faced with situations that could give rise topotential conflict of interest. In order to provide complete transparency to our clients, before we make any recommendations, we are committed to making a disclosure of our interest and any potential conflict INADVANCE so that the interests of our clients are safe- guarded at all times. In light of this policy, we have instituted what we believe to be the most comprehensive disclosure policy among leading investmentbanks/brokerages in the world so that our clients may make an informed judgment about our recommendations. The following disclosures are intended to keep you informed before you make any decision- in addition, wewill be happy to provide information in response to specific queries that our clients may seek from us.Disclosure of interest statement (As of August 8, 2012)1. Analyst ownership of the stock No2. Firm ownership of the stock No3. Directors ownership of the stock No4. Investment Banking mandate No5. Broking relationship No We are committed to providing completely independent and transparent recommendations to help our clients reach a better decision.This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial advice,and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. The intent of this document is not in recommendary natureEach recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including themerits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investorsEnam Securities Private Limited has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the accuracy, completeness orfairness of the information and opinions contained in this documentThe Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subjectto change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approvalEnam securities Private Limited, its affiliates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentionedin this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entitiesfunctions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the documentThis report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of ENAM Securities Private Limited. The views expressed are those ofanalyst and the Company may or may not subscribe to all the views expressed thereinThis document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for anypurpose. Neither this document nor any copy of it may be taken or transmitted into the United State (to U.S.Persons), Canada, or Japan or distributed, directly or indirectly, in the United States or Canada or distributed orredistributed in Japan or to any resident thereof. 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