IRB InvIT. First of its kind!!! Public Issue. Overview. April 28, Rating : Unrated

Transcription

1 Public Issue Rating matrix Rating : Unrated Issue Details Issue Opens Issue Closes 3-May-17 5-May-17 Issue Size ( Crore) Price Band ( ) Institutional (%) 75 Non-Institutional (%) 25 Minimum lot size (No. of units) Objects of the issue Objects of the Issue Investment in Project SPVs by way of an issue of debt General Purposes Financial Summary Crore FY14 FY15 FY16 9MFY17 Total Revenue EBITDA EBITDA Margin (%) PAT Research Analyst First of its kind!!! April 28, 2017 IRB Infrastructure Investment Trust (InvIT) is slated to be India s first publicly listed infrastructure investment trust. Through the trust, IRB Infrastructure Developers Ltd (Sponsor) will hold operational NHAI toll road assets aggregating to 3,645 lane km of highways across five states in western and southern India. These assets are operational and generate income through inflation-linked tariff hikes. They have weighted average balance concession period of ~16 years. Investors are expected to be offered returns in the form of dividend, interest and buyback for holding units in the InvIT. Overview The issue comprises a fresh issue and an offer for sale (OFS) with an option to retain oversubscription of up to 25% of the issue size. Issue proceeds will be utilised towards reduction of debt of the project SPVs and associated interest obligations. IPO proceeds will be utilised towards (a) full/part repayment/prepayment from their respective senior lenders, (b) full prepayment of subordinate debt provided by the sponsor and the project manager and (c) full prepayment of certain unsecured loans and advances provided by the sponsor, the project manager and certain members of the sponsor group. Exhibit 1: Post listing InvIT structure IRB InvIT Sachin Jain sachain.ja@icicisecurities.com Deepak Purswani, CFA deepak,purswani@icicisecurities.com Vaibhav Shah vaibhav.shah@icicisecurities.com

2 Exhibit 2: Current shareholding of six project SPVs Investment Rationale Portfolio of income generating assets in key growth markets: Upon completion of the formation transactions, the InvIT will own 100% of the six project SPVs. Each of these project SPVs own, operate and maintain a toll-road project in India. The toll revenue trend of six SPVs over the past three years is mentioned below. The projection for next three years are also shared in RHP. Exhibit 3: Toll revenue trend of SPVs Projects FY14 FY15 FY16 9MFY17 CAGR ISDTPL % ITCTPL % IDAAIPL % IJDTPL % MITPL % ITATPL % Exhibit 4: Projected financials of trust... ( Crore) FY18P FY19P FY20P Net Revenue 1, , ,291.1 O&M Expenses InvIT Expenses (incl IM, Trustee, Valuer Fees) Total Operating Expenditure EBITDA ,032.8 EBITDA Margin (%) 81.5% 81.8% 80.0% Interest Depreciation PBT Total Tax Net Profit / (Loss) for the year Page 2

3 Attractive sector with strong underlying fundamentals The road transport sector accounted for 4.7% of India's GDP in Over the last five years, the number of vehicles on Indian roads has grown at an average rate of ~10.2% per year. According to NHAI, there are currently ~96,260 km of national highways in India, constituting less than 1.7% of India's entire road network but carrying ~40% of India's total road traffic. Going forward, an increase in traffic is expected to drive investment in the roads & highways sector. Increases in two wheeler and four wheeler vehicles, freight traffic, trade and interstate tourism are all expected to drive growth. India's National Transport Development Policy Committee estimates that road freight traffic in India will grow at ~9% per annum and road passenger traffic will grow at ~17% per annum over the next 20 years. The rapid expansion and strengthening of the road network, therefore, is imperative, for managing both present and future traffic. Diversified road project portfolio and revenue base Initial road assets consist of a mix of operational toll road projects spread across several states in India. The geographic diversity of the initial road assets could play a significant role in developing experience and expertise, including ability to evaluate, acquire, operate and maintain new projects. Initial road assets are generally located near or connect major cities in India. Exhibit 5: Diversified location of operational assets... Page 3

4 Experienced sponsor, investment manager and project manager with consistent track records in operating, maintaining projects: The sponsor is one of the largest infrastructure development and construction companies in India in terms of networth in the roads & highways sector with a large project portfolio of 8,183 lane km of roads and highways in operation, under construction or under development, excluding the initial road assets, as of December 31, The Investment manager has ~18 years of experience in operating road BOT projects and is also experienced in developing, operating and maintaining toll plazas. The investment manager is a wholly owned subsidiary of the sponsor. The project manager is a wholly-owned subsidiary of the sponsor, having executed a majority of all EPC work being undertaken by the sponsor. It also acts as the operations and maintenance contractor for substantially all of the sponsor's projects, including the initial road assets. The project manager has experience in execution of construction work for roads, highways, and other relevant structures and has a track record of constructing over 2,500 km of roads & highways as of December 31, Low leverage upon listing, providing debt capacity to finance future growth Net proceeds are expected to be used to repay and replace a significant portion of the project SPVs' existing indebtedness. The resulting low leverage will provide debt capacity to grow business, including by financing future acquisitions. The trust intends to finance future development and acquisitions through issuance of additional units, as well as through bank borrowings and other indebtedness, subject to the borrowing limits contained in the InvIT Regulations. Thus, the low leverage will provide a significant advantage over competitors in developing and acquiring projects that meet investment objectives. Growth opportunities and access to sponsor's portfolio Through its relationship with the sponsor, the trust will have access to an important pipeline of potential acquisitions. Pursuant to the right of first offer/right of first refusal (ROFO/ROFR) deed and the future assets agreement, the sponsor has agreed to provide the trust with rights of first offer and first refusal with respect to certain toll road assets located in India, which are owned or which may be acquired or developed by the sponsor or its existing or future subsidiaries. The valuation for the tollroad assets under the future assets agreement will be based on the average of the valuations provided by any two independent valuers, one appointed by the sponsor or its subsidiary, and the other by the trust (acting through the trustee) and the investment manager. This access to future toll road assets sourced by the sponsor or its existing or future subsidiaries will be an important source of growth in the future. Page 4

5 Portfolio details of six toll road assets under InvIT Surat Dahisar NH 8 Project Surat Dahisar (ISDTPL) project comprises the section of NH 8 with project length of 239 km. It is part of the Golden Quadrilateral project undertaken by NHAI. NHAI granted ISDTPL concession for 12 years for this project. The concession period commenced on February 20, 2009 and is expected to expire on February 19, ISDTPL began collecting tolls with respect to this project on February 20, The tollable traffic count for the Surat Dahisar NH 8 Project increased to 9.92 million (mn) vehicles in 2016 from 7.93 mn vehicles in 2014, representing 11.86% CAGR. Also, gross toll collections grew at 12.1% CAGR to crore in FY Exhibit 6: Map of Surat-Dahisar Project Tumkur Chitradurga NH 4 project Tumkur Chitradurga (ITCTPL) project comprises the section of NH 4 with project length of 114 km. It caters to various types of traffic, including urban, suburban and regional traffic. The land use on both sides of project is mixed and includes agricultural, residential, commercial, and small and medium scale industrial uses, as well as undeveloped land. The NHAI granted ITCTPL a concession for 26 years for this project. The concession period commenced on June 4, 2011 and is expected to expire on June 3, ITCTPL began collecting tolls with respect to this project on June 4, The tollable traffic count for the project increased to 5.8 mn vehicles in 2016, representing a CAGR of 12.0%. Also, gross toll collections grew at 11.3% CAGR to crore in FY Exhibit 7: Map of Tumkur - Chitradurga Project Page 5

6 Bharuch - Surat NH 8 Project The Bharuch Surat (IDAAIPL) project comprises the section of NH 8 with project length of 65 km. The project is part of the Golden Quadrilateral project undertaken by the NHAI and is part of the first section of that project to be completed. The land abutting the project is largely agricultural and undeveloped but in many places, especially near urban centres, ribbon development is occurring on both sides of the project for reasonable lengths. IDAAIPL was granted a concession period of 15 years for this project. The concession period commenced on January 2, 2007 and is scheduled to expire on January 1, It began collecting tolls with respect to this project on September 25, The tollable traffic count for the project increased to 9.03 million vehicles in 2016, representing a CAGR of 5.33% in FY Also, gross toll collections grew at 7.8% CAGR to crore in FY Exhibit 8: Map of Bharuch - Surat Project Jaipur Deoli NH 12 Project The Jaipur Deoli project (IJDTPL) comprises the section of NH 12 with project length of km. NH 12 passes through two states via Rajasthan and Madhya Pradesh. The land use on both sides of the project is mixed and includes agricultural, residential, commercial and small & medium scale industrial uses, as well as undeveloped land. It was granted a concession period of 25 years, which commenced on June 14, 2010 and is scheduled to expire on June 13, IJDTPL began collecting tolls with respect to this project on September 27, This project commenced operations on September 27, Thus, the financial year 2014 numbers only represent the traffic count for part of The tollable traffic count grew at 57.6% CAGR to 3.26 mn over FY Also, gross toll collections grew at 87.8% CAGR to crore in FY Exhibit 9: Map of Jaipur Deoli Project Page 6

7 Omalur Salem Namakkal NH 7 Project The Omalur Salem Namakkal project comprises the sections of NH 7 with project length of ~69 km. The land abutting the project from Omalur to Namakkal is a mix of agriculture, urban and semi-urban land use. The portions of the project near Salem and Namakkal are predominately urban. MVR Infrastructure and Tollways Pvt Ltd (MITPL) was granted a concession period of 20 years for this project. The concession period commenced on August 15, 2006 and is scheduled to expire on August 14, MITPL began collecting tolls with for this project on August 6, The tollable traffic count for project grew at 26.2% CAGR to 7.91 mn vehicles over FY Also, gross toll collections grew at 10.5% CAGR to 74.9 crore over FY Exhibit 10: Map of Omalur Salem - Namakkal Project Talegaon Amravati NH 6 project The Talegaon Amravati project (ITATPL) comprises the section of NH 6 with project length of 64 km. It caters to various types of traffic such as urban, suburban and regional traffic. The land use on both sides of the project is mixed and includes agricultural, residential, commercial, and small & medium scale industrial uses, as well as undeveloped land. The dominant land use on both sides of project corridor is rural agriculture land. ITATPL was granted a concession period of 22 years for this project. The concession period commenced on September 3, 2010 and is scheduled to expire on September 2, Substantial completion of the project was achieved on April 24, 2013, and ITATPL commenced partial tolling on a project length of 45.3 km on this date. It achieved second provisional completion on March 31, 2014, and commenced tolling on total project length on April 1, The tollable traffic count for project grew at 6.5% CAGR to 3.03 mn vehicles over FY Also, gross toll collections grew at 33.7% CAGR to 47.2 crore over FY Exhibit 11: Map of Talegaon Amravati Project Page 7

8 Key Risks & Concerns Certain project SPVs have experienced losses in prior years; any losses in future could adversely affect business Few of the project SPVs have experienced losses in prior years. For FY14, FY15 and FY16 and 9MFY17, the project SPV s net loss on a combined historical basis was 47.4 crore, crore, 76.4 crore and 13.1 crore, respectively, primarily due to depreciation and amortisation expenses and finance costs. Under the Companies Act, 2013, companies that do not generate distributable profits are not permitted to pay dividends to their shareholders. Accordingly, any project SPVs that fail to generate such distributable profits will not be permitted to pay dividends to the trust. Any losses in future could adversely affect the trust s business, financial condition and results of operations, its ability to make distributions and the trading price of the units. Trust may be unable to distribute to unit holders/level of distribution may fall The distribution to unit holders will be in the form of dividends, interest, buyback of units and any other means permitted by law. There can be no assurance or guarantee that the trust will have sufficient distributable or realised profits or surplus in any future period to make distributions every six months in any amount or at all. In addition, the financing agreements entered into by project SPVs with certain banks and financial institutions contain certain restrictive covenants, including, but not limited to, requirements that they obtain consent from the lenders prior to making any dividend payments to the Trust. Any failure to obtain such consents in a timely manner or at all would impede its ability to make distributions to unit holders on a regular basis or at all. This could materially and adversely affect the market price of the units. Decline in traffic volumes may affect business prospects Toll revenues depend on toll receipts, which, in turn, depend on toll fees and traffic volumes on the toll roads. Over FY14-16, the passenger car unit volumes grew at 9.38% CAGR to 2.6 lakh units. Traffic volumes are directly or indirectly affected by a number of factors, many of which are outside of InvIT s control, including: toll fees, fuel prices in India, the frequency of traveller use, the number and affordability of automobiles etc. In addition, under the terms of the concession agreements entered into by each of the project SPVs and NHAI, the government and state governments have the right to construct and open additional roads, which may serve as alternate routes to initial road assets after expiry of between eight to 15 years, depending on terms of concession. The construction of such alternative roads and highways may result in a diversion of vehicular traffic from initial road assets and a reduction of revenue from toll receipts. The existence or improvement of such alternative roads and highways may also result in a diversion of vehicular traffic from initial road assets and a reduction of revenue from toll receipts. Any change in tax benefits on SPVs may affect results of operations Currently, surface transport infrastructure development projects, including toll-road concession projects, enjoy certain benefits under Section 80-IA of the Income Tax Act. In accordance with and subject to the condition specified in this section, the project SPVs are entitled to certain benefits for all of the operational infrastructure projects and would be entitled to a deduction of 100% of the profits derived from the development or operation and maintenance or development, operation and maintenance of the toll roads for any 10 consecutive tax assessment years out of 20 years, beginning from the year in which the project SPV develops and begins to operate the infrastructure facility. Page 8

9 Incentives for Section 80-IA of the Income Tax Act are available for 10 consecutive tax years out of a block of 20 years from the year of commencement of operations. However, the project SPVs would be liable to pay tax on their respective book profits under the MAT provisions at the rate of 18.5% (plus applicable surcharge and cess). When the tax incentives expire or terminate, tax liability may increase, thereby impacting profitability. Further, the Indian tax authorities may disallow the deduction availed if the conditions specified are not complied with or the computation of profits and gains of the eligible business is not in accordance with the manner prescribed and there is no assurance that such projects will continue to enjoy the tax benefits. This may affect the overall tax liabilities of the Project SPVs and result in significant additional taxes becoming payable thereby resulting in a material, adverse effect on business, financial condition, cash flows and results of operations and consequently may have a material, adverse impact on distributions. Criminal investigations pending against promoter, chairman, managing director of sponsor In 2009, pursuant to a complaint filed by a social worker and right to information activist (RTI activist), a case was registered at Lonavala city police station against Virendra D Mhaiskar (the promoter, chairman and managing director of the Sponsor), Deepak D Gadgil (Head Realty, airport and hospitality of the sponsor) and certain others, alleging illegal purchase of governmental land in village Pimploli and village Ozarde, Taluka Maval, District Pune on the basis of fake and forged documents. Later on January 13, 2010, the RTI Activist was murdered by unknown persons. The investigation of the murder case of the RTI Activist was subsequently transferred from local police to the Central Bureau of Investigation (CBI). In the event that there is any adverse finding in the land acquisition matter or in the murder case, the reputation of the sponsor and its business, results of operations, cash flows, prospects and financial condition may be adversely affected. Such an event could, in turn, have a material adverse effect on its reputation, business, financial condition and results of operation, including as a result of any regulatory or other issues in connection therewith. Page 9

10 Brief profiles of sponsor s directors a) Virendra D Mhaiskar Virendra D Mhaiskar, aged 45 years, is the Chairman & Managing Director of the sponsor. He holds a Diploma in Civil Engineering from Shriram Polytechnic, Navi Mumbai. Mr Mhaiskar has several years of experience in the construction and infrastructure industry. He joined the IRB Group in June 1990 and is responsible for leading and directing the IRB group s strategy in BOT and funded projects. b) Deepali V Mhaiskar Deepali V Mhaiskar, aged 43 years, is a wholetime director of the sponsor. She joined the sponsor in July She has a Bachelor s degree in Arts (Special) from Gujarat University and has several years of experience in administration and management. c) Mr. Sudhir R. Hoshing Sudhir Rao Hoshing, aged 52 years joined the Sponsor group as a joint managing director in He is a civil engineer and business administration graduate has experience in the field of highway and airport infrastructure. He has earlier worked as the chief executive officer of road business in Reliance Infrastructure Limited. He is also life time member of IRC (Indian Road Congress). d) Mukeshlal Gupta Mukeshlal Gupta, aged 61 years, is a wholetime director of the sponsor. In 2008, he joined Modern Road Makers Pvt Ltd (project manager) as Director Technical. He holds a Bachelor s degree in Civil Engineering from Mumbai University. He has several years of experience in managing infrastructure projects e) Sunil Talati Sunil Talati, aged 65 years, is an independent director of the sponsor. He holds a Bachelor s degree in law from Gujarat University and a Master s degree in commerce from HL Commerce College, Ahmedabad. He is also a fellow member of the Institute of Chartered Accountants of India. He was the Vice President and President of the Institute of Chartered Accountants of India for the year and respectively. He has several years of experience in the field of Accounts, Audit and Tax Laws. f) Chandrasekhar S. Kaptan Chandrasekhar S. Kaptan, aged 64 years, is an Independent Director of the Sponsor. He holds a Bachelor s degree in law from Nagpur University. Mr Kaptan practices before the Nagpur Bench of the Bombay High Court. Mr Kaptan has several years of experience in constitutional and excise matters. g) Sandeep J. Shah Sandeep J Shah, aged 57 years, is an independent director of the sponsor. He is member of the Institute of Chartered Accountants of India. He has been a practicing chartered accountant for several years and has experience in the field of accounts, audit and tax laws. h) Sunil Tandon Sunil Tandon, aged 59 years, is an independent director of the sponsor. He is a former officer of the Indian Administrative Services, and in the past, has held various positions in state and central governments. He has several years of experience in public administration Page 10

11 Financial Summary Exhibit 12: Profit & Loss Statement ( Crore) FY14 FY15 FY16 9MFY17 Net Revenue Road work & Site expenses Employee benefit expenses Other expenses Total Operating Expenditure EBITDA EBITDA Margin (%) 89.8% 80.9% 83.7% 82.8% Other Income Interest Depreciation PBT (45.1) (126.3) (59.1) (5.4) Total Tax 2.4 (2.4) Net Profit / (Loss) for the year (47.5) (123.9) (76.4) (13.0) Exhibit 13: Balance Sheet ( Crore) FY14 FY15 FY16 9MFY17 Equity share capital 1, , , ,114.6 Subordinate debt (in nature of equity) Other equity Total Shareholders funds 2, , , ,815.3 Long term borrowings 4, , , ,698.9 Short term borrowings Total Debt 4, , , ,386.6 Current Tax Liabilities (net) Other Non-current liabilities 6, , , ,254.3 Liability side total 13, , , ,459.5 Net Intangible Block 13, , , ,690.6 Current Investments Debtors Cash Other Current Assets Deferred tax assets (net) Other non current assets Total Current Assets Creditors Provisions Other Current Liabilities Total Current Liabilities Net Current Assets (62.8) (231.0) Assets side total 13, , , ,459.6 Page 11

12 RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai research@icicidirect.com Page 12

13 ANALYST CERTIFICATION We /I, Sachin Jain, CA, Deepak Purswani, CFA MBA (Finance), Vaibhav Shah, MBA (Finance); Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered Research Analyst with Sebi Registration Number INH ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report. It is confirmed that Sachin Jain, CA, Deepak Purswani, CFA MBA (Finance), Vaibhav Shah, MBA (Finance); Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Sachin Jain, CA, Deepak Purswani, CFA MBA (Finance), Vaibhav Shah, MBA (Finance); Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Page 13