Orient Paper & Industries Ltd

GICS Industry : Construction Materials l Sub Industry : Construction Materials l Website : www.orientpaperindia.com Orient Paper & Industries Ltd Key Stock Indicators NSE Ticker : ORIENTPPR Bloomberg Ticker : OPI:IN Face value / Share: 1. Div. Yield (%): 2.9 CMP (as on 24 Jan 211 Rs/share):.7 2-week range up to 24 Jan 211 (Rs)(H/L): 6.4/44.4 Market Cap as on 24 Jan 211 (Rs mn): 9,778 Enterprise Value as on 24 Jan 211 (Rs mn): 14,9 Shares outstanding (mn): 192.9 Free Float (%): 66.4 Average daily volumes (12 months) : 272,4 Beta (2 year) : 1.2 Orient Paper and Industries Limited (OPIL), has been promoted by the G P Birla and C K Birla groups. It has 3 major businesses cement, electrical consumer durables and paper. The products manufactured are portland pozzolana cement (PPC) and ordinary portland cement (OPC) in the cement segment, fans and compact fluorescent lighting (CFL) in the electrical consumer durables segment and tissue paper, writing paper, etc in the paper segment. The company s cement unit has presence in Andhra Pradesh, Maharashtra and Gujarat. It exports products manufactured in electrical consumer durables and paper segment to developed markets. KEY HIGHLIGHTS Diversified revenue stream OPIL is diversified into production of cement, electrical consumer durables and paper. In FY1, cement contributed ~% to total revenues, followed by electrical consumer durables at ~3% and paper ~%. Presence in different production segments mitigates the risk of a downturn in revenues in any particular segment. The company has a wide network of distributors and dealers for electrical and paper segments. It exports electrical consumer durables to Egypt, Sudan, the USA and other developed markets. Exports contributed ~4% to FY1 revenues. Presence in western and southern region for cement segment OPIL manufactures PPC and OPC. It has a manufacturing capacity of million tonnes per annum (mtpa). Manufacturing plants are located at Devapur in Andhra Pradesh and Jalgaon in Maharashtra. The cement division s core market is in Maharashtra, Gujarat and Andhra Pradesh. These 3 states account for almost ~93% of cement sales, as of FY1. The cement segment contributed ~% to total revenues in FY1. Popular brands are Birla A1 Premium (PPC) and Orient Gold (OPC). Capacity expansion implemented in FY1 In FY1, OPIL expanded cement manufacturing capacity to mtpa vis-à-vis 2.4 mtpa in FY9. The Devapur plant now has capacity of 3 mtpa, while the Jalgaon plant has capacity of 2 mtpa. Also in FY1, the company commissioned a MW power plant to meet captive requirement of cement plants. In electrical consumer durables segment, the company expanded its fan manufacturing capacity from 3. mn units a year to mn units a year. Expansion took place at the company s Faridabad, Haryana and Kolkata, West Bengal plants. The company also launched 6 new models in the CFL segment. In the paper segment, OPIL expanded tissue paper manufacturing capacity at its Amlai, Madhya Pradesh plant from 1, tonnes per year to, tonnes per year. KEY RISKS Increase in prices of key inputs coal, copper, steel, pulpwood, etc Cyclicality of cement business Competition from domestic players and the unorganised market in cement, electric and paper segments Stock Performances vis-à-vis market Returns (%) YTD 1-m 3-m 12-m ORIENTPPR -2-12 -16 6 NIFTY 8 - -7 12 Key Financial Indicators Mar-8 Mar-9 Mar-1 Revenue (Rs mn) 14,116.6,497.6 16,69.6 EBITDA margins (%).1 22.9 18.4 PAT (Rs mn) 1,97. 2,4.9 1,7.8 PAT margins(%) 13..7 9.4 Gearing (x)..7.6 EPS (Rs/share) 9.9 12.6 8.2 PE (x) 4. 1.9 6.2 P/BV (x) 1.6.7 1.3 RoCE (%) 4. 36.3 21.6 RoE (%) 47.9 4.6 22. EV/EBITDA (x) 3.1 2. 4. n.m. : Not meaningful Shareholding (As on September 3, 21) (index) 16 14 12 1 8 6 4 2 Jan-1 FII 1% Feb-1 DII 34% Indexed price chart Mar-1 Apr-1 May-1 Jun-1 Jul-1 Aug-1 Sep-1 Oct-1 Nov-1 Others 31% Promoter 34% Dec-1 (') 4 3 2 1 Volumes (RHS) ORIENTPPR NIFTY Note: 1) YTD returns are since April 1, 21 to Jan 24, 211. 2) 1-m, 3-m and 12-m returns are up to Jan 24, 211. CRISIL COMPANY REPORT 1

BACKGROUND OPIL was incorporated in the year 1936. The company has been promoted by the G P Birla and C K Birla groups. It has 3 major businesses cement, electrical consumer durables and paper. The cement manufacturing plants are located at Devapur in Andhra Pradesh and Jalgaon in Maharashtra, and have a combined capacity of mtpa. The products manufactured are PPC and OPC. The plants for electrical consumer durables are located at Faridabad in Haryana and Kolkata in West Bengal. The products manufactured are fans and CFLs. The plant for paper manufacturing is located at Amlai in Madhya Pradesh and manufactures products such as tissue paper, writing paper, notebooks, etc. Popular brands of the company are Birla A1 (PPC) and Orient Gold (OPC) in cement, Orient PSPO (fans) and Orient OLO (CFL) in electrical segment and Orient photocopying paper and 1st Choice notebook in paper segment. COMPETITIVE POSITION Peer Comparison Orient Paper & Tamil Nadu Newsprint Crompton Industries Ltd J.K.Cement Ltd & Papers Ltd J K Paper Ltd. Greaves Ltd. Mar-1 Mar-1 Mar-1 Mar-1 Mar-11 Revenue (Rs mn) 16,69.6 18,391.7 11,21.2 12,64.3 93,382.2 EBITDA margins (%) 18.4 24.7 27.9 2.4 14. PAT (Rs mn) 1,7.8 2,24. 1,26.6 91. 8,624.2 PAT margins(%) 9.4 12.2 11.4 7. 9.2 Gearing (x).6 1. 1.7 1.2.3 EPS (Rs/s hare) 8.2 32.1 18.2 12.9 13.4 PE (x) 6.2 4.7 7.6 4.3 23.3 P/BV (x) 1.3 1. 1.2.8 9.3 RoCE (%) 21.6 17.6 1.2.6 48.4 RoE (%) 22. 22.9 17.2 19.9 47.6 EV/EBITDA (x) 4. 4.3 7. 3.9.2 n.m: Not meaningful FINANCIAL PROFILE Stable growth over last 2 years; EBITDA margin declines OPIL registered a growth of ~9% CAGR between FY8 and FY1, with top-line growing from Rs 14.1 bn in FY8 to Rs 16.6 bn in FY1. Revenue growth in FY1 was ~8% vis-à-vis FY9. In FY1, growth was led by increased sales in the cement and electric consumer durables segments, following expansion of capacity. In FY1, cement contributed ~% to total revenues, while electrical consumer durables contributed ~3%. EBITDA margin declined from 22.9% in FY9 to 18.4% in FY1, owing to increase in cost of raw materials such as coal, copper, steel, pulpwood, etc. Key Financial Indicators Units Mar-8 Mar-9 Mar-1 Revenue Rs million 14,116.6,497.6 16,69.6 EBITDA margins.1 22.9 18.4 PAT Rs million 1,97. 2,4.9 1,7.8 PAT margins 13..7 9.4 Revenue growth 16.3 9.8 7.7 EBITDA growth 33..4-13.4 PAT growth 62.8 27.2-3. Gearing Times..7.6 RoCE 4. 36.3 21.6 RoE 47.9 4.6 22. CRISIL COMPANY REPORT 2

INDUSTRY PROFILE Cement The cement industry is one of the key growth drivers of the Indian economy due to its vitality in the infrastructure development of the country. Cement consumption has increased at a compound annual growth rate (CAGR) of around 1 per cent from 24- to 29-1, primarily driven by demand from infrastructure and housing segments. As of 29-1, the pan-india installed capacity in the cement industry was around 249 million tonnes with an operating rate of close to 8 percent in the same year. Additionally, the market share of the top players has grown from 48 per cent in 23-4 to 4 per cent in 29-1, indicating increased consolidation in the industry. CRISIL Research believes the overall consolidation in the industry has ensured better pricing flexibility in the hand of the producers. Writing and Printing Paper The writing and printing (W&P) paper segment is less fragmented as compared to other segments in the paper industry. Hence, domestic players in this segment enjoy a fair degree of pricing flexibility. Further, most large players have introduced value-added products to command higher prices. W&P paper can be sub-divided into coated and uncoated paper. Uncoated paper comprises creamwove, maplitho and copier paper. Coated paper consists of coated chrome paper, art paper and art board. Creamwove is a low quality, low value product, whereas coated paper is a high quality, high value product. Uncoated paper accounts for bulk of the market (creamwove with 47 per cent; maplitho and copier together with 39 per cent) with coated paper holding the remaining share. Greater emphasis on education and literacy, coupled with growth in organised retail and demand for better quality paper, has pushed up demand for W&P paper. The factors that affect demand for W&P paper include printing of books and stationery for education; usage of office printing and stationery; and printing of company published statutory documents such as annual reports, share issue forms etc. Therefore, growth in industrial and services sectors augurs well for W&P paper demand. Lighting The industry can be broadly classified into light sources (constitutes 6 per cent of the lighting market), and lighting fixtures and accessories. Light sources can be further divided into general lighting system lamps, fluorescent tubes, special lamps, compact fluorescent lamps (CFLs) and other lamps (mini, auto, etc). Incandescent lamps accounted for 63 per cent of the light sources market in volume terms in 29, fluorescent lamps at per cent, and CFL, the fastest growing segment, at 21 per cent. The domestic lighting industry is influenced by expansion plans of key sectors such as real estate and organised retail, ongoing power sector reforms, continued emphasis on rural electrification, and compact fluorescent lamp (CFL) promotion programmes like Bachat Lamp Yojana introduced by the Central Government. Raw materials such as glass envelopes, copper, steel, aluminium, molybdenum shells and tungsten wires account for 6-6 per cent of the total manufacturing costs. CRISIL COMPANY REPORT 3

ANNUAL RESULTS Income Statement Balance sheet (Rs million ) Mar-8 Mar-9 Mar-1 (Rs million ) Mar-8 Mar-9 Mar-1 Net Sales 14,7.2,441.9 16,627. Equity share capital 192.7 192.8 192.9 Operating Income 14,116.6,497.6 16,69.6 Reserves and surplus,376. 6,187.9 7,46.6 Tangible net worth,69.2 6,38.7 7,99. EBITDA 3,42.3 3,4.9 3,8.1 Deferred tax liablity: asset 988.1 1.8 1,12.8 EBITDA Margin.1 22.9 18.4 Long-term debt 2,6. 3,481. 4,96.2 Short-term-debt 38.6 97. 62.2 Depreciation 338.6 347.3.2 Total debt 2,44.6 4,46.6 4,698.4 Interest 413. 187.1 348.7 Current liabilities 2,6.3 2,17.7 2,793.1 Other Income 69.7 48.4 79.3 Total provisions 3.9 76. 678. Total liabilities 11,674.1 14,279.8 16,871.8 PBT 2,99.9 3,26.3 2,323.8 Gross block 11,49.4 8,397.8 16,191.2 PAT 1,97. 2,4.9 1,7.8 Net fixed assets 7,878.7 1,321.8 11,74. Investments 91. 91.7 47.7 PAT Margin 13..7 9.4 Current assets 3,73.9 3,866.2 4,827. Receivables 1,39.8 1,419.1 1,844. No. of shares (Mn No.) 192.7 192.8 192.9 Inventories 1,242.4 1,99.9 1,3.1 Cash 27.8 338.2 467.2 Earnings per share (EPS) 9.9 12.6 8.2 Total assets 11,674.1 14,279.7 16,871.7 Cash flow Ratio (Rs million ) Mar-8 Mar-9 Mar-1 Mar-8 Mar-9 Mar-1 Pre-tax profit 2,86.4 3,.9 2,26.6 Revenue growth (%) 16.3 9.8 7.7 Total tax paid -1,12. -1,86.7-146.9 EBITDA growth(%) 33..4-13.4 Depreciation 338.6 347.3.2 PAT growth(%) 62.8 27.2-3. Change in working capital 329.4 273. -31.4 EBITDA margins(%).1 22.9 18.4 Cash flow from operating activities 2,.9 2,4. 2,362. Tax rate (%) 33.9 29.9 6.3 Capital Expenditure -2,.3-2,81.7-1,848.2 PAT margins (%) 13..7 9.4 Investments and others.7 -.2-379. Dividend payout (%) 12. 11.9 18.4 Dividend per share (Rs) 1.1 1. 1. Cash flow from investing activities -2,14.6-2,81.9-2,227.2 BV (Rs) 28.9 33.1 39.4 Equity raised/(repaid) 1,78. -4.6 3.6 Return on Equity (%) 47.9 4.6 22. Debt raised/(repaid) -1,812.1 1,912. 241.9 Return on capital employed (%) 4. 36.3 21.6 Dividend (incl. tax) -28.8-342.1-338.1 Others (incl extraordinaries) 111.6-1,227.1 86.4 Gearing (x)..7.6 Interest coverage (x) 8.3 18.7 8.8 Debt/EBITDA (x).7 1.3 1. Cash flow from financing activities -48.3 338.2-6.2 Change in cash position 93. 67.3 129.1 Asset turnover (x) 1.3 1.6 1.4 Opening cash 177.8 27.8 338.2 Current ratio (x) 1.2 1. 1.3 Closing cash 27.8 338.2 467.2 Gross current assets (days) 92 91 12 n.m : Not meaningful; QUARTERLY RESULTS (Rs million) Sep-1 % of Rev Sep-9 % of Rev Sep-1 % of Rev Sep-9 % of Rev No of Months 3 3 6 6 Revenue 3,926.8 1. 3,79. 1. 8,43. 1. 7,7. 1. EBITDA 28.4 7.3 79.1 21.2 1,9.9 12.9 1,419.2 2.1 Interest 76. 1.9 72. 2. 176.7 2.1 133.2 1.9 Deprecia tion 2.2.1 19.1 3. 392. 4.7 198.4 2.8 PBT 9.3.2 77.4 16.1 22.2 6.2 1,87.6.4 PAT..1 4.4 11.3 347.4 4.1 739.9 1. CRISIL COMPANY REPORT 4

FOCUS CHARTS & TABLES Rs mn 6,, 4, 3, 2, 1, Mar-7 Sep-7 Sales Quarterly sales & y-o-y growth Dec-7 Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Sep-9 Dec-9 Mar-1 4 3 Sep-1 Sales growth y-o-y (RHS) 3 2 1 Rs mn 7 6 4 3 2 1 Mar-7 Sep-7 Dec-7 Net Profit Quarterly PAT & y-o-y growth Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Sep-9 Dec-9 Mar-1 6 Sep-1 Net profit growth y-o-y (RHS) 4 3 2 1-1 -2 Rs/share 4 3 3 2 1 Mar-7 Sep-7 Dec-7 Mar-8 Jun-8 EPS Sep-8 Dec-8 Mar-9 Sep-9 Dec-9 Mar-1 Sep-1 4 3 3 2 1 Mar-7 Sep-7 Movement in operating and net margins Dec-7 OPM Mar-8 Jun-8 Sep-8 Dec-8 Mar-9 Sep-9 Dec-9 NPM Mar-1 Sep-1 Shareholding Pattern () Dec 29 Mar 21 Jun 21 Sep 21 Promoter 33. 33.7 33.7 33.6 FII 1.1 1. 1.8 1. DII 31.9 33.2 33. 34.1 Others 33. 32.1 31.6 3.8 Board of Directors Director Name Chandra Kant Birla (Mr.) Manohar Lal Pachisia (Mr.) Michael John Bas tian (Mr.) Amitabha Ghosh (Mr.) Basant Kumar Jhawar (Mr.) Prabhat Kumar Sen (Mr.) Designation Non-Executive Chairman, Promoter- Director Managing Director Director 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 +91-22-3342361, or via e-mail: clientservicing@crisil.com. CRISIL COMPANY REPORT