The Jeypore Sugar Company Ltd

Q1FY12 Result Update Enhancing investment decisions CRISIL Limited. All Rights Reserved.

Explanation of CRISIL Fundamental and Valuation (CFV) matrix The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP). CRISIL Fundamental Grade Assessment CRISIL Valuation Grade Assessment 5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP) 4/5 Superior fundamentals 4/5 Upside (1-25% from CMP) 3/5 Good fundamentals 3/5 Align (+-1% from CMP) 2/5 Moderate fundamentals 2/5 Downside (- 1-25% from CMP) 1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP) Analyst Disclosure Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias the grading recommendation of the company. Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer: This Exchange-commissioned Report (Report) is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. The Data / Report are 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 Report is not a recommendation to buy / sell or hold any securities of the Company. 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 authorized 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 Limited. All Rights Reserved.

Strong revenue growth Fundamental Grade Valuation Grade Industry 2/5 (Moderate fundamentals) 2/5 (CMP has downside) Food products The Jeypore Sugar Company Ltd s (Jeypore Sugar s) results were broadly in line with CRISIL Research s expectations. Q1FY12 revenues increased by 4% y-o-y as the company liquidated the inventory built up in Q4FY11. The new plant at Pothavaram, Andhra Pradesh does not seem to have commenced production as the depreciation levels remained flat y-o-y. We have not been able to confirm from the management about production in Q4FY11, cost of production and the details of commissioning of its new plant. We expect sugar prices to remain firm at Rs 28-29 per kg in H2 of SS21-11 (October 21 to September 211). and at Rs 27-3 per kg in SS211-12 (October 211 to September 212). We maintain our earnings estimates and the fundamental grade of 2/5. Q1FY12 result analysis Revenues increased 4% y-o-y and 1% q-o-q to Rs 757 mn as the company liquidated its inventory built up during Q4FY11. The inventory at Q4FY11-end was 32% higher than that at Q4FY1-end. EBITDA margin expanded from.1% in Q1FY11 to 8.% in Q1FY12 due to higher realisations. The depreciation of the company remained stagnant at Rs 15 mn indicating that the Pothavaram plant was not commissioned during this quarter. The interest expenses increased 37% y-o-y on account of higher interest rates. However, it declined 12% q-o-q indicating that the company might have repaid certain portion of its debt. The net loss of the company declined from Rs 7 mn in Q1FY11 to Rs 3 mn in Q1FY12. Valuations: Current market price has downside We continue to use the P/BV method to value Jeypore Sugar. We have assigned P/BV multiple of.7x and maintain our fair value of Rs 11 per share. KEY FORECAST (Rs mn) FY8 FY9 FY1 FY11# FY12E Operating income 1,944 1,792 2,42 2,15 3,568 EBITDA 24 364 614 241 691 Adj PAT (75) (7) 192 (92) 66 Adj EPS-Rs (16.6) (1.5) 42.3 (2.4) 14.5 EPS growth (%) NM NM NM NM NM Dividend yield (%).7 1.3 3.1 - - RoCE (%) 4.3 8.9 15.3 3.5 12.4 RoE (%) NM NM 29.1 NM 9.5 P/E (x) NM NM 4.5 NM 8.7 P/BV (x) 1.4.7 1.2.9.8 EV/EBITDA (x) 12.6 7.6 5.8 14.8 4.8 #FY11 numbers are based on abridged financials NM: Not meaningful; CMP: Current market price Source: Company, CRISIL Research estimate August 5, 211 Fair Value Rs 11 CMP Rs 125 CFV MATRIX KEY STOCK STATISTICS NIFTY 5332 NSE JEYPORE Face value (Rs per share) 1 Shares outstanding (mn) 4.5 Market cap (Rs mn)/(us$ mn) 569/13 Enterprise value (Rs mn) /(US$ mn) 3,553/8 52-week range (Rs) (H/L) 24/97 Beta.97 Free float (%) 55.2 Avg daily volumes (3-days) 329 Avg daily value (3-days) (Rs mn) SHAREHOLDING PATTERN % 9% 8% 7% 6% 5% 4% 3% 2% 1% Excellent Fundamentals Fundamental Grade 5 4 3 2 1 Poor Fundamentals % PERFORMANCE VIS-À-VIS MARKET Returns 1-m 3-m 6-m 12-m JEYPORE 8% 6% -16% -38% NIFTY -6% -4% -1.2% -2.5% ANALYTICAL CONTACT Chetan Majithia (Head) chetanmajithia@crisil.com Suresh Guruprasad Onkar Kulkarni Strong Downside 1 2 3 4 5 Valuation Grade 54.5% 54.5% 54.5% 54.5%.8%.8%.7%.7% 44.8% 44.8% 44.8% 44.8% sguruprasad@crisil.com okulkarni@crisil.com Strong Upside Sep-1 Dec-1 Jun-11 Promoter DII Others Client servicing desk +91 22 3342 3561 clientservicing@crisil.com CRISIL Limited. All Rights Reserved. CRISIL RESEARCH 1

Q1FY12 Result Summary (Rs mn) Q1FY12 Q4FY11 Q1FY11 q-o-q (%) y-o-y (%) Net sales 757 691 541 1% 4% Raw materials cost 65.1 1.6 485.9 38224% 25% Raw materials cost (% of net sales) 79.9%.2% 89.8% 7,968bps (994)bps Employee cost 29.7 16.8 24.3-72% 22% Other expenses 61.7 338.8 3.3-82% 14% EBITDA 6.7 243.4.3-75% NM EBITDA margin 8.% 35.2%.1% (2,722)bps 796bps Depreciation 15 6 15-74% 3% EBIT 45 184-15 -75% NM Interest and finance charges 76 86 56-12% 37% Operating PBT -31 97-7 -132% NM Other Income 1.1 1.4.5-23% 131% Extraordinary Income/(expense) NM NM PBT -3 99-7 -13% NM Tax -22 NM NM PAT -3 121-7 NM NM Adj PAT -3 121-7 NM NM Adj PAT margin -3.9% 17.5% -12.9% NM NM No of equity shares (mn) 5 5 5 - - Adj EPS (Rs) -6.6 26.7-15.4 NM NM Strong growth in sales - up 4% y-o-y Source: Company, CRISIL Research Sale and EBITDA margin PAT and PAT margin (Rs mn) 8 7% 7 6 5 22% 26% 4 3 % 2 644 69 333 541 445-14.9% 14% 432 35% 8% 691 757 8% 7% 6% 5% 4% 3% 2% 1% % -1% -2% (Rs mn) 15 12% 12% 3% 5 8 76 12-5 - -15-13% -7-3% -12-3% -131 18% 121-4% -3 2% 1% % -1% -2% -3% -4% Sep-1 Dec-1 Jun-11 Sep-1 Dec-1 Jun-11 Net Sales EBITDA Margin (RHS) PAT PAT Margin (RHS) Source: Company, CRISIL Research Source: Company, CRISIL Research Share price movement Fair value since initiation 35 (Rs) (') 3 25 2 18 16 3. 2.5 2 15 14 12 2. 1.5 8 1. 5 6 4.5 2. Jul-9 Nov-9 Jan-1 May-1 Jul-1 Sep-1 Nov-1 May-11 Dec-1 Dec-1 Dec-1 Feb-11 Feb-11 May-11 Jun-11 Jun-11 -indexed to Jeypore NIFTY Traded Quantity (RHS) CRISIL Fair Value Jeypore CRISIL Limited. All Rights Reserved. CRISIL RESEARCH 2

VALUATION We continue to value Jeypore Sugar using the P/BV method. We assign P/BV multiple of.7x to FY12E book value of Rs 159 and maintain our fair value of We maintain the fair value of Rs 11 Rs 11 per share. Our valuation grade is 2/5. One-year forward P/B band (Rs) 45 4 35 3 25 2 15 5 One-year forward EV/EBITDA band (Rs mn) 9, 8, 7, 6, 5, 4, 3, 2, 1, Mar-7 Jul-7 Oct-7 Jan-8 Apr-8 Aug-8 Nov-8 Feb-9 Oct-1 Mar-7 Jul-7 Oct-7 Jan-8 Apr-8 Aug-8 Nov-8 Feb-9 Oct-1 Jeypore.5x 1x 1.5x 2x 2.5x Jeypore 3x 5x 7x 9x P/B premium/discount to NIFTY P/B movement -76% -78% -8% -82% -84% -86% -88% -9% -92% -94% -96% -98% 3. 2.5 2. 1.5 1..5. +1 std dev -1 std dev Mar-7 Jul-7 Oct-7 Jan-8 Apr-8 Aug-8 Nov-8 Feb-9 Oct-1 Mar-7 Jul-7 Oct-7 Jan-8 Apr-8 Aug-8 Nov-8 Feb-9 Oct-1 Premium/Discount to NIFTY Median premium/discount to NIFTY 1yr Fwd PB (x) Median PB CRISIL IER reports released on The Jeypore Sugar Company Ltd Date Nature of report Fundamental grade Fair value Valuation grade CMP (on the date of report) 2-Dec-1 Initiating coverage* 2/5 Rs 152 3/5 Rs 167 21-Feb-11 Q3FY11 result update 2/5 Rs 152 3/5 Rs 154 9-June-11 Q4FY11 result update 2/5 Rs 11 3/5 Rs 5-Aug-11 Q1FY12 result update 2/5 Rs 11 2/5 Rs 125 * For detailed initiating coverage report please visit: www.ier.co.in CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters. CRISIL Limited. All Rights Reserved. CRISIL RESEARCH 3

FINANCIALS Income statement Balance Sheet (Rs mn) FY8 FY9 FY1 FY11# FY12E (Rs mn) FY8 FY9 FY1 FY11# FY12E Operating income 1,944 1,792 2,42 2,15 3,568 Liabilities EBITDA 24 364 614 241 691 Equity share capital 45 45 45 45 45 EBITDA margin 1.5% 2.3% 25.4% 11.4% 19.4% Reserves 498 528 7 612 677 Depreciation 113 117 112 111 225 Minorities - - - - - EBIT 91 247 52 13 466 Net worth 544 573 745 657 723 Interest 177 25 233 249 379 Convertible debt - - - - - Operating PBT (86) (3) 269 (119) 86 Other debt 1,99 2,424 2,836 3,167 2,967 Other income 5 8 5 5 8 Total debt 1,99 2,424 2,836 3,167 2,967 Exceptional inc/(exp) 14 36 1 - - Deferred tax liability (net) 116 125 117 95 95 PBT (67) 41 275 (115) 94 Total liabilities 2,649 3,123 3,699 3,919 3,785 Tax provision (5) 12 82 (22) 28 Assets Minority interest - - - - - Net fixed assets 1,446 1,384 1,33 1,219 3,483 PAT (Reported) (61) 29 193 (92) 66 Capital WIP 1,226 1,848 2,189 2,619 13 Less: Exceptionals 14 36 1 - - Total fixed assets 2,672 3,233 3,519 3,838 3,613 Adjusted PAT (75) (7) 192 (92) 66 Investments 2 2 2 2 2 #FY11 numbers are based on abridged financials Note: All ratios are computed on Adj PAT Source: Company, CRISIL Research estimate Current assets Ratios Inventory 1,915 1,78 1,574 2,77 2,564 FY8 FY9 FY1 FY11# FY12E Sundry debtors 79 92 38 13 22 Growth Loans and advances 476 495 433 61 1,33 Operating income (%) NM NM 35. (13.) 69.5 Cash & bank balance 172 71 124 183 245 EBITDA (%) NM 78.5 68.6 NM 186.7 Marketable securities - - - - - Adj PAT (%) NM NM NM NM NM Total current assets 2,642 2,366 2,169 2,999 4,62 Adj EPS (%) NM NM NM NM NM Total current liabilities 2,682 2,487 1,995 2,924 3,896 Net current assets (41) (121) 174 75 166 Profitability Intangibles/Misc. expenditure 16 8 4 4 4 EBITDA margin (%) 1.5 2.3 25.4 11.4 19.4 Total assets 2,649 3,123 3,699 3,919 3,785 Adj PAT Margin (%) NM NM 7.9 NM 1.8 RoE (%) NM NM 29.1 NM 9.5 Cash flow RoCE (%) 4.3 8.9 15.3 3.5 12.4 (Rs mn) FY8 FY9 FY1 FY11# FY12E RoIC (%) 5.4 9.5 13.5 4.6 12.8 Pre-tax profit (81) 5 274 (115) 94 Total tax paid (1) (2) (9) () (28) Valuations Depreciation 113 117 112 111 225 Price-earnings (x) NM NM 4.5 NM 8.7 Working capital changes 352 (2) (242) 158 (29) Price-book (x) 1.4.7 1.2.9.8 Net cash from operations 383 54 154 262 EV/EBITDA (x) 12.6 7.6 5.8 14.8 4.8 Cash from investments EV/Sales (x) 1.3 1.5 1.5 1.7.9 Capital expenditure (1,241) (671) (394) (43) - Dividend payout ratio (%) NM 18.2 13.7 - - Investments and others - - () - - Dividend yield (%).7 1.3 3.1 - - Net cash from investments (1,241) (671) (394) (43) - Cash from financing B/S ratios Equity raised/(repaid) - - - - - Inventory days 415 46 33 47 327 Debt raised/(repaid) 858 434 413 331 (2) Creditors days 555 626 39 546 468 Dividend (incl. tax) (5) (5) (26) - - Debtor days 14 19 6 23 23 Others (incl extraordinaries) 25 42 7 4 () Working capital days (7) (41) (11) (5) (1) Net cash from financing 878 471 393 335 (2) Gross asset turnover (x).9.8 1..9 1. Change in cash position 21 () 53 59 62 Net asset turnover (x) 1.4 1.3 1.8 1.7 1.5 Closing cash 172 71 124 183 245 Sales/operating assets (x).9.6.7.6 1. Current ratio (x) 1. 1. 1.1 1. 1. Quarterly financials Debt-equity (x) 3.7 4.2 3.8 4.8 4.1 (Rs mn) Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Net debt/equity (x) 3.3 4.1 3.6 4.5 3.8 Net sales 541 445 432 691 757 Interest coverage 1.2 1.5 2.6 1. 1.8 Change (q-o-q) 62% -18% -3% 6% 1% EBITDA.3 (66) 63 243 61 Per share Change (q-o-q) -% NM NM 289% -75% FY8 FY9 FY1 FY11# FY12E EBITDA margin % -15% 14% 35% 8% Adj EPS (Rs) (16.6) (1.5) 42.3 (2.4) 14.5 PAT (7) (131) (12) 121 (3) CEPS 8.2 24.2 67. 4.1 64.1 Adj PAT (7) (131) (12) 121 (3) Book value 119.9 126.4 164.3 144.9 159.4 Change (q-o-q) NM NM NM NM -125% Dividend (Rs) 1.2 1.2 5.8 1.2 - Adj PAT margin -12.9% -29.5% -2.9% 17.5% -3.9% Actual o/s shares (mn) 4.5 4.5 4.5 4.5 4.5 Adj EPS (15.4) (29.) (2.7) 26.7 (6.6) CRISIL Limited. All Rights Reserved. CRISIL RESEARCH 4

CRISIL Research Team Senior Director Mukesh Agarwal +91 (22) 3342 335 magarwal@crisil.com Analytical Contacts Tarun Bhatia Director, Capital Markets +91 (22) 3342 3226 tbhatia@crisil.com Prasad Koparkar Head, Industry & Customised Research +91 (22) 3342 3137 pkoparkar@crisil.com Chetan Majithia Head, Equities +91 (22) 3342 4148 chetanmajithia@crisil.com Sudhir Nair Head, Equities +91 (22) 3342 3526 snair@crisil.com Jiju Vidyadharan Head, Funds & Fixed Income Research +91 (22) 3342 891 jvidyadharan@crisil.com Ajay D'Souza Head, Industry Research +91 (22) 3342 3567 adsouza@crisil.com Ajay Srinivasan Head, Industry Research +91 (22) 3342 353 ajsrinivasan@crisil.com Sridhar C Head, Industry Research +91 (22) 3342 3546 sridharc@crisil.com Manoj Mohta Head, Customised Research +91 (22) 3342 3554 mmohta@crisil.com Business Development Vinaya Dongre Head, Industry & Customised Research +91 (22) 3342825 vdongre@crisil.com Ashish Sethi Head, Capital Markets +91 (22) 3342823 asethi@crisil.com CRISIL s Equity Offerings The Equity Group at CRISIL Research provides a wide range of services including: Independent Equity Research IPO Grading White Labelled Research Valuation on companies for use of Institutional Investors, Asset Managers, Corporate Other services by the Research group include Funds & Fixed Income Research Mutual fund rankings Wealth Tracking and Financial Planning tools for asset managers, wealth managers and IFAs Valuation for all debt instruments Developing and maintaining debt and hybrid indices Consultancy and research support to retirement funds Industry & Customized Research Provide comprehensive research coverage across 65 sectors Customised research on market sizing, demand modelling and entry strategies Customised research content for Information Memorandum and Offer Documents CRISIL Limited. All Rights Reserved.

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