December August 2010

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Magnum ConnectIssue No. 45 May 2012

Monthly Magazine

Magnum Wealth Management Pvt. Ltd.Regd. Office :Mr. Piyush K. Upadhyay (Correspondent)Magnum ConnectD-13, Empire Mahal, 806, Dr. B. A. Road,Khodadad Circle, Dadar T.T.,Mumbai – 400 014.For General Enquiries Contact :+91-22-2415 8686E-mail : mconnect@magnum.co.inWebsite : www.magnum.co.inPrinted at : HariOM Printers, Mumbai.

Dear Friends,

Our markets are going through a turbulent phase and while the GAAR fiasco was yet to be over, another setback came in for the Indian markets in the form of S&P’s outlook downgrade to negative from stable, citing slow progress on its fiscal situation, as well as deteriorating economic indicators. Though, the ratings were not downgraded but the lowered outlook jeopardises India’s long-term BBB- rating , which is the lowest investment grade rating. But one markable thing that S&P outlined was that the Indian government will face headwinds in implementing key policy measures. It’s not only the global rating agency but the whole globe that by now must have started doubting about that. The government might be saying that the outlook revision will not impact capital inflows and India continues to remain an attractive investment destination but it’s a fact that it has dented the morale of the foreign investors, simultaneously the Reserve Bank of India’s battle to contain a falling rupee just got tougher.

Friends we are going to witness a revolution, transition from analog television to digitization, Telecom Regulatory Authority of India (TRAI) has made digitization mandatory for four metros- Chennai, Delhi, Kolkata and Mumbai, effective July 1, 2012 onwards. Transition of the mass market from analogue to digital forms a major challenge to the players as the Government mandates to digitize the entire cable network by the end of 2014. The whole process is expected to be completed in four phases. While, the cable operators are viewing it as profit dampener, on the same time it has came as a big opportunity for DTH players. But the crux of the process is that the conversion of analogue to digital spells evolution of a new trend in the Indian market.

Jiten J. Chheda

(Director)

Magnum Group

This document has been prepared by M/s Magnum Wealth Management Pvt Ltd and is being distributed in India byM/s. Magnum Wealth Management Pvt Ltd a registered broker dealer. The information in the document has been compiled by the research department.

Due care has been taken in preparing the above document. However, this document is not, and should not be construed, as an offer to sell or solicitation to buy anysecurities. Any act of buying, selling or otherwise dealing in any securities referred to in this document shall be at investor’s sole risk and responsibility.

This document may not be reproduced, distributed or published, in whole or in part, without prior permission from the CompanyM/s. Magnum Wealth Management Pvt Ltd

Subject only to Mumbai jurisdiction

IndexCover Story DTH Industry.......................................................2 Economy Article..................................................7

EquityCompany Research .........................................11 Stock Update....................................................13Corporate News................................................ 14Market Snapshot............................................... 16

EconomyEconomy News................................................. 18

StatisticsScorecard : DTH Industry ................................ 20 Sales................................................................22 Dividend Yield..................................................23High PE ........................................................... 24Low PE ............................................................ 25 Price Trend...................................................... 26

Mutual FundMutual Fund Analysis....................................... 27MF Scorecard................................................... 28

StudyBRICS Summit Delhi Declaration .....................30Indo-Pak Improving Trade Relations..................32

CommodityCommodity Watch ........................................... 34

InsuranceLife Insurance .................................................. 36

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DTH Industry

Industry Overview

The Direct-To-Home (DTH) industry in India has been expanding at a swift pace over the last five years and has become a key player in the distribution sector. The DTH sector has seen exponential growth with almost 1 million subscribers being added each month. According to latest Telecom Regulatory Authority of India’s (TRAI) performance indicators there are about 44 million DTH subscribers in the country. India today has a large broadcasting and distribution sector comprising around 730 satellite TV channels, 100 Multi System Operators (MSO), 6000 Independent Cable operators, around 60,000 Local Cable Operators (LCO), 7 DTH operators and several IPTV service providers. Out of a total of 138 million TV homes, about 30 million are dependent on Doordarshan’s terrestrial broadcast services and 74 million are covered by cable services and the rest by Direct to Home (DTH) and Internet Protocol Television Services (IPTV) services. However while DTH and IPTV are digital services, the cable TV sector is predominantly analog in nature and nearly 68 million i.e. over 93% of the cable homes receive TV signals though analogue mode. India is the only country in the world with 88 million non TV households, indicating the potential for growth in the market. Television industry is getting more and more localized in nature with the spurt of regional channels over the last few years. With the media landscape changing day by day, the industry has immense opportunities to gather huge subscriber base in India.

The television industry has witnessed aggressive growth as this medium overshadowed all the other available media platforms. India is the world’s third largest TV market with close to 138 million TV households next to China and USA. Television is projected to command half of the entertainment pie by 2015 as it is estimated to grow at a robust 14.5% cumulatively over the next five years, from an estimated Rs 306 billion in 2010 to Rs 602.5 billion by 2015. The cable television industry, which forms the backbone of television distribution in India, is well penetrated in urban regions. As a consequence, it has established itself as a robust

mass medium for entertainment and information and is available to more than 94 million consumer households across India. As such, cable TV remains the most prolific means of distributing television content in the country. Since the current medium of cable distribution is largely analogue in nature, it leads to leakage of revenue through the value chain and digitization addressability remains the solution to this.

Digitization

The cable industry has played predominant role in the growth of the electronic media sector in the past 20 years. However, this platform has a number of limitations. Riddled with rampant under-reporting and limitations of carriage under analogue distribution, business transactions in the cable service chain are conducted on a negotiated subscriber base. Lack of transparency with regard to the subscriber base has given rise to frequent disputes between service providers at various levels of distribution chain, differential pricing for the same content, incidence of carriage and placement fee due to capacity constraints, and the advertisement-centric market strategy of broadcasters.

However, the TRAI in its endeavor to put an end to such malpractices, plug the leakage of subscription revenue and bring greater transparency to the television sector recommended a four phase digitization for the industry. The cable television industry in India is poised for one of its most significant developments in the last decade - a transformation to the Digital Addressable System (DAS) for television distribution. Cable operators in a DAS regime would be legally bound to transmit only digital signals. Subscribed channels can be received at the customer’s premises only through a set-top-box equipped with a conditional access card, and a subscriber management system (SMS). In a nut-shell, each user in the network would be uniquely identifiable to the service provider.

Digitization Impact:

For consumers, digitization implies better choice and quality of television viewing. Digitization of cable and satellite broadcasting is now being taken up in earnest with plans to complete the nationwide roll-out by December 2014. Phase I covering four metros of Mumbai, Delhi, Kolkata and Chennai and thereafter covering the entire nation by 31st December 2014. It is expected that mandatory digitization of Cable TV networks will have far reaching consequences for the entire media industry. It will be most important to improve the economics of Cable TV companies and broadcasters. It will also significantly enhance customer experience empowering them to pick

Indian TV Industry Size

122 140 158 169 194 214250

287344

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505

61 71 82 88 103 116 130 148 170 197230

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600

2006 2007 2008 2009 2010 2011 2012P 2013P 2014P 2015P 2016P

Subscription revenues Advertisement revenues

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DTH Industry

and choose the content. DTH platforms of which there are seven in the fray have, resorted to predatory pricing to acquire market share. These companies continue to bleed extensively. Cable TV enjoys several advantages over DTH such as Bundling with broadband services, lower Subscriber Acquisition Costs (SAC), higher channel carrying capacity, interactivity and better quality in all weather conditions. However, the new DAS has the support of key stake-holders including the government, the broadcasters and the multi-system operators (MSOs). The Indian consumer also appears to be ready for digital television, as demonstrated by the high penetration of DTH platform amongst C&S subscribers. The local cable operator (LCO) is likely to be most affected by digitization. However given the mandatory shift to digitization and inherent difficulty in managing the large investments required to fund this move, the LCO appears to have limited options, apart from aligning with the MSOs.

DTH industry growing rapidly since inception

The DTH sector is rapidly becoming a key player in the distribution sector. The DTH industry is growing at a swift pace which will certainly boost the upcoming digitization of the cable industry in India. According to the TRAI report, over 44 million people subscribe to direct to home (DTH) satellite TV services in India. At the end of December 2011, 44.21 million private subscribers took services from the six private DTH operators in India, namely: Dish TV, Tata Sky, Sun Direct, Airtel Digital TV, Videocon d2h, and Reliance Digital TV. During the same quarter, digital cable subscriptions have increased in metropolitan area which comes in the first phase of the digitization drive wherein the transformation will take place by 1 July 2012. The total number of set top boxes installed increased to 853,737 in the quarter ended 31 December 2011, compared with 819,960 in the previous quarter. The Information and Broadcasting Ministry has given licenses to around 825 private satellite television channels of which 163 channels comes under the list of premium channels. Multi system operators (MSOs) are carrying 277 digital channels at the

most; while a maximum of 100 analogue channels are being carried by any one MSO.

Foreign Direct Investments in DTH Industry:

Rationalization of Foreign Investments (FI) limits in various segments of broadcasting sector has been under consideration of the Ministry for quite some time. The Union Cabinet is expected to soon consider a proposal to increase foreign direct investment cap in broadcasting services like Direct-to-Home and cable TV networks to a uniform 74%. The proposal, mooted by Department of Industrial Policy and Promotion (DIPP) in the Industry Ministry, has proposed that FDI limits in the broadcast carriage services providers must be uniform. At present, 49% FDI is allowed in cable TV and DTH, while it is 74% in including Head-end in the Sky (HITS), a satellite multiplex service that provides cable channels for cable television operations. However, for the TV news channels, FM radio and content providers, the FDI limit will stay at 26%. In June 2010, TRAI had suggested to raise the FDI for broadcast carriage services like DTH to 74%.

Growth Drivers

• Lowpenetration;Hugepotential:

Television in India is the most preferred entertainment medium with the highest impact of advertising on the audiences. India has the third largest TV households globally, second to only China and the US. However, the digital TV penetration in India is very low at 36% as compared to more than 90% in countries such as Finland, Spain, UK, Bahrain, Saudi Arabia. With India still being a nation with low media penetration, subscription revenues have continued to grow at a healthy rate and there still remains significant growth potential in the industry.

• Emergingmiddle-class;Risingincomelevels:

One of the biggest drivers of the industry is the middle class. For a country to be strong and healthy, it needs a good middle class and there are few countries with a middle class as large, or growing as fast, as India’s middle class. The burgeoning middle class consumers

In M

illio

n

Digital Subscribers Growth

69 68 6859

50

32

1244 5 6

1932

49

6775

1628

3746

5364

7886

6 7 8 8 8 8 8 80

20

40

60

80

100

2009 2010 2011 2012P 2013P 2014P 2015P 2016P

Analog Digital DTH IPTV

DTH Industry Market Share 29.4

18.414.1

8.2

18.6

11.3

0

5

10

15

20

25

30

35

Dish TV Tata Sky Sun Direct Big TV AirtelDigital

VideoconD2H

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have widely accepted the market offerings and helped DTH players to maximize their revenues. With the Indian economy continuing to grow at a rate healthier than most developed and emerging nations, there is a sense of growth prevailing everywhere. The average Indian’s disposable income and purchasing power has risen to never before levels in the recent years. The Indian DTH industry is also not far behind. With increase in per capita consumption, discretionary spends are expected to grow and entertainment and leisure platforms have been clear beneficiaries of this trend, helping Indian’s DTH industry to sustain strong growth momentum.

• IncreasingtelevisionpenetrationsaleofLCDmonitors:

India has 146 million television households which makes it the third largest TV market after USA and China and Cable and Satellite (C&S) have penetrated into 80 percent of television households, with DTH driving a significant part of the growth in the last 12 months. The robust growth in DTH industry has been driven by rise in the number of television households, increasing advertising spends and expanding regional markets. The TV penetration in India is expected to reach more than 90 percent in the long-term. The future, of pay TV in India, will be driven by media owners and distributors expanding market share with an eye on profits, rather than at the expense of profits.

• Increasing price war with rise in number ofplayers

DTH players are realizing that the “customer is the king” and “what you want to see and when you want to see” is the new mantra. Since Tata Sky’s entry into the DTH industry there has been phenomenal growth in the industry. In between, the DTH industry, which is expected to touch a base of 40-50 million subscribers by 2015, saw the entry of players including Reliance Big TV, Bharti Airtel and Sun TV. DTH industry is adjusting according to preferences of viewer and not the other way round. Pricing models and levels are being matched to consumer demographics,

preferences and perceptions. Also, there have been major changes in the market dynamics in the form of price wars and introduction of more customized offerings such as video-on-demand, Catch UP TV and cheaper channel packs in regional languages, movies-on-demand etc, which have led to strong growth in the industry. DTH service providers are fighting hard to increase their market share of subscriber’s base. They are providing many attractive channel packages for attracting their subscribers. DTH companies are offering a wide range of subscription prices depending on the social status of different customers. It also enables the consumers to switch between packages as per their needs. The availability of wide range of choice to the consumers is the major force that is driving the DTH market.

• DTHPenetratesintoruralCableTVMarkets

Due to its high quality of digital services over analogue cable TV, DTH is clearly the better option. And given that rural cable TV operators are not in a position to make large investments to upgrade their services, there is a gradual penetration of DTH services in small towns, worldwide. As DTH connectivity increases in semi urban and rural areas, advertising will also shift to DTH. This will naturally have an adverse impact on local cable TV advertising revenues - with cable operators gradually losing market share. Larger cable companies, having much ground to cover in urban areas - are expected to remain focused on urban & suburban locations. Moreover, as metros and tier 1 markets get saturated, media companies are looking to penetrate the tier 2 - tier 3 towns and rural markets.

• Innovation

The emergence of new technologies, the High Definition (HD) and dynamic nature of Indian DTH industry will create immense business opportunities. The key for the DTH service providers to survive and grow is to provide latest bunch of services, flexibility and wide range of choices to the consumers. The DTH players are on the forefront

All India Household (in million)

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160

2009 2010 2011 2012

TV owning Cable & Satellite (C&S) Non C & S Digital

URBAN v/s RURAL (in million)

0102030405060708090

2010 2011 2012 2010 2011 2012

TV households C & S households DTH subscribers

RURAL URBAN

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of introducing future technologies and innovations in the Indian DTH industry. A unique range of interactive services, the bi-lingual guide followed by the PVR (Personal Video Recorder), Gaming, High Definition and Mobile Access which provides consumers a unique social experience. The latest addition to the technology leadership is the launch of our latest Video on Demand (VoD) service that includes ‘Catch Up TV’ and VoD Movie Library.

Challenges

Despite the phenomenal growth story, the DTH industry is also facing a host of challenges. Carriage of channels in DTH though higher that analogue cable is limited to 200 to 220 channels due to limited transponder capacity. Shortage of transponder space is likely to affect the future expansion of DTH sector in India. Interactivity is limited to one way in DTH while digital cable can have two way interactivity providing triple play services. Besides, the grievance of the DTH operators has been that they are burdened with multiple taxations.

• ARPU:

ARPU (Rs per month)

Analog Digital DTH IPTV

2011 160 160 160 160

2012(E) 165 170 170 170

2013(E) 170 180 180 180

2014(E) 170 201 201 201

2015(E) 171 226 226 226

2016(E) 171 253 253 253

The industry faces several issues such as low ARPU (average revenue per user), high cost of acquisition of content and subscribers, and various taxes. While the industry is under pressure due to low ARPU, in the last two years, it has been growing slowly and steadily and now the trend is that the revenue is moving up as consumers have realized that DTH offers better quality and services as compared to cable operators.

• Bandwidth:

While the DTH industry is working on new ideas, one of its areas of concern has been the availability of sufficient bandwidth, which would allow a DTH operator to telecast more than 500 channels. There is more than sufficient bandwidth available for the DTH industry and companies are working with DTH operators to develop two-three satellites to increase their capacity. However, it takes two-to-three years to build and launch a satellite and the cost

of production is very high, taking about $250-350 million. So, while the industry is working towards ensuring that maximum bandwidth is available for DTH operators, the cost of production makes the process a bit slow.

• Multi-TaxRegime

Another major deterrent for the industry is that it is liable to a number of taxes such as license fee, service tax, entertainment tax and the additional value-added tax levied by certain state governments such as Andhra Pradesh and Madhya Pradesh. The government should work towards easing certain taxes like license fee, which is 10 percent of the gross revenue earned, along with entertainment tax. The DTH industry has to pay about 35 percent of the total turnover which runs into several thousand crore. It is about time that the government recognized DTH as a sector similar to any other sector and not as a niche category.

• Resurgenceofcableand facing thenewageIPTV

DTH Industry faces stiff competitions form the Terrestrial, Cable and IPTV. Key challenge that the DTH operators would face in future is the resurgence of cable. Cash rich from increased PE investments and IPOs, corporatization and digitization in cable will offer stiff competition to DTH players. Improved quality of services by digital cable and IPTV players are potential threats. In coming years, competition will be in terms of added services coming along with entertainment. When it comes to adding additional interactive services, IPTV will play a major role. Some of the additional services like Caller ID and option to take or drop the call, internet browsing over TV, and home networking applications will make IPTV attractive.

• ContentRegulation:

While the channels are experimenting with different content formats in an effort to retain eyeballs, concerns on the content continue to be expressed by various sections of society, including various reports of Parliamentary Committees and judicial pronouncements to make the system more effective. Regulation of content of Television channels and setting up an independent regulator for the broadcasting sector has been a much debated issue. The Indian Broadcasting Foundation (IBF), taking a cue from NBA’s self regulation and in consultation with the Ministry, has also set up a mechanism for self-regulation in case of general entertainment channels. As part of this, IBF has laid down Content Code & Certification Rules 2011 covering an entire gamut of content-related principles and criterion for television broadcast. If the industry’s self regulation mechanism succeeds and lives up to the expectations of

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pubic as well as the government, self regulation will be a unique model amongst democracies of the world and will limit government’s role to only issues involving national security, law and order, communal harmony and other issues of national importance.

• LicensefeecomputationinDTHSector

Presently, the license fee collected by the Ministry of Information and Broadcasting from DTH operators is based on the Gross Revenue, as defined in the Article 3 of the Schedule to the DTH License Agreement. As per this definition, taxes revenue earned from the sale of Set Top Box, installation, commissions, content cost, subscription and service is required to be included for the purpose of calculation of annual license fee. The TDSAT has, however, in its orders dated 26.8.2008 and 28.5.2010, applied the principle of Adjusted Gross Revenue (AGR) for determination of annual license fee, removing majority of components such as installation charges, taxes, commissions, content cost, sale of STBs etc. The Government has filed an appeal in the Supreme Court against these TDSAT orders. As of now, the DTH operators are paying license fee as per adjusted gross revenue which is less than according to gross revenue computation.

Outlook

While, India continues to be the third largest TV market in the world (after USA and China), with 146 mn TV households and current TV penetration at 61 percent, there is still significant growth potential for India’s DTH industry. Going forward, the economic growth prospects in the subsequent 1-2 years is likely to be lower than earlier expectations, and real GDP growth is expected to reach 8 percent only in 2013-14. However, consumer demand for content beyond free to air channels, combined with the relatively low ARPUs are likely to drive the demand and is a positive sign for the industry. About 12 to 15 million set-top-boxes (including DTH providers) are expected to be installed in Phase I cities over the next five years. The back-end infrastructure and required network is largely in place for Phase I, however much more work may need to be done to scale up billing and customer service operations, which may further lead to large scale IT outsourcing contracts. Phase II, III, IV cities may require significant upgrade of existing infrastructure and network (e.g. poor quality fiber). Approximately 100 to 110 million set-top-boxes are estimated to be required in these cities over the next five years. It may however be interesting to note that the penetration of digital C&S platform is already higher than 40 percent in Phase IV cities, driven

by increasing DTH penetration in the rural areas.

Digitization of cable, driven by the recent government ordinance, is expected to be a game changer, affecting the entire value chain. DTH operators are expected to be one of the beneficiaries of the government mandate. While the government’s mandate presents a significant opportunity for MSOs and DTH operators, they may face several challenges and practical difficulties in implementation, and adhering to the prescribed timelines for digitization. DTH providers must ensure that they are making the right offering to the right section of the population. Though the DTH market in India has not seen the growth that was expected of it, there are still a host of reasons to be optimistic. There are so many households across the country that do not yet receive digital TV services, so many untapped areas, that, if the providers pitch it correctly, there could be a considerable boom in the adoption of DTH. Regulatory reforms will be key to the fast development of DTH in the region. The huge population and the hunger for entertainment - especially in the form of Bollywood films for example - are not going to decline. The increased wealth of the country and the individual has created a good foundation for demand for DTH but the issues of cost, content, regulation and piracy will still be central to its increased adoption. Average television viewing time in India continues to be low vis-a-vis developed economies. The average time spent on TV by an individual in India is around 150 minutes per day - it has the potential to go up to over 200 minutes with digitization providing more accessibility to content, as well as evolved marketing wooing audiences for higher engagement. Thus, there is potential for growth not only in terms of penetration/reach, but also in terms of viewing time. Time spent watching TV in India is significantly lower than developed economies.

While it is true that the DTH industry is slowly spreading its roots, there is still some time left before the industry turns into a profitable venture. Nevertheless, the industry has managed to gain a fair amount of interest from investors as they feel that the industry will grow in the same pattern as telecom. Currently, the game is about subscriber acquisition. As soon as the operators move beyond the acquisition mode, it is expected that the industry will be about retaining the consumer base and the game will change from there on. Factors like the potential for penetration of different mediums, greater segmentation of audiences and catering to individual niches, growth expected from regional markets, government and industry players’ push for digitization, increasing mobile and broadband penetration and consolidation are pointing towards a very promising future for the DTH industry.

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Global economy growth improves;sustainability remains a concern

Though the recovery was expected to be weak and vulnerable, given the feeble Q4 numbers, global economic activity improved in the first quarter of 2012. However, the growth is not uniform as better performance in the US was offset by weak numbers from many Euro-zone countries and slow growth witnessed in key emerging economies. To be more precise, the JP Morgan Global Purchasing Managers’ Index (PMI) came in at 51 throughout the first quarter, a level above 50, which divides expansion from contraction. Global manufacturing activity improved in the first quarter, helped by firmer activity in the US and Asia. On the other hand, it continued to contract in the Euro-zone, with PMI falling to 47.7 in March from 49 in February, its lowest in 3-months. Similarly, Chinese PMI pointed towards contraction throughout the Q1 after plummeting below 50 in November 2011. The Japanese PMI, however, rose, but remained weak at 51.1 in March, indicating a modest manufacturing recovery.

Despite various headwinds, road ahead for the US economy is more promising, however global factors are likely to darken prospects. Rising inflation remains a big risk to the economic recovery, mainly on the back of higher international prices due to geopolitical factors. For Europe, the economic trajectory remains clouded by the ongoing sovereign-debt crisis, further the Euro-zone unemployment rate reached 10.8%, with six of the 17 members recording rates above 10%. Moreover, European Commission, ECB and the International Monetary Fund (the troika) will continue to support governments facing debt repayment difficulties, but economic activity is likely to remain weak before improving in the medium term. Thus the outlook for the Euro-zone economy remains affected by the debt crisis.

Further, in case of emerging economies like India and Russia, signals seem to be constant; however, indicators of China and Brazil continue to point below-trend growth so far. The GDP growth for China, major contributor of world economic growth, has been revised downwards. On the whole, in spite of gloomy economic conditions, central banks across the globe have continued to support the economic recovery; however, the rise in inflation on the back of higher global crude oil prices may limit the extent of monetary easing that can be implemented during the year. Therefore, the global growth though on the recovery path, the outlook witnesses persistent uncertainties.

Political barrier along with surging fiscaldeficitdragsIndia’sgrowth

Indian economy is facing a problem, which is a combination of tight monetary policy aimed at controlling inflation, stressed global economic situation, enlarging fiscal deficit, growing subsidy basket and lack of political accord on major economic reforms, which can to a large extent help the economy to tide over the problems. India’s GDP growth substantially moderated to 6.9% in FY2011 from 8.4% in FY2010 as per the advance estimates of the government. The slowdown was mainly witnessed in the industrial activity, which throughout the time remained volatile, mainly on the back of high interest rate regime, falling potential investments and subsequent weakening in external trade.

However, inflation, which remained at 9% mark for most part of FY12, started its declining trend since January 2012 onwards, primarily on food price showing moderation, but that seems to be again back on rising trend, given the rising global oil prices and depreciating rupee against dollar. Further, the surprise 50 bps repo rate cut by the apex bank, after 13 consecutive policy rate hikes since March 2010, is not likely to bring in much relief to the government and to the common man in general, since there still exists suppressed inflation in the economy, though headline inflation is in the government’s comfort zone.

Moreover, there are number of bills and reforms, which can improve India’s investment environment, are introduced in the parliament session but lack of political consensus, along with Standard & Poor (S&P) revising outlook on India’s long-term debt to negative and further warning for a possible credit downgrade is making things worse. On the whole, impact of monetary easing and lower interest rates, improving external conditions, and some progress

Economy Article

Global growth rates

-2-1012345678

US Euro Area Japan UnitedKingdom

EmergingEconomies

2010 2011 2012 (P) 2013 (P)

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on delayed reforms and removal of the log jam should lead to a revival of industrial activity, but the effect is likely to be limited until the government removes the policy issues.

VolatiletrendcontinuesinIIP;growthslowsto4.1%y-o-yinFebA data, which is considered to be a key measure to gauge the industrial output - Index of Industrial Production (IIP), continued its volatile trend and came much below market expectations of 6.6% restating the declining growth trend in the economy. The sluggish growth of intermediate goods, consumer durable and non-durable sectors kept the IIP for the month of February at 4.1% much less than the market expectation of 6.6% and also considerably less than 6.7% growth witnessed in the same month of last year. On the collective basis, IIP growth in April-February 2012 stands at 3.5% less than 8.1% in the same period a year ago. However, the downward revision of January IIP growth numbers to 1.1% from provisional estimates of 6.8% came in as a bit of surprise, which was mainly on the back of erroneous reporting of sugar production as 134.08 lakh tonnes in place of actual 58.09 lakh tonnes.

On the sectoral front, manufacturing sector showed improvement to 4% compared to the revised estimate of 1.4% for the previous month but remained considerably less than 7.5% registered in the same month of the previous year. To be more precise, only four sub-sectors displayed negative growth while the rest 18 industry groups in the manufacturing sector recorded positive growth for the month. Mining sector, on the other hand, grew at 2.1% after registering a negative growth in each month since August 2011, and almost double compared to 1.1% growth in the corresponding month of the previous year. Nevertheless, growth remained slow reflecting the continued negative impact of regulatory issues and bans on mining imposed in certain areas by the Supreme Court on mining activity.

Electricity after sliding sharply to 3.2%, expanded by a healthy 8% in February, followed by capital goods, which recorded a growth of 10% compared to the negative growth of 1.7% in the previous month. Consumer durables continued the declining trend at 6.7% though slowed from 7.1% fall in the previous month. On the other hand, consumer non-durables growth slowed to 5.1% from 11% a month ago. On the whole, growth rate of consumer goods contracted by 0.3%, compared to an expansion of 2.9% in January 2012 and 13.4% in February 2011. Intermediate goods growth, however, continued to be in the pessimistic zone for the third month in a row at 0.6%, compared to a positive growth in the same period a year ago.

The clarification of surge in industrial output for the month of January in tune with the market expectations of about less than 2%, once again raised the question of reliability of IIP data. This is not the first time Indian government agencies reported erroneous data. Earlier, in December the government had similarly overstated exports numbers for the April-October period. Though IIP numbers have seen revisions in the past, but the month of January saw massive change from 6.8% to 1.1% in growth numbers. Given the high base effect, and continuous fall witnessed in consumer durables, industrial output for the month of March is likely to slow down further. Moreover early indicators of output growth in March 2012 such as the HSBC manufacturing PMI and automobile production and sales suggest a slowdown. The PMI moderated to 54.7 in March from 56.6 in February 2012.

Inflationmoderatesto6.89%;riskstoinflationstill on upside

India’s headline inflation eased to 6.89% in March, but higher than the market expectation of 6.7%, though moderated marginally from 6.95% registered in February, mainly on the back of surge in food prices. It is widely expected that inflation numbers are likely to remain within this range only in the first half of 2013. Continuing the rising trend, food inflation accelerated to 9.9% on y-o-y basis mainly on account of surge in prices of vegetables, milk and eggs. Moreover, on m-o-m basis food articles inflation increased sharply for about 2.3%, however, food inflation in total including manufacturing food products rose further to 8.5% in March from 5.9% in February. As a result, contribution of food inflation to overall inflation once again climbed up to 33% in the current month from 23% in the previous month and 20% a year ago.

Economy Article

Growth trends in major industry (%)

-10

-5

0

5

10

15

20

Nov-1

0

Dec-1

0

Jan-1

1

Feb-1

1

Mar-

11

Apr-

11

May-1

1

Jun-1

1

Jul-11

Aug-1

1

Sep-1

1

Oct-

11

Nov-1

1

Dec-1

1

Jan-1

2

Feb-1

2

Headline Inflation IIP Growth Mining Manufacturing Electricity

December August 2010

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Showing a positive sign to the government agencies and policy makers, manufacturing inflation tripped further to a 27-month low of 4.9% in March from 5.7% in February 2012 partly on account of rising base effect. On a collective basis, manufacturing inflation, which excludes food products, moderated further to 4.7% at the end of current fiscal year from 5.7% in the previous month and 8.5% at the end of previous financial year. Similarly, fuel inflation continued the declining trend and moved down to 10.41% from 12.83% registered a month ago. The fuel index started moving lower after November, in spite of a surge in global oil prices, as petrol and diesel do not reflect the actual market prices with in-complete pass through to consumers on political pressures.

However, the government might take some measures to reduce the already enlarging fiscal deficit, and to control the outburst of the OMCs, who have threatened to raise oil prices if the government does not compensate them for the losses incurred. Moreover, in the latest report by the Petroleum Products Planning and Analysis Cell (PPAC), which functions under the Petroleum Ministry, it has been observed that the country’s diesel consumption rose considerably to 11.9% in 2011-12, the highest in 4 years. This has been termed as ‘disturbing’ by PPAC as this fuel constituted about 70% of the overall growth in petroleum products.

Further, the index, which tracks retails prices in five major food groups - fuel and light, housing, clothing and miscellaneous - across rural and urban India - the all India Consumer Price Index (CPI), provided a different picture all together. The index for March 2012 on point to point basis came in at 9.47% against 8.83% for the previous month, with the corresponding inflation rates for rural and urban areas at 8.79% and 10.30% respectively.

In the short-run, the factors which would impact inflation

would be global commodity prices and weakening rupee. India’s rupee, which tumbled 16% last year as growth decelerated and the nation’s trade gap widened, still hovers around 52 against the dollar. On the whole, the firm rise in food prices has contributed for a rise in inflation while moderation in manufacturing inflation, mainly driven by the high base effect, has helped to contain the overall inflation. A similar trend is likely to continue in the next few months. However, given the 50 basis points repo rate cut, when inflation is still high may instigate further price rise in the near future.

RBI cuts repo rate by a surprise 50 bps;indicateslimitedroomforfurtherratecut

The Reserve Bank of India (RBI) reversed its monetary policy stance in its annual policy meet by slashing the repo rate by a higher-than-expected 50 basis points (bps) to 8% from 8.5% with immediate effect, the first rate cut in the past 3 years. As a result, the reverse repo and the marginal standing facility (MSF) rate also stand reduced by 50 bps each to 7% and 9%, respectively. For the first time in many quarters, the RBI’s policy stance was more towards addressing the moderating economic growth rather than suppressing inflationary pressures. However, the apex bank cautioned that inflationary concerns still continues even as the growth is expected to go back close to the post-crisis trend in the current financial year, thus limiting the space for further cutback in interest rates.

PolicyBackdrop

The RBI’s surprise action of reducing the repo rate by 50 bps against the market expectations of only 25 bps cut is based on the following global and domestic economic scenario:

1. Global economy though showed signs of improvement; the sustainability remains a cause of concern in the short term.

2. India’s third quarter economic growth numbers once again showed weakness, mellowed down further to 6.1% from 6.9% posted in the last quarter, mainly on the back of global uncertainties, surging inflation, and unpredictable industrial growth. The slowdown was widespread across all sectors, which took the overall GDP growth to nearly three year low.

3. Inflation, which hovered around the 9% mark for most part of 2011, has been moderating since January 2012. Headline inflation for March eased to 6.85%, much

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under the RBI’s comfort zone projection of 7%.

4. Liquidity conditions in the banks, which have been stiff since November 2011, with the banks borrowing about Rs 122,785 crore from the RBI through the repo window. The RBI increased its OMO purchases to Rs 142,500 crore up to March 30, 2012 compared with Rs 78,800 crore up to March 31, 2011. RBI also reduced the Cash Reserve Ratio (CRR) by 125 bps to 4.75%.

5. Sharp fall in investment on the back of slowing growth

6. Widening current account deficit (CAD), and rising external debt

RBI’sProjection

Based on the recent rate cut and prevailing economic scenario, the central bank highlighted and projected the likely growth trend to be seen in the current financial year:

1. The RBI kept the GDP growth projection for 2011-12 at 7% while that of 2012-13 was placed a little higher at 7.3% mainly on account of improving industrial output and assuming normal monsoons, leading to trend growth in agriculture.

2. The baseline projection for headline inflation has been placed at 6.5%, and factors that would exert pressure on prices in 2012-13 include a structural demand-supply mismatch for protein rich food items; incomplete pass-through of high crude oil prices to domestic fuel prices; suppressed inflation related to coal and electricity; and a rise in global commodity prices.

3. Deposit growth is estimated at 16% while the money supply (M3) growth for 2012-13 is projected at 15% whereas the growth in non-food credit of scheduled commercial banks is forecasted at 17%.

Key regulatory and supervisory measures announcedbyRBIThe Urban Co-operative Banks (UCBs) are permitted to utilize the additional limit of 5% of their total assets for granting housing loans up to Rs 25 lakh, this will be covered under the priority sector. At present, UCBs are permitted to assume combined exposure on real estate, commercial real estate and housing loans up to a maximum of 10% of their total assets with an additional limit of 5% of their total assets for housing loans up to Rs 15 lakh

The apex bank also proposed not to permit banks to impose foreclosure charges/pre-payment penalties on home loans on a floating interest rate basis. Further, banks should offer a ‘basic savings bank deposit account’ with certain minimum common facilities and without the requirement of minimum balance to all their customers

Moreover, worried over significant increase in loans by NBFCs against gold in the recent period and surge in gold imports, banks should reduce their regulatory exposure ceiling in a single NBFC, having gold loans to the extent of 50% or more of its total financial assets, from the existing 10% to 7.5% of bank’s capital funds. However, exposure upper limit may go up by 5%, i.e., up to 12.5% of bank’s capital funds if the additional exposure is on account of funds on-lent by NBFCs to the infrastructure sector; and bank should have an internal sub-limit on their aggregate exposure to all such NBFCs, having gold loans to the extent of 50% or more of their total financial assets, taken together.

On the whole, the Reserve Bank has reduced the repo rate by 50 basis points to 8% and raised the MSF limit to 2% to improve the liquidity and develop the growth prospects while controlling inflation. The RBI, however, gave a clear signal that the scope for further easing of interest rates is very limited in view of the risk of rising inflation, high fiscal and current account deficit. The main factors affecting growth and inflation would be the exchange rate. The rupee has maintained its volatile trend and the depreciation seen in 2011-12 have affected the bottom lines of companies. Given this, the risk to inflation remains on upside, and the limited room for rate cut by RBI is justified. Therefore, taking into account the further large government borrowings and rising commodity prices - domestic as well as global, the apex bank is unlikely to alter policy rates until the first quarter review of monetary policy.

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Company Research

Dish TVInvestment overview

w Dish TV is India’s largest direct-to-home company having vast distribution network of about 1400 distributors and 55,000 dealers.

wGovernment’s regulation to replace analogue broadcasting with digitalized one is likely to give revenue boost to the company.

BusinessOverview

Dishtv is a division of Zee Network Enterprise (Essel Group Venture). EGV has national and global presence with business interests in media programming, broadcasting

& distribution, speciality packaging and entertainment. It is Asia Pacific’s largest DTH company. Zee Network incorporated dishtv to modernize TV viewing. dishtv is India’s first direct to home (DTH) entertainment service. By digitalizing Indian entertainment, this enterprise brought best television viewing technology to the living room.

Dish TV provides wide range of packages that caters to all segment of keeping in mind needs various customers such as Dish Maxi Plus, Dish Maxi, Dish Welcome, Dish Freedom Plus, Dish Freedom, Silver Pack, Child Pack, Dish Mini, Dish A La Carte. It has also introduced new packages to attract more consumers such as “Mini Pack”. It also provides other services such as movies on demand, gaming, bhakti active, astro active, sports active and multilingual services. It also provides ICICI active, an Interactive banking services giving information about products and services of ICICI Bank.

Financial HealthThe company’s total income from sales and services for the quarter ended December 31, 2011 increased by 31.43% to Rs 490.46 crore from Rs 373.16 crore in the corresponding previous quarter. The company was also able to cut its losses for the quarter to Rs 42.96 crore from Rs 44.28 crore in the same quarter last year.

For the nine months the company reported revenue of Rs 1433.04 crore, up by 42.81% to Rs 1003.45 crore, similarly the losses declined to Rs 109.83 crore from Rs 152.63 crore in the same period last year.

Subscription revenues for the quarter stood at Rs 425.40 crore, recording a growth of 37.6% as compared to the corresponding period last fiscal. Other operating revenues included lease rent of Rs 4.49 crore, bandwidth revenues was of Rs 11.20 crore, and teleport and trading income was of Rs 4.90 crore.

Industry ScenarioIndia is the world’s third largest TV market, next only to China and USA. Television is projected to command half of the entertainment pie by 2015 as it is estimated to grow at a robust 14.5% cumulatively over the next five years, from an estimated Rs 306 billion in 2010 to Rs 602.5 billion by 2015. The television industry has witnessed aggressive growth as this medium overshadowed all the other available media platforms.

The Direct-To-Home (DTH) industry in India has been expanding at a swift pace over the last five years and has become a key player in the distribution sector. The DTH sector has seen exponential growth with almost 1 million subscribers being added each month.

The cable television industry in India is poised for one of its most significant developments in the last decade - a

Stock Data (as on 30/4/12)

Current Mkt Price (Rs.) 60.00

52 week High (Rs.) 94.20

52 week low (Rs.) 52.00

Mkt Cap (Rs. Cr.) 6,370

Return in last one Month (%) -6.26

Share Holding Pattern (as on March, 12)

Total Promoter 64.75

FII 11.19

DII 5.44

Others 18.62

Key RatiosP/E --Price/Book(x) -139.09 Dividend Yield (%) --ROCE(%) -3.14 ROE(%) -81.94

Performance in the last year

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Particulars Dec Qtr-11 Dec Qtr-10 Growth% FY11 FY10 Growth%Net Sales 490.46 373.16 31.43 1436.55 1084.79 32.43 Total Income 498.24 391.21 27.36 1,524.58 1,090.12 39.85Other Income 7.78 18.05 -56.90 88.03 5.32 1553.77PBT -42.96 -44.28 -- -189.70 -261.35 --PAT -42.96 -44.28 -- -189.70 -261.33 52.20EPS -0.40 -0.42 -- -1.79 -3.18 --

Company Research

(Rs. Cr.)

Standalone

transformation to the Digital Addressable System (DAS) for television distribution. TRAI in its endeavor to put an end to malpractices by cable operators, plug the leakage of subscription revenue and bring greater transparency to the television sector recommended a four phase digitization for the industry.

Digitization of cable, driven by the recent government ordinance, is expected to be a game changer, affecting the entire value chain. DTH operators are expected to be one of the beneficiaries of the government mandate. While the government’s mandate presents a significant opportunity for MSOs and DTH operators, they may face several challenges and practical difficulties in implementation, and adhering to the prescribed timelines for digitization.

InvestmentRationaleDish TV continued to maintain its lead in incremental share in a six player market. Dish TV today is recognized for its largest bouquet of channels, pan-India selling and distribution network and the most advanced infrastructure and technology amongst others. The company is regularly investing in new technologies and content. The platform added 8 new channels during the last quarter and remains the only DTH provider in the country to have a fail proof twin satellite arrangement, so that in case one of the satellites fail the service can remain uninterrupted for its viewers.

The Information & Broadcasting Ministry has announced its intent to implement the Digital Addressable Cable System by 2014 leading to a sunset for the analogue cable regime. The first phase comprising of four Metros is proposed to be implemented by July 1, 2012. With mandatory digitization flowing through urban markets in the first two phases of implementation, High Definition service is likely to generate significant consumer interest. With digitalization expected to boost subscriber additions, Dish TV is well-entrenched to further build on its supremacy while also targeting larger uptake of ARPU accretive HD subscribers. The recent judicial pronouncement reducing the cost of content for DTH operators from the existing 50% of non CAS rates to 42% of non CAS rates will further boost the financial health of the DTH industry.

HDTV (High Definition) hit the market in 1998 and very

late in about 2009 in India. It provides high clarity viewing and is the new buzz word among the TV viewers; with all the service providers regularly introducing HD channels in their bouquet the market has become more competitive. Enjoying significant advantage over its peers, Dish TV with its existing bandwidth can accommodate the highest number of High Definition channels on its platform through its highest number of transponders. Dish TV is presently offering over 42 channels in HD format which is regularly growing. The company’s current HD ARPU is at Rs 454. It has introduced HD ‘World Pack’ at Rs 375 to attract entry level HD subscribers. HD ‘Premier’ at the rate of Rs 450 & ‘Royale’ at Rs 550 to target top-end HD subscribers. With these attractive offerings; the company sees opportunity to scale up overall ARPU’s going forward.

On the concern side the company has to bear the brunt of continuously depreciating rupee against the US dollar. As the company is having significant foreign currency debt which needs to be reported using the closing exchange rate. Also a significant portion of the company’s capital equipment is dollar denominated. Though, the company initiated and sustained a significant price hike at the entry level to offset the unprecedented rupee depreciation in the last few months. But the same may not be repeated in a tough competitive environment and the company will have to opt for some other avenues to minimize the forex losses.

At the CMP of Rs 60, Dish TV is trading at EV/EBITDA of 12.5x and 10.4x FY13E and FY14E, respectively, we recommend ‘BUY’ in the scrip for a price target of Rs 68 with a medium to long term outlook. The company’s revenue is likely to improve with the subscriber addition due to shift from analogue to digital format. Dish TV, the largest DTH company has been a consistent market leader with highest absolute share. The company is having a twin advantage of offering largest HD channels, as after digitization consumers are likely to begun upgrading to High Definition transmission as rising consumerism in rural India and increased level of discretionary spends has heightened the aspiration quotient among all socio economic categories. Company’s wide and established reach through active trade partners are likely to continue supporting its growth. However, multiple taxation concern will continue weighing in long term.

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Stock Update

w Wire and Wireless India (WWIL), one of the largest Multi System Operator (MSO) in India, is part of the Essel Group. The company, whose products are marketed under the SITI brand name, has 50 analogue and 8 digital head ends; it provides its cable services in 54 cities of India reaching out to 10 million households. The Cable TV service provider will be offering highest number of channels in the first phase of digitization in its three lucrative markets of Delhi, Kolkata and Mumbai, under SITI Cable brand name. SITI Cable is on the forefront to provide advanced IP based digital delivery platform that will transmit superior quality TV signal to subscribers.

w WWIL maintained its momentum in the third quarter as its consolidated operating revenues for the third quarter ended December 31, 2011 was Rs. 871.7 million as compared to Rs. 744.4 million during the corresponding quarter last fiscal showing a growth of 17.1%. While, its consolidated revenue and EBITDA grew to Rs 957.1 million and Rs. 46.0 million respectively, a healthy growth of 26.9% and 5.2% over corresponding quarter of last fiscal.

w Digitization of existing cable infrastructure will augment the channel carrying capacity, offer better quality & will provide opportunities to monetize through different value added services like movies on-demand, broadband, gaming, etc.

w At current market price of Rs. 9.72, Wire and Wireless India has given returns of around 6 percent in the last one year, which is higher than that of most of its peers in that segment. Going forward multi-fold increase in subscriber number is expected with the digitization. Such exponential growth in subscriber numbers requires huge infrastructure to serve them as well, for which WWIL is well positioned. The company is technologically ready to further augment its channel carrying capacity in times to come. The company has strong growth prospects primarily in the Tier II and III markets. Thus, we expect that there is good upside potential left in the stock and going forward, we see around 20% increase in WWIL’s market capitalization from the CMP. We maintain a ‘BUY’ recommendation with a target of Rs 12 achievable over a medium to longer term.

Last Traded Price (As on Apr 30, 2012) 9.72

Price target 12.00Market cap. (Rs cr.) 43852 Week H/L 10.69/5.70Free Float (Rs cr.) 175BSE code 532795

WIREAnDWIRELESSInDIA(WWIL)

w Hathway Cable and Datacom (Hathway) is a leading Multi System Operator (MSO) in India with active subscriber base of around 8.9 million. It is also the largest cable operator to offer broadband services in the country. The company has arranged 1.3 million set-top boxes for the roll-out during the first phase of digitization which has a sunset date of June 30, 2012 covering four metros of Delhi, Mumbai, Kolkata and Chennai.

w The company has tied up with vendors like the US-based NDS that was acquired by Cisco in a $5 billion deal, for conditional access, Cisco and Ericsson for the digital compression and leading set-top box manufacturers like Humax, Skyworth and Kaon.

w Hathway in the past 3 years has successfully acquired secondary subscribers through stake purchase in more than 21 MSOs to consolidate its market presence and increase its regional spread. It acquired majority stake in Bhasker Multinet (Cable TV arm of Dainik Bhaskar Group), 50% stake in largest MSO in Gujarat - Gujarat Telelinks and few other MSOs in Maharashtra. MSO Hathway is likely to invest Rs 500-600 crore for the second phase of digitization. About 7.5 lakh of our subscribers have already installed set top boxes and the company would be upgrading about 2 million subscribers for the first phase of digitization.

w At current market price of Rs. 155.50, Hathway Cable has given returns of around 25 percent in the last one year, which is way above the valuations enjoyed by its peers in that segment. Going forward the company is best placed among the other MSOs to monetize the digitization opportunity. With digitization a reality, sustained leadership in its key markets, improved business dynamics of cable and broadband businesses and clarity in profitability makes Hathway becomes a very attractive play in digitization space. The company has strong growth prospects primarily in the Tier II and III markets. Thus, we expect that there is good upside potential left in the stock and going forward, we see around 20% increase in Hathway Cable’s market capitalization. We maintain a ‘BUY’ recommendation with a target of Rs 186 achievable over a medium term.

Last Traded Price (As on Apr 30, 2012) 155.50

Price target 186.00Market cap. (Rs cr.) 2,22152 Week H/L 193.80/72.00Free Float (Rs cr.) 777BSE code 533162

HATHWAyCABLEAnDDATACOM(HATHWAy)

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Corporate News

JSPLtospendoverRs10,000croretopart-funditsRs2lakhcrorecapexplanIn a bid to part-fund its Rs 2 lakh crore capex plan, Naveen Jindal-led Jindal Steel & Power (JSPL) will spend over Rs 10,000 crore in 2012-13. The company’s plan aims to ramp up its steel making capacity to 18 million tonnes in five years. The company has already invested about Rs 40,000 crore towards the planned investment and will keep a 2:1 debt-equity ratio for project financing. JSPL produces around 4.5 million tonnes per annum (mtpa) at its Raigarh plant in Chhattisgarh. It is now setting up three steel facilities at Angul in Odisha, Patratu in Jharkhand and Raigarh to raise capacity to 18 mtpa. Besides, it is setting up a 4,200 MW captive power plants in Chhattisgarh and Jharkhand. The company is also investing Rs 45,000 crore in a Coal to Liquid project in Odisha.

Tata Steel to produce one million tonne more steelthisfiscal

Tata Steel is planning to produce one million tonne (mt) more steel this year to around 8 mt on expanded capacity at Jamshedpur, as it expects India’s steel demand to grow at 8% in the current financial year. The company is going to commission the first phase of its upcoming Greenfield plant at Kalinganagar in Orissa between October 2013 and March 2014. The new plant will have an initial capacity of 3.5 mt per annum and 5.5 mt per annum in the second phase.

Godrej Consumer acquires 60% stake inCosmetica NacionalGodrej Consumer Products (GCPL) has completed the acquisition of 60% stake in Cosmetica Nacional, a market leading hair colorant and cosmetics company in Chile. Earlier in January this year, the company had entered into an agreement to acquire 60% stake in Cosmetica Nacional. With this move, GCPL continued expanding its presence in emerging markets in line with its global 3 x 3 strategy.

nalco secures supply of important rawmaterialsNational Aluminium Company (Nalco) has in principle secured supply of all important raw materials like bauxite, limestone, coal and caustic soda from Gujarat government for its proposed one lakh tonnes a year alumina project in Gujarat. Government is likely to provide raw materials through two state-promoted outfits for the proposed Rs 4,500 crore (first phase) refinery project in the state. The company is entering into joint venture with Gujarat Minerals Development Corporation (GMDC) for this upcoming project, where it will be holding majority stake and GMDC

will hold a minority stake between 10% and 26%. Apart from providing bauxite 3 million tonnes per year, GMDC will also supply coal (lignite) and limestone.

Engineers India inks MoA with Oil IndiaEngineers India (EIL) has signed a memorandum of agreement (MoA) with Oil India (OIL) for providing consultancy services to OIL for its various upcoming and revamp projects involving construction of surface facilities in Oil and Gas fields including pipeline projects spread throughout the country. EIL is a Total Solutions Consultancy Company & EPC Contractor in the fields of petroleum refining, petrochemicals, pipelines, oil and gas, terminal & storages, mining and metallurgy, & infrastructure projects. The company has diversified into newer areas such as PowerNuclear, solar & thermal, water & solid waste management, city gas distribution, fertilizer and coal to liquid.

Procter & Gamble to build largestmanufacturingplantinHyderabadProcter & Gamble Hygiene and Health Care, the world’s largest consumer goods company, will build its largest manufacturing plant in the Indian sub-continent in Hyderabad by investing Rs 345 crore. The plant, to be spread across 170 acres at Mahbubnagar district, will make products across categories such as laundry, personal and baby care. The plant will start commercial production in two years. Building the plant in Hyderabad will make the company eligible for a 100% stamp duty reimbursement and fixed power allocation as per Andhra Pradesh’s newly-revised industrial policy. The company has also asked for a 75% reimbursement on VAT for five years.

Hero MotoCorp ramps up total production capacityto800units/hrHero MotoCorp, the country’s largest two-wheeler maker, has ramped up its total production capacity to seven million units and mdash that is more than 800 units per hour. The company, which has a share of 45 per cent in the domestic two-wheeler market, is now looking to beat the industry growth of 10-12 per cent projected for this financial year. The company is making strides in expanding its capacity further by setting up new plants, one of which would come up in South India. Hero presently has three operational plants in the country, located in Gurgaon, Dharuhera (Haryana) and Haridwar (Uttarakhand). Meanwhile, after launching a motorcycle and a un-geared scooter under its new brand ‘Hero’ is now gearing up to launch a 125cc bike named Ignitor and a 110cc commuter bike called Passion XPro. While the Ignitor is a new model, Passion XPro is

December August 2010

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Corporate News

based on the Passion series of brand in the Hero line-up.

SupremeInfrastructuresecuresorderworthRs283croreEngineering, procurement and construction player Supreme Infrastructure has bagged two orders worth Rs 283 crore in Punjab and Delhi in the highways and building construction segment. Of which, the company has bagged Rs 117 crore order for a BOT (build, operate and transfer) road project from Punjab Public Works Department while, another order worth Rs 166 crore is for building Project from Delhi Urban Shelter Improvement Board. About the Punjab project, it was awarded in joint venture led by SIIL with SPML Infra. EPC work of the project will be executed by SIIL. The project will be housed in the separate SPV. The project pertains to development, operation and maintenance of Kotkapura-Muktsar Road (SH-16) on design, build, finance, operate and transfer (DBFOT) basis. The other order was bagged from Delhi Urban Shelter Improvement Board (DUSIB) for construction of 3,400 five storeyed houses for economically weaker sections under JNNURM for slum dwellers at Pocket-II, Bhalaswa Jahangir Puri, New Delhi.

PGCILselectedsuccessfulbidderundertariffbased competitive biddingPower Grid Corporation of India (PGCIL) has been selected as the successful bidder under tariff based competitive bidding for establishing transmission system associated with IPPs of Vemagiri Area: Package - A. in accordance with the guidelines for competitive bidding, Vemagiri Transmission System, the special purpose vehicle incorporated to establish the transmission system on build, own operate and maintain (BOOM) basis, was acquired on April 18, 2012 by PGCIL. The transmission system comprising 765 kV D/C is to traverse the state of Andhra Pradesh and is to be constructed over a period of 36 months. This is the second project that the company won under tariff based competitive bidding.

Strides Arcolab’s arm receives USFDAapprovalforCisplatinInjectionStrides Arcolab’s wholly owned subsidiary - Onco Therapies, has received USFDA approvals for Cisplatin Injection, 1 mg/mL packages in 50 mL and 100 mL multiple dose vials. Cisplatin is amongst the products in the drug shortage list of USFDA. According to IMS data, the US market for generic Cisplatin is approximately $10 million. Cisplatin is part of the oncology portfolio licensed to Pfizer in January 2010 for the US market and expected to be launched shortly. Cisplatin is a chemotherapy drug used

to treat various types of cancers, including sarcomas, some carcinomas (e.g. small cell lung cancer, and ovarian cancer), lymphomas, and germ cell tumors.

Kajaria Ceramics forms JV with VennarCeramicsKajaria Ceramics (KCL) has formed a joint venture (JV) with Vennar Ceramics, a subsidiary of Anjani Portland Cement, to manufacture wall tiles. The joint venture will set up a unit at Kaikalur near Vijaywada in Andhra Pradesh with a capacity to produce 2.30 million sq metre a year of high-end ceramic wall tiles. Kajaria acquired a 51% stake in Vennar Ceramics by way of subscribing to fresh equity share capital for a sum of Rs 13.65 crore. Vennar is putting up a brand new plant which would start commercial production in June 2012. This will help Kajaria cater to the southern markets by reducing the transit time for the delivery of goods and savings in transportation costs.

VATechWabagbagscontractforsettingupRs1,000-croreplantVA Tech Wabag, the Chennai-based multinational player in water and waste water management, bagged the contract of setting up Rs 1,000-crore plant for the Chennai Metropolitan Water Supply and Sewerage Board, the public sector water utility. It has to operate and maintain the plant for seven years after contract completion, which represents revenue of about Rs 70 crore a year. This plant will produce fresh water from sea water. Recently it has achieved an important milestone when a km-long, 1.6-metre pipeline was launched into the sea to take in over 300 million liters of sea water a day.

PunjLloydbagscontract fromEnOC’sarmto build oil terminalPunj Lloyd, an India-based construction conglomerate has bagged a contract from Horizon Terminals, a subsidiary of Emirates National Oil Company (ENOC) to build oil terminal. The deal covers the engineering, procurement and construction of a bulk oil terminal inside the Jebel Ali Free Zone along with a 60 kilometre jet fuel pipeline to the Dubai International Airport. Previously referred to as ‘Project Falcon,’ it will have state of the art oil terminal facilities with storage tanks capacity of 141,000 cubic metres, including a Tanker Truck Loading system connected to the oil tanker berths and associated facilities. The oil terminal will handle a jet fuel system initially and other petroleum products at later stages. The proposed 60 km pipeline running from the Jebel Ali Free Zone to the Dubai International Airport will have a branch off point at the new Dubai World Central (DWC) airport for future expansion.

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Market Snapshot

Indian markets extended the sluggishness in the month of April and remained cautious since the start of the month, though there were mixed economic reports in the beginning as the car manufacturers reported robust sales numbers for the month of March as the expectation of a price rise after the budget prompted people to buy cars before the end of the fiscal. Car prices are expected to go up in this fiscal as the Finance Minister has announced a hike in excise duty from the current 10% to 12%. As per leading car makers, this hike will lead to an increase in prices upto 3 lakh. All major Auto makers had earlier expressed their unhappiness over the government’s decision to hike the duties in the Budget. But the other news that dampened the mood of investors was Manufacturing activity in India declining marginally in the month of March as compared to February, as per the HSBC PMI numbers. The seasonally adjusted HSBC Purchasing Managers’ Index (PMI) - a headline index designed to measure the overall health of the manufacturing sector - come to 54.7 in March, down from February’s 56.6. It stood at 57.5 in January. Though the numbers have been above the 50 mark that separates growth from contraction, they are tad disappointing. The rate of expansion has been the weakest in three months. Mainly attributed to shortages in power supply and increasing prices of raw materials. Even though demand has improved, the manufacturers’ propensity to process new orders has been limited due to these shortages. As a result customers have also been hesitant in placing new demands. Even though the numbers have been declining for the third consecutive month, they are depicting a consolidating growth trend. Not only the manufacturing but the Services sector too showed contraction, slowing down notably in the month of March, as per the HSBC Services Business Activity Index. Growth of new business which had so far fuelled activity levels is also significantly down. The seasonally adjusted HSBC Services Business Activity Index posted 52.3 in March significantly down from 56.5 in February, the lowest in 5 months. Similarly, posting 53.6, the HSBC India Composite Index - which covers both the manufacturing and service sectors - fell from February’s 57.8 to a four-month low. However, on a more positive note, there has been a marginal increase in employment in the service sector. What actually marred the sentiments of the markets in early trade was the lingering uncertainty over the GAAR provisions coupled with a pessimistic start of the official earnings season after a gloomy guidance from IT bellwether Infosys. It was not all then the India’s

industrial production was reported to have grown by a small 4.1% in February, much lower than the expectation of 6.6-6.7%. The January’s IIP number was revised to a shocking 1.1% as compared to the 6.8% put out earlier. With the revision, the actual growth in industrial activity now stands at 3% (m-o-m). The development shook the markets and took it to the lowest level for the month.

BSESensexmovementforthemonthofApril

w Tata Motors and DRB-HICOM Defence Technologies Sdn Bhd (DEFTECH), a wholly-owned subsidiary of DRB-HICOM Berhad, Malaysia, have signed a cooperation agreement to enable both DEFTECH and Tata Motors to develop, promote and market Tata Motors high mobility 4x4 trucks with payloads ranging from 2.5 tonnes to 5.0 tonnes, for the Armed forces of Malaysia. In the initial stage, DEFTECH will be working on two of Tata Motors proven models, LPTA 715 and LPTA 1623. These vehicles are suitable in various configurations including troop carriers, command post, ambulance, reconnaissance missions, as an armoured carrier communication shelter and others.

w Hero MotoCorp, the country’s largest two-wheeler maker, has ramped up its total production capacity

BSESensexMonthlyGainers

Company Prev Price (Mar 30’12)

Last Price (Apr 30’12)

Change (%)

Tata Motors 275.70 316.75 14.89

Hero MotoCorp 2054.85 2234.90 8.76

ITC 226.85 245.55 8.24

TCS 1167.85 1244.90 6.60

Sun Pharma Inds. 569.50 602.35 5.77

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December August 2010

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Market Snapshot

to seven million units and mdash; that is, more than 800 units per hour. The company, which has a share of 45 per cent in the domestic two-wheeler market, is now looking to beat the industry growth of 10-12 per cent projected for this financial year. The company is making strides in expanding its capacity further by setting up new plants, one of which would come up in South India. Hero presently has three operational plants in the country, located in Gurgaon, Dharuhera (Haryana) and Haridwar (Uttarakhand). Meanwhile, after launching a motorcycle and a un-geared scooter under its new brand ‘Hero’ is now gearing up to launch a 125cc bike named Ignitor and a 110cc commuter bike called Passion XPro. While the Ignitor is a new model, Passion XPro is based on the Passion series of brand in the Hero line-up.

w Infosys outdid expectations with a 27% rise in its fourth-quarter consolidated net profit, but has set a weak dollar revenue forecast for the current fiscal year, as the uncertain global economic environment continued to weigh on the outsourcing major. Infosys has guided for 8-10% growth in dollar revenue terms which is much lower than expectations of 12-15%. The company expects FY13 dollar revenues at $7553-$7692 million. The FY13 EPS guidance is expected at Rs 158.76-161.4 (at assumed currency rate of INR50.88/USD). The guidance for the full year is even below IT lobby Nasscom’s forecast of 11-14%.

w The Rajasthan government has abruptly scrapped tenders worth Rs 12,000 crore that were bagged by Bharat Heavy Electricals (BHEL) more than a year ago for two big tickets thermal power projects in the state. The development comes at a time when BHEL is grappling with slowdown in its order book. Owing to an overall sluggishness in the power sector, the company’s

order book more than halved to Rs 22,096 crore last fiscal compared to 2010-11 period.

However, recovery was seen in the markets from the mid of the month after the Reserve Bank of India (RBI) in a surprising move cut the Repo rate by a substantial 50 basis points. Although a rate cut was largely expected, but the quantum of it come in as a pleasant surprise. Though, the apex bank stated that there is limitation for further rate cuts that led investors think that it could be the only rate cut by RBI in this financial year. The RBI has further stated that going forward it expects GDP growth to be around 7.3% which is lesser than the government’s estimate of 7.5%. It feels that the economy will settle at its post 2008 levels of 7-7.5% in the current fiscal. The RBI has also said that oil prices and a weak rupee pose inflationary risks, and has warned that inflation could remain sticky in the current fiscal, calling for a policy that would not exacerbate inflation. In the last leg of the month the markets were dragged down by the mixed earnings numbers and jitters in the global markets. On the domestic front there was good news for the OMCs reeling under cash crunch, the government in principle agreed to deregulate diesel prices. However no details were given about the time frame and extent of the deregulation. Meanwhile there was some report of government going for some dilution in the GAAR provisions after repeated concern of the FII’s and the finance ministry is considering exempting transactions or tax-saving arrangements less than Rs 15 crore to ensure only corporate structures of significant size come under the ambit of the new regime. On the F&O front, April series Nifty and Sensex went into the consolidation mode and snapped the series on an absolutely flat note with marginal gains of less than half a percent. Besides, the broader markets too snapped the series on a weak note with the mid cap index underperforming not only its larger peers but also the Small Cap index. The Technology and Software counters remained among the prominent laggards in the series, which was countered by the sharp gains in rate sensitive Automobile counter. From the expiry perspective, market wide rollover of 61.63% was observed in the series which was marginally higher than the three month average of 61.03% while Nifty rollovers were at 60.28%, higher than 3 month average of 57.37%. Sectorally, the Finance, Capital Goods, Power, Metal and Sugar counters witnessed high rollovers while sectors like technology, FMCG, banking, Cement and Telecom observed relatively low rolls.

BSESensexMonthlyLosers

Company Prev Price (Mar 30’12)

Last Price (Apr 30’12)

Change (%)

Infosys 2864.95 2462.60 -14.04

BHEL 256.95 224.90 -12.47

GAIL India 374.95 330.40 -11.88

Bharti Airtel 336.75 310.30 -7.85

Jindal Steel & Power 545.00 502.70 -7.76

D e c e m b e r May 2012

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Economy News

India surpasses Japan to become third largesteconomyintermsofPPP:IMF

India has surpassed Japan to become the third largest economy in the world in terms of purchasing power parity (PPP), as per data released by the International Monetary Fund (IMF). India’s gross domestic product in PPP terms stood at $4.46 trillion in 2011, marginally higher than Japan’s $4.44 trillion, making it the third-biggest economy after the United States and China.

India’s share in world GDP in terms of PPP stood at 5.65% in 2011 against Japan’s 5.63%, with the gap expected to widen significantly by 2017. In five years, the IMF estimates the share of India’s GDP in PPP terms would grow to 8.09% compared with 4.8% for Japan. These statistics are a reminder of the growth potential that the country has despite the prevailing mood of cynicism. It has successfully turned the spotlight back on India and its untapped potential. However, it has to be kept in mind that Japan has recently faced a devastating tsunami and earthquakes, because of which its economy is expected to contract. On the other hand, India’s economy is estimated to have grown by about 7% over the past financial year. These factors have significantly contributed to the upward movement of India on the scale. India is also now Asia’s second-largest economy, behind China.

PPP refers to the amount of money a person will have to spend to purchase the same basket of goods and services in one country as compared to the other. Based on this the relative value of currencies is determined. This method does away with the effect of a market determined currency and enables a comparison on real terms.

Exportsofgemsandjewelleryfallby0.36%inFy‘12

The Indian gem and jewellery industry has witnessed a marginal decline of 0.36% in exports in FY ’12. The dip has come due to a fall in the exports of diamonds. Gold jewellery has been the major driver of growth and has registered an increase of 30% in FY‘12. As per Gems and Jewellery Export Promotion Council (GJEPC), the total gem and jewellery industry exports were recorded at $42839 million (INR 204823 crores) in FY 2011-12 as compared to $42995 million (INR 195735 crores) in April 2010 - March 2011. Though in dollar terms there is a marginal drop of 0.36%, the exports mark an increase of 4.6% in rupee value. The gem and jewellery sector accounted for 14% of India’s total merchandise exports in FY 2011-2012.

The decrease in the exports of diamonds has been because

of a decline in the imports of Cut and Polished Diamonds (CPD) due to the 2% import duty levied on them by the government in mid-January, 2012. The increase in import duty was done with the aim of reducing the trade deficit. As a result imports of CPD fell by nearly 70% during the period of Jan-March. For FY’12 CPD witnessed a decline of 17.3%. It is expected that the total import of polished diamonds at in 2011-12 may eventually come down significantly in 2012-13. It is expected that the total import of polished diamonds at in 2011-12 may eventually come down significantly in 2012-13. Gold jewellery remained the major driver of growth and saw an increase of 30% in FY’12. Coloured gemstone exports witnessed an increase of 9.10% in FY’12. The GJEPC is making efforts to promote exports of gems and jewellery. It has planned a series of initiatives that will provide an impetus to trade and catapult the industry to newer heights. It has taken on the onus of improving skill sets for the Industry, and has established gem and jewellery sector specific council of India to achieve the same.

TRAIsaysnoseparate‘exitpolicy’fortelcoswanting to quit

Telecom Regulatory Authority of India (TRAI) reiterated that licence fee will continue to be non-refundable to mobile service providers if they lose or surrender permits, while adding that a separate exit policy was not required for mobile phone companies who wanted to quit the business. TRAI’s commendations will facilitate the government to save about Rs 10,000 crore, which was paid by the 122 licences that were quashed by the Supreme Court in its February 2, 2012 orders.

The regulator’s recommendations, if accepted, will also result in dismissal of requests from companies like Loop, S Tel and Telenor that had demanded repayment of their licence fee from the government. Unitech Wireless or Uninor, majority owned by Norway’s Telenor, has sought a reimbursement of Rs 1,659 crore paid as licence fee to the government when it acquired mobile permits while Loop wants around Rs 3,800 crore back from licence fee and damages.

Many players are willing to exit the telecom space due to stiff competition and lower profits but are unable to do so. They want clear guidelines on mergers and acquisitions (M&As) and exit policy. But, last month, TRAI had said it was not in favour of an exit policy for telcos since the Supreme Court, on February 2, 2012, had already cancelled all 122 telecommunication licenses issued to various operators in India’s 22 service areas under the 2G spectrum sale by the government in January 2008 allegedly at very low

December August 2010

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Economy News

prices favoring some companies, and thereby causing a loss of Rs 1.76 trillion (as per Comptroller and Auditor General report) to the exchequer.

But prior to the SC’s orders in February 2, the telecom department had asked the regulator to exercise an exit-policy to allow some operators that had not even started operations, and others who wanted to wind down to exit the sector, as it felt that this was a better option compared to canceling the licences, as recommended by TRAI. While the regulator’s recommendations are not binding on the government, TRAI has restated its suggestions from the draft proposal last month, which advises the government to continue with its present rules that allow a Telco to give up permits by giving a notice of 60 days.

FDI increases by awhopping 74% to $2.21billion in February

India’s Foreign Direct Investment (FDI) has increased by a whopping 74% to $2.21 billion in February as compared to the same month last year. This has taken the total FDI for the period April- February 2011-12 to $24.8 billion, which is substantially higher than $19.42 billion in 2010-11, and $25.83 billion in 2009-10. Services sector received the largest share of $5.05 billion followed by pharmaceuticals $3.21 billion and telecom $1.99 billion. The other major beneficiaries were construction $2.52 billion, power $1.61 billion and metallurgical industries $1.76 billion. Experts are of the opinion that there is even more scope to increase the FDI if the government goes through its economic reforms of allowing 100% FDI in sectors like multi-brand retail and insurance. They are of the opinion that $2 billion is not a large amount and India can do much better.

Mauritius remained the top source of inflows with investments of $9.42 billion, thanks to the double taxation avoidance treaty. Other sources were Singapore ($5.07 billion), Japan ($2.86 billion), UK ($2.75 billion), Germany ($1.54 billion), Netherlands ($1.21 billion) and Cyprus ($1.42 billion). Recently, the government has rationalized the procedure to enhance foreign investment into the country and also allowed FIIs to invest up to 23% in commodity exchanges without seeking its prior approval.

CPIrisesto9.4%inMarch2012

The consumer price index (CPI) has surged to 9.4% in March as compared to 8.33% in February 2012, as per data released by the central statistical organization (CSO). The March numbers are provisional whereas the February numbers are final. The corresponding provisional inflation rates for rural and urban areas for March 2012 are 8.79% and 10.30% respectively. Inflation rates (final) for rural

and urban areas for February 2012 are 8.36% and 9.45% respectively.

The CPI numbers which are a recent addition to the government’s data, show the impact of inflation on the final consumer. The WPI (wholesale price index) which is traditionally used by the RBI as an inflation gauge monitors the wholesale prices of the country and so far it was assumed that the consumer inflation would move in the same fashion.

However, the concept came under criticism as it was felt that these statistics do not correctly bring to light the impact of inflation on the aam aadmi. Hence the government has now started collecting the CPI numbers to get a better account of inflation levels in the economy. However it will take some time before the series is firmly established and the RBI can start using it as a gauge for inflation. The apex bank has recently cut interest rates by 50 basis points to spur the economy. The cut was based on the WPI index after establishing the fact that inflation has taken a downward trajectory after being stubbornly high for many months.

RBIslashesreporateby50bps

The Reserve Bank of India (RBI) has cut the Repo rate by a substantial 50 basis points. Although a rate cut was largely expected, the quantum of it has come in as a pleasant surprise. There has been no cut in the CRR rates. The repo rate is the rate at which banks borrow money from RBI. This is a reference rate used by banks to lend to their customers like companies and individuals. With the recent cut this rate now stands at 8%. The reverse repo rate, the rate of interest at which the central bank borrows funds from other banks for a short duration, has also been reduced by 0.50%.

The governor of the RBI, D Subarao has stated that the reason for cut is the substantial slow down in GDP growth rate to 6% levels and an even more substantial fall in the core inflation. Non food manufacturing inflation slowed down to below 5% levels for the first time in the last two years. Going forward, the RBI expects GDP growth to be around 7.3% which is lesser than the government’s estimate of 7.5%. It feels that the economy will settle at its post 2008 levels of 7-7.5% in the current fiscal.

The RBI governor has also said that oil prices and a weak rupee pose inflationary risks, and has warned that inflation could remain sticky in the current fiscal, calling for a policy that would not exacerbate inflation. Hence going forward the monetary decisions taken by the RBI will depend on the growth levels and the trajectory taken by inflation.

D e c e m b e r May 2012

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F u l l Ye a r

Company Name

YearEnd

NOMEquity

Rs. Mn.FV Promoter

Stk % BVRs.

RONW(%)

Sales Rs. Mn.

Sales Var (%)

OPM(%)

NP Rs.Mn.

NP Var (%)

DIV (%)

CPS(Rs.)

Bharti Airtel 201203 12 18988.00 5 68.50 115.42 19.09 416038.00 9.44 34.30 57300.00 -25.75 20.00 30.67

Broadcast Initiative 201103 12 253.14 10 52.30 -13.79 - 96.12 30.24 -424.47 -528.85 38.20 - -17.90

Cinevistaas 201103 12 114.87 2 67.61 11.81 -4.33 349.43 -26.24 5.35 -29.98 -994.93 - -0.22

Creative Eye 201103 12 100.29 5 57.72 16.72 -9.19 128.50 -59.04 -4.20 -32.30 -7.71 - -0.66

Den Networks 201103 12 1304.90 10 54.69 56.17 0.95 3383.70 3.08 15.14 69.50 -66.62 - 2.53

Dish TV India 201103 12 1062.98 1 64.75 0.59 -81.94 14365.50 32.43 22.75 -1897.00 -27.41 - 1.65

Entertain. Network 201103 12 476.70 10 71.15 80.49 14.60 2799.59 21.28 26.06 522.09 192.21 - 13.46

Eros Internatl.Media 201103 12 914.07 10 77.84 60.43 19.29 4776.60 -10.65 23.56 695.60 34.91 - 7.77

Hathway Cable & Data 201103 12 1428.57 10 49.57 59.04 -4.41 4732.17 17.77 23.68 -398.41 -52.29 - 4.01

Hathway Bhawani Cable 201103 12 80.00 10 63.59 6.04 10.82 142.10 16.02 8.43 3.63 145.27 - 1.39

Hinduja Ventures 201103 12 205.56 10 65.70 314.02 9.14 67.26 -87.47 1038.34 576.10 47.39 125.00 29.15

Idea Cellular 201203 12 33032.72 10 45.96 37.18 7.10 193223.30 25.56 22.32 5765.40 -31.74 - 9.49

Jain Studios 201103 12 143.86 10 54.89 16.77 2.14 110.76 67.51 -51.47 5.11 -128.76 - 1.05

MTNL 201103 12 6300.00 10 56.25 105.50 -34.82 38412.13 1.88 -25.03 -28295.75 14.02 - -22.44

New Delhi Television 201103 12 257.89 4 61.45 68.27 -34.77 3552.90 16.61 -4.69 -986.30 380.65 - -11.06

Padmalaya Telefilms 201103 12 169.98 10 10.44 15.69 -8.62 21.85 22.34 21.78 -15.86 -28.78 - 0.28

Perfect-Octave Media 201103 12 73.90 10 50.80 7.33 -5.16 1.45 - -95.17 -1.76 -563.16 - -0.17

Raj TV Network 201103 12 129.78 10 72.48 67.03 -10.76 445.50 -0.80 -13.50 -98.14 -37.79 - -5.36

Reliance Comm 201103 12 10320.10 5 67.86 233.26 -1.54 121297.70 -1.31 7.53 -7579.90 -258.27 10.00 4.05

Sea TV Network 201103 12 120.20 10 58.23 48.30 4.89 116.94 24.83 36.79 16.60 10.30 - 1.95

Southern Online Bio 201103 12 346.14 10 17.48 15.49 -12.11 608.39 58.75 8.82 -69.86 -557.80 - -0.72

Sri Adhikari Brother 201103 12 228.84 10 44.57 66.12 0.37 324.40 15.19 33.43 5.54 -590.27 6.00 3.41

Sun TV Network 201103 12 1970.40 5 77.00 60.54 35.10 19237.10 37.90 83.42 7722.20 36.10 175.00 30.95

Tata Communications 201103 12 2850.00 10 76.15 245.88 2.28 36117.70 12.24 28.19 1625.60 -66.36 20.00 28.85

Scorecard Legends : NOM - Number of Months for which P& L a/c is prepared by the companies, Equity Rs.Mn - Latest Paid Up Capital of the Company, FV-Latest Face values of equity Shares, Promoter Stk % - Its promoter holding in the equity capital of the company as per latest shareholding pattern, BV Rs. - Book Value Per Share is calculated as (Equity + reserves ) / No of Equity shares, RONW - Return on Net Worth is calculated as {(Net profit - preference capital)/ Shareholder’s Fund }*100.Share- holders funds includes Equity Paid Up + Reserves excluding revaluation reserves - Misc Expenditures Not written off, Sales Rs. Mn - Sales , Turnover & Income from operations,Sales Var% - Percentage Change in Sales over previous period Sales, OPM% - Operating Profit after interest expended as a % of Interest income & income from operation, NP Rs. Mn - Net Profit as reported after Tax, NP Var% - Percentage Change in Net profit over previous period Net profits, Div% - Total % of Dividend Declared during latest Financial year.

Scorecard : DTH Industry

December August 2010

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21May 2012

CPS Rs. - Cash Profit per Shares, EPS Rs. - Earning Per Shares is calculated as Net Profit / Number of Equity Shares, Sales Rs. Mn - Sales ,Turnover & Income from operations for Latest Quarter, Sales Var% - Percentage Change in Sales for Latest Quarter over previous Corresponding Quarter Sales, OPM% - Operating Profit after interest expended as a % of Interest income & income from operation for Latest Quarter,NP Rs. Mn - Net Profit as reported after Tax for Latest Quarter,NP Var% - Percentage Change in Net profit for Latest Quarter over Previous quarter Net profits, Ended - Trailing Twelve months Ended On, TTMEPS - Earning Per Shares is calculated as TTM Net Profit / Number of Equity Shares,TTMNP Var% - Percentage Change in TTM Net profit over Corresponding previous TTM Net profits, H52 - High Price during last 52 Week,L52 - Low Price during last 52 Week,PE - Market Price / TTM Earning Per Shares,Market cap Rs.Mn - Market Capitalisation is calculated as Latest price multiplied by No of Equity Shares outstanding.

Scorecard : DTH Industry

Latest Quarter TTM Market Data

EPSRs.

SalesRs. Mn.

SalesVar (%)

OPM(%)

NPRs. Mn.

NPVar(%)

EndedEPSRs.

NPVar (%)

Price30/04/12

H52W L52W PEMkt. Cap(Rs. Mn.)

15.09 107572.00 9.45 34.36 15743.00 -14.34 201203 - - 310.30 444.70 289.05 - 1178395.28

-20.89 38.17 11.15 -269.95 -115.64 -2.86 201112 -25.07 25.08 7.86 13.48 4.81 - 198.97

-0.52 130.33 54.15 9.55 0.04 -101.15 201112 -0.60 90.15 2.71 6.59 2.36 - 155.65

-1.61 100.10 1309.86 11.49 8.00 -157.55 201112 0.48 524.74 4.35 6.40 3.25 9.00 87.25

0.53 1072.70 26.36 15.69 22.10 -1104.55 201112 - - 108.50 112.40 35.25 - 14158.17

-1.78 4904.60 31.43 26.08 -429.60 -2.98 201112 -1.38 -44.60 60.00 94.20 52.00 - 63778.54

10.95 755.94 -2.45 37.15 182.11 -26.74 201112 - - 207.00 295.90 194.00 - 9867.78

7.58 3650.80 67.98 25.40 542.90 56.41 201112 - - 185.70 277.00 136.35 - 16974.28

-2.79 1276.59 6.43 19.38 -182.78 47.36 201112 -4.27 47.12 155.50 193.80 72.00 - 22214.28

0.45 40.40 13.17 14.75 2.91 429.09 201112 1.33 68.36 17.00 18.00 7.60 12.81 136.00

28.03 14.89 -1.39 1304.30 165.58 6.47 201112 - - 393.00 414.95 238.00 - 8078.31

1.74 52946.20 26.02 21.82 1899.80 -25.77 201203 - - 78.50 103.65 62.65 - 259306.85

0.36 30.31 19.76 -28.08 -11.10 121.12 201112 1.34 100.00 9.60 13.43 6.23 7.15 138.11

-44.91 8747.68 -8.04 -36.16 -9439.31 39.83 201112 -59.63 12.02 24.95 49.45 22.50 - 15718.50

-15.30 1017.60 4.94 10.52 -23.90 -86.01 201112 0.00 42.00 73.75 24.75 - 2707.79

-0.93 5.96 -7.60 2.18 -5.03 38.57 201112 -0.38 -265.00 4.20 9.27 3.00 - 71.39

-0.21 18.45 1745.00 -5.26 -0.97 7.78 201112 0.01 1933.33 29.30 48.75 13.30 - 216.53

-7.56 159.22 14.77 41.22 46.53 230.00 201203 7.10 177.19 168.00 198.30 41.55 23.66 2180.36

-3.67 27880.00 -6.34 11.94 -2770.00 -24.10 201112 - - 75.15 109.70 61.00 - 155111.10

1.38 30.91 9.22 16.05 1.17 -73.41 201112 - - 42.50 45.95 11.75 - 510.85

-2.02 226.00 25.86 1.91 -52.09 37.48 201112 -7.93 83.56 6.85 15.10 4.40 - 237.10

0.22 108.93 18.61 36.72 11.78 116.94 201112 1.06 -84.43 72.00 89.00 46.50 68.09 1647.61

19.60 4251.10 -28.91 85.70 1678.80 -25.55 201112 18.88 2.02 286.35 435.95 214.50 15.17 112844.81

5.70 10192.30 16.14 25.71 294.80 -35.55 201112 - - 237.35 263.20 176.30 - 67644.75

D e c e m b e r May 2012

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Sales

Company Name201113 Qtr 201013 Qtr

Change In Sales

% Change in Sales 201113 201013

Change In Net Profit

% Change in Net Profit

Chemf Alkalies 236.70 71.80 164.90 229.67 48.10 14.90 33.20 222.82Binani Inds 559.50 170.90 388.60 227.38 121.50 -144.00 265.50 -Thinksoft Global Services 316.30 146.10 170.20 116.50 24.40 1.20 23.20 1933.33Coromandel Interntl. 26721.80 12489.60 14232.20 113.95 1215.40 726.20 489.20 67.36Muthoot Capital Serv 231.90 115.25 116.65 101.22 62.70 26.79 35.91 134.04Parrys Sugar Inds. 2808.39 1413.67 1394.72 98.66 425.40 125.17 300.23 239.86Astra Microwave Prod 892.23 454.08 438.15 96.49 100.82 36.68 64.14 174.86Granules India 1654.23 859.64 794.59 92.43 147.83 82.13 65.70 80.00De Nora India 106.79 62.97 43.82 69.59 13.71 12.58 1.13 8.98Vakrangee Software 4519.78 2697.64 1822.14 67.55 198.13 138.96 59.17 42.58Lloyd Steel Inds. 14594.90 9117.87 5477.06 60.07 -69.51 272.66 -342.17 -Petronet LNG 63754.30 39859.70 23894.60 59.95 2451.20 2062.75 388.45 18.83Veer Energy & Infra 371.34 232.32 139.02 59.84 24.99 16.74 8.25 49.28Chola. Invest & Fin. 5219.70 3395.30 1824.40 53.73 538.60 134.80 403.80 299.56Punj Lloyd 18873.70 12343.40 6530.30 52.91 180.30 318.70 -138.40 -Jindal Steel & Power 41740.20 27421.90 14318.30 52.21 7836.30 6483.30 1353.00 20.87Chaman Lal Setia Exp 602.77 398.69 204.08 51.19 37.07 28.26 8.81 31.17Hexaware Tech. 2129.63 1428.85 700.78 49.05 830.49 458.62 371.87 81.08Yes Bank 17851.00 12226.10 5624.90 46.01 2718.00 2033.80 684.20 33.64Tourism Finance Corp 425.01 292.11 132.90 45.50 233.81 198.33 35.48 17.89Alstom Projects (I) 11238.60 7788.90 3449.70 44.29 1373.70 844.60 529.10 62.65Oil Country Tubular 1545.72 1081.58 464.14 42.91 133.94 133.96 -0.02 -Igarashi Motors 743.82 522.11 221.71 42.46 66.19 11.69 54.50 466.21Mah & Mah Finl. Serv 8388.58 5916.25 2472.33 41.79 2276.90 1565.50 711.40 45.44Indusind Bank 14810.20 10488.40 4321.80 41.21 2233.80 1717.60 516.20 30.05Gruh Finance 1458.90 1035.00 423.90 40.96 555.70 416.00 139.70 33.58Ajanta Pharma 1761.04 1258.48 502.56 39.93 235.98 174.66 61.32 35.11P&G Hygiene 3268.80 2348.00 920.80 39.22 520.50 389.40 131.10 33.67Axis Bank 60603.20 43666.60 16936.60 38.79 12772.70 10201.10 2571.60 25.21Indag Rubber 563.57 408.67 154.90 37.90 65.04 36.49 28.55 78.24Gujarat Gas 7235.43 5287.71 1947.72 36.83 651.67 723.62 -71.95 -ING Vysya Bank 10614.60 7769.10 2845.50 36.63 1273.90 913.00 360.90 39.53Automobile Corp.Goa 1102.23 806.90 295.33 36.60 89.11 52.85 36.26 68.61Indiabulls Fin Serv. 7992.54 5900.84 2091.70 35.45 1983.98 1588.04 395.94 24.93Asahi Inds. 450.92 333.64 117.28 35.15 3.06 -9.49 12.55 -HDFC Bank 73880.40 54685.50 19194.90 35.10 14530.80 11147.10 3383.70 30.36Zensar Technologies 1963.90 1459.90 504.00 34.52 203.90 216.30 -12.40 -BOC India 3012.07 2239.80 772.27 34.48 178.53 267.20 -88.67 -Mindtree Ltd 5257.00 3912.00 1345.00 34.38 692.00 322.00 370.00 114.91Kajaria Ceramics 3774.70 2818.60 956.10 33.92 242.10 184.30 57.80 31.36Vijaya Bank 21522.30 16087.80 5434.50 33.78 1809.70 542.30 1267.40 233.71Bajaj Corp 1470.35 1101.10 369.25 33.53 340.48 268.85 71.63 26.64

St.Bk of Travancore 18985.60 14256.50 4729.13 33.17 1530.42 2383.19 -852.77 -

Rs. in million

Net Sales Net Profit

December August 2010

Magnum

23May 2012

Dividend Yield

Company NameYear End

Price(Rs.)

(30/04)

Yield(%)

EPS(Rs.)

FV PE

TTM 52-WkHigh(Rs.)

52-WkLow(Rs.)

Year End

NPRs. ml

EPS(Rs.)

PE

HCL Infosystems Ltd. 201106 44.60 17.94 7.95 2 5.61 201203 534.80 2.40 18.59 124.00 38.80

3I Infotech Ltd. 201103 14.30 10.49 6.22 10 2.43 201112 -650.50 -3.39 0.00 53.90 11.50

Clariant Chemicals (India) Ltd. 201112 613.85 9.77 114.04 10 5.38 201203 1122.60 42.11 14.58 854.80 556.15

Shipping Corpn. Of India Ltd. 201103 61.50 8.94 12.18 10 5.05 201112 -785.30 -1.69 0.00 111.90 46.60

Chennai Petroleum Corp.Ltd. 201103 148.45 8.08 34.35 10 4.32 201112 2687.60 18.05 8.23 236.95 145.00

Escorts Ltd. 201109 73.60 2.04 11.74 10 6.27 201112 1054.62 9.99 7.37 140.35 63.60

Polyplex Corporation Ltd. 201103 178.05 7.30 53.20 10 3.23 201112 840.50 26.28 6.78 224.95 150.35

JBF Industries Ltd. 201103 113.00 7.08 18.34 10 6.16 201112 743.00 10.32 10.95 181.80 89.00

Uflex Ltd. 201103 115.65 6.49 39.07 10 2.96 201112 1526.90 21.14 5.47 226.00 98.25

Electrosteel Castings Ltd. 201103 20.50 6.10 4.73 1 4.33 201112 749.89 2.29 8.93 32.60 15.80

Geodesic Ltd. 201103 45.75 6.01 26.03 2 1.76 201112 1986.06 22.03 2.08 87.15 39.25

SRF Ltd. 201103 239.20 5.85 79.90 10 2.99 201112 4364.80 75.74 3.16 348.85 230.25

Indian Overseas Bank 201103 87.40 5.72 17.33 10 5.04 201112 9556.05 11.99 7.29 164.20 72.85

Peninsula Land Ltd. 201103 31.70 5.36 8.80 2 3.60 201112 1440.60 5.16 6.14 59.25 29.10

Finolex Industries Ltd. 201103 58.70 5.11 6.14 10 9.56 201203 751.52 6.06 9.69 102.45 42.00

Corporation Bank 201103 407.80 4.90 95.41 10 4.27 201112 15001.11 101.27 4.03 592.70 335.50

Andhra Bank 201103 116.55 4.72 22.64 10 5.15 201112 13177.83 23.55 4.95 147.90 79.00

Balmer Lawrie & Company 201103 551.15 4.72 74.35 10 7.41 201112 1367.00 83.94 6.57 688.70 463.00

Hindustan Petroleum Corp.Ltd. 201103 300.90 4.65 45.45 10 6.62 201112 -25969.00 -76.69 0.00 419.50 238.75

Canara Bank 201103 436.85 2.52 90.88 10 4.81 201112 33525.30 75.68 5.77 636.70 349.05

Oriental Bank Of Commerce 201103 230.25 4.52 51.51 10 4.47 201203 11415.60 39.13 5.88 378.00 190.10

HEG Ltd. 201103 226.35 4.42 30.08 10 7.53 201112 917.10 22.95 9.86 262.80 141.00

Vijaya Bank Ltd 201103 58.70 4.26 11.08 10 6.47 201203 5809.90 11.72 5.01 83.60 43.85

Dena Bank 201103 93.20 2.36 18.35 10 5.08 201112 7053.50 20.15 4.63 104.40 47.50

SJVN Ltd. 201103 19.25 4.16 2.21 10 8.73 201112 10592.20 2.56 7.52 23.80 18.65

IFCI Ltd. 201103 41.15 2.43 9.55 10 4.30 201203 6636.20 8.99 4.58 52.45 19.65

Rolta India Ltd. 201106 88.50 3.95 30.70 10 2.88 201112 3704.30 22.96 3.85 144.25 50.15

UCO Bank 201103 77.25 3.88 14.45 10 5.35 201112 10817.30 16.27 4.75 105.00 44.80

State Bank Of Bikaner & Jaipur 201103 383.40 3.78 110.18 10 3.48 201203 6520.30 93.15 4.12 600.00 302.25

Bank Of Maharashtra 201103 53.75 3.72 6.86 10 8.61 201112 4274.10 7.25 7.41 60.90 37.75

Rei Agro Ltd. 201103 11.33 2.65 2.95 1 3.84 201112 2603.98 2.72 4.17 30.40 9.61

Allahabad Bank 201103 166.15 3.61 29.88 10 5.56 201112 17241.90 34.48 4.82 222.00 113.60

D e c e m b e r May 2012

Magnum

24

High PE

Company Name Year End Price (30/04) Rs. EPS FV PE

Religare Enterprises Ltd 201103 355.00 0.37 10 971.24

KGN Industries Ltd. 201103 22.60 0.03 1 896.83

MMTC Ltd. 201103 776.95 1.22 1 638.73

Sunteck Realty Ltd. 201103 379.95 0.98 2 386.01

Jet Airways (India) Ltd. 201103 335.95 1.12 10 299.31

Indiabulls Power Ltd. 201103 13.85 0.05 10 289.75

Den Networks Ltd. 201103 108.50 0.53 10 203.45

Essar Ports Ltd. 201103 90.50 0.51 10 177.97

GMR Infrastructure Ltd. 201103 26.75 0.15 1 176.80

Punj Lloyd Ltd. 201103 53.80 0.37 2 144.28

Aptech Ltd. 201103 74.40 1.62 10 46.00

Hindustan Copper Ltd. 201103 280.65 2.42 5 115.87

Adani Enterprises Ltd. 201103 280.45 2.45 1 114.61

Reliance Power Ltd 201103 106.85 0.98 10 109.18

Jubilant FoodWorks Ltd. 201103 1182.95 11.16 10 106.02

JM Financial Ltd. 201103 13.85 0.13 1 103.36

Bombay Dyeing & Manufacturing Co Ltd. 201103 521.60 5.22 10 98.47

United Breweries Ltd. 201103 535.90 5.79 1 97.52

Gillette India Ltd. 201106 2572.15 26.44 10 97.28

ABB Ltd. 201112 813.40 8.71 2 93.41

Astrazeneca Pharma India Ltd. 201103 2079.25 25.65 2 81.06

KSK Energy Ventures Ltd. 201103 63.65 0.90 10 80.38

Asahi India Glass Ltd. 201103 72.10 0.95 1 76.09

EIH Ltd. 201103 83.75 1.13 2 74.17

Godrej Industries Ltd. 201103 266.35 4.20 1 63.40

IRB Infrastructure Developers Ltd 201103 171.60 2.71 10 63.26

Page Industries Ltd. 201103 3119.80 52.49 10 59.43

Bajaj Hindusthan Ltd. 201109 30.20 0.53 1 57.48

Bajaj Finserv Ltd 201103 732.25 13.02 5 56.25

Tree House Education & Accessories Ltd 201103 215.00 3.83 10 56.16

Indiabulls Real Estate Ltd. 201103 63.10 1.14 2 55.41

Ballarpur Industries Ltd. 201106 24.75 0.46 2 53.80

Strides Arcolab Ltd. 201012 673.90 12.74 10 52.90

Kotak Mahindra Bank Ltd. 201103 583.05 11.10 5 52.51

Tata Teleservices (Maharashtra) Ltd. 201103 13.72 0.26 10 52.17

Oberoi Realty Ltd. 201103 270.15 5.20 10 51.99

Pantaloon Retail (India) Ltd 201106 187.75 3.63 2 51.77

Jaiprakash Power Ventures Ltd 201103 40.35 0.79 10 51.21

Info Edge (India) Ltd. 201103 764.05 15.38 10 49.67

EPS Earning Per Shares is calculated as Net Profit / Number of Equity Shares (Rs)FV Latest Face values of equity Shares (Rs)PE Market Price / Trailing Twelve Months Earning Per Shares

December August 2010

Magnum

25May 2012

Low PE

Company Name Year End Price (30/04) Rs. EPS FV PEPiramal Healthcare Ltd. 201103 436.40 768.13 2 0.57

ARSS Infrastructure Projects Ltd. 201103 103.95 75.57 10 1.38

Jindal Poly Films Ltd. 201103 195.25 128.72 10 1.52

Geodesic Ltd. 201103 45.75 26.03 2 1.76

Shree Ganesh Jewellery House Ltd. 201103 78.10 43.48 10 1.80

Subex Ltd 201103 23.55 10.32 10 2.28

3I Infotech Ltd. 201103 14.30 6.22 10 2.43

GTL Ltd. 201106 37.05 14.76 10 2.51

Prakash Industries Ltd. 201103 52.35 19.86 10 2.64

Rolta India Ltd. 201106 88.50 30.70 10 2.88

Vardhman Textiles Ltd. 201103 214.00 73.79 10 2.90

Uflex Ltd. 201103 115.65 39.07 10 2.96

SRF Ltd. 201103 239.20 79.90 10 2.99

Punjab & Sind Bank 201103 73.10 23.59 10 3.18

Great Offshore Ltd. 201103 88.00 27.32 10 3.22

Polyplex Corporation Ltd. 201103 178.05 53.20 10 3.23

Jyoti Structures Ltd. 201103 44.55 13.51 2 3.30

Jai Balaji Inds. Ltd. 201103 39.00 11.59 10 3.36

Onmobile Global Ltd 201103 53.50 15.54 10 3.44

Central Bank Of India 201103 97.50 30.99 10 3.46

Panacea Biotec Ltd. 201103 76.55 22.03 1 3.47

State Bank Of Bikaner & Jaipur 201103 383.40 110.18 10 3.48

Peninsula Land Ltd. 201103 31.70 8.80 2 3.60

State Bank Of Travancore 201103 539.95 145.55 10 3.71

Housing Development & Infrastructure Ltd. 201103 80.60 21.60 10 3.73

Alok Industries Ltd. 201103 19.50 5.13 10 3.80

Oil India Ltd 201103 456.60 120.10 10 3.80

Rei Agro Ltd. 201103 11.33 2.95 1 3.84

Corporation Bank 201103 407.80 95.41 10 4.27

IFCI Ltd. 201103 41.15 9.55 10 4.30

Chennai Petroleum Corporation. Ltd. 201103 148.45 34.35 10 4.32

Electrosteel Castings Ltd. 201103 20.50 4.73 1 4.33

Tulip Telecom Ltd. 201103 93.00 21.35 2 4.36

Manappuram Finance Ltd 201103 30.00 6.78 2 4.42

Oriental Bank Of Commerce 201103 230.25 51.51 10 4.47

Jaypee Infratech Ltd. 201103 46.20 10.33 10 4.47

Ess Dee Aluminium Ltd. 201103 152.70 33.56 10 4.55

Jindal Stainless Ltd. 201103 79.15 16.99 2 4.66

Bilcare Ltd. 201103 172.60 36.97 10 4.67

State Bank Of Mysore 201103 501.65 106.97 10 4.69

EPS Earning Per Shares is calculated as Net Profit / Number of Equity Shares (Rs)FV Latest Face values of equity Shares (Rs)PE Market Price / Trailing Twelve Months Earning Per Shares

D e c e m b e r May 2012

Magnum

26

Price Trends

Date Price Rs.30-Apr-12 29213.3528-Mar-12 28250.0029-Feb-12 28600.0031-Jan-12 28150.0031-Dec-11 27194.5530-Nov-11 28883.3531-Oct-11 27225.0030-Sep-11 26005.0030-Aug-11 26817.3530-Jul-11 23300.0030-Jun-11 21963.3531-May-11 22535.0030-Apr-11 22713.35

Silver

Crude

Gold

Currency

Date Price Rs.30-Apr-12 56727.0017-Mar-12 56234.9529-Feb-12 60500.0030-Jan-12 56050.0030-Dec-11 50600.0030-Nov-11 55400.0031-Oct-11 56200.0030-Sep-11 52700.0030-Aug-11 62750.0030-Jul-11 58626.7530-Jun-11 52800.0030-May-11 57200.0030-Apr-11 71400.00

Date Price Rs30-Apr-12 52.7430-Mar-12 50.8829-Feb-12 49.0130-Jan-12 49.7030-Dec-11 53.0730-Nov-11 52.2131-Oct-11 48.7030-Sep-11 49.3830-Aug-11 45.9731-Jul-11 44.1030-Jun-11 44.6630-May-11 45.0929-Apr-11 44.25 Date Price $

30-Apr-12 106.1630-Mar-12 103.0229-Feb-12 107.0730-Jan-12 98.7830-Dec-11 98.8330-Nov-11 100.3631-Oct-11 93.1930-Sep-11 79.2030-Aug-11 88.9029-Jul-11 95.7030-Jun-11 95.4231-May-11 102.7029-Apr-11 113.93

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December August 2010

Magnum

27May 2012

Mutual Fund Analysis

Outlook

Sundaram S.M.I.L.E (S.M.I.L.E denotes Small and Medium Indian Leading Equities) Fund (Growth) is Sundaram Asset Management Company’s open-ended Equity - Mid-cap scheme, being managed by S. Krishnakumar, a fund manager with more than 14 years of experience in mid- and small-cap stocks. It is one of better performing funds in its category and is suitable for investors with a three-to five-year horizon. Despite being a mid-cap oriented fund it can be called a balanced fund with constituents prospective as it follows an aggressive approach towards mid and small-cap stocks with a cushion of up to 35% in large cap stocks.

Duration 1 Week % 1 Mth % 3 Mth % 6 Mth % 1 Year % 3 Year % 5 Year % Since Inc. %Scheme Return % 0.47 2.65 11.60 1.44 -8.14 22.43 10.31 16.06Category Avg % -0.03 0.49 9.98 3.70 -2.62 27.54 6.49 12.91

Market cap-wise Allocation StyleAverage Mkt Cap (Rs Cr) 54871.12Market Capitalization % of Portfolio Large 91.13Mid 5.51Small 0.25Note: Large-Cap = 5000 Crs. and above, Mid-Cap = 2000 Crs. to 5000 Crs. and Small-Cap = less than 2000 Crs

SundaramS.M.I.L.EFund(G))Sundaram S.M.I.L.E Fund (Growth) is Sundaram Asset Management Company managed open-ended Equity - Mid-cap scheme.

The fund was launched on February 15, 2005 and its fund manager is S. Krishnakumar.

The benchmark index of the fund is CNX Midcap and the custodian of the fund is HDFC Bank Limited.

The current net asset value (NAV) of the fund as on April 30, 2012 was Rs 29.25; while the 52 week high NAV was Rs 32.73 on April 27, 2011 and the 52 week low NAV for the scheme was Rs 23.37 on December 20, 2011.

The minimum investment to the fund is Rs 5000 and additional investments can be made in multiples of Rs 500.

The investment objective of the scheme is to achieve capital appreciation by investing mainly in small and mid-cap stocks in a diversified manner.

Thetopfiveholdingsofthefundare:

As far as market capitalization-wise companies are concerned, the scheme’s portfolio consists of 41.73% from Large-cap, 20.53% from Mid Cap stocks and 32.17% from Small Cap stocks.

The fund has given a return of 16.06% since inception and a negative return of 8.14% in last one year, while the category average in the same period has been 12.91% and -2.62 % respectively.

CompanyShasun Pharma

Karur Vysya Bank

BoschGlaxos-mithkline

ConsumerHexaware

% Holding 4.42 4.15 4.12 3.80 3.60

Fund allocation

Last one year NAV Graph

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D e c e m b e r May 2012

Magnum

28

MF Scorecard

Returns as on 30th April 2012

FundAUM

Rs.Crore30 Mar 12

NAVRs

30/04/12

Absolute % CAGR %

1 Month

6 Months

1 Year

3 Years

5Years

10Years

Since Launch

Launch Date

Equity - DiversifitedBirla SL India Opportunities(G) 39.38 49.61 0.18 7.22 -7.70 22.35 -1.15 13.98 9.77 2-Mar-95HDFC Equity(G) 9916.37 259.51 -0.83 1.39 -9.32 26.81 11.40 27.61 20.66 1-Jan-95DSPBR India T.I.G.E.R-Reg(G) 1673.71 39.60 -2.50 -2.34 -12.76 11.20 3.02 0.00 19.05 11-Jun-04Fidelity Equity(G) 3401.12 33.71 -1.16 -1.94 -6.52 22.62 9.07 0.00 19.07 16-May-05Franklin India Bluechip(G) 4516.35 207.91 -2.51 -1.29 -4.67 20.88 9.59 25.10 22.42 1-Dec-93ICICI Pru Focused Blue Chip Equity-Ret(G) 3805.27 16.14 -0.98 -0.37 -3.96 22.88 0.00 0.00 12.92 23-May-08Kotak Opportunities(G) 805.45 43.15 -1.01 0.14 -6.39 19.42 7.86 0.00 21.08 9-Sep-04SBI Magnum Multicap(G) 400.32 16.34 -0.55 3.48 -8.01 14.00 1.13 0.00 7.69 16-Sep-05Reliance Equity Oppor-Ret(G) 3340.12 37.12 1.95 6.22 2.28 34.78 11.53 0.00 20.33 31-Mar-05Reliance Vision-Ret(G) 2226.23 252.08 -0.77 1.17 -7.61 18.64 6.51 27.98 21.50 8-Oct-95Sundaram S.M.I.L.E Fund(G) 451.86 29.25 2.65 1.44 -8.09 22.43 10.31 0.00 16.06 15-Feb-05

Equity - ELSSBirla SL Tax Plan(G) 125.90 13.01 -0.23 -0.08 -7.10 16.18 3.39 0.00 4.83 4-Oct-06HDFC TaxSaver(G) 3114.05 219.97 -1.36 1.74 -6.47 25.16 8.79 27.27 29.17 31-Mar-96SBI Magnum TaxGain'93(G) 4778.54 58.15 -0.34 2.67 -4.26 17.92 0.00 0.00 5.22 7-May-07ICICI Pru Tax Plan(G) 1278.42 133.85 -1.46 -0.84 -6.95 27.18 8.80 25.78 22.65 19-Aug-99DSPBR Tax Saver(G) 724.44 15.87 0.35 2.45 -7.19 21.17 9.06 0.00 9.13 18-Jan-07Reliance Tax Saver (ELSS)(G) 1972.81 21.60 1.42 9.28 0.50 25.20 9.03 0.00 12.36 21-Sep-05Sundaram Tax Saver(G) 1391.33 40.91 -2.48 0.48 -5.78 15.89 8.23 0.00 17.53 2-May-05Franklin India Taxshield(G) 812.36 210.19 -1.55 0.08 -1.04 23.21 10.55 23.74 26.25 10-Apr-99

Equity - Large CapBirla SL Frontline Equity(G) 2900.75 82.91 -0.19 -0.56 -7.22 20.18 9.55 0.00 24.63 23-Sep-02Birla SL Dividend Yield Plus(G) 1162.99 84.87 -1.45 2.30 -1.92 28.97 14.68 0.00 26.23 26-Feb-03DSPBR Top 100 Equity-Reg(G) 3248.40 99.43 -0.03 2.88 -2.52 19.52 10.73 0.00 28.54 10-Mar-03HDFC Growth(G) 1261.95 83.67 -2.08 -0.31 -5.39 23.72 11.47 25.39 20.02 11-Sep-00HDFC Top 200(G) 11381.06 199.20 -1.09 0.52 -7.41 22.75 12.23 28.14 21.04 3-Sep-96Kotak 50(G) 828.44 95.90 -1.44 -2.46 -7.23 15.80 6.72 0.00 25.23 5-Feb-03SBI Magnum Equity(G) 491.37 42.63 -0.21 1.50 -3.03 21.01 8.42 0.00 8.54 24-Nov-06Reliance Growth-Ret(G) 5843.49 434.60 0.18 1.80 -6.79 21.36 9.53 32.19 25.28 8-Oct-95

Equity - Mid CapBirla SL Midcap(G) 1309.10 101.48 -2.80 0.86 -6.11 25.68 9.22 0.00 27.48 16-Oct-02ICICI Pru Discovery(G) 1778.60 49.40 2.55 9.92 -0.92 34.92 13.16 0.00 23.02 16-Aug-04Sundaram Select Midcap(G) 2025.07 143.34 -1.88 -0.07 -5.03 29.32 9.59 0.00 31.26 19-Jul-02DSPBR Small & Mid Cap-Reg(G) 1179.73 17.12 0.73 0.83 -4.21 33.21 10.26 0.00 10.35 14-Nov-06Franklin India Prima(G) 726.18 267.08 -0.97 3.87 -1.96 27.77 6.04 25.47 19.52 1-Dec-93Kotak Midcap(G) 264.50 24.76 0.19 4.64 -2.10 27.24 3.64 0.00 13.45 24-Feb-05Sundaram Select Midcap(G) 1998.67 144.09 2.10 -2.11 5.04 4.80 10.55 0.00 31.93 19/Jul/02

Equity - PharmaSBI Magnum Pharma(G) 41.05 49.66 3.98 10.95 10.17 37.38 7.45 0.00 11.68 31-Dec-04Reliance Pharma(G) 563.56 58.50 4.51 5.45 4.41 42.81 22.06 0.00 25.06 8-Jun-04

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Returns as on 30th April 2012

FundAUM

Rs.Crore30 Mar 12

NAVRs

30/04/12

Absolute % CAGR %

1 Month

6 Months

1 Year

3 Years

5Years

10Years

Since Launch

Launch Date

Finance SectorICICI Pru Banking & Fin Serv-Ret(G) 140.76 17.29 0.88 5.23 -7.89 26.06 0.00 0.00 15.99 22-Aug-08Reliance Banking(G) 1730.82 93.78 -0.59 2.73 -12.15 28.92 19.59 0.00 28.48 28-May-03Sundaram-Select Thematic Funds-Fin Serv Oppor(G)

222.37 17.66 -2.21 1.23 -13.56 24.04 0.00 0.00 15.74 10-Jun-08

Commodities - GoldDSPBR World Gold-Reg(G) 937.83 17.42 -1.54 -12.19 -9.16 14.35 0.00 0.00 12.74 14-Sep-07Kotak GOLD ETF 1026.58 2807.75 2.82 5.61 30.45 24.81 0.00 0.00 27.57 27-Jul-07HDFC Gold Fund(G) 206.97 10.49 3.80 0.00 0.00 0.00 0.00 0.00 10.15 1-Nov-11

FundAUM

Rs.Crore30 Mar 12

NAVRs

30/04/12

Absolute % CAGR %

1 Month

6 Months

1 Year

2 Years

3 Years

5 Years

Since Launch

Launch Date

Balanced - Equity OrientedHDFC Balanced(G) 554.93 58.88 0.74 4.96 4.39 10.27 25.87 13.82 16.45 11-Sep-00HDFC Prudence(G) 6248.60 216.11 0.33 4.06 -0.13 7.08 27.24 13.35 18.34 1-Feb-94Birla SL '95(G) 525.89 303.70 -0.66 0.00 -3.77 3.20 19.62 10.74 21.91 10-Feb-95

Balanced - Debt OrientedReliance Reg Savings-Balanced(G) 634.97 21.96 0.31 3.96 -2.23 2.02 20.31 13.49 12.09 10-Jun-05HDFC Children's Gift - Investment 300.35 45.86 1.36 5.32 5.63 13.46 28.19 12.64 14.61 2-Mar-01ICICI Pru Child Care Plan-Gift Plan 166.32 55.71 0.45 3.72 -1.51 -0.81 24.68 6.53 17.46 31-Aug-01

FundAUM

Rs.Crore30 Mar 12

NAVRs

30/04/12

Absolute % CAGR %

1 Month

3 Months

6 Months

1 Years

3 Years

5 Years

Since Launch

Launch Date

Liquid FundsBirla SL Cash Plus-Ret(G) 12501.70 284.20 0.83 2.35 4.59 8.97 6.29 6.95 7.27 16-Jun-97HDFC Cash Mgmt-Savings(G) 2082.93 22.60 0.90 2.56 4.91 9.51 6.95 7.48 6.74 3-Jan-00Reliance Liquid-Treasury-Ret(G) 6852.87 25.72 0.82 2.33 4.60 9.06 6.62 7.17 6.92 23-Mar-98Templeton India CMA(G) 316.96 17.94 0.69 1.92 3.76 7.11 4.86 5.53 5.44 23-Apr-01UTI Money Market(G) 2541.19 2990.62 0.81 2.35 4.62 8.98 6.52 7.10 7.56 23-Apr-97Templeton India CMA(G) 375.54 17.72 0.59 1.82 3.56 6.93 4.65 5.51 5.40 23/Apr/01UTI Money Market(G) 2137.74 2944.97 0.72 2.25 4.42 8.71 6.33 7.09 7.53 23/Apr/97

Monthly Income PlansBirla SL MIP II-Savings 5(G) 351.63 19.29 0.82 2.62 5.18 9.37 8.03 10.48 8.62 22-May-04Birla SL Monthly Income(G) 475.68 39.14 0.36 2.40 3.88 6.30 8.92 8.92 11.31 10-Aug-99Reliance MIP(G) 4141.96 23.45 1.29 3.74 6.89 7.30 10.66 11.47 10.78 13-Jan-04HDFC MIP-LTP(G) 6636.06 24.34 0.34 3.34 4.43 4.96 12.25 10.18 11.24 26-Dec-03ICICI Pru MIP 25(G) 541.84 20.90 1.20 3.47 4.73 6.87 9.63 7.56 9.54 30-Mar-04SBI Magnum MIP(G) 246.63 21.55 0.83 3.67 5.60 6.52 7.48 5.17 7.15 23-Mar-01UTI MIS(G) 416.65 21.04 0.52 1.88 3.47 5.85 8.66 8.53 8.09 11-Oct-02

MF Scorecard

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BRICS Summit Delhi Declaration

Overview:

The fourth summit of the world’s big five briskly sprouting economies viz. Brazil, Russia, India, China and South Africa commonly called the BRICS, held at New Delhi, resulted in some bold measures which may pave way for some structural changes in world trade and finance. The continuity in BRICS summits and the current economic primacy of the BRICS grouping suggests that the global politics is entering a new phase of power politics, with the developing world taking the lead in the global decision-making process. The New Delhi summit, which concluded on March 29, gives clear indication of this. If the BRICS nations are far apart geographically and disparate politically to forge a useful alliance, then the ideology of multilateralism has brought together a subversive new power in politics as well as the world economy. In its first two summits in Russia and Brazil, the nations concentrated upon an economic agenda, with the leaders using the platform to articulate the viewpoint of the emerging economies and developing countries. The theme for the New Delhi summit was “BRICS Partnership for Global Stability, Security and Prosperity.” The leaders deliberated on a wide ranging agenda that included issues such as sustainable development, food and energy security, health, poverty eradication and global governance. They have decided to set up a joint working group to examine the feasibility of a BRICS investment bank to mobilize resources for infrastructure development projects in BRICS and other developing countries. At the same time, two agreements were concluded to enhance intra-BRIC trade and economic ties: the agreement on extending facilities in local currencies under BRICS inter-bank cooperation mechanism, and the multilateral letter of credit confirmation between the intra-BRICS EXIM banks.

Promotetradeinlocalcurrencies

In the joint declaration after fourth BRICS Summit under the leadership of Prime Minister Dr. Manmohan Singh which was attended by Dilma Rousseff, President of Brazil, Dmitry Medvedev, President of Russia, Hu Jintao, President of China and Jacob Zuma, President of South Africa, the leaders agreed to sign pacts aimed at promoting trade in local currencies among BRICS members - a move seen as replacing the US dollar as the main unit of intra-BRICS trade. The export import banks of the five BRICS countries signed two pacts the “Master Agreement in Extending Credit Facility” in local currencies, and the

“BRICS Multilateral Letter Of Credit Confirmation Facility Agreement”. The agreement amongst BRICS members to promote trade in local currencies will reduce the dependency on dollar and euro and insulate exporters from sharp fluctuations in currencies. This also is likely to give a boost to intra BRICS trade which is currently at less than its potential. Intra BRICS exports are around 9 percent while Intra BRICS imports are about 12 percent. India’s trade with BRICS countries was $87 billion in 2010-11, showing 45 percent growth, with exports amounting to $29.5 billion while Imports accounting to $57.5 billion.

The master agreement is aimed at reducing the demand for fully convertible currencies for transactions among BRICS nations and thereby reducing the transaction costs of intra-BRICS trade. The confirmation facility pact envisages confirmation of lines of credit on receipt of a request from the exporter, the exporter’s bank or the importer’s bank. The pacts are expected to scale up intra-BRICS trade, which has been growing at the rate of 28 percent over the last few years, but at $230 billion, it remains much below the potential of the five economic powerhouses. BRICS has set a target of $500 billion by 2015. This move may also address the issue of widening trade deficit amongst few BRICS partners, as trade in local currencies will encourage imports from such countries to countries having favorable trade balance.

BRICSBank

The leaders of the so-called BRICS nations have been ingeniously calling for an end to the American greenback’s status as the world reserve currency for years. The nations are making more moves to turn that rhetoric into reality, proposing a jointly controlled “development” bank and working to sideline America’s already-troubled Federal Reserve Notes in trade by relying more heavily on their own fiat currencies. The BRICS grouping of influential emerging economies have taken another step towards establishing a development bank that could one day rival the World Bank. The leaders of the five countries considered a proposal to set up a BRICS-led South-South Development Bank, funded and managed by the BRICS and other developing countries. The so called “BRICS Bank,” would help in funding development projects and infrastructure in developing nations and also to lend among themselves during difficult global times. The proposal is to make it as a powerful financial tool to improve trade opportunities. The finance ministers of the member states were directed to conduct feasibility studies of the initiative and to submit their reports at the next BRICS summit. The

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delegates were confident that the bank will be a reality sooner than later. It could be real good news for India, which was the first country to propose the idea for setting up such a bank, as a sign of firming the power of the group and increasing its influence in global decision-making.

IMFReforms

Leaders of top emerging economies, coming under the banner of BRICS, voiced concerns over the slow pace of reforms within the International Monetary Fund (IMF). The BRICS group of emerging market nations pushed Western nations to give up more voting rights at the IMF this year and criticized the rich world’s reflationary monetary policies for putting global economic stability in jeopardy. The nations were concerned at the slow pace of quota and governance reforms in the IMF. This dynamic process of reform is necessary to ensure the legitimacy and effectiveness of the Fund. They stressed that the ongoing effort to increase the lending capacity of the IMF will only be successful if there is confidence that the entire membership of the institution is truly committed to implement the 2010 Reform faithfully.

Besides, India has also stepped up efforts particularly towards the reform of the United Nations Security Council as G-4 partners. India, Brazil, Japan and Germany are part of the G-4 grouping that’s pitching for a permanent seat in a reformed UN Security Council.

Merit based selection process

The group also called for a transparent, merit based process to select the next World Bank president. Traditionally, the job of head of the World Bank always goes to an American, while that of the International Monetary Fund is invariably filled by a European, usually a French national. For much of the post-war period, this was a reasonable trade-off, reflecting the prevailing balance of geopolitical and economic power in the Western world. Asia and the Soviet Union didn’t count, as these were largely closed economies of limited or marginal significance for world trade. It was only right and proper that governance of the global monetary system should be directed by its two dominant economic blocs. But then China, followed quickly by India and Russia, adopted free-market reforms and joined the global economy. The world changed. Admittedly, both the IMF and the World Bank have changed a bit with it, but they have yet fully to reflect the shift that has occurred. Both the US and Europe are reluctant to relinquish their grip on these institutions.

Dialogues–thewayforwardonIran&Syria

India along with other BRICS members pushed for avoiding political disruptions that create volatilities in global energy markets affecting trade flow. Obliquely denouncing current US and EU nation’s efforts against Iran, the Delhi Declaration issued at the end of the summit reflected the shared perception of the BRICS countries, on these burning global issues that pit them against the Western approach of using sanctions and speculation about the use of force to resolve complex global issues. The situation concerning Iran cannot be allowed to escalate into conflict, the disastrous consequences of which will be in no one’s interest. Backing Iran’s right to peaceful uses of nuclear energy, the BRICS countries supported resolution of the issues involved through political and diplomatic means and dialogue between the parties concerned, including between the IAEA, Iran and in accordance with the provisions of the relevant UN Security Council Resolutions.

Amid the unfolding crisis in Syria, the BRICS members voiced deep concern at the current situation and called for an immediate end to all violence and violations of human rights in that country. The Delhi declaration highlighted that global interests would best be served by dealing with the crisis through peaceful means that encourage broad national dialogues that reflect the legitimate aspirations of all sections of Syrian society and respect Syrian independence, territorial integrity and sovereignty. The declaration supported a Syrian-led inclusive political process, an explanation India had used to justify its vote on the UN’s Syria resolution, and welcomed the joint efforts of the UN and the Arab League. The BRICS leaders also welcomed the appointment of Kofi Annan, a former UN secretary general, as the joint special envoy on the Syrian crisis and supported him in his efforts to play a role in spurring a political resolution of the crisis.

BottomlineofthenewDelhideclaration

A number of working and high level BRICS meetings are being planned for the year 2012 during India’s Chairmanship of BRICS to further deepen and widen cooperation under BRICS format. The summit marked the evolution of a group focused on global economic governance issues to one which is trying to achieve greater political coherence. Thus, the New Delhi BRICS summit was a successful one, not a wasted opportunity as the five emerging economies demonstrated collective confidence by striking a clear-cut stand on global and regional issues.

BRICS Summit Delhi Declaration

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Indo-Pak Improving Trade Relations

OverviewAfter conjointly fighting the war of Independence against Britain till 1947, India and Pakistan decided to be on the opposite side of fences which led to bitter partition and its acrimony continues even today. The two neighboring nations have fought three wars in 1965, 1971 and 1999 over Instrument of Accession (Jammu and Kashmir) and also various terror strikes on India, which has alleged Pakistan’s involvement. The bitterness of war and terror attacks has spread its gloom on the overall relations of both nations. With the severely rising resentment, the two nuclear armed nations are presently a threat not only to its combined 1.4 billion population but also to the other neighboring nations. Also, involvement of world’s second largest economy China with Pakistan got suspecting reaction from India as both of them together may affect latter’s border security. All these factors had forbidden entry across border, however, trade relations continued. Post partition, India was the major importing nation to Pakistan accounting to nearly 90% of its agricultural and other products’ imports; while the latter sufficed 32% of India’s import requirements. However, this dependence scaled down in 1949 when Pakistan failed to match Indian rupee and trading with this nation became detrimental to India’s trade balance. The various stringent norms being imposed by respective government on the cross border trade and investments added to the traders woes. Also, the wars and terror attacks sidelined the trade as it coerced authorities to focus on the peace talks. The two nuclear armed nations are now trying to strengthen the friendship bonding between them. After many discussions of both governments, the trade terminal on one of the most significant border - Wagah, Punjab has been opened up. Post this the industry experts are anticipating a three-fold

jump in the bilateral trade. The traders and farmers from both sides of border are likely to be benefited the most; their euphoria was seen at the recent Lifestyle Pakistan exhibition in New Delhi. As many as 600 businessmen from Pakistan exhibited their wares with textiles being at the centre stage. India, in a bid to encourage the trade, has decided to reduce import duties on about 260 items within next four months.

Imports&ExportsIndia has listed Pakistan “Most Favoured Nation Status” (MFN) for trade since 1996, however, the neighboring nation had kept India under “a Positive List” which permitted import of less than 2000 items till 2012. Pakistan imported other essential items from foreign countries which were expensive, but had to maintain India under positive list to protect its domestic industry. This included import of Indian goods from third country - Dubai. According to few media reports in Pakistan, granting MFN status to India is subject to international repercussions and is also an economic issue. Since Pakistan is a signatory of WTO, it has to open the domestic markets to trade with India without any discrimination. However, the trade to a greater extent was held up owing to security reasons.

In March 2012, Pakistan decided to switch over to negative list regime for India trade. Under this regime, the neighboring nation will be barring only 1209 items from India. Of these nearly 137 items will be exported to Pakistan via Wagah land border crossing which is the cheapest option. The detailed list will be phased out by end of this calendar year and will pave entry for many business opportunities and thus prove to be beneficial for people from both sides of fences. In response to the positive step initiated by Pakistan, India has decided to reduce the list

Indo-Pakimprovingtraderelations;endeavortohealwounds

India’stradewithPakistan

India's Imports fromPak ($Mn)

050

100150200250300350400

2006-07 2007-08 2008-09 2009-10 2010-11

India's Export to Pak ($Mn)

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500

1000

1500

2000

2500

2006-07 2007-08 2008-09 2009-10 2010-11

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Indo-Pak Improving Trade Relations

of 865 sensitive items by 30% in four months. Following this move, the cost incurred for importing and exporting via third country, which was estimated at $10billion per year, will also reduce.

Now having granted MFN status to India, the neighboring nation needs to simultaneously protect interest of its domestic producers. In case of Pakistan, textile is its one of the core industry and represents 46% of its manufacturing produce and nearly 65% of export receipts. With Indian textile goods entry in its domestic markets may concern the local producers whose interest will be at stake. However, the strengthening of business with Pakistan will pin the ballooning Indian fiscal trade deficit which is widened to $185 billion in 2011-12 fiscal year. India’s exports grew by 21% and touched $303.7 billion for the fiscal year 2011-12 while imports rose 32.1% to $488.6 billion.

The exports to historic neighbor has seen surge over the years, except for the dismal performance during the fiscal year 2008-09. On the other hand, imports hovered in the range of $200- $300 million. With the opening of Wagah border trade terminal, the trade is expected to report three fold jump.

India to welcome cross border FDI Being one of the fastest growing countries, with a growth rate of around 7-9%, India over the years has made every possible attempt to pave smooth entry way for foreign inflows. India has received FDI worth $26.19 billion during April-January of last fiscal, an increase of 53% over the same period of previous year. Foreign airlines are already in talks to purchase stake in Asia’s third largest economy and thereby boost FDI in nation. Permitting FDI till 49% in the retail sector was part of similar move.

Presently, Pakistan is the only country which is in the negative list under Foreign Exchange Management Act (FEMA). The negative list also included Sri Lanka and Bangladesh but they were withdrawn in 2006 and 2007 respectively. The Indian government, considering its resent relations with Pakistan, had restricted FDI.

With the slew of various policy changes to strengthen the bilateral trade ties with Pakistan, the Indian government will be soon allowing FDI from this neighboring nation. Presently, the procedural work from Pakistan is underway post which the order will be notified. The trade and commerce minister Anand Sharma will be soon announcing allowance of Pakistani FDI to deepen the economic ties. These FDI will be evaluated on case-to-case basis by Foreign Investment Promotion Board as proposed by the Department of Industrial and promotion.

*For April-February of 2011-2012 fiscal year (in USD billion)

The friendly bond strengthening is constructing its route ahead; the two bitterly parted nations are also holding talks to permit their banks to launch branches across the border. From India, the central bank - Reserve Bank of India and its counterpart - State Bank of Pakistan are in favour of functioning on the opposite sides of fences.

Current scenarioAfter overcoming various road bumps, the two traditional foes are constantly trying to strengthen their trade relations. In a bid to boost the exchange of goods, India and Pakistan have opened a new checkpost at the Wagah border crossing. This move comes on the back of complaints by businessmen, from both sides of border, over accessing the opposite markets. The newly opened terminal has immigration facilities which will ease movement of traders and lorries carrying goods over the border. The terminal, capable of handling over 600 trucks, will be closely monitored by multiple close-circuit cameras.

Accelerating bilateral trade pace, the neighbors have also decided to fast-track ongoing discussions to permit trade of petroleum products and electricity. However, launching bank branches will be priority.

Besides this, both countries are also set to welcome people from opposite side of border. India and Pakistan have agreed to allow one year-long multiple entry visas for business visitors which will allow visitors enter and exit through different cities. The amended norms also ease movement of tourists in groups.

Considering all the factors, the extending trade relations may do little to improve the strain relations of both countries who hold each other at gunpoint but economically, they are likely to be benefited on a lofty note; farmers and traders are expected to be prominent gainers.

FDI in India

0

5

10

15

20

25

30

35

40

2007-08 2008-09 2009-10 2010-11 2011-12*

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Commodity Watch

CACP recommends an increase in MSP ofpulses,oilseed,andriceThe prices of pulses, oilseeds, and rice may rise if the government accepts the recommendations of an expert panel to increase farm-gate price of these commodities by up to 30%. Although the recommendations are in line with the government’s intention to shift cultivation towards oilseeds and pulses from foodgrains to reduce dependence on imports for proteins and fats, it could lead to a further increase in food inflation. The Commission on Agricultural Costs and Prices (CACP), under the ministry of agriculture, has recommended a 25% rise in the floor price of cotton, 16% rise in paddy, 30% rise in soyabean and sunflower seed, 25% in urad and moong, and more than 40% in bajra and jowar. The CACP’s price recommendations are eagerly watched by industry and traders because they are an important indicator of how the market for these commodities will move in the coming months.

If the minimum support prices (MSPs) on the commodities are indeed increased then their prices will shoot up and food inflation might become difficult to control even if we have a bumper crop. Inflation in food items rose sharply to 9.94% in March, as against 6.07% in February government data showed. Food articles have 14.3% share in the WPI basket. During the month, rice and cereals turned costlier by 4.73% and 4.41% respectively. The price of pulses was up 10.05% in March. The rate of price rise was lower than 20% in February.

If the MSP of paddy is increased it will mean a rise in the procurement cost of the Food Corporation of India, which is expected to buy half the marketed surplus in rice. Further if this price is not transferred on to the consumer it could mean a larger subsidy bill for the government.

Sugarproductionup13%tillApril15;higheroutputmayhelpformoresugarexportsSugar production this year is expected to be more than last year’s production number. Given the additional produce, the government is expected to allow an additional 1 million tonnes of sugar to be exported. Food Minister, K V Thomas has stated that the decision regarding additional exports will be decided in the coming Empowered Group of Ministers (EGoM) meeting on April 25. The EGoM is also expected to discuss the shipment modalities for the export of the 3 million tonnes recently approved.

As per the Food Ministry, production for the 2011-12 season is likely to touch 25.5 million tonnes, up from 24.6 million tonnes last year. However, according to Indian

Sugar Mills Association (ISMA) the production should be around 26 million tonnes. As per the ISMA, mills have produced 24.63 million tonnes of sugar till April 15 of 2011-12, as compared to 21.73 million tonnes in the year-ago period and hence by the year end, the production should reach 26 million tonnes. In either case sugar production is set to increase.

Sugar production in Uttar Pradesh, the country’s second biggest producer, has increased by 18% to 6.91 million tonnes from the corresponding period last year. Similarly, the output in Maharashtra has gone up by 9% to 8.54 million tonnes in the review period. Karnataka, Tamil Nadu and Andhra Pradesh have also reported higher output of 3.72 million tonnes, 1.45 million tonnes and 1.95 lakh tonnes, respectively, so far this year.

Given the excess production the government may consider allowing more sugar exports. So far, the government has allowed exports of 3 million tonnes in three tranches of 1 million tonnes each. However, the export notification for 1 million tonnes approved late March is yet to be issued by the Food Ministry.

CABpegscottonproductionat34.7millionbalesforseason2011-12The cotton advisory board (CAB) has pegged cotton production at 34.7 million bales for season 2011-12, against 33.9 million bales in 2010-11. As per the agriculture ministry, the number stood at 34 million bales for 2011-12. The total supply of cotton is now pegged a little higher at 39.2 million bales in 2011-12 as compared to 38.4 million bales in 2010-11. The demand for the fluff is estimated 36.7 million bales in season 2011-12 as compared to 34.5 million bales in 2010-11. The mill consumption is estimated lower at 21.1 million bales in 2011-12 as against higher consumption of 22 million bales in 2011-12. The exports are however, estimated much higher at 11.5 million bales this year as compared to 7.8 million in the previous year.

As per CAB, Gujarat continues to remain the largest producer of cotton with estimated production of 12 million bales in 2011-12 as compared to 10.6 million bales in the previous year. Maharashtra’s cotton production is expected to decline sharply at 7.3 million bales as compared to 8.7 million bales in 2010-11. The north zone, which includes Punjab, Haryana and Rajasthan, is likely to move up at 5.6 million bales in 2011-12 from 4.5 million in 2010-11. The cotton production of south zone, which includes Andhra Pradesh, Karnataka and Tamil Nadu, is estimated at 7.4 million bales as compared to 7.7 million bales in 2010-11.

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35May 2012

Global tea prices likely to rise with drop in productionTea prices are likely to rise given the fall in production in the major tea producing countries such as India, Kenya and Sri Lanka. Persistent dry weather conditions in these countries are expected to result in tea prices staying higher in 2012. It is further reported that the production in Kenya and Sri Lanka has been badly affected by the dry weather.

According to India’s Tea Board, India’s tea production in January has dropped to 18.69 million kg from 20.93 million Kg last year. The demand for tea on the other hand has risen as Pakistan plans to double its imports from India. Given the situation, the price of tea, which has risen by Rs 25-40 a kg in India is expected to rise further. India is the second largest producer of tea after China and produces all the three types of tea CTC tea, Orthodox tea, and Green tea. Moreover, India is the fourth largest exporter of the commodity after Kenya, China, and Sri Lanka. India’s tea production for 2011-12 is expected to be around 988 million kgs.

Increaseinimportduty,volatilepriceslikelytoimpactgold,silverimportsin2012Increase in import duty on gold and volatile prices of silver are expected to dip the demand for these metals leading to a fall in their imports this year. The Union Budget of 2012-13 has doubled the import tax on gold to 4% of value which will increase its prices leading to a fall in demand. It is expected that gold imports could fall by 38% to 600 tonnes in 2012. Silver imports are also likely to fall to 3,500-4,000 tonnes in 2012, down from 4,800 tonnes imported last year.

It is also feared that the slew of taxes on the bullion could revive smuggling routes and government revenues may fall on account of lower imports. Investor interest in gold may decline globally due to rising risk appetite on the back of revival in the US economy. However, the yellow metal’s status as a safe haven, an asset diversification tool and a store of value still remains unshaken. Even though import duty on the white metal have not changed, imports are likely to be affected by the volatile prices. India is the largest consumer of silver in the world but Indians are averse to steep and volatile changes in prices of silver, which could dent imports this year.

Govtallowsexportofanother19lakhbalesofcottonThe government has allowed export of another 19 lakh

bales of cotton, which is likely to give a fresh impetus to cotton prices and would benefit both farmers and exporters. As per the Commerce Ministry statement, on April 11, registration certificates (RCs) in respect of about 10 lakh bales were revalidated for exports, including the revalidation made on 23rd and 28th March 2012. Further, DGFT has completed the scrutiny of the remaining applications. The government has decided that all these RCs be revalidated. Thus, RCs for approximately another 9 lakh bales of cotton will be revalidated no later than April 17, 2012.

Moreover, as per the statement, all RCs were to be scrutinized before revalidation so that they could go ahead with their exports. The government directed that priority be given to such cotton that had been pending for export through Land Custom Station on Indo-Bangladesh, Indo-Myanmar, Indo-Pak, Indo-Nepal and Indo-Bhutan borders. The next priority was to be given to cotton that had been handed over to Customs. The government had banned the export of raw cotton on March 5, 2012. However, the ban was revoked on March 12, 2012 under tremendous political pressure on the condition that the pending RCs would undergo scrutiny and re-validation by the director general of foreign trade before being exported.

India to resumedirectshipmentofbasmatirice to IranWith the introduction of new payment mechanism, India is expected to resume the direct shipment of basmati rice to its largest importer Iran. The payment option between the two countries which allows the Iranian traders to make payment in Indian rupee. UCO Bank of India and Persian Bank in Iran will make direct shipments possible for both sides. The new mechanism will not only make exports easier but will also bring down the cost of logistics. This is expected to increase the quantity of trade by 10-15%.

Post the US sanctions on Iran, India had been routing its exports of basmati rice through a third country like UAE. Adding to the woes was the recent volatility in Iranian currency which had triggered a payment crisis. India is a major producer of basmati rice and accounts for almost 70% of the world production. India produced 6.5 million tons of basmati rice in 2010-11 which is expected to grow by a record 15.3 % to 7.5 mn tons in 2011-12 harvest. Of this India is expected to export around 2.5 million tons. Major consumers of Indian basmati rice are Saudi Arabia, UAE, Iran, Kuwait. Iran alone accounts for over 20% of India’s annual shipments.

Commodity Watch

D e c e m b e r May 2012

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Life Insurance

HDFCLifeClick2Protect

HDFC Life Click 2 Protect is a term insurance plan. The plan, like its peers aim to provide pure life insurance cover at a bargain cost. The online term plans are targeted at young savvy investors who lead healthy lifestyle. This plan provides for a payment of a lump sum in the event of one’s unfortunate death during the policy term. The objective of HDFC Life Click2Protect is to cater to the needs of informed customers based not only in metros, but in Tier 2 and 3 cities in the country. Click2Protect is available in more than 750 cities across the country, the highest reach of an online term insurance plan in the industry. The plan can be bought at click of button, anytime & anywhere, it has high cover at a very nominal cost and gives flexibility to choose the Sum Assured and policy term. Not only this, the plan offers attractive premium rates for Non tobacco user and those with healthier lifestyle.

HDFC Life Click 2 Protect plan features

Entry Age 18 years to 65 years (both inclusive)

Maturity Age 28 years to 65 years (both inclusive)

Minimum Sum Assured Rs 10 Lakh

Maximum Sum Assured Rs 10 Crore

Policy terms 10/15/20/25/30 years

Premium Paying Term Same as policy term

Premium Paying Frequency Annual mode only

Otherfeatures

1. Minimum premium will be Rs 2000.

2. 30 days grace period is provided for payment of premium from the due date.

3. Once policy starts no alteration in sum assured or premium is allowed.

4. The policy comes with a Free Look period of 30 days. It can be returned stating the reason for the receipt of the policy. The premiums will be refunded deducting the Stamp Duty paid, pro-rata cost for the period under insurance cover and medical expenses if any.

Taxbenefits

Premium paid under this plan are eligible for tax benefits under section 80C of the income tax Act 1961, subject to the provisions contained therein. Under Section 10(10D), the benefits received from this policy are exempt from tax.

Indicative premium (exclusive of service tax and education cess) for various combination of age, term and sum assured for a healthy male (non tobacco user)

Policyterm20years

Entry Age (Yrs)

Sum AssuredRs 25 lakh Rs 50 lakh Rs 100 lakh

30 3,350 5,100 900035 4,675 6,400 11,30040 6,975 9,150 16,20045 10, 750 14,150 25,300

PolicyTerm25years

Entry Age (Yrs)

Sum AssuredRs 25 lakh Rs 50 lakh Rs 100 lakh

25 2975 4700 820030 3800 5450 970035 5400 7150 1260040 8100 10450 18500

PolicyTerm30years

Entry Age (Yrs)

Sum AssuredRs 25 lakh Rs 50 lakh Rs 100 lakh

25 3325 4900 860030 4375 6000 10,60035 6250 8150 14,400

Otherfeatures

Death

On death during the policy term, the sum assured will be paid to the nominee. The policy will terminate.

Maturity

As it’s a pure term insurance plan no benefits are paid on maturity or surrender.