CRISIL COMPANY REPORT | 1

Shriram EPC Ltd

GICS Industry : Construction & Engineering l Sub Industry : Construction & Engineering l Website : www.shriramepc.com

NSE Ticker : SHRIRAMEPC

Bloomberg Ticker : SEPC:IN

Face value / Share: 10.0

Div. Yield (%): 0.8

CMP (as on 01 Mar 2011—Rs/share): 150.8

52-week range up to 01 Mar 2011 (Rs)(H/L): 313.90/141.00

Market Cap as on 01 Mar 2011 (Rs mn): 6,675

Enterprise Value as on 01 Mar 2011 (Rs mn): 12,348

Shares outstanding (mn) : 44.3

Free Float (%) : 58.3

Average daily volumes (12 months) : 29,089

Beta (2 year) : 1.5

Key Stock Indicators

Shriram EPC Ltd (SEPC) was established in 2000. The company provides engineering, procurement

and construction (EPC) services to renewable energy infrastructure projects, process and

metallurgy projects and municipal projects. The company is headquartered in Chennai and has

offices at Kolkata, Mumbai and New Delhi in India and overseas at Beijing and Rotterdam

KEY HIGHLIGHTS

Presence across several verticals

SEPC is into EPC business wherein it provides services to renewable energy projects, metallurgical

and process plants and municipal water-based plants. Under renewable energy project the

company is involved in design, engineering, construction, erection and commissioning of biomass

power plants and co-generation power plants. Under metallurgy and process segment, SEPC

provides turnkey solutions for blast furnace, rolling mills, iron and steel plants, cement plants,

copper smelting, aluminum refining and thermal power plants. The company also provides

municipal services wherein it provides services related to water and waste- water distribution,

sewage treatment and repair/rehabilitation of pipes. SEPC manufactures and provides

maintenance service for wind turbine generators (WTG). EPC business contributed ~ 81% of the

FY10’s revenue and wind turbine business ~19%.

Strong order book securing future revenue

The company’s order book stood at ~Rs.32 bn. During the year SEPC bagged turnkey business (EPC)

orders worth ~ Rs. 10 bn while remaining orders came from WTG business. Some of SEPC’s

prestigious orders include- order from M/s PPS Enviro Power for installing WTGs of 15 mega watt

(MW) capacity in Tamil Nadu, from M/s T.S. Wind Power developers for WTGs of 30 MW capacity.

FY10’s order book also comprises orders from Bharat Wind Farms Ltd worth ~Rs.17 bn which is a

subsidiary company of SEPC’s associate company named- Orient Green Power Company Ltd. This

~Rs.32 bn order book provides visibility of future revenue.

Acquisition for value added services

The company in FY09, acquired majority stake of 50% plus 1 share of Blackstone Group

Technologies Ltd for advanced design and engineering services. Blackstone Group Technologies Ltd

was set up in Chennai in 1993. It is an engineering outsourcing company which undertakes

engineering work for structural steel, conveyer equipments and piping. This acquisition will give the

company, an access to Blackstone’s high quality engineering set up and enable it to reduce

execution time and undertake more complex projects.

KEY RISKS

• Cost and time overruns in execution could affect profitability

• Change in government regulations

• Volatile raw material prices viz iron, steel etc

• Environmental clearance

YTD 1-m 3-m 12-m

SHRIRAMEPC -28 -13 -26 -23

NIFTY 4 2 -7 10

Returns (%)

Note:

1) YTD returns are since Apr 01, 2010 to Mar 01, 2011.

2) 1-m, 3-m and 12-m returns are up to Mar 01, 2011.

Mar-08 Mar-09 Mar-10

Revenue (Rs mn) 7,002.9 10,075.6 13,719.8

EBITDA margins (%) 11.0 8.9 12.0

PAT (Rs mn) 187.9 482.4 461.8

PAT margins(%) 2.7 4.8 3.4

Gearing (x) 0.5 0.8 1.8

EPS (Rs /share) 4.4 11.1 10.5

PE (x) 54.3 10.9 14.3

P/BV (x) 2.9 1.3 1.6

RoCE (%) 16.5 14.8 16.3

RoE (%) 7.5 12.9 11.3

EV/EBITDA (x) 12.9 8.7 7.4

n.m. : Not meaningful

Promoter

42%

FII

6%

DII

5%

Others

47%

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Indexed price chart

Shareholding (As on December 31, 2010)

Key Financial Indicators

Stock Performances vis-à-vis market

CRISIL COMPANY REPORT | 2

Shriram EPC Ltd

BACKGROUND

Chennai based SEPC was established in 2000. It provides EPC services to renewable energy infrastructure, process and metallurgy projects and municipal projects. The

company segments its business under two heads viz- turnkey contracts and WTG. Under turnkey contract it provides EPC services while WTG business comprises of sales

and services of 1.5 MW and 250 kilo watt (KW) class wind turbine generators. In FY10, EPC business contributed ~81% of the total revenues and remaining 19% was driven

by wind turbine business. The company is headquartered in Chennai and has offices in Kolkata, Mumbai, New Delhi, Beijing and Rotterdam. Its wind-turbine manufacturing

plant is located in Chennai and Puducherry while cooling tower manufacturing plant is located in Gujarat. It has executed EPC projects across India in ~16 states and

internationally in Zambia and France as of March, 2010. SEPC’s strong client base includes clients viz- Steel Authority of India Ltd, Reliance Industries Ltd, Birla White, Tata

Steel, Vedanta Group and others.

COMPETITIVE POSITION

Peer Comparison

Shriram EPC Ltd

Ramky

Infrastructure

Ltd

I V R C L

Infrastructures &

Projects Ltd. Thermax Ltd.

Mar-10 Mar-10 Mar-10 Mar-10

Revenue (Rs mn) 13,719.8 21,868.2 58,677.4 33,376.4

EBITDA margins (%) 12.0 11.2 13.6 11.4

PAT (Rs mn) 461.8 1,494.7 934.9 1,439.0

PAT margins(%) 3.4 6.8 1.6 4.3

Gearing (x) 1.8 1.4 1.6 n.m.

EPS (Rs/share) 10.5 30.2 6.8 12.1

PE (x) 14.3 10.6 17.9 72.8

P/BV (x) 1.6 2.3 1.7 9.8

RoCE (%) 16.3 20.1 10.8 24.8

RoE (%) 11.3 24.7 4.4 14.1

EV/EBITDA (x) 7.4 9.2 7.9 25.7 n.m: Not meaningful

FINANCIAL PROFILE

Significant growth in top-line accompanied by margin expansion

SEPC’s top-line grew by 36.2% y-o-y reaching Rs.13.72 bn in FY10 as a result of

improved economic scenario and more investments in infrastructure projects. In

FY10, EPC business grew by ~17% while WTG business grew by ~347% leading to

overall top-line growth.

Operating margin improved to 12% in FY10 compared to 8.9% in FY09 as a result of

decrease in material costs as percentage of total revenues, which stood at 61.46% in

FY10 against 75.03% in FY09.

However, PAT decreased from Rs.482.4 mn in FY09 to Rs.461.8 mn in FY10 primarily

on account of increase in depreciation expenses and interest costs along with

decrease in profits from associate companies.

Units Mar-08 Mar-09 Mar-10

Revenue Rs mi l l ion 7,002.9 10,075.6 13,719.8

EBITDA margins Per cent 11.0 8.9 12.0

PAT Rs mi l l ion 187.9 482.4 461.8

PAT ma rgins Per cent 2.7 4.8 3.4

Revenue growth Per cent 136.8 43.9 36.2

EBITDA growth Per cent 226.9 17.4 83.4

PAT growth Per cent 43.0 156.7 -4.3

Gearing Times 0.5 0.8 1.8

RoCE Per cent 16.5 14.8 16.3

RoE Per cent 7.5 12.9 11.3

Key Financial Indicators

INDUSTRY PROFILE

Construction (erection and commissioning)

The construction (erection and commissioning) sector comprises infrastructure and industrial construction. Infrastructure construction incorporates design and

construction of roads, bridges, canals, dams, ports and airports, while industrial construction includes construction activities in key industries such as automobiles, textiles,

petrochemicals, and oil and gas. In construction (erection and commissioning) sector, demand is determined by expected investments in the sector. The increase in

investments has been driven primarily by the roads and power sector, followed by irrigation and urban infrastructure.

CRISIL COMPANY REPORT | 3

Shriram EPC Ltd ANNUAL RESULTS

Income Statement Balance sheet

(Rs million ) Mar-08 Mar-09 Mar-10 (Rs million ) Mar-08 Mar-09 Mar-10

Net Sales 6,998.0 10,058.1 13,623.7 Equity share capital 430.5 433.5 439.4

Operating Income 7,002.9 10,075.6 13,719.8 Reserves and surplus 3,101.0 3,527.3 3,757.9

Tangible net worth 3,531.5 3,960.8 4,197.3

EBITDA 767.4 900.7 1,651.5 Deferred tax liablity:|asset| 59.3 150.6 276.8

EBITDA Margin 11.0 8.9 12.0 Long-term debt 1,059.6 1,511.1 1,672.2

Short-term-debt 196.2 1,438.0 5,912.7

Depreciation 31.8 76.1 150.6 Total debt 1,255.7 2,949.1 7,584.9

Interest 207.7 219.4 864.7 Current liabi lities 3,105.5 5,055.8 7,583.0

Other Income 27.8 102.2 48.8 Total provisions 66.1 118.4 121.8

Total liabilities 8,018.1 12,234.7 19,763.8

PBT 390.4 715.0 706.9 Gross block 485.9 1,178.4 2,146.0

PAT 187.9 482.4 461.8 Net fixed assets 489.0 1,143.6 2,092.0

Investments 806.1 1,617.7 1,575.4

PAT Margin 2.7 4.8 3.4 Current assets 6,723.0 9,473.4 16,096.4

Receivables 3,228.0 5,314.9 9,505.7

No. of shares (Mn No.) 42.9 43.3 43.9 Inventories 512.6 1,267.4 2,223.6

Cash 1,541.5 410.6 1,911.8

Earnings per share (EPS) 4.4 11.1 10.5 Total assets 8,018.1 12,234.7 19,763.8

Cash flow Ratio

(Rs million ) Mar-08 Mar-09 Mar-10 Mar-08 Mar-09 Mar-10

Pre-tax profit 555.7 707.4 685.1 Revenue growth (%) 136.8 43.9 36.2

Total tax paid -152.2 -141.3 -118.8 EBITDA growth(%) 226.9 17.4 83.4

Depreciation 31.8 76.1 150.6 PAT growth(%) 43.0 156.7 -4.3

Change in working capital -713.8 -1,878.1 -2,591.2

EBITDA margins(%) 11.0 8.9 12.0

Cash flow from operating activities -278.5 -1,235.9 -1,874.3 Tax rate (%) 38.7 19.8 17.0

Capital Expenditure -415.4 -800.1 -1,120.5 PAT margins (%) 2.7 4.8 3.4

Investments and others -635.5 -811.5 42.2

Dividend payout (%) 0.0 10.8 11.4

Dividend per share (Rs) 0.0 1.2 1.2

Cash flow from investing activities -1,050.9 -1,611.6 -1,078.3 BV (Rs) 82.4 91.4 95.6

Equity raised/(repaid) 1,528.9 38.4 29.1 Return on Equity (%) 7.5 12.9 11.3

Debt raised/(repaid) 880.0 1,693.4 4,635.8 Return on capital employed (%) 16.5 14.8 16.3

Dividend (incl. tax) 0.0 -60.9 -61.4

Others (incl extraordinaries) 191.9 46.3 -149.6 Gearing (x) 0.5 0.8 1.8

Interest coverage (x) 3.7 4.1 1.9

Debt/EBITDA (x) 1.6 3.3 4.6

Cash flow from financing activities 2,600.8 1,717.2 4,453.9

Change in cash position 1,271.4 -1,130.3 1,501.3 Asset turnover (x) 22.5 12.1 8.3

Opening cash 269.3 1,541.5 410.6 Current ratio (x) 1.9 1.4 1.2

Closing cash 1,541.5 410.6 1,911.8 Gross current assets (days) 350 343 426

n.m : Not meaningful;

QUARTERLY RESULTS

(Rs million) Dec-10 % of Rev Dec-09 % of Rev Sep-10 % of Rev Dec-10 % of Rev Dec-09 % of Rev

No of Months 3 3 3 9 9

Revenue 2,823.1 100.0 2,404.8 100.0 2,979.0 100.0 8,436.5 100.0 6,376.6 100.0

EBITDA 413.7 14.7 248.4 10.3 436.6 14.7 1,133.5 13.4 651.7 10.2

Interest 244.5 8.7 110.0 4.6 190.6 6.4 561.4 6.7 235.9 3.7

Depreciation 36.4 1.3 28.6 1.2 29.9 1.0 96.4 1.1 71.2 1.1

PBT 132.7 4.7 109.8 4.6 216.1 7.3 709.3 8.4 344.6 5.4

PAT 88.0 3.1 74.4 3.1 143.8 4.8 548.8 6.5 245.6 3.9

Profit and loss account

CRISIL COMPANY REPORT | 4

Shriram EPC Ltd

FOCUS CHARTS & TABLES

Mar 2010 Jun 2010 Sep 2010 Dec 2010

Promoter 42.0 42.0 42.0 41.7

FII 6.0 6.4 6.6 6.6

DII 4.9 4.7 4.7 4.6

Others 47.2 46.9 46.8 47.1

Shareholding Pattern (Per cent)

Director Name Designation

Arun Kumar Duggal (Mr.) Non-Executive Chairman

Thyagara jan Shivaraman (Mr.) Managing Director

Mohammed Amjad Shari ff (Mr.) Jt.Managi ng Director

Robin Sushi l Chandra (Mr.) Nominee Director

Prabhakar Dattatraya Karandikar

(Mr.)

Non-Executive Director

Suni l Kumar Kolangara (Mr.) Nominee Director

Subramaniam Krishnamurthy

(Mr.)

Non-Executive Director

Rangaswamy Sri rangam

Ramakrishnan (Mr.)

Non-Executive Director

R. Sundarara jan (Mr.) Non-Executive Director

Suni l Varma (Mr.) Non-Executive Director

Ranganathan Vathsa la (Ms.) Non-Executive Director, Promoter-

Director

Board of Directors

Additional Disclosure

This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

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