21 June 2012 Update | Sector: Oil & Gas

Reliance Industries
BSE Sensex 17,033 S&P CNX 5,165

CMP: INR719

TP: INR760

Neutral

JV partner Niko cuts KG-D6 2P gas reserves by 80% to 1.9tcf

Additional investments contingent on gas price revision; cutting SOTP by INR25/sh
Bloomberg RIL IN Equity Shares (m) 3,271.0 52-Week Range (INR) 906/674 1,6,12 Rel. Perf. (%) -2/-12/-12 M.Cap. (INR b) 2,351.8 M.Cap. (USD b) 41.7

Valuation summary (INR b)

Y/E March 2012 2013E 2014E Net Sales 3,299 3,407 2,997 EBITDA 336 310 321 Net Profit 200 186 206 EPS (INR) 67.7 63.4 69.9 EPS Gr. (%) -1.1 -6.2 10.2 BV/Sh. (INR) 560.7 612.1 670.6 P/E (x) 10.6 11.3 10.3 P/BV (x) 1.3 1.2 1.1 EV/EBITDA (x) 6.9 7.4 6.7 EV/Sales (x) 0.7 0.7 0.7 RoE (%) 13.0 11.0 11.1 RoCE (%) 12.1 11.0 11.3

Niko Resources, the E&P JV partner of Reliance Industries, in its 'Reserves and Contingent Resources Update' has announced (1) reduction in KG-D6 2P gas reserves by 80% to 1.9tcf, and (2) its production guidance for next 7 years indicates decline in D1D3/MA production and increase in new gas production from D6 satellites fields and NEC-25 block, resulting in gross production of 44mmscmd by FY19 (v/s current rate of 32mmscmd). Niko stated that the reduced reserve estimates only pertain to the currently producing D1D3/MA fields and does not include satellite field reserves. Further, it stated that the additional capex will be contingent on gas price revision and government approval for the development plan.

RIL's 1P reserve higher than Niko's new 2P reserve: RIL does not give 2P reserve numbers and only gives out 1P reserve number in its annual report. Post the downgrade in FY12, RIL's 1P gas reserves were 104bcm (3.7tcf, net share number). It should be noted that RIL's reserve numbers also include its share in PMT (RIL stake at 30%). Even after adjusting PMT reserves (estimated), RIL's 1P reserve number will still be higher than Niko's 2P reserve number of 1.9tcf. Niko states that additional investments contingent on gas price revision: Niko stated that the new reserve estimates factor pertain only to the current producing fields - D1D3/MA and additional investment decisions on development plans (satellite and NEC) are contingent upon natural gas pricing (revision scheduled in March 2014). Further, it stated that the reserve/production estimates by Ryder Scott (independent reserve consultant) does not assume any additional drilling in D1D3/MA fields, as Ryder Scott believes that no new wells will be required to recover the revised 2P reserves in D1D3/MA fields in the KG-D6 block. Key things to watch on RIL: (1) Resolution of cost recovery issues with the government, (2) DGH approvals for E&P program and update on KG-D6 ramp-up, (3) Clarity on 7-year income tax holiday for KG-D6 gas (we model tax holiday), (4) Margin trend in refining and petchem, (5) Developments on USD12b capex plan, and (6) Update on BWA and retail foray.

Shareholding pattern % (Mar-12)

Others, 22.8

Foreign, 21.7

Domestic Inst, 10.6

Promoter 44.9

Stock performance (1 year)

Cutting SOTP; Maintain Neutral: We have cut our plateau production assumption from 60mmscmd in FY18 to 40mmscmd and cut our overall recovery from 10 tcf to ~7tcf. However, our FY13 and FY14 estimates remain unchanged. Our revised SOTPbased target price is INR760 (earlier INR785) as we cut our KG-D6 value to INR51/ share from earlier INR74/share and NEC-25 to INR13/share (earlier INR15/share). We maintain Neutral due to concerns of (1) RoE slipping to sub-12% levels, (2) falling KG-D6 volumes, and (3) increased share (75%) of cyclical refining and petchem businesses. The stock trades at 11.3x FY13E adjusted EPS of INR63.4 and 7.4x FY13E EV/EBITDA. Harshad Borawake (HarshadBorawake@MotilalOswal.com); +91 22 3982 5432 Deepak Dult (Deepak.Dult@MotilalOswal.com); +91 22 3982 5445
1

Reliance Industries

Key takeaways from the Niko's concall

Niko's reserves only from producing fields: Niko's KG-D6 reserve numbers only include reserves from producing D1/D3 and MA fields. Niko further says that it is not sure of RIL's reserve composition given in RIL's FY12 annual report as it will also include reserves from its other fields (RIL also has 30% stake in PMT fields which currently produce ~15mmscmd gas). Every company and country has different guidelines to categorize the reserves and Niko's reserves are based on Canadian regulations. Niko expects gas pricing to be market determined in India: The likely March 2014 gas price increase to USD8/mmbtu from current USD4/mmbtu mentioned in the Niko's press release is purely for the purpose to show sensitivity to its NPV and is not its expectation of the likely price revision in March 2014. However, Niko is in favor of market determined gas pricing as against the current practice of getting the approval from Govt. of India. No additional drilling required in D1/D3 & MA to recover current estimated reserves: Niko mentioned that the reserve estimates by Ryder Scott does not assume any additional drilling in D1/D3 & MA fields, as it believes that no further wells will be required to recover the revised proved and probable reserves in D1/D3 and MA. In MA, JV has scheduled 1 more well. Gas price hike critical for further capex: Gas price increase will be critical before committing further capex for integrated development plan for satellite fields. Company is hopeful of government approvals for this development plan as it will utilize the already built infrastructure at KG-D6 and will be cost effective. Integrated development plan will be submitted in later part of current year. Niko expects the capex at USD4b for integrated development plan.

Niko downgrades 2P gross reserve estimates by 80% to 1.9 tcf

Source: Company/MOSL

21 June 2012

Reliance Industries

Niko's reasoning for reserve downgrade

Niko has indicated that the part of the reserve change relates to production, but it is largely attributable to field performance and revised geological model. The reasoning is similar to that given by RIL during the recent downgrade. a) Field performance at D1/D3 field during 2011 demonstrated higher than expected pressure drawdowns resulting in material balance estimates to differ from in place gas volumes derived from geologic mapping. b) An assessment of reservoir performance concluded that contrary to the previous geological model, the current D1/D3 producing wells did not appear to be receiving any contribution from outside the main channel areas. c) Enhanced inter-connectedness of the main channel sands has resulted in increased water production and hence lowered the ultimate recovery. Niko further stated that the revised geological model no longer anticipates reservoir outside the main channel fairways.

Niko had reduced its India gas reserves from 13tcf in FY10 to 9.9 tcf in FY11 (gross for JV)
As at March 31, 2011 Natural Gas Gross* (mmcf) Net* (mmcf) 340,203 53,534 281,859 675,596 314,699 990,295 307,959 33,164 171,371 512,494 222,038 734,532 As at March 31, 2010 Natural Gas Gross* (mmcf) Net* (mmcf) 568,289 16 374,611 942,916 364,677 1,307,593 510,152 13 195,607 705,772 158,831 864,603

Reserves Category Proved Developed Producing Developed Non-Producing Undeveloped Total proved Probable Total proved plus probable

Net number factor in the royalty impact/Profit Petroleum * Represents Niko 10% stake in KG-D6

Source: Niko Resources/MOSL

Niko's production guidance much lower than RIL's AGM announcement

RIL announced in its FY12 AGM that it targets to produce 60mmscmd of domestic gas on sustainable basis in next 3-4 years and expects to produce 30mmscmd of additional gas through development of R-series/satellite fields in KG-D6 and NEC25 blocks. While, Niko's production plan envisages production at just 18/21mmscmd in FY15/ 16 and even seven years from now, i.e. FY19, it expects production to just touch 44mmscmd.

Niko's planned production v/s our current estimates (mmscmd)

* Our estimate does not include NEC 21 June 2012

Source: Niko, MOSL 3

Reliance Industries

RIL had downgraded 1P gas reserves by 7% in its FY12 annual report

RIL indicated that extensive reservoir studies are underway for augmenting production along with BP's technical teams. However, it has reduced proved gas reserve estimates by 7% based on production data v/s original production geological model, validated by experts. The reserve downgrade was partly compensated by D-34 discovery (not quantified), which was declared to be commercial. Proved reserves were further reduced to account for stake sale to BP. 1P gas reserves have been reduced from 185.8bcm to 104bcm led by: (a) 56.6bcm reduction for stake sale to BP, (b) 12.4bcm cut due to reservoir reassessment, and (c) 12.8bcm cut led by production during the year. Further, the reserve cut of 12.4bcm is for RIL's 60% stake and if we were to gross up, the actual reserve cut would be ~10%. Key reasons for reserve downgrade cited by RIL were: a) Decline in pressure / production has been higher than originally predicted b) Volumes connected to existing wells are lower than envisaged c) Gas outside the main channel is in small uneconomic volumes and not participating in production.

1P reserves decline due to reservoir reassessment (apart from production and third-party transfer)
Proved Reserves FY10 FY11 FY12 As a % Restated open. for 90% bal. stake As a % open. bal. Remarks

Crude Oil (mmt) Opening Balance Transfer of interest to BP Addition/(deletion) Production Closing Balance Natural Gas (bcm) Opening Balance Transfer of interest to BP Addition/(deletion) Production Closing Balance

11.02 1.13 (1.04) 11.11

11.11 (1.44) (1.38) 8.29

8.29 (1.69) (2.61) (0.93) 3.06

20.4 31.5 11.2 36.9

(3.92)

47.2

30% stake sale to BP Deletion led by reassessment of the reservoir Led by production during the year Oil reserve life (based on 1P) has declined from 6 years to 3 years

220.47 5.35 (14.61) 211.21

211.21 (5.77) (19.62) 185.82

185.82 (56.62) (12.42) (12.82) 103.96

30.5 6.7 6.9 55.9

(18.63)

10.0

30% stake sale to BP Deletion led by reassessment of the reservoir Led by production during the year Gas reserve life (based on 1P) has declined from 9 years to 8 years

Crude Oil (mmt) Opening Balance 4.97 8.62 Transfer of interest to BP Addition/(deletion) 4.69 0.42 Production (1.04) (1.38) Closing Balance 8.62 7.66 Natural Gas (bcm) Opening Balance 133.89 130.82 Transfer of interest to BP Addition/(deletion) 11.54 (3.84) Production (14.61) (19.62) Closing Balance 130.82 107.36 *RIL sold 30% stake in 21 E&P blocks to BP 21 June 2012

7.66 (1.65) (2.66) (0.93) 2.42 107.36 (30.54) (38.84) (12.82) 25.16

21.5 34.7 12.1 31.6

(3.99)

52.1

30% stake sale to BP Deletion led by reassessment of the reservoir Led by production during the year

28.4 36.2 11.9 23.4

(58.25)

54.3

30% stake sale to BP Deletion led by reassessment of the reservoir Led by production during the year Source: Company/MOSL 4

Reliance Industries

Status of RIL's key E&P blocks

Sl No Name of the Block Area (Sq. Km) 1-2 Panna - Mukta - Tapti 2,678 Pre-NELP 3 CB-ON-1 1,533 4 SR-OS-94/1 1,475 NELP - I 5 SR-OSN-97/1 5,040 6 NEC-OSN-97/2 (NEC-25) 10,755 7 KG-DWN-98/3 (KG-D6) 7,645 NELP - II 8 GS-OSN-2000/1 5,890 NELP - III 9 KK-DWN-2001/1 20,468 10 KK-DWN-2001/2 23,515 11 CY-DWN-2001/2 14,325 12 CY-PR-DWN-2001/3 8,600 NELP - V 13 KG-DWN-2003/1 (D3) 3,288 14 CB-ONN-2003/1 635 NELP - VI 15 KG-DWN-2004/4 11,904 16 KG-DWN-2004/7 11,856 17 MN-DWN-2004/1 9,885 18 MN-DWN-2004/2 11,813 19 MN-DWN-2004/3 11,316 20 MN-DWN-2004/4 8,822 21 MN-DWN-2004/5 10,454 NELP - VII 22 KG-DWN-2005/2 1,949 Total Domestic 183,846 Status of key blocks Under production Likely to be relinquished Likely to be relinquished Likely to be relinquished Awaiting govt. approval for development plan Under production Expect to submit FDP for 1 gas discovery Relinquished DGH has granted 6-month extension for Ph-1 Submitted DoC for one discovery Appraisal program for one discovery submitted 4 gas discoveries; To drill 2 more wells by 1HCY13 8 oil discoveries; no immediate further plans At At At At At At At exploratory exploratory exploratory exploratory exploratory exploratory exploratory stage stage stage stage stage stage stage

At exploratory stage Source: Company/MOSL

Niko expects the integrated development plan to be submitted by end-2012

Niko expects NEC-25 production to commence in FY19

Source: Niko Resources

21 June 2012

Reliance Industries

Valuation and view

Our assumptions for RIL: 1) Average gas production of 28/22mmscmd for FY13/14; 2) Well-head gas price of USD4.2/mmbtu; 3) Tax holiday on KG-D6 gas profits; and 4) Blended GRM of USD8.3/bbl in FY13 and USD9/bbl in FY14. Key things to watch would be 1) Resolution of cost recovery issues with govt. and DGH approvals for its E&P program and update on its KG-D6 ramp-up, 2) clarity on 7-year income tax holiday for KG-D6 gas (we model tax holiday); 3) margin trend in refining and petchem, 4) developments on it USD12b capex plan and 5) update on its BWA and retail foray. Cutting SOTP; Maintain Neutral: We have cut our plateau production assumption from 60mmscmd in FY18 to 40mmscmd and cut our overall recovery from 10 tcf to ~7tcf. However, our FY13 and FY14 estimates remain unchanged. Our revised SOTP-based target price is INR760 (earlier INR785) as we cut our KG-D6 value to INR51/share from earlier INR74/share and NEC-25 to INR13/share (earlier INR15/share). We maintain Neutral due to concerns of (1) RoE slipping to sub-12% levels, (2) falling KG-D6 volumes, and (3) increased share (75%) of cyclical refining and petchem businesses. The stock trades at 11.3x FY13E adjusted EPS of INR63.4 and 7.4x FY13E EV/EBITDA
Segmental EBIT break-up
Segmental EBIT (INRb) Refining Petrochemicals E&P Total Segmental EBIT share (%) Refining Petchem E&P Total FY09 96 69 23 188 51 37 12 100 FY10 60 86 55 200 30 43 27 100 FY11 92 93 67 252 36 37 27 100 FY12 97 90 53 239 40 38 22 100 FY13E 94 89 32 215 FY14E 102 103 28 233

44 44 41 44 15 12 100 100 Source: Company/MOSL

RIL: Key Assumptions

Key Metrics FY09 FY10 47.5 62.0 60.6 98 6.9 3.6 3.3 39.8 10.7 69.7 4.2 FY11 45.6 62.0 66.5 107 8.7 5.2 3.5 56.2 18.9 86.5 4.2 FY12 47.9 62.0 67.6 109 8.4 8.3 0.1 42.6 13.8 FY13E 50.0 62.0 67.7 109 8.3 8.2 0.1 28.0 11.0 FY14E 48.1 62.0 66.4 107 9.0 8.2 0.8 22.0 11.0 Exchange Rate (INR/USD) 45.8 Refining Capacity (mmt) 33.0 Production (mmt) 32.0 Capacity Utilization (%) 97 GRM (USD/bbl) Blended GRM 12.3 Singapore GRM 5.8 Premuim to Singapore 6.5 E&P Gas Production (mmscmd) Oil Production (kbd) Pricing Brent Oil (USD/bbl) 84.8 Wellhead Gas Price (USD/mmbtu)

114.5 110.0 100.0 4.2 4.2 4.2 Source: Company/MOSL 6

21 June 2012

Reliance Industries

Reliance: Sum of parts valuation

Business USD b Core business: 28 Refining 15 Petchem 13 E&P Initiatives 8 KG - D6 Gas (KG Basin) 2 KG - D6 MA1 Oil (KG Basin) NEC - 25 (Mahanadi basin) KG-DWN-2003/1 (D3) per Hardy; RIL (60%) Sohagpur East & West (CBM) Block - 9 (Yemen) 0 1 INR b 1,504 803 701 450 127 26 38 Adj. INR/sh 508 271 237 152 43 9 13 Remarks/Methodology Core business EV @6x FY13E EBITDA EV @6.5x FY13E EBITDA DCF; 60% stake; Plateau of 40mmscmd in FY18; 6.5TCF recovery DCF; 60% stake; 47mmbbls recovery; (LT Brent - USD90/bbl) DCF; 60% stake; OGIP of 3.7 TCF; Production in 2019 Prospective resources of 695mmboe as DCF; 100% stake; OGIP of 3.65 TCF, assumed 50% recovery Currently producing. 2P reserves of 330 mmbbls valued, assumed 50% recovery valued at @USD20/bbl; RIL stake 25% Currently producing. EV @4.5x FY13E EBITDA JV with Atlas, Pioneer & Carrizo; valued at cash investment Includes RGTIL, RIIL and SEZ At book value and 20% discount to estimated book value BWA Foray Valud at 0.75x equity investment 100% subsidiary of RIL; 0.75x equity investments FY13E Based on fully diluted equity shares of 2,962m (excl 309m treasury shares) Source: Company/MOSL

1 1 1

34 31 40

11 10 14

PMT Investment in Shale Gas Investments RGTIL, RIIL fuel Retailing BWA SEZ Reliance Retail Less: Net Debt Total Base Value

2 1 3 0 1 1 1 1 -2 42

99 51 136 24 32 48 32 63 -98 2,252

33 17 46 8 11 16 11 21 -33 760

21 June 2012

Reliance Industries

Financials and Valuation

Income Statement
Y/E March Net Sales Change (%) EBITDA % of Net Sales Depreciation Interest Other Income PBT Tax Rate* (%) PAT Adj. PAT Change (%) Key Operating Metrics GRM (USD/bbl) KG-D6 production (mmscmd) 2009 1,418 6.3 233 16.4 52 17 21 184 31 16.9 153 156 2.3 12.3 0.0 2010 1,925 35.7 306 15.9 105 20 25 205 43 21.0 162 162 4.0 6.9 39.8 2011 2,482 28.9 381 15.4 136 23 31 252 50 19.6 203 203 24.9 8.7 56.2 2012 3,299 32.9 336 10.2 114 27 62 258 57 22.2 200 200 -1.2 8.4 42.6

(INR Billion)
2013E 3,407 3.3 310 9.1 101 29 66 245 59 24.1 186 186 -7.0 8.3 28.0 2014E 2,997 -12.1 321 10.7 95 29 76 273 67 24.6 206 206 10.3 9.0 22.0

Balance Sheet
Y/E March Share Cap. (incl sh. Susp.) Reserves Net Worth Total Loans Deferred Tax Capital Employed Gross Fixed Assets Less: Depreciation Net Fixed Assets Capital WIP Investments Curr. Assets, L & Adv. Inventory Debtors Cash & Bank Balance Loans&Adv.and Other CA Current Liab. & Prov. Liabilities Provisions Net Current Assets Application of Funds E: MOSL Estimates 2009 31 1232 1,264 739 97 2,100 1496 493 1,003 690 216 2010 33 1339 1,372 625 109 2,106 2159 626 1,533 121 232 2011 33 1483 1,515 674 116 2,305 2213 785 1,427 128 377 2012 33 1628 1,661 684 121 2,466 2055 918 1,137 78 540

(INR Billion)
2013E 32 1765 1,798 682 126 2,606 2106 1019 1,088 112 580 2014E 32 1939 1,971 679 132 2,782 2166 1114 1,053 169 620

148 46 222 131

270 117 135 103

298 174 271 171

360 184 396 257

374 183 417 264

327 161 552 272

327 30 190 2,100

368 36 220 2,106

497 46 373 2,305

442 43 712 2,466

365 46 826 2,606

321 49 941 2,782

21 June 2012

Reliance Industries

Financials and Valuation

Ratios
Y/E March Basic (INR) EPS Adj. EPS (ex Treasury) Cash EPS Adj. Book Value DPS Payout (incl. Div. Tax.) Valuation (x) P/E Adj. P/E Cash P/E EV / EBITDA EV / Sales Adj. Price / Book Value Dividend Yield (%) Profitability Ratios (%) RoE RoCE Turnover Ratios Debtors (No. of Days) Fixed Asset Turnover (x) Leverage Ratio Net Debt / Equity (x) 2009 52.6 58.7 69.1 475.5 6.5 14.5 2010 49.6 54.8 81.7 463.2 7.0 15.0 2011 62.0 68.4 103.5 511.2 8.0 13.7 2012 61.3 67.7 96.1 560.7 8.5 14.7 2013E 57.4 63.4 88.6 612.1 8.5 17.3 2014E 63.3 69.9 92.5 670.6 9.0 16.6

11.6 10.5 6.9 6.8 1.0 1.4 1.1

11.7 10.6 7.5 6.9 0.7 1.3 1.2

12.5 11.3 8.1 7.4 0.7 1.2 1.2

11.4 10.3 7.8 6.7 0.7 1.1 1.3

15.7 12.5

13.4 11.3

14.8 12.9

13.0 12.1

11.0 11.0

11.1 11.3

14 1.1 0.4

15 1.1 0.3

21 1.1 0.2

20 1.5 0.0

20 1.6 0.0

21 1.4 -0.1

Cash Flow Statement

Y/E March OP/(Loss) before Tax Depreciation Interest /Other Income Direct Taxes Paid (Inc)/Dec in Wkg. Capital Other op activities CF from Op. Activity (Inc)/Dec in FA & CWIP (Pur)/Sale of Investments Other In activities CF from Inv. Activity Change in Equity Inc / (Dec) in Debt Dividends Paid CF from Fin. Activity Inc / ( Dec) in Cash Add: Opening Balance Closing Balance E: MOSL Estimates 21 June 2012 2009 184 72 2 -19 -38 -19 182 -247 24 -18 -241 152 105 -19 237 179 43 222 2010 205 135 -1 -31 -53 -50 205 -218 -12 48 -182 1 -88 -22 -110 -87 222 135 2011 252 162 -3 -42 1 -38 333 -121 -141 59 -203 2 30 -24 7 137 135 271 2012 258 137 -17 -48 -28 -32 270 -80 62 -12 -30 -2 -85 -28 -115 125 271 396

(INR Billion)
2013E 245 101 -37 -54 -93 0 163 -86 -40 66 -60 -20 -32 -29 -81 21 396 417 2014E 273 95 -47 -62 20 0 279 -116 -40 76 -80 0 -31 -32 -64 135 417 552 9

Disclosures
This report is for personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report . MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Group/Directors ownership of the stock 3. Broking relationship with company covered 4. Investment Banking relationship with company covered Reliance Industries No No No No

Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For U.K.
This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to which this document relates is only available to investment professionals and will be engaged in only with such persons.

For U.S.
MOSt is not a registered broker-dealer in the United States (U.S.) and, therefore, is not subject to U.S. rules. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., Motilal Oswal has entered into a chaperoning agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo"). This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, Marco Polo and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

Motilal Oswal Securities Ltd

Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025 Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com