June 3, 2010

Recommendations <= 1 year 1 - 2 yrs 2 - 5 yrs

HAVELLS INDIA LTD HOLD
Strong Buy
Havells India Ltd (HIL), incorporated in 1983, is one of the largest and fastest growing Buy
manufacturers of electrical components and systems in India. It is the market leader in light- Hold
Reduce
duty power distribution products. Its offerings include electrical products like domestic and
Sell
industrial switchgears, cables and wires, and consumer durables like fans, CFLs, and lighting Strong Buy – Expected Returns > 20% p.a.
Buy – Expected Returns from 10 to 20% p.a.
fixtures. Hold – Expected Returns from 0 % to 10% p.a.
Reduce – Expected Returns from 0 % to 10% p.a. with possible downside risk
HIL owns some of the prestigious global brands like Crabtree, Sylvania, Concord, Sell – Returns < 0 %
Luminance, Linolite, & SLI Lighting.
In Apr’07, HIL acquired Sylvania, one of the world's largest manufacturers of artificial
light sources. With this, the company now has its presence and operations in over 52
countries. STOCK DATA
HIL has not been able to turnaround Sylvania and it is still making losses at the EBIDTA BSE / NSE Code 517354 / HAVELLS
Bloomberg Code HAVL IN
level. The company has undertaken two plans, Project Phoenix and Project Parakram to No. of Shares (Mn) 60.17
turn around Sylvania, and it expects Sylvania to be profitable in FY11. Sensex / Nifty 16,742 / 5,020
PRICE DATA
During Q4 FY2010, HIL posted revenues of Rs 7bn, an increase of 22% (Y-o-Y) and a net CMP Rs (2nd Jun'10) 567.80
profit of Rs 644mn on a standalone basis. In its international business, represented by Beta 1.0
Market Cap (Rs mn) 34,164
Sylvania, it managed to limit its losses to Rs 851mn from Rs 1.47bn in Q4 FY2009 though
52 Week High-low 673.7 - 243.55
revenue decreased from Rs 7.56bn to Rs 6.86bn Average Daily 189,088
STOCK RETURN (%)
Post the FY2010 results, we expect HIL’s revenues to grow at a CAGR of 10% over
30D 3M 6M 1Y
FY2010-12 to Rs 64.33bn by FY2012. We further estimate that the PAT would grow to Rs Havells India -7% 7% 44% 85%
Sensex -5% 0% -2% 13%
3.28bn in FY2012.
Nifty -5% 0% -2% 11%
Based on a consolidated FY12 P/E of 12, the fair value for Havells India Ltd. SHARE HOLDING PATTERN (%)
Promoter 60.1
works out to Rs 654.
Institution 20.6
Financial Snapshot Non Institution 19.3
Projections (Rs Mn) FY08A FY09A FY10A FY11E FY12E
Total 100.0
Revenue 49,997 54,790 53,569 59,352 64,329
Y-o-Y Growth % 224.2% 9.6% -2.2% 10.8% 8.4% 1 Year Price Performance (Rel. to Sensex)
EBIDTA 3,702 2,561 3,005 5,243 6,443 140
Y-o-Y Growth % 143.2% -30.8% 17.3% 74.5% 22.9% 120
Sensex
PAT 1,610 -1,601 -2,384 2,375 3,280 100 Havells
Y-o-Y Growth % 57.6% - - - 38.1%
80
EPS Rs 27.0 - - 39.5 54.5
60
BVPS Rs 116.1 101.8 57.1 91.5 138.9
40
EBIDTA % 7.4% 4.7% 5.6% 8.8% 10.0%
20
NPM % 3.2% -2.9% -4.5% 4.0% 5.1%
0
PERx 14.4 10.4
P/B Ratio 6.2 4.1 -20
-40
Disclaimer: This document is prepared by Epitome Global Services Private Limited exclusively for Fullerton Securities & Wealth Advisors Ltd (FSWA) customers. This document is
not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in
any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors,
including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person
or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The
document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for
investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the
information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment
decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of
an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for
investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial
product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services
provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination of the information and
services provided herein.
 June 3, 2010

BUSINESS PROFILE
HIL is one of the largest electrical and power distribution equipment manufacturers with products ranging from
Industrial & Domestic Circuit Protection Switchgear, Cables & Wires, Motors, Fans, Power Capacitors, CFL Lamps, Havells is in capacity
expansion mode and is
Luminaries for Domestic, Commercial & Industrial applications, Modular Switches covering the entire gamut of
planning to increase its CFL
household, commercial and industrial electrical needs. and fan manufacturing
HIL owns some of the prestigious global brands like Crabtree, Sylvania, Concord, Luminance, Linolite, & SLI Lighting. capacity.

It is currently one of the fastest growing fans brands in the Indian market with market share at approximately
17%(market size Rs 20bn). Havells has launched innovative products with its energy efficient fans (consuming only
50W) making it the largest energy efficient fan in the country. In the switchgear market, Havells is the market leader in
the low voltage segment with approximately 20% share (market size Rs 12bn). In CFL and Luminaries it has
approximately 10% market share (market size Rs 10bn for CFL and Rs 20bn for Luminaries). With a spurt in domestic
demand and to cash on to export opportunities through Sylvania, it is expanding domestic capacities significantly. HIL
will expand the capacity of its CFL plant in Neemrana in Rajasthan from 4mn pieces to 8mn pieces with a capex of
about Rs 300mn. It will also up the capacity of its fan facility in Haridwar from 4.8mn fans an annum to 6mn at a cost of
Havells has a strong and
Rs 200mn.
focused management team.
In 2007, Warburg Pincus, a global private equity firm invested USD 110mn in HIL. Havells issued fresh shares to
Warburg Pincus, representing approximately 11.2% of the fully diluted share capital of the company. In Apr’07, Havells
acquired Sylvania, one of the world's largest manufacturers of artificial light sources. This has helped Havells to build a
global network of 91 branches and representative offices and with over 8,000 professional and 20,000 strong global
distribution network. Sylvania has a strong presence European and American markets. Havells Sylvania is also
planning to expand production facility in Mexico to cater to Central and South America. Sylvania is expected to be
profitable in FY11 on depending on the success of the two restructuring plans.
During 4QFY10, Havells sold its bathroom fittings and accessories, under the brand `Crabtree`, to HSIL in an all cash
13.47
deal. This deal will help focus Havells in its core business.

105.38
Europe

292.51 Americas

Asia

FY10 Regionwise Revenue Analysis (Sylvania, Mn Euro)

Disclaimer: This document is prepared by Epitome Global Services Private Limited exclusively for Fullerton Securities & Wealth Advisors Ltd (FSWA) customers. This document is
not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in
any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors,
including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person
or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The
document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for
investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the
information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment
decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of
an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for
investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial
product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services
provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination of the information and
services provided herein.
 June 3, 2010

BUSINESS PERFORMANCE
FY10 performance of Havells was a mixed bag. Havells India Ltd, its domestic business showed a strong growth in
terms of revenue as well as profitability but Sylvania, its international business saw drop in both, revenue and
We expect a strong
profitability. Its Net Revenue for FY10 from India business stood at Rs 24.7bn, a growth of 12% compared to the last
performance from Havells’
year. This was driven by growth across all business segments except Cable & Wire. Cable & Wire prices have Indian Business backed by
declined due to sharp fall in metal prices however sales volume has grown by 20%. Switchgear revenues increased the buoyancy in the real
estate and construction
by 16% in FY10 compared to the prior year. Lighting & Fixtures revenues increased by 32% compared to the prior sector.
year comparable period due to increased sales of both Luminaries and CFL. Its EBIDTA Margins also improved from
9.2% to 12.9% due to reduction in fixed cost base, decline in material cost and better price realization. We expect a
strong growth in fan and CFL market, also new products launch will be the key for future growth.
The International business represented through Sylvania demonstrated muted performance in FY10, primarily
driven by the European market conditions. It’s Net Revenue declined by 12% to Rs 28.83bn while it Net Loss
widened to Rs 4.66bn from Rs. 3.05bn. Increase in the net loss was primarily due to the restructuring cost and
Integration cost.
Sylvania turnaround: The key to profitability
Havells management has unveiled two plans, Project Phoenix and Project Parakram, to turn around Sylvania.
Project Phoenix, initiated in Jan’09, costing Euro 12.23mn, was aimed at reduction in manpower, working capital It will be difficult for
Sylvania to have good
and material cost. Project Prakram, initiated from Sep’09, costing Euro 23mn, is aimed at rationalizing fixed cost
revenue growth given the
base, increasing outsourcing to low cost countries like China/ India, increasing savings in material costs, value gloomy outlook of
engineering, process optimization and enhancing managerial participation by Havells. With completion of both the European Economies, but
it should be able to cut
rounds of restructuring, management is confident that Sylvania will be profitable in FY11. With this, Havells will be
cost by outsourcing.
able to reap benefit of Sylvania’s brand name and distribution network by cross selling high margin products and
reducing cost of good by outsourcing manufacturing to low cost countries.

Revenue, Operating & PAT Margin 80% Revenue & EBIDTAGrowth

70,000 12%
60,000 10% 60%
8%
50,000 40%
6%
40,000 4%
2% 20%
30,000
0%
20,000 0%
-2%
10,000 FY09 FY10E FY11E FY12E
-4%
-20%
- -6%
FY07 FY08 FY09 FY10E FY11E FY12E -40%
Revenue (Rs Mn) EBIDTA Margin PAT Margin Revenue Growth EBIDTA Growth

Disclaimer: This document is prepared by Epitome Global Services Private Limited exclusively for Fullerton Securities & Wealth Advisors Ltd (FSWA) customers. This document is
not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in
any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors,
including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person
or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The
document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for
investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the
information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment
decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of
an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for
investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial
product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services
provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination of the information and
services provided herein.
 June 3, 2010

VALUATIONS
Post the FY2010 results, we expect Havells’ revenues to grow at a CAGR of 10% over FY2010-12 to Rs Based on a consolidated FY12
64.33bn by FY2012. We further estimate that the PAT would grow to Rs 3.28bn in FY2012. P/E of 12, the fair value for
Havells India Ltd. works out to
Based on a consolidated FY12 P/E of 12, the fair value for Havells India Ltd. works out to Rs Rs 654.

654.

We recommend the stock as ‘HOLD’.

Financial Analysis and Projections

Particulars (Rs Mn) FY08A FY09A FY10A FY11E FY12E
Net Revenue 49,997 54,790 53,569 59,352 64,329
Other Income 2,151 -1,818 -659 359 389
Total Income 52,148 52,973 52,909 59,711 64,718
Operating Expenditure 48,445 50,412 49,904 54,467 58,275
Depreciation 694 905 825 924 957
EBIT 3,008 1,656 2,180 4,319 5,486
EBIT Margin (%) 6% 3% 4% 7% 9%
Interest 1,036 1,253 867 1,180 1,262
Profit Before Tax 1,972 403 1,313 3,139 4,224
Less: Tax 376 428 941 764 944
Profit After Tax 1,596 -25 372 2,375 3,280
Minority Interest & EO 13 -1,576 -2,756 0 0
PAT After MI 1,610 -1,601 -2,384 2,375 3,280
PAT Margin (%) 3.2% -2.9% -4.5% 4.0% 5.1%
ROE (%) 23.6% - - 43.1% 39.2%
EPS (Rs) 27.0 - - 39.5 54.5
BVPS (Rs) 116.1 101.8 57.1 91.5 138.9

Valuation Ratios (x) FY11E FY12E

P/E 14.4 10.4
P/B 6.2 4.1

Disclaimer: This document is prepared by Epitome Global Services Private Limited exclusively for Fullerton Securities & Wealth Advisors Ltd (FSWA) customers. This document is
not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in
any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors,
including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person
or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The
document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for
investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the
information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment
decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of
an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for
investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial
product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services
provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination of the information and
services provided herein.
 June 3, 2010
Board of Directors
Director Name Current Position Description
Mr.Qimat Rai Gupta, founder of Havells, is the first generation entrepreneur. Mr. Gupta has been recognized by the various
sections of the industry for his path breaking work in this segment. Mr. Gupta has held various responsible positions in Trade and
Commercial associations of the Industry from time to time. He has, in his past, served as the President of Federation of All India
Chairman &
Qimat Rai Gupta Electrical and Trade association. Amongst the acknowledgments bestowed upon him, Mr.Gupta received the Self-made
Managing Director
Entrepreneur Award "Udyog Patra" in 1989, Distinguished Entrepreneurship Award 2004, from the PHD Chamber of Commerce
and Industry in 2004, Udyog Vibhushan from the Institute of Trade & Industrial Development, Delhi in 2005 and Udyog Ratna from
PHD Chamber of Commerce & Industry for Economic Contribution to Uttaranchal State in 2005.
Mr. Anil Gupta, JMD, Havells India Ltd. graduated in Economics from Sri Ram College of Commerce, Delhi University.He did MBA
(Marketing and Finance) from Wake Forest University, North California, USA. Mr. Gupta was awarded the “Babcock Award” for
Joint Managing
Anil Gupta excellence in academics, integrity and leadership. He joined Havells in 1992 and started supervising the marketing and sales
Director
function. Today, he is instrumental in business development by forming new alliances and acquisitions with foreign collaborators
and / or taking over other businesses within India.
Surjit Gupta Director Mr. Surjit Gupta is a Director at Havells India Ltd.
Rajesh Gupta Director (Finance) Mr. Rajesh Gupta is a Director, Finance at Havells India Ltd.
A P Gandhi Director Mr. A.P. Gandhi is a Director at Havells India Ltd.
Mr Mathur is a Director at Havells India Ltd.. He retired from Life Insurance Corporation of India in October 2004 as its Chairman. He
joined Life Insurance Corporation of India in 1967 as a direct recruit officer and rose to the rank of Chairman. He held various
S B Mathur Director positions such as Senior Divisional Manager of Gwalior division, Chief of Corporate Planning, General Manager of LIC
(International) E.C., Zonal Manager in charge of Western Zone and Executive Director. He is a qualified chartered accountant and
cost accountant.

Dr. Abid Hussain is a Director at Havells India Ltd. He is the Chairman of ICEC since its inception in 1997. Dr. Hussain has been an
able administrator and an astute planner and a diplomat par excellence. He has been the Secretary, Ministry of Commerce for over
Abid Hussain Director
five years. He has also been a Member of Planning Commission. His illustrious career includes a tenure as India's Ambassador to
the USA. Today also, he is very active in supporting various growth and developmental programs for the country.

Niten Malhan is a Director at Havells India Ltd.. He has been with Warburg Pincus since 2001 and focuses on the firm's investment
activities in India. Previously, he was a director of business development at Stratum8 Corporation, a Silicon Valley start-up. He also
Niten Malhan Director worked as an engagement manager with McKinsey & Company in New Delhi, Jakarta and Boston. Mr. Malhan holds a B.S. in
Computer Science and Engineering from IIT-Delhi, and an M.B.A. from the Indian Institute of Management, Ahmedabad. He is a
director of Aryan Coal, Dainik Bhaskar, Havells India, Lemon Tree Hotels and Punj Lloyd.

Major General D.N. Khurana is a Director at Havells India Ltd.. He retired from the Indian Army after a distinguished service of nearly
40 years. He was honoured by the President of India with the award of Ati Vashisht Seva Medal for distinguished services of Highly
Exceptional Order. After retirement, he has been very actively involved in professional management and education in the country
for nearly 16 years. He was the founding Director General of Institute of Directors India (IOD) for two years. Thereafter, he steered
D N Khurana Director the National Management Movement in the country for nearly 12 years as Director General of All India Management Association.
For last few years, he assumed the leadership of management movement in the Asia Pacific region as Secretary General of Asian
Association of Management Organization. He is a Director on the Boards of Cadila Pharmaceuticals Ltd., Ahmedabad and RRB
Energy Ltd. He is also on the Board of Governors of IIM Lucknow and a number of leading Business Schools. He was awarded the
Life Time Achievement Award for Management by World HRD Congress in 2005.

Mr. V.K. Chopra is a Director at Havells India Ltd. Mr. V.K. Chopra, a Chartered Accountant has had a very distinguished career
spanning nearly 4 decades in banking, financial institutions and as a regulator. His last assignment was as Whole Time Member
with Securities & Exchange Board of India. Prior to this he was Chairman & Managing Director of Corporation Bank, SIDBI as also
Punjab & Sind Bank. He also worked as Executive Director of Oriental Bank of Commerce for a period of three years. Prior to this he
V K Chopra Director
had a long association of almost three decades with Central Bank of India where he worked in various capacities. During his tenure
with all these institutions, he was able to steer them to greater heights. Further during his tenure as CMD of Corporation Bank, the
bank was adjudged as the “Best Public Sector Bank” in Business India survey. He was also on the Board of Indo Zambia Bank at
Lusaka and IDBI Bank.

Mr. S K Tuteja, Director at Havells India Ltd., is an Ex IAS Officer of 1968 batch. He holds a Masters degree in Commerce from Delhi
University and is a Fellow member of the Institute of Company Secretaries of India. He has served the government in several key
positions at the state and national level and was Secretary to the Government of India in the Department of Food & Public
S K Tuteja Additional Director Distribution when he retired. Previously, he was Finance Secretary, Government of Punjab from 1997 to 1999, Chairman of the
Punjab State Electricity Board, Managing Director of Punjab State Industrial Development Corporation and Deputy Finance
Secretary (Chandigarh Administration). He has been a consultant to the World Bank and UNIDO. Mr Tuteja has rich & varied
experience of 38 years. He is currently the Chairman of Central Warehousing Corporation - A Government of India Undertaking.

Disclaimer: This document is prepared by Epitome Global Services Private Limited exclusively for Fullerton Securities & Wealth Advisors Ltd (FSWA) customers. This document is
not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in
any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors,
including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person
or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The
document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for
investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the
information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment
decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of
an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for
investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial
product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services
provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination of the information and
services provided herein.