Brickwork Independent Research

Update for Year ended March 31, 2011 SMALL CAP

Tilaknagar Industries Limited

basis for Q4 FY11

(Quarterly Update)

Key Data
BSE Code 507205 BSE ID TILAKIND Issued Shares 96.95 mn Face Value `10.00 Market Cap. `8.20 bn (US$ 181.55 mn) CMP `84.55 BSE Sensex 20,028 52-week High/Low 147.80/29.54 3M Avg Vol (No of Shares) 257336

Operating revenue has marginally decreased by 3.7% on YoY During Q4 FY11, net operating revenue marginally decreased by 3.7% to ` 129.6 Cr from `134.7 Cr in Q4 FY10 on YoY basis. However, on Q0Q basis it registered a growth of 1.5% in Q4 FY11. Subsequently PAT witnessed a fall of 13% in Q4 FY11 to ` 11.1 Cr from ` 13.4 Cr in Q4 FY10 on YoY basis. Dip in profitability in Q4 FY11 on YoY basis, was due to trend of rising prices of glass, which is used as packaging material.

Valuation Ratios
Yr to 31 Mar Adj.EPS (`) EPS Growth (%) PER (x) PBV (x) Dividend/Yield (%) EV (` bn) EV/Sales (x) EV/EBITDA (x)
* Fig for FY11 are unaudited.

PAT registered a healthy growth of 13% in FY11 to ` 468.3 Cr FY 09 FY10 10.2 15.67 59.7 52.76 N.A 22.13 1.50 2.54 0.20 0.01 3.22 9.27 1.36 2.45 7.48 11.50 FY11 20.07 13.42 N.A N.A N.A N.A N.A N.A from ` 378.4 Cr in FY10 on YoY basis On account of improved growth in sales volume on the back of increased consumer demand and expansion of product portfolio, Company reported 24% growth in its operating revenue in FY11 to ` 468.3 Cr from ` 378.4 Cr in FY10 on YoY basis. PAT registered a healthy growth of 13% in FY11 to ` 468.3 Cr from ` 378.4 Cr in FY10 on YoY basis. Gearing improved to 1.03 times in FY11 from 2.23 times on YoY basis JUN11 54.16 18.26 4.60 22.98 Gearing improved to 1.03 times in FY11 from 2.23 times on YoY basis, due to increase in net worth by 105% to `416.8 Cr in FY11 from ` 202.6 Cr on YoY basis. QIP proceeds and Promoters contribution resulted in increase in net worth during FY11 period. Rising glass prices may put pressure on profitability Packaging cost may put pressure on the operating margins front, due to increase in glass prices by 7% in Aug10 and another subsequent increase of 10% in Feb11.
Note: This report is a quarterly updated version. It is to be read with reference to the Initiation Report which provides brief company profile.

Shareholding Pattern (%)

Promoters FIIs DIIs Public & Others MAR11 54.09 19.64 4.63 21.64

Stock Chart (Relative to SENSEX)

Sumit Pol sumit.pol@brickworkratings.com

Milind Diwakar milind.d@brickworkratings.com

Analyst Declaration: We, Sumit Pol & MIlind Diwakar, hereby certify that the views expressed in this report accurately reflect our personal views about the subject securities and issuers. We also certify that no part of our compensation was, is, or will be, directly or indirectly, related to the specific view expressed in this report. This report is not a buy/sell/hold recommendation on the stock.

TILAKNAGAR IND

BRICKWORK Operating revenue decreased by 3.7% on YoY basis for Q4

Decrease in PAT for Q4 FY11 by 13% on YoY basis, due to increase in price of packaging glass material during the period

FY11
` In Cr Net Operating Revenue EBIDTA PBT PAT Q4 FY10 Growth Q4 FY11 Growth Q3 FY11

134.7 33.2 26.8 13.4

-3.7% -2.9% -18.8% -17.4%

129.6 32.2 21.7 11.1

1.5% 12.2% 32.5% 0.4%

127.7 28.7 16.4 11.0

Source: BSE, Brickwork Research

During Q4 FY11, net operating revenue decreased by 3.7% to ` 129.6 Cr from `134.7 Cr in Q4 FY10 on YoY basis. However, on Q0Q basis it registered a growth of 1.5% in Q4 FY11. Subsequently PAT witnessed a fall of 13% in Q4 FY11 to ` 11.1 Cr from ` 13.4 Cr in Q4 FY10 on YoY

Overall sales volume across different segments has registered a healthy growth of 14.6% to 3.07 mn cases in Q4 FY11 from 2.68 mn cases on YoY basis.

basis. EBIDTA decreased by 17.4% in Q4 FY11 as compared to Q4 FY10 but has seen a marginal improvement of 0.4 % on QoQ basis. Dip in profitability in Q4 FY11 on YoY basis, was due to increase in price of packaging material such as glass, which has increased by 7% in Aug10 and another subsequent increase of 10% in Feb11.
1.1 Segment-wise sales volume (mn cases)

1.68

1.86

Millionaire brand Mansion House registered a growth of 4% in Q4 FY11 on YoY basis.

Brandy Whisky Q4 FY10 Rum Q4 FY11 Vodka & Gin 0.53 0.64 0.45 0.56 0.02 0.01

Overall sales volume across different segments has registered a healthy growth of 14.6% to 3.07 mn cases in Q4 FY11 from 2.68 mn cases on YoY basis. This was on account of increase in sales volume in existing brands, particularly Millionaire brand Mansion House which registered a growth of 4% in Q4 FY11 on YoY basis.

BRICKWORK INDEPENDENT RESEARCH

TILAKNAGAR IND

BRICKWORK

Performance Highlights:
(` Cr) As on March 31 Net Operating Income (In ` Cr) EBIDTA (In ` Cr) PAT (In `Cr) Capital Structure: Tangible Net worth (In ` Cr) Borrowings (In ` Cr) Debt/Equity (x) Profitability: Operating Profit Margin Net Profit Margin ROCE ROE Coverage Ratio: Interest Coverage (x) 5.40 1.47 1.77 4.02 1.36 1.97 3.42 2.82 3.56 2.93 4.76 4.76 Liquidity Ratio: Quick Ratio Current Ratio (x)
Source: BSE, CMIE * Fig for FY11 is unaudited.

2008 136.71 27.15 12.30 109.78 64.76 0.59 19.86% 8.07% 14.31% 10.05%

2009 237.42 43.06 19.78 129.84 132.20 1.02 18.14% 7.42% 15.18% 13.57%

2010 378.45 80.59 34.89 197.04 453.47 2.30 21.29% 8.16% 11.29% 15.68%

2011* 468.33 113.60 39.57 416.81 433.31 1.04 24.26% 7.89% 11.82% 8.87%

On account of improved growth in volume on the back of increasing consumer demand and expansion of product portfolio, Company reported 24% growth in its operating revenue in FY11

PAT registered a healthy growth of 13% in FY11 to ` 468.3 Cr from ` 378.4 Cr in FY10 on YoY basis

On account of improved growth in sales volume on the back of increased consumer demand and expansion of product portfolio, Company reported 24% growth in its operating revenue in FY11 to ` 468.3 Cr from ` 378.4 Cr in FY10 on YoY basis. PAT registered a healthy growth of 13% in FY11 to ` 468.3 Cr from ` 378.4 Cr in FY10 on YoY basis. Profitability in FY11 got marginally impacted due to increase in prices of key packaging material -glass and one time investment in family shaped bottles. Going forward introduction of family shaped bottles may help company to reduce its packaging cost.

BRICKWORK INDEPENDENT RESEARCH

TILAKNAGAR IND

BRICKWORK

Gearing improved to 1.03 times in FY11 from 2.23 times on YoY basis Gearing improved to On balance sheet front, gearing improved to 1.03 times in FY11 from 2.23 times on YoY basis, due to increase in net worth by 105% to `416.8 Cr in FY11 from ` 202.6 Cr on YoY basis. QIP proceeds and Promoters contribution resulted in increase in net worth during FY11 period. Net fixed asset increased by 26% to ` 463.1 Cr in FY11 from ` 368.8 Cr on YoY basis. This was on account of capital expenditure of about Rs 100 Cr on 100KLPD a grain based facility for manufacture of more premium brands.

1.03 times in FY11 from 2.23 times on YoY basis, due to increase in net worth by 105% in FY11

Rising glass prices may put pressure on profitability As per the recent policy change, Companies registered with the CSD are now required to package at least 30% of the bottles in glass as opposed to the previous flexibility of packaging them in PET bottles. TIL has around 14% of its revenue from CSD, which can put pressure on its packaging cost, due to increase in prices of glass witnessed during recent period. Glass has seen a price rise of 7% in Aug10 and another subsequent increase of 10% in Feb11. Considering the rise in glass prices, Company is now making investments in family shaped bottles.

Glass has seen a price rise of 7% in Aug10 and another subsequent increase of 10% in Feb11.

BRICKWORK INDEPENDENT RESEARCH

TILAKNAGAR IND
Annexure I: Profit & Loss Statement:

BRICKWORK

` In Cr

SALES Less: Indirect Taxes INCOME FROM OPERATIONS: COST OF PRODUCTION: Raw material expenses Packaging expenses Purchase of finished goods Power, fuel & water charges Compensation to employees Royalties, technical know-how fees, etc. Lease rent & other rent Repairs & maintenance Insurance premium paid Outsourced mfg. jobs (incl. job works, etc.) TOTAL COST OF PRODUCTION: Change in stock GROSS PROFIT Selling, General & Admin. Exp. EBIDTA Depreciation / Amortization EBIT Interest paid PROFIT BEFORE TAX, OTHER INCOME & EXTRAORDINARY ITEMS Other Income PROFIT BEFORE TAX & EXTRAORDINARY ITEMS Provision for direct taxes PAT BEFORE EXTRAORDINARY ITEMS Prior period & extraordinary expenses PAT

31.03.06 31.03.07 31.03.08 31.03.09 31.03.10 31.03.11 96.67 112.43 226.91 405.38 550.23 24.20 22.52 90.20 167.96 171.78 72.47 89.91 136.71 237.42 378.45 468.33 31.97 0.00 0.00 3.01 4.46 0.00 0.10 1.48 0.10 0.00 41.12 -0.44 30.91 25.23 5.68 1.04 4.64 3.90 0.74 1.75 2.49 1.25 1.24 0.03 1.21 31.95 0.00 0.00 3.10 6.69 0.00 0.10 0.61 0.13 0.00 42.58 0.11 47.44 30.08 17.36 1.32 16.04 3.56 12.48 0.56 13.04 4.36 8.68 0.02 8.66 55.68 0.00 0.00 5.78 12.22 0.00 4.14 1.74 0.52 0.00 80.08 6.95 63.58 36.43 27.15 2.17 24.98 5.03 19.95 1.30 21.25 8.92 12.33 0.03 12.30 56.64 56.34 0.00 2.46 20.06 0.00 13.16 3.03 0.64 5.17 157.50 15.34 95.26 52.20 43.06 3.29 39.77 10.71 29.06 2.57 31.63 11.44 20.19 0.41 19.78 71.62 98.43 0.00 2.27 20.14 0.00 6.02 3.00 0.72 33.00 235.20 18.95 162.20 81.61 80.59 7.14 73.45 23.58 49.87 4.15 54.02 18.97 35.05 0.16 34.89 150.68 21.25 171.93 -9.60 286.80 173.20 113.60 13.12 100.49 38.78 61.71 2.62 64.33 24.76 39.57 39.57

Source: CMIE, Brickwork Research, BSE Note: Figures for FY11 are unaudited and unadjusted as detailed profit and loss statement not available

BRICKWORK INDEPENDENT RESEARCH

TILAKNAGAR IND
Annexure II: Balance Sheet:

BRICKWORK

` In Cr

31.03.06 31.03.07 31.03.08 31.03.09 31.03.10 31.03.11 Liabilities SHARE CAPITAL, RESERVES & SURPLUS Issued equity capital Paid up preference capital Reserves & surplus Less: Expenses not written off TOTAL NETWORTH MINORITY INTEREST: BORROWINGS: Secured borrowings Unsecured borrowings NET DEFFERED TAX LIABLITY TOTAL LIABLITIES Assets NET FIXED ASSETS INTANGIBLE ASSETS INVESTMENTS CURRENT ASSETS, LOANS & ADVANCES (A): Cash & bank balance Other Current Assets Loans & advances CURRENT LIABLITIES & PROVISIONS (B): NET WORKING CAPITAL (A-B) TOTAL ASSETS Contingent liabilities
Source: CMIE, Brickwork Research Balance sheet statement for FY11 is not available

5.73 0.00 6.08 0.58 11.81 0.00 18.40 5.02 2.70 37.93

5.73 0.00 13.73 0.29 19.46 0.00 29.98 0.33 2.89 52.66

5.73 0.00 106.17 0.00 111.90 0.00 64.55 0.21 3.39 180.05

5.73 8.22 121.52 0.01 135.47 0.00 123.84 8.36 6.23 273.90

32.31 0.00 170.36 0.00 202.67 0.00 272.12 181.35 11.95 668.09

123.095 1.9 291.815 416.81

433.306 19.9105 870.03

9.40 2.12 0.02 1.34 41.86 0.00 17.39 25.81 37.35 0.23

18.56 2.12 5.09 3.14 39.90 12.62 29.06 26.60 52.37 5.89

120.48 2.12 2.43 2.09 107.42 16.66 71.15 55.02 180.05 13.24

173.98 5.63 0.04 4.81 186.90 0.00 97.47 94.24 273.89 11.24

368.87 5.63 0.29 26.56 381.46 0.00 114.72 293.30 668.09 98.84

463.184 0.2877 16.6485 177.967 320.103 108.157 406.56 870.03 -

BRICKWORK INDEPENDENT RESEARCH

TILAKNAGAR IND

BRICKWORK

Contact Details: Jatin Vyas Brickwork Ratings, Phone: +91-22-28389144 Email: jatin.v@brickworkratings.com

Disclaimer
All information contained in this document has been obtained by Brickwork Ratings from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided 'as is' without any warranty of any kind, and Brickwork Ratings in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and Brickwork Ratings shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document should not be construed as any indication of credit rating or grading of Brickwork Ratings for any instruments that have been issued or are to be issued by any entity.

Published on behalf of The Stock Exchange Investors' Protection Fund

Bombay Stock Exchange Ltd. P J Towers, Dalal Street, Mumbai. Tel: 22721233/34 www.bseindia.com

BRICKWORK INDEPENDENT RESEARCH