Transmission 4

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India Research
Sector: Power Transmission Towers

Reinitiating Coverage
CMP Market Cap Market Cap
Company Ticker Reco.
(Oct. 9, '09) (Rs bn) ($ bn)
KEC International KEC.IN / KECI.BO 567.9 28.0 0.6 Outperform
Kalpataru Power KPP.IN/KAPT.BO 833.5 22.1 0.5 Outperform
Jyoti Structures JYS.IN/JYTS.BO 151.6 12.4 0.3 Outperform
Relevant Index: CNX Nifty: 4,945.2 (Oct 9, ’09)
Robust growth in power generation, inter-regional

capacity additions, distribution reforms, & rural
electrification to continue driving strong growth…
KEC International, Kalpataru Power and Jyoti Structures
Ltd. are our top picks in this space
October 10, 2009
TO ACCESS FIRST GLOBAL RESEARCH ON BLOOMBERG, TYPE FGSL <GO>
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Table of Contents
The Story… 3-4
Valuation & Outlook 4
Key Growth Drivers 5-8

• Capacity addition in power generation on a rising trend 5
• Building of transmission infrastructure to follow addition in power generation capacities 5-6
• Power Grid Corporation of India Ltd. (PGCIL), the main source of
equipment orders in India 6
• Upgradation of system to reduce T&D losses provides ample opportunities for
transmission companies 6
• Integration of nation’s transmission network through national grid 6-7
• RGGVY & R-APDRP 7
• Opportunities in Railway & Telecom sectors 7
• Overseas market 7-8
Possible Downside Risks 9

• Volatile raw material prices 9
• Execution delays 9
• Interest rates 9
• Competition 9
• Currency fluctuations 9
Peer Comparison 10-12

• Order book 10
• Margin Analysis 10-11
• Capacity expansion 11
• Working capital management 11-12
• Return on Equity 12
• Interest cost 12
KEC International Ltd. - Company Analysis 13-21
Price and Rating History Chart 15
Key Ratios 16
KEC International Business in picture… (FY09) 17
The Company 18
Business Highlights 19
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Financial Highlights 20
• Revenues record CAGR of 29.2% over four year period 20
• Balance sheet restructuring 20
• EBIDTA margin 20
• Debt 20
Quarterly Results Analysis 21
Kalpataru Power Transmission Limited - Company Analysis 22-32

Key Ratios 26
Kalpataru’s Business in Pictures... (FY09) 27
The Company 28
Business Highlights 29-30

• Acquisition of JMC Projects 29
• Segments 29-30
• Segmental revenues 31
• Order book provides good earnings visibility 31
Jyoti Structures Ltd. - Company Analysis 33-42
Key Ratios 37
Jyoti Structure’s Business in Pictures… (FY09) 38
The Company 39
Business Highlights 40
• Margins 41
• Increase in debt level due to higher working capital 41
KEC International Ltd. -- Financials (Standalone) -- Earnings Model (Standalone) 43-49
Kalpataru Power Transmission -- Financials (Consolidated) -- Earnings Model (Standalone) 50-56
Jyoti Structures - Financials (Standalone) - Earnings Model (Standalone) 57-63
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The Story…
Over the last six years, the power transmission towers sector has been delivering pretty good returns
and strong growth, driven primarily by inter-regional capacity additions, distribution reforms, rural
electrification and a robust growth in power generation. The
We believe that companies Government of India’s (GoI) Eleventh Plan has envisaged a
possessing financial strength capital expenditure of over Rs.6,665 bn for the country’s power
and project execution skills sector in order to ensure “Power for All”. The GoI’s Common
will enjoy an edge over their Minimum Program is focusing on achieving 100% village
competitors and will be better electrification by the year 2009 and 100% household
positioned to capitalize on the electrification by 2012. It plans to add 78,700 MW of power
opportunities arising in the
generation capacity in the XIth Five Year Plan, which, coupled
power transmission sector
with, its decision to set up transmission lines with generation
capacity for effective power evacuation, has opened ample
business opportunities for transmission lines companies. The planning commission has allocated a
budget of Rs.3,773 bn towards power generation, Rs.1,404 bn for power transmission and Rs.1,487
bn for sub-transmission and power distribution system, in order to tackle the power deficit situation
prevailing in the country. We believe that companies possessing financial strength and project
execution skills will enjoy an edge over their competitors and will be better positioned to capitalize
on the opportunities arising in the power transmission sector.
KEC International (KEC.IN/KECI.BO), Kalpataru Power Transmission Ltd. (KPP.IN/KAPT.BO)

(KPTL) and Jyoti Structures Ltd. (JYS.IN/JYTS.BO) are our top picks in this space, as we view
them to be the biggest beneficiaries of the positive
developments in the sector. For players such as KEC We are positive on the transmission
International, which derives almost 60% of its revenues towers sector and our investment
from the international market, there exist significant thesis on the top picks in this space
opportunities abroad, particularly in the Middle East and is balanced between our outlook on
Africa, where grid expansion and development has just the overall sector, as well as the
commenced and the power transmission & distribution strengths and weaknesses of each
(T&D) infrastructure is being ramped up. We believe that of these players. We reinitiate
these players will be able to sustain their growth momentum coverage on KEC International,
for the next few years, though the slow down in the Kalpataru Power and Jyoti
international market could impact their order inflow, which Structures with a rating of
Outperform
might act as a hindrance to growth. We are positive on the
transmission towers sector and our investment thesis on the
top picks in this space is balanced between our outlook on the overall sector, as well as the strengths
and weaknesses of each of these players. We reinitiate coverage on KEC International, Kalpataru
Power and Jyoti Structures with a rating of Outperform.
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Comparative Valuation
Annual Annual
EPS P/E P/S P/BV EV/Sales EV/EBITDA EBITDA ROE ROCE EPS Sales
Company Year
(Rs.) (x) (x) (x) (x) (x) (%) (%) (%) Growth Growth
(%) (%)
End FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY11E FY10E FY10E FY10E 11E/10E 11E/10E
KEC International Ltd. Mar 31.6 46.8 18.0 12.1 0.7 0.5 4.1 3.3 0.8 0.6 8.7 6.4 8.9% 24.5% 17.0% 47.9% 21.6%
Kalptaru Power Ltd. Mar 55.7 70.7 15.0 11.8 0.5 0.4 2.2 1.9 0.8 0.6 7.1 6.2 10.8% 15.7% 13.4% 27.1% 25.0%
Jyoti Structures Ltd. Mar 13.0 16.9 11.7 9.0 0.6 0.4 2.4 2.0 0.7 0.5 6.4 5.3 11.1% 22.6% 19.2% 30.2% 32.4%
PTC India Ltd. Mar 4.88 5.28 18.0 16.7 0.2 0.2 1.2 1.1 0.1 0.1 30.5 24.2 0.5% 6.9% 7.3% 8.1% 8.5%
NTPC Mar 11.1 15.5 19.0 13.7 3.6 3.0 2.8 2.5 4.3 3.6 15.6 11.2 27.4% 14.7% 10.3% 40.3% 22.7%
Tata Power Co. Ltd. Mar 62.2 71.8 20.9 18.1 1.4 1.1 2.7 2.5 2.1 1.7 11.4 9.6 18.0% 14.5% 7.4% 15.4% 24.7%
Power Grid Mar 6.03 7.37 18.7 15.3 6.2 4.7 2.9 2.6 10.3 9.0 12.6 11.1 81.8% 15.7% 8.2% 22.1% 24.9%
Source: Company, FG Estimates
Valuation & Outlook

The strong and sustainable growth in the T&D sector across the world is being driven by huge
spending towards transmission lines, both on account of increasing generation capacity and
maintenance of existing lines, as well as distribution networks, especially in the developing countries
of Asia, Africa and the Middle East. In India, the ratio of
In India, the ratio of investments in power generation to T&D stands at 1:0.5, as against
investments in power the global level of 1:1, thus leaving huge room for growth in the
generation to T&D stands at domestic T&D sector. The Government of India’s (GoI) spending
1:0.5, as against the global on T&D in the X Five Year Plan stood at Rs.500 bn, while the XI
level of 1:1, thus leaving Five Year Plan (2007-12) envisages an investment of Rs.2,891 bn
huge room for growth in the
in T&D, which provides huge growth opportunity for players in the
domestic T&D sector
power transmission sector.
As per the CEA, India’s annual power shortage stands at 11% and the country has a peak shortage at
12.4%. The country’s estimated power requirements at the end of the XI Five Year Plan is 1,038 bn
units, with a peak demand of 151,000 MW. The power ministry
is focusing on increasing the power generation capacity and We expect the margin pressure
evacuation of power from these power stations, which provides to ease, due to lower interest
huge opportunities for transmission companies. Also, India’s rates in FY10 in comparison to
telecom and railway sectors are growing at a very fast pace and FY09 and a decline in
the planning commission has allotted a capex of Rs.2,584 bn commodity prices. The margins
and Rs.2,618 bn for both the sectors respectively. The of companies with a higher
development of the telecom and railways sectors will provide a proportion of fixed price
contracts in their order books
boost to the order book of transmission sector companies.
will witness an improvement
Considering the investments in transmission and distribution
sector, we expect the growth of order book for the transmission
EPC players in tandem with industry growth in the coming years. Further orders from other
developing countries will add to the growth of integrated transmission line EPC companies. In
H2FY08 and HIFY09, higher raw material prices and rising interest rates were the key concerns for
power transmission companies. We expect the margin pressure to ease, due to lower interest rates in
FY10 in comparison to FY09 and a decline in commodity prices. The margins of companies with a
higher proportion of fixed price contracts in their order books will witness an improvement.
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Key Growth Drivers

Capacity addition in power generation on a rising trend
As per the CEA, in FY09, India’s annual power shortage stood at 11% and its peak shortage at
12.4%. In FY09, India’s total power generation was 724 bn units and the country’s expected power
requirement at the end of the XI Plan is estimated to be 1,038 bn
Transmission companies units, with a peak demand at 151,000 MW. In order to fulfil the
will be able to capitalize on country’s estimated electricity demand requirements, the planned
the opportunities to build capacity addition in the XI Five Year Plan is 78,700 MW. Four
the infrastructure required UMPPs of around 4,000 MW capacity each have been awarded to
to evacuate power from power project developers, which will be based on supercritical
new power plants technology. The planning commission has an estimated budget of
Rs.400 bn for the XI Five Year Plan for establishing merchant power
plants. The total estimated investment in power generation capacity in the XI Five Year Plan is
Rs.3,773 bn. Hence, transmission companies will be able to capitalize on the opportunities to build
the infrastructure required to evacuate power from new power plants. The estimated budget for the
XI Five Year Plan to build the required infrastructure for T&D stands at Rs.2,891 bn.
Break-up of investment in power sector in XIth Plan
22%
57%
21%
Generation Transmission Distribution
Source: Planning commission
Building of transmission infrastructure to follow addition in power generation

capacities
With more and more power generation capacity being added,
we expect the building of transmission tower infrastructure to With more and more power
generation capacity being added, we
also follow with a lag, as typically, a power project takes expect the building of transmission
close to 3.5-5 years for completion, while a transmission tower infrastructure to also follow
tower is usually set up after 2-2.5 years of the financial with a lag, as typically, a power
closure. In order to evacuate power from new power plants, project takes close to 3.5-5 years for
as well as strengthen the transmission and distribution completion, while a transmission
tower is usually set up after 2-2.5
system, the Power Ministry plans to add around 95,000 ckt years of the financial closure
km of line length and over 178,000 MVA of substation
capacity to the transmission system. The Power Ministry also
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plans to add 3,253,773 ckt km of line length and 214,000 MVA of substation capacity to the
country’s distribution system, for which it plans to invest Rs.1,404 bn in the transmission sector and
Rs.1,487 bn in the sub-transmission & power distribution system in the XI Five Year Plan. This will
keep the order books of the players in the transmission sector robust for the next few years.
Power Grid Corporation of India Ltd. (PGCIL), the main source of

equipment orders in India
PGCIL is the dominant player in the Indian power transmission market and undertakes a majority of
the transmission projects, thereby acting as the key source for equipment orders. The company’s
projects include high voltage lines of 400-800 kV, 1,200 kV, ± 500kV Dc and ±800kV DC, as well
as expansion of the existing transmission line network. PGCIL has planned a capex of Rs.550 bn for
XIth FYP and targeted an interregional transmission capacity of 37,700 MW by the end of the XIth
FYP, which will create a significant opportunity for companies in the transmission sector. The
Mundra, Sasan, Krishnapatnam and Tilaiya UMPPs have been awarded to project developers and
each UMPP will entail an investment of Rs.45-50 bn for setting up a transmission system. In order to
evacuate power from the Mundra UMPP, PGCIL has allocated a budget of Rs.48.24 bn for building
transmission infrastructure. PGCIL has planned a capex of Rs.120 bn for FY10, out of which a major
portion will be used for setting up 765kV transmission lines in order to evacuate power from the four
upcoming UMPPs. Hence, the UMPPs will benefit players in the transmission sector.
Upgradation of system to reduce T&D losses provides ample

opportunities for transmission companies
According to industry sources, India’s AT&C losses stand at around 32%, which the government is
targeting to reduce to 15% by 2012, by consistently strengthening and improving the country’s
interstate and interregional networks through the use of new technologies. However, the orders from
state electricity boards (SEB) and international geographies are likely to slow down due to the
uncertain global macro environment.
Integration of nation’s transmission network through national grid

The key growth driver for the Indian transmission tower sector
The key growth driver for the
Indian transmission tower sector has been the move to integrate the country’s transmission
has been the move to integrate network through a national grid i.e., increasing the inter-
the country’s transmission regional transmission network to 37,700MW by 2012 from the
network through a national grid current capacity of 20,800MW.
i.e., increasing the inter-regional
transmission network to
37,700MW by 2012 from the
current capacity of 20,800MW
Growth in inter-regional transmission capacity (MW)

Year 2002 2005 2007 2010 2012E
Total 5,050 9,450 16,450 21,150 37,700
Source-CEA
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The dynamics of the power market is changing with a shift towards national transmission of power,
as compared to the earlier region centric generation and consumption pattern. Earlier, the surplus
available in one region was not being fully utilized in other deficit regions, as the previous plans
were not for bulk inter-regional transfer. In line with the shift, new power generating capacities will
be set up in locations based on their proximity to raw material sources and will distribute power to
regions depending on their requirements.
RGGVY & R-APDRP

Rajiv Gandhi Grameen Vidyutikaran Yojana’s (RGGVY) original estimated outlay was Rs.160 bn,
though an amount of Rs.280 bn was approved for the XI Five Year Plan on January 2008. The
objective of the RGGVY is rural electrification and to provide access to electricity to all rural
households. The Government launched Restructured Accelerated Power Development Reforms
Programme (R-APDRP) with the objective of encouraging reforms and reduction in T&D losses, and
improving power supply quality for which it has planned to invest Rs. 515 bn in XIth FYP. R-
APDRP provides opportunities to companies for system upgradation.
Opportunities in Railway & Telecom sectors

The Indian telecom market continues to grow at a very fast pace. The introduction of 3G networks in
India and a growing customer base requires network expansion, including installation of towers. In
the coming years, a huge number of new towers and large investments will be required in the Indian
Telecom sector. BSNL has floated tenders worth Rs.500 bn for setting up telecom infrastructure, for
which the bidding has been completed. Moreover, in order to strengthen and upgrade the country’s
railway system, the total outlay for the Indian Railways, as per the XIth Plan, stands at Rs.2,618 bn.
A rail freight corridor (East & West) has been planned by the Ministry of Railways, covering about
2,700 km of track at an investment of Rs.220 bn. Over the next five years, the Indian Railways is
expected to complete the laying of 1,100 route kms of new lines.
Overseas market
The players in the transmission tower sector are also set to benefit from the emerging export markets,
such as the Middle East and Africa, where transmission tower infrastructure is being ramped up.
Africa and the Middle East continue to offer immense
opportunities, on account of their need for a better power
The players in the transmission
transmission network, funding support from multilateral tower sector are also set to benefit
agencies, huge power generation plans, and increased from the emerging export markets,
spending by oil producing countries. For instance, KEC such as the Middle East and Africa,
International derives about 60% of its revenues from where transmission tower
exports, mainly from the Middle East and Gulf region, infrastructure is being ramped up
while Africa is in the development stage and the availability
of electricity in some parts of the region is in the range of 4-
5%.
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Electrification Rates in Africa

Region Electrification Rate
North Africa 27 to 99%
West Africa 4 to 40%
Central Africa 3 to 35%
East Africa 5 to 25%
Southern Africa 7 to 70%
Source: Union of Producer, Transporters and Distributors of Electricity in Africa (UPDEA)
Africa has and always had massive investment potential and vast resources. Only 24% of the
population in the sub-Saharan Africa has access to electricity and South Africa accounts for over half
of the region’s electricity production. The region’s electrification programme is growing, which is
creating opportunities for Indian and Chinese companies.
T&D investment over next five years
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Possible Downside Risks

Volatile raw material prices
Steel is one of the key raw materials for power transmission line companies and hence, an increase in
steel prices has a negative impact on the margins of the players in the transmission sector. However,
the companies are insulated to some extent from the increase in steel prices due to price variation
clause, which is included in most domestic contracts.
Execution delays
A delay in the execution of transmission projects due to a
A delay in the execution of
delay in the corresponding generation project or delay in
transmission projects due to a delay in
the corresponding generation project rural electrification on account of lack of political will to
or delay in rural electrification on control theft and shift from providing free energy to the
account of lack of political will to agriculture activity will have a direct impact on the
control theft and shift from providing business of transmission companies.
free energy to the agriculture activity
will have a direct impact on the
business of transmission companies
Interest rates
The transmission line industry is working capital intensive in We expect an increase in the
nature. We expect an increase in the interest rates in the near interest rates in the near
future, which could adversely impact the performance of the future, which could adversely
players in the transmission companies. Due to high interest rates, impact the performance of
the players in this space could find it difficult to meet their the players in the
working capital requirements. transmission companies
Competition
The entry of power generation and construction companies into the T&D business could result in an
increase in competition in the industry. In the last two years,
In the last two years, several several strong competitors, such as Reliance Infrastructure and
strong competitors, such as IVRCL, have entered the T&D space, thus resulting in
Reliance Infrastructure and intensifying competition and consequently, margin pressure. The
IVRCL, have entered the T&D new players have adopted aggressive pricing strategies to
space, thus resulting in acquire pre-qualification and/or market share, which may keep
intensifying competition and
the margins of the players in the sector under pressure for some
consequently, margin pressure
more time.
Currency fluctuations
The companies in the transmission line industry are also benefiting from opportunities in the
overseas markets, such as Africa and the Middle East, where the
transmission infrastructure is being ramped up. However, the The appreciation of the Indian
appreciation of the Indian Rupee could have an adverse impact Rupee could have an adverse
on the margins of these companies, as well as on their revenues impact on the margins of these
companies, as well as on their
from the International business in Rupee terms.
revenues from the International
business in Rupee terms
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Peer Comparison
Order book
Jyoti: As on August 2009, the company’s order book stood at around Rs.40 bn, out of which 85%
was contributed by the domestic market. In terms of segmental performance, 72% of the company’s
order book comprised of transmission lines, with the balance being equally divided between
substations and rural electrification (RE) orders.
KEC: In Q2 FY10, the company’s order book stood at Rs.55 bn, with 43% coming from the
international market and 57% contributed by South Asia. In Q1 FY10, the company bagged orders
worth Rs.7.2 bn, down 35% Y-o-Y, mainly due to lack of orders from Power Grid, as well as a delay
in orders for telecom towers and related infrastructure from BSNL on account of litigation. Out of
KEC’s total orders, 79% was for transmission, 21% for distribution and substations, and the balance
came from the railway and telecom sectors. KEC’s order book is executable within 18 months. In Q2
FY10, the company bagged orders worth Rs.12.5 bn in the domestic and international market.
Kalpa-taru: In Q1 FY10, the company secured orders worth Rs.2.7 bn and its current order book
stands at Rs.60 bn, including overseas orders worth Rs.20 bn (33% of total order book). In Q2 FY10,
the company received orders worth Rs.14 bn from Maharashtra Electricity Transmission Company
Ltd. (MSETCL) and North East Transmission Company Ltd. for transmission projects. The order
book of JMC Projects, a subsidiary company of KPTL, stood at around Rs.22 bn at the end of the
quarter.
Peer comparison
Market cap/Order book Sales/order book Debt/equity
Jyoti Structures 0.32 0.43 0.73
KEC International 0.48 0.62 1.11
Kalpataru Power 0.36 0.54 1.09
Margin Analysis
Over the period FY06-09, JSL and KEC recorded a CAGR of 35% and 25.7% respectively in
revenues. In FY09, the margins of all the three players declined due to high raw material prices and
forex losses. KPTL’s margins declined from 17% in FY07, which was the highest among the three
companies, to 10% in FY09. For FY10E, we expect JSL’s margins to decline, though we estimate
the margins of KEC and KPTL to improve to 8.9% and 10.8% respectively.
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Total revenues & EBIDTA margin

20.0% 36,000
30,000
16.0%
Total Revenue (Rs. Mn)

EBIDTA Margin (%)
24,000
12.0%
18,000
8.0%
12,000
4.0%
6,000
0.0% 0
2006 2007 2008 2009
Jyoti Structures KEC Kalpataru

Source: FG estimates
Capacity expansion
In view of the continuous In view of the continuous increase in the order book and in order
increase in the order book and to capitalise on opportunities arising in the transmission sector,
in order to capitalise on all the companies are expanding their manufacturing capacities.
opportunities arising in the Jyoti increased its manufacturing capacity from 95,800 MTPA in
transmission sector, all the FY08 to 110,000 MTPA in FY09. The manufacturing capacity of
companies are expanding their KEC and Kalaptaru currently stands at 151,000 MTPA and
manufacturing capacities 108,000 MTPA respectively.
Working capital management

The domestic transmission tower industry is highly working capital intensive in nature. Most
contracts have payment terms that include retention of money
till the date of expiry of the warranty period of the tower and Efficient management of
performance guarantee money retained by the clients. Efficient working capital could make all
management of working capital could make all the difference the difference between
between companies posting profits and losses in an industry companies posting profits and
where the margins are thin and highly sensitive to raw material losses in an industry where the
prices. The companies are working on reducing their working margins are thin and highly
sensitive to raw material prices
capital intensity and their cash conversion cycle is getting
smaller.
Working Capital Cycle (in Days)

Year Jyoti KEC Kalpataru
2007 129 113 139
2008 85 101 112
2009 83 108 135
Source: FG estimates
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Since most of JSL’s working The working capital cycle for both, KEC and KPTL, increased in
capital requirement is to be FY09. Since most of JSL’s working capital requirement is to be
funded by debt, the company is funded by debt, the company is more vulnerable to an increase in
more vulnerable to an increase working capital than KEC, which will have a direct impact on its
in working capital than KEC, interest costs.
which will have a direct impact
on its interest costs
Return on Equity
The RoE of the three companies has been on a declining trend on account of an increase in raw
material prices. In FY09, JSL’s RoE declined 240 bps to 20.9%, while that of KEC and KPTL fell
sharply from 44.6% and 22.8% to 21.7% and 13.3% respectively. We expect the RoE of KEC,
KPTIL and JSL to improve by around 2% in FY10E.
RoE
50.0%
45.0%
40.0%
35.0%
30.0%
R oE
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2007 2008 2009
Note: We have not considered FY07 financials of Kalpataru Power
Interest cost
We expect JSL to fund a large part of its working capital requirement through debt. As a result,
higher debt and high borrowing costs could pull down JSL’s PBT margin, on account of the increase
in the company’s interest cost.
Interest cost (Rs. mn)

Jyoti KEC Kalpataru
Year Interest as a Interest as a Interest as a
Debt Interest Debt Interest Debt Interest
% of debt % of debt % of debt
2007 1,594 329 21% 3,863 593 15% 3,367 433 13%
2008 2,248 464 21% 5,918 677 11% 3,259 548 17%
2009 3,036 683 22.5% 6,218 1,000 16% 9,451 1,369 14.5%
Source: Company, FG Estimates
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KEC International Ltd.

Company Analysis
Key Financials
(YE Mar 31st) (Rs. mn) FY 07 FY 08 FY 09 FY 10E FY 11E
Total Revenue 20,406 28,145 34,274 41,926 50,982
Revenue Growth (Y-o-Y) 18.1% 37.9% 21.8% 22.3% 21.6%
EBIDTA 2,518 3,543 3,003 3,736 5,040
EBIDTA Growth (Y-o-Y) 55.2% 40.7% -15.2% 24.4% 34.9%
Net Profit 1,046 1,722 1,163 1,560 2,308
Net Profit Growth (Y-o-Y) 112.3% 64.5% -32.5% 34.2% 47.9%
Net Profit (Excl.Extra-ordinaries) 1,046 1,722 1,163 1,560 2,308
Net Profit Growth (Excl.Extra-ordinaries )(Y-o-Y) 112.3% 64.5% -32.5% 34.2% 47.9%
Shareholders Equity 2,590 4,848 5,586 6,781 8,549
Number of Diluted shares(mn) 38 49 49 49 49
Key Operating Ratios
(YE Mar 31st) FY 07 FY 08 FY 09 FY 10E FY 11E
Diluted EPS (Rs) (Excl. Extra-Ordinaries) 27.8 34.9 23.6 31.6 46.8
EPS Growth (Y-o-Y) 112.3% 25.7% -32.5% 34.2% 47.9%
CEPS (Rs.) (Excl. Extra-Ordinaries) 36.6 40.0 28.2 37.7 53.8
EBIDTA (%) 12.3% 12.6% 8.8% 8.9% 9.9%
NPM (%) 5.1% 6.1% 3.4% 3.7% 4.5%
Tax/PBT (%) 34.5% 34.3% 34.6% 34.8% 35.0%
RoE (%) 46.2% 44.6% 21.7% 24.5% 29.1%
RoCE (%) 22.9% 23.7% 15.5% 17.0% 19.7%
Return on Op. assets (%) 12.8% 15.4% 10.3% 10.6% 12.3%
Book Value per share (Rs.) 68.7 98.3 113.2 137.4 173.3
Debt/Equity (x) 1.42 1.20 1.11 1.02 0.89
Dividend Payout Ratio (%) 19.0% 16.8% 24.8% 23.4% 23.4%
Free Cash Flow Analysis
Operating Cash flow (1,129) (554) (859) 47 (567)
Total Free Cash flow (440) (1,805) 1,456 1,408 971
Valuation Ratios
P/E (x) 18.0 12.1
P/BV (x) 4.1 3.3
P/CEPS (x) 15.1 10.6
EV/EBIDTA (x) 8.7 6.4
Net Cash / Market Cap (%) *NM NM
Market Cap./ Sales (x) 0.7 0.5
Div.Yield (%) 1.1% 1.6%
*NM-Not Meaningful
Market Cap. And Enterprise Value Data as on Oct 9,2009
Current Market Price (Rs.) 567.9
No. of Basic Shares outstanding (mn) 49.3
Rs.bn US$ bn
Market Cap 28.0 0.60
Total Debt* 6.22 0.13
Cash & Cash Equivalents* 1.37 0.03
Enterprise Value 32.9 0.71
* Debt & Cash & Cash Equivalents as of FY09; Exchange Rate:1$=INR 46.45
13
India Research
DuPont Model
EBIDTA/Sales (%) 12.3% 12.6% 8.8% 8.9% 9.9%
Sales/Operating Assets (x) 1.8 2.0 1.9 2.0 2.0
EBIDTA/Operating Assets (%) 22.5% 25.3% 17.0% 17.6% 20.2%
Operating Assets/ Net Assets(x) 1.8 1.6 1.5 1.6 1.6
Net Earnings/ EBIDTA (%) 41.5% 48.6% 38.7% 41.8% 45.8%
Net Assets/ Equity (x) 2.7 2.3 2.2 2.0 1.9
Return on Equity (%) 46.2% 44.6% 21.7% 24.5% 29.1%
Common Sized Profit & Loss Account
Total Revenues 100% 100% 100% 100% 100%
Net Raw Material Consumed 45.5% 50.3% 57.6% 51.6% 53.2%
Erection and Subcontracting expenses 25.8% 22.0% 16.8% 21.5% 17.9%
Personnel expenses 4.7% 4.3% 4.1% 3.6% 3.4%
Other expenses 11.6% 10.9% 12.7% 14.4% 15.6%
EBITDA 12.3% 12.6% 8.8% 8.9% 9.9%
Depreciation and Amortization 1.6% 0.9% 0.7% 0.7% 0.7%
Interest 2.9% 2.4% 2.9% 2.5% 2.2%
PBT 7.8% 9.3% 5.2% 5.7% 7.0%
Tax 2.7% 3.2% 1.8% 2.0% 2.4%
PAT 5.1% 6.1% 3.4% 3.7% 4.5%
PAT(Excl.Extra-ordinaries) 5.1% 6.1% 3.4% 3.7% 4.5%
Source: Company Reports, FG Estimates.
Top Management Team Capital Issue History

Designation Name
Share Capital
Chairman H V Goenka Date Post Issue Mode of Capital Raising
Managing Director R D Chandak (Rs in Mn.)
Director S S Thakur 31/12/2005 0.5 As Per Quarterly Result
Director G L Mirchandani 23/02/2006 360.1 Scheme of Arrangement
Director D G Piramal 31/03/2006 376.9 As Per Quarterly Result
Director S M Kulkarni Scheme of
29/02/2008 493.4
Director A T Vaswani Arrangement/Amalgamation
Director J M Kothary
Additional Director P A Makwana
Company Secretary Ch V Jagannadha Rao
Key Statistics
Industry: Share holding Pattern as on 30-06-2009
52 Week Hi:Lo: Rs.571.7/110
Non
CMP: Rs. 567.9 Promote r
(NonInstitut Indian
ion) (Promoter &
Avg Daily Vol (20 days): 0.03 mn 13.9% Group)
41.9%
Avg Daily Val (20 days): Rs.18.07 mn Non
Promote r
(Institution)
Performance over 52 weeks: 44.2%
KEC : Up 93.6%
Nifty: Up 40.7 %
14
India Research
Price and Rating History Chart

Ratings Key
B = Buy BD = Buy at Declines OP = Outperform
Positive Ratings S-OP = Sector MO-OP = Moderate
M-OP = Market Outperform
Outperform Outperform
Neutral Ratings H = Hold MP = Market Perform SP = Sector Perform
S = Sell SS = Sell into Strength UP = Underperform
Negative Ratings
A = Avoid MO-UP = Moderate Underperform S-UP = Sector Underperform
ST: Short Term MT: Medium Term LT: Long Term
KEC International (KECI.BO)/ (KEC.IN)

150
10-Mar-2006 =100 (LHS)
890
130
790
9-May-08
7-Aug-07
MP
110 OP 690
90 590
(INR)
12-Apr-07 30-Apr-07 490
70 OP OP
9-Oct-09
OP 390
50
290
7-Jan-09
30
MP 190
10 90
10- 17- 17- 18- 21- 24- 2- 6- 7- 10- 11- 13- 22- 25- 27- 3- 9- 18- 27- 28- 30-
Mar-May- Jul- Sep- Nov- Jan- Apr- Jun- Aug- Oct- Dec- Feb- Apr- Jun- Aug-Nov- Jan- Mar-May- Jul- Sep-
06 06 06 06 06 07 07 07 07 07 07 08 08 08 08 08 09 09 09 09 09
Relative to NIFTY (LHS) OP FG Reco KEC INTERNATIO Share Price (RHS)
Represents an Upgrade
Represents a Downgrade
Represents Reiteration of Existing Rating
Details of First Global’s Rating System given at the end of the report
15
India Research
Key Ratios
Raw Material / Sales (%) 45.5% 50.3% 57.6% 51.6% 53.2%
Other Income/EBT (%) 0.4% 0.1% 0.2% 0.0% 0.0%
EBITDA Margin (%) 12.3% 12.6% 8.8% 8.9% 9.9%
Tax / PBT (%) 34.5% 34.3% 34.6% 34.8% 35.0%
Net Profit Margin (%) 5.1% 6.1% 3.4% 3.7% 4.5%
RoE (%) 46.2% 44.6% 21.7% 24.5% 29.1%
RoCE (%) 22.9% 23.7% 15.5% 17.0% 19.7%
Optg. Assets/Total Assets (x) 1.8 1.6 1.5 1.6 1.6
Return on Optg. Assets (%) 12.8% 15.4% 10.3% 10.6% 12.3%
Total Loans / Equity (%) 142.1% 119.5% 111.3% 102.0% 89.1%
Interest Coverage (times) 4.3 5.2 3.0 3.6 4.4
Interest / Debt (%) 16.5% 13.8% 16.5% 15.9% 15.8%
Growth in Gross Block (%) 3.9% 11.5% 20.0% 12.8% 11.3%
Sales Growth (%) 18.1% 37.9% 21.8% 22.3% 21.6%
Operating (EBITDA) Profit Growth (%) 55.2% 40.7% -15.2% 24.4% 34.9%
Net Profit Growth (%) 112.3% 64.5% -32.5% 34.2% 47.9%
Debtors (Days of net sales) 159 183 194 190 190
Creditors (Days of Raw Materials) 77 112 112 108 106
Inventory (Days of Optg. Costs) 31 30 26 26 26
Current Ratio 1.3 1.5 1.3 1.3 1.3
Net Current Assets/Capital Employed (%) 37.1% 59.3% 54.0% 55.2% 58.0%
Shares Outstanding (Diluted) (mn) 37.7 49.3 49.3 49.3 49.3
Fully diluted EPS (Rs.) (Reported) 27.8 34.9 23.6 31.6 46.8
Fully diluted EPS (Rs.) Proforma) 27.8 34.9 23.6 31.6 46.8
EPS Growth (%) (Proforma) 112.3% 25.7% -32.5% 34.2% 47.9%
Dividend Payout (%) 19.0% 16.8% 24.8% 23.4% 23.4%
Fully diluted Cash EPS (Rs.) 36.6 40.0 28.2 37.7 53.8
16
India Research
KEC International Business in picture…(FY09)

(All figures are in Rs. Mn except where stated otherwise. All percentages are percent of revenues, unless stated
otherwise)
Total Revenues (FY09)
Rs.34, 274 mn Major Export Market-
Africa, Middle East.
Major Domestic Clients-
Raw material- PGCIL, SEBs
Steel & Zinc prices forms Raw Material: Rs.19, 758 mn(57.6%)
major cost and are prone to Erection & Sub-contracting Expense: Rs5, 746
volatility in price mn (16.8%)
movement of these Personal Expenses: Rs.1, 416mn (4.1%) Designing, Fabrication,
commodities. Other Expenses: Rs.4, 350mn (12.7%) Installation and testing of
electrical transmission towers.
EBIDTA
Rs 3,003 mn (8.8%) Pricing
Domestic contracts have
price escalation clauses
Other Non-operating Income
: Rs.3 mn (0.01%) International contracts are
Interest: Rs 1,000 mn (2.9%) either fixed price contracts or
Depreciation: Rs 227 mn (0.7%) have price escalation clauses.
Profit before Tax: Competitors –

Rs.1, 778 mn (5.2%) Kalpataru Power
Jyoti Structures Ltd
Taxes:
Rs.615 mn (1.8%)
Profit after Tax:

Rs.1, 163mn (3.4%)
Net Profit:
Rs. 1,163mn (3.4%)
Assets Balance Sheet Liabilities

Rs 30,963 mn (100%) (FY09) Rs.30, 963 mn (100%)
Fixed Assets: Rs 5,032 mn (16.3%) Debt & Minority Inte: Rs 6,218 mn (20.1%)
Capital WIP: Rs.504 mn (1.6%) Reserves: Rs 5,092 mn (16.4%)
Investments: Rs 18mn (0.1%) Current Liabilities & Provisions: Rs 18,860 mn
Others: Rs 10 mn (0.03%), (60.9%)
Loans &Advances: Rs 3,266 mn (10.5%), Equity cap incl pref cap: Rs 493 mn (1.6%)
Debtors: Rs 18,510 mn (59.8%), Deferred Tax Liab: Rs.298 mn (1.0%)
Inventory: Rs 2,258 mn (7.3%)
Cash: Rs 1,365 mn (4.4%)
17
India Research
The Company
KEC International Ltd. (KEC) was established as Kamani Engineering Corp. Ltd. in 1945 and was
taken over by R.P. Goenka (RPG) Enterprises in 1982 and renamed as KEC International Ltd in
1984. KEC is mainly into the business of design, manufacture and erection of transmission towers
and power transmission lines on an EPC basis. The company has now broadened its activities by
diversifying into the distribution sector (through rural electrification projects), railway electrification
projects, as well as providing services, such as optical fibre installations, satellite/GPRS surveys, and
turnkey telecom infrastructure services. KEC is one of the largest power transmission EPC
companies in the world and has operations in around 40 countries, with a strong presence in India,
Middle East, Africa, and Central Asia. With the merger with RPG Transmission Ltd. with KEC in
place from October 1, 2007 onwards, KEC now has three manufacturing plants at Jaipur, Nagpur and
Jabalpur, with a cumulative capacity of 151,000 tonnes per annum, for transmission towers capable
of carrying power ranging from 33 kV to 800 kV.
18
India Research
Business Highlights
KEC’s strong presence in the international market will enable it to capitalise on the growth
opportunities in the US, Middle East and South Asian markets.
The huge investments being made in the railway sector will KEC’s strong presence in the
also provide growth opportunities for the company. KEC’s international market will enable
manufacturing plants are located in Jabalpur, Jaipur and Nagpur it to capitalise on the growth
for producing transmission and telecom towers. The company’s opportunities in the US, Middle
total manufacturing capacity currently stands at 151,000MT. East and South Asian markets.
KEC is experienced in supplying towers to countries such as The huge investments being
the US and Canada and has the capability of testing towers of made in the railway sector will
also provide growth
up to 1,200 kv. The company has tower testing stations at
opportunities for the company
Jabalpur, Jaipur and Vashi and has tested 2,214 tower tests till
date. KEC has also presence in telecom towers and railway
electrification segments.
19
India Research
Financial Highlights
Revenues record CAGR of 29.2% over four year period
Over the period FY05-09, KEC’s revenues recorded a CAGR of 29.2%. The company’s order book
currently stands at Rs.55 bn or 1.6 x its FY09 revenues. We expect the huge investments in the
transmission and distribution segment to drive an improvement in KEC’s order book as well as
project execution, which will result in the company’s revenues recording a CAGR of 21% over the
period FY09 to FY11E.
Balance sheet restructuring

KEC has restructured its balance sheet and resolved the conflict of interest between two group
companies arising from being in the same line of business. In FY06, the company hived off various
investments and advances that it had provided to group companies. KEC merged two companies,
RPG Transmission and NITEL with itself in FY08.
EBIDTA margin
In FY09, KEC’s EBIDTA margin declined from 12.6% in FY08 to 8.8%, due to higher raw material
prices and forex losses. We expect the company’s EBIDTA
The easing of commodity prices margin to improve to 8.9% in FY10E, on account of falling
and the depreciated Rupee will raw material prices. The easing of commodity prices and the
help the company improve its depreciated Rupee will help the company improve its EBIDTA
EBIDTA margin, as a major margin, as a major portion of its order book comes from the
portion of its order book comes international markets in terms of fixed priced contracts. KEC
from the international markets in
has been able to maintain its margins at a healthy level due to
terms of fixed priced contracts
its operational leverage and execution of high margin orders.
Debt
In FY09, KEC’s total debt increased by 5% Y-o-Y to Rs.6.2 bn, while its interest expense grew 48%
Y-o-Y to Rs.1, 000 mn. The company’s operations are exposed to currency risks arising from a large
share of exports in its total revenues, as well as on account of counter party credit risks. Funding
support from multi-lateral agencies for overseas projects, particularly in the developing countries,
provides some comfort to KEC. The company incurred a capex of Rs.1.3 bn in FY09, which was
funded through internal accruals.
KEC’s debt/equity
2.0
1.8 1.8
1.6
1.4 1.4
1.2 1.2
1.1
1.0
0.8
0.6
0.4
0.2
0.0
2006 2007 2008 2009
Debt/Equity
20
India Research
Quarterly Result Analysis

FY10 FY09 Y-o-Y FY09 Q-o-Q
(YE Mar 31st) (Rs. mn)
Q1 Q1 Change Q4 Change
Net Sales Revenue 7,266 6,002 21.1% 11,346 -36.0%
Raw materials/Stock Adjustments 3,246 2,997 8.3% 6,392 -49.2%
Erection & Fabrication/Sub Contracting Charges 2,222 1,141 94.7% 2,140 3.8%
Personnel 386 353 9.3% 323 19.5%
Other Expenses 555 895 -38.0% 1,394 -60.2%
Total Cost 6,410 5,387 19.0% 10,249 -37.5%
EBIDTA 856 615 39.2% 1,097 -21.9%
Other Non-Operating Income 0 0 4
Less: Depreciation 59 46 29.3% 79 -25.0%
EBIT 797 569 40.0% 1,022 -22.0%
Less: Interest 218 180 20.9% 290 -24.7%
PBT 579 389 48.9% 733 -20.9%
Less: Total Tax 197 134 47.0% 252 -21.9%
Profit After Tax 382 255 49.9% 480 -20.4%
Earnings Per Share (Rs.) 7.75 5.17 9.73
Weighted Average No. of Shares 49.3 49.3 49.4
EBITDA Margin (%) 11.8% 10.2% 153.79 9.7% 211.57
EBIT Margin (%) 11.0% 9.5% 148.60 9.0% 196.33
PBT Margin (%) 8.0% 6.5% 149.13 6.5% 151.60
NPM (%) 5.3% 4.2% 101.27 4.2% 102.92
Effective Tax Rate (%) 34.0% 34.4% (44.07) 34.5% (44.61)
• In Q1 FY10, net sales increased marginally by 21.1% Y-o-Y to Rs.7.2 bn, out of which, 65%
came from international sales, while 35% was contributed by the South Asian market.
• The company’s volume sales for the quarter came in at 32,000 MT.
• Out of the company’s total revenues, the transmission segment contributed 87%, distribution
segment 9% and the railway & telecom segment 4%.
• Erection and fabrication/sub contracting charges rose 94.7% Y-o-Y to Rs.2.2 bn.
• The EBIDTA increased by 39.2% Y-o-Y to Rs.856 mn, while the EBIDTA margin improved
by 153 bps Y-o-Y to 11.8%, on account of a forex gain of Rs.199 mn.
• In Q1 FY10, the company’s PAT increased by 49.9% Y-o-Y to Rs.382 mn, due to low
interest costs and forex gain.
• The company’s total order inflow declined 35% Y-o-Y to Rs.8 bn in Q1 FY10. KEC received
orders from a JV between the Tripura government and IL&FS, the West Bengal State
Electricity Board, and Chhattisgarh State Electricity Board. The company also received
orders from South Africa, Peru, Australia, Middle East and Africa.
21
India Research
Kalpataru Power Transmission Limited

Company Analysis
Key Financials
(YE Mar 31st) (Rs. mn) FY 08 FY 09 FY 10E FY 11E
Total Revenue 26,749 32,461 40,576 50,720
Revenue Growth (Y-o-Y) 67.4% 21.4% 25.0% 25.0%
EBIDTA 3,294 3,298 4,382 5,326
EBIDTA Growth (Y-o-Y) 21.2% 0.1% 32.9% 21.5%
Net Profit 3,294 3,298 4,382 5,326
Net Profit Growth (Y-o-Y) 21.2% 0.1% 32.9% 21.5%
Net Profit (Excl.Extra-ordinaries) 1,649 1,109 1,475 1,876
Net Profit Growth (Excl.Extra-ordinaries )(Y-o-Y) 2.3% -32.7% 32.9% 27.2%
Shareholders Equity 7,831 8,698 9,936 11,547
Number of Diluted shares(mn) 27 27 27 27
(YE Mar 31st) FY 08 FY 09 FY 10E FY 11E
Diluted EPS (Rs) (Excl. Extra-Ordinaries) 62.2 41.9 55.7 70.7
EPS Growth (Y-o-Y) 2.3% -32.7% 32.9% 27.1%
CEPS (Rs.) (Excl. Extra-Ordinaries) 76.8 63.6 79.3 97.7
EBIDTA (%) 12.3% 10.2% 10.8% 10.5%
NPM (%) 6.2% 3.4% 3.6% 3.7%
Tax/PBT (%) 27.7% 24.5% 27.6% 27.6%
RoE (%) 22.8% 13.3% 15.7% 17.3%
RoCE (%) 18.5% 14.1% 13.4% 14.8%
Book Value per share (Rs.) 294.2 327.4 374.1 434.9
Debt/Equity (x) 0.6 1.1 1.0 1.0
Dividend Payout Ratio (%) 14.5% 21.3% 14.0% 14.1%
Operating Cash flow 810 (1,891) 2,265 1,282
Total Free Cash flow (411) (4,586) 980 3
Valuation Ratios
P/E (x) 15.0 11.8
P/BV (x) 2.2 1.9
P/CEPS (x) 10.5 8.5
Net Cash/Market Cap (%) *NM NM
Div.Yield (%) 0.8% 1.0%
*NM-Not Meaningful
No. of Basic Shares (mn) 26.5
Rs.bn US$ bn
Market Cap. 22.1 0.48
Total Debt * 9.45 0.20
Cash & Cash Equivalents * 0.58 0.01
22
India Research
DuPont Model
EBIDTA/Sales (%) 12.3% 10.2% 10.8% 10.5%
Sales/Operating Assets (x) 2.5 2.0 2.0 2.2
EBIDTA/Operating Assets (%) 31.1% 20.8% 21.7% 23.4%
Operating Assets/ Net Assets(x) 0.9 1.0 1.0 1.0
Net Earnings/ EBIDTA (%) 50.1% 33.6% 33.7% 35.2%
Net Assets/ Equity (x) 1.7 2.0 2.2 2.1
Return on Equity (%) 22.8% 13.3% 15.7% 17.3%
Total Revenues 100% 100% 100% 100%
Net Raw Material Consumed 48.6% 50.7% 49.0% 49.0%
Employees Emoluments 5.7% 6.1% 6.1% 5.5%
Manufacturing & Operating expenses 26.1% 27.1% 26.5% 27.0%
Administrative, Selling & Other expenses 7.3% 5.9% 7.6% 8.0%
EBITDA 87.7% 89.8% 89.2% 89.5%
Depreciation and Amortization 1.4% 1.8% 1.5% 1.4%
Interest 2.5% 4.2% 3.4% 3.2%
Non-Operating Income 0.9% 1.1% 0.0% 0.0%
PBT 9.3% 5.2% 5.8% 5.9%
Tax 2.3% 1.2% 1.4% 1.5%
PAT 6.2% 3.4% 3.6% 3.7%
PAT(Excl.Extra-ordinaries) 6.2% 3.4% 3.6% 3.7%
Top Management Team

Designation Name
Chairman Mofatraj P Munot
Vice Chairman Mahendra G Punatar
Managing Director K V Mani
Director Parag Munot
Executive Director Ajay Munot
Executive Director Manish Mohnot
Director Imtiaz Kanga
Independent Director Sajjanraj Mehta
Independent Director Vimal Bhandari
Independent Director Shitin Desai
Director Narayan Seshadri
Company Secretary Bajrang Ramdharani
Deputy Managing Director Pankaj Sachdeva
Capital Issue History

Date Equity Capital Reason
31/03/1993 9.5 As Per Annual Report
31/03/1994 28.5 Bonus Issue
31/01/1995 42.8 Rights Issue
28/02/1995 57.1 Bonus Issue
31/03/1995 78 Public Issue
31/03/1996 108.6 Shares Issued On Amalgamation
13/04/2006 217.2 Bonus Issue
7/9/2006 265 Equity shares issued
23
India Research
Key Statistics
Industry: Share Holding Pattern as on 30-06-2009
52 Week Hi:Lo: Rs.852.8/227.5 Non
Prom oter
CMP: Rs. 833.5 (Institution)
26.5%
Avg Daily Vol (20 days): 0.04 mn
Avg Daily Val (20 days): Rs.35.9 mn Indian

(Prom oter
Non
& Group)
Performance over 52 weeks: Prom oter
63.7%
(Non-
Institution)
KALPATPOWR : Up 18.7 % 9.8%
Nifty: Up 40.7 %
24
India Research

Ratings Key
Negative Ratings
Kalpataru Power Ltd. (KAPT.BO)/ (KPP.IN)
775
03-Jan-2005 =100 (LHS) 2170
675
1870
575
1570
1-Nov-07
OP
475 1270
9-Oct-09
(INR)
375 OP
970
9-Jun-06
275 UP
670
7-Jan-09
OP
175 370
75 70
3- 4- 29- 28- 28- 30- 28- 25- 22- 28- 27- 24- 20- 24- 24- 22- 26- 31- 3- 1-
Jan- Apr- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jul- Oct-
05 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09
Relative to NIFTY (LHS) FG Reco KALPATARU POWER Share Price (RHS)

25
India Research
Key Ratios
Raw Material / Sales (%) 48.6% 50.7% 49.0% 49.0%
Other Income/EBT (%) 10.1% 20.4% 0.1% 0.0%
EBITDA Margin (%) 12.3% 10.2% 10.8% 10.5%
Tax / PBT (%) 27.7% 24.5% 27.6% 27.6%
Net Profit Margin (%) 6.2% 3.4% 3.6% 3.7%
RoE (%) 22.8% 13.3% 15.7% 17.3%
RoCE (%) 18.5% 14.1% 13.4% 14.8%
Sales/Operating Assets (x) 2.5 2.0 2.0 2.2
Optg. Assets/Total Assets (x) 0.9 1.0 1.0 1.0
Return on Optg. Assets (%) 19.9% 12.9% 13.5% 14.7%
Total Loans / Equity (%) 57.3% 108.9% 101.7% 96.6%
Interest Coverage (times) 4.9 2.4 3.2 3.3
Interest / Debt (%) 15.9% 19.7% 14.2% 15.1%
Growth in Gross Block (%) 39.8% 29.0% 23.0% 17.6%
Sales Growth (%) 67.4% 21.4% 25.0% 25.0%
Operating (EBITDA) Profit Growth (%) 21.2% 0.1% 32.9% 21.5%
Net Profit Growth (%) 2.3% -32.7% 32.9% 27.2%
Debtors (Days of net sales) 126 159 149 149
Creditors (Days of Raw Materials) 56 65 59 59
Inventory (Days of Optg. Costs) 42 41 41 42
Current Ratio 1.6 1.7 1.8 1.7
Net Current Assets/Capital Employed (%) 42.2% 47.6% 50.9% 53.1%
Shares Outstanding (Diluted) (mn) 26.5 26.5 26.5 26.5
Fully diluted EPS (Rs.) (Reported) 62.2 41.9 55.7 70.7
Fully diluted EPS (Rs.) Proforma) 62.2 41.9 55.7 70.7
EPS Growth (%) (Proforma) 2.3% -32.7% 32.9% 27.1%
Dividend Payout (%) 14.5% 21.3% 14.0% 14.1%
Fully diluted Cash EPS (Rs.) 62.2 41.9 55.7 70.7
Book Value per share (Rs.) 294.2 327.4 374.1 434.9
26
India Research
Kalpataru’s Business in Pictures... (FY09)

otherwise)
Rs.32, 461 mn Major Export Market-
Africa, Middle East.
Major Domestic Clients-
PGCIL, SEBs
Raw material- Raw Material: Rs.16, 453 mn(50.7%)
Steel & Zinc prices forms Employees Emoluments: Rs.1, 988 mn (6.1%)
major cost and are prone to Mftg & Operating Expenses: Rs.8, 805mn (27.1%)
volatility in price Admin, Selling &Other Expenses: Rs1, 916mn (5.9%) Designing, Fabrication,
movement of these Installation and testing of
commodities. electrical transmission towers.
EBIDTA
Rs 3,298 mn (10.2%)
Pricing
Domestic contracts have price
escalation clauses
Other Non-operating Income
: Rs.346 mn(1.1%) International contracts- fixed
Interest: Rs 1,369 mn (4.2%) price contracts/price escalation
Depreciation: Rs 576 mn (1.8%) causes.
Profit before Tax: Competitors –

Rs.1, 700 mn (5.2%) KEC International
Jyoti Structures Ltd
Taxes:
Rs.417 mn (1.3%)
Profit after Tax before

Minority Interest:
Rs.1, 283mn (4.0%)
Minority Interest:
Rs.173 mn (0.5%)
Net Profit:
Rs.1, 109mn (3.4%)

Rs 31,559 mn (100%) (FY09) Rs.31, 559 mn (100%)
Fixed Assets: Rs 5,331 mn (16.9%) Debt & Minority Inte: Rs 10,398 mn (32.9%)
Capital WIP: Rs.1,133 mn (3.6%) Reserves: Rs 8,433 mn (26.7%)
Investments: Rs 5mn (0.02%) Current Liabilities & Provisions: Rs 12,256 mn
Others: Rs 3,636 mn (11.5%), (38.8%)
Loans &Advances: Rs 3,424 mn (10.8%), Equity cap incl pref cap: Rs 265 mn (0.8%)
Debtors: Rs 14,160 mn (44.9%), Deferred Tax Liab: Rs.206 mn (0.7%)
Inventory: Rs 3,270 mn (10.4)
Cash: Rs 583 mn (1.8%)
Miscellaneous Assets: Rs 17 mn (0.1%)
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India Research
The Company
Kalpataru Power Transmission Limited (KPTL) is a part of the diversified Kalpataru Group and was
incorporated in 1981 as HT Power Structures Pvt. Ltd. KPTL is in the business of design, testing,
fabrication, erection and construction of transmission lines and substation structures on a turnkey
basis across India as well as overseas. It is one of the leading companies in the field of turnkey
projects for EHV transmission lines of up to 800 kv. The company also provides EPC services for
distribution projects of 11/33 kv and constructs cross country pipelines, besides telecom towers.
The company manufactured 98,484 MT of towers in FY09, as against 79,531 MT in FY08. KPTL’s
production capacity currently stands at 108,000 MT of towers and the company has an average
capacity utilization rate of 96%.
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India Research
Business Highlights
Within four years of entering the infrastructure business in the oil & gas sector, KPTL completed
over 1,200 kms of crosscountry pipelines in India. The company has invested Rs.1 bn in specialized
construction equipment to enable the division to build crosscountry pipelines of any size from 12
inch to 48 inch and in the toughest of terrains.
KPTL has a diversified business model and has a presence in T&D, real estate, infrastructure and
biomass energy. The company has made a successful foray into international rural distribution
projects in Kenya by securing orders from Kenya Power & Lighting Co. Ltd. KPTL expects to bag
more rural distribution and transmission jobs from the African market.
Acquisition of JMC Projects

In FY05, KPTL acquired a 46% stake in JMC Projects for Rs.78 mn, which was subsequently
increased to 53% through a right issue, warrant conversion and open market purchase. JMC Projects
is an Ahmedabad-based company that is involved in the business of construction. Over the last three
years, JMC Projects recorded a growth of 60% and the company had an order book of Rs.22 bn at
the end of FY09.
Segments
Transmission & Distribution
The transmission tower sector is KPTL’s core business and is witnessing a phenomenal growth. The
thrust on building transmission infrastructure and rural electrification augurs well for the segment.
The company is also witnessing a number of growth opportunities in the international market in
countries such as the Middle East, North Africa, Algeria, Nigeria,
Ethiopia, Libya and others, which are planning to make huge
investments in the transmission sector. KPTL is likely to benefit The transmission tower
sector is KPTL’s core
from the same due to its international presence. On the distribution
business and is witnessing a
front, the company is focused on rural electrification projects, phenomenal growth. The
where the scope of work includes supplies of various items thrust on building
required for these projects. In the last five years, the company has transmission infrastructure
commissioned 4,000 kms of lines and has additional orders to and rural electrification
commission lines in excess of 2,500 kms over the next 18-24 augurs well for the segment
months.
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India Research
Infrastructure Division
KPTL has recently entered the Infrastructure business and in order to overcome pre-qualification
problems and execution risks, it has entered into consortium/cooperation agreements with overseas
pipeline contractors. The pipeline network available in India today
KPTL has recently entered is grossly inadequate to transport the products to demand centres
the Infrastructure business in an efficient, safe and environment friendly way. An estimated
and in order to overcome pre- 7000 kms of gas pipelines and over 4000 kms of product and
qualification problems and crude pipelines are estimated to be set up in the next 3-4 years,
execution risks, it has entered mainly by Indian Oil Corporation Limited (IOCL), Bharat
into consortium/cooperation Petroleum Corporation Ltd. (BPCL), Hindustan Petroleum
agreements with overseas
Corporation Ltd. (HPCL), Gujarat State Petroleum Corporation
pipeline contractors
Limited (GSPC), Reliance and GAIL. Besides, a number of four
lanes and six lanes highways/expressways are likely to be
promoted in the next 3-4 years under various National Highway Development Programmes, wherein
more private participation is sought on a BOT basis. KPTL is considering entering the road sector for
BOT projects on a selective basis, wherein JMC Projects will provide support as an EPC contractor.
Biomass Energy Division

KPTL has two power plants with a capacity of 7.8 MW each and generates power from non-
conventional sources. The generation of biomass power is fully dependent on the availability of
agriculture residue (mustard husk & cotton stalk), which is seasonal in nature. Inadequate winter
rains and/or alternate use of residue can affect the adequate availability and prices of fuel to the
plant. KPTL is taking appropriate steps to procure and store adequate quantity of fuel and also
operates collection centres at different places. In FY09, KPTL generated 120 mn units of power at a
PLF of 95%, out of which 110 mn units were exported. The company’s Biomass Energy division
generated revenues of Rs.480 mn in FY09.
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India Research
Segmental revenues
In FY09, KPTL’s net sales increased by 21.4% Y-o-Y to Rs.32,461 mn. Revenues of the T&D
segment grew 10.1% Y-o-Y to Rs.16,878 mn, revenues of the construction segment were up 43.1%
Y-o-Y to Rs. 13,090 mn, while the biomass energy segment recorded a growth of 30% Y-o-Y to
Rs.476 mn. We expect KPTL to record a CAGR of 24% in revenues over the period FY09 to FY11E
to Rs.50,720 mn.
Segmental revenues (Rs. mn)

Segment FY09 % contribution FY08 Y-o-Y Growth (%)
Transmission & distribution division 16,878 51.6% 15,333 10.1%
Real estate division 0.6 0.0% 5.6 -89.3%
Bio-mass energy division 476 1.5% 367 30.0%
Infrastructure division 1,720 5.3% 1,827 -5.9%
Mining product 30 0.1% 35 -14.9%
Construction division 13,090 40.0% 9,150 43.1%
Trading of commodity 540 1.6% 293 84.0%
Source: Company
Order book provides good earnings visibility

KPTL’s order book, which will be executed within 2-3 years, currently stands at Rs.60 bn and
provides good earnings visibility for the coming years. We expect the company’s EBIDTA margin to
improve to 10.8% and the PAT to grow by 32.9% in FY10E.
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India Research

YE March 31st (Rs in Mn)
Net Sales Revenue 4,873 4,758 2.4% 5,584 -12.7%
Raw materials/Stock Adjustments 1,972 2,524 -21.9% 3,064 -35.6%
Personnel 323 279 15.9% 308 4.9%
Other Expenses 1,994 1,388 43.7% 1,634 22.0%
Total Cost 4,289 4,190 2.4% 5,006 -14.3%
EBIDTA 584 568 2.8% 579 0.9%
Other Non-Operating Income 64 51 27.1% 69 -7.3%
Less: Depreciation 82 60 36.4% 76 7.1%
EBIT 567 559 1.4% 572 -0.9%
Less: Interest 140 158 -11.3% 302 -53.6%
PBT 427 401 6.4% 271 57.6%
Less: Total Tax 106 111 -4.5% 39 174.4%
Profit After Tax 321 290 10.6% 232 38.2%
Earnings Per Share (In Rs.) 12.1 10.9 8.8
Weighted average Shares Outstanding (mn) 26.5 26.5 26.5
EBITDA Margin (%) 11.98% 11.94% 4.79 10.37% 161.9
EBIT Margin (%) 11.63% 11.74% -11.38 10.24% 138.5
PBT Margin (%) 8.75% 8.42% 33.15 4.85% 390.7
NPM (%) 6.58% 6.09% 48.89 4.16% 242.5
Effective Tax Rate (%) 24.82% 27.67% -284.55 14.26% 1056.5
• In Q1 FY10, KPTL’s revenues increased marginally by 2.4% Y-o-Y to Rs.4.8 bn, out of
which, the T&D segment contributed 78%, while the balance was contributed by the biomass
energy and infrastructure division. Revenues of the T&D segment declined 6.1% Y-o-Y to
Rs.3.8 bn, while revenues of the infrastructure division grew 62% Y-o-Y to Rs.949 mn.
Segmental Analysis
Segment Revenue(Rs. mn) % contribution
Transmission & Distribution 3,798 78%
Real Estate division 0.2 0%
Biomass energy division 125 3%
Infrastructure division 949 19%
Source: company
• Due to decline in the commodity prices, the raw material cost declined by 21.9% Y-o-Y to
Rs. 1.9 bn.
• Other non-operating income jumped by 27.1%Y-o-Y to Rs.64 mn and interest expenses

declined by 11.3% Y-o-Y to Rs.140 mn, resulted in 10.6% Y-o-Y increase in the PAT of the
company.
• JMC Projects, a subsidiary company of KPTL posted revenue of Rs. 2.9 bn in Q1 FY10 as
against Rs. 3.1 bn in the corresponding last quarter.
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India Research
Jyoti Structures Ltd.

Company Analysis
Key Financials
Total Revenue 9,708 13,704 17,171 22,241 29,440
Revenue Growth (Y-o-Y) 39.1% 41.2% 25.3% 29.5% 32.4%
EBIDTA 1,254 1,719 1,959 2,458 3,001
EBIDTA Growth (Y-o-Y) 67.7% 37.1% 14.0% 25.5% 22.1%
Net Profit 550 724 797 1,058 1,378
Net Profit Growth (Y-o-Y) 98.8% 31.6% 10.1% 32.7% 30.2%
Net Profit (Excl.Extra-ordinaries) 550 724 797 1,058 1,378
Net Profit Growth (Excl.Extra-ordinaries )(Y-o-Y) 98.8% 31.6% 10.1% 32.7% 30.2%
Shareholders Equity 2,758 3,412 4,168 5,091 6,294
Number of Diluted shares(mn) 81 81 82 82 82
Diluted EPS (Rs) (Excl. Extra-Ordinaries) 6.82 8.92 9.76 13.0 16.9
EPS Growth (Y-o-Y) 77.5% 30.8% 9.5% 32.7% 30.2%
CEPS (Rs.) (Excl. Extra-Ordinaries) 7.5 9.7 10.8 14.7 18.9
EBIDTA (%) 12.9% 12.5% 11.4% 11.1% 10.2%
NPM (%) 5.7% 5.3% 4.6% 4.8% 4.7%
Tax/PBT (%) 37.1% 39.8% 36.9% 34.0% 34.0%
RoE (%) 27.5% 23.3% 20.9% 22.6% 23.9%
RoCE (%) 20.6% 19.7% 18.8% 19.2% 19.8%
Return on Op. assets (%) 18.1% 18.0% 16.5% 17.7% 19.1%
Debt/Equity (x) 0.6 0.7 0.7 0.7 0.6
Dividend Payout Ratio (%) 10.3% 10.5% 10.8% 12.7% 12.7%
Operating Cash Flow (539) (491) 87 1,057 563
Total Free Cash Flow (757) (374) (200) (102) 214
Valuation Ratios
P/E (x) 11.7 9.0
P/BV (x) 2.4 2.0
P/CEPS (x) 10.3 8.0
Net Cash / Market Cap (%) *NM NM
Div.Yield (%) 0.8% 1.0%
*NM-Not Meaningful
No. of Basic Shares (mn) 81.7
Rs.bn US$ bn
Market Cap. 12.4 0.27
Total Debt 3.04 0.07
Cash & Cash Equivalents * 0.30 0.01
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India Research
DuPont Model
EBIDTA/Sales (%) 12.9% 12.5% 11.4% 11.1% 10.2%
EBIDTA/Operating Assets (%) 30.1% 31.1% 27.3% 28.6% 30.6%
Operating Assets/ Net Assets(x) 1.1 1.1 1.1 1.1 1.0
Net Earnings/ EBIDTA (%) 43.9% 42.1% 40.7% 43.0% 45.9%
Net Assets/ Equity (x) 1.8 1.6 1.7 1.7 1.6
Return on Equity (%) 27.5% 23.3% 20.9% 22.6% 23.9%
Total Revenues 100% 100% 100% 100% 100%
Net Raw Material Consumed 60.6% 65.2% 64.2% 66.0% 66.7%
Other expenses 8.9% 7.3% 9.1% 7.3% 7.7%
EBITDA 12.9% 12.5% 11.4% 11.1% 10.2%
Depreciation and Amortization 0.6% 0.5% 0.5% 0.7% 0.6%
Interest 3.4% 3.4% 4.0% 3.3% 2.7%
Non-Operating Income 0.1% 0.1% 0.4% 0.1% 0.1%
PBT 9.0% 8.8% 7.4% 7.2% 7.1%
Tax 3.3% 3.5% 2.7% 2.5% 2.4%
PAT 5.7% 5.3% 4.6% 4.8% 4.7%
PAT(Excl.Extra-ordinaries) 5.7% 5.3% 4.6% 4.8% 4.7%
Top Management Team

Designation Name
Chairman S D Kshirsagar
Director A J Khan
Director G L Valecha
Director P A Sethi
Director S H Mirchandani
Managing Director K R Thakur
Whole-time Director Prakash K Thakur
Deputy Managing Director Santosh V Nayak
Company Secretary L H Khilnani
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India Research
Capital Issue History

Date Equity Capital Reason
31/03/1990 16.2 As Per Annual Report
30/11/1992 32.7 Rights Issue
28/09/1994 49.1 Bonus Issue
27/06/2000 98.2 Rights Issue
29/09/2003 114.6 Preferential Issue Of Shares
16/12/2004 138.2 Private Placement
9/10/2006 154.2 Issued under ESOP Scheme
11/1/2007 158.7 Conversion of Warrants
21/02/2007 161.4 Equity shares issued
8/10/2007 162 Issued under ESOP Scheme
Key Statistics
Industry:
52 Week Hi:Lo: Rs.166.9/40
Shareholding Pattern as on Jun '09
Non Non
CMP: 151.6
Promoter Promoter
(Institution) (Non-
Avg Daily Vol (20 days): 0.24 mn
44% Institution)
29%
Avg Daily Val (20 days): Rs.37.7 mn
Performance over 52 weeks: Indian

(Promoter &
JYOTISTRUC : Up 95.9% Group)
27%
Nifty: Up 40.7%
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India Research

Ratings Key
Negative Ratings
Jyoti Structures Ltd. (JYS.IN)/ (JYST.BO)
3-Jan-2005 =100 (LHS)

370 300
320 31-Oct-07 250

OP
9-May-08
MP
270 200
9-Oct-09
(INR)
OP
220 150
12-Apr-07 7-Jan-09
OP MP
170 100
120 50
70 0
3- 4- 29- 28- 28- 30- 28- 25- 22- 28- 27- 24- 20- 24- 24- 22- 26- 31- 3- 1-
Jan- Apr- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jul- Oct-
05 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09
Relative to NIFTY (LHS) FG Reco JYOTI STRUCTURES Share Price (RHS)
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India Research
Key Ratios
Raw Material / Sales (%) 60.6% 65.2% 64.2% 66.0% 66.7%
Other Income/EBT (%) 0.9% 1.3% 5.8% 1.9% 1.6%
EBITDA Margin (%) 12.9% 12.5% 11.4% 11.1% 10.2%
Tax / PBT (%) 37.1% 39.8% 36.9% 34.0% 34.0%
Net Profit Margin (%) 5.7% 5.3% 4.6% 4.8% 4.7%
RoE (%) 27.5% 23.3% 20.9% 22.6% 23.9%
RoCE (%) 20.6% 19.7% 18.8% 19.2% 19.8%
Optg. Assets/Total Assets (x) 1.1 1.1 1.1 1.1 1.0
Return on Optg. Assets (%) 18.1% 18.0% 16.5% 17.7% 19.1%
Total Loans / Equity (%) 58.3% 66.2% 73.1% 67.6% 58.5%
Interest Coverage (times) 3.8 3.7 2.9 3.3 3.8
Interest / Debt (%) 20.5% 24.2% 25.8% 22.8% 22.0%
Growth in Gross Block (%) 9.7% 12.8% 59.8% 23.7% 11.5%
Sales Growth (%) 39.1% 41.2% 25.3% 29.5% 32.4%
Operating (EBITDA) Profit Growth (%) 67.7% 37.1% 14.0% 25.5% 22.1%
Net Profit Growth (%) 98.8% 31.6% 10.1% 32.7% 30.2%
Debtors (Days of net sales) 129 130 137 119 119
Creditors (Days of Raw Materials) 82 69 89 84 84
Inventory (Days of Optg. Costs) 33 24 35 34 28
Current Ratio 2.3 2.5 2.1 2.3 2.2
Net Current Assets/Capital Employed (%) 82.6% 85.7% 79.9% 79.2% 80.9%
Shares Outstanding (Diluted) (mn) 80.7 81.2 81.7 81.7 81.7
Fully diluted EPS (Rs.) (Reported) 6.8 8.9 9.8 13.0 16.9
Fully diluted EPS (Rs.) Proforma) 6.8 8.9 9.8 13.0 16.9
EPS Growth (%) (Proforma) 77.5% 30.8% 9.5% 32.7% 30.2%
Dividend Payout (%) 10.3% 10.5% 10.8% 12.7% 12.7%
Fully diluted Cash EPS (Rs.) 7.5 9.7 10.8 14.7 18.9
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India Research
Jyoti Structure’s Business in Pictures… (FY09)

otherwise)
Rs.17, 171 mn
Jyoti Structure provides turnkey
solutions in setting up High voltage
transmission towers & setting up
Raw Material Raw Material: Rs 11,019 mn (64.2%) substations.
Steel & Zinc prices forms Erection & Subcontracting Expenses:
major cost and are prone to Rs. 2,201 mn (12.8%)
volatility in price Personal Expenses: Rs.435mn (2.5%)
movement of these Other Expenses: Rs.1, 556mn (9.1%)
commodities. Pricing
Domestic contracts have
price escalation clauses
EBIDTA
Rs 1,959 mn (11.4%) International contracts are
either fixed price contracts or
have price escalation clauses.
Other Non-operating Income: Rs.73 mn
(0.4%)
Interest: Rs 683 mn (4.0%)
Depreciation: Rs 86 mn (0.5%)
Major Clients
SEBs
PGCIL
Profit before Tax:

1,264 mn (7.4%)
Below Operating Line Competitions-
KEC International
Taxes: Kalpataru Power
Rs.466 mn (2.7%) RPG Transmission
Profit after Tax:

Rs.797 mn (4.6%)
Net Profit:
Rs. 797 mn (4.6%)

Rs 12,462mn (100%) (FY09) Rs.12, 462 mn (100%)
Fixed Assets: Rs 1,167 mn (9.4%)

Debt & Minority Inte: Rs 3,036 mn (24.4%)
Capital Work-In-Progress: Rs.52mn (0.4%)
Reserves: Rs 4,004 mn (32.1%)
Investments: Rs 231 mn (1.9%)
Current Liabilities & Provisions: Rs 5,174
Loans &Advances: Rs 2,695 mn (21.6%),
mn (41.5%)
Debtors: Rs 6,548 mn (52.5%),
Equity cap incl pref cap: Rs 164 mn (1.3%)
Inventory: Rs 1,460 mn (11.7%)
Deferred Tax Liab: Rs.82 mn (0.7%)
Cash: Rs 297 mn (2.4%),
Miscellaneous Assets: Rs.12 mn (0.1%)
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India Research
The Company
Jyoti Structures Ltd. (JSL), incorporated in 1974, is in the business of project execution related to
power transmission and comprising transmission line and sub-stations. The company manufactures,
deals in various components/equipments and constructs infrastructure related to power transmission.
JSL has the expertise to take on turnkey projects for transmission lines from 33 kV to 800 kV and
substations of up to 400 kV, irrespective of the terrain, location and requirements of power utilities
within as well as outside India.
JSL has two plants located at Nasik and Raipur, for manufacturing transmission lines towers with a
combined capacity of 110,000MT per annum. Both the facilities are also well equipped for
microwave towers, windmill towers and railway electrification structures. The company also has in-
house tower testing facilities of up to 1,000 kv at Ghoti, Igatpuri.
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India Research
Business Highlights
JSL is the smallest player in our coverage universe in the transmission sector. After incurring losses
incurred in the export market in 2002, the company had been focusing on the domestic market and
reduced its high exposure to exports. JSL is now once again
looking at export opportunities, though in a planned manner, After incurring losses incurred in
and is selectively choosing international ventures. The the export market in 2002, the
company is bidding for projects in the UAE, Saudi Arabia, company had been focusing on the
Ethiopia, Australia and Ghana. It has formed a joint venture domestic market and reduced its
(JV) - Gulf Jyoti International LLC - with the Gulf high exposure to exports. JSL is
Investment Corporation, Kuwait for establishing a tower now once again looking at export
manufacturing facility in the UAE, which will provide the opportunities, though in a planned
manner, and is selectively
company with the necessary footing for catering to the
choosing international ventures
demand in the export market. JSL has supplied over 650,000
MT of transmission line towers and structures to various
utilities in India as well as abroad. The company has tested over 200 types of transmission line
towers for various clients worldwide.
The company has been on the growth trajectory since the year 2003 and is recognised for its
financial performance and strong project execution capabilities. With its core competence being
transmission project execution as well as towers, JSL is now tapping
We expect the GoI’s rural the growing demand in the transmission segment. JSL has entered
electrification programme into contracts with Damodar Valley Corporation for the evacuation
and expansion of the of power from the Durgapur Steel Plant and Raghunathpur thermal
country’s transmission power station. The company also has a contract with Reliance
network to provide huge Power Trading for setting up 400 kv transmission lines in
opportunities for JSL to Maharashtra and Gujarat. We expect the GoI’s rural electrification
generate higher revenues
programme and expansion of the country’s transmission network to
provide huge opportunities for JSL to generate higher revenues. The
company’s robust order book position is an indication of its strong growth prospects. In order to
benefit from the growth in the T&D space in Africa, where the availability of electricity in some
parts of the country is in the range of 5-6%, the company has formed a joint venture, Jyoti Structures
Africa (Pty.) Ltd. and signed a contract with the Republic of South Africa for 765 kv transmission
line worth Rands 184 mn (Rs.930 mn).
Over the period 2004-09, the company’s production capacity recorded a CAGR of 16%, while
production recorded a CAGR of 32%. The company recently increased its capacity from 95,800MT
to 110,000MT and is expected to witness a robust order flow in the next two-three years, due to
spending on the national grid by PGCIL and the government’s thrust on rural electrification
programmes. The company’s capacity utilization increased from 41% in FY04 to 77.6% in FY09 on
the increased capacity of 110,000MT and we expect the capacity utilization to be in the 80-83%
range on the back of higher order intake in the coming years. The company’s capacity expansion,
coupled with higher capacity utilization, will result in better order intake.
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India Research
Around 65% of JSL’s orders come from transmission projects, 15% from substations, and the rest
20% from rural electrification related distribution projects. Almost 85% of JSL’s orders are from the
domestic market. With a rich experience of over three decades, the company boasts of executing
projects across 36 countries worldwide.
Margins
JSL’s order book currently stands at Rs.40 bn, or 2.3x its FY09 revenues, and is executable in 18-24
months. We expect the company’s order book execution to drive a CAGR of 30% in its total
revenues from FY09 to FY11E. The company’s EBIDTA margin declined from 12.9% in FY07 to
11.4% in FY09, primarily on account of an increase in Other expenses (conversion expenses and
freight charges), as well as fixed price international orders.
EBIDTA margin trend
35,000 14.0%
30,000 12.0%
EBIDTA M argin
25,000 10.0%
Rs. m n
20,000 8.0%
15,000 6.0%
10,000 4.0%
5,000 2.0%
0 0.0%
2007 2008 2009 2010E 2011E
Revenue EBIDTA Margin(%)
Increase in debt level due to higher working capital

In FY09, JSL’s total debt stood at Rs.3 bn, primarily on account of an increase in its working capital
requirements to Rs.2.4 bn. The company’s incremental debt of Rs.400 mn in FY09 was mainly on
account of a capex of Rs.660 mn incurred for the full year.
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India Research

(YE Mar 31st) (Rs. mn)
Net Sales Revenue 4,858 4,016 21.0% 4,699 3.4%
Raw materials/Stock Adjustments 3,072 2,643 16.2% 2,715 13.1%
Erection & Fabrication/Sub Contracting Charges 764 502 52.2% 868 -11.9%
Personnel 128 103 24.6% 85 50.2%
Other Expenses 354 288 23.0% 541 -34.5%
Total Cost 4,319 3,536 22.1% 4,209 2.6%
EBIDTA 539 480 12.3% 490 10.1%
Other Non-Operating Income 8 4 114.0% 38 -78.8%
Less: Depreciation 31 17 77.7% 29 6.4%
EBIT 517 467 10.7% 499 3.6%
Less: Interest 178 134 32.9% 190 -6.6%
PBT 339 333 1.8% 309 9.9%
Less: Total Tax 115 128 -9.6% 98 17.4%
Profit After Tax 224 205 8.9% 210 6.5%
Earnings Per Share (Rs.) 2.74 2.50 2.57
Weighted Average No. of Shares 81.7 82.2 81.8
EBITDA Margin (%) 11.10% 11.96% (85.38) 10.43% 67.64
EBIT Margin (%) 10.64% 11.62% (98.38) 10.61% 2.44
PBT Margin (%) 6.98% 8.29% (131.18) 6.57% 41.66
NPM (%) 4.61% 5.12% (50.88) 4.47% 13.31
Effective Tax Rate (%) 34.02% 38.32% (430.07) 31.87% 215.91
• In Q1 FY10, JSL recorded net sales of Rs.4.8 bn, up 21% Y-o-Y, driven by the execution of a
strong order book. Transmission line projects contributed 68% of the company’s net sales,
while 15% was contributed by substations and 17% by rural electrification projects.
• In terms of volumes, the company produced around 21000 MT of transmission towers in Q1

FY10, up 24% Y-o-Y.
• Out of JSL’s total sales, 88% came from the domestic market and the balance from exports.
Transmission lines constituted around 68% of the company’s sales in the quarter, followed by
rural electrification at around 17% and substation at about 15%.
• In Q1 FY10, the company’s conversion cost (erection cost) increased from Rs.40 mn in Q1
FY09 to Rs.70 mn per MT, while its freight cost rose from Rs.30 mn in Q1 FY09 to Rs.50
mn.
• JSL’s outstanding secured loans increased from Rs.3 bn in Q1 FY09 to Rs.3.5 bn in Q1 FY10
at an average interest cost of around 9.5%. The company has been sanctioned around Rs.650
crore of LC by banks at an interest cost of 7.5%.
• The EBIDTA margin declined 85 bps Y-o-Y to 11.1% in Q1 FY10, due to an increase in
erection & fabrication/sub contracting costs.
• The EBIT margin declined 98 bps Y-o-Y to 10.6%, on account of an increase in depreciation.
• In Q1 FY10, depreciation jumped up by 77.7% to Rs.31 mn and interest expenses increased

by 32.9% to Rs.178 mn, which resulted in an increase of 8.9% Y-o-Y in the PAT to Rs.224
mn.
42
India Research
KEC International Ltd.

Financials (Standalone)
Earnings Model (Standalone)
(YE Mar 31st) (Rs. mn) Q1 Q2 Q3 Q4 FY09 Q1 Q2E Q3E Q4E FY10E
Net Sales Revenue 6,002 8,060 8,865 11,346 34,273 7,266 9,914 10,904 13,842 41,926
Raw materials/Stock Adjustments 2,997 4,820 5,550 6,392 19,758 3,246 5,255 5,779 7,336 21,616
Erection & Fabrication/Sub
1,141 1,281 1,184 2,140 5,746 2,222 1,884 2,126 2,768 9,000
Contracting Charges
Personnel 353 346 394 323 1,416 386 367 382 388 1,522
Other Expenses 895 1,052 1,010 1,394 4,350 555 1,537 1,745 2,215 6,051
Total Cost 5,387 7,498 8,137 10,249 31,271 6,410 9,042 10,032 12,707 38,190
EBIDTA 615 562 728 1,097 3,002 856 872 872 1,135 3,736
Other Non-Operating Income 0 0 0 4 4 0 0 0 0 0
Less: Depreciation 46 55 48 79 228 59 78 80 81 298
EBIT 569 507 680 1,022 2,778 797 794 793 1,054 3,438
Less: Interest 180 233 297 290 1,000 218 273 277 279 1,047
PBT 389 274 383 733 1,778 579 521 516 775 2,392
Less: Total Tax 134 96 133 252 616 197 182 181 271 831
Profit After Tax 255 178 250 480 1,163 382 339 336 504 1,560
Earnings Per Share (In Rs.) 5.17 3.61 5.06 9.73 23.6 7.75 6.86 6.80 10.2 31.6
Weighted average Shares
49.3 49.3 49.3 49.4 49.3 49.3 49.3 49.3 49.3 49.3
Outstanding (mn)
EBIDTA Margin (%) 10.2% 7.0% 8.2% 9.7% 8.8% 11.8% 8.8% 8.0% 8.2% 8.9%
EBIT (%) 9.5% 6.3% 7.7% 9.0% 8.1% 11.0% 8.0% 7.3% 7.6% 8.2%
PBT Margin (%) 6.5% 3.4% 4.3% 6.5% 5.2% 8.0% 5.3% 4.7% 5.6% 5.7%
NPM (%) 4.2% 2.2% 2.8% 4.2% 3.4% 5.3% 3.4% 3.1% 3.6% 3.7%
Effective Tax Rate (%) 34.4% 35.0% 34.8% 34.5% 34.6% 34.0% 35.0% 35.0% 35.0% 34.8%
43
India Research
Profit & Loss A/c

Total Revenue 20,406 28,145 34,274 41,926 50,982
Less:
Cost of Raw material (Net) 9,293 14,155 19,758 21,616 27,104
Power & Fuel 5,270 6,180 5,746 9,000 9,112
Manufacturing Expenses 955 1,209 1,416 1,522 1,750
Personnel 2,370 3,058 4,350 6,051 7,975
Total Operating Expenditure 17,888 24,602 31,271 38,190 45,942
EBIDTA 2,518 3,543 3,003 3,736 5,040
Less: Depreciation 334 251 227 298 344
EBIT 2,184 3,293 2,775 3,438 4,696
Interest 593 677 1,000 1,047 1,145
Non-Operating Income 7 3 3 0 0
Profit before tax 1,599 2,619 1,778 2,392 3,551
Tax 552 897 615 831 1,243
Profit after Tax 1,046 1,722 1,163 1,560 2,308
Profit After Tax (Excl.Extra-ordinaries) 1,046 1,722 1,163 1,560 2,308
Common sized Profit & Loss A/c

Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Less:
Cost of Raw Material (Net) 45.5% 50.3% 57.6% 51.6% 53.2%
Power & Fuel 25.8% 22.0% 16.8% 21.5% 17.9%
Manufacturing Expenses 4.7% 4.3% 4.1% 3.6% 3.4%
Personnel 11.6% 10.9% 12.7% 14.4% 15.6%
Total Operating Expenditure 87.7% 87.4% 91.2% 91.1% 90.1%
EBIDTA 12.3% 12.6% 8.8% 8.9% 9.9%
Less: Depreciation 1.6% 0.9% 0.7% 0.7% 0.7%
EBIT 10.7% 11.7% 8.1% 8.2% 9.2%
Interest 2.9% 2.4% 2.9% 2.5% 2.2%
Profit before tax 7.8% 9.3% 5.2% 5.7% 7.0%
Tax 2.7% 3.2% 1.8% 2.0% 2.4%
Profit after Tax 5.1% 6.1% 3.4% 3.7% 4.5%
Profit After Tax (Excl.Extra-ordinaries) 5.1% 6.1% 3.4% 3.7% 4.5%
44
India Research
Balance Sheet
LIABILITIES
Equity Capital 377 493 493 493 493
Reserves & Surplus 2,213 4,354 5,092 6,287 8,055
Preference Share Capital 130 104 0 0 0
Net Worth 2,720 4,952 5,586 6,781 8,549
Net Deferred tax liability/(Asset) 335 200 298 298 298
Loans 3,864 5,918 6,218 6,918 7,618
Capital Employed 6,919 11,070 12,102 13,997 16,465
ASSETS
Gross Block 4,676 5,213 6,255 7,055 7,855
Less: Depreciation 600 899 1,222 1,520 1,865
Net Block 4,076 4,314 5,032 5,534 5,990
Capital WIP 18 169 504 704 904
Investments in subsidiaries 205 0 0 0 0
Investments- Others 1 5 18 18 18
Total Investment 206 5 18 18 18
Others 49 20 10 10 10
Current Assets
Inventories 1,506 2,053 2,258 2,768 3,274
Sundry Debtors 9,041 14,300 18,510 21,825 26,538
Cash and Bank Balance 214 680 1,365 2,579 3,146
Loans and Advances 1,717 2,701 3,266 3,354 4,079
Total Current Assets 12,478 19,735 25,398 30,525 37,038
Less: Current Liabilities and Provisions

Sundry Creditors 3,783 7,567 9,636 11,324 13,395
Provisions 370 540 444 569 843
Others 5,756 5,066 8,780 10,901 13,255
Total current liabilities & provisions 9,908 13,173 18,860 22,794 27,494
45
India Research
Common sized Balance Sheet

LIABILITIES
Equity Capital 5.4% 4.5% 4.1% 3.5% 3.0%
Reserves & Surplus 32.0% 39.3% 42.1% 44.9% 48.9%
Preference Share Capital 1.9% 0.9% 0.0% 0.0% 0.0%
Net Worth 39.3% 44.7% 46.2% 48.4% 51.9%
Net Deferred tax liability/(Asset) 4.8% 1.8% 2.5% 2.1% 1.8%
Loans 55.8% 53.5% 51.4% 49.4% 46.3%
Capital Employed 100.0% 100.0% 100.0% 100.0% 100.0%
ASSETS
Gross Block 67.6% 47.1% 51.7% 50.4% 47.7%
Net Block 58.9% 39.0% 41.6% 39.5% 36.4%
Capital WIP 0.3% 1.5% 4.2% 5.0% 5.5%
Investments in subsidiaries 3.0% 0.0% 0.0% 0.0% 0.0%
Investments- Others 0.0% 0.0% 0.1% 0.1% 0.1%
Total Investment 3.0% 0.0% 0.1% 0.1% 0.1%
Others 0.7% 0.2% 0.1% 0.1% 0.1%
Current Assets
Sundry Debtors 130.7% 129.2% 152.9% 155.9% 161.2%
Inventories 21.8% 18.5% 18.7% 19.8% 19.9%
Cash and Bank Balance 3.1% 6.1% 11.3% 18.4% 19.1%
Loans and Advances 24.8% 24.4% 27.0% 24.0% 24.8%
Total Current Assets 180.3% 178.3% 209.9% 218.1% 224.9%

Sundry Creditors 54.7% 68.4% 79.6% 80.9% 81.4%
Provisions 5.3% 4.9% 3.7% 4.1% 5.1%
Others 83.2% 45.8% 72.6% 77.9% 80.5%
Total current liabilities & provisions 143.2% 119.0% 155.8% 162.8% 167.0%
46
India Research
Cash Flow Statement

From Operations
Profit Before Tax 1,599 2,619 1,778 2,392 3,551
Depreciation 334 251 227 298 344
Less:
Dividend Payout 198 289 289 365 540
Tax Paid 552 897 615 831 1,243
Operating cash flow 1,182 1,684 1,102 1,493 2,112
Changes in Capital Structure

Increase in Equity Share capital 0 117 0 0 0
Increase in Share premium 0 (11) (45) 0 0
Increase in other reserves 0 719 (91) 0 0
Increase in Pref Capital 0 (26) (104) 0 0
Increase in Others 126 (134) 98 0 0
Inc/(Dec) in Loans 538 2,053 301 700 700
Inc/(Dec) in Equity/Loans/MI 664 2,718 158 700 700
Adjustments
Diff.in Dep. (3) 48 96 0 0
Total Inflows 1,843 4,449 1,356 2,193 2,812
CASH OUTFLOWS
Working Capital Changes
Inc/(Dec) in Provisions 233 171 (96) 125 274
Inc/(Dec) in Current Liabilities 273 3,094 5,783 3,809 4,426
Less:
Inc/(Dec) in Inventory 257 548 204 510 506
Inc in Debtors 2,238 5,259 4,210 3,315 4,714
Inc/(Dec) in Loans & Adv. 99 984 564 89 724
Inc/(Dec) in Working Capital 2,087 3,526 (709) (20) 1,244
Capex/Investments
Inc/(Dec) in Investments 1 (201) 13 0 0
Addition to Gross Block 177 537 1,042 800 800
Inc/(Dec) in Capital WIP (33) 151 335 200 200
Inc/(Dec) in other assets 33 (29) (10) 0 0
Inc/(Dec) in Fixed assets/ Investments 178 457 1,379 1,000 1,000
Inc/(Dec) in Cash/Bank Balance (422) 466 685 1,213 568
Total Outflows 1,843 4,449 1,356 2,193 2,812
47
India Research
Common Sized Cash Flow Statement

From Operations
Profit Before Tax 86.7% 58.9% 131.2% 109.0% 126.3%
Depreciation 18.1% 5.6% 16.8% 13.6% 12.2%
Less:
Dividend Payout 10.8% 6.5% 21.3% 16.6% 19.2%
Tax Paid 30.0% 20.2% 45.4% 37.9% 44.2%
Operating cash flow 64.2% 37.8% 81.3% 68.1% 75.1%

Increase in Equity Share capital 0.0% 2.6% 0.0% 0.0% 0.0%
Increase in Share premium 0.0% -0.3% -3.3% 0.0% 0.0%
Increase in other reserves 0.0% 16.2% -6.7% 0.0% 0.0%
Increase in Pref Capital 0.0% -0.6% -7.7% 0.0% 0.0%
Increase in Others 6.8% -3.0% 7.2% 0.0% 0.0%
Inc/(Dec) in Loans 29.2% 46.2% 22.2% 31.9% 24.9%
Inc/(Dec) in Equity/Loans/MI 36.0% 61.1% 11.7% 31.9% 24.9%
Adjustments
Diff.in Dep. -0.2% 1.1% 7.1% 0.0% 0.0%
Total Inflows 100.0% 100.0% 100.0% 100.0% 100.0%
CASH OUTFLOWS

Inc/(Dec) in Provisions 12.7% 3.8% -7.1% 5.7% 9.8%
Inc/(Dec) in Current Liabilities 14.8% 69.5% 426.5% 173.7% 157.4%
Less:
Inc/(Dec) in Inventory 13.9% 12.3% 15.1% 23.3% 18.0%
Inc in Debtors 121.4% 118.2% 310.5% 151.1% 167.6%
Inc/(Dec) in Loans & Adv. 5.4% 22.1% 41.6% 4.0% 25.8%
Inc/(Dec) in Working Capital 113.2% 79.2% -52.3% -0.9% 44.3%
Capex/Investments
Inc/(Dec) in Investments 0.1% -4.5% 1.0% 0.0% 0.0%
Addition to Gross Block 9.6% 12.1% 76.8% 36.5% 28.4%
Inc/(Dec) in Capital WIP -1.8% 3.4% 24.7% 9.1% 7.1%
Inc/(Dec) in other assets 1.8% -0.7% -0.8% 0.0% 0.0%
Inc/(Dec) in Fixed assets/ Investments 9.7% 10.3% 101.7% 45.6% 35.6%
Inc/(Dec) in Cash/Bank Balance -22.9% 10.5% 50.5% 55.3% 20.2%
Total Outflows 100.0% 100.0% 100.0% 100.0% 100.0%
48
India Research
Free Cash Flow

EBITA 2,184 3,293 2,775 3,438 4,696
Less: Adjusted Taxes 754 1,128 961 1,195 1,644
NOPLAT 1,430 2,165 1,815 2,243 3,052
Plus: Depreciation 334 251 227 298 344
Gross Cash flow 1,764 2,415 2,042 2,541 3,397
Less: Increase in Working Capital 2,893 2,970 2,901 2,494 3,964
Operating Cash flow -1,129 -554 -859 47 -567
Less: Net Capex 147 640 1,281 1,000 1,000
Less: Increase in Net Other Assets -836 816 -3,595 -2,360 -2,538
FCF From Operation -440 -2,010 1,456 1,408 971
Less: Inc./(Dec.) in Investment -440 -2,010 1,456 1,408 971
FCF after Investment -440 -1,805 1,456 1,408 971
Total FCF -440 -1,805 1,456 1,408 971
49
India Research
Kalpataru Power Transmission Limited

Financials (Consolidated)
Raw materials/Stock
2,524 2,190 2,168 3,064 10,177 1,972 2,253 2,204 3,267 9,696
Adjustments
Personnel 279 262 237 308 1,086 323 334 334 345 1,336
Other Expenses 1,388 1,350 1,363 1,634 5,504 1,994 2,199 2,127 3,042 9,362
Total Cost 4,190 3,803 3,768 5,006 16,767 4,289 4,787 4,665 6,654 20,394
EBIDTA 568 523 400 579 2,083 584 578 461 606 2,229
EBIT 559 529 433 572 2,093 567 559 442 587 2,154
Less: Interest 158 227 200 302 887 140 142 143 147 571
Extraordinary income 0 0 0 0 -2 0 0 0 0 0
PBT 401 302 233 271 1,204 427 418 299 440 1,584
Less: Total Tax 111 79 34 39 262 106 84 60 88 337
Profit After Tax 290 223 199 232 943 321 334 239 352 1,246
Weighted average Shares
26.5 26.5 26.5 26.5 26.5 26.5 26.5 26.5 26.5 26.5
Outstanding (mn)
EBIDTA Margin (%) 12.1% 9.6% 10.4% 11.0% 12.0% 10.8% 9.0% 8.4% 9.9% 12.1%
EBIT (%) 12.2% 10.4% 10.2% 11.1% 11.6% 10.4% 8.6% 8.1% 9.5% 12.2%
PBT Margin (%) 7.0% 5.6% 4.8% 6.4% 8.8% 7.8% 5.8% 6.1% 7.0% 7.0%
NPM (%) 5.2% 4.8% 4.2% 5.0% 6.6% 6.2% 4.7% 4.8% 5.5% 5.2%
50
India Research
Profit & Loss A/c

Total Revenue 26,749 32,461 40,576 50,720
Less:
Cost of Raw material (Net) 13,005 16,453 19,882 24,853
Employees Emoluments 1,522 1,988 2,475 2,790
Manufacturing & Operating expenses 6,973 8,805 10,753 13,694
Administrative, Selling & Other expenses 1,954 1,916 3,084 4,058
Total Operating Expenditure 23,454 29,162 36,194 45,394
EBIDTA 3,294 3,298 4,382 5,326
Less: Depreciation 386 576 626 715
EBIT 2,908 2,722 3,757 4,611
Interest 674 1,369 1,386 1,603
Non-Operating Income 251 346 1 1
Profit before tax 2,485 1,700 2,372 3,009
Tax 689 417 653 829
Profit after Tax before Minority Interest 1,797 1,283 1,718 2,180
Minority Interest 148 173 243 304
Profit after Tax 1,649 1,109 1,475 1,876
Profit After Tax (Excl.Extra-ordinaries) 1,649 1,109 1,475 1,876

Total Revenue 100.0% 100.0% 100.0% 100.0%
Less:
Cost of Raw Material (Net) 48.6% 50.7% 49.0% 49.0%
Employees Emoluments 5.7% 6.1% 6.1% 5.5%
Manufacturing & Operating expenses 26.1% 27.1% 26.5% 27.0%
Administrative, Selling & Other expenses 7.3% 5.9% 7.6% 8.0%
Total Operating Expenditure 87.7% 89.8% 89.2% 89.5%
EBIDTA 12.3% 10.2% 10.8% 10.5%
Less: Depreciation 1.4% 1.8% 1.5% 1.4%
EBIT 10.9% 8.4% 9.3% 9.1%
Interest 2.5% 4.2% 3.4% 3.2%
Non-Operating Income 0.9% 1.1% 0.0% 0.0%
Profit before tax 9.3% 5.2% 5.8% 5.9%
Tax 2.6% 1.3% 1.6% 1.6%
Profit after Tax before Minority Interest 6.7% 4.0% 4.2% 4.3%
Minority Interest 0.6% 0.5% 0.6% 0.6%
Profit after Tax 6.2% 3.4% 3.6% 3.7%
Profit After Tax (Excl.Extra-ordinaries) 6.2% 3.4% 3.6% 3.7%
51
India Research
Balance Sheet
LIABILITIES
Equity Capital 265 265 265 265
Reserves & Surplus 7,566 8,433 9,671 11,282
Net Worth 7,831 8,698 9,936 11,547
Minority Interest 822 947 947 947
Net Deferred tax liability/(Asset) 210 206 206 206
Loans 4,467 9,451 10,081 11,131
Capital Employed 13,330 19,302 21,170 23,831
ASSETS
Gross Block 5,474 7,062 8,688 10,213
Less: Depreciation 1,178 1,731 2,356 3,071
Net Block 4,297 5,331 6,332 7,142
Capital WIP 80 1,133 407 381
Investments in subsidiaries 351 (0) (0) (0)
Investments- Others 5 5 5 5
Total Investment 356 5 5 5
Others 2,940 3,636 3,636 3,636
Current Assets
Inventories 2,677 3,270 4,113 5,175
Sundry Debtors 9,332 14,160 16,564 20,705
Cash and Bank Balance 1,085 583 871 398
Loans and Advances 1,996 3,424 2,818 3,427
Total Current Assets 15,090 21,436 24,366 29,704

Sundry Creditors 3,617 5,177 5,875 7,393
Provisions 1,023 1,203 819 1,039
Others 4,820 5,875 6,898 8,622
Total current liabilities & provisions 9,461 12,256 13,592 17,054
Miscellaneous Assets 29 17 17 17
Capital Employed 13,330 19,302 21,170 23,831
52
India Research

LIABILITIES
Equity Capital 2.0% 1.4% 1.3% 1.1%
Reserves & Surplus 56.8% 43.7% 45.7% 47.3%
Net Worth 58.7% 45.1% 46.9% 48.5%
Minority Interest 6.2% 4.9% 4.5% 4.0%
Net Deferred tax liability/(Asset) 1.6% 1.1% 1.0% 0.9%
Loans 33.5% 49.0% 47.6% 46.7%
Capital Employed 100.0% 100.0% 100.0% 100.0%
ASSETS
Gross Block 41.1% 36.6% 41.0% 42.9%
Less: Depreciation 8.8% 9.0% 11.1% 12.9%
Net Block 32.2% 27.6% 29.9% 30.0%
Capital WIP 0.6% 5.9% 1.9% 1.6%
Investments in subsidiaries 2.6% 0.0% 0.0% 0.0%
Total Investment 2.7% 0.0% 0.0% 0.0%
Others 22.1% 18.8% 17.2% 15.3%
Current Assets
Sundry Debtors 70.0% 73.4% 78.2% 86.9%
Inventories 20.1% 16.9% 19.4% 21.7%
Cash and Bank Balance 8.1% 3.0% 4.1% 1.7%
Loans and Advances 15.0% 17.7% 13.3% 14.4%
Total Current Assets 113.2% 111.1% 115.1% 124.6%

Sundry Creditors 27.1% 26.8% 27.8% 31.0%
Provisions 7.7% 6.2% 3.9% 4.4%
Others 36.2% 30.4% 32.6% 36.2%
Total current liabilities & provisions 71.0% 63.5% 64.2% 71.6%
Miscellaneous Assets 0.2% 0.1% 0.1% 0.1%
Capital Employed 100.0% 100.0% 100.0% 100.0%
53
India Research
Cash Flow Statement

From Operations
Profit Before Tax 2,485 1,700 2,372 3,009
Depreciation 386 576 626 715
Less:
Dividend Payout 239 236 207 264
Tax Paid 689 417 653 829
Operating cash flow 1,944 1,623 2,137 2,631

Increase in other reserves (169) (180) (273) (304)
Increase in Others 52 (4) 0 0
Inc/(Dec) in Loans 480 4,985 630 1,050
Inc/(Dec) in Minority Interest 197 125 0 0
Inc/(Dec) in Equity/Loans/MI 561 4,925 357 746
Adjustments
Diff.in Dep. (26) (23) 0 (0)
Total Inflows 2,479 6,525 2,493 3,376
CASH OUTFLOWS

Inc/(Dec) in Provisions 243 181 (385) 221
Inc/(Dec) in Current Liabilities 2,342 2,614 1,721 3,242
Less:
Inc/(Dec) in Inventory 787 592 843 1,062
Inc in Debtors 2,333 4,828 2,404 4,141
Inc/(Dec) in Loans & Adv. 396 1,363 (606) 609
Inc/(Dec) in other Current Assets 142 66 0 0
Inc/(Dec) in Working Capital 1,072 4,054 1,305 2,349
Capex/Investments
Inc/(Dec) in Investments (1,036) (351) 0 0
Addition to Gross Block 1,559 1,587 1,626 1,525
Inc/(Dec) in Capital WIP 29 1,053 (726) (25)
Inc/(Dec) in other assets 1,109 696 0 0
Inc. in Misc. Assets 28 (12) 0 0
Inc/(Dec) in Fixed assets/ Investments 1,690 2,973 900 1,500
Inc/(Dec) in Cash/Bank Balance (283) (502) 288 (473)
Total Outflows 2,479 6,525 2,493 3,376
54
India Research

From Operations
Profit Before Tax 100.2% 26.0% 95.1% 89.1%
Depreciation 15.6% 8.8% 25.1% 21.2%
Less:
Dividend Payout 9.6% 3.6% 8.3% 7.8%
Tax Paid 27.8% 6.4% 26.2% 24.6%
Operating cash flow 78.4% 24.9% 85.7% 77.9%

Increase in other reserves -6.8% -2.8% -11.0% -9.0%
Increase in Others 2.1% -0.1% 0.0% 0.0%
Inc/(Dec) in Loans 19.4% 76.4% 25.3% 31.1%
Inc/(Dec) in Minority Interest 8.0% 1.9% 0.0% 0.0%
Inc/(Dec) in Equity/Loans/MI 22.6% 75.5% 14.3% 22.1%
Adjustments
Diff.in Dep. -1.0% -0.4% 0.0% 0.0%
Total Inflows 100.0% 100.0% 100.0% 100.0%
CASH OUTFLOWS

Inc/(Dec) in Provisions 9.8% 2.8% -15.4% 6.5%
Inc/(Dec) in Current Liabilities 94.5% 40.1% 69.0% 96.0%
Less:
Inc/(Dec) in Inventory 31.7% 9.1% 33.8% 31.5%
Inc in Debtors 94.1% 74.0% 96.4% 122.7%
Inc/(Dec) in Loans & Adv. 16.0% 20.9% -24.3% 18.0%
Inc/(Dec) in other Current Assets 5.7% 1.0% 0.0% 0.0%
Inc/(Dec) in Working Capital 43.2% 62.1% 52.3% 69.6%
Capex/Investments
Inc/(Dec) in Investments -41.8% -5.4% 0.0% 0.0%
Addition to Gross Block 62.9% 24.3% 65.2% 45.2%
Inc/(Dec) in Capital WIP 1.2% 16.1% -29.1% -0.7%
Inc/(Dec) in other assets 44.7% 10.7% 0.0% 0.0%
Inc. in Misc. Assets 1.1% -0.2% 0.0% 0.0%
Inc/(Dec) in Fixed assets/ Investments 68.2% 45.6% 36.1% 44.4%
Inc/(Dec) in Cash/Bank Balance -11.4% -7.7% 11.6% -14.0%
Total Outflows 100.0% 100.0% 100.0% 100.0%
55
India Research
Free Cash Flow

EBITA 2,908 2,722 3,757 4,611
Less: Adjusted Taxes 953 841 1,035 1,270
NOPLAT 1,954 1,881 2,722 3,340
Plus: Depreciation 386 576 626 715
Gross Cash flow 2,341 2,457 3,347 4,055
Less: Increase in Working Capital 1,530 4,349 1,083 2,773
Operating Cash flow 810 -1,891 2,265 1,282
Less: Net Capex 1,614 2,663 900 1,500
Less: Increase in Net Other Assets 645 383 385 -221
FCF From Operation -1,449 -4,937 980 3
Less: Inc./(Dec.) in Investment -1,039 -351 0 0
FCF after Investment -411 -4,586 980 3
Total FCF -411 -4,586 980 3
56
India Research
Jyoti Structures Ltd.

Financials(Standalone)
Raw materials/Stock
2,643 2,821 2,841 2,715 11,019 3,072 3,778 3,736 4,093 14,679
Adjustments
Erection & Fabrication/Sub
502 440 390 868 2,201 764 699 682 758 2,903
Contracting Charges
Personnel 103 126 121 85 435 128 139 143 162 572
Other Expenses 288 320 462 541 1,556 354 415 408 452 1,629
Total Cost 3,536 3,707 3,814 4,209 15,211 4,319 5,030 4,969 5,465 19,783
EBIDTA 480 501 488 490 1,959 539 650 624 645 2,458
EBIT 467 487 494 499 1,946 517 621 592 613 2,342
Less: Interest 134 174 184 190 683 178 186 187 189 739
PBT 333 312 310 309 1,264 339 435 405 424 1,603
Less: Total Tax 128 111 129 98 466 115 148 138 144 545
Profit After Tax 205 201 181 210 797 224 287 267 280 1,058
Weighted Average No. of
82.2 82.1 81.7 81.8 81.9 81.7 81.2 81.2 81.2 81.2
Shares
EBIDTA Margin (%) 12.0% 11.9% 11.3% 10.4% 11.4% 11.1% 11.5% 11.2% 10.6% 11.1%
EBIT (%) 11.6% 11.6% 11.5% 10.6% 11.3% 10.6% 10.9% 10.6% 10.0% 10.5%
PBT Margin (%) 8.3% 7.4% 7.2% 6.6% 7.4% 7.0% 7.7% 7.2% 6.9% 7.2%
NPM (%) 5.1% 4.8% 4.2% 4.5% 4.6% 4.6% 5.1% 4.8% 4.6% 4.8%
57
India Research
Profit & Loss A/c

Total Revenue 9,708 13,704 17,171 22,241 29,440
Less:
Cost of Raw material (Net) 5,882 8,937 11,019 14,679 19,630
Erection and Subcontracting expenses 1,441 1,705 2,201 2,903 3,743
Personnel expenses 267 347 435 572 809
Other expenses 865 995 1,556 1,629 2,258
Total Operating Expenditure 8454 11985 15211 19783 26439
EBIDTA 1,254 1,719 1,959 2,458 3,001
EBIT 1,196 1,652 1,873 2,312 2,835
Interest 329 464 683 739 782
Non-Operating Income 8 15 73 31 34
Profit before tax 875 1,203 1,264 1,603 2,088
Tax 325 478 466 545 710
Profit after Tax 550 724 797 1,058 1,378
Profit After Tax (Excl.Extra-ordinaries) 550 724 797 1,058 1,378
Source: Company Reports, FG Estimates

Total Revenue 100.0% 100.0% 100.0% 100.0% 100.0%
Less:
Cost of Raw Material (Net) 60.6% 65.2% 64.2% 66.0% 66.7%
Other expenses 8.9% 7.3% 9.1% 7.3% 7.7%
Total Operating Expenditure 87.1% 87.5% 88.6% 88.9% 89.8%
EBIDTA 12.9% 12.5% 11.4% 11.1% 10.2%
EBIT 12.3% 12.1% 10.9% 10.4% 9.6%
Interest 3.4% 3.4% 4.0% 3.3% 2.7%
Non-Operating Income 0.1% 0.1% 0.4% 0.1% 0.1%
Profit before tax 9.0% 8.8% 7.4% 7.2% 7.1%
Tax 3.3% 3.5% 2.7% 2.5% 2.4%
Profit after Tax 5.7% 5.3% 4.6% 4.8% 4.7%
Profit After Tax (Excl.Extra-ordinaries) 5.7% 5.3% 4.6% 4.8% 4.7%
Source: Company Reports, FG Estimates
58
India Research
Balance Sheet
LIABILITIES
Equity Capital 161 162 164 164 164
Reserves & Surplus 2,597 3,250 4,004 4,927 6,130
Net Worth 2,758 3,412 4,168 5,091 6,294
Net Deferred tax liability/(Asset) 77 81 82 218 218
Loans 1,595 2,249 3,036 3,436 3,676
ASSETS
Gross Block 936 1,056 1,688 2,088 2,328
Net Block 561 616 1,167 1,421 1,495
Capital WIP 2 28 52 152 212
Investments in subsidiaries 65 65 66 66 66
Investments- Others 120 94 165 165 165
Total Investment 185 160 231 231 231
Current Assets
Inventories 763 785 1,460 1,830 2,049
Sundry Debtors 3,635 4,988 6,548 7,251 9,598
Cash and Bank Balance 92 137 297 93 23
Loans and Advances 1,970 2,317 2,695 3,294 3,709
Total Current Assets 6,461 8,228 10,999 12,469 15,380

Sundry Creditors 1,902 2,279 3,714 4,576 6,083
Provisions 196 431 258 313 408
Others 705 598 1,202 650 650
Total current liabilities & provisions 2,803 3,307 5,174 5,539 7,141
Miscellaneous Assets 24 17 12 12 12
59
India Research

LIABILITIES
Equity Capital 3.6% 2.8% 2.2% 1.9% 1.6%
Reserves & Surplus 58.6% 56.6% 55.0% 56.3% 60.2%
Net Worth 62.3% 59.4% 57.2% 58.2% 61.8%
Net Deferred tax liability/(Asset) 1.7% 1.4% 1.1% 2.5% 2.1%
Loans 36.0% 39.2% 41.7% 39.3% 36.1%
ASSETS
Gross Block 21.1% 18.4% 23.2% 23.9% 22.9%
Net Block 12.7% 10.7% 16.0% 16.2% 14.7%
Capital WIP 0.0% 0.5% 0.7% 1.7% 2.1%
Investments in subsidiaries 1.5% 1.1% 0.9% 0.8% 0.6%
Investments- Others 2.7% 1.6% 2.3% 1.9% 1.6%
Total Investment 4.2% 2.8% 3.2% 2.6% 2.3%
Current Assets
Sundry Debtors 82.1% 86.9% 89.9% 82.9% 94.2%
Inventories 17.2% 13.7% 20.0% 20.9% 20.1%
Cash and Bank Balance 2.1% 2.4% 4.1% 1.1% 0.2%
Loans and Advances 44.5% 40.3% 37.0% 37.7% 36.4%
Total Current Assets 145.8% 143.3% 151.0% 142.6% 151.0%

Sundry Creditors 42.9% 39.7% 51.0% 52.3% 59.7%
Provisions 4.4% 7.5% 3.5% 3.6% 4.0%
Others 15.9% 10.4% 16.5% 7.4% 6.4%
Total current liabilities & provisions 63.3% 57.6% 71.0% 63.3% 70.1%
Miscellaneous Assets 0.5% 0.3% 0.2% 0.1% 0.1%
60
India Research
Cash Flow Statement

From Operations
Profit Before Tax 875 1,203 1,264 1,603 2,088
Depreciation 58 67 86 146 166
Less:
Dividend Payout 57 76 86 134 175
Tax Paid 325 478 466 545 710
Operating cash flow 552 715 798 1,070 1,368

Increase in Equity Share capital 8 1 1 0 0
Increase in Share premium 1,025 36 38 0 0
Increase in other reserves 15 (31) 5 0 0
Increase in Others (1) 4 2 136 0
Inc/(Dec) in Loans (14) 654 787 400 240
Inc/(Dec) in Equity/Loans/MI 1,033 664 833 536 240
Adjustments
Diff.in Dep. (6) (2) (5) (0) 0
Total Inflows 1,579 1,377 1,625 1,605 1,608
CASH OUTFLOWS

Inc/(Dec) in Provisions 55 234 (173) 55 95
Inc/(Dec) in Current Liabilities 49 270 2,040 310 1,507
Less:
Inc/(Dec) in Inventory (450) 22 674 371 219
Inc in Debtors 1,148 1,353 1,559 704 2,347
Inc/(Dec) in Loans & Adv. 548 68 634 390 227
Inc/(Dec) in other Current Assets 272 279 (256) 209 188
Inc/(Dec) in Working Capital 1,413 1,218 745 1,308 1,379
Capex/Investments
Inc/(Dec) in Investments 19 (25) 71 0 0
Addition to Gross Block 83 120 632 400 240
Inc/(Dec) in Capital WIP (13) 26 24 100 60
Inc. in Misc. Assets 23 (7) (5) 0 0
Inc/(Dec) in Fixed assets/ Investments 112 114 721 500 300
Inc/(Dec) in Cash/Bank Balance 54 45 159 (203) (70)
Total Outflows 1,579 1,377 1,625 1,605 1,608
61
India Research

From Operations
Profit Before Tax 55.4% 87.3% 77.7% 99.9% 129.8%
Depreciation 3.7% 4.9% 5.3% 9.1% 10.3%
Less:
Dividend Payout 3.6% 5.5% 5.3% 8.4% 10.9%
Tax Paid 20.6% 34.7% 28.7% 34.0% 44.1%
Operating cash flow 34.9% 51.9% 49.1% 66.6% 85.1%
Increase in Equity Share capital

Increase in Share premium 0.5% 0.1% 0.1% 0.0% 0.0%
Increase in other reserves 64.9% 2.6% 2.3% 0.0% 0.0%
Increase in Others -0.1% 0.3% 0.1% 8.4% 0.0%
Inc/(Dec) in Loans -0.9% 47.5% 48.4% 24.9% 14.9%
Inc/(Dec) in Equity/Loans/MI 65.4% 48.2% 51.2% 33.4% 14.9%
Adjustments
Diff.in Dep. -0.4% -0.1% -0.3% 0.0% 0.0%
Total Inflows 100.0% 100.0% 100.0% 100.0% 100.0%
CASH OUTFLOWS

Inc/(Dec) in Provisions 3.5% 17.0% -10.6% 3.5% 5.9%
Inc/(Dec) in Current Liabilities 3.1% 19.6% 125.5% 19.3% 93.7%
Less:
Inc/(Dec) in Inventory -28.5% 1.6% 41.5% 23.1% 13.6%
Inc in Debtors 72.7% 98.3% 95.9% 43.8% 145.9%
Inc/(Dec) in Loans & Adv. 34.7% 4.9% 39.0% 24.3% 14.1%
Inc/(Dec) in other Current Assets 17.2% 20.2% -15.7% 13.0% 11.7%
Inc/(Dec) in Working Capital 89.5% 88.4% 45.8% 81.5% 85.7%
Capex/Investments
Inc/(Dec) in Investments 1.2% -1.8% 4.4% 0.0% 0.0%
Addition to Gross Block 5.2% 8.7% 38.9% 24.9% 14.9%
Inc/(Dec) in Capital WIP -0.8% 1.9% 1.5% 6.2% 3.7%
Inc. in Misc. Assets 1.4% -0.5% -0.3% 0.0% 0.0%
Inc/(Dec) in Fixed assets/ Investments 7.1% 8.3% 44.4% 31.1% 18.7%
Inc/(Dec) in Cash/Bank Balance 3.4% 3.3% 9.8% -12.7% -4.4%
Total Outflows 100.0% 100.0% 100.0% 100.0% 100.0%
62
India Research
Free Cash Flow

EBITA 1,196 1,652 1,873 2,312 2,835
Less: Adjusted Taxes 444 657 691 786 964
NOPLAT 752 995 1,182 1,526 1,871
Plus: Depreciation 58 67 86 146 166
Gross Cash flow 810 1,062 1,268 1,672 2,037
Less: Increase in Working Capital 1,349 1,553 1,181 615 1,473
Operating Cash flow -539 -491 87 1,057 563
Less: Net Capex 75 148 661 500 300
Less: Increase in Net Other Assets 143 -265 -374 660 49
FCF From Operation -757 -374 -200 -102 214
Less: Inc./(Dec.) in Investment -757 -374 -200 -102 214
FCF after Investment -757 -374 -200 -102 214
Total FCF -757 -374 -200 -102 214
63
India Research
IMPORTANT DISCLOSURES
Price Target
Price targets (if any) are derived from a subjective and/or quantitative analysis of financial and non-
financial data of the concerned company using a combination of P/E, P/Sales, earnings growth,
discounted cash flow (DCF) and its stock price history.
The risk factor that may impede achievement of the price target/ investment thesis
are-
¾ Any change in Government Policies having impact on the Generation, Transmission or
Distribution or any other activities related to the Power Sector may have an impact on power
trading business activities.
¾ Delay or indefinite deferment of spending plans by PGCIL and SEB’s
¾ Extreme price movements in the steel and zinc prices effecting margins in adverse manner.
¾ Any Regulatory or other developments that could affect the sector in an adverse manner.
64
India Research
First Global’s Rating System

Our rating system consists of three categories of ratings: Positive, Neutral and Negative. Within each
of these categories, the rating may be absolute or relative. When assigning an absolute rating, the
price target, if any, and the time period for the achievement of this price target, are given in the
report. Similarly when assigning a relative rating, it will be with respect to certain market/sector
index and for a certain period of time, both of which are specified in the report.
Rating in this report is relative to: CNX Nifty Index
Positive Ratings
(i) Buy (B) – This rating means that we expect the stock price to move up and achieve our specified
price target, if any, over the specified time period.
(ii) Buy at Declines (BD) – This rating means that we expect the stock to provide a better (lower)
entry price and then move up and achieve our specified price target, if any, over the specified time
period.
(iii) Outperform (OP) – This is a relative rating, which means that we expect the stock price to
outperform the specified market/sector index over the specified time period.
Neutral Ratings
(i) Hold (H) – This rating means that we expect no substantial move in the stock price over the
specified time period.
(ii) Marketperform (MP) – This is a relative rating, which means that we expect the stock price to
perform in line with the performance of the specified market/sector index over the specified time
period.
Negative Ratings
(i) Sell (S) – This rating means that we expect the stock price to go down and achieve our specified
price target, if any, over the specified time period.
(ii) Sell into Strength (SS) – This rating means that we expect the stock to provide a better (higher)
exit price in the short term, by going up. Thereafter, we expect it to move down and achieve our
specified price target, if any, over the specified time period.
(iii) Underperform (UP) – This is a relative rating, which means that we expect the stock price to
underperform the specified market/sector index over the specified time period.
(iv) Avoid (A) – This rating means that the valuation concerns and/or the risks and uncertainties
related to the stock are such that we do not recommend considering the stock for investment
purposes.
65
India Research
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Sector: Power Transmission Towers

Robust growth in power generation, inter-regional

Valuation & Outlook 4

Key Growth Drivers 5-8

Possible Downside Risks 9

Peer Comparison 10-12

KEC International Ltd. - Company Analysis 13-21

Price and Rating History Chart 15

KEC International Business in picture… (FY09) 17

Quarterly Results Analysis 21

Kalpataru Power Transmission Limited - Company Analysis 22-32

Kalpataru’s Business in Pictures... (FY09) 27

Business Highlights 29-30

Quarterly Results Analysis 32

Jyoti Structures Ltd. - Company Analysis 33-42

Price and Rating History Chart 36

Jyoti Structure’s Business in Pictures… (FY09) 38

Quarterly Results Analysis 42

KEC International Ltd. -- Financials (Standalone) -- Earnings Model (Standalone) 43-49

Kalpataru Power Transmission -- Financials (Consolidated) -- Earnings Model (Standalone) 50-56

Jyoti Structures - Financials (Standalone) - Earnings Model (Standalone) 57-63

KEC International (KEC.IN/KECI.BO), Kalpataru Power Transmission Ltd. (KPP.IN/KAPT.BO)

Valuation & Outlook

Key Growth Drivers

Break-up of investment in power sector in XIth Plan

Generation Transmission Distribution

Source: Planning commission

Building of transmission infrastructure to follow addition in power generation

Power Grid Corporation of India Ltd. (PGCIL), the main source of

Upgradation of system to reduce T&D losses provides ample

Integration of nation’s transmission network through national grid

Growth in inter-regional transmission capacity (MW)

RGGVY & R-APDRP

Opportunities in Railway & Telecom sectors

Electrification Rates in Africa

T&D investment over next five years

Possible Downside Risks

Total revenues & EBIDTA margin

Total Revenue (Rs. Mn)

Jyoti Structures KEC Kalpataru

Working capital management

Working Capital Cycle (in Days)

Interest cost (Rs. mn)

KEC International Ltd.

Top Management Team Capital Issue History

Price and Rating History Chart

ST: Short Term MT: Medium Term LT: Long Term

KEC International (KECI.BO)/ (KEC.IN)

Represents Reiteration of Existing Rating

KEC International Business in picture…(FY09)

Profit before Tax: Competitors –

Profit after Tax:

Assets Balance Sheet Liabilities

Balance sheet restructuring

Quarterly Result Analysis

Kalpataru Power Transmission Limited

Top Management Team

Capital Issue History

Avg Daily Val (20 days): Rs.35.9 mn Indian

Price and Rating History Chart

ST: Short Term MT: Medium Term LT: Long Term

Kalpataru Power Ltd. (KAPT.BO)/ (KPP.IN)