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Crime and punishment

Vol. XXVIII/04

Apr 15 28, 2013


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...................................................................................................................................... Owner : Capital Market Publishers India Pvt. Ltd. ...................................................................................................................................... Managing Director : S. Anantharaman ...................................................................................................................................... Jt Managing Director : Ruby Anand ...................................................................................................................................... Editor : Mohan Sule ...................................................................................................................................... Deputy Editor : Yagnesh Thakkar ...................................................................................................................................... Assistant Editor : Sameer Purohit ...................................................................................................................................... REGISTERED OFFICE 401, Swastik Chambers, Sion-Trombay Road, Chembur, Mumbai-400 071. Tel: 91-022-2522-9720 Fax: 91-022-2522-0954 / 2523-0011. email: info@capitalmarket.com CAPITALINE DATABASES Tel: 91-022-2522-1112 / 2522-9720 Fax: 91-022-2522-0954 / 2523-0011 email: info@capitaline.com ADVERTISING Tel: 91-022-2102-8388/ 2522-9720 Fax: 91-022-2102-4366 / 2522-0954 email: advt@capitalmarket.com SUBSCRIPTION & DISTRIBUTION Tel: 91-022-2102 3869 / 5472 Fax: 91-022-2102-4366 email: subscription@capitalmarket.com AHMEDABAD 312, Sampada Complex, 3rd flr., Rashmi Society, Mithakhali, Six-Road Junction, Navrangpura, Ahmedabad-380 009. Tel: 079-2642 1534 / 35, 2656 4727 Fax: 079-2642 1535. email: cm-ahmd@capitalmarket.com BANGALORE No.37, 2nd Floor, Dickenson Road, Bangalore-560 042. Tel: 080-2557-2334 / 5 Fax: 080-4151-0674. email: cm-bglr@capitalmarket.com CHENNAI No.41, 1 st Flr, Sundareshwarar Street, Mylapore Chennai-600004. Tel: 044-246-12690 / 38, 249-51900 / 01 / 02 Fax: 044-2461-2638 email: cm-chennai@capitalmarket.com COCHIN Oriental Business Centre, 36/1262 A, Vaidyar Lane, Kaloor, Cochin-682 017. Tel: 0484-325 3420 email: cm-cochin@capitalmarket.com DELHI 601, 6th Floor, Padma Tower - II, 22, Rajendra Place, New Delhi - 110 008. Tel: 011 - 2581-1255 / 56 / 57 email: cm-delhi@capitalmarket.com HYDERABAD # 3-5-890, Room No-209, Paras Chambers, Himayatnagar, Hyderabad-500 029. Tel: 040-2326 4384, 32408398. Fax: 040-4007-7098. email: cm-hyd@capitalmarket.com KOLKATA 3-B, 3rd flr, Satyam Bldg 46 D, Rafi Ahmed Kidwai Rd, Kolkata-700 016. Tel: 033-329 66683. Fax: 033-2227-3120 email: cm-kolkata@capitalmarket.com PUNE C-28, 1st Flr, Shrinath Plaza, Plot no. 559, Bhamburda, Shivaji Nagar, Fergusson College Road, Pune-411 005. Tel: 020-2551-1616 / 17. email: cm-pune@capitalmarket.com ...................................................................................................................................... Cover Price: Rs 50 Annual Subscription (26 issues): India Rs 1,300 Overseas (Airmail) US$ 140. (Cheque/D.D. drawn on Mumbai in favour of Capital Market Publishers India Pvt. Ltd.) 2011 Capital Market Publishers India Pvt. Ltd. All rights reserved. Reproduction in whole or in part without permission is prohibited. All possible efforts have been made to present factually correct data. However, the publication is not responsible, if, despite this, errors may have crept in inadvertently or through oversight. Though all care is taken in arriving at the recommendations given in this publication, readers are cautioned that prices of equity shares and debentures may rise or fall in a manner not foreseen. Readers are advised to take professional advice before investing. Subject only to Mumbai jurisdiction ...................................................................................................................................... Printed and published by S. Anantharaman on behalf of Capital Market Publishers India Pvt. Ltd. Printed at Magna Graphics (I) Ltd Kandivili (W), Mumbai - 400 067 and published from 401, Swastik Chambers, Umarshi Bappa Chowk, Sion-Trombay Road, Chembur, Mumbai 400 071.

Why is the market rewarding loose monetary policies of Japan but is unimpressed with Indias promise of fiscal discipline?
A stocks price is supposed to fully value its historical earning at any given point of time. Risk-averse pickers wait for correction to possess a long-desired scrip. The reversal in price could be due to company-specific hiccups. The counter could also slide on profit booking after a sharp run-up, deterioration in the health of the industry due to factors beyond the companys control, or because of the broad market slide on muddied outlook for the economy. The small gains that the cautious investor makes through this incremental approach are blunted by limited opportunities. The other class of risk takers prefers to look ahead to load the portfolio. The appeal of a stock is based on growth potential, estimated through order backlog or completion of ongoing projects. Last year, Maruti Suzuki was beaten on worker unrest at its Manesar, Haryana, unit as the valuation assigned due to its bulging order book looked expensive in view of the imminent delays in delivery and cash flow. IT stocks swing to economic data from the US and the rupee movement, which dictate the flow, pricing and realisation of contracts. The market crashed even as the UPA I government was being formed in May 2004 as a partner indicated burial of the PSU divestment program, so vital for narrowing the fiscal deficit and easing pressure on interest rates. Most firms tend to be conservative in their guidance. However, many are unnecessarily optimistic. The reason could be to convince the market to assign premium pricing to aid in fund-raising. The exuberance is more pronounced in a bull market. In a downtrend, the concern is the worst is still to come despite valuations that have already factored in the sluggish growth and liabilities on the balance sheet. Of late, the market seems to be going against logic. Take two recent instances. Equity investors hardly flinched when rating agencies downgraded the UK and Japan due to their unhealthy balance sheets: Britains debt-to-GDP ratio is nearly 90% and Japans fiscal deficit is expected to balloon to more than 10% of GDP in the current year. As against a conventional response, the Nikkei index surged to a new high. In contrast, the Indian stock market seemed unimpressed with the finance ministers confidence of lowering fiscal deficit to 4.8% from 5.2% last fiscal and boosting growth to an impressive 6.5% from an anemic 5% estimated for the March 2013 year end. It remained flat in the month since the budget. If equities are supposed to be forward looking, Japan should have shed value and India experienced a renewed surge. There could be two explanations for this behavior. One, the market had already absorbed the two contrasting scenarios: growth pangs for Japan and a turnaround for India. Two, it was excited at the Bank of Japans aim to inject liquidity till inflation rose to 2%. On the other hand, the Indian finance minister had failed to spell out the roadmap to achieve his projections. PSU divestment had fallen short of the Rs 30000-crore target. There was expectation of renewed policy paralysis due to the election season. Yet stocks had responded heartily to the increase in FDI cap to 51% in the retail sector and to 49% in aviation in spite of the formidable obstacles at the ground level and to the partial rollback of fuel subsidies despite the walkout of a key ally from the coalition government. On the surface, it would appear that the market is discriminating by ignoring Britains debt pileup and the danger to Japans health due to easy money policy. Indias promise of prudent fiscal policies, in contrast, is not getting a warm reception. The inescapable conclusion is that foreign investors are assigning higher discounting to growth and differentiating between good inflation (US and Japan) induced to expand the economy and bad inflation (India) due to supply bottlenecks that is stalling output. The message is that India has to undertake deep reforms. The glimmer of structural shakeup late 2012 did more to propel the market than balancesheet jugglery to bridge revenue shortfall. Selling shares of PSUs to a stateowned insurer can at best be described as cash transfer. Instead of drastically slashing market borrowings for welfare spending and subsidies that keep interest rates high, the budget has passed the buck to the conservative investors, who will face lower payout from debt mutual funds that had become attractive due to higher return because of the hike in dividend distribution tax (DDT) and from efficient companies making more than Rs 10-crore profit due to the increase in surcharge on DDT.
MOHAN M SULE 3

Apr 15 28 , 2013

CAPITAL MARKET

ReadersReact
cash flow and protection of principal (Changing equation, Mar 18 - 31, 2013). Chances of projections about future earning going wrong are high for stocks but so is the potential for return.
P S eddon , vi a e -m a il

A credit rating for a fixedincome product, is supposed to accurately predict the likeliness of default by the borrower. The advantage is neutralized by barely-above inflation return and higher tax compared with equity. The cost of price rise That inflation is at a three-year low is illusion (Stocks: Beating inflation, Mar 18 - 31, 2013). What has happened is that the pace at which prices have been rising has moderated. But inflation remains high. Not only for poor, inflation could be taxing for Corporate India as well. This is true for companies that are not in a position to pass on the rise in prices of inputs to customers.
C h i n t ya G our i she tt y, vi a e - m a il Mini S ehga l , vi a e -m a il

corporate profit and also increased surcharge on dividend distribution tax (Budget 201314: Neutral for equities, Mar 18 - 31, 2013). These are major negative for equity investors.
B il aa l T, vi a e -m a il

Whether a company is able to pass on the inflationary pressure to customers depends on a variety of factors such a market share which, in turn, depends on brand, market reach, and so on. A company operating in a niche segment with an edge in technology could be in a better position to pass on the price escalation to customers.
K anchan M anj r eka r , vi a e - m a il

Mortgage-backed debt paper comprised securities of different profiles. Rating agencies erred in not alerting subscribers to the inherent volatility due to the composition. Instead, they clubbed it in the highest-safety category. The reasoning probably was that the mix of the dodgy with the credit-worthy would eventually spread out the risk. Instead, these papers turned out to be combustible.
G i r i A mdavad i , v i a e - m a il

The government is contemplating inflation-indexed bonds to reduce demand for gold, which is largely imported and puts pressure on current account deficit. But these bonds are unlikely to meet this objective. The rural population is a main driver of demand for gold. Does the government believe the rural population is going to invest in inflation index bonds?
K unaa l S i gw an , v i a e - m a il

Ripe for picking Generally stocks tend to witness correction once they go ex-dividend (Dividendpaying stocks: Low-hanging fruits, Mar 18 - 31, 2013). Therefore, investing in stocks with high dividend yield ahead of annual results makes sense. A rally in a stock post dividend announcement wipes out gains for investors.
R a j u P assi , vi a e - m a il

Rating agencies that keep a hawks eye on countries fiscal health turned sloppy when it came to monitoring their clients.
Iye r Arun , vi a e -m a il

Banks would be permitted to act as insurance brokers. This would help to increase insurance penetration. This would also strengthen position of insurance industry in the equity markets as against other institutional investors. Importantly, banks would be in a position to sell policies of multiple insurance companies.
B adr i S i mkhada , vi a e - m a il

Growth pangs Credit sales or outstanding debtors are actually interestfree loans extended to customers by a business (Stocks: Cashless growth, Mar 04 - 17, 2013). A very high debtors collection days implies companies have to put in that much of extra capital in the business to finance these debtors. This could mean bearing additional interest burden if a company has opted for borrowed funds to finance its working capital. Debtors are part of current assets.
M S av i t endr a , v i a e - m a il

The pros and the cons As against the inbuilt uncertainty associated with exposure to equity including volatility in earning, debt is considered dependable for the stability in

Most times, rating alerts come after the equity market has passed its judgment. For investors the lesson is that fixed-income products could turn out to be as unpredictable as stocks.
M anir a m an S , vi a e -m a il

Budget maths The finance minister has increased the surcharge on

The surcharge on dividend distribution tax (DDT) would increase from 5% to 10%. With this, the effective rate of DDT will increase from 16.22% and touch almost 17%. This double whammy would hit investors hard as companies would hit dividend payout ratio.
S e t hur a m an Pott i , vi a e -m a il

Cleaning the books Change in the depreciation policy would not translate into inflow or outflow (Investment Strategy: Out of the ordinary, Mar 04 - 17, 2013). Similarly, provision for diminution in the value of investments or impairment of loans to subsidiaries is cleaning the books without actual cash outflow. Provisioning for slowmoving trade receivables and unbilled revenue is also putting the books of accounts in order.
M anav K eva t, v i a e - m a il

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Apr 15 28 , 2013 CAPITAL MARKET

InSide
07 | Cover Story
Stocks: Worth the investm ent
12 | In Focus
FMCG companies Indian rupee Cox & Kings Partial sugar decontrol Recording high and consistent return on equity is not the prerogative of MNCs. Many mid and small caps also belong to this category

69 | Stocks in Action
Volatile movements Kite-flying

90 | Capitaline Corner
Balmer Lawrie & Company Well diversified

25 | IPO Performance
Lackluster show

73 | Apna Money
Procedural irritants Dressing up Sweeping under the carpet What is the return on PPF this year? Flexibility v rigidity What is the liability for service from an unregistered provider?

27 | Sector Specific
Slim pickings amid setback

29 | OffFocus
Packing the bags Have will, will travel

68 | Stock Watch
KPIT Cummins Infosystems On a sound footing

89 | Commodity Watch
Silver Midsummer's price fall

32 | Corporate Scoreboard 61 | Consolidated Scoreboard 62 | Company Index 66 | Bulletin 67 | Watch List


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S a mpl e som e o f t he cap t i ons o f 10th April 2013:


R e li a n ce C o mm un i ca t i ons l ea ds g a i n e r s i n A g r oup ( 10 - A p r, 16 : 40 H r s I S T ) M o r e H DFC spu r t s on b a r g a i n hun t i ng ( 10 - A p r, 15 : 18 H r s I S T ) M o r e B ank of B aroda recovers after 5-day 8.5% slide (10- A pr, 14 : 42 Hrs IS T) M o r e Sesa G oa drops to 52-week low (10-Apr, 14 : 31 Hrs IST) M o r e Vo l u me s j u m p a t V ST Indus tr i e s c oun te r ( 10 - A p r, 13 : 44 H r s I S T ) M o r e

K ee p You r P o r t f o li o O n li n e

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S eve r a l investors m a int a in the ir portfolios online a t our si t e . Pr e mium se rvices (Apna Money) include a l e rt s on a ll corpor a t e act ions like boa rd m ee t ings, dividends e t c. Also r eady output st a t e ments segr ega t ing short-t erm and long-t erm ga ins.
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Apr 15 28 , 2013 CAPITAL MARKET

CoverStory CoverStory

Stocks

Stocks

Worth the investment


Recording high and consistent return on equity is not the prerogative of MNCs. Many mid and small caps also belong to this category
The most important ratio for the shareholders is return on equity (ROE) signifying the return a company manages to generate on invested capital. Companies with consistently high ROE include Colgate-Palmolive (India), Nestle India, Hindustan Unilever, Castrol India, Kwality Dairy (India) and Hero MotoCorp. Among these companies, Kwality and Hero MotoCorp are Indian firms, while the remaining four are multinational companies (MNCs). Moreover, Hero MotoCorp used to have an MNC connection earlier as it was a joint venture (JV) between the Hero group owned by Munjal and Honda Motor Company, Japan. The partner decided to part ways in December 2010. Though it reported commendable ROE of 67.8% in the financial year ended 31 March 2012 (FY 2012), Kwality scores low when it comes to consistency in recording high ROE. The company reported financial turnaround in FY 2004 and has notched a fairly consistent increase in ROE since then. MNCs rule when it comes to delivering consistently high ROE. Colgate with ROE of 109% in FY 2012 is the best among the listed companies on twin parameters of high
Apr 15 28, 2013 CAPITAL MARKET

ROE and consistency. Its ROE is in triple digits for the last five years. Nestles ROE, though, has witnessed a decline to 90.3% in the year ended 31 December 2011 from 113.9% in 2010. It has reported ROE of over 70% in the last 10 years. MNCs are known for disciplined approach to capital deployment and utilisation. Their strategy of prudent and cautious approach to capital investment helps maintain healthy ROE. Another striking feature about MNCs is that they command premium valuation. One of the major reasons is the consistently high ROE reported by these companies. (see box: What matters). Colgate (P/E 34.5), Nestle (41.6), Hindustan Unilever (27.6) and Castrol India (35.6) enjoy superior price to earning (P/E) multiple. However, there are several Indian firms that have also shown remarkable consistency in reporting high ROE. Though the ROE reported by domestic companies is certainly not comparable with the best numbers reported by MNCs, it is still not meager to be sidelined. For instance, Torrent Pharmaceuticals has reported outstanding consistency in ROE. Its ROE stood at 29.7% in FY 2012, 29.1% in FY 2011, 31.2% in

FY 2010, 31.7% in FY 2009 and 29.2% in FY 2008. Indraprastha Gas is a similar case. The company reported ROE of 27.4% in FY 2012, 28.4% in FY 2011, 28.5% in FY 2010, 27.3% in FY 2009 and 33.4% in FY 2008. The ROE of these companies may not impress some investors. But both these companies are among the top 100 companies in by superior ROE. ROE in excess of 20% is considered good. The common feature among these two counters is that both are mid-cap companies. Mid- and small-cap stocks have reported heavy offloading in the market correction in March 2013. The BSE Small-Cap index touched a 52-week low of 5,708 on 28 March 2013. The index was at 6,048 on 3 April 2013. Similarly, the BSE Mid-Cap index is at 6,258, which is not too far from its annual low of 5,734 in June 2012. The index hit a 52-week high of 7,391 in January 2013. From this level, the index has seen a massive correction in a matter of mere three months. Thus, this could be an opportune time to focus on these categories, particularly companies that have reported high ROE on a consistent basis. To spot small- and mid-cap companies
7

CoverStory
with high ROE, Capital Market started with companies listed on the Bombay Stock Exchange, with market cap above Rs 100 crore and fairly liquid on the trading floor. Only domestic companies were considered. Companies with market cap below Rs 1000 crore are classified as small-cap companies and companies with market cap between Rs 1000 crore and Rs 9000 crore categorized as mid-caps. Only small- and mid-cap companies were taken for further screening. Basically, large-cap companies with market cap above Rs 9000 crore were ignored. Small- and mid-cap companies were sorted based on the descending order of ROE for the latest financial year. Companies with ROE greater than 25% in the latest financial year were taken into account. Apart from high ROE, consistency over the last five years was given preference. Therefore, companies with wild swings in ROE over the last five years were weeded out. As small- and mid-cap companies are risky compared with large-cap companies, an additional safeguard of companies that had paid dividend over the last five years was introduced. This was done to ensure healthy cash-flow position and that reported profit is not merely book profit. Firms where mutual funds held an equity stake were picked. At last there were 20 companies. Established in 1959, kitchenware player Hawkins Cookers mainly makes 65 models of pressure cookers in 10 different types and markets them under three brands: Hawkins, Futura, and Miss Mary. Cookers are exported to the US under the Futura brand,

Stocks
factory. This was largely resolved with the signing of a wage agreement with 85% of workers in October 2012. Hawkins Cookerss ROE over the last seven years ranged between a low of 112.2% in FY 2010 and a high of 31% in FY 2006. Despite this volatility, the ROE is attractive (61.5% in FY 2012). One of the major reasons for the high ROE is the low net worth. The denominator (net worth) is on the lower side because of a turnaround in FY 2005. However, the low base is not the sole reason as the net worth has risen sharply since them. Sterling operational performance is another important factor for the high ROE. The company reported the highest ever turnover in FY 2012. Zydus Wellnesss ROE of 41.6% in FY 2012 and 41.9% in FY 2011 is not as eyecatching as that of Nestle or Colgate but is certainly impressive among domestic companies. What is striking is the focused business model. In the wellness space, flagship brand Sugar Free enjoys 90% market share in the sugar substitutes segment. SugarFree Gold and SugarFree Natura are popular sub-brands. A fieldforce of 500 takes these products to towns with population of over 50,000. Zydus markets skincare products like scrubs and peel-offs under the EverYuth brand. Nutralite, an alternative to butter, is the countrys largest selling brand in the margarine segment. It forayed in the neutraceutical segment by launching ActiLife, a nutritional milk additive for adults, nationwide in FY 2012 after test marketing. The zero-debt company since the last one decade has set a revenue target of Rs 500 crore by FY 2014 from a turnover of Rs 331.4 crore in FY 2012. However, Zydus faces multiple challenges at the market place. First is the over-dependence on Sugar Free for topline and bottomline growth. Second, is the increasing competition in all the product segments. EverYuth is on shaky ground in the scrub and facewash categories due to aggressive new entrants including domestic and multinational firms that are investing serious money in brand-building. Similarly, the margarine category is fighting with lowpriced competitors, particularly in the institutional segment. Balkrishna Industries is a niche tyre maker with focus on off-highway specialty tyres, which find application in industries like agricultural, industrial, material
Apr 15 28, 2013 CAPITAL MARKET

Zydus Wellness has a focused business model

while Hawkins is the major brand in the domestic market. Besides three plants one each at Thane in Maharashtra, Hoshiarpur in Punjab and Jaunpur in Uttar Pradesh the firm has a network of 700 authorised service centers and largely focuses on marketing its products through dealers with less reliance on wholesalers. In a major breakthrough in October 2012, Howkins received no-objection certificate from the Punjab Pollution Control Board (PPCB) for its Hoshiarpur factory, which is largest plant of the company. In October 2011, the PPCB had instructed the company to cease operations on allegation that the factory was producing harmful effluents. Further, supply was hindered by labour strike at the Jaunpur

What matters
Investors should look at ROE over a long period of time for consistency Return on equity (ROE), also known as return on net worth, is one of the most important ratios as it reflects the return generated on funds belonging to the shareholders. ROE is determined as profit after tax and preference dividend upon shareholders funds or net worth. The shareholders fund can be taken as an average, considering the opening and closing shareholders fund. This ratio is expressed in percentage terms. Shareholders fund includes paid-up share capital and reserves and surplus. Shareholders fund is exclusive of preference share capital. ROE is primarily influenced by profitability, debt and rate of tax. If a companys profitability is increasing at a higher pace, it would push ROE to a higher trajectory. Similarly, low cost of debt would boost profitability. Lower corporate tax rate is boon for ROE. Even the dividend policy has an influence on ROE. If a company returns excess cash not required by the business, the ROE would receive a boost. Ideally, investors should look at ROE over a long period of time to examine the consistency. Is the high ROE part of a well thought-out corporate strategy or a mere accident?

CoverStory
handling, construction, earthmoving, forestry, garden equipments and all-terrain vehicles. The product portfolio consists of over 2,000 stock keeping units. This segment can be categorised as large variety, low volume and high price. As the tyres are customised, the business is capital-intensive. With manufacturing plants at Bhiwadi and Chopanki in Rajasthan, Aurangabad and Dombivali in Maharashtra, and Bhuj in Gujarat, Balkrishna exports to 120 countries. About 90% of the revenue comes from exports to the US and Europe. Present capacity of 1,66,000 tonnes per annum is expected to touch 2,31,000 tonnes by FY 2014 and 2,76,000 tonnes by FY 2015. A 25,000-tonne plant was commenced at Bhuj, Gujarat, in August 2012. Further, 65,000 tonnes will go commercial by FY 2015. The total project outlay of the greenfield plant at Bhuj is US$ 275 million and will be funded through debt and internal accruals. The revenue target is US $1 billion by FY 2015. On the flip side, Balkrishna needs to deal with volatility in prices of natural rubber, a key raw material. Further, it is exposed to currency risk. A major portion of its revenue comes from exports but raw material imports form a significant quantum. Imports were Rs 1719 crore and exports Rs 2570 crore in FY 2012. Generally, it is perceived that companies with high ROE have insignificant debt or are cash-rich. However, this is not true. Judicious use of debt could give a boost to ROE. Balkrishna reported debt-to-equity ratio of 1.18 in FY 2012 and 0.71 in FY 2011. Despite this, ROE increased to 27.2% from 25.2% in this period. Exponential growth in revenue and earning was a major reason for the jump in ROE. Torrent Pharmaceuticals has reported improvement in ROE banking on expanded profitability margins over the last five year. Additional capacity has successful translated into enhanced turnover. The flagship company of the Torrent Group is into therapeutic segments of diabetology, cardiovascular, central nervous system, gastro-intestinal, anti-infective, pain management and gynecology. Ranked number 2 in the cardiovascular segment, number 4 in neuro psychiatry therapies, and 17th by turnover in the domestic market, Torrent has six brands in the top 300 brands. The fieldforce stood at 4,412 end FY 2012. Its research center employs 640 scientists and has various
Apr 15 28, 2013 CAPITAL MARKET

Stocks
consumers, and 1,213 industrial and commercial customers. IGL provides fuel to Delhi public transport buses, the largest CNG bus fleet in the world. In FY 2012, IGL provided 87,920 new domestic PNG connections, which is a record. To strengthen the market position in Delhi and NCR, it has set a capital expenditure budget at Rs 500 crore for FY 2013. Also, the company is looking at new geographies through strategic alliance and so on for future growth. IGL has managed to report consistent ROE with capacity expansion on a continual basis and corresponding increase in turnover and profitability. CNG stations increased 304 from 163 end FY 2008. Compression capacity is up to 60.8 lkpd from 20.76 lakh kg per day (lkpd). The public transport system is going to see major expansion. A fleet of 5,000 new buses under the private bus cluster scheme is expected to be added by FY 2016. Apart from increase in private cars, issuance of permits to 45,000 new passenger autos by the government will boost demand for CNG. Supreme Industries has reported an impressive rise in ROE over the last five years, to 37.4% in June 2012 from ROE of 21.1% in the year ended 30 June 2008 (FY 2008). Better profit margin and sales-toassets ratio and prudence in use of debt in capital expansion were the major reasons. Founded in 1942, Supreme is the countrys largest plastics processors. It processed over 2.45 lakh tonnes of polymers in 2012 as against 2.24 lakh tonnes in FY 2011. Over the last decade, the quantity of polymers processed has increased by over 2.7 times and turnover by 4.2 times. The range of plastic products are manufactured in 19 advanced plants, powered by technology from world leaders. The company has pioneered several products in the domestic market including a wide variety of films and piping systems. Plastics piping system, with 46% revenue share, was the largest contributor to sales in FY 2012, followed by packaging products (25%), industrial products (19%), and consumer durables (10%). To cater to the spurt in demand from domestic and international markets, Supreme is expanding capacity. It is in the process of setting up a plant at Halol, Gujarat. The first phase of 12,000 tonnes is expected to be operational by April 2013 and the second phase of 8,000 tonnes by April 2014. Besides 1,000 tonnes would be added through de9

IGL has reported consistent ROE

discovery projects in pipeline. The company has filed 450 patents for new chemical entities in several major markets worldwide. Of these, 211 patents have been granted so far. The manufacturing plant at Chattral, Gujarat, has capacity of 5,500 million tablets and 45,000 kilograms of bulk drugs. The facility has been approved by authorities from regulated markets like the US, the UK, Germany, Australia and South Africa. The manufacturing plant at Baddi, Himachal Pradesh, commissioned in November 2005, has capacity of 3,300 million tablets and 350 million capsules. The manufacturing plant at Sikkim has capacity of 3,900 million tablets. Another manufacturing facility is being set up at the Dahej special economic zone for active pharmaceutical ingredient and formulations at a cost of Rs 1000 crore. Phases I and II are expected to go commercial in Q1 of FY 2015 and Q1 of FY 2017. Torrent has incorporated subsidiaries in various countries including Russia, Brazil, Germany, US and Philippines to tap these markets. The company exports to around 50 countries and recorded exports of Rs 758.5 crore in FY 2012 and Rs 578.1 crore in FY 2011. Incorporated in 1998, Indraprastha Gas (IGL) is a JV between Gail and BPCL. The government of National Capital Territory (NCT) of Delhi holds 5% equity stake. In 1999, the company started operations in NCT with nine compressed natural gas (CNG) stations and 1,000 piped natural gas (PNG) consumers. At present, it has operations in NCT of Delhi, Noida, Greater Noida and Ghaziabad, with 304 CNG stations, 3.65 lakh residential

CoverStory
bottlenecking of existing plants. Turnover is projected to touch of Rs 5000 crore by FY 2015 from Rs 2965.6 crore in FY 2012. Supreme Petrochem is an associate company in which Supreme holds 29.88% equity stake. It is a JV with the R Raheja Group. Supreme Petrochems total installed capacity of expandable polystyrene is around 72,100 tonnes. Part of the Murugappa Group, Coromandel International is into four business segments of fertilisers, speciality nutrients, crop protection and retail. The countrys second-largest phosphatic fertiliser player manufactures and markets around 2.9 million tonnes (mt) of a wide range of fertilisers. Its specialty nutrient products include organic fertilisers. The crop protection business produces insecticides, fungicides and herbicides. The company is the second largest manufacturer of malathion and only the second manufacturer of phenthoate. Besides, the foray into the retail business has resulted in more than 640 rural retail centers in Andhra Pradesh and Karnataka. Lately, Coromandel is in the thick of action with organic and inorganic growth initiatives. The third complex fertiliser plant commenced at Kakinada, Andhra Pradesh, in March 2013. Total capacity post expansion will be around four mt. In January 2013, a definitive sharepurchase agreement was signed to acquire the promoters stake up to a maximum of 56.28% in Liberty Phosphate (LPL) at Rs 241 per share. Under a separate agreement, 100% stake will be acquired in Liberty Urvarak (LUL). A term sheet has been executed for buying the business undertaking of Tungabhadra Fertilizers & Chemicals Company through slump sale. The total cost of these purchases is expected to be around Rs 348 crore-Rs 375 crore including open offer for 26% of LPL shares. This will be funded through internal accruals. In May 2011, it acquired Sabero Organics to emerge among the top five players in the domestic agro chemical industry. Coromandels ROE stood at 29% end FY 2012 compared with 40.1% close of FY 2011. The debt-to-equity ratio is little over 1. Over the last three years, Engineers India (EIL) reported an impressive ROE of 38% in FY 2012, 40.1% in FY 2011, and 34.3% in FY 2010. Since its inception in 1965, the zero-debt company for the last several years has emerged as Asias leading design, engineering and turnkey contracting
10

Stocks
FY 2010. The almost zero-debt company has reported a consistent rise in turnover over the last 10 years and paid dividend over the last seven years. The top line and the bottom line has grown exponentially over the last three years, which, in turn, has boosted ROE. Turnover increased 2.7 times and profit 5.5 times between FY 2009 and FY 2012. Mayur is one of the largest manufacturers of artificial leather (PVC vinyl) in the country and has been aggressively adding capacity since it started operations: 1.85 million linear meters per month (lmpm) from 400,000 lmpm. It has four coating lines at Jaitpura in Jaipur in Rajasthan. Running at full capacity, the company is in the process of installing a fifth coating line, with capacity of six lakh lmpm. Domestic and international original equipment manufacturer clients include Ford and Chrysler in the US and Maruti Suzuki, Tata Motors, Mahindra & Mahindra and Honda Motorccycles in India. Business opportunities are being explored with BMW, Mercedes and General Motors. It is also a supplier to footwear makers Bata, Action, Liberty, and Paragon among several others. As part of backward integration, Mayur in September 2012 started commercial operations at its new synthetic knitted fabric unit at Dodhsar, Rajasthan, which is 20 km from the existing plant at Jaitpura. Knitted fabric is a key raw material in making artificial leather. Raw material constitutes around 70%-75% of sales. Suppliers hold the pricing power in the value chain is one of the major worries for the company. Swaraj Engines (SEL) was set up to manufacture engines for fitment into Swaraj tractors of Punjab Tractors (PTL), which is now part of Mahindra & Mahindra (M&M). Subsequently, SEL became supplier of hitech engine components to SML Isuzu, earlier known as Swaraj Mazda. Since it started commercial operations in 1989, SEL has supplied 4.6 lakh engines to Swaraj tractors. The engine business constitutes around 95% of the product revenue. Remaining 5% represents hi-tech engine components supplied to SML Isuzu for assembly of commercial-vehicle engines. M&M holds 33.22% and Kirloskar Industries 17.39% equity stake. SEL reported ROE of 31.2% in FY 2012, 31.9% in FY 2011 and 34% in FY 2010. The firm issued bonus shares twice: 1:1 in FY 1997 and 2:1 in 2005. For the first time, the 50,000 mark in production and
Apr 15 28, 2013 CAPITAL MARKET

Mayur Uniquoters is consistent in dividend

company. With employee base of 3,450 in FY 2012, it offers a holistic range of engineering services to the energy (hydrocarbons and petrochemicals) and infrastructure sectors. In the international market, EIL has presence in the Middle East, North Africa, South East Asia and Latin America. Lately, the company has seen major traction in the overseas business, which in FY 2012 was at three times that of FY 2011. Orders were received from Venezuela and Kenya. A JV, Jabal Eiliot, has been formed in partnership with IOTL and Jabal Dhahran for tapping business opportunities in Saudi Arabia. A new branch office has been established in Venezuela to explore the South American market. Apart from the core hydrocarbon sector, EIL is looking at business diversification in sectors such infrastructure and water management, solar and nuclear power, city gas distribution, and fertilisers. The firm reported an all-time high turnover of Rs 3723.4 crore in FY 2012. Turnkey projects contributed 67.3%, while the remaining 32.7% came from the consultancy and engineering projects. FY 2012 has been a challenging year: Turnover declined 5.9% in the 12-months ended 31 December 2012, while profit grew a mere 4.3%. Mirroring the tough business environment, EIL plunged to a three-year low of Rs 150 in March 2013. Though further correction cannot be ruled out as the investment cycle remains weak world over, this could be a value buying opportunity. Among small-cap companies, Mayur Uniquoters has an impressive ROE: 45.4% in FY 2012, 49% in FY 2011 and 45.6% in

CoverStory
Shareholders delight
Mid and small caps with consistent ROE in the last five years and greater than 25% in the latest financial year

Stocks

COMPANY

CMP M-CAP 52-WEEK (Rs) (Rs cr) LOW (Rs)


268.4 193.5 153.8 2151 20 280.3 136.5 407.7 766.4 316 215.5 397.5 565.9 683.3 3308 102.6 374.5 242.5 431 2594 5477 5182 1138 417.8 3924 562.1 186.1 441.5 1080 4015 360.7 493.6 6743 5782 3744 506.3 323.5 1057 1684 241.5 181.2 150 1455 19.1 170 400 130 210.3 577.7 199.6 174 385 401.6 580.8 2650 84 330 178.5 320

52-WEEK HIGH (Rs)


317.9 304.8 266 2485 30 391.8 550 174 505.1 827 331 346.7 528.5 684 766.6 3996 180 563.4 302.5 532.9

NETWORTH (Rs cr)


1110.1 2400.3 1898.8 51.6 233.4 1228.9 229.7 182.8 85.9 283.7 695.4 351.3 186.3 1629.3 1193.8 283 187 204.3 575.9 186.9

TOTAL DEBT (Rs cr)


1709.2 2943.4 0 12.2 61.4 389 12.5 1.7 3.8 0 351.1 1572.9 0 272.6 578.7 59.7 172.7 16 248.1 0

DEBT EQUITY RATIO


1.18 1.03 0 0.24 0.35 0.3 0.07 0.02 0.08 0 0.7 3.28 0 0.14 0.52 0.13 0.75 0.04 0.47 0

ROCE (%)
17.8 23.1 54.2 75.5 34.6 30.9 40.6 36.9 64.5 33.8 38 17.2 45.3 34.1 25.6 61.7 31.3 38.5 31.5 49.8

RONW (%)
27.3 29 38 61.6 35.2 27.5 29.8 31.3 45.4 26.7 37.4 24.9 31.2 25.2 29.8 48 33.2 27.2 31.1 41.6

CHG IN TTM NET SALES (%)


25.1 17.1 -5.9 11.2 4.8 39 -9.7 4.8 23.5 11.7 16.9 38.9 12.7 -9.1 19.8 24.2 30.9 -1.1 26.3 10.6

CHG IN TTM PAT(%)


42.2 -24.2 4.4 7.6 3.7 18.6 -37 -17.6 45 21.5 27.4 15.6 8.7 -9.7 -2.7 13.2 31.6 -4.1 11.1 32

MF HOLD (%)
19.9 5.2 2.1 5.8 1.4 7.8 16.8 0.9 0.2 1.9 8.7 6.8 11.6 6 9.4 3.3 0.4 5.4 1.2 7

P/E P/BV

DY (%)
0.6 3.6 3.9 1.9 7.5 1.8 2.7 4.4 1.7 0.4 1.9 0.6 3.3 1.2 1.2 0.5 2 2.4 2.9 1.2

Balkrishna Industries Coromandel Int ernational Engineers India Hawkins Cookers IL&FS Investment Managers Indraprastha G as Lumax Auto Technologies Mayur Uniquot ers NESCO Supreme Industries Supreme Infrastructure India Swaraj Engines Thermax Torrent Pharmaceuticals TTK Prestige Vinati Organics VST Tillers Tractors Zensar Technologies Zydus Wellness

7.5 11 8.1 35 5.6 11 12 4.1 11 14 16 3.4 9 19 18 30 7.5 6.7 6 20

2.3 2.3 2.7 22.1 1.8 3.2 2.4 1 5.1 3.8 5.8 1 2.6 4.1 4.8 13.2 2.7 1.6 1.8 9

Kirloskar Pneumatic Company 437.8

C MP (curr ent ma rke t price ) is closing as on 1 April 2013. Yea r end M a rch 2012, execept for Supr e me Infr astructur e it is June 2012. TTM (tr a iling tw e lve months) is for the pe riod ended 31 D ece mbe r 2012. C hange in TTM ne t sa l es and PAT is ove r the corrosponding pe riod of the pr evious yea r. Mutua l fund holding (%) as on 31 D ece mbe r 2012 Source : C apit a line Corpor a t e Da t abases

sale of engines was crossed in FY 2012. It reported volume of 55,239 units in FY 2012 and 47,413 units in FY 2011, representing 16.5% growth over the year. Capacity expansion to 75,000 engines in two phases was completed recently. Among the risk factors, SEL is solely dependent on M&M and SML Isuzu for generating business. However, investors can draw comfort from the fact that M&M is a strategic equity investor and customer as well. Still, the companys fortune swings along with the performance of M&Ms Swaraj tractors. The good part of the association is that M&M has sustained its market leadership in the domestic tractor market for over 29 years. The consolidated market share of M&Ms farm equipment sector is around 41% of the domestic market. Conclusion Many companies reporting high ROE also have debt on their balance sheets. Opting for leverage expansion or capital expenditure could be one of the ways to boost ROE. However, this could backfire during ecoApr 15 28, 2013 CAPITAL MARKET

nomic slowdown. This is because interest cost starts hurting the moment the business starts underperforming compared with what was anticipated. Interest outgo could prove a drag and put pressure on ROE. Thus, companies need to do a balancing act in deploying debt in capital expansion. There are companies that avoid this balancing act by staying away from debt. Thus, the list of high ROE companies include several companies with no or insignificant debt on their balance sheets. Ten have zero or insignificant debt including EIL, Kirloskar Pneumatic Company, Lumax Auto Technologies, Mayur, Nesco, SEL, Thermax, TTK Prestige, VST Tillers Tractors, and Zydus. Holding too much of cash also can put downward pressure on the ROE. One of the solutions is to drain out excess cash through payment of dividend. Out here, cash-rich companies like EIL have paid interim dividend to the shareholders. For companies in the high-growth trajectory, it could be impossible to rely on internal accruals to finance capital expansion

projects. Moreover, expansion of capacity could result in decline in ROE till the time the capacity starts yielding full-scale benefits. In turn, this could make ROE volatile to a certain extent. Thus, investors should look at the long-term trend in ROE to arrive at appropriate conclusions. Further, they should also keep in mind the overall economic and business situation while analysing swings in ROE. In short, it is a relative concept and should be seen in relation to markets and competition. Companies with high ROE could emerge as long-term winners. This is one of the most important ratios for equity investors as it reveals how much a company generates from risk capital invested in the enterprise. Apart from high ROE, investors should focus on future opportunities for business growth, which will eventually drive shareholders wealth. Last, maintaining high ROE over a long term along with business expansion is an art. Companies with high ROE over the long-term could be the ones that have mastered this art. S Khedekar
11

InFocus InFocus

FMCG companies

Rinsed, can they shine?


Untouched till last fiscal, topline growth could weaken even if price increases protect the bottom line
The financial year ended March 2013 (FY2013) has been a mixed bag for investors. Fifteen out of 30 stocks in the S&P BSE Sensex pack gained, while the other 15 declined. However, defensive sectors such as fast moving consumer goods (FMCG) led the performance charts buzzing in the volatile year. As against 8.1% return of the Sensex, the BSE FMCG index rose 31.5% in FY 2013. FMCG major ITC was the second biggest gainer in the Sensex pack, clocking 36.2% return, second only to Sun Pharmaceuticalss 43.7% return. The FMCG sector was untouched by the economic slowdown till last year. But it has started feeling the heat of slowdown in consumption. This is getting reflected in investor interest in FMCG stocks. Along with the Sensexs decline of 5.8%, the BSE FMCG index, too, has fallen, but by a lesser magnitude of 3.7%, since the beginning of calendar year (CY) 2013. The fall in volume growth of FMCG companies is despite the record amounts spend on advertising and marketing. The price increases taken by them in the earlier quarters to pass on the rise in the input cost coupled with
12

unfavourable economic scenario have taken a toll on consumer demand. Dabur India (8.2%), Godrej Consumer Products (GCPL) (8.2%), Britannia Industries (2.8%) and ITC (1.5%) are the only major stocks to have gained since January 2013. ITC is favoured because of its strong

To remain outperformer
Being defensive and in a consumerdriven economy, the FMCG sector is expected to fare comparatively better than other sectors
Relative performance of BSE FMCG v BSE Sensex
140 BSE FMCG 130 120 110 BSE Sensex 100 90 A M J J A S O N D J 2013 F M A

Base=100 as on 05 April 2012 F V of BS E F MCG Rs 100.

* 05 April 2013

cigarettes business despite the excise duty hike on cigarettes in the Union Budget for 2013-14 and reducing losses of its FMCG business. Dabur was sought after as it is a play on the rural market and on expected benefits of a restructured distribution network. GCPLs presence in emerging international markets and decline in palm oil prices, its main raw material, grabbed attention. Stock prices of other major players Hindustan Unilever (HUL), Colgate Palmolive, Tata Global Beverages, Nestle India, Jubilant Foodworks, United Breweries, United Spirits, and Marico fell in varying degrees, from 1.5%-20.5%. The FMCG pack is facing a dicey situation. On one side, the market is under pressure. On the other side, valuations are fairly rich. Though consumption volumes are dropping, these companies have pricing power to protect their margin. However, the top line could suffer. Still, these stocks are likely to continue to outperform the market. The other positive is that sectors like metals, cement and auto are expected to fare still worse, underperforming the market considerably. In the absence of lack of themes, the FMCG sector could just act as a clear defensive along with the pharma space. Rural consumption will be a key driver for the FMCG sectors growth, going forward. There are significant mindset and lifestyle shifts taking place in rural India over the last three-four years. These changes
Apr 15 28 , 2013 CAPITAL MARKET

InFocus
are driven by rising household incomes, growing awareness levels due to increasing media penetration, better rural infrastructure, increased mobile phone usage, and farmerfriendly government policies. Governments focus on the rural economy through support and development schemes and substantial increases in the minimum support prices of agri commodities have aided rural prosperity and improved the financial health of farmers. Over the past few years, there has been a steady shift of rural workforce towards non-agricultural sector (services and own enterprises), which has further supplemented rural household income. Land sales (to government in most cases) have also resulted in higher capital flows to farmers. Direct-to-home TV penetration and deeper distribution thrust by national companies are leading to a demanding and sensitive rural consumer, for whom quality and brand perception are becoming important parameters for purchase decisions. The urban-rural mix of the FMCG industry is about 65:35. Except for HUL, Dabur and Colgate, the sales mix of most others including GCPL, Marico, P&G, Nestle and GSK Consumer is currently skewed towards urban markets. Companies are adjusting existing strategies and adopting new strategies to meet the new reality. Key actions being taken by the FMCG companies include direct servicing, affordability, higher advertising and better reach. Retailers are increasingly being tapped by distributors as against the earlier practice of relying solely on wholesalers to improve stock fill and servicing levels. This helps companies to ensure availability of wider product portfolio at the retailers end. Direct servicing also aids in understanding consumption patterns in a

The market is the village


The urban-rural mix of the FMCG industry, at about 65:35, is expected to change on aggressive distribution expansion initiatives in rural regions
GSk Consumer GCPL Marico Dabur Emami Colgate ndia HUL 10 16 22 28 34 40 46 20 23 25 35 38 40 50 52

Rura l contribution to consolida t ed sa l es in percent age . Source : Company reports.

particular catchment area in a better manner (see table: Outreach efforts). Widening the product portfolios in rural areas, FMCG companies have successfully introduced low unit packs and low price offerings to enhance affordability and, in turn, gained share from local brands. HUL has doubled its direct distribution reach to two million outlets over the last couple of years, with incremental gains largely coming from rural areas. Dabur's new initiative to deepen its direct rural reach has resulted in the number of sub-stockists more than doubling in Uttar Pradesh. It has now rolled out this initiative in 10 more states. For Marico, the share of rural sales has risen 25% to 30% of domestic revenue over the past three years. It is about 25% of consolidated sales (see chart: The market is the village). Meanwhile, modern retail is fast becoming a launch pad for premium and specialised product launches in urban areas as this medium offers better mix and margin. Chem-

Outreach efforts
Distribution network of home- and personalcare companies in India

COMPANY
Hindustan Unilever Colgate Palmolive India Marico Dabur India GCPL Jyothy Laboratories P&G India Emami
Source : Company reports

DISTRIBUTION NETWORK
Direct reach to 2 million (mn) + outlets; products reach 6.5 mn outlets Direct reach to 1,713 outlets and indirect reach to 4.5 mn outlets Direct reach to over 0.8 mn outlets and indirect reach to 4 mn outlets Total reach 5.8 mn outlets; direct reach 0.8 mn outlets Covers 3.7 mn retailers in India predominantly in the north and west Available in 2.9 mn outlets in India as of 31 December 2012 Direct reach to 1.3 mn outlets 0.55 mn+ retail outlets; brand reach 3.5 mn outlets; 3,000+ distributors

ists channel, which accounts for about 9% of FMCG sales, is also witnessing its share rising as the companies try to push premium personal and healthcare products through this channel. The home- and personalcare segments, in particular, have been the key beneficiaries of a shift towards premium or valueadded products by consumers and has been responsible for improved realisation for most companies. Affordable low unit packs induce more consumers to try premium products. For example, HUL has successfully expanded the customer base for its premium Dove hair care brand with the introduction of sachets priced at Rs 3. Similarly, low unit packs of Colgate toothpaste have aided rural consumers to uptrade from economy toothpaste brands. While the share of these premium products is not that significant, they do have the potential to drive consumer uptrading and support margin growth. HUL has been reporting higher growth rates for its premium brands Dove (soaps and shampoos), Surf and Rin (laundry), and Ponds (skin care). New distribution formats (modern trade, specialised salons, and chemists) are also supporting growth of premium offerings. Certain premiumisation trends have been observed across crucial key FMCG categories. For instance, ITC has been registering faster growth in the kings segment compared with regular size cigarettes. As they are considered inexpensive luxury and affordable status symbol, demand for cigarettes will likely rise more than bidis as disposable income levels increase. In the skincare segment, fairness creams continue to dominate, with nearly half the share. But incrementally anti-aging creams and mens skincare products are catching up for higher share. In terms of price points, economy brands (Rs 30-Rs 150) dominate the category with over 80% share, while the top end (Rs 500+) accounts for 6-8% share, which is likely to go up as the premium end is growing at 20-25% as against the economy brands 13%-15%. In oral care, FMCG companies have come up with multiple niche variants targeting various consumer segments and ailments such as whitening, foul breath, gum problems, and sensitive teeth over recent years. Most of these premium variants are priced 1.5-3 times their mass-market variants. With new launches, the share of multibenefits (whitening and sensitive care) has risen to about 12%

Apr 15 28 , 2013 CAPITAL MARKET

13

InFocus
in the overall toothpaste sales now. The ITC is one of largest companies Helping hand sensitive oralcare space specifically has in India with a diversified portfolio seen lot of action from MNC players comprising cigarettes, hotels, The declining raw material price trend will help from Colgate, GSK Consumer, and HUL paperboards and specialty papers, the FMCG sector with a lag with aggressive launches and promotion packaging, agri-business, packaged CRUDE OIL PALM OIL WHEAT SUGAR to gain share in this fast growing category. foods and confectionery, branded apRs/Barrel Rs/Tonne Rs/100kg Rs/100kg parel, personal care, stationery, safety Incumbents are introducing various Q1 FY2012 5,686 52,895 1,248 3,018 premium products in the shampoo segmatches and other FMCG products. Q2 FY2012 5,725 55,857 1,237 2,931 ment such as hair treatments, serums, Over the years, the company has Q3 FY2012 5,912 50,331 1,427 3,359 hair masks, and hair conditioners to help evolved from a major cigarettes manuQ4 FY2012 5,896 38,765 1,577 3,349 support margin profile for their haircare facturer to a FMCG conglomerate Q1 FY2013 6,125 40,250 1,563 3,136 portfolio. And these premiumisation efwith a diversified portfolio. Growth forts are not just restricted towards the is attributed to distribution network, mid or the premium segments. New prodsupply-chain management, and brandgrowth. Companies that enjoy dominant uct are being introduced within mass brands. building capabilities. market shares, strong brand equity and For example, Clinic Plus conditioners Over the last decade, ITC has built a lower competition tend to have better priclaunched recently by HUL. robust portfolio of FMCG businesses built ing power. This, in turn, helps to protect The household insecticides market is on reinvestment of strong cash-flow genthe margin even in adverse raw material endominated by coils (with about 45% share), eration of its cigarette division and backvironment. Within the home- and while electrics account for 30% and aerosols ward integration (sourcing of agri inputs personalcare spaces, companies enjoy pric18% share. However, aerosols and electrics for foods and paper for stationery) and ining power in selective categories. HUL has (mid-high teens growth) are gaining over coils house packaging expertise. Its FMCG busigood pricing power in skin care, with domi(high single-digit growth). A rising number of ness has been delivering a steady 20% plus nant shares and wide gap with the next comaffluent urban homes and improved distriburevenue growth for the last 10-11 quarters, petitor. It has fairly low pricing power in tion through modern retail are bolstering the driven by strong expansion in the branded the highly competitive and fragmented catgrowth of aerosols, while increasing packaged foods, personal products (soaps, egories of laundry and shampoos. Marico affordability continues to drive higher penshampoos and skin care) and stationery and Dabur hold sway in niche categories etration of electrics. In coils, low-smoke prodbusinesses. While the FMCG business is such as hair oils in Dabur health suppleucts are driving premiumisation. In rural Instill making loss, the branded packaged ments, and GCPL in household insecticide. dia, rising urbanisation, more closed construcfoods business (about 67% of segment revITC's pricing power in the cigarette segtion of homes, lesser frequency of power cuts, enues) has already broken even and is likely ment remains unmatched, led by over 70% and enhanced affordability with launch of to generate higher margin driven by rising market share by volume, very strong dislower priced electric variants are supporting contribution of premium variants, in both tribution network, and strong brands the premiumisation trends. atta and biscuits, and better profitability across various price points. Further, it is In addition to premiumisation, pricing on Bingo, a salt snack. also supported by consolidated industry power is the key to sustainable earning ITCs share price has been under presstructure, which does not allow for adversure since the Union Budget 2013-14, when tising (see table: For excise duty was increased 18% on 65-mm sustainable earning). For sustainable earning cigarettes. This was followed by valueThe declining raw added tax increases by states (see box: A material price trend Pricing power of FMCG companies in select categories breather) . However, with its near-mowould also help the secCOMPANIES CATEGORIES MARKET SHARE OF tor. Over the last six nopoly on cigarettes, the company will be SHARE (%) REVENUE (%) months, while crude able to pass on cost increases as it has brands at all price points and the best retail prices have increased Home and Personal Care presence and distribution network to push 13% in rupee terms, HUL Skincare 57 15 through the introduction of micro filters. palm oil has declined a Dabur Hair oils 22 16 Duty on the micro filter segment less than sharp 27%. As commodEmami Hair oils 9 18 65mm, now called deluxe size filters, was ity prices hit them with Marico Hair oils 22 50 unchanged in the budget. There will be a a lag, moderation in palm GCPL Household Insecticides 34 28 growth opportunity for this product, oil prices will positively GCPL Hair Colors 32 7 which could make up for a decline in longer impact FMCG compaPackaged Foods length cigarettes. ITC has extended its brand nies, going forward. GCPL Malted Food Beverages 71 94 portfolio into this segment. Though agri commodiNestle India Noodles 60 23 In the first week of April 2013, ITC ties like wheat have been Nestle India Baby Foods 76 22 raised prices of its cigarettes by 14-18% in up 29% over the last six Tobacco line with market expectations. This price months, they have been ITC Cigarettes 72 58 hike would support the margin of the comstable in recent months Source : Company reports pany, especially in cigarette business. (see table: Helping hand).
14 Apr 15 28 , 2013 CAPITAL MARKET

InFocus
HUL, a subsidiary of Unilever with strong local roots in more than 100 countries across the globe, is India's largest FMCG company. HUL has its presence in business segments like home- and personal care, food and beverages and water purifier. It has a strong product presence for the entire income pyramid and enjoys a commending market share across all product categories. With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the company is a part of the everyday life of millions of consumers across India. Historically, HUL was a follower in price changes. In the past two to three months, the company is taking the initiative. With lower commodity costs, It has made pre-emptive price cuts in soaps and detergents. While this may hurt near-term average sales prices, the margin is expected to sustain. HUL is committed to improve the operating margin, despite increases in royalties and growing revenue, either in line or ahead of the market in the next two to three years. The key metric to watch for the company is revenue growth (underlying average sales price growth) because it determines brand equity (over cost push) and is a function of the proportion of premium products to the total portfolio.

A breather
After the 18% hike in specific excise duty in FY 2013-14 Union Budget, moderate Vat increase by key states After the unexpected 18% hike in specific excise duty by the government in its FY 2013-14 Union Budget, the moderate value-added tax (Vat) increase by key states has come as a breather for cigarette companies. Andhra Pradesh and Tamil Nadu, which are among the highest cigarette-consuming states (about 35% of total cigarette sales of ITC comes from here), have kept their Vat rate on cigarettes unchanged, while Kerala increased it marginally from 20% to 25%. Further, no increase in Vat by Andhra Pradesh is a key positive for VST Industries as cigarettes are the highest volume contributor to its sales. ITC has increased cigarette prices by 14%-18%, as expected by the market. This price hike will support the margin of the company. Among other states, the steepest increase in Vat was taken by Punjab (from 22.5% to 55%), Himachal Pradesh (from 18% to 36%) and Bihar (from 20% to 30%). However, with the contribution of cigarettes to ITCs and VSTs volumes being less than 5%, this would not have a large impact on revenue growth. Moreover, the launch of lower excise duty 64mm cigarettes by the companies nationally is expected to be the focal point for driving volume growth. price corrections are absorbed by consumers, the volume growth could trend higher to 6%-7%. Nestl India, a subsidiary of Nestl S.A. of Switzerland, the world's leading nutrition, health and wellness company is majorly into food categories like milk products and nutrition, beverages, prepared dishes and cooking aids, chocolates, and confectionary. The company enjoys one of the top two positions in most categories it operates in, with dominant leadership in the core categories of baby foods and instant noodles. Its popular international brands in India include Nescafe, Maggi, Milkybar, KitKat, BarOne, Milkmaid and Nestea. Nestle also exports products to Russia, Hungary, Japan, US, and several other countries. Despite eight manufacturing facilities and four branch offices spread across the region, Nestle is bogged by capacity constraints to capitalise on the long-term growth potential in India. The company undertook a mega capacity expansion plan in calendar year 2010, through a mix of brownfield and greenfield expansion, post which it has doubled its capacity in all product segments except Nescafe. Last year was tough for Nestl, with weak discretionary spend and portfolio realignment affecting volume growth. While
Apr 15 28 , 2013 CAPITAL MARKET

G r o wt h a dd i c t i on

HULs pricing points, category depth, and geographical reach provide it with the ability to grow volume and revenue once macro headwinds diminish. The current 5%6% volume growth is temporary and as

Room for selective growth


Given the rich valuations, the market has turned cautious towards FMCG stock though a few have scope for further appreciation

COMPANY NAME

CMP (Rs)
515 1321 4471 471 291 128 143 1756 217 1149 781 766 18450 5724

% CHANGE IN CY 2013
2.8 -15.5 -10.1 -11.2 1.5 -20.4 10.7 -10.1 -1.5 -12.4 8.2 -18.4 -5.8 -3.7

52-WEEK HIGH (Rs)


599 1580 5040 580 311 182 145 2149 250 1397 832 1023

52-WEEK LOW (Rs)


400 1098 4306 400 223 100 101 547 166 1020 465 458

CURRENT MARKET CAP (Rs Cr)


6162 17972 43114 101875 230298 7925 24958 22960 14005 7498 26569 20241

TTM P/E*
30.0 42.3 40.4 33.2 33.0 42.3 39.8 90.5 34.6 63.2 49.2 138.9

Britannia Inds. Colgate-Palm. Nestle India Hind. Unilever ITC Tata Global Dabur India United Spirits Marico Jubilant Food. Godrej Consumer United Breweries BSE Sensex BSE FMCG Index

As on 5 April 2013. TTM ended December 2012. Source : C api t a line C orpor a t e D a t abases

16

InFocus
Payback time
The increase in royalty by HUL and Nestle India eliminates the near-term uncertainty for these stocks. But the overhang remains for Colgate and GSK Consumer Hindustan Unilever (HUL) and Nestle India (Nestle) have seen an increase in the royalty rates paid to their parents in recent months. Nestle has hiked the royalty payment to Nestle SA to 4.5% of sales from 3.5% over the next five years. The increase will be at 0.20% a year for five years from 1 January 2014. This royalty will be paid on third-party sales and is net of tax. The company has a general license agreement that allows it to access its Swiss parent's intellectual property rights including its global portfolio of brands, proprietary science, and technology including over 1,300 patents, and research and development. The increase of 20 basis points each year starting next January will raise the cost of technology and brands for the Indian subsidiary, but also puts a certainty over the royalty rates that will be applicable in the medium term. HUL had announced an increase in royalty to 3.15% of its turnover by March 2018 from 1.4% currently in a macro slowdown and capacity constraints were partly to blame, the core reason for volume slippage has been a strategic tilt towards margin focus compared with volume growth as the company took steep price hikes across product categories, defocused on low margin distribution channels like army canteens and exports and rationalised its product portfolio. The volume growth is expected to pick up in CY 2013 from new products and capacity additions and portfolio re-alignment and repricing that should drive volume growth. Given the penetration and acceptance of its products, Nestl will benefit from growing urbanisation and increasing disposable incomes and will use the Maggi brand equity to drive packaged food consumption. The companys recent acquisition of 26% stake in dairy company Indocon Agro & Allied Activities in February 2013 indicates the intention to integrate the back-end and ensure milk supplies. Outlook Given the outperformance and the rich valuations, the market has turned cautious toApr 15 28 , 2013 CAPITAL MARKET

phased manner from 1 February 2013. However, it is still lower than the rate that Nestle is currently paying. Colgate and GSK Consumer have not announced any increase in royalty yet. But given the changes seen recently, there could be a risk of new negotiated rates in the future. Both these companies pay a significantly higher payment as royalty to their parents: Colgate 5.2% and GSK Consumer 3.5%. The reason

Nestle has left the door open for more royalty

for the higher payment is that a large part of their portfolios is owned by the parent. Nestle India says the increase is based on the lower limit of the ranges established by the two Indian firms and is in line with the erstwhile guidelines of the government of India. In the longer term, this leaves scope for further increase, particularly if more global brands are introduced in India. While it is difficult to conclusively say if the increase in royalty rates is justified, it does take out the near-term uncertainty over HUL and Nestle. While there will be some impact on earning of HUL and for Nestle because of the increases in royalty rates, the quantum will not be large. Colgate and GSK Consumer have not seen any increases in royalty recently but the chances of changes in royalty rates will remain an overhang for these stocks. Meanwhile, GSK Consumers stock price may be supported by investor expectation of a further buyback and Colgate might hold on to present valuations given the stable nature of the business in the current environment. minals that facilitate daily reports to understand consumption patterns in a particular location and help decide stocking or promotional scheme requirements at a store or area level. Besides supporting the topline growth, mix improvement and scale over time would also support profitability. Emergence of modern retail is gaining higher share in urban markets and recent changes in foreign direct investment regulations bodes well for the FMCG sector, whose long-term growth outlook is driven by rising disposable income levels, favorable demographics, faster rural growth, and rising aspirations leading to premiumisation across product categories. Companies in the sector are known for good corporate governance and high dividend payouts. Given their inherent strengths in respective products, strong product profile, market leadership in product offerings, brand equity and robust growth ITC, HUL and Nestle are expected to do better compared with other FMCG players. ITC is trading at TTM P/E of 33.0 times, while HUL is at 33.2, and Nestle 40.4 times. CA Aryan
17

wards FMCG stock. Currently, the Sensex is trading at trailing 12-month (TTM) priceearning (P/E) ratio of 16.7 times, while the BSE FMCG index is at P/E of 35.2 times, more than twice that of the Sensex. However, there is still room for selective players to outperform. FMCG stocks may not perform that well as they did last year. But being defensive and in a consumer-driven economy, the sector would fare comparatively better than other sectors. The premium valuations that the sector enjoys are justified due to the relatively resilient and robust revenue growth of most companies. The companies have healthy and stable free cash-flow generation, high return on equity, and strong balance sheets. High earning visibility is supported by stable-to-increasing margin profile for most companies. Distribution footprint expansion has been one of the key enablers for the healthy volume growth in recent quarters and is expected to remain an important driver for growth over medium term. The use of technology has improved data availability. Sales teams are being provided with handheld ter-

InFocus
Indian rupee
Check, counter-check
Despite foreign portfolio investment hitting highs, a rising current account deficit is keeping the gains of the rupee capped

Whats the diagnosis?


More than increase in foreign fund flows, reduction in import bill will boost the currency
The Indian rupee is caught in a fix. It is down more than 20% over the last four years, recording the biggest loss for any major emerging market currency. After eroding a sharp 30% last year and approaching an all-time low of 58 per US dollar, the currency has moved in a broad range of 55-53 against the US dollar in the current year. This battering has taken place despite recovery in the local stock markets in calendar year (CY) 2012. Though the rupee is off its all-time low, at 54.70 a US dollar on 9 April 2013, it has failed to improve much. The movement of the Indian currency in the last one year has been rather ironic despite net foreign portfolio inflow of US$ 31 billion into equity and debt in the fiscal ended March 2013 (FY 2013) compared with its performance during the previous periods of equity market bull runs. The partially convertible currency gained 10.50% in CY 2007, hitting a multi-decade high of under 39 per US dollar, as the central bank let the currency ride higher to curb domestic inflation. FIIs invested a net US$ 40 billion in equity and debt in FY 2008. However, with the US dollar gaining favour with international investors in the aftermath of the global financial crisis in the second half of CY 2008, the rupee witnessed episodes of selling pressure purely linked to the strength of the greenback. While the Indian currency managed to recover from these bouts of selling, the scenario turned around late CY 2011. The second half of the year witnessed heavy losses for the currency. All other emerging market currencies also fell steeply during this time as the eurozone crisis had taken a turn for the worse and growth worries hurt investor sentiments. The rupee eventually broke beyond 55 per US dollar mark and slipped to a fresh alltime low near 58 per US dollar in the first few months of a CY 2012 even as foreign funds clawed their way back to the local fi18

C urr ent account de f ici t. F igur es in US$ billion.

Ne t F II investment in debt and equity in US $ billion

The move m ent of t he rupee aga inst the US doll a r

nancial markets, surpassing their inflows in FY 2010 and FY 2011, and equities soared. A weak currency raises the governments fertiliser and oil subsidies bill as India is dependent on the global market to a very large extent for its energy and fertilizer needs. In fact, it is the deteriorating external finances that have been keeping the rupee under pressure. The countrys current account deficit (CAD) stood at a record US$ 71.7 billion, or 5.4% of GDP, in April-December 2012 and hit a decade high of US $32.6 billion, or 6.70% of the GDP in the October-December 2012 quarter. India had been recording sustained trade deficits due to low exports base and high imports of oil, gold and coal for its energy needs. The countrys merchandise imports grew 9.4%, while merchandise exports did not show any significant growth in Q3 of FY 2013 compared with the 7.6% growth in Q3 of FY 2012. On the positive side, a weak rupee is beneficial to the Indian IT stocks. The BSE IT index zoomed to a fresh all-time high above 7,000 on 8 March 2013. The index is up nearly 16% in FY 2013, recording a handsome gain of 350% since it bottomed out at a multiyear low in March 2009. The broad market, as measured by the BSE Sensex, has given return of around 250% during the same time. The other sector, which has been benefited the most by the weakness in the rupee, is pharmaceuticals. The BSE Health Care index is up 320% over last four years and around 23% in FY 2013. Conclusion The Indian rupee gained modestly in the first couple of months of the year but the recovery failed to extend beyond 53.50 per US dollar mark. The bounceback could be linked to the drastic correction in the US dollar in

overseas markets on worries triggered by the US fiscal cliff rather than on the surge foreign funds into local debt and equity markets. However, the greenback reversed these losses and stuck a five-month high against euro in the first week of April as the Cyprus banking crisis hit the world markets. The dollar gained even more as the Dow Jones Industrial Average Index hit an all-time high, indicating that investors are comfortable parking their funds in the US currency even in times of buoyant risk appetite. This means that even if foreign investment remains strong in near term, it is unlikely that the rupee would be headed back to its winning ways of FY 2008. FII flows can be erratic and a sharp reversal, possibly triggered by an external shock, could hurt the Indian currency even more. Oil imports remain the most critical aspect of Indias foreign trade composition. The share of oil in total imports is around 30% and oil imports expressed in US dollar terms have nearly doubled in the last five years. The finance ministry has recently said the CAD would moderate in the March 2013 quarter if the trend of improved exports and steady imports persisted. The government and the central bank have eased procedures to allow Indian companies to raise funds overseas to boost dollar inflows. The International Monetary Fund (IMF) estimates Indias economic growth at a 10year low of 5.4% in the last financial year. It has pegged growth at 6% in FY 2014, anticipating lower infrastructure investments and supply bottlenecks, especially for food, electricity and transportation. As such, a significant reduction in CAD cannot be expected. This will keep the rupee volatile. Sachin Dabhade
Apr 15 28 , 2013 CAPITAL MARKET

InFocus
is among the major foreign exchange providers in India and enjoys or status similar to that of foreign-exchange-nominated banks. Coxs leveraged buyout of Holidaybreak, the UK-based travel firm with operations across Europe, for GBP 311.4 million was the largest acquisition by an Indian firm in the travel and tourism sector. The company floated a special purpose, a wholly owned subsidiary, Prometheon Holdings UK (Prometheon), to acquire Holidaybreak. The acquisition was completed in September 2011. With the buy of Holidaybreak, Cox has emerged a dominant player in the education tour segment in the UK. The British company provides educational and activity trips for school children, worldwide adventure holidays, short breaks in the UK and Europe, mobile-home and camping holidays on sites throughout Europe. The multiple operating divisions consist of education adventure, hotel breaks and camping. The over 15 brands comprise PGL, NST, EST, Eurocamp and Keycamp. The management believes that the business of Holidaybreak is recession-proof and defensive business. Cox is fairly aggressive in perusing inorganic growth. In December 2009, My Planet Australia Pty Ltd and Bentours International Pty Ltd were bought through an earn-out mechanism. In April 2009, the company acquired US-based East India Travel Company Inc, a up-market tour and travel package provider. 2008 saw the purchase of Tempo Holidays Pty Ltd, a travel wholesaler offering tours arrangements in 42 countries, with focus on Europe, Middle East, India and Latin America. This acquisition facilitated Coxs entry into the Australian market, which, in turn, gives it economy of scale and more bargaining power with its suppliers. The aggressive consolidation over the last five years has severely added to Coxs debt. Debt stood at Rs 4605.1 crore end of the fiscal year that closed March 2012 (FY 2012) compared with Rs 844.3 crore end FY 2011, a jump of five times. The purchases, with an aim to increase market presence and to gain bargaining power with vendors, would certainly pay off in the medium to long term. However, the company would be struggling with the debt at least for the next two years. This could keep its valuation depressed. In FY 2012, the interest coverage ratio collapsed to 1.5 times compared with 4.5 times in FY 2011 and 7.9 times in FY 2010. The scenario is unlikely to improve in the immediate future.
19

Cox & Kings

On a holiday
The challenging conditions in several international markets, due to economic slowdown and debt, are key concerns
Among the high profile listings in recent times, Cox & Kings (Cox) is one of the big disappointments. The stock was trading at Rs 129 on 5 April 2013. This represents a loss of 21.8% compared with the initial public offering (IPO) price. Over the last one year, the stock is hovering below the IPO price, reporting an all-time low of Rs 119 in June 2012. It is now available at its historical low. Cox came out with an IPO in November 2009. The issue was priced at Rs 330 per share with premium of Rs 320 and face value of Rs 10. The issue was oversubscribed 5.6 times. The stock was listed at Rs 343 on the NSE and closed at Rs 430 on the listing day, a gain of Rs 100. Of the total funds raised through IPO, a significant portion was used for acquisition and other strategic initiatives (Rs 211.2 crore), repayment of loans (Rs 128.4 crore) and investment in overseas subsidiaries (Rs 59.2 crore). In June 2011, the company went for stock-split. The face value of Rs 10 was sub-divided into shares of Rs 5 each. This gives the IPO price of Rs 165 per share. The domestic and international travels and tours operators core business is leisure travel including tour and destination management services. Operations are spread across
Apr 15 28 , 2013 CAPITAL MARKET

26 countries including India, Europe, Australia, US, Dubai, Japan and Singapore. Established in 1758, the oldest travel company is a premium brand in its markets. In India, the companys leisure business also includes meetings, incentives, conferences, and exhibitions and trade fairs. Besides its destination management services comprises groundhandling services. The corporate travel division services over 200 clients. The company

Disappointing showing
Coxs & Kings stock, listed at Rs 343, was trading at Rs 129 on 5 April 2013, a loss of 21.8% compared with the IPO price
Relative performance of Cox & Kings v BSE Sensex

B ase =100 as on 11 D ece mbe r 2012 . F V of C ox & Kings Rs 5.

* 5 April 2013

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InFocus
Lately, Cox has reported a jump in finance cost. Consolidated, finance cost increased to Rs 263.2 crore in the nine months ended 31 December 2012 from Rs 98.6 crore a year ago. The consolidated results are not comparable with those in the nine months ended 31 December 2011 as the numbers of Holidaybreak were consolidated from 28 September 2011. However, the risk of interest cost clearly reveals the mounting burden. Standalone finance cost rose 122% to Rs 79 crore in the nine months ended 31 December 2012 over a year ago. Standalone profit nosedived to Rs 45.5 crore in the nine months ended 31 December 2012 from Rs 70.5 crore mainly on account of surge in finance cost . In FY 2012, the international market contributed 64% to Coxs consolidated revenue and rest 36% came in from the domestic market. Thus, the company is subject to currency risk and adverse developments in the overseas markets. In August 2012, Citi Venture Capital International (CVCI Private Equity) entered into a binding agreement with Cox to acquire a significant minority stake in Prometheon for US$ 137.75 million. This transaction was completed in November 2012. The investment proceeds were used to retire part of the debt raised for the acquisition. The quantum of stake acquired

O n a n ac qu i s i t i on sp r ee

by CVCI is not known. But certainly it certifies the value of Holidaybreak and a positive development for the company. Going forward, Cox would be focusing on increasing footprint through franchisee and agent network. The company also views cross-selling as a major opportunity to boost revenue. Besides, it would be expanding its education brands to Europe with products available in India and Australia. Also, Cox has the advantage in the domestic market as early mover in the education travel market. The camping holiday segment has reasonably strong visibility

Debt is a burden
Consolidated Financials of Cox & Kings

201203
Networth (Rs cr) Capital Employed (Rs cr) Net Sales (Rs cr) Other Income (Rs cr) PBIDT (Rs cr) PAT (Rs cr) Cash Profit (Rs cr) Book Value (Rs) Dividend (%) Dividend Payout (%) Cash Flow From Operating Activity (Rs cr) Cash Flow From Investing Activity (Rs cr) Cash Flow From Financing Activity (Rs cr) Debt-Equity Ratio (times) Interest Cover Ratio (times) PBIDTM (%) PATM (%) ROCE (%) RONW (%) 1189.6 5821.3 837.9 166 302.2 27 76.1 87.1 20 55.2 -136.6 -2293.5 2483.6 2.3 1.5 38.8 4.4 7 3.1

201103
1204.5 2050.3 496.7 36 266 130.6 149.1 176.5 10 5.8 95.1 -81.3 573.2 0.7 4.6 53.6 26.3 14.7 13

201003
807.1 1311.4 399.2 42.1 228.6 134.8 149.9 128.3 10 4.7 38.4 -330.4 604 0.8 7.9 57.3 33.8 22.6 26.2

200903
224 578.2 286.9 6.7 128 63.4 73 80.2 2 0.9 -95.8 -94.1 203.7 1.2 5.9 44.6 22.1 27.1 32.5

200803
165.9 295.6 182.1 6.2 79.2 45.2 51.5 59.4 2 1.2 -13.9 14.5 38.1 0.8 12.3 43.5 24.8 33.4 36.3

PBIDTM (%) is profit before int erest depreciation and t ax margin. PATM (%): Profit aft er t ax margin. ROCE: Return on capit al employed.

for FY 2014. Considering the bookings so far, the company has already achieved 63% of the revenue target for full year. The shift in business from unorganised tour operators to organised tour operators and the addition of first-time travelers to the market pie is a long-term positive trend for Cox. Increase in disposal income and emergence of young and aspiring workforce would be the driving force for the travel and tourism industry. But the challenging market conditions in several international markets, particularly in Europe, due to economic slowdown is the key concern for the stock. At the current market price of Rs 128.2, the stock is trading at a price to earnings (P/E) multiple of 7.4 based on the consolidated trailing 12-month earning for the period ended 31 December 2012. In a strategic roadmap released in November 2012, Cox has set a revenue target of Rs 2700 crore-Rs 2800 crore by FY 2016. Further, it would be aiming to achieve return on equity (ROE) of 19%-21% and keep the debt-to-equity ratio at around 1 by FY 2016. The consolidated debt-to-equity ratio stood at 2.3 times end of FY 2012. ROE was 3% in FY 2012 and 13% and FY 2011. The ratio of debt-to-equity of around 1, as targeted by the company, in a way admission of the fact that debt is going to on the high side for the next couple of years. In challenging economic situation, servicing debt is always going to be a problem. Cox is a low beta stock. Considering the last one year, its beta based on the Sensex stood at 0.59. Thus, the stock is less volatile compared with the market. This could provide solace to investors in the falling market. S Khedekar
Apr 15 28 , 2013 CAPITAL MARKET

22

InFocus
states will now have to buy sugar at open market rates and maintain the existing PDS sale price, which has not been revised for a decade. The Central government will then reimburse the states for the cost difference as against the market price of Rs 32 per kg. This will substantially increase the governments subsidy cost on sugar from about Rs 1540 crore to Rs 5180 crore a year. However, sugar companies, which otherwise had to bear about Rs 3640-crore subsidy, would not have to bear the burden (see table: Crushed). The impact of doing away this levy obligation will be substantial on the sugar companies as the incremental revenue will directly flow to their bottom lines. At the current market price, the blended realisation of the sugar companies would increase by Rs 1.1Partial sugar decontrol 1.3 per kg (see table: Bottomline boost). At this rate, companies with higher sugar production would benefit more. Bajaj Hindusthan, the largest sugar producer in the country, would be the biggest gainer. Its profit For sustainable profitability, output prices need to be linked before tax will increase by about Rs 152 crore. Under the regulated monthly release to cane prices, a politically-sensitive issue mechanism, the government fixes the Share prices of sugar companies rose 4.6%gineering 8.7%, Bajaj Hindusthan 8.1%, monthly sugar quota that can be sold in the 13% between 4 and 5 April 2013 after the Balrampur Chini Mills 7.4% and Bannari open market by each sugar mill. Since April Cabinet Committee on Economic Affairs Amman 4.6% (see graph: A relief rally). 2012, this mechanism has been relaxed and cleared the partial decontrol of the sugar secUnder the earlier levy quota obligation, the quota is now being released on halftor by abolishing the requirement for prisugar companies had to sell their quota to yearly basis. The abolition of the release vate mills to sell 10% of their output to the the government at a price of Rs 19 per kilo mechanism will facilitate the free play of government at concessional rates. The govgram (kg). The government, in turn, sold this market forces for the commodity and enable ernment has also abolished the decades-old sugar under the public distribution system mills to sell their inventory as per their cashpractice of regulating how much sugar a mill (PDS) scheme at Rs 13.50 per kg to the flow requirement to pay cane farmers, escan sell in open market, known as monthly poor. Thus, a large portion of the subsidy pecially during the crushing season. release mechanism. Sakthi Sugar was up burden was borne by the sugar companies. The regulated release mechanism forced 13%, Shree Renuka sugar 9.6%, Triveni EnTo continue subsidised supply to poor, the sugar industry to hold back its output. Now, the pullback will deA relief rally Looking ahead pend on whether the sugar mills have the financial strength to carry Sugar stocks rose 4.6%-13% between Among larger companies, efficient players that inventory. There would be 4 and 5 April 2013 after partial decontrol should trade at par to their BVs due to the downward pressure on sugar of the by abolishing levy quota and improved profitability outlook prices during the crushing season release mechanism as millers would need to sell sugar to pay farmers. Otherwise, they would have to borrow working capital loans at 14%-16%. Thus, there would be trade-off between prevailing sugar prices and carrying cost of sugar. The government took these decisions following the C Rangarajan Committee report, which proposed dispensing with both the regulatory release mechanism and CMP as on 8 April 2013. BV: Book value as on 31 March 2012 but for The C Rangarajan Committ ee submitt ed its report on decontrol of sugar the levy system. The panel, headed Ba j a j Hindusthan and Triveni Engineering 30 Sept ember 2012. on 12 Octobe r 2012. Source : C api t a line C orpor a t e D a t abase Base =100 on 1 October 2012 by Economic Advisory Council to

Half-finished job

Apr 15 28 , 2013 CAPITAL MARKET

23

InFocus
the Prime Minister Chairman C Rangarajan, there should be linkage between sugar and Crushed submitted its report on 12 October 2012. Besugar cane prices. Otherwise, the cyclicality Sugar companies would have had to bear sides recommending the immediate removal would persist. Rs 3640-cr loss in SY 2013 of these two controls, other proposals that Further, being politically sensitive, any have still to be accepted included complete BEFORE AFTER haphazard increase in sugarcane prices candecontrol of the sector, removal of cane resDECONTROL DECONTROL not be ruled out as witnessed in SY2012 ervation and minimum distance criteria, and and SY2013 in Uttar Pradesh. In two conSugar production SY 2013 (E)# 24.6 24.6 cane price linkage to sugar revenue of mills. secutive sugar seasons, sugarcane prices Levy share# 2.8 2.8 The committee favoured stable import-export were increased 40% without commensuLevy price for companies (Rs/kg) 19.0 0.0 duty barring exceptional circumstances and rate increase in sugar prices. Sugar prices Open market price (Rs/kg) 32.0 32.0 no regulations on by-products, especially moare driven by domestic demand supply as Subsidy by sugar companies (Rs/kg) 13.0 0.0 lasses, and scrapping of the jute packaging well global sugar prices. PDS selling price (Rs/kg) 13.5 13.5 mandate for sugar. Lower production estimate by one-two Subsidy by government (Rs/kg) 5.5 18.5 The two decontrol measures accepted by million tonnes (mt) for the next season from Subsidy borne by sugar cos (Rs/bn) 36.4 0.0 the goverment come into effect for output since 24.5 mt in the current season coupled with Subsidy borne by government (Rs/bn) 15.4 51.8 1 October 2012, the start of the sugar year the end of the crushing season in May 2013 # mn tonnes 2013 (SY2013), and will be reviewed after may support sugar prices from here on. Howwatching the impact on the market and farmever, weak international prices will act as a farmers, who, in turn, would feel incentivised ers for two years. However, Indian Sugar Mills cap as the lower import parity prices would to cultivate the sugarcane crop. This would Association Director General, Abinash Verma restrict any meaningful increase in domestic lead to abundant production in the coming says the regulated release mechanism and levy prices. The landed cost of imported sugar, season and keep prices under check and will sugar mandate have gone forever. These are available at 18 cents per pound in the interalso contribute to reducing the subsidy burnot going to come back after two years. The national market, is roughtly at parity with den of the Centre. two-year rider is only for the governments the current domestic price of Rs 32 a kg. Mills will now enjoy better profitabilsubsidy that will be given to state governments. However, if the import duty of 10% is reity along with improved cash flows, thereby The subsidy, as per the decision of the Cabimoved, imports would turn cheaper. Thus, enabling them to tide over the downturns net, will be calculated at the maximum price of the government can stabilise domestic sugar without defaulting on sugarcane payments Rs 32 per kg. Therefore, the government is prices by removing the import duty on sigto farmers, thus reducing the cyclicality in going to give subsidy to the state governments nificant increase in domestic prices. the sugar industry. for the next two years at Rs 32 minus Rs 13.50 Among the larger companies, efficient PDS sales price. players should trade at par to their book Outlook Besides, sugar mills will continue to be values (BVs) due to the improved profitDecontrol would improve sugar companies subjected to controls by state governments, ability outlook after the partial decontrol profitability. With a benefit of Rs 1.1- 1.3 which will decide cane prices and regulate of the sector (see chart: Looking ahead). per kg flowing straight to the bottom line, various aspects of cane cultivation and sale. Due to its leaner balance sheet and lower the earning per share for all sugar compaThe state governments have been given the dependence on international sugar prices, nies would increase significantly. However, flexibility to decide on the minimum diswhich are expected to remain subdued, for sustainable profitability of the sector, tance norms for mills. Balrampur Chini would have an edge The decontrol measures will reas it is the most efficient sugar proBottomline boost duce the cyclicality in the sugar sector. ducer in the country. The blended realisation of sugar companies will now Until now, the sugar industry followed Many players are quoting at a huge increase by Rs 1.1-1.3 per kg in SY 2013 a four-five-year cycle. The levy oblidiscount to their BVs due to problems gation and the monthly release mechaSH. RENUKA BALRAMPUR BAJAJ of higher leverage. Some like Bajaj nism prevented sugar mills from adSUGAR CHINI HINDUSTHAN Hindusthan, Triveni Engineering and justing output and prices as per deSakthi Sugars reported losses in the Sales volume for SY2013(E)# 0.62 0.89 1.17 mand and added to their financial stress. fiscal ended March (FY 2012), which Before decontrol Thus, mills were not be able to make may come down in FY2013 due to the Open market sales# 0.56 0.80 1.05 timely payments to the farmers, reincremental sugar realisation. However, Levy sales # 0.06 0.09 0.12 sulting in arrears. This would lead to a complete turnaround and re-rating of Open market price (Rs/kg) 30.00 32.00 32.00 lower plantation of sugarcane in the the sugar sector may not be possible Levy price (Rs/kg) 19.00 19.00 19.00 following season, thereby reducing unless other decontrol measures, as Blended realisation before decontrol 28.90 30.70 30.70 production steeply. The sugar mills, suggested by Rangarajan committee, are After decontrol unable to pass on on the increase in implemented. No wonder the rally in Open market sales# 0.62 0.89 1.17 cane prices to the market, had to absugar stocks for a couple days after the Levy sales # Nil Nil Nil sorb the higher input cost. announcement of partial decontrol Open market price (Rs/kg) 30.00 32.00 32.00 The freeing of prices and quancould not be sustained. Thus, any share Blended realisation after decontrol (Rs/kg) 30.00 32.00 32.00 tity to be sold would improve mills Incremental benefit (Rs/kg) 1.10 1.30 1.30 price increase could be considered as profitability, allowing them to make an exit opportunity. Incremental benefit at PBT (Rs bn) 0.68 1.16 1.52 # mn tonnes higher sugarcane payments to the C A Aryan
24 Apr 15 28 , 2013 CAPITAL MARKET

IPOPerformance
Lackluster show
Share prices of about two-third companies that hit the primary market in the past 33 months are languishing below their issue price. Their performance was weighed by steep valuation, reversal of market sentiment, corporate governance issues and problems impacting the sector or the business of the company. Barring micro-cap stocks, shares of jewellery retailer TBZ, education services provider Tree House Education and Accessories, and non-banking finance L&T Finance Holdings logged decent gains. Losers included jewellery retailer Tara Jewels, consumer electronics firm PG Electroplast, and pharmaceuticals producer Aanjaneya Lifecare.

COMPANY

ISSUE CLOSE

TIMES OVER SUBSCB


2 1 2 1 1 1 1 2 1 1 1 1 6 34 2 2 1 1 1 1 2 1 1 1 2 1 1 2 1 1 5 4 1 1 46 1 1 2 1 3 2 1 1 2 1 1 3 2 2 5 5 1

OFFER PRICE (Rs)


20.00 35.00 172.00 25.00 35.00 40.00 25.00 20.00 210.00 25.00 25.00 220.00 135.00 750.00 50.00 230.00 15.00 10.00 27.00 10.00 402.00 20.00 15.00 20.00 22.00 5.50 20.00 150.00 40.00 120.00 106.00 80.00 30.00 25.00 1032.00 74.00 49.00 18.60 155.00 150.00 110.00 60.00 79.00 13.80 210.00 58.00 256.00 100.00 135.00 52.00 29.25 82.00

LIST PRICE OPEN (Rs)


65.00 35.80 165.00 25.50 37.25 40.90 26.25 21.45 216.00 25.25 24.50 200.00 135.50 949.00 58.00 242.00 16.70 10.10 26.85 10.30 403.00 20.30 15.20 22.00 22.10 5.58 51.50 153.00 42.00 115.00 100.00 86.05 29.95 27.00 1387.00 75.00 33.45 18.00 155.00 157.40 115.00 62.00 85.00 14.50 200.00 55.00 251.60 110.00 132.80 51.00 29.75 84.00

LIST PRICE CLOSE (Rs)

LIST PRICE HIGH (Rs)

LIST PRICE LOW (Rs)

LIST DATE

PRICE 5/APRIL/13 (Rs)


68.25 35.50 171.55 25.25 45.25 40.90 30.30 29.70 165.95 54.50 41.40 180.70 109.10 771.25 50.40 176.50 10.50 9.90 31.50 24.75 373.00 26.00 14.70 24.40 22.00 14.10 96.00 168.25 255.00 209.95 129.15 81.85 56.95 25.15 928.80 10.13 3.90 21.10 221.60 7.01 151.85 6.10 13.26 7.20 85.00 44.55 231.75 18.60 247.70 75.25 5.19 6.10

HIGH /LOW VAR. (%) VAR(%) FRM DATE FRM OFFER FRM LIST OF LISTING PRICE PRICE (Rs)
68/65 36/35 178/158 26/25 45/37 43/39 30/26 30/21 216/145 55/25 41/21 216/163 195/103 986/758 58/50 245/164 20/6 11/8 34/23 30/10 403/297 26/20 18/15 25/21 26/19 36/5 96/49 227/141 255/40 301/88 195/79 142/67 73/27 28/25 1617/830 99/9 35/4 39/5 385/132 185/6 849/114 68/6 93/7 31/7 548/77 61/26 342/206 131/13 295/104 97/40 84/5 84/4 241.25 1.43 -0.26 1.00 29.29 2.25 21.20 48.50 -20.98 118.00 65.60 -17.86 -19.19 2.83 0.80 -23.26 -30.00 -1.00 16.67 147.50 -7.21 30.00 -2.00 22.00 0.00 156.36 380.00 12.17 537.50 74.96 21.84 2.31 89.83 0.60 -10.00 -86.31 -92.04 13.44 42.97 -95.33 38.05 -89.83 -83.22 -47.83 -59.52 -23.19 -9.47 -81.40 83.48 44.71 -82.26 -92.56 5.00 -0.84 3.97 -0.98 21.48 0.00 15.43 38.46 -23.17 115.84 68.98 -9.65 -19.48 -18.73 -13.10 -27.07 -37.13 -1.98 17.32 140.29 -7.44 28.08 -3.29 10.91 -0.45 152.69 86.41 9.97 507.14 82.57 29.15 -4.88 90.15 -6.85 -33.04 -86.49 -88.34 17.22 42.97 -95.55 32.04 -90.16 -84.40 -50.34 -57.50 -19.00 -7.89 -83.09 86.52 47.55 -82.55 -92.74

GCM Securit. Lakhotia Poly. Repco Home Fin Bothra Metals HPC Biosci. Kavita Fabrics Channel Nine Sunstar Realty V-Mart Retail Esteem Bio Org. Eco Friendly Bharti Infra. PC Jeweller Credit Analysis Veto Switchgears Tara Jewels Bronze Infra RCL Retail Anshus Clothing Comfort Comtrade Thejo Engg. SRG Housing Jointeca Edu. Jupiter Info. Sangam Advisors VKS Projects Max Alert Speciality Rest. Looks Health TBZ NBCC MT Educare Olympic card. BCB Finance-SME Multi Comm. Exc. Indo Thai Sec. Vaswani Inds. M and B Switch. Flexituff Intl. Taksheel Sol. Onelife Capital Tijaria Poly. RDB Rasayans Prakash Constro. PG Electro. SRS TD Power Sys. Brooks Lab. Tree House Edu. L&T Fin.Holdings Inventure Grow. Bharatiya Glob.

20/03/2013 21/03/2013 15/03/2013 14/03/2013 05/03/2013 22/02/2013 26/02/2013 25/02/2013 05/02/2013 22/01/2013 31/12/2012 14/12/2012 12/12/2012 11/12/2012 05/12/2012 23/11/2012 23/10/2012 01/10/2012 28/09/2012 10/09/2012 06/09/2012 28/08/2012 21/08/2012 01/08/2012 26/07/2012 04/07/2012 02/07/2012 18/05/2012 16/05/2012 26/04/2012 27/03/2012 29/03/2012 13/03/2012 27/02/2012 24/02/2012 05/10/2011 03/05/2011 05/10/2011 05/10/2011 04/10/2011 04/10/2011 29/09/2011 23/09/2011 21/09/2011 12/09/2011 26/08/2011 26/08/2011 18/08/2011 12/08/2011 29/07/2011 22/07/2011 14/07/2011

68.25 68.25 65.00 35.00 35.90 35.00 160.85 176.00 158.05 25.00 25.55 24.85 39.10 39.10 37.25 41.00 41.00 40.00 26.25 26.25 26.25 22.50 22.50 21.20 205.25 216.00 205.25 26.50 26.50 25.25 25.55 26.00 24.15 191.20 200.00 188.70 149.00 154.75 135.50 923.95 986.20 896.20 50.45 58.00 50.30 229.95 244.90 229.95 16.30 17.10 16.00 10.45 10.45 10.10 27.15 28.15 26.85 10.80 10.80 10.10 403.00 403.00 403.00 20.30 20.35 20.30 15.00 15.25 15.00 22.05 22.10 21.10 22.00 22.20 21.95 5.51 5.60 5.31 49.25 51.50 49.25 160.65 160.65 152.90 40.10 42.00 40.10 111.20 119.80 110.00 97.05 101.00 95.05 90.35 90.35 86.05 28.50 30.00 28.50 25.70 27.00 25.70 1297.05 1426.00 1282.10 23.00 99.10 18.10 17.75 35.40 13.00 31.76 35.60 11.87 166.40 185.40 142.00 55.85 185.00 38.50 145.90 173.00 114.00 18.10 67.80 16.05 26.50 93.15 19.80 22.95 24.50 11.25 411.65 490.00 175.05 33.65 61.40 31.80 274.80 308.75 242.00 60.20 131.10 57.75 116.55 161.50 104.15 49.95 52.50 49.50 51.99 56.25 22.89 30.95 84.00 27.15

05/04/2013 04/04/2013 01/04/2013 25/03/2013 19/03/2013 12/03/2013 12/03/2013 11/03/2013 20/02/2013 07/02/2013 14/01/2013 28/12/2012 27/12/2012 26/12/2012 13/12/2012 06/12/2012 07/11/2012 16/10/2012 12/10/2012 24/09/2012 18/09/2012 11/09/2012 04/09/2012 16/08/2012 09/08/2012 18/07/2012 13/07/2012 30/05/2012 30/05/2012 09/05/2012 12/04/2012 12/04/2012 28/03/2012 13/03/2012 09/03/2012 02/11/2011 24/10/2011 20/10/2011 19/10/2011 19/10/2011 17/10/2011 14/10/2011 07/10/2011 04/10/2011 26/09/2011 16/09/2011 08/09/2011 05/09/2011 26/08/2011 12/08/2011 04/08/2011 28/07/2011

Apr 15 28 , 2013 CAPITAL MARKET

25

IPOPerformance
COMPANY ISSUE CLOSE
Readymade Steel Rushil Decor Birla Pacific Timbor Home VMS Indus. Power Fin.Corpn. Aanjaneya Life. Sanghvi Forg. Innoventive Ind. Servalaksh.Paper Future Ventures Para. Print. Muthoot Finance Shilpi Cable PTC India Fin Lovable Lingerie Fineotex Chem Sudar Industries AcroPetal Tech. Omkar Spl.Chem. Tata Steel Midvalley Enter C Mahendra Exp Shekhawati Poly. Pun. & Sind Bank Ravikumar Distll A2Z Maintenance Claris Lifescien SCI MOIL RPP Infra Proj. Power Grid Corpn Gravita India Coal India Prestige Estates Gyscoal Alloys BS Oberoi Realty Commercial Eng. Bedmutha Indus. Ashoka Buildcon Sea TV Network Va Tech Wabag Tecpro Systems Cantabil Retail Gallantt Ispat Ramky Infra Electrosteel St. Orient Green Eros Intl.Media Career Point Microsec Fin Tirupati Inks Indosolar Guj Pipavav Port Prakash Steelage Bajaj Corp 29/06/2011 23/06/2011 23/06/2011 02/06/2011 02/06/2011 13/05/2011 12/05/2011 09/05/2011 29/04/2011 29/04/2011 28/04/2011 25/04/2011 21/04/2011 25/03/2011 18/03/2011 11/03/2011 25/02/2011 24/02/2011 24/02/2011 27/01/2011 21/01/2011 12/01/2011 06/01/2011 29/12/2010 16/12/2010 10/12/2010 10/12/2010 02/12/2010 03/12/2010 01/12/2010 22/11/2010 12/11/2010 03/11/2010 21/10/2010 14/10/2010 15/10/2010 13/10/2010 08/10/2010 05/10/2010 01/10/2010 28/09/2010 29/09/2010 27/09/2010 28/09/2010 27/09/2010 24/09/2010 23/09/2010 24/09/2010 24/09/2010 21/09/2010 21/09/2010 21/09/2010 17/09/2010 15/09/2010 26/08/2010 10/08/2010 05/08/2010

TIMES OVER SUBSCB


2 3 1 6 1 4 1 1 1 1 1 4 21 3 2 30 2 1 1 4 6 4 3 7 50 2 1 1 5 56 2 15 42 15 2 9 1 10 2 8 15 11 32 20 2 1 3 7 1 25 41 12 9 1 19 5 16

OFFER PRICE (Rs)


108.00 72.00 10.00 63.00 40.00 203.00 234.00 85.00 117.00 29.00 10.00 35.00 175.00 69.00 28.00 205.00 70.00 77.00 90.00 98.00 610.00 70.00 110.00 30.00 120.00 64.00 400.00 228.00 140.00 375.00 75.00 90.00 25.00 245.00 183.00 71.00 248.00 260.00 127.00 102.00 324.00 100.00 524.00 355.00 135.00 50.00 450.00 11.00 47.00 175.00 310.00 118.00 43.00 29.00 46.00

LIST PRICE OPEN (Rs)


115.00 81.25 10.10 72.00 43.95 197.60 229.45 85.00 110.00 30.00 9.50 35.00 180.00 78.35 28.00 261.50 80.00 74.00 130.00 95.00 630.15 73.00 111.00 32.50 146.10 64.00 390.00 224.40 136.90 551.00 75.00 95.00 43.75 287.75 190.00 76.60 251.00 280.00 122.80 114.40 333.55 120.00 662.00 399.40 133.80 48.90 450.00 12.35 45.70 213.35 461.00 135.10 53.95 29.75 56.25

LIST PRICE CLOSE (Rs)


66.45 119.65 25.35 91.20 28.50 199.45 311.25 111.75 93.60 19.00 8.30 26.65 176.25 47.60 24.90 249.20 140.90 113.10 98.45 46.20 625.70 58.05 110.85 47.50 127.05 80.05 328.90 205.85 132.45 466.50 68.95 96.60 42.08 342.35 192.55 81.55 378.50 282.95 112.25 180.80 333.35 106.00 683.76 407.85 104.75 81.60 387.35 11.25 44.90 190.05 632.35 110.90 36.65 23.70 54.05

LIST PRICE HIGH (Rs)


117.75 124.05 30.70 94.50 49.25 200.70 324.00 116.50 114.85 48.75 9.50 37.50 198.00 84.65 28.00 278.95 157.90 117.70 150.00 101.00 633.85 76.50 120.90 69.00 149.70 90.30 398.90 227.90 138.00 591.05 80.40 97.20 51.00 344.75 209.00 112.70 399.00 299.00 144.80 205.00 362.30 126.15 722.64 454.25 133.80 87.40 460.00 12.35 46.60 217.70 674.00 141.00 61.45 29.90 58.40 201.90 162.40

LIST PRICE LOW (Rs)


62.30 75.00 10.10 72.00 24.00 191.40 224.00 85.00 86.30 17.30 7.95 24.60 161.50 45.45 23.50 241.40 74.10 74.00 89.00 42.50 615.65 55.00 110.00 30.70 126.20 64.00 318.65 198.10 132.15 458.50 67.35 94.00 41.00 287.45 188.15 76.60 247.80 269.80 106.30 98.00 312.65 105.05 660.44 398.00 102.10 48.80 345.05 9.35 38.30 178.60 450.00 108.30 35.70 22.80 51.90 117.00 146.00

LIST DATE

PRICE 5/APRIL/13 (Rs)


40.55 44.25 1.22 25.30 20.80 187.00 102.35 25.85 100.05 2.99 9.95 1.36 178.40 13.45 14.02 267.35 18.45 21.60 6.57 111.00 308.50 0.00 87.85 38.75 59.75 8.95 20.25 209.85 42.10 228.85 39.30 104.85 31.30 308.50 166.30 22.55 329.35 253.90 30.05 10.41 200.00 22.50 501.70 96.35 19.10 74.05 61.70 4.99 14.26 170.85 113.15 32.00 4.38 2.79 49.40 95.95 236.05

HIGH /LOW VAR. (%) VAR(%) FRM DATE FRM OFFER FRM LIST OF LISTING PRICE PRICE (Rs)
118/35 350/36 31/1 109/19 135/10 227/130 851/102 145/22 148/76 49/2 12/8 38/1 246/106 85/9 28/10 637/220 353/17 184/22 156/6 150/27 661/301 153/6 342/46 69/20 150/56 94/8 399/16 292/98 138/39 591/216 95/35 124/92 205/26 422/287 232/58 113/8 509/78 328/205 145/27 287/9 362/180 126/12 723/270 454/86 134/12 119/35 460/51 12/4 47/8 277/124 711/105 141/20 61/4 31/2 75/41 243/82 264/73 -62.45 -38.54 -87.80 -59.84 -48.00 -7.88 -56.26 -69.59 -14.49 -89.69 -0.50 -96.11 1.94 -80.51 -49.93 30.41 -73.64 -71.95 -92.70 13.27 -49.43 0.00 -20.14 29.17 -50.21 -86.02 -94.94 -7.96 -69.93 -38.97 -47.60 16.50 25.20 25.92 -9.13 -68.24 32.80 -2.35 -76.34 -89.79 -38.27 -77.50 -4.26 -72.86 -85.85 48.10 -86.29 -54.64 -69.66 -2.37 -63.50 -72.88 -89.81 -90.38 7.39 -12.77 78.83 -64.74 -45.54 -87.92 -64.86 -52.67 -5.36 -55.39 -69.59 -9.05 -90.03 4.74 -96.11 -0.89 -82.83 -49.93 2.24 -76.94 -70.81 -94.95 16.84 -51.04 0.00 -20.86 19.23 -59.10 -86.02 -94.81 -6.48 -69.25 -58.47 -47.60 10.37 -28.46 7.21 -12.47 -70.56 31.22 -9.32 -75.53 -90.90 -40.04 -81.25 -24.21 -75.88 -85.72 51.43 -86.29 -59.60 -68.80 -19.92 -75.46 -76.31 -91.88 -90.62 -12.18 -19.06 61.68

13/07/2011 07/07/2011 07/07/2011 22/06/2011 14/06/2011 27/05/2011 27/05/2011 23/05/2011 13/05/2011 12/05/2011 10/05/2011 09/05/2011 06/05/2011 08/04/2011 30/03/2011 24/03/2011 11/03/2011 11/03/2011 10/03/2011 10/02/2011 02/02/2011 27/01/2011 20/01/2011 12/01/2011 30/12/2010 27/12/2010 23/12/2010 20/12/2010 15/12/2010 15/12/2010 06/12/2010 25/11/2010 16/11/2010 04/11/2010 27/10/2010 27/10/2010 27/10/2010 20/10/2010 18/10/2010 14/10/2010 14/10/2010 14/10/2010 13/10/2010 12/10/2010 12/10/2010 11/10/2010 08/10/2010 08/10/2010 08/10/2010 06/10/2010 06/10/2010 05/10/2010 01/10/2010 29/09/2010 09/09/2010 25/08/2010 18/08/2010

110.00 118.55 187.95 132.00 146.00 151.65

NOTE: Price in Rs adjusted for rights, bonus and splits. Var(%) from offer price and list price as on 5 April 2013.

26

Apr 15 28 , 2013 CAPITAL MARKET

SectorSpecific SectorSpecific Slim pickings amid setback


Key benchmark indices edged lower in the fortnight ended 5 April 2013 after a private survey showed that growth in the services sector hit a 17-month low in March 2013. However, the BSE Mid-Cap and the BSE Small-Cap indices logged gains on bargain hunting after a steep recent slide. Auto stocks dropped as sales remained sluggish in March 2013, with buyers postponing purchases on account of higher interest rates and rising fuel prices. Capital goods stocks fell on worries the ongoing slowdown in the economy could restrict new orders. Shares from the healthcare sector gained on defensive buying and attractive valuation.

MARKET CAP
S&P BSE Sensex S&P BSE 200 S&P BSE 500 TCS ONGC Reliance Inds. ITC Coal India Infosys S&P BSE Mid-Cap Pidilite Inds. Glenmark Pharma. M & M Financial Apollo Hospitals Essar Oil Motherson Sumi S&P BSE Small-Cap Alembic Pharma Navneet Publicat Ajanta Pharma Kirloskar Indus. Vardhman Textile Triveni Turbine S&P BSE IT Sector TCS Infosys Wipro HCL Technologies Oracle Fin.Serv. Satyam Comput S&P BSE FMCG Sector ITC Hind. Unilever Nestle India Godrej Consumer Dabur India United Spirits S&P BSE Capital Goods Larsen & Toubro BHEL Siemens ABB Bharat Electron Havells India S&P BSE Healthcare Sun Pharma.Inds. Dr Reddys Labs Cipla Lupin Wockhardt Ranbaxy Labs. S&P BSE PSU ONGC Coal India 3061836 5385880 6010184 293580 268770.4 251979.7 230298 194859.7 164453.7 898320.1 13325.04 12641.55 11869.81 11743.81 11449.27 10832.06 274569.1 2162.1 2006.53 1796.2 1766.73 1744.01 1741.87 684782.5 293580 164453.7 111998.1 52726.09 22296.49 13332.92 503409.9 230298 101875.4 43113.72 26568.92 24958.33 22960.18 216654.3 83056.03 43493.85 17719.9 10400.05 9454.8 7504.27 326022 89020.18 32440.71 31016.03 27676.49 21778.48 19013.85 1453355 268770.4 194859.7

CLOSE PRICE
18450.23 2248.82 6975.85 1500 314.15 780.35 291.45 308.5 2863.85 6144.36 259.95 466.65 208.7 844.15 80.2 184.25 5914.39 114.7 59.95 766.95 363.9 274 52.8 6730.9 1500 2863.85 454.75 757.45 2652.45 113.25 5723.78 291.45 471.1 4471.45 780.75 143.2 1755.5 8914.64 1348.75 177.7 498.45 490.8 1181.85 601.4 8208.56 859.6 1910.3 386.3 618.4 1987.45 449.5 6509.42 314.15 308.5

FORTNIGHT HIGH / LOW


19041 / 18450 2321 / 2249 7198 / 6976 1572 / 1500 317 / 296 811 / 767 309 / 291 310 / 297 2970 / 2853 6310 / 6054 271 / 257 487 / 463 211 / 194 844 / 791 82 / 71 205 / 176 6074 / 5727 115 / 103 60 / 57 767 / 643 373 / 347 275 / 256 53 / 52 6976 / 6731 1572 / 1500 2970 / 2853 455 / 431 796 / 743 2694 / 2532 128 / 113 5921 / 5724 309 / 291 472 / 459 4686 / 4471 814 / 772 144 / 131 1901 / 1756 9342 / 8826 1422 / 1337 185 / 176 555 / 498 511 / 489 1206 / 1129 648 / 594 8247 / 7933 865 / 814 1910 / 1752 392 / 380 637 / 618 2024 / 1894 452 / 432 6621 / 6369 317 / 296 310 / 297

52-WEEK HIGH / LOW


20104 / 15948 2489 / 1969 7764 / 6176 1590 / 1059 341 / 243 923 / 676 309 / 224 382 / 297 3005 / 2125 7336 / 5809 271 / 160 543 / 308 242 / 121 881 / 599 95 / 47 209 / 105 7657 / 5727 115 / 48 69 / 52 767 / 255 420 / 263 290 / 205 62 / 41 7060 / 5158 1590 / 1059 3005 / 2125 455 / 330 800 / 461 3375 / 2368 130 / 67 6142 / 4472 309 / 224 578 / 404 4990 / 4328 814 / 488 144 / 102 2075 / 564 11354 / 8553 1711 / 1135 266 / 176 830 / 490 836 / 489 1532 / 1122 698 / 521 8303 / 6511 865 / 559 1947 / 1543 429 / 302 637 / 510 2115 / 622 570 / 380 7862 / 6369 341 / 243 382 / 297

FORTNIGHT
-1.52 -1 -0.8 -2.66 6.19 -3.76 -4.51 3.71 0.11 1.06 -1.31 -3.96 7.27 6.78 12.88 -10.06 2.45 9.66 5.73 19.29 1.44 7.09 1.54 -0.84 -2.66 0.11 4.32 -1.34 3.08 -8.85 -2.21 -4.51 2.59 -4.59 0.3 7.19 -5.14 -2.29 -3.55 -1.28 -9.99 -3.59 3.88 1.33 3.22 4.79 9.04 1.06 -1.51 4.95 4.1 2.08 6.19 3.71

MONTHLY

VARIATION OVER (%) QUARTERLY HALF YEARLY


-6.74 -9.15 -9.9 15.61 10.32 -9.34 3.2 -14.98 21.95 -15.99 12.48 -11 -13.86 4.64 10.77 -7.64 -22.34 61.89 -10.52 97.34 -5.48 4.38 -14.15 16.08 15.61 21.95 12.77 19.5 -19.41 4.57 -2.73 3.2 -11.74 -8.28 7.71 11.92 -9.37 -19.66 -17.14 -26.69 -27.91 -32.28 -10.27 -5.55 0.03 16.99 1.15 -7.14 2.38 21.63 -12.44 -14.33 10.32 -14.98 -2.58 -3.52 -4.17 15.05 9.38 -8.99 5.71 -15.11 13.29 -8 25.37 16.36 17.1 8.85 32.56 14.3 -17.23 63.39 2.92 95.53 18.3 17.67 5.92 13.87 15.05 13.29 21.66 32.04 -12.09 3.95 1.49 5.71 -16.55 -2.7 12.56 7.75 39.21 -21.38 -18.09 -32.47 -32.97 -37.8 -3.25 -6.5 10.52 25.71 12.82 6.08 8.74 55.67 -15.06 -13.53 9.38 -15.11

YEARLY
5.51 3.18 2.06 27.3 14.9 4.45 28.31 -9.69 0.47 -5.09 57.69 51.09 51.43 36.26 41.32 44.96 -13.59 114.79 -0.08 204.19 5.4 35.64 6.24 10.23 27.3 0.47 2.72 49.09 1.36 39.9 27.09 28.31 17.91 -4.68 58.53 35.8 159.67 -13.94 0.25 -35.04 -36.73 -41.64 -21.97 3.5 24.94 52.37 11.72 26.26 15.71 2 08.71 -5.77 -12.77 14.9 -9.69

3-YEAR
2.87 0.06 -1.39 86.89 14.84 -30.64 120.75 7.14 -11.79 122.37 73.09 178.3 129.89 -44.07 114.99 -33.36 18.36 669.64 116.93 1.88 25.71 86.89 7.14 5.16 110.05 15.17 20.67 101.95 120.75 106.22 64.96 187.41 75.38 27.94 -37.82 -18.13 -63.88 -33.04 -41.98 -43.77 92.36 51.43 133.97 50.34 10.59 89.01 1277.78 -6.75 -28.91 14.84 -

-3.62 -3.86 -3.79 -2.61 -0.51 -5.56 -0.24 -2.87 -1.95 -3.05 4.42 -5.62 9.58 0.42 -8.86 -5.99 -3.77 24.4 -1.64 23.08 -0.3 0.46 -1.4 -1.8 -2.61 -1.95 5.01 1.52 -8.44 -6.41 0.78 -0.24 4.79 -5.09 7.06 7.11 -5.27 -4.1 -3.24 -10.59 -0.31 -15.02 -4.53 -2.78 3.71 7.6 6.48 1.07 3.6 3.92 14.95 -5.11 -0.51 -2.87

Apr 15 28 , 2013 CAPITAL MARKET

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SectorSpecific
MARKET CAP
St Bk of India NTPC IOCL NMDC S&P BSE BANKEX HDFC Bank St Bk of India ICICI Bank Axis Bank Kotak Mah. Bank Bank of Baroda S&P BSE Auto Tata Motors M&M Bajaj Auto Maruti Suzuki Hero Motocorp Bosch S&P BSE Metal Coal India NMDC Hind.Zinc Jindal Steel Sterlite Inds. Tata Steel S&P BSE Oil&Gas ONGC Reliance Inds. IOCL Cairn India GAIL (India) Oil India S&P BSE IPO Bharti Infra. L&T Fin.Holdings Muthoot Finance Multi Comm. Exc. Credit Analysis PC Jeweller S&P BSE Greenex St Bk of India HDFC NTPC ICICI Bank Hind. Unilever Sun Pharma.Inds. S&P BSE Power NTPC Power Grid Corpn BHEL NHPC Ltd Tata Power Co. Reliance Power S&P BSE Realty Index DLF Oberoi Realty Unitech Prestige Estates Godrej Propert. Phoenix Mills 140657.1 116137.3 69779.28 49479.46 664885.6 147854.9 140657.1 115118.5 57490 47397.9 27788.3 314579.3 81441.98 51439.24 49103.2 40620.71 29525.65 27595.89 465770 194859.7 49479.46 49224.75 31287.76 29998.71 29961.83 780300.9 268770.4 251979.7 69779.28 55167.73 40172.76 31913.99 74357.92 34129.53 12918.62 6631.31 4736.88 2201.92 1953.98 1196003 140657.1 119154 116137.3 115118.5 101875.4 89020.18 368546.5 116137.3 48542.72 43493.85 26631.1 22580.05 17980.88 78914.7 39571.22 8333.76 6174.47 5820.5 4141.33 3632.11

CLOSE PRICE
2056.3 140.85 287.4 124.8 12742.79 621.2 2056.3 997.95 1228.55 634.85 655.4 9741.8 255.3 837.8 1696.9 1405.95 1478.5 8788.5 8518.54 308.5 124.8 116.5 334.7 89.25 308.5 8416.78 314.15 780.35 287.4 288.8 316.7 530.9 1545.56 180.7 75.25 178.4 928.8 771.25 109.1 1453.37 2056.3 770.55 140.85 997.95 471.1 859.6 1647.12 140.85 104.85 177.7 21.65 95.15 64.1 1770.2 232.95 253.9 23.6 166.3 530.6 250.75

FORTNIGHT HIGH / LOW


2140 / 2051 145 / 140 290 / 274 138 / 125 13234 / 12743 630 / 605 2140 / 2051 1052 / 998 1315 / 1229 655 / 632 696 / 655 10115 / 9688 275 / 255 874 / 838 1823 / 1674 1406 / 1280 1656 / 1459 9054 / 8704 8831 / 8492 310 / 297 138 / 125 121 / 114 353 / 329 94 / 88 322 / 304 8528 / 8280 317 / 296 811 / 767 290 / 274 294 / 272 322 / 304 531 / 489 1587 / 1497 185 / 170 77 / 71 182 / 174 929 / 834 811 / 771 123 / 107 1501 / 1453 2140 / 2051 826 / 771 145 / 140 1052 / 998 472 / 459 865 / 814 1686 / 1630 145 / 140 107 / 103 185 / 176 22 / 20 96 / 95 66 / 59 1889 / 1761 256 / 231 264 / 251 25 / 22 169 / 163 570 / 515 267 / 248

52-WEEK HIGH / LOW


2539 / 1829 174 / 138 349 / 240 199 / 125 14759 / 10543 704 / 487 2539 / 1829 1214 / 782 1508 / 930 693 / 530 889 / 611 11768 / 8680 333 / 205 968 / 636 2214 / 1447 1626 / 1068 2245 / 1459 9476 / 8221 11405 / 8492 382 / 297 199 / 125 143 / 114 514 / 329 122 / 88 470 / 304 9696 / 7389 341 / 243 923 / 676 349 / 240 363 / 272 392 / 304 561 / 436 1980 / 1402 213 / 170 94 / 41 231 / 116 1594 / 834 938 / 767 188 / 105 1649 / 1307 2539 / 1829 875 / 621 174 / 138 1214 / 782 578 / 404 865 / 559 2144 / 1630 174 / 138 124 / 101 266 / 176 29 / 17 112 / 89 119 / 59 2311 / 1498 286 / 181 316 / 227 40 / 18 189 / 103 672 / 501 279 / 157

FORTNIGHT
-1.32 0.93 -1.02 -4.7 -0.96 2.61 -1.32 -2.96 -5.48 -0.83 -3.08 -3.69 -5.58 -4.12 -6.91 7.94 -10.73 -0.33 -1.24 3.71 -4.7 2.46 -4.89 -3.51 -4.22 -0.07 6.19 -3.76 -1.02 4.05 -1.08 8.51 2.76 4.39 5.47 1.16 8.69 -1.48 2.3 -2.16 -1.32 -3.2 0.93 -2.96 2.59 4.79 0.58 0.93 2.29 -1.28 10.46 -0.73 2.97 -0.63 0.82 -3.75 -1.46 -1.36 3.02 -4.17

VARIATION OVER (%) MONTHLY QUARTERLY HALF YEARLY


-3.49 -5.72 -6.63 -10.67 -5.81 -1.79 -3.49 -8.76 -12.5 -3.17 -7.98 -9.13 -15.07 -6.67 -13.9 -1.77 -10.16 3.92 -6.68 -2.87 -10.67 1.3 -5.16 -5.71 -10.31 -3.91 -0.51 -5.56 -6.63 -1.21 -5.9 -2.57 -6.78 -7.17 -6 -11.57 -11.94 -3.49 -10.06 -5.46 -3.49 -0.32 -5.72 -8.76 4.79 7.6 -6.05 -5.72 -3.41 -10.59 8.25 -3.45 -11.77 -9.08 -10.28 -5.05 -10.27 -2 -5.71 -1.26 -17.24 -11.19 2.11 -23.72 -13.29 -8.59 -17.24 -15.59 -10.86 -2.3 -25.87 -15.95 -19.03 -10.88 -23.03 -8.94 -21.56 -5.75 -24.55 -14.98 -23.72 -16.58 -26.92 -25.59 -28.82 -4.96 10.32 -9.34 2.11 -14.4 -14.53 10.28 -21.95 -12.75 -20.24 -21.06 -34.51 -17.46 -41.81 -11.64 -17.24 -8.01 -11.19 -15.59 -11.74 16.99 -18.96 -11.19 -8.75 -26.69 -13.92 -13.58 -33.16 -19.48 -2.02 -15.44 -34.26 -10.04 -18.4 -3.41 -12.1 -17.51 11.07 -34.09 -3.55 -0.12 -12.1 -6.44 7.65 -0.46 -17.37 -7.16 -8.94 -3.6 -3.09 1.27 -18.35 0.2 -19.68 -15.11 -34.09 -14.21 -19.75 -11.59 -24.82 -4.92 9.38 -8.99 11.07 -11.41 -19.28 8.58 -6.82 48.13 -1.16 -30.47 -8.13 -12.1 2.79 -17.51 -6.44 -16.55 25.71 -21.1 -17.51 -11.18 -32.47 7.44 -8.55 -37.83 -9.2 -3.64 -5.74 -7.63 17.2 -10.13 28.03

YEARLY
-4.99 -16.04 9.55 -25.67 6.86 17.96 -4.99 12.07 5.25 15.34 -18.21 -3.21 -8.22 19.77 3.93 6.64 -26.46 7.25 -24.98 -9.69 -25.67 -9.34 -36.36 -19.3 -35.01 3.39 14.9 4.45 9.55 -19.45 -14.72 7.46 -1.9 58.76 36.44 -27.93 0.06 -4.99 13.36 -16.04 12.07 17.91 52.37 -23.68 -16.04 -5.07 -35.04 5.87 -5.75 -47.13 -1.53 14.08 -9 -18.9 55.78 -14.11 20.12

3-YEAR
-3.8 -32.61 -2.26 -58.16 16.78 59.84 -3.8 1.38 4.62 65.61 -2.07 24.6 63.48 53.12 61.84 0.75 -27.29 83.66 -54.06 -58.16 -6.85 -53.16 -58.81 -54.55 -19.59 14.84 -30.64 -2.26 -6.7 -23.98 15.04 -25.3 -3.8 38.11 -32.61 1.38 106.22 133.97 -47.81 -32.61 -2.19 -63.88 -30.5 -31.16 -58.06 -47.9 -27.51 -69.13 1.79 33.77

Market cap in Rs crore. Stock prices in Rs. Only top six index constituent by market cap taken.

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Apr 15 28 , 2013 CAPITAL MARKET

OffFocus OffFocus
other individual, it is also good to align financial compatibility. One of the travelling companions may not be comfortable staying at expensive hotels. In case of trips that involve strenuous activities like trekking or climbing, travelling with someone who is not used to much physical activity can be a deal breaker. Then there are those who just prefer to go it alone. One of the chief advantages of travelling alone is ironically the chance to socialise. It is far easier to start a conversation with a total stranger in a train or a plane if there is no one else in the tow. With no one to set the terms of the trip, that boring museum that every one in the family wanted to skip can be seen at leisure. Endless hours at the beach doing particularly nothing useful are no longer a problem either. Also, without the tag-along travel companion or companions, the budget can be tailor-made to individual taste. On the flip side, travelling alone involves the problem of security. Getting lost on your own or staying in a dodgy hotel can get really scary. In adventure holidays, having a travel companion means that, if something goes wrong, the co-traveller can easily arrange medical attention or rescue in case of an emergency. For the solo traveller that is not an option. Long backpacking holidays can sometimes get lonely. Being home-sick after being weeks alone is not unheard of. One of the fundamental problems that all solo travellers face when they set out is that they miss having someone to watch over their luggage while going to the bathroom or when they fall asleep at a train or a bus station. Solo travellers also face physical dangers like being easy victims of crime and being fleeced by touts and unscrupulous malefactors that prey on tourists worldwide. Priyank Thatte is a travel blogger living mostly in Toronto, Canada, and travelling the world part-time for the past five years. Every year he takes approximately two months off work and travels to places he hasnt been before. Israel, Russia, Turkey and Bhutan are some of the countries he has visited in the past. But his favourite region to explore is Latin America. Priyank writes about his backpacking stories on his travel and photography blog: finaltransit.com. He had this to say about travelling solo: I almost exclusively travel by myself and I prefer independent travel both for the extreme solitude it offers and the crazy experiences I encounter. I was in Turkey few months ago and went hiking in
29

Packing the bags

Have will, will travel


Both group and solo travel can be pleasurable. There is always the middle way of travelling alone but gaining local company
Planning a vacation is almost as fun as going on one. Sometimes it is even more so because the anticipation is almost better than the real thing. For most people their first memory of a vacation is almost always a family trip. It is natural for families to travel together. A change of scene brings the family closer. It is also a chance for members to rediscover each other. Being with the people who are related makes for a comforting experience. For a lot of people travel is an experience in itself. A time for new discoveries and for meeting new people. A walk away from the familiar and comforting things in life. These people may like to travel by themselves. It may be inconceivable for a few people why someone would want to go away from a loving home and family or even the comfort of ones own bed. Yet there are those that brave all the odds and set out into the vast unknown with just the bare essentials or whatever the airlines allow people to carry with them these days. So from the havetoothbrush-will-travel kind to those who take everything and everyone including the kitchen sink, it takes all kinds of people to go on outings, either alone or in hordes. Trips in a group can mean different things to different people. A group could be a family or friends. It could also be colleagues or, sometimes, an organised group tour with even strangers. Group trips usually need to cater to the tastes of many
Apr 15 28 , 2013 CAPITAL MARKET

individuals and are, therefore, best planned within the group, days in advance. Logistics of a group tour are also different. When people of different age groups travel together, care may be required to plan for activities that interest each and every member of the group. If there are elderly or the children involved, special consideration must be paid towards their needs. In a group setting, matching of temperament and tastes is necessary. Travel can be stressful and weigh heavily on the nerves. If there is a personality clash involved, an already stressful trip can turn in to a living nightmare. Even a trip in which only two people travel together, for example, a married couple, can be stressful if not all is well at home to begin with. In Japan, a popular drama series, Narita Rikon, was based on just that premise. Narita Airport is the main gateway to Tokyo, while Rikon means divorce. The show featured couples that went on honeymoons and got a divorce after they got back to Japan. The term Narita divorce has now gone mainstream in Japanese vocabulary. The right frame of mind is important before anyone sets foot outside the house. This means aligning expectations and planning ahead. The trip should be planned in such a way that everyone gets to see and do as much can possibly be done in the time when the group is on holiday. When travelling in small groups or just with an-

OffFocus
the Cappadocia desert that is dotted with caves and rock formations that seem like terrain another planet. On the way I got lost and barely escaped a pack of wild dogs; but then I also saw spectacular scenery that had no sign of human presence. It was immensely fulfilling. Everyone has a different take on travelling alone or in a group. Some people just prefer the idea that there is someone to cover their back in case something untoward happens. Then there are others that think that no one should cramp their style. For women, travelling alone always poses interesting challenges. In the late 19th and early 20th centuries, there was a dramatic increase in the number of European and American woman travellers. Many of them wrote about their experiences. Some of these travellers were married but still decided to go on journeys to far-flung areas of the world by themselves. Some of them were on journeys of scientific or geographic exploration, while others just travelled for leisure. One famous woman traveller was Alexandara David Nel, who travelled to Tibet in 1924 when it was still closed to the outside world.She wrote many books on religions of the East, philosophy and her travels. David Nel also travelled to Vietnam, India, Sikkim, Japan and France. There were other famous female travellers like Mary Kingsley, who went to West Africa, and Mary Seacole, a mulatto from Jamaica, who went to the Crimea during the war. In modern India, many women have taken to travelling solo. Naina Sharma based in Mumbai works for a global telecom company. In her free time she likes to travel on her own and sometimes with companions. I have been travelled in large groups extensively in southern India, especially Karnataka, and in mountainous regions of the north in Uttaranchal, she says. As a solo backpacker, she has been to Swedish Laplands, SouthWest China in Yunnan, and Sri Lanka. When asked what she thinks about unique challenges that the woman traveller faces, Naina said: Most importantly, it is a bit difficult to find cheap and safe accommodation. We often have to pay a premium just to ensure that nobody would be forcing open our doors in the middle of the night. Also, there is often curiosity and unwanted attention attached to solo women travelers by the local populace. To tackle it gracefully is partly an art, and part borderline science. Whether the traveller is a man or a
30

Ma ny options to c hoose the w a y to tr a ve l

woman, there are certain charms in solo travel that cannot be ignored. Solo v group is a highly sensitive topic in the backpacking community, notes Priyank. I travel solo but solo travel does not mean I have to be alone all the time. In fact, travelling independently compels you to talk to locals, meet fellow travellers and plan your own journey without having to accommodate other peoples demands. I also take public transport, eat in markets and stay with the locals (through couchsurfing). There are times when he would rather let someone else plan, organise and lead a tour. When he goes hiking in the Himalayas, he would rather have someone else to worry about finding food and accommodation or figuring out other details of the journey. I would advice you to choose your group well; traveling in smaller groups with likeminded travellers can be a blast, says Priyank. My city tour of Mexico City was awful because I was in a bus full of older Caucasian Americans. On the other hand, I went hiking in the Colca Canyon, Peru, in a group of four active travellers in their late-twenties and it was one of my most memorable hikes. Naina says she would take solo travel any day. It is highly addictive. You are always present in the moment with no idle chit-chat to distract you from experiencing your travel in the highest intensity possible. For a lot of travellers going it solo, the internet has opened new avenues. Couchsurfing.com and AirBNB.com provide accomodations in the form of either rentals or homestays. These services allow hosts to give on rent living space or sleeping quarters to travellers for short stays. The review-based rating helps people pick the right accommodation for their needs. These ser-

vices make it possible to interact more with the locals because it is they that let out the accommodations for homestays. Other services like Tripping.com and Triptrotting.com help connect locals and travellers as well. A visitor can hook up with a local person who can show the sights and enjoy the company of an exotic foreign guest in return. Those travellers who would rather travel solo but find a travelling companion just for a particular trip can use the services of websites like FindMeetGo.com or Globetrooper.com. In fact, AirBNB has proved to be such a challenge to established hotels and hostels that some countries are now losing out on tax revenue and are considering outlawing the use of it. Recently, the local government in Amsterdam was thinking of banning AirBNB entirely. Those that like to travel in groups have many options as well. Traditional travel agents like Cox & Kings, Thomas Cook, and Sita do provide travel packages, which are geared towards the Indian traveller. Some online travel companies like makemytrip.com, cleartrip.com, and yatra.com also provide holiday packages that cater both to group and personalised itineraries. When booking a group holiday it is important to check on the kind of accommodation and transport provided by the agent. It is also important to examine if the group tour will provide some leeway in terms of excursions to shopping malls or cultural spots. Most group tours have some amount of flexibility built in to them but it is unreasonable to expect a lot of freedom because the structure of the tour will remain rigid. Different travellers have different needs. Those that like to plan everything by themselves love solo travel. Travelling alone is also the way to go for those holidaymakers that enjoy the idea of mingling with local people and getting a bit of cultural experience. Travellers who just want to have a change of scene without immersing themselves in to the nittty-gritty often just want to go with a group. Factors like safety and security are real concerns in todays global environment and group travel does allow for a more secure experience. Both group and solo travel can be pleasurable. There is always the middle way of travelling alone but gaining local company for getting the best of both the worlds. Whatever way anyone chooses, as long as the mind is open, travel will certainly broaden horizons. Shivdeep Singh
Apr 15 28 , 2013 CAPITAL MARKET