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Investment Opportunity

October 2010 The Group An Overview The group has two companies :

Project: Diva

Company 1 - Manufacturing transformer core and lamination started in 1994 Company 2 - Manufacturing power transformers, distribution transformer and CTPT (Current transformers) acquired in 1998 Both the companies belong to the same promoter having 17 years of experience in the same line of business Transformer core and lamination are raw materials for manufacturing transformers and constitute approximately 30% to 40% of the total cost of transformer Company 2 is forward integration for Company 1 Key customers Company 1 Voltamp Transformers, Ashmor Electricals, Suzlon Infrastructure, Coil & Transformer India Limited Company 2 Gujarat Urja Vidhyut Nigam Limited (GUVNL) State Electricity Board, Suzlon Infra Services Limited, RRB Energy Limited Industry - The Ministry of Power, Government of India has envisaged a capacity addition of 78,577 MW and 86,500 MW in the 11th and 12th Plan period respectively. A corresponding plan for new investment and R&M is also conceived for the Transmission and Distribution segments in line with the National Electricity Plan and the Integrated Energy Policy. The Government of India has thus launched the "Power for all by 2012" program which targets adding about 1,00,000 MW of

power generation capacity by 2012. The transformer market is now pegged at Rs 100 billion and will grow two-three times in another five years. Power transformers account for 50 per cent of the total value of the industry with remaining accounted for distribution and special transformers. The transformer industry in India has evolved and now has a well matured technology base upto 800 kV class. India has a field-proven technology & capacity to manufacture a wide range of power transformers, distribution transformers and other types of special transformers for welding, traction, furnace etc. Today, about 95% of the transformers installed in the Indian Power Network are of indigenous origin. Energy efficient transformer with low losses and low noise levels are also manufactured in India to meet international requirements. The group has expansion plans in both the companies: Company 1 The company has identified a target for buy out which will give it entry into higher margin business (Targets topline Rs. 2.55 billion, PAT Rs. 170.0 million) Company 2 The company plans to venture into medium and high voltage power transformers and manufacturing of dry type transformers Products Company 1 Torodial cores - The Toroidal wound cores (Round Cores) are normally used in many electrical applications. Instrument transformers, variable volt transformer, air-gap transformers, transducers, indicators, auto transformers, low loss reactors, magnetic amplifiers are some of the examples of its applications Rectangular cores - The rectangular cores are wound from CRGO slit strip and are annealed with the former inside the cores, to keep its shape intact. Electrical properties of rectangular cores are same as that of round cores

Miniature cores - These are used in instrument transformers, ballast, energy meters etc. Miniature cores are wound on fully automatic imported core winding machine with a thin CRGO strip and are annealed in a high vacuum pit type circular furnace under protection atmosphere Cut Cores - The cut cores are mainly used in industrial electronics products like inductance ballast, current transformers, inductors, radios, televisions etc. Gapped cores - They are mainly used in current transformer, instrument

transformer, inductance ballast etc. Transformer lamination - These laminations of various grades and sizes are slit as per the customers design from 10kVA to 50000 kVA (50MVA), it can be metered (45 angle), v-notched, tip-cut, punched with holes as per the customers requirement and specification. It protects the transformer from losses Company 2 Distribution and power transformers Rectifier Transformer Furnace Transformer(Arc and Induction) Dry Type Transformer 5 KVA-5.0 MVA, upto 33 KV class Upto 2.5 MVA, upto 22 KV class Upto 2.5 MVA, upto 22 KV class Upto 2.5 MVA, upto 11 KV class

The

break

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type

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transformers

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as

under

Distribution transformers 80%, Power 10-15% and other 5%

In addition to the above the company also offers following services: Technical consultancy Tailor made design activity Detail Engineering Installation and Commissioning Repairing and maintenance facility

New product development Annual maintenance contract

Financial Overview Company 1 Year Ended March 31st, Total operating income (TOI) EBIDTA EBIDTA/TOI (%) Operating Profit (OP) PAT PAT/TOI (%) Net Cash Accruals (NCA) (Figures in million) 2008 2009 2010 Actuals Actuals Actuals 596.7 851.7 1194.1 76.8 67.8 178.2 12.9% 8.0% 14.9% 59.4 40.6 153.1 39.8 9.4 126.3 6.7% 1.1% 10.6% 42.3 13.5 129.2

Company 2 Year Ended March 31st, Total operating income (TOI) EBIDTA EBIDTA/TOI (%) Operating Profit (OP) PAT PAT/TOI (%) Net Cash Accruals (NCA) 2008 Actuals 262.70 44.65 17.00% 39.18 25.59 9.74% 26.05

(Figures in million) 2009 Actuals 313.82 36.53 11.64% 28.88 18.54 5.91% 19.34 2010 Actuals 628.76 53.61 8.53% 43.63 30.21 4.80% 32.79

Proposed Transaction The company is looking to partner with a private equity investor and raise an estimated Rs. 700.0 million in Company 1 to take over the assets and business of existing concern in the same line of business having Total Operating Income of Rs. 2.55 billion and PAT of Rs. 170.0 million

The company is looking to partner with a private equity investor and raise an estimated Rs. 300.0 million in Company 2 to undertake expansion project and venture into medium and high voltage power transformers The promoters will dilute a minority stake in both the companies through issues of fresh equity shares to raise the required capital The purpose of the fund raise is to enable the company to expand its product offerings in high margin space, to gain ready market through acquisition, to add to its marketing capability and to tap new geographies

Contacts For further details please contact: Malhar Mehta malhar_mehta@hotmail.com Mob: +919879566240

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