RPG Group: Widening Horizon

Phase I
RPG Enterprises, established in 1979, is one of Indias fastest growing business groups with a turnover touching over Rs. 17,000 crs. RPG is a global & diversified Indian business group which consists of over fifteen companies managing diverse business interests in the areas of Automotive Tyres, Infrastructure, IT, Pharmaceuticals, Plantations and Power Ancillaries. Corporate General Manager Mr. Yasaswy Kothari, while sipping his coffee had a closer look at the financial reports of CEAT, KEC and Zensar for the year 2013. Sitting alone in the cabin he started brainstorming on the current stepping stones and building blocks of these companies. CEAT, one of the most recognised brands in India has over 50 yrs of presence in the tyre industry. With exports to over 130 countries & over Rs 1000 crs in FY 13, it is one of the leading tyre exporters from India. Currently, No. 1 player in Srilanka and has expanded its footprint in Bangladesh which is part of the N11 countries as identified by GS economist Jim ONeill. With revenue doubling in the last 5 years, consistent volume growth backed by improved margins augurs well for the company in future. KEC International Limited is one of the largest multinational Power Transmission Engineering, Procurement & Construction (EPC) companies in the world. KEC is growing presence in Power Systems, Cables, Telecom, Railways and Water. KEC has gone from strength to strength successfully exporting its EPC services to over 50 countries and widening its client base across the world. Spread across 6 continents it is currently executing projects in over 30 countries. Sales growth of over 20% in the last 5 years with an order book of over Rs 10,000 crs will help the firm achieve greater heights in future. Zensar is among the top 13 software services providers from India and is spread across 20 locations globally servicing over 290 active customers. The Company has developed tools and methodologies, which enables its clients with innovative business solutions and a rapid 'go-to-market' capability. The Company supports Fortune 500 clients with software business solutions that help them compete in the digital economy. 22% CAGR for Revenue and PAT in the last 5 years will only grow from here in the near future. These three companies contribute more than Rs. 14,000 crores to the top line of the group. But drilling deeper what concerns Yasaswy is the market capitalization and bottom line figures. A closer look reflects tremendous opportunities for improvement in these two areas.

Mr. Yasaswy is keen on hiring consultants who can improve the current financial figures of these group companies and is capable of proposing innovative and practical ideas on improving the market capitalization and bottom line of these three companies.

Can you be the consultant to RPG? Deliverable 1:

Analyse the current financial status of these three companies of RPG vis--vis the peers in India and globally. Analyse the comparative PE multiple and market capitalization of these 3 companies with other listed peers. As per your view what should be the fair value for each of the 3 companies?

Refer to the following links for financial data of: CEAT http://www.ceat.in/newsite/aboutus/investors.asp KEC - http://kecrpg.com/corporate-presentation ZENSAR - http://www.zensar.com/investors