December 2011

1
Deal Picks
Source: Market information (1): 1US$ = INR 52.25 (Assumed)
National Oilwell Varco in Sara Sae Pvt Ltd. National Oilwell
Varco, a global drilling equipment company, had acquired a
76% stake in the company in August 2007.
Sara Sae's key clients include National Oilwell Varco, FMC Ltd
and ONGC. Its exports account for more than 85% of the
turnover of the company.
Suzlon Completes Hansen Stake Sale For Rs 890Cr, Completes
RePower Buyout
Suzlon Energy Ltd has completed the sale of its remaining
26.06 % stake in Belgium-based Hansen Transmissions
International NV to German engineering firm ZF
Friedrichshafen AG for Rs 890 crore(GBP 115.25 million).
Suzlon had acquired Hansen from private equity firms Allianz
Capital Partners and Apax for USD 565 million in March 2006.
It sold 10 per cent stake in Hansen to Ecofin at the start of
2009 for USD 100-120 million and followed it up with a sale
Sara Sae acquires Consolidated Pressure Control
Sara Sae Pvt Ltd, a Multiples PE funded company, has
acquired US based Consolidated Pressure Control.
Consolidated Pressure Control is a seven-year-old company
engaged in the business of manufacturing, supplying and
servicing control systems for surface mounted blow out
protection (BOP) units. It also supplies land rig units, BOP test
pumps and other components used in the oil and gas
industry.
Sara Sae is managed by V K Dhawan(Co-promoter) and his
two sons, and manufactures oil field equipments such as BOP
accumulators, hydraulic tongs, swivel joints and hammer
unions for the global upstream oil drilling sector at its plants
in Dehradun and Faridabad. In August 2011, Sara Sae had
raised funding from Renuka Ramnath's Multiples Private
Equity fund to finance the buyout of 76% stake held by
of 35.2 per cent stake for USD 370 million through a
placement by the end of the year. Proceeds from this stake
sale will be partly used to redeem the FCCBs, while part of it
has been used to buyout the minority stake in REpower
Systems AG, in which Suzlon already owned 95%.
BiMonthly Newsletter
Foreign earthmoving and construction equipment (ECE) companies flock at Indian shores
FY2011. Earthmoving machinery contributed a mammoth
70% chunk, road compacting machinery and cranes
contributed 11% each, and concreting machinery
contributed the rest.
The growth momentum of the global ECE industry is shifting
to emerging markets, specifically India, due to several reasons:
Finance has become scarce and business confidence is
low in the matured markets (North America and Europe)
due to slower growth and sovereign debt crisis
The Indian government has projected a whopping USD
1 trillion (Rs.1 lakh crore) investment in the infrastructure
sector (power, transportation, urban infrastructure)
during the 12th Plan period (2012-17), which will result
Global firms have shown keen interest to expand into the
fledgling Indian earthmoving and construction equipment
(ECE) market through subsidiaries or joint ventures to cash in
on the opportunities in the booming infrastructure sector.
While global players such as JCB from Britain, Hitachi,
Kobelco and Komatsu from Japan, Volvo from Sweden and
Caterpillar and Terex from the US have entered the Indian
market in the past decade, the 30 percent industry growth in
2010 has attracted many firms from China, Finland, Germany,
Italy, South Korea, Spain and Turkey to plan assembly and
manufacturing facilities in the country. John Deere, Kone
Cranes, Mitsubushi, and Schwing Stetter are amongst foreign
companies which recently invested in India.
The ECE industry in India was pegged at INR198Bn as of
in huge demand for construction equipment
While the ECE industry worldwide staged a modest
recovery in 2010 from the impact of global recession in
2008 and 2009, India, China and Brazil made up for the
declining growth in the developed countries. Indias
share in the global ECE market is expected to reach 7% in
2013 from 5% in 2009
India turns out to be low cost base for manufacturing
and exports to Asian and Middle Eastern markets,
especially UAE, which holds a 25% share of these exports
Demand for energy efficient customized market is
growing, and foreign companies already have the
technology for developed markets, where emission
norms are very strict
M&A and Capital Market Deals in Oct-Nov 11
Investor /
Acquirer
Investee /
Target
Deal
Type
Deal Value
(in Mn$)
(1)

% stake
Sara Sae
Consolidated
Pressure
Control
M&A N.A. N.A.
Suzlon Hansen M&A 170 26%
Mitsubishi
Anupam
Industries
JV 36
Anupam (51%),
MHI (49%) in
the JV

2
Hansen is an LSE listed wind turbine gearbox and industrial
gearbox designer, manufacturer and supplier, which was
acquired by Suzlon in 2006.
Suzlon has windfarms with capacity of more than 6700MW
spread across 8 states including Rajasthan, Gujarat, MP,
Maharashtra, Karnataka, AP, Tamil Nadu and Kerala. Apart
from it's domestic operations, it has windfarms in Germany
and Belgium.
Mitsubishi Forms JV With PE-backed Anupam Industries
Mitsubishi Heavy Industries Ltd (MHI, Japan) and Anupam
Industries Ltd have formed a joint venture to establish
Anupam-MHI Industries Ltd that will manufacture heavy-duty
material handling equipment like quayside container cranes
in India. The joint venture will have an investment of Rs 188
crore, with Anupam holding 51% stake and Mitsubishi
holding 49%.
MHI aims at aggressively exploring the fast-growing Indian
market and also the Asian and MENA markets by
collaborating with Anupam industries, to whom MHI has
already licensed related technologies. The JV will set up two
plants which will be functional in the first half of 2012 and
will oversee production and assembly of structural
components.
Founded in 1973 and located in Gujarat, Anupam Industries
designs and manufacture cranes for various industries such as
Deal Picks (Contd.)
steel, power, construction, cement, shipyard, fertilizer,
petrochemical and heavy & general engineering.
Founded in 1950 and headquartered in Tokyo, Mitsubishi
focuses on manufacturing, installation, sale and repair of
heavy machinery worldwide.
Note: INR USD exchange rate as on announcement date
Ashok Leyland-John Deere JV launches maiden Construction
Equipment product
The 50:50 Joint venture between Hinduja Group flagship
Ashok Leyland and John Deere has launched its first product,
a backhoe loader. The backhoe loader has been designed
specifically for the Indian market conditions and has lower
operating cost, good fuel economy and low maintenance
and repair costs. The product launch involved an investment
of Rs 200 crore.
The product will be sold under the Leyland Deere' branding
and manufactured at a greenfield facility in Gummidipoondi
near Chennai. The product will be initially launched in the
southern states, before being rolled out nationally. The
company has tied up with partners like TVS Logistics for
distribution. The focus is solely on the domestic market.
Two more products are being developed by the joint venture
company - the second product, a wheel loader, will be rolled
out in 2013. The company is looking at a capacity of 10,000
units by 2016-17, across the three product categories, with
the backhoe accounting for 8800 units.
The sales of the backhoe category in India stand at 20,000
units a year, growing at 30-35% annually. JCB is the market
leader in this segment with a 75 per cent share.
Konecranes lines up Rs 100 crore expansion plan
Finnish crane company Konecranes will invest Rs 100 crore in
India over the next year to expand capacity as part of its
strategy to offset a slowdown in the US, its mainstay market.
The company plans to double capacity at its unit near Pune
to manufacture 1,000 cranes every year by the end of 2012.
The Indian unit would be developed as an export hub for
other geographies, particularly the Middle East.
The company recently completed the acquisition of Mumbai
based WMI Cranes for about Rs 400 crore. Konecranes had
bought 51% stake in WMI from the Vazirani family in
February 2011 for Rs 169 crore, with an option to acquire
balance stake by the end of the year.
India's planned industrial investment, growing ports and the
fact that the current base for the cranes market is very low are
key reasons for the market being expected to grow faster
than other economies.
Latest Buzz
Schwing Stetter launches 19 new products, to invest
Rs 80 crore till end of 2012 to expand operations
Concreting equipment manufacturing company Schwing
Stetter launched 19 new products thereby expanding the
product portfolio to 61 products. All except two of them will
be produced at the company's plant in Chennai.
The company plans to invest Rs 80 crore till the end of
2012 - the investment programme is already underway with
the new plant to be situated adjacent to the existing plant
near Chennai.
Schwing Stetter, a multinational with headquarters in
Germany, has been in India (Chennai) for a little over a
decade now. In the current year, it expects to achieve a
turnover of Rs 1,100 crore in India. The topline is expected to
grow at a faster rate in the coming years as the company
plans to now cater to the markets of South-East Asia and
SAARC countries as well.
Company Name
Stock Price
(in INR)
Market
Capitalization
(in INR mm)
Net Sales
1

(in INR mm)
EBITDA
1

(in INR mm)
EBITDA
Margin
1
(%)
Net Income
1

(in INR mm)
EV/EBITDA
1

Fwd
2

EV/EBITDA
P/E
1

Fwd
2

P/E
P/BV
Larsen & Toubro Ltd. 1,294.6 792,094 515,520 79,498 15.4 44,562 12.8x 10.0x 17.9x 16.5x 3.1x
Siemens Ltd. 700.8 238,479 119,547 13,522 11.3 8,677 16.2x 12.6x 27.4x 19.3x 7.2x
Jaiprakash Associates Limited 65.0 138,112 110,831 49,396 44.6 17,928 11.0x 8.2x 7.7x 13.2x 1.3x
ABB Limited 602.1 127,590 62,871 2,290 3.6 632 55.4x N/A 201.8x 31.5x 5.3x
Aditya Birla Nuvo Ltd. 904.8 102,688 181,678 25,167 13.9 8,221 3.4x 2.7x 10.4x 19.1x 1.5x
Cummins India Limited 356.3 98,766 35,285 5,562 15.8 4,629 17.3x 12.0x 21.3x 15.3x 6.6x
Crompton Greaves Ltd. 127.8 81,983 100,051 13,438 13.4 8,887 8.0x 6.9x 9.2x 12.4x 2.5x
Engineers India Limited 211.4 71,212 28,482 6,646 23.3 5,313 8.0x 5.9x 13.4x 10.5x 4.8x
Bharat Forge Ltd. 261.2 60,806 49,686 7,834 15.8 2,880 10.0x 6.5x 21.0x 12.3x 3.1x
Thermax India Ltd. 465.6 55,473 52,474 5,269 10.0 3,817 9.3x 7.2x 14.5x 12.0x 4.2x
Havells India Ltd. 419.7 52,368 56,126 5,585 9.9 3,036 11.4x 8.6x 17.3x 15.3x 8.0x
Jain Irrigation Systems Ltd. 119.1 45,959 41,528 7,589 18.3 2,807 9.5x 6.2x 16.2x 10.8x 3.0x
Alfa Laval (India) Ltd. 2,182.0 39,625 3,785 803 21.2 653 49.2x N/A 60.6x 29.7x 22.5x
SKF India Ltd. 596.7 31,463 20,684 2,675 12.9 1,770 11.0x N/A 17.8x 12.2x 3.7x
Voltas Ltd. 91.0 30,111 51,768 4,496 8.7 3,572 N/A 7.1x 8.4x 10.0x 2.2x
Carborundum Universal Ltd. 154.5 28,928 16,007 2,809 17.5 1,708 8.6x 7.7x 16.9x N/A 3.9x
AIA Engineering Ltd. 288.1 27,174 11,369 2,530 22.3 1,834 9.8x 8.2x 14.8x N/A 2.6x
Sintex Industries 92.9 25,361 44,752 8,075 18.0 4,600 5.0x 4.2x 5.5x 4.4x 1.1x
Fag Bearings India Ltd. 1,180.0 19,608 10,401 1,947 18.7 1,215 5.6x N/A 16.1x 9.8x 3.4x
Lakshmi Machine Works Ltd. 1,732.3 19,517 17,937 2,508 14.0 1,533 4.8x 2.9x 13.9x 9.4x 2.4x
Greaves Cotton Limited 78.4 19,133 13,923 2,130 15.3 1,175 8.6x 6.4x 16.3x 10.9x 4.5x
BGR Energy Ltd. 260.5 18,794 47,498 5,370 11.3 3,230 4.1x 4.1x 5.8x 6.6x 2.0x
Amara Raja Batteries Limited 214.0 18,273 17,611 2,610 14.8 1,481 6.4x N/A 12.3x 8.7x 2.8x
Kennametal India Ltd. 750.3 16,490 5,069 1,384 27.3 886 11.8x N/A 18.6x N/A 5.6x
Blue Star Ltd. 178.4 16,040 29,510 2,561 8.7 1,610 7.8x 7.5x 10.0x 9.5x 3.1x
Punj Lloyd Ltd. 48.0 15,924 78,496 4,859 6.2 (595) 8.7x 6.1x N/A N/A 0.5x
Praj Industries Ltd. 75.8 14,006 6,649 489 7.4 578 25.2x 10.1x 24.2x 14.9x 2.5x
Graphite India Ltd. 69.5 13,569 14,439 2,999 20.8 1,891 5.0x 4.0x 6.3x 5.6x 0.9x
Grindwell Norton Ltd. 240.4 13,306 7,807 1,431 18.3 836 8.8x 8.3x 15.9x 12.2x 3.3x
Ingersoll-Rand (India) Ltd. 417.0 13,164 4,645 561 12.1 686 15.4x N/A 19.2x N/A 1.6x
Timken India Ltd. 187.5 11,947 4,433 712 16.1 511 16.7x N/A 23.4x N/A 3.1x
Continued...
Source: Bloomberg (as on 30th November 2011) Note: 1: Trailing Twelve months 2: Forward One Year
Capital Goods Scorecard
3
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Company Name
Stock Price
(in INR)
Market
Capitalization
(in INR mm)
Net Sales
1

(in INR mm)
EBITDA
1

(in INR mm)
EBITDA
Margin
1
(%)
Net Income
1

(in INR mm)
EV/EBITDA
1

Fwd
2

EV/EBITDA
P/E
1

Fwd
2

P/E
P/BV
Elgi Equipments Ltd. 70.0 11,092 9,390 1,442 15.4 890 N/A 6.0x 12.5x N/A 3.3x
Kirloskar Brothers Ltd. 116.0 9,203 26,417 2,541 9.6 970 4.8x 4.3x 9.5x N/A 1.1x
NESCO Ltd. 602.1 8,484 97 109 112.1 62 77.9x 4.9x 136.3x 7.6x 35.5x
Titagarh Wagons Ltd. 436.1 8,203 7,244 1,206 16.7 713 7.0x N/A 11.2x 9.2x 1.4x
Vesuvius India Ltd. 364.6 7,400 4,401 861 19.6 489 7.6x N/A 15.1x 10.9x 2.9x
HEG Ltd. 164.3 7,039 11,136 2,308 20.7 1,214 6.8x 5.4x 5.8x 5.6x 0.8x
Nitin Fire Protection Industries Limited 30.2 6,650 4,378 795 18.2 534 10.1x 7.1x 12.5x N/A 2.9x
KSB Pumps Limited 179.7 6,253 6,102 784 12.9 584 6.9x N/A 10.7x 12.1x 1.6x
Man Industries India Ltd. 111.9 6,186 16,482 1,502 9.1 815 4.4x 3.0x 7.3x 5.5x 1.2x
Finolex Industries Ltd. 49.0 6,102 19,747 2,399 12.1 762 6.6x N/A 8.0x 10.2x 1.0x
Kirloskar Pnuematic Co. Ltd. 472.5 6,066 4,917 743 15.1 439 6.0x N/A 13.8x N/A 3.2x
Elecon Engineering Co. Ltd. 60.1 5,576 12,193 1,986 16.3 900 5.9x 4.4x 6.2x 5.8x 1.3x
V-Guard 181.0 5,402 7,263 744 10.2 426 8.9x N/A 12.7x 8.7x 3.1x
Forbes & co. Ltd. 414.8 5,351 10,457 594 5.7 199 13.9x N/A 26.6x N/A 1.8x
Voltamp Transformers Limited 509.8 5,158 5,263 690 13.1 518 8.2x N/A 10.0x 9.2x 1.4x
Andrew Yule & Company Ltd. 16.1 5,130 2,437 487 20.0 570 11.0x N/A 8.6x N/A 2.9x
Apar Industtries Ltd. 134.8 4,849 28,983 2,059 7.1 953 2.5x N/A 4.6x N/A 1.2x
Shriram EPC Limited 105.0 4,656 16,411 1,836 11.2 742 7.8x 7.2x 6.2x N/A 0.9x
Sanghvi Movers Ltd. 100.6 4,355 3,612 2,558 70.8 863 N/A 3.2x 5.0x 4.1x 0.8x
HBL Power Systems Limited 16.8 4,238 12,066 918 7.6 169 13.8x N/A 25.2x 8.4x 0.7x
Triveni Engineering 14.6 3,752 17,072 2,236 9.9 222 5.8x 3.3x 10.9x N/A 0.4x
NRB Bearings Ltd. 38.7 3,751 4,734 1,079 22.8 535 4.4x 2.9x 7.0x 6.3x 1.8x
Hercules Hoists Ltd. 227.1 3,633 1,186 413 34.8 299 6.7x N/A 12.1x N/A 3.2x
Action Construction Equipment Ltd. 37.5 3,483 6,878 574 8.4 411 7.0x 3.4x 8.3x 5.1x 1.4x
Diamond Power Infrastructure Ltd 100.0 3,454 15,209 1,816 11.9 1,104 4.4x N/A 3.4x 2.0x 0.7x
Source: Bloomberg (as on 30th November 2011) Note: 1: Trailing Twelve Months 2: Forward One Year
Capital Goods Scorecard
4