[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd.

Research Desk Industry : Pharmaceutical Pune e Stock Broking Pvt. Ltd. Company : Ranbaxy Laboratories Ltd. CMP : `544.10 Long-term BUY Bloomberg : RBXY @IN CODES BSE :500359 NSE : RANBAXY Reuters : RANB.BO Financial Summary EPS P/E Revenue (`mn) EBITDA (`mn) EBITDA Margin % EV/EBITDA (x) Market Cap (`mn ) Free Float Mar Cap (`mn) 52 week high/low Total Debt (`mn) Enterprise Value (` mn) Book Value Per Share P/BV 7.1 77.1 75,970.4 11,991.0 15.8 21.1 228,749.4 82, 670.0 625/364 36,295.2 253,161.5 103.3 5.3 Ranbaxy Laboratories, Indias largest pharmaceutical company in terms of revenue h as reported a significant growth in its bottomline for the quarter ended Septemb er 2010. The consolidated net profit during the period increased in triple digit by 169% to `3,079.4 million. This sharp rise in bottomline was partly due to fo rex gain of `2,605.2 million (Exchange gain on FCCBs, foreign currency derivativ e options and mark to market gain on outstanding loans). However, total operatin g income during the quarter ended September 2010 reported a mere growth of aroun d 3% to `19,346.6 million on the back of growth from across all regions except f or Europe, Africa and ROW. Good performance in the North American market was the major growth driver as the revenues from this region increased by 70% compared with the corresponding quarter last year. In the domestic market, the company po sted a growth of 18%, in line with the industry's average growth rate. However, earnings before Interest, Tax, Depreciation & Amortization (EBITDA) declined by 35% to `1,386.5 million. Other income excluding foreign exchange gain increased nearly six fold to ` 932.2 million. Ranbaxy sets up new manufacturing facility i n South Africa Ranbaxy Laboratories, wholly owned subsidiary Ranbaxy S.A. has se t up a new manufacturing facility, Be-Tabs Pharmaceuticals Manufacturing Plant, at Roodepoort, Johannesburg, South Africa. This particular manufacturing plant w as Ranbaxys second manufacturing facility in South Africa and the third in the Af rican continent. The new facility was built with an investment of USD 30 million . The new plant that was set up will produce products which will include tablets and hard gelatin capsules that will be supplied to current registered regions. Further the plant is capable of producing approximately 1.75 billion units and p ackaging of 2.0 billion units, annually. ` Million Operating Income (`) EBITDA (`) Net Profit (`) Share Capital (`) EPS (`) P/E (x) EV/EBITDA (x) ROA (%) ROE (%) Shareholding pattern as on September 30, 2010

CY08A 74,213.6 (2,626.3) (9,512.1) 2,101.9 (22.6) (24.0) (94.5) 0.0 (22.1) CY09A 75,970.4 11,991.0 2,965.0 2,102.1 7.1 77.1 21.1 2.7 6.8 CY10E 89,515.0 26,603.1 16,037.8 2,102.1 38.1 14.3 9.0 19.1 29.0 CY11E 98,466.5 23,577.8 13,826.0 2,102.1 32.9 16.5 10.0 18.4 21.9 1 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Largely focused on setting up manufacturing facilities To strengthen Ranbaxys man ufacturing capacities, a new facility was set up last year at the Special Econom ic Zone in Mohali (Punjab). This facility will cater to the developed markets of the US and the EU. The new commercial facility has a capacity of 2 billion tabl ets and 500 million capsules per annum. Further the company is also investing in its manufacturing facilities at Ohm Laboratories Inc., USA, to significantly en hance manufacturing capacities. Reviving Indian market share Ranbaxy Laboratorie s has been focusing its operation a lot in abroad mainly, in U.S. and as a resul t it lost ground in the domestic market and slipped to the third position behind Abbott Labs and Cipla in terms of market share leadership in India. However, th is might turnaround and the company could witness a growth of between 1520% annu ally in the coming years. The company launched Project Viraat, an initiative tar geted to ramp up its presence across the country, especially in rural areas thro ugh introduction of new products and increasing its field force comprising medic al representatives. This project is key to re-establishing Ranbaxys presence in t he local market as it would help expand its presence, and in reaching out to mor e than 350,000 doctors in the coming few years. It expects to launch about 60 pr oducts annually, including those in-licensed from multinationals, and add about 300 people to its current field force of about 4,000 by December end. Currently about 25% of the companys turnover comes from the domestic market. Global sales s plit in 2009 Ranbaxy to play great role for Daiichi in emerging markets Ranbaxy, Indias larges t drug maker by revenue and a subsidiary of Daiichi, is likely to generate a maj or chunk of revenue for its parent company by taking Daichi Sankyo to expand its reach into the emerging markets and others outside Japan, Europe and the US. Ra nbax y already has a strong presence in these markets as well as in Africa, Lati n America and the Commonwealth of Independent States (CIS) region. Daiichi is li kely to sell its patented products through Ranbaxy in these markets. Further Ran baxy is also likely to contribute to 23.4% of Daiichis total revenue by 2012 from the current contribution of 15% to the revenue. US $ 397 mn US $ 86 mn US $ 441 mn US $ 269 mn US $ 214 mn US $ 112 mn Global sales split Asia RoW API Europe

North America CIS* *CIS includes Russia & Ukraine belt Source: Company, Research Desk Exploring synergies with Daiichi Sankyo to strengthen its presence Ranbaxy Labor atories and Daiichi Sankyo recently integrated new drug research, wherein Ranbax ys New Drug Discovery Research (NDDR) has been transferred to Daiichi Sankyo Indi a Pharma as part of the strategy to strengthen the global R&D structure of the D aiichi Sankyo Group. Since Ranbaxy has joined with Daiichi Sankyo, they have tur ned their focus more into R&D. So the incorporation of NDDR into the global Rese arch function has provided an upper hand for the company in the field of R&D as the Group would benefit from more efficient global R&D along with get faster res ults. Apart from this Ranbaxy also introduced Daiichi Sankyo's innovative antihy pertensive product in India, in particular, Olmesartan Medoxomil under the brand name 'Olvance'. Further a dedicated marketing division within Ranbaxy's Mexico subsidiary has been established, which will soon introduce Daiichi Sankyo's prod ucts in this market. Apart from expanding its presence in the domestic market, R anbaxy will also leverage its network in Africa in order to further intensify it s position. The company will be launching Olmesartan Medoxomil in six African ma rkets. In addition to this, Daiichi Sankyo and Ranbaxy together are exploring sy nergistic opportunities in the areas of R&D, Manufacturing, Global Supply Chain, Service/Support and IT functions, among others to cement their position in the particular field in the coming years. 2 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. US FDA approval for Aricept may boost sales Ranbaxy Laboratories has received th e exclusive rights from the US Food and Drug Administration (FDA) to sell generi c version of Alzheimer drug Aricept in the US. US FDA has granted sole exclusive rights to sell Aricept, Eisai Co's best selling Alzheimer drug. Aricept is used in the treatment of Alzheimers and is co-promoted by Eisai and Pfizer and distri buted by Eisai in the US. Ranbaxy may start selling the Aricept copies in the US after the patent on the medicine expires on November 25 this year. It, however, will need a final permission from the regulator before it started to market the drug. The US FDA said Teva Pharmaceutical Industries Ltd., which also had an ap proval to sell the drug, cant compete with Ranbaxy for 180 days. So the company h as the advantage of generating revenues from sale of the generic version of the drug for 180 days ahead of other generic players. Ranbaxys patent expiries upto 2011 ( in US$ bn) Source: Company, Research Desk Launches Atorvastatin drug in South Africa Ranbaxy Laboratories has launched the generic version of cholesterol lowering drug atorvastatin in South Africa under the brand Lipogen, during mid year. Atorvastatin is a patented drug from Pfizers portfolio which is considered as the worlds largest selling medicine under the L ipitor brand with annual sales of more than ` 60,000 crore. This action has earm arked Ranbaxy as the first generic pharmaceutical company to launch a generic at orvastatin in South Africa. Atorvastatin is the second largest molecule in South Africa after esomeprazole, an anti-stomach ulcer drug and has a current market size of $26.1 million per annum. Also, Ranbaxy was the first generic drug maker to challenge the Lipitor patent, was eligible for gaining exclusive marketing ri ghts for 180 days of the drug after getting US health regulator Food and Drug Ad ministration nod in US, which is also the largest drug market globally. Ranbaxy d rifted its focus towards generic drugs 1800 1600 Global Revenue trend (in US$ million) 1700 1519 1339 1619 1667 1400 1200 1000 800 600 400 200 0 2006 2007 2008 2009 2010 (F) Source: Company, Research Desk Ranbaxy Laboratories chalked out plans to focus more on generic drugs. In order to create a better synergy with its parent company Daiichi Sankyo, Ranbaxy Labor atories is shifting its focus of its research from the development of new drugs to that of generic drugs. Recently Ranbaxy and Daiichi Sankyo has signed a three

year synergy plan where in both the companies are working on developing a hybri d business model. According to the plan, Ranbaxy would focus more on generic med icine research while Daiichi Sankyo will look after the new drug discovery. In I ndia, Daiichi hopes to establish Ranbaxy as the top firm in the market by 2012. Daiichi hopes to establish Ranbaxy as the top firm in the Indian market by 2012. However according to Daichi, Ranbaxy is unable to achieve the synergies what ha s been planned out, due to the U.S. import bans. So this will remain a key chall enge for the company in the next three years. However, the key to Ranbaxy's grow th would be depend how soon it resolved pending issues with the United States' d rug regulator, the Food and Drugs Administration, and resumed volume supplies to U.S. 3 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Business Plan Global Reach Developed Markets North America, EU, Japan Africa Product Portfolio Generics Branded Generics Research & Development New Chemical Entities Therapeutic Width & Depth Acute Chronic Source: Company Business Overview Ranbaxy Laboratories Limited, India's largest pharmaceutical c ompany, is an integrated, research based, international pharmaceutical company p roducing a wide range of quality, affordable generic medicines, trusted by healt hcare professionals and patients across geographies. Ranbaxys continued focus on R&D has resulted in several approvals in developed markets and significant progr ess in New Drug Discovery Research. The Companys foray into Novel Drug Delivery S ystems has led to proprietary "platform technologies" resulting in a number of p roducts under development. The company is having a ground presence in 46 countri es and with its products selling over 125 countries and is also having manufactu ring locations in 7 countries. Ranbaxy is a member of the Daiichi Sankyo Group. Daiichi Sankyo is a leading global pharma innovator, headquartered in Tokyo, Jap an. Ranbaxy was incorporated in 1961 and went public in 1973. In June 2008, Ranb axy entered into an alliance with one of the largest Japanese innovator companie s, Daiichi Sankyo Company Ltd. Ranbaxy is focused on increasing the momentum in the generics business in its key markets through organic and inorganic growth ro utes. The company has also expanded its presence into the Biosimilars and Specia lty Injectables and also wants to increase its focus in this segment. These new areas will add significant depth to the existing product pipeline. 4 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010 Branded OTC Complex / Niche/ FTF

Emerging markets India, Romania, CIS,

Generics / NDDS

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Indian Pharmaceutical Industry Indian pharmaceutical industry has come a long way from waiting for imports of b ulk drugs from global majors for re-processing to becoming an industry which is driving product development and breaking new grounds in medicine research worldw ide. As known, the overall world economy has witnessed an unprecedented economic crisis causing severe recessionary trends in various sectors. But the pharmaceu tical sector across the globe was shield against the recession due to government intervention to revamp the healthcare sector. With the infrastructure developme nt, new technology and a wide range of production, Indian pharmaceutical industr y is looking forward to increase its strength in the global market. Further, the industry comprises large, medium and small-scale operators out of which around 300 companies contributes approximately 90% of the domestic market. Currently th e Indian pharmaceutical market is worth of US$ 7.3 bn opportunity, with the dome stic retail market expected to cross over US$ 12 bn mark in 2012. According to M cKinsey, Indias pharmaceutical market has potential to grow to US$ 20 bn by 2015 with the CAGR of 12.3%.The Indian pharmaceutical industry ranks 3rd in terms of volume, contributing 8% share in global sales globally, while ranks 13th in term s of value with the share of 1% in global sales. The domestic pharmaceutical mar ket will outperform the global market with compounded annual growth rate of 12-1 5% as against a global average of 4-7% during 2008-2013. According to IMS, China , Brazil, India, South Korea, Mexico, Turkey and Russia are collectively expecte d to see drug sales growth of nearly 12-14% in 2010, in which Indian pharmaceuti cal market alone will grow 12-14% next year. Indian Formulations Industry Formul ations are broadly categorized into patented drugs and generic drugs. A patented drug is an innovative formulation that is patented for a period of time from th e date of its approval. On the other hand, a generic drug is a copy of an expire d patented drug that is similar in dosage, safety, strength, method of consumpti on, performance and intended use. The domestic formulation industry has register ed a CAGR of 14% in the last 5 years from US$ 3.9 bn to US$ 7.7 bn outpacing the global Pharma industry growth rate of 7%. The Indian pharmaceutical industry is a leading producer of high quality, low cost genric drugs. It has a significant market share in the US$ 80 bn world generic market which is expected to increas e by another 50% by the end of 2010. According to a report by global pharmaceuti cal intelligence company IMS health, the generic manufacturer are expected to gr ow at a faster pace as drugs worth approximately US$ 20 bn in annual sales will face patent expiry in 2011. Nearly US$ 80 bn worth of patent protected drugs wil l go off-patent (including 30 of the best selling US patent-protected drugs) by 2012. Addition to this, India is also expected to rank among the top 10 global p harmaceutical markets by the end of 2015. Exports The Indian pharmaceutical indu stry has grown from a mere turnover of US$0.32 billion in 1980 to around US$21.2 6 billion in 2009-10. The Indian pharmaceutical industry is currently ranked 17t h in terms of export value of bulk actives and dosage. The Domestic pharma secto r has been expanding and is estimated at US$ 11.72 billion (` 55,454 crore) in 2 008-09 from US$ 6.88 billion (` 32,575 crore) in 2003-04. The main reason behind this significant growth is due to lower cost of drugs in India ranging from 5% to 50% less as compared to the developed countries. Indian exports are destined to various countries around the globe including highly regulated markets of USA, Europe, Japan and Australia. 60,000 17.2% 50,000 39,989 34,128 45,367 50,946 55,454 Export of domestic drugs & pharmaceuticals

20% 18% 16% 12.3% 8.9% 14% 12% 10% 8% 4.8% 10,000 6% 4% 2% 0 2003-04 2004-05 200 5-06 2006-07 2007-08 2008-09 0% 30,000 7.3% 20,000 32,575 40,000 13.5% Domestic Market Growth Rate 5 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. CRAMS- The super power In the coming years, India is likely to mature further as a provider of services across the drug development spectrum discovery, research , pre-clinical, clinical, process formulations and IT among others. Further, Ind ia is preferred destination for Pharma outsourcing as it is known as one of the low cost research and manufacturing (CRAMS) hub in the international markets. Th e growing demand from the domestic market coupled with increased focus from the MNCs for contract research and manufacturing services are set to fuel the Indian pharmaceutical growth in the years to come. Addition to this, the Indian pharma ceutical industry is also expected to leverage from the global generics market w hich is forecasted a CAGR of 10.5% along with growing involvement of Indian bigg ies into clinical research services. CRAMS Segment Breakup Other Services, 5% Contract Research, 29% Contract Manufactu ring, 66% CRAMS is one the fastest growing segment in the Indian pharmaceutical market and is all set to grow by expected rate of 34% till 2013. With this growth rate it is also capable of generating overall business of around `28,700 crore by the en d of 2013. The outsourcing business is mainly attributed in 3 segments namely, C ontract Research and Contract Manufacturing. Among all aforesaid segments Contra ct manufacturing contributes maximum market share of 66%, while Contract Researc h contributes 29% market share in CRAM segment. Globally, the outsourcing trends are expected to grow further with the contract manufacturing market is expected to cross USD 45 billion (USD 29 billion from dosage forms and USD 16 billion fr om APIs) whereas the size of contract research market is approximately USD 38 bi llion (USD 11 billion from drug discovery and USD 27 billion from Clinical resea rch). Outlook: The growth in the Indian Pharmaceutical industry is witnessing a significant growth in recent years due to rising consumption levels in the count ry and strong demand from export markets. The Indian Pharmaceutical industry is set to scale new heights in the fields of production, development, manufacturing and research backed by the presence of low cost manufacturing facilities, educa ted and skilled manpower and cheap labor force among others. The government of I ndia has undertaken several including policy initiatives and tax breaks for the growth of the pharmaceutical business in India. The future outlook of the pharma ceutical industry looks bright as several companies are slated to make investmen ts in India. The public spending on healthcare is likely to grow from 7% of GDP in 2007 to 13% of GDP by 2015. Further with the emergence of low cost of R&D, th e Indian pharmaceutical offshoring industry is designated to be a USD 2.5 billio n opportunity by 2012. 6 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Quarterly Result (Consolidated) ` Million Operating Income Other Income Total In come Consumption of raw materials Employee expenses Other Expenditure Operating Expenses EBITDA Q3CY10 19,346.6 2,029.6 21,376.2 5,970.2 3,660.9 8,329.0 17,960. 1 1,386.5 Q3CY09 18,858.0 163.0 19,021.0 5,494.5 3,057.5 8,173.7 16,725.7 2,132. 3 %YoY 2.6 1,145.2 12.4 8.7 19.7 1.9 7.4 (35.0) (414bps) 51.0 (73.0) (14.0) 53.2 1,332.9 123.4 3.0 168.3 23.5 (231.8) 168.9 828bps Q2CY10 21,504.5 1,272.5 22,77 7.0 5,288.7 3,752.2 8,295.4 17,336.2 4,168.3 %QoQ (10.0) 59.5 (6.2) 12.9 (2.4) 0 .4 3.6 (66.7) (1,222bps) 42.1 (88.5) (91.3) (33.3) 7.8 (18,164.1) (5.8) 12.1 (60 .6) (5.5) 10bps EBITDA Margin % Depreciation EBIT Interest Profit Before Exceptional Items Exceptional Items Pro fit Before Tax Taxes Net Profit Minority Interest Share of Profit & Loss of Asso ciate Net Profit after MI & Share of P&L 7.2 987.3 399.2 110.0 2,318.8 1,257.2 3,576.0 448.0 3,128.0 (36.7) (11.9) 3,079.4 11.3 654.0 1,478.3 128.0 1,513.3 87.7 1,601.0 435.0 1,166.0 (29.7) 9.0 1,145.3 19.4 695.0 3,473.3 1,269.0 3,476.8 (159.2) 3,317.6 (2.5) 3,320.1 (32.7) (30.2) 3,257. 1 Net Profit Margin % 14.4 6.1 14.3 q-o-q revenue performance of Ranbaxy Laboratories (` in mn) EBITDA margin squeezed due to rising input costs while NPM witnessed sustained g rowth 12,000 10,000 8,000 4,168.3 6,000 4,000 2,000 0 Q3CY09 3,473.3 1,386.5 399.2 2,132.3 1,478.3

3,257.1 3,079.4 1,145.3 Q2CY10 Q3CY10 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 7.2% 11.3% 19.4% 14.4% 6.1% 14.3% Q3CY09 Q2CY10 Q3CY10 Net Profit EBIT EBITDA NPM EBITDA Margin 7 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Balance Sheet (Consolidated) (` Million) Equity Share Capital Equity Share warra nts Share application money pending allotment Reserves & Surplus Total Networth Minority Interest Loan Funds Deferred Tax Liability Capital Employed Gross Block Depreciation Net Block Capital work in progress Investments Deferred Tax Asset Net Current Assets Capital Deployed CY08A 2,101.9 1,756.6 39,104.0 42,962.5 674. 6 42,848.7 246.6 86,732.4 61,941.6 17,042.0 44,899.7 4,707.4 5,431.5 12,476.0 19 ,217.8 86,732.4 CY09A 2,102.1 1,756.6 2.0 39,573.3 43,433.9 533.2 36,295.2 160.5 80,422.9 62,785.5 17,880.5 44,905.1 6,230.7 5,407.4 4,906.2 18,973.6 80,422.9 C Y10E 2,102.1 1,756.6 51,445.3 55,304.0 479.9 37,073.6 144.5 93,002.0 67,808.4 19 ,664.4 48,144.0 4,361.5 5,677.8 4,660.9 30,157.9 93,002.0 CY11E 2,102.1 1,756.6 59,162.1 63,020.7 431.9 22,769.0 130.0 86,351.7 71,876.9 23,000.6 48,876.3 3,053 .0 5,734.5 4,427.8 24,260.0 86,351.7 8 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Profit & Loss Account (Consolidated) (` Million) Operating Income CY08A 74,213.6 CY09A 75,970.4 CY10E 89,515.0 CY11E 98,466.5 % Growth Other Income Total Income Consumption of Raw materials Employee Expenses Other E xpenses Operating Expenses 2,706.2 76,919.8 21,565.7 9,669.5 48,310.8 79,546.0 2.4 2,935.5 78,905.8 23,962.5 14,174.7 28,777.6 66,914.8 17.8 8,855.1 98,370.1 25,160.6 14,812.4 31,794.0 71,767.0 10.0 5,313.1 103,779.6 28,934.7 16,293.6 34,973.4 80,201.7 % of sales EBITDA 107.2 (2,626.3) 88.1 11,991.0 80.2 26,603.1 81.5 23,577.8 % Growth EBITDA Margin % Depreciation & depletion EBIT (918.0) (3.5) 2,824.7 (5,451.0) (556.6) 15.8 2,676.1 9,314.9 121.9 29.7 3,211.3 23,391.7 (11.4) 23.9 4,014.2 19,563.6 EBIT Margin % Interest Profit Before Tax Tax Net Profit before extraordinary items & minority interest Minority Interest Share of Profit & Loss of Asso. Net Profit after mino rity interest & share of P & L

(7.3) 9,549.4 (15,000.3) (5,650.8) (9,349.5) (84.4) (78.2) (9,512.1) 12.3 (782.7) 10,097.6 6,990.9 3,106.8 (109.4) (32.4) 2,965.0 26.1 1,748.0 21,643.7 5,462.0 16,181.7 (114.8) (29.1) 16,037.8 19.9 2,097.6 17,466.0 3,493.2 13,972.8 (120.6) (26.2) 13,826.0 % Growth NPM Margin % (12.4) (131.2) 3.8 440.9 16.3 (13.8) 13.3 9 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Key Ratios & Valuations CY08A Net Profit Margin (%) EBITDA Margin (%) RoCE % RoE % ROA (%) Debt/Equity (x) EPS P/E (x) Book Value P/BV (x) EV/EBITDA (x) EV/EBIT (x) EV/Sales (x) (12.4) (3.5) (6.3) (22.1) 0.0 1.0 (22.6) (24.0) 102.2 5.3 (94. 5) (45.5) 3.3 CY09A 3.8 15.8 11.7 6.8 2.7 0.8 7.1 77.1 103.3 5.3 21.1 27.2 3.3 C Y10E 16.3 29.7 25.3 29.0 19.1 0.7 38.1 14.3 131.6 4.1 9.0 10.3 2.7 CY11E 13.3 23 .9 22.8 21.9 18.4 0.4 32.9 16.5 149.9 3.6 10.0 12.1 2.4 Valuations: Ranbaxy Laboratories has launched Project Viraat, an initiative targ eted to ramp up its presence across the country. This project is key to re-estab lishing Ranbaxys presence in the local market as it would help in expanding its p resence, and in reaching out to more than 350,000 doctors in the coming few year s. Further the company is also aiming to increase its presence while expanding t hrough both organic and inorganic route. Ranbaxy is unable to achieve the synerg ies what has been planned out, due to the U.S. import bans. So this will remain a key challenge for the company in the next three years. Further the management remains optimistic and has indicated that it is in dialogue with US FDA for reso lving its GMP problems at both Dewas and Paonta facilities. Apart from this, Ran baxy Laboratories has received the exclusive rights from the US Food and Drug Ad ministration (FDA) to sell generic version of Alzheimer drug Aricept in the US. So the company has the advantage of generating revenues from sale of the generic version of the drug for 180 days ahead of other generic players. Looking at all these aspects, the stock looks attractive at the current market price of ` 544. 10 and therefore we rate the stock as BUY. At the current market price, the stock is trading at a PE of 77.1x on CY09 EPS of ` 7.1 and 14.3x on CY10E EPS of ` 38. 1. 10 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry : Coal Pune e Stock Broking Pvt. Ltd. Company : Coal India Ltd. CMP: ` 320.9 Long-term BUY Bloomberg : COAL@IN CODES BSE : 533278 NSE : COALINDIA Reuters : COAL.BO Financial Summary EPS P/E Revenue (`bn) EBITDA (`bn) EBITDA Margin % EV/EBITDA (x) Market Cap (`bn ) Free Float Mar Cap (`bn) 52 week high/low Total Debt (`bn) Enterprise Value (` bn) Book Value per share (`) P/BV (x) 15.2 21.1 4,73.5 154.7 29.4 10.4 2,026.9 2 02.7 357.6/287.45 20.9 1657.2 40.8 7.9 Coal India H1 FY11 net rises further up Coal India Ltd (CIL), operate 471 mines in 21 major coalfields across the nation, is considered the largest coal produci ng company in the world. After going out in public, the company posted the most historic IPO with an issue size of US$ 3.5 billion and it was oversubscribed by more than 15.28 times. The company reported a substantial growth of 29.06% in it s net profit at ` 40,200 million for the period ended April-September 2010, agai nst the figure of ` 31,150 million during 2009-10. The state run firm registered net sales of ` 225,255.3 million, a rise of 16.9% for the first half of the cur rent fiscal as against ` 192,695.2 million recorded in the same period the previ ous fiscal. Coal India eyeing for a possible assets buy from Massey and Peabody CIL is in advance talks to buy a mine owned by Massey Energy Co. and a deposit i n Australia from Peabody Energy Corp. to secure supplies. This buy is likely to be attractive since the gap on valuations on this one seems to be narrowing. Min es overseas would help the state-run miner meet demand from power stations and s teel mills that are rising faster than production in Asias second-biggest energyconsuming nation. It held ` 380.5 billion in cash and bank deposits at the end o f June 2010 and has set aside ` 60 billion for acquisitions this fiscal 2011. Ma ssey owns 2.8 billion tones of reserves, 1.3 billion of which are metallurgical coal, used to produce steel. Proposed to set up 20 new washeries to propel quali ty coal With a view to augment availability of quality coal in the country, CIL has proposed setting up 20 new washeries and made it a policy to develop integra ted washries in case of all new mining projects of 2 Mtn per annum capacity. As a long term strategy CIL is planning supply of washed coal to consumers located away from pit heads and alongside also develop big opencast mines of 2 Mtn per y ear capacity with integrated washeries. Proposed 20 new washeries will be set up on a modified "Build, Operate and Maintain" (BOM) basis at an estimated cost of approximately ` 2500 crore. ` Million Operating Income (`mn) EBITDA (`mn) Net Profit (`mn) Share Capital (`mn) EPS (`) PE (x)

Promote rs 90% Shareholding pattern as on October 30, 2010 Institutio nal Investors 5% General Public 4% Other Investors 1% FY09A 412,790.7 75,303.8 20,786.9 63,163.6 3.3 97.5 10.6 23.3 10.8 9.9 FY10A 473,514.5 154,688.9 96,224.5 63,163.6 15.2 21.1 7.9 10.7 37.3 33.2 FY11E 562,738.9 188,025.1 118,301.5 63,163.6 18.7 17.1 6.8 8.4 39.5 35.5 FY12E 674,492.0 227,865.1 145,268.9 63,163.6 23.0 14.0 5.8 6.6 41.4 37.4 P/BV (x) EV/EBITDA (x) ROE (%) ROA % 11 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. No-Competitor for coal production in India as of FY10 MEGH 1% TISCO 2% SCCL 9% O thers 7% Caters over 81% of coal production in India; largest coal reserve in world Being the largest producer and supplier of coal, CIL contributes over 81% of countrys total coal output. It also pioneers in coal reserve upto 18,862.9 million tons ( Mtn), comprising 10,595.1 Mtn of Proved Reserves and 8,267.8 Mtn of Probable Res erves. Above this, it has 64,218.0 Mtn of total resources, comprising 51,326.3 M tn of measured resources, 9,924.4 Mtn of indicated resources and 2,967.3 Mtn of inferred resources, as on April 01, 2010. With the rising demand for coal in Ind ia the company empowered as the sole supplier of coal to industries like power, steel, cement, etc. In India, coal is the primary source of fuel for thermal pow er plants, which consumed 77% of the total coal produced in India during 2009. T his is facilitated by 471 mines in 21 major coalfields across eight states in In dia, including 163 open cast mines, 273 underground mines and 35 mixed mines (wh ich include both open cast and underground mines). CIL 81% Capacity expansion CIL has been proactive in increasing its coal production to l ive up the rising demand within the country. To quantify this, CIL along with re levant subsidiaries approved 77 projects with an aggregate proposed capacity add ition of 184.78 mtpa, involving an aggregate proposed capital expenditure of `11 ,006.46 crore. Of the 77 projects, 45 identified projects (comprising 22 capacit y expansion projects for existing mines and 23 new mine projects) had received t he requisite investment approval. They are in various stages of mine planning an d development: a) 25 projects, with an aggregate estimated capacity of 47.51 mtp a, and involving an aggregate estimated capital expenditure of `3,385.71 crore, are at various stages of implementation. They are expected to become operational by the end of fiscal 2012; and b) 20 projects, with an aggregate estimated capa city of 33.27 mtpa and involving an aggregate estimated capital expenditure of ` 25,76.28 crore, involve longer gestation periods and are expected to become oper ational during the XIIth Five Year Plan (2013-2018) period. CIL consistently mai ntains lower cost of production (`/ tonne) for raw coal from open cast mines 900 847.9 Cash cost is lower for CIL from global peers As compare to global standard, CIL has been one of the least cost producers with cash cost of production of `745/to nne for FY10 and `848/tonne for Q1FY11 for raw coal from open cast mines. Since open cast mines assimilates 90% of its total output, the overall cash cost of pr oduction has also been considerably under control. It benefit from favorable geo graphic and geological conditions of many of the coalfields in which it operates , including relatively thick flatlying coal seams located at shallow depths, sta ble ground conditions, relatively simple geological structures and low stripping ratio which enables it to bring into operation large open cast mines within rel atively short time frames with relatively low specific investment. It has upgrad ed its technologies and equipment for its open cast mines, including high capaci ty surface miners, shovels, dumpers and draglines. Consequently, its raw coal pr ice increases have been lower than average inflation rates in India and is signi ficantly less than the landed cost of imported coal in India. 850

800 745 750 714.8 700 737.9 650 600 2008 2009 2010 Q1FY11 12 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Volume of coal production of different grades (Mtn) Non coking coal Coking coal CIL encompasses 11 direct & indirect subsidiaries to evolve larger & bigger CIL has 11 direct and indirect subsidiaries in India, out of which 9 are directly en gaged in coal production. CILs wholly-owned subsidiary, Central Mine Planning and Design Institute Ltd (CMPDIL) is an established exploration and coal mine desig n and planning institute in India and provides technical and consultancy service s for its operations as well as to third party clients regarding coal exploratio n, mining, processing and related activities. CIL along with SAIL, NTPC, NMDC an d RINL has set up a joint venture International Coal Venture Ltd (ICVL) to scout for acquisition of coal mines outside India. Continue to leverage its strong ex ploration & technical expertise to strengthen its reserve base 500 400 300 200 100 0 2006 2007 2008 2009 329.8 347 363.8 388.5 29.1 28.1 30 30. 2 39.1 406.8 2010 Volume of coal production from different mines (Mtn) Open Cast mines Underground Mines 500 450 400 350 300 250 200 150 100 50 0 45.82 43.32 43.54 43.96 43.25 CIL continues to leverage its strong exploration capabilities and technical expe rtise related to mining activities to strengthen its reserve base. It utilizes a systematic exploration plan to implement its reserve strategy, which is focused on enhancing productivity and increasing the size of its reserve base. It conti nues to invest in updating its equipment and technology to develop a geological database of its resources to optimize the development and utilization of its res ource base. It intends to increase exploratory drilling targets for its existing mines to assess the viability of its resources and maximize the development of its resource base on a continuous basis. BCCL and ECL (Subsidiaries of CIL) have been referred to BIFR Two subsidiaries of CIL, BCCL and ECL have been predominant ly loss making companies since incorporation due to difficult geomining conditio ns, limited scope to conduct open cast mining, low productive underground mines and excess manpower. These were incorporated in 1972 and 1975, respectively, thr ough the nationalization of coking coal mines and noncoking coal mines. These tw

o Subsidiaries have been declared sick under the Sick Industrial Companies (Spec ial Provisions) Act, 1985 and have been referred to the BIFR (Board for Industri al and Financial Reconstruction) in the late 1990s. Both the companies have impl emented revival plans approved by BIFR. Any disruption in the operation of these two companies could have an adverse affect on cos financial condition, results o f operation and profitability. Risk & concern Higher employee costs: Being highe r manpower requirement industry, CIL has been incurring high employee costs (36% of the revenue in FY10) due to larger number of employees. However, the company is expecting some wage revisions during 2011. CIL has been continuously putting efforts to reduce this by deploying workers in unviable mines to new projects. Issues relating to land acquisition and associated surface rights: If CIL is una ble to acquire land and associated surface rights to access its coal reserves, i t may be unable to mine coal from its reserves which could materially and advers ely affect its business, results of operations and financial condition. 359.77 388.01 297.57 317.59 335.92 2006 2007 2008 2009 2010 Coal transportation through different modes Others, 6 MGR*, 19 Rail, 46 Road, 29 13 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Corporate overview of Coal India Ltd Bottomline likely to grow on the back of rise in topline 250,000 29.4% 200,000 25.3% 18.3% 96,224 154,689 4.5% 75,304 0 FY08 FY09 FY10 FY 11E FY12E 20,787 5% 0% 18.7% 118,302 188,025 19.2% 145,269 227,865 29.8% 35% 30% 25% 150,000 13.6% 100,000 52,433 97,592 16.4% 20% 15% 10% 30.0% 50,000 EBITDA Company Profile Net Profit EBITDA Margin % NPM% Coal India Ltd (CIL), established in 1973 as a wholly-owned subsidiary of the Go vernment of India, is the worlds largest coal producing company both in terms of production as well as reserves with a total coal production of ~445.9 Mtn in FY1 0. In terms of reserves also, it is the worlds largest coal company with proven r eserves of ~18.9 Btn and resources of ~64.3 Btn. It has over three and a half de cades of core competence across the entire coal business values chain starting f rom exploration, planning and design, operations, beneficiation and marketing. A s of March 31, 2010, CIL operated 471 mines in 21 major coalfields across eight states in India. Out of the total mines operated, the number of open cast mines, underground mines and mixed mines remained 163, 273 and 35, respectively. The p rincipal product of CIL is raw coal, primarily non-coking. CIL is in the process of implementing a plan for beneficiation of coal supplies to consumers, other t han those at pithead, in a phased manner. CIL is also looking for diversificatio n opportunities in the areas of Coal Bed Methane, Coal Gasification, Coal Liquef action and Power Generation. CIL has also made progress in acquiring metallurgic al and high grade thermal coal resources abroad to enhance energy security of th e nation. 14 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Indian Coal Industry The Indian coal Industry stands out to be 4th largest in terms of reserves and 3 rd largest in terms of production in the world. During Apr09-Jan10, coal productio n in the country registered a growth of 8.17% at 416.47 million tones as against 385.02 million tones of the corresponding period prior year. Holding around 7.0 9% of the total coal reserve of the world, India also stands third in race next to China and USA on consumption front with an accountability of 7.49% to the wor ld consumption. Coal productivity in the country is dominated to a larger extent by one of the worlds largest coal mining company, Coal India Ltd. (CIL), which a ccounts for nearly 90% of the countrys coal production, controlling almost all th e 390 mines of the operating in the region. Among the other producers, Singerani with 37 underground and 13 opencast mines and Minerals & Metals Trading Corp ar e some promising names. Coal demand in India (Mtn) sector wise X 5-year Plan FY0 7 Actual supply Coking coal Steel/Coke ovens & cokeries Steel (Import) Sub-total Coking Non-Coking Coal Power utilities (Gen reqd) Captive Power Cement Steel DR BRK & others Sub-total Non-Coking Grand Total 17.3 17.88 35.18 307.92 28.13 19. 67 17.47 55.51 428.70 463.88 FY08 Actual supply 16.99 22.03 39.02 332.40 29.31 21.27 20.92 61.37 465.27 504.2 9 FY09 Actual supply 16.58 21.08 37.66 362.93 32.74 18.85 19.78 77.07 511.37 549.0 3 XI 5-year plan FY10 Actual supply (P) 17.23 23.47 40.70 371.66 39.08 18.98 23.09 88.82 541.63 582.33 FY11E BE FY12E MTA Revised 26.02 42.48 68.50 473.00 47.00 33.35 28.96 62.43 644.74 713.24 17.92 32.59 50.51 442.00 44.00 30.00 28.80 61.00 605.80 656.31 Coal production and consumption in India In emerging nations like India, where e nergy consumption is increasing at an alarming rate, about 70% of India's coal p roduction is used for power generation, with the remainder being used by heavy i ndustry and public use. And its requirement for the power utilities is expected to grow at a CAGR of 10% between FY08-FY12. Meanwhile, the requirement of coking coal in the steel industry is also expected to reach over 85.34 Million metric tonnes by FY12. During FY10 (till Dec09) 13 coal blocks with reserves of 3591.32 MT were allocated to eligible public and private sector companies. Of which 6 bl ocks with reserves of about 1674.60 MT were allocated for power generation. Alth ough India is a major producer of coal, it produces only limited quantities of c oking coal needed by its steel plants. As a result, it imports large amount of c oking coal, mostly from Australia. It is estimated that by the end of XI Plan, d emand for coal in the country will grow to 713 Mt while the indigenous availabil ity is likely to be at 630 MT, keeping a gap of 83 MT to be met through imports. Coal production from captive blocks could contribute to about 42 million tonnes against an envisaged target of 81 million tonnes, which would further augment t he need to import more coal during 2011-12. For meeting partly the shortfall in the requirement of power utilities, CIL has even taken initiation for importing 6 MT of coal for the current year (2010-11).The planning commission has also rec

eived approval for a capital outlay of Rs. 37100 crore to achieve the projected production level. Currently, the Indian government is actively pursuing the deve lopment of between five and seven large coal-fired power projects with combined capacity of 48 GW. The government also seeks to introduce legislative changes al lowing for private mining, whilst liberalising norms for the allocation of capti ve blocks permitting trading of coal. Under which, captive block holders are lik ely to be permitted to sell their coal on the open market. The current legislati ve requirements permit private-sector investment only for the limited purpose of setting up coal washeries and captive mining for specified end-uses, including setting up power plants, fertiliser and steel units. 15 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Coal Imports in India 11.69% of its total coal consumption Indias appetite for co al imports has grown steadily over the past years due to the constantly widening gap between demand and supply in the coal sector. As per the current import pol icy, coal is allowed to be freely imported under the Open General License by con sumers directly. Coking coal is imported by the steel sector and coke manufactur ers. Coal-based power generators and cement producers also import non-coking coa l. In fiscal 2010, India imported about 67.74 Mtn (provisional) of coal which is 11.69% of its total coal consumption. Due to the poor quality of indigenous non -coking coal, India imports non-coking coal for blending with its domestic produ ction to increase the calorific value of coal. However, only 44.28 Mtn of non-co king coal was imported during fiscal 2010. Coal Imports in India reported CAGR o f 18% for FY05-09 70 60.88 60 54.04 47.77 41.21 40 30.8 30 20 10 0 FY05 FY06 FY07 FY08 FY09 Coal production in India reported CAGR of 10% for FY05-09 450 400 350 300 282.42 295.15 309.52 385.02 416.47 Million Tonne Million Tonne 50 250 200 150 100 50 0 2005 2006 2007 2008 2009 Global coal demand Global coal demand is expected to rise strongly in 2010-12 ma inly due to rapidly growing consumption in nonOECD countries. In India, coal con sumption is also expected to rise strongly, continuing the trend since the late 1990s and making India an increasingly important player in the global coal marke t. India's coal industry regulator estimates that India's imports will grow by n early 40% in FY11 to 83 MT or 12.4% of consumption, largely because of the const ruction of thermal power stations in a bid to extend the rural population's acce ss to electricity. For the XI plan, as many as 142 projects have been identified to be considered for the coal sector. Out of these, 77 projects with an ultimat e capacity of 184.78 MT. and capital outlay of Rs. 11234.46 crores have already been sanctioned and are under various stages of implementation. The balance 65 p rojects with an estimated capacity of 195.44 MT and estimated capital outlay of Rs. 25,486.93 crores are under various stages of approval / formulation. These p rojects are likely to contribute about 118 Mt during the terminal year of the XI plan i.e. 2011-12. 16 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Balance Sheet (Consolidated) (`million) Share Capital Reserve and surplus Shareh olders Fund Shifting and Rehabilitation Fund Loan Funds Minority Interest Capita l Employed Gross fixed assets Less: accumulated depreciation Less: Impairment Le ss: Other provision Net Fixed assets Capital Work in Progress Surveyed Off Asset s Total of Fixed Assets Investments Net Interest in JV Deferred Tax Assets Net C urrent Assets Misc Exp. Capital Deployed FY09A 63,163.6 128,487.0 191,650.7 12,2 38.4 21,484.8 19.0 225,392.9 332,561.3 217,915.1 4,429.6 4.2 110,212.4 18,223.0 971.9 129,407.3 15,051.8 0.0 9,267.7 71,665.8 0.2 225,392.9 FY10A 63,163.6 194,7 88.5 257,952.2 14,774.3 20,868.5 236.1 293,831.0 349,453.2 224,866.6 4,228.4 3.7 120,354.4 20,908.8 1,197.9 142,461.1 12,821.4 2.0 9,603.9 128,927.3 15.3 293,83 1.0 FY11E 63,163.6 236,587.6 299,751.3 18,075.6 19,825.1 290.7 337,651.9 401,569 .3 258,402.4 4,859.0 4.3 138,303.6 24,027.1 1,376.5 163,707.2 14,733.5 2.3 11,03 6.2 148,155.1 17.6 337,651.9 FY12E 63,163.6 287,569.2 350,732.8 22,592.0 19,230. 3 327.7 392,555.2 466,865.8 300,419.5 5,649.1 5.0 160,792.2 27,933.9 1,600.4 190 ,326.5 17,129.3 2.7 12,830.7 172,245.5 20.5 392,555.2 17 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Profit & Loss Account (Consolidated) (`million) Operating Income FY09A 412,790.7 18.4 47,783.1 460,573.8 385,270.0 93.3 75,303.8 (22.8) 16.3 16,629.3 58,674.5 ( 28.7) 12.7 1,565.0 277.2 54.3 57,441.0 36,654.1 20,786.9 (60.4) 4.5 FY10A 473,51 4.5 14.7 52,408.4 525,922.9 371,234.0 78.4 154,688.9 105.4 29.4 13,138.4 141,550 .5 141.2 26.9 1,364.6 (536.6) 0.0 139,649.3 43,424.8 96,224.5 362.9 18.3 FY11E 5 62,738.9 18.8 68,759.6 631,498.5 443,473.4 78.8 188,025.1 21.6 29.8 16,244.0 171 ,781.0 21.4 27.2 1,421.7 0.0 0.0 170,359.3 52,057.8 118,301.5 22.9 18.7 FY12E 67 4,492.0 19.9 84,283.2 758,775.2 530,910.1 78.7 227,865.1 21.2 30.0 19,730.5 208, 134.6 21.2 27.4 1,602.1 0.0 0.0 206,532.5 61,263.6 145,268.9 22.8 19.1 % Growth Other Income Total Income Expenses % of operating income EBITDA % Growth EBITDA Margin % Depreciation/Amortisation EBIT % Growth EBIT Margin % Interest Prior Period Adjustments Extra ordinary items Profit before tax Tax Net Profit % Growth NPM % 18 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Coal Pharmaceutical Company Company Coal India Ltd Ranbaxy Laboratories Ltd. Key Ratios & Valuations FY09A EBITDA Margin (%) EBIT Margin (%) NPM (%) ROCE (%) ROE (%) ROA (%) Interest Coverage (x) EPS Cash EPS P/E (x) BVPS P/BVPS (x) EV/O perating Income (x) EV/EBITDA (x) EV/EBIT (x) 16.3 12.7 4.5 26.0 10.8 9.9 37.5 3 .3 5.6 97.5 30.3 10.6 4.2 23.3 29.9 FY10A 29.4 26.9 18.3 48.2 37.3 33.2 103.7 15 .2 18.0 21.1 40.8 7.9 3.5 10.7 11.7 FY11E 29.8 27.2 18.7 50.9 39.5 35.5 120.8 18 .7 21.5 17.1 47.5 6.8 2.8 8.4 9.2 FY12E 30.0 27.4 19.1 53.0 41.4 37.4 129.9 23.0 26.4 14.0 55.5 5.8 2.2 6.6 7.2 Valuation The company being one of the largest Coal producing in the world has p osted strong financials. Because of its preeminent position in the coal industry in India, the continuing dependence of the power sector on coal as a cost effec tive source of fuel and its long standing relationship with significant customer s such as NTPC and other government-owned and controlled power utilities, compan y play a strategic role in the development of Indias thermal power sector, which continues to be a key driver for growth in the Indian economy. The notified pric es of CIL are significantly lower than imported coal prices adjusted for calorif ic value. Further, the company has been gradually increasing its mix of market-l inked price sales, which has further boosted its profitability. Henceforth, CIL could trade at par or at a premium to global coal companies (due to the above po sitives and despite the concerns) given the lower volatility in earnings and pos sibility to expand margins based on wide current discount to international price s. The host of acquisitions and business expansion in the coal sector shows good visibility for the future growth and at the current market price of `320.9 we r ate the stock as BUY. Further, at the current market price the stock is trading at a PE of 21.1x on FY10 EPS of `15.2 and 17.1x on FY11E EPS of ` 18.7. 19 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry: Infrastructure Pune eeStock Broking Pvt. Ltd. Pune Stock Broking Pvt. Ltd. Company: BF Utilities Ltd. CMP: ` 700.2 Long-term BUY Bloomberg : BFUT@IN CODES BSE : 532430 NSE : BFUTILITIE Reuters : BFUT.BO Financial Summary EPS P/E Revenue (`mn) EBITDA (`mn) EBITDA Margin % EV/EBITDA (x) Market Cap (`mn ) (24.0) (29.2) 751 235 29.6 181.6 26,375 Q4 September 2010-the rebound quarter carried forward BF Utilities Ltd is the su bsidiary company of the $2.4 billion Kalyani Group. It came into existence out o f a scheme of demerger with Bharat Forge Ltd. Operating in the Bangalore-Mysore Infrastructure Corridor (BMIC) Project, Hubli - Dharwad Road Project, Wind Power Assets, the company carried forward the robust performance since the last quart er and witnessed a decent growth in its Q4 September 2010 Q-o-Q operating income , which increased significantly by 70.3% to `85.9 million as against `50.4 milli on. BMIC, the cash-cow project for BFUL, covers 164 km tolled expressway connect ing Bangalore and Mysore including 3 km of Elevated road at Bangalore Side. The project also includes development of infrastructure and amenities including town ships, with state-ofthe-art connectivity with the help of NICE (SPV), which is l ikely be completed in phases. Further, the Q-o-Q net profit surged over two fold s by 270.5% to `24.3 million as against `6.6 million. NICE, revenue-puller for c oming years BFUL, through its SPV-NICE, is implementing an integrated infrastruc ture Bangalore - Mysore Infrastructure Corridor (BMIC) project. This mainly invo lves the development of integrated infrastructure corridor project consisting of toll road and township. As per Phase-I of BMIC project, it entails development of 62 km of toll road and one township near Bidadi. As on Sep09, almost 88% of to ll road work was completed. Out of 7,290 acres of total land, 4,188 acres has be en acquired by Govt of Karnataka and transferred to the NICE. Other detail parts of the project also include 5 New Township developments along the Expressway be tween Bangalore and Mysore, concomitant development at the interchange along the Peripheral Road and Link Road. In addition to this, NICE will also have the rig hts to supply power, water, telecommunication services, sewage and waste water m anagement etc. Concession period for toll road is 40 years including 10 years of construction period. ` Million Operating Income (` mn) EBITDA (` mn) Net Profit (` mn) Share Capital (` mn) Free Float Mar Cap (`mn) 8,950 52 week high/low Enterprise Value (`mn) Book Valu e per share P/BV 1,431.8/652 17,074 42,683 25.6

Shareholding pattern as on September 30, 2010 14% 17% 66% Sep09A 423.0 179.3 (157.5) 188.3 (4.2) (167.5) 30.4 220.4 (18.1) 1.3 Sep10A 750.6 235.0 (902.2) 188.3 (24.0) (29.2) 27.3 181.6 (93.5) 1.7 Sep11E 1,014.9 401.5 (858.2) 188.3 (22.8) (30.7) 23.3 114.6 (75.8) 2.1 Sep12E 1,372.3 516.8 (1,098.5) 188.3 (29.2) (24.0) 19.5 93.1 (81.2) 1.8 3% Promoters General Public Institutional Investors Other Investors EPS (`) PE (x) P/BV (x) EV/EBITDA (x) ROE (%) ROA (%) 20 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. During the year 2008-09, generation of wind power from its projects has decrease d by 8% over last year due to dismal wind conditions which prevailed throughout the country. The Company plans to raise Rs. 1,500 crore through qualified instit utional placement (QIP) to qualified institutional buyers Margins were under pres sure due to report of demerger, amalgamation and fragile economic sentiment. 18.33 MW Wind Power project in Maharashtra The Company has set up wind-assisted power plants in Satara district of Maharashtra that is declared as the best site in the state by MNES with an annual mean wind speed of 23.3 KMPH and annual mea n wind power density of 287 W/m2 at 30 m. The windmills were set-up in phases si nce June'98 and as of now, 51 machines of 230 KW capacity each and 11 machines o f 600 KW capacity each have been set up. This power plant with a total capacity of 18.33 MW is expected to generate around 40.0 million units annually. Karnatak a Govt. rejected demand for additional land of 776 acres by BFUL The Karnataka g overnment filed an affidavit rejecting the demand of BFULs arm, Nandi Infrastruct ure Corridor Enterprise (NICE), for an additional land of 776 acres within the B engaluru municipal limit. However, the High Court has issued notice to the State Government on an appeal filed by NICE, challenging the single bench order regar ding construction of the peripheral road. If the ruling is in favor of the Compa ny, it will be positive for the stock. Margins gaining momentum after the turnaround to profit from loss 100 80 60 40 20 0 -20 Mar-09 15.9 3.5 13.1% 58.7% 26.1% 53.2 27.9 31.5 8.1 Jun-09 Dec-09 Operating Income (Rs. mn) 10.3 -75. 0% -7.9 Mar-10 46.8% 50.4 56.6% 85.9 47.7 23.7 Jun-10 Sep-10 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% EBITDA (Rs. mn) Source: Company, Research Desk BFUL could seek QIP route for long-term financial requirement for its various pr ojects The Company could raise around ` 1,500 crore through qualified institutio nal placement (QIP) to qualified institutional buyers, American depository recei pt, global depository receipts, foreign currency convertible bonds or convertibl e warrants. The proceeds will be used to meet the company's long-term financial requirements for projects in infrastructure development, urban infrastructure, p ower, renewable energy and other allied fields. 21 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Risk attached to BFUL Since the industry itself is technology driven, it is capi tal intensive in nature, and hence procurement of funds at competitive rates wil l be a key risk factor. Not only the set up cost is very high, the company requi res substantial funding for the maintenance of their wind turbines. Wind energy requires stable policy frameworks with well-designed feed-in tariffs and suffici ent legal stability in order to limit the long term price risk. The demand for w ind power plants is dependent on the cost of wind-generated electricity compared to electricity generated from other sources of energy. The cost and limited sup plies of oil, coal and other fossil fuels are key factors in determining the eff ectiveness of wind power. Putting forward a low priced tender for a project and also keeping the cost of the same at efficient levels is a key factor for the co mpany. With higher gestation period for some of the larger EPC packages requirin g longer execution schedule, the timelines for conversion of order book to sales revenue would be relatively longer and hence will block capital. Fluctuations i n key raw materials prices is a major risk, since it will result in raising the overall project cost. End-to-end wind energy solution provider in India Infrastructure development Wind resource assessment Land acquisition Evacuation facilities/substations Technology Development WTG and component manufacturing Project construction and executions Installation and erection Commissioning Operations & maintenance Lifetime Services BFULs Key Projects Bangalore Mysore Infrastructure Corridor (BMIC) Project Sole manager to execute the BMIC project One of the largest integrated infrastructure development projec t in India 164 km tolled expressway connecting Bangalore and Mysore including 3 km of elevated road at Bangalore Side Development of infrastructure and amenitie s including townships, with state-of-the-art connectivity Nandi Economic Corrido r Enterprise (NECE) is an SPV promoted by NICE to execute a part of Section - A of the BMIC project. 62 km long toll road in Bangalore side Interchanges and its Developments Part of Township 1 (1732 Acres out of 2775 Acres) Hubli - Dharwad Road Project 30 km bypass road connecting the twin cities of Hubli and Dharwad i n North Karnataka. Operational since last 9 years with current toll collection o f around Rs.220 million per annum Notified as part of the NH4 (PuneBangalore), a lso part of the Golden Quadrilateral Road Project of India Wind Power Assets Win d power plants set up at Thoseghar in Satara District Maharashtra with a total c apacity of 18.33MW Set-up to satiate the power requirements of the Kalyani Group companies. 22 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Business Overview BF Utilities Ltd (BFUL) is a part of $2.4 billion Kalyani Grou p, established in 2001 as per a scheme of demerger with Bharat Forge Ltd by tran sferring the financial services and windmill division. The company was set up to satiate the power requirement of the Kalyani Group companies as power is a crit ical element in the group's activities. Presently, the company is engaged in the infrastructure business after undergoing a restructuring through a Composite Sc heme of Arrangement by shifting the investment business to BF Investment Ltd. BF ULs subsidiaries include Nandi Infrastructure Corridor Enterprises Ltd (NICE) and Nandi Highway Developers Ltd (NHDL). NICE is engaged in the development of inte grated infrastructure corridor project consisting of a development of 62 km of t oll road and one township, near Bidadi. It is implementing an integrated infrast ructure project in Bangalore - Mysore Infrastructure Corridor (BMIC) project wit h the help of NICE. Besides, NHDL has built and operating 30 km bypass road conn ecting the twin cities of Hubli and Dharwad in North Karnataka. This project has been notified as part of the NH4 (Pune-Bangalore), also part of the visionary G olden Quadrilateral Road Project of India with a concession period up to May 5, 2024. Moving along, it has set up wind-assisted power plants at Thoseghar in the Satara district of Maharashtra, which has a total capacity of 18.33 MW. Technol ogy for the energy has been provided by Enercon India with support from its busi ness partners, Enercon GmbH, Germany. NICE Project Structure with various Utilities 23 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Wind Energy Industry 9% Wind Powers share of worlds electricity generation (%) 8.4% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2007 2008 2009 2014E 2019E 1.0% 1.3% 1.6% 4.0% Wind energy has played a major role in the contribution to electricity supply of different nations across the globe and its usage as well as importance is on a spree. The popularity of wind power is attributed to its cost competitiveness as compared to other renewable energy sources. Further, it is also increasing empl oyment in the field of renewable energy and allied industries. At present, wind power accounts for 1.6% of all electricity generated in the world with Denmark h aving the highest penetration of wind energy at 22.5%. Wind energy is estimated to supply nearly 9% of the world's electricity requirements by the end of this d ecade. In the domestic arena, a few new players have entered windmills manufactu ring segment and also set up manufacturing bases in India. Some of the component s manufacturers are also seen catering to the global needs. A 14% growth in the wind power capacities has been witnessed during the year 2009 in the domestic sc enario. By the end of 2009, with an aggregate installed capacity of 11 GW, India has been ranked fifth globally. Source: BTM world market update 2009 - BTM Consultant ApS 3. Deficit in Energy The increasing energy deficit together with the complexitie s of geo-politics has compelled the countries across globe to pay special attent ion to their ever-heightening energy requirements. Governments are finding thems elves in awkward situations having to balance internal energy requirements with external politics. In such a scenario, wind energy is proving to be the useful f iller in the power supply gap and side by side it is also providing a suitable a lternative to Long term growth drivers: The major growth drivers for the wind po wer industry importing energy. in the long term are discussed below: Outlook on Wind Energy: 1. Policy Support During 2009, the wind industry has commissioned a The Copenhagen Summit or COP-15 in the year 2009 healthy 38GW of wind power, th ough the years provided a boost to the industry in terms of increased growth was expected to be relatively slow. The base awareness and focus on mitigating clima te change. The and long term growth drivers for the industry Government, togethe r with the banks has committed to remained powerful with political and regulator y fund renewable energy projects, manufacturing R&D support. Growing awareness o f the global warming facilities and set up attractive tariff regimes. Countries crisis among general public and the contribution of across the globe are having structured tariff regimes for wind energy in mitigating the same is also proving to wind energy along with compulsory renewable energy be a strong fillip to the wind industry. In the next 4 targets. These form the base of the industry and w ill years, by 2014, the global annual capacity is expected continue to drive the growth for the wind industry in to be almost double to 72GW with Asia matching future. installations with Europe & the USA, led primarily by China. The offshor e sector is also expected to play a 2. Technological improvements & Cost Effecti veness The wind power industry is growing day by day with major role by 2012 beg inning, as planned wind farms continuous dedicated focus on R&D and product come online primarily in Europe and possibly in China. improvements. During 2009, ne w developed machines were introduced globally. While the average size of machine s gets larger, there is a constant effort to reduce the cost of the machine over

its life-cycle, improve machine availability and thereby provide a higher rate of return on projects. Similar efforts are being made in allied spheres such as logistics, service & maintenance, etc. 24 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. The countrys infrastructure sector is the backbone of the economical growth and s ocial development. Besides, India has immense natural and human resources to be a leading economy, but these resources can be put to use only if the requisite i nfrastructure is provided to tap them. The infrastructure industry is expected t o reach $59.4 billion during the current year. According to investment banking c ompany Goldman Sachs, India's infrastructure sector will require $1.7 trillion i nvestment in the next 10-years. It also added that such investment would come mo re from the domestic market than overseas. India is planning to set up `500 bill ion debt fund to build ports, roads and bridges needed to drive economic growth. The construction industry in India is the second largest industry of the countr y after agriculture. The investment in construction accounts for nearly 11% of I ndia's Gross Domestic Product (GDP) and nearly 50% of its Gross Fixed Capital Fo rmation (GFCF). The construction sector is set to grow at 15% and the Government is opening several sectors for private participation in what is referred to as p ublic private partnerships (PPPs). As per the 11th Five Year plan, the planning c ommittee has targeted an investment of `20,56,150 crore in Infrastructure sector of which about 70% is estimated to come from the Central and State Governments and about 30% from the private sector. Percentage of fund allocated to various s ectors as per 11th Five Year Plan 1.1% 1.5% 4.3% 32.4% 0.8% Indian Infrastructure Industry 7.0% 15.3% 12.7% 12.6% Roads Railways Water supply and Sanitation Airports Gas 12.3% Electricity Telecom Irrigation Ports Storage Roads: India is ramping up its road infrastructure, quadrupling highway construc tion in six months in a bid to accelerate economic growth in Asia's third larges t economy. India boasts the second largest road network in the world after the U nited States at 3.4 million km. The CCI has approved the widening of over 445 km of national highways at an estimated cost of $950 million, which will be undert aken by the National Highways Authority of India (NHAI) in the design-build-fina nce-operatetransfer (DBFOT) mode. In the budget 2010-11, allocation for road tra nsport increased by over 13% from `17,520 crore to `19,894 crore by the governme nt. Power: The growth of the economy and its global competitiveness hinges on the av ailability of reliable and quality power at competitive rates. The demand of pow er in India is enormous and is growing steadily. The vast Indian power market, t oday offers one of the highest growth opportunities for private developers. Indi a has the fifth largest power generation capacity in the world with an installed capacity of 152 GW as on 30 Sep09, which is about 4% of global power generation. In order to provide availability of over 1000 units of per capita electricity b y 2012, it has been estimated that need-based capacity addition of more than 100 ,000 MW would be required. As per budget 2010-11, power sector has been allocate d `5,130 crore as compared to `2230 crore in 2009-10 excluding RGGVY. Conclusion on Infrastructure Industry: India doubled its target for infrastructure spendin g to $1 trillion in the five years starting 2012 to narrow the gap with China, t he worlds fastest growing major economy. The fund is the latest attempt by the go vernment to raise capital from overseas after a $5 billion fund planned in 2007 with Citigroup Inc. and Blackstone Group LP. India spent 6.5% of its gross domes

tic product in 2009 on infrastructure. 25 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Quarterly Result (Standalone) (` million) Sep10 Sep09 %YoY Jun10 %QoQ Operating Income Other Income Total Income Operating Expenses EBITDA 85.9 (1.6) 84.3 36.6 47.7 243.3 (90.3) 153.0 63.0 90.0 (64.7) (44.9) (41.9) (47.0) 50.4 0.2 50.7 27.0 23.7 70.3 66.4 35.7 101.2 EBITDA Margin (%) Depreciation EBIT 56.6 15.4 32.3 58.8 15.4 74.6 (220 bps) (0.5) (56.7) 46.8 15.1 8.6 980 bps 2.0 274.5 EBIT Margins (%) Interest Exceptional items PBT Tax PAT Extraordinary Items Net Profit 38.3 5.4 27.0 9.3 17.7 17.7 48.7 5.9 68.7 38.0 30.7 30.7 (1040 bps) (8.7) (60.8) (75.7) (42.3) (42.3) 17.0 2.1 6.6 6.6 6.6 2130 bps 160.4 310.2 169.4 169.4 NPM (%)

21.0 20.1 90 bps 13.0 800 bps 26 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Balance Sheet (` million) Share Capital Reserve and surplus Net Worth Minority I nterest Loan funds Deferred Tax (Liability) Capital Employed Gross fixed assets Less: accumulated depreciation Net Fixed assets Capital Work in Progress Pre Op Exp pending allocation Total of Fixed Assets Investment Net Current Assets Misce llaneous Expenditure Capital Deployed Sep09A 188.3 679.7 868.0 1,772.0 14,209.9 2 0 16,870.4 10,643.5 738.7 9,904.7 3,192.7 1,301.5 14,399.0 359.3 2,098.6 13.5 16 ,870.4 Sep10A 188.3 776.7 965.0 1,971.5 17,073.9 43.2 20,053.6 12,651.7 878.1 11, 773.6 3,795.1 1,547.1 17,115.8 427.1 2,494.6 16.1 20,053.6 Sep11E 188.3 943.4 1,1 31.7 2,396.3 20,662.1 54.2 24,244.3 17,166.0 1,261.6 15,904.4 4,588.2 1,870.4 20 ,492.6 516.4 3,215.9 19.4 24,244.3 Sep12E 188.3 1,164.5 1,352.8 2849.687797 24,45 4.4 56.8 28,713.8 19,564.7 1,358.0 18,206.7 5,868.7 2,392.5 24,075.4 660.5 3,953 .0 24.9 28,713.8 27 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Profit & Loss Account (` million) Operating Income Sep09A 423.0 Sep10A 750.6 Sep11E 1,014.9 Sep12E 1,372.3 % Growth Other Income Total Income Expenses (94.2) 29.4 452.4 273.1 77.4 43.5 794.1 559.1 35.2 58.8 1,073.7 672.2 35.2 79.5 1,451.8 935.0 % of Sales EBITDA 64.6 179.3 74.5 235.0 66.2 401.5 68.1 516.8 % Growth EBITDA Margin % Depreciation/Amortisation EBIT EBIT Margin % Interest Profit bef ore Tax Tax Adj. related to earlier yrs Transfer to minority interest Exceptiona l items Net Profit NPM% (86.9) 39.6 152.0 27.4 6.0 378.3 (350.9) 5 0 198.5 0.0 (157.5) 31.0 29.6 356.6 (121.6) (15.3) 1,234.1 (1,355.7) 11.5 (6.8) 480.2 21.9 (902.2) 70.9 37.4 482.2 (80.7) (7.5) 1,360.2 (1,440.9) 15.6 0.0 598.3 0.0 (858.2) 28.7 35.6 652.0 (135.1) (9.3) 1,606.7 (1,741.9) 18.1 0.0 661.4 0.0 (1,098.5) (34.8)

(113.6) (79.9) (75.7) 28 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Infrastructure Pharmaceutical Company Company BF Utilities Ltd Ranbaxy Laboratories Ltd. Key Ratios & Valuations Sep09A EBITDA Margin (%) EBIT Margin (%) NPM (%) ROCE (%) ROE (%) ROA (%) Interest Coverage (x) EPS Cash EPS P/E (x) BVPS P/BVPS (x) EV/O perating Income (x) EV/EBITDA (x) EV/EBIT (x) 39.6 6.0 (34.8) 0.2 (18.1) 1.3 13. 1 (4.2) 4.6 (167.5) 23.0 30.4 93.5 220.4 1,444.5 Sep10A 29.6 (15.3) (113.6) (0.6) (93.5) 1.7 14.9 (24.0) 5.9 (29.2) 25.6 27.3 56.9 181.6 (350.9) Sep11E 37.4 (7.5) (79.9) (0.3) (75.8) 2.1 15.2 (22.8) 10.2 (30.7) 30.0 23.3 45.3 114.6 (570.0) Se p12E 35.6 (9.3) (75.7) (0.5) (81.2) 1.8 15.2 (29.2) 13.2 (24.0) 35.9 19.5 35.1 93 .1 (356.0) Valuations Diversified portfolio of projects provides stable cash flows in futur e along with government thrust on infrastructure sector will augur additional pr ojects down the line. The Company has potential to augment its operations in lie u of changing environment, technology & modernization. It has continued to perfo rm strongly following the good performance in the third quarter ended June 2010, and the year to date. Though the market conditions remained turbulent during th e period but the Company continued to respond proactively in adjusting resources in line with prospective demand and delivering cost saving efficiencies. Furthe r, its financial position remains good, with ongoing focus on working capital de livering a strong cash flow performance in the period. 29 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry : Cement Pune e Stock Broking Pvt. Ltd. Company : India Cements Ltd. CMP : ` 105.55 Long-term BUY Bloomberg : ICEM@IN CODES BSE : 530005 NSE : INDIACEM Reuters : ICMN.BO Financial Summary EPS P/E Revenue (`mn) EBITDA (`mn) EBITDA Margin % EV/EBITDA (x) Market Cap (`mn ) Free Float Mar Cap (`mn) 52 week high/low Total Debt (`mn) Enterprise Value (` mn) Book Value per share (`) P/BV (x) 11.5 9.2 38,714.9 8,575.1 22.1 6.4 32,422. 3 24,316.7 143/95 23,006.2 54,675.4 131.7 0.8 Subdued demand, lower realization and higher cost shrink margins India Cements L td, having around 7 plants in Tamil Nadu and Andhra Pradesh with total capacity of 14 million tonne per annum (mtpa), swung to net loss of `336.3 million in 2QF Y11 from net profit of `1,369.4 million during same period last year on the back of de-growth in operating income which fell by 15.3% to `8,428.4 million in 2QF Y11 quarter over `9,949.2 million during 2QFY10. This was mainly impacted by mut ed demand growth in southern market as well as production discipline. In South I ndia, Cement volumes just grew by 2% while in Andhra Pradesh the volume declined over 4%. Revenues from IPL were at `343 million (2QFY10: `79 million; 1QFY11: ` 129 million). However, the company has taken steps in increasing the capacity th rough upgrades and installation of greenfield plants and has been constantly loo king for opportunities for further growth in capacity thereby enhancing the valu e of the stakeholders. Embarked upon ` 1,500 crore capital expansion plan; sprea d over 2-years The Company to propel its growth trajectory has taken robust expa nsion plan of ~`1,500 crore in the sphere of capacity addition of cement and coa l based power plant. To accelerate the market share in northern region, the Comp any has undertaken to build 1.5 mtpa greenfield cement facility through its subs idiary (Indo Zinc Ltd) in Rajasthan which will lower capex requirement and gesta tion period. After being a regional leader with strong presence in South India a nd well acclaimed brand visibility in its key markets, the Cement provider has i nclined towards other regions to get the advantage of geographical presence. A p arallel project to build two power plant of 50 MW each is on its full swing in T amil Nadu with an outflow of `250 crore. This will mitigate the fuel requirement dependency and in-house cost benefits. The company has also taken steps to secu re long term agreement for supply of additional fly ash to maximize blended ceme nt production. ` Million Operating Income (`mn) EBITDA (`mn) Net Profit (`mn) Share Capital (`mn) EPS (`) PE (x) Instituti onal Investor s 45%

Shareholding pattern as on September 30, 2010 Other Investor s 22% Promote rs 25% FY09A 35,518.0 10,441.0 4,224.2 2,824.3 15.0 7.1 0.8 4.7 12.0 9.2 FY10A 38,714.9 8,575.1 3,518.2 3,071.7 11.5 9.2 0.8 6.4 8.7 7.5 FY11E 36,004.9 3,461.0 (74.2) 3,071.7 (0.2) 0.7 16.0 (0.2) 1.6 FY12E 37,805.1 3,388.2 (91.5) 3,071.7 (0.3) 0.7 16.5 (0.2) 1.2 General Public 8% P/BV (x) EV/EBITDA (x) ROE (%) ROA % 30 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. Acquisition of coal mine will reduce dependency for feedstock on outside sources ICL acquired coal mine rights in Indonesia to meet its ever increasing coal req uirements for cement production and power generation plant at Tamil Nadu and And hra Pradesh. The said mine has reserves of ~30 mt of coal with 5,700 Kcal/kg and would give access to import coal at cost of US$ 45-50/tonne FOB which is expect ed to start functioning from March 2011. Adding to the advantage is the fact the Company acquired two ships last year which will be fruitful now in transporting coal that would significantly reduce its exposure towards volatile energy price s and shipping freight. Moreover, strategically located plants with proximity to marketplace and to the port would provide easy access to international markets and imported coal. Tepid trend in EBITDA and margins 3,500 3,000 2,500 2,981 2,0 00 1,500 1,000 500 0 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10 Q2 FY10 36% 31% 24% 25% 14% 1,165 13% 1,260 30% 30% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2,901 1,801 2,255 2,863 2,977 11% 1,001 3% Q2 FY11 286 Q3 FY10 Q4 FY10 EBITDA (Rs in mn) Entered the power sector to become an integrated cement produc er in India The Company is establishing two 50 MW captive power facilities in Ta mil Nadu and Andhra Pradesh, a move that will curtail its fuel costs significant ly thereby giving strength to margins. It would also reduce its reliance on outs ide sourcing for feedstock as soon as the Indonesian coal mine begins operations , which is expected as early as March 2011. This will facilitate it being a full y integrated cement producer in India. Downward trend in realization and volumes 4,000 3,500 3,000 2,500 2.4 2.4 2.0 2.3 2.5 2.8 2.8 3.0 2.7 2.7 EBITDA Margin % Sector wise breakup of M&A Deals based on deal value during Apri l-Sep 2010 Commercial Real Estate, Banking, 2% Others, 13% 2% Steel, 2% Cement, 2% Utilitie s, 2% Deep Sea Freight Transportatio n, 5% Oil&Gas, 31% 3.5 3.0 2.5 2.0 3,726 3,736 3,585

3,400 3,028 3,125 3,211 2,909 2,000 1,500 1,000 500 0 3,438 Metals, 9% Electric Power, 12% Telecommuni cations, 13% 3,632 1.5 1.0 0.5 0.0 Pesticide & Fertilizer, 7% Q4 FY10 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q1 FY11 Realizations (Rs/tonne) Volume (mn tonne) Source: ISI Emerging Markets Database Q2 FY11 Q1 FY11 31 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Indo Zinc Limited (IZL) Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. ICL currently holds ~61% of the stake in IZL (12.97% acquired initially + 39.73% Promoters stake + 8.19% under open offer) through its wholly owned subsidiary I CL Financial Service Ltd (ICLFSL). Now, IZL is the subsidiary of ICLFSL, thereby becoming the step-down subsidiary of ICL. Further, it plans to increase stake t o ~90% in IZL. IZL was involved in construction of 1.5 mtpa cement plant in Raja sthan which has commenced operations in September 2010, with gradual ramp-up exp ected over next 6-9 months. After positioning its product in South India, the co mpany is formulating its strategies to trap northern and western region where th e infrastructure development is in its full swing and growing very rapidly. With demand picking up during last two months i.e., Oct & Nov 2010, the Company is h opeful about rise in volumes and fuller utilization of plant capacity. ICLs Subsidiaries Direct and indirect subsidiaries with majority stake Industrial Chemicals & Monomers Ltd. ICL Financial Services Ltd. ICL Securities Ltd. ICL Internation al Ltd. Trishul Concrete Products Ltd. Indo Zinc Ltd. PT. Coromande l Minerals Resources, Indonesia Risk and Concerns Weak utilisation in the cement business is likely to continue due to large capacity additions, especially in South India. Further, it is expec ted that existing overcapacity in industry to remain with utilisation at about 8 5% due to large capacity additions. The plan to venue into newer markets in Hima chal Pradesh & Rajasthan could pose significant business cycle risk and effect b alance sheet. The demand and capacity equilibrium is expected to match during Mi d FY13 based on current statistics. This is even after taking into account relev ant higher demand growth from Infrastructure and housing sector. The profitabili ty is likely to report de-growth in FY11 and FY12 on the back of higher tax prov isions, increased raw materials cost, especially coal and under capacity utilisa tion across a few plants. Economic growth would drive cement growth Since economic growth is driven more b y development of infrastructure and housing, it has a direct link to the cement consumption which has grown at more than 100% of the growth in GDP. With this su stained growth in cement consumption and with part of the new capacities having already been absorbed in the market place, the industry is poised to register si gnificant strides with improved returns despite marginal aberrations in prices d uring commissioning of new capacities in 2010-11. Effective measures to control cost On the cost front, the company has taken steps for increasing the sources o f fly ash in order to maintain the blended cement proportion which was over 73% during the year under review. The company is also taking steps to bring down the

cost of fuel through securing additional coal linkages in the domestic front an d mining rights for imported coal besides inducting the Companys own ships for tr ansport of coal to combat the freight costs. Steps are also taken to ensure powe r availability through installation of power plants. The company has also trimme d its manpower across all the units already. 32 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. Margins are expected to shrunk on de-growth in sales & rise in cost of productio n 12,000 36.2% 40% 35% 29.4% 30% 10,000 11,235 8,000 22.1% 10,441 20.7% 25% 20% 15% 9.6% 6,000 4,000 6,416 11.9% 9.1% 4,224 3,461 8,575 9.0% 10% 5% 0% -5% 2,000 3,518 (74) 3,388 NPM% 0 FY08 (2,000) FY09 FY10 FY11E -2.1% FY12E

-2.4% EBITDA (Rs mn) Net Profit (Rs mn) EBITDA Margin % Company Profile The India Cements Ltd is `33.17 billion India-based cement compa ny established in 1946 with its first plant at Sankarnagar in Tamil Nadu in 1949 . The companys core activity is cement production that are mainly cater in South India. Some of its well known brands in the market include Sankar Super Power, C oromandel Super Power and Raasi Super Power. Its product includes ready mix conc rete (RMC). The Chennai based largest cement producers plants are widely spread w ith three plants in Tamil Nadu and four in Andhra Pradesh, which cater to all ma jor markets in South India and Maharashtra. The clinker production of the compan y was at 86.82 lakh tones, cement production was at 104.94 lakh tones while the cement sales was at 105 lakh tones. ICL Financial Services Ltd, the wholly owned subsidiary, acquired 60.89% in Indo Zinc Ltd in January, 2010. Besides, the com pany was privately placed in Mar10, 24,594,000 equity shares at a price of `120.2 0 per share to Qualified Institutional Buyers. Moving on, India Cements Ltd also owns Indian Premier League's Chennai franchise, Chennai Super Kings, supported by N. Srinivasan, Vice Chairman and Managing Director is also involved in BCCI a nd AICF, the Indian administrative bodies for Cricket and Chess. (92) 33 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. The Indian Cement Industry Indias Cement Production growing at a brisk Pace: The Indian cement industry has sustained its upward growth movement over the past years. In the past couple of years, rising domestic demand has surpassed the economic growth rate of the coun try. Cement demand is expected to grow at fast pace on account of robust economi c growth and infrastructure development in the country despite the aftereffects of economic slowdown. Presently, India is the second-largest producer of cement in the world. Despite recession, the Indian cement industry enhanced its product ion to the record level in FY 2010 supported by the boom in the infrastructure a nd housing markets. Cement production at large plants grew at the rate of over 9 .5% during FY 2010 to 200.7 Million Metric Tons against the total production of 181.4 Million Metric Tons in the previous fiscal. In FY 2010, large plants conti nued their positive growth momentum and accounted for the maximum cement product ion. Many cement manufacturers rapidly increase their production levels in view of the upcoming government backed infrastructure projects across the country. Fo r instance, the leading cement companies, including Grasim, Ultratech, JP Associ ates and Madras Cements, registered an year-on-year production growth of approxi mately 17%, 11.2%, 41% and 24.5% respectively in FY 2010. Cement Sales Declines by 19% in November 2010 India: Cement Production (MTPA), FY 2009 FY 2012e 250 214.8 200.7 200 168.3 150 181.4 235.9 100 50 0 FY 2008 FY 2009 FY 2010 FY 2011e FY 2012e Source: CMA Shortage of labour during the festival season in November slowed real estate acti vity resulting in reduced demand for cement. Besides, some of the companies hike d prices in October resulting in lower demand. Despite a ` 10-15 decline in the prices of cement bag the sales of the commodity witnessed a 19% (MOM) decline for the month of November 2010. The unseasonal ra infall in some of the states along with the prolonged festival season (due to di wali) was the main reasons behind the decline of cement sales in November. Short age of labour during the festival season in November slowed real estate activity resulting in reduced demand for cement. As a result, almost all the cement majo rs have reported a sharp fall in cement sales for the month of November. India: Cement Sales by Companies (MT) Company ACC Ambuja Cement Jaypee Cement Aditya Birla JK Lakshmi Nov2010 1.74 1.42 1.10 2.66 0.328 Oct2010 1.92 1.75 1.46 3.42 0.413 MOM Change (%) (9) (19) (25) ( 22) (21) Source: Hindu Business Line (3rd December 2010) In the short term factors like increase in the prices of raw materials (coal, fu

el and power) and increase in transportation cost will ct on the sales and profitability of the Indian cement ted by fundamental growth drivers of demand that India cture and commercial real estate sector the demand and ement) is expected to be strong in the long run.

also have a neagtive imap industry. However, suppor has in housing, infrastru sales of the commodity (c

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[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. KEY INDUSTRY TRENDS & GROWTH DRIVERS Increase in Housing Demand India is witness ing a continuous increase in its urban population. The share of the countrys urba n population is projected to increase from approximately 30% in FY 2008 to close to 45% by FY 2050 end. Increased migration of rural population towards urban ci ties has accelerated the housing requirements in the urban India. Apart from thi s, factors such as increasing per capita income, increasing population base, dec lining size of households, and low housing ownership penetration are creating mo re demand for housing units. Supported by above mentioned facts, Planning Commis sion estimates that (between FY 2008 and FY 2012) there will be a requirement of approximately 74 million housing units both in urban as well as rural India. Mo reover, in wake of rising housing demand, the Indian government has lowered hous ing loan interest rates to ease out the financial burden on individuals and to s upport the housing industry. As there is a direct relationship between the domes tic cement demand and housing sector, therefore, more demand of housing units wi ll lead to the increase in demand of cement in the country. Government focus on Infrastructure Development India is one of the fastest growing economies in the world and has posted an impressive GDP growth rate of approximately 8.5% between FY 2005 and FY 2009. This fast paced growth of the Indian economy is placing hu ge stress on the countrys physical infrastructure including ports, irrigation fac ilities, railways, roads, power plants and so on. In order to sustain this excep tional growth story, India needs to further boost its investment in basic infras tructure. The corresponding table provides information regarding the infrastruct ure development targets across various sectors which the Union Government has se t forth: India: Housing Requirements (Million Units), FY 20032007 & FY 2008-2012 e 80 70 60 50 40 30 20 10 0 FY 2003-2007 22.4 74 FY 2008-2012 Source: Planning Commission Note: FY 2003-2007 numbers represents only urban hou sing that includes backlog of 8.89 Million Units from the previous five-year pla n FY 2008-2012 numbers represents both urban and rural housing India: Infrastructure Development Targets (FY 20082012) Sector Roads/Highways Ports Airports Railways Power Irrigation Eleventh Plan Tar gets 6-lane 6500 km in Golden Quadrilateral ; 4-lane 6736 km NS-EW; 4-lane 20000 km; 2-lane 20000 km; 1000 km Expressway New capacity: 485 million metric tonnes in major ports; 345 m MT in minor ports Modernize 4 metro and 35 non-metro airp orts; 3 Greenfield in Northern East Region; 7 other Greenfield airports 8132 km new rail; 7148 km gauge conversion; modernize 22 stations; dedicated freight cor ridors Add 78577 MW; access to all rural households Develop 16 mha major and min or works; 10.25 mha CAD; 2.18 mha flood control India: Key Merger & Acquisition Deals Source: Planning Commission In early 2010, cement Major ACC acquired Encore Cement and Additives (ECA) for a n undisclosed sum. The acquisition will support the company to strengthen its po

sition in the coastal Andhra Pradesh After the purchase of Raymond Cement facili ty in 2001 and the acquisition of L&T's concrete business in 2008, Lafarge Cemen t India is looking for further M&As opportunities in the country Dalmia Cement, a s a part of its expansion plans in Eastern India, has increased its stake in OCL India from 21.7% to 45.4% with an investment of US$ 38.24 million. French cemen t company Vicat acquired a 51% stake in Bharathi Cement Company Ltd, promoted by Y S Jagan Mohan Reddy, Member of Parliament, to tap the southern markets, which represent 40% of the total Indian cement market Ultratech Cement, the countrys s econd-largest cement maker and a part of Aditya Birla group, is acquiring Dubaibased ETA Star Cement for an enterprise value of US$ 382.1 million Holcim streng thened its position in India by increasing its share holdings in Ambuja Cement f rom 22% to 56% through various open market transactions along with an open offer for a total investment of US$ 1.8 billion Holcim also increased its stake in AC C Cement with US$ 486 million, being the single largest acquirer in the cement s ector Ultratech is absorbing sister unit Samruddhi Cement to form India's bigges t cement firm Leading foreign funds like Fidelity, ABN Amro, HSBC, Nomura Asset Management Fund and other emerging market funds have collectively bought around 7.5% share in India's third largest cement firm, India Cements (ICL), for US$ 12 4.91 million. 35 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. Quarterly Result (Standalone) (` million) Q2FY11 Q2FY10 %YoY Q1FY11 %QoQ Operating Income Other Income Total Income Raw materials consumed Employee Expen ses Other operating expenses Operating Expenses EBITDA 8,428.4 6.3 8,434.7 1,375.5 602.8 6,147.0 8,125.3 309.4 9,949.2 9,949.2 1,189.0 598.3 5,129.9 6,917.2 3,032.0 (15.3) (15.2) 15.7 0.8 19.8 17.5 (89.8) 8,827.9 263.7 9,091.6 1,387.0 629.6 5,789.7 7,806.3 1,285.3 (4.5) (97.6) (7.2) (0.8) (4.3) 6.2 4.1 (75.9) EBITDA Margin % Depreciation EBIT EBIT Margin % Interest Profit Before Exceptional Items Excepti onal Items Profit Before Tax Taxes Net Profit 3.7 609.6 (300.2) 30.5 571.8 2,460.2 (2681bps) 6.6 (112.2) 14.1 598.5 686.8 (1047bps) 1.9 (143.7) (3.6) 279.6 (579.8) 112.5 (467.3) (131.0) (336.3) 24.7 374.0 2,086.2 (12.7) 2,073.5 704.1 1,369.4 (2829bps) (25.2) (127.8) (122.5) (118.6) (124.6) 7.6 297.5 389.3 (115.5) 273.8 24.0 249.8 (1111bps) (6.0) (248.9) (270.7) (645.8) (234.6) Net Profit Margin % (4.0)

13.8 (1775bps) 2.7 (673bps) 36 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. Balance Sheet (Consolidated) (`million) Equity Share Capital Equity share entitl ement warrants Funds pending for allotment of shares Reserves & Surplus Total Ne t worth Minority Interest Loan Funds Deferred Tax Liability Capital Employed Gro ss Block Depreciation Net Block Capital work in progress Investments Net Current Assets Deferred Tax Asset Misc. Expenditure Capital Deployed FY09A 2,824.3 0.8 32,517.8 35,342.9 31.2 19,887.8 2,743.8 58,005.7 53,359.9 15,120.8 38,239.1 9,04 0.4 3,556.0 6,828.1 184.5 157.6 58,005.7 FY10A 3,071.7 0.1 0.8 37,380.7 40,453.4 15.2 23,006.2 2,903.3 66,378.2 57,399.7 18,011.4 39,388.3 14,290.6 5,147.9 7,34 5.1 206.4 66,378.2 FY11E 3,071.7 0.1 0.8 40,371.1 43,443.8 12.2 23,767.6 3,048.5 70,272.1 60,269.7 20,491.7 39,778.0 15,719.6 5,662.7 8,781.6 330.2 70,272.1 FY1 2E 3,071.7 0.1 0.8 44,308.5 47,381.2 9.7 24,682.1 3,200.9 75,273.9 63,283.2 21,5 16.3 41,766.9 17,291.6 6,115.7 9,670.5 429.2 75,273.9 37 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. Profit & Loss Account (Consolidated) (`million) Operating Income FY09A 35,518.0 FY10A 38,714.9 FY11E 36,004.9 FY12E 37,805.1 % Growth Expenses 14.6 25,077.1 9.0 30,139.8 (7.0) 32,543.9 5.0 34,417.0 % of operating income EBITDA 70.6 10,441.0 77.9 8,575.1 90.4 3,461.0 91.0 3,388.2 % Growth EBITDA Margin % Depreciation/Amortisation EBIT (7.1) 29.4 2,045.2 8,395.8 (15.7) (17.9) 22.1 2,344.5 6,230.6 (25.8) (59.6) 9.6

2,532.1 928.9 (85.1) (2.1) 9.0 2,734.6 653.5 (29.6) % Growth EBIT Margin % Interest Profit Before Exceptional Items Exceptional Items Profit Before Tax Tax PAT but before minority interest & share of P&L of associate Minority Interest S hare of loss of associates Net profit 23.6 1,122.8 7,273.0 (793.4) 6,479.6 2,174.2 4,305.4 (8.3) (72.9) 4,224.2 16.1 1,428.5 4,802.1 435.8 5,237.9 1,776.7 3,461.2 0.0 57.0 3,518.2 2.6 1,214.2 (285.2) (7.0) (292.2) (218.0) (74.2) 0.0 0.0 (74.2) 1.7 1,032.1 (378.5) 0.0 (378.5) (287.0) (91.5) 0.0 0.0 (91.5) % Growth NPM Margin % (34.2) 11.9 (16.7) 9.1 (102.1) (0.2) (0.2) 38 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Cement Pharmaceutical Company Company India Cements Ltd Ranbaxy Laboratories Ltd. Key Ratios & Valuations FY09A EBITDA Margin (%) EBIT Margin (%) NPM (%) ROCE (%) ROE (%) ROA (%) Debt/Equity EPS P/E (x) BVPS P/BVPS (x) EV/Operating Income (x) EV/EBITDA (x) EV/EBIT (x) 29.4 23.6 11.9 14.5 12.0 9.2 0.6 15.0 7.1 125.1 0.8 1.4 4.7 5.8 FY10A 22.1 16.1 9.1 9.4 8.7 7.5 0.6 11.5 9.2 131.7 0.8 1.4 6.4 8.8 FY11E 9.6 2.6 (0.2) 1.3 (0.2) 1.6 0.5 (0.2) FY12E 9.0 1.7 (0.2) 0.9 (0.2) 1.2 0.5 (0.3) 141.4 0.7 1.5 16.0 59.5 154.2 0.7 1.5 16.5 85.7 Valuation The company has taken lot of steps in increasing the capacity through upgrades and installation of green field plants and has been constantly looking for opportunities for further growth in capacity thereby enhancing the value of the stakeholders. This has resulted in improvement in production by over 20% as detailed elsewhere during the year under review. On the cost front, the company has taken steps for increasing the sources of fly ash in order to maintain the b lended cement proportion which was over 73% during the year under review. The co mpany is also taking steps to bring down the cost of fuel through securing addit ional coal linkages in the domestic front and mining rights for imported coal be sides inducting the Companys own ships for transport of coal to combat the freigh t costs. Steps are also taken to ensure power availability through installation of power plants. The company has also trimmed its manpower across all the units already. Further the valuations look very attractive at the current market price ` 105.55 and therefore we rate the stock as BUY. At the current market price, the stock is trading at a P/E of 9.2x on FY10 EPS of ` 11.5. 39 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry: Pune e Stock Broking Pvt. Ltd. Oil&Gas On a high growth trajectory. Private sector participation to enhance competition in Indian fuel retailing sec tor Indian Oil & Gas Sector: Stimulating the Rapid Growth of the Indian Economy Indian Oil & Gas sector is one of the most prominent industries and has a very s ignificant linkage with the economy. India ranks sixth in the world in terms of petroleum demand and by the end of 2010 India is projected to replace South Kore a and emerge as the fourth-largest consumer of energy, after the United States, China and Japan. The growing demand for crude oil and gas in the country and pol icy initiative of Government of India towards increased E&P activity has raised hopes of increased exploration. India is one of the fastest growing energy consu mers in the world, with a rapidly growing economy. Due to limited domestic crude oil reserves, India imports over 70% of its crude oil requirements. However, th e start of production of natural gas from Reliance Industries Ltd's (RIL) Krishn a Godavari (KG) fields and Cairn India Ltd's fields will provide a major boost t o the domestic oil and gas sector in India. As per the latest data from Indian M inistry of Petroleum, country has total reserves of 775 Million tonnes of crude oil and 1074 billion cubic meters (BCM) of natural gas India: Crude oil producti on increases nearly 14% in October 2010 Indias crude oil production for the month of October witnessed a YOY increase of approximately 14%. This increase in prod uction level was due to the higher output from Cairn Indias prolific Rajasthan fi elds. Crude oil production rose for the 11th straight month to 3.24 million tonn es in October from 2.85 million tonnes in the corresponding month a year ago. Ca irn, which began crude oil production from the Barmer field in end-August last y ear, has already ramped up output to 125,000 barrels per day and is awaiting gov ernment approval to further augment production to 150,000 bpd. In contrast, stat e-owned Oil and Natural Gas Corp (ONGC) reported a 1.6% drop in oil output to 2. 08 million tonnes on the back of steep decline in production from its prime Mumb ai High fields. India: Crude Oil Reserves (Mn Tonne), FY 2008 FY 2010 780 770 760 750 740 730 720 710 700 FY 2008 FY 2009 FY 2010 725 769 775 Source: Ministry of Petroleum & Natural Gas India: Crude Oil Production (Mn Tonne), FY 2009 - FY 2010 33.75 33.7 33.7 33.65 33.6 33.55 33.5 33.5 33.45 33.4 FY 2009 FY 2010 Source: Ministry of Petroleum & Natural Gas 40 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Ranbaxy Laboratories Ltd. Industry Snapshot Company Reliance Industries ONGC IOCL Gail India Cairn India Oil India BPCL HPCL Petronet LNG * Closing price as on December 16, 2010. Market Cap.(` Mn) 3,144,194 2,842,799 918,129 632,845 625,527 332,151 253,060 14 2,588 93,975 Equity Capital (` Mn) 29,780 21,389 24,280 12,685 18,970 2,405 3,615 3,390 7,500 EPS (`) 82 78 44 26 6 109 45 44 5 FV (`) 10 10 10 10 10 10 10 10 10 P/E (x) 13 17 9 19 60 13 16 10 23 Turnover (` Mn) 2,033,706 599,863 2,554,921 270,353 16,230 79,056 1,235,827 1,11 1,282 106,491 Net profit (` Mn) 245,031 167,676 107,132 33,278 10,511 26,104 16,324 14,753 4,0 45 Technical Viewpoint (Oil & Gas Index) 11500 11880 3500 3450 11350 3325 11000 3300 10990 10500 10550 10000 9500 9000 Nov-10 Nov-10 Dec-10 May-10 Dec-10

Dec-09 Dec-09 Apr-10 Apr-10 Dec-10 Jun-10 Jul-10 Sep-10 Oct-10 May-10 Aug-10 Feb-11 Feb-10 Feb-10 Jun-10 Jun-10 Jul-10 Sep-10 Oct-10 Feb-11 Jan-11 Aug-10 Mar-11 Jan-10 Jan-10 Mar-10 Mar-10 Jan-11 Mar-11 41

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[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Ranbaxy Laboratories Ltd. Key Industry Trends & Growth Drivers Established reserves Coal reserves in India are the fourthlargest in the world, amounting to 58.6 billion tonnes (2008) Crude oil accounted for 775 million metr ic tonnes (MMT) in 2009. Natural gas accounted for 1,074 billion cubic metres (B CM) (2009) High demand Favorable government policies Policies such as the New Ex ploration Licensing Policy (NELP) and the Coal Bed Methane (CBM) Policy have hel ped attract investments from both the public and private sectors India is the th ird-highest consumer of coal (7% of the total world consumption) It is the fourt h-highest consumer of crude oil (3.4% of the total world consumption) Advantage India Skilled workforce Approximately 139,000 people are currently employed in the pet roleum industry (2009) The University of Petroleum and Energy Studies in Dehradu n, Uttarakhand, is Asias first and only Energy University Increase in Automobile Demand Automobile sector is one of the core sector of Ind ian economy. Supported by a number of factor like ising prosperity, increasing a ffordability, introduction of new models the Indian automobile sector is witness ing a steady growth over the years. Between FY 2008 and FY 2010, the countrys aut omobile production level increased from 11 million units to approximately 14 mil lion units. The Indian automobile growth story has continued in FY 2011, where t he countrys auto sales (between April-August 2010) reached close to 7.1 million u nits, representing a YOY increase of over 3%. Moreover, with the further improve ment in the countrys economic condition the sales momentum is likely to continue in the near future as well. In future, the increase in the demand of automobile will be beneficial to the countrys oil sector as it would trigger a strong demand for petroleum products like petrol and diesel in the country. India: Automobile Production (Million Units), FY 2008-FY 2010 16 14.0 14 12 10 8 6 4 2 0 FY 2008 FY 2009 FY 2010 10.9 11.2 Source: SIAM Note: Automobiles include passenger vehicles, commercial vehicles, three wheelers and two wheelers 42 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Oil & Gas Pharmaceutical Company Ranbaxy Laboratories Ltd. Crude Oil Pricing Regime in India Government takes a step forward towards Deregulation of Prices In June 2010, the Indian government took a bold step to deregulate petrol and diesel prices in th e country. Deregulation means that the consumers have to shell out more money di esel and petrol whenever the prices of crude oil increase in the international m arket. Similarly, when the prices of crude will decline at the international mar ket, the prices of diesel and petrol will automatically come down. The governmen t took this decision so as to help the state run oil companies to cut their loss es as they were selling petroleum products at state-set prices. For a number of years the state owned oil companies were selling the petroleum products to consu mers at a price which was far less than at what they were acquired. This decisio n will also help the government to shrink its budget deficit. Impact on Inflatio n The increase in the prices of the petrol and diesel will result in the increas e in the inflation rate due to the increase in the prices of cooking fuels like Kerosene and LPG. However, the impact of this inflationary pressure will not be that straightforward due to various reasons like: impact of the price hike on fr eight rates probability of government reducing state sales tax in order to cushi on the consumers from the price hike Opportunity for Upstream Companies In the p ast all the upstream oil companies in India (GAIL, OIL and ONGC) had to bear the subsidy burden on auto fuels (petrol and diesel) only. The subsidy burden on co oking fuel was either compensated by the Union Government in the form of cash or to be borne by OMCs. The policy of complete deregulation of petrol and diesel w ill help the upstream oil companies immensely as they would now be in a position to regulate domestic auto fuel prices which are directly linked with the intern ational crude prices. The price hike would help ONGC in reducing its subsidy bur den by about ` 158 billion, whereas, OIL and GAIL would be able to reduce their shares of subsidies by about `20 billion each. Increase Competition in Fuel Reta iling Historically, the Indian fuel retailing business was not able to attract t he private players as the administered prices of fuels have acted as entry-barrie r . However, the governments decision to deregulate the prices of auto fuels will p lay an important role in attracting players like Reliance, Essar and Shell to en ter the Indian fuel retailing market. The entry of private players will make thi s sector more competitive. In the past, the entry of private players in retail f uel market had resulted in an erosion of about 10% in the market share of public sector OMCs. Prices of Petrol in Delhi `/Litre (2010) 60 51.43 51.43 51.43 47.93 52.59 51.83 55.87 50 40 30 20 10 0 47.43 44.72 47.43 47.93 52.91 September November February

August March May Source: Indian Oil December January June October April July 43 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Ranbaxy Laboratories Ltd. Policy and Regulatory Framework Governments FDI Policy: Government of India has undertaken numerous progressive a ctions in order to formulate encouraging policy and rigid structure to attract i nvestments: Government have permitted FDI upto 100% under the automatic route fo r encouraging exploration activities of oil and natural gas fields, infrastructu re related to marketing of petroleum products, actual trading and marketing of p etroleum products, petroleum product pipelines, natural gas and LNG pipelines, m arket study and formulation and petroleum refining in the private sector. FDI up to 49% is allowed under the government route in petroleum refining by the publi c sector undertakings. Tax Benefits: Besides, the finance ministry has removed t he 7 year tax holiday, or exemption from payment of income tax, on natural gas p roduction in the FY 2009 budgets. Further, one of the major moves was the extens ion of tax holiday under Section 80 IB (9) for production of natural gas too. Th is tax benefit will be available to undertakings in respect of profits derived f rom the commercial production of mineral oil and natural gas from oil and gas bl ocks which are awarded under the NELP-VIII round of bidding. Policy Initiative: Apart from this an Empowered Group of Minister headed by Finance Minister Pranab Mukherjee had on June 25 2010 decided to free petrol and diesel prices from gov ernment control. While petrol was being decontrolled with immediate effect, the implementation of the same in diesel was put on hold for the time being. This de cision will allow the private players to compete with the well established playe r in the retail segment like Indian Oil, Bharat Petroleum and Hindustan Petroleu m. Various Policy and Government Initiatives Freight Subsidy (for far-flung areas) Scheme, 2002 to compensate public sector OM Cs on the freight incurred to distribute subsidisedproducts in far-flung areas A uto Fuel Policy 2003 to provide a roadmap to achieve various vehicular emission n orms over a period of time and corresponding fuel quality upgrading requirements Bio-diesel Purchase Policy, 2005 to encourage the production of biodiesel in the country Petroleum and Natural Gas Regulatory Board (PNGRB) Act, 2006to regulate the refining, processing, storage, transportation, distribution, marketing and s ale of petroleum, petroleum products and natural gas New Exploration Licensing P olicy (NELP), 1999 to provide a contract framework for the E&P of hydrocarbons; l icencesfor exploration awarded only through a competitive bidding system; eight rounds of bidding completed so far The Eleventh Plan outlay for the oil and gas sector has been fixed at USD 47.72 billion (` 2,290.72 billion), about 121% more than the Tenth Plan allocation The GoI has formulated the regulatory framework for the safe usage of LPG as an automotive fuel. Thrust areas for E&P in the pla n: Increasing domestic production by attracting investments in the upstream sect or Increasing production from ONGCs assets, including its maturing fields Providi ng exploration coverage of 80% during the period Establishing a national knowled ge hub during the period Source: Ministry of Petroleum & Natural Gas India: Country Wise FDI (USD Million), FY 2004-FY 2009 Country Singapore Mauritius FDI (USD Million) 1,288.72 360.55 FDI (Number) 13 21 Focus Area Oil refinery and transportation Oil refinery and fuel Oil refinery, oil exploration and fuel Oil refinery, oil exploration and fuel Oil refinery and fuel

UK 97.52 21 Cyprus USIndustry 91.88 17 Power 82.57 26 Source: Ministry of Petroleum & Natural Gas 44 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Ranbaxy Laboratories Ltd. The Indian Upstream Sector - Exploratory and Development Drilling Private-partic ipation in the Industry Historical Overview: Although oil was first explored in Digboi Assam way back in 1889, India still remains a vastly unexplored territory. Presently, only a frac tion of its vast sedimentary basins are under development and exploration. Befor e 1974 the exploration activity in the country was dominated by a number of PSUs like Oil India Ltd and ONGC. However, with the discovery of massive Mumbai High fields in 1974, the Indian government introduced New Exploration Licensing Polic y (NELP) in FY 1998 so as to encourage private sector participation in the oil a nd gas sector. Moreover, domestic explorers are also using new techniques like E nhanced Oil Recovery (EOR) and Underground Coal Gasification (UCG) to increase t he domestic production of the crude oil. The introduction of NELP attracted a nu mber of private sector and foreign companies in the Indian oil exploration and d rilling sector. The Indian private sector giant RIL won the maximum number of bl ocks after the state owned ONGC. Moreover, a number of foreign players like BHP Billiton and Cairn also participated in the bidding process by forming consortiu ms with domestic as well as foreign players. Present Scenario: The introduction of NELP has proved to be a boon for the Indian oil explorations sector, as the p roportion of unexplored acreage has declined from approximately 40% in FY 99 to around 15% by the end of FY 2007. Over the years, the biding process has started to garner the interest of both the domestic players and foreign players. This i nference is based on the fact that the number of blocks offered to the companies has increased from around 25 in the year 2000 to around 70 by the end of 2009. Also, the total number of exploratory and development wells and metreage drilled in onshore and offshore areas during FY 2010 was 428 and 1019 thousand metres r espectively up from around 381 and 888 thousand metres in FY 2009. India: Exploratory and Development Drilling Area FY 2009 Wells Metreage Exploratory Onshore Offshore 90 32 243,000 97,000 De velopment Onshore Offshore 210 49 393,000 155,000 236 48 470,000 123,000 110 34 298,000 128,000 FY 2010 Wells Metreage Source: Ministry of Petroleum & Natural Gas Snapshot of Previous Rounds of NELP Year 1998 2000 2002 2003 2005 2006 2007 2009 Number of Blocks Offered 48 explora tion blocks offered in the first round second round of the NELP launched and 25 exploration blocks offered third round of the NELP launched and 27 exploration b locks offered fourth round of the NELP launched and 24 exploration blocks offere d fifth round of the NELP launched and 20 exploration blocks offered sixth round of the NELP launched and 55 exploration blocks offered seventh round of the NEL P launched and 57 exploration blocks offered eighth round of the NELP launched a nd 70 exploration blocks offered Source: Ministry of Petroleum & Natural Gas Industry Power India: Emerging as a Refining Hub 45 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Ranbaxy Laboratories Ltd. India: Emerging as a Refining Hub India: Global Refining Hub With a current refining capacity of almost 185 MTPA a nd significant capacity expansions planned over the next few years, India is all set to surface as a main refining hub. Post independence when Mumbai Refinery o f HPCL was first commissioned, Indias refining sector has come a long way in term s of both investments and capacity expansion. Like the private sector undertakin gs, the Indian public sector refiners like (Indian Oil, HPCL and BPCL) are also undertaking large scale capacity expansion plans at their existing and new locat ions. Despite boosting of surplus refining capacity a number of refinery capacit y expansion plans are currently underway in India which are as follows: Vadinar refinery of Essar Paradeep refinery of Indian Oil Corporation Bina refinery by B PCL Bhatinda refinery by HPCL-Mittal Energy Advantage India Indias strategic geog raphical location, close to the oil producing region of the Gulf and the ability of new refiners to process heavy, low-grade crude gives India an edge over its rivals to emerge as a global refining hub. Majority of Indian private sector ref ineries are only focusing on the lucrative export market for their future growth . For instance, Reliance Petroleum Ltd (RPL) new refinery at Jamnagar was establ ished with an aim to sell its refined products in the US market. In addition to this, a number of challenges like high compliance cost and environmental concern s have led to the closure of a number of small refineries in Europe and America. As a result, the primary capacity expansion in refinery sector is coming from e merging economy like India. The Indian government is also assisting the countrys refinery sector by proving a number of fiscal and tax incentives to both public and private refiners. For instance, RPL refinery, benefited from its Special Eco nomic Zone (SEZ) status. We believe a number of competitive advantages like favo rable location, lower construction and operating costs along with increased dema nd of crude oil across the world will benefit the Indian refinery sector. India: Refining Capacity (MTPA), FY 2010 & FY 2012 250 235.0 200 184.4 150 100 50 0 FY 2010 FY 2012 Source: Ministry of Petroleum & Natural Gas India: Installed Capacities of Refineries Refinery Location Digboi Guwahati Barauni Koyali Haldia Mathura Panipat Chennai Narimanam Bongaigaon Mumbai Visakhapatnam Mumbai Kochi Numaligargh Tatipaka Mang alore Jamnagar Jamnagar Jamnagar Capacity(MMT) 0.65 1 6 13.7 6 8 12 9.5 1 2.35 5 .5 7.5 12 7.5 3 0.078 9.69 33 29 10.5 IOCL CPCL BRPL HPCL BPCL NRL ONGC MRPL RIL RPL EOL

Source: Ministry of Petroleum & Natural Gas 46 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry: Oil and Gas Pune e Stock Broking Pvt. Ltd. Company: ONGC CMP: ` 1,329.1 Long-term BUY Bloomberg : ONGC@IN CODE BSE : 500312 NSE : ONGC Reuters : ONGC.BO Financial Summary EPS P/E Revenue (` mn) EBITDA .mn) Free Float Mar Cap(`.mn) e (`.mn) Book Value per share 739,126.6 1,472.0/997.35 49.8 (`.mn) EBITDA Margin % EV/EBITDA (x) Market Cap (` 52 week high/low Total Debt (`.mn) Enterprise Valu P/BV 78.4 17.0 599,863 396,415 61.8 6.9 2,842,795 2,734,565.2 408.1 3.3

ONGC to acquire 25% stake in Kazakh oilfield ONGC Videsh Ltd, the foreign arm of state-run ONGC, is likely to sign a deal to acquire 25% stake in Kazakhstans Sat payev oilfield by the end of February 2011. The company is set to invest USD 400 million in the 1,582 sq km North Caspian Sea oilfield. A peak output of 287,000 barrels per day (14.3 million tonnes a year) is envisaged from the 256 million tonnes of reserves in the field. Kazakh national oil firm KazMunaiGas will be th e operator of the field, holding remaining 75% stake. Under the terms of the agr eement, the overseas subsidiary of the Indian oil giant will also have the optio n of taking an additional 10% stake in the block on commercial rates once a disc overy is made. The company is likely to pay USD26 million as signing amount and USD80 million as one-time assignment fee to the Kazakhstan government. Apart fro m this, the company has also has committed a minimum exploration investment of U SD165 million and an additional optional expenditure of USD235 million in the co untry. ONGC likely to divest 5% by March 2011 State-run ONGC is likely to divest 5% of its equity stake by March 2011 through a follow-on public offer (FPO). Po st-disinvestment, the government's holding in the company will be 69.14% from th e present 74.14 per cent. The company is expecting to raise through the FPO more than `10,000 crore (`100 billion) that it mopped up by divesting 10% equity hol ding in 2004. The company has also declared their bonus equity shares in the 1:1 ratio under which it is likely to make the division of every equity share worth `10 to be able to be paid through two equity shares of `5 each. ` Million Operating Income (`mn) Shareholding Pattern as On 30th September 2010 Gener al Public, 11.90 % Other In vest ors, 1.60% FY09A 635,983.0 359,880.7 161,263.2 21,388.9 75.4 17.6 3.6 7.6 20.5 15.8

FY10A 599,862.8 396,414.5 167,675.6 21,388.9 78.4 17.0 3.3 6.9 19.2 14.9 FY11E 709,757.6 447,001.1 188,582.2 21,388.9 88.2 15.1 2.9 6.1 19.3 15.1 FY12E 851,709.2 485,655.5 208,664.6 21,388.9 97.6 13.6 2.6 5.7 19.2 15.0 EBITDA (`mn) Net Profit (`mn) Share Capital (`mn) EPS (`) PE (x) Promo ters, 74.10 % Pune e Stock Broking Pvt. Ltd. Institu tional Invest ors, 12.40 % P/BV (x) EV/EBITDA (x) ROE (%) ROA % 47 For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Company ONGC Ltd Ranbaxy Laboratories Ltd. ONGC bets higher with 2 joint ventures Presently, ONGC is working to construct 2 joint venture petrochemical plants in the country, namely, ONGC Petroadditions Ltd (OpaL) and ONGC Mangalore Petrochemicals Ltd (OMPL). ONGC Petro-additions Lt d (OpaL) is a `20000 crore mega petrochemical project at Dahej, Gujarat while ON GC Mangalore Petrochemicals Ltd (OMPL) is constructing a ` 5,750 crore aromatic plant within the Mangalore Special Economic Zone, likely to be completed by the end of 2012. The OPAL project, likely to be commissioned by early 2013, is joint ly owned by ONGC, GAIL and Gujarat State Petroleum Corp (GSPC) with a stake of 2 6%, 19% and 5% respectively, while the remaining stake of 5% is kept reserved fo r strategic investor and financial institutions who are yet to be finalized. Mea nwhile, ONGC holds 46% stake in OMPL and its subsidiary Mangalore Refinery owns another 3% stake while the rest 51% is yet to be tied up. Recently, the state-ow ned oil and gas firm has offered Kuwait Petroleum Corporation (KPC), a Kuwaiti n ational oil firm, stake in its 2 upcoming petrochemical project. Ultimate Reserve in FY10 highest in last 2 decades 90 80 70 60 50 40 30 20 10 0 MTOE Years ONGC - Product Mix 11.73% 60.90% 9.61% Well planned strategies to drive the growth in revenues and overall production O il and gas production from domestic fields, including ONGCs share in PSC JVs has been 52.06 MTOE during FY10 against 52.45 MTOE during FY09. ONGC accounted for 79% of Indias crude oil and 54% of natural gas production during FY10. In future as well, production of crude and natural gas from ONGCs domestic fields is likely show a small growth, with production maintained through IOR/EOR from its ageing fields. Moreover, implementation of several schemes such as the Vasai East proj ect, the C-series project and the Heera project are expected to maintain the com panys production volumes. The company has some ambitious plans for developing new exploration areas abroad. This may drive the growth in revenues and overall pro duction in longer terms. 7.52% 3.53% 1.57% Crude Oil HSD Liquefied Petroleum Motor Spirit General 1.53% G as Natural Aromatic Rich Naptha Superior Kerosene Oil C2/C3 1.90% 1.71% ONGC to Enter in City Gas Business Cash-rich Oil and Natural Gas Corporation (ON GC) has joined hands with Bharat Petroleum (BPCL) for a foray into city gas dist ribution (CGD). ONGC owns and operates 22,000 km of pipelines in India, includin g nearly 4,500 kilometres under the sea. Recently, the Petroleum and Natural Gas Regulatory Board (PNGRB) invited bids for installing and running a CGD network in Asansol-Durgapur (in West Bengal), Bhavnagar, Gandhidham-Anjar, BhujMundra an d Jamnagar (all in Gujarat), Ludhiana and Jalandhar (in Punjab) and Panipat (in Haryana). Setting up a full-fledged CGD network with CNG stations and a pipeline for industrial and domestic consumers usually costs ` 1,000-1,500 crore. ONGC b ids for 25% stake in US energy major Exxon Mobil The overseas arm of state-owned Oil and Natural Gas Corp (ONGC), ONGC Videsh Ltd is also bidding for 25% stake in US energy major Exxon Mobil in a deep-sea oil block in Angola. The company ha

s submitted its bid for an offer made by Exxon Mobil to participate in the sale process of its 25 per cent stake in Block 31 in Angola, which is expected to pro duce 150,000 barrels of crude oil per day (7.5 million tons a year). 48 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Company ONGC Ltd Ranbaxy Laboratories Ltd. Overseas Oil & Gas Production of ONGC ONGC will allow GAIL to market gas from C-series field State-run Oil and Natural Gas Corporation (ONGC) has decided to bury the hatchet with Gas Authority of In dia Ltd. (GAIL) over marketing natural gas from its C-series field off the weste rn coast and is likely to allow GAIL to market the gas. C-series is a marginal f ield located 60 km west of Daman in the Tapti Daman block of the Mumbai offshore basin, producing around 1 mscmd of gas, which is expected ot reach a peak outpu t of 2.8 mscmd. It was developed by ONGC at an investment of ` 3,195 crore. The empowered group of ministers had, in July, allocated the C-series gas to users i n the Uran region of Maharashtra. The field was given to ONGC by the government on nomination prior to the New Exploration Licensing Policy regime, though it do es not fall in the administered price regime, and the contractor is entitled to freedom on pricing and marketing. While ONGC had earlier sought a sale price of $5.5 per mBtu for C-series gas, the government has approved a price of $5.25 per mBtu. The price is fixed for the first five years of production, till March 201 4. 9 8 7 6 5 4 3 2 1 0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 3.35 0.52 3.71 4.58 1.35 5.8 1.76 6.84 6.56 6.49 2.15 1.96 2.22 2.38 Oil (MMT) Gas (BCM) Valuation ONGC has emerged as a well established Oil and gas major with presence in almost all oil and related product segment. Seeing the consistent and better performance run of the company the government gave it a Maharatna status Another stone in crown. The company is not only expanding its presence in India but also in the international markets. Apart from this the company has also phased out a robust growth plan in renewable energy development with an investment USD 110.5 million to promote research and development of renewable energy sources. These all aspects augur well for the company in the future. Also, the oil price deregu lation by Indian government will also help ONGC increasing its profit margin. Wi th this outlook we give a buy recommendation to ONGC. The valuation of stock loo ks quite attractive at the current market price ` 1,329. The price range in FPO which is like to launch to by early of next year, will be interesting to watch a nd it may pull the stock price of the company to a different height. At the curr ent market price, the stock is trading at a PE of 17.0x on FY10 EPS of ` 78.4 an d 15.1x on FY11E EPS of ` 88.2. 49 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry: Oil and Gas Pune e Stock Broking Pvt. Ltd. Company: Cairn India CMP : ` 329.75 Long-term BUY Bloomberg : CAIR@IN CODES BSE : 532792 NSE : CAIRN Reuters : CAIL.BO Financial Summary EPS P/E Revenue (`mn) EBITDA (`mn) EBITDA Margin % EV/EBITDA (x) Market Cap (`mn ) Free Float Mar Cap (`mn) 52 week high/low Total Debt (`mn) Enterprise Value (` mn) Book Value Per Share P/BV 5.5 59.5 16,230.3 11,796.5 72.7 55.1 625,527.2 235 ,198.2 368/248 34,007.1 650,240.1 178.5 1.8 Cairn seeks to feed RILs refinery, awaits govt nod 5.5 Cairn India, part of UK-ba sed Cairn group, proposed to supply crude to Reliance60.9 Industries (RIL) refine ry in the special economic zone (SEZ) at Jamnagar in Gujarat. Cairn drills 125,0 00 barrels of oil per day (bpd) oil 16,230.3 from Barmer block in Rajasthan that is one of the most prolific basins in the country. It supplies 15,000 bpd to IO Cs Panipat refinery, 30,000 bpd to 11,796.5 Essars Vadinar refinery and 80,000 bpd to RILs refinery at the domestic 72.7 tariff area (DTA) in Jamnagar. Vedanta to acquire majority stake in Cairn India Cairn Energy has struck a deal with London based miner Vedanta Resources to sell a majority stake upto maximum of 51% of C airn India, the company 240,910.7 it formed through spinning off its Rajasthan a ssets in 2007, for up to $8.5 368/248 billion. Cairn said it will spend part of the proceeds on exploration in Greenland and for other future growth opportuniti es. The deal is expected 34,007.1 to be closed before end of FY11. Cairn Energy is charging ` 50 a share from Vedanta for not competing with Vedanta itself in I ndia, Sri Lanka and 664,752.0 Bhutan for next three years. But this particular d eal is still awaited for 178.6 government approval. However the Government of In dia has asked Cairn Energy to clear all access, royalty and oil field management issues 1.9 regarding Indias largest oil field in Rajasthan before the company ca n proceed for approval to sell a majority stake in Cairn India to Vedanta Resour ces ` Million Operating Income (`) EBITDA (`) Net Profit (`) Share Capital (`) EPS (`) PE (x) 640,039.1 56.4 Shareholding pattern as on September 30, 2010 Other Investo Genera rs, l 17.6% P ublic, 2.3% FY09A 14,326.7 12,641.0 8,034.5 18,966.7 4.2 77.8 47.8 2.1 2.4

FY10A 16,230.3 11,796.5 10,511.1 18,969.7 5.5 59.5 55.1 2.8 3.1 FY11E 79,528.3 59,169.7 41,102.7 18,969.7 21.7 15.2 11.0 10.4 11.1 FY12E 127,245.2 102,242.1 80,545.8 18,969.7 42.5 7.8 6.2 17.6 19.0 Institut ional Investo rs, 17.7% Pune e Stock Broking Pvt. Ltd. EV/EBITDA (x) Promo ters, 62.4% ROA (%) ROE (%) 50 For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Company Cairn India Ltd Ranbaxy Laboratories Ltd. Strategic Initiatives Maximize recovery from production base Execute Rajasthan d evelopment Maximize Potential in Rajasthan Identify new growth opportunities Foc us of development of offshore production facilities Cairns strategic strength lies in its ability to optimally utilize of its capacit ies. The company has been constantly increasing its production capacity over the past few years. The company produces 125,000 barrels of crude oil per day (6.25 million tons a year) from Mangala oilfield, the largest among the 15 discoverie s in the Rajasthan block RJ-ON-90/1 and proposed to raise production to 150,000 bpd (7.5 million tons) without any new investment from existing facilities. Apar t from this, the company is also relying heavily on Lanka oil fields, which may convert into long term profitable business for Cairn. However, the company needs to resolve its regulatory issues with government so as to boost investors and s takeholders confidence. Cairn India is the second largest private crude oil producer in India after Reli ance Industries. The cairn India has shown strong growth in Revenues in its quar terly results. The company registered revenues worth USD 577 million in financia l quarter ending September 10 posting a skyrocketing growth of 213% over the pre vious quarter. The growth is mainly attributed to the surge in oil exploration c apacity especially in Mangala gas field and increasing crude oil prices. Recentl y Cairn India has sold its 51% stake to Vedanta resources for USD 9.6 billion am ount. The transaction and transfer is likely to be completed by mid of next year . The transaction if get approved will provide more investments options to inves t in new oil fields, which may lead the growth of company to many fold. Cairn - Quaterly Revnues (Billion USD) 700 600 577 Million USD 500 400 300 200 100 0 Q3'10 Q4'10 Q1'11 Q2'11 106 151 184 Quarter Cairn plans to kick off drilling in Ravva block by December Cairn India, an oil and gas major, plans to start drilling activities at the Ravva block, in the Kri shna Godavari basin. The cost of drilling is expected to be around USD100 millio n, while the estimated revenue from the firm period of the contract for the jack -up rig is expected to be around USD15 million. Cairn India, the operator of the Ravva block, holds 22.5% participating interest in the Ravva block. Its joint v enture partners ONGC holds 40%, Videocon 25% and Ravva Oil (Singapore) 12.5%. Th e Ravva oil and gas block has completed 15 years of production. As of now, the f ield has already produced 223 million barrels of oil against the original estima te of 101 million barrels. Cairn India Output Boost May Be Delayed a Few Months Cairn India Ltd.s plans to boost oil output by 20% from its Mangala field may be delayed past the end of the year as approval for the project remains under revie w by the Indian government. The company previously said it thought it would secu re approval and be able to increase output to 150,000 barrels a day from 125,000 by the end of December. The Indian government also is reviewing Vedanta Resourc es Plcs USD9.6 billion bid for the company. Cairn India still plans to bring tota l output from Mangala and other fields in the state of Rajasthan to 175,000 barr

els a day by the second half of next year. Mangala is the largest onshore oil fi nd in India in more than 20 years. 51 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Company Cairn India Ltd Ranbaxy Laboratories Ltd. Rajasthan Vision to produce 240,000 bopd * Subject to Government approval **M: 125kbopd, B: 40kbopd, A: 10kbopd Rajasthan Block a potential resource base Cairn India is the operator of the Rajasthan bl ock with a 70% participating interest and its joint venture partner ONGC has a 3 0% participating interest. The potential resource base for the Rajasthan block i s now estimated to be 6.5 billion barrels of oil equivalent (boe) in place. The Rajasthan block consists of three contiguous development areas that include Mang ala, Aishwariya, Raageshwari and Saraswati (MARS) fields; Bhagyam and Shakti fie lds; and Kaameshwari West fields. The company has discovered more than 150 wells and has yielded 25 discoveries in Rajasthan. The discovered resource base has i ncreased from 3.7 billion boe to 4 billion boe in place. The Rajasthan resources provide a basis for a vision to produce 240,000 bopd, subject to Government of India approval and additional investment. In terms of financing the Rajasthan pr oject, Cairn India has completed the financing arrangements for US$ 1.6 billion at competitive pricing. The financing consists of international borrowing of US$ 750 million and domestic borrowing of ` 4,000 crore (US$ 850 million). Valuatio n Cairn India is one of the largest private major in oil and gas field. The comp any has performed strongly over the last few years on the back of consistent inc rease in production and exploration capacity. Cairn India has announced an incre ase in the field's potential resource base to 6.5 billion barrels of oil equival ent (boe) from 4 billion boe earlier. Along with this, the company estimates pro duction potential of 240,000 barrels of oil per day (bopd) at peak capacity, muc h higher than the 175,000 bopd estimated earlier. Besides, the company also plan s to expand aggressively after the completion of acquisition by Vedanta giving h ope to investors for further increase in production and revenues. Cairn's strong execution track record and low cost of production also add to the positive sent iments. Looking at all these aspects, the stock looks attractive with a long ter m prospect. Simultaneously, we rate the stock as BUY at the current market price o f ` 329.75. At the current market, the stock is trading at a PE of 59.5x on FY10 A EPS of ` 5.5 and 15.2x on FY11E EPS of ` 21.7. 52 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. Research Desk Industry: Oil & Gas Pune e Stock Broking Pvt. Ltd. Company: Indian Oil Corporation Ltd. CMP: ` 378.2 Long-term BUY Bloomberg : IOCL @IN CODE BSE : 530965 NSE : IOC Reuters : IOC.BO Financial Summary EPS P/E Revenue (` mn) EBITDA (` mn) EBITDA Margin % Net Profit Margin (%) Marke t Cap (` mn) 52 week high/low Total Debt Enterprise Value (` mn) Book Value Per Share P/BV (X) 44.1 8.6 2,554,921.2 204,160.8 7.8 4.1 918,129.3 458.9/274.0 494, 725.7 1,396,870.7 216.1 1.8 IOC to raise US$4.4bn via FPO in Jan Indian Oil Corp reportedly aims to raise US $4.4 billion in January through a FPO. The government is selling a 10% stake, wh ile the IOC will offer an equal number of new shares to raise ` 20 billion. IOC has hired six banks including Bank of America Merrill Lynch, Citigroup and ICICI Securities to handle the share sale. The share price is expected to be around ` 450. However, the government has still not taken a final decision on the Indian Oil Corporation (IOC) FPO. This is in light of crude prices touching USD 90 a b arrel. IOC Q2 earnings jump 18.6 times Indian Oil Corporation has reported a net profit of ` 52.94 billion in the quarter ended Sep. 30, 2010 against ` 2.84 bil lion in the quarter ended Sep. 30, 2009, surge of 18.6 times. Total income rose 26.5% to ` 781.98 billion in the quarter ended September 30, 2010 against ` 618. 18 billion in the quarter ended September 30, 2009. Besides refining, IOC has di versified its revenues from pipeline and chemicals businesses, and will add nucl ear power. The earning of Indian Oil Corporation is mainly attributed to increas e in oil demand in domestic market and rising oil prices after deregulation. Shareholding pattern as on September 30, 2010 Promo ters, 78.92% ` Million Operating Income (`) EBITDA (`) Net Profit (`) Share Capital (`) EPS (`) PE (x) EV/EBITDA (x) FY09A 2,833,458.8 106,560.2 25,994.0 11,923.7 21.8 17.3 8.6 5.7 6.8 FY10A 2,554,921.2 204,160.8 107,131.9 24,279.5 44.1 8.6 6.8 20.4 11.4

FY11E 2,957,065.8 244,546.0 133,241.9 24,279.5 54.9 6.9 5.7 22.6 13.1 FY12E 3,480,170.7 296,424.7 165,431.0 24,279.5 68.1 5.5 4.7 24.9 15.0 Other Investo rs, 12.15% Genera l Public, 2.92% Institut ional Investo rs, 6.01% ROE (%) ROA (%) 53 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Company IOC Ltd Ranbaxy Laboratories Ltd. Capacity expansion remained the key growth driver Indian Oil Corporations (IOC) p erformance has improved over the last few years. In recent years IOC has focused on increasing its refining capacity and its annual crude oil refining capacity is likely go up from 60 million tonnes to 80.7 million tonnes by 2012. Indian Oi l and its subsidiaries account for a 47% share in the petroleum products market, 40% share in refining capacity and 67% downstream sector pipelines capacity in India. The Indian Oil Group of Companies owns and operates 10 of India's 19 refi neries with a combined refining capacity of 60.2 million metric tons per year. W ith price deregulation and increasing consumption, the sales is likely to be on positive mode in future. Product Mix 88.08% 0.06% 8.18% 1.66% 0.04% 0.84% 0.47% 0.62% Petroleum Products Gases Explosive Oil Crude PTA General Lubricants & Diseases L ab IOC - Operating Income (Billion `) IOC to foray in wind and nuclear energy segments Petroleum products own a major share in IOCs total revenue. Besides refining, the company is also focusing on ot her energy segments such as nuclear and wind energy. It will invest ` 900 crore to buy 26 per cent stake in Nuclear Power Corporations 1,400 mw Kota atomic power plant. Among other projects, it will add a new LNG terminal at Ennore. It has a lready opened 450 new outlets this financial year, and will add 450 more pumps b y March. IndianOil operates the largest and the widest network of fuel stations in the country, numbering about 17606. It has also started Auto LPG Dispensing S tations (ALDS). It supplies Indane cooking gas to over 47.5 million households t hrough a network of 4,990 Indian distributors 3500 3000 2500 2000 1500 1000 500 0 FY 2008 2473 3071 2694 FY 2009 FY 2010 IOCL to be the Anchor Tenant for Orissa PCPIR The Cabinet Committee on Economic Affairs has approved the proposal of the Gover nment of Orissa to set up a Petroleum Chemicals and Petrochemicals Investment Re gion (PCPIR) in Paradeep. This is the fourth PCPIR which has been approved after PCPIRs in Andhra Pradesh, Gujarat and West Bengal. A total investment of about ` 277,734 crore is expected in the Orissa Petroleum Chemicals and Petrochemicals Investment Region (OPCPIR), which includes a committed investment of ` 29,777 c rore. IOCL signed a MoU with GoO in 2004 for setting up a 15 MMTPA grassroot ref

inery at Paradeep in the first phase at a cost of ` 29,777 crore. The Refinery i s likely to be commissioned by March 2012 and should be fully stabilized by Nove mber 2012. Indian Oil: Margin spike Indian Oil Corporations (IOC) performance imp roved during the September quarter as its gross refining margins (GRMs) increase d to $6.6 a barrel from $3.6 a barrel in the first quarter. During the period, S ingapore-Dubai GRMs were up $0.50 to $4.2 a barrel. This was partly helped by in ventory gains as IOC kept more crude oil in its inland refineries and produced m ore compared to Hindustan Petroleum and Bharat Petroleum, which saw refining mar gins of $2.7 and $2.8 a barrel, respectively. 54 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Industry Oil & Gas Pharmaceutical Company Company IOC Ltd Ranbaxy Laboratories Ltd. LNG segment to drive growth in petrochemicals business IOC has signed an MoU wit h Tamil Nadu Industrial Development Corporation Ltd (TIDCO) to set up an LNG reg asification terminal and gas-based Power Plant at Ennore and gas pipelines for d istribution. With a potential to transform the energy landscape of Tamil Nadu, K arnataka, Andhra Pradesh and Puducherry, this MoU encompasses setting up a 2.5 m illion tonnes per annum LNG terminal expandable to 5 million tonnes per annum wh ich will cost `3000 crore approximately. A 1000 MW LNG based Power plant that is likely to cost around `5000 crore will be anchor customer and will come up adja cent to the terminal. Driven by the LNG re-gasification terminal and gas-based p ower plant, Ennore will become a Special Economic Zone that will spawn a grid of gas pipelines criss-crossing the demand centres across Tamil Nadu and other Sou thern States. This will spur city gas distribution and boost industrial activity in the region. Valuation Being a public sector unit, IOC enjoys the freedom of capacity expansion and investments. The company has aggressively expanded its di stribution network over the years A key strength to the company. Moreover, the d ecision of price regulation will minimize the loss to the company, and profit ma rgins are likely to increase further in future. Irrespective of government aids, company may open to issues such as distribution in rural areas, sustaining cost of output and production, and prospective growth. At the current market price o f `378.2, the stock is trading at a P/E of 8.6x on FY10 earnings of `44.1 and P/ E of 6.9x on FY11 earnings of `54.9. 55 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010

[Type text] Research Desk Industry Pharmaceutical Company Ranbaxy Laboratories Ltd. 1198 Shukrawar Peth, Subhash Nagar, Lane No. 3 Near Hirabaug, Pune - 411002 E-Ma il: research@pesb.co.in www.pesb.co.in Board Line: +91-20-41000600 Fax: +91-20-2 4498100 Disclaimer: This report and Information contained in this report is solely for information p urpose and may not be used as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. The investme nt as mentioned and opinions expressed in this report may not be suitable for al l investors. In rendering this information, we assumed and relied upon, without independent verification, the accuracy and completeness of all information that was publicly available to us. The information has been obtained from the sources that we believe to be reliable as to the accuracy or completeness. While every effort is made to ensure the accuracy and completeness of information contained, Pune e Stock Broking Pvt. Ltd. and its affiliates take no guarantee and assume no liability for any errors or omissions of the information. This information is given in good faith and we make no representations or warranties, express or im plied as to the accuracy or completeness of the information. No one can use the information as the basis for any claim, demand or cause of action. Pune e Stock Broking Pvt. Ltd. and its affiliates shall not be liable for any direct or indir ect losses or damage of any kind arising from the use thereof. Opinion expressed is our current opinion as of the date appearing in this report only and are sub ject to change without any notice. Recipients of this report must make their own investment decisions, based on their own investment objectives, financial posit ions and needs of the specific recipient. The recipient should independently eva luate the investment risks and should make such investigations as it deems neces sary to arrive at an independent evaluation of an investment in the securities o f companies referred to in this document and should consult their advisors to de termine the merits and risks of such investment. The report and information cont ained herein is strictly confidential and meant solely for the selected recipien t and is not meant for public distribution. This document should not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any o ther person or to the media or reproduced, duplicated or sold in any form. 56 Pune e Stock Broking Pvt. Ltd. For Private Circulation Only December 16, 2010