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Pleaserefertothedisclaimertowardstheendofthedocument.

IndiaEquityResearch

Automobiles

February23,2012

A D D EicherMotorsTargetPrice(INR) 1,918 StrongmomentuminHCVsandmotorcycles

INITIATINGCOVERAGE EIMshighgrowthtrajectoryinCVs,whichstartedwiththeassociation

withVolvoinJul08,islikelytocontinueongrowingacceptanceofthe

companys HCV vehicles by freight operators. We estimate domestic

CV sales volumes to grow at a CAGR of 10% over 2012f2014f.

Domestic motorcycle sales volumes are also likely to continue their

growth trajectory at a CAGR of 26% over 2012f2014f, and led by a

healthy order book. Robust sales volume growth in CVs and

motorcycles is likely to result in positive operating and financial

leverage over 2012f2014f. We have used the relative valuation

methodtovalueEIMsstandalonebusinessanditsstakeinVECV.Our

SOTP

based

Mar13

target

price

for

EIM

stands

at

INR1,918,

which

provides a 11% upside. Initiate with an Add rating. Risk factors are

higherrawmaterialcostsandfuelprices.

MomentuminHCVsmaydeliverthreeyearCAGRof10%

EIMhasoutpacedthe industry inCVsalesvolumessince itsjointventure VE

Commercial Vehicles (VECV) with Volvo AB (VOLVB SS, NR) in Jul08. We

estimate this trend tocontinuewithdomesticCVsalesvolumesestimated to

growataCAGRof10%over2012f2014fduetotherisingpenetration inthe

HCVsegment.TheHCVshavebeenwell receivedby freight operatorsdue to

theirlowercostofownership.VECVisalsosettingupanengineplanttolargely

cater to VOLVBs global requirements. We estimate the engine business to

contribute7%

and

6%

of

EIMs

total

income

and

EBITDA,

respectively,

by

2014f.

Healthyorderbooklikelytosustainthehighgrowthinmotorcycles

We estimate domestic motorcycle sales volumes to grow at a CAGR of 26%

over2012f2014fduetothehealthyorderbookandcapacityexpansions.EIMs

vehicles continue to witness robust demand, despite entry of new

manufacturers, due to their unique product positioning, wherein cruiser

motorcyclesareofferedatapricesignificantlybelowpeers.

Robusttotalincomegrowthof17%over2012f2014f

Total income is estimated to grow at a CAGR of 17% over 2012f2014f on

accountof robustsalesvolumegrowth.EBITDAmarginsare likelyto increase

from10.4%in2011to10.8%in2014fasaresultofimprovementinmarginsin

the motorcycle business. Despite higher depreciation due to the large capex,

PATis

estimated

to

grow

at

aCAGR

of

25%,

outpacing

EBITDA

growth.

InitiatewithanAddratingandMar13pricetargetofINR1,918

We use the relative valuation method to value EIMs businesses. We have

valued EIMs standalone business and VECV stake at a 10% discount to

valuationsofHeroMotoCorp(HMCLIN,Hold)andAshokLeyland(ALIN,Buy),

respectively. We have taken the mean EV/EBITDA over the previous cycle of

thesecompaniesandprovidedadiscounttofactorinthedifferenceinbusiness

size.OurSOTPbasedMar13targetforEIMstandsatINR1,918,whichprovides

a11%upside.InitiatewithanAddrating.Riskfactorsarehigherrawmaterial

costsandfuelprices.

LastPrice(INR)Bloomberg code

Reuterscode

Avg.Vol.(3m)

Avg.Val.(3m)(INRmn)

52wkH/L(INR)

Sensex

MCAP(INRbn/USDmn)

Shareholding(%) 9/11 12/11

Promoters

MFs,FIs,

Banks

FIIs

Public

Others

StockChart(RelativetoSensex)

StockPerfm.(%) 1m 3m 1yr

Absolute

Rel.toSensex

Financials(INRmn) 12/11 12/12f 12/13f

Sales

YoY(%)

EBITDA(%)

A.PAT

Sho/s(diluted)

A.EPS(INR)

YoY(%)

D/E(x)

P/E(x)

EV/E(x)

RoCE(%)

RoE(%)

QuarterlyTrends 03/11 06/11 09/11 12/11

Sales(INRmn)

PAT(INRmn)

1,724

57,160

17.4

64.1

6.0

11.0

10.4

77,73267,384

18.4

55.2 55.2

18,145

46.55/946

6.2

11.0

9.2

177.2

22

9.7

64.9

854

27

145.3

737

15,766

27

6.9

1.5

7.8

5.2

24

14,513

7.49.5

23

24

0.4

28

0.3

23

11.9

15

10.3

3,941

18

10.6

4,807

29

10.4

3,088

0.4

27

113.8

63

EIMIN

EICH.BO

16,209

1,845/995

26.0

733

13,897

15.2

11.2

22

26

763

12,984

700

1,100

1,500

1,900

Feb11 Jun11 Oct11 Feb12

Eicher Motors Sensex Rebased

SriRaghunandhan

N

L,

+91

022

6684

2863

[email protected]

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India Equity Research EicherMotors

Automobiles 3

InvestmentSummary

EIMhasoutpacedindustrygrowthinCVsalesvolumessinceitsetupitsJVVECommercialVehicleswithVolvoABin

Jul08.This

JV

has

created

apresence

for

itself

in

the

high

growing

HCV

segment.

We

estimate

VECVs

domestic

CV

sales

volumes to grow at a CAGR of 10% over 2012f2014f on account of growing acceptance of the companys HCVs by

freightoperators.TheJVisalsobuildinganengineplanttolargelycatertoVOLVBsglobalrequirements.Weestimate

theenginebusinesstocontribute7%and6%ofEIMstotalincomeandEBITDA,respectively,by2014f.Meanwhile,the

companyiswitnessingrobustgrowthinthemotorcyclebusiness,despiteentryofnewmanufacturersduetoitsunique

productpositioning,wherein it isabletooffercruisermotorcyclesatapricesignificantlybelowpeers. In lightofthe

strongorderbookandcapacityexpansions,weestimateaCAGRof26%indomesticsalesvolumesinmotorcyclesover

2012f2014f.Robustsalesvolumegrowth inCVsandmotorcycles is likelytoresult inpositiveoperatingandfinancial

leverage over 2012f2014f. We have used the relative valuation method to value EIMs standalone business and its

stake inVECV.OurSOTPbasedMar13targetprice forEIMstandsat INR1,918,whichprovidesa11%upside. Initiate

coveragewithanAddrating.Riskfactorsarehigherrawmaterialcostsandfuelprices.

Momentumin

HCVs

likely

to

deliver

three

year

sales

CAGR

of

10%

EIMhasgainedmarketshareaftertransferring itsCVbusinesstoaJVwithVolvoAB(VOLVBSS,NR).

This JV VE Commercial Vehicles (VECV) has improved its market share in the domestic MHCV

segment from 7.6% in 2008 to 10.7% in 2011 due to growing acceptance of VECVs HCVs by freight

operators on account of lower cost of ownership. We estimate VECV to largely sustain this market

shareandgrowitsCVsalesvolumesataCAGRof10%over2012f2014f.Meanwhile,VECVissettingup

anengineplantto largelycatertoVOLVBsglobalrequirements.Weestimatethisenginebusinessto

contribute7%and6%ofEIMstotalincomeandEBITDA,respectivelyby2014f.

Healthyorderbooklikelytosustainhighgrowthinmotorcycles

The companys cruiser motorcycles continue to witness robust demand, despite entry of new

manufacturers.

This

is

on

account

of

unique

product

positioning,

wherein

cruiser

motorcycles

are

offered at a price significantly below peers. Due to this advantage, EIM has been witnessing long

waiting periods of 89 months for its motorcycles. To meet these pending orders, the company is

setting up a new plant. In light of the healthy order book and capacity expansions, we estimate

domesticsalesvolumegrowthof26%inmotorcyclesover2012f2014f.WeestimateEBITDAmargins

in the standalone business to increase from12.1% in 2011 to15.5% by2014f, largely on account of

positiveoperatingleverage.

Robusttotalincomegrowthof17%likelyover2012f2014f

Total income is estimated to grow at a CAGR of 17% over 2012f2014f, on account of robust sales

volumegrowth.DomesticmotorcyclesalesvolumesarelikelytogrowataCAGRof26%,outpacingthe

CAGRof10%inCVsalesvolumesduetorobustdemandandahealthyorderbook.Robusttotalincome

growth

is

likely

to

lead

to

positive

operating

and

financial

leverage.

EBITDA

margins

are

likely

to

increase from 10.4% in 2011 to 10.8% in 2014f, largely on account of positive operating leverage.

Despite higher depreciation due to the large capex, PAT is estimated to grow at a CAGR of 25%,

outpacingEBITDAgrowth.

InitiatewithanAddratingandaMar13pricetargetofINR1,918

EIMhasoutperformedtheBSEAutoIndexandtheNiftysinceannouncementoftheJVwithVOLVBin

Jul08. The outperformance has also been in line with fundamentalssales volumes for motorcycles

andCVsgrewataCAGRof20.3%and25.8%,respectively,over20092011.Wehaveusedtherelative

valuation method to value EIMs businesses. We have valued EIMs standalone business and VECV

stakeata10%discounttothevaluationsofHeroMotoCorp(HMCLIN,Hold)andAshokLeyland(ALIN,

Buy),respectively.WehavetakenthemeanEV/EBITDAoverthepreviouscycleofthesecompaniesand

providedadiscounttofactorinthedifferenceinbusinesssize.OurSOTPbasedMar13targetforEIM

Growingpenetrationin

HCVsegmenttodrive

salesvolumegrowth.

EIMhasbeenwitnessing

strongdemand,

with

waitingperiodsof89

monthsforits

motorcycles.

Thecompanyislikelyto

witnesspositiveoperating

andfinancialleverage.

Initiatecoveragewithan

AddratingwithaMar13

TPofINR1,918.

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Automobiles 4

standsat INR1,918,whichprovidesa11%upside. Initiatewith anAddrating.Riskfactorsarehigher

rawmaterialcostsandfuelprices.

Exhibit1:OneyearforwardrollingEV/EBITDAandEV/EBITDAattargetprice

10

0

10

20

Apr07 Feb08 Dec08 Oct09 Sep10 Jul11 May12 Mar13

1yrFwdEV/EBITDA Ta rgetEV/EBI TDA Ave ra geEV/EBITDA

Source:Bloomberg,AvendusResearch

Exhibit2:Valuationsummary

(INRmn) Totalincome EBITDA NetProfit EPS(INR) P/E(x)* EV/EBIT DA(x)* EV/Sales(x)* P/B(x)*

Dec10 44,213 3,811 1,889 70 24.8 17.3 1.5 3.8

Dec11 57,160 5,935 3,088 114 15.2 11.2 1.2 3.2

Dec12f 67,384 6,970 3,941 145 11.9 9.5 1.0 2.6

Dec13f 77,732 8,258 4,807 177 9.7 7.4 0.8 2.1

Dec14f 91,624 9,908 6,092 225 .7 5.4 0.6 1.7

Source:Company,AvendusResearch Note:*ProportionateshareofEIMinVECVJVconsideredforcalculationofratios

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Automobiles 5

MomentuminHCVslikelytodeliverthreeyearsalesCAGRof10%

EIMhasgainedmarketshareaftertransferring itsCVbusinesstoaJVwithVOLVB.ThisJVVECVhas improved its

marketshare

in

the

domestic

MHCV

segment

from

7.6%

in

2008

to

10.7%

in

2011

due

to

growing

acceptance

of

its

HCVsbyfreightoperatorsonaccountoftheirlowercostofownership.WeestimateVECVtolargelysustainthismarket

shareandgrowitsCVsalesvolumesataCAGRof10%over2012f2014f.Meanwhile,VECVissettingupanengineplant

to largelycatertoVOLVBsglobalrequirements.Weestimatethisenginebusinesstocontribute7%and6%ofEIMs

totalincomeandEBITDA,respectively,by2014f.

AssociationwithVOLVBdrivingrobustgrowthinCVs

EIMowns54.4%stake in itsCVmanufacturingJV VECV.Theremainingstake inthe JV isownedby

VOLVB. Since its inception in Jul08, VECV has consistently increased its market share in domestic

MHCVs from 7.6% in 2008 to 10.7% in 2011. We estimate VECV to sustain this market share over

2012f2014f.

Exhibit3:

Categorywise

domestic

market

share

for

VECV

Segment Category Categorywisemarketshare(%)

Grossvehicleweight(GVW)

Categoryscontributiontodomestic

CVsalesvolumesofVECV2011(%) 2008 2009 2010 2011

MHCVPassenger 7.512.0tonne 6.5 18.7 18.1 17.2 20.3

12.016.2tonne 1.3 0.9 0.5 0.4 1.9

MHCVCargo 7.512.0tonne 54.5 38.8 35.6 40.7 38.9

12.016.2tonne 10.3 2.3 2.0 4.6 7.5

>16.2tonne 6.7 2.1 1.9 1.9 1.9

LCVPassenger 5.07.5tonne 7.1 7.8 7.8 10.7 14.4

LCVCargo 5.07.5tonne 13.8 11.8 10.1 14.3 13.4*

TotalMHCVs 79.7 7.6 8.4 9.4 10.7

TotalLCVs 20.3 2.0 1.8 2.1 2.2

TotalCVs 100 5.0 4.7 5.6 5.9

Source:SIAM Note:*Marketsharein3.5to7.5tonneGVWsegmentnotcomparablewithpreviousperiods

VECVholdsstrongmarketshareinthe7.5to12tonneGVWsegment,asthesevehiclesarepreferred

byfreightoperatorsonaccountoftheirlowercostofownership(includespurchasecost,runningcost

andresalevalue).TherunningcostofVECVsvehiclesislowerduetohigherfuelefficiencyandlower

maintenancecost.

Exhibit4:FreightoperatorsannualincomestforVECV,TTMT,ALvehiclesin12tonneGVWsegment

(INR) VECV:Model11.1 TTMT:Model 11.09 AL:Model 1012

Revenues 1,302,921 1,302,921 1,412,410

Fuelcost 355,726 415,014 452,742

Salary 240,000 240,000 240,000

Permit,roadtax,tolletc 240,000 240,000 240,000

Otherexpenditure 84,659 87,734 88,984

EBITDA 382,536 320,174 390,684

EBITDAMargin(%) 29.4 24.6 27.7

Interest 65,556 62,976 64,584

Depreciation 57,094 54,844 56,250

Tax 85,762 66,777 89,050

PAT 174,124 135,577 180,800

PATMargin(%) 13.4 10.4 12.8

RoE(%) 34.3 27.8 34.0

Onroadprice(Mumbai) 1,015,000 975,000 1,062,000

Source:Industry,AvendusResearch Note:Basedonsamplesurveyoffreightoperators

VECVhasconsistently

gainedmarketsharesince

itsformationinJul08.

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Automobiles 6

The same factor low cost of ownership is also driving higher acceptance of HCVs among freight

operators.

Exhibit5:Freightoperatorsannualincomest.forVECV,TTMT,ALvehiclesin25tonneGVWsegment

(INR) VECV:Model30.25 TTMT:Model 2518 AL:Model 2516IL

Revenues 1,658,880 1,726,787 1,831,947

Fuelcost 602,051 662,256 735,840

Salary 240,000 240,000 240,000

Permit,roadtax,tolletc 240,000 240,000 240,000

Otherexpenditure 196,425 214,050 212,300

EBITDA 380,404 370,481 403,807

EBITDAMargin(%) 22.9 21.5 22.0

Interest 88,152 102,108 99,840

Depreciation 76,781 88,931 86,963

Tax 71,105 59,216 71,611

PAT

144,366 120,226

145,393PATMargin(%) 8.7 7.0 7.9

RoE(%) 21.2 15.2 18.8

Onroadprice(Mumbai) 1,365,000 1,581,000 1,546,000

Source:Industry,AvendusResearch Note:Basedonsamplesurveyoffreightoperators

VECV has gained market share of 1.9% in the HCV segment in 2011, and the company targets to

improvethisto15.0%by2015f.Toreachthistarget,thecompanyisexpandingcapacityandthedealer

networkinHCVs.

VECV is expanding its total annual CV production capacity from 48,000 vehicles in Sep11 to 60,000

vehiclesbyJun12.Thiscapacityislikelytobefurtheraugmentedto100,000vehiclesbyDec14.Mostof

theincrementalcapacityislikelytobeintheHCVsegment.

Outof

VECVs

220

dealers,

only

apart

of

its

dealers

sell

HCVs

for

the

company.

In

an

attempt

to

enable

moreofitsdealerstosellHCVs,thecompanyistraininguptofourdealerseachmonthtohandlesales

and service of HCVs. Expansion of the HCV dealer network is likely have a positive impact on the

segmentssalesvolumegrowth.

WeestimateaCAGRof10%inVECVsdomesticCVsalesvolumesover2012f2014f.

VECVJVstructureandholdingdetailsThestructure,holdingandotherdetailsoftheJVformedinJul08wereasfollows:

TheJVcontainstheEIMsCVbusinessalongwithcomponentbusiness.

VOLVB acquired 45.6% stake in VECV for a consideration of USD350mnUSD275mn as cash and

USD75mnfor itstrucks(exclusiverightsfordistributionofvehicles,sparesandservice)andbuses

(exclusiverights

for

service).

VOLVBs

trucks

in

India

are

largely

in

the

more

than

25

tonne

GVW

HCVcategory.

VECVisjointlymanagedbyVOLVBandEIM,withequalrepresentationontheBoard.

VOLVBacquired8.1%stakeinEIMatINR691.7/share.Asaresult,VOLVBsindirectholdinginVECV

increasedto50%.

Outsourcingbusinesshashugepotential

VECVissettingupanengineplantwithcapacityof85,000unitsataninvestmentofcINR4bn.Thisplant

is likely to manufacture engines of up to EuroVI emission standards to meet VOLVBs global

requirements.Asignificantpart (c80%)of theproductionwouldbeexported toVOLVB,whereas the

remainingislikelytobeusedforVECVsHCVs.

Freightoperator

profitabilityishigherfor

VECVtrucks.

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Automobiles 7

SourcingofenginesfromthisplantislikelytoreducetheenginecostforVOLVBsglobalbusiness.The

engineisthemostcriticalcomponentinaCVsuccessinthiscriticalengineprojectmayinduceVOLVB

toalsosourceotherlesscriticalautocomponentsfromVECV.

We have assumed production of 15,000 and 40,000 engines for 2013 and 2014, respectively. We

estimatetheenginebusinesstocontribute7%and6%ofEIMstotalincomeandEBITDA,respectively,

by2014f.

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Healthyorderbooklikelytosustainhighgrowthinmotorcycles

Thecompanyscruisermotorcyclescontinuetowitnessrobustdemand,despiteentryofnewmanufacturers.Thisison

accountof

unique

product

positioning,

wherein

cruiser

motorcycles

are

offered

at

aprice

significantly

below

peers.

Due

to this advantage, EIM has been witnessing long waiting periods of 89 months for its motorcycles. To meet these

pendingorders,thecompanyissettingupanewplant.Inlightofthehealthyorderbookandcapacityexpansions,we

estimatedomesticsalesvolumegrowthof26% inmotorcyclesover2012f2014f.WeestimateEBITDAmargins inthe

standalone business to increase from 12.1% in 2011 to 15.5% by 2014f, largely on account of positive operating

leverage.

Capacityexpansiontomeetdemand

EIMs Royal Enfield cruiser motorcycles used to dominate the above250cc category in motorcycles,

with100%marketshare.Themarketsharehasreducedduetoentryofplayers.Despiteentryofnew

players,thecompanycontinuestomaintainleadershippositionandreportsrobustgrowthduetothe

positioning

of

its

vehicles.

Exhibit6:Marketshareintheabove250cccategoryofmotorcycles(%)

2005 2006 2007 2008 2009 2010 2011

RoyalEnfield 100.0 100.0 100.0 100.0 100.0 100.0 82.7

Others 17.3

Source:SIAM

Thecompanyhasachieveduniqueproductpositioning,whereinit isabletooffercruisermotorcycles

atapricesignificantlybelowpeers.

Exhibit7:Pricecomparisonofcruisermotorcycles(INR)

Company Models Displacement (cc) Price(000)*

RoyalEnfield Bullet350UCE,Classic350,Classic500,Electra,Thunderbird 346499 100165

SuzukiMotorcycle

India

IntruderM800,

M1800R

805

1783 970

1,458

IndiaYamaha

Motor

MT01,VMAX 1,6701,679 1,1942,282

HarleyDavidson

MotorCompany

India

Classic,CVO,FatBoy,Iron883,NightRod,Nightster,RoadKing,

StreetBob,StreetGlide,SuperGlide,SuperLow,UltraClassic

ElectraGlide,XL883RRoadster,XR1200X

8831803 6504,208

Source:Industry Note:*OnroadpriceinMumbai

Asaresultof thispositioning,the company has beenwitnessingstrong demand for itsvehicles.The

currentwaitingperiodstandsat89months.Inlightofthestrongdemandandhealthyorderbook,EIM

is setting up a new plant at an investment of cINR1.6bn. The company is also working on de

bottleneckingandexpandingcapacitiesatitsexistingplant.

Thecompany

is

working

on

new

models

and

variants.

The

launches

of

Thunderbird

500cc

and

Caf

RacerarelikelybyJun12andJun13,respectively.

WeestimateaCAGRof26% indomesticsalesvolumesover2012f2014f,basedon thestrongorder

bookandtheestimatedrampupinproductioncapacities.

EBITDAmarginslikelytosignificantlyimproveby2014f

RoyalEnfieldmotorcyclesareinthepremiummotorcyclecategory,whereplayerssuchasBJAUTderive

EBITDAmargins inexcessof20%.EBITDAmarginsforEIMsmotorcyclebusinesshave improvedfrom

10.3% in2010to12.1%in2011.Thesemarginsare likelyto improveto15.5%by2014fasaresultof

positiveoperatingleverage.Also,costbenefitsarelikelytoaccruefrom2013fwiththecommissioning

ofthenewplant.

RoyalEnfieldcontinuesto

remainthemarketleader

inabove250cccategory

ofmotorcycles.

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Automobiles 10

Robusttotalincomegrowthof17%over2012f2014f

Total income is estimated to grow at a CAGR of 17% over 2012f2014f, largely on account of robust sales volume

growth.Domestic

motorcycle

sales

volumes

are

likely

to

grow

at

aCAGR

of

26%,

outpacing

the

CAGR

of

10%

in

CV

sales

volumes due to robust demand and a healthy order book. Robust total income growth is likely to lead to positive

operatingandfinancialleverage.EBITDAmarginsarelikelytoincreasefrom10.4%in2011to10.8%in2014f,largelyon

accountofpositiveoperatingleverage.Despitehigherdepreciationduetothelargecapex,PATisestimatedtogrowat

aCAGRof25%,outpacingEBITDAgrowth.

Strongsalesvolumegrowthinthestandalonebusiness,VECV

We estimate a CAGR of 10% in domestic CV sales volumes over 2012f2014f due to the growing

acceptanceofVECVsHCVsbyfreightoperators.

SalesvolumegrowthisestimatedtobehigherformotorcyclesincomparisontoCVs.Robustgrowthin

motorcyclesalesvolumesisonaccountofthehealthyorderbookandcapacityexpansion.Weestimate

domesticmotorcycle

sales

volumes

to

grow

at

aCAGR

of

26%

over

2012f

2014f.

Exhibit10:Estimatedsalesvolumeandtotalincomegrowth(%)

2011 2012f 2013f 2014f CAGRover2012f2014f

VECV(CVs,Engines,etc)

DomesticCVvolumes 45,935 50,529 55,581 61,139 10.0

ExportCVvolumes 3,108 3,263 3,753 4,316 11.6

TotalCVvolumes 49,043 53,792 59,334 65,455 10.1

Totalincome(INRmn) 50,451 59,901 68,117 78,542 15.9

Standalone(Motorcycles)

Domesticmotorcyclevolumes 71,756 80,708 104,830 142,950 25.8

Exportmotorcyclevolumes 3,563 4,293 5,170 7,050 25.5

Totalmotorcycle

volumes

75,319

85,000

110,000

150,000

25.8


Consolidated


Source:Company,SIAM,AvendusResearch

An increase in vehicle prices due to reduction of export incentives is unlikely to significantly impact

overall volumes in cargo CVs and motorcycles. EIMs focus on exports has been lower, as current

productioncapacityisbeingutilizedtomeetdomesticdemand.Thecompanyderived7.4%ofitssales

volumesfromexportsin2010,whichislowerthanthatforpeers.

We estimate consolidated total income to grow at a CAGR of 17% over 2012f2014f, on account of

robustsalesvolumegrowthinCVsandmotorcycles.

Costcutting,

operating

leverage

in

motorcycles

aid

EBITDA

margins

EIMs EBITDA margin is increasing, mainly due to the rising margins in the standalone (motorcycle)

business.

Exhibit11:TrendinEBITDAmargins

(%) 2011 2012f 2013f 2014f

Standalonebusiness(motorcycles) 12.1 12.6 14.5 15.5

VECV 10.2 10.1 10.1 10.0

Overall 10.4 10.3 10.6 10.8

Source:Company,AvendusResearch

The EBITDA margin in the standalone business improved from 10.3% in 2010 to 12.1% in 2011. The

EBITDAmargin

is

likely

to

increase

to

15.5%

by

2014f

on

account

of

positive

operating

leverage.

The

Salesvolumegrowthin

motorcyclesislikelytobe

higherthanCVsover

2012f2014f.

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Automobiles 11

contributionofthestandalonebusinesstooverallEBITDAisestimatedtoincreasefrom22.5%in2011

to32.1%by2014f.

EBITDA is estimated to grow at a CAGR of 19% over 2012f2014f, outpacing growth in total income

(CAGRof17%)overthesameperiod.

Exhibit12:EstimatedtotalincomeandEBITDA

(INRmn) 2011 2012f 2013f 2014f CAGRover2012f2014f

Totalincome 57,160 67,384 77,732 91,624 17.0

EBITDA 5,935 6,970 8,258 9,908 18.6


PATgrowthlikelytomarginallyoutpaceEBITDAgrowth

Thecompanyisworkingonalargecapexplan(morethanINR10bnby2014),whichinvolvessettingup

of new engine, busbody and motorcycle plants and capacity expansion at the existing CV plant. On

accountofthesecapexplans,weestimatehigherdepreciation.Despitethis,PATisestimatedtogrow

ataCAGR

of

25%

over

2012f

2014f,

outpacing

EBITDA

growth

(CAGR

of

19%).

Exhibit13:EstimatedEBITDAandPAT

(INRmn) 2011 2012f 2013f 2014f CAGRover2012f2014f

EBITDA 5,935 6,970 8,258 9,908 18.6

PAT 3,088 3,941 4,807 6,092 25.4


EBITDAisestimatedto

outpacegrowthintotal

incomeover2012f2014f.

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Automobiles 12

InitiatewithanAddratingandMar13pricetargetofINR1,918

EIM has outperformed the BSE Auto Index and the Nifty since announcement of the JV with VOLVB in Jul08. The

outperformancehas

also

been

in

line

with

fundamentalssales

volumes

for

motorcycles

and

CVs

grew

at

aCAGR

of

20.3%and25.8%,respectively,over20092011.WehaveusedtherelativevaluationmethodtovalueEIMsbusinesses.

We have valued EIMs standalone business and VECV stake at a 10% discount to the valuations of Hero MotoCorp

(HMCLIN,Hold)andAshokLeyland(AL IN,Buy),respectively.WehavetakenthemeanEV/EBITDAovertheprevious

cycleofthesecompaniesandprovidedadiscounttofactor inthedifference inbusinesssize.OurSOTPbasedMar13

targetforEIMstandsatINR1,918,whichprovidesa11%upside.InitiatewithanAddrating.Riskfactorsarehigherraw

materialcostsandfuelprices.

Strongoutperformanceinstockpriceduetorobustsalesgrowth

EIMhasoutperformedtheBSEAutoIndexandtheNiftybyahugemarginsinceannouncementofthe

JV with VOLVB. The outperformance has also been in line with fundamentalssales volumes for

motorcyclesand

CVs

grew

at

aCAGR

of

20.3%

and

25.8%,

respectively,

over

2009

2011.

Exhibit14:EIMsstockperformanceincomparisonwiththeBSEAutoIndexandtheNifty(%)

(%) 2008* 2009 2010 2011

EIM 13.6 178.8 88.5 20.5

BSEAutoIndex 33.6 204.2 37.6 20.4

Nifty 31.7 75.8 17.9 24.6

Source:Bloomberg Note:*SinceannouncementofJVwithVOLVBinJul08

Exhibit15:EIMsstockperformanceincomparisontotheBSEAutoIndexandtheNifty

0

600

1,200

1,800

2,400

Aug0 8 Dec08 Apr0 9 Aug09 Dec09 Apr10 Aug10 Dec10 Apr11 Aug11 Dec11

EIM Niftyre ba se d BSEAutorebased

Source:Bloomberg

Usingrelativevaluationstovaluethestandalonebusiness,VECV

WehavevaluedEIMsstandalonebusiness(motorcycles)at8.0xEV/EBITDA,whichisata10%discount

toHMCLspreviouscycles(Apr07Feb12)meanEV/EBITDAof8.8x.WeprovidethisdiscountasEIMis

smallerthanHMCLintermsofmotorcyclesalesvolumesandtotalincome.

Exhibit16:SizecomparisonbetweenHMCLandEIM

(FY11/2010) Salesvolumes Totalincome(INRmn)

HMCL 5,402,444 194,012

EIM* 52,574 4,427

Source:Company,SIAM,AvendusResearch Note:*YearendingDecember

However,EIMsestimatedgrowthinthestandalonebusiness(motorcycles)over2012f2014fishigher

thanthat

of

HMCLs

historical

(FY08

FY11)

growth

and

the

estimated

growth

(FY12f

FY14f).

Theoutperformanceof

EIMvisvistheNiftyand

BSEAutoIndexwasdueto

robustsalesvolume

growthover20092011.

WehavevaluedEIMs

standalonebusiness

(motorcycles)at8x

EV/EBITDA.

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Automobiles 13

Exhibit17:GrowthcomparisonbetweenHMCLandEIMsmotorcyclebusiness

(%) Totalincomegrowth EBITDAgr owth EPSgrowth

HMCL CAGRoverFY08FY11 18.3 22.2 23.7

HMCL

CAGRover

FY12f

FY14f

13.7

13.7 13.6

EIMsstandalonebusiness CAGRover2012f2014f* 17.0 18.6 25.4

Source:Company,AvendusResearch Note:*YearendingDecember

Exhibit18:HMCLsoneyearforwardrollingEV/EBITDA

4

7

10

13

16

Apr07 Mar08 Mar09 Mar10 Feb11 Feb12

1yrFwdEV/EBITDA AverageEV/EBITDA


We have valued VECV at 7.7x EV/EBITDA, which is at 10% discount to ALs previous cycles (Apr07

Feb12)meanEV/EBITDAof8.6x.Weprovidethisdiscounttofactorinthedifferenceinsize.

Exhibit19:SizecomparisonbetweenALandVECV

(FY11/2010) Salesvolumes Totalincome(INRmn)

AL

94,104

111,177VECV* 39,508 39,786

Source:SIAM,Bloomberg,AvendusResearch Note:*YearendingDecember

In terms of growth, VECVs estimated growth over 2012f2014f is higher than that of ALs historical

(FY08FY11)growthandestimated(FY12fFY14f)growth.

Exhibit20:GrowthcomparisonbetweenALandVECV

(%) Totalincomegrowth EBITDAgrowth EPSgrowth

AL CAGRoverFY08FY11 11.6 14.7 11.2

AL CAGRoverFY12fFY14f 13.2 9.2 8.9

VECV CAGRover2012f2014f 15.9 15.4 16.7


WehavevaluedVECVat

7.7xEV/EBITDA.

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Automobiles 14

Exhibit21:ALsoneyearforwardrollingEV/EBITDA

5

10

15

20

Apr07 Mar08 Mar09 Feb10 Feb11 Feb12

1

yr

Fwd

EV/EBITDA Average

EV/EBITDA

Source:Bloomberg,

Avendus

Research

ApplyingtheEV/EBITDAmultiplesof8.0xand7.7xtothestandalonebusinessandVECV,respectively,

wearriveatourMar13SOTPbasedtargetpriceofINR1,918.Thepotentialupsidestandsat11%.We

initiatecoveragewithanAddrating.

Exhibit22:SOTPvaluation

(INRmn) BasisofValuation(x) Enterprisevalue Netdebt Equityvalue

Standalonebusiness 8.0xEV/EBITDA 12,436 6,493 18,929

VECV* 7.7xEV/EBITDA 28,393 2,234 30,627

Enginebusiness* Bookvalue 2,176

Total 51,732

Persharevalue(INR) 1,918

Source:AvendusResearch Note:*ProportionateshareofEIMconsidered

AtourMar13TP,thestocktradesatanEV/EBITDAof8.2x.

Exhibit23:OneyearforwardrollingEV/EBITDAandEV/EBITDAattargetprice

10

0

10

20

Apr07 Feb08 Dec08 Oct09 Sep10 Jul11 May12 Mar13

1yrFwdEV/EBITDA Ta rgetEV/EBI TDA Ave ra geEV/EBITDA


Riskfactors

Rise in raw material prices: We have assumed stable raw material cost per vehicle over 2012f

2014f.Ifpricesofsteel,aluminumandrubber increase,thenthecompanysmarginsanddemand

arelikelytobeadverselyaffected.

Rise

in

fuel

prices:

Any

increase

in

fuel

prices

is

likely

to

lead

to

postponement

of

CV

purchases

by

freightoperators,asitnegativelyimpactstheirmargins.

Initiatecoveragewithan

AddratingwithaMar13

TPofINR1,918.

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Automobiles 15

Exhibit24:Sensitivityanalysis Impactonconsolidatedearningsonaccountof1%declinein:

(%) 2012f 2013f 2014f

CVsalesvolumes 0.9 0.8 0.7

Blendedrealizations

for

CVs

6.1

5.6

4.9

RawmaterialcostpervehicleforCVs 5.1 4.6 4.0

Source:AvendusResearch

Note:Sensitivityanalysishasnotbeencarriedoutformotorcycles,asthestrongorderbookprovidespricingpowerand

visibilityinsalesvolumes.

Exhibit25:RelativevaluationsasonFebruary22,2012

CMP Rating TargetPrice Upside PriceChange(%) P/E EV/E ROCE(%) ROE(%)

(INR) (INR) (%) 1m 3m 6m 2012f/

FY12f

2013f/

FY13f

2014f/

FY14f

2012f/

FY12f

2013f/

FY13f

2014f/

FY14f

2012f/

FY12f

2012f/

FY12f

AL 28 Buy 41 46 5.4 13.1 11.3 12.8 10.7 9.2 8.9 7.8 6.8 10.2 14.3

EIM* 1724 Add 1918 11 6.9 7.8 27.1 11.9 9.7 7.7 9.5 7.4 5.4 21.5 24.0

TTMT 268 Add 303 13 22.5 55.7 82.1 8.3 7.9 7.0 4.8 4.3 3.7 21.3 45.6

Source:Bloomberg,AvendusResearch Note:*YearendingDecember,ProportionateshareofEIMinVECVconsideredforratios

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Automobiles 16

Financialsandvaluations(consolidated)

Incomestatement(INRmn)Fiscal

year

ending 12/ 10 12/11 1 2/12f 12/13f 12/14f

Grosssal es 47,016 61,234 72,280 83,408 98,341

Less: Excise duty 3,046 4 ,459 5 ,263 6,073 7 ,161

Net sal es 43,971 56,775 67,017 77,335 91,180

Other operatingincome 242 385 367 397 443

Totaloperatinginco me 44,213 57,160 67,384 77,732 91,624

Totaloperatingexpenses 40,402 51,225 60,414 69,474 81,715

Net materi als 33,147 41,818 48,932 56,513 66,543

Other directcosts 1,504 1,784 2,244 2 ,451 2,828

Personnel 2,631 3,461 4,003 4,791 5,749

SG& A 2,851 3,749 4,716 5,151 5,942

R&D 269 413 519 567 654

EBITDA 3,811 5,935 6,970 8,258 9,908

Other income 1,034 1,383 2,111 2,644 3,320

Depreciat ion 573 640 957 1,199 1,244

EBIT 4,272 6,679 8,124 9,703 11,984Inter est 95 77 54 54 54

RecurringPB T 4,177 6,602 8,070 9,649 11,930

Net extraordinaryitems 0 0 0 0 0

PBT (reported) 4,177 6,602 8,070 9,649 11,930

Totaltaxes 1,108 1,628 1,972 2,332 2,841

PA T(r epor ted) 3,069 4,974 6,098 7,318 9,090

Add:Shareo fearningsofassociat e 0 0 0 0 0

Less: Minorityi nter est 1,179 1,886 2,157 2,511 2,997

Priorperiod items 0 0 0 0 0

Net income (reported) 1,889 3,088 3,941 4,807 6,092

Avendusneti ncome 1,889 3,088 3,941 4,807 6,092

Dividend+Distributiontax 346 503 638 845 1,174

Shares outstanding(mn) 27 27 27 27 27

Avendusdilutedshares(m n) 27 27 27 27 27

AvendusEPS (INR) 70 114 145 177 225

Growth ratios(%)Totaloperatingi ncome 49.5 29.3 17.9 15.4 17.9

EBITDA 137.2 55.7 17.4 18.5 20.0

EBIT 118.0 56.3 21.6 19.4 23.5

RecurringPB T 123.0 58.1 22.2 19.6 23.6

Avendusnet income 126.5 63.4 27.6 22.0 26.8

AvendusEPS 126.5 63.4 27.6 22.0 26.8

Operatingratios(%)EBITDAmargi n 8.6 10.4 10.3 10.6 10.8

EBIT mar gin 9.7 11.7 12.1 12.5 13.1

Net profitmarg in 4.2 5.3 5. 7 6.0 6.4

Other income/PBT 24.8 20.9 26.2 27.4 27.8

EffectiveTaxrate 26.5 24.7 24.4 24.2 23.8

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Automobiles 17

Balance sheet(INRmn)Fiscal yearending 12/ 10 12/11 1 2/12f 12/13f 12/14f

Equitycapital 269 270 270 270 270

Preferencecapital 0 0 0 0 0

Reservesandsurpl us 12,018 14,480 17,783 21,745 26,663

Net worth 12,287 14,750 18,053 22,015 26,933

Minority interest 6,774 8,377 10,533 13,044 16,042

Totaldebt 956 504 504 504 504

Deferredtax liability 249 645 645 645 645

Totalliabilit ies 20,267 2 4,275 2 9,734 36,207 4 4,123

Grossblock 8,113 13,025 17,893 20,385 21,958

less:Accumulated depreciati on 4,269 4,909 5,866 7,065 8,310

Net block 3,844 8 ,116 12,027 13,319 13,648

CW IP 669 875 998 373 300

Goodwill 0 0 0 0 0

Investments 4,586 5,126 5,126 5,126 5,126

Cash 12,457 11,973 13,583 19,699 27,736

Inventories 3,265 4 ,280 4,300 4,370 4 ,745

Debtors 2,609 3,434 3,543 3,661 3,833

Loansandadvances 2,169 3,814 3,886 3,955 4,076

less:Currentliabilities 7,942 11,846 12,097 12,459 13,174

less:Prov isions 1,391 1,497 1,632 1,839 2,168

Net workingcapital 11,168 10,157 11,583 17,389 25,049

Totalassets 20,267 24,275 29,734 36,207 44,123

Cashflowstatement(INRmn)Fiscal yearending 12/ 10 12/11 1 2/12f 12/13f 12/14f

Net pr ofit 1,889 3,088 3,941 4,807 6,092

Depreciat ion 573 640 957 1,199 1,244

Deferredtax 0 0 0 0 0

Working capital changes 726 527 185 311 377

Less: Otheri ncome 1,034 1,383 2,111 2,644 3,320

Cashflowfrom operations 2,154 2,871 2,972 3,672 4,393

Capitalexpenditure 1,222 5,118 4,992 1,867 1,500

Strategicinvestmentspur chased 0 0 0 0 0

Marketable investmentspurchased 1,644 540 0 0 0

Change inotherloansan dadvances 0 0 0 0 0

Goodwillpaid 0 0 0 0 0

Other income 1,034 1,383 2,111 2,644 3,320

Cashflowfrom investing 1,833 4,275 2,880 777 1,820

Equityraised 0 0 0 0 0

Change inborrowings 307 453 0 0 0

Dividendspaid(incl. tax) 346 503 638 845 1,174

Ot her s 1,094 2,160 2,157 2,511 2,997

Cashflowfrom financing 441 1,204 1,519 1,666 1,823

Net change incash 762 200 1,610 6,116 8,037

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Automobiles 18

KeyRatiosFiscalyearending 12/10 12/11 12/12f 12/13f 12/14f

Valuationratios(x)

P/E (on AvendusEPS) 24.8 15.2 11.9 9.7 7.7

P/E (on basic,reportedEPS) 24.6 15.1 11.8 9.7 7.6

P/CEPS 18.8 12.6 9.6 7.8 6.4

P/BV 3.8 3.2 2.6 2.1 1.7

Dividendyield(%) 0.6 0.9 1.2 1.6 2.2

Marketcap./FCF 49.9 20.7 23.0 25.8 16.1

Marketcap./Sal es 1.1 0. 8 0.7 0.6 0.5

EV/Sales 1.5 1. 2 1.0 0.8 0.6

EV/EBITDA 17.3 11. 2 9.5 7.4 5.4

EV/FCF 101.0 159.8 998.8 14.7 9.3

EV/TotalA ssets 3.0 2 .5 2 .1 1.6 1.2

Net Cash/ Marketcap. 36.6 36.7 40.1 53.3 70.5

Per shareratios(INR)

AvendusEPS 69.6 113.8 145.3 177.2 224.5

EPS(Basic,

r epor ted) 70.1 114.5 146.0 178.1 225.7

Cash EPS 91.6 137.4 180.5 221.3 270.4

Book Value 456.1 546.5 668.9 815.7 997.9

Dividendper shar e 11.0 16.0 20.3 26.8 37.3

ROE Decomposition(%)

EBIT margin 10.5 13.2 12.9 13.4 14.1

Assetturnover(x) 2.1 2. 3 2.3 2.2 2.2

Interestexpenserat io 0.5 0. 4 0.2 0.2 0.1

Taxretentionratio 75.5 78.4 77.0 77.4 77.9

RO A 16.2 24.1 22.5 22.7 23.8

Totalassets /equity(x) 1.1 1. 1 1.1 1.1 1.0

RO E 17.4 25.9 24.0 24.0 24.9

Returnratios(%)

EBIT /CapitalEmploy ed 22.4 30. 0 30.1 29.4 29.8

ROCE 15.6 21.5 22.7 22.9 23.9

RO IC 68.8 70.5 48.6 45.9 55.7

FC F/ IC 32.7 50.4 24.6 17.1 26.3

OCF/Sal es 4.9 5. 0 4.4 4.7 4.8

FC F/Sal es 2.1 3. 9 3.0 2.3 3.2

Turnoverratios(x)

Grosstur nover 5.4 4.4 3.8 3.8 4.2

Net tur nover 11.5 7.0 5.6 5.8 6.7

Revenue /IC 15.5 12.8 8.2 7.4 8.3

Inventory/Sales(days) 22.4 23.7 23.2 20.2 18.0

Receivables(days) 19.1 17.8 17.5 15.5 13.6

Payables(days) 79.0 86.5 89.8 79.5 69.9

Workingcapitalcycle (ex cash)(days) 11.4 13.1 13.8 13.8 13.7

Solvencyratios(x )

Grossdebttoequit y 0.4 0. 4 0.4 0.4 0.3

Net debttoequity 0.6 0. 4 0.3 0.4 0.5

Netdebt

to

EBITDA

3.1

1. 8

1.5

1.7

1.9

InterestCoverage(EBIT/ Interest) 43.1 88.6 145.5 176.4 222.0

Note:ProportionateshareofEIMinVECVJVconsideredforcalculationofratios

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Automobiles 19

AnalystCertification

Thefollowinganalyst(s) is(are)primarilyresponsibleforthisreportand,certifies(y)thattheopinion(s)onthesubjectcompany(ies)and itssecurity(ies)andanyotherviewsor

forecastsexpressedhereinaccuratelyreflecttheirpersonalview(s).Theyfurthercertifythatnopartoftheircompensation was,isorwillbedirectlyorindirectlyrelatedtothe

specificrecommendation(s)orviewscontainedinthisresearchreport:SriRaghunandhanNL

Disclosures

MeaningofAvendusSecuritiesPrivateLimitedsequityresearchratings

Theratingrepresentstheexpectedchangeinthepriceofthestockoverahorizonof12months.

Buy:morethan+20% Add:+10%to+20% Hold:10%to+10% Reduce:10%to20% Sell:lessthan20%

Proportionofratingsineachcategoryandinvestmentbankingrelationships

AttheendofDecember2011 Buy Add Hold Reduce Sell NR Total

Proportionofratingsineachcategory 32% 24% 29% 7% 0% 7% 100%

Proportionofcompaniestowhommaterialinvestmentbankingserviceswereofferedduringtheprevious12months 0% 13% 5% 0% 0% 20% 6%

Analystdisclosures

None of theanalysts involved in thepreparation of this researchreportoramemberof his/herhousehold isan officer, director or supervisory board memberof any of the

company(ies)that

is/are

the

subject

of

this

research

report.

None

of

the

analysts

involved

in

the

preparation

of

this

research

report

or

members

of

his/her

household

hold

any

financialinterestinthesecuritiesofthecompany(ies)thatis/arethesubjectofthisresearchreport.Noneoftheanalystsinvolvedinthepreparationofthisresearchreporthave

receivedorpurchasedsharesofthesubjectcompanypriortothepublicofferingofthoseshares

DisclosuresonpotentialconflictsofinterestforAvendusSecuritiesPrivateLimitedand/oritsassociatecompanies(Avendus)asonFebruary21,2012

Asontheabovementioneddate,theshareholdingsofAvendusdoesnotexceed5%ofthetotal issuedsharecapitalofEicherMotorsLimited(EIM).Avendusdoesnotholdany

otherfinancialinterestinEIMthatissignificantwithregardtotheresearchrecommendation. Asontheabovementioneddate,theshareholdingsofEIMdoesnotexceed5%ofthe

totalissuedsharecapitalofAvendus.Avendusisnotamarketmakerorliquidityproviderinthesecuritiesoftherelevantissuerorinanyrelatedderivatives.Avendushasnotbeen

aleadmanagerorcoleadmanagerofapubliclydisclosedofferofsecuritiesofEIMorinanyrelatedderivativesoverthepast12months.Overthepast12months,Avendushas

not been party to an agreement with EIM with regard to the provision of other investment banking services that do not entail the disclosure of any confidential commercial

information. Avendusisnotpartytoanagreementwiththesubjectcompany(ies)ofthisresearchreportwithregardtotheproductionofthisresearchreport.

Sharepricehistoryandratingchanges

Add,23Feb12,1918

800

1,200

1,600

2,000

Feb11 Apr11 Jun11 Jul11 Sep11 Nov11 Dec11 Feb12

EIM(Initiated onFeb23, 12) Rating,Date,TP(INR)

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Automobiles 20

Disclaimer

ThisdocumenthasbeenpreparedbyAvendusSecuritiesPrivateLimited(ASPL).Thisdocumentismeantfortheuseoftheintendedrecipientonly.Thoughdisseminationtoall

intendedrecipientsissimultaneous,notallintendedrecipientsmayreceivethisdocumentatthesametime.Thisdocumentisneitheranoffernorsolicitationforanoffertobuy

and/orsellanysecuritiesmentionedhereinand/orofficialconfirmationofanytransaction. Thisdocumentisprovidedforassistanceonlyandisnotintendedtobe,andmustnot

betakenas,thesolebasisforaninvestment decision.Theuserassumestheentireriskofanyusemadeofthisinformation. Eachrecipientofthisdocumentshouldmakesuch

investigationashedeemsnecessarytoarriveatanindependentevaluation,includingthemeritsandrisksinvolved,forinvestment inthesecuritiesreferredtointhisdocument

andshouldconsulthisownadvisorstodeterminethemeritsandrisksofsuchinvestment. Theinvestmentdiscussedorviewsexpressedmaynotbesuitableforallinvestors.This

documenthasbeenpreparedonthebasisofinformation obtainedfrompubliclyavailable,accessibleresources.ASPLhasnotindependently verifiedalltheinformationgivenin

thisdocument.Accordingly,norepresentationorwarranty,expressorimplied,ismadeastoaccuracy,completenessorfairnessoftheinformationandopinioncontainedinthis

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Thiscommunication isexemptfromthefinancialpromotionrestriction(inSection21oftheFinancialServicesAndMarketsAct,2000(FSMA))relatingtothecommunication ofan

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ASPLanditsaffiliatesmayhaveinterest/positions,financialorotherwise,inthecompaniesmentionedinthisdocument.Inordertoprovidecompletetransparencytoourclients,

wehaveincorporateddisclosuresaboutinterestsofanalystsandaboutpotentialconflictsofinterestofASPLanditsassociatecompaniesinthisdocument.Thisshould,however,

notbe

treated

as

an

endorsement

of

the

view

expressed

in

the

document.

ASPL

is

committed

to

providing

high

quality,

objective

and

unbiased

research

to

our

investors.

To

this

end,wehavepolicies inplaceto identify,considerandmanagepotentialconflictsofinterestandprotecttheintegrityofourrelationshipswith investingandcorporateclients.

Employeecompliancewiththesepoliciesismandatory. AnycommentorstatementmadehereinaresolelythoseoftheanalystanddonotnecessarilyreflectthoseofASPL.

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