>ATUL LIMITED (GEPL)

Atul Ltd is a totally integrated chemical company with manufacturing plants based at Valsad and Ankaleshwar in Gujarat. It operates through six business divisions, namely, Agrochemicals, Aromatics, Bulk Chemicals & Intermediates, Colors, Pharmaceuticals & Intermediates and Polymers. It is a part of Lalbhai Group of companies and has crossed the landmark of Rs. 1000 Cr turnover last year. It manufactures a range of chemicals products and caters to diversified user segments. Over the years, Atul Ltd had joint ventures with American Cyanamid Corp (1952), Imperial Chemical Industries plc (1955) and Ciba-Geigy Ltd (1960) namely, Cyanamid India Ltd, Atul Industries Ltd and Cibatul Ltd respectively.

FY 09 RESULTS
Atul Ltd came out with its full year results ending 31 March 09, with an increase in net sales by 16.5% y-o-y to Rs. 11.8 bn. The growth was mainly led by specialty chemicals which registered a healthy growth of 19% to Rs. 9.3 bn from Rs. 7.8 bn in FY08. The colors division registered a flat growth of 1.8% and stood at Rs. 3.2 bn as against Rs. 3.1 bn in F Y08.

Segment Revenues
The company achieved healthy EBITDA margins of 12.7%, up 570 bps from FY08. This was possible on account of lower input prices as compared to FY08 and is evident from the decline in raw material cost and cost of power and fuel. The raw material cost and cost of power and fuel as a percentage of net sales declined to 52% (as against 57% in FY08) and 9.4% (as against 10.6% in FY08) respectively. The absolute EBITDA excluding other income has more than doubled Rs. 1.4 bn as against Rs. 0.7 bn in FY08.

Interest expenses for FY09 rose by 25.3% y-o-y to Rs. 410 mn as compared to Rs. 327 mn in FY08. However the company has repaid some of it's debt, and currently has a net debt of Rs. 3.48 bn as against Rs. 4.28 bn in FY08. The Profit before tax from ordinary activities stood at Rs. 897.3 mn, an increase of 219% from Rs. 281.5 mn in FY08. However it reported forex losses to the tune of Rs. 440.4 mn as against a gain of Rs. 100.2 mn in FY08 which led to Profit before tax of Rs. 456.9 mn as against Rs. 381.7 mn in FY08. During the quarter the company had tax refund in respect of earlier years to the tune of Rs. 23 mn which inflated the profits to Rs. 378.7 mn as against Rs. 366.2 mn. The EPS for the year FY09 stood at Rs. 12.7 as against Rs. 12.3 in F Y 08.

Margins continue to remain at healthy levels
The uptrend in the commodity prices in the early of the year had put tremendous pressure on Atul's operating margins. It reported a very low operating margin of 4.3% for the quarter ended March 08. Since then Atul's has been consistently trying for higher pricing of its products from the clients and has been very successful in it. The efforts are now being realized with the rise in margins as shown in the chart. Secondly the recent cooling off of commodity prices is also driving the margin expansion.

To see full report: ATUL LIMITED

>STEEL SECTOR (GEPL)

Crude steel production in all major steel producing countries/continents declined 3% in the month of Apr -09 compared to Mar-09. However, the production was down by ~24% on YoY basis. Asia (mainly China and India) which produced highest steel in the month of Mar-09 since Oct-08 was 3% down in the months of Apr-09. Steel production in all major countries/continents declined by up to 8% on month-on-month (MoM) basis led by EU (-8.1%), China (-3.7%), India (-3.3%), CIS countries (-3.3%).

During Jan-Apr 09 period, the world crude steel production was down 22.7% YoY led by US (-53%), EU (-44%), CIS (-33%) and Japan (-43%). India reported only 1.6% fall in production whereas China produced flat during the same period.

Steel prices in all major markets were on uptrend in last one month except the US. Steel prices in China and India went up by ~16% and ~2% in last one month. On the contrary, steel price in US continued its downtrend and fell ~6%. Indian steel association urged the government to impose a safeguard duty of 25% on imported HR coil and other flat products due to higher imports. The government did not take any such measure due to lack of evidence.

Total steel inventory at Shanghai, China which was falling continuously, started moving up from the beginning of May-09. The rise in inventory level was mainly due to lower consumption of steel due to increase in steel prices in China.

China steel export was also down in the month of Apr-09 compared to Mar-09. According to China Iron and Steel Association (CISA), China steel export may fall by 80% in CY09 to 12 mt (Vs 60 mt in CY08) due to massive fall in steel demand from export markets due to global recession.

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>CHAMBAL FERTILISERS AND CHEMICALS LIMITED. (GEPL)

“Margins dip on inventory losses”

Chambal Fertiliser & Chemicals Ltd (CFCL) came out with its full year results ended 31st March 09 with a rise in net sales of 69% y-o-y to Rs. 45.95 bn as against Rs. 27.2 bn in FY08. The rise in the revenues was mainly led by the shipping division and traded goods segment. The shipping division saw a rise in revenues of 43% y-o-y to Rs. 4135 mn as against Rs. 2890 mn in FY08. The traded goods segment rose to Rs. 15.3 bn up by 351% y-o-y from Rs. 3.4 bn in FY08. On the consolidated front, net sales rose by 74.6% to Rs. 56.4 bn as against Rs. 32.1 bn in FY08. the rise was mainly on account higher sales of phosphoric acid from JV IMACID, which rose by 125% to Rs. 7.6 bn as against Rs. 3.3 bn in FY 08.

CFCL holds fertiliser bonds worth of Rs 3671.5 mn as on March 31, 2009. The company has so far booked MTM losses of Rs 281 mm. The debt on books st increased from Rs. 15 bn in March 08 to Rs. 21 bn as on 31 March 09, which resulted into a higher interest outgo of Rs. 1225 mn up by 33.4% y-o-y from Rs. 918 mn in FY08. The company reported profit after tax of Rs. 2305 mn in FY09 up by 13% y-o-y to Rs. 2038 mn in FY08. During the quarter ended June30, 2008, the company changed its accounting policy to adjust the forex fluctuation on borrowings towards acquisition of fixed assets, to the cost of fixed assets instead of adjusting it to P& L account as was followed during previous year. The current cash on hand stands at Rs. 7 bn. During the year quarter the company informed that Chambal Infrastructure Ventures Ltd, a wholly owned subsidiary
has divested its entire stake in its subsidiary Gulbarga cement Ltd to Zuari Industries Ltd.

Debottlenecking of Urea plant on track
Debottlenecking of Unit-I of the fertilizer plant of the company was completed in March 09. CFCL had to carry out plant shutdown for a period of about 36 days in the month of February and March 09 for the purpose of debottlenecking. Unit – II debottlenecking is currently under process and is expected to be completed by June 09. With this process CFCL would increase its production capacity by 25% and would be make itself eligible for the new urea policy which links the prices of Urea to Import parity price (IIP).

Shipping division continues to perform well
The shipping division continues to deliver good performance with healthy margins. The revenues
from the shipping division rose to Rs. 4135 mn up by 43% y-o-y from Rs. 2890 mn in FY08. The
company is into the Aframax segment and currently has a fleet of five tankers out of which three
tankers are double hull tankers. It has entered into Time Charter contract for three of its double hull tankers and therefore was uneffected from the slump in spot rates.

To see full report: CHAMBAL FERTILISERS

>ELECTION RESULTS - LOK SABHA (GEPL)

"Uncertainity out"

Post Election Leads/Result - Elect Your Sectors

The country has seen another reversal on the election results front which were forecasted by lot of sephologist who were basically indicating a terribly terribly hung parliament. The results are clearly indicating a mandate for UPA to run the government for next five years and that too without any clutches. This means UPA can accelerate the reform process with a human face with its team comprising of Mr. Manmohan Singh (Hon.. Prime Minister), Mr. Chidambaram (though currently trailling) (Hon.. Home Minister) and Mr. Montek Singh Ahluwalia (Chairman,.Planning Commission), who were the first to promote LPG (Liberalization, Privatization and Globalization). We expect the following sectors to be in limelight and attract faster liberalization steps which were opposed by LEFT, who have incidentally been left out in the race.

INFRASTRUCTURE: The government spending coupled with further stimulus to the economy shall attract more funds to infrastructure development programme.

POWER: The backbone of any economic growth cannot be completed without any government laying emphasis on the power sector. Further industrialization shall need more power and more UMPPs (Ultra Mega Power Plants). The concentration initially would be on Power ancillaries and equipment manufacturers.

INSURANCE: The almost clear majority and no hitches left for LEFT now. The reform in sector shall be put on faster accelerator.

RETAIL: Initially the government will probably go slow in further reforms in the sector,
keeping the social obligation in mind.

DIVESTMENT: The off balance sheet expenses and with almost majority in parliament, the
divestment of most profitable PSU's may take place at appropriate time and price. This
could attract investor latching on to PSU listed stocks.

BANKING: The banking / finance sector reforms would also be now taken up on priority basis. One could see consolidation in this sector particularly within the PSU banks themselves. However, there might be some legacy issues such as resistance from unions, branch overlap and different technological platforms which might make the merger of some PSU banks difficult. In case of private banks we believe RBI will be selective and allow acquisition of weak Indian banks only to begin with. We also expect voting rights of investors holding more than 10% in a banking company to be made proportional to their shareholding.

AGRICULTURE: In the last couple of years of UPA's last tenure, the focus was repeatedly harped on the agriculture reforms. One could expect some tinkering in the subsidies both directly and indirectly associated with the sector. We would like to highlight the fertilizer sector in particular.

EDUCATION: We think by the past experience that educating the Indian population or increasing the literacy rates in India shall become beneficial for any political party as the average age of an Indian citizen is between 25 -35 years. Thus the focus of UPA would also be on Education sector.

Though every thing looks rosy now but we certainly feel the economy has to go through serious consolidation phase both domestically and adjust to the international events that have taken place and their repercussions to Indian economy which is very much visible on export front, which have seen a drop of 33% in last couple of months. We would thus caution investors not to get carried away but be selective and have a systematic investment approach to create wealth.

To see full report: ELECTION RESULTS

>HDFC BANK (GEPL)

COMPANY PROFILE

HDFC Bank promoted by HDFC Ltd is amongst the first private sector banks that were permitted by the RBI, during the 'Reform Era' of early 1990's, to undertake banking
activities. The bank commenced operations in 1995. Currently it operates 1412 branches and
3295 ATMs in 528 cities and has an asset size of Rs 1833 bn at the end of March 31, 08 with
retail assets constituting 61% of the gross advances. HDFC bank completed the acquisition of Centurion Bank of Punjab (CBoP) in May 2008 by offering one share of its own for every 29 shares of CBoP. At the time of merger CBoP had a balance sheet size of Rs 254 bn, representing 20% of HDFC Bank.

Key Highlights of HDFC Bank Q4FY09 Conference Call:

· HDFC Bank Ltd's net profit for FY09 grew by 41.2% y-o-y to Rs 22.4bn mainly driven by the merger of Centurion Bank of Punjab which was effective from May 23, 2008, and a robust 42% y-o-y and 44% y-o-y growth in net interest income and non interest income to Rs 74.2bn and Rs 32.9bn respectively.

· In Q4FY09 the bank registered a 33.9% increase in its net profits to Rs 6.3 bn mainly due to higher non interest income which grew by 102% y-o-y to Rs 11.1bn due to robust growth in its fee based income and profit on sale of investments during the quarter.

· Operating profit grew by 37.5% y-o-y to Rs 51.8bn in FY 09 and by 44.3% y-o-y to Rs 15.7bn in Q4FY09.

· Net interest income expanded by 42% in FY 09 to Rs 74.2 bn mainly on account of a robust growth in advances by 48.3% to Rs 1002.3bn. Retail loans at Rs 611.5 bn were up by 55.5% over March 08 and now form 61% of gross advances. Net interest income in Q4FY09 declined by 6.4% q-oq to Rs 18.5bn despite a decrease in the cost of funds to 5.9% in Q4FY09
from 6.5% in Q3FY09. This was mainly on account of the cautious lending approach adopted by the bank in this scenario. The NIMs for FY 09 stood at 4.2% and going forward the management expects to maintain it at around 4%.

· Total deposits increased by 41.7% y-o-y to Rs 1428 bn at the end of March 08. The CASA deposits of the bank saw a revival in Q4FY09 and total CASA as % of total deposits stood at 44% at the end of March 09 as against 40% at the end of Dec 08.

· Non Interest Income registered a 102.9% y-o-y gain in Q4FY09 to Rs 11.1 bn due to a 45.8% increase in fee based income to Rs 7.1 bn, 153% growth in forex/derivative income to Rs 1.5bn and 2037% growth in profit on sale of investments to Rs 2.4 bn. Non interest income in FY 09 increased by 44.1% y-o-y to Rs 32.9bn.

· With the worsening economic environment starting to hurt the bank's SME and retail assets and slightly lower asset quality of CBoP, HDFC Bank has reported a 64 bps y-o-y and 8 bps q-o-q increase in gross NPA levels to 1.98% and 10 bps y-o-y increase in net NPA levels to 0.6%. With the bank's provisioning policies for Q4FY09 for specific loan loss provisions remaining higher than regulatory requirements its provision coverage stood at 68%.

To see full report: HDFC BANK