Ambit - Consumer Durables - July 2011

July 28, 2011
Consumer Durables

THEMATIC

Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit
Capital may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Please refer to disclaimer section on the last page for further important disclaimer.

Analyst contact
Vijay Chugh
Tel: +91 22 3043 3054
vijaychugh@ambitcapital.com
Shariq Merchant
Tel .: + +91 22 3043 3246
shariqmerchant@ambitcapital.com
Exhibit 1: Company Rankings based on
competitive advantages
Company Score
LG 35
Samsung 35
Sony 34
Godrej & Boyce 29
Whirpool 27
Videocon (Standalone) 27
Hitachi 23
IFB Industries 21
Symphony 20
Note: Above rankings are subjective and based on
our assessment and channel checks; Source: Ambit
Capital research
Exhibit 2: Indian Consumer Durables
Market Share as of FY10

Colour
TV
Refrige
rator
Washing
Machines
ACs
LG 28% 26% 26% 22%
Samsung 18% 19% 21% 17%
Videocon 24% 15% 15% NA
Whirpool NA 19% 16% NA
Mirc Elec. 11% NA NA 11%
Source: CRISIL, Ambit Capital research
Exhibit 3: India Consumer Durables
Sector Earnings Growth for FY06-11
1 Yr 3Yr 5Yr
Sales 35% 24% 23%
EBITDA 26% 20% 30%
PAT 26% 21% 29%
Note: Coverage universe comprises sample of listed
consumer durable companies; Source: Company,
Ambit Capital research

No Juicy Apple
Consumer Durables represents the biggest opportunity in the
Indian consumption space from a growth perspective and we
expect the Indian market to be amongst the top 10 durables
markets globally within a decade. Our analysis of current
demand trends also suggests that there has been no major
slowdown on account of macro-economic challenges. Similar to
other markets, companies in India have low pricing power,
single digit margins and the space is largely dominated by
North Asian companies. However, from an investment
perspective we find no suitable proxies as we believe North
Asian companies will retain the competitive edge over Indian
and other MNC counterparts.
The Consumer Durables category (excluding brown goods), in our opinion,
should significantly outpace overall consumption growth of 14% by more than
400bps and achieve a scale of US$130bn by 2020. Sales growth and EBITDA
growth for the sector in the past five years (FY06-11) was 24% and 31%
respectively.
The impact of macro-economic challenges on short-term demand trends has
been mixed as confirmed by our channel checks (dealers and manufacturers).
However it could get accentuated after the recent 50 bps move by Reserve
Bank of India (RBI). Demand trends for electronics, mobile phone and lifestyle
products have been fairly resilient. Television demand trends have been in line
but sales in the appliances division (air conditioner and refrigerator) has been
marginally below expectations to some extent also influenced by seasonal
factors (a short summer).
3D, Smartphones, Internet/Broadband, Touch and Nano Technologies are
some of the key mega trends in technology which in our opinion will drive
significant growth across various categories in India. Considering the
demographic profile of Indian consumer, adaptation to these technologies will
remain high, in our opinion, this will provide additional fillip to growth besides
higher penetration in tier 2 and tier 3 markets. These trends also imply that
growth opportunities, even in highly penetrated categories such as consumer
electronics (audio/visual) and mobile phones, will remain promising.
Bargaining power of buyers will remain high as we expect fragmentation to
continue. (After Korea, Japan, and to some extent, China will drive the next
round of fragmentation.) Based on available investment information, we
expect supply chain investments to significantly lag overall growth
requirements on account of infrastructural challenges and lower tariff barriers.
North Asian companies in our opinion enjoy significant competitive
advantages (innovation, brand equity, distribution and sourcing base) and
therefore proxy investing in these North Asian names, we believe, is the best
approach to the Indian Consumer Durables space. We prefer categories such
as Autos (Bajaj Auto), Brown Goods (TTK Prestige), Distribution (Redington)
and Retail (Titan) in the discretionary space from a long term investment
perspective. On a specific basis in the consumer durable category we are
negative on Videocon and Whirlpool from a long term perspective as they lag
their peers in sustainable competitive advantages.

Consumer Durables
Ambit Capital Pvt Ltd 2

The durables market has come of
age
The Consumer Durables market in India has come a long way over the last 20
years with entry of several multinational players especially those from North Asia.
Mobile Phones, Personal Computers (used for household consumption) and
Televisions are the largest component of the consumer durables space with
aggregate share of more than 80%. Microwaves have been the fastest growing
category in the consumer durables space (31% CAGR from FY04-FY11), albeit on
a low base. Mobile phones have grown at 24% CAGR over the same period and
have achieved 81% penetration in urban and 23% in rural areas.
Maximum rural penetration has been achieved by television (45%) and mobile
phone (23%) segments while air conditioner (2%), microwave (1%) and personal
computer (2%) categories are relatively underpenetrated. In urban areas, again
television (84%) and mobile phones (81%) have achieved maximum penetration
while air conditioners (15%), microwaves (11%) and personal computers (24%)
categories are relatively underpenetrated.
Samsung and LG are the dominant players across categories and have a
controlling market share across most categories where they are present. Both
companies see India forming a large part of their global revenue from current
levels of 7% for LG and 3.5% for Samsung. Amongst the Indian players, Godrej
and Videocon have significant presence in most categories.
Considering penetration and consumer purchase behaviour we expect microwaves
(35%), televisions (20%) and air conditioners (20%) to remain the fastest growing
segments over the next five years while mobile phones (11%) are expected to lag
in overall growth rates.
Exhibit 4: Industry mix
Industry
Size FY04
(Rsbn)
Size FY11
(Rs bn)
% CAGR
FY04-FY11
Rural
penetration %
Urban
penetration %
Key players
Growth %
FY12-FY16
Mobile phones 100 450 24 23 81
Nokia, Samsung, Spice,
Micromax, GFive
14
Television 85 220 15 45 84
LG, Samsung, Sony, Videocon,
Mirc Electronics
20
Personal
computers
(Household
consumption)
60 190 18 2 24 Dell, Acer, Sony, Lenovo, HP 18
Refrigerators 38 84 12 10 40
LG, Samsung, Godrej,
Videocon, Whirlpool
16
AC's 30 70 13 2 15
Samsung, Voltas, Carrier,
Bluestar, LG
20
Washing
machines
14 40 16 5 2
LG, Samsung, Whirlpool,
Godrej, Videocon
18
Microwaves 2 13 31 1 11
LG, Samsung, Godrej, Mirc
Electronics, Whirlpool
35
Note: Industry size includes effects of taxes and unorganised markets; Source: Ambit Capital research, Various market studies
Largest consumption opportunity in India with multiple growth
drivers
The Consumer durables opportunity in India is huge and we expect the sector to
be amongst the fastest growing sectors in the country. We estimate overall sector
size (including mobile phones) to be in the region of US$25bn and assuming a
CAGR of 18% over the next decade we expect the sector to exceed an overall value
of US$130bn. From available public sources the growth over past five years has
been in the region of 24% in sales and 30% in EBITDA.

Consumer Durables

Exhibit 5: Fastest growing consumption categories in India (Category size US$ bn)

Category
(2010)
Incremental net additions
(2010-2020)
Consumer durables (excluding brown goods) 25 105
Packaged foods 35 90
Processed dairy 11 29
Bottled water 2 10
Out of home(OOH) 2 8
Paints 3 8
Skin care 2 7
Personal care services 2 7
Juices 1 4
Cosmetics and deos 0.5 3.5
OTC pharma 0.1 2
Source: Ambit Capital research
Significant growth in per capita income and household income (high single digits)
has resulted in a continued shift in the spend towards the discretionary and
services category. On an aggregate basis we expect the share of staples to witness
a decline by nearly 10% over the next decade from 50% to 40%. Discretionary and
Services spend will witness an increase of a similar nature. This is the key
underlying trend in discretionary spending which is driving strong growth for the
consumer durables markets.
Exhibit 6: PFCE Trends and Composition
Segment 2005A 2010E 2015E 2020E
Staples 255 457 801 1,354
5-Year CAGR 12.4% 11.9% 11.1%
Discretionary 67 141 291 597
5-Year CAGR 15.9% 15.6% 15.5%
Services 146 310 667 1,401
5-Year CAGR 16.3% 16.6% 16.0%
PFCE Total 468 908 1,758 3,352
14.2% 14.1% 13.8%
Composition of PFCE
Staples 54.4% 50.3% 45.5% 40.4%
Discretionary 14.4% 15.5% 16.5% 17.8%
Services 31.2% 34.2% 37.9% 41.8%
Total 100% 100% 100% 100%

The demographic orientation of the society also suggests that the countrys
dependency ratios remain on a downtrend, and should further boost consumption
trends. The youth segment (10-24 age group) constituting nearly 25% of Indias
population is extremely aspirational and arguably the most significant influencer of
demand for the top three categories Mobile Phones, Television and PCs.

Consumer Durables

Exhibit 7: Improving income and demographic profile
800
1,300
1,800
2,300
2,800
3,300
3,800
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0
58
59
60
61
62
63
64
65
Per Capita Income % of population between 15-64 (RHS)

Although financing of durables is not very significant we believe availability of
good financing options will also drive overall growth particularly among income
households in the quintiles 3-5 (where Quintile 1 is the most affluent) and tier 2-3
markets. While the quarterly trends for credit growth in the consumer durables
industry have been very volatile, FY11 saw credit growth increase from Rs82.9bn
in March 2010 to Rs101.6bn in March 2011. This was in the wake of credit growth
declining from Rs.98bn in March 2008 to Rs.82bn in March 2009 and remaining
flat in March 2010. One of the largest lenders in the consumer durables segment,
Bajaj Finance, has grown its consumer durables loan book from Rs4.3bn in FY10
to Rs8.9bn in FY11.
Exhibit 8: Credit growth in the Consumer Durables industry
Date Amount (Rsbn) QoQ growth % YoY growth %
Sep-07 101.6 5.7 NA
Dec-07 100.8 -0.8 NA
Mar-08 98.0 -2.8 NA
Jun-08 89.0 -9.2 -7.5
Sep-08 89.7 0.8 -11.7
Dec-08 91.3 1.8 -9.4
Mar-09 81.9 -10.3 -16.4
Jun-09 77.8 -4.9 -12.5
Sep-09 80.8 3.8 -10.0
Dec-09 78.8 -2.4 -13.6
Mar-10 82.9 5.2 1.3
Jun-10 83.4 0.6 7.2
Sep-10 90.8 8.9 12.5
Dec-10 90.4 -0.5 14.7
Mar-11 101.6 12.4 22.4
Source: RBI, Ambit Capital research
Several Mega Technology Trends will provide an additional fillip to
long-term growth
In our opinion growth will get an additional fillip from several mega technology
(innovation) trends such as 3D, Smartphones, Internet/Broadband, Touch and
Nano Technologies. In the recent past color television, laptops and affordable
handsets were amongst the biggest drivers of penetration and replacement growth
in the consumer durable space. Considering the demographic profile of the Indian
consumer, adaptation to these technologies remains high. Importantly these
innovations also help drive growth in tier 2 and tier 3 markets.

Consumer Durables

Market leaders Samsung and LG have led the innovation agenda. While Samsung
has introduced the dual core processor in mobile phones, LG has launched a
magic motion remote for televisions. Samsungs new air wash technology for
washing machines, LGs linear compressors for more spacious refrigerators and
Hitachis self cleaning air conditioners are some of the new innovations in the
consumer durables space. Apple, with its path breaking iPad, has also redefined
the tablet computer market.
Exhibit 9: New innovations in the Consumer Durables space
Model Product Company Price point Innovative feature
Samsung
Galaxy SII
Smart phone Samsung 30,000
Amoled screen, dual core
processor
LG 47LW550T Television LG 130,000 Magic motion remote, 3D TV
WD8754CJZ
Washing
machine
Samsung 44,000 Air wash technology
Wonder Door Refrigerator LG 175,000
Linear compressor for more space,
Wonder Door
RAU517IRD
Air conditioner
(1.5T)
Hitachi 45,000 Self cleaning technology
iPad 2 Tablet PC 32,000
Touch screen, portability, battery
life
The TV industry has seen the innovation of LCD and LED TVs, which have become
significant drivers of growth for the industry driven by the shift from conventional
TVs to the LCD/LED TVs. According to CRISIL estimates, while conventional TVs are
expected to grow at 11% in the next five years, the LCD segment, already
constituting 40% of new TV sales, is expected to grow at 50% from FY11 to FY16.
The washing machine segment is witnessing a rise in demand for the fully
automatic variant, and is expected to grow at 20% from FY11 to FY16 according to
our channel checks, while the semi automatic variant is expected to grow at 12%
during the same period. Despite prices of the fully automatic machines being more
than twice that of the traditional model, they command nearly 34% of the market.
The refrigerator segment is witnessing a higher demand for frost free refrigerators
from the urban areas, while the rural areas see higher demand for direct cool
refrigerators. Being a penetration story, CRISIL expects the direct cool segment to
grow quicker at 17% in the next five years, as against 10% for the frost free
segment. Frost free refrigerators presently command a 34% market share.
The air conditioning market is witnessing a shift from window ACs to split ACs due
to lower noise levels, higher aesthetic value and narrowing price differential. Split
ACs have attained a majority market share of 53%. Split ACs, priced at a premium
of around 40% to traditional ACs, are expected to grow at 22% from FY11 to FY16
versus 12% for window ACs as per our discussions with our channel partners.
Smartphones have already captured almost 3% of the cell phone market despite
being priced at a minimum 200% premium to traditional phones. While the
traditional phones are expected to grow at 11%, driven more by replacement
demand, the upgrading of consumers to smartphones is expected to witness
volume growth of over 26% over the same period.
Laptops are a fast growing segment and already constitute 30% of sales. With the
narrowing price differential between laptops and desktops, consumer preference is
directed towards the laptop segment. Laptops are expected to grow at 26%
compared to 12% for desktops.

Consumer Durables

Exhibit 10: New innovation growth
Industry
Legacy
product
Technological
innovation
Average pricing premium
in new product %
Volume share of
new product %
Growth of legacy
product %
Growth of new
product %
Colour TV CRT LCD/LED 150 40 11 50
Washing
Machine
Semi
Automatic
Fully Automatic 120 34 12 20
Refrigerators Direct Cool Frost free 50 28 17 10
Air
Conditioners
Window AC Split AC 40 53 12 22
Mobile
Phones
Traditional
phones
Smartphones 200 3 11 26
Personal
Computers
Desktop
Computers
Laptops 30 30 12 26
Source: CRISIL, various market reports, Ambit Capital research
Impact of Macro-Economic Challenges on short term demand trends
has been limited
Whilst the recent IIP consumer durables growth numbers have been somewhat
disappointing (4% in April, 2011 v/s 14% in April 2010), correlation between
industry growth figures and the IIP consumer durables volume growth has been
rather weak historically. For instance, while the IIP data indicated that consumer
durables grew 26% in FY07 and 33% in FY08, the industry reported growth of 13%
in FY07 and 15% in FY08. Similarly, while the IIP indicated only 14% volume
growth for FY11, the industry reported growth of 29%.
Our channel checks with manufacturers, dealers and retailers have also indicated
that demand continues to be robust and the near term outlook remains positive.
Demand trends for electronics, mobile phone and lifestyle products have been
fairly resilient. Television demand trends have been in line but sales in the
appliances division (air conditioner and refrigerator) has been marginally below
expectations, to some extent also influenced by the shorter summer this year.
Based on revenue growth numbers from the industry as well as our channel
checks, we are of the opinion that there has been no significant retracement of
demand.
In our opinion the differences in trends, to some extent, can be explained by data
points which may be outdated (such as conventional and LCD/LED television sets),
and data sources which could be limited. In particular, the IIP data, possibly
excludes data from foreign manufacturers such as LG and Samsung who are now
the key constituents of the market.
Our primary data sources suggest that key segments such as television are
witnessing good uptrading trends (LCD/LED TVs) and there are no major discounts
being offered by manufacturers. However, these trends could change with the
recent aggressive move by the RBI to raise interest rates.
Exhibit 11: Comparison of industry growth v/s IIP Consumer Durables growth
(%) FY2007 FY2008 FY2009 FY2010 FY2011
Industry 13 15 12 27 29
IIP Consumer Durables 26 33 12 19 14
Competitive advantages matter a great deal considering the
fragmented nature of the industry
Similar to durables markets in other countries, the market in India also remains
extremely competitive and fragmented. Manufacturers enjoy limited pricing power
and the product cycle tends to be short. After the Koreans, we expect the next
round of fragmentation to be led, by the Japanese and Chinese players.
Building and sustaining competitive advantages in a fragmented market such as
India is critical to maintaining a meaningful and profitable presence. In our

Consumer Durables

opinion some of the key areas of competitive advantages in the sector are product
portfolio and innovation track record, brand equity, distribution franchise and
supply chain capabilities.
As markets in India are extremely heterogeneous, companies with wide product
portfolio capabilities tend to gain higher customer acceptance. Growth rates have
varied significantly across categories and diversity in product mix reduces
dependence on growth dynamics of particular category. Also, the Indian
consumer is as aspirational as his counterparts in other developed markets;
therefore companies must be contemporary and innovative with technologies.
Brand equity tends to influence purchase decision a great deal in the Indian
consumer durables space; therefore it is a source of significant competitive
advantages. In order to retain this advantage, companies constantly engage in
brand building efforts primarily through the medium of television and the media.
In a me too market, brand equity is an important indicator of loyalty and ability
to charge some premium versus competition. Brand equity in our opinion is also
an important driver of higher marketshare trend which ensures a stable
relationship and better control over distribution channels.
Markets in India are extremely heterogeneous therefore a wide distribution
franchise decreases any geographical risk which could arise from changes in
customer preferences. It is also improves companys capability to introduce
multiple products and is critical in launching new products. A wide network is also
helpful in improving brand profile and bargaining power with trade.
Pricing power in the industry is usually low; therefore a low cost structure and an
efficient supply chain is critical to maintaining healthy profitability trends and
reasonable return on capital. An efficient supply chain significantly enhances the
pricing ability of the company and helps in achieving better operating rates during
slowdown.
We have ranked the various industry players on the basis of their competitive
advantages after considering the aforesaid mentioned factors. Korean companies
LG and Samsung emerge as the strongest followed by Videocon and
Whirlpool. Domestic players trail their foreign counterparts on overall and specific
rankings.
Exhibit 12: Companywise rankings on competitive advantage (marks out of 10 for each category)*
Rank Company
Product portfolio
& innovation
Brand
equity
Distribution
franchise
Supply chain
capabilities
Total
1 LG 10 9 8 8 35
2 Samsung 10 9 8 8 35
3 Sony 9 9 8 8 34
4 Godrej & Boyce 7 8 7 7 29
5 Whirpool 7 7 6 7 27
6
Videocon
(Standalone)
7 6 7 7 27
8 Hitachi 7 5 5 7 24
9 IFB Industries 6 4 6 6 22
10 Symphony 6 3 6 6 21
Source: Ambit Capital research, *Above rankings are subjective and based on our assessment and channel checks

Consumer Durables

Exhibit 13: Product mix of various players
(%)
Colour
TV
Refrigerators
Air
conditioners
Washing
machines
Others Total
LG 30 17 17 7 29 100
Samsung 32 18 11 7 32 100
Videocon 56 NA 7 NA 37 100
Whirlpool 0 64 7 18 11 100
Mirc Electronics 51 0 17 7 25 100
Exhibit 14: Market shares
(%) Colour TV Refrigerators Washing machines Air conditioners
LG 28 26 26 22
Samsung 18 19 21 17
Videocon 24 15 15 NA
Whirpool NA 19 16 NA
Mirc Electronics 11 NA NA 11
Total 81 79 78 50
Supply Chain investments in India will lag overall growth
Although the domestic market in India will exceed several other markets in Asia
(such as Korea and Thailand) in size, we expect these countries to continue to be
important sourcing bases. Infrastructure challenges and low tariff barriers arising
out of free trade agreements imply that imports in areas of electronic components
will continue to remain high. The investment plans of various Indian players in the
industry also suggest that these players are likely to satisfy demand in the mass
category. Most mid- and premium categories in the consumer durables segment
will continue to have high dependence on imports. In order to boost the domestic
production base, the Government will have to support the scaling up of several
basic components such as semi-conductors, specialized plastics and panels.
Amongst the players that have so far committed substantial investments into the
country are Videocon (Rs16bn), LG (Rs13bn) and Panasonic (Rs10bn).
Exhibit 15: Expected investments by leading companies
Company Investment (Rsbn)
Videocon 16
LG 15
Panasonic 10
Samsung 4.5
Havells 2
Godrej 1
Mirc Electronics 0.6
Voltas 0.4
Bajaj Electricals 0.25
Blue Star 0.21
Source: Business Standard, Business Line, Ambit Capital research
Distribution getting more organized
The Consumer Durables industry, in common with other consumption categories,
has a high dependence on hundreds of distributors and thousands of store
owners. This is changing rapidly as we see emergence of several regional (Vijay
Sales, Vivek) and pan India players (Croma, EZone and Next). In our opinion this

Consumer Durables

organized distribution infrastructure can serve as an important growth catalyst. The
Consumers experience at most of these new outlets is superior and we believe this
element can play a critical role in driving premiumisation across the industry.
Companies are also stepping up their penetration and distribution foray by setting
up exclusive brand outlets. All players have plans to increase distribution reach by
setting up similar outlets to aid margins as well as visibility. LG currently has the
largest network with 1,200 exclusive outlets.
Exhibit 16: Modern retailing in electronics (stores)
Current Planned by FY12
Retailers
Next* 600 750
Viveks 44 94
Croma 63 72
Ezone 47 NA
Vijay Sales 38 NA
Exclusive brand outlet rollouts
Videocon 1000+ 3000
LG 1200 2000
Sony 800 1500
Samsung 300 450
Panasonic 116 200
Whirlpool 70 150
Mirc Electronics 0 30
Note: *based on FY14 guidance; Source: Whirlpool annual report, mydigitalfc.com, indiaretialing.com,
company websites, Ambit Capital research

Consumer Durables

Porters Analysis
Exhibit 17: Porter's 5 Forces

Although topline growth is expected to remain buoyant considering that the Indian
Consumer enjoys a high degree of bargaining power, we expect improvement in
margins and return on capital/equity to be capped.

Bargaining power of buyers (HIGH)
Large number of brands across
categories and segments at attractive
price points. Almost a buyers market
Threat of substitutes (HIGH)
Many local brands in competition
with each other at aggressive
price points on similar products
Chinese imports and Private
Labels from retailers also serve
as substitutes
Competitive rivalry (HIGH)
Number of well established
players with increasing A & P
budgets
Narrow product differentiation
amongst top players
Bargaining power of suppliers (MEDIUM)
All manufacturers are significantly dependent
on imports. However the vendor base is
reasonably large. Indian manufacturers
importing goods generally have at least 2-3
international vendors
Threat of new entrants (MEDIUM)
Nearly all MNC players already have a
meaningful presence in India. J apanese
and Chinese players are looking to
expand their scope of operations and
this could lead to some more
fragmentation
Low-end categories may see new
players. Lag effect in replicating
technology by local players (LCD,LED)
New entrants will have to invest in
brand development and distribution
Bargaining power of buyers (HIGH)
Large number of brands across
categories and segments at attractive
price points. Almost a buyers market
Threat of substitutes (HIGH)
Many local brands in competition
with each other at aggressive
price points on similar products
Chinese imports and Private
Labels from retailers also serve
as substitutes
Competitive rivalry (HIGH)
Number of well established
players with increasing A & P
budgets
Narrow product differentiation
amongst top players
Bargaining power of suppliers (MEDIUM)
All manufacturers are significantly dependent
on imports. However the vendor base is
reasonably large. Indian manufacturers
importing goods generally have at least 2-3
international vendors
Threat of new entrants (MEDIUM)
Nearly all MNC players already have a
meaningful presence in India. J apanese
and Chinese players are looking to
expand their scope of operations and
this could lead to some more
fragmentation
Low-end categories may see new
players. Lag effect in replicating
technology by local players (LCD,LED)
New entrants will have to invest in
brand development and distribution

Consumer Durables

Financial Analysis
Expect healthy topline growth trends to sustain - Sales in the consumer
durable space have grown at a median of 24% from FY06 to FY11 in our Indian
company sample. While most companies have delivered double digit growth on
the topline, LG grew slower at 14% CAGR. The best performers were Symphony
61% CAGR over FY06-FY11 and Samsung India 32% CAGR over FY06-FY10. In
EBITDA, Samsung India with 68% CAGR (FY06-FY10) and Whirlpool India with
59% CAGR (FY06-FY11), beat the median of 31%, while LG India growing slower
at 8% CAGR was a laggard during the period.
Globally, the space has seen moderate growth with a median of only 5% from
CY05 to CY10. Apple and HTC were the top performing companies with sales
growth of 36.2% CAGR and 31.2% CAGR respectively over the period. Panasonic
and Dell were stark underperformers, with CAGRs of -0.3% and 1.5% respectively.
In EBITDA, Apple and HTC were the top performers with 61% growth CAGR and
29% CAGR respectively from CY05 to CY10, against a median of 0%. LG
Electronics and American music equipment manufacturer, Harman International
were the underperformers with sales decline of 23% CAGR and 14% CAGR
respectively during the period.
Considering our industry growth forecast and track record for the past five years
we expect the industry to maintain a growth rate of more than 20%. We expect
market leaders such as Samsung and LG to report growth in line with industry.
Some of the other smaller players could have a mixed track record and overall we
expect them to underperform the leaders.
Exhibit 18: Sales and EBITDA growth in India from FY06-
FY11
Whirpool Samsung*
Symphony
IFB Industries
Videocon (Standalone)
LG* Hitachi
MIRC Electronics

Sales growth (20%)
EBITDA
growth (25%)

Note: *Figures up to FY10; Source: Ambit Capital research
Exhibit 19: Sales, EBITDA growth globally from CY05-
CY10
Sharp Apple
Canon HP
Electrolux Whirlpool
Gome Electrical
Toshiba
HTC
Dell Nokia
Harman International
Panasonic
Sony
LG Electronics
Sales growth (5%)
EBITDA
growth (0%)

Operating Margin growth could lag topline growth. On comparing EBITDA
margins across the industry, we find that the foreign players with scale (except
Whirlpool, 9%) operate on lower margins whereas some of the smaller players
such as Symphony (30%) and IFB Industries (11%) have margins significantly
higher than the median of 7%. Globally, Apple (30%) and Cannon (18%) have the
best margin profile whereas LG (2%) and Sony (6%) have a poor margin profile.
On the Advertising and promotion spends front, the industry has averaged around
4.7% of sales from FY07 to FY11, while it stood at 4.5% in 2011. Hitachi has
traditionally had a high advertising spend at an average of 6.5% of sales, while
Videocon has been more conservative at 1.3% of sales.
In the medium term, for domestic players we do not expect any significant margin
improvements, given the high input cost pressures and competitive intensity. The
introduction of GST and moderation in commodity costs could help margin trends
over the longer term. On an aggregate basis we expect the industry to deliver
operating growth of about 15%-20% which is about 10 percentage points lower
than the growth rate witnessed in the past five years.

Consumer Durables

Exhibit 20: Advertising & Promotion as % of Sales
Company FY07 FY08 FY09 FY10 FY11
Videocon (Standalone)* 1.4% 1.2% 1.3% NA NA
Whirpool 2.9% 2.9% 3.1% 3.4% 3.3%
MIRC Electronics 4.7% 4.3% 3.6% 5.0% 4.8%
Hitachi 7.4% 7.0% 6.0% 7.8% 4.3%
Symphony 7.3% 6.7% 5.0% 3.5% NA
IFB Industries 5.3% 5.8% 4.1% 4.9% 4.7%
Median
5.0% 5.1% 3.8% 4.9% 4.5%

Exhibit 21: Sales and EBITDA margins in India for FY11
LG* Whirpool
Samsung* Videocon (Standalone)
Hitachi Symphony*
MIRC Electronics IFB Industries
Sales (US$500mn)
EBITDA margin (7%)

Note: *Figures for FY10; Source: Ambit Capital research
Exhibit 22: Sales and EBITDA margins globally for CY10
Panasonic Apple
Dell HP
Sony Nokia
Toshiba
Whirlpool Canon
Gome Electrical Electrolux
Harman International Sharp
LG Electronics HTC
EBITDA margin (9%)
Sales (US$50bn)
Net Margin trends and growth will be moderate. For the period FY06-FY10
median net earnings growth for the industry was 34%, Samsung India reported a
CAGR of 110% and Whirlpool India had a CAGR of 73%. Videocon Industries was
a laggard growing at 12%. If net margin performance were to be considered,
Symphony (19%) and IFB Industries (7%) enjoyed the best margins, while LG
Electronics (3%) and Samsung India (3%) had lower margins.
Globally, median earnings performance was negative 4% for the period CY05 to
CY10 (understandable, given recessionary conditions). Apple with 60% CAGR and
HP with 30% CAGR were the best performers while Sharp and Dell performed
poorly with profits falling by 42% and 14% CAGR respectively over the period. In
net margins, Apple (21%) and HTC (14%) came up leaders while Panasonic (-1%)
and Sony (-1%) were laggards.
In line with operating margin trends, we expect net margins in India also to remain
under pressure largely on account of variable costs. On an aggregate basis we
expect net earnings growth to be in the region of 15%-20%, which is nearly 10
percentage points below the growth seen in the past five years.
Exhibit 23: Net income growth, India, FY06-FY11
Symphony
LG IFB Industries
Samsung Whirpool
Hitachi Videocon (standalone)
MIRC Electronics
Net Margins (5%)
Net income
growth (15%)

Note: *Figures up to FY10; Source: Ambit Capital research
Exhibit 24: Net income growth globally from CY06-CY11
LG Electronics Apple
Whirlpool HP
Electrolux Gome Electronics
HTC
Dell Nokia
Panasonic Harman International
Sharp Canon
Sony
Toshiba
Net Margins (4%)
Net income
growth (-4%)


Consumer Durables

Valuation and Recommendation
Durable Index Performance is in line with the broad index but has
underperformed the FMCG index. The Indian Consumer Durable space has
limited proxies and on an aggregate basis the performance of these companies
has been somewhat lacklustre. Over the last six years performance of the Ambit
Consumer Durables Index has largely been in line with the BSE Small Cap and
BSE200 indices (average annual return of approx 14%). However, our Consumer
Durables Index has underperformed the Nifty and BSE FMCG indices that have
delivered higher returns (16% and 22% respectively).
Exhibit 25: Ambit Consumer Durables index v/s BSE
Small Cap index
100
150
200
250
300
350
400
450
500
J
a
n
-
0
5
M
a
y
-
0
5
S
e
p
-
0
5
J
a
n
-
0
6
M
a
y
-
0
6
S
e
p
-
0
6
J
a
n
-
0
7
M
a
y
-
0
7
S
e
p
-
0
7
J
a
n
-
0
8
M
a
y
-
0
8
S
e
p
-
0
8
J
a
n
-
0
9
M
a
y
-
0
9
S
e
p
-
0
9
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
BSE Small Cap Ambit Consumer Durables Index

Source: Bloomberg, Ambit Capital research
Exhibit 26: Ambit Consumer Durables index v/s BSE 200
index
100
150
200
250
300
350
400
450
500
J
a
n
-
0
5
M
a
y
-
0
5
S
e
p
-
0
5
J
a
n
-
0
6
M
a
y
-
0
6
S
e
p
-
0
6
J
a
n
-
0
7
M
a
y
-
0
7
S
e
p
-
0
7
J
a
n
-
0
8
M
a
y
-
0
8
S
e
p
-
0
8
J
a
n
-
0
9
M
a
y
-
0
9
S
e
p
-
0
9
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
Ambit Consumer Durables Index BSE 200


Exhibit 27: Ambit Consumer Durables index v/s BSE
FMCG index
100
150
200
250
300
350
400
450
500
J
a
n
-
0
5
J
u
l
-
0
5
J
a
n
-
0
6
J
u
l
-
0
6
J
a
n
-
0
7
J
u
l
-
0
7
J
a
n
-
0
8
J
u
l
-
0
8
J
a
n
-
0
9
J
u
l
-
0
9
J
a
n
-
1
0
J
u
l
-
1
0
J
a
n
-
1
1
J
u
l
-
1
1
BSE FMCG Ambit Consumer Durables Index

Exhibit 28: Ambit Consumer Durables index v/s NIFTY
index
100
150
200
250
300
350
400
450
500
J
a
n
-
0
5
M
a
y
-
0
5
S
e
p
-
0
5
J
a
n
-
0
6
M
a
y
-
0
6
S
e
p
-
0
6
J
a
n
-
0
7
M
a
y
-
0
7
S
e
p
-
0
7
J
a
n
-
0
8
M
a
y
-
0
8
S
e
p
-
0
8
J
a
n
-
0
9
M
a
y
-
0
9
S
e
p
-
0
9
J
a
n
-
1
0
M
a
y
-
1
0
S
e
p
-
1
0
J
a
n
-
1
1
M
a
y
-
1
1
Nifty Ambit Consumer Durables Index


Stock price performance. Although long term (3-year and 5-year) performance
of the domestic durables companies has been encouraging, the emergence of
macro-economic challenges has resulted in underperformance in the short term.
Symphony and Whirlpool have been the best outperformers amongst their
domestic peers whereas Videocon has significantly underperformed.

Consumer Durables

Exhibit 29: Absolute and relative returns (%)
Absolute returns Relative returns (NIFTY)
3M 1Yr 3Yr 5Yr 3M 1Yr 3Yr 5Yr
Indian companies
Symphony (22) 125 236 161 (18) 119 205 130
IFB Industries 5 10 63 50 11 8 48 32
Videocon 3 (9) (11) (13) 8 (12) (19) (23)
MIRC Electronics (12) (13) 15 13 (11) (18) 4 (1)
Whirpool (18) (17) 71 58 (14) (19) 55 39
Hitachi (11) (40) 14 25 (7) (42) 3 10
International companies
HTC (17) 102 36 26 (16) 82 23 11
HP 4 78 8 22 9 74 (2) 8
Apple 15 53 35 45 21 50 23 28
Harman International (11) 43 2 (10) (6) 40 (8) (21)
Gome Electrical 34 38 11 19 39 34 1 5
Dell 9 25 (10) (5) 15 23 (18) (16)
Canon 5 14 (6) (4) 9 8 (15) (15)
Toshiba (1) (8) (17) (10) 4 (11) (25) (21)
Whirlpool (19) (15) 2 1 (15) (19) (7) (11)
Panasonic (5) (18) (24) (16) (0) (20) (31) (26)
Sony (14) (19) (22) (16) (9) (21) (29) (26)
LG Electronics (20) (19) (8) 10 (16) (21) (17) (3)
Sharp (2) (24) (21) (16) 3 (27) (28) (26)
Electrolux (21) (22) 21 9 (17) (27) 10 (4)
Nokia (31) (41) (36) (21) (32) (46) (42) (30)
Note: Dividends are assumed to be reinvested; Source: Bloomberg, Ambit Capital research

Relative valuation
Indian Consumer Durable valuations have seen significant improvement since
March 2009 coinciding with the rally in the broad market. Most stocks are
currently trading at a premium to their historical median over the past five years.
In our opinion, these valuations fairly reflect the improvement seen in operating
performance over the last five years. On an EV/EBITDA basis, median multiples for
Indian durable stocks are approximately 9x, which is nearly twice the international
average. Symphony trades at a premium to the sector reflecting its above-average
growth performance whereas Videocon and IFB trade at a discount.
Apple, HTC and LG trade at a premium amongst international companies whereas
Nokia, Electrolux and Whirlpool (which have been facing a slowdown in their
home markets and stiff competition from North Asian companies in international
markets) are trading at a discount.

Consumer Durables

Exhibit 30: Comparative tables for Indian companies for FY12
Company
Mcap
(US$mn)
EV/EBITDA
P/E
(x)
EV/Sales
(x)
Earnings CAGR (%)
FY06-11
Videocon
+
1,321 6.9 9 1.6 12
Whirpool 662 8.3 11 1.1 73
Symphony
#
200 10.4 17 2.2 156
IFB^ 131 4.9 8 0.8 9
Hitachi* 105 10.8 16 0.8 15
Mirc Electronics* 71 8.9 11 0.3 -13
Note:*Figures based on FY11A,
#
figures based on year ending June10 and CAGR from FY07-10,
+
figures
pertain to 12 months ending September 2010; ^CAGR from FY07-11; Source: Bloomberg, Ambit Capital
research
Exhibit 31: Comparative tables for CY11
Company
Mcap
(US$mn)
EV/EBITDA
P/E
(x)
EV/Sales
(x)
Earnings CAGR
(%) FY06-11
Apple 373,998 9.5 14.8
2.6 60
HP 77,719 4.6 7.4
2.7 30
Canon 66,449 6.6 19.2
1.1 -4
Dell 32,278 4.5 9.0
0.4 -14
HTC 28,810 9.1 11.6
1.1 NA
Panasonic 28,801 6.3 69.8
0.4 NA
Sony 26,332 3.1 23.8
0.2 28
Toshiba 22,421 5.3 12.3
0.4 NA
Nokia 21,718 8.3 28.6
0.3 -11
LG Electronics 11,533 11.4 13.0
0.3 12
Sharp 10,309 5.1 1,820.7
0.5 -42
Gome Electrical 7,943 12.9 19.5 0.6 37
Electrolux 6,097 5.0 10.5 0.4 19
Whirlpool 5,472 4.6 6.2 0.4 8
Harman International 3,139 8.3 20.9
0.7 -7
Note: NA indicates loss incurred; Source: Bloomberg, Ambit Capital research
Investment Implications
Listed Indian and MNC names such as Videocon and Whirlpool have seen
significant improvement in performance over the last five years supported by
general buoyancy, moderation in indirect taxes and improved supply chain
capabilities. In the short term we expect twin challenges of inflation and higher
interest rate could have significant impact on demand and cost dynamics.
Therefore we do not envisage any significant improvement in operating
performance from current levels and this in our opinion will negatively impact their
stock price performance. Also on valuations most stocks are trading above their
median valuations and this too does not augur well for outperformance.
Over longer term we expect North Asian Companies will continue to enjoy
significant competitive advantages (product portfolio and innovation, brand equity,
distribution and supply chain base) and therefore proxy investing in our opinion is
likely the best approach to the Indian Consumer Durables space. We also prefer
Autos, Brown Goods, Distribution and Retailing as categories for investment from a
long term perspective in the discretionary space. In the Auto space, our top pick is
Bajaj Auto. In brown goods, we prefer TTK Prestige and in retail and distribution
our best picks are Titan Industries and Redington India.
Some of the listed Indian and MNC names in our opinion are engaged in
significantly improving their portfolio, brand equity and sourcing capabilities.

Consumer Durables

Although these efforts are laudable we do not expect any meaningful change in
their competitive advantage position vis a vis their North Asian peers. We are
negative on Videocon and Whirlpool even from from a long- term perspective, as
they lag in market share and the previously mentioned sources of sustainable
competitive advantages.
Exhibit 32: International Players in India (US$ bn)
Company Global Sales Asia Sales India Sales
India as %
of sales
Position in
Indian Market
Nokia 58.7 22.9 3.9 6.6% 1
Samsung
(Electronics)
103.6 69.4 3.54 3.4% 2
LG 49.4 21.9 2.91 5.9% 1
Sony 89.1 49.1 1.27 1.4% 4
Suzuki 26.8 18.7 6.24 23.3% 1
Unilever 58.7 23.5 3.9 6.6% 1
Colgate 15.6 3.0 0.44 2.8% 1
Reckitt Benckiser 13.5 2.6 0.44 3.3% 1
Note: Data refers to CY10 for Global and Asia Sales and FY10 for Indian Sales; Source: Bloomberg,
Company, Ambit Capital research

Exhibit 33: Valuations in the discretionary space
Recomme Mcap P/E EV/EBITDA EPS Growth (%)
ndation CMP (US$mn) FY12E FY13E FY12E FY13E FY12E FY13E
Auto
Maruti Suzuki SELL 1206 7,922 14.4 13.2 7.8 6.3 2.7 9.3
Tata Motors BUY 957 11,705 6.0 5.2 3.9 3.4 13.5 15.8
Hero Honda SELL 1802 8,179 16.7 14.1 16.2 12.9 7.1 18.5
Bajaj Auto BUY 1434 9,431 14.2 12.6 10.0 9.0 11.7 13.0
Brown Goods
TTK Prestige
NOT
RATED
3054 784 29.3 22.7 19.5 15.0 41.0 28.8
Distribution
Redington BUY 98 883 13.6 10.8 7.2 5.9 27.5 25.4
Retail
Pantaloon SELL 342 1,564 20.6 15.5 8.1 7.1 31.1 32.5
Shoppers Stop
NOT
RATED
433 809 44.2 32.3 21.3 15.9 77.4 36.9
Titan Industries BUY 225 4,533 28.3 22.8 19.7 15.1 31.5 24.3

Exhibit 34: Indian companies key ratios for FY11 (%)
Company EBITDA margin Net profit margin RoA RoE
Videocon
+
18.8 4.9 2.4 7
Whirpool 9.4 6.1 13.1 55
Symphony 30.1 19.4 39.0 54
IFB 10.6 7.6 14.8 27
Hitachi* 7.3 3.8 5.5 18
MIRC Electronics* 7.5 1.5 3.6 11
Median 10.0 5.5 9.3 23
Note:
#
figures based on year ending June10,
+
figures pertain to 12 months ending September 2010; Source:
Bloomberg, Ambit Capital research

Consumer Durables

Exhibit 35: Foreign companies key ratios for CY10
Company EBITDA margin Net profit margin RoA RoE
Apple 29.8 21.5 22.8 35
HP 14.1 7.0 7.3 24
Canon 17.9 6.7 6.3 9
Dell 7.2 4.3 7.3 42
Panasonic 7.7 0.9 0.9 3
Sony 7.3 (3.6) (2.0) (9)
HTC 16.2 14.2 25.6 57
Toshiba 7.8 2.2 2.5 16
Nokia 9.0 4.4 4.9 13
LG Electronics 2.5 2.2 3.8 9
Sharp 11.6 0.6 0.7 3
Gome Electrical 4.9 3.9 5.5 15
Electrolux 9.2 3.8 5.5 26
Whirlpool 8.9 3.4 4.0 19
Harman International 6.7 4.7 6.3 6
Median 8.9 3.9 5.5 15.3
Major Players
Samsung India Electronics
Televisions and mobile phones are the main revenue drivers for Samsung India.
The share of Television sales in total revenues has reduced from its peak of 33% in
FY07 to 28% in FY09. Sales of IT and other products increased from 35% to 42%
over the same period, primarily driven by mobile phones.
The company has guided for revenue of Rs.220bn in the current year, an increase
of 40% from the previous year. The management expects 50% of revenue to be
derived from mobile and IT products.
Exhibit 36: FY09 Revenue breakup for Samsung India
Monitors, IT
Products &
Others, 42
Washing
Machines, 6
Air Conditioners,
8
Refrigerators,
15
Colour
Television, 28

LG Electronics
While Monitors, IT products and televisions form the bulk of revenue for LG India,
the refrigerator and air conditioners division also makes a substantial contribution
to turnover, higher than its competitor Samsung. The proportion of refrigerators
have risen from 16% in FY06 to 20% in FY09, while televisions and air

Consumer Durables

conditioners have fallen from 36% and 17% in FY06 to 30% and 13% in FY09
respectively.
The company has indicated that it will invest a further Rs.15bn in the current year,
of which Rs.8bn would be towards capacity expansion and India specific R&D, and
Rs.7bn in marketing and enhancing brand visibility. The company also plans to
increase its exclusive brand outlets from the present 375. The company is targeting
a turnover of Rs.200bn in 2011 from the Rs.160bn posted in 2010.
Exhibit 37: FY09 Revenue breakup for LG Electronics
Monitors, IT Products
& Others, 30
Washing Machines,
7
Air Conditioners,
13
Refrigerators, 20
Colour Television,
30

Whirlpool of India
Whilst the proportion of refrigerators in total sales has remained fairly constant at
63% of sales, the proportion of washing machines has increased from 16% in FY06
to 19% in FY10. The proportion of air conditioning sales have also increased from
3% to 7% over the same period. During FY11, the company has posted volume
growth of 65% for air conditioners, 24% for washing machines and 21% for
microwave ovens.
With Whirlpool India being one of the two fastest growing markets for Whirlpool
Corporation, the management is focused on developing the Indian market by
driving penetration levels. The company has also set up 70 exclusive outlets as
part of its expansion program.
Exhibit 38: FY10 Revenue breakup for Whirlpool of India
Others, 11
Air Conditioners,
7
Washing
Machines, 19
Refrigerators,
63

Videocon
The contribution of television sales to turnover has increased from 52% in FY06 to
56% in FY09, while the crude and natural gas division turnover has reduced from
19% to 11% of sales over the same period.

Consumer Durables

Exhibit 39: FY09 Revenue breakup
Others, 26
Crude oil &
Natural gas, 11
Air Conditioners,
7
Television & sub
assemblies, 56

Note: The company follows a September year end; Source: CRISIL, Ambit Capital research
Mirc Electronics
The colour television space continues to remain the areas of focus for the company
forming almost half of all sales. However, the proportion of turnover from
televisions has reduced from 68% in FY06 to 49% in FY10. The biggest beneficiary
has been the air conditioning segment which has risen from 7% of turnover to 19%
of turnover over the same period.
They hold a 4% market share in the LCD segment currently and a 12% share in the
colour TV space.
Exhibit 40: FY10 Revenue breakup
Colour
Televisions, 49
Washing
Machines, 6
Air Conditioners,
19
DVD, TV
Components &
Others, 26


Consumer Durables

Annexures
Television
The Television (TV) industry, a significant part of the consumer durables pie, clocks
sales of over 12mn units annually. Volumes have grown at a CAGR of 6% over
FY05 to FY10. Overall growth has, however, been led by a better mix with
maximum growth seen in LCD and LED products .
Exhibit 41: Television sales growth
-
2
4
6
8
10
12
14
2005-06 2006-07 2007-08 2008-09 2009-10
70,000
80,000
90,000
100,000
110,000
120,000
130,000
Volume (mn) Value

The share of the traditional CRTs has fallen from 96% of total TV sales in FY07 to
76% in FY10. The share of CRT is expected to drop further to 24% by FY13 while
LCDs are expected to command a share of 75% by FY13. Plasmas are expected to
hold the balance 1% stake. This analysis excludes Tamil Nadu governments
initiative to procure 5mn TV sets for free distribution.
Exhibit 42: Television market share
Market Segment
0
20
40
60
80
100
2007 2008 2009 2010 2011E 2012E 2013E
CRT LCD Plasma

Source: CEAMA, Ambit Capital research
An improved mix of LCD TVs has enabled companies to improve margins despite
higher input costs. LCD TVs delivered 6.9% margins in FY11, while flat colour TVs
(FCTV) and conventional colour TVs (CCTV) delivered 4.5% and 2.5% respectively.
Overall margins have increased from 4.8% in FY07 to 5.6% in FY11. They are
likely to be maintained in FY12.

Consumer Durables

Exhibit 43: Segment wise profitability margins
1.5%
2.5%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
CCTV FCTV LCD Overall

We expect volume growth of 10% in urban areas largely on account of
replacement demand whereas rural demand is expected to increase at 11% arising
from higher penetration. Currently, replacement demand accounts for around 42%
of total CTV demand.
Whilst LG and Samsung are the largest players in the FCTV as well as the high-end
TV market, the third spot is occupied by Videocon for FCTV and Sony in the higher
end segment. The change in market shares are driven essentially by innovation of
newer technologies, distribution channels and availability at attractive price points.
Exhibit 44: Player-wise volumes
Volumes ('000)
2500
1400
2300
3100
3700
0
500
1000
1500
2000
2500
3000
3500
4000
LG Videocon
Group
Samsung Onida Others

Source: ADI Media, Ambit Capital research
New Innovations
Smart TVs that have been recently launched enable the user to access an internet
browser and enable sharing of data through the television. It also enables the user
to make video calls. Samsung, LG and Sony have launched a line of smart TVs.

Consumer Durables

Refrigerators
The Rs65bn refrigerator industry has grown volumes at 12% CAGR from 3.6mn
units in FY06 to 5.6mn units in FY10. The market is highly concentrated with
Godrej, LG, Samsung, Videocon and Whirlpool commanding 97% of the market.
Exhibit 45: Refrigerator sales growth
0
1000
2000
3000
4000
5000
6000
2005-06 2006-07 2007-08 2008-09 2009-10
30,000
35,000
40,000
45,000
50,000
55,000
60,000
65,000
Volume ('000) Value (RHS)

The market, segmented into the low end direct cool and high end frost free
refrigerators, is slowly moving towards frost free segment, which currently
commands around 20% of total sales.
Exhibit 46: Sales volumes for refrigerator manufacturers
Sale Volumes
123
318
620
17.2
340
1258
1215
2000
181
1060
0
500
1000
1500
2000
2500
Videocon Whirlpool LG Haier Godrej
Frost Free Direct Cool ('000 units)

While frost-free refrigerators historically have enjoyed higher margins than direct
cool refrigerators, margins are expected to converge this year. Overall profitability
margins have fallen from 6% in FY07 to 4.9% in FY11 and are expected to be
4.5% in FY12.

Consumer Durables

Exhibit 47: Segmentwise profitability
Segment wise profitability
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Direct cool Frost free Overall

The market shares are fairly evenly distributed amongst the leading players with
LG being the largest with 26% share, followed by Whirlpool and Samsung at 19%.
While Samsung has been the highest gainer of market share from 15% in FY07 to
19% in FY10, Whirpool has lost most share from 25% in FY07 to 19% in FY10. The
market is still highly under penetrated with only 40% urban penetration and 10%
rural penetration.
Exhibit 48: Refrigerator market shares
1
6
11
16
21
26
LG Samsung Videocon Godrej Whirlpool Others
2006-07 2007-08 2008-09 2009-10

Note: Videocon Brands includes Videocon, Sansui, Akai, Hyundai, Kenstar & Toshiba; Source: CRISIL, Ambit
Capital research
New Innovations
Innovations in the refrigerator space include energy saving, efficient storage, less
noise, quick freezing and LED touch dispensers.
Washing Machines
The washing machine market in India is a highly under penetrated market with
only 25% of the urban population using washing machines and less than 5% of the
rural population. The market currently valued around Rs.32bn is likely to see
growth driven essentially by penetration in both urban and rural areas.

Consumer Durables

Exhibit 49: Washing machine sales growth
0
1000
2000
3000
4000
5000
6000
2005 2006 2007 2008 2009 2010 2011
10%
15%
20%
25%
30%
35%
40%
Washing Machines % Growth

The washing machines market segregated mainly into semi-automatic and fully
automatic categories. Both categories have grown significantly, with semi
automatic washing machines growing from 1.2mn units in FY06 to 3.2mn units in
FY11 at 22% CAGR and fully automatic washing machines growing from 0.5mn
units in FY06 to 1.8mn units in FY11 at 29% CAGR. Fully automatic machines are
expected to continue to grow faster than semi automatic machines, especially in
urban areas.
While LG, Samsung and Videocon are market leaders in the overall washing
machine market, the fully automatic segment sees only LG and Samsung as
meaningful players.
Exhibit 50: Player wise sales volumes
Sale Volumes ('000 units)
270
150
937
236
463
675
90
50
423
40
344
75
0
200
400
600
800
1000
Godrej Haier LG Onida Samsung Videocon
Semi Automatic Fully Automatic

The washing machine manufacturers continue to focus on the urban markets, as
incremental absolute growth continues to be driven by the urban areas.
Minimal penetration has been achieved in the rural markets, with urban
penetration numbers also quite dismal.

Consumer Durables

Exhibit 51: Washing machine market penetration
Market Penetration
4
1
2 2
5
15
13
10
0
2
4
6
8
10
12
14
16
Haier LG Onida Videocon
Rural Urban

Margins for both the fully automatic as well as semi automatic segment have come
off in the past few years from 6.2% in FY07 to 4.9% in FY11 for fully automatic
and 4.8% in FY07 to 3.8% in FY11 for semi automatic machines. Overall margins
have dropped from 5.4% to 4.4% over the same period and are expected to drop
to 4% in FY12.
Exhibit 52: Segment wise profitability
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Fully Automatic Semi Automatic Overall

LG continues to dominate market with 26% share. Samsung has increased share
from 16% in FY07 to 21% in FY10. Videocon has lost share from 18% in FY07 to
15% in FY10, along with other smaller players.
Exhibit 53: Market Shares
0
5
10
15
20
25
30
LG Samsung IFB Videocon* Godrej Whirlpool Others
2006-07 2007-08 2008-09 2009-10

Note: Videocon Brands includes Videocon, Sansui, Akai, Hyundai, Kenstar & Toshiba; Source: CRISIL, Ambit
Capital research
New Innovations

Consumer Durables

New innovations in the washing machine space include air washes using hot air
and blowers, lower water consumption, voltage controllers, quick washes and
automatic load detectors for the appropriate washing method.
Air Conditioners
The Rs.55bn air conditioning market in India is estimated to be one of the fastest
growing segment within consumer durable markets. Underpentration favourable
and favourable weather conditions are the key underlying drivers of growth for the
Indian air conditioning industry. On account of short summer industry sales growth
could see a bit of moderation in FY12 however the long term growth outlook of
the segment remains intact. India produced almost 4mn units in 2011 compared
to 3.25mn units in 2010, a growth of 23%. Globally, 2009 saw a production of
73.8mn units of room air conditioners, with China selling 28.2mn units, USA
11.8mn units, Europe 4.9mn units, Japan 7.4mn units and the rest of Asia 9.9mn
units.
Exhibit 54: Air conditioner sales volumes
Sales Volumes ('000 units)
84
40
30
190
63
280
156
170
37
310
162
500
0
100
200
300
400
500
600
Videocon Onida Whirpool Samsung Godrej LG
Window Split

Penetration in urban market stands at 15% whereas in rural areas it is less than
2%. In International Markets Air Conditioners have penetration in excess of 40%
with 97% in Japan, 90% in France, 45% in Spain and 40% in Italy.
Exhibit 55: Air conditioning market penetration
Market penetration
0.0%
0.5%
3.0%
0.5% 0.5%
3.0% 3.0%
0.0%
2.0%
1.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Godrej LG Onida Videocon Whirlpool
Rural Urban

Split ACs dominate the industry forming almost 65% of sales, with the market
slowly trending towards split ACs from the conventional window ACs due to higher
aesthetic appeal, narrowing price differential and lesser noise produced. On the
market segmentation front, most manufacturers see around 80% of sales from
urban areas.

Consumer Durables

Exhibit 56: Market segments
Market Segment
80
72
100
80
20 20 0
22
0
20
40
60
80
100
120
Videocon Onida Godrej LG
Urban Rural

Split AC margins have fallen from 8.6% in FY07 to 7.2% in FY11 while window AC
margins have fallen from 4.8% in FY07 to 3.7% in FY11. They are expected to
further decline to 6.9% and 3.5% respectively in FY12. Overall industry margins
have declined from 9% in FY07 to 6.1% in FY11 and are expected to fall to 5.8% in
FY12.
Exhibit 57: Segment wise profitability
3%
4%
5%
6%
7%
8%
9%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Split ACs Window ACs Overall

LG, Samsung and Voltas continue to be the largest players with LG being the
largest player in the market with 22% share.
Exhibit 58: Air conditioning industry market shares
Market Shares
Others, 34%
LG, 22%
Samsung,
17%
Voltas, 16%
Mirc
Electronics,
11%

Source: Adi Media, Company, Ambit Capital research

New Innovations

Consumer Durables

New innovations in the air conditioning space include using smart inverters to save
electricity, auto cleaning evaporator coils, turbo cooling to the set temperature and
high density filters for cleaner air.
Mobile Phones
India is now the second largest mobile handset market in the world after China.
The market is expected to rise from 120mn handsets currently to 208mn handsets
by 2016, growing at a CAGR of 11.4% annually. As of 2010, there were 68
players in the mobile phone market, expected to rise to 200 next year.
The smartphone market currently accounts for 2.5% of total handset sales.
However, they form close to 10% of the industry turnover. Sale of smart phones
are expected to rise from 2.9mn units currently to 29.4mn units by 2016, growing
at a CAGR of 26% annually.
The total mobile phone market in India is pegged at Rs. 300bn. Around 50% of
Indians currently use utra low cost handsets, while only a small percentage use
smart phones.
The replacement market currently accounts for around 70% of total handset sales
in India. Sales of replaced handsets are expected to increase 15% annually.
Nokia, Samsung, Spice, Micromax, GFive are the largest players in the market in
terms of number of handsets sold. Globally, Nokia, Apple and RIM (Blackberry)
were the largest players in 2010, with Nokia losing share over 2009 while
Samsung and HTC gained share.
Exhibit 59: Global smartphone market share
Vendor 2010 Units 2010 Market Share 2009 Units 2009 Market Share YoY Growth
Nokia 100.3 33% 67.7 39% 48%
RIM 48.8 16% 35 20% 41%
Apple 47.5 16% 25.1 15% 89%
Samsung 23 8% 5.5 3% 318%
HTC 21.5 7% 8.1 5% 165%
Others 61.5 20% 32.6 19% 89%
302.6 100% 173.5 100% 74%
Source: Plugged.in, Ambit Capital research
New Innovations
The launch of smartphones with dual core processors, graphic processing units,
light weight, abundant memory and 24/7 connectivity have changed the way
phones are used. Rapid developments in operating systems such as the android,
iOS and Blackberry OS have also improved the interface significantly.

Consumer Durables

Appendix 1
Exhibit 60: Foreign Consumer Durables companies (US$mn)
CY05 CY06 CY07 CY08 CY09 CY10 % CAGR
Sales 13,931 19,315 24,578 37,491 42,905 65,225 36.2
EBITDA 1,822 2,678 4,734 8,823 12,474 19,412 60.5
EBITDA margin 13.1% 13.9% 19.3% 23.5% 29.1% 29.8%
Depreciation 179 225 327 179 734 1,027
Interest - - - - - -
PBT 1,808 2,818 5,006 1,808 12,066 18,540 59.3
Apple
PAT 1,328 1,989 3,495 6,119 8,235 14,013 60.2
Sales 49,205 55,788 57,420 61,133 61,101 52,902 1.5
EBITDA 4,588 4,776 3,541 4,130 3,961 3,024 -8.0
EBITDA margin 9.3% 8.6% 6.2% 6.8% 6.5% 5.7%
Depreciation 334 394 471 334 769 852
Interest 16 29 45 16 93 160
PBT 4,445 4,608 3,345 4,445 3,324 2,024 -14.6
Dell
PAT 3,043 3,602 2,583 2,947 2,478 1,433 -14.0
Sales 86,696 91,658 104,286 118,364 114,552 126,033 7.8
EBITDA 7,304 9,123 12,001 14,185 15,798 17,736 19.4
EBITDA margin 8.4% 10.0% 11.5% 12.0% 13.8% 14.1%
Depreciation 2,344 2,353 2,705 2,344 4,773 4,820
Interest 334 336 531 334 585 505
PBT 3,543 7,191 9,177 3,543 9,415 10,974 25.4
HP
PAT 2,398 6,198 7,264 8,329 7,660 8,761 29.6
Sales 3,031 3,248 3,551 4,113 2,855 3,364 2.1
EBITDA 470 537 521 337 59 226 -13.6
EBITDA margin 15.5% 16.5% 14.7% 8.2% 2.1% 6.7%
Depreciation 119 130 127 119 146 128
Interest 11 13 10 11 21 30
PBT 335 376 382 335 (529) 49 -31.9
Harman
International
PAT 233 255 314 108 (432) 159 -7.4
Sales 42,541 51,664 69,991 74,589 57,150 56,310 5.8
EBITDA 6,658 7,685 12,599 9,680 5,423 5,096 -5.2
EBITDA margin 15.7% 14.9% 18.0% 13.0% 9.5% 9.0%
Depreciation 886 895 1,653 886 2,488 2,349
Interest 22 28 59 22 339 337
PBT 6,185 7,190 11,334 6,185 1,341 2,369 -17.5
Nokia
PAT 4,499 5,410 9,877 5,866 1,242 2,454 -11.4
Sales 34,144 35,744 38,089 39,715 34,340 42,346 4.4
EBITDA 7,358 8,335 9,336 8,123 5,698 7,582 0.6
EBITDA margin 21.5% 23.3% 24.5% 20.5% 16.6% 17.9%
Depreciation 2,055 2,255 2,904 2,055 3,375 3,155
Interest 16 19 13 16 4 22
PBT 5,566 6,184 6,531 5,566 2,347 4,488 -4.2
Canon
PAT 3,493 3,915 4,151 2,999 1,409 2,817 -4.2
Sales 81,141 78,667 77,918 79,625 77,590 79,994 -0.3
EBITDA 5,903 6,401 6,649 7,375 4,373 5,270 -2.2
EBITDA margin 7.3% 8.1% 8.5% 9.3% 5.6% 6.6%
Depreciation 3,031 2,737 2,718 3,031 3,645 3,216
Interest 213 192 179 213 194 277
PBT 2,231 2,835 3,766 2,231 (3,662) (311) NA
Panasonic
PAT 545 1,366 1,858 2,475 (3,786) (1,116) NA
Sales 23,651 24,739 26,757 30,008 28,449 29,719 4.7
EBITDA 2,983 3,097 3,381 3,945 2,494 3,411 2.7
EBITDA margin 12.6% 12.5% 12.6% 13.1% 8.8% 11.5%
Depreciation 1,577 1,649 1,785 1,577 3,049 2,852
Interest 53 57 66 53 91 84
PBT 1,194 1,238 1,354 1,194 (2,040) 66 -43.9
Sharp
PAT 716 784 870 895 (1,257) 47 -41.9

Consumer Durables

Foreign Consumer Durables companies (US$mn) (contd.)
CY05 CY06 CY07 CY08 CY09 CY10 % CAGR
Sales 66,670 66,428 70,968 77,891 77,235 77,794 3.1
EBITDA 4,533 5,380 4,036 7,046 1,775 4,343 -0.9
EBITDA margin 6.8% 8.1% 5.7% 9.0% 2.3% 5.6%
Depreciation 3,472 3,377 3,422 3,472 4,051 4,001
Interest 229 256 233 229 244 243
PBT 1,734 2,649 1,546 1,734 (1,748) 290 -30.1
Sony
PAT 1,526 1,093 1,081 3,244 (989) (440) NA
Sales 54,346 56,106 60,879 67,326 66,490 68,817 4.8
EBITDA 3,689 4,377 4,716 5,428 995 4,488 4.0
EBITDA margin 6.8% 7.8% 7.7% 8.1% 1.5% 6.5%
Depreciation 2,248 2,248 2,505 2,248 3,495 3,224
Interest 203 218 273 203 337 385
PBT 1,036 1,576 2,553 1,036 (2,790) 269 -23.6
Toshiba
PAT 429 692 1,176 1,119 (3,433) (213) NA
Sales 43,406 48,550 57,498 58,620 43,732 48,239 2.1
EBITDA 4,472 3,903 7,316 7,163 3,388 1,192 -23.2
EBITDA margin 10.3% 8.0% 12.7% 12.2% 7.7% 2.5%
Depreciation 2,801 3,898 4,280 2,801 1,055 1,116
Interest 549 576 620 549 298 202
PBT 866 (426) 2,560 866 2,258 376 -15.4
LG Electronics
PAT 591 257 1,323 406 1,803 1,062 12.4
Sales 2,276 3,239 3,598 4,835 4,376 8,858 31.2
EBITDA 400 812 956 989 775 1,434 29.1
EBITDA margin 17.6% 25.1% 26.6% 20.4% 17.7% 16.2%
Depreciation 20 21 22 20 30 32
Interest 1 0 0 1 0 0
PBT 378 828 981 378 769 1,429 30.4
HTC
PAT 367 776 881 909 685 1,256 27.9
Sales 14,317 18,080 19,408 18,907 17,099 18,366 5.1
EBITDA 1,291 1,428 1,717 1,295 1,339 1,637 4.9
EBITDA margin 9.0% 7.9% 8.8% 6.8% 7.8% 8.9%
Depreciation 442 550 593 442 525 555
Interest 130 204 203 130 219 225
PBT 598 620 786 598 294 586 -0.4
Whirlpool
PAT 422 433 640 418 328 619 8.0
Sales 17,368 14,107 15,518 16,069 14,360 14,794 -3.2
EBITDA 1,365 976 1,093 682 1,161 1,368 0.0
EBITDA margin 7.9% 6.9% 7.0% 4.2% 8.1% 9.2%
Depreciation 457 375 406 457 453 463
Interest 132 107 96 132 72 56
PBT 431 520 598 431 458 738 11.3
Electrolux
PAT 237 523 433 56 343 556 18.7
Sales 2,192 3,102 5,586 6,605 6,246 7,523 28.0
EBITDA 104 114 296 295 270 365 28.5
EBITDA margin 4.7% 3.7% 5.3% 4.5% 4.3% 4.9%
Depreciation 6 15 35 6 52 50
Interest - 8 25 - 51 65
PBT 106 134 201 106 268 371 28.4
Gome Electrical
PAT 61 103 148 151 206 290 36.6

Consumer Durables

Exhibit 61: Indian Consumer Durables companies financials (US$mn)
FY06 FY07 FY08 FY09 FY10 FY11 % CAGR
Sales 1,211.0 1,604.2 1,841.2 2,167.5 2,036.2 3,202.2 21.5
EBITDA 161.2 334.2 427.1 502.0 404.7 603.1 30.2
EBITDA margin 13.3% 20.8% 23.2% 23.2% 19.9% 18.8%
Depreciation 51.6 74.6 111.5 146.7 128.3 158.4
Interest 51.4 56.6 74.9 96.0 147.9 211.2
PBT 58.1 203.0 240.6 259.3 128.5 233.4 32.0
Videocon
(standalone)
*data to CY10
PAT 95.0 181.9 190.0 189.8 89.0 165.5 11.7
Sales 56.9 72.2 99.2 104.5 142.2 168.6 24.3
EBITDA 5.2 6.7 12.6 8.3 15.6 12.3 19.0
EBITDA margin 9.1% 9.2% 12.7% 8.0% 11.0% 7.3%
Depreciation 1.0 1.0 1.7 1.8 2.6 3.6
Interest 0.6 0.7 0.5 0.6 0.3 0.5
PBT 3.5 4.9 10.4 5.9 12.7 8.9 20.5
Hitachi
PAT 3.3 4.3 9.4 4.7 10.3 6.5 14.6
Sales 278.3 328.0 396.9 429.8 565.4 684.3 19.7
EBITDA 0.3 10.0 18.5 31.7 56.7 64.3 59.1
EBITDA margin 0.1% 3.1% 4.7% 7.4% 10.0% 9.4%
Depreciation 8.1 7.6 8.3 8.7 8.8 9.9
Interest 4.0 3.6 3.8 3.8 1.8 1.3
PBT (11.9) (1.3) 6.4 19.2 46.0 53.2 NA
Whirlpool
PAT (8.5) (1.2) 7.2 15.7 32.2 36.9 NA
Sales 1,394.3 1,645.4 1,771.5 1,986.8 2,375.8 NA 14.3
EBITDA 99.9 82.0 106.0 91.7 134.8 NA 7.8
EBITDA margin 7.2% 5.0% 6.0% 4.6% 5.7% NA
Depreciation 29.3 25.1 24.6 28.3 29.7 NA
Interest 7.8 8.6 3.3 2.3 0.2 NA
PBT 62.9 48.3 78.2 61.1 104.9 NA 13.7
LG
PAT 38.1 32.7 55.9 44.4 77.2 NA 19.3
Sales 847.7 906.5 1,123.5 1,731.6 2,591.8 NA 32.2
EBITDA 21.1 37.1 58.1 79.0 167.4 NA 67.9
EBITDA margin 2.5% 4.1% 5.2% 4.6% 6.5% NA
Depreciation 10.1 11.6 20.8 31.9 31.2 NA
Interest 3.0 2.4 3.0 7.4 2.8 NA
PBT 7.9 23.2 34.3 39.7 133.5 NA 102.7
Samsung
PAT 4.6 14.5 (17.0) 9.2 89.4 NA 110.4
Sales 270.5 336.3 339.4 317.7 333.7 424.9 5.4
EBITDA 20.2 20.3 19.5 12.7 13.3 16.6 -9.9
EBITDA Margin 3.9% 4.0% 4.0% 5.7% 6.0% 7.5%
Depreciation 5.0 4.4 5.3 4.1 4.4 4.8
Interest 4.0 4.5 5.2 6.3 3.9 3.9
PBT 11.2 11.4 9.0 2.3 5.0 7.8 -18.1
Mirc Electronics
PAT 7.3 7.6 7.7 2.0 4.1 6.1 -13.5
Sales 5.6 9.3 16.3 27.6 42.3 NA 66.1
EBITDA (0.2) 0.9 3.3 13.5 12.7 NA NA
EBITDA Margin -3.7% 9.2% 20.6% 48.8% 30.1% NA
Depreciation 0.4 0.3 0.2 0.3 0.3 NA
Interest 0.0 0.1 0.0 0.0 0.1 NA
PBT (0.7) 0.5 3.1 13.2 12.3 NA NA
Symphony
PAT (0.7) 0.5 2.7 9.6 8.2 NA NA
Sales 56.9 72.1 93.8 108.9 134.0 169.6 24.4
EBITDA 4.0 11.0 10.6 72.3 14.9 18.0 39.3
EBITDA Margin 7.0% 15.3% 11.3% 66.4% 11.1% 10.6%
Depreciation 4.1 2.8 1.9 1.7 1.9 2.3
Interest 2.8 0.1 0.2 0.3 0.2 0.4
PBT (2.9) 8.1 8.5 70.3 12.8 15.3 NA
IFB Industries
PAT (3.1) 7.8 8.3 70.0 11.9 11.2 NA
Source: Capitaline, Bloomberg, Ambit Capital research

Consumer Durables

Institutional Equities Team
Saurabh Mukherjea,
CFA

Managing Director - Institutional Equities (022) 30433174

saurabhmukherjea@ambitcapital.com
Research
Analysts Industry Sectors Desk-Phone E-mail
Aadesh Mehta Banking / NBFCs (022) 30433239 aadeshmehta@ambitcapital.com
Ankur Rudra, CFA IT/Education Services (022) 30433211 ankurrudra@ambitcapital.com
Ashish Shroff Technical Analysis (022) 30433209/3221 ashishshroff@ambitcapital.com
Ashvin Shetty Consumer/Automobile (022) 30433285 ashvinshetty@ambitcapital.com
Bhargav Buddhadev Power/Capital Goods (022) 30433252 bhargavbuddhadev@ambitcapital.com
Chandrani De, CFA Metals & Mining (022) 30433210 chandranide@ambitcapital.com
Chhavi Agarwal Construction, Infrastructure (022) 30433203 chhaviagarwal@ambitcapital.com
Gaurav Mehta Derivatives Research (022) 30433255 gauravmehta@ambitcapital.com
Hardik Shah Technology (022) 30433291 hardikshah@ambitcapital.com
Krishnan ASV Banking (022) 30433205 vkrishnan@ambitcapital.com
Nitin Bhasin Construction, Infrastructure, Cement (022) 30433241 nitinbhasin@ambitcapital.com
Pankaj Agarwal, CFA NBFCs (022) 30433206 pankajagarwal@ambitcapital.com
Parita Ashar Metals & Mining / Media / Telecom (022) 30433223 paritaashar@ambitcapital.com
Puneet Bambha Power/Capital Goods (022) 30433259 puneetbambha@ambitcapital.com
Rakshit Ranjan, CFA Mid-Cap (022) 30433201 rakshitranjan@ambitcapital.com
Ritika Mankar Economy (022) 30433175 ritikamankar@ambitcapital.com
Ritu Modi Cement (022) 30433292 ritumodi@ambitcapital.com
Shariq Merchant Consumer (022) 30433246 shariqmerchant@ambitcapital.com
Subhashini Gurumurthy IT/Education Services (022) 30433264 subhashinig@ambitcapital.com
Vijay Chugh
Consumer (incl FMCG, Retail,
Automobiles)
(022) 30433054 vijaychugh@ambitcapital.com
Sales
Name Regions Desk-Phone E-mail
Deepak Sawhney India / Asia (022) 30433295 deepaksawhney@ambitcapital.com
Dharmen Shah India / Asia (022) 30433289 dharmenshah@ambitcapital.com
Dipti Mehta India / Europe (022) 30433053 diptimehta@ambitcapital.com
Pramod Gubbi, CFA India / Asia (022) 30433228 pramodgubbi@ambitcapital.com
Sarojini Ramachandran UK / US +44 (0) 20 7614 8374 sarojini@panmure.com

Consumer Durables

Explanation of Investment Rating

Investment Rating Expected return
(over 12-month period from date of initial rating)
Buy
>5%
Sell
<5%

Disclaimer

This report or any portion hereof may not be reprinted, sold or redistributed without the written consent ot Ambit Capital. AMBIT Capital Research is disseminated and available primarily
electronically, and, in some cases, in printed form.
Additional information on recommended securities is available on request.
DISCLAIMER
1. AMBIT Capital Private Limited (AMBIT Capital) and its affiliates are a full service, integrated investment banking, investment advisory and brokerage group. AMBIT
Capital is a Stock Broker, Portfolio Manager and Depository Participant registered with Securities and Exchange Board of India Limited (SEBI) and is regulated by SEBI
2. The recommendations, opinions and views contained in this Research Report reflect the views of the research analyst named on the Research Report and are based
upon publicly available information and rates of taxation at the time of publication, which are subject to change from time to time without any prior notice.
3. AMBIT Capital makes best endeavours to ensure that the research analyst(s) use current, reliable, comprehensive information and obtain such information from
sources which the analyst(s) believes to be reliable. However, such information has not been independently verified by AMBIT Capital and/or the analyst(s) and no
representation or warranty, express or implied, is made as to the accuracy or completeness of any information obtained from third parties. The information or
opinions are provided as at the date of this Research Report and are subject to change without notice.
4. If you are dissatisfied with the contents of this complimentary Research Report or with the terms of this Disclaimer, your sole and exclusive remedy is to stop using
this Research Report and AMBIT Capital shall not be responsible and/ or liable in any manner.
5. If this Research Report is received by any client of AMBIT Capital or its affiliate, the relationship of AMBIT Capital/its affiliate with such client will continue to be
governed by the terms and conditions in place between AMBIT Capital/ such affiliate and the client.
6. This Research Report is issued for information only and should not be construed as an investment advice to any recipient to acquire, subscribe, purchase, sell,
dispose of, retain any securities. Recipients should consider this Research Report as only a single factor in making any investment decisions. This Research Report is
not an offer to sell or the solicitation of an offer to purchase or subscribe for any investment or as an official endorsement of any investment.
7. If 'Buy', 'Sell', or 'Hold' recommendation is made in this Research Report such recommendation or view or opinion expressed on investments in this Research Report is
not intended to constitute investment advice and should not be intended or treated as a substitute for necessary review or validation or any professional advice. The
views expressed in this Research Report are those of the research analyst which are subject to change and do not represent to be an authority on the subject. AMBIT
Capital may or may not subscribe to any and/ or all the views expressed herein.
8. AMBIT Capital makes no guarantee, representation or warranty, express or implied; and accepts no responsibility or liability as to the accuracy or completeness or
currentess of the information in this Research Report. AMBIT Capital or its affiliates do not accept any liability whatsoever for any direct or consequential loss
howsoever arising, directly or indirectly, from any use of this Research Report.
9. Past performance is not necessarily a guide to evaluate future performance.
10. AMBIT Capital and/or its affiliates (as principal or on behalf of its/their clients) and their respective officers directors and employees may hold positions in any
securities mentioned in this Research Report (or in any related investment) and may from time to time add to or dispose of any such securities (or investment). Such
positions in securities may be contrary to or inconsistent with this Research Report.
11. This Research Report should be read and relied upon at the sole discretion and risk of the recipient.
12. The value of any investment made at your discretion based on this Research Report or income therefrom may be affected by changes in economic, financial and/ or
political factors and may go down as well as up and you may not get back the full or the expected amount invested. Some securities and/ or investments involve
substantial risk and are not suitable for all investors.
13. This Research Report is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied in whole or in part, for any purpose. Neither this Research Report nor any copy of it may be taken or transmitted or distributed, directly
or indirectly within India or into any other country including United States (to US Persons), Canada or Japan or to any resident thereof. The distribution of this
Research Report in other jurisdictions may be strictly restricted and/ or prohibited by law or contract, and persons into whose possession this Research Report comes
should inform themselves about such restriction and/ or prohibition, and observe any such restrictions and/ or prohibition.
14. Neither AMBIT Capital nor its affiliates or their respective directors, employees, agents or representatives, shall be responsible or liable in any manner, directly or
indirectly, for views or opinions expressed in this Report or the contents or any errors or discrepancies herein or for any decisions or actions taken in reliance on the
Report or inability to use or access our service or this Research Report or for any loss or damages whether direct or indirect, incidental, special or consequential
including without limitation loss of revenue or profits that may arise from or in connection with the use of or reliance on this Research Report or inability to use or
access our service or this Research Report.
Conflict of Interests
15. In the normal course of AMBIT Capitals business circumstances may arise that could result in the interests of AMBIT Capital conflicting with the interests of clients or
one clients interests conflicting with the interest of another client. AMBIT Capital makes best efforts to ensure that conflicts are identified and managed and that
clients interests are protected. AMBIT Capital has policies and procedures in place to control the flow and use of non-public, price sensitive information and
employees personal account trading. Where appropriate and reasonably achievable, AMBIT Capital segregates the activities of staff working in areas where conflicts
of interest may arise. However, clients/potential clients of AMBIT Capital should be aware of these possible conflicts of interests and should make informed decisions
in relation to AMBIT Capitals services.
16. AMBIT Capital and/or its affiliates may from time to time have investment banking, investment advisory and other business relationships with companies covered in
this Research Report and may receive compensation for the same. Research analysts provide important inputs into AMBIT Capitals investment banking and other
business selection processes.
17. AMBIT Capital and/or its affiliates may seek investment banking or other businesses from the companies covered in this Research Report and research analysts
involved in preparing this Research Report may participate in the solicitation of such business.
18. In addition to the foregoing, the companies covered in this Research Report may be clients of AMBIT Capital where AMBIT Capital may be required, inter alia, to
prepare and publish research reports covering such companies and AMBIT Capital may receive compensation from such companies in relation to such services.
However, the views reflected in this Research Report are objective views, independent of AMBIT Capitals relationship with such company.
19. In addition, AMBIT Capital may also act as a market maker or risk arbitrator or liquidity provider or may have assumed an underwriting commitment in the securities
of companies covered in this Research Report (or in related investments) and may also be represented in the supervisory board or on any other committee of those
companies.
Copyright 2006 AMBIT Capital Private Limited. All rights reserved. Ambit Capital Pvt. Ltd.
Ambit House, 3rd Floor
449, Senapati Bapat Marg, Lower
Parel, Mumbai 400 013, India.
Phone : +91-22-3043 3000
Fax : +91-22-3043 3100

Ambit - Consumer Durables - July 2011

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ambit - Consumer Durables - July 2011

Uploaded by

Copyright:

Available Formats

July 28, 2011

You might also like