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    This is a licensed product of Ken Research and should not be copied

    Kaveri Seed Company Limited

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    This is a licensed product of Ken Research and should not be copied

    TABLE OF CONTENTS

    1. Executive Summary: Kaveri Seed Company Limited

    2. Business Overview

    Introduction

    Expertise

    Products

    Awards

    2.1. Corporate Timeline

    2.2. Key Developments

    2.3. Ownership Structure

    2.4. Kaveri Seed Company Limited Organisational Structure

    3. Kaveri Seed Company Limited Products Portfolio

    3.1. By Hybrid Seeds

    3.2. By Micro-Nutrients

    3.3. By Exotic Vegetables

    4. Kaveri Seed Company Limited Financial Performance

    4.1. Valuation Analysis and Financial Summary

    4.2. DCF (Discounted Cash flow) Valuation and Upside Potential

    5. Kaveri Seed Company limited Annotated Stock Chart and Analyst Recommendations

    5.1. Annotated Stock Price Performance

    5.2. Analyst Recommendations

    Expected Bullish Stock Performance

    Low Liquidity Implying High Investments

    Expectation of Earning Growth

    6. SWOT Analysis

    Strengths

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    Weaknesses

    Opportunities

    Threats

    7. Kaveri Seed Company Limited Operational Overview

    7.1. Board of Directors Profile

    7.2. Management Profile

    8. Indian Hybrid Seed Industry Overview and Size, FY2008- Fy2012

    8.1. Indian Hybrid Seed Industry Segmentation, FY2012

    8.2. Market Share of Major Players in the Indian Hybrid Seed Market, FY2012

    9. Competitive Analysis

    9.1. By Products Offered/Revenue/Business Strategy

    9.2. By Financial Performance (Topline/ Enterprise Value/ Multiples)

    9.3. A Relative Valuation Analysis of Indian Seed and Agrochemical Industry

    10. Kaveri Seed Company Limited Management Outlook and Future Projections

    10.1. Kaveri seed Company Limited Future Projections

    10.2. Ratio Analysis

    11. Appendix

    11.1. Market Definition

    11.2. Abbreviations

    11.3. Research Methodology

    Data Collection Methods

    Approach

    11.4. Disclaimer

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    LIST OF FIGURES

    Figure 1: Kaveri Seed Company Limited Corporate Timeline

    Figure 2: Kaveri Seed Company Limited Ownership Structure in Percentage as on 30 September 2012

    Figure 3: Kaveri Seed Company Limited Product Portfolio

    Figure 4: Kaveri Seed Company Limited Revenue Segmentation on the Basis of Contribution by Business Segments in overall Revenue in Percentage, FY2012

    Figure 5: Kaveri Seed Limited Hybrid Seeds Performance on the Basis of Revenue in INR Crore, FY2008-LTM 31st December 2012

    Figure 6: Kaveri Seed Company Limited Micro-nutrients and Bio-pesticides Performance on the Basis of Revenue in INR Crore, FY2008-LTM 31st December 2012

    Figure 7: Kaveri Seed Company Limited Annotated Stock Price Performance on the Basis of Volume Traded and Stock Prices in Thousand Shares and INR per Share, 25th February 2012-25th February 2013

    Figure 8: India Hybrid Seed Industry Market Size and Contribution in the Overall Indian Seed Market on the Basis of Revenue in INR Crore and percentage, FY2008-FY2012

    Figure 9: India Hybrid Seed Industry Segmentation on the Basis of Contribution in the Overall Hybrid Seed Industry in Percentage, FY2012

    Figure 10: Market Share of Major Players in Indian Hybrid Seed Market on the Basis of Contribution by Revenue in Percentage, FY2012

    Figure 11: Kaveri Seed Company Limited Future Projections on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore and Percentage, FY2013-FY2017

    Figure 12: Non-linear Regression Analysis and Scatter Chart Based upon Indian Hybrid Seed Industry Market size, FY2008-FY2012

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    LIST OF TABLES

    Table 1: Kaveri Seed Company Limited Financial Summary on the Basis of Revenue, Growth and Net Profit Margin in INR Crore and Percentage, FY2008-LTM, 31st December 2012

    Table 2: Kaveri Seed Company Limited Key Developments

    Table 3: Kaveri Seed Company Limited Ownership Structure on the Basis of Share held as on 30th September 2012

    Table 4: Kaveri Seed Company Limited Promoters Stake on the Basis of Number of Share Held and the Percentage of Share Held in Shares Outstanding, as on 30th September 2012

    Table 5: Kaveri Seed Company Limited Top Mutual fund Investors stake on the Basis of Number of Shares Held and the Percentage of Shares Held in Shares Outstanding, as on 30th September 2012

    Table 6: Kaveri Seed Company Limited Seed Product Quality on the Basis of Breeding Objectives

    Table 7: Kaveri Seed Company Limited Financial Performance on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore, and Percentage, FY2008-LTM ending 31st December 2012

    Table 8: Kaveri Seed Company Limited Valuation Analysis on the Basis of Market Capitalization, Net Debt and Enterprise Value in INR Crore and Units as on 25th February 2013

    Table 9: Kaveri Seed Company Limited Valuation Multiples Ratios on the Basis of Revenue, EBITDA and Net Profit Multiples, FY2008-LTM ending 31st December 2012

    Table 10: Kaveri Seed Company Limited Discounted Cash Flow Valuation on the Basis of Weighted Average Cost to Capital, Present Value of Company Valuation and Target Share Price

    Table 11: Kaveri Seed Company Limited Sensitivity Analysis of Discounted Cash Flow Analysis, Perpetuity Growth Rate and weighted Average Cost of Capital on the basis of Perpetuity Growth Rate Method in INR Crore and in Percentage

    Table 12: Kaveri Seed Company Limited Operational Overview on the Basis of Board of Directors Profile

    Table 13: Kaveri Seed Company Limited Operational Overview on the Basis of Management Profile

    Table 14: Competitive Landscape of Major Companies on the basis of Product Offered, Revenue and Business Strategies

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    Table 15: Company Comparable Analysis on the Basis of Financial Performance in INR Crore and Valuation Multiples as on LTM 31st December 2012

    Table 16: Company Comparables on the Basis of Revenue in INR Crore, FY2008-LTM year ending 31st December 2012

    Table 17: Relative Valuation Analysis on the Basis of Deal Value, Deal Stake, Implied Enterprise Value and Multiples in INR Crore, Percentage and Multiples

    Table 18: Kaveri Seed Company Limited Fututre Projections on the Basis of Income Statement in INR, FY2011-FY2014

    Table 19: Kaveri Seed Company Limited Future Projections on the Basis of Balance Sheet in INR, FY2011-FY2014

    Table 20: Kaveri Seed Company Limited Fututre Projections on the Basis of Cash Flow Statement in INR, FY2011-FY2014

    Table 21: Kaveri Seed Company Limited Ratio Analysis on the Basis of Liquidity, Asset Management, Profitability and Leverage Ratios in Multiple and Percentage, FY2008-FY2014

    Table 22: Regression Coefficients of the Indian MSW market

    Table 23: Regression Intercepts of the Kaveri Seed Company Limited

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    EXECUTIVE SUMMARY: KAVERI SEED COMPANY LIMITED

    Recommendation: ~ Target Price: INR ~ Date: 25th February 2013

    Kaveri Seed Company is involved in the production of genetically modified hybrid seed for various vegetables and field crops. The company generates most of the revenue from the sale of these hybrid seeds. The company engages in the production of soil enhancing micro-nutrients, bio-pesticides and has a separate division for producing exotic vegetables. The company was listed on the Bombay stock exchange of India in 2007 and is headquartered in Hyderabad

    Key Differentiators

    The company engages in the pre cleaning, grading, cob drying, packing and storage of hybrid seeds via ultra modern equipment

    Competition and Positioning

    The company is one of the leading hybrid cotton producer, contributing ~% in the INR ~ crore hybrid cotton market

    Key Developments

    Established a new Subsidiary Kexveg India Private Limited for producing exotic vegetables and herbs to cater to the demand in both domestic and international market

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    Financial Summary

    Kaveri Seed Company Limited Financial Summary on the Basis of Revenue, Growth and Net Profit Margin in INR Crore and Percentage, FY2008-LTM, 31st December 2012

    Particulars FY2008 FY2009 FY2010 FY2011 FY2012 LTM

    Revenue

    Growth%

    Net Profit%

    CORPORATE TIMELINE

    The company started its operations in 1976 with the production of different varieties of hybrid seeds such as corn, millet, sunflower and rice. In 1986, the company changed its structure to a private limited under the Companies Act, having registration No. 6728 of 1986-87. The company established a seed processing unit in Bellary, Karnataka. In 1987, Kaveri Seed set up its first marketing office in Davangere in Karanataka. In 1997, the company established its first research and development facility and launched its first hybrid corn seeds in 1997 in South India. The companys hybrid corn seeds product were successfully commercialized as it was providing more yield than other existing variety of seeds. In 1999, the company increased its seed production capacity to meet the growing demand for the same by setting up a processing plant at Kandlakoi near Hyderabad. Subsequently, the company had added more hybrid seeds of other crops such as sunflower, pearl millet, sorghum and rice...

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    The company introduced its first corn hybrid seed

    The company had developed its first seed conditioning plant in Kandlkoi

    The company was given recognition from the department of science and industry research, for its research and development practices on hybridization of seeds

    The company entered into partnership for producing bio-pesticides and micro-nutrients

    The company had acquired license from Mahyco Monsanto Biotech (India) Limited for using Bt. Gene technology to produce hybrid cotton seeds

    The company had established a seed conditioning plant with cob dryers facility at Gundla, Pochampally and Eluru

    The company was listed on the bombay stock exchange (BSE)

    The company had signed an agreement with Agri Jenetics for producing testing and marketing hybrid cotton seed products

    The company acquired Kaveri Agritek, a joint venture establishment which produces micro-nutrients

    The companys revenue had inclined to INR 1.0 billion

    The company had established a new division for producing exotic vegetables and herbs named as Kexveg India Private limited

    Kaveri Seed Company Limited Corporate Timeline

    The company had incepted its operation in the field of hybrid seed, at Gatla Narsingapur Village, Andhra Pradesh

    The company had expanded its structure to a private limited entity and developed a seed processing unit at Bellary, Karnataka

    The company had started research and development on the hybridization of seeds and thus initiated a seed processing plant in Biramulguda

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    OWNERSHIP STRUCTURE

    Kaveri Seed promoters are the major stake holders of the company accounting for ~% stake in total shares outstanding of the company. Company promoters have increased their stake from ~% as of 31st March 2012 to ~% as of 30th September 2012, a ~% y-o-y increase. Foreign Institutional Investors (FIIs) have increased their share holding significantly from ~% as on 30th June 2012 to ~% as of 30th September 2012 an increase of ~%. Among the promoters, G.V.Bhaskar Rao and R.Venu Manohar Rao had the highest shares held. Together they held more than ~%. The institutional investors held ~% stake in the company, of these institutional investors, IDFC premier equity fund has the highest stake of ~%.

    Kaveri Seed Company Limited Ownership Structure on the Basis of Share held as on 30th September 2012

    Category No. of Share Holder as on 30th September 2012

    No. of Shares as on 30th September 2012

    Change in Share Held

    Percentage Change

    Promoters

    Mutual Funds

    Financial Institutions/ Banks

    Bodies Corporate

    FIIs

    NRIs

    Public

    Total

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    Kaveri Seed Company Limited Ownership Structure in Percentage as on 30 September 2012

    Kaveri Seed Company Limited Promoters Stake on the Basis of Number of Share Held and the Percentage of Share Held in Shares Outstanding, as on 30th September 2012

    Name of Shareholder No. of Share as on 30th September 2012

    Percentage of Shares as on 30th September 2012

    G.V.Bhaskar Rao

    G.V. Bhaskar Rao (HUF)

    DR.C.Gopal Rao

    Gouthareddy Shanker Reddy

    G. Madhushree

    G. Pawan

    Padamaja C

    R. Venu Mahohar Rao

    G. Vanaja Devi

    Promoters

    Mutual Funds

    Financial Institutions/ Banks

    Bodies Corporate

    FIIs

    NRIs

    Public

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    Madhavi Chennamaneni

    C Mithun Chand

    Vamsheedhar Chennamaneni

    Total

    Kaveri Seed Company Limited Top Mutual fund Investors stake on the Basis of Number of Shares Held and the Percentage of Shares Held in Shares Outstanding, as on 30th September 2012

    Name of Institution No. of Share Percentage of Share

    IDFC Premier Equity Fund

    Religare Finvest Ltd.

    Bengal Finance & Investment Private Limited

    Bodhivrishika Advisors LLP

    Ashish Kacholia

    Bodhivriksha Advisors LLP

    Total

    BY HYBRID SEEDS

    The company had introduced 4 hybrid paddy seeds namely KPH 216, KPH 371, KPH 272, and KPH 199

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    The company has a market share of more than ~% in the overall hybrid seed industry of India and is primarily involved in the production of hybrid cotton, corn/maize and rice in the segment of field crops. The companys revenue from the hybrid seed has increased at a CAGR rate of ~% from FY2008-FY2012. The company produced ~ tonnes of seeds in FY2012 up by ~% y-o-y. The segments generated an overall net profit of INR ~ crore in FY2012 up by ~% y-o-y.

    The companys product for hybrid cotton and corn seeds contributes the highest in the overall revenue from the hybrid seed segment. The product is estimated to contribute 47.3% in the overall revenue from hybrid seed in FY2012 and the company has a market share of 5.5% in the hybrid cotton market in FY2012

    .

    The company has been giving emphasis on the development of herbicide tolerance (HT) and draught tolerance (DT) while BT cotton has been the main focus of the company. The companys sales of the BT cotton seeds had increased because of the increase in the demand for the companys premier BT cotton hybrid products namely, jadoo and jack-pot.

    Kaveri Seed Limited Hybrid Seeds Performance on the Basis of Revenue in INR Crore, FY2008-LTM 31st December 2012

    0.0

    100.0

    200.0

    300.0

    400.0

    500.0

    600.0

    700.0

    FY'2008 FY'2009 FY'2010 FY'2011 FY'2012 LTM

    INR

    Cro

    re

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    Kaveri Seed Com...

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