ibrel-rbsreport

Produced by: The Royal Bank of Scotland N.V., (India) Office

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Important disclosures can be found in the Disclosures Appendix.

Indiabulls Real Estate

Turning around

1Q11 marked IBREL's transition from an asset to a real-estate play. We see the strategy shift – aggressive addition of monetisable land bank and better financialand operational disclosures – as positive. We add the value of land parcels to our DCF-based NAV, but a sharp drop in net cash (ex-power) lowers our TP to Rs230.

Key forecasts

FY08A FY09A FY10F FY11F FY12F

Total property income (Rsm) 5,151 2,186 1,294& 10,659% 24,047%Reported net profit (Rsm) 3,959 133.8 -240.5& 1,239& 2,936&Reported EPS (Rs) 15.4 0.52 0.6& 3.08& 7.31&Reported PE (x) 12.8 378.1 n/m 63.7 26.9 Dividend per share (Rs) 13.5 0 0& 0.5& 1&Dividend yield (%) 6.87 0 0 0.25 0.51 Book value per share (Rs) 165.3 214.7 233 238.3 244.5 Disc/(prem) to adj BV (%) -18.9 8.46 15.6 17.5 19.6

Use of %& indicates that the line item has changed by at least 5%. Accounting standard: Local GAAP Source: Company data, RBS forecasts

year to Mar, fully diluted

Change in strategy – gets aggressive, more disclosures; promoters increase stake Despite cash reserves of Rs22bn in FY09 and having raised Rs42bn (from QIP and Power IPO) in FY10, we have not seen IBREL bid aggressively for land parcels. However, in last two weeks, it has bid for and won two NTC mill projects at twice the reserve price. Given limited clarity on IBREL’s share of the developable area, we do not incorporate this in our valuation, but estimate possible upside of about Rs15/share. IBREL plans to add other such high-potential monetisable land parcels in the near term, given its low gearing of about 1%, vs about 50% for peers. There has been noticeable improvement in financial and operational disclosures, addressing investor concerns. Promoters’ stake has increased from 16.7% in December 2009 to 23% in July 2010 (28%, factoring in the proposed warrants issue), which should mitigate the concern about low promoter ownership resulting in a high freefloat.

1Q11 marked IBREL’s shift from an asset play to a real-estate play IBREL has long been an asset play (huge cash and investments in Indiabulls Property Investment Trust [IPIT]), as most of its real-estate projects are still in the initial stages of construction. However, 1Q11 marked the start of its transition to a real-estate play, with EBITDA turning positive. IBREL guides to FY11 revenues of about Rs10bn, vs Rs4.9bn cumulative revenues booked over FY07-10. The company states the total revenue potential of the area under its development is Rs218bn. We note that IBREL’s execution has picked up, but we would be more enthusiastic on sales ramp-up at IPIT and other projects.

Use of cash reserves sees our target price decline to Rs230 (from Rs280); Buy We factor in the faster pace of execution and include a couple of land parcels, resulting in our FY11-12 revenue forecasts increasing about 45% (on a low base), but we reduce other income (largely interest income), resulting in a 25-40% cut to earnings. We add some land parcels to our DCF-based NAV estimate, but a reduction in per-share net cash (ex-power) from Rs66 to Rs(1) reduces our SOTP target price from Rs280 to Rs230: 1) Rs169/share NAV for the real-estate business, applying a 15% discount to GAV and accounting for net cash; and 2) Rs61/share for the 58.6% stake in Indiabulls Power at market price less a 20% holding-company discount (details on Table 12). Potential upside could be Rs40/share, Rs25 from the Mumbai Mantralaya project and Rs15 from the NTC mill projects (not included yet).

17 August 2010

Analyst

Prakash Agarwal India +91 22 6715 5314 [email protected] 83/84 Sakhar Bhawan, Nariman Point, Mumbai 400 021, India http://research.rbsm.com

Price performance

(1M) (3M) (12M)

Price (Rs) 168.0 162.4 236.6Absolute (%) 17.0 21.0 -16.9Rel market (%) 16.4 13.9 -29.1Rel sector (%) 11.8 13.8 -9.9

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Market capitalisation Rs78.95bn (US$1.69bn) Average (12M) daily turnover Rs1520.45m (US$32.96m) Sector: BBG AP Real Estate RIC: INRL.BO, IBREL IN Priced Rs196.55 at close 16 Aug 2010. Source: Bloomberg

Buy Target price Rs230.00 (from Rs280.00) Price Rs196.55 Short term (0-60 days) n/a Market view Underweight

Indiabulls Real Estate | Investment View | 17 August 2010

2

Turning around

The real estate business has started contributing to IBREL’s financial performance, with EBITDA turning positive. IBREL also seems to have become aggressive in bidding for land parcels. We view greater disclosures and an increase in the promoter stake as positive.

1Q11 results – financials start to kick in Revenue from real estate kicks in for the first time The real estate business has started to contribute to IBREL’s financial performance, with 1Q11 revenue at Rs1.7bn (up 858% yoy and up 183% qoq on a low base). We note that IBREL follows a POCM (percentage of completion method, like most developers) for revenue recognition – recognising revenues only after 30% of the construction cost (excluding land costs) has been incurred. Since most of its projects (excluding those held by IPIT, of which it owns 45%) are in the initial stages of construction, revenues were not being booked. However, with its projects in Gurgaon, Ahmedabad, Baroda, Chennai and Hyderabad having crossed the threshold for revenue recognition, there has been revenue booking this quarter.

EBITDA positive after eight consecutive quarters of losses IBREL’s revenue-recognition policy did not allow revenue booking in the past, but fixed costs have resulted in the company booking marginal losses at the EBITDA level for quite some time. The company for the first time in eight quarters booked a profit at the EBITDA level – EBITDA of Rs217m, implying an EBITDA margin of 12.6%. With a reduction in cash reserves, interest income and other income dropped to Rs206m, from Rs313m in 1Q10. Profit after tax was Rs206m, versus a loss of Rs283m in the comparable quarter last year.

Table 1 : 1Q11 results snapshot

(Rsm) 1Q10 2Q10 3Q10 4Q10 1Q11Revenues 179 132 375 607 1,717COGS 0 83 21 1 1,323Staff 86 112 166 277 122SGA 393 268 510 450 56EBITDA -300 -330 -322 -120 217EBITDA margin -167.5% -248.8% -85.9% -19.8% 12.6%Other income 313 612 480 294 206Interest expense 31 21 43 2 10Depreciation 30 31 32 33 33Pre-tax profit -48 231 83 139 378Tax 144 132 -16 76 127Tax rate -300.5% 57.1% -18.7% 55.1% 33.5%Minority Interest 51 52 71 54 46Preference dividend 40 40 0 0 0Profit after tax -283 7 28 9 206Profit after tax margin -158.2% 5.1% 7.4% 1.4% 12.0%

Source: Company data, RBS forecasts

Operational highlights – picking up momentum IBREL’s share of revenue from projects under development – Rs217.7bn The total area under development by the IBREL group (including IPIT) is 54.2m sq ft, of which 14.5m sq ft is under construction. Management has disclosed that the total sales revenue potential of the area under development (at current prices) is Rs310.9bn, of which IBREL’s share is Rs217.7bn. Furthermore, the company guides for revenue booking of Rs10.3bn in FY11 (excluding the IPIT contribution). We believe most of the FY11 revenue booking will be back-ended – ie, in 4Q of this year – because the Panvel project, which has the highest sales potential of IBREL’s projects, is expected to contribute from 4Q.


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Table 2 : IBREL group developing 54m sq ft – 14.5m sq ft under construction

Area (m sq ft)* Residential Commercial Total Gross developable area 44.5 11.6 56.1 Less: project handover 1.9 1.9 Net developable area 44.5 9.7 54.2 Area under construction 12.14 2.32 14.46

*Excludes recent Mumbai Mill Land acquisitions. Source: Company data

About 90% of area under construction is in super metros,... About 90% of the area under construction is in ‘super metros’, as defined by management, which includes the Mumbai region, the National Capital Region (NCR) and Chennai. About 12m sq ft of this is under the ‘residential’ segment and 2.3m sq ft is commercial.

Table 3 : Area under construction (including IPIT)

(m sq ft) 1Q11 4Q10 1Q10Residential Super metro* 10.7 10.7 0.5Rest of India 1.44 1.44 0.8Total 12.14 12.14 1.3Commercial Super metro* 2.2 1.8 2.7Rest of India 0.12 0.12 Total 2.32 1.92 2.7

*Super metro includes Mumbai region, NCR and Chennai. Source: Company data, RBS forecasts

… yet sales momentum is still to pick up significantly IBREL made residential sales bookings of 0.65m sq ft worth Rs3.1bn during the quarter, with 0.05m sq ft from premium residential projects in Lower Parel (IPIT), about 0.3m sq ft from the Panvel project and 0.3m sq ft from other projects such as in Gurgaon, Ahmedabad, Chennai, etc. Of the 12.1m sq ft under construction, sales have been booked for only 3.65m sq ft. Hence, there was no need for new launches as IBREL initially focuses on selling existing inventory.

In the commercial segment, the company has cumulatively leased 1.05m sq ft of IPIT assets (0.05m sq ft in 1Q), of which 0.65m sq ft is currently yielding rent. It handed over three buildings of IPIT assets (two in Jupiter and one in Elphinstone) in the quarter.

Table 4 : Residential segment – operational highlights

1Q11 4Q10 1Q10 Value (Rsm) Area (msf) Value (Rsm) Area (msf) Value (Rsm) Area (msf)Sales status Opening balance 14,050 3 10,900 2.22 590 0.25 Add: sales booked in qtr 3,100 0.65 3,150 0.78 620 0.29 Less: handed over Closing balance 17,150 3.65 14,050 3 1,210 0.54 Under construction Opening balance 12.1 8.8 New launches/additions 3.3 0.8 Less: handed over Closing balance 12.1 12.1 0.8


Greater disclosures on additional development potential Besides the 54m sq ft of land under development, the company has 2,990 acres of land that has been earmarked as follows: 434 acres for residential, 56 acres for commercial and 2,500 acres for SEZ (Nashik). The company also disclosed that this land is fully paid for and is in its possession.

We note that the 434 acres of residential land bank includes 35 acres (1.2m sq ft) of prime South Delhi land (Tehkand project), 250 acres of the Savroli project (integrated golf project on Mumbai Pune highway – ahead of Panvel) and 149 acres of the Sonepat project.


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Turning aggressive on bidding for land parcels; promoters increase stake After not utilising its huge cash reserves for a long time… IBREL had net cash and equivalents of Rs22bn in FY09. There was a cumulative gross equity raising of Rs42.8bn (Rs26.6bn from IBREL’s QIP issue and Rs16.2bn through Indiabulls Power’s IPO) in FY10, despite which the consolidated company’s net cash declined to Rs15.2bn at the end of 1Q11.

… IBREL recently began bidding for land aggressively In the past, we have not seen IBREL (despite having a cash pile) bid aggressively for assets, which is why it lost out to Bhushan Steel in Kharghar (Navi Mumbai) and to Lodha Developers for Finlay Mills in Lower Parel (Mumbai) – IBREL is still contesting the latter due to Lodha's disqualification on bidding lower than the reserve price due to the downturn. In addition, the Mumbai Mantralaya project, which IBREL won through a bid, was not entirely successful as IBREL had to rebid and its bid is under review by the state government.

However, IBREL recently changed its strategy, winning the first NTC bid for the 2.39-acre Worli land e-auctioned by NTC Mills on 31 July 2010 for up-front payment of Rs4.74bn (the bid is almost double the reserve price of Rs2.5bn). It followed this up with winning the NTC Bharat Mill project – 8.3 acres for upfront payment of Rs15.05bn (double the reserve price). IBREL plans to add other such high-potential monetisable land parcels. Thus, this marks a clear shift in IBREL’s strategy, which now includes aggressively adding such projects.

We value its NTC mill project wins at Rs15-30/share, but not yet incorporated in our TP While its NTC mill project bids were aggressive (twice the reserve price), we presume IBREL will attempt to capitalise on DCR 33(24), a regulation that permits developers to avail of a higher FSI (4x) by building a public parking facility, resulting in a higher saleable area. We expect reasonable demand for these projects (if priced reasonably, we assume Rs25,000/sq ft vs Rs 30,000/sq ft prevailing in the vicinity), which could see construction work beginning in the near term since the projects have clear titles and should not be delayed. We collectively value these two projects at Rs15-30/share (based on an FSI range of 3-4x) with key assumptions as shown in the next table.

Table 5 : We value its NTC mill project wins at Rs15-30/share

Poddar Mills(case 1)

Poddar Mills (case 2)

Bharat Mills (case 1)

Bharat Mills (case 2)

Acres 2.39 2.39 8.30 8.30FSI 3 4 3 4Saleable area (m sq ft) 0.40 0.58 1.50 2.02Sales price (Rs/sq ft) 25,000 25,000 25,000 25,000Land cost (Rsm) 4,740 4,740 15,050 15,050Land cost (Rs/sq ft) 10,840 8,130 9,911 7,433Construction cost (Rs/sq ft) 5,000 5,000 5,000 5,000Potential sales proceeds (Rsm) 10,931 14,575 37,963 50,617Total cost (Rsm) 7,211 7,939 23,546 26,076DCF (Rs/share) – base-case scenario 3 6 12 24


However, we do not incorporate the NTC projects into our model, due to lack of clarity on FSI norms, as part of the land may have to be reserved for mill workers’ welfare and Mhada (the Maharashtra Housing & Area Development Authority) societies. IBREL has stated that it will comply with all steps required to complete the process. In addition, a press report (Business Standard – 13 August 2010) stated that state-run National Textile Corporation (NTC) and IBREL have agreed to earmark one-third of the total developable land of Bharat Textile Mills and Poddar Mill for the Brihanmumbai Municipal Corporation (BMC) and Mhada.

Promoters have increased their stake steadily in the last few quarters We note that in May 2009 the promoters let their 43m warrants (issued in November 2007 with an exercisable price of Rs540) lapse, forfeiting their 10% advance of Rs2.3bn. However, IBREL’s promoters are now steadily increasing their stake in the company – from 16.7% as of December 2009 to 18.3% as of March 2010 and 23% as of July 2010. We believe this is a positive sign and indicates the promoters’ confidence in the company.


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Proposed issue of warrants to further increase promoters’ stake The board of directors recently proposed issuing 28.7m fully convertible warrants at a conversion price of Rs165 per equity share. Of this, about 27.4m warrants would be issued to the promoter group and, upon conversion, would increase promoter shareholding in the expanded equity base by 4.9%.

Table 6 : IBREL promoters increasing their stake in the company

millions Dec-09 Mar-10 Jun-10 Jul-10 PotentialTotal shares outstanding 401.5 401.5 401.7 401.7 430.4Shares owned by promoters 67.1 73.4 88.8 92.4 119.8% promoter holding 16.7% 18.3% 22.1% 23.0% 28%


Pick-up in IPIT portfolio remains the other key driver Apart from the value-accretive monetisable land parcels recently acquired, the IPIT portfolio of assets (Jupiter and Elphinstone mills) remain IBREL’s jewel assets, although they are not consolidated in its books. To recap, IBREL entered the Mumbai real estate market in 2005 by aggressively bidding at the NTC textile mills auction and winning about 19 acres in Jupiter Mills and Elphinstone Mills at Lower Parel, in Central Mumbai, for about Rs7.2bn. These properties have been seeded in IPIT, where IBREL (also the sponsor of the trust) owns 45% equity. The IPIT portfolio of assets has a cumulative saleable area of about 7.1m sq ft: 3.3m sq ft of residential, 3.3m sq ft commercial and the balance 0.5m sq ft for which end use has not yet been determined.

Leasing volumes for commercial assets yet to pick up in a significant way… The commercial properties, spanning across five towers and comprising 3.3m sq ft, are nearing completion. Management expects to deliver them in FY11 (it has already delivered 1.9m sq ft of this). However, despite these high-quality assets nearing completion, only about 1m sq ft has been leased out.

… as demand for commercial properties remains subdued Demand for commercial properties across the country remains subdued. A report by JLL states: “Out of the 200m sq ft that was planned between 2009 and 2011, 60m sq ft has been shelved or delayed. Supply overhang to remain in the medium term.” JLL estimates that the demand-supply mismatch will be addressed from 2012.

Chart 1 : Demand for commercial properties remains subdued, resulting in oversupply

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While rentals in Mumbai (IBREL’s primary market) have stabilised… Commercial property rents in Mumbai – the key segment for IBREL – largely stabilised (modest increases in a few pockets) over the past three months, after undergoing a 0-15% correction over the past one year. The 8% rental appreciation in Lower Parel, where IPIT’s commercial properties are located, is encouraging.


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Table 7 : Commercial property rentals have fairly stabilised (2QCY10)

Average rent (Rs/sq ft) % chg in 3M % chg in 1Y 6-month outlook

CBD 300 0% -14% Market stable Worli 250 0% 0% Market stable Lower Parel 195 8% 3% Market stable Bandra Kurla 250 4% 0% Market stable Andheri Kurla 115 5% -4% Market stable Malad – IT 90 13% 13% Market stable Powai – IT 90 0% 0% Market stable Vashi – IT 65 0% 0% Market stable Thane Belapur Rd–IT 40 0% 0% Market stable Thane – IT 45 0% -10% Market stable

Source: JLL, Cushman & Wakefield

… oversupply persists; we expect demand to pick up within four to six quarters Cushman & Wakefield (C&W), a leading international property consultant (IPC), estimates that Mumbai will see supply of about 7m sq ft within the next six months, the majority of which will be concentrated along Lower Parel and Andheri. While rentals have largely stabilised in Mumbai, the country’s commercial capital, we expect a significant pick-up in leasing volumes within only four to six quarters, due to the large supply expected.

Chart 2 : Mumbai commercial segment – rentals stabilising, but oversupply persists

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We believe IBREL will be the first to benefit from the demand revival because its office projects, and now the residential project in lower Parel, are in relatively advanced stages vs the projects of IBREL’s peers.

Table 8 : Commercial assets nearing completion, but awaiting demand revival

IPIT – portfolio of assets Commercial office Leasable area Current leasing rate Expected delivery One Indiabulls Centre (Tower 1 & 2) Indiabulls Finance Centre (Tower 1, 2 & 3) Total commercial offices 3.3m sq ft Rs175-225/sq ft/month FY11 Residential Saleable area Current selling rate Expected delivery Indiabulls Sky (1 Tower) Indiabulls Sky – Forest (4 Towers) Indiabulls Sky – Suites (1 Tower) Total residential 3.3m sq ft Rs21,000/sq ft FY13-14 Additional development 0.5 To be finalised

Source: Company data, RBS


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Oversupply has led to muted sales in the residential vertical as well According to C&W, central Mumbai (where Indiabulls Sky is located) is expected to see a supply of about 7,000 residential apartments over the next three to four years (see next chart). For more details, see Appendix of this note. Interestingly, out of this upcoming supply, nearly 4,400 apartment units are coming up on mill lands. With an estimated demand of 2,300-2,600 residential units over the next three years, C&W expects a significant supply/demand gap in central Mumbai. With supply significantly outstripping demand, capital values in Central Mumbai could see downward pressure.

Moreover, availability of mill lands through auctions in the near future should lead to additional supply in this precinct. With locations such as Worli and Prabhadevi being the preferred choice for buyers, taking into account better infrastructure facilities, the residential segment of Lower Parel should see correction in the near future.

Thus, we have assumed a total ASP of Rs22,000-25,000/sq ft (including all frills such as preferred location charges (PLC), parking fees, floor rise etc), without any price inflation for the entire project (which is at 20-25% for similar properties near that area). We also note that IPIT has been successful in selling 0.5m sq ft of the total 3.3m sq ft, and we expect sales momentum to pick up as construction activity picks up. The company expects completions over FY13-14.

Chart 3 : Upcoming residential units in Central Mumbai

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Additional mill land development could boost supply and moderate property prices/rentals C&W estimates that development of mill lands could add 17,000-22,000 residential units and about 20m sq ft of commercial space over the next 10 years. This increase in supply could result in moderating property prices/rentals in Central and South Mumbai.

Chart 4 : Potential residential supply through mill land development

Chart 5 : Potential commercial supply through mill land development

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Source: Cushman & Wakefield Source: Cushman & Wakefield


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Mumbai Mantralaya and Khargar projects could provide upside Mumbai Mantralaya project – IBREL resubmits bid IBREL won the Mumbai Mantralaya modernisation project in August 2009. However, the government subsequently decided to construct Mantralaya through the MMRDA, for security reasons. IBREL has expressed its willingness to handle the project and has submitted a new proposal to the government and is awaiting the government’s response. The terms of its proposal are as follows.

IBREL to pay Rs3.85bn for the construction and redevelopment of sensitive buildings to the MMRDA or any other agency appointed by the MMRDA (as per the tender cost estimates).

IBREL to carry out the balance of construction and development as proposed in the tender document at an estimated cost of Rs4.7bn.

IBREL to pay an upfront premium of Rs2.77bn, as quoted in its financial proposal, with a maintenance corpus of Rs2.93bn as per the tender requirement.

IBREL not to develop the plot beyond 1.33 FSI, as per the DC rule specified in the tender document.

We earlier attributed a value of Rs20 (20% discount to our GAV of Rs25) to the Mumbai Mantralaya project, assuming an FSI of 4x. With the FSI now proposed to be reduced to 1.33x, coupled with uncertainties about IBREL bagging the project, we no longer build it into our valuations. If the government accepts IBREL’s revised proposal, it could provide upside to our valuation. We also note that IBREL could have a modified saleable area in this project, and so the upside could vary.

Khargar government land auction – IBREL’s prospects brighten IBREL was the second-highest bidder for developing the 250-acre CIDCO project in Kharghar (Navi Mumbai, Maharashtra). However, after the withdrawal of the highest bidder, IBREL expects the government to award it the project, in line with the tender document. To recap, ‘Future City Properties (P) Ltd’ bid Rs15.3bn for developing the plot in Kharghar. About 60% of the land is reserved for a ‘Bollywood’ theme park and the rest would be used for residential and commercial development. CIDCO will retain a 26% stake in the project. Our valuation model does not ascribe any value to this project.

Decline in cash reserves (IBREL ex-power) erodes value Cash reserves decline seen in FY10... There was a cumulative gross equity raising of Rs42.8bn (Rs26.6bn from IBREL’s QIP issue and Rs16.2bn through Indiabulls Power’s IPO) in FY10. Despite this, the consolidated company’s net cash marginally declined from Rs22.1bn at the end of FY09 to Rs21.7bn at the end of FY10. We estimate the net cash reserve of IBREL (ex-power) declined more significantly, to Rs4.3bn at the end of FY10, from Rs10.2bn at the end of FY09.

In the case of IBREL (ex-power), the decline in cash reserves was largely due to an increase in investments (R31bn) and an increase in the working capital requirement (Rs8bn). The company now treats ICDs (inter-corporate deposits) of about Rs22.7bn given to group companies as investments. We used to classify these ICDs as cash equivalents, because we expected them to be a temporary funding mechanism. But post reclassification as investments, we exclude them from cash equivalents. The impact of the increase in investments and working capital has resulted in net cash for IBREL (ex-power) declining from Rs25/share at the end of FY09 to Rs11/share at the end of FY10 despite a contribution from QIP of Rs66/share.

… and continuing in 1QFY11 Net cash reserves continued to decline in 1Q11, as more projects were brought under construction and development activity. On a consolidated basis, net cash reserves declined to Rs15.7bn (Rs38/share), while the real estate business division (ex-power) turned cash negative for the first time – ie gross debt exceeded cash and liquid investments. .


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Table 9 : Decline in cash reserves despite significant equity raising during the year

IBREL (consolidated)

Indiabulls Power IBREL (ex-Power)

IBREL (consolidated)

IBREL (ex-Power)

Rsm Rsm Rsm Rs/sh Rs/sh Gross cash (31-Mar-2009) 15,897 11,955 3,942 40 10 Add: ICDs 22,662 22,662 56 56 Add: liquid investments 0 0 0 0 0 Less: debt (including Preference share capital) 16,456 2 16,454 41 41 Net cash (as on 31-Mar-09) 22,103 11,953 10,150 55 25 PAT (post dividend + depreciation) (a) -115 381 -496 0 -1 Working capital change (b) -12,221 -4,164 -8,057 -30 -20 Cash generated / (utilised) from operations (c = a+b) -12,336 -3,783 -8,553 -31 -21 Capex (d) -4,368 -5,318 950 -11 2 ICDs converted/shifted to investments (e) -22,662 -22,662 -56 -56 Subscription to IPIT Right's Issue (f) -3,015 -3,015 -8 -8 Increase in other investments (g) -6,410 0 -6,410 -16 -16 Cash generated/(utilised) from investments (h = d+e+f+g) -36,456 -5,318 -31,137 -91 -78 QIP proceeds of IBREL (i) 26,565 26,565 66 66 IPO proceeds of Indiabulls Power adjusted for change in reserves (j) 14,613 14,613 0 36 0 Redemption of preference capital (k) -1,375 -1,375 -3 -3 Increase in minority interest (l) 8,623 4 8,619 21 21 Cash generated/(utilised) from financing (m = i+j+k+l) 48,426 14,617 33,808 121 84 Net Cash generated/(utilised) during the year -366 5,516 -5,882 -1 -15 Net cash at the end of the year (31-Mar-2010) 21,737 17,469 4,269 54 11 PAT 206 30 176 1 0 Add: working capital change -4,146 482 -4,628 -10 -12 Cash flow from capex/investments -3,157 -2,721 -436 -8 -1 Cash flow from financing activities 531 449 81 1 0 Net cash generated / (utilised) during 1Q (30-Jun-2009) -6,567 -1,760 -4,807 -16 -12 Net cash at the end of 1Q (30-Jun-2009) 15,170 15,709 -539 38 -1

Source: Company data, RBS

Indiabulls Power – preparing the ground work IPO proceeds have begun to be deployed... Indiabulls Power, IBREL’s subsidiary, has strengthened its balance sheet, raising Rs16.2bn through an IPO in FY10. The strong balance sheet should enable the company to execute its ambitious power projects, which are highly capital-intensive. Operationally, the company has not begun to book revenues, resulting in modest losses at the EBIT level – Rs105m in 1Q11 via non-operating income (interest income, etc) resulted in the company recording PAT of Rs30m.

Table 10 : IPO issue helped to strengthen balance sheet

Rsm FY09 FY10F 1QFY11FNet worth 23,899 38,893 39,372Debt 2 2,006 8Minority interest 3 7 7Total 23,904 40,907 39,388Fixed assets 2,069 7,387 10,106Net current assets 9,880 14,045 13,564Cash and liquid investments 11,955 19,475 15,717Total 23,904 40,907 39,387


… and work commences on Amravati and Nashik projects Work has commenced on the Amravati and Nashik Thermal power projects. IBREL recently disclosed that fresh coal linkage for Phase 2 of both Amravati (1,320 MW) and Nashik (1,320 MW) was granted in April 2010 by the Ministry of Coal’s Standing Linkage Committee. The Maharashtra State Electricity Distribution company has tied up a long-term power-purchase agreement (25 years) for 1,200MW at a levelised tariff of Rs3.26/unit from the Amravati Phase I project.


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Reduction in cash reserves leads to 18% cut in target price We raise our revenue forecasts to factor in the pick-up in the pace of execution IBREL recognises revenues on a percentage of completion method (POCM), whereby revenues are recognised only after 30% of the construction cost (excluding land costs) has been incurred. The company expects to reach this threshold in quite a few of its ongoing projects in FY11, and therefore guides for an impressive revenue booking of Rs10.3bn in FY11 (maintains the guidance provided at end-FY10). This compares with cumulative revenue booking of Rs4.9bn in FY07-10.

We factor in a pick-up in the execution pace, include couple of land parcels and incorporate management’s guidance and raise our FY11-12 revenues forecasts by about 45%. However, we believe that at its ongoing sales-and-execution pace the revenue booking would largely be back-ended.

We factor in an EBITDA margin moderation… We note that IBREL reported an FY10 loss of Rs1bn at the EBITDA level, due to the absence of a contribution from any of its big-ticket ongoing residential projects. Considering the slower-than-expected sales pace, we believe the selling and marketing expenses could rise to increase sales volume and thereby result in lower EBITDA margins. We now forecast EBITDA margins of 19% for FY11 and 23% for FY12, compared with our earlier assumptions of 22% and 33%.

… and reduce ‘other income’ assumption due to declining cash from bidding aggressively IBREL’s net cash (on a consolidated basis) dropped to Rs15.2bn as of 1Q11 vs Rs21.7bn as of the end of FY10. With the execution pace picking up at IBREL and Indiabulls Power and with IBREL aggressively bidding for new projects (Mumbai NTC Mill projects – IBREL’s cumulative bid amount for the two projects was Rs19.8bn), we believe the company’s net cash reserve is likely to turn negative. ‘Other income’, which primarily comprises interest income, was reduced to Rs1.7bn at end-FY10, from Rs2.2bn at end-FY09. We now estimate it will be reduced further to Rs631m (vs our previous forecast of Rs2.8bn) at end-FY11 (Rs206m reported in 1Q11).

Moderation in the EBITDA margin assumptions as well as lower assumptions for ‘other income’ are the key reasons for the downgrade of our PAT forecasts.

Table 11 : Summary of changes to our forecasts

Rsm FY11F FY12F old new % chg old new % chgRevenue 7,463 10,659 43% 16,289 24,047 48%EBITDA 1,607 2,025 26% 5,358 5,438 1%PAT 2,045 1,239 -39% 3,644 2,936 -19%

Source: RBS forecasts

Reduction in cash reserve leads to target price cut We factor in the pick-up in the execution pace, no longer ascribe value to the Mumbai Mantralaya project, reflect the correction in Indiabulls Power’s stock price and, more significantly, incorporate the reduction in net cash reserves. Cumulatively, these changes result in our target price being cut 18% to Rs230.

Real estate business valued at Rs169/share; could have upside of Rs40/share We value IBREL’s 45% stake in IPIT at Rs75/share (compared with Rs63/share previously) to

reflect the marginal improvement in the leasing environment and a pick-up in the execution pace. We have not yet attributed a value to the 0.5m sq ft of potential developable area, for which end use has not yet been determined.

Ex-IPIT, the remaining projects are valued at Rs125/share (compared with Rs84/share previously) to reflect the pick-up in the execution pace. Another key reason for the increase in value is to reflect the additional lucrative land bank disclosed by the company – 1.2m sq ft of prime land in South Delhi (Tehkhand), 250 acres in Savroli and 150 acres in Sonepat.

We no longer ascribe any value to the Mumbai Mantralaya redevelopment project (previously Rs25/share, or Rs20/share after execution of a risk discount), because of increasing uncertainties. IBREL has submitted a revised proposal to the government. Its acceptance could provide upside to our valuation.


11

We also ascribe no value to its Mumbai NTC mill projects (could provide upside of Rs15/sh), because of lack of clarity on IBREL’s share of the development area.

We reduce the execution risk discount to 15% (from 20%), due to the pick-up in the execution pace and better disclosure standards. We arrive at a discounted GAV of its real estate business of Rs170/share, compared with Rs134/share previously.

Power business valued at Rs61/share We reflect the correction in Indiabulls Power’s stock price, which results in the market value of

IBREL’s 58% stake in Indiabulls Power being reduced to Rs77/share, from Rs100/share.

We continue to attribute a 20% holding company discount, which results in the power business being valued at Rs61/share, compared with Rs80/share previously.

Decline in cash reserves to Rs(1)/share (ex-Power) provides the largest negative surprise Net cash reserves for IBREL on a consolidated level have dropped from Rs137/share to Rs38/share. For valuation purpose, we only consider net cash reserves ex-power, which has declined to Rs(1)/share, from Rs66/share. Overall, our target price and NAV for the stock are reduced 18% to Rs230/share and Rs275/share, respectively.

Table 12 : Valuation snapshot

Valuation Rs/share Rs/share (old) Comment DCF of IBREL's real estate portfolio 125 84 Includes Delhi-Tehkhand project,

Sonepat and Savroli project; does not include 2,500-acre SEZ

DCF of IBREL's 45% stake in IPIT 75 63 Does not include the additional 0.5m sq ft future development

DCF of Mumbai Mantralaya redevelopment project

0 25 Excluded from valuation because no clear timelines

Total GAV of real estate business (a) 200 172 Less: 15% discount to GAV (b) 30 34 Reducing discount from 20% to 15% Less: payable for land bank (c) 0 4 Company has stated that its land

bank is fully paid for Discounted GAV of real estate business (d= a-b-c)

170 134

Market value of IBREL's 58.6% stake in Indiabulls Power (e)

77 100 At current CMP of Rs26; power projects gaining momentum

Less: 20% holding company discount (f) 15 20 Value of IBREL's stake in Indiabulls Power (g = e-f)

61 80

Consolidated net cash of IBREL 38 137 Net cash of IBREL (ex-power) (h) -1 66 TP of IBREL (d+g+h) 230 280 Total NAV (Real Estate + Power) 275 335


The key risks to our target price and Buy rating are:

a weaker-than-expected response to the recently launched and/or upcoming residential projects in Mumbai and other cities;

slower-than-expected execution;

poor performance of its listed power entity; and

deterioration in the macro environment resulting in a demand slowdown across verticals.

Indiabulls Real Estate | Appendix | 17 August 2010

12

Appendix

Table 13 : Major upcoming residential projects on mill lands In Mumbai

Mill land Name of developers Name of project Approx. unitsMumbai Textile Mills (Sakserja Mills) DLF NA 1,000Pidilite Industries D B Realty Orchid Heights 640Swan Mills Peninsula Land Ashok Gardens 600Hindustan Mills K. Raheja Corp Vivarea 492Crown Mills D B Realty Orchid Crown 342Srinivas Mills Lodha Group World One 300Apollo Mills Lodha Group Lodha Bellissimo 267Elphinstone Mills Indiabulls Real Estate Indiabulls Sky Suites 215Apollo Mills Lodha Group Lodha Primero 180Spring Mills Bombay Dyeing NA 160Sri Ram Mills Sri Ram Urban Infrastructure Palais Royale 120Jupiter Mills Indiabulls Real Estate Indiabulls Sky 102Jupiter Mills Indiabulls Real Estate Indiabulls Sky Forest NAKhatau Mills Marathon Nextgen and Adani

Infrastructure NA NA


Table 14 : Other major residential projects In Central Mumbai

Name of developers Name of project Location Approx. unitsUnitech The Residences Parel 250Unitech Woodside & Ascot Dadar 240Kumar Builders Kumar Echlon Worli 200DB Realty Orchid Enclave – II Mumbai Central 188Orbit Group Orbit Terraces Lower Parel 108Orbit Group Orbit Grand Lower Parel 88Rupji Constructions Rupji Arena Lower Parel 88Ahuja Group Ahuja Towers Worli NA


Table 15 : Major commercial projects on mill lands In Mumbai

Mill land Name of project Area (m sq ft) Current statusJupiter Mills One Indiabulls Centre 1.43 OperationalElphinstone Mills Indiabulls Finance Centre 1.67 Under constructionRuby Mills The Ruby 0.85 Under constructionJalan Mills NA 1.35 Under constructionApollo Mills Lodha Excelus 0.38 OperationalDawn Mills Peninsula Business Park 1.2 Under constructionCentury Mills NA 2 Under construction


Indiabulls Real Estate | Key Financial Data | 17 August 2010

Income statement

Rsm FY08A FY09A FY10F FY11F FY12FNet rental income 0.00 0.00 0.00 0.00 0.00Prop development income 5151 2186 1294 10659 24047Other revenue 0.00 0.00 0.00 0.00 0.00Total property income 5151 2186 1294 10659 24047Other costs -1426 -2656 -2365 -8634 -18609EBITDA 3725 -470.5 -1072 2025 5438DDA & Impairment (ex gw) -33.2 -108.3 -125.7 -304.8 -698.9EBITA 3692 -578.8 -1197 1720 4739Goodwill (amort/impaired) n/a n/a n/a n/a n/aEBIT 3692 -578.8 -1197 1720 4739Associates (pre-tax) n/a n/a n/a n/a n/aNet interest -522.4 -244.2 -96.8 -135.5 -480.1Other pre-tax items 2495 2214 1699 630.9 536.3Reported PTP 5665 1390 404.5 2215 4795Taxation -1598 -698.2 -337.0 -737.7 -1597Minority interests -64.6 -397.5 -227.7 -239.1 -263.0Other post-tax items -43.6 -160.9 -80.2 0.00 0.00Reported net profit 3959 133.8 -240.5 1239 2936Dividends declared -4067 0.00 0.00 -235.0 -469.9Tot normalised items 0.00 0.00 0.00 0.00 0.00Normalised EBITDA 3725 -470.5 -1072 2025 5438Normalised PTP 5665 1390 404.5 2215 4795Normalised net profit 3959 133.8 -240.5 1239 2936

Source: Company data, RBS forecasts year to Mar

Balance sheet

Rsm FY08A FY09A FY10F FY11F FY12FCash & market secs (1) 16219 15897 10454 9135 9774Props under dev n/a n/a n/a n/a n/aOther current assets 62322 50979 43218 68212 80988Investment prop 674.7 12347 72474 50042 45038Other non-current assets 2459 4184 8429 11847 12896Total assets 81674 83407 134576 139236 148695Short term debt (2) n/a n/a n/a n/a n/aLong term debt (3) 3389 11956 13632 14995 20396Other liabilities 24042 4835 7445 8324 9653Total liabilities 27431 16791 21076 23319 30049Total equity (incl min) 54243 66616 113499 115918 118646Total liab & sh equity 81674 83407 134576 139236 148695Net debt -10253 -816.3 6302 8985 13747

Source: Company data, RBS forecasts year ended Mar

Cash flow statement

Rsm FY08A FY09A FY10F FY11F FY12FEBITDA 3725 -470.5 -1072 2025 5438Change in working capital -39840 -8412 10368 -24113 -11446Net interest (pd) / rec 1973 1969 1602 495.4 56.1Taxes paid -1598 -698.2 -337.0 -737.7 -1597Other oper cash items n/a n/a n/a n/a n/aCash flow from ops (1) -35739 -7611 10561 -22330 -7549Capex (2) -2030 -2047 -4368 -3725 -1748Disposals/(acquisitions) 5269 -11672 -60127 22432 5004Other investing cash flow -212.9 212.9 0.00 0.00 0.00Cash flow from invest (3) 3026 -13506 -64495 18707 3257Incr / (decr) in equity 30295 12819 38274 936.5 -263.0Incr / (decr) in debt 1969 8567 1676 1363 5401Ordinary dividend paid -4067 0.00 0.00 -235.0 -469.9Preferred dividends (4) -208.4 -252.8 -80.2 0.00 0.00Other financing cash flow 8814 -338.0 8623 239.0 263.0Cash flow from fin (5) 36803 20795 48492 2304 4931Forex & disc ops (6) n/a n/a n/a n/a n/aInc/(decr) cash (1+3+5+6) 4090 -321.9 -5443 -1319 638.8Equity FCF (1+2+4) -37978 -9911 6112 -26055 -9296

Lines in bold can be derived from the immediately preceding lines. Source: Company data, RBS forecasts

year to Mar

Indiabulls Real Estate | Performance and Valuation | 17 August 2010

Standard ratios Indiabulls Unitech HDIL

Performance FY08A FY09A FY10F FY11F FY12F FY10F FY11F FY12F FY11F FY12F FY13FNormalised EPS growth (%) 2226 -96.6 464.7 73.5 137.0 -60.0 16.3 38.7 4.96 35.4 63.8EBIT margin (%) 71.7 -26.5 -92.6 16.1 19.7 49.9 47.7 48.4 48.7 49.4 51.0Net profit margin (%) 76.8 6.12 -18.6 11.6 12.2 28.4 26.5 28.3 36.8 37.7 40.0Return on avg assets (%) 8.34 1.03 0.12 1.14 2.44 3.56 3.84 4.75 5.69 7.17 10.8Return on avg equity (%) 15.0 0.28 -0.33 1.31 3.03 8.96 7.49 9.58 8.90 10.8 15.7Return on cap empl (%) 14.4 -1.05 -1.29 1.41 3.68 8.21 8.71 10.9 8.04 10.3 15.8ROIC (%) 33.3 -0.86 -1.18 0.93 2.47 5.90 5.81 7.28 5.53 6.66 10.7 year to Mar year to Mar year to Mar

Valuation Normalised PE (x) 12.8 378.1 n/m 63.7 26.9 29.3 25.2 18.1 15.6 11.5 7.03Dividend yield (%) 6.87 0.00 0.00 0.25 0.51 0.12 0.17 0.23 0.72 0.89 1.07Disc/(prem) to BV (%) -18.9 8.46 15.6 17.5 19.6 -95.4 -82.0 -66.1 -31.1 -19.1 -3.20Disc/(prem) to adj BV (%) -18.9 8.46 15.6 17.5 19.6 -95.4 -82.0 -66.1 -31.1 -19.1 -3.20PEG 3yr (%) n/a n/a -2.32 n/a n/a -2.15 n/a n/a 0.47 n/a n/aEV/EBITDA (x) 18.4 n/m n/m 43.4 17.0 20.8 17.5 13.4 14.3 10.00 6.21 year to Mar year to Mar year to Mar

Per share data FY08A FY09A FY10F FY11F FY12F Solvency FY08A FY09A FY10F FY11F FY12FTot adj dil sh, ave (m) 257.5 257.5 401.5 401.7 401.7 Net debt to equity (%) -18.9 -1.23 5.55 7.75 11.6Reported EPS (INR) 15.4 0.52 -0.60 3.08 7.31 Net debt to tot ass (%) -12.6 -0.98 4.68 6.45 9.24Normalised EPS (INR) 15.4 0.52 -0.60 3.08 7.31 Net debt to EBITDA -2.75 1.73 -5.88 4.44 2.53Dividend per share (INR) 13.5 0.00 0.00 0.50 1.00 Current ratio (x) 3.66 39.3 12.4 14.9 13.9Equity FCF per share (INR) -147.5 -38.5 15.2 -64.9 -23.1 Operating CF int cov (x) 18.3 4.51 -5.80 44.6 107.0Book value per sh (INR) 165.3 214.7 233.0 238.3 244.5 Dividend cover (x) 0.97 0.00 0.00 5.27 6.25 year to Mar year to Mar

Priced as follows: INRL.BO - Rs196.55; UNTE.BO - Rs86.25; HDIL.BO - Rs279.65 Source: Company data, RBS forecasts

Valuation methodology

Valuation Rs/sh Rs/sh (old) Comments DCF of IBREL's real estate portfolio 125 84 includes Delhi-Tehkhand project, Sonepat and Savroli project;

does not includes 2,500-acre SEZ and Sonepat DCF of IBREL's 45% stake in IPIT 75 63 Does not include the additional 0.5m sq ft future development DCF of Mumbai Mantralaya redevelopment project 0 25 Excluding from valuation as no clear timelines Total GAV of real estate business (a) 200 172 Less: 15% discount to GAV (b) 30 34 Reducing discount from 20% to 15% Less: payable for land bank (c) 0 4 Company has stated that its land bank is fully paid for Discounted GAV of real estate business (d= a-b-c) 170 134 Market value of IBREL's 58.6% stake in Indiabulls Power (e) 77 100 At current CMP; power projects gaining momentum Less: 20% holding company discount (f) 15 20 Value of IBREL's stake in Indiabulls Power (g = e-f) 61 80 Consolidated net cash of IBREL 38 137 Net cash of IBREL (ex-power) (h) -1 66 TP of IBREL (d+g+h) 230 280 Total NAV (Real Estate + Power) 275 335


Indiabulls Real Estate | Strategic and Competitive Overview | 17 August 2010

Strategic analysis Average SWOT company score: 3 GAV breakdown, FY11F

Company description Buy Price relative to country

Indiabulls Group began with Indiabulls Financial (IFSL) in 2000 and demerged its real estate business asIndiabulls Real Estate in August 2006. Through acquisitions and government allotments, the company hasestablished a sizeable land bank (exceeding 150m sq ft), which is largely paid up and is focused on Maharashtra,Chennai and the National Capital Region. After achieving reasonable success in real estate, IBREL entered the power segment through its subsidiary in 2007, and is developing coal-based thermal and hydro power projects with a total generation capacity of around 6,600MW.

20

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Nov07

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Price relative to country

Competitive position Average competitive score: 3+ Broker recommendations

18%6%

76%

ResidentialOfficeFuture development

Source: RBS forecasts

Market data Headquarters Malhotra Building, Connaught Place, New Delhi 110 001 Website http://indiabulls.com/ Shares in issue 401.7m Freefloat 77% Majority shareholders Promoter & Promoter group (23%), HSBC Global Investment Fund (4%), Deutsche Securities (3%)

Supplier power 4+ Supplier power has weakened in recent times, as most developers have already built large land banks and are notlooking at acquiring new parcels unless available at very attractive prices.

Barriers to entry 3+ Real estate development is capital-intensive in nature and therefore deep pockets are a must for entering thesector.

Customer power 3- High, especially in commercial and retail segments, due to oversupply and low demand. Also high in residential as volumes sales are seen in attractively priced affordable housing.

Substitute products 4+ Substitutes such as renting or building a home are common, but are not considered threats to home purchases.Almost no substitutes for commercial and retail properties.

Rivalry 3+ Rivalry among developers is benign during property upcycles, but during downturns there could be severe pricecuts and therefore margin pressure.

Scoring range 1-5 (high score is good) Plus = getting better Minus = getting worse

Country view: India Underweight Country rel to Asia Pacific

The macro picture for India has been constructive recently, with GDP and industrial production tracking in line withexpectations, while portfolio allocators continue to favour the market for its domestic consumption orientation.However, these positives have already been priced in and we believe risks are rising from the increasing doubledeficit, demanding valuations and tightening liquidity.

The country view is set in consultation with the relevant company analyst but is the ultimate responsibility of the Strategy Team.

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Nov07

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Feb09

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Sep09

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MarketIndex

0

5

10

15

20

Buy Hold Sell

Source: Bloomberg

Strengths 4 IBREL's expertise lies in raising equity through complex structures, and securing and executing capital-intensive mega projects that have significant regulatory hurdles.

Weaknesses 3 Limited execution track record and exposure to tier-1 and tier-2 cities.

Opportunities 4 Unlike its peers, IBREL is a net-cash-positive company, which enables it to leverage its balance sheet and bid for large-scale opportunities such as the Mumbai Mantralaya project and other high-margin redevelopment or mill-land projects in Mumbai.

Threats 2 Weak response to its near-term launches. The company does not have adequate experience of operating in the power sector and could face execution risks.

Scoring range is 1-5 (high score is good)

Indiabulls Real Estate | Disclosures Appendix | 17 August 2010

Recommendation structure Absolute performance, short term (trading) recommendation: A Trading Buy recommendation implies upside of 5% or more and a Trading Sell indicates downside of 5% or more. The trading recommendation time horizon is 0-60 days. For Australian coverage, a Trading Buy recommendation implies upside of 5% or more from the suggested entry price range, and aTrading Sell recommendation implies downside of 5% or more from the suggested entry price range. The trading recommendation time horizon is 0-60 days. Absolute performance, long term (fundamental) recommendation: The recommendation is based on implied upside/downside for the stock from the target price and, except as follows, only reflects capital appreciation. A Buy/Sell implies upside/downside of 10% or more and a Hold less than 10%. For research produced by Nedbank Capital, a Buy implies upside inexcess of 20%, A Sell implies an expected return less than 10%, and a Hold implies a return between 10% and 20%. For UK-based Investment Funds research, the recommendation structure is not based on upside/downside to the target price. Rather it is the subjective view of the analyst based on an assessment of the resources and track record of the fund management company. For research produced by Nedbank Capital and for research on Australian listed property trusts (LPT) or real estate investment trusts (REIT), the recommendation is based upon total return, ie, the estimated total return of capital gain, dividends and distributions received for any particular stock over the investment horizon. Performance parameters and horizon: Given the volatility of share prices and our pre-disposition not to change recommendations frequently, these performance parameters should beinterpreted flexibly. Performance in this context only reflects capital appreciation and the horizon is 12 months. Market or sector view: This view is the responsibility of the strategy team and a relative call on the performance of the market/sector relative to the region. Overweight/Underweight impliesupside/downside of 10% or more and Neutral implies less than 10% upside/downside. Target price: The target price is the level the stock should currently trade at if the market were to accept the analyst's view of the stock and if the necessary catalysts were in place to effectthis change in perception within the performance horizon. In this way, therefore, the target price abstracts from the need to take a view on the market or sector. If it is felt that the catalystsare not fully in place to effect a re-rating of the stock to its warranted value, the target price will differ from 'fair' value.

Distribution of recommendations The tables below show the distribution of recommendations (both long term and trading). The first column displays the distribution of recommendations globally and the second columnshows the distribution for the region. Numbers in brackets show the percentage for each category where there is an investment banking relationship. These numbers includerecommendations produced by third parties with which RBS has joint ventures or strategic alliances.

Valuation and risks to target price Indiabulls Real Estate (RIC: INRL.BO, Rec: Buy, CP: Rs196.55, TP: Rs230.00): We value IBREL using a sum-of-the-parts model. Key risks to our target price are: 1) weak response to the recently launched and upcoming residential projects in Mumbai and other cities; 2) slower-than-expected execution; and 3) poor performance of its listed power subsidiary.

Indiabulls Real Estate coverage data

Stock performance, recommendations and coverage (as at 16 Aug 2010)

Prakash Agarwal started covering this stock on 18 Jan 10 Source: RBS

Regulatory disclosures

Long term recommendations (as at 17 Aug 2010)

Global total (IB%) Asia Pacific total(IB%)

Buy 683 (0) 398 (0)Add 0 (0) 0 (0)Hold 414 (0) 232 (0)Reduce 0 (0) 0 (0)Sell 97 (0) 58 (0)Total (IB%) 1194 (0) 688 (0)

Source: RBS

Trading recommendations (as at 17 Aug 2010)

Global total (IB%) Asia Pacific total (IB%)

Trading Buy 2 (0) 2 (0)Rec 00 (00) 00 (00) Trading Sell 1 (0) 1 (0)Total (IB%) 3 (0) 3 (0)

Source: RBS

Trading recommendation history (as at 17 Aug 2010) Date Rec Analyst n/a

Source: RBS

Indiabulls Real Estate | Disclosures Appendix | 17 August 2010

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The financial products and services to which the material relates will only be made available to customers who satisfy the requirements of a "Professional Client". This Document has not been reviewed or approved by the DFSA. Qatar Financial Centre: This material has been prepared by The Royal Bank of Scotland N.V. and is directed solely at persons who are not "Retail Customer" as defined by the Qatar Financial Centre Regulatory Authority. The financial products and services to which the material relates will only be made available to customers who satisfy the requirements of a"Business Customer" or "Market Counterparty". United States of America: This document is intended for distribution only to "major institutional investors" as defined in Rule 15a-6 under the U.S. Exchange Act of 1934 as amended (the "Exchange Act"), and may not be furnished to any other person in the United States. Each U.S. major institutional investor that receives these materials by its acceptance hereofrepresents and agrees that it shall not distribute or provide these materials to any other person. Any U.S. recipient of these materials that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this document, should contact and place orders solely through a registered representative of RBS Securities Inc., 600 Washington Boulevard, Stamford, CT, USA. Telephone: +1 203 897 2700. RBS Securities Inc. is an affiliated broker-dealer registered with the U.S. Securities and Exchange Commission under the Exchange Act, and a member of the Securities Investor Protection Corporation (SIPC) and the Financial Industry Regulatory Authority (FINRA). - Material means all research information contained in any form including but not limited to hard copy, electronic form, presentations, e-mail, SMS or WAP. ____________________________________________________________________________________________________________________________________________________The research analyst or analysts responsible for the content of this research report certify that: (1) the views expressed and attributed to the research analyst or analysts in the research report accurately reflect their personal opinion(s) about the subject securities and issuers and/or other subject matter as appropriate; and, (2) no part of his or her compensation was, is orwill be directly or indirectly related to the specific recommendations or views contained in this research report. On a general basis, the efficacy of recommendations is a factor in theperformance appraisals of analysts. ____________________________________________________________________________________________________________________________________________________For a discussion of the valuation methodologies used to derive our price targets and the risks that could impede their achievement, please refer to our latest published research on those stocks at research.rbsm.com. Disclosures regarding companies covered by us can be found on our research website at research.rbsm.com. Our policy on managing research conflicts of interest can be found at https://research.rbsm.com/Disclosure/Disclosure.AspX?MI=2. Should you require additional information please contact the relevant research team or the author(s) of this report.

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