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TABLE OF CONTENTS
1. 2. Executive Summary Business Overview 2.1. 2.2. 2.3. 3. Corporate Timeline Ownership Structure Organizational Structure

Product Portfolio 3.1. 3.2. 3.3. 3.4. Fertilizers Nutritional Products Veterinary Products Agricultural Products

4.

Aries Agro Limited Financial and Valuation Analysis 4.1. Valuation Analysis and Financial Summary

5.

Aries Agro Limited Annotated Stock Chart 5.1. Annotated Stock Price Performance

6. 7. 8.

Aries Agro Limited Analyst Recommendations Aries Agro Limited Swot Analysis Key Professionals 8.1. Management Profile on the Basis of Key Board of Members

9.

Macro Analysis of Fertilizer Industry 9.1. Indian Fertilizers Industry Market Size, FY2009-FY2013 By Production and Consumption, FY2009-FY2013 By Value, FY2009-FY2013

9.1.1. 9.1.2. 9.2.

Indian Fertilizers Industry Segmentation, FY2012 By Inorganic and Organic Fertilizers, FY2012 By Generic and Bio-Fertilizers, FY2009-FY2012 2

9.2.1. 9.2.2.

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9.2.3. 9.3.

By Micronutrients and Macronutrients, FY2012

Market Share of Major Players in Indian Fertilizer Industry, FY2012 By Revenue, FY2012 By Micronutrients, FY2012

9.3.1. 9.3.2. 10.

Aries Agro Limited Competitive Analysis By Products Offered/ Revenue/ Business Strategy

10.1. 11.

Aries Agro Limited Management Outlook and Future Projections Aries Agro Limited Future Projections Aries Agro Limited Financials Future Projections Aries Agro Limited Ratio Analysis

11.1. 11.2. 11.3. 12.

Appendix Market Definitions Abbreviations Research Methodology Disclaimer

12.1. 12.2. 12.3. 12.4.

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LIST OF FIGURES
Figure 1: Aries Agro Limited Corporate Timeline 2007-2012 Figure 2: Aries Agro Limited Ownership Structure in Percentage as on 31st March 2013 Figure 3: Aries Agro Limited Organizational Structure Figure 4: Aries Agro Limited Product Portfolio Figure 5: Aries Agro Limited Fertilizer Product Division on the Basis of Types of Nutrients Figure 6: Aries Agro Limited Annotated Stock Price Performance on the Basis of Volume Traded and Stock Prices in INR per Share, 25th May, 2012 - 23rd May, 2013 Figure 7: India Fertilizer Market Size on the Basis of Production and Consumption in Thousand Tonnes, FY2009-FY2013 Figure 8: India Fertilizer Industry Market Size by Revenue in INR Crore and Percentage Growth in the Indian Fertilizer Market, FY2009-FY2013 Figure 9: India Fertilizer Market Segmentation by Organic and Inorganic Fertilizers on the Basis of Contribution in Percentage (%), FY2012 Figure 10: India Fertilizer Market Segmentation by Macronutrients and Micronutrients on the Basis of Contribution in Percentage (%), FY2012 Figure 11: Market Share of Leading Companies in Micronutrients on the Basis of Production in Percentage, FY2012 Figure 12: Aries Agro Limited Future Projections on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore and Percentage, 2014-2017 Figure 13: 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: Aries Agro Limited Financial Summary on the Basis of Revenue, Growth and Net Profit Margin in INR Crore and Percentage, 2009-2013 Table 2: Aries Agro Limited Ownership Structure on the Basis of Shares Held as on 31st March 2013 Table 3: Aries Agro Limited Promoters Stake on the Basis of Number of Shares Held as on 31st March 2013 Table 4: Aries Agro Limited Revenue Segmentation on the Basis of Contribution by Products in the Overall Revenue, in FY2011-FY2012 Table 5: Aries Agro Limited Financial Performance on the Basis of Revenue, EBITDA Margin and Net Profit Growth in INR Crore and Percentage, 2008-2012 Table 6: Financial Performance of Fertilizers Companies in India on the Basis of Revenue in INR Crore, FY2008-LTM year ending 31st December 2012 Table 7: Financial Performance of Fertilizers Companies in India on the Basis of EBITDA in INR Crore, FY2008-LTM year ending 31st December 2012 Table 8:Company Comparable Analysis on the Basis of Market Capitalization, Net Debt and Enterprise Value and Valuation Multiples in INR Crore and Multiples, LTM 31st December 2012 Table 9: Relative Valuation Analysis on the Basis of Deal Value, Deal Stake and Multiples in INR Crore, Percentage and Multiples Table 10: Aries Agro Limited Operational Overview on the Basis of Key Board of Directors Profile Table 11: Fertilizer Prices in India in INR per Ton, 2009-2012 Table 12: India Fertilizer Market Segmentation by Organic and Inorganic Fertilizers on the Basis of Revenue in INR Crore, FY2012 Table 13: India Fertilizer Market Segmentation by Bio-fertilizers and Generic Fertilizers on the Basis of Production in Thousand Tonnes, FY2009-FY2012 Table 14: India Fertilizer Market Segmentation by Bio-fertilizers and Generic on the Basis of Contribution in Percentage (%), FY2009-FY2012 Table 15: Market Positioning of Major Players on the Basis of Revenue in INR Crore and Percentage, FY 2012 5

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Table 16: Company Profile of Major Competitors of Aries Agro Limited on the basis of Services Offered, Revenue and Business Strategies Table 17: Aries Agro Limited Balance Sheet, 2012-2015 Table 18: Aries Agro Limited Income Statement, 2012-2015 Table 19: Aries Agro Limited Cash Flow Statement, 2011-2015 Table 20: Aries Agro Limited Ratio Analysis on the Basis of Liquidity, Asset Management, Profitability and Leverage Ratios in Multiple and Percentage, 2011-2014 Table 21: Regression Coefficients of the Aries Agro Limited Table 22: Regression Intercepts of the Aries Agro Limited

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1.

EXECUTIVE SUMMARY
Target Price: INR 59.9 Date: 01th March 2013

Recommendation: Buy

Aries Agro Limited is an Indian based multinational company. The company produces nutritional products, multi micro micronutrients, chelated micronutrients, specialty soluble NPK fertilizers, veterinary products, plant protection chemicals, agricultural products and farm equipments. The product manufacturing factories are established in India and UAE. The company was converted to public limited company on 30, December 1994 by the name of Aries Agro-Vet Industries Limited. The companys corporate office is located at Mumbai and is traded on Bombay stock exchange of India and National stock exchange of India.

Key Differentiators

Aries Agro Limited is the first Indian company to manufacture calcium chelate indigenously

Competition and Positioning

The company has more than 1,000 professional trained staff in India

Key Developments Financial Summary

The company was the first recipient of the ISI mark for its mineral feed supplements

Aries Agro Limited Financial Summary on the Basis of Revenue, Growth and Net Profit Margin in INR Crore and Percentage, 2009-2013 Particulars Revenue Growth% Net Profit% 2009 2010 2011 2012 2013

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2.

BUSINESS OVERVIEW

INTRODUCTION Dr. T.B. Mirchandani and Mrs. Bala Mirchandani incorporated Aries Agro Limited in 1969 by the name of Aries Agro-Vet Industries Private Limited. The companys registered office is located in Maharashtra. Originally the company introduced small collection of mineral feeding products such as vitamin premixes, protein concentrates, milk boosters, mineral premixes and others for only birds and animals. So the company developed a brand leading position in the area of nutritional products. Subsequently in 1975 the company entered to nutrient feeds for plants with the launch of Chelated micronutrients fertilizers

2.1.

CORPORATE TIMELINE

On 26th December 2007, company has completed its IPO by issuing 4,500,000 shares generating INR 54.0 crore. This was required for further expansion and for meeting the working capital needs of the company On 14th February 2012, the company entered into Memorandum of Understanding with Institute of Technology and Management Trust. Under this agreement a PGDM programme in agribusiness was introduced, which promoted the agricultural sector among the aspirants of this sector.

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Figure 1: Aries Agro Limited Corporate Timeline 2007-2012

2.2.

OWNERSHIP STRUCTURE

Promoters of Aries Agro Limited are the major stake holders of the company accounting for 52.7% shares in total shares outstanding of the company Aries Agro Limited Ownership Structure on the Basis of Shares Held as on 31st March 2013
Category No. of Share Holder as on 31st March 2013 No. of Shares as on 31st March 2013 Change in Share Held Percentage Change

Promoters

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FIIs Mutual Funds/ UTI Bodies Corporate Individuals NRIs Clearing Members Total

Figure: Aries Agro Limited Ownership Structure in Percentage as on 31st March 2013

Promoters FIIs Mutual Funds/ UTI Bodies Corporate Individuals NRIs Clearing Members

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2.3.

ORGANIZATIONAL STRUCTURE

The company has branches spread all over the country such as Ahmadabad, Bellary, Bhubaneswar, Coimbatore, Ghaziabad, Guwahati, Hissar, Nasik, Raipur, Solapur, Sriganganagar, Jodhpur, Jalandhar, Nipani, Vijayawada and others Also on 30th December 2010, Amarak Chemicals FZC became the subsidiary company of Aries agro limited with shareholding of 75.0%. Amarak Chemicals FZC generated a loss of INR 0.73 crore in FY2012.

Aries Agro Limited Organizational Structure

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3.

PRODUCT PORTFOLIO

The company has a total of 84 brands covering broad category of plant nutrients, insecticides and veterinary products covering agri equipments Aries Agro Limited Product Portfolio

Aries Agro Limited Revenue Segmentation on the Basis of Contribution by Products in the Overall Revenue, in FY2011-FY2012
Segmentation (in Percentage Contribution) Agricultural Micronutrient and Specialty Fertilizers Plant Nutrient Products FY2011 FY2012

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Insecticides and Pesticides Veterinary Products Agricultural Equipments and Others Total

3.1.

FERTILIZERS

Fertilizer is the major revenue generating section of the company with ~% contribution in the overall revenue of the company in FY2012 Aries Agro Limited has increased its focus on fertilizers section with revenue of INR ~crore in FY2011 to INR ~crore in FY2012 showing a growth of ~points in the consecutive years FY2011 to FY2012. Aries Agro Limited fertilizer product division on the basis of types of nutrients

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The company produces Multi micro nutrient Fertilizers with variant combinations of micronutrients. Certain products enrolled under multi micro nutrient are AGROMIN (Soil Application), AGROMIN Gold (Chealted Liqued), AGROMIN Liquid, AGROMIN MAX, Agripro

3.2.

NUTRITIONAL PRODUCTS

The revenue generated from nutritional products of the company contributes ~% in the overall revenue of INR ~crore of the company in FY2012.

3.3.

VETERINARY PRODUCTS

Veterinary product includes nutrient feeds and feed supplements developed for animals and birds. This segment generates marginal revenue of ~% in the overall revenue of INR ~crore of the company in FY2012.

3.4.

AGRICULTURAL PRODUCTS

Aries Agro Limited produces plant growth hormones, insecticides and pesticides in agricultural products segment. The revenue contribution of agricultural products in overall revenue of the company is ~% in FY2012.

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4.

ARIES AGRO LIMITED FINANCIAL AND VALUATION ANALYSIS

4.1.

VALUATION ANALYSIS AND FINANCIAL SUMMARY

The revenue of the company has endures the average annual growth rate of ~% from FY2008 to FY2012 In FY2012, the company has registered the growth of ~% y-o-y with revenues of INR ~crore The COGS of the company showcased a CAGR of ~% from FY2008 to FY2012. The depreciation margin on EBITDA was increased to ~% in FY2012 from ~% in the preceding year. Aries Agro spends INR ~crore in FY2011 as an expenditure on long term assets as compared to INR ~crore in FY2010 which increased the depreciation by ~% for FY2012. Also the finance cost As Aries Agro is a small cap company so the revenue multiple from these financial deals is discounted. Therefore, on the basis of precedent transactions, Aries Agro Limited has been valued at INR ~ crore with a revenue multiple of ~x.

Table: Aries Agro Limited Financial Performance on the Basis of Revenue, EBITDA Margin and Net Profit Growth in INR Crore and Percentage, 2008-2012
Particulars (in INR Crore and Percentage) Revenue y-o-y Growth% EBITDA Margin % Net Profit Growth % FY2008 FY2009 FY2010 FY2011 FY2012

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Table: Company Comparable Analysis on the Basis of Market Capitalization, Net Debt and Enterprise Value and Valuation Multiples in INR Crore and Multiples, LTM 31st December 2012
(INR Crore, unless Stated) Last Twelve Months (LTM) Year Ending December 2012 Market Cap Net Debt Enterprise Value (EV) EV/Revenue EV/EBITDA P/E

Company

Aries Agro Limited Chambal Fertilizers and Chemicals Limited Gujarat State Fertilizer & Chemical Co Limited Coromandel International Limited Zuari Agro Chemicals Limited Nagarjuna Fertilizers and Chemicals Limited Rashtriya Chemicals and Fertilizers Limited Mean Median

Relative Valuation Analysis on the Basis of Deal Value, Deal Stake and Multiples in INR Crore, Percentage and Multiples
Date Target Company Deal Type Deal Value INR (Cr) Stake % Implied EV/ Revenue Implied EV/ EBITDA Implied EV/ PAT

02-Apr-13

Mangalore Chemicals & Fertilizers PI Industries Limited

Block trade

29-Jan-13

Private Placement Private Placement

10-Jan-13

Karnalyte Resources Inc.

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04-Dec-12

Sree Ramcides Chemicals Private Limited PI Industries Limited PI Industries Limited Shree Renuka Sugars Limited SD Agchem (Netherlands) B.V. Zero Waste Agro Organics Private Limited

Inbound Acquisition

04-Dec-12 04-Oct-12 28-Sep-12

Block trade Block trade Block trade

13-Jul-12

Outbound Acquisition Domestic Acquisition

23-Apr-12

Mean Median

MACRO ANALYSIS OF FERTILIZER INDUSTRY

INDIAN FERTILIZERS INDUSTRY MARKET SIZE, FY2009-FY2013

BY VALUE, FY2009-FY2013

The agriculture sector in India accounts for 10% of Indias export earnings. Thus, if the agricultural waste is low and productivity is high, then the export earnings tend to be more robust.

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Figure: India Fertilizer Industry Market Size by Revenue in INR Crore and Percentage Growth in the Indian Fertilizer Market, FY2009-FY2013
2,45,000.0 2,40,000.0 5.0% 2,35,000.0 2,30,000.0 2,25,000.0 3.0% 2,20,000.0 2,15,000.0 2,10,000.0 1.0% 2,05,000.0 2,00,000.0 FY'2009 FY'2010 FY'2011 FY'2012 FY'2013P 0.0% 2.0% 2,26,539.9 4.0% 6.0%

Indian Fertilizer Industry Market Size

Growth in Indian Fertilizer Industry

BY MICRONUTRIENTS, FY2012

Micronutrients contribution to the overall fertilizer consumption is nearly 0.07% in India. Figure: Market Share of Leading Companies in Micronutrients on the Basis of Production in Percentage, FY2012

Aries Agro Limited Multiplex Group Vanita Agrochem (I) Pvt. Limited. Zuari Agro Chemicals Coromandel International Nagarjuna Fertilizers and ChemicalsLlimited Gujarat State Fertilizer & Chemicals Limited Others

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ARIES AGRO LIMITED MANAGEMENT OUTLOOK AND FUTURE PROJECTIONS

ARIES AGRO LIMITED FUTURE PROJECTIONS

As the fertilizer business of the company is highly dependent on the climatic conditions prevailing in the country..

Aries Agro Limited Future Projections on the Basis of Revenue, EBITDA Margin and Net Profit Margin in INR Crore and Percentage, 2014-2017
600.0 500.0 400.0 311.9 300.0 10.0% 200.0 100.0 0.0 FY'2013 Revenue FY'2014 FY'2015 EBITDA Margin FY'2016 FY'2017 Net Profit Margin 5.0% 15.0% 25.0%

20.0% Margin

INR Crore

0.0%

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ARIES AGRO LIMITED FINANCIALS FUTURE PROJECTIONS

Aries Agro Limited has been showing an upward trend in its shareholders funds. The company has shown a growth in net worth of ~% in FY2012, representing an increase in profitability margin of the company. Outsider funds of the company include both long term and short term loan of the company. Long term loans constitute approximately ~% of the total outsider funds as on 31st March 2012. The overall financials of the company will be increased from 2012-2017 as the company is planning to expand its business. For which the company is performing long term investments by increasing its expenditure on capital. It is anticipated that Working capital of Aries Agro has increased from INR ~crore in FY2011 to INR ~crore in FY2012. . Additionally a decrease of ~% in inventories and fall of ~% in cash and cash equivalent will further decrease the working capital.

Aries Agro Limited Balance Sheet, 2012-2015

Particulars (in INR Crore) EQUITY AND LIABILITIES 1) Shareholders' funds a) Share Capital b) Reserve and Surplus Net Worth 2) Non-Current Liabilities a) Long-Term Borrowings b) Deferred tax Liabilities (Net) c) Long-Term Provisions Total 3) Current Liabilities a) Short-Term Borrowings b) Trade Payables FY2012 FY2013E FY2014 FY2015

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c) Other Current Liabilities d) Short-Term Provisions Total (4) Minority interest (a) Equity (b) Non-Equity Grand Total ASSETS 1) Non-Current Assets a) Fixed Assets b) Capital Work-in-Progress c) Non-Current Investments d) Unamortized Expenses Total 2) Current Assets a) Inventories b) Trade Receivables c) Cash and Bank Balances d) Short-Term Loans and Advances Total Grand Total

Aries Agro Limited Income Statement, 2012-2015

Particulars (in INR Crore) Revenues EBITDA Depreciation Net profit (after tax) FY2012 FY2013* FY2014 FY2015 FY2016

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Aries Agro Limited Cash Flow Statement, 2011-2015

Particulars (in INR Crore) CASH FLOW FROM OPERATION Profit Before Tax Adjustment for:-Depreciation -Finance cost -Dividend Paid -Other adjustments Changes in working capital -(Increase)/ decrease in Inventories -(Increase)/ decrease in trade receivable -Increase/ (decrease) in other current liabilities -Increase/ (decrease) in trade payable Working capital movement Cash Generated from Operations -Net Prior Year Adjustments --Taxes Paid Cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net Capital expenditure Movement in short term loan and advances Other Adjustments Cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Long Term Borrowings Short Term Borrowings Issue of Share Capital FY2011 FY2012 FY2013E FY2014

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Interest Paid Cash flow from financing activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the Beginning of the Year Cash and Cash Equivalents at the End of the Year

ARIES AGRO LIMITED RATIO ANALYSIS

Current ratio of the company was marginally increased by 3.6% in FY2012 due to fluctuation in inventory turnover days, debtor turnover days and creditor turnover days. From 2011 -2012, Profitability ratio of the company has been declining in FY2012. Also operating margin of the company is expected to decline at a CAGR of~% from 2012-2014. Debt to equity ratio and debt ratio are part of liquidity ratio. Debt to equity ratio has increased at ~% in FY2012 because of Aries Agro Limited Ratio Analysis on the Basis of Liquidity, Asset Management, Profitability and Leverage Ratios in Multiple and Percentage, 2011-2014
Particulars Current Ratio Quick Ratio Inventory Turnover Debtor Turnover Return on Assets Return on Equity Return on Sales Operating Margin Debt to Equity Debt ratio 2011 2012 2013E 2014

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4.2. DISCLAIMER

The research reports provided by Ken Research are for the personal information of the authorized recipient and is not for public distribution and should not be reproduced or redistributed without prior permission. You are permitted to print or download extracts from this material for your personal use only. None of this material may be used for any commercial or public use. The information provided in the research documents is from publicly available data and other sources, which are reliable. Efforts are made to try and ensure accuracy of data. With respect to documents available, neither the company nor any of its employees makes any warranty, express or implied, including the warranties of merchantability and fitness for a particular purpose, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use will not infringe privately owned rights. The report also includes analysis and views expressed by our research team. The research reports are purely for information purposes. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Investors should not solely rely on the information contained in the research documents and must make investment decisions based on their own investment objectives, risk profile and financial position. The recipients of this material should take their own professional advice before acting on this information. Ken Research will not accept returns of reports once dispatched due to the confidentiality of information provided in our reports. In case, a report qualify for return, we will issue a credit, minus shipping charges, of equal value to the original purchase price, toward a future purchase no refunds. The decision about whether the product return can be accepted or not is solely at our discretion. Any dispute will be subject to the laws of India and exclusive jurisdiction of Indian Courts.

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