IISL - Apar Industries Visit Note

[Deadpresident]

We  met  the  management  of  Apar  Industries Ltd. Our initial view on the
company  is positive, given a sharp growth in its high return businesses --
conductor  and  transformer  oil  --  and  attractive  valuation  at 9X its
annualised 9MFY07 EPS.

Apar is the second largest player in the aluminium power conductor business
(contributing  43% of its total revenue), with a market share of about 25%.
The  company  is  the  largest  exporter of aluminium power conductors from
India.  With a surge in orders from Power Grid Corporation (PGCIL), Apar is
rapidly  expanding  capacity  to  gear  up  for  additional demand. This is
supported by a robust order book position of Rs5.4bn

Apar's  transformer oil division is the largest player, with a market share
of  50%,  in  this  business.  The  division is a cash cow for the company,
generating   a   RoCE   of   59%,  contributing  about  50%  of  its  total
profitability.  The  company's  key  strength  in the industry is its large
market share in the OEM market.

The  company's polymer business remains the only segment which is a drag on
its overall profitability and return ratios. Apar is trying to address this
issue  by  setting  up  swing  manufacturing  facilities  for  high  demand
products.

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