MOIL - IPO Note (Keynote Capitals)

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note of the IPO of MOIL Ltd.

Issue Highlights

Price Band                                                          : Rs340-375 per share

Minimum Bid Lot Size                         : 17 Equity Share                         

IPO open during                                               : Nov. 26 - Dec. 1, 2010 (for QIBs issue closes on Nov. 30, 2010)

Book Running Lead Manager                      : Edelweiss Capital, IDBI Capital, JP Morgan India

To list on                                                             : NSE & BSE

IPO Grading                                                       : 5 / 5 (CARE)

PE                                                                           : 12.3x (based on base price)*

                                                                                : 13.5x (based on cap price)*

Market Cap post-listing                                : Rs6300Cr or $1381mn (based on the cap price)

Market Cap of Free Float                             : Rs1260Cr or $276mn (based on the cap price)

* Based on FY10 EPS

Executive Summery

•     Incorporated in 1962, MOIL is the largest producer of manganese ore by volume in India. According to the JORC report prepared by IMC dated October 30, 2010, as on October 1, 2010, MOIL has access to 21.7mn tonnes of proved and probable reserves and a total of 69.5mn tonnes of measured, indicated and inferred mineral resources of manganese ore.

•     Manganese ore is primarily used to make ferro-alloys for steel production. According to the Indian Ministry of Steel, India was the fifth largest producer of crude steel in the world in 2009 and is expected to become the second largest producer of crude steel in the world by 2015-2016. MOIL is the key beneficiary of the steel sector’s expansion.

•     As the largest producers of manganese ore by volume in India, MOIL is able to achieve economies of scale in procurement of input materials, production efficiency, marketing, sales, and other aspects of its operations.

•     The company has well-entrenched management team. Its key management personnel have an average of over 20 years of experience in the mining industry.

•     All of MOIL’s mines are located in central India, in the states of Maharashtra and Madhya Pradesh, benefiting from well-developed road and rail infrastructure. Central location also gives the company a marketing advantage over competitors, since it facilitates transportation of the company’s products, resulting in lower cost and faster time of delivery for the customers.