hindustan construction company limited investor … meet/100185_20090601.pdf · statements,”...

Investor Presentation June 2009

Hindustan Construction Company Limited

INVESTOR PRESENTATONJUNE 2009


DisclaimerCertain statements made in this presentation may not be based on historical information or facts and may be “forward looking statements,” including those relating to general business plans and strategy of Hindustan Construction Company Limited (“HCC"), its future outlook and growth prospects, and future developments in its businesses and its competitive and regulatory environment. Actual results may differ materially from these forward-looking statements due to a number of factors, including future changes or developments in HCC's business, its competitive environment, its ability to implement its strategies and initiatives and respond to technological changes and political, economic, regulatory and social conditions in India. This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, or a solicitation of any offer, to purchase or sell, any shares and should not be considered as a recommendation that any investor should subscribe for or purchase any of HCC's shares. Neither this presentation nor any other documentation or information (or any part thereof) delivered or supplied under or in relation to the shares shall be deemed to constitute an offer of or an invitation by or on behalf of HCC.HCC, as such, makes no representation or warranty, express or implied, as to, and does not accept any responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or opinions contained herein. The information contained in this presentation, unless otherwise specified is only current as of the date of this presentation. HCC assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this document, the information contained herein is based on management information and estimates. The information contained herein is subject to change without notice and past performance is not indicative of future results. HCC may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. This presentation may not be copied and disseminated in any manner. THE INFORMATION PRESENTED HERE IS NOT AN OFFER OR SOLICITATION OF ANY OFFER TO PURCHASE OR SELL ANY EQUITY SHARES OR ANY OTHER SECURITY OF HCC.This presentation is not for publication or distribution, directly or indirectly, in or into the United States, Canada or Japan.These materials are not an offer or solicitation of any offer of securities for purchase or sale in or into the United States, Canada or Japan.


HCC – An Introduction

• Leading engineering, construction and infrastructure development company

• Four broad sectors: Engineering & Construction; Infrastructure; Comprehensive Urban Development & Management and Real Estate

• As of 31-Mar-2009 order book of INR 16,400 Crores (US$ 3,232 MM) (1)

• Proven track record in technically complex, high value projects

8.71%

47.17%29.62%

14.50%

Promoter

Mutual Funds

FII

Public

Shareholding Pattern as on March 31, 2009

2,3223,035 3,572

0

2,500

5,000

2006-07 2007-08 2008-09

Steady Growth in Revenues and Margins

CAGR (07-09): 24.0%

Consolidated Total Revenues

10065

87

0

60

120

2006-07 2007-08 2008-09

(INR Cr)CAGR (07-09): 23.7%

As of June 09, 2009 INR Crores US$ MM

Share Price (INR/ US$) 116.9 2.46

Market Capitalization 2,994 631

Enterprise Value (2) 6,956 1,465

(INR Cr)

Profit After Tax (Before Minority Interest)(2)

Summary Market Statistics

458 598 704US $ MM(1)

13 17 20US $ MM(1)

Note 1 : Exchange rate of 1 US$ = INR 50.735Note 2: Before impact of prior period tax adjustmentNote 3 : For Enterprise Value Market Value as at June 9, 2009 and Net Debt as at March 31, 2009


Highly Respected Infrastructure Company for Over 80 Years

Engineering &Construction Infrastructure

• Innovative construction solutions

• Experienced project management to execute technologically advanced, large value projects

• Unique, specialized skill set in areas with high entry barriers

• Associated with civil construction of nearly a quarter of India’s hydro power and majority of nuclear power capacity

• Development & operation of infrastructure projects

• 3 road projects already in portfolio

• Building on HCC’s core expertise in areas like roads and hydro power

Proven Platform and Specialized Skills to Capitalize on Growth Opportunities

Urban Development& Management Real Estate

• Lavasa Hill City - master plan of 12,500 acres

• Set amidst 7 hills and nearly 60 kms. of lake front

• Lavasa will span over five towns i.e. Dasve, Mugaon, Dhamanhol, SakhariWadawali & CBD

• MOU with Gujarat State Government for 4,000 acres water front city

• 247 Park, a 1.8 mn sq.ft. commercial park nearing completion with c.45% leased

• Integrated development of c. 40 acres(1) under the SRA scheme in Mumbai

• Land purchases in progress for townships at Thane, Pune & Nasik

Note : SRA Land in Vikhroli (E) 28 acres and Powai 12.75 acres


HCC – Strong Growth Platform

India’s Leading Infrastructure Company for Over 80 Years1

Proven Track Record in Technically Complex Projects3

Strong, Diversified Orderbook 2

Strategic Shift to Develop and Own Model4

Strong Fundamentals5


• Political stability opens up a window for sustainable economic growth

• Expect policy measures towards higher private sector participation

• Increased thrust on infrastructure spending will result in order flow particularly in areas like power, roads and irrigation

HCC Set to Capture Indian Infrastructure OpportunityThe Experience The Opportunity

• Leadership position in the Indian infrastructure space, HCC poised to capitalize on the immense opportunity

–Leaders in hydro power and nuclear power project execution

–Built over 25 dams across geographies in India

–More than 1,900 lane-kms of highway construction

–More than 300 bridges constructed

–Worked on 1st (Kolkata) and 2nd

(Delhi) Metro Rail Transport System in India

–Major player in Bulk Transmission (Pipeline & Tunnels) for water & irrigation projects

0

3,000

6,000

9,000

12,000

15,000

18,000

21,000

X Plan XI Plan

Power Roads TelecomRailways Irrigation WaterOthers

Rs. Bn

The Potential

Source: Planning Commission

* *

*


E&C Business – Leading Position across the SpectrumHydro Power

• 12 Contracts under implementation

• Total Order backlog of c.INR 7,077 Crs (USD 1,395 MM)

• Amongst Top 3 Hydro Power construction company in India

• Over 150 km of tunneling

Water Solutions


• Total Order backlog of c.INR 5,133 Crs (USD 1,012 MM)

• Completed 7 Irrigation Dams, 70 Sewerage Treatment Plants, 35 Water Treatment plants, 18 Barrages

Nuclear Power & Special Projects


• Total Order backlog of c.INR 327 Crs (USD 64 MM)

• Associated with majority of Nuclear Power civil construction in India (11 Nuclear Power Plants)

Transportation


• Total Order backlog of c.INR 3,038 Crs (USD 598 MM)

• Over 1,900 km of highways, 300+ bridges, India’s 1st & 2nd MRTS, India’s only cable stayed sea link

EPC

• 1 Contract under implementation(1)

• Total Order backlog of c. INR 825 Crs (USD 163 MM)

• Executing a 330MW Hydro electric project under EPC

• Construction of Dams, Barrages, Tunnels, Powerhouses, etc

• Integrated Water Supply & Irrigation

• Dams, Barrages, Canals, Tunnels, Pipelines

• Treatment plants etc

• Construction of Nuclear Power plants, utility buildings, ports and underground caverns

• Construction of Roads, Bridges, MRTS, Railways and Tunnels

• Lump sum Turnkey • EPC • Design Build• Engineering Centre

Note 1: EPC portion of Kishanganga HEP project included, remaining contract value under Hydro Power Segment


Steady Growth in High Quality and Well Diversified Order Book

9,31210,158

16,400

5,000

10,000

15,000

20,000

2006–2007 2007–2008 2008–2009

Strong Order Book Growth High Quality Customer and Business Mix

• Order Book comprises of predominantly public sector clients, leading to high degree of revenue assurance

• Recent strategy to foray into EPC will create a fifth value component further diversifying the mix

Order book of INR16,400 Crs (c. USD 3,232 MM) spread over 49 contracts (4.6x FY09 Revenues) giving strong revenue visibility

Verticals Client Type

• Strong Growth in the Order Book• 61.5% growth YOY

• The order book has an increased strategic focus towards hydro power and water solutions segments that provide room for higher margins

Govt. and PSUs c.95%

Othersc.5%

US$ Million 1,836 2,002 3,232

INR Crores

Water Solutions

31%

Nuclear Power & Special projects

2%

EPC5%

Transport19%

Hydro Power43%

As at March 31, 2009


Increased Focus on EPC Projects: Moving Up The Value ChainUnder Execution• Kishanganga Hydro-Electric Project, Jammu & Kashmir 330 MW

• Total value of project : INR 2,726 Crs (USD 537 MM)• All civil and associated infrastructure works; supply, installation, testing and

commissioning of all electromechanical plant & machinery and hydro-mechanical components including generating units on EPC basis.

• Godavari Lift Irrigation Scheme, Phase II (1)

• Total value of project - INR 1,887 Crs (USD 372 MM)• Phase I - 10 cumecs capacity, 135 km of pipeline, pumping stations (Completed)• Phase II - 14 cumecs capacity, 200 km of pipeline, pumping stations

Completed• Tirupur Water Supply Pipeline, Tamilnadu

• Total Value of Project – INR 310 Crs (USD 61 MM)• 185MLD system includes intake, water treatment plant, booster

pumping station, master balancing reservoir & 56km of pipeline

• Delhi Metro Rail Corridor Project, Contract MC1A • Value of project – INR 937 Crs (USD 185 MM)• 4km long underground mass transit system

Note 1: Project is currently included under Water Solutions Segment for accounting purposes


Order Book Shifting Towards Higher Margin Water Solutions & Hydro Power Projects

Strategic Shift in Business Model to Large Value, High Margin Business

Focus on High Complexity, High Entry Barrier Projects

15

31

38

43

43

- 54 2

19

0%

20%

40%

60%

80%

100%

FY 06 FY 09

Water Solutions Hydro Power Transportation EPC Others

13%

107%

• The Company’s philosophy has been to do fewer but large value technically complex projects• Focusing on projects with higher

threshold limits• Larger value Water Solutions, Hydro

Power and Nuclear projects as they are technically complex, allowing for greater value addition

• Transportation - focus is now on BOT, MRTS, large roads & bridges


Revenue Visibility

Cap

ital C

omm

itmen

ts

Shift towards ownership of assets

Infra BOT Projects

Real Estate

Infrastructure

• Already won 3 BOT road projects• Building on HCC’s core expertise in areas like

roads and hydro power

Real Estate

Growth Driven by Strategic Shift to Develop and Own Model

Road, Water, Power Project

Execution

Asset Ownership in Core Competence Areas Provides Enhanced Revenue and Cash Flow Visibility

• Lavasa Hill City− HCC Holding – 64.99%

• 247 Park, Corporate Centre at Vikhroli, Mumbai


Developing Infrastructure Portfolio in Areas of Core HCC Competence

Roads– Consortium agreement with John Laing, UK for participating in targeted list of BOT road

projects to be awarded by NHAI

– Three road projects with aggregate project cost of INR 2,307 Crs (USD 454 MM) under implementation (Nirmal, Badarpur and Dhule)

– Several bids in pipeline

Hydro Power– Strategic ownership of Hydro Power projects leveraging HCC’s track record and industry-

leading EPC strengths in hydro power plant construction

– Advanced discussions with potential JV partners

Airports– Leveraging core strengths and partnering with renowned international airport developers

to participate in India’s airport privatization

– Qualified for bidding for a Greenfield airport development in Western India


Attractive Road Portfolio Under Development

• Nirmal BOT (Annuity project in Andhra Pradesh):

– Estimated completion by July 2009, three months ahead of schedule

– Becomes eligible for annuity of INR 23.8 Crs (USD 4.7 MM) semi-annually starting from

October 2009*

• Badarpur Elevated Expressway (Toll Road between Delhi – Faridabad)

– Financial closure achieved

– Construction commenced in January 2009

• Dhule - Maharashtra / MP border (Toll Road Project)

– Awarded to a consortium led by HCC in association with John Laing Investments

Limited and Sadbhav Engineering Limited

– Concession agreement expected to be signed shortly* Commercial Operation Date (COD) – October 2009


LAVASA: Free India’s Largest Hill City• 25,000 acres declared as a Hill Station by Government of Maharashtra i.e. 1/4th size of

Greater Mumbai(1)

• Present development to be spread across 12500 acres, 7 hills and 60 kms of lake front

• Conveniently located with easy access from Mumbai and Pune, 4 access points

• To span over five towns – Dasve, Mugaon, Dhamanhol, Sakhari Wadawali & CBD

• Recent investment of approximately INR 531Crs (USD 105 MM) by banks & investors

• Over INR1,350 Crs (USD 265 MM) already invested in land purchase and project development of the hill city

• 9,691 acres land already purchased(2)

• Planned for 200,000 permanent population & 2 MM tourists

• Lavasa declared as Special Planning Authority

• 1st Town “Dasve” to be operational during 2010

• 23 partners in Travel, Hospitality & Leisure, Health & Education

• 3 Hotels already operational

An illustration of Lavasa lake line c.60 Kms.

Note 1:Total area of 437.71 SqKm for Greater Mumbai, per mcgm.gov.inNote 2: 9,691 acres purchased and 990 acres under agreement for purchase


Lavasa Vision

• Villas & Apartments• Studio & Serviced Apartments • Workforce Housing• Retiree Housing • Family Entertainment Centre • Promenade and Marinas • Health and Wellness Centres• Spiritual Centres• 24x7 Power, Water and

Connectivity • GIS and e-Governance • Social Infrastructure

• Budget to Luxury Hotels • Clubs and Resorts • Spas • Golf Course• Multiple Theme Parks • Eco Safari • Water Sports • Adventure Sports • Nature Trails • Cafes, Restaurants and

Shopping • Multiple Leisure Activities

• Non – polluting industries • IT/ITES• Biotechnology• R&D centres• Training Centres• Fashion Design • Film Production • Animation Studios • Professional Services• Convention Centre• Town Support Services

• Schools and Colleges• Management Institutes • Executive Education Centres• Post Graduation Institutes • Adventure Training Institutes • Vocational Institutes • Sports Academy • Music Academy • Edutainment Park

Live Work Learn Play


Lavasa Business Philosophy

• Villas

• Apartments

• Assisted housing

• Retail

• Commercial

• Institutional plot sales

• Project Management

• Lavasa Housing Board

• Lease rentals

• Corporate Research Center

• Training Center

• Hostel

• Retail

• Laundry

Real Estate Business Ventures

• Water Treatment Plant & distribution system

• Sewerage Treatment Plant & Distribution system

• Power

• Information & Communication Technology

• Hospitals

• Parking

• Transportation

Infrastructure SPV

• Tourism

• Water & Adventure sports

• Tourist Attractions

• Hospitality

• Hotels & Service apartments

• Convention center

• Spa & Clubs

• Leisure

• Edutainment park

• Amusement park

• Golf course

THL- SPV

City management

• Residential schools

• Colleges & universities

• Life long learning

Education

Lavasa will hold 0 to 100% equity in these SPVs


Lavasa Financial Summary

* % age completion method

Note1. Using exchange rate of US$1 = INR50.735 as on March 31, 2009

For the year ended (Standalone) March 31, 2009INR Crs

March 31, 2009USD MM(1)

Income from operation * 212 41.8

Operating Expenditure 77 15.2

PAT 123 24.2

EBT 135 26.6

EBT Margin 64% 64%

19.599279 acresSPV Land Sales 3.920125 plotsResidential Land

Build Space Sales

157.50.2

18.175.629.2

10.6

USD MM

148368Apartment

799 Total Sales Value135Club Membership

385390Villa

54174 acresInstitutional LandLand Sales

92183,249 sq.ft.Retail

INR CrsNo of UnitsTotal sales up to March 31, 2009


247 Park Commercial Real Estate Development

• Commercial Development with a total built of area of 1.8 MM sq.ft.

• Strategically located in next high growth business district in Mumbai

• c.45% of the Park already leased to marquee clients including Future Group, KEC International, HCC(1)

• Possession by June 2009

• Fit out works commenced by clients

One of the largest standalone commercial buildings in Mumbai

Note 1: 16% of total area leased to HCC


Attractive Opportunities Being Developed in Real Estate

• Integrated Development, Vikhroli (East), Mumbai:

− 28 acres of strategically located land bank for an integrated real estate development through the Slum Rehabilitation Scheme

− Obtained the desired level of consent (above 70%) from slum dwellers to apply for SRA scheme for Phase I (14.8 acres)

− Construction commencement expected by 2010

• Land Procurement in process for townships in Thane, Pune & Nasik

• MOU with Gujarat State Government for 4,000 acres water front city


163 188246

384

511

0

150

300

450

600

2004-05 2005-06 2006-07 2007-08 2008-090.0%

5.0%

10.0%

15.0%

20.0%

68 7565

87100

0

35

70

105

140

2004-05 2005-06 2006-07 2007-08 2008-09

5,400

9,700 9,312 10,158

16,400

0

4,500

9,000

13,500

18,000

2004-05 2005-06 2006-07 2007-08 2008-09

CAGR: 33.1% CAGR: 10.1%

Delivering Steady Growth in Revenues and Margins

Orderbook

EBITDA(2) PAT (Before Minority Interest)(3)

Orderbook (INR Cr)

PAT (INR Cr)EBITDA (INR Cr) EBITDA Margin (%)

1,5851,962

2,322

3,0353,572

0

1,000

2,000

3,000

4,000

2004-05 2005-06 2006-07 2007-08 2008-09

Consolidated Total RevenuesRevenue (INR Cr)

32 48 76 10037US $ MM(1) 13 13 17 2015US $ MM(1)

1,064 1,833 2,010 3,2321,912US $ MM(1) 312 458 598 704387US $ MM(1)

(4)

4. Includes INR 36.1 Cr (post tax) one time development rights

CAGR: 32.0% CAGR: 22.5%

1. Using exchange rate of US$1 = 50.735 as on March 31, 20092. EBITDA = PBT + Interest + Depreciation3. Before earlier years tax impact


Consolidated Balance Sheet Strength

Consolidated Balance Sheet as at March 31, 2009

Sources of Funds Amount (INR Crs) Amount (US$ MM) (1)

Net-worth 879 173

Minority Interest 128 25

Secured & Unsecured Loans 4,054 799

Fixed Assets 2,875 567

Investments 95 19

Cash 219 43

Deferred Tax Liabilities 122 24

Total 5,183 1,022

Uses of Funds Amount (INR Crs) Amount (US$ MM) (1)

Other Current Assets 3,880 765

Less: Current Liabilities 1,887 372

Total 5,183 1,022

Note1. Using exchange rate of US$1 = INR50.735 as on March 31, 2009


Summary

• India’s leading Infrastructure Company specializing in execution of technically complex, high value projects and providing innovative solutions to its customers

• Strong order book position in high entry-barrier areas provides margins and cash flow comfort

• Strategic shift in focus towards higher margin EPC contracts, a move-up in the value chain

• Capitalizing on over 80 years of experience in India to develop a portfolio of infrastructure assets in areas of core HCC competence and expertise

• Real Estate portfolio poised to provide stable, visible revenue streams

• Building upon strong track record in executing projects to build an attractive portfolio of assets


For further details, please contact:

Parul Shah

HCC – General Manager Finance

Tel.: +91 22 2571-5420

Email: [email protected]

Praveen Sood

HCC – Group CFO

Tel.: +91 22 2571-5433

Email: [email protected]

Thank You


Hydro Power

Vaitarana Dam (Maharashtra) Nathpa Jhakri HEP (HP)

Purulia Pump Station (West Bengal)

Tala HEP (Bhutan)

Salal HEP (J&K)

Koyna HEP – Stage 4 (Maharashtra)


Water Solutions

Pune Water Filtration (Maharashtra)

Gomti Aqueduct (UP) Hathnikund Barrage (Haryana)

Goshikhurd Spillway (Maharashtra)


Nuclear Power & Special Projects

Kudankulam (Tamil Nadu) RAPP (Rajasthan)

Ennore Breakwaters(Tamil Nadu)

Trombay Chimney (Maharashtra)


Transportation

Mumbai-Pune Expressway (Maharashtra) Bandra-Worli Sealink (Maharashtra)

RJ-7 (Rajasthan)DMRC (Delhi)Godavari Bridge (Andhra Pradesh)


EPC Projects

GLIS (Andhra Pradesh)

Delhi Metro – C1 (Delhi)

Kishanganga HEP (Jammu & Kashmir)


LAVASA: Comprehensive Urban Development

Villa

Waterfront Apartments

Hotel

Dam at Dasve

Power Lines

Power StationDasve Under Development

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