techno electric and engineering company limited … meet/220869_20101130.pdf · techno electric and...
TRANSCRIPT
TECHNO ELECTRIC AND TECHNO ELECTRIC AND ENGINEERING COMPANY LIMITEDENGINEERING COMPANY LIMITED
INVESTOR PRESENTATION
November 2010
Private & Confidential
November 2010
CONTENTSCONTENTS
Section 1: Introduction and Company OverviewSection 1: Introduction and Company Overview
Section 2: Financial Performance
Section 3: Industry Outlook
2
Section 1
INTRODUCTION AND COMPANY OVERVIEWINTRODUCTION AND COMPANY OVERVIEW
TECHNO TECHNO –– NOT JUST NOT JUST ANOTHER ANOTHER POWER SOLUTIONS COMPANYPOWER SOLUTIONS COMPANY
Company and Business Overview
Incorporated in 1963, Techno Electric and Engineering CompanyLimited (Techno) is headquartered in Kolkata
Techno is involved in the following business segments:
Revenue Growth CAGR ‐ 29% over last 4 years
20%
%14%
17%20%
15%
20%
25%
6,000
8,000
EPC contracting focused on the Indian power sector –
– Turnkey projects ranging from complete power generatingplants to system packages of plant tailored to complementlarger systems supplied by others 3,526 4,296 4,860 7,021
10%12% 11%
12%
0%
5%
10%
15%
‐
2,000
4,000
– Electrical System across Generation, Transmission &Distribution up to 765 KV
– Tailored power solutions for Industries such as Aluminium,Petrochemicals etc
Renewable Power Generation – operates 95 MW of Wind
FY07 FY08 FY09 FY10
Revenue EBITDA Margin PBT Margin
Key Milestones
*FY10 includes Wind generation business
Renewable Power Generation operates 95 MW of WindEnergy assets and plans to expand further. Plans to enter BioMass, Solar and Hydro based power generation
Transmission – recently won a 25 year (extendable by 10 years)Concession in consortium with Kalpataru Power for transmissionlink at Jhajjar Haryana
y
2010*link at Jhajjar, Haryana
Experienced team of over 150 engineers backed by 200 skilledprofessionals and 100 staff members
Recognized as one of the leading Indian corporate:
Forbes 2008 (Best 200 Under Billion List in Asia) *
2006*
Private Equity Investment by CVCI
2009*
Company Enters power generation business with acquisition of Wind assets
Enters Transmission Management with award of a PPP contract in Jhajjar, Haryana
4
Forbes, 2008 (Best 200 Under Billion List in Asia)
Business Standard, 2009 (Top 1000 Companies of India)
Dalal Street , 2009 (Top 400 Large Cap Corporates in India)
Mint, September 2010 (Top 100 Performing Companies in India)
1963*
Incorporated
by CVCI Wind assets
* Calendar Year
CORPORATE STRUCTURECORPORATE STRUCTURE
Techno Electric & Engineering Company Ltd
EPC Contracting45 MW Wind Energy Generation
N Bi M SPV *Jh jj KT T P t Ltd*Simran Wind Project
100% 100%49%
New Bio Mass SPVs*Jhajjar KT Transco Pvt Ltd*Simran Wind ProjectPrivate Ltd
6 Bio Mass Power Generation Plants in West
( )
Design, Build, Finance, Operate and Transfer a 400 KV / 1500 MVA50.45 MW Wind Energy
Bengal (3), Orissa, MP and Rajasthan (1 each)
KV / 1500 MVA Transmission Network in Haryana
Generation
* Not yet operational
5
Not yet operational
LED BY EXPERIENCED MANAGEMENT TEAMLED BY EXPERIENCED MANAGEMENT TEAM
Name Details
Mr. P.P. Gupta(Managing Director)
Mr. P.P. Gupta took over Techno in 1980 and has led Techno to become one of the largest companies in the electro‐mechanical fieldin the power sector in India
Actively involved in various power sector developmental activities on behalf of industrial bodies and Ministry of Power, India andll k i th I di t H ll t l ti hi ith i t k h ld i th i d twell known in the Indian power sector. Has excellent relationships with various stakeholders in the industry
Previous employers include Bharat Heavy Chemicals Limited (BHEL) and National Grindlays Bank (Merchant Banking Division)
Education – Hons. Graduate in Industrial Engineering with post‐graduation in Management from IIM, Ahmedabad
Mr. A.K. Mitra(ED – Electricals
Associated with Techno since 1977 and has been heading the Electrical Division at Kolkata since 1980
l d h ll h l l(ED Electricals Division, Kolkata)
He is leading the team to cover all the Electrical Power System
Previously employed with WBSEB (a state utility responsible for Power)
Mr. R.C. Agarwal(ED – UtilityDivision)
Joined Techno in 1978 and has independent charge of handling operations (including Business Development and Execution). Hasexpertise in all aspects of Contracting, Project and Construction Management
Member of Institution of Engineers Indian Institute of Welding Project Manager Associate and the CIIMember of Institution of Engineers , Indian Institute of Welding , Project Manager Associate and the CII
Education qualifications include a degree in Mechanical Engineering from BITS Ranchi
Mr. P.K. Lohia(President ‐Finance)
Associated with Techno since 2004 and has overall responsibility for Finance, Accounts and Taxation
Previously employed with HNG as General Manager (Commercial)
Chartered Accountant by qualification with 20 years of experience in this fieldChartered Accountant by qualification with 20 years of experience in this field
Mr. R.K. Raina(ED – Electrical Division, New Delhi)
Associated with Techno for the past 10 years
Heading the organization's set up in North India. He has expertise in Procurement, Tendering & Project Execution.
6
BOARD OF DIRECTORSBOARD OF DIRECTORS
Name DetailsName Details
Mr. P.P. Gupta Mr. P.P. Gupta took over Techno in 1980 and has led Techno to become one of the largest companies in the electro‐mechanical fieldin the power sector in India
Actively involved in various power sector developmental activities on behalf of industrial bodies and Ministry of Power, India andwell known in the Indian power sector. Has excellent relationships with various stakeholders in the industry
Previous employers include Bharat Heavy Chemicals Limited (BHEL) and National Grindlays Bank (Merchant Banking Division)
Education – Hons. Graduate in Industrial Engineering with post‐graduation in Management from IIM, Ahmedabad
Mr. S.N. Roy(Independent Director )
Has been associated with Techno since 2003
Previous employers include Indian Oil Corporation and BHEL, where he retired as Executive Director
Bachelor of Engineering (Electrical) from Indian Institute of Technology (IIT), Kharagpur
Mr. V.D. Mohile(Independent Director )
50 years of varied experience and is associated with Techno for the last 10 years
Previous appointments include General Manager, BHEL; CEO, Indal Power Company and Chairman OPTCL, Orissa
B.E. (Electrical & Mechanical), Post Graduate Diploma in Industrial Management
K. M. Poddar(Independent Director )
Renowned industrialist with 41 years of experience in the field of accounting and finance
Bachelor of Commerce
K. Vasudevan(I d d t
Positions held presently include Chairman, Green Business Centre for the Southern region, Member, National Committee onP f CII I d d t Di t Al t P j t I di Ltd(Independent
Director )Power of CII, Independent Director, Alstom Projects India Ltd.
Past associations include President, Indian Electrical and Electronics Manufacturers Association and Joint Managing Director,Alstom India Limited
Bachelor of Engineering (Electrical) and a fellow-member of the Institute of Engineers and Institute of Standard Engineers
K. K. Rai Retired banking professional, with 40 years of banking experience.
7
K. K. Rai(Independent Director )
Retired banking professional, with 40 years of banking experience.
Past employments include Executive Director, Allahabad Bank from 2001 to 2004. At present he holds directorships in manyreputed companies
Bachelor of Arts and member of C.A.I.I.B
VISION TO GROW FROM ONLY A POWER EPC COMPANY TO A COMPREHENSIVE POWER PLAYERVISION TO GROW FROM ONLY A POWER EPC COMPANY TO A COMPREHENSIVE POWER PLAYER
Historically been a Power EPC Company
Growing vertically into a Power Generator (Renewable Energy) and Transmission Network
operatorCompany
Provided solutions to nearly half of India’s installed thermal capacity and made it
possible to build 50% of National Grid for
Growing Focus towards Asset Ownership across the Value Chain and High Value EPC Contracting
Inter‐regional Transmission
PAST
8
PASTFUTURE
GROWTH STRATEGY GROWTH STRATEGY –– TWO FOLD APPROACH TO MAXIMISE VALUETWO FOLD APPROACH TO MAXIMISE VALUE
The Indian Power sector continues to provide significant opportunities for EPC companies
India continues to be a power deficit country and the Government has set ambitioustargets for capacity addition
Almost half a century of experience in the Indian power EPC sector and well poised toGrowing the Existing Power EPC Almost half a century of experience in the Indian power EPC sector and well poised tocapitalize on the growing market
G o g t e st g o e CBusiness
Company proposes to build upon its experience and proven expertise in bidding for larger projects and consolidate its presence across a lower number of high value projects
Long term strategy of entering asset heavy businesses requiring lower running costs:
Renewable Power Generation
– Depletion of finite resources to increase relevance for renewable energy in thelong term
– Aspire to be one of the largest Independent Renewable Power Producers in Indiaconcentrating on both proven technologies (Wind power, Bio mass and Hydro)and emerging technologies (Solar)
Transmission Network and Management
Moving up the Value Chain: Entering new Businesses
– Growing priority to reduce transmission losses through up gradation and buildingnew capacities
– Techno already a pioneer in this segment, bagging the first contract awarded inthe private sector under a state PPP model with viability gap funding
9
Comprehensive pure play of the Growing Prospects of India’s Power Industry
GROWTH ENVISAGED GROWTH ENVISAGED –– ACROSS BUSINESS SEGMENTSACROSS BUSINESS SEGMENTS
EPC Business
9,000 10,000
Renewable Energy Generation
300300
350CAGR –
20% CAGR –77%
6,250
2,500
5,000
7,500
95.45
50
100
150
200
250
%
‐
Existing ‐ FY10 Projected ‐ FY12
Revenue (INR mn)
0
50
Existing ‐ FY10 Projected ‐ FY12
Capacity (MW)
Transmission Network
Capacity further expected to grow to 1,250 MW by the endof the Twelfth 5 year plan (FY17)
Company expects to add one transmission line to itsCompany expects to add one transmission line to itsportfolio annually
Portfolio of 5 projects by the end of the Twelfth 5year plan (FY17)
10
EPC CONTRACTING BUSINESS EPC CONTRACTING BUSINESS –– TECHNO IS A PIONEERTECHNO IS A PIONEER
Overview
EPC has been the core business of the Company and accounted for90% of FY10 revenues
Proven Track Record with focus on meeting and exceeding
Financial Performance
12.2% 12.6%7,000 Revenue
CAGR – 26%Proven Track Record with focus on meeting and exceedingcustomer expectations
BHEL awarded Techno as the best vendor for the year 2010
Efficiently run business with low levels of working capital (contraryto industry norms)
11.7%
11.2%
10.6%3,000
4,000
5,000
6,000
, %
Clientele includes major Indian and Global companies like PowerGrid, GE, BHEL, Indian Oil, NTPC, Reliance, Vedanta, Hindalco, etc
Currently multiple EPC projects are under execution across Indiafor clients including Bengal Energy, IOC, MSEDCL, Vedanta, NTPC,Hindalco etc
4,296 4,860 6,318 8.6%‐
1,000
2,000
FY08A FY09A FY10AHindalco, etc
Unexecuted order book of ` 12,850 million as at 31 March 2010
Growth in business to continue going forward owing to:
Growth in market with increasing government focus on powersector and expansion of private sector capacities
Revenue (INR mn) EBITDA%
sector and expansion of private sector capacities
Expansion in product offering as Techno continues to expand itsarray of services
In house EPC (for transmission and bio mass power projects)
11
EPC CONTRACTING BUSINESS EPC CONTRACTING BUSINESS –– TECHNO IS A PIONEERTECHNO IS A PIONEER
Power Generation Power T & D Industrial
EPC Business Segments
EHV Substations
Distribution Systems Management (APDRP)
Rural Electrification (Rajiv Gandhi Gramin Vidyutikaran Yojna)
Fire Fighting Systems
Fuel Oil Systems
Off site piping systems
AC/DC substation for Aluminum plants
Captive Power Plants up to 100 MW on a turnkey basis
Balance of Plant
Fuel oil System
Water intake/ Make Up Systems p
Power distribution systems
Plant Electrical
Illumination systems
High intensity power system for Aluminum smelter pots
p y
Piping networks
Coal handling plant
HT/LT Switchgear
CablingAluminum smelter potsIllumination Systems
Power Evacuation Systems
12
PROVEN TRACK RECORDPROVEN TRACK RECORD
Project Type Description
Major Projects Undertaken
Project Type Description
Fuel Oil System 42 projects covering 60 TG units of sizes up to 500MW
Fire Fighting System 17 projects for Power Plants, Petrochemicals & Industries
Piping Projects 15 projects for Power Plants & Petrochemicals up to 80” dia.
Air‐conditioning System 6 projects for EHV substation
A1 Bus bar Projects 6 projects (power supply system for Industrial sector)A1 Bus bar Projects 6 projects (power supply system for Industrial sector)
Switchyard Projects 75 projects of 400 KV / 220 KV / 132 KV rating20 projects for power plants up to 500 MW & Industries
Plant Electrical 19 projects for Industriesp j
Balance of Plant 3 projects for GT/DG Power Plant
Captive Power Plants 4 projects of 12‐40 MW capacity
13
SOME MARQUEE PROJECTS SOME MARQUEE PROJECTS ‐‐ KhandwaKhandwa‐‐Seoni Transmission Line Seoni Transmission Line
Installation of 40% fixed series compensation package for 400 KV double circuit D/CKhandwa‐Seoni transmission line in association with Nokian Capacitors Ltd, Finlandfor Power Grid Corporation of India Ltd
PROJECT
The FSC platform to be managed was arguably the largest in Asia (each platformThe FSC platform to be managed was arguably the largest in Asia (each platform23.6m x 9.5m), across 6 such platforms
Both line bays were already constructed by another agency and owing to the largesize of the banks it was difficult to accommodate them within the available space
CHALLENGES FACED
Techno innovatively restricted the weight of the platform and used special beams(parallel flange section) conforming to European specifications sourced specially forthe project
TECHNO DELIVERYUsed 110 MT telescopic cranes to assist with the work
Layout and orientation were modified by incorporating middle gantry
TECHNO DELIVERY
14
“It is great to have such an achievement with the scheduled 2 year time span. It is a matter of great pleasure for usthat the power grid system is now able to provide additional power transfer capacity with the introduction of state ofthe art systems from India and Finland” – Client Endorsement
SOME MARQUEE SOME MARQUEE PROJECTS PROJECTS ‐‐ Grid Stations at Bihar Sharif and Bari PahariGrid Stations at Bihar Sharif and Bari Pahari
Modernisation of Grid stations at Bihar Sharif and Bari Pahari for the Bihar StateElectricity Board
PROJECT
Legacy sub stations with no drawings or schemes in existence
Need to identify and categorize key action areas in terms of outright replacement,overhauling and installation of new systems where required while minimizing
CHALLENGES FACED overhauling and installation of new systems where required while minimizing
downtime
Mapped the existing system and developed drawings
Conducted detailed survey with operational tests on individual components to
FACED
Conducted detailed survey with operational tests on individual components toassess quality of current system
Circuits were taken out of service sequentially to minimize downtime.
Apart from main electrical systems and circuit controls, all other sub stationili i (lik LT l ill i ti t fi fi hti t t )
TECHNO DELIVERY
auxiliaries (like LT power supply, illumination systems, fire‐fighting systems etc)were newly installed or overhauled
Complete renovation of control room building, landscaping, roads, drains etc
15
“It is a pleasant surprise to note that a renovated sub station can be as good or better than a newly constructed one.This project must set a benchmark in our sector for upcoming renovation packages in terms of qualitative andquantitative value addition done in a renovation contract” – Client Endorsement
SOME MARQUEE PROJECTS SOME MARQUEE PROJECTS ‐‐ OthersOthers
Project Description
12 MW waste heat recovery based power plant at Haldia
Project Description
12 MW waste heat recovery based power plant at Haldia(Captive Power Plant)
Techno provided full EPC services for the project:Engineering
Conceptual Design
Turbo Generator package for 1x30 MW TT12 (23 MW with air cooling) at Mithipur Plant of Tata chemicals on EPC basis
Techno provided engineering, procurement, execution of all civil, structural, mechanical, electrical and instrumentation, h k h d f hPreliminary & Detail Engineering
Preparation of BOQProcurement
Floating of enquiriesReceipt of offersCommercial evaluation & Placement of orders
hook up with existing system and commissioning of the TG set. Some of the specific work include:
Conversion from brushless excitation system tostatic excitation systemConversion of governing system from hydraulic toCommercial evaluation & Placement of orders
Follow up & inspectionDispatch of material to site
ConstructionCivil construction of boiler fdns,. Power house,cooling tower, DM plant bldg, pipe rack etc
Conversion of governing system from hydraulic toelectro‐ hydraulic system
Techno was able to complete the project in 5 months(against scheduled time of 11 months), earningcommendation from the clientcooling tower, DM plant bldg, pipe rack etc
Erection of equipment, piping, electricals,instrumentation, etcTesting & CommissioningSynchronization with grid
commendation from the client
16
CLIENTELE INCLUDE SOME OF THE LARGEST PLAYERS IN THE INDUSTRYCLIENTELE INCLUDE SOME OF THE LARGEST PLAYERS IN THE INDUSTRY
17
EXCELLENT REVENUE VISIBILITYEXCELLENT REVENUE VISIBILITY
Unexecuted Order Book of `12 850 illi 31 M h
Order Book at 31 March 2010 – Top 10 Orders
Customer Project Value 12,850 million as at 31 March2010 including orders for:
Generation – ` 3,950 mn
Transmission – ` 5,650 mn
Di t ib ti ` 2 500
(` mn)
Maharashtra State Electricity Distribution Ltd 2,480
Maharashtra State Electricity Transmission Co Ltd 1,940 Distribution – ` 2,500 mn
Industrial – ` 750 mnBengal Energy Ltd. 1,203
Bihar State Electricity Board 1,189
National Thermal Power Corporation 762
NEPCO Ltd 755
Vedanta Alumina Ltd. 609
West Bengal State Electricity Transmission Corporation Ltd 517West Bengal State Electricity Transmission Corporation Ltd 517
Power Grid Corporation of India Ltd 490
Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. 389
18
WIND POWER WIND POWER –– A SUSTAINABLE SOURCE OF ENERGYA SUSTAINABLE SOURCE OF ENERGY
Entered the power generation sector by acquiring two wind energy companies in 2009
Current Operations
Pollution free and environmentfriendly source of energy
Super Wind Project Ltd Simran Wind Project Pvt LtdZero fuel cost
Lower construction timecompared to conventionalpower projects
Low operations and
Super Wind Project Ltd
Capacity – 45 WM
Location – Karnataka (12 MW) & TN (33 MW)
30 turbines at 3 wind farms
Simran Wind Project Pvt Ltd
Capacity – 50.45 MW
Location – Karnataka (6 MW) & TN (44.45 MW)
41 turbines at 5 wind farms Low operations andmaintenance Cost PLF – 24% to 29%
Contracted Tariff – ` 3.40 (Karnataka) and ` 3.39(Tamil Nadu)
PLF – 23% to 29%
Contracted Tariff – ` 2.90 to ` 3.39 (Tamil Nadu) and ` 3.40 (Karnataka)
Planned Expansion
Plans to expand by more than 1000 MW by FY17
Recently announced purchase of 202 MW of Wind assets for ` 11,490 million from Suzlon:
106 turbines ranging from 1.5 to 2.1 MW each
~100 MW to be commissioned by May 2011 (Phase 1) and the rest by December 2011 (Phase 2)
Phase 1 is located in Tamil Nadu
Further agreed to purchase additional 300 MW from Suzlon during FY13 – FY14 on mutually agreed terms
19
Further agreed to purchase additional 300 MW from Suzlon during FY13 FY14 on mutually agreed terms
BIO MASS BIO MASS –– AN EMERGING OPPORTUNITYAN EMERGING OPPORTUNITY
No new technologicaldevelopment required givenits similarity to coal basedth l j t
As part of its Renewable Power Generation strategy, Techno plans to foray into Bio mass based powergeneration
Salient features:thermal power projects
Operational Flexibility withthe possibility of using varietyof biomass materials in thesame plant
Six Plants with capacity of 10 MW each
Improving the quality ofelectricity supply in ruralareas 3 Plants in West Bengal, 1 each in Orissa, Madhya Pradesh and Rajasthan
Total estimated project capex ‐ ` 3,000 million
Currently in Land acquisition stage at all locations (completed for 3 sites and ongoing for remaining 3)
20
TRANSMISSION NETWORK MANAGEMENTTRANSMISSION NETWORK MANAGEMENT
First of its kind Public Private Partnership (PPP) project in the country at the state level
First ever transmission project to get VGF support from central government
Jhajjar KT Transco Pvt Ltd
Pioneering Contract to set upand operate a Transmission link
First project in Haryana for which VGF has been sanctioned under the PPP mode
In partnership with Kalpataru Power Transmission Ltd (KPTL) – a leading Power Transmission Company inIndia
Project to be carried out by an SPV (Jhajjar KT Transco Pvt Ltd) – a 51:49 Joint Venture between KPTLd T h
Being a design‐build‐finance‐operate‐transfer contract, itoffers wider revenue streamsfor Techno
and Techno
Awarded Concession to design, build, finance, operate and transfer :
400 KV, 100 Km long transmission link
Connecting 2 sub‐stations at Rohtak & Sonepat (24 bays each)
To evacuate 1,320 MW (2*660) of power from the Jhajjar Power Plant (design capacity – 2,430 MW)built by China Light & Power, Hongkong
Concession period – 25 years (extendable by 10 years)
Project commercials:
Sustainable revenue ‐ Company to be paid a monthly unitary charge (`45 million per month) by HaryanaVidyut Prasaran Nigam (HVPN), besides enjoying incentives and rebates
Bid under viability gap funding where Haryana Government has given grant of ` 939 million
Techno to do EPC and Operations & Maintenance work for the sub‐station part of the project
C i i i f h b i h d l d f D b 2011
21
Commissioning of the sub stations scheduled for December 2011
Section 2
FINANCIAL PERFORMANCEFINANCIAL PERFORMANCE
GROWING REVENUES AND GROWING REVENUES AND EARNINGS (STANDALONE*)EARNINGS (STANDALONE*)
1,368
1,138 1,200
1,400
1,600 6,680
6 000
7,000
8,000
Standalone Revenues & EBITDA# – CAGR – 28% Standalone Profits
Revenue CAGR – 28%
415
613
844
280
491 631
200
400
600
800
1,000
1,200
2,506
3,526 4,296
4,860
369 505 5451,118
1 000
2,000
3,000
4,000
5,000
6,000
‐
200
FY07 FY08 FY09 FY10*PBT PAT
152 369 505 545
‐
1,000
FY06 FY07 FY08 FY09 FY10*Revenues EBITDA
` millions` millions
# Revenue and EBITDA figures above do not include Other Income
19.94 20.00
25.00
Earning Per Share (` ) Profitability Ratios
CAGR –53%
17%12%
14%17%
20%
17%15%
20%
25%
5.57
8.80 11.05
5.00
10.00
15.00 53%10%
12% 11%12%
8%
11% 13%
17%
0%
5%
10%
15%
FY07 FY08 FY09 FY10*
23
‐
FY07 FY08 FY09 FY10*
* Standalone financials for FY10 include 45 MW of wind assets acquired during the year
FY07 FY08 FY09 FY10*
EBITDA Margin PBT Margin PAT Margin
SUMMARY INCOME STATEMENTSUMMARY INCOME STATEMENT
Improvement in EBITDAmargins is due to high EBITDAbeing generated by the Windgeneration business
Standalone Income Statement
` million FY 07 FY 08 FY 09 FY10*
Revenues 3,526 4,295 4,860 6,680Other income includesinterest and dividend receivedfrom market investmentsmade by the company due tosurplus cash balance
Revenues 3,526 4,295 4,860 6,680
Growth % 41% 22% 13% 37%
Operating expenses 3,158 3,791 4,315 5,561
EBITDA 368 504 545 1,118High interest and Depreciationduring FY10 is due tocapitalization of Wind assetswhich were partly financed bydebt
,
EBITDA % 10% 12% 11% 17%
Other income 53 117 312 525
Depreciation 5 6 6 147
Interest 2 3 6 128
PBT 415 612 844 1,368
PBT % 12% 14% 17% 20%
Taxes 135 122 214 230
PAT 280 491 631 1,138
PAT% 8% 11% 13% 17%
24
* Standalone financials for FY10 include 45 MW of wind assets acquired during the year
SUMMARY BALANCE SHEET SUMMARY BALANCE SHEET
Company has historically beenalmost a debt free Company
Debt was taken duringFY09/FY10 to finance
Standalone Balance Sheet
`million 31‐Mar‐07 31‐Mar‐08 31‐Mar‐09 31‐Mar‐10*
Sources of fundspurchase of Wind assets
Increase in fixed assets ismainly on account of windassets
Investments includes
Shareholders' funds 1,166 1,714 2,278 3,701
Loan funds 1 1 420 1,667
Deferred tax liability 6 6 6 7 Investments includesinvestment in Wind powersubsidiary (Simran WindProject Pvt Ltd)
Low levels of operatingworking capital
Deferred tax liability 6 6 6 7
Total 1,173 1,722 2,705 5,375
Application of funds
working capitalNet fixed assets 41 48 47 2,605
Investments 697 1,545 1,514 1,865
Current Assets 937 973 2,620 3,116
Current Liabilities 503 845 1,477 2,212
Net Current Assets 434 129 1,143 905
Total 1,173 1,722 2,705 5,375
25
* Standalone financials for FY10 include 45 MW of wind assets acquired during the year
SUMMARY INCOME STATEMENTSUMMARY INCOME STATEMENT
Consolidated results includefinancials of Simran WindProject Pvt Ltd in FY10
High PBT levels due to other
Consolidated Income Statement
` million FY 07 FY 08 FY 09 FY10
Revenues 3,526 4,295 4,860 7,021 income from interest earnedon deposits & investments
Revenues 3,5 6 , 95 ,860 ,0
Growth % 41% 22% 13% 44%
Operating expenses 3,158 3,791 4,315 5,598
EBITDA 368 504 545 1,423 ,
EBITDA % 10% 12% 11% 20%
Other income 53 117 312 503
Depreciation 5 6 6 303
Interest 2 3 6 210
PBT 415 612 844 1,414
PBT % 12% 14% 17% 20%
Taxes 135 122 214 231
PAT 280 491 631 1,183
PAT% 8% 11% 13% 17%
26
SUMMARY BALANCE SHEET SUMMARY BALANCE SHEET
Consolidated results includefinancials of Simran WindProject Pvt Ltd in FY10
Consolidated Balance Sheet
` million 31‐Mar‐07 31‐Mar‐08 31‐Mar‐09 31‐Mar‐10
Sources of funds
Shareholders' funds 1,166 1,714 2,278 4,626
Loan funds 1 1 420 2,467
Deferred tax liability 6 6 6 7Deferred tax liability 6 6 6 7
Total 1,173 1,722 2,705 7,100
Application of funds
Net fixed assets 41 48 47 5,530
Investments 697 1,545 1,514 500
Current Assets 937 973 2,620 3,289
Current Liabilities 503 845 1,477 2,219
Net Current Assets 434 129 1,143 1,070
Total 1,173 1,722 2,705 7,100
27
Section 3
INDUSTRY OUTLOOKINDUSTRY OUTLOOK
INDIAN POWER SCENARIO: INDIA CONTINUES TO BE POWER DEFICITINDIAN POWER SCENARIO: INDIA CONTINUES TO BE POWER DEFICIT
India is far below other countries in electricity consumption
6,317
13,652
Russia
US
Peak Load Shortage due to Capacity Shortfall (%)
13 13.8
16.6
13 315
20
542
2,171
2,332
6,3
India
Brazil
China
12.4 1311.8 12.2
11.2 11.7 12.3 11.913.3
5
10
15
Per capita consumption expected to increaseto 1000 kWh pa over next 5 years
%
Demand to grow at 9% over next 20 years (GW)
0
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
Industry Dynamics
KWh per capita per annum
Source: CEA Source: CEA
Demand to grow at 9% over next 20 years (GW)
785
1,207
800
1,000
1,200
1,400
Industry Dynamics
The government plans to add 95 GW of generating capacity during thenext 5 years to meet the growing demand
Development of National grid with a capacity of 200,000 MW andinter‐regional transmission capacity of 37,000 MW estimated to be
215 331
510
‐
200
400
600
800 g p ycompleted by 2012
Government initiatives
Sector outlay ~ ` 9.3 trillion over next 5 years
Increasing role of private players in generation, transmission anddistribution
29
FY12E FY17E FY22E FY27E FY32Edistribution
– Faster approvals and facilitation for projects under privatesector
Growing domestic consumption and increased government thrust to fuel power sector growth
Source: CEA
POWER CAPACITY TO WITNESS DOUBLE DIGIT GROWTHPOWER CAPACITY TO WITNESS DOUBLE DIGIT GROWTH
` 9.3 trillion to be spent onPower sector over next 5years as follows:
India’s Power Capacity set to grow at CAGR of 10.8% over next 5 years
Generation – ` 5.8 trillion
Transmission andDistribution – ` 3.4trillion
21.5
23.7
20
25
2,500
3,000
Capacity of 95 GW to be added over next 5 years
` 9.3 Trillion to be spent on capacity expansion
1,379 1,589
1,812
2,082
2,397
13.5
17.618.8
10
15
20
1 000
1,500
2,000
,500
0
5
‐
500
1,000
FY11P FY12P FY13P FY14P FY15PFY11P FY12P FY13P FY14P FY15P
Yearly Investment (INR bn) Capacity Addition for the year (GW)
Capacity Expansion in the Power sector presents huge opportunity for Power
Source: CRISIL
30
Capacity Expansion in the Power sector presents huge opportunity for Power EPC players
RENEWABLE RENEWABLE ENERGY (RE) ENERGY (RE) IN GREATER FOCUSIN GREATER FOCUS
53.0 Renewable energy principally comprises wind power, hydropower, solar power and biomass energy
Sector to Continue on Growth Path (GW)Renewable Energy in India
7 5
6.5
Mini
3.3 9.3
15.5 23.3
Sector has experienced rapid growth in India, with the 15.5 GWof installed capacity (excluding large hydro) accounting for ~10%of India’s overall power capacity
Capacity expected to grow at a CAGR of 11% by the end of13th 5 year plan
39
7.5 Mini Hydro
Biomass
Wind
FY03 FY07 FY10 FY12P FY22P
Strong Regulatory Thrust Towards Renewable Energy
y p
Good execution track record – 6.7 GW added in the 10th 5year plan against a planned addition of 3.5 GW
Source: MNRE, Planning commission, CRISILFY22P
Pursuant to the Electricity Act of 2003 and the National Tariff Policy of 2006, SERC’s are encouraged to set preferential tariffs for powerproduced from renewable energy
Renewable Energy Companies are entitled to various tax incentives like:
Accelerated depreciation @ 80% on assets employed in renewable energy generation
g g y gy
p @ p y gy g
Tax holiday for 10 years (within first 15 years of operations)
Excise duty relief on certain capital goods
“Must Run” Status – Per CERC Regulations, all renewable energy power plants (except certain biomass plants) treated as must run powerplants and are not subject to merit order dispatch principles
31
p j p p p
Other incentives like RPOs, GBI, REC etc
India plans to raise the share of renewable energy in national power output to 10% by 2015
INCENTIVES FOR RENEWABLE ENERGYINCENTIVES FOR RENEWABLE ENERGY
Renewable Portfolio Obligation (RPO) specified by the State Electricity Regulatory Commissions*
Many states have institutedpenal mechanism for notmeeting RPO requirements
State FY11 FY12 FY13 FY14 FY15 FY16
1 Gujarat 5% 6% 7%
2 Maharashtra 6% 7% 8% 9% 9% 9%meeting RPO requirements(Maharashtra SERC has alreadylevied financial penalty on stateutilities for not meeting RPOobligations)
NAPCC (National Action Plan on
2 Maharashtra 6% 7% 8% 9% 9% 9%
3 Uttaranchal 4% 5% 6%
4 Manipur 2% 3% 5%
5 Mizoram 5% 6% 7%
6 Jammu & Kashmir 1% 3% 5%NAPCC (National Action Plan onClimate Change) targets 15%share of renewable energy by2020; Most SERCs are expectedto increase RPO obligations tomeet national target gradually
6 Jammu & Kashmir 1% 3% 5%
7 Uttar Pradesh 4% 5% 6%
8 Tripura 1% 1% 2%
9 Jharkhand 2% 3% 4%
10 Himachal Pradesh 10 10% 11 10 12 10%
REC mechanism will encourageinter‐state transmission ofrenewable power, enablingstates to meet their RPO bytrading RECs on power exchange
10 Himachal Pradesh 10.10% 11.10 12.10%
11 Orissa 4.5% 5% 5.5% 6% 6.5% 7%
12 Assam Draft 1.4% 2.8% 4.25 5.6% 7%
13 Tamil Nadu 14%
14 Delhi 1%
States are offering increasingpreferential tariffs for powergenerated from renewableenergy sources
14 Delhi 1%
15 Andhra Pradesh 5%
16 Karnataka 11%
17 West Bengal 10%
18 Rajasthan 9 5% 9 5%
32
18 Rajasthan 9.5% 9.5%
19 Madhya Pradesh 10%
20 Punjab 4%
21 Haryana 10%*Source: MNRE
INCENTIVES FOR RENEWABLE ENERGYINCENTIVES FOR RENEWABLE ENERGY
Renewable Energy Certificates (REC)
REC is a mechanism to enforce RPO across the country
This mechanism is to be governed by CERC which announced the Renewable Energy GeneratorThis mechanism is to be governed by CERC, which announced thebasic terms and conditions for a tradable REC program in January2010. Key stakeholders in REC framework are:
Central Agency
– Responsible for registration, issuance of RECs, maintainingOption 1:
Preferential TariffsOption 2: RECs
Renewable Energy Generator
accounts, settlements, repository, monitoring and suchother functions incidental to the implementation of RECmechanism [National Load Dispatch Centre]
Accreditation Body (AB)
Checks RE generators against their eligibility criteria and
Preferential Tariffs RECs
• Sale of power at weighted Sale of RECs at market determined– Checks RE generators against their eligibility criteria andthe norms specified by MNRE, An approving Authority[State Nodal Agency (SNA)]
Monitoring Body (IB)
– Verifies electricity generation from RE sources and
• Sale of power at weighted average power purchase cost** of distribution company
• Sale of electricity at market price in open market
Sale of RECs at market determined prices at Power Exchange (With Floor & Forbearance Prices* for non‐solar of `1.5 & `3.9 and of `12.0 & `17.0 for solar )
notifies the Central Agency [Load Dispatch Centres (LDCs)]
Trading Platform
– Facilitates transactions [IEX/Power Exchange India Ltd.]
Compliance Auditors
States with low renewable energy generation will be able to purchase RECs to offset their respective Renewable Purchase Obligations
33
– Monitors effective compliance by RE producers ( To beselected by CERC) •Per KWh
** Weighted average pooled price at which distribution company has purchased electricity (including cost of self generation, long term and short term purchase) in the previous year, but excluding cost of RE power purchase
INCENTIVES FOR RENEWABLE ENERGYINCENTIVES FOR RENEWABLE ENERGY
Generation Based Incentive (GBI)
A GBI pilot scheme was introduced in July 2008 to provide benefit towind power producers
Clean Development Mechanism (CDM)
Under the Kyoto Protocol, the CDM allows for projects in developingcountries that result in reduction of GHG emissions to earn Certifiedp p
Current GBI scheme was introduced in December 2009 as an optionalbenefit available for Wind power producers in lieu of AcceleratedDepreciation Benefit
GBI is a Generation based benefit available to Wind Power producerso er and abo e the base tariff
Emission Reduction credits (CERs)
CERs are tradable carbon credits that can be purchased by developedcountries to meet their emission reduction targets
To qualify to receive CERs, a project must satisfy the following criteria:over and above the base tariff
Benefit of ` 0.5 / kWh of power produced
Incentive available for a maximum period of 10 years from date ofcommercial operation (subject to maximum of ` 6.20 mn perMW)
Approval from Designated National Authorities of host country
Public registration and issuance process with the UNFCCC
The additional funds thus generated to go towards improving thefinancial viability of clean energy projects
)
Incentive is limited to wind farms with a maximum aggregate installedcapacity of 4,000 MW
Only available for power producers whose capacities arecommissioned for sale to the grid (i.e. ‐ not available for captivepower projects and merchant plants)
Indian scenario:
Indian projects comprised about 24% of all projects registeredglobally till 2009.
As of September 2010, India had 532 registered projects (426 ofwhich were in the energy sector)power projects and merchant plants)
IREDA appointed as the nodal agency for monitoring GBIimplementation, project registration and disbursement of GBI
Entire funding for GBI to be met by Central Government
which were in the energy sector)
34
WIND ENERGY WIND ENERGY –– LONG TERM GROWTH MARKETLONG TERM GROWTH MARKET
Historical CAGR – 28%
Projected CAGR – 12%
Wind Energy ‐ Historical Growth to Continue
142,219 140,000
160,000
CAGR – 28% CAGR – 12%
63,230
111,432
80,000
100,000
120,000
1,077 1,167 1,407 1,702 2,125 3,000 4,430 6,270 7,845 9,645
31,436
‐
20,000
40,000
60,000
Source: Global Wind Energy Council (Moderate Scenario)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2015P 2020P 2025P 2030P
Only 25% of potential currently utilized
75 000
Industry potential could be much higher than the 48 GW estimate dueto offshore wind resources – Global Wind Energy Council
48,561
12,809* 25,000
50,000
75,000 gy
Wind is expected to account for 12 – 14% of India’s power generationby 2030
Capacity additions to translate into an average annual investment of ``327 bn
35
‐
Power Potential Installed Capacity
* As at 30.9.2010
BIO MASS BASED POWER BIO MASS BASED POWER –– EMERGING MARKET WITH HUGE POTENTIALEMERGING MARKET WITH HUGE POTENTIAL
Power Generation through Biomass
Biomass is a resource for deriving renewable energy using agriculturalwastes like straw, husk and bagasse and other forms of waste likeanimal dung, municipal waste and sewage
Biomass in India: The Story is Just Beginning
Total installed capacity of biomass plants in India as at October 2009was 2,125 MW
Estimated potential of 25 000 MW means just 8 5% of the biomassBiomass is collected from farmers and transported to the power plant,where the material is processed and readied for burning
Fuel is burnt in a high pressure boiler to generate steam and operate aturbine to produce power
Estimated potential of 25,000 MW means just 8.5% of the biomasspotential has currently been realized
Number of policy initiatives have been introduced since 1993 forsupporting the commercial exploitation of India’s biomass powerpotential
Some of the common technologies used in biomass power generationinclude direct combustion, biomass gasification, co‐generation andbiogas production
Climate change legislation is further expected to incentivize lowcarbon options such as bio power
Biomass Potential of 25 000 MW Largely UntappedBiomass Power Generation Technologies Biomass Potential of 25,000 MW Largely Untapped
16,881
24%20%
25%
30%
12,000
15,000
18,000Actual Potential % Achievement (RHS)
Biomass Power Generation Technologies
Technologies
1,241 817 67
5,0002,700
5%3%
0%
5%
10%
15%
0
3,000
6,000
9,000
C i b A id W
Co Generation
Combustion Gasification Biogas
Biomass used as fuel by partial combustion and
Utilizing a byproduct to generate
Anaerobicbacterial fermentation of
Direct burning of biomass to produce energy
36
Cogeneration‐bagasse Agro‐residue Waste to energy
Source: MNRE
combustion and conversion to fuel gas
generate electricity (such as bagasse based power generation in sugar sector)
fermentation of biomass in a closed space
produce energy
IMPORTANT NOTICEIMPORTANT NOTICE
No representation or warranty, express or implied is made as to, and no reliance should be placed on, the fairness, accuracy,
completeness or correctness of such information or opinions contained herein. The information contained in this presentation
is only current as of its date Certain statements made in this presentation may not be based on historical information or factsis only current as of its date. Certain statements made in this presentation may not be based on historical information or facts
and may be “forward looking statements”, including those relating to the Company’s general business plans and strategy, its
future financial condition and growth prospects, and future developments in its industry and its competitive and regulatory
environment Actual results may differ materially from these forward looking statements due to a number of factors includingenvironment. Actual results may differ materially from these forward‐looking statements due to a number of factors, including
future changes or developments in the Company’s business, its competitive environment and political, economic, legal and
social conditions in India. This communication is for general information purpose only, without regard to specific objectives,
financial situations and needs of any particular person This presentation does not constitute an offer or invitation to purchasefinancial situations and needs of any particular person. This presentation does not constitute an offer or invitation to purchase
or subscribe for any shares in the Company and neither any part of it shall form the basis of or be relied upon in connection
with any contract or commitment whatsoever. The Company 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 can not be copiedof this presentation, without obligation to notify any person of such revision or changes. This presentation can not be copied
and/or disseminated in any manner.
37
THANK YOU