AN INVESTOR PRESENTATION Quarter ended March 31, 2018 TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED

Transcription

1 AN INVESTOR PRESENTATION Quarter ended March 31, 2018 TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 1

2 SNAPSHOT TEECL is 3.5 decade old primarily power sector EPC company headquartered in Kolkata (India), listed on NSE, BSE Core engineering team possesses average experience of 25+ years Completed and delivered 350+ projects in existence (up to 31 March 2018) Credit Rating by CRISIL & ICRA Long Term: AA Short term: A1+ Employs 500+ professionals (engineering, commercial, graduates and post-graduates) Enjoyed a market capitalization of INR mn (as on 31 st March, 2018) TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 2

3 TECHNO S OPERATING STRUCTURE Techno Electric & Engineering Company Limited 100% 49% 49% 26% Generation Simran Wind Projects Limited Jhajjar KT Transco Private Limited Patran Transmission Company Limited Kohima Mariani Transmission Limited EPC Transmission & Distribution MW Wind Energy Generation Design, Build, Finance, Operate and Transfer a 400kV/1500MVA Transmission Network in Haryana capable of transferring 2,430 MW Build a transmission network at Patran, Punjab on Build, Own, Operate and Maintain (BOOM) basis for 35 years Build & Transmission network at Kohima, Nagaland on Build, Own, Operate and Maintain (BOOM) basis for 35 years Industrial Green Power Linkages TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 3

4 OVERVIEW TEECL, one of the most attractive proxies of India s power sector One of the largest in the power-infrastructure space in India Engaged in three business types EPC/Asset Ownership/Operations and Maintenance Covers three power sector segments - generation, transmission and distribution Lifecycle engagement - design to commissioning to handover to maintenance CPSUs, State-run utilities and private sector customers (captive power plant and power distribution system for power intensive industries) Addresses complete solutions for conventional and renewable sectors Once a customer, always a customer 1980 Launched EPC services 2009 Entered renewable energy generation 2010 Entered transmission segment TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 4

5 RICH PROMOTER PROFILE & EXPERIENCE TEECL led by Mr P. P. Gupta, Key promoter & Managing Director Honours Graduate in Industrial Engineering; post-graduate in Management (IIM, Ahmedabad); working experience with BHEL; merchant banker with National Grindlays Bank Partnered in Techno Electric and Engineering Company Ltd in 1980 Grew TEECL into prominent Indian EPC company engaged in power generation and transmission PPP linkages Engaged with industry associations (IEEMA, Confederation of Indian Industry, IIPW and IIW; Vice President of Indian Electricals and Electronics Manufacturers Association) Recognized as top 100 Indian CEO s by Business Today PWC TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 5

6 ONE-STOP SOLUTIONS PROVIDER BOOT and BOOM projects (providing annuity income) EPC (T&D + rural electrification + captive waste heat recovery + solutions for power-intensive industries (88% of revenues, 63% of EBIT, FY18) Green power generation (10% of revenues, 25% of EBIDTA, FY18) PPP transmission: capital-intensive, modest ROE, stable multi-year income/cash flow, in-house EPC business, annuity O&M revenues EPC: Less capital-intensive, high risk-reward ratio Wind energy: Capital-intensive, modest IRR, multi-year stable income/cash flows TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 6

7 GROWING RESPECT AND RECOGNITION IEI Industry Excellence Award, 2016 IEI Industry Excellence Award 2016 from The Institution of Engineers (India) for demonstrating Highest Order of Business Excellence Mr. P. P. Gupta receiving the best performance award, 2013 Meritorious Performance in Power Sector in by Ministry of Power Best player in 765 KV AIS Substation Construction in India in 2018 by PGCIL Certificate of appreciation from North Bihar Power Distribution Co. Ltd. & Bihar State Power (Holding) Company Limited Best performance & Safety award 2016, 2015, 2014 & 2013 from Power Grid Corporation National award for meritorious performance in the power sector from the Ministry of Power, 2014 Best Under a Billion (according to Forbes) Top 200 small and mid-cap companies Received award from PGCIL in 2018 as Best player in 765 KV AIS Substation Construction in India TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 7

8 TEECL BUSINESSES Engineering, Procurement and Construction Services Transmission projects under PPP model (BOOT and BOOM) Renewable Energy Generation TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 8

9 OPTIMISTIC OUTLOOK: POWER SECTOR Thirteenth Plan Highlights ( ) : Total Generation capacity target: 450 GW Total capacity in demand till 2022: 280 GW, Fresh Capacity addition: 85 GW (35% in pvt. Sector) Increase in inter-regional capacity from 63 GW (FY17) to 118GW (FY22). Total Transmission investments: INR 2,600 Bn, of which 1,600 Bn in 400 KV +, and 1,000 Bn in 220 KV Rising private sector participation through TBCB and VGF scheme Road map to award project worth Rs 1000 Bn, additional projects work Rs 74 Bn are identified. Target Substation Capacity 5,00,000 MVA, Additional Capacity target: 1,30,000 MVA Distribution sector will see surge in investment. Central government sponsored scheme such as IPDS and DDUGY, investment of Rs 72 Bn from FY State DISCOMS and TRANSCOS expected to strengthen T&D infrastructure as part of UDAY scheme. Techno is attractively poised & geared up to address the sizeable opportunity in forthcoming 13 th Plan and bid for the projects that come in years ahead. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 9

10 1 OUR BOOT AND BOOM BUSINESS Why transmission? Leveraging EPC knowledge as transmission complements EPC Long-term annuity incomes; annuity model enhances valuation and profitable encashment opportunity Generates operations & maintenance revenues Asset ownership; enhances scale and stability Growing government preference for private sector role Reduces requirement to bid aggressively and therefore decrease participation in unhealthy competition TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 10

11 Techno s transmission competitiveness Extension of EPC capability - leveraged knowledge; extended from one segment to another Competitiveness has translated into a higher strike rate in bagging projects Active solutions orientation 400 kva to 765 kva substations (AIS & GIS technology) Extensive vendor ecosystem - timely project delivery/excellent negotiation ability/quality control 500 professionals with diverse skills (EPC and support) Low gearing; high credit rating; low-cost debt Delivered most EPC and BOOT/BOOM projects on or before schedule Increased global interest in our business model TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 11

12 PROJECT ONE: JHAJJAR KT HARYANA Implementing agency Jhajjar KT Transco Pvt. Ltd. 51:49 JV of Kalpataru Power Transmission Ltd. and Techno Electric JV commissioned 400 kv project (March 2012) Project commissioned in record 15 months First transmission project to receive viability gap funding support from Central Government INR 4440 mn project (debt and equity) INR 2760 mn debt (current debt INR 1600 mn) and combined equity (INR 760 mn) from JV partners INR 920 mn grant by Central Government DBFOT arrangement for 25 years (extendable by 10 years) Terminal value 60 months of revenue (after 25 years of concession period) INR 45 mn income/month without considering inflation 400 kv transmission system comprises Double Circuit Quad Moose Line Extending from Jharli to Kabulpur, Rohtak (35 KM) Extending from Kabulpur to Dipalpur, Sonepat (64 KM) Two substations of 400/220 kv of 24 bays each at Rohtak and Sonepat Transmission network designed to evacuate 2,400 MW Will initially transmit 1,320 MW (2X660 MW) from Jhajjar Power Plant TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 12

13 PROJECT TWO: PATRAN, PUNJAB 400 kv transmission system commissioned in June 2016 Comprises LILO of both circuits 1,000 MVA evacuation capacity INR 2000 mn project with Debt Equity ratio of 3 Build, Own, Operate and Maintain (BOOM) transmission network Implementing company acquired by TEECL from PFC Consulting under PoC mechanism of CERC Designing, constructing, erecting, completing and commissioning responsibility INR 1750 mn to TEECL EPC arm and expected revenue to O&M agency (TEECL) of INR 20 mn annually Annual revenue of INR 300 mn. Projected INR 10,000 mn income over the complete concession period of 35 years Financial closure achieved at competitive rates; Commissioned in June, 2016 Entered a definite agreement with India Grid Trust to sale 46% of shares of Patran at Enterprise Value of Rs 250 crores 400/220kV substation with 14 bays in Patran Patiala-Kaithal 400 kv double circuit triple snow bird line at Patran TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 13

14 PROJECT THREE: KOHIMA NAGALAND Build, Own, Operate and Maintain (BOOM) transmission network. INR mn project with Debt Equity ratio of 3 Implementing agency REC Ltd. 74:26 Kalpataru Power Transmission Ltd. and Techno Electric Designing, constructing, erecting, completing and commissioning responsibility INR 2800 mn to TEECL EPC arm and expected revenue to O&M agency (TEECL) of INR 60 mn annually Annual revenue of expected INR 2000 mn. Projected INR 70,000 mn income over the complete concession period of 35 years. Financial closure has been achieved; Expected date of Commissioning in July, kv transmission system Extending from Imphel to New Kohima, (134 KM) Extending from New Kohima to Mariani (119 KM) Substations of 400/220 kv at New Kohima TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 14

15 ROAD FORWARD Execute 1-2 project annually Generate increasing insourcing of EPC contracts Increasing expertise and focus in setting up substations Diversified incomes; annuity and upfront fees Projected portfolio of 4 projects by 2020 From 20% of EPC orders from PPP projects in 2012 to 10% in 2015 to 20% (est.) by 2020 Increased competitiveness is translating into project selectivity (high IRR) Building efficient evacuation facilities for the nation TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 15

16 2 OUR ENGINEERING, PROCUREMENT AND CONSTRUCTION (EPC) SERVICES BUSINESS Power generation Turnkey solutions to captive power plants Balance of Plant Transmission and distribution EHV substations EHV substations up to 765 kv (AIS / GIS) STATCOM installation up to 250 MVaR Distribution Distribution systems management (APDRP) Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGVY) Industrial sector (including power intensive industries, aluminum smelter, refineries) Power distribution systems to power intensive industries Offsite piping systems Oil handling plant process industries TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 16

17 Techno s EPC competitiveness Promoter-driven for 35 years Three-decade experience (including BOP packages) Respected for project management, timeliness, completion and cost-effectiveness Partnership with large International manufacturers Management of customer expectations and contractual obligations Respected for graduating to next technology and embracing challenges Robust vendor eco-system Pioneered power distribution solutions for aluminum smelters (360 ka busbar systems, 2013) Quicker project completion than industry standard 40% share of 765 KV EHV substation segment Efficient working capital management TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 17

18 Techno s operating philosophy Focus on PAT/retained cash (not size of order book) Cash rich; high liquidity; low gearing; income mix (lumpy and annuity) Project execution synced with project cash cycle; zero penalty record; realized retention money within 12 months of project completion Marginal working capital outlay De-risked: bid with own cash; work for CPSUs or bilaterally/multi-laterally funded SEB projects Conservative accounting policy Quality assets for national benefit TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 18

19 Core business (EPC) 88% of overall FY18 revenues Revenue visibility of 24 months Selective project bidding 67% ROCE of EPC as on 31 March, 2018 Annual cash surplus of more than INR 2500 mn Bright outlook for next 5 years Order book INR 20,500 mn (as on March 31, 2018) CAGR of 23% for EPC Revenues over last 4 year Well-planned projects executed in sync with cash flow and contractual obligations Prestigious Clients Power Grid, BHEL, Indian Oil, NTPC, Reliance, Vedanta, NTPC, Hindalco, GE among others Conservative & prudent management approach to EPC business Timely projects closure and retention money inflow TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 19

20 TECHNO S EPC ORDER BOOK ORDER BOOK as on 31 st March, 2018 Name of the client Amount % Power Grid Corporation of India Ltd. 9, Jharkhand Bijli Vitran Nigam Ltd 3, NERSS, Nagaland (BOOT Project) 2, DBS 2, TS Transco Ltd NTPC Ltd Rajasthan Rajya Vidyut Prasaran Nigam Ltd Others Total 20, Segment - wise order book as on 31 March, 2018 Generation INR 539 million Transmission INR million Distribution INR 3926 million TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 20

21 TECHNO S IMPRESSIVE CLIENTELE Helped build 50% of India s National power grid Historically engaged with more than 50% NTPC projects (various capacities) Multi-year engagements with Power Grid Corporation, BHEL, Indian Oil, NTPC and Hindalco Associated with power distribution solutions for major oil refineries (Bina, Paradip, Bhatinda, Panipat among others) and aluminium smelters (Hindalco, Nalco among others) TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 21

22 EPC FINANCIALS (INR in mn.) Revenue 5, , , , , EBIDTA , , , PAT , , Cash surplus , , , ROCE (%) Note FY 2017 and FY18 Financials are not comparable due to impact of GST. 1. Earlier the Revenues was accounted inclusive of taxes which now is exclusive of taxes hence the revenues is impacted by around 10-11% lower for FY Some of the contracts have not been amended by our clients post GST. Therefore, the contracted value is yet to be amended, and billing to that extent is yet to be completed. This is being done during the current quarter. However, we have accounted the bills with GST effect from our sub-contractors as expenses and bills against these expenses are yet to be raised by us to our customers. This has lowered the EBIDTA in FY18 to the tune of Rs 20 crores, which will be accounted for in Q1FY19. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 22

23 EPC ROAD FORWARD Overseas Market Won 2 Overseas Project: Uganda: Design, Supply & Erection of 160 km 132 Kv double circuit Mbarara - Nkendao transmission line and associated substations worth Rs 95 Crores Afghanistan: The Afghanistan Breshna Sherkat (DABS), Kabul, Afghanistan for design, supply and construction of 500 KV Substation worth US$ 35 Mn. Our portion is US $26 Mn, that is likely to be enhanced to US$ 40 Mn. Potential Kenya: We are in exploring opportunities in countries like kenya, wherein we expect an order of around US$ 100 Mn. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 23

24 EPC ROAD FORWARD INDUSTRIAL IOC, BP, HP plan to spend more than INR 12,00,000 mn on refinery expansions in the next 5 years. Vedanta and NALCO plan to invest around INR 4,00,000 mn on expansion of its capacities in the next 3-5 years. Expertise in certain niche areas in handling complex projects, which includes high precision fabrication and machining skills in power guzzling industrial units. TEECL s specialization extends to installation of high end (360KA) aluminum bus bar system for aluminum smelters. Its capability extends to plant s electrical and illumination, cabling project, water & allied system, installation of fire protection system. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 24

25 EPC ROAD FORWARD Emission Control Pursuant to Govt. of India, Gazette notification of 7th December, 2015 all Thermal Power Plants need to limit the Sulphur emission. Techno is expected to take 1-2 orders with an order size of INR mn. Requirement of global technology tie-ups by EPC players. Total investment of Rs 1200 Bn estimated. Tied up with Global Major K C Cottrell, South Korea for emission control technology Waste-to-Energy NTPC to invite players to set up 100 waste-to-energy pollution-free plants. As per MNRE, it has a potential to generate power of 2780 MW by Establishing relationship with Global Major from Norway for waste-to-energy technology. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 25

26 EPC EMERGING OPPORTUNITIES Solar Power / Power Storage Solution Targeted Solar Capacity in India by 2022 of 100 GW with investment of Rs 6000 Bn. 25 GW of installation expected through from EPC route of Rs 1500 Bn NTPC to execute 10 GW installation in next 5 years. Well placed to execute 3-5% of installations by CPSU s in EPC route over next 5 years. We have tied up with Global Major STEAG, Germany for power storage technology. Electric Vehicle Charging Station We are working exclusively with Delta Group, Taiwan to bid for a NTPC project for establishing a major electric vehicle charging station at Jabalpur TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 26

27 CURRENT RENEWABLE ENERGY ASSET OVERVIEW Sold MW of wind power assets at an effective valuation of INR 2150 mn during the Q1 FY Sold 33 MW of wind energy assets at an effective valuation of INR 1650 mn in Jan Exited the assets at the same price at which investment was made. 12 MW of wind energy asset sold to subsidiary. Intend to divest balance portfolio of MW wind assets to improve strength for bidding more PPP projects in transmission sector, improve ROCE & focus on core EPC vertical. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 27

28 CURRENT ASSET OVERVIEW Capacity 18 MW MW Date of Acquisition /Commissioning Simran Wind Project Limited During March 31, February 24, 2012 Location Karnataka Tamil Nadu ( MW) Capacity 12 turbines * 1.5 MW each 48 turbines * 1.5 MW each; 19 turbines * 2.1 MW each PLF 18% - 26% 19% - 26% Tariff INR 3.40 (Karnataka) APPC tariff INR 3.12** (TN) for MW Project cost INR 6650 mn* O&M Free for first 5 years; 5% escalation from INR 1 mn/mw Free for first 4.5 years; 5% escalation from INR 0.80 mn/mw started from May 2016 for 72MW and INR 0.95 mn/mw starting Aug 2018 GBI benefit MW registered with IREDA *IFC had originally invested 3.38% in Simran Wind Project Ltd. for $5 million at INR 40/share in lieu of 5,625,000 equity shares (buyback done by Techno in FY 2016); Project debt of $85 mn (INR 4165 mn) raised at average 6.5% from IFC, DBS and Standard Chartered Bank. One of the longest (10.5 years) non-recourse project financing undertaken for a wind energy project in India (without credit guarantees or credit insurance). TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 28.

29 GREEN ENERGY FINANCIALS (INR in mn.) Revenue , , EBIDTA , , Other Income PAT Cash generated , Units generated (in mn) Realization / unit (INR) Note FY 2016, FY 2017 and FY18 Financials are not comparable with that of previous year as the Company had divested MW of wind assets during FY 2016 & 33MW in FY FY17 revenues includes revenue of Rs crores for the wind asset sold, which was not there in FY18. Due to this the EBIDTA was also lower by effective amount. 2. There was a capital gain in FY17 due to the sale of wind asset to the tune of Rs crores, which should be excluded while looking at the bottom-line of the company. 3. There was a capital gain in FY16 of Rs 25.4 crores on account of sale of MW of wind assets included in other income, which should be excluded while looking at the bottom-line of the company. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 29

30 QUARTERLY FINANCIALS (INR mn) Standalone Consolidated Mar-18 Mar-17 Change (%) Mar-18 Mar-17 Change (%) Revenues 3,282 3,579-8% 3,296 3,619-9% Operating expenses 2,835 3,069-8% 2,874 3,075-6% EBITDA % % EBITDA % 13.6% 14.1% -11% 12.8% 15.0% -16% Other income % % Depreciation % % Interest % % PBT % % PBT % 15.81% 20.64% -23% 11.95% 18.31% -35% Taxes % % Profit after tax % % Note 1. Q42017 and Q4FY18 Financials are not comparable. Earlier the Revenues was accounted inclusive of taxes (Sales tax/vat/gst) which now is exclusive of taxes. 2. Some of the contracts have not been amended by our clients post GST. Therefore, the contracted value is yet to be amended, and billing to that extent is yet to be completed. However, we have accounted the bills with GST effect from our sub-contractors as expenses and bills against these expenses are yet to be raised by us to our customers. This has lowered the EBIDTA in FY18 to the tune of Rs 20 crores, which will be accounted for in Q1FY19. There was a capital gain in FY17 due to the sale of wind asset to the tune of Rs crores, which should be excluded while looking at the bottom-line of the company. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 30

31 CONSOLIDATED FINANCIALS Consolidated Income Statement (INR mn) Revenues 13, , EPC 12, Energy 1, ( ) Corporate ( ) EBIT EPC 1, , Energy ( ) Corporate ( ) Interest PBT 2, , PBT % Taxes (-97.0) PAT 1, (+97.6) 2, PAT % EPS (Rs) Note on the subsequent page TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 31

32 CONSOLIDATED FINANCIALS Consolidated Balance Sheet SOURCES OF FUNDS (INR mn) Shareholders funds 11,070 * 12,520 Minority interest Loan funds 2, Deferred tax liabilities Other liabilities and provisions Total 14,358 13,982 APPLICATION OF FUNDS Net fixed assets 6,468 6,047 Investments Loans and advances Cash and Bank Balance (including short term Investment) (a) 4,871 4,083 Current assets (b: Less a) 7,197 8,274 Current liabilities (c) 5,053 5,402 Net current assets (b c) 2,144 2,872 Total 14,358 13,982 TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 32

33 Notes to Accounts Note 1. FY2017 and FY2018 Financials are not comparable. Earlier the Revenues was accounted inclusive of taxes (Sales tax/vat/gst) which now is exclusive of taxes hence the revenues is impacted by around 10-11% lower for FY Some of the contracts have not been amended by our clients post GST. Therefore, the contracted value is yet to be amended, and billing to that extent is yet to be completed. This is being done during the current quarter. However, we have accounted the bills with GST effect from our sub-contractors as expenses and bills against these expenses are yet to be raised by us to our customers. This has lowered the EBIDTA in FY18 to the tune of Rs 20 crores, which will be accounted for in Q1FY The Company had divested wind assets of 33MW in FY FY17 revenues includes revenue of Rs crores for the wind asset sold, which was not there in FY18. Due to this the EBIDTA and PAT was also lower by effective amount. 4 FY17 other income includes extra ordinary income of INR 233 mn on account of sale of 33 MW of wind assets and a tax of INR 330 mn was given, which is reflected separately in the numbers. 5. PAT numbers shows the effective comparable number plus (in brackets) the impact of one time/other income adjested. 6. * Techno have concluded a buyback of 15 lakh equity shares from non-promoter category, at a price of INR 400 per share under tender method mechanism having a total outflow of INR 60 crores in FY17. Impact of buyback is reflected on the Net worth of FY18 financial ratios. TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 33

34 THANK YOU! TECHNO ELECTRIC & ENGINEERING COMPANY LIMITED 34