I n v e s t o r p r e s e n t a t i o n February

Transcription

1 I n v e s t o r p r e s e n t a t i o n February

2 Disclaimer This presentation is prepared and issued by Sterlite Investment Managers Limited (the Investment Manager ) on behalf of and in its capacity as the investment manager of India Grid Trust ( IndiGrid ) for general information purposes only without regards to specific objectives, financial situations or needs of any particular person and should not be construed as legal, tax, investment or other advice. This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an offering memorandum, an advertisement, an offer or an offer document under the Companies Act, 2013, the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, as amended, or any other applicable law in India. This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or inducement to sell or issue or an offer, or any solicitation of any offer, to purchase or sell any securities. This presentation should not be considered as a recommendation that any person should subscribe for or purchase any securities of: (i) IndiGrid or its portfolio assets (being, Sterlite Grid 1 Limited, Bhopal Dhule Transmission Company Limited and Jabalpur Transmission Company Limited) (collectively, the IndiGrid Group ), or (ii) its Sponsor (being Sterlite Power Grid Ventures Limited) or subsidiaries of the Sponsor (collectively, the Sponsor Entities ), and should not be used as a basis for any investment decision. Unless otherwise stated in this presentation, the information contained herein is based on management information and estimates. The information contained in this presentation is only current as of its date, unless specified otherwise, and has not been independently verified. Please note that, you will not be updated in the event the information in the presentation becomes stale. This presentation comprises information given in summary form and does not purport to be complete and it cannot be guaranteed that such information is true and accurate. You must make your own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as you may consider necessary or appropriate for such purpose. Moreover, no express or implied representation or warranty is made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. Further, past performance is not necessarily indicative of future results. Any opinions expressed in this presentation or the contents of this presentation are subject to changewithout notice. None of the IndiGrid Group or the Sponsor Entities or the Investment Manager or the Axis Trustee Company Limited or any of their respective affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever arising from any information presented or contained in this presentation. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the IndiGrid Group or the Sponsor Entities. The distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation should inform themselves about and observe any such restrictions. This presentation contains certain statements of future expectations and other forward-looking statements, including those relating to IndiGrid Group s general business plans and strategy, its future financial condition and growth prospects, and future developments in its sectors and its competitive and regulatory environment. In addition to statements which are forward looking by reason of context, the words may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential or continue and similar expressions identify forward- looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance including those relating to general business plans and strategy, future outlook and growth prospects, and future developments in its businesses and its competitive and regulatory environment. No representation, warranty or undertaking, express or implied, is made or assurance given that such statements, views, projections or forecasts, if any, are correct or that the any objectives specified herein will be achieved. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results, performances or events to differ materially from the results contemplated by the relevant forward looking statement. The factors which may affect the results contemplated by the forward-looking statements could include, among others, future changes or developments in (i) the IndiGrid Group s business, (ii) the IndiGrid Group s regulatory and competitive environment, (iii) the power transmission sector, and (iv) political, economic, legal and social conditions. Given the risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. 2

3 1. Vision and strategy I n d e x 2. Assets and performance 3. Governance 4. Growth 5. Closing remarks 6. Appendix 3

4 I n d i G r i d V i s i o n To become the most admired yield vehicle in Asia which is built upon solid fundamentals of transparency, governance & providing superior risk-adjusted returns to unitholders INR B N A U M b y Deliver p redictable D P U and growth B e st-in-class corporate governance 4

5 IndiGrid Strategy Focused Business Model Value Accretive Growth Optimal Capital Structure Maximize Distribution Focus on owning power transmission assets with long term contracts low operating risks stable cash flows 3-5% DPU growth YoY Acquire assets from Sponsor under ROFO Acquire third party assets Cap of 49% consolidated leverage of total asset value Appropriate risk policies in place Minimum 90% net cash to be distributed Quarterly distribution to the unitholders INDIGRID 5

6 A s s e t s a n d p e r f o r m a n c e 6

7 IndiGrid- India s First Power Sector InvIT Owns inter-state high voltage power transmission assets Fully operational and revenue generating portfolio Focused on stable and sustainable distribution to unitholders PTCL Strong growth pipeline with ROFO on Sponsor assets ~INR 55 Bn* AUM 6 Project SPVs RTCL Kota Shujalpur JTCL Ranchi Purlia 3,361 circuit KM 7,000 MVA AAA Rated Perpetual Ownership 13 Lines and 3 substations ~ 3 3 ye a r s o f r e s i d u al c o ntract # * Based on independent valuation report for BDTCL and JTCL as of 30 Sep 2017 and for RTCL, PKTCL, MTL and PTCL as of 30 Jun 2017 # Remaining TSA contractual life of 33 years. However, the projects are on BOOM model with perpetual ownership of IndiGrid BDTCL Nizamabad Yeddumailaram Mehboobnagar Chaibasa Kharagpur Mehesshwaram MTL IPAs PKTCL ROFO Assets injected Proposed Investment in the asset of Techno INDIGRID 7

8 IndiGrid Key Stakeholders Sterlite Power Grid Ventures Limited Sponsor & Project Manager Public Unitholders ~20.7% ~79.3% Sterlite Investment Managers Limited Investment manager Trustee SGL1 Proposed third party investment (expected to be completed by Q1 FY19) BDTCL 1 JTCL 1 RTCL 2,4,8 PKTCL 2,5,8 MTL 2,6,8 PTCL 3,7 Note 1: 100% owned. 2: 49% owned. 3: Proposed 46% investment. 4: RTCL - 74% by Mar-18, 100% by Mar-21. 5: PKTCL - 100% by Mar-18. 6: MTL - 74% by Dec-19, 100% by Dec-22. 7: PTCL - 74% by Nov-18, 100% by Nov-21. 8: Balance stake today held by Sponsor entities. INDIGRID 8

9 Financial performance Consolidated Financials - IndiGrid (INR Mn) Q1 FY18 One month of operations Q2 FY18 Full Quarter of operations Q3 FY18 Full Quarter of operations YTD FY18 Seven months of operations Revenue 406 1,323 # 1,267 2,996 EBITDA 369 1,223 1,173 2,765 NDCF 258 1,014 1,013 2,285 DPU (INR) # Revenue was higher in Q2 FY18 due to higher realisation of change in law arrears for JTCL 9

10 Operational performance BDTCL Avg. availability (since COD) : 99.8% Avg. availability (YTD FY 18) : 99.9% 99.6% 99.8% 99.8% 100.0% 99.9% 1.6% 1.8% 1.8% 2.0% 1.9% 98% 98% 98% 98% 98% JTCL Avg. availability (since COD) : 99.8% Avg. availability (YTD FY 18) : 99.9% 99.8% 99.9% 99.7% 99.9% 100.0% 1.8% 1.9% 1.7% 1.9% 2.0% 98% 98% 98% 98% 98% FY 16 FY 17 Q1 FY18 Q2 FY18 Q3 FY18 FY 16 FY 17 Q1 FY18 Q2 FY18 Q3 FY18 Continue to deliver robust operational efficiency INDIGRID 10

11 G o v e r n a n c e 11

12 Governance Framework InvITs are governed by the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 InvITs have to be registered with SEBI Eligibility and lock in Atleast 90% of InvIT s assets have to be revenue generating for 1 year or more prior to acquisition unless InvIT is listed through private placement route. Stringent eligibility criteria for key stakeholders Sponsor, Trustee, Investment Manager and Project Manager Sponsor to remain invested and hold atleast 15% of units of InvIT for a minimum period of 3 years Independence Valuation of assets along with physical inspection to be undertaken by an independent expert periodically. Oversight of InvIT by a reputed and independent Trustee 50% of Board to be independent 12

13 Governance Unitholder rights Unitholders have the ability to appoint and remove Investment Manager and Project Manager vote on increase in leverage over 25% vote on acquisition or divestment of assets vote on related party transactions Leverage and distribution Maximum gearing of 49% permissible with credit rating and unitholders approval required for gearing above 25% 90% of net cash flows to be distributed to unitholders atleast every six months Minimum subscription and trading lots of units 13

14 E x perienced B oard of D irectors Tarun Kataria Additional Independent Director Kuldip K. Kaura Additional Non-Executive Director Shashikant H. Bhojani Additional Independent Director Pratik Agarwal CEO & Executive Director Rahul Asthana, IAS Additional Independent Director Harsh Shah CFO & Executive Director Independent Non-Executive Director of Mapletree Logistics Trust Management Almost 30 years of experience in banking and capital markets in New York, Hong Kong, Singapore, Mumbai MBA in Finance from the Wharton School of the University of Pennsylvania Rich experience in cement, natural resources and power Previously CEO & MD of ACC, CEO of Vedanta, COO of Vedanta Resource, Managing Director of ABB India Limited Served as a member of the National Council of Confederation of Indian Industries Independent Director on the board of directors of L&T Infrastructure Finance Company Limited Partner at Cyril Amarchand Mangaldas since years of experience with ICICI Limited, starting as Law Officer and reaching Board of Directors MD & CEO of Sterlite Power 10+ years of experience in building core infrastructure businesses in ports, power transmission and broadband Bachelor s degree from the Wharton Business School and MBA from the London Business School Non Executive Director on the board of directors of Mahindra Vehicles Manufacturing Ltd, Vadhivare Specialty Chemicals, Aegis Logistics, NBS International and Mumbai Metro Rail corp Ltd Ex Chairman of Mumbai Trust and Maharashtra State Electricity Board Bachelor s degree from IIT Kanpur and MBA from ICPE University of Ljubljana, Slovenia CFO of Sterlite Power 10+ years of experience in PE Financing, Mergers and Acquisitions, Infrastructure financing, regulatory and macro economic policy focused on Infrastructure Bachelor s degree from the Nirma Institute of Technology and MBA from the National University of Singapore

15 Audit Committee 2/3 rd Independent Directors Chairperson Independent Director B oard Committees: S trong I ndependent R epresentation Investment Committee Nomination and Remuneration Committee 100% Independent Directors Approve investment decisions in relation to related party transactions, further issue of units 2/3 rd Independent Directors Chairperson Independent Director Stakeholders Relationship Committee 1/3 rd Independent Directors Chairperson Independent Director 15

16 Growth strategy 16

17 Strong pipeline of existing Sponsor Assets East North Interconnection Ltd (ENICL) NRSS XXIX Transmission Ltd (NTL) Odisha Generation Phase Transmission Ltd (OGPTL) Gurgaon- Palwal Transmission Ltd (GPTL) Khargone Transmission Ltd (KTL) NER-II Transmission Limited Goa Tamnar Transmission Project Ltd. Overview 2 x 400 kv D/C lines 3x400 kv D/C lines, 1x400/220 kv D/C GIS substation 1x765 kv D/C line, 1x400 kv D/C line 5x400kV D/C lines and 3x400/220 kv substations 2x765 kv D/C lines, 1x400 kv D/C line and 1x765/400 kv substation 2x400 kv D/C lines, 2x132 kv D/C lines and 2x400/132 kv substations 2x400 kv D/C quad lines, 1x765 kv D/C line, 2x500 MVA, 400/220 kv substation Scheduled COD Commissioned Oct 2018 Aug 2019 Sep 2019 Jul 2019 Nov 2020 LOI Received on Nov 30, 2017 Length 909 ckms 887 ckms 715 ckms 271 ckms 624 ckms 900 ckms ~500 ckms (tentative) Revenues (5 yr. avg.) INR 1,420 Mn INR 5,030 Mn INR 1,590 Mn INR 1,440 Mn INR 1,860 Mn INR 4,520 Mn Tariff adoption order awaited INDIGRID 17

18 Sponsor asset injection alone underpins 12% IRR and AUM of INR 200bn 8.6% FY2018 FY FY FY Equity IRR at INR 100/unit 10% 12% AUM in INR billion First third party investment by IndiGrid to be completed by Q1 FY 2019 Note 1. IPA AUM as of 30 Sep MRP (MTL, RTCL and PKTCL) AUM as of 30 Jun INDIGRID 18

19 Indicative DPU considering Sponsor assets and PTCL 15.0 IPA assets MRP Injection I Injection II Injection III Acquisition of 3 rd party assets and future Sponsor projects DPU (INR) INDIGRID 19

20 C l o s i n g r e m a r k s 20

21 IndiGrid a value proposition Strong Industry Outlook: Structural Growth story $46 billion opportunity Experienced Sponsor with Track Record 30% Share in TBCB auctions Fully Contracted, Long-term Assets with Minimal Counter Party Risk AAA Rated Portfolio IRR of 11% Growth Pipeline Seven Sponsor Assets Medium term target of 12 % IRR Robust Corporate Governance Framework Committed to Maximum Distribution Highly Experienced, Independent and Diversified Board DPU of at least INR 12 for next 5 years INDIGRID 21

22 A ppendix 22

23 MRP - Acquisition consideration and financing Asset Previous acquisition consideration (INR mn) Final acquisition consideration (INR mn) RTCL 3,738 3,542 PKTCL 6,186 5,861 MTL* 4,957 4,697 Additional discount will lead to an equity IRR of 11% at current price Total 14,881 14,100 Acquisition financed by INR 10.0 billion loan with bullet repayment after 10 years at 8.25% fixed interest rate INR 4.2 billion short term loan to be refinanced with long term loan/ bond INDIGRID 23

24 R A P P Transmission Company Limited ( R T C L ) RAPP Transmission Company Limited Overview Description Key dates and tenure Lead LTTC Project was set up to transfer power from the atomic power plant near Kota in Rajasthan to Shujalpur in Madhya Pradesh to provide the path for the evacuation of electricity generated at RAPP-7 and8 The network will act as an interregional link between the Northern and the Western region RAPP would help in evacuation of power even in case of any grid constraints in the Northern region Project scope involves establishment and operation of one 4 00 kv Double Circuit transmission line Initial tenure period of 35 years (residual tenure of 33.5 years) TSA signed on: July 24, 2013 Scheduled COD: March 1, 2016 Actual COD: February 26, 2016 Injection into POC: March 1, 2016 UP Power Corporation Limited Lines Route Length Specifications Location Status RAPP- Shujalpur 403 ckms kv D/C Rajasthan, Madhya Pradesh Operational INDIGRID 24

25 Purulia & Kharagpur Transmission Company Limited ( P K T C L ) Purulia & Kharagpur Transmission Company Limited Overview Description Key dates and tenure Lead LTTC Connecting link further strengthening the interconnection between the West Bengal state grid and ISTS to strengthen the transmission system in the Indian states of West Bengal and Jharkhand kv substation at Kharagpur of West Bengal State Electricity Transmission Company Limited (WBSETCL ) has been commissioned with LI LO of Kolaghat-Baripada line. Chaibasa substation of Powergrid is under implementation with LILO of both circuits of Jamshedpur-Rourkela line Ranchi kv substation is a sub-station in Eastern Region grid and also one of the gateways for power exchange with Western Region Grid Initial tenure period of 35 years (residual tenure of 34.5 years) TSA signed on: August 6, 2013 Scheduled COD: April 2016 Actual COD: June 18, 2016 (KC Line), Jan 7, 2017 (PR Line) Injection into POC: June 18, 2016 (KC Line), Jan 7, 2017 (PR Line) Bihar State Electricity Board Lines Route Length Specifications Location Status Kharagpur Chaibasa 322 ckms kv D/C West Bengal, Operational Jharkhand Purulia Ranchi 223 ckms kv D/C West Bengal, Jharkhand Operational INDIGRID 25

26 Maheshwaram Transmission Limited (MTL) Maheshwaram Transmission Limited Overview Description Maheshwaram Transmission Limited (MTL) will create a key component to enable Southern region to draw more power from North-East-West (NEW) Grid and address the issue of power stability in Telangana region to a great extent The improved grid connectivity shall facilitate power procurement from the I STS network to the beneficiary states Telangana, Tamil Nadu, Seemandhra and Karnataka to meet their electricity demands Project envisaged to provide grid connectivity for Maheshwaram 765/400 kv Pooling Substation and Nizamabad 765/400 kv Substation Key dates and tenure Initial tenure period of 35 years (residual tenure of 35 years) TSA signed on: June 10, 2015 Scheduled COD: June 2018 Lead LTTC TANGEDCO Lines Route Length Specifica Location tions Maheshwaram (PG) Mehboob Nagar 199 ckms kv D/C Status Telangana Expected COD: Q3 FY 2018 N i z a m a b a d Yeddumailaram ( Shankarpalli) 278 ckms kv D/C Telangana Commissioned in September 2017 INDIGRID 26

27 R ecently signed agreement f or t hird party A sset 27

28 PTCL - Valuation and purchase consideration Independent Valuation & Purchase Consideration PTCL EV as per Independent Valuation 1 (INR mn) 2,247 Patran, Punjab c Purchase Consideration (INR mn) ~2,320 Premium over Independent Valuation 3% Premium Note 1. Source independent valuation report from Haribhakti & Co. LLP., a member firm of Baker Tilly International PTCL helps strengthen the transmission system in Punjab (specific need for 400/220 kv substation in the region) 33 years of residual tenure Asset under PoC mechanism Avg. availability since COD: 99.96% Investment to be funded by debt and/ or equity Transaction expected to be completed by Q1 FY19 INDIGRID 28

29 P T C L o v e r v i e w Patran Transmission Company Limited Project awarded to TEECL by the Ministry of Power on a BOOM basis Overview Project executed by TEECL on a turnkey contract basis Project comprises of 400/ 220 kv substation with 14 bays in Patran, Punjab and LILO of both Description circuits of Patiala-Kaithal 400 kv double circuit triple snow bird line Key EPC Subcontractors ABB, Oblum, Tesla, Statcon, Exide Key dates and tenure Lead LTTC Project Tenure: 35 years (residual tenure of ~33 years) TSA signed on: May 12, 2014 Scheduled COD: November 11, 2016 Actual COD: June 21, 2016 Injection into PoC: May 18, 2017 UP Power Corporation Limited INDIGRID 29

30 P o wer transmission i ndustry update 30

31 Sector fundamentals point to strong growth in the next 3 years Distribution Reforms Saubhagya Scheme requires a six fold jump in the pace of electrification Deen Dayal Upadhyaya Gram Jyoti Yojana (DDJUGY) & Ujwal DISCOM Assurance Yojana (UDAY) helping rural electrification and revival of DISCOMs Demand for Power Evolution of Generation Footprint Non-Performing Assets (NPAs) and safety issues to see retirement of plants GOI targets GW renewable energy capacity addition by 2022 Intermittency of renewable output poses a need for higher transmission capacity addition Transmission Footprint Availability of Renewables (linked transmission benefits) Greater Scope for PPP Projects Inter State Transmission system moving to TBCB as cost-plus not feasible Intra State projects coming into TBCB (case-in-point: Jharkhand tender - INR 52 billion) Number of Tenders Released INDIGRID 31

32 Further growth potential from near term bids Current Inter-State and Intra-state TBCB tenders Name of Tender Stage of Tender Location Estimated Cost (INR billion) WR-NR Interconnection RFP UP, MP 10.8 Ultra Mega Solar Park in Fatehgarh RFP Rajasthan 6.2 Connectivity and LTA to HPPCL RFP Himachal Pradesh 3.5 Strengthening in Jharkhand (Package 1) RFQ Jharkhand 9.8 Strengthening in Jharkhand (Package 2) RFQ Jharkhand 10.8 Strengthening in Jharkhand (Package 3) RFQ Jharkhand 9.5 Strengthening in Jharkhand (Package 4) RFQ Jharkhand 10.4 Strengthening in Jharkhand (Package 5) RFQ Jharkhand 11.4 System strengthening Scheme in Northern Region Pipeline Northern Region 2.3 Reactive Power Compensation in Northern Region Pipeline Northern Region 2.3 ISTS Feed to Navi Mumbai Pipeline Maharashtra 2.6 New Substation near Vapi area Pipeline Gujarat 2.0 North Eastern Region Strengthening Scheme IX Pipeline North Eastern Region 0.7 Additional 400 kv outlets from Banaskantha Pipeline Gujarat 0.6 Total 82.9 INDIGRID 32

33 Glossary Availability BDTCL BOOM COD DPU E G M E P C INR IPA JTCL LILO LTTC MTL PKTCL PoC PTCL ROFO RTCL SGL1 TEECL TSA Percentage amount of time for which the asset is available for power flow Bhopal Dhule Transmission Company Limited Build, Own, Operate & Maintain Commissioning Date Cash paid to the Unitholders in the form of interest/ capital repayment / dividend Extraordinary General Meeting Engineering, Procurement and Construction Indian Rupees BDTCL and JTCL which were acquired by IndiGrid at the time of IPO Jabalpur Transmission Company Limited Loop In Loop Out Long Term Transmission Customer Maheshwaram Transmission Limited Purulia Kharagpur Transmission Company Limited Point of Connection Patran Transmission Company Limited Right Of Fi rst Offer RAPP Transmission Company Limited Sterlite Grid Limited Techno Electric & Engineering Company Limited Transmission Service Agreement INDIGRID 33

34 Thank You