Reliance Infrastructure Limited · NSE:RELINFRA
Reliance Infrastructure — Reliance Energy — Investor Presentation (February 2004)
66 slides from Reliance Infrastructure's investor presentation, Feb 22, 2004
Slide 1: Reliance Energy Ltd. Creating Growth Momentum
Reliance Energy Ltd. Creating Growth Momentum
Slide 2: Background
Background Serving over 25 million consumers in substantial areas of Mumbai, Delhi, Goa and Orissa Reliance Energy is India’s leading private sector utility company
Slide 3: Background
Background Powering 2 out of 3 homes in Mumbai, and 1 out of 2 in Delhi Reliance Energy is India’s leading private sector utility company
Slide 4: Background
Background 7,500 Schools 3,000 Hospitals 250 Theatres 5 Airports Reliance Energy is 130 Railway Stations India’s leading private sector utility company
Slide 5: Background
Background Industrial, commercial and residential urban consumers Reliance Energy is India’s leading private sector utility company
Slide 6: Background
Background Distributing over 5,000 MW of power – the largest in India Reliance Energy is India’s leading private sector utility company
Slide 7: Background
Background Power generation capacity of nearly 950 MW in Maharashtra, Goa, Andhra Pradesh, Kerala Reliance Energy is and Karnataka India’s leading private sector utility company
Slide 8: Background
Background India’s most valuable power company, with market capitalisation of over Rs. 10,000 crore Reliance Energy currently ranks among India’s top 25 listed private sector companies on all major financial parameters
Slide 9: Background
Background Annual revenues over Rs 6,400 crore Reliance Energy currently ranks among India’s top 25 listed private sector companies on all major financial parameters
Slide 10: Background
Background Annual cash profits over Rs 600 crore Reliance Energy currently ranks among India’s top 25 listed private sector companies on all major financial parameters
Slide 11: Background
Background Annual net profits over Rs 350 crore Reliance Energy currently ranks among India’s top 25 listed private sector companies on all major financial parameters
Slide 12: Background
Background Debt free at the net level Reliance Energy currently ranks among India’s top 25 listed private sector companies on all major financial parameters
Slide 13: Background
Background Top end credit ratings - rated ‘AAA’ by CRISIL/ ICRA/ FITCH Reliance Energy currently ranks among India’s top 25 listed private sector companies on all major financial parameters
Slide 14: Report Card 2003-04
Energy is life Report Card 2003-04 Reliance Energy ADhirubhai Ambani Enterprise
Slide 15: Report Card 2003-04
Report Card 2003-04 Tariff Revision petition filed after 7 years – to achieve stipulated Return on Equity
Slide 16: Report Card 2003-04
Report Card 2003-04 Approval to import power into Mumbai, through open access on existing transmission lines – lower tariffs expected
Slide 17: Report Card 2003-04
Report Card 2003-04 Resolution of 5 years old standby charges dispute in Mumbai expected shortly from MERC – end to uncertainties
Slide 18: Report Card 2003-04
Report Card 2003-04 Encroachment of customer base in Mumbai stopped by MERC
Slide 19: Report Card 2003-04
Report Card 2003-04 Wage Agreements signed covering 4,500 employees and 1,200 officers – pending since April 2002
Slide 20: Report Card 2003-04
Report Card 2003-04 Cumulative financial provisions of over Rs. 350 crores made to strengthen Balance Sheet
Slide 21: Report Card 2003-04
Report Card 2003-04 100% equity in Andhra and Goa projects acquired, and operations merged with RE
Slide 22: Report Card 2003-04
Report Card 2003-04 Andhra 220 MW power plant’s PLF raised to 85%, through increased gas allocation
Slide 23: Report Card 2003-04
Report Card 2003-04 Kerala power plant restarted after a 1 year shutdown - project’s financial viability restored
Slide 24: Report Card 2003-04
Report Card 2003-04 Completed first phase of VRS in Delhi distribution companies – reducing workforce by nearly 4,500 persons in 7 days
Slide 25: Report Card 2003-04
Report Card 2003-04 Exited from non-core activities of Coal Washery, coal-based Maithon power generation project, broadband telecom
Slide 26: Report Card 2003-04
Report Card 2003-04 Transformed into India’s most valuable power company Market capitalisation increased more than 200% in a year to over Rs. 10,000 crore Best performing utility stock in the year 2004, outperforming Sensex by 29% Among the top 10 performers in Sensex stocks in 2003, outperf
Slide 27: Creating Growth Momentum
Energy is life Creating Growth Momentum Reliance Energy ADhirubhai Ambani Enterprise
Slide 28: Power Environment
Power Environment Dominated by state owned undertakings Poor existing infrastructure Unreliable quality of power Unsustainable levels of technical and Huge opportunity for commercial losses private sector to create High tariffs world class power Low standards of customer care infrastruct
Slide 29: Synergies for Reliance
Synergies for Reliance Leveraging Reliance group’s core competencies: - World scale and world class plants - Infrastructure development - Project management and execution - Financial engineering Feedstock integration with Reliance’s upstream gas business A natural fit in Leveraging of customer
Slide 30: Vision statement
Vision statement • To be among the most admired and most trusted integrated utility companies in the world • To establish leadership in the power sector in the country, across generation, transmission, trading and distribution • To deliver reliable and quality power to millions of customers at compe
Slide 31: Generation Strategy
Generation Strategy • “From Well Head to Wall Socket” • Environment friendly fuels – gas the preferred feedstock • Adequate capacity to meet captive requirements of 5,000 MW, covering: - Base Load - Trading • Offtake primarily by own customer base • Location in proximity to customers • Economies of
Slide 32: World's Largest Gas based Power Project
World’s Largest Gas based Power Project • Setting up the world’s largest gas based mega power project with initial capacity of over 3,500 MW capacity – scale benefits • Initial investment outlay of over To benefit millions of Rs 10,000 crore (US$ 2.2 billion) – consumers in the power single largest
Slide 33: World's Largest Gas based Power Project
World’s Largest Gas based Power Project • End-to-end integration in the energy value chain - gas sourced from Reliance’s Dhirubhai gas fields in KG basin – integration benefits • Commissioning in phases from mid – 2006 through mid 2007 Project to supply clean-green • Project will be a strategic nati
Slide 34: Location Map
Location Map • 40 kms from Delhi • HBJ gas pipeline is 15 kms away • Main Ganga Canal is just 2-3 kms away • Power Grid’s Dadri substation to help in Dadri evacuation of power
Slide 35: Distribution Strategy
Distribution Strategy • Expansion of the customer base, with a national footprint • Acquisition of existing networks in major cities and towns, through the privatisation process Providing a world class • Open access on distribution experience systems, as individual States to millions of customers de
Slide 36: Distribution Strategy
Distribution Strategy • Setting up new networks where economically feasible • World class systems, automation, quality and Providing a world class reliability of power, competitive experience pricing, highest standards of to millions of customers customer care
Slide 37: Existing Areas
Existing Areas Increased automation and strengthening of distribution systems in Mumbai to bring down losses to around 10% Significant potential for enhancing returns in Mumbai, Delhi and Orissa
Slide 38: Existing Areas
Existing Areas Comprehensive revamp of Delhi infrastructure, to reduce losses from the existing levels of 55% Significant potential for enhancing returns in Mumbai, Delhi and Orissa
Slide 39: Existing Areas
Existing Areas Recapitalise the Orissa distribution companies, and turn around their operations, subject to suitable restructuring by Significant potential for Govt. of Orissa enhancing returns in Mumbai, Delhi and Orissa
Slide 40: New Areas
New Areas Applications filed for building new networks in various cities: - Bhandup, Vashi, Pune, Nasik, Nagpur, Aurangabad - BEST area in Mumbai NDMC area in New Delhi - 12 areas under franchise in Gujarat - Other cities and states in the Participation in privatisation future of distribution asse
Slide 41: Growth Opportunities - Trading
Growth Opportunities - Trading Trading in Power Trading in power – Physical (merchant/ own generated) Creating exchanges for trading in power – financial Enhancement of and derivative products returns from generation and transmission
Slide 42: Mega Investment Plans
Mega Investment Plans Capital Investments Amount (Rs Crore) Generation 10,000 Transmission 4,000 Distribution 6,000 Total : 20,000 UP power project implemented by a new company , Reliance EGen P. Ltd. Investment of upto Rs. 20,000 crores in the next 5 years
Slide 43: Financial Engineering
Energy is life Financial Engineering Reliance Energy ADhirubhai Ambani Enterprise
Slide 44: Shareholding Pattern
Shareholding Pattern Present Reliance Group 49.5% FIs / Banks / MFs 21.0% FIIs / GDRs 21.3% Others 8.2% Reliance’s stake reduced Total: 100.0% from 58.2% to 49.5%
Slide 45: Preferential Offer
Preferential Offer Equity shares and/or equity related securities Offer price of Rs. 640 per share, determined in accordance with Priced nearly 3 times SEBI Preferential Allotment Reliance’s open offer price guidelines
Slide 46: Preferential Offer
Preferential Offer Offer price at 38% premium to 26 week average price 2% discount to last traded market Postal ballot for all price shareholders on preferential offer and various other resolutions though not required in law
Slide 47: Strong Vote of Confidence
Strong Vote of Confidence Reliance to subscribe to over 2 crore equity shares, aggregating nearly Rs. 1,400 crores Institutional shareholders, like LIC Endorsement of and GIC, agree in principle to growth prospects subscribe to nearly 1 crore shares, and aggregating over Rs. 600 crores positive
Slide 48: Financial Flexibility
Financial Flexibility Enabling approvals to offer additional amount of Rs. 1,000 crores through: - equity shares; and/or - equity shares with differential voting rights; and/or Reliance has confirmed - international convertible bond its willingness to offering subscribe additional Rs. 1000 crores
Slide 49: Proposed Reliance Stake
Proposed Reliance Stake Present Proposed Reliance Group 49.5% 56.5% FIs / Banks / MFs 21.0% 21.0% FIIs / GDRs 21.3% 16.5% Others 8.2% 6.0% Reliance stake still 2% below peak levels of over 58%
Slide 50: Reduction in Free Float
Reduction in Free Float Present Proposed Reliance Group 49.5% 56.5% FIs / Banks / MFs 21.0% 21.0% FIIs / GDRs 21.3% 16.5% Others 8.2% 6.0% Reduction in free float from over 50% to 43%
Slide 51: Value creation for Reliance Energy shareholders
Value creation for Reliance Energy shareholders
Slide 52: Impact on Net Worth
Impact on Net Worth Reliance Energy to rank among India’s top 3 private sector companies Net Worth to rise by Rs. 3,000 Third only to Reliance Industries crores, from Rs. 3,500 crores to Rs. and 6,500 crores ICICI Bank
Slide 53: Impact on Book Value
Impact on Book Value A 43% increase in Book Value per share from Rs. 217 to Rs. 312 Price to book ratio will decline to 2
Slide 54: Impact on Leveraging ability
Impact on Leveraging ability Increased ability to leverage Balance Sheet, while maintaining top end AAA ratings Increase in borrowing ability by Rs. 3,000 crores to Rs. 6,500 crores
Slide 55: Impact on Profitability
Impact on Profitability Increase in capital base by Rs. 3000 crores - potential accretion to earnings Increase in EPS leading to substantial enhancement of To rank among overall shareholder value India’s top 10 private sector companies
Slide 56: Value creation for Reliance Industries shareholders
Value creation for Reliance Industries shareholders
Slide 57: Mark to Market gains
Mark to Market gains Reliance’s investments in Reliance Energy now valued at over Rs 5,200 crores Average cost of Reliance’s shareholding in RE will still be only Rs. 350 per share, Capital gains of nearly against market price of Rs. 650 per share Rs 3,500 crores
Slide 58: Participation in power sector growth
Participation in power sector growth Enhancement of leadership position in the power sector for Reliance Group Benefits of sustained long term Positive impact on RIL’s financial ratios growth in the entire sector through consolidation
Slide 59: Gas Off-take
Gas Off-take Assured feedstock off-take for about 25% of production from RIL’s KG - D6 Dhirubhai gas field Share of gas in Long term contracts at power generation competitive prices to increase from 10 % to global average of 30 %
Slide 60: Deployment of Cash flows
Deployment of Cash flows Proposed investments only 8 % of Reliance group’s cash flows of over Rs. 30,000 crores in the next 3 years…. ….and less than 5 % of value of RIL’s Opportunity for Reliance to deploy its strong future gas sales contracts of over Rs. cash flows 50,000 crores to the UP gas
Slide 61: Win Win Win...
Energy is life Win Win Win... Reliance Energy ADhirubhai Ambani Enterprise
Slide 62: Win for Customers
Win for Customers Quality , Reliable power Competitive prices World class customer care
Slide 63: Win for the Power sector
Win for the Power sector Mega investments Technology upgradation Accelerated loss reduction
Slide 64: Win for the Country
Win for the Country World class power infrastructure Enhanced competitiveness Fiscal deficit reduction
Slide 65: Win for Reliance Group
Win for Reliance Group Leadership in power sector Exponential growth Enhanced profitability
Slide 66: Energy is life
Energy is life Reliance Energy A Dhirubhai Ambani Enterprise A) Reliance Energy () ADhirubhai Ambani Enterprise
Reliance Energy — Investor Presentation (February 2004) on 6ix