Igc Pharma, Inc. · AMEX:IGC
Igc Pharma — India Globalization Capital — Merger or Acquisition (January 2008)
28 slides from Igc Pharma's merger presentation, Jan 29, 2008
Slide 1: India Globalization Capital Investor Presentation, January 2008
India Globalization Capital Amex: IGC Investor presentation, January 2008
Slide 2: Forward-Looking Statements
3 Forward-Looking Statements We believe that some of the information in this presentation constitutes forward-looking statements within the definition of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as "may," will," "should," "
Slide 3: Summary
5 Summary India Globalization Capital (IGC): Listed on Amex. Preliminary proxy initially filed on November 23, 2007 Acquiring 2 Infrastructure companies & entering the alternative energy sector in India Investing ~$70 million (~$65 million into operations and $5 million to Indian founders) Visibilit
Slide 4: Summary (cont.) Implied Equity Value
7 Summary (cont.) IGC Fully Diluted Implied Equity Value based on Sricon, TBL and Wind energy farm Valuation based on market multiples: An implied equity value of $459M assuming all acquisitions and full dilution of warrants. The escrow value of approximately $5.85 is achieved at a P/E ratio of 6.4x
Slide 5: Government of India Infrastructure Spending is a Catalyst for Growth
9 Government of India (GoI) Infrastructure Spending is a Catalyst for Growth GoI expects to spend $475 billion on infrastructure by 20121 40% of villages have no access to all weather roads2 55% of the population has inadequate power3 GoI estimates that India's GDP could grow 25% faster with suffici
Slide 6: Infrastructure Stocks on the SENSEX Have Dramatically Outperformed the Market
Infrastructure Stocks on the SENSEX Have Dramatically Outperformed the Market historical return past 3 years (oct 2004 oct 2007) sensex vs, road builder sector Sector graph includes 10 companies
Slide 7: Public & Private Infrastructure Company Valuations
13 Public & Private Infrastructure Company Valuations Comparable Public Company's Trading on Indian Exchanges: Private Equity Transactions: 1 TBL does not include non-recurring income 2 Sricon's and TBL's financials are estimated
Slide 8: About Sricon Infrastructure
15 About Sricon Infrastructure Core competencies: Industrial logistics Transportation of coal and ore mining waste Civil & mechanical engineering and construction Eng. & construction of steel & cement plants Eng. & building of sea port jetties, power plants, water supply systems, highways, bridges,
Slide 9: Sricon management
17 Sricon management Sricon has an experienced management team in place Founder, Chairman and Managing Director, Mr. Srivastava(54) Over 30 years of infrastructure experience having worked for Larsen & Toubro, B.Sc. Banaras University (1974) CFO, Mr. Abhay Wakhare(36) Held various positions, includi
Slide 10: About Techni Bharathi Limited (TBL)
19 About Techni Bharathi Limited (TBL) Core competencies: Civil engineering & construction Civil construction and structural engineering of roads, highways, bridges, tunnels Engineering and constructions of airport runways, rail roads and dams $47 million of backlog. Positioned regionally in importa
Slide 11: TBL management
21 TBL management TBL has an experienced board & management team in place Chairman: Mr. V.C. Antony (76) Over 50 years of infrastructure experience. Founder of Bhagheeratha Engineering which he took public. Under his leadership it grew to be one of the 10 largest construction companies in India with
Slide 12: Synergies between companies
23 Synergies between companies Synergies: Joint, Risk Management Committee Multiple bid teams Geographic sharing of equipment TBL to subcontract for Sricon Complementary service offerings: Expertise in highways, power, railroad, seaports, airports Potential for additional acquisitions to enhance the
Slide 13: IGC Capital Enables Higher Growth & Margins
25 IGC Capital Enables Higher Growth & Margins Dramatic improvement in Balance Sheet: Increased ability to bid on larger contracts and BOTs Increased investment in plant & equipment Improves ability to access lower cost debt markets Dramatic improvement in profit margins: Cost reduction in raw mater
Slide 14: Revenue & Earnings Visibility Through FYE 3/31/09
27 Revenue & Earnings Visibility Through FYE 3/31/09 Backlog of contracts combined with enhanced liquidity, we believe, will drive revenue and earnings for FYE 2009
Slide 15: Combined Revenue Based Only on Backlog
29 Combined Revenue Based Only on Backlog Revenue is based on executing backlog of orders In Dec./Jan. we provided the companies with bridge financing of around $6M Does not include potential wins of new contracts
Slide 16: Earnings Based on Backlog
31 Earnings Based on Backlog Margin improvement from approx. 3-5% to 13-16% over two years 3% improvement from the reduction in raw material cost 3% from greater productivity through purchases of capital equipment 5% from reduction in interest costs High margin, recurring, work based on financial in
Slide 17: Projected financials of Sricon, TBL and Combined
Projected financials of Sricon, TBL and Combined 33
Slide 18: Alternative Energy Background and Opportunity
35 Background: Energy India's energy requirement is projected to increase nearly four fold in the next 25 years Opportunity: Niche, untapped and highly fragmented market Potential for wind energy expansion from 4,000MW to 40,000MW. (GoI) Potential for bio mass energy to expand from 950MW to 19,500MW
Slide 19: IGC's Alternative Energy Platform
37 IGC's Alternative Energy Platform IGC is funding the development of a "turn- key" 24 mega watt wind energy farm located in the wind belt Installation, maintenance and operation are outsourced IGC is investing $6.5 million which will support $22.0 million in bank debt Approximately 9-12 months to
Slide 20: Management Bios
39 Management Bios Team: Directors & Officers: 6, Special Advisors: 5 Chairman: Dr. Ranga Krishna (43) Founder of Rising Sun Holding (RSH), Inc. a $120mm residential real estate developer serving NY, NJ, & Conn. Founder of International Pharma Trials, Inc. A Clinical Research Organization (CRO) base
Slide 21: Structure for IGC Investment Vehicle
41 Structure for IGC Investment Vehicle Mauritius offers: Investment Protection Treaty with India. Favorable income tax treatment Favorable Dividend tax treatment No tax on capital gains
Slide 22: Summary of transactions
Summary of transactions 43 Approximately $19 million in capital still on IGC's balance sheet to fund additional growth TBL debt is a convertible debenture and assumed to be converted. The debt for the wind energy farm is expected to be bank debt. ~$65mm into operations & $5mm to shareholders of the
Slide 23: Sources and Uses of Funds
Sources and Uses of Funds Sources and Uses ($mm) Approximate Total inve stment Sources: SPAC Debt for wind energy farm $ $ $ 69.00 47.00 22.00 Uses: PP&E including energy farm and other Bank guarantees, working capital, etc. Founders and early investors of the Indassets ian comipanies $ $ $ 42.00 22
Slide 24: Fully diluted shares
FullyNet diluted sharescash Pre IPO/IPO/PP 13,974,500 $ 68,847,000 Warrants 22,949,000 $ 114,745,000 Bridge warrants 425,000 $ 2,125,000 Bridge shares754,953 $- Total38,103,453 $ 185,717,000 One Unit has one share of common and two warrants Warrant exercise price $5 UPO not included Bridge warrant i
Slide 25: Valuation
Valuation We used three methodologies to value Sricon and TBL Public peer group multiples (P/E of 27.9) with a 30% discount (P/E of 19.5). DCF using a discount rate of 18.52%. Comparable private market transactions discounted by 30% Plus, value attributed to wind energy farm of around 25% of escrow.
Slide 26: Valuation (cont.) Implied Equity Value
51 Valuation (cont.) IGC Fully Diluted Implied Equity Value based on Sricon, TBL and Wind energy farm Valuation based on public peer group multiples: An implied equity value of $459M assuming all acquisitions and full dilution of warrants. An escrow value of approximately $5.85 is achieved at a P/E
Slide 27: Summary
53 Summary High Growth: India expects to spend $475 billion on infrastructure in the next 4-5 years. Arbitrage: Buying at an escrow price of 6.4 times FYE 3/31/09 projected earnings. Indian public market comparables: 28 X Average of three methodologies: 218% of escrow plus wind energy. Visibility: B
Slide 28: India Globalization Capital Amex: IGC
India Globalization Capital Amex: IGC
India Globalization Capital — Merger or Acquisition (January 2008) on 6ix