Adani Energy Solutions Ltd · NSE:ADANIENSOL
Adani Energy Solutions — Adani Transmission — Investor Presentation (January 2019)
54 slides from Adani Energy Solutions's investor presentation, January 2019
Slide 1: Adani Transmission Limited Equity Investor Presentation
Adani Transmission Limited Equity Investor Presentation January 2019 | STRICTLY PRIVATE AND CONFIDENTIAL
Slide 2: Legal Disclaimer
Legal Disclaimer The information contained in this presentation is provided by Adani Transmission Limited ATL assumes no responsibility to publicly amend, modify or revise any forward looking statements, (together with its subsidiaries, the “Company” or “ATL”) to you solely for your reference and fo
Slide 3: Index
Index A Introduction to Adani Group and Adani Transmission Limited B ATL - Showcase C Sector D Regulatory Framework E Financial and Operating Performance to date F Closing G Appendix 1 ATL – Business Segment Showcase 2 ATL Holding and Capital Structure 3 Group Capabilities and Management Team 2
Slide 4: Introduction to Adani Group and Adani Transmission Limited
Introduction to Adani Group and Adani Transmission Limited A 3STRICTLY CONFIDENTIAL
Slide 5: Adani Group: One of India's Largest Infrastructure Conglomerates
Adani Group: One of India’s Largest Infrastructure Conglomerates 74.92% 56.68% 74.97% 74.92% 86.58% 74.92% Portfolio AEL APSEZ APL ATL AGEL Adani Gas Mkt Cap Energy Port & Logistics Thermal Power T&D Renewables ~USD 23 bn(1) 25.08% 43.32% 25.03% 25.08% 13.42% 25.08% Public Pan-India presence with
Slide 6: Adani Group: Track Record of Delivering World Class Assets
Adani Group : Track Record of Delivering World Class Assets Leveraging Core Strengths Delivering World Class Assets Only HVDC line in India to be executed by a private player Large scale businesses Location: Mundra-Mohindergarh delivering strong growth Longest Private HVDC Line in India Capa
Slide 7: ATL: Replicating Adani Infrastructure Story in Transmission and Distribution
ATL: Replicating Adani Infrastructure Story in Transmission and Distribution Platform well-positioned to leverage growth opportunities through both organic and inorganic route “Grid-to-Switch” Integrated Platform High EBITDA Margins(1) Margin 94% 94% 90% 500 FY17 21% CAGR MW INR 28 Bn / c. 3 mn INR
Slide 8: ATL - Showcase
ATL - Showcase B 7STRICTLY CONFIDENTIAL
Slide 9: ATL: One of India's Largest Private Sector Transmission Player
ATL: One ofIndia’s Largest Private Sector Transmission Player 74.92% 25.08% Adani Transmission Limited(1) Public 100%(2) 100% Various Transmission SPVs Distribution SPV Business Model Technology Fully integrated Strongly focused Focused on development: Strong business developer, owner on cost of cap
Slide 10: ATL: At a Glance
ATL: At a Glance Doubled portfolio in 2 years(1) Consistent performance with 99.9% Execution Operational Strengths Only private player to commission a Capabilities availability and focus on incentive HVDC line in India maximization Predictable Regulated Asset Base(2) Growth 7 projects comm
Slide 11: Value of Regulated and Contracted Assets
Value of Regulated and Contracted Assets Asset Base Mix Key Characteristics Fixed Tariff TBCB 36% Regulated equity never depreciates in the regulatory system for tariff calculation Regulated 22% Return - Distribution Continued capex in the distribution business allows Regulated growth of regulated e
Slide 12: Sector
Sector C 11 STRICTLY CONFIDENTIAL
Slide 13: India's Per Capita Power Consumption Remains Low
India’s Per Capita Power Consumption Remains Low Significant opportunity to improve India’s per-capita power consumption India’s per-capita power consumption was significantly lower Growth in per Capita Power Consumption in India to other economies 2016 (Jan-Dec)(1) Rising in Sync with Rising Per Ca
Slide 14: Electricity Sector Fundamentals Remain Robust
Electricity Sector Fundamentals Remain Robust Strong Demand For Electricity further supported by Renewable Sector Growth Electricity demand expected to grow at ~6% in Significant growth in renewable sector the long term(1) foreboding well for transmission sector(1) (Billion Units) (GWs) CAGR: 5.6% 3
Slide 15: Indian Transmission Sector Poised for Significant Growth
Indian Transmission Sector Poised for Significant Growth Robust growth outlook driven by strong policy support Significant under-investment in Transmission … implying robust growth in the sector with sector historically…(1) share increasing by 1.7x over next 5 years(1) INR 10 Trillion INR 9–9.5 Tril
Slide 16: Large Addressable Market for Private Players
Large Addressable Market for Private Players Government focus on transmission and distribution sector has opened up a large opportunity for the private sector over next 5 years. Large Opportunity for Transmission Growth in the Significant Private Sector Contribution Expected Next 5 years in Central
Slide 17: Structural Factors Providing Significant Opportunities in Power Distribution
Structural Factors Providing Significant Opportunities in Power Distribution Existing systemic inefficiencies leading to increasing focus on privatization Considerable Scope in C. 89% of Power Loss of Distribution Terms of Reliability, Distribution Owned by More than 60 State Sector Estimate
Slide 18: Regulatory Framework
Regulatory Framework D 17 STRICTLY CONFIDENTIAL
Slide 19: Well Defined Regulatory Framework
Well Defined Regulatory Framework Pre 1956 Until 1991 2003 onwards • Electricity Supply Act 1948 • Industrial policy resolution 1956 • Electricity Act 2003 • State Electricity Boards (SEB) • Power sector under state control • National Tariff Policy 2 0 0 6 Ministry of (Conventional) Power (MoP) / Mi
Slide 20: India – Predictable Regulatory Framework
India – Predictable Regulatory Framework CERC and SERC have Long Standing History of Maintaining and Defining Tariffs 20 years Tariffs Determining CERC Track record • Return on Assets (ROA); and (Regulatory determinations commenced • The framework for Operations & Maintenance costs in 1998) 19 years
Slide 21: Business Model: Fixed Return and Fixed Tariff
Business Model: Fixed Return (with Cost Pass-through) and Fixed Tariff Both concession models provide significant visibility on cash flows with limited operational risk Annual Transmission Revenue for Each Project Annual Fixed Costs Incentive/(Penalty) Fixed Return Based Projects O&M Costs Based on
Slide 22: Financial and Operating Performance to date
Financial and Operating Performance to date E 21 STRICTLY CONFIDENTIAL
Slide 23: Transmission - Strong Capabilities Underscored by Operating Performance
Transmission - Strong Capabilities Underscored by Operating Performance Consistent performance across all operational assets with 99.9% availability and focus on incentive maximization Availability Across Operational Assets (%) Focus on Maximizing Incentives (Average, Min, Max) (%) Normative Incenti
Slide 24: ATL Pro-forma (ATL + AEML): Robust Historical Performance
ATL Pro-forma (ATL + AEML): Robust Historical Performance Strong Revenue(1) Growth High EBITDA(2) Margins Margin 43% 44% 19% CAGR 19% CAGR INR 103 Bn / INR 48 Bn / INR 87 Bn / US$ 1,520 Mn INR 32 Bn / US$ 710 Mn US$ 1,283 Mn US$ 475 Mn FY17 FY18 FY17 FY18 One time arrear of INR 1 Bn / US$ 17 Mn in F
Slide 25: Diversified Counterparty Risk and Receivable Profile
Diversified Counterparty Risk and Receivable Profile Attractive mix of central / state counterparties, in conjugation with strong contractual protections, limits overall payment risk to ATL CTU / STU Mix Credit Profile of CTU/STU Receivable Profile In terms of Ckt Kms (H1FY19) In terms of Ckt Kms (H
Slide 26: ATL: Financing Prowess
ATL: Financing Prowess Diversification of funding sources and focus on debt maturity / cost rationalization to deliver improved long-term returns Diversified Debt Mix Improved Returns through Extended Debt Maturity Profile Based on FY2018 Debt FY2016 FY2018 7% 12% 17% 19% 31% 26% 43% 4% 40% 69% 32%
Slide 27: Visible Cash Flows Providing Floor Returns
Visible Cash Flows Providing Floor Returns Robust growth in revenue and asset base driven by integration of Mumbai Generation- Transmission-Distribution (Mumbai-GTD) business and commissioning of newly won TBCB bids Visibility on Account of Approved Tariff Expansion of Invested Asset Base(2) Order a
Slide 28: Closing
Closing F 27 STRICTLY CONFIDENTIAL
Slide 29: Growth Opportunity Focus
Growth Opportunity Focus Distribution Opportunity – Emerging Mega Transmission Growth Opportunities Trends Retain market share in Fixed tariff transmission Pursue New Geographies: New License Alongside assets - Inter State, Intra State and Brownfield City Gas Distribution Licenses acquisitions Focus
Slide 30: Delivering Significant Growth and Returns
Delivering Significant Growth and Returns Leveraging Floor Return IG Ratings On time & Maximizing Mega trends from Access to Cross Selling Terminal within cost efficiency / Regulated capital Value Growth execution incentives Customer Asset Base sources Focus Regulated High Returns focus Asets Operat
Slide 31: Maximizing Cash Flows to Deliver Strong Growth
Maximizing Cash Flows to Deliver Strong Growth Maturity Efficient Hurdle Rate Availability of Target to Maximizing Reduction Double Asset aligned with Capital Based Long Term Cash Flows in Cost Base in Next lifecycle Structure Investments Financing 5 Years EBITDA Repayment of Debt Interest Outco Tax
Slide 32: ATL: A Compelling Investment Proposition
ATL: A Compelling Investment Proposition Growth Mature Business Performance Delivering Shareholder Value Strong Cash Flow and Advanced Technology Accretive Value Creation Track Record Financing Competitiveness; Risk Management Internal Accruals Led Growth Capabilities Integration of In-Organic Ventu
Slide 33: Appendix
Appendix G 32 STRICTLY CONFIDENTIAL
Slide 34: ATL – Business Segment Showcase
ATL – Business Segment Showcase 1 33 STRICTLY CONFIDENTIAL
Slide 35: ATL – Transmission Segment Showcase
ATL – Transmission Segment Showcase 34 STRICTLY CONFIDENTIAL
Slide 36: Long Life of Assets and Contracts, Excellent Operating History
Operating Assets – Mature & Stable Asset Profiles 1 Completed Assets with Minimal Ongoing Maintainance Long Life of Assets and Contracts Mundra – Dehgam Mundra – Mohindergarh Tiroda – Warora Tiroda – Aurangabad Regulator CERC CERC MERC MERC License Period 25 years + 10 years 25 years + 10 years 25 y
Slide 37: Long Life of Assets and Contracts, Excellent Operating History
Demonstrated Track Record of Value Accretive Acquisitions 1 Operational assets – 2 years to full legal ownership Long Life of Assets and Contracts MTSCL (74%)(1) ATSCL (74%)(1) Regulator RERC RERC License Period 25 years + 10 years 25 years + 10 years COD Aug-2012 Jul-2014 Ckm 300 97 Remaining Life
Slide 38: Long Life of Assets and Contracts, Excellent Operating History
Demonstrated Track Record of Value Accretive Acquisitions 1 Operational assets – Fixed tariff (WRSS M, WRSS G and KEC) Long Life of Assets and Contracts WRSS M (100%) WRSS G (100%) KEC (100%) Regulator CERC CERC RERC License Period 35 years 35 years NA COD Jan-2014 Dec-2015 NA Ckm 2,089 974 343 Rema
Slide 39: Transmission: Payment Pooling Mechanism Reduces Counterparty Risk
Transmission : Payment Pooling Mechanism Reduces Counterparty Risk Payment pooling mechanism substantially reduces any counter party default risk – also mitigating concerns around receivables Payment Pooling Mechanism Credit Support Mechanism and Structural Support Tariffs collected by either CTU
Slide 40: ATL (Consolidated): Robust Historical Performance
ATL (Consolidated): Robust Historical Performance Strong Revenue(1) Growth High EBITDA(2) Margins 24% CAGR Margin 94% 94% 90% INR 31 Bn / US$ 460 Mn INR 20 Bn / 47% CAGR INR 21 Bn / US$ 301 Mn US$ 312 Mn INR 28 Bn / INR 19 Bn / INR 20 Bn / US$ 416 Mn US$ 283 Mn US$ 292 Mn FY16 FY17 FY18 FY16 FY17 FY
Slide 41: ATL – Distribution Segment Showcase
ATL – Distribution Segment Showcase 40 STRICTLY CONFIDENTIAL
Slide 42: Adani Electricity – Integration into Distribution Sector
Adani Electricity – Integration into Distribution Sector One of the largest private sector power distribution players in the country supplying power to 3 mm customers. Mumbai Power Generation-Transmission-Distribution Stable business with assured post tax RoE of 16% approved by MERC 1,892 MW of
Slide 43: Robust Business Characteristics and Strategy
Robust Business Characteristics and Strategy Distribution business provides the benefits of a long term asset with regulated returns and high cash flow visibility, while also giving the potential of leveraging multiple operational and technological upsides. Business Focus on Enhancing Customer Focus
Slide 44: Distribution – Leveraging Distribution Network and Efficiencies
Distribution – Leveraging Distribution Network and Efficiencies to Deliver Superior Service Network Length (Kms) PT Capacity (MVA) 3,600 2,492 5,933 3,619 3,860 4,618 FY09 FY18 FY09 FY18 HT Cable LT Cable DT Capacity (MVA) Distribution Loss (%) 10.59% 4,860 3,923 8.12% FY09 FY18 FY09 FY18 Adequate N
Slide 45: Embedded Power Plant – One of India's Best Run Station
Embedded Power Plant – One of India’s best run station (efficiency and capacity utilization) Commissioning Year 1995 Capacity 500 No. of units & Size (MW) 2 X 250 Plant Performance for last 15 years (FY04 – FY18) Average PLF (%) 96.51 Average Availability (%) 95.65 Gross SHR (kCal/kWh) 2290 Sp. Oil
Slide 46: Mumbai- Transmission
Mumbai- Transmission Transformation capacity (MVA) 3,125 Transmission lines (Ckt kms) 540 220 kV Bays (No) 115 33 kV Bays (No) 385 Gross Fixed Assets (Rs. Cr) 1,550 Regulatory Equity (Rs. Cr) 517 System Availability (%) 99.84 Peak Demand (MW)(1) 1,377 Caters ~70% demand of AEML Distribution (1) YTM
Slide 47: Focus on Consumer Energy Service
Focus on Consumer Energy Service Services Solutions Text Financial and Home Services Lighting E-Security Insurance Smart Home Parking Energy Efficiency Entertainment on Products Management Improvement Demand Street Lighting Management Renewable and Energy Battery Storage Gas Connection Fibre to Ho
Slide 48: Distribution – Large Customer Base, Growing Energy Consumption
Distribution – Large Customer Base, Growing Energy Consumption Customers (Mn) Energy Wheeled (MU) Max Demand (MW) 11,154 1,884 3.00 2.836 9,996 1,664 FY12 FY18 FY12 FY18 FY12 FY18 47
Slide 49: AEML (Distribution): Historical Performance
AEML (Distribution): Historical Performance Strong Revenue Growth High EBITDA(1) Margins Margin 27% 24% 9.2% INR 72 Bn / US$ 1,060 Mn INR 66 Bn / US$ 971 Mn INR 18 Bn / INR 17 Bn / US$ 265 Mn US$ 249 Mn FY17 FY18 FY17 FY18 Improvement in Profitability Growing Net Fixed Asset Base INR 8 Bn / US$ 123
Slide 50: ATL Holding Structure
ATL Holding Structure 2 49 STRICTLY CONFIDENTIAL
Slide 51: ATL: One of India's Largest Private Sector Transmission Player
ATL: One of India’s Largest Private Sector Transmission Player Shareholding as on 31st March 2018 Adani Transmission Limited Promoters: 74.92% Public: 25.08% 100% 100% 74% (1) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% ATSCL & WRSS Acquired PPP Ghatam- Obra-C ATIL MEGPTCL ATRL RRWTL
Slide 52: Largest Pure-play Integrated Transmission and Distribution Player in India
Largest Pure-play Integrated Transmission and Distribution Player in India Operational Assets – 9,672 Ckm & 17,115 MVA Central vs State Capacity Distribution Projects Under Execution – 3,792 Ckm & 3,165 MVA (Ckt Kms) Centre PPP-8 Mohindergarh Electrode line Mundra - State Mohindergarh Mohindergarh-B
Slide 53: Group Capabilities
Group Capabilities 3 52 STRICTLY CONFIDENTIAL
Slide 54: Highly Experienced Board and Management Team
Highly Experienced Board and Management Team Esteemed Board Membership Mr. Gautam Mr. Rajesh S. Mr. Anil Mr. K. Jairaj Dr. Ravindra H. Mrs. Meera Adani Adani Sardana Dholakia Shankar (Chairman) (MD and CEO) Strong Sponsorship Managing Director Independent Directors Skilled and Experienced Management
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