The Tata Power Company Limited
Investors’ Meet – July 2008
1
Disclaimer
Certain statements made in this presentation may not be based on historical information or facts and may be
“forward looking statements”, including those relating to The Tata Power Company Limited’s general business plans
and strategy, its future outlook and growth prospects, and future developments in its industry and its competitive
and regulatory environment. Actual results may differ materially from these forward-looking statements due to a
number of factors, including future changes or developments in The Tata Power Company Limited’s business, its
competitive environment, its ability to implement its strategies and initiatives and respond to technological changes
and political, economic, regulatory and social conditions in India.
This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer to acquire
any Shares and should not be considered as a recommendation that any investor should subscribe for or purchase
any of The Tata Power Company Limited’s Shares. Neither this presentation nor any other documentation or
information (or any part thereof) delivered or supplied under or in relation to the Shares shall be deemed to
constitute an offer of or an invitation by or on behalf of The Tata Power Company Limited.
The Company, as such, makes no representation or warranty, express or implied, as to, and do not accept any
responsibility or liability with respect to, the fairness, accuracy, completeness or correctness of any information or
opinions contained herein. The information contained in this presentation, unless otherwise specified is only current
as of the date of this presentation. Unless otherwise stated in this document, the information contained herein is
based on management information and estimates. The information contained herein is subject to change without
notice and past performance is not indicative of future results. The Tata Power Company Limited may alter, modify
or otherwise change in any manner the content of this presentation, without obligation to notify any person of such
revision or changes. This presentation may not be copied and disseminated in any manner.
THE INFORMATION PRESENTED HERE IS NOT AN OFFER FOR SALE OF ANY EQUITY SHARES OR ANY
OTHER SECURITY OF THE TATA POWER COMPANY LIMITED.
2
Agenda
•
Part A: Overview of Tata Power
•
Part B: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
•
Part C: Other Businesses
•
Part D: Financial Performance
•
Part E: Beyond Business
3
Part A: Overview of Tata Power
4
A Tata Company
5
Tata Power: Introduction
•
Largest private, integrated utility company in India today with presence across the
value chain in fuel, generation, T&D and trading
•
Founded in 1906, to supply hydro-electric power to Mumbai. Set-up thermal
generation in Trombay in 1960s
•
•
•
Expanded outside Mumbai with IPP (Belgaum) and CPP (Tata Steel) in 1990’s
Thrust on renewables including wind, hydro and solar
Successful Public Private Partnerships in generation, transmission and distribution
6
Pioneer in Power Sector
First 800 MW
thermal unit
First pump
storage unit
in the country
of 150 MW Capacity
First to Introduce
SCADA and
Fibre Optic
ground wire
communication
Flue Gas
De-sulphurisation
plant using
sea water
220 kV
Cable
Transmission
220 kV
Network
transmission
Computerized
lines in
grid control
First
four circuit
and energy
gas
towers
management
First
insulated
system
500 MW switch
First
150 MW thermal gear
thermal unit
unit
7
Existing Presence in Power Sector
Tala Transmission
NDPL
Trombay 1330 MW
Mumbai Distribution
Mumbai Transmission
Hydro 447 MW
Jojobera 428 MW
Supa 17 MW
Khandke 51 MW
Bramanvel 11 MW
Thermal (1839 MW)
Belgaum 81 MW
Hydro (471 MW)
Wind ( 79 MW)
Transmission
Distribution
8
Tata Power Group – Major Companies
Tata Power
Subsidiaries
Joint Ventures
Page
Page
15
100%
Coastal Gujarat
Power Ltd
37
100%
Tata Power Trading
20 40%
Company Ltd`
30
100%
Trust Energy
Resources Pte Ltd
16
74%
Maithon Power
Ltd
17
74%
Industrial Energy
Ltd
34
51%
North Delhi
Power Ltd
35
51%
Powerlinks
Transmission Ltd
41
50%
Nelco Ltd
42 49%
20 33%
Associates
Page
Tata BP Solar Ltd
Tubed Coal
Mine Ltd
Mandakini Coal
Mine Ltd
29 30%
KPC
29 30%
Arutmin
40%
Refer to page numbers in black for details
9
•
•
•
•
•
•
•
•
•
•
•
Trombay
13, 18
Hydro
13, 23
Jojobera
17
Belgaum
13
Haldia
19
Wind Farm 24 - 26
Solar PV
42
Mundra
Maithon
Tata Steel JV (IEL)
Tata BP Solar
Transmission
•
•
Mumbai
Tala
33
Distribution
•
•
Mumbai
Delhi
33
•
Tata Power Trading
•
•
•
•
•
Indonesian Coal Mines
Coal Bed Methane
Mandakini
Tubed
TPC Asia
Businesses
Generation
Division
Other Entities
Power Business
Tata Power
Trading
Fuel & Logistics
Other Business
•
SED
•
NELCO
40
Refer to page numbers in black, for details
10
Part B: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
11
Generation: Business Models
12
Tata Power: Existing Operations
Mumbai Licence Area (1777 MW)
Trombay - Thermal
Hydro Power Generation
Unit 4
150 MW
Oil & Gas
Khopoli
72 MW
Unit 5
500 MW
Oil, Coal & Gas
Bhivpuri
75 MW
Unit 6
500 MW
Oil & Gas
Bhira
300 MW
Unit 7
180 MW
Gas
Total
447 MW
Total
1330 MW
Wind 79 MW
Jojobera
428 MW
Belgaum
CPP
81 MW
IPP
13
Thermal Projects Under Implementation
Maithon1050 MW
Jojobera/Jamshedpur 240 MW
Haldia 120 MW
Mundra 4000 MW
Trombay 250 MW
Thermal (5660 MW)
14
Project Capacity
• 4000 MW (5 x 800 MW)
Ownership Structure • 100% subsidiary: Coastal Gujarat Power Limited
Customers
• Gujarat (1805 MW), Maharashtra (760 MW), Punjab (475 MW),
Haryana (380 MW), Rajasthan (380 MW)
Funding
• Project Cost: Rs 17,000 Crore (D/E: 75:25)
• Financial closure completed in April 08 – lenders such as IFC, ADB
Completion
• Targeted by 2012 vs 2014 as per bid conditions
Project Status
• Fuel: 10 mtpa offtake agreement with KPC/Arutmin - 50% for Mundra.
Pricing part fixed and part linked to CERC index.
• Construction activities – foundation for boiler island, TG, office building
Mundra
UMPP
15
Project Capacity
• 1050 MW (2 x 525MW)
Ownership Structure • Maithon Power Limited 74: 26 JV of Tata Power and Damodar
Valley Corporation
Business Model
• Regulated
Customers
• DVC (300 MW), Active discussions with PSEB, NDPL and WBSEB
Funding
• Project Cost: Rs 4450 Crores
• (D/E: 70:30)
• Debt syndication completed
Completion
• Unit 1: 2010, Unit 2: 2011
Project Status
• Fuel: Linkage Coal, initial supply by DVC
• Foundation work for power island initiated
Maithon
16
JAMSHEDPUR (PH #6)
Project Capacity
JOJOBERA (Unit #5)
• 120 MW
• 120 MW
Ownership Structure • IEL (74:26 JV of Tata
Power and Tata Steel)
• IEL
Business Model
• CPP
• CPP
Funding
• Project Cost: Rs 490 Crores
• Project Cost: Rs 620 Crores
• D/E 70:30
• D/E 70:30
Completion
• December 2008
• December 2009
Project Status
•
Fuel: Coke oven gases of Tata
Steel
•
Fuel: Linkage from West Bokaro and Mahanadi
Coal field.
•
Turbine rotor erection end Aug 08
•
Civil construction for boiler and BoP facilities on
Captive Power
Plants
17
Project Capacity
• 250 MW
Ownership Structure • Tata Power Division
Business Model
• PPA with TPC D, BEST (150 MW)
Funding
• Project Cost: Rs 1066 Crore
• D/E 70:30
Completion
• October 2008
Project Status
• Fuel: Imported coal
• Boiler, turbine, generator installed, interconnection on
Trombay Unit 8
18
Project Capacity
• 120 MW (2 x 45 MW + 30MW)
Ownership Structure • Tata Power Division
Business Model
• Merchant and PPA
Customers
• Hoogly Metcoke, PPA with Tata Power Trading and WBSEDCL
Funding
• Project Cost Rs 605 Crores
• D/E 70:30
Completion
• September 2008 (45MW), December 2008 (45MW), March
2009 (30MW)
Project Status
• Fuel: Hot flue gases from Hoogly Metcoke
• Unit 1 & 2 in place – synchronization on
Haldia
19
Projects in Pipeline
Total
Planning & development activities initiated
20
5670
Generation Capacity (Tata Power Group)
12861
Capacity (MW)
11261
5261
2389 2474 3041 3161
2007 2008
2009 2010
2011
Fiscal Year
(Ended 31st March)
21
2012
2013
Future Opportunities In Thermal Generation
Bid Based
Captive
IPP/Merchant
International
Tata Power qualified for about 8000 MW of bidding based generation
projects such as Tillaiya, Dhopave and Shahpura.
Further opportunities to be explored as available
Growth in Tandem with Tata Steel requirements
Opportunity to grow with similar other customers
Further IPPs being explored based on coal mine allocation
Opportunity to set up CBM based projects
Actively exploring opportunities for acquisition and greenfield
expansion
22
Hydro Electric Power
•
Oldest and one of the largest private sector players with capacity of 447 MW
•
Several awards and recognitions – Bhira and Bhira Pump Storage Scheme received
the CEA Silver Shield this month
•
Actively exploring additional 1000 MW in large hydel projects including India, Nepal,
Bhutan etc – final stages of negotiations for 120MW, with import of power
23
Initiatives In Renewables
• 79 MW operational & 23 MW under commissioning
• 101 MW ordered – will be commissioned by Dec 2008
• 300 MW being additionally explored
• Developing a 3 MW grid connected solar PV farm in Maharashtra
• Evaluating potential for concentrated solar thermal (CST) generation
• Exploring micro hydel opportunities
• Actively looking for fuel cell technology partners to pursue opportunities in
Other
Initiatives
the Indian market
• Exploring feasibility of standalone biomass based power plants
• Exploring possibilities of geothermal generation
24
Installed Capacity
• 79 MW
Project Under
Implementation
• 123 MW
(50 MW Karnataka, 50 MW Gujarat, 23 MW Maharashtra)
Ownership Structure
• Tata Power division
Business Model
• Regulated
Funding
• Project Cost: Rs 633 Crores
Completion
• September 2008 (23 MW)
• February 2009 (100 MW)
Project Status
• Turnkey projects by Enercon
• Substations ready at Gujarat and Karnataka
Wind Farms
25
Wind Projects Under Implementation
Samana 50 MW
Sadawaghapur 23 MW
Gadag 50 MW
Wind (123 MW)
26
Part B: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
27
Fuel
Fuel supplies
for new proje
cts
s
ear
y
25
0
2
for
28
Indonesian Coal Mines
Deal Highlights
Performance
• Quantity mined in 2007 ~ 54MT
• Acquired 30% equity stake in KPC and
Arutmin from PT Bumi Resources,
Indonesia
• Average realised price per tonne (FOB)
– US$44
• Acquisition value of USD 1.1 bn
• EBITDA from Operations – US$480
millions
• Off-take contract with KPC for 10.5
mtpa ± 20% (at Tata Power’s option)
Source – Bumi Annual Report 2007
Loading port – all
weather, capable of
handling cape size
vessels
Mining operations
are efficient – Rio
Tinto and BHP
practices followed
Loading port at KPC
Coal conveyor belt at KPC
29
Trust Energy Asia Pte Limited
•
SPV incorporated in Singapore for owning ships to meet shipping requirements
and trading in fuels
•
Present shipping requirements of 8-9 vessels for Mundra
•
To be met through a combination of long term charters and out right purchases –
3 LT charters and LOI for 3 vessels signed
•
Spare capacity may be used commercially
30
Part B: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
31
Distribution Opportunities
• Second License – parallel licensing unlikely to happen soon
• Privatization – not much progress in replicating Delhi model
• Outsourcing – opportunity for marginal players
• Franchisee Opportunity – window is open for private participation
32
Mumbai: Transmission and Distribution
•
23,000 customers with 2500 MUs of sales (mostly to high value bulk consumers)
•
17 receiving and distribution stations, 318 consumer substations and 1335 Kms of
HT & LT Cable network. Total asset base over Rs 1400 crores
•
MERC regulated tariff with 16% RoE on distribution and 14% on transmission.
Incentive on reducing ATC losses
33
North Delhi Power Limited (NDPL)
• 51:49 JV of Tata Power and Delhi Vidyut
Praday Nigam (Govt. of Delhi)
• Over 1 million consumers with 5000 MUs
consumption and net asset base of over
Rs 1800 Crores
• Assured returns upto 16%, plus
incentives on loss reduction
Mar 2008: Sales – Rs 22.87 billion, PAT Rs 2.82 billion
Dividend – 12% on enhanced capital, after 1:2 bonus
AT&C Losses
60.00
50.00
P 40.00
e
r
c 30.00
e
n
t 20.00
Achieved
10.00
2002
34
2003
2004
2005
2006
2007
2008
Powerlinks Transmission Limited
•
•
•
•
•
51:49 JV of Tata Power and Power Grid Corporation of India
1200 km 400 kV double-circuit transmission lines
Transmits power from Tala Hydroelectric Project and Eastern/North-Eastern region
to New Delhi and adjoining areas.
Total investment of Rs 1560 Crores (D/E 70:30)
CERC based tariff (14% ROE) with incentive of 10% (pre-tax) as majoration charges
Mar 2008: Operating Income – Rs 2.45 billion, PAT – Rs 0.58 billion, Dividend – 8%
35
Part B: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
36
Tata Power Trading Company Limited
TPTCL Sales (MU)
Role
1711
1800
•
1600
1205
1400
•
1200
MU
1000
•
675
800
600
400
200
•
76
0
2005
2006
2007
•
•
2008
March 31
•
Identify and tap surplus power source in
the country
Locate a customer who is ready to pay
in cash the for power at its landed cost
inclusive of transmission losses
Settle commercial terms on both sides
such that trader’s open positions are
minimized
Organize and ensure physical delivery
(RTC control room operation)
Ensure payment security on both ends
Balance the risk within regulated trading
margin of 4 paisa
Develop the power trading market
Mar 2008: Operating Income – Rs 8.82 billion, PAT – Rs 0.04 billion, Dividend – 20%
37
Power Trading
Traded Power (MU)
Power Trading Projections (MU)
25000
21636
MU
%
1.7
3
GR
A
C
15023
14188
11847
11029
20000
15000
10000 4178
5000
0
2003
2004
2005
2006
2007
2008
March 31
Improvements needed:
• Cap on trading margins
• Operational - scheduling delays, non-grant of intra-state corridors
• Corridor congestion - inter-state and inter-regional power evacuation for merchant plants
• Regulatory framework - long term commitments and forecasting is a challenge
38
Part C: Other Businesses
39
Strategic Electronics Division (SED)
•
•
Revenues of Rs.59 crores (Mar 08) against Rs.51 crores during the previous year.
•
•
•
Future revenue to come from MBRL Pinaka production order and Air Defence System.
•
7 manufacturing licenses of SED to provide access to foreign vendors under domestic offset obligation
Current revenue contributors include electronics system for the Rocket Launchers, Fire Control
Computers for Arjun Tank and Command and Control systems.
Defence spend over Rs. 400 bn, 40% indigenous. Expected growth ~ 15%.
SED expected to be granted Raksha Udyog Ratna status which will provide access to technology, prequalification benefits and defence R&D budgets
40
• A subsidiary of Tata Power (50.04% stake) listed on BSE and NSE
• Current Businesses structured around Automation & Control and Network Systems.
• Caters to core industries like Defence, Railways, Steel, Cement, Automobile, Oil and Gas
etc.
• Tie-ups with international players for defence, weather management systems, VSAT,
SCADA etc.
Mar 2008: Operating Income – Rs 1.97 billion, PAT – Rs 0.04 billion
41
Tata BP Solar
•
•
•
•
51:49 JV between BP Solar and Tata Power
•
Growth plans include expansion of its module manufacturing facility and thrust on
domestic sales
Market leader in Solar Photovoltaic technology in India with turnover of Rs 660 Crores
Nearly 75% of sales from exports largely to Europe and USA
India’s first Polycrystalline Solar cell manufacturing plant and 45 MW module
manufacturing facility (largest in the region)
Mar 2008: Revenue – Rs.9.10 billion, PAT – Rs.0.3 billion, Dividend – 16%
42
Part D: Financial Performance
43
Financials
Year Ended March 31, 2008
Quarter Ended
Year Ended
31-Mar-08
31-Mar-07
31-Mar-08
31-Mar-07
16.34
9.47
59.16
47.15
(14.81)
(9.42)
(49.79)
(39.92)
1.53
0.05
9.37
7.23
Interest & Finance charges
(0.43)
(0.48)
(1.42)
(1.89)
Depreciation
(0.78)
(0.69)
(2.91)
(2.92)
Other Income
2.25
1.79
4.66
3.44
Profit Before Tax
2.57
0.67
9.70
5.86
Provision for Taxes
(0.32)
0.26
(1.00)
1.11
Statutory Appropriations
(0.59)
(0.23)
(0.59)
(0.23)
1.66
0.70
8.11
6.74
Rupees in Billions
Operating Income
Operating Expenditure
Operating Profit
Profit After Tax
Dividend: Mar 2008 – 105%, Mar 2007 – 95%, Equity Share Capital – Rs.2.21 billion
44
Financials - Consolidated
Year Ended March 31, 2008
Year Ended
31-Mar-08
31-Mar-07
Operating Income
108.91
64.76
Operating Expenditure
(87.70)
(53.85)
Operating Profit
21.21
10.91
Interest & Finance charges
4.88
2.83
Depreciation
5.59
4.15
Other Income
4.79
2.67
Profit Before Tax
15.53
6.60
Provision for Taxes
(3.76)
0.99
Profit Before Minority Interest
11.77
7.59
Minority Interest/Associates
(1.22)
0.01
Profit After Minority Interest
10.55
7.60
Statutory Appropriations
(0.59)
(0.23)
9.96
7.37
Rupees in Billions
Profit after Statutory Appropriations
45
Tata Power – Financials (Standalone)
Annual Sales (MU)
12,318
2003
12,231
2004
12,663
2005
13,616
2006
14,422
2007
Profit After Tax (In Billion Rs.)
8.70
14,959
2008
5.19
5.09
5.51
2003
2004
2005
EPS (in Rs.)
6.11
2006
6.97
2007
2008
Net Worth (In Billion Rs.)
64.26
39
34
26
26
28
29
32.01
2003
2004
2005
2006
2007
2003
2008
46
35.36
36.19
2004
2005
40.10
2006
44.67
2007
2008
Dividend History
Earnings (Rs.)
40
40
Dividends (Rs.)
Payout ratio (%)
30
30
Rs.
20
20
10
10
0
0
2003
2004
2005
47
2006
2007
2008
%
Funding by Tata Power - Projects under
Implementation
Own Funds
(Rs.6,000 Crores)
Debt
(Rs.18,000 Crores)
• Domestic loans through domestic
financial institutions, banks and
capital markets
• Internal accruals: Rs.2900 Crores
• Preferential Issue/warrants - Tata
Sons: Rs.1900 Crores
• Remainder
• Foreign loans through external
Credit Agencies and Multilateral
Agencies: ADB, IFC
– Disinvestment of various holdings
or assets
– Equity dilution through warrants,
preferential issue and/or rights if
required
Total Fund Requirement (2008 -12): Rs.24,000 Crores
48
Part E: Beyond Business
49
Socially Responsible
Environment
•
•
•
Community
Over thirty year old eco-restoration and eco-development program in the
Western Ghats – One of the most sensitive ecosystems in the world
Over 7 million saplings of 60 tree species planted in the area. Over 600,000
trees being planted regularly
A green belt raised around Thermal Power Plants in Trombay and Jojobera
Health
• Sponsored Lifeline Express - the world's first Hospital Train
• Medical camps with the Doctors of Rotary Club for local communities
Education
• Construction of Primary schools in rural areas
• Training imparted to more than 200 teachers
Livelihood
• Distribution of fruit trees and providing fingerlings of fast growing fish species
• Actively supports pisciculture activities at their hydro stations by assisting in
the breeding of fishes
• Supplying drinking water from the Company’ lakes to local communities
50
Environment: Achieving Global Norms
•
•
Operates under one of the strictest SO2 emission norms in the world
Recipient of various environment awards such as
–
–
–
Greentech Environment Excellence Silver Award 2004
Golden Peacock Award for Environment Excellence – 2005
Golden Peacock Environment Management Award – 2006
Source : PwC Report
51
51
Drive Energy Efficiency & Conservation Measures
•
•
Launched “I will Mumbai will”, a joint advertising campaign
with REL and BEST to educate Mumbai consumers on
energy conservation. Key messages were:
–
Shift consumption away from the 10 am - 8 pm peak
times
–
–
AC at 24 degree centigrade
Switch off the devices from the plug point
Ongoing education of Mumbai consumers to invest in
energy efficient devices/appliances
52
Thank you
53