The Tata Power Company Limited
Analyst Meet – March 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
Management Team
Prasad Menon
S Ramakrishnan
Managing Director
Executive Director
(Finance)
S Padmanabhan
Banmali Agrawala
Executive Director
(Operations)
Executive Director
(Strategy & Business Dev)
3
Agenda
•
Part A: Overview of Tata Power
•
•
Part B: Global Scenario
Part C: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
•
Part D: Other Businesses
•
Part E: Financial Performance
•
Part F: Beyond Business
4
Part A: Overview of Tata Power
5
A Tata Company
6
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
7
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
8
Existing Presence in Power Sector
NDPL
Trombay 1330 MW
Mumbai Distribution
Mumbai Transmission
Hydro 471 MW
Tala Transmission
Jojobera 428 MW
Supa 17 MW
Khandke 51 MW
Bramanvel 11 MW
Belgaum 81 MW
Thermal (1839 MW)
Hydro (471 MW)
Wind ( 79 MW)
Transmission
Distribution
9
Vision, Mission and Values
10
Tata Power Group – Major Companies
Tata Power
Subsidiaries
Joint Ventures
100%
Coastal Gujarat
Power Ltd
49%
100%
Tata Power Trading
Company Ltd`
40%
100%
TPC Asia Pte Ltd
74%
Maithon Power
Ltd
74%
Industrial Energy
Ltd
51%
North Delhi
Power Ltd
51%
Powerlinks
Transmission Ltd
50%
Nelco Ltd
33%
Tata BP Solar Ltd
Tubed Coal
Mine Ltd
Mandakini Coal
Mine Ltd
11
Associates
30%
KPC
30%
Arutmin
40%
Tata Ceramics Ltd
•
•
•
•
•
•
•
•
•
•
•
Trombay
Hydro
Jojobera
Belgaum
Haldia
Wind Farm
Solar PV
Mundra
Maithon
Tata Steel JV (IEL)
Tata BP Solar
Transmission
•
•
Mumbai
Tala
Distribution
•
•
Mumbai
Delhi
•
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
Tata Ceramics
NELCO
12
Strategic Directions
Integrated Play
• Presence across
value chain
• Fuel supplies
& logistics
Competency
Management
Focus on Large
Indian Opportunity
• Create strong
project pipeline
• Operations
• Project
Execution
• New Business
Models
Grow Subsidiary
Businesses
Thrust on
sustainable
development
• Renewables
• CSR Initiatives
International
Play
13
Part B: Global Scenario
14
World Primary Energy Needs
‘000’ Mtoe
Other renewables
Biomass and waste
Hydro
Nuclear
18
14
10
•
•
Gas
6
Oil
2
Coal
2005
2015
2030
Projected to grow from about 11.4 billion to about 17.7 billion tonnes of oil
equivalent from between now & 2030
74% of that increase will be accounted for by developing countries (India & China
would account for 45% of that increase)
Source: International Energy Agency
15
World Primary Energy Needs by Fuel
000’ Mtoe
6
5
4
3
2
1
2005
Coal
Oil
Gas
Nuclear
2030
Hydro
Biomass and waste
Other renewables
•
Fossil fuel will continue to dominate this scenario
•
84% of the increase would come from fossil fuel, and coal use will increase
significantly. Electricity demand will double
Source: International Energy Agency
16
Energy Related CO2 Emissions
45
High Growth Scenario
41.9
4
68%
Reference
Scenario
35
27%
Alternative Policy
Scenario
26.6
57%
25
15
1980
1990
2000
2010
2020
2030
•
Energy related CO2 emissions will go up by 57% from 26.6 to 41.94 billion tons
and US, China, Russia and India will contribute 2/3 of this increase.
•
India will become the 3rd largest emitter by 2015, with China & US above it.
Source: International Energy Agency
17
Energy & Electricity Consumption
Per Capita Energy Consumed
Kgoe
kwh
7,000
12,200
1,000
US
•
•
Per Capita Electricity Consumed
China
2,150
500
625
US
India
China
India
Per capita energy consumption of India is 500 Kgoe as compared to US which is
at 7,000 & China at 1,000 (2005)
Per capita electricity consumption of India is 625 kWh as compared to US of
12,200 & China 2,150 (2007)
Source: International Energy Agency
18
Part C: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
19
The Indian Power Industry: Snapshot
Plan Achievements (GW)
(92-97)
(97-02)
(02-07)
Deficit Scenario
(07-12)
Source: CEA, CrisInfac
• Capacity addition has not kept pace with demand leading to significant shortages
• Investment tilted towards Generation:
– G to T & D
1 : 0.5
– In developed markets.
1: 1
20
Generation
Up to 2032, Indian GDP (USD per capita) expected to jump 6x from $ 646 to $ 4119...
… creating a potential energy demand (BU): 690 to over 1800
Installed Capacity (GW)
Private Contribution Expected
6x
Huge capacity additions will be required
Private participation is likely to increase
This presents a great opportunity for Tata Power
Source: Planning Commission Documents
21
Generation: Business Models
22
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
23
Thermal Projects Under Implementation
Maithon1050 MW
Jojobera/Jamshedpur 240 MW
Haldia 120 MW
Mundra 4000 MW
Trombay 250 MW
Thermal (5660 MW)
24
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 expected by April 08
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.
• Land: Acquisition for construction activities completed
Mundra
UMPP
25
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
• Site works initiated
Maithon
26
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 640 Crores
• D/E 70:30
• D/E 70:30
Completion
• August 2008
• September 09
Project Status
• Fuel: Coke oven gases of
Tata Steel
• Fuel: Linkage from West Bokaro and
Mahanadi Coal field.
• Land: Provided by Tata Steel
• Land: Provided by Tata Steel
Captive Power
Plants
27
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
• August 2008 (ahead of schedule)
Project Status
• Fuel: Imported coal
• Land: Existing land at Trombay
Trombay Unit 8
28
Project Capacity
• 120 MW (2 x 45 MW + 30MW)
Ownership Structure • Tata Power Division
Business Model
• Regulated
Customers
• Hoogly Metcoke, PPA with Tata Power Trading and WBSEDCL
Funding
• Project Cost Rs 605 Crores
• D/E 70:30
Completion
• March 2008 (45MW)
• October 2008 (75 MW)
Project Status
• Fuel: Hot flue gases from Hoogly Metcoke
• Land: Subleased from Hoogly Metcoke
Haldia
29
Projects in Pipeline
Total
Planning & development activities initiated
30
5670
Generation Capacity (Tata Power Group)
Capacity (MW)
12861
11261
5261
2389 2474 3041 3161
2007 2008
2009 2010
2011
Fiscal Year
(Ended 31st March)
31
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
32
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
33
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
Other
Initiatives
• Exploring micro hydel opportunities
• Actively looking for fuel cell technology partners to pursue opportunities in
the Indian market
• Exploring feasibility of standalone biomass based power plants
• Exploring possibilities of geothermal generation
34
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
35
Wind Projects Under Implementation
Samana 50 MW
Sadawaghapur 23 MW
Gadag 50 MW
Wind (123 MW)
36
Tata BP Solar
•
•
•
•
•
51:49 JV between BP Solar and Tata Power
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)
Growth plans include expansion of its module manufacturing facility and thrust on
domestic sales
37
Part C: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
38
Fuel
Fuel supplies
for new proje
cts
f
s
ear
y
25
0
or 2
39
Indonesian Coal Mines
Deal Highlights
Off Take Agreement: Key Features
• Acquired 30% equity stake in KPC and
Arutmin from PT Bumi Resources,
Indonesia
• Pricing in line with Mundra assumptions
for first 5 years
• Prices linked to CERC index post 5 years
• Acquisition value of USD 1.1 bn
• Off-take contract of 10.5 mtpa ± 20%
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
40
TPC Energy Asia Private 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
•
Spare capacity may be used commercially
41
Part C: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
42
Inter Region Transmission Opportunities
Northern Region
+ 4000 MVA
• Interregional transmission
capacity is inadequate and
leads to network congestion
North-Eastern Region
+ 5500 MVA
2300 MVA
+ 3500 MVA
5000 MVA
Western Region
1250 MVA
+ 1000 MVA
+ 5700 MVA
2800 MVA
+ 1000 MVA
1700 MVA
Southern Region
Eastern Region
• Accumulating utility / zone
access charges lead to high
tariff for power flow from East
to demand centers (North and
West)
• Longer term allotment (> 7
yrs) prioritized over short term
• Capacity to be increased to
37 GW by 2012
3150 MVA
Capacity to be implemented
43
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
44
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
45
North Delhi Power Limited (NDPL)
• 51:49 JV of Tata Power and Delhi Vidyut
Praday Nigam – A Govt. of Delhi
undertaking
• Over 1 million consumers with 5000 MUs
of consumption and net asset base of
over Rs 1800 Crores
• Assured returns upto 16%, plus
incentives on loss reduction
Privatized July 2002
AT&C Losses
46
Re
du
c
ed
f
ro
m
53
%
to
23
%
Powerlinks Transmission Limited
•
•
•
51:49 JV of Tata Power and Power Grid Corporation of India
•
•
Total investment of Rs 1560 Crores (D/E 70:30)
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.
CERC based tariff (14% ROE) with incentive of 10% (pre-tax) as majoration charges
47
Part C: Power Business
– Section 1: Generation
– Section 2: Fuel & Logistics
– Section 3: T & D
– Section 4: Power Trading
48
Power Trading
Traded Power (MU)
Power Trading Projections (MU)
G
CA
%
1.7
3
R
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
49
Tata Power Trading Company Limited
TPTCL Sales (MU)
Market Share Position
as of Feb 2008
Source : Compiled from RLDC web sites
50
Part D: Other Businesses
51
Strategic Electronics Division (SED)
•
•
•
•
•
•
Revenues of Rs. 47.17 crores against Rs. 38.18 crores during the previous year.
Current revenue contributors include electronics system for the Rocket Launchers, Fire Control
Computers for Arjun Tank and Command and Control systems.
Future revenue to come from MBRL Pinaka production order and Air Defence System.
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
7 manufacturing licenses of SED to provide access to foreign vendors under domestic offset obligation
52
• 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.
53
Tata Ceramics
•
Best quality fine bone chine products in the world.
•
Products exported to UK, Ireland, USA, Canada, Italy, Germany, Korea, Australia and
New Zealand
•
Customers include Wedgewood, Churchill China, Royal Doulton and Villeroy & Boch –
•
Future growth to be driven by domestic sales. Focus areas to include hospitality and
retail
54
Part E: Financial Performance
55
Financials
Nine Months Ending December 31 2007
56
Tata Power – Financials (Standalone)
Annual Sales (MU)
12,318
2003
12,231
2004
12,663
2005
13,616
2006
Profit After Tax (In Billion Rs.)
14,422
2007
EPS (in Rs.)
5.19
5.09
2003
2004
5.51
2005
26
2003
2004
28
29
2005
2006
2006
6.97
2007
Net Worth (In Billion Rs.)
34
26
6.11
32.01
2003
2007
57
35.36
36.19
2004
2005
40.10
2006
44.67
2007
Dividend History
Earnings (Rs.)
40
Dividends (Rs.)
Payout ratio (%)
30
30
Rs.
20
20
10
10
0
0
2003
2004
2005
58
2006
2007
%
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
59
Sensex vs Tata Power
Rs / share
Points
60
Part F: Beyond Business
61
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
62
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
63
63
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
64
Thank you
65