#1Corporate Presentation November 2013 Strictly Private and Confidential पावरग्रिड 'ONE NATION, ONE GRID' COPT#2Disclaimer N THIS PRESENTATION IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ELSEWHERE. N By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: N N N N N N N N This presentation has been prepared by Power Grid Corporation of India Limited (the "Company") solely for your information and for your use without regard to any specific objectives, suitability, financial situations or needs of any particular person and may not be taken away, reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organization or firm) or published in whole or in part, for any purpose. 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We undertake no obligation to update or revise any information or the opinions expressed in this presentation as a result of new information, future events or otherwise. 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 Company's general business plans, planned projects and strategy, future financial condition and growth prospects, future developments in industry and 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 Company's business, competitive environment and political, economic, legal and social conditions. The Company expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements in this presentation as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which these forward-looking statements are based. Neither the Company nor its advisers or representatives nor any of its subsidiary undertakings or any such person's directors, officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this presentation or the actual occurrence of the forecasted developments. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document. This presentation is not a complete description of the Company and may not be all inclusive and may not contain all of the information that you may consider material. Except as otherwise noted, all of the information contained herein is indicative and is based on management information, current plans and estimates. Industry and market-related information is obtained or derived from industry publications and has not been verified by the Company. Any opinion, estimate or projection herein constitutes a statement as of the date of this presentation unless specified to be as of an earlier date and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. The information presented or contained in these materials is subject to change without notice and its accuracy is not guaranteed. Any person placing reliance on the information contained in this presentation or any other communication by the Company does so at his or her own risk and neither the Company nor any of its affiliates, advisers or representatives accepts any responsibility or liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this document or its contents or otherwise in connection with this document.. 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This presentation is not an offering circular, a statement in lieu of a prospectus, an offer document or a prospectus as defined under the Companies Act, 1956, as amended or replaced by the Companies Act, 2013, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India. It is clarified that this presentation is not intended to be an advertisement or document inviting offers or invitations to offer or solicitations to offer from the public or any class of investors for the subscription for or sale and purchase of any securities. Nothing in this presentation is intended by the Company to be construed as legal, accounting or tax advice. N N For Financial Statements: N FY 2009- FY 2010 standalone financial numbers and FY 2011 - FY 2013 consolidated financial numbers are presented through the presentation as reported by the Company. Prior to FY 2011, the Company did not prepare consolidated financial statements. Power Grid Corporation of India Limited is proposing, subject to receipt of requisite approvals, market conditions and other considerations, a further public offering of its equity shares and is in the process of filing a Red Herring Prospectus (RHP) with the Registrar of Companies. Any potential investors should note that investment in equity shares involves a high degree of risk. For details, potential investors should refer to the RHP which will be filed with the Registrar of Companies including the section titled "Risk Factors". 'ONE NATION, ONE GRID' 1 पावरग्रिड#3Presentation Outline POWERGRID Overview 'ONE NATION, ONE GRID' 2 Table of Contents 1 पावरग्रिड 4 2 Key Company Highlights 3 Other Information Risks and Considerations पावरग्रिड#41. POWERGRID Overview पावरग्रिड#5POWERGRID: India's Principal Power Transmission Company VISION Transmission Grid Management Consultancy Telecom World Class, Integrated, Global Transmission Company With Dominant Leadership in Emerging Power Markets Ensuring Reliability, Safety and Economy India's Power Transmission leader owning more than 90% of Inter state transmission system (ISTS) Provides transmission of electricity through inter-state, inter-regional and transnational links Central Transmission Utility (CTU) of the country, responsible for planning and coordination related to ISTS Real-time Grid Operation and Management ✔ Non-discriminatory short term open access In-house expertise in areas of transmission, distribution and telecom consultancy in project planning, design, engineering, load dispatch, financing and project management Leverages POWERGRID's nationwide transmission infrastructure for providing bandwidth to all major telecom players Partnering with Gol in strategic initiatives Income Statement5 CTU Transmission Lines 102,109 ckm Transformation Capacity 172,378 MVA Sub-Stations 172 Nos System Availability 99.90%² Bulk of inter-regional capacity Grid mgmt. through POSOCO³ Executed Projects Over 460 Telecom Network 29,279 km STOA Ongoing Domestic Over 115 Projects Connecting 290 cities Reliability 0.32 T/L² Innovation ± 800kV HVDC / 1200kV AC Green Energy Certificates >5mm RECs4 Energy Accounting Nodal Agency Ongoing International 20 Projects System Availability 99.92% (FY13) Project Spread 14 countries NKN and NOFN Shareholding Pattern Others Balance Sheet5 (In INR cr) FY12 FY13 H1FY14 (In INR cr) FY12 FY13 H1FY142 DII 6.9% 6.8% Revenue? 11,074 13,727 7,738 Gross Fixed assets (ex-CWIP)⁹ 64,519 82,316 87,107 Gol 69.4% FII EBITDA7,8 9,326 11,777 6,627 Total Debt 10 52,697 67,206 77,710 16.9% Net Profit 3,303 4,313 2,280 Net Worth 11 23,583 26,377 28,476 Note: 1. As on 30th September 2013. 2. For period from April - Sept 2013. 3. Wholly owned subsidiary of POWERGRID. 4. Since commencement till March 2013 - REC Registry of India. 5. Audited consolidated financials for FY12 and FY13, reviewed standalone financials for 1HFY14. 6. BSE data as of 30th September 2013. 7. Includes Other Income. 8. EBITDA = Profit 'ONE NATION, ONE GRID' before Tax + Finance Cost + Depreciation and Amortization (excluding prior period adjustments). 9. Includes Tangible and Intangible Assets. 10. Total Debt: Long Term Borrowings + Current 3 Maturities of Long Term Debt.. 11. Excludes CSR Activities reserve of INR 26.5 cr for FY13 and INR 42.6 cr for H1FY14. पावरग्रिड#6POWERGRID: Business Overview पावरग्रिड A Gol Navratna Enterprise Transmission (FY13 Revenue: INR 12,211 cr¹) Grid Management (FY13 Revenue: INR 220 cr 1, 2) Consultancy (FY13 Revenue: INR 315 cr 1) Telecom POWERTEL (FY13 Revenue: INR 231 cr¹) TM Owns and operates ~90% of India's ISTS Inter-state, inter-regional and transnational links Transmission systems for UMPPS, CGS, IPPS Grid strengthening High Capacity Transmission Corridors Development of 1,200kV UHV-AC 'ONE NATION, ONE GRID' 4 1. 2. 3. 23 ✓ Real-time grid operation ✔ Optimum scheduling and dispatch ✔ Energy accounting and settlements ✔ Provides non-discriminatory short term open access ✔ Administering green energy certificates mechanisms Leverages in house expertise for providing services in areas of transmission, distribution and telecom Provides services to: State power utilities, private sector and government utilities domestically and internationally including in Asia, Africa and other SAARC countries पावरग्रिड Standalone revenue from operations. Revenue for Power System Operation Corporation Ltd. (POSOCO) 100% subsidiary of POWERGRID. As of September 2013. इ ✔ Leverages POWERGRID'S nationwide transmission infrastructure ✓ Owns and operates 29,279 kms of telecom networks ✔ Implement GOI's strategic initiatives: - National Knowledge Network ("NKN") National Optic Fiber Network ("NOFN") पावरग्रिड#7POWERGRID: Major Corporate Milestones Physical 22,228 100,200 FY92-93 FY12-13 167 12,201 39 164,763 Financial1 (INR cr) Transmission Line (ckm) Sub-stations (Nos.) Transformation Capacity (MVA) 4.5x Starts Commercial Operations 1992 4.3x FY92 -93 FY12-13 82,316 EIT 3,521 13,727 4,313 634 237 Turnover Manpower: Only 1.6x Increase! 13.5x Diversification into Telecom Business Notified as a Navratna Company 2001 1998 2007 Notified as The Central Transmission Utility by Government of India 1. 2. 'ONE NATION, ONE GRID' 3. 5 P 1.6x 21.7x Power System Operation Corporation Ltd. established to oversee Grid Management 2008 2009 2010 Net Profit Gross Fixed Assets (excluding CWIP) 18.2x 2012 23.4x Achieved 18% of XIIth Plan Approved Capex Budget² 2013 1200kV test line charged Projects secured through TBCB Partners Gol for NOFN Initial Public Offering. Lists on BSE & NSE "Further Public Offer" Fifth Fastest Growing Electric Utility in the World³ On a standalone basis for FY93 and consolidated basis for FY13. As of March 31, 2013 on standalone basis. On the basis of Revenue CAGR for last three years by Platts. पावरग्रिड#82. Key Company Highlights पावरग्रिड#9Key Company Highlights पावरग्रिड 1 Compelling Industry Dynamics 'ONE NATION, ONE GRID' 6 8 2 Leadership Position in India's Transmission Sector 3 Effective Project Implementation and Focused Growth Plans 4 High Operational Efficiency 5 Stable Business Model with Comparatively Low Risk 6 Diversification and New Business Initiatives 7 Strong Financial Track Record Skilled and Experienced Management Team with Extensive Industry Experience पावरग्रिड#10A 1 Compelling Industry Dynamics Low Per Capita Power Consumption and Electrification¹... (kWh/Year for 2011) B I 2,016 9172 ...And India's continued Power Deficits³... D ...Driving Capacity Addition Across Power Sector to Meet Demands ('000 MW) (Capacity additions and expenditure) % Peak Deficit 3,312 109 2,933 FY08 16.6% 2,441 91 India Brazil China World ...Rising Income in India4 (Base year: 2004-05)... XIIth Plan Estimated Generation ✓ Investment requirement: INR 838,700 cr 110 FY09 11.9% 97 ✓ Non-renewable capacity addition of 88GW N 119 FY10 12.7% 104 (INR '000 cr) CAGR: 9,000 7.1% 122 FY11 9.8% 8,000 CAGR: 7.0% 110 7,000 6,000 5,000 3,871 130 FY12 10.6% 116 4,000 3,000 2,000 135 FY13 9.0% 123 1,000 0 07A 08A 09A 10A 11A 12A 13A 14E 15E 16E 17E ■Peak Requirement Demand met Renewable energy capacity addition of 30GW Transmission ✓ Investment requirement: INR 180,000 cr Centre INR 100,000 cr State: INR 55,000 cr Private: INR 25,000 cr ckm addition : 107,440 MVA addition : 270,000 Distribution ✓ Investment requirement: INR 306,235 cr Including INR 9,500 cr for Smart Grid ✓ ckm addition (<33kV): 1,305,000 MVA addition (33/11KV): 138,000 Note: 1. IEA Key World Energy Statistics 2013. 2. Provisional data for the period April 2012 March 2013, CEA. 3. CEA LGBR Report 2013-14, CEA Power Scenario at a Glance November 'ONE NATION, ONE GRID 2012, Report of The Working Group on Power for 12th Plan, 12th Five Year Plan 4. RBI- Handbook of Statistics on Indian Economy 2012-13, IMF- World Economic Outlook Database, October 7 2013 पावरग्रिड#111 Compelling Industry Dynamics (Cont'd) Strengthening National Grid through inter-regional high capacity transmission corridors Large pit-head stations under central as well as private sector Hydro projects in NER, Himachal Pradesh, Uttarakhand and J&K ✔ Large import coal based power projects along the sea coast ✓ Need for strong pan-India Transmission Network Estimated cost INR 75,190 cr Majority projects being implemented by POWERGRID Jammu Ludhiana A NEPAL Partabpur Lucknow SIKKIM BHUTAN Guwahati NER Paradigm Shift From "Self Sufficiency at Regional Level" concept to "National Level" Pipavav NR Delhi A RAPP Jaipur Gandhinagar B Indore WR Tarapur Mumbai Vindhyachal Δ Bhopal Korba Patna ER CHICKEN NECK Kolkata BANGLA DESH Talcher/lb Valley Raipur A Bhubaneswar Inter-regional capacity (MW) 31,850 27,750 14,050 5,050 MYANMMAR LEGEND Vizag Simhadri Hyderabad Generation Load-Centre SR Coal 65,550 Kaiga Krishnapatnam > 2x Ennore Bangalore Hydro Kozhikode Mangalore South Madras Chennai Cuddalore Lignite IX Plan X Plan XI Plan As of September 2013 End of XII Plan (Planned) 'ONE NATION, ONE GRID' 8 Kayamkulam Thiruvananthapuram Coastal Kudankulam Nuclear COLOMBO SRI LANKA Power needs to travel from generation centers to demand centers, propelling the need for high capacity transmission corridors Source: Planning Commission of India - 11th Five Year Plan and 12th Five Year Plan, CERC Order. पावरग्रिड#122 Leadership Position in India's Transmission Sector Sole Central Transmission Utility and National Grid Manager India's Transmission Backbone Share of Inter-State Transmission System Others -10% Share of XIIth Plan Capex (Transmission) Private 14% Center 55% LAKSHADWEEP 'ONE NATION, ONE GRID' 9 BANGLADESH 1200 KV LINES 765 KV LINES LEGEND EXISTING UNDER CONST./ PROPOSED 400 KV LINES HVDC B-TO-B HVDC BIPOLE 220 KV LINES 2 132 KV LINES cxp dis 2b 351 0 ANDAMAN & NICOBAR State 31% Growth in 765kV lines (ckm) PGCIL -90% Total: INR 180,000 cr POWERGRID's Approved Plan: INR 109,650 cr¹ 3.6% of Total Network 2,933 As of Mar 31, 2011 Source: POWERGRID data from company filings. Factset. Note: Map not to scale. Outlines indicative. 1. On a standalone basis; earlier plan of INR 100,000 cr was revised to INR 109,650 cr to include new initiatives and TBCB projects. 7.0% of Total Network 7,174 As of Sep 30, 2013 पावरग्रिड#133 Effective Project Implementation... (INR '000 cr) 107.1% POWERGRID has Consistently Beaten Capex Targets¹... 101.1% 100.9% 100.6% 100.2% 11.9 12.0 10.5 10.6 8.2 7.6 FY09 FY10 FY11 49.1% 22.2 20.0 20.0 17.7 17.8 10.9 FY12 FY13 FY14 H1FY14 327 ■Planned Capex Actual Capex % of Planned Capex Achieved % of FY14 Planned Capex ... With Accelerated Pace of Capitalization Gross Fixed Assets (excluding CWIP)1 (INR cr) Total (as of Sep 30, 2013): INR Since inception till 87,107 cr March '11, INR 50,343 cr Addition during April '11 - September '13, INR 36,764 cr 'ONE NATION, ONE GRID' 10 Source: Company data. 1. On a standalone basis. 2. Data for the period from April 1, 2011 to September 30, 2013. Accelerated Capacity Addition 2.0x 658 CKM Added/Month 7.2x 369 2,644 MVA Added/Month ■Capacity Additions till FY11 Since Inception Capacity Additions in Last 30 Months 2 73.0% of Gross Fixed Assets as of March '11 added during April '11 - September '13 Pace of Capacity Addition has Increased Significantly! 19,754 ckm added in the last 30 months (April '11 - September '13) as compared to 82,355 ckm added in first 252 months (Inception - March '11) 79,328 MVA capacity added in the last 30 months (April '11 September (13) as compared to 93,050 MVA added in first 252 months (Inception - March '11) पावरग्रिड#143 ... And Focused Growth Plans Elements of Following Major Projects to be Commissioned 1 in FY14-15 Common Scheme for 765 KV Pooling Station and Network associated with DVC & Maithon Right Bank Project (INR '000 cr) Capitalization / Capex¹ 85.9% 73.2% 60.0% 59.5% 27.2% 2 Transmission System associated with Mundra UMPP 3 Transmission System of Vindhyachal-IV and Rihand-III (1000MW each) Generation Projects 8.2 4.9 4 Transmission System for Phase-I Generation Projects in Jharkhand and West Bengal - Part-B 5 Transmission System for Phase-I Generation Projects in Orissa - Part-B 6 Supplementary Transmission System associated with DVC & Maithon Right Bank Project 7 Transmission System for Phase-I Generation Projects in Orissa - Part-C 8 Transmission System for Phase-I Generation Projects in Jharkhand and West Bengal Part-A2 - 2.9 10.6 7.1 20.0 17.8 17.2 13.0 12.0 FY09 FY10 Capitalization 2 FY11 Capex FY12 FY13 Capitalization/Capex Capex Plans¹ (INR '000 cr) 9 Kudankulam - APP Transmission System (Balance lines) 10 Trans. System associated with Pallatana Gas Based Power Project and Bongaigaon Thermal Power Station (BTPS) 21.4 18.2 109.73 XIIth Plan Approved Budget: Annual Capex Split Actual FY13 FY13 20.0 Capex: INR 20,037 cr FY17 22.5 55.0 55.3 (INR '000 cr) FY14 22.2 30.9 FY16 22.5 Actual till Sep FY15 22.5 30, 2013: INR 10,895 cr 11 Transmission System strengthening in Western part of WR for IPP Generation Projects in Chhattisgarh - Part-D 12 Transmission System for Phase-I Generation Projects in Orissa - Part-A X Plan XI Plan XII Plan Planned Capex Actual Capex INR 109,650 cr³ In FY13 and H1FY14 (18 months), 28.2% of XIIth Plan capex target has already been achieved Source: Company data. 1. On a standalone basis. 'ONE NATION, ONE GRID' 11 2. Capitalization = Change in Gross Fixed Assets (excluding CWIP). 3. Includes new initiatives and TBCB projects.. पावरग्रिड#154 Highly Efficient Operations Consistently High Availability... 100% 99.55% 99.94% 99.90% 99.90% 99.80% 99.77% Gross Fixed Assets (ex CWIP)/Employee (INR cr/Employee) FY09 FY10 FY11 FY12 Capacity/Employee (MVA/Employee) Improving Productivity² FY13 8.6 FY09-13 CAGR CAGR: 15.1% 17.6 CAGR: 16.2% FY13 H1 FY14 Revenue / Employee (INR cr/Employee) 1.4 CAGR: 17.5% Incentives in the form of higher RoE if targets are exceeded NAC system > 98% Availability HVDC bi pole links> 92% availability HVDC B2B¹ stations > 95% PAT / Employee (INR cr/Employee) ...And Continuously Improving Reliability Trippings per line 2.56 2.07 1.27 0.59 0.58 0.32 FY09 FY10 FY11 FY12 FY13 H1FY14 Source: Company filings 1. B2B: Back to Back 'ONE NATION, ONE GRID' 2. On a standalone basis 12 0.5 CAGR: 21.8% Adopting Modern Technologies Hot line maintenance ✔ Insulator washing in polluted areas using helicopters ✔ Aerial patrolling of transmission lines ✓ Remote operation of substations Remote maintenance hub through National Transmission Asset Management Centre (under implementation) पावरग्रिड#165 Stable Business Model With Comparatively Low Risk Framework on Cost Plus Basis ✓ Revenue model on assets built and annual fixed charges basis 15.5% guaranteed ROE + 0.5% for timely completion ✓ Recovery of operating costs, including debt servicing charges and currency depreciation / hedging Debt Equity of 70:30 ✓ Availability based incentives Existing tariff norms applicable up to March 2014 2 Changing Regulatory Framework TBCB Regulated returns New Framework Post January 2011 Following projects will continue under the cost plus model - All existing projects All under construction projects All projects for which agreements have been signed before January 2011 but are yet to start implementation New projects allotted by GOI on nomination basis All future ISTS projects, except certain scheme, to be awarded through tariff based competitive bidding ("TBCB") route, in line with tariff policy of Gol, will be done by independent SPV Companies Secure Payment Collection LC coverage from Designated ISTS Customers adequate to cover monthly billing ✓ Regulation of power supply of defaulting entities as per CERC regulations Denial of Short Term Open Access to consistent defaulting entities being pursued with CERC ✓ Disconnection of feeders being contemplated for the entities who neglect to pay the transmission charges 3 Right of Way Enjoys Right of Way ("ROW") under the Indian Telegraph Act, 1885 Significantly reduces project execution timelines 'ONE NATION, ONE GRID' 13. Secure Tariff Mechanism Linked to the transmission network availability Independent of actual power transmitted or transmission losses through the network 5 Gol Assistance Operational: RoW, forest clearances and land acquisitions ✓ Sovereign rating ✓ Assistance in collecting dues from State Power Utilities ("SPUS") S Transmission charges allocated to all customers based on CERC's Sharing Methodology and adjustable on actuals on a quarterly basis पावरग्रिड#176 Increasing Diversification: Consultancy and Telecom Verticals Consultancy Services System Studies Communication Infrastructure Project Management Design and Drawings Operation and Maintenance Tr. Line and S/S incl. GIS Rural Electrification (ULDC, OPGW) Others (HR, Contracts, DPR, Smart Grid) Clientele Domestic International Footprint Nepal Bangladesh Sri Lanka UAE Bhutan Afghanistan Govt. Institutions State Utilities CPSUS (Power and Metal Sectors) Private Sector (Utilities, IPPs and Corporates) THE Myanmar Nigeria Kenya Ethiopia Tajikistan Kyrgyz Republic Pakistan Over 115 domestic projects under execution WORLD WB NER Project BANK Signed agreement with 6 NER states to provide technical / managerial support for intra-state T&D system improvement 20 international consultancy projects under execution in 14 Countries Telecom Vertical Reach Services Partnership Gol Projects Congo IFC Consultant for EPC and O&M agencies for CASA-1000 project Clientele Fiber Optic Network: 29,279km (as on September 2013) Points of Presence: 290 (as on September 2013) Leased line Multi-site LAN Interconnect Internet bandwidth MPLS-VPN Leasing of optic fiber ROW on T&D lines Infrastructure sharing NKN Project: Aggregate contract to POWERGRID - INR 900 cr NOFN: Estimated project costs INR 20,000 cr; allotment to POWERGRID: INR 2,434 cr Public sector and private sector majors 'ONE NATION, ONE GRID' 14 पावरग्रिड#186 New Business Initiatives SMART Grid (SC) integrates latest tech in IT, communication, automation with the electrical grid ✓ Developing SG pilot through open collaboration ✓ Successfully integrated all SG attributes at control center at Puducherry to show case its efficacy ✔ Promoting SG technology with a pilot smart city ✔ Implementing real time smart grid in transmission using WAMS Intends to set up Energy Efficiency Service Company (ESCO) to provide energy efficiency solutions Intend to undertake sustainable development projects in commercial establishments ✔ Existing pool of certified energy auditors ✓ Intend to start manufacturing towers, conductors and equipment through JVs ✔ Signed MoU with other PSUs to explore opportunities in manufacturing conductors (NALCO) and transmission line towers (RINL and SAIL) JV with states to develop intra-state transmission lines Agreements with Bihar & Odisha with a total project cost of -INR 8,790 cr finalized; discussions under way with other states ✔ Developed comprehensive master plan for RE grid integration and capacity addition in XIIth Five Year Plan across India through Green SMART Grid/ Energy Corridors with investments envisaged in power transmission - SMART City anticipated RE capacity -33GW ✓ Covers intra-state and inter- state transmission systems for grid interconnection Includes control infrastructure like forecasting tools, RE mgmt. centers, provisions for flexi generation etc. Green Energy Corridors / RE Integration 1 "ONE NATION, ONE GRID' 15 Source: Company data. Energy Efficiency Initiatives Strategic Alliances/JVs 3 2 पावरग्रिड Wire Business 5 Intends to undertake distribution wire business & operational management of distribution circles Applied for license in Odisha पावरग्रिड#197 (INR cr) Strong Financial Track Record Gross Fixed Assets (Excluding CWIP)1 51,462 64,519 FY11 (INR cr/%) 7,772 FY12 (INR cr) CAGR: 23.4% 82,316 87,107 9,273 FY13 1,2,3 EBITDA 1,2,3 and EBITDA Margin¹, H1FY14 CAGR: 23.1% 85.8% 11,777 85.6% 9,326 84.2% 83.8% FY11 FY12 (INR cr) 6,627 2,672 FY13 H1 FY14 Total Revenue 1,2 CAGR: 21.7% 13,727 11,074 FY11 FY12 7,738 FY13 H1 FY14 PAT1 and Dividend4 PAT CAGR: 27.0% 4,313 3,303 2,280 1,482 1,134 943 nil FY11 FY12 FY13 H1FY14 PAT Dividend Source: Company filings. 'ONE NATION, ONE GRID' 16 1. Based on audited consolidated financials for FY11-13 and reviewed standalone financials for 1 H FY14. 2. Includes Other Income 3. EBITDA = Profit before Tax + Finance Cost + Depreciation and Amortization (excluding prior period adjustments) 4. Includes Dividend Paid out and Dividend Distribution Tax, on a standalone basis. पावरग्रिड#207 Strong Financial Track Record (Cont'd) RoE1 (INR cr) Net Worth 1,3 and BVPS1 (INR cr/INR) 16.4% 16.0%² 61.5 57.0 14.0% 12.5% 50.9 46.2 Networth CAGR: 12.1% 28,476 26,377 23,583 21,402 FY11 FY12 1.88 40,162 21,402 FY13 Financial Leverage 1,4 H1FY14 2.73 2.55 77,710 2.23 67,206 52,697 23,583 26,377 28,476 (INR) FY11 FY12 Networth FY13 Book Value per Share H1FY14 EPS1 CAGR: 23.5% 9.3 7.1 6.1 4.95 FY11 FY12 FY13 H1FY14 Debt Equity 3 D/E R FY11 FY12 FY13 H1FY14 Source: Company filings. 1. Based on audited consolidated financials for FY11-13 and reviewed standalone financials for 1 H FY14. 2. Annualized. 3. Excludes CSR Activities reserve of INR 13.2 cr for FY11, INR 26.5 cr 'ONE NATION, ONE GRID' for FY13 and INR 42.6 cr for H1FY14 4. Total Debt= Long Term Borrowings + Current Maturities of Long Term Debt 5. Not annualized 17 पावरग्रिड#218 Seasoned Management with Extensive Industry Experience The management team of POWERGRID is highly experienced and qualified to execute the Company's strategic plan 1 Senior Management R.N. Nayak, Chairman and Managing Director 35 years of experience, primarily in power sector Over 21 years of experience in POWERGRID Worked at NTPC, also had a stint with SAIL Featured in the list of '2013 All-Asia Executive Team: Best CEOs' by Institutional Investor 2 I.S. Jha, Director-Projects 32 years of experience, primarily in power sector Served as ED (Engg.) in the company, also worked as ED Corporate Monitoring Group and ED of North Eastern Region Prior to joining POWERGRID, he has worked at NTPC Government Nominees and Independent Directors Officer of Central Secretariat Service 6 Rita Acharya, Govt. Nominee Director Joint Secretary, Ministry of Power (MOP) Handled various assignments while working at the Ministry of Finance (Department of Economic Affairs) and the Home Ministry of the Government of India 7 Pradeep Kumar, Govt. Nominee Director Joint Secretary & Financial Adviser, MoP IAS officer with over 26 years of experience Held positions such as Principal Secretary, Environment and Forest Department, Government of Kerala 11 12 Dr. K Ramalaingam, Independent Director Over 36 years of experience in the aviation sector Previously employed at the Directorate General of Civil Aviation, National Airports Authority, Kochi International Airport and the Airports Authority of India Has been on the board of various airlines and airport authorities R Krishnamoorthy, Independent Director Fellow Member of the Institute of Cost Accountants of India More than 37 years of experience in Power & Financial Sector Ex-member CERC and ex-Chairman of PFC 3 R.T. Agarwal, Director-Finance Over 32 years of experience in finance and accounts Worked in NTPC before joining POWERGRID in 1991 Understanding of execution and operational issues of power sector 4 Ravi P. Singh, Director-Personnel Over 31 years of experience in power sector Held position of ED (HR), ED (Eastern Region - II) Worked at NTPC, prior to joining POWERGRID 8 Rita Sinha, Independent Director 13 Mahesh Shah, Independent Director Retired from the Indian Administrative Service in July, 2010 Held post of Secretary to the Gol, Department of Land Resources, Ministry of Rural Development 9 Santosh Saraf, Independent Director Over 36 years of experience as a practicing Chartered Accountant in the field of finance and tax Served various institutions such as the Employees Provident Fund Organization of the Gol and the Associated Chambers of Commerce and Industry of India 14 Over 36 years of work experience in the field of corporate governance, corporate finance, investment banking and financial management Director of Inter Corporate Financiers & Consultants Ltd, an authorized Category-I Merchant Banker Has been president of bodies like ICSI, ICWAI Ajay Kumar Mittal, Independent Director Over 27 years of experience in Finance, Project Appraisal, Financial Management and Government statutory compliances Fellow Member of ICAI 5 R. P. Sasmal, Director-Operations Over 31 years of experience in power sector Worked in NTPC prior to joining POWERGRID ✔ Recognized as a 'Distinguished Member of CIGRE' (International Council on Large Electric Systems) in 2012 Currently the national representative for India at CIGRE for HVDC and power electronics 10 RK Gupta, Independent Director Professor of Human Behaviour & Organization Development at MDI, Gurgaon Was a member of the Advisory Group on Human Resources Issues of public sector banks set up by the Ministry of Finance of the Government of India. Also a Professional Member of the Indian Society of Applied Behavioral Science Chief Vigilance Officer Parvez Hayat, Chief Vigilance Officer IPS Officer of Jharkhand Cadre with over 25 years of experience Worked in various capacities in State and Central Govt. such as S.P/Sr.S.P of five Districts of Bihar/Jharkhand; PS to the Union Minister of Home Affairs 'ONE NATION, ONE GRID' 18 पावरग्रिड#22Risks and Considerations Macroeconomic Risk Regulatory Risk Operational Risk Business Risk Limited exposure to business cycles - GDP 'slowdown-proof business model given regulated return Planned capex of ~INR 109,650 cr in the XIIth Plan; 28.2% incurred during April '12 - September '13 - Historically exceeded capex targets ✔ No impact of fuel shortages All existing and under construction projects continue to remain under cost plus mechanism Tariff structure given by the regulator considering the sectoral development Regulator has historically maintained consistency in tariff structure - ✔ Gol assistance: Related to Right of Way, MoEF Clearances, land acquisition where applicable System availability consistently over 99% ✓ Trippings per line substantially reduced ✔ Employs modern technologies for maintenance of vast network ✓ Continued demand / supply mismatch - driving growth in transmission sector Ready for competition from the private sector Future ready: Since January 2011, POWERGRID has won 3 projects under the TBCB regime - Widespread network allows advantage over new entrants ✓ Consultancy and telecom are emerging business verticals Projects secured after January 6, 2011 under TBCB are executed through SPVs and are not covered under cost plus mechanism Low payment collection risk given LC from customers Regulation of power supply of defaulting entities Payment Risk ✔ Comfortable leverage position Financing Currency Risk 'ONE NATION, ONE GRID' 19 ✔ Ease of access to low cost debt - international ratings capped at sovereign ratings and domestically highest rating by CRISIL, ICRA & CARE Robust financial performance Tariff Mechanism allows for pass-through of foreign exchange variation cost and interest on outstanding debt Major equipments / works sourced domestically Source: Company data. 1. On a standalone basis. पावरग्रिड#23POWERGRID: Company Highlights Attractive Industry Dynamics Market Leader Stable Business Model Government of India Support Strong Financial Position Emerging Business Verticals: Telecom and Consultancy Management Focused on Growth with Extensive Project Execution Experience 'ONE NATION, ONE GRID' 20 पावरग्रिड#24POWERGRID: Targets and Achievements Delivered Comprehensively on Targets In September 2007 Target Invest INR 55,000 cr Over Next Five Years Achievement In November 2010 Target Achievement Exceeded planned capex targets every year' Achieved Capex of INR 29,559 cr¹ in FY11 & FY12 Maintain System Availability Above 99% Maintained availability above 99% Take Advantage of Diversification Opportunities Successfully tapped Telecom and Consultancy business opportunities Continue to Collaborate with Customers Achieved Continue to Maintain High Operational Achieved Efficiency Exceeded planned capex Trippings reduced from 2.07 in FY10 to 0.32 during April - September 2013 Achieved Achieved Increase International Footprint From presence in 7 countries in 2010 to 14 countries presently Achieved Entered into JVs with SEBS and private sector players Achieved Sustainable Development 'ONE NATION, ONE GRID' 21 1. On a standalone basis. First power sector PSU to release a "Sustainability Report" Achieved पावरग्रिड#253. Other Information पावरग्रिड#26Sustainability Framework Environmental and Social Policy & Procedures (ESPP) Environment and Social Policy Statement "POWERGRID is committed to the goal of sustainable development and conservation of nature and natural resources. While continually improving its management systems, accessing specialist knowledge and introducing state of the art and internationally proven technologies, POWERGRID strictly follows the basic principles of Avoidance, Minimization and Mitigation in dealing with environmental and social issues. Where necessary, restoration and enhancement is also undertaken❞ Certificate of Registration Certifications Certificate of Registration Certificate of Registration TM -- Environmental Objectives Avoid operations in environmentally sensitive areas, eco-sensitive zones, forests, sanctuaries, national parks, tiger/biosphere reserves, and CRZ covered coastal areas ✓ Consider environmental implications of location, terrain, and sensitive areas in impact identification and mitigate these with innovative/practical engineering solutions Application of efficient and safe technology practices Abate pollution in all activities and operations Minimize energy losses and promote energy efficiency 'ONE NATION, ONE GRID' Social Objectives Take due precautions to minimize disturbance to human habitations, tribal areas and places of cultural significance Take due care of Project Affected People (PAP) ✓ Involve affected people from inception stage to operation and maintenance ✓ Consult affected people in issues of RoWs, land acquisition or loss of livelihood ✓ Encourage consultation with communities in identifying environmental and social implications of projects ✔ Pay special attention to marginalized and vulnerable groups and secure their inclusion in overall public participation ✔ Guarantee entitlements and compensation to affected people as per its R&R policy Share information with local communities about environmental and social implications Always maintain highest standards of health and safety and adequately compensate affected persons in case of any eventuality Occupational Health & Safety Management System ISO 18001:2007 Environment Management Social Accountability System ISO 14001:2004 Certificate Certificate of Registration of Registration System SA 8000:2008 Quality Management Integrated Management System ISO 9001: 2008 Registration PAS 99:2006 Company certified with a PAS based Integrated Management Section World Bank has selected POWERGRID'S ESPP as the first candidate for 'Use of Country Systems' in India Source: Sustainability Report 2009-2011 duly validated externally by accredited assurance provider M/s TUV Rhineland India Limited. 22 पावरग्रिड#27Sustainability Initiatives 1. Land Acquisition Aim to locate sub-stations on government/waste land as far as possible ✔ Private land selected keeping in mind social impact on account of land loss Site selection planned on the basis of avoiding irrigated land, homestead land/houses, religious structures, cultural property or public infrastructure. Strictly follow procedures under the National Law for acquisition of private properties i.e. the Land Acquisition Act 1894, when land is acquired for the construction of sub-stations 3. Reduction in Forest Land Usage The forest land usage as a percentage of total land utilization in POWERGRID projects as been brought down from 6% till 1998 to 0.9% in 2011 Barren Land Before Construction of Gwalior S/s Gwalior S/s After Construction 2. Community Development Work In addition to Rehabilitation & Resettlement (R&R) measures, community development works are also undertaken for the overall improvement of surrounding village and community Based on social assessment outcomes, POWERGRID implements need based development Undertakes construction of roads, drinking water facilities, school Environment Management Multi Circuit Tower in Forest 4. Commitment to Social Responsibility ✔ Adopted Integrated Management Policy, Environmental and Social Policy & Procedures, Rehabilitation Action Plan (RAP), etc. 1% of previous year's standalone net profit after tax invested towards CSR initiatives Before POWERGRID intervention After POWERGRID intervention PROVIDED BY POWEINER UNDERC buildings, community centers etc. in association with local authorities Tubewell in Lucknow Under CD Works Renovation of Govt. Primary School Building at Barabanki 'ONE NATION, ONE GRID' Source: Sustainability Report 2009-2011 duly validated externally by accredited assurance provider M/s TUV Rhineland India Limited. 23 पावरग्रिड#28Indian Power Sector Generation SEBS/SPUs Transmission SEBS/SPUs Distribution SEBS, EDs, Discoms, Pvt. Licenses CPUs POWERGRID Energy Available and Sold IPPs & Private Licenses Private Utilities Captive 'ONE NATION, ONE GRID' 24 Open Power Trading Companies Transformation, Transmission and Distribution Losses Including Unaccounted Energy Consumption Agriculture, Domestic, Commercial, Industries, and Others Captive Consumer पावरग्रिड#29Financial Summary For the Year Ended March 31 For Six Months Ended 30 September INR cr FY11 FY12 FY13 HY14 Income Statement Total Revenue¹ 9,273 11,074 13,727 7,738 EBITDA 1,2 7,772 9,326 11,777 6,627 EBITDA Margin 83.8% 84.2% 85.8% 85.6% EBIT3 5,499 6,688 8,349 4,696 Profit after Tax 2,672 3,303 4,313 2,280 Balance Sheet Total Assets 77,662 92,132 113,384 127,425 Gross Fixed Assets (Ex. CWIP) 51,462 64,519 82,316 87,107 Total Debt4 40,162 52,697 67,206 77,710 Net Worth5 21,402 23,583 26,377 28,476 Dividend Paid Out 943 1,134 1,482 nil पावराग्रड Source: Company annual reports. FY11-13 data is based on consolidated financials and H1FY14 data is based on standalone financials. 'ONE NATION, ONE GRID' and Amortization (excluding prior period adjustments). 4. Total Debt: Long Term Borrowings + Current Maturities of Long Term Debt. 5. Excludes CSR Activities reserve of INR 13.2 cr 25 Notes: 1. Includes Other Income. 2. EBITDA = Profit before Tax + Finance Cost + Depreciation and Amortization (excluding prior period adjustments). 3. EBIT = EBITDA - Depreciation for FY11, INR 26.5 cr for FY13 and INR 42.6 cr for H1FY14. 6. Includes dividend distribution tax, on a standalone basis पावरग्रिड#30Corporate Overview (Cont'd) Government of India 69.42% Joint Ventures Institutions 23.69% पावरग्रिड Subsidiaries Non-institutions 6.89% Investment 4.1% 50% 50% Kalinga Bidyut Prasaran Bihar Grid Company Ltd. 100% Nigam Pvt. Ltd. POSOCO (Grid Management) PTC India Ltd. Teesta Valley Power Transmission Ltd. 26% 49% Powerlinks Transmission Ltd. North Eastern 26% 26% Torrent Power Grid Ltd. Transmission Co. POWERGRID NM Transmission Ltd. 100% POWERGRID 100% National High Power Test Laboratory 20% 26% Parbati Koldam Transmission Co. Vemagiri Transmission System Ltd. Energy Efficiency 25% 26% Jaypee Powergrid Ltd. Services Ltd. 100% Vizag Transmission Ltd. Cross Border Power Transmission Co. Ltd. 26% पावराग्रड Note: Shareholding pattern as of 30th September 2013. 'ONE NATION, ONE GRID' Power Transmission Company Nepal Limited not included as POWERGRID is yet to infuse capital into the company. 26 Operational JVS पावरग्रिड#31List of Abbreviations AG CBT CTC EPFO ESCO ESPP FERV FPO ICWA IWC ISTS JS&FA NKN NLDC NOFN PAS POSOCO RoE RoW SAARC TBCB UMPP Accountant General Central Board of Trustees Central Transmission Utility Employees Provident Fund Organization Energy Efficiency Service Company Environment and Social Policy & Procedure Foreign Exchange Rate Variation Follow-on Public Offer Institute of Cost and Works Accountants of India Interest on Working Capital Inter State Transmission System Joint Secretary and Financial Adviser National Knowledge Network National Load Dispatch Center National Optic Fiber Network Publically Available Specification Power System Operation Corporation Limited Return on Equity Right of Way South Asian Association for Regional Cooperation Tariff Based Competitive Bidding Ultra Mega Power Projects 'ONE NATION, ONE GRID' 27 पावरग्रिड