One Nation, One Grid
Risks 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
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✔ 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'
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✔ 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.
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