Reliance Energy Ltd.

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Reliance Energy Ltd. Creating Growth Momentum
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Background
Serving over 25 million consumers in
substantial areas of Mumbai, Delhi, Goa and
Orissa
Reliance Energy is Indias leading private
sector utility company
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Background

• Powering 2 out of 3 homes in Mumbai, and 1 out
  of 2 in Delhi

Reliance Energy is Indias leading private
sector utility company
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Background

• 7,500 Schools
• 3,000 Hospitals
• 250 Theatres
• 5 Airports
• 130 Railway Stations

Reliance Energy is Indias leading private
sector utility company
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Background

• Industrial, commercial and residential urban
  consumers

Reliance Energy is Indias leading private
sector utility company
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Background

• Distributing over 5,000 MW of power the
  largest in India

Reliance Energy is Indias leading private
sector utility company
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Background

• Power generation capacity of nearly 950 MW in
  Maharashtra, Goa,
• Andhra Pradesh, Kerala
• and Karnataka

Reliance Energy is Indias leading private
sector utility company
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Background

• Indias most valuable power company, with market
  capitalisation of over Rs. 10,000 crore

Reliance Energy currently ranks among Indias
top 25 listed private sector companies on all
major financial parameters
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Background

• Annual revenues over Rs 6,400 crore

Reliance Energy currently ranks among Indias
top 25 listed private sector companies on all
major financial parameters
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Background

• Annual cash profits over Rs 600 crore

Reliance Energy currently ranks among Indias
top 25 listed private sector companies on all
major financial parameters
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Background

• Annual net profits over Rs 350 crore

Reliance Energy currently ranks among Indias
top 25 listed private sector companies on all
major financial parameters
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Background

• Debt free at the net level

Reliance Energy currently ranks among Indias
top 25 listed private sector companies on all
major financial parameters
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Background

• Top end credit ratings - rated AAA by CRISIL/
  ICRA/ FITCH

Reliance Energy currently ranks among Indias
top 25 listed private sector companies on all
major financial parameters
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Report Card 2003-04
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Report Card 2003-04

• Tariff Revision petition filed after 7 years
• to achieve stipulated Return on Equity

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Report Card 2003-04

• Approval to import power into Mumbai, through
  open access on existing transmission lines
• lower tariffs expected

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Report Card 2003-04

• Resolution of 5 years old standby charges
  dispute in Mumbai expected shortly from MERC
• end to uncertainties

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Report Card 2003-04

• Encroachment of customer base in Mumbai stopped
  by MERC

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Report Card 2003-04

• Wage Agreements signed covering 4,500 employees
  and 1,200 officers
• pending since April 2002

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Report Card 2003-04

• Cumulative financial provisions of over
• Rs. 350 crores made to strengthen Balance Sheet

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Report Card 2003-04

• 100 equity in Andhra and Goa projects acquired,
  and operations merged with RE

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Report Card 2003-04

• Andhra 220 MW power plants PLF raised to 85,
  through increased gas allocation

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Report Card 2003-04

• Kerala power plant restarted after a 1 year
  shutdown - projects financial viability restored

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Report Card 2003-04

• Completed first phase of VRS in Delhi
  distribution companies reducing workforce by
  nearly
• 4,500 persons in 7 days

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Report Card 2003-04

• Exited from non-core activities of Coal Washery,
  coal-based Maithon power generation project,
  broadband telecom

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Report Card 2003-04

• Transformed into Indias most valuable power
  company
• Market capitalisation increased more than 200 in
  a year to over Rs. 10,000 crore
• Best performing utility stock in the year 2004,
  outperforming Sensex by 29
• Among the top 10 performers in Sensex stocks in
  2003, outperforming Sensex by 57

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Creating Growth Momentum
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Power Environment

• Dominated by state owned undertakings
• Poor existing infrastructure
• Unreliable quality of power
• Unsustainable levels of technical and
• commercial losses
• High tariffs
• Low standards of customer care

• Huge opportunity for
• private sector to create
• world class power
• infrastructure in India

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Synergies for Reliance

• Leveraging Reliance groups core competencies
• - World scale and world class plants
• - Infrastructure development
• - Project management and execution
• - Financial engineering
• Feedstock integration with Reliances upstream
  gas business
• Leveraging of customer base for Reliances other
  businesses

A natural fit in Reliances overall business
portfolio
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Vision statement

• To be among the most admired and most trusted
  integrated utility companies in the world
• To establish leadership in the power sector in
  the country, across generation, transmission,
  trading and distribution
• To deliver reliable and quality power to millions
  of customers at competitive costs
• To set international standards of customer care
  creating superior value for all stakeholders
• To set new benchmarks in standards of corporate
  performance and governance, through the pursuit
  of operational and financial excellence,
  responsible citizenship and profitable growth

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Generation Strategy

• From Well Head to Wall Socket
• Environment friendly fuels gas the preferred
  feedstock
• Adequate capacity to meet captive requirements of
  5,000 MW, covering
• - Base Load
• - Trading
• Offtake primarily by own customer base
• Location in proximity to customers
• Economies of scale, capital productivity,
• lowest operating costs

Generation of power at the most competitive
unit costs globally
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Worlds Largest Gas based Power Project

• Setting up the worlds largest gas based mega
  power project with initial capacity of over 3,500
  MW capacity scale benefits
• Initial investment outlay of over Rs 10,000 crore
  (US 2.2 billion) single largest investment
  across any sector in Uttar Pradesh

To benefit millions of consumers in the power
deficit regions of Delhi, UP and other parts
of Northern India
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Worlds Largest Gas based Power Project

• End-to-end integration in the energy value chain
  - gas sourced from Reliances Dhirubhai gas
  fields in KG basin integration benefits
• Commissioning in phases from mid 2006 through
  mid 2007
• Project will be a strategic national asset and
  will help realise Honble Prime Ministers vision
  of Power for all by 2012

Project to supply clean-green power based on
environment friendly natural gas at competitive
costs
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Location Map

• 40 kms from Delhi
• HBJ gas pipeline is
• 15 kms away
• Main Ganga Canal
• is just 2-3 kms away
• Power Grids Dadri
• substation to help in
• evacuation of power

Dadri
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Distribution Strategy

• Expansion of the customer base, with a national
  footprint
• Acquisition of existing networks in major cities
  and towns, through the privatisation process
• Open access on distribution systems, as
  individual States deregulate

Providing a world class experience to millions
of customers
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Distribution Strategy

• Setting up new networks where economically
  feasible
• World class systems, automation, quality and
  reliability of power, competitive pricing,
  highest standards of customer care

Providing a world class experience to millions
of customers
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Existing Areas

• Increased automation and strengthening of
  distribution systems in Mumbai to bring down
  losses to around 10

Significant potential for enhancing returns in
Mumbai, Delhi and Orissa
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Existing Areas

• Comprehensive revamp of Delhi infrastructure, to
  reduce losses from the existing levels of 55

Significant potential for enhancing returns in
Mumbai, Delhi and Orissa
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Existing Areas

• Recapitalise the Orissa distribution companies,
  and turn around their operations, subject to
  suitable restructuring by Govt. of Orissa

Significant potential for enhancing returns in
Mumbai, Delhi and Orissa
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New Areas

• Applications filed for building new networks in
  various cities
• - Bhandup, Vashi, Pune, Nasik, Nagpur,
  Aurangabad
• - BEST area in Mumbai
• NDMC area in New Delhi
• - 12 areas under franchise in
• Gujarat
• - Other cities and states in the
• future

Participation in privatisation of distribution
assets of SEBs as opportunities arise
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Growth Opportunities - Trading

• Trading in Power
• Trading in power Physical (merchant/ own
  generated)
• Creating exchanges for trading in power
  financial and derivative products

Enhancement of returns from generation and
transmission
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Mega Investment Plans

• Capital Investments
• Amount (Rs Crore)
• Generation 10,000
• Transmission 4,000
• Distribution 6,000
• Total 20,000
• UP power project implemented by a new company ,
  Reliance EGen P. Ltd.

Investment of upto Rs. 20,000 crores in the
next 5 years
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Financial Engineering
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Shareholding Pattern
Present Reliance Group 49.5 FIs / Banks /
MFs 21.0 FIIs / GDRs 21.3 Others 8.2 Total 100
.0

Reliances stake reduced from 58.2 to 49.5
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Preferential Offer

• Equity shares and/or equity related securities
• Offer price of Rs. 640 per share, determined in
  accordance with SEBI Preferential Allotment
  guidelines

Priced nearly 3 times Reliances open offer price
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Preferential Offer

• Offer price at 38 premium to
• 26 week average price
• 2 discount to last traded market price

Postal ballot for all shareholders on
preferential offer and various other
resolutions though not required in law
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Strong Vote of Confidence

• Reliance to subscribe to over 2 crore equity
  shares, aggregating nearly Rs. 1,400 crores
• Institutional shareholders, like LIC and GIC,
  agree in principle to subscribe to nearly 1 crore
  shares, aggregating over Rs. 600 crores

Endorsement of growth prospects and positive
signal to markets
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Financial Flexibility

• Enabling approvals to offer additional amount of
  Rs. 1,000 crores through
• - equity shares and/or
• - equity shares with differential voting
• rights and/or
• - international convertible bond
• offering

Reliance has confirmed its willingness to
subscribe additional Rs. 1000 crores
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Proposed Reliance Stake
Present
Proposed Reliance Group
49.5 56.5 FIs / Banks / MFs
21.0 21.0 FIIs / GDRs
21.3 16.5 Others
8.2 6.0

Reliance stake still 2 below peak levels
of over 58
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Reduction in Free Float

Present
Proposed Reliance Group
49.5 56.5 FIs / Banks / MFs
21.0 21.0 FIIs / GDRs
21.3 16.5 Others
8.2 6.0
Reduction in free float from over 50 to 43
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Value creation for Reliance Energy shareholders
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Impact on Net Worth

• Reliance Energy to rank among Indias top 3
  private sector companies
• Net Worth to rise by Rs. 3,000 crores, from Rs.
  3,500 crores to Rs. 6,500 crores

Third only to Reliance Industries and ICICI Bank
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Impact on Book Value

• A 43 increase in Book Value per share from Rs.
  217 to Rs. 312

Price to book ratio will decline to 2
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Impact on Leveraging ability

• Increased ability to leverage Balance Sheet,
  while maintaining top end AAA ratings

Increase in borrowing ability by Rs. 3,000
crores to Rs. 6,500 crores
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Impact on Profitability

• Increase in capital base by Rs. 3000 crores -
  potential accretion to earnings
• Increase in EPS leading to substantial
  enhancement of overall shareholder value

To rank among Indias top 10 private sector
companies
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Value creation for Reliance Industries
shareholders
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Mark to Market gains

• Reliances investments in Reliance Energy now
  valued at over Rs 5,200 crores
• Average cost of Reliances shareholding in RE
  will still be only Rs. 350 per share, against
  market price of Rs. 650 per share

Capital gains of nearly Rs 3,500 crores
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Participation in power sector growth

• Enhancement of leadership position in the power
  sector for Reliance Group
• Benefits of sustained long term growth in the
  entire sector

Positive impact on RILs financial ratios
through consolidation
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Gas Off-take

• Assured feedstock off-take for about 25 of
  production from RILs KG - D6 Dhirubhai gas field
• Long term contracts at competitive prices

Share of gas in power generation to increase
from 10 to global average of 30
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Deployment of Cash flows

• Proposed investments only 8 of Reliance groups
  cash flows of over
• Rs. 30,000 crores in the next 3 years.
• .and less than 5 of value of RILs future gas
  sales contracts of over Rs. 50,000 crores to the
  UP gas based power project

Opportunity for Reliance to deploy its strong
cash flows for attractive returns
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Win Win Win
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Win for Customers
Quality , Reliable power Competitive
prices World class customer care
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Win for the Power sector
Mega investments Technology upgradation Accel
erated loss reduction
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Win for the Country
World class power infrastructure Enhanced
competitiveness Fiscal deficit reduction
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Win for Reliance Group
Leadership in power sector Exponential
growth Enhanced profitability
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