kec international limited
TRANSCRIPT
KEC International LimitedCorporate Presentat ion
U p d a t e d o n 31 January 2017
An Group Company
Power T & D Cables Railways Water Solar Civil
Disclaimer
This presentation may include statements which may constitute forward-looking statements. All statements that address expectations or projections
about the future, including, but not limited to, statements about the strategy for growth, business development, market position, expenditures, and
financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events
and involves known and unknown risks, uncertainties and other factors. The Company cannot guarantee that these assumptions and expectations
are accurate or exhaustive or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in
any such forward-looking statements. No obligation is assumed by the Company to update the forward-looking statements contained herein.
The information contained in these materials has not been independently verified. None of the Company, its Directors, Promoter or affiliates, nor
any of its or their respective employees, advisers or representatives or any other person 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, and makes no representation or warranty, express or implied, for the contents of this document including its accuracy, fairness,
completeness or verification or for any other statement made or purported to be made by any of them, or on behalf of them, and nothing in this
document or at this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future. The
information and opinions contained in this presentation are current, and if not stated otherwise, as of the date of this presentation. The Company
relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. The Company 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. Any opinions or information expressed in this presentation are subject to change without notice.
This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase
or subscribe for, any securities of KEC International Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis
of, or be relied on in connection with, any contract or commitment or to be relied in connection with an investment decision in relation to the
securities of the Company therefore any person/ party intending to provide finance / invest in the shares/businesses of the Company shall do so
after seeking their own professional advice and after carrying out their own due diligence procedure to ensure that they are making an informed
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circumstances, create any implication that there has been no change in the affairs of the Company since that date. This presentation is strictly
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Co
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RPG Group
Page 04-05
Page 14-37
Business Overview
Management Team
Financial Overview
Business OverviewPage 18-25
Page 39-40
Page 26-33
Industry OverviewPage 09-14
KEC InternationalPage 06-08
Leadership TeamPage 15-17
RPG Group
Power T & D Cables Railways Water Solar Civil
RPG Group : Powered by Passion, Driven by Ethics
RPG Enterprises was founded in 1979 by Shri Rama Prasad Goenka, popularly known as RP Goenka, a pioneering fifth
generation business leader from the Goenka family. The Goenkas have a history of business dating back to 1820 AD in
banking, textiles, jute and tea. Under RP Goenka’s dynamic leadership, the Group grew in size and strength with several
acquisitions in the 1980s and 1990s. KEC became a part of the RPG Group in 1982, which is now one of India’s fastest
growing conglomerates with 20000+ employees, presence in 100+ countries and annual revenues of ~₹21,000 Cr (USD 3 Bn)
KEC International
World leader in Power
Transmission
EPC space.
CEAT
One of India’s leading
manufacturer of automobile
tyres.
ZensarTechnologies
Software
services provider
spread across 20 countries,
400+ customers.
RPG Life Sciences
Pharmacompany with wide
range medicines in
global generics and
synthetic APIs.
Raychem RPG
Engineering products and
services
catering to infrastructure
segment
of the economy.
Harrisons Malayalam
One of India’s largest
plantation companies with tea,
rubber and other agro products. 1
KEC International
Power T & D Cables Railways Water Solar Civil
2
KEC OVERVIEW
EPC Projects
Tower Supply
Footprint in 61+ countries across the globe
• An Indian multinational infrastructure EPC major
• FY16 Sales: ₹ 8,516 Cr (USD 1.3 Bn)
• 8 manufacturing facilities across India, Brazil and Mexico
• Consistently 50% + revenue from outside India
• ~5600 employees
3
INVESTMENT RATIONALE
World’s largest power transmission EPC company
• An Indian multinational infrastructure EPC major
• Over 7 decades of experience. Presently executing 180+ projectsSustained leadership in Power
Transmission EPC
• Footprint in 61+ countries across all continents
• Currently executing projects in 33 countries. 51% sales from abroadRisk mitigation through diversified
geographical presence
• 25% market share in PGCIL orders in FY 16
• Strong market share in select State Electricity Board transmission orders
Strong domestic presence
• Order Book backlog as on 31 Mar.16 at ₹ 9,449 Cr (USD 1.4 Bn)
• Diversified across businesses and geographiesRobust Order Book
• FY16 sales: ₹ 8,516 Cr (USD 1.3 Bn)
• Sales growth 5 yr. CAGR: 14%Consistent Growth
Industry Overview
Power T & D Cables Railways Water Solar Civil
10
Business-wise Breakup – 9M FY17
Order Intake YTD: Rs 8,634 crs
Order Intake YTD FY17 has grown by 26% Y-o-Y
Order Book as on 31st Dec: Rs 11,186 crs
T & D (Excl. SAE)72%
SAE12%
Cables 2%
Railways12%
Water 1%
Solar0.9%
Orders book by Business
61%
11%
9%
17%
2%
T & D (Excl. SAE)
SAE
Cables
Railway
Solar
Orders intake by Business
11
Geography-wise Breakup- 9M FY17
L1 Position as on 31st Dec very strong at Rs 3800 Crs
Order Intake YTD: Rs 8,634 crs Order Book as on 31st Dec: Rs 11,186 crs
51%49%
India
International
Order intake by Geography
India52%
International48% Order book by
geography
5
Industry Outlook : Transmission & Distribution (T&D)
Region Transmission Distribution
India 119 551
Middle East 60 165
Africa 135 286
United States 254 564
Americas 324 696
Brazil 90 186
Asia 793 2335
Strong demand anticipated driven by -
• Increase in new power generation capacities
• Increasing Private Sector Investments
• Investments in interconnection grids/projects
• Replacement of existing aged networks
• More frequent and intense blackouts
• Government focus on increasing access
Region Key nations Key Demand Drivers
India India Energy, Rail & Water – Priorities of New Government
Africa South Africa, Nigeria, Ethiopia, Kenya Low per capita electricity consumption. Interconnections being planned
Middle East Saudi, UAE, Oman, Kuwait Upcoming large power generating plants, interconnection lines
North America United States, Canada ~2,60,000 kms of lines planned 2014-35. Estimated investment $324 bn.
South America Brazil New ~2,28,000 km of lines by 2035. Cross country lines planned.
Central Asia Kazakhstan, Ukraine and Georgia Initiatives funded by multilateral institutions to expand power infra
SAARC Bangladesh, Sri-Lanka, Nepal, Bhutan Expansion of India’s cross border interconnection
Source: IEA's World Energy Outlook 2014, World Bank
T&D Capex need - FY2014-35 ($Bn)
6
Industry Outlook : Cables, Railways and Water
CABLES
• Annual Indian market ~ ₹ 20,400 Cr p.a. (USD 3.1 Bn)
• Strong demand driven by power sector, real estate and industrial activity
• India’s aggressive plans for power sector driving growth
• Demand for improved network quality expected to improve telecom tower and cable demand
WATER
• Targets spend 1.7x as compared to previous 5 year outlay
• Demand for fresh water expected to increase by ~50% by 2025*.
• Focus on new irrigation schemes, Setting sewage treatment plants, desalination plants, inter-linking of rivers
RAILWAYS
• Targets spend 2x as compared to previous 5 year outlay at ~` 521,800 Cr (USD 80 Bn)
• Urbanization & strain on existing infrastructure driving investment in Mass Rapid Transit System
• Metro systems probable for cities with 2Mn population
• Connection to ports through new Rail networks. Diamond Quadrilateral project (bullet train)
*Source: National Commission for Central Water Resources, India
Energy WaterRailway
7
Energy, Rail & Water – Priorities of the New Government
The new government has integrated the related ministries like coal, power and renewable energy into
one and transmission and distribution is the focus area of the new Power Minister
• Focus on energy infrastructure
• Upgradation of technology
• Set up small-hydro power projects
• Increase coal exploration & mining
• Bridge demand-supply gap
• Expedite Oil and gas explorations
• Strengthen national solar mission
• Reduce T & D losses
• Connection to ports through
strategic new Rail networks
• Modernization of technology
• Agri Rail, Tourist Rail etc.
• Invest in stressed infrastructure
• Modernize stations
• Prioritize Safety and R&D
• Diamond Quadrilateral project
• Pradhan Mantri Gram Sinchayee
Yojana
• Prioritize pending irrigation
projects
• Sewage treatment plants
• Desalination plants
• Inter-linking of rivers
• Set up drinking water supply grid
• Water resource management
Leadership Team
Power T & D Cables Railways Water Solar Civil
8
Board of Directors
H. V. Goenka, Chairman & Non-Executive
DirectorChairman of RPG Group. Elder son of RPG Group founder, R.P Goenka.
Vimal Kejriwal, MD & CEO, Executive DirectorChartered Accountant, 32 years of experience across different industries in various
capacities.
S. S. Thakur, Non-Executive & Independent
Director
Professional banker, former Chairman of HDFC Bank. Served RBI and United
Nations at senior positions.
G. L. Mirchandani, Non-Executive &
Independent Director
Eminent Industrialist. Founder Chairman of the Onida Group, Akasaka Electronics,
Iwai Electronics and Gulita Securities.
D. G. Piramal, Non-Executive & Independent
DirectorIndustrialist; Chairman of Dilip Piramal Group.
S. M. Kulkarni, Non-Executive & Independent
Director
Management Consultant to several Indian and Global Companies. Associated with
many NGOs.
A.T. Vaswani, Non-Executive & Independent
Director
Independent director of multinational companies including as Glaxo India Ltd,
India's largest pharmaceutical company.
S. M. Trehan, Non-Executive & Independent
Director
Rich experience in the engineering field. Former Managing director of Crompton
Greaves Ltd.
Vinayak Chatterjee, Non-Executive &
Independent Director
Well known towering expert in Indian Infrastructure. Chairman of the Confederation
of Indian Industry's (CII) National Task Force on Infrastructure Projects –
Monitoring & Advocacy.
Nirupama Rao, Non-Executive & Independent
Director
Retired Bureaucrat; Former Foreign Secretary and, former Indian Ambassador to
the USA.
R. D. Chandak, Non-Executive Director Former MD and CEO of KEC, led Company’s remarkable turnaround into one of
the largest transmission line construction companies in the world.
9
Management Team
Vimal Kejriwal
MD & CEO
Rakesh Amol
President -
Infrastructure & Cables
Randeep Narang
President – International
Transmission &
Distribution
Neeraj Nanda
President – South Asia
Transmission &
Distribution and Solar
Rajeev Agarwal
Chief Financial Officer
Vasudevan Narasimha
Executive Director - HR
Anand Kulkarni
Executive Director –
Business Operations
Gustavo Cedeno
CEO – SAE Towers Rakesh Gaur
Chief Executive –
Railways
Nagesh Veeturi
Senior Vice President &
Head – Civil Business
Business Overview
Power T & D Cables Railways Water Solar Civil
10
Transmission & Distribution : Overview
• End-to-end solutions in power transmission and distribution
• Global leadership with experience of over six decades
• Strong international presence across multiple geographies
• Turnkey capability of up to 1,200 kV transmission lines
• Leading turnkey provider of telecom towers, Optical Fibre
Cable laying and Optical Ground Wire stringing
• EPC of Substations, Distribution network & Electrical-Balance of Plant, Industrial Electrification and Cabling
SAE Towers, USA : Wholly owned subsidiary
• Leading manufacturer of lattice transmission towers in Americas. Also manufactures steel poles and hardware.
• Annual production capacity – 100,000 MTs spread over Mexico (35,000 MTs) & Brazil (65,000 MTs)
11
Transmission & Distribution : Capabilities
Design & Engineering
• In-house design centers with a team of over 100 design experts in India and Americas.
• Equipped with latest softwares like BOCAD, PLS Tower, PLS Pole, PLS CADD,
AUTOCAD, MICROSTATION and Google Earth.
Manufacturing
• Largest globally operated tower manufacturing capacity
• Multi- location plants – 3 in India (Nagpur, Jabalpur, Jaipur); 1 in Mexico and 1 in Brazil
• Manufacturing Capacity - 311,200 MTs (Owned)
• Value Added Partners for tower manufacturing
• Manufactures Transmission towers, Telecom towers, Steel poles and Hardwares
Tower Testing
• Only company in the world to have 4 tower testing stations - 3 in India; 1 in Brazil
• Capable of testing towers up to 1,200 kV
• Brazil facility is the largest tower testing station in the Americas
• Capable of testing all types of towers: Lattice, Guyed, Tubular and Mono Poles
12
Cables : Overview
• Capacity of 35,400 km of cables (Power, Control, HT, EHV and Instrumentation cables). 0.6 Mn cKm Jelly filled
copper cables and 0.6 Mn fKm of Optical fiber cables.
• Fully integrated state-of-the-art manufacturing facilities in different parts of India.
• Pioneered production of XLPE cables in India.
• Manufactures range of power cables upto 220kV (Including Solar Cables) and telecom cables
• Turnkey cabling solutions
• Testing facilities for entire range of power and telecom cables as per various national and international specifications.
• Accredited with ISO 9001, ISO 14001 and OHSAS 18001 certifications.
• Manufacturing locations –
• Vadodara (Gujarat) – High Tension and Extra High Voltage Power Cables
• Mysore (Karnataka) – Low Tension Power Cables, Telecom Cables and Instrumentation Cables
• Silvassa (Union Territory) – Low Tension Power Cables
New Cables facility at VadodaraExtra High Voltage power cables
13
Railways : Overview
• 50 projects executed/ ongoing
• Prequalified to bid various parts of dedicated freight corridor projects in consortium with partners
• Complete turnkey solutions provider in the railways infrastructure EPC space
• Civil infrastructure including bridges, tunnels, platform, workshop modernization & station building
• Earthwork, new track laying & rehabilitation of existing tracks
• Railway electrification and power systems, signaling and telecommunication network
Electrification Civil Wok & EarthworkSignaling Track Work
14
Water : Overview
Water Treatment Works Water Resource Management – Dam Works
• Recent foray into Water segment
• 21 projects executed/ ongoing
• Water Resource Management Projects - Including construction of canals, dams, tunnels, embankments and lift
irrigation systems
• Water and Waste Water Treatment – Including intake system, transmission, storage, collection, treatment and
disposal of waste water
• Currently executing projects in Gujarat, Madhya Pradesh, Maharashtra and West Bengal
FY 15 – ₹ 9,853 Cr (Incl. L1)FY16 -- ₹ 11,634 Cr (Incl. L1)
Market shares
KEC13%
Others87%
Share of PGCIL Projects – FY 15
KEC29%
Others71%
Share of select State Electricity Boards -FY 15
FY 15 – ₹3,036 Cr #
KEC33%
KPTL19%
Chinese Players
14%
L&T8%
Dextron & Jyoti4%
Babcock4%
Others19%
Africa Market* Share FY 15
NCC34%
ASKEC16%
HYUNDAI16%
AETCON8%
L&T6%
Others20%
Saudi Arabia Market Share FY 15
15
SAE Towers
41%
Brametal40%
Incomisa8%
Others11%
Brazil Market Share - SAE Towers
*excl. North Africa
#KEC participating States
KEC25%
Others75%
PGCIL Market Share - FY16
16
Growth Strategy
•Automate business processes
•Strengthen risk management
•M&A: Look for opportunistic acquisition
•Grow presence in existing businesses
•Focus on margin improvement
•Enter new countries every year
•Strengthen presence in SAARC &
Southeast Asia
•Grow EPC presence in the Americas
•Increase pole business at SAE Mexico
•Strengthen foothold in Indian market
•Expand internationally by leveraging
KEC’s strong global presence in T&D
•Continue to expand pre-qualifications
•Gradually move closer to T&D margins
CORPORATE ESTABLISHED BUSINESS Power T&D
EMERGING BUSINESSESRailways, Water & Solar
Financial Overview
Power T & D Cables Railways Water Solar Civil
Financials : Revenue & Order book Analysis
17
4,4745,815
6,9797,902 8,468 8,516
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY11 FY12 FY13 FY14 FY15 FY16
Net Sales₹ Cr
4 Year CAGR 10%
3,549 4,1484,998
6,116 6,484 6,280354
913
1,032
854 803 830
480
571
552
631907 1,026
91
164
270
169133 210
0
19
127
131132 103
9
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY11 FY12 FY13 FY14 FY15 FY16
Net Sales - By Business Solar
Water
Railways
Cables
SAE
Trans. & Dist. (ExSAE)
₹ Cr
7,800 8,572 9,470 10,200 9,508 9,449
0
2,000
4,000
6,000
8,000
10,000
12,000
FY11 FY12 FY13 FY14 FY15 FY16
Order Book` Cr.
4 Year CAGR 2.5%
2,192 2,732 2,8893,589 4,006 4,175
2,282
3,083
4,091
4,3134,462 4,341
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY11 FY12 FY13 FY14 FY15 FY16
Net sales - By Geography
International
India
₹ Cr
Financials : Margin Analysis
18
Initiatives to improve profitability
• Strengthened Bidding, Procurement, Execution
processes and systems through a process
excellence exercise
• Focus on closure of legacy projects
• Stopped bidding entry level projects in new
businesses
• Focus on improving working capital cycle
• Reduction in interest costs (Debt levels & Interest
rates)
*PAT/ EBITDA numbers exclude impact of exceptional items/ Asset sale
477 471381
493 512
679
10.7%
8.1%
5.5%6.2% 6.0%
8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
100
200
300
400
500
600
700
800
FY11 FY12 FY13 FY14 FY15 FY16
EBITDA / EBITDA Margin
EBITDA EBITDA margins (%)
₹ Cr
214 210
65 79 69
187
4.8% 3.6%
0.9% 1.0% 0.8%
2.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0
50
100
150
200
250
FY11 FY12 FY13 FY14 FY15 FY16
PAT / PAT Margin
Profit After Tax (PAT) PAT margins (%)
₹ Cr
9471,108
1,147 1,192 1,3301,512
21.9%20.2%
12.9%14.0%
12.5%
15.6%
23.7%
20.5%
5.8%6.8%
5.5%
13.1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
200
400
600
800
1,000
1,200
1,400
1,600
FY11 FY12 FY13 FY14 FY15 FY16
Net Worth, ROCE, ROE
Shareholders funds ROCE (%) ROE (%)
₹ Cr
Financials : Leverage and Capital efficiency Analysis
19
1.3
0.9 1.3
1.7
1.51.6
2.7
2.2
4.0
4.0
3.93.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
FY11 FY12 FY13 FY14 FY15 FY16
Leverage ratios
Net debt to equity Ratio (times) Net Debt to EBITDA (times)
Times
4.1
3.0
2.0 1.9 1.7
2.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
FY11 FY12 FY13 FY14 FY15 FY16
Interest coverageTimes
603
363
748
1,207
1,308 1,723
817 876 921
920881
791
0
500
1,000
1,500
2,000
FY11 FY12 FY13 FY14 FY15 FY16
Debt Profile
Short Term Long Term
₹ Cr
5.46.3 6.9
8.0
9.6 9.9
3.4
5.0 4.6 4.0 3.73.1
0.0
2.0
4.0
6.0
8.0
10.0
12.0
FY11 FY12 FY13 FY14 FY15 FY16
Capital utilization
Asset Turnover ratio Working capital Turnover ratio
Times
Financials : Earnings, Dividend and Balance Sheet
20
Balance Sheet Snapshot
*FY15 EPS includes impact of profit on Thane land sale
FY14 FY15 FY16
Shareholders funds 1,192 1,330 1,512
Loan funds (Gross) 2,127 2,189 2,514
Deferred tax liabilities (Net) 51 53 42
Total Liabilities 3,370 3,572 4,068
Fixed assets (Net) 992 881 860
Goodwill on consolidation 378 394 418
Working capital (Net) 2,000 2,297 2,791
Total Assets 3,370 3,572 4068
₹ Cr
8.0 8.1
2.5 2.6
6.37.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
FY11 FY12 FY13 FY14 FY15 FY16
Earnings Per Share₹
60% 60%
25% 30%
45% 50%
0%
10%
20%
30%
40%
50%
60%
70%
FY11 FY12 FY13 FY14 FY15 FY16
Dividend Per Share% of Face value
36.843.1 44.6 46.3
51.758.8
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
FY11 FY12 FY13 FY14 FY15 FY16
Book value per share
21
Profit & Loss Highlights (Consolidated)
(₹ crore)
Particulars Q3 FY17 Q3 FY16 Growth (Y-o-Y)
FY16 FY15 Growth (Y-o-Y)
Net Sales 1,965 2,101 -6.5% 8516.3 8467.8 1%
EBITDA 182 167 8.7% 679.3 511.8 33%
EBITDA Margins (%) 9.26% 8% 8.0% 6.0%
Interest Costs 58 69 -15.9% 277.4 308.9 -10%
Interest Cost (% of net sales) 3% 3.3% 3.3% 3.6%
PBT 101 69 46.5% 319.2 126.4 153%
- Profit on sale (Telecom Assets/Thane Land) 5.4 134.7
Taxes - On normal income 38 43 133.1 56.9
- On asset sale 0.0 43.2
PAT - Operating 63 26 139% 186.1 69.5 168%
PAT (Incl. asset sale) 63 26 139% 191.5 161.0 19%* Q3 and 9M FY 16 numbers are restated numbers as per IND AS
23
KEC : Equity Share Information
Shareholding Pattern (as on 29 Nov 2016) Equity Share Information
Share Price (31 Jan, 2017) : Rs. 148.15 / share
Market Cap (31 Jan, 2017) : Rs. 3809 Cr.
Net Worth (FY 16): Rs. 1512 Cr.
Financial Year – April to March
Listed on Indian Stock Exchanges
Bloomberg Code – KECI IN
Reuters Code – KECL.BO
₹ Cr
Promoters50.9%
Institutions31.9%
Public17.2%
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4/1/2011 10/1/2011 4/1/2012 10/1/2012 4/1/2013 10/1/2013 4/1/2014 10/1/2014 4/1/2015 10/1/2015 4/1/2016 10/1/2016
KEC International - Market Cap Trend
THANK YOU
www.kecrpg.com
Registered Office
RPG House, 463, Dr. Annie Besant Road, Worli, Mumbai - 400 030.
Phone: +91-22-6667 0200 Email: [email protected]
An Group Company