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AGL Presentation May 19
AGL Presentation May 19
AGL Presentation May 19
May 2019
Legal Disclaimer
Certain statements made in this presentation may not be based on historical AGL assumes no responsibility to publicly amend, modify or revise any forward
information or facts and may be “forward-looking statements,” including looking statements, on the basis of any subsequent development, information
those relating to general business plans and strategy of Adani Gas Limited or events, or otherwise. Unless otherwise stated in this document, the
(“AGL”), its future outlook and growth prospects, and future developments in information contained herein is based on management information and
its businesses and competitive and regulatory environment, and statements estimates. The information contained herein is subject to change without
which contain words or phrases such as ‘will’, ‘expected to’, etc., or similar notice and past performance is not indicative of future results. AGL may alter,
expressions or variations of such expressions. Actual results may differ modify or otherwise change in any manner the content of this presentation,
materially from these forward-looking statements due to a number of factors, without obligation to notify any person of such revision or changes.
including future changes or developments in its business, its competitive No person is authorized to give any information or to make any representation
environment, its ability to implement its strategies and initiatives and not contained in and not consistent with this presentation and, if given or
respond to technological changes and political, economic, regulatory and made, such information or representation must not be relied upon as having
social conditions in India. This presentation does not constitute a been authorized by or on behalf of AGL. This presentation is strictly
prospectus, offering circular or offering memorandum or an offer, or a confidential.
solicitation of any offer, to purchase or sell, any shares and should not be This presentation does not constitute an offer or invitation to purchase or
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purchase any of AGL’s shares. Neither this presentation nor any other part of its should form the basis of or be relied upon in connection with any
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an invitation by or on behalf of AGL. States, without registration under the U.S. Securities Act of 1933, as amended,
AGL, as such, makes no representation or warranty, express or implied, as to, or pursuant to an exemption from registration therefrom.
and does not accept any responsibility or liability with respect to, the This presentation is confidential and may not be copied or disseminated, in
fairness, accuracy, completeness or correctness of any information or whole or in part, and in any manner. This presentation contains translations of
opinions contained herein. The information contained in this presentation, certain Rupees amounts into U.S. dollar amounts at specified rates solely for
unless otherwise specified is only current as of the date of this presentation. the convenience of the reader.
2
Index
2 Sector Dynamics
3 Regulatory Framework
5 Growth Strategy
3
Introduction to Adani Group and Adani Gas
STRICTLY CONFIDENTIAL
Adani Portfolio: Leading Developer, Owner, Operator in Infrastructure
Promoters Portfolio
Mkt Cap*
~USD 22 bn
25.00
25.00% 43.32% 32.68% 25.00% 13.42%
%
Public
No 1 in Ports, T&D and Thermal Power, Leading position in Renewables & Gas Distribution
Large Scale Businesses Delivering Consistent Growth
648 MW Ultra
Mundra Port: India’s Largest Commercial Port Mega Solar
Power Plant
Mundra-Mohindergarh 1,980 Ckt Km: Longest Private Asian HVDC
Mundra 4,620 MW: Largest Single Location Private Thermal Power Station in India
648 MW, Tamil Nadu: India’s Largest Single Location Solar Power Plant
Strong Operational Efficiencies
Largest Private
60%+: Highest EBITDA margin Among Port Peers Globally Thermal Power
Station in India
99%+ Availability: Highest Operational Efficiencies in Power Transmission
5%: Lowest Operation & Maintenance Costs in Solar Power Generation
6
Adani Gas – India’s Largest City Gas Distribution Company
AGL Mkt Cap* Adani Gas Piped gas supply (PNG) to residences, commercial, industrial
~USD 2.0 bn units and CNG to automobiles
Long term exclusivity coupled with Business Model delivers best in class margins, returns & growth
Adani CNG
1,300+ 1.5
Industrial mmscmd gas supply
5 82 6,500+ 380,000
AGL Operational Residential
Cities *
CNG stations Kms pipeline
network
2,550+ customers 12%
Commercial 3 yrs CAGR
Largest private player in India’s City Gas space with over a decade of experience
* At AGL 5 Operational & 14 under implementation; at IOAGPL 8 operational and 11 under implementation
8
Sector Dynamics
STRICTLY CONFIDENTIAL
India’s Natural Gas Demand on a multi-year growth cycle
Lower Gas Consumption per Capita (Cbm/person) Consistent increase in Indian Natural Gas Demand
(in MMSCMD)
30,630 21,449
252
219
2,367 190
1,678 167
139 144
253 130 194
152 116 183
80 168
139 144 152
130
116
UAE Qatar United Thailand Bangladesh China India FY 15 FY 16 FY 17 FY 18 FY 19e FY 20e FY 21e FY 22e
States
Normalised Bull
2017 2025
Gas expected to be
20% of the India Other
Other
energy mix Sources, Gas, 6% Sources,
94%
80%
India has lagged, but given the global glut, this might be a advantage with significant uncontracted demand.
Gas and Renewables together serves the twin purpose of climate and growth
Poor air quality in cities supporting gas adoption (# of cities) Global Gas export capacity increasing 50% between 2016-20
In MMTPA
Iran 3 398 401 407
Nigeria 374
5
Pakistan 328
5 299
B'desh 6 265
World’s 100 cities with worst Air Quality
Saudi… 6
China 16
India 31 2016 2017 2018 2019e 2020e 2021e 2022e
Supply constraints easing as domestic production is growing Natural Gas has cost advantages than oil linked fuels
In MMSCMD In $/ MMBTU In INR / liter*
123 Oil Linked
107 Gas Price
88 86 89 86 93
33.4
13.1 14.8
9.5 9.1 11.8
8.4
3.2 29.2 22.6
Carrier first - Commodity latter. Infrastructure to unlock latent demand Focus on Infrastructure Development
27 28 2424
17 1424
About $23bn will be spent in the next 5 years to build energy infrastructure
Source: PNGRB, PPAC
12
Infrastructure Development Propels Gas Demand
China: 4x Increase in Gas Demand with Infrastructure Impetus Gujarat: Gas Infrastructure Integration Driving Demand
6.1 7.1
5.1 6.0 5.2
4.0 4.2 4.9 4.9 4.6 5.0
3.6 3.7
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
2,667 2,800
2,230
1,824
25%
175
777
124 137 Gujarat’s Natural
203 304 Gas Penetration over
101 74 6%
14 17 22 38 4x of India Average
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16
India Average Gujarat
Heavy duty Trucks ('000) LNG station (in Nos)
Government thrust on creating infrastructure & regulatory initiatives to increase gas share to 20%+
Source: PNGRB, PPAC, MS Research
13
City Gas Distribution In India is ready for next growth cycle
Increasing Share of Gas distribution in Natural Gas Demand Growth Drivers
(in MMSCMD)
31% 31% 31% 30%
26% 28%
19% 21%
17%
14%
• Coverage increasing to over 70% of Population
~402 >700
• Constraints on LPG production and imports
Districts
50 228
85
Regulatory / • Favourable regulatory support for CGD
56 Government
Priority • Industrial automation supports gas
36
Pre PNGRB Round 1 to 8 9th Round 10th Round Total GAs India Districts
Trinity of availability of gas supply, Infrastructure build-out and competitive pricing vs alternate fuels to drive gas demand
Source: PNGRB, PPAC, MS Research
14
Regulatory Framework
STRICTLY CONFIDENTIAL
Sector Regulation - Light on Carrier and none on Content marketing
CGD have two distinct revenue stream: Carrier of 3rd Party Gas and direct Marketing of Gas to End users.
Carrier Content
Marketing Marketing
5 years to 8 years Unregulated by PNGRB
Exclusivity Chain
Open Post marketing exclusivity Marketing Free Pricing based on market dynamics
Access 25% of capacity, if available Margin (prices aligned to alternate fuels)
Gas as a source of energy is more aligned with oil which is market driven compare to electricity which is regulated
16
Regulatory & Policy Boost for CGD Development
Stable Regulatory Environment Strong Government Impetus to Gas Sector
17
Adani Gas – Operations and Financial Performance
STRICTLY CONFIDENTIAL
Adani Gas – India’s Leading Play on Gas Distribution
Pan India Footprint Sturdy Growth in Gas Distribution Infrastructure
Adani CNG
82
Retail Outlets
61
3.80
Households (Lac) 2.06
19
Existing AGL Operations - Prudent Pricing & Cost Optimisation
The most diversified customer base company with balanced geographic spread Lowest operating cost in the industry
Commercial Khurja
Vadodra 8.4
Domestic 3% 3% 7.6
6%
8% 6.9 6.9
5.8
4.1
3.2 3.0 3.2 2.8 3.2
Customer Faridabad Geographic 2.2
CNG
30%
Industrial Segment 51% Spread
38% Ahmedabad
61%
FY 14 FY 15 FY 16 FY 17 FY 18 FY19
Access to Diverse Suppliers & Sourcing of Gas Prudent Gas Sourcing & Pricing Mechanism
Sourcing of Gas
• Government allocates gas for CNG & domestic as priority sector
• Gas for other customer segments bought from open market
• Sourcing is fair mix of short term and spot contracts
42% • Main suppliers are GAIL, GSPC, IOCL
46%
20
Best in Class Execution with Superior Operations & Service
Execution Excellence World Class Technology for Operation Management
AMR GIS
(Automated Meter Reading (Global Information System for
system) pipeline with essential details)
Execution
Empowering
Quality
Customers
Management
System
with Tech &
Tools
T4S
compliant
World Class
Pipeline
Superior Best Health and
#16th Great Place 100% safety network T4S
Customer Environment Safety
to Work record compliant &
Service Management Management
certified
System Systems
21
Joint Venture with IOC To Support Expansion
Strategic JV with IOCL: Public sector pedigree with private sector expertise
Infrastructure as at
March 2019
Retail Outlets 22
Domain
Infrastructure
Expertise
Logistics &
Processes Network (Kms) 6,100
resources
Manpower
Households 16,000
Strategic Advantages
Economies of Scale Retail and Operations Benefits
Access to LNG
• Minimize funding cost given parentage • Access to 25,000 retail outlets of IOC
• 5 LNG Terminals
• Bulk sourcing of imported LNG • Plug and play penetration for CGD
• Competitive sourcing of gas
• Access to wider geographies • Centralized operations, SCADA, call
centers driving operating margins
• Funding limited to equity contribution
FY 14 FY 15 FY 16 FY 17 FY 18 FY19
FY 16 FY 17 FY 18 FY19 FY 16 FY 17 FY 18 FY19
Op EBIDTA Report PAT
CNG PNG Total Op EBIDTA (Per SCM) Opex (Per SCM) EBIDTA Margin (%)
Gross Margin (Rs/SCM & %) ROCE & ROE (%) Free Cash Flow (Rs Crs)
37% 38% 36%
33%
20% 21%
19% 19% 52
10.1 11.2
9.7
9.6 23% 49
21% 40 33
19% 18%
12.3 13.1 240
11.1 11.8 78 125 141
9.1
7.7 7.1 7.7
121 93
91
51
Transport Market
1550
CNG Retail Size
Outlets (#)
65
62 mmscmd
2018 2027
Residential Market
Households 6.00 Size
(#)
0.35
14 mmscmd
2018 2027
Adani Gas is well positioned to benefit from the large scale opportunity
24
Experienced Board and Management Team
Esteemed Board Members
CEO &
Strong Sponsorship
Additional Director
Independent Directors
25
Growth Strategy
STRICTLY CONFIDENTIAL
Growth Strategy
Proven track record of expanding footprint
• New areas are targeted towards high consumption intensity and environmental sensitivity
• Execution excellence – experienced team for Design, Engineering and project execution
Robust growth strategy to increase market share with focus on maximising returns
• Expand Existing CGD Network • Return Focussed New Bids • Leverage Group strengths and Synergy
• Organic growth
• Pursue New Industrial and Commercial Load • Process and cost efficiencies
• Tap unconnected zones
• Optimize Supply Portfolio • Technology and Monitoring
• Integrated expansion with Industrial /
CNG as anchor load
27
Recently won bids to support Growth Aspirations
Market Share Based on Recent Bids Plan for 50 Geographical Areas in Next 5 Years
Geographical Areas
38 GAs
25 Coverage
(~7.5% population)
7
States: Gujarat, Bihar, Haryana, Karnataka, Kerala, Madhya
Pradesh, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand,
West Bengal, Odisha
3
Adani Gas targets 10% population across geographies by 2023 with a proposed investment of over $1bn in the next 5 years
28
Adani Gas: A Compelling Investment Opportunity
✔ Adani Gas is the largest private sector player – well positioned to take advantage of growth in NG sector
✔ Natural gas – clean energy source, expected to be 25% of the India energy mix in the medium term
✔ Strong track record of project execution, cost effective operations and customer service
29
Sustainability
3.73
Training (Man-Hrs) No of Employees
231 3432 2.83
2.29
1.97
7 152 11 232
30
Thank You