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Investor Meet 26 March 2009 Mumbai Disclaimer Certain statements - - PDF document
Investor Meet 26 March 2009 Mumbai Disclaimer Certain statements - - PDF document
1 Gujarat Gas Company Limited Investor Meet 26 March 2009 Mumbai Disclaimer Certain statements included in this presentation contain forward-looking information concerning Gujarat Gas Company Limited (GGCL)s strategy, operations, financial
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Disclaimer
Certain statements included in this presentation contain forward-looking information concerning Gujarat Gas Company Limited (GGCL)’s strategy, operations, financial performance or condition,
- utlook, growth opportunities or circumstances in the sectors or markets in which GGCL operates. By
their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within GGCL's control or can be predicted by
- GGCL. Although GGCL believes that the expectations reflected in such forward-looking statements
are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that may affect our business, financial performance or results of
- perations, we urge you to look at the relevant article on Risk Management included in GGCL’s
Annual Report and Accounts 2007. Nothing in these results should be construed as a profit forecast and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in GGCL or any other entity, and must not be relied upon in any way in connection with any investment decision. GGCL undertakes no obligation to update any forward-looking statements.
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Agenda Ownership Structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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GGCL – Shareholding pattern
14.13% 12.23% 8.52% 65.12% Parent Com pany Holding (BGAPH) Foreign Institutional Investors Others Resident Individuals
Shareholding as on 31st Dec. 2008 Market cap as on 13th March 2009. Source: GGCL
Market Capitalisation ~ Rs 16 Billion ($ 320 Mn)
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BG Group
- Expertise across the gas chain
- A rapidly growing gas company with interests across five
continents
- Turnover in 2008 was around $24bn (using the avg US$/£
exchange rate for the year)
- Operating profit was $10.1bn
- Present in over 25 countries
- Listed on London Stock Exchange
- A FTSE 10 company with a market cap over $50bn
- BG India is a “core asset” for BG Group
A strong parentage
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BG India
5 1 6 2 3 4
Legend
1 Panna-Mukta-Tapti Fields 2 KG-OSN-2004/1 3 KG-DWN-98/4 4 MN-DWN-2002/2 5Gujarat Gas Comp. (GGCL) 6 Mahanagar Gas Ltd. (MGL)
Company Information
BG E&P India Ltd
- Jointly operates Panna-Mukta-Tapti fields
(BG-30%, RIL - 30% & ONGC - 40%)
- Largest private oil & gas JV
- Exploring KG-OSN-2004/1 with ONGC
(55%) from NELP-VI Licensing round
- Secured two deepwater exploration blocks:
- KG-DWN-98/4 (BG-30%, ONGC-
55%, OIL-15%)
- MN-DWN-2002/2 (BG-25%, ONGC-
75%)
BGIES
- Gas/LNG marketing entity and aggregator
- f domestic supplies
GGCL
- India’s largest private CGD company (by
volumes); 2008 sales: 1089 mmscm
- BG has a controlling equity stake of 65.12%
MGL
- India’s largest private CGD company (by
customers)
- JV with GAIL (49.75%) and State Govt.
(0.5%)
BG India
Integrated player with presence in significant Indian markets Present across the full hydrocarbon chain
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Agenda Ownership structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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Advantage Gujarat
- 2nd most industrialized state in India
- Population ~ 55 million
- 265 industrial clusters and estates
- 22% of India’s private sector investment
- Vibrant Gujarat
- Investment proposed > $ 20 Billion in Surat and
Bharuch districts
- Delhi-Mumbai Industrial Corridor (DMIC)
- 38% of proposed freight corridor in Gujarat
- Passes through GGCL areas of operations
- Phase I - approved with proposed investment of
$ 90 bn
5% of India’s population - 13% of industrial production & 19.2% of exports
Source : vibrantgujarat.com & indextb.com
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Gujarat – The nerve of DMIC
Pipavav
GGCL Schematics
DMIC
GGCL Areas: Surat, Ankleshwar & Bharuch
GGCL in the heart of DMIC in Gujarat
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Gujarat – the natural gas hub of India
Existing LNG Terminal Proposed LNG Terminal Ultra Mega Power Project (4000 MW)
RoU in Progress Under Construction Commissioned
Gas Pipelines Established CGDs New CGDs Major SEZs
GSPL Transmission pipeline GAIL HBJ GAIL DUPL
Dahej LNG Hazira LNG Pipavav Mundra
GGCL Schematics GSPL pipelines legends
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Agenda Ownership structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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Vision “We make natural gas the safe and preferred energy solution”
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Strategy
Moving up the value chain
- Grow retail market
- Develop CNG
business
- Develop new
applications Building materiality
- Geographic
expansion
- Exploring alliances
Management Strategy
GGCL Schematics
Strategy aligned with regulatory framework
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Sales mix (by volume)
Year 2008
Dom & Com m 7% Bulk 13% CN G 8% R etail 72%
1089 mmscm Source: GGCL
Largest private sector CGD operator in India - by volume
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Industrial retail segment
Profile Gro drivers
- Dispersed customer base across diverse industry sectors
- Low volume (< 50,000 scmd) high margin: large number of customers
- Low probability of gas-on-gas competition
- Gas off-take risk mitigated by ToP liability clause
- Margin risk mitigated by gas cost pass-through clause
- Credit Risk mitigated by security deposits / bank guarantee
Risk Profile
Geographical expansions and network extensions Captive Power demand
wth
Core business segment driving growth
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Industrial retail customer profile
46% 18% 8% 6% 6% 11% 29% 5% 23%
25% 50% 75% 100%
Textiles Chemical Dyes & Intermediate Pesticides Pharmaceutical Glass & Ceramics Others Total
Power Liquid Fuel Solid Fuel 48%
Source: GGCL
Demand from textile and chemical industry remained firm
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CHP (Mwe)
140 187 234 326 326 50 100 150 200 250 300 350 2004 2005 2006 2007 2008
1 Mwe ~ 5000 scmd
Mwe
Source: GGCL
Sustained focus on CHP
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Distribution volumes
447 526 657 781 783 91 48 57 60 72 200 217 327 143 21 47 70 3 44 285
200 400 600 800 1000 1200 1400 2004 2005 2006 2007 2008
Ind Ret CNG Dom/Com Bulk 813
mmscm
1088 695 1196 Source: GGCL 1089
CAGR of 17.6% in retail markets Added more than 26000 households and 23500 vehicles in 2008
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Multiple gas sources
Dahej
Hazira
Ankleshwar Bharuch
Surat
River Narmada
Gulf of Cambay
Amboli H A P i
Gujarat
Jhagadia
GGCL Mora
Petronet LNG Kim-Karanj
PMT Gas Vapi New areas
Kosamba Shell LNG Hojiwala
Magdalla GAIL’s HVJ
GAIL Surat GAIL Ank GSPC/ Niko Niko PMT JV CAIRN JV
GSPL pipeline GGCL pipelines Existing LDZ
RLNG
GGCL Schematics
Multiple receiving facilities
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Gas sourcing mix
PMT 76% GA IL 5% C A IRN 11% N IK O 8%
Year 2008
1095 mmscm Source: GGCL
Predominantly indigenous sources 95% at market determined prices
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Agenda
Ownership Structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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Performance in 2008 Growth vs 2007
- Top line
5%
- Distribution volume - 9%
- PAT
5%
Profitability sustained
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Revenue growth
6089 7182 9571 12991 114 286 442 21 22 12424
2000 4000 6000 8000 10000 12000 14000 2004 2005 2006 2007 2008
Transmission Non Transmission
6531 7468 9685 12446 13012
Rs Mn
Source: GGCL
Re-emergence of transmission revenues in Q4 of 2008
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Profit growth
478 442 286 638 793 1169 2281 2324 21 22 114 1199
500 1000 1500 2000 2500 2003 2004 2005 2006 2007 2008
Transmission Non Transmission
2303 1455 1313 1235 1116
Rs Mn
Source: GGCL 2345
Profits driven by strong growth in distribution business
PBT
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Capital investment
39 82 60 101 55 87 206 394 1406 740 758 797 104 136 272 222 104
232
200 400 600 800 1000 1200 1400 1600 1800 2003 2004 2005 2006 2007 2008
Non Gas Capex Network Expansion/Upgradation CNG COGEN
Rs Mn
245 580 1602 1035 1345 988 Source: GGCL
Investment – for sustained growth
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Key factors which affected business in 2008
- Gas supply
– PMT gas reduced by 30% from April ‘08
– GAIL replaces PMT JV as supplier – Term Sheet with GAIL governs current supply
- Sources aligned with market segments
– GAIL APM & PMT supply to Domestic and CNG segments
– GAIL PMT gas to SMEs (< 50,000 scmd customers) – Non GAIL sources piped to larger customers – rLNG to meet peak customer demand
- Depreciation of Rupee against USD impacted margins
- Optimized margins through improved customer mix
Key 2008 challenge: sustaining supply to core markets
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Agenda Ownership structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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Regulations
- Application filed with PNGRB for authorisation in districts of
Surat and Bharuch
- Letter from MoPNG confirming authorisation in Surat, Bharuch
and Ankleshwar cities
- Application filed for Hazira -Ankleshwar pipeline authorisation
- Submitted “Expression of Interest” with PNGRB for areas in
Kachcch and Bhavnagar
- Permission received from PNGRB to continue construction in all
the operational areas
High degree of engagement with the PNGRB
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Regulatory framework – cost structure
END CONSUMER TARIFF
Marketing margins (Bad-debts, business risks etc.) Unregulated
Network Tariff Return on Capital Employed – 14% Post tax (Grossed up for pre-tax)
[CE = GFA – Depreciation + WC (20 days opex)] DCF over economic life of the asset
OPEX
Regulated Gas Cost Unregulated Compression charge (CNG) LMC charge (New domestic) Zero LMC (Old domestic) Transmission Tariff Regulated
R R
END CONSUMER TARIFF “Marketing Margins” beyond purview of regulator
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Agenda Ownership structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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HR aligned with business needs
- 546 employees with a blend of experience and youth
- Senior Management Team deputed from BG Group
- Strong HSSE culture – driven by BG Group guidelines
- Focus on appraisal process, training programmes help maintain
high standards
- Progressive HR policies towards high employee engagement
and development
- ESOP introduced for select managerial talent w.e.f 1st Nov 08
Focus on internal talent development
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Human resources pyramid
MD Director General Manager Assistant General Manager Manager Deputy Manager Associate Manager
- Sr. Engineer
Staff
147 161 245
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Agenda Ownership structure Gas Infrastructure & Gujarat’s Economic Profile GGCL - Business Profile Financials Regulation Human Resources Way Forward
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Potential opportunities
- New license areas
- Bid for new areas
- Explore alliances
- Grow CNG business
- Expand sourcing portfolio with term rLNG
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Key challenges
- Augmenting the gas sourcing portfolio to meet demand
growth
- Securing regulatory licenses for new areas
- Growth in a competitive environment
To sustain and grow company’s leadership position among CGDs
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Key messages
- Positioned to grow gas distribution business in a
regulated environment
- Robust business model and strategy in place
- Focus on growth
Strong business performance; Well positioned for further growth
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