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Sterlite Technologies Limited Investor Presentation May 2015 - - PowerPoint PPT Presentation
Sterlite Technologies Limited Investor Presentation May 2015 - - PowerPoint PPT Presentation
Sterlite Technologies Limited Investor Presentation May 2015 www.sterlitetechnologies.com 2 www.sterlitetechnologies.com Disclaimer Certain words and statements in this communication concerning Sterlite Technologies Limited (the Company)
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Disclaimer
Certain words and statements in this communication concerning Sterlite Technologies Limited (“the Company”) and its prospects, and other statements relating to the Company’s expected financial position, business strategy, the future development of the Company’s operations and the general economy in India & global markets, are forward looking statements. Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of the Company, or industry results, to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. The important factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements include, among others, changes in government policies or regulations of India and, in particular, changes relating to the administration of the Company’s industry, and changes in general economic, business and credit conditions in India. The information contained in this presentation is only current as of its date and has not been independently verified. No express or implied representation or warranty is made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. None of the Company or any of its affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any information presented or contained in this presentation. Please note that the past performance of the Company is not, and should not be considered as, indicative of future results. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the Company. The Company may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. These materials are confidential, are being given solely for your information and for your use, and may not be copied, reproduced or redistributed to any
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2
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Company overview
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Sterlite Technologies: One of the leading global providers of solutions in telecom and power transmission
4
FY15 Net Revenues* Of the global top 10 telecos Use Sterlite’s innovative solutions Vedanta Group* Shares the same lineage as the FY15 Consolidated EBITDA* Consolidated revenues are from international markets* Business Lines Operates in 2 Sectors Telecom & Power Full time Employee Patents in USA, EU, India, China & 53 more under consideration Locations India, China & Brazil Global sales presence with manufacturing locations in
* As of FY15 consolidated numbers
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Key Markets Major competitors Key FY15 Financials (Rs. mn)* Offering
- Optical fibers & preform
- Fiber optic cables
- Data Cables
- System integration and
FTTH solutions
- Power conductors
- HV/EHV cables
- OPGW
- T&D engineering solution
- 6 projects across 11 states
won through competitive bidding on BOOM basis
- 5000 km circuit
transmission lines and 3 substations
- Europe, China and Middle
East
- America, Middle East, Africa
and Asia
- India
- Corning (US) and Prysmian
(Italy)
- Apar Industries (India) and
Midal (Middle East)
- Power Grid (India) and L&T
(India)
- Revenue: 15,764
- EBITDA: 3,452
- Revenue: 14,730
- EBITDA: 352
- Revenue: 1,539
- EBITDA: 1,320
Telecom Power Products and Transmission Grid
* Consolidated financials before inter-segment eliminations
Our business verticals
5
Proposed to be demerged
Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business
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Telecom
- Optical Fiber (Capacity: 20 mn fkm)–
Aurangabad(India) and Haimen, Jiangsu Province (China)
- Optical Fiber Cable (Capacity: 8 mn fkm
being increased to 15m fkm)– Silvassa (India) and Curitiba (Brazil) Capacity being increased to 15mn fkm
- Structured data cables – Silvassa (India)
Power Products
- Conductors (Capacity: 1,60,000
tonnes) Silvassa (India) and Jharsuguda (India)
- HV and EHV Cables Hairdwar (India)
Manufacturing Locations
- China - 75%:25% with Tongguang for
drawing optic fiber
- Brazil - 50:50 JV with Conduspar for
fiber cabling
Joint Ventures
Sales Manufacturing Market presence
Global presence ensures proximity to our clients
6
- China, India, Netherlands, Russia,
South Africa, Turkey, UAE, UK
Sales Offices Services and Solutions
Telecom
- NFS Project execution in J&K
Power
- 6 Grid projects across 11 states in India
Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business
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Evolution from products to an engineering company
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Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business
- Incorporated
Copper telecom cables Facility
1993
- Fiber optic cables
facility setup
- Optical fiber
facility set-up at Aurangabad
2000
- Demerger from
Sterlite Industries
- Acquisition of power
conductors business
- Commencement of
Grid business
2010
- JV with TG for fiber
facility in China
- Set-up of EHV power
cables facility at Haridwar
- JV with Conduspar in
Brazil for fiber cable
- Commissioned
India’s first UMTP (in record 26 months)
2013
- Secured prestigious NFS
project to implement end to end OF Network for Defense services
- Added sixth UMTP project
1988 1995 2006 2012 2014
Erstwhile Sterlite Industries Sterlite Optical Technologies renamed to Sterlite Technologies
2015
- Demerger
Announced
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STL offers a unique proposition
8
Unique opportunity to participate in the growth of the telecom and power sector in India as well as globally Underlying industry dynamics are very attractive – telecom led by the exponential growth in data consumption and power led by increase in per capita power consumption Sterlite Technologies operates on a global scale – 20m fkm fully integrated optical fiber plant in India and 160,000MT for power conductors – capacities are well invested Full control over the value chain by way of backward integration allowing for significant cost advantage Sterlite Technologies offers complete end to end solutions for high speed data transmission and high voltage power transmission Strategic JV and tie ups with reputed partners globally led by a strong management team
Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business
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Telecom Business
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Products
- Optical fibers & preform
- Fiber optic cables
- Structured data cables
- Dedicated Center of
Excellence
- Low loss to bend Insensitive
Fibres
- For Long-Haul to Last Mile
communication applications Solutions
- System and network
integration
- End-to-end project
management
- Technology platform
deployment MPLS, GPON, DWDM, etc.
- Core, metro and access
network
- Network engineering,
Roll out, Integration and O&M Key metrics (FY 15)
- Fiber volumes 17.7m fKm
- OF Cable volume 7.7m fKm
- Consolidated revenue of Rs.
15,764 mn
- EBITDA of Rs. 3,452 mn
Key Customers
- Global Telecom Service
- Internet Service Providers
- MSO/CATV Operators
- Govt. of India agencies
Our telecom business
10 Infrastructure
- Specialized team with
FTTH experience
- Build, Install, Own and
Manage
- Neutral access network
- Over 180,000 homes
connected across 8 major cities Full control over the entire value chain Raw materials
- Silica & Power
- Certain natural
gases Preform
- Integrated
Core rod + cladding Optic fiber
- 16m fkm
drawing India and 4m fkm in China OF cable
- Portfolio
catering to diverse end use Solutions
- High speed
broadband networks
Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business
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Various economies at different stages of fiber deployment should help sustain global growth
Data consumption continues to grow fiber demand
11 Mobile data to grow 44% CAGR vs 15% for fixed internet
62 75 95 118 140 173 189 218 245 263 297 50 100 150 200 250 300 350 400 450 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Million Fiber Km China India North America Europe Others World Total 62 76 91 110 132 50 100 150 200 250 300 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 '000 Petabyte/month Fixed Internet Managed IP Mobile Data 844 380 327 83 71 54 100 200 300 400 500 600 700 800 900 China United States Europe India Latin America Africa
India as a market is under fiberized – optical fiber cable deployment in India in 1/10th the cable deployed in China
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Long term sustainable demand going forward
Leveraging the growth in India – Products to Solutions
12
Current project highlights
National Optic Fibre Network (NOFN)
- Secured largest share within the country for
cable supply Network for Spectrum (NFS)
- Turnkey deployment of network in J&K worth
- Rs. 16,500 mn and supply of cable worth
- Rs. 3,000 mn to other participants
Private Telco rollout
- Ongoing supply of OFC to RelianceJio, Bharti
Airtel and other Indian operators
Infrastructure Solutions Products Opportunities To become an End-to-End Service Provider
Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business
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Volumes (m fiber km) Order Book (Rs Mn)
2,000 3,450 21,876 24,000 23,000 21,000
- 5,000
10,000 15,000 20,000 25,000 30,000 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Order book in Rs Mn
Resulting in improved volumes & order book
13
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Power Business
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Our power business
15 Products
- Full range conductors from
ACSR to high performance conductors
- HV and EHV cables from
voltage grade of 6.6 kV to 220 kV
- Optical Ground Wire
(OPGW) that leverage core expertise in power conductors & fiber optic cables Solutions
- Engineering T&D
networks & re- conductoring solutions
- Enhancing current
carrying capacity
- End-to-end project
management
- Engineering,
Integration, Roll out and O&M Key metrics (FY 15)
- Capacity : 160,000 MT
- Volume of conductor sold :
77,996 MT
- Consolidated revenue of Rs.
16,268 mn
- EBITDA of Rs. 1671 mn
Key Customers
- Central and Private sector
power utilities
- State Electricity Boards
- EPC contractors
Infrastructure
- Largest private sector
independent power transmission company in India
- 6 Projects in Portfolio
- $1.3 bn capital
commitment
- 5000 Km transmission
lines & 3 substations across 11 states Full control over the entire value chain Raw materials Products Engineering Power Grids
- Aluminium
- Other alloys
- HV and EHV
product line
- Heli stringing and
live line reconductoring
- Inter State
Transmission networks
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765 KV D/C 765 KV S/C 400 KV D/C 2x1500 mVA, 765/400 kV Substation
Dhule Vadodara Aurangabad Indore Bina Bhopal Jabalpur Bihar Sharif Purnia Siliguri Bongaigaon Dharamjaygarh Kota Shujalpur Purlia Ranchi Kharagpur Chaibasa
5 4 2 1 3 6
400/220 kV Substation
Jalandhar Amargarh
Note: Map is representative of project locations and transmission lines not to scale
Connecting key generating centers with load centers
- Build-Own-Operate-Maintain (BOOM) Model with 6
Projects in Portfolio
- 5000 Km circuit transmission lines & 3 substations
across 11 states
- Estimated capital expenditure of Rs 80,000 mn
- One project fully commissioned, all 6 to be
commissioned by FY20
- One of the lowest risk profiles as compared to other
segments within the Infrastructure segment
- Fixed annuity model (35 years) with high quality of
receivables that is not dependent on power flow
- Perpetual assets with minimum maintenance capex
- Assets have opportunity for additional revenue
generation
- SCPE has entered into agreements for a Rs. 5 bn equity
investment - the first foreign investment into India’s power transmission sector
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Project name States covered Other details Line length (kms) Expected
- peration by
- Approx. Level
Tariff (Rs Mn)^ East North Interconnect Assam, Bihar & West Bengal 2 * 400 kV double circuit 450 Commissioned 1,180 Jabalpur transmission Chhattisgarh, Madhya Pradesh 1 * 765 kV single circuit 1 * 765 kV double circuit 610 Jun-15 1,400 Bhopal – Dhule Madhya Pradesh, Maharashtra & Gujarat 4 * 765 kV single circuit 2 * 400 kV double circuit 2 sub stations 990 June-15 2,000 Rajasthan Atomic Power Rajasthan & Madhya Pradesh 1 * 400 kV double circuit 200 Mar-16 400 Purulia & Kharagpur West Bengal &Jharkhand 2 * 400 kV double circuit 270 Mar-16 600 NRSS 29 Punjab & Jammu & Kashmir 3 * 400 kV double circuit 1 substation 440 Jul-18 4,400
6 5 4 3 2 1
^ Levelised tariff for 25 years for East North Interconnect project; 35 years for all other projects
Business Model Pre-bid steps Execution Post COD
- Detailed route planning
- leverage in house engineering
capabilities
- Network planning and detailed
cost estimates
- Strong project management
- Use global vendors and
international best practices
- Monetization and asset rotation
- Financial engineering
Infrastructure project details
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Order book for power segment (in Rs. Mn)
The India opportunity leading to a strong and diversified
- rder book
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3,390 2,890 2,624 2,567 3,088 3,101 7,547 6,450 7,018 12,169 11,219 12,216 13,063 12,420 12,519 10,579 9,853 10,505 24,000 21,760 22,161 25,314 24,159 25,823 5,000 10,000 15,000 20,000 25,000 30,000 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 PGCIL Others Exports Total
Conducive macro environment
- Opportunity being driven by growth in generation
capacity and increased residential demand
- Policy changes transforming the Indian power sector
– more private sector participation opportunities
- Growth in renewable energy will increase demand for
T&D evacuation capacity
- A number of projects to be commissioned across
strengthening and capacity augmentation projects
- TBCB model for power transmission projects well
accepted and should become more widespread even at state level
- Improving financial profile of participants in the
sector
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Demerger Update
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Restructuring to create focused pure play opportunities
20 Promoters
STL Telecom division Power Products division Grid Projects subsidiary
Public shareholders
45.2% 54.8%
Standard Chartered PE
Demerger of power products division and transmission grid business undertaking
Sterlite Power Transmission Ltd
100%
Current Structure Post Restructuring
Promoters
STL Telecom Business
Public shareholders
45.2% 54.8%
Promoters
Sterlite Power Transmission Ltd. (SPTL) Power Products Business Grid Projects subsidiary
Public shareholders
Standard Chartered PE
27.1% fully diluted 27.1% fully diluted
STL* Revenue : 1,619 EBITDA: 345 Net Debt: 674 SPTL* Revenue : 1,478 EBITDA: 167 Net Debt: 4,207
Note : * In Rs Cr . Based on FY 15 consolidated basis , numbers are representative and have not been audited
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Options for shareholders
21 5 shares Option A
5 shares in STL STL Telecom (Listed)
Value of share Rs 112.30 (based on 5:1 ratio) implying per share value of STL at Rs22.46
SPTL (Unlisted equity)
1 RPS to be redeemed at the end of 18 months for Rs 125.80 with dividend
SPTL Listed RPS
Option B
SPTL Listed RPS
Option C 1 RPS to be redeemed within30 days
- f Effective Date for Rs 112.30
Scheme offers multiple options to cater to investor’s preference
- Option A : Continue to hold equity shares and partner in the value creation
- f the power sector
In case shareholder is unable to hold shares due to conflict with their investment mandate then will be issued Redeemable Preference Shares (RPS)
- Option B : Provides a liquidity event at the end of 18 months
- Option C : Provides an initial liquidity window for 30 days
Note : * Representative for resident shareholders options for other shareholders and Promoters may be different and is covered in the scheme document
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Financials
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* Gross Debt – Cash – Inv Cumulative contribution by STL in Transmission Projects
- Rs. Mn
- Rs. Mn
- Rs. Mn
- Rs. Mn
Our consolidated financials
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Proforma financials
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Standalone Consolidated Tel Power Tel Power Revenue 1,530 1,500 Revenue 1,619 1,478 EBIDTA 345 41 EBIDTA 345 167 EBITDA margin 23% 3% EBITDA margin 21% 11% Depreciation 76 32 Depreciation 96 89 Interest 53 126 Interest 75 252 Cash Profit 292 (85) Cash Profit 270 (84) Tax 54 (40) Tax 55 (52) PAT 161 (77) PAT 118 (121) EPS 4.09 (1.95) EPS 2.99 (3.08) Net Worth 668 575 Net Worth 600 469 Borrowing 502 875 Borrowing 674 4,207 Total 1,170 1,450 Minority Investment in Grid Business 450 Investment in Grid Business
- 1,197
Total 1,275 5,126 Fixed Assets 705 242 Fixed Assets 984 5,264 Net Fund Involvement 465 11 Net Fund Involvement 290 (138) FY 2014-15 (Carve out) FY 2014-15 (Carve out) Balance Sheet as on Mar 31, 2015 Balance Sheet as on Mar 31, 2015
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Way Forward
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Business strategy and way forward
26
Demerger to create a winning outcome for all – two pure play focused companies with flexibility to pursue growth independently
- Maintain strong presence in the Indian market
- Deeper penetration in export markets
- Focus on increasing sales of high performance conductors
- Providing more value added turnkey solution opportunities
- Take advantage of the India opportunity – Products + Services
- Leverage our manufacturing capabilities and increase utilisation
- Continue to increase share of cabling in overall mix (38% in FY14 and
44% in FY15)
- Increase penetration in global accounts
Telecom Products and Solutions Power Products and Solutions
- Focus on execution of existing projects
- Selectively monetize and refinance assets post CoD
- Strategically continue to bid for transmission projects in India
Power Transmission Grid
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Appendix
www.sterlitetechnologies.com Anupam Jindal, CFO (18 years experience)
- Joined the Sterlite Group in 1998 and is
Chartered Accountant from the ICAI
- His key focus areas have been Finance,
Treasury, Accounts and MIS.
- K. S. Rao, COO – Telecom & Power
Conductors (21 years exp)
- Joined Sterlite in 1993 and holds a
Bachelor’s degree in Mechanical Engineering
- His key focus areas have been
engineering, mfgr, product and business development Ajay Bhardwaj, COO – Grid Business (30 years experience)
- Joined Sterlite in 2011
- Worked in senior capacities in various
- rganisations ion projects in T&D,
Energy Management Systems.
- An electrical Engineer from IIT-Roorkee
- Dr. Anand Agarwal, CEO
(19 years experience)
- Joined Sterlite in 1995 and B. Tech. in
Metallurgical Engineering from IIT- Kanpur, Masters and Ph.D. from the Rensselaer Polytechnic Institute, USA Pravin Agarwal, Whole time Director (30+ years experience)
- Closely involved with the Sterlite
Group’s operations in India since its inception
- Has rich experience in general
management and commercial matters Rajendra Mishra, COO - Power Cables (24 years experience)
- Joined Sterlite in 2008 and holds a
Bachelor’s degree in Electrical and Electronics Engineering from REC, Suratkal Pratik Agarwal Head-Infrastructure Business (10+ years experience)
- He leads strategic business initiatives in
the infrastructure ownership space
- Completed his B.Eco from Wharton,
Pennsylvania and MBA from London Business School Ankit Agarwal Global Head - Telecom Products (7+ years experience)
- Also responsible for identifying and
executing strategic opportunities globally for Sterlite
- Holds a Bachelor’s degree from Univ. of
Southern California and MBA from London Business School. Pankaj Priyadarshi, CCO – SCM (28 years of experience
- Joined Sterlite in 2012 and has completed
Mechanical Engineering from BITS Pilani and a course on Strategic Sourcing Management from IIM-Ahmedabad.
Professional Management Team
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Scheme highlights
29
- April 01, 2015
Appointed Date
- For every 5 equity shares held in STL, retain 5 shares of STL + option to receive either:
– One equity share of face value Rs 2/- in SPTL; or – One Redeemable Preference Shares (RPS) of face value of Rs 2/- each in SPTL with a dividend of 8% of Face value per annum. The RPS can be redeemed for cash of Rs 125.80 per RPS with dividend after 18 months from allotment, alternative window to sell within 30 days of allotment to promoter or any
- ther entity appointed by promoter’s for Rs 112.30
Share Entitlement Ratio
- The demerger would be compliant with section 2(19AA) of the Income Tax Act
- Equity shares of Sterlite Power Transmission Ltd. is proposed to be kept unlisted
- RPS of Sterlite Power Transmission Ltd. are proposed to be listed
- Exit Options, as per Scheme will be made available to public shareholders
Other Key Details
- Expected to complete by Q4-FY16
- Shareholders, Creditors, SEBI and Stock Exchanges, Bombay High Court, RBI and other applicable
regulatory authorities, if any Timelines & Approvals
- SPTL valued at Rs 885crore which is at the higher end of range 804crs to 885cr
- Implied value of demerged undertaking Rs 22.46 per share
- Valuation based on the independent valuers report issued by Price Waterhouse & Co. LLP and Haribhakti
& Co Valuation
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Options for public shareholders
30
- Options:
– Receive equity shares of SPTL , or – Receive Redeemable Preference Shares (RPS) of SPTL and seek cash exit from redemption of RPS after 18 months, or – Sell RPS of SPTL to promoters and / or their affiliates within 30 days of allotment
- Note:
– Where no option is exercised by a shareholder, the resulting company will issue and allot equity shares as per the entitlement of such shareholder
Resident shareholders of STL
- Receive equity shares of SPTL and sell shares of SPTL to promoters and / or
their affiliates
Non-Resident shareholders of STL# (excluding FPIs and GDR holders)
- Options:
– GDR holders acting through their depository shall compulsorily sell to promoters and / or their affiliates the equity shares of SPTL that they are entitled to receive – The merchant banker appointed by SPTL shall sell the equity shares and distribute cash thereof to the GDR holders, net of withholding tax
GDR holders
Note: #If RBI approval is not received before the Effective Date, FPIs acting through a merchant banker appointed by SPTL will receive equity shares of SPTL. The merchant banker shall sell the equity shares and distribute cash thereof to the FPIs, net of withholding tax. Where no option is exercised by a shareholder, the resulting company will issue and allot equity shares as per the entitlement of such shareholder and such equity shares will be sold and cash proceeds will be distributed thereof, net of withholding tax
Foreign Portfolio Investors (FPI)*
- Options:
If RBI approval received – Receive unlisted equity shares of SPTL which shall be compulsorily sold to the promoters and / or their affiliates , or – Receive listed RPS of SPTL and seek cash exit from redemption of RPS after 18 months, or – Sell RPS of SPTL to promoters and / or their affiliates within 30 days of allotment If RBI approval not received – FPIs acting through a merchant banker appointed under the Scheme will receive equity shares of SPTL. The merchant banker shall sell the equity shares and distribute cash thereof to the FPIs, net of withholding tax Company Overview Way Forward Financials Demerger Update Appendix Telecom Business Power Business