KEC International Limited

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

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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


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


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


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


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


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)

http://www.saetowers.com/Default.aspx

http://www.saetowers.com/Default.aspx

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


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


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


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


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


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


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


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


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


Interest coverageTimes

603

363

748

1,207

1,308 1,723

817 876 921

920881

791

0

500

1,000

1,500

2,000


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


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


Earnings Per Share₹

60% 60%

25% 30%

45% 50%

0%

10%

20%

30%

40%

50%

60%

70%


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


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

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KEC International Limited