Reliance Power

By Aditi Chaturvedi MMS B Roll no : 061

About Reliance Power Ltd.

Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group. It was established to develop, construct and operate power projects in the domestic and international markets. Reliance Energy Limited, an Indian private sector power utility company along with the Anil Dhirubhai Ambani Group promotes Reliance Power. Along with its subsidiaries, it is presently developing 13 medium and large-sized power projects with a combined planned installed capacity of 33,480 MW. Reliance Natural Resources merged with Reliance Power in 2010, shortly after its initial public offering.

Overview
Industry : Electric utility Founded : 2007 Headquarters : Navi Mumbai, India Key people : Anil Ambani (Chairman) Products : Electrical power & natural gas Services : Electricity generation and distribution, natural gas exploration, production, transportation and distribution Revenue : 1,892 crore (US$344.34 million) (2011) Net income : 760 crore (US$138.32 million)(2011)

Background

 Serving over 25 million consumers in substantial areas of Mumbai, Goa, Delhi and Orissa. Powering 2 out of 3 homes in Mumbai and 1 out of 2 in Delhi. 7500 Schools, 3000 Hospitals, 250 Theatres, 5 Airports, 130 Railway Stations. Distributing over 5,000 MW of power the largest in India.

 Power generation capacity of nearly 950 MW in Maharashtra, Goa, Andhra Pradesh, Kerala and Karnataka. Indias most valuable power company, with market capitalisation of over Rs. 10,000 crore. Annual revenues over Rs 6,400 crore. Annual cash profits over Rs 600 crore. Annual net profits over Rs 350 crore. Top end credit ratings - rated AAA by CRISIL/ ICRA/ FITCH

Power Projects
The largest power generation portfolio under development in the private sector in India.

Financial Engineering

Shareholding Pattern
Present

Reliance Group
FIs / Banks / MFs FIIs / GDRs Others Total:

49.5%
21.0% 21.3% 8.2% 100.0%
Reliances stake reduced from 58.2% to 49.5%

Preferential Offer
Equity shares and/or equity related
securities Offer price of Rs. 640 per share, determined in accordance with SEBI Preferential Allotment guidelines

Priced nearly 3 times Reliances open offer price

Preferential Offer
Offer price at 38% premium to 26 week average price 2% discount to last traded market price

Postal ballot for all shareholders on preferential offer and various other resolutions

though not required in law

Strong Vote of Confidence

Reliance to subscribe to over 2 crore equity shares, aggregating nearly Rs. 1,400 crores

Institutional shareholders, like LIC and

GIC, agree in principle to subscribe to nearly 1 crore shares, aggregating over Rs. 600 crores

Endorsement of growth prospects and positive signal to markets

Financial Flexibility
Enabling approvals to offer additional amount of Rs. 1,000 crores through: - equity shares; and/or - equity shares with differential voting

rights; and/or
- international convertible bond offering

Reliance has confirmed its willingness to subscribe additional Rs. 1000 crores

Proposed Reliance Stake

Present Proposed
Reliance Group FIs / Banks / MFs FIIs / GDRs 49.5% 21.0% 21.3% 56.5% 21.0% 16.5%

Others

8.2%

6.0%

Reliance stake still 2% below peak levels of over 58%

Reduction in Free Float

Present Proposed

Reliance Group
FIs / Banks / MFs FIIs / GDRs Others

49.5%
21.0% 21.3% 8.2%

56.5%
21.0% 16.5% 6.0%

Reduction in free float from over 50% to 43%

Value creation for Reliance Energy shareholders

Impact on Net Worth

Reliance Energy to rank among Indias top 3 private sector companies Net Worth to rise by Rs. 3,000 crores, from Rs. 3,500 crores to Rs. 6,500 crores

Third only to Reliance Industries and ICICI Bank

Impact on Book Value

A 43% increase in Book Value per share from Rs. 217 to Rs. 312

Price to book ratio will decline to 2

Impact on Leveraging ability

Increased ability to leverage Balance
Sheet, while maintaining top end AAA ratings

Increase in borrowing ability by Rs. 3,000 crores to Rs. 6,500 crores

Impact on Profitability
Increase in capital base by Rs. 3000

crores
earnings Increase

potential

accretion

to

in

EPS

leading

to

substantial enhancement of overall shareholder value

To rank among
Indias top 10 private sector companies

Value creation for Reliance Industries shareholders

Mark to Market gains

Reliances investments in Reliance Energy

now valued at over Rs 5,200 crores

Average cost of Reliances shareholding in

RE will still be only Rs. 350 per share,

against market price of Rs. 650 per share

Capital gains of nearly Rs 3,500 crores

Participation in power sector growth

Enhancement of leadership position in the power sector for Reliance Group Benefits of sustained long term growth in

the entire sector

Positive impact on RILs financial ratios through consolidation

Gas Off-take
Assured feedstock off-take for about

25% of production from RILs KG D6 Dhirubhai gas field Long term contracts at competitive prices

Share of gas in power generation to increase from 10 % to global average of 30 %

Deployment of Cash flows

Proposed investments only 8 % of

Reliance groups cash flows of over

Rs. 30,000 crores in the next 3 years. .and less than 5 % of value of RILs future gas sales contracts of over Rs. 50,000 crores to the UP gas based power project

Opportunity for Reliance to deploy its strong cash flows for attractive returns

Win Win Win

Win for Customers

Quality , Reliable power Competitive prices World class customer care

Win for the Power sector

Mega investments Technology upgradation Accelerated loss reduction

Win for the Country

World class power infrastructure
Enhanced competitiveness Fiscal deficit reduction

Win for Reliance Group

Leadership in power sector

Exponential growth
Enhanced profitability

Generation Statistics
Power generation capacity has increased from 1,362 MW in 1947 to 160,000 MW by mid of 2010. As of March 31, 2012 India had an installed power capacity of almost 2,00,000 MW
Hydro Coal State
Private Central Total Thermal

Nuclear Total 55,025

30,761 45,817 1,31,063

R.E.S (MNRE)

Total

Gas 4,965
6,713 6,702 18,381

Diesel 603
597 0 1,200

27,380
2,525 9,085

49,457
23,450 39,115

0
0 4,780 4,780

3,514
20,990 0

85,919
54,276 59,683

38,990 1,12,022

24,503 1,99,877

BALANCE SHEET

COTD

FINANCIAL RATIOS OF RELIANCE POWER

RELIANCE POWER CASH FLOW

CAPITAL STRUCTURE OF RELIANCE POWER

PROFIT AND LOSS STATEMENT OF RELIANCE POWER

Energy is Life