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Investor Presentation
March 2019
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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
6
Adani Gas – India’s Largest City Gas Distribution Company
Long term exclusivity coupled with Business Model delivers best in class margins, returns & growth
Adani CNG
1,300+ 1.5
Industrial 325,000 mmscmd gas supply
4 70+ 6,000+ Residential
AGL Operational Kms pipeline
Cities *
CNG stations 2,300+ customers 12%
network
Commercial 3 yrs CAGR
Largest private player in India’s City Gas space with over a decade of experience
* 4 Operational at AGL, 15 licenses won, 9 operational at IOC Joint Venture and 10 licenses won
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
374
Nigeria 5
328
Pakistan 5
299
B'desh 6 265
World’s 100 cities with worst Air Quality
Saudi… 6
China 16
India 31 2016 2017 2018e 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
61 71
51 60 50 53
40 42 49 49 46
36 37
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 50% of Population
~402 >700
• Constraints on LPG production and imports
Districts
50 227
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
Gas Distribution – Transforming India’s Energy Landscape
2018 Post 10th Round
20% 70%
Population 3.5x Population
124 402
Districts 3.2x Districts
4 mn 40 mn
Households 10.0x Households
1,450 7,500+
Retail Retail
Outlets
5.2x
Outlets
15
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
17
Regulatory & Policy Boost for CGD Development
Stable Regulatory Environment Strong Government Impetus to Gas Sector
18
Adani Gas – Operations and Financial Performance
STRICTLY CONFIDENTIAL
Adani Gas – India’s Leading Play on Gas Distribution
Unparalleled Network of Gas Distribution Pan India Footprint
2015 2018
AGL
IOAGPL
Volume 1.4 Chandigarh
(mmscmd) 1.1 Panchkula
Panipat
Udhamsingh Nagar
Palwal-Nuh
Bhiwani
Faridabad
Bulandshahr
Bhilwara-Bundi Khurja Aligarh
Adani CNG Allahabad
Udaipur-Chittorgarh Gaya-Nalanda
70 Jhansi Jaunpur
Retail Outlets
61 Surendranagar Ahmedabad
Kheda Anuppur Burdhman
Porbandar Vadodara
Barwala Navsari
Daman
Balasore-Bhadrak
Udupi Cuddalore
3.50 Kasargod-Mahe
Kozhikhode
Households (Lac) 2.06 Mallapuram Tiruppur
Thrissur
Ernakulum
20
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
3% Vadodra 2% 7.64
Domestic
6% 6.93 6.89
8%
5.79
4.13
3.22 3.05 3.21 2.82
Faridabad
Customer 29% Geographic 2.17
CNG
Industrial Segment 52% Spread
Ahmedabad
37%
63%
FY 14 FY 15 FY 16 FY 17 FY 18
Access to Diverse Suppliers & Sourcing of Gas Prudent Gas Sourcing & Pricing Mechanism
2018
Sourcing of Gas
• Government allocates gas for CNG & domestic as priority sector
6% • Gas for other customer segments bought from open market
• Sourcing is fair mix of short term and spot contracts
• Main suppliers are GAIL, GSPC, IOCL
36% 46%
21
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
22
Joint Venture with IOC To Support Expansion
Strategic JV with IOCL: Public sector pedigree with private sector expertise
Infrastructure as at
Sept 2018
Retail Outlets 14
Domain
Infrastructure
Expertise
Logistics &
Processes Network (Kms) 5,090
resources
Manpower
Households 11,000
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
Gross Margin (Rs/SCM & %) ROCE & ROE (%) Free Cash Flow (Rs Crs)
37% 38%
33% 22%*
20% 19% 49
19% 33
9.65 10.12 40
9.56
25%* 141
78 125
12.34 21%
11.09 11.80
19% 18%
7.69 7.11 7.73
121
91 93
FY 16 FY 17 FY 18 FY 16 FY 17 FY 18 H1 FY19 FY 16 FY 17 FY 18
PNG CNG
Total Gross Margin (%) ROE ROCE FCF (Post Capex) Capex IOAGPL Equity
* annualised
24
Adani Gas: Large Addressable Market Size
Infrastructure creation in new 34 GAs would open up a large opportunity
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
25
Experienced Board and Management Team
Esteemed Board Members
CEO &
Strong Sponsorship
Additional Director
Independent Directors
26
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
28
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
29
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
30
Sustainability
7 152 11 232
31
Thank You