Project Voltage

1
Project Voltage
Information Overview
2
Agenda

• Executive Summary
• Company Overview
• Investment Highlights
• Industry Overview

3
Executive Summary

• Leading Chennai-based manufacturer of Porcelain
  Insulators
• Key supplier to major Transmission Distribution
  players, Power OEMs, State Electricity Boards,
  Power Grid Corporation of India Indian Railways
• Insulators are used in the Power transmission and
  distribution networks (in transmission lines
  sub-stations), manufacture of power equipment
  railway electrification
• Manufacturing plant located near Cuddalore (200
  kms from Chennai). Has a manufacturing capacity
  of 15,000 tons of Insulators p.a
• Company is in the process of setting up its
  second manufacturing facility near Chennai with
  an annual capacity of 24,000 tons of Insulators
  p.a - Capex plan of Rs 2,000 Mn
• Thrust on power infrastructure investments in
  India. Massive investments for ramping up
  existing Transmission and Distribution
  architecture and increasing the existing
  generation capacity Huge order flow for
  companies in the power sector value chain
• New facility would also cater to the demand from
  Middle-East, Africa other Asian countries
  witnessing substantial capex in power
  infrastructure
• The Company is looking to raise equity of Rs
  1,250 Mn to fund its expansion plan

4
Agenda

• Executive Summary
• Company Overview
• Investment Highlights
• Industry Overview

5
Snapshot - Saravana Global Energy
PL Projection
Overview

• Promoted in 2003 by acquiring the assets of the
  erstwhile Seshasayee Industries Ltd, a reputed
  manufacturer of High-Voltage Porcelain Insulators
• Co. is a leading manufacturer of High-tension
  Electro-porcelain Insulators for use in
  Sub-stations, Power Equipments, Transmission and
  Distribution lines and Railway Electrification
• Has majority market share in high voltage Solid
  Core Post Insulators in India
• Strong industry relationships - Supplies to all
  major Power OEMs, State Electricity Boards
  major TD players
• Chairman-Mr.Padam J Challani, MD-Mr.D.B.Prakash
  Chand Jain

B/S Projection
Operations

• Manufacturing facility in P.N.Kuppam, near
  Cuddalore (Tamil Nadu) with annual capacity of
  15,000 TPA of Insulators
• Has about 700 employees, including a strong
  technology team
• Is setting up a 24,000 MT p.a hollow insulator
  manufacturing facility near Chennai. Production
  would commence in Dec08
• PVC (Price-Variation Clause) based Rate Contracts
  with ABB, BHEL, Siemens and Crompton Greaves
• Strong international demand for hollow insulators
  Low cost of manufacturing gives the co. a
  competitive advantage
• Also has a modernized, NABL accredited
  High-voltage Laboratory, used for internal and
  3rd party testing

6
Promoter Group

• Serial entrepreneur with over 30 of years of
  experience in the financial services field
• Plays a critical role in the formulation of the
  companys vision, mission and strategy. Is a
  graduate in Chemical Engineering

Mr. PADAM J CHALLANI (Founder and Chairman)

• Has over 25 years of experience in the jewellery
  manufacturing and retailing industry
• MD of Prakash Gold Palace, South Indias leading
  Manufacturer, retailer and exporter of jewelry

Mr.PRAKASH CHAND JAIN (Co-Founder and M.D)

• An Electrical Engineering Graduate MS from
  Wichita University, Kansas, USA
• Heads the Marketing functions of the company.
  Plays a significant role in identifying new areas
  of growth for the company

Mr. AJEETH P CHALLANI (Executive Director)

• Has over 5 yrs of experience in the financial
  services retailing industry
• Is in charge of the day to day administration of
  the company

Mr. ABILASH MUTHA (Executive Director)
7
Key Management Personnel
Mr.S.RANGASWAMI (Executive Director)

• A graduate in Mechanical Engineering with 36
  years of experience in the Porcelain Insulator
  Industry
• Served in Seshasayee Industries Limited for 15
  years, where he spear-headed the maintenance,
  innovation and optimisation functions in their
  plant

Mr.S.BALACHANDRAN (President, Plant)

• An A.M.I.E in Ceramics, Diploma in ISO 9000 TQM
  and ISO 14000
• 24 of years of experience in Production and
  Quality functions across various industries
• Heads the Production and Quality department at
  the factory

Mr.RAGHAVAN (GM, Finance Company Secretary)

• A Company Secretary Cost Accountant with over
  23 years of experience in Finance and Accounts
  functions in Manufacturing Industries
• Heads the Finance function and Secretarial
  practice in the Company

Mr. VIMAL SHARMA (DGM, Marketing)

• Graduate in Mechanical Engineering
• 20 years of experience in Marketing of Porcelain
  Insulators, welding consumables, equipment
  automobile pistons
• Strong relationships with various power OEMs,
  power equipment majors Electricity Boards

8
Advisors

• A Chartered Accountant with over 20 years
  experience in Financial Management in various
  sectors like real-estate, manufacturing, IT etc.
• Advices the company on corporate finance matters

Mr. GIGI GEORGE (Non Executive Director)

• Over 25 years experience in banking and financial
  services sectors. Is the CEO of the promoter
  familys financial services business
• A Post-graduate in Economics and a qualified
  Company-secretary with banking and management
  qualifications

Mr. S.B.CHANDRASHEKAR (Advisor)
Mr.G.S.RAMESH (Advisor)

• A Management graduate with over 25 years of
  experience. Formerly a Senior Vice-President
  (HR) of Hyundai Motor India Ltd
• Held positions in reputed forums such as CII,
  State Planning Commission, Regional Board, E.S.I.
  Corporation
• Advices the Company on HR Administrative matters

Mr.V.PICHUMANI (Advisor)

• Has extensive experience in the porcelain
  insulator industry (over 15 yrs in Modern
  Insulators). Played a key role in establishing
  the Companys manufacturing operation
• Has good relationships with leading companies in
  the power sector, both in India and abroad

9
Product Portfolio Porcelain Insulators
Insulator Types
Hollow
Disc
Solid Core
Used in Switch Gears, (Circuit Breakers,
Lightning Arrestors, Isolators) and Transformers
Used in TD Lines
Long Rod
Railway Traction
Station/Bus Post
Used in Substations
Used in TD Lines
Used in Railway Electrification
10
Product Portfolio - Porcelain Insulators
Disc Insulator
Long Rod Insulator
Post Insulators
Hollow Insulators in Transformer
Hollow Insulators in Circuit Breaker
Railway Insulators
11
Extra-High Voltage Lab
A Competitive Advantage
The Company no longer needs to incur expenditure
on obtaining Quality Certifications from CPRI or
ERDA a must for insulator manufacturers for
their products
3rd Party Testing
Technology Upgradation

• To promote 3rd party testing Capacity
  utilisation during idle time
• Revenue from 3rd party testing is currently
  clocked at USD 30,000 per annum
• Promotion of 3rd party testing on a larger-scale
  after modernization Revenue of USD 1 mn p.a
  targeted

• Earmarked Investment outlay - USD 1 Million
• Modernisation of existing set-up by addition of
  sophisticated equipments
• Implementation of an aggressive marketing
  strategy to boost visibility

E.H.V Lab
12
Key Clients
13
Financials
FY07 Revenue Break-up
FY07 Cost Break Up As a of Total Cost
FY07 Sales Distribution Key Customers
14
New Manufacturing Plant
Business Plan Summary
New Plant - Product Mix

• New plant with a capacity of 24,000 tons p.a to
  come up near Chennai
• Plant would manufacture entire range of Porcelain
  Insulators
• Hollow Insulators (used in Power Equipments like
  Transformers, Isolators, Lightning Arresters etc)
• Post Insulators (used in Sub-Stations)
• Disc Long Rod Insulators (used in TD Lines)
• Traction Insulators (Used in Railway
  Electrification)
• Potential for Forward Integration Hollow
  Insulators form majority of the product cost of
  Switch Gears

Project Details

• Land acquisition is in progress suppliers have
  been identified for Plant Machinery. Total
  estimated cost of project - Rs. 2,000 Mn
• The plant would be operational in Nov08 would
  initially have an installed capacity of 6000 tons
  p.a. This would gradually go up to 24,000 tons
  p.a in a year
• The new plant would cater to the strong Indian
  and international demand for porcelain insulators
  About 40 production to be exported
• The proposed unit will also have in-house RD and
  pilot plant facility for continuous upgradation
  of technology and capacity optimization
• Strong customer relationships provide a ready
  market

15
Agenda

• Executive Summary
• Company Overview
• Investment Highlights
• Industry Overview

16
Investment Highlights
Dominant market share in the High Voltage segment
Marquee Clientele
Diverse Product Portfolio
Strong Potential for Forward Integration
Favourable Domestic and Export Market
Investment Rationale
Proficient Team
Favourable Industry Dynamics
PVC based Rate Contracts
17
Agenda

• Executive Summary
• Company Overview
• Investment Highlights
• Industry Overview

18
Power Sector - Snapshot
Source Ministry of Power
19
Power Sector - Industry Highlights
Fact-Sheet
Capex Summary

• Thrust on power infrastructure investments in
  India Huge order flow for companies in the
  power value chain
• Focus on Capacity Additions in Power Generation,
  Refurbishment and Augmentation of existing TD
  Networks Rural Electrification
• Future capex in Transmission Distribution is
  tilted towards higher Kv infrastructure (400Kv
  and 765 Kv) and greater automation of networks
  (to reduce Transmission and Distribution Losses)
• Huge capex by companies (BHEL, ABB, CG, Areva)
  for manufacturing power equipment (Circuit
  Breakers, Transformers, Isolators etc) to cater
  to the increased needs of the Transmission and
  Distribution segment
• Global majors have shifted their manufacturing
  sourcing base to India China due to low cost of
  raw material labour

• Estimated Rs 5,000 Bn Capex in 11th Plan
  (FY08-12).
• Power Generation to witness Rs 2,764 Bn worth of
  investments. Capacity additions of around 69 GW
  during 11th Plan period and 88 GW during the 12th
  Plan period
• Transmission Network Creation to witness Rs 1,021
  Bn worth of investments. Additions in
  transmission lines to Increase from 47,446 Ckm
  during the 10th plan to 114,034 Ckm during the
  11th Plan. Additions in Substations to increase
  from 77,696 MVA to 235,500 MVA during the same
  period
• Distribution Network Augmentation and Upgradation
  would require Rs. 731 Bn worth of investments
• Rs 200 Bn to be invested in Rural Electrification

20
Power Sector Reforms to Drive Growth
PREVIOUSLY
REFORMS
GOING FORWARD

• Losses of SEBs
• Irregularity of payment to Suppliers
• Capex planned impacted
• Acute Shortage
• Focus on Generation
• TD Losses

• Rising role of Private Sector
• Increased project size (Ultra Mega Generation
  Transmission Projects)
• New technologies
• Thrust on Hydro and Nuclear

• Settlement of SEBs dues
• Electricity Act, 2003
• APDRP (Accelerated Power Development and Reforms
  Program)
• AREP (Accelerated Rural Electrification Program)
• Power Trading

High Power Deficit in India
Per Capita Consumption
Sources Research Reports
21
Power Sector - Investment in power sector in 11th
Plan (FY08 12)
A Rs 5,000 Bn Opportunity !
22
Power Sector - Power Generation Overview
Summary

• High energy shortage and potential for
  electrification (About 40 of households in India
  lack of Addition of 69 MW during 11th plan and 88
  MW during 12th plan to
• Government initiatives for setting up Ultra Mega
  Power Plants (UMPPs). Nine Ultra mega power
  projects of 4,000 MW each to be commissioned in
  the 11th plan
• Large Projects to be executed on a
  Public-Private Partnership basis
• Consequent to enactment of The Electricity Act,
  2003, there is progress on the regulation front,
  but peak shortages continues at 12-13 and energy
  shortages at 8

Power Requirement
Generation Capacity
Sources Power Ministry
Sources Planning Commission
23
Power Sector - Transmission and Distribution
System - Overview

• A reliable Transmission and Distribution system
  is important for the proper and efficient
  transfer of power from generating stations to
  load centers and beyond
• A Transmission and Distribution (TD) System is
  typically comprised of transmission lines,
  sub-stations, switching stations, transformers
  and distribution lines
• Inter-connected Transmission Networks -
• In order to ensure the reliable supply of power
  and the optimal utilisation of generating
  capacity, a TD system is organized in a grid,
  which interconnects various generating stations
  and load-centers
• Permits un-interrupted supply of power to a load
  center, even if there is a failure at the local
  generating station, or a maintenance shutdown
• Facilitates power to be transmitted through an
  alternative route, if a particular section of the
  transmission system is unavailable
• Power distribution is a critical link between
  power generation, power transmission and end
  users of power, and is typically the domain of
  the S.E.Bs or other State Utilities

24
Power Sector Investments in Transmission
Distribution
Summary

• Investment in augmentation and automation of TD
  infrastructure to be driven by the need to reduce
  TD losses
• Introduction of open access and power trading
  to be possible once total transmission capacity
  is sufficiently expanded
• Creation of an Integrated National Power Grid by
  2012 for inter-regional power evacuation
  -Expected additions of over 60,000 ckm of
  Transmission Network to evacuate additional 1,
  00,000 MW by the year 2012 and carry 60 of the
  power generated in the country (Source Power
  Ministry)
• Rural Electrification Programme No license
  required for generators to distribute
  electricity to rural areas

Transmission Line under 10th 11th Plan
Power Grid Integration - Investment outlay
Sources Power Ministry, HDFC Securities Research
25
Power Sector - Vision 2012 Integrated National
Power Grid
Targeting inter-regional power transfer
capacities of 37,150 MW
Saravana to largely benefit from the growth in
the High-Voltage TD segment
Sources Research Reports
26
Power Sector Transmission Distribution -
Capacity Additions
Increased additions to translate to increased
demand for Insulators
27
Power Sector Global Transmission and
Distribution Market
Overview
Demand Drivers Country-specific

• Asia occupies most of the 2005-06 growth pie
  driven by India and China. The trend is expected
  to continue till 2010
• Areva, ABB and Siemens together control 45 of
  the market
• Raw-material sourcing strategies are veering
  largely towards Asia emerging as a strong
  supply-base

• India TD capex of USD 100 Bn over 2007-12
• China Sustained market potential strong needs
  in UHV
• Mid. East GCC interconnections to drive USD 50
  Bn worth of investments over the next 5 years
• North America Recent black-outs have led to a
  need for refurbishment of existing network
• Europe Need for refurbishment, with emphasis on
  non-renewable sources

Global Market - Size
2006 Global Market Player-wise
Sources Research Reports
ABB, Siemens and Areva occupy large chunk of
Global TD Market
28
Power Sector - Power Equipment Manufacturers -
Snapshot
Prospects

• Increasing MNC interest in this sector promises
  increased activity in this sector as well as
  increased competitive tendencies
• Domestic companies are going in for JVs with
  foreign companies for technology transfer etc.,
• Increasing infrastructure spending resulting in
  bulging order book positions
• Subsidiaries of MNCs are leveraging on the
  project management skills in engineering,
  procurement and construction for opportunities in
  export markets

Top-Line Growth (Q-o-Q)
Current Order Book Position
Saravana is a supplier to all major Power OEMs
Sources Research Reports
29
Power Sector - Power Equipment Manufacturers -
Financials
Crompton Greaves
ABB
BHEL
Siemens
Sources Research Reports
30
Power Sector Global Players shifting focus to
Asia
Advantage Asia !
Global TD Market Break-up

• Manufacturing Cost Advantage
• Strong vendor base for sourcing components
• Resource of semi-skilled workers
• Strong Domestic Market Growth
• Growth has shifted from developed to developing
  nations
• Building Economies of Scale
• ABB and Siemens Indians subsidiaries are hubs
  for servicing Middle East market
• Moving up the Value Chain
• Currently low voltage (LV) or commodity products
  are sourced
• Capacity creation for high-end products

Key Global Growth Drivers
Saravanas new plant to meet the increased
requirements of Power OEMs
31
THE END