Friday, February 10, 2012

Ujjain DF Webinar: Rs. 70 cr. Capex, given AT&C loss reduction trajectory and Rs. 3.5 Levelised Input price can bring 8.79% Equity IRR

Webinar Brief Introduction
The revised MP Distribution Franchisee (DF) RFP for Ujjain has brought down on average coverage area by 98%, number of consumers and electricity sales by 70% and number of DTCs by 90%, with move from district level to city level. There is now mandated capex of Rs. 70 cr. for Ujjain and target ATC reductions to 15% in 2 years from current 40.82%
The webinar cum workshop will focus on 3 important ‘perspectives’ that plays important role in overall investment analysis of DF business. pManifold ground study results with GIS visualizations from Gwalior city will be shared.
  1. RFP analysis: How have been the load growth trends across different categories of consumers?
    • HT & Commercial growth has picked up well with higher sales growth rate compared to Gwalior.
    • Growth is consistent with indication of lower theft as compared to Gwalior.
  2. Socio Economic analysis: Which socio-economic indicators trend could give insight into future load growth of the region?
    • Ujjain has higher DDP growth rate and workforce participation as compared to Gwalior.
    • Also highest literacy rate, and net sown area in MP.
    • Higher urban slum rate, but lowest ST population in MP.
  3. Utility performance analysis: What key issues related to Power reliability, Metering/Billing/Payment, Customer services, and other service attributes faced by end-customers? Could this be a Lead indicator for required Capex and Opex in the region?
    • What are the major Capex component drivers? What utility performance they target to improve?
    • EUCOPS Study Framework - Further breakdown of CSFs into 27 attributes. They in turn drives to create a ‘functional role’ & ‘performance’ based DF organization
    • Category-wise & geographical localization of factor issues - Outages, Breakdown restoration & Maintenance are key issues affecting all customer categories including revenued ones.
  4. Bid Investment Analysis: What are key parameters and their sensitivity to bidding?
    • Key Results
      • Equity IRR = 8.79%
      • Equity payback = 9 years
      • Avg. DSCR = 1.02
    • Key Assumptions
      • Capex - Capex Rs. 70 cr., 100% refund of depreciated terminal value
      • Opex - 60 paisa per unit employee cost (80% of O&M costs)
      • Input Price - Bid price curve with LIP of Rs. 3.52 (previous slide top green curve)
      • Loss Reduction - Technical Loss reduction rate of 16% per year (cap 6%), Non-Technical Loss reduction rate of 20% per year (cap 4%)
      • Growth - Avg. Tariff growth rate of 3%, Avg. Load growth rate of 7%
      • Investments - Equity 30%, Term Loan Interest rate 13%
      • Taxes - Tax rate 33.22%, MAT 19.93%
Live Discussion and Q&A Q&A
Their will be 45 mins of presentation followed by 15 mins of LIVE Discussion and Q&A. Please consider taking our online survey (if you already have NOT) and share your broad views on MP Distribution Francisee bids to better facilitate this discussion.

Speaker Profile
Rahul Bagdia is Co-founder and Director of pManifold Business Solutions. pManifold is an Information and Advisory services company and has positioned its 'Energy' services to support scale-up of the emerging Distribution Franchisee business model in India. Our services includes:

1. Research
2. Stakeholder Engagement
3. Consulting
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