Investor Q&A - Tata Power › uploaded...Nadu, Rajasthan: 461 MW Solar projects in Maharashtra,...

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Investor Q&A

Table of Contents

General Business Overview .......................................................................................................... 2

Regulated Mumbai Generation Business ...................................................................................... 6

Transmission Business .................................................................................................................. 8

Distribution Business ................................................................................................................. 10

Coastal Gujarat Power Limited ................................................................................................... 12

Maithon Power Limited .............................................................................................................. 16

Coal Business ............................................................................................................................. 18

Tata Power Delhi Distribution (“TPDDL”) .................................................................................... 21

Tata Power Trading Company (“TPTCL”) ..................................................................................... 23

Haldia ........................................................................................................................................ 24

Jojobera .................................................................................................................................... 25

Industrial Energy Limited (“IEL”) ................................................................................................. 26

Belgaum .................................................................................................................................... 27

Specialised Electronics Division .................................................................................................. 28

Maharashtra Hydro Plants and Other Renewable Energy Sources................................................ 30

Under-execution Projects ........................................................................................................... 31

Under-development Projects ..................................................................................................... 33

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Potential Question Suggested Response

General Business Overview

1. What are the businesses Tata Power is engaged in?

Tata Power is an integrated utility group primarily engaged in the generation, transmission, distribution and trading of electricity in India

The core business is organized into 4 segments Generation Transmission and distribution Fuel and logistics Power trading and other businesses

2. What is the current installed power generation capacity across India?

As of September 2014, 8,613 MW

3. What is plant-wise operational generation capacity and fuel-type across regulated as well as other models of generation businesses?

Mundra (Gujarat): 4,000 MW (Coal) Trombay (Maharashtra): 1,580 MW (Coal, Gas and Oil) Maithon (Jharkhand): 1,050 MW (Coal) Jojobera (Jharkhand): 428 MW (Coal) IEL (Jojobera) (Jharkhand): 120 MW (Coal) Rithala (TPDDL) (New Delhi): 108 MW (Gas) Belgaum (Karnataka): 81 MW (Oil) Lodhivali (Maharashtra): 40 MW (Diesel) IEL (Jamshedpur): 120 MW (Coal) Haldia (West Bengal): 120 MW (Flue gas) Bhira (Maharashtra): 300 MW (Hydro) Bhivpuri (Maharashtra): 75 MW (Hydro) Khopoli (Maharashtra): 72 MW (Hydro) Wind projects in Maharashtra, Gujarat, Karnataka, Tamil

Nadu, Rajasthan: 461 MW Solar projects in Maharashtra, Gujarat and Delhi: 56 MW

4. Who are the main customers of the operational regulated generation business?

BEST, TPTCL, Tata Power Distribution, DVC (300 MW), NDPL (300 MW), WBSEBL (300 MW)

5. How does MERC determine tariffs under MYT?

In terms of the MYT Regulations, the MERC shall determine the tariffs under a multi-year tariff framework for the period from April 1, 2011 up to March 31, 2016 (“Control Period”) based on several elements including the following: – Forecast of the aggregate revenue requirement (“ARR”)

and expected revenue from existing tariff and charges which shall be submitted by individual applicant and approved by the MERC;

– A detailed business plan based on operational norms and trajectories of performance parameters for each year under the Control Period that shall be submitted by the applicant;

– Changes in indexation if required for indexed parameters as notified by the MERC by order to that effect;

– Mid-term review of performance vis-à-vis forecasts broken down into factors within the control of the

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applicant and others outside the control of the applicant; – Mechanism of pass through of approved gains or losses

on account of controllable factors and uncontrollable factors as specified by the MERC; and

– One time tariff determination for each of the years under the Control Period to be undertaken at the start of the Control Period and reviewed at the time of the mid-term performance review

6. What is the Business Model in regulated generation business – How much ROE?

Regulated Returns. Generation Business is entitled to earn 15.5% post-tax RoE plus incentives

Debt : Equity ratio is 70:30 for capital investment irrespective of source of capital

7. What are the recent expansions that Tata Power has undertaken in its regulated generation business?

Added 1,050 MW of capacity at Maithon Expanded capacity at its Jojobera plant by adding three units

of 120MW each to the initial generation capacity of 68MW Through the Industrial Energy Limited JV (IEL), the company

has added two units of 120MW at its Jamshedpur and Jojobera plants

Similar capacity expansions have also been carried out at Trombay and Haldia

8. Is the company contemplating any JVs or partnerships in the near term?

No JVs or Partnerships are currently being confirmed However, we continue to be in talks with various players

(including PEs) to explore a possibilities for a potential JV/partnership.

9. What are the key factors affecting financial results of the company over the past year?

There are three key factors affecting the financial performance of Tata Power i.e. CGPL, Coal business in Indonesia and other power projects

Current operations (other than Mundra, coal) have been fairly stable

Declining prices and declining profitability of coal operations are impacting the surplus funds available from coal to support CGPL

Maithon capacity is in the process of being completely tied up

10. Is there any financial restructuring being contemplated currently?

No financial restructuring planned as of now

11. What is the regulatory build up for the standalone business?

Rs 1,797 cr in standalone & Rs 4,984 cr in TPDDL as of Q2 FY15

12. What is Tata Power’s strategy in the up-coming coal block auctions

A firm strategy will be in place closer to the auction dates when we have more clarity.

At present, we are exploring all possible opportunities and looking at all possible options.

13. Could you elaborate on your recent acquisition of IEPL?

We have signed a share purchase agreement for acquisition of 100% stake in Ideal Energy Projects Limited (IEPL).

IEPL currently has 270 MW operational thermal coal plant

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with fuel linkages. The project will help Tata Power service its customers in Maharashtra competitively.

The acquisition is subject to certain condition precedents and statutory approvals.

14. Will the 270 MW at IEPL be eligible to bid for the auction? If yes, will it bid?

Yes, the plant qualifies for bidding as per the bidding eligibility criteria.

However, it is too early to comment on whether IEPL will bid in the auctions or not.

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Operational Capacity Snapshot

Capacity

(MW) Type Fuel required Fuel source PPA

Unit 4 150 Thermal 1. c.3 MTPA of coal 2. oil 3. 1MMSCM of gas.

1. Long-term offtake agreement for coal

2. 1MMSCMD of gas from GAIL

Power generated at Tata Power’s power generating units is utilized in its operations for the Mumbai License Area. Additionally, Tata Power has entered into a PPA with BEST for 772 MW.

Unit 5 500 Thermal

Unit 6 500 Thermal

Unit 7 180 Thermal

Unit 8 250 Thermal

Total Mumbai Thermal

1,580

Khopoli 72 Hydro NA NA

Bhria 300 Hydro NA NA

Bhivpuri 75 Hydro NA NA

Total Mumbai Hydro 447

Total Mumbai LA 2,027

Jojobera 428 Thermal c. 2 MTPA of coal

West Bokaro coal fields (Tata Steel) and MCL

PPA with Tata Steel

IEL 240 Thermal Furnace and coke oven gases and coal

Tata Steel(furnace and coke oven gases) and West Bokaro coal fields (Tata Steel)

PPA with Tata Steel

Haldia 120 Thermal Hot fuel gases

Hot flue gases obtained from the Tata Steel plant at Haldia.

PPA with WBSEDCL. Part Merchant

Mundra UMPP 4,000 Thermal c. 12 MTPA of coal

Agreement with Indocoal for 10.11 MTPA ± 20% till 2021

Gujarat (1,805 MW), Maharashtra (760 MW), Punjab (475 MW), Haryana (380 MW) and Rajasthan (380 MW)

Maithon 1,050 Thermal c. 4.5 MTPA of coal

FSA for 3.64 MTPA + 1 MTPA, ± 20% of imported coal

DVC (300 MW), NDPL (300 MW), WBSEB (300 MW), KSEB (150 MW)

Rithala 108 Thermal Gas NA PPA with TPDDL

Belgaum 81 Thermal NA NA NA

Lodhivali 40 Thermal NA NA NA

Total conventional 8,094

Solar 57 Solar NA NA PPA with GUVNL

Wind capacities 461 Wind NA NA Various PPAs

Total operational 8,612

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Regulated Mumbai Generation Business

1. What is the operating capacity of Trombay plant?

1,580 MW through 5 units

2. What fuel do the Trombay plants work on?

All five units have multi-fuel capabilities and are currently running on a mixture of coal, gas and oil

3. How much is the imported coal requirement for Trombay?

The total imported coal requirement for Trombay is approximately 3 MTPA

Currently, Indonesian coal is purchased pursuant to 5-10 year contracts with price negotiations conducted annually or semi-annually

4. How is the imported coal transported?

The imported coal is transported by ships which are anchored in and around Mumbai harbour and then transported by barges to a custom jetty at Haji Bunder and then by road to Trombay

The company is also considering expanding its captive jetty and coal handling facilities at Trombay

The company generally stockpiles approximately one month’s coal requirements as inventory

5. Where is the oil for these plants sourced from?

Oil (including LSHS) is sourced from nearby refineries and is delivered by pipeline

6. Who is the supplier of gas for these plants?

GAIL (India) Limited is contracted to supply 1 MMCMD; however, in recent years, actual deliveries have not reached this level

7. What are the efforts being taken by Tata Power to reduce pollution from the Trombay plants?

Given that the Trombay plant is situated in Mumbai, stringent environmental restrictions on sulphur dioxide emissions and ash disposal requires the import of some fuel types to comply with environmental restrictions imposed by the Maharashtra Pollution Control Board

Tata Power has also fitted a flue gas desulphurization plant at Trombay in order to reduce sulphur dioxide emissions

8. What is the status of Conversion of Unit 6? Is the plant currently working?

Tata Power proposed to convert the oil and gas fired 500 MW Unit 6 at Trombay to run on imported coal

Coal conversion to result in lower cost of power for consumers

The modified Unit-6 will use imported coal which has significantly less amount of Ash and Sulphur, which are the main cause of air pollution, as compared to Indian coal

Coal Conversion of 500 MW Unit will help to reduce ground level concentration of pollutants in view of significant investment in pollution control equipment

Company responsible to handle 100% of Ash being generated in benign applications

The Company submitted a draft environmental impact assessment report for the proposal in 2012 and public hearings are ongoing

The Company submitted environmental impact assessment report to MOEF for the proposal in 2013. Public hearing was held on 15th Jan 2013. MOEF approval has been received

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Regulated Mumbai Generation Business

Currently going ahead with the motions with regard to the customers to say yes to buy the power on a long term basis and once that is done we will get on with the job and it will take 18 months

9. Cost of conversion of Unit 6 from oil to coal?

Approx. Rs 870 cr

10. What is the source of coal? Is there a long term agreement?

PT Adaro: 1.00 MTPA (+/- 0.25MTPA) for 5 yrs (minimum off-take of 0.75 MTPA) till 2018

PT Adaro: 1.00 MTPA (+/- 0.2MTPA) for 10 yrs (minimum off-take of 0.75 MTPA) till 2018

11. What is the current Regulatory buildup – Plan for recovery

As of Q2FY15, Regulatory build-up in Tata Power Standalone is about Rs 1,707 Crs.

This will come down based on the MYT order released for Generation, Transmission & Distribution. Expected recovery in next 2-3 years.

12. When was the last MYT approved?

MYT order was received on 5th June, 2013 for the control period till 31st March, 2016

However, the MERC will undertake a mid-term review of the performance of Tata Power - G during the third quarter of FY 2014-15

13. What are the generation schemes that have been approved by MERC?

The generation schemes that have been approved by the MERC include – enhanced coal berth augmentation systems at Trombay – unified SCADA (supervisory control and data acquisition)

systems at Trombay – up gradation of systems for the different units at the

Trombay including: – modernization of boiler lift at Unit 5 – replacement of condenser inlet valves at Unit 6 – replacement of motor protection at each of Unit 5,

Unit 6 and Unit 7 – up gradation of protection systems at Unit 5 – cooling water pump replacement at Unit 7 and

cooling water pump modification at Unit 8

14. What is the status of the recent unit 8 stoppage?

The repair work is complete and Unit 8 to commence operations soon

15. What is the total regulated equity of Mumbai operations

Rs 3,140 cr as of Q2 FY15

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Transmission Business

1. Which are the business divisions / companies through which Tata Power undertakes its transmission business?

Tata Power carries out its transmission business in Mumbai License Area through Tata Power (parent company)

Through Powerlinks Transmission (JV with PGCIL), The Company has a 51% stake in the 1,166 Km Tala Transmission project (JV with Power Grid) Powerlinks Transmission Limited which has been formed primarily to evacuate power from the Tala Hydro Project in Bhutan and to carry surplus electricity from the North Eastern States to the Northern Indian belt

2. Where do the transmission operations in Mumbai extend to?

Tata Power's transmission operations in Mumbai License Area stretch from Colaba in South Mumbai to Bassein Creek in North Mumbai and to Vikhroli in North-East Mumbai (bypassing Bhandup and Mulund)

3. What is the Business Model in Mumbai transmission business? What is the ROE?

The EHV Transmission network in Mumbai License is part of the Western Grid supplying power to DISCOMS (BEST, MSEDCL, R-Infra, Tata Power – D) and regulated by MERC

The Tata Power Transmission network comprises approximately 1,100 CKm of 220kV/ 110 kV lines and 20 receiving stations that evacuate power from the Trombay and hydro generating stations

It has interconnections with MSETCL at Trombay, Kalyan, Salsette and Borivali for bringing in power from outside Mumbai

Currently earns a regulated return of 15.5% on equity invested

4. What is the capex planned?

Most capex plans are sustenance / growth schemes within Mumbai License area and about Rs 900-1000 cr of capex is planned in FY15 and FY16 each; 30% of the above is to be funded via equity

5. What are the future plans / growth prospects?

Transmission envisions operating at benchmark levels and exploring opportunities for expansion outside Mumbai License area

Maintaining operational efficiency and providing project management consultancy

A 400 kv receiving station is being built for meeting the load demand in Mumbai and the same will be connected to the STU 400 kv network as well as CTU 400 kv network. This will create a new transmission corridor for importing power to Mumbai

MERC has also approved a transmission line from Khargar to Vikhroli.

6. How is the tariff calculated and who are the customers?

Tariff calculation is based on the Annual Revenue Requirement as approved by MERC on Asset base build up and Operational efficiencies in Mumbai License area and Discoms in Mumbai are the customers


MYT was received on 30th March, 2013 for the control period till 31st March, 2016

However, the MERC will undertake a mid-term review of the performance of Tata Power - T during the third quarter of FY

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Transmission Business

2014-15

8. What are the transmission schemes that have been approved by MERC?

The transmission schemes that have been approved by the MERC include – installation of a 220 KV transmission line from Kalwa to

Salsette, a 220 KV Trombay Dharavi Salsette transmission line, 145 KV GIS (gas insulated switchgear) at Bandra Kurla Complex in Mumbai, 145 KV GIS at HDIL, Kurla, 220 KV GIS at Mahalaxmi, Mumbai, a 75 MVA transformer with a 33 KV GIS at Parel, Mumbai

– replacement of a 22 KV bus section at Dharavi, Mumbai

9. How long is the transmission license that Powerlinks has received from CERC?

25 years with effect from November 2013

10. What is the regulated equity of Powerlinks

INR 466 cr as of Q2 FY15

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Distribution Business

1. Which are the business divisions / companies through which Tata Power undertakes its distribution business?

Tata Power carries out its distribution business in Mumbai License Area through Tata Power (parent company)

Through Tata Power Delhi Distribution Limited (“TPDDL”), Tata Power supplies power to a largely residential customer base in northern Delhi

2. What is the area in which Tata Power distributed power in the Mumbai License Area?

Tata Power distributes and supplies electricity in a 438 sq. kms. area of Mumbai

3. In which areas in Mumbai can Tata Power supply power?

Tata Power can give power supply in the licensed areas, which extends from Colaba to Vasai Creek and up to Kanjur Marg / Mankhurd

4. What is Fuel Adjustment Charge (“FAC”)?

FAC is a variable component depending on the Fuel prices, and is calculated every month. This value is indicated in your monthly power supply bill

5. How many customers does Tata Power have?

More than 5.4 lakh customers

6. Who are customers to Tata Power’s Mumbai distribution business?

Customers include retail and bulk consumers of electricity such as other power distribution companies, railways, refineries and other large industrial and commercial complexes

7. Describe the Mumbai License Area distribution network

Distribution network of approximately 1,782 kms of high tension and low tension underground cable network, 99.3 kms of overhead line network, 17 receiving stations, 14 distribution sub-stations and 441 consumer sub-stations, as at 31 December 2013

8. Till when is the distribution license valid in Mumbai License Area?

The distribution & transmission license were renewed for a period of another 25 years on August 14th, 2014.

9. What are the sales in Mumbai License Area?

FY14: 10,597 MUs; H1 FY15: 5,094


MYT was received on 28th June, 2013 for the control period till 31st March, 2016

However, the MERC will undertake a mid-term review of the performance of Tata Power - D during the third quarter of FY 2014-15

11. What are the distribution schemes that have been approved by MERC?

The distribution schemes that have been approved by the MERC include providing new connections in identified locations that would involve – installation of consumer sub-stations – setting up ring main units (“RMUs”) – setting up distribution transformers – laying of HT/LT metering equipment – laying of HT/LT cables

12. What have been the migration / reverse

There has been some migration of customers from Tata Power to Reliance Infra after the MERC passed the order on

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Distribution Business

migration of customers to / from Reliance Infra?

cross subsidy surcharge.

13. What is the status of the dispute with Reliance Infrastructure?

The dispute with Reliance Infrastructure Limited in connection with the standby charges payable to the Maharashtra State Electricity Distribution Company Limited has not been resolved

Tata Power has filed an appeal in the Supreme Court against Orders by the ATE regarding sharing of standby charges between Tata Power and Reliance Infrastructure

Additionally, Tata Power has, in accordance with the Supreme Court’s order, deposited an amount of Rs 227 cr and submitted a bank guarantee for such amount

Reliance Infrastructure Limited has withdrawn the entire sum deposited with an undertaking that, in the event of the appeal being decided against Reliance Infrastructure, either in whole or in part, such amount as may be determined as being refundable by Reliance Infrastructure shall be refunded to Tata Power, together with interest as may be determined by the Supreme Court

The other ongoing case is on MERC’s order on allowing Reliance Infra to get cross subsidy surcharge from customers who have migrated to Tata Power. The same was appealed by Tata Power.

14. What are the performance incentives earned in the distribution business?

Rs 90.9 crs for FY14; Rs 48.3 cr in H1 FY15 for entire MO (GTD)

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Coastal Gujarat Power Limited

1. What is the duration for which the power purchase agreement has been signed for?

25 years Signed in April 2007

2. What is the capacity in CGPL

Operational – 4,000 MW Under Development – 1,600 MW

3. What is the amount of coal required for the Mundra UMPP?

Melwan & Eco 100 : 0 -11 MTPA of coal Melwan & Eco 70 : 30 - 12 MTPA of coal Melwan & Eco 30 : 70 - 13.50 MTPA of coal

4. Where are the fuel requirements for Mundra UMPP being met from?

The fuel requirements are currently met through an off-take agreement with KPC for 10.11 MTPA ± 20% till 2021 (extendable)

In addition, the company is seeking additional sources to imported coal

5. Which states does the Mundra UMPP provide power to?

Gujarat Maharashtra Punjab Haryana Rajasthan

6. How much output did the plant generate?

H1FY15: 12,322 MUs FY14: 23,928 MUs FY13: 12,440 MUs FY12: 39 MUs

7. How much is the compensatory tariff for FY14?

As per the committee report, the compensatory tariff for FY14 is INR 0.524/kWh

8. What is the financial impact due to the CERC order?

While the challenges on profitability will still remain, the company is hopeful that the extent of losses is reduced to a manageable level

Even after the tariff hike, this is one of the most competitive sources of power available for the procurers

At 80% PLF, the plant should produce 26,600 MUs with the indicated gross compensation of 52 paisa per unit

9. What is the summary of the CERC order?

Compensatory tariff to be effective from 01.04.2013. provisional compensatory tariff to be billed on monthly basis and to be reconciled quarterly using coal prices at the beginning of each year

True up of provisional tariff to be done at the end of each financial year based on audited statements within two months of end of year

Technical parameters to be as per bid – Station Heat Rate: 2,050 Kcal/kWh, Aux Power Consumption: 4.75% & Transit Loss : 0.20% to be used till hardship persists

Coal prices as per HPB marker prices adjusted for GCV Provisional lump sum compensation for FY2013 amounting to

INR 329 crs after adjusting carpet coal to be paid in 36 equal installments from date of order along with carrying costs for

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any delay Excess realization towards third party sale in above 80% of

the target availability after adjusting Energy Charges including compensatory tariff shall be shared in the ratio of 60:40 between procurers and Company based on written agreement with procurers

Sharing of actual incremental profit from Mining Company to be calculated on total incremental revenue net of incremental mining cost, taxes and royalty for coal in proportion to the usage for generating contracted power

1% of ROE based on equity investment of contracted capacity as on Scheduled COD to be adjusted towards sacrifice of ROE from compensatory tariff. This will be reviewed after 3 years of the order

To explore the cost economics of blending of 80% of Melawan coal and 20% of Eco Coal to reduce impact of compensatory tariff

Company & procurers may jointly approach RBI, Ministry of Power and Finance for relief in interest rates and restructuring of loans to make project viable and reduce hardship on capacity charges

Company to approach the lenders for reduction of lending rate and extension of the moratorium period. Benefit, if any, to be set off against Capacity Charges (& not in the compensatory tariff)

Company & procurers shall jointly pursue all possible options for reduction of taxes and duties to be passed on to consumers in reducing compensatory tariff

Ceiling on compensatory tariff to be mutually decided by the Company and the procurers

Compensatory tariff to be reviewed after 3 years unless withdrawn earlier

10. What is the current status of the CERC order?

The Procurers challenged the CERC Order in APTEL. The APTEL issued an interim order dated July 21, 2014 granting the beneficiary applicant relief from payment of arrear regarding past losses from April 1, 2012 till February 28, 2014 pending the disposal of the appeal while allowing CGPL to recover compensatory tariff. One of the Procurers challenged the APTEL order dated July 21, 2014 in the Supreme Court. The Supreme Court in its order dated August 25, 2014 stayed the interim order of APTEL dated July 21, 2014 and ordered APTEL to decide on the matter expeditiously. The original petition of Procurers is still pending before APTEL for hearing.

In the meantime, Supreme Court has taken up the appeal for condoning the delay in filing against CERC order against Force Majeure and will be hearing them. It has also asked APTEL to put on hold its hearing till the time this is heard by SC

11. What was the change in the Indonesian law?

Change in Indonesian law stipulated that all coal exports will happen at the benchmark price – i.e. at HBA price. This was

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enforced in September 2011. All contracts signed prior to the enactment of new

regulations will be aligned to the new regulations.

12. What has caused the impairment?

Impairment is primarily caused due to mismatch of expenses and tariff

This mismatch is caused mainly by unfavorable movement in cost of fuel & FX

However, impairment is a non cash element

13. Can Tata Power walk out of the PPA? If so, what are the penalties?

Tata Power has signed a Sponsor Support agreement, which amongst other things guarantees the loan and interest payment during the entire tenor of the loan

14. Do you foresee any further impairment?

Impairment is an accounting entry which is tested every quarter

It is a reversible charge If the factors responsible for impairment at CGPL move

favorably / unfavorably we will see reversal of / further impairment accordingly

15. How likely is it that Tata Power writes off the entire equity in CGPL and lets the lenders seize possession?

We will not be able to comment any further on this

17. How much is the quantum of Forex loss in CGPL because of rupee depreciation?

Rs225 crs for FY14

18. What is the realization for Q2FY15 for the Mundra plant? How much of this is fixed and how much is the variable cost?

INR 2.40/kwh => INR 0.97/kwh was capacity & INR 1.43/kwh was energy.

19. How much is the under recovery in the Mundra plant currently?

52 paisa in Q1 FY15

20. What is the heat rate, aux consumption and eco-coal blending in the Mundra plant for Q3 FY14 and 9M FY14?

Heat rate: 2,158 kcal/kWh for FY14 and 2,112 kcal/kWh for Q2 FY15

Aux consumption of 8.1% for FY14 and 8.0% for Q2 FY15 Eco coal blending of 67% for FY14 and 7% for Q2 FY15 –

falling price of coal means the eco blending mix has declined

21. What is the cost per unit of fuel used for the Mundra project?

Rs 2.07 per unit in FY14 Rs 1.85 per unit in Q2FY15

22. Will the sale of Arutmin have an impact on the coal supply to CGPL?

As of now nothing gets impacted in terms of coal supply

23. What is the PLF and PLF: 60% (FY14), 62% (Q2 FY15)

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availability? Availability: 80% (FY14), 67% (Q2 FY15)

24. What is the position on waivers of covenants?

This is still under discussion with the lenders The last waiver was valid till 30th June, 2013. The Company is

in discussion with the lenders for extension of the waivers. The lenders are comfortable as the debt has been guaranteed by Tata Power. They have not called for an EoD. No notice has also been served.

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Maithon Power Limited

1. What is the corporate structure of Maithon Power Limited?

Maithon Power Limited is a JV between Tata Power (74%) and Damodar Valley Corporation (26%)

2. Have we signed PPAs for both the projects?

We have signed bi-lateral PPAs under CERC cost plus tariff formulae for eentire MW of capacity with DVC (300 MW), NDPL (300 MW), WBSEB (300 MW), KSEB (150 MW)

3. Has the sale of 150 MW to KSEB commenced

No, the off take is yet to commence due to non-availability of evacuation facility.

4. What is the status of the railway line at the project

Completion of railway infrastructure is expected to be delayed since land acquisition is not complete

We hope to construct it by March 2016

5. Are there any long-term fuel off-take agreements that Tata Power has for the Maithon power plant?

1.66 MTPA from Bharat coking coal till 2032 1.98 MTPA from Central Coal Fields till 2032 0.05 – 1.00 MTPA from Tata Steel till 2015


FY14: 6,328 MUs (H1 FY15: 3,371 MUs) FY13: 4,587 MUs FY12: 1,225 MUs

7. What is the status on the additional 2 units in Maithon that would be coming up in the future?

The land is available for the second phase in Maithon We are assessing the environment impact of coming up with

the two new units and fuel source Once all approvals are in place, the 2 units should come up in

36-44 months

8. What is the heat rate in the Maithon plant?

FY14: 2,390 kcal/kwh H1FY15: 2,397 kcal/kwh

9. What is the PLF? FY14: 69% H1 FY15: 73%

10. What is the landed cost of coal being used for the Maithon project?

H1 FY15: Rs 2,942/MT FY14: Rs 3,243/MT

11. How much is the under recovery in the Maithon plant currently?

No under recovery. The plant is making a profit H1 FY15: 15 paise FY14: 19 paise

12. What is the impact of the new land acquisition bill on Maithon’s railway siding construction?

Land acquisition has become challenging post enactment of the bill

13. What is the impact of the new CERC regulations on returns of Maithon?

Company will be eligible for PLF incentive instead of availability based incentive. At normative level, there is not much loss. Probability of incentive earning based on availability exceeding 85% was easier than load incentive exceeding 85% PLF.

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14. Please summarize the recent CERC order on Maithon & how will it impact the profitability.

CERC recently came out with the long-awaited tariff order for FY2011-14 period.

Almost entire capital cost has been approved. Of the proposed Rs 5445 cr, Rs 5170 cr has been approved. Another 55 cr to be spent in FY15 and retention money of Rs 62 cr to be considered after actual capitalization. Only Rs 99 cr of IDS has been disallowed due to delay in commissioning of units.

Rs 41 cr of Ash Disposal cost for FY14 is also allowed to be recovered.

The billing as per new tariff order to commence immediately. Also, MPL is eligible to raise a supplementary bill and reconcile the receivables/payables with Long-term Beneficiaries

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Coal Business

1. What is the off-take arrangement with the Indonesian mines? Will this change with the closure of the Arutmin sale?

Tata Power owns a 30% stake in KPC and Arutmin coal mines in Indonesia (currently, entered into an agreement to sell Arutmin)

In addition to the equity investment in the Coal Companies, Tata Power has entered into a coal purchase agreement

This long term off-take arrangement is for a total of approximately 10.11 MTPA ± 20%

This agreement is valid until 2021 and will be extendable upon extension of the coal contract of work for the mine

2. Which projects is the coal from KPC and Arutmin used for?

The coal purchased under the agreement is currently being used for Mundra

3. What is the coal mine production, sales realization and the cost of production from the KPC and Arutmin mines?

Quantity mined in FY14: 83.4 MT, 42.5 MT in H1FY15 Average Selling Price (FOB USD/ton) in FY14 : 59.6

(US$ 52.8/ton net of royalty). US$52.7/ton in H1FY15 Cost of production: US$38/ton in FY14, US$35.3/ton in

H1FY15

4. What is the debt at the coal SPV level?

US$900 mn as of Sep 2014

5. What is the strip ratio of the coal mined at the KPC and Arutmin mines?

7x in Q2FY15

6. What is the depreciation at the mine level?

US$102.4 mn for 100% for H1 FY15

7. What is the pricing mechanism for procuring this coal and how much of this will be used for the Mundra power project?

The coal is procured on the basis of the Indonesian regulations which obliges coal miners to sell coal based on a regulated benchmark price determined by the Director General of Minerals and Coal and the spot price of coal in the international markets

CGPL has an offtake agreement for 10.11 MT +/- 20%

8. What was the thought process in selling the Arutmin mines? How much was it sold for?

Company received a good valuation for Arutmin and funds were required for paring debt at the consolidated level, hence the sale of Arutmin and its associated infrastructure companies was made

The company has currently signed an agreement to sell its 30% stake in Arutmin

The aggregate consideration for which the 30% stake in Arutmin is being sold is approx. US$510 mn (USD390mn for coal mine + USD120mn for infra co.), subject to certain closing adjustments

9. What will be the tax implications on the sale of Arutmin?

There is no tax implication in Mauritius As far as Indonesia is concerned, there is a 10% withholding

tax

10. When is the cash from Arutmin sale expected to come?

The cash is expected by end of FY15. There are some CPs pending before the cash comes in.

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Coal Business

11. What are the terms for 5% stake sale in KPC?

Tata Power has signed an options agreement to sell 5% stake in KPC and 30% stake in KPC related power infrastructure companies. It is just an option as of now and no action has been taken.

12. What is the consideration for 5% stake?

The aggregate consideration for 5% stake is USD 250 mn.

13. What are the Loans taken for specific projects?

There have been no loans taken at the coal companies for any specific project. There are loans however taken at the infrastructure company levels which are independent companies

14. How is the capex to be funded for the mines?

This is funded through internal accruals The mining equipment is held through another company in

which Tata Power has a 30% share; funding for this has been done through debt and equity

15. What are the taxes in Indonesia?

The coal companies pay a 45% corporate tax in Indonesia

16. What would be the realization and cash cost for the Indonesian coal going forward, now that Arutmin is being sold?

The two mines are very different in terms of realization per ton because the GCV values of the mines are different as well as strip ratios are different

We will definitely share the appropriate numbers once the transaction is closed

17. What are the plans regarding the procurement of coal from BSSR/AGM? How much coal is currently being procured from AGM? What is the intended use for such coal?

There is no offtake agreement with BSSR/AGM We have an offtake right in proportion to our holding, which

we have not yet exercised

18. How much is the Forex gain/loss in the Indonesian coal mines for this quarter?

US$33.5 mn loss for 100%

19. What is a CCOW and when is it due to expire for KPC

CCOW is Coal Contract of Works and is effectively the mining licence. For KPC, CCOW is due to expire in 2021.

20. What is the status of the proposed restructuring to transfer 75% or more equity interest in the Indonesian Coal Companies to CGPL?

To prevent the impairment of Tata Power’s holding in CGPL, Tata Power wanted to transfer some of the equity interest of Coal SPVs to CGPL

However, the Lenders were not comfortable with CGPL holding the Coal loans – hence the discussions have been put on hold till the CERC meeting

21. What is the status of development of the Tubed captive coal block and Mandakini captive coal block?

Allocations for both Tubed and Mandakini were cancelled by Supreme court order dated Sep 24, 2014. Tata. Power would study the order and discuss the same with Board before having a view point

20


Coal Business

23. What is the capital that has already been invested in Mandakini and Tubed?

The land acquisition is at a very early stage for both projects. Very little equity has been put in at this stage

Tata Power has spent around Rs 60 cr in both the mines as equity. Note that we have already taken a hit of diminution of Rs 30 cr in Q2FY15.

24. What is the compensation for investments already made in these blocks

The quantum of compensation for the land in shall be as per the registered sale deeds together with twelve per cent (12%) simple interest from the date of such purchase or acquisition.

25. Are you looking to participate in the upcoming auctions for 74 coal blocks?

We will definitely look to participate if it makes sense. However, it is too early to make a definitive answer. We will wait for more details to emerge and then take a call accordingly.

21


Tata Power Delhi Distribution (“TPDDL”)

1. What is the corporate ownership structure?

TPDDL is a joint venture between Tata Power (51%) and Delhi Power Company (49%), a government owned company

2. Who are customers of TPDDL?

TPDDL supplies power to a largely residential customer base in north, north west areas of Delhi and has over 14.22 lakh customers till sept 14

3. Describe the TPDDL distribution network

Distribution network comprises of all the 66kV and below grid substations along with associated transmission lines. In terms of numbers 28468 sub-stations, 66 grid stations, 4576 kms of HV cable and 6318 kms of LV cable

4. Till when is the distribution license valid for TPDDL?

The Delhi Electricity Regulatory Commission has granted a 24 year distribution license to TPDDL which took effect on March, 2004

5. What is the impact of subsidy (if any) in TPDDL?

No impact

6. What is the power purchase cost?

For TPDDL, INR 5.67 per unit for FY14, INR 5.51 per unit Sept 14

7. Can you quantify the AT&C losses for TPDDL?

TPDDL has been the frontrunner in implementing power distribution reforms in the capital city and is acknowledged for its consumer friendly practices

Since privatization, the Aggregate Technical & Commercial (AT&C) losses in TPDDL areas have shown a record decline

Today they stand at 10.43% (as on Sept 30, 2014) which is an unprecedented reduction of over 80% from an opening loss level of 53%

8. What is the generation capacity?

As a step towards captive generation, TPDDL has also established a 108 MW gas based combined cycle power generating facility at Rithala, North Delhi in its distribution area

9. What are the regulatory dues?

The buildup is around INR 4,984 Cr as of Sept 14

10. What is the recovery mechanism for these dues?

The regulatory dues are recoverable in future tariff along with actual carrying cost.

The dues are funded through bank loans with actual interest as pass through.

10. What are the broad financials?

TPDDL had a revenue of INR 5,978.51 Cr in FY14 with PAT of INR 333.86 Cr, INR 3,445.94 Cr YTM Sept 14 with PAT of INR 167.55 Cr

11. What is the current status of the CAG audit on TPDDL?

In January 2014, the Department of Power, Government of the National Capital Territory of Delhi, notified TPDDL of a decision taken by Lft. Governor , GNCTD to conduct the audit of TPDDL by the Comptroller and Auditor General of India . The CAG audit decision is applicable to cover all 3 private power distribution companies in Delhi since inception in July 2002.

TPDDL had filed a petition before the Hon’ble High Delhi High Court to seek an interim order restraining the CAG from conducting such audit as it was legally impermissible.

22

This petition was brought before a single judge of the High Court of Delhi, who declined TPDDL the interim relief sought, directing the audit to continue but restraining the CAG to submit any final audit report. Thereafter, TPDDL has challenged the said order of the single judge of the High Court of Delhi, and the matter is currently pending before the Division bench of Delhi High Court for final hearing on powers and jurisdiction of CAG to undertake audit of TPDDL.

The audit is currently being conducted by the CAG in light of the Delhi High Court Single judge order.

23


Tata Power Trading Company (“TPTCL”)

1. What are the brief financial highlights of TPTCL?

Turnover was at Rs 4,140.26 cr and PAT at Rs 39.20 cr for FY14 Turnover was at Rs 1,988 cr and PAT at Rs 16 cr for 1HFY15

24


Haldia

1. What is the capacity in Haldia?

The capacity in Haldia is 120 MW (2 x 45 + 1 x 30) The two units of 45 MW each were commissioned in August

2008 and December 2008, respectively The 30MW unit was commissioned in September 2009

2. What is the fuel for Haldia? Hot fuel gases from the Tata Steel coking plant

3. Who are the offtakers? 18 MW to WBSEDCL and balance to TPTCL on mostly merchant basis

The PPA with WBSEDCL had a validity of 10 years


FY14: 942 MUs FY13: 925 MUs FY12: 867 MUs

25


Jojobera

1. What is the capacity in Jojobera?

4 units having total Capacity is 428 MW First unit of 68 MW was acquired in 1997 from Tata Steel and is

today operated as a captive power plant Three additional units of 120 MW each have been constructed in

2001, 2002 and 2005 and used by Tata Steel

2. What is the type of fuel used?

Domestic coal is used from Mahanadi Coal Limited (MCL) and West Bokaro coal fields (Tata Steel)

3. Whom is the power sold to?

The power generated at the Jojobera plants is sold to Tata Steel pursuant to multiple 30 year PPAs, the first of which was executed on September 12, 1997


FY14: 2,832 MUs FY13: 3,067 MUs FY12: 2,855 MUs

26


Industrial Energy Limited (“IEL”)

1. How was IEL incorporated?

IEL was incorporated pursuant to the Captive Power Policy under the Electricity Act of 2003

2. What is the corporate structure of IEL?

IEL is a JV between Tata Power (74%) and Tata Steel (26%)

3. What is the capacity of IEL?

240 MW divided into 120 MW at Tata Steel campus and 120 MW at Jojobera

4. What is the PPA signed by IEL?

The 240 MW is tied up with Tata Steel for a period of 30 years, commencing in 2009


The fuel for the first unit is furnace and coke oven gases sourced from Tata Steel

The fuel for the second unit is coal sourced from West Bokaro coal fields

6. How much output did the plants generate?

FY14: 1,694 MUs FY13: 1,705 MUs

27


Belgaum

1. What is the capacity in Belgaum?

81.3 MW


Furnace oil


FY13: 86 MUs FY12: 189 MUs

4. Is the plant currently operational

No. The PPAs have expired and plant is currently not operating.

28


Specialised Electronics Division

1. What does the SED do? For close to four decades, The Tata Power Company Limited through its Strategic Engineering Division (Tata Power SED) has been a leading private sector player in indigenous Design, Development, Production, Integration, Supply and Life-cycle Support of mission-critical Defence Systems of strategic importance. During this period, the Division has partnered the Ministry of Defence (MoD), the Armed Forces, DPSUs and DRDO in the development & supply of state-of-the-art Systems and emerged as a Prime Contractor to MoD for Indigenous Defence Production when it secured Orders for Pinaka Multi Barrel Rocket Launcher , Akash Army Launcher and Integrated EW System (MT) for the Indian Army and for the Akash Air Force Launcher, COTS-based Automatic Data Handling System for Air Defence and Modernisation of Airfield Infrastructure (MAFI) for the Indian Air Force, MOD.

Tata Power SED has the unique distinction of participating in Defence Programs through a dedicated R&D setup at Mumbai since 1974 and a dedicated Production Facility at Bengaluru since 1982 and set up R&D facility from 2014

2. What is the full range of products in SED?

Weapon Systems and their Upgradation for Ground Forces (i) Pinaka Multi Barrel Rocket Launcher (ii) Akash Army and Air Force Missile Launchers (iii) Medium Range Surface to Air Missile Launcher (iv) TCT A5 Launcher (v) 105mm Mounted Gun System (vi) Upgrade of Air Defence Guns with EO Sights and on board Ballistic Computers (vii) Launchers with Integrated sensors for All Types of Missiles and Rockets (viii) Fire Control Computer for Tanks and ICVs (ix) 155/52mm Mounted Gun System (x) 155/52mm Self Propelled Gun (Tracked) (xi) Remote Weapon Station

Upgradation of Tanks, Armoured Vehicles and related Equipment (i) Advanced Hull Electrical Systems for Armoured Vehicles (ii) Thermal Imager Fire Control Systems

Ballistics and Data Fusion (i) Ballistic Software for Air Defence Guns (ii) Ballistic Software for Field Artillery Weapon Systems (iii) Ballistic Software for T-90 tank (Indian and Russian Projectiles including Tank fired Missiles) (iv) Data Fusion

Aerial Reconnaissance Equipment, Airborne Radio Transmitters / Receivers, Radars and Navigation Equipment

29


Specialised Electronics Division

3. Does SED make weapons of mass destruction

No

4. What is the turnover of SED?

INR 335.32 cr in FY 14

30


Maharashtra Hydro Plants and Other Renewable Energy Sources

1. What is the operating capacity of the hydro plants?

Bhira (300 MW) Bhivpuri (75 MW) Khopoli (72 MW) Aggregating to 437 MW

2. How much output did the hydro plants generate in aggregate?

FY14: 1,597 MUs FY13: 1,450 MUs FY12: 1,530 MUs

3. What is the business model for these hydro plants

All these plants sell power to Tata Power distribution and earn cost plus regulated returns. They are part of Mumbai LA

4. What is the operating capacity of the wind plants?

461 MW across Maharashtra, Gujarat, Tamil Nadu, Karnataka and Rajasthan

5. How much output did the wind plants generate in aggregate?

FY14: 725 MUs FY13: 813 MUs FY12: 569 MUs

6. What are the PPAs for wind plants

All wind plants in Maharashtra sell to Tata Power distribution Other wind plants sell to respective state discoms PPAs are at regulated tariff

6. What is the operating capacity of the solar plants?

57 MW

7. Where are the solar plants located?

Mulshi, Mithapur & Palaswadi

8. How much output did the solar plants generate in aggregate?

FY14: 47.9 MUs FY13: 47.9 MUs FY12: 13.4 MUs

8. How is Tata Power’s renewable portfolio structured

TPREL (wholly owned subsidiary of Tata Power) has 138.2 MW (84 MW wind and 54 MW solar)

Balance 376.4 MW is directly held by Tata Power (almost entirely wind barring 3 MW solar plant at Mulshi)

8. What are the growth plans of Tata Power in Renewable space?

We are currently executing two wind projects at various locations with an aggregate capacity of 57.5 MW and expect to complete these projects in next 12 months.

Overall, Tata Power plans to add 100-150 MW of renewable plants (wind & solar) every year going forward

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Under-execution Projects

1. Which are the upcoming projects under execution? What is the expected capacity that they will add?

Dagacchu (Bhutan): 126 MW (Hydro) Kalinganagar (Orissa): 202.5 MW (Gas-based) Georgia: 185 MW (Hydro) Visapur (Maharashtra): 8 MW (Wind) Pethshivpur (Maharashtra): 49.5 MW (Wind) South Africa: 229 MW (Wind) The above will aggregate to 800 MW

2. What is the year-wise commissioning status for the under-execution projects?

FY15: 378 MW (Dagacchu, Kalinganagar and Pethshivpur) FY16: 0 MW FY17: 414 MW (Georgia and South Africa)

3. Have funds been tied up for these projects?

Dagacchu (Bhutan): Yes Kalinganagar (Orissa): yes Georgia: Yes Palaswadi (Maharashtra): Yes Visapur (Maharashtra): Yes Pethshivpur (Maharashtra): Yes South Africa: Financial closure received

4. How much equity does Tata Power own in the Dagacchu project?

26% The JV is with Druk Green Power Corporation Limited

(representing the Royal Government of Bhutan and its nominated investors)

5. For how many years is the Dagacchu PPA signed and with whom?

PPA signed for 25 years in June 25, 2008 PPA signed with Tata Power Trading Company Limited PPA is at a guaranteed tariff of Rs 2.9/kwh with upside sharing

with TPTCL for power sold above Rs2.9/kwh

6. What is the project cost of the Dagacchu project?

US$200mn In January 2014, project financing of US$120mn was completed

7. What is the status update of the Dagacchu project?

The project is currently under construction and expected to be commissioned in Fiscal Year 2015

8. For how many years is the Kalinganagar PPA signed and with whom?

Not yet executed; under negotiation. Kalinganagar power will be offtaken by Tata Steel. PPA with Tata Steel is currently under negotiation.

9. What is the status update of the Kalinganagar project?

Civil work for this project is currently in progress and the project is expected to be fully commissioned in Fiscal Year 2015

10. What is the project cost of the Kalinganagar project?

Approx. Rs 1,100 cr for first phase of 202.5 MW

11. Where will the power produced in the Georgia Hydro project be sold?

The power generated by this project will be sold to customers in Turkey and Georgia

12. Where will the revenue model for power produced in Georgia

80% Turkey & 20% Georgia on merchant Basis during non winter months. 100% to Georgia in winter months (Dec, Jan, Feb)

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Under-execution Projects

13. What is the status update of the Georgia Hydro project?

Civil work for this project is currently in progress and the project is expected to be commissioned in Fiscal Year 2017

14. What is the status update of the Palaswadi Solar project?

The project was commissioned in May 2014.

15. What is the status update of the Visapur Wind project?

24 MW has already been commissioned. Balance 8 MW will be commissioned in FY15.

16. What is the status update of the Pethshivpur Wind project?

The project is currently under execution and is expected to be commissioned in Fiscal Year 2015

17. What is the status update of the 2 South African Wind projects?

This projects are currently under execution and are expected to be commissioned in Fiscal Year 2017

18. What is the revenue model for South African wind projects?

The project will earn regulated returns

19. What is the rationale to enter South Africa / Georgia, how attractive is the South Africa power market compared to India

De-risking the balance sheet The investment meets our target returns We have only partnered with strong players in the geographies

that we have entered in

Capacity under execution

Project Type Capacity

(MW) Status Offtake COD

Visapur Wind 8 Under execution PPA with Tata Power Renewable Energy

FY15

Pethshivpur Wind 49.5 Under execution FY15

Daggachu, Bhutan Hydro 126 Land acquired or leased; under construction

PPA with Tata Power Trading

FY15

Kalinganagar, Orissa Flue Gas 202.5 Civil work in progress PPA with Tata Steel to be executed

FY15

Georgia (40% stake) Hydro 185 Land acquired; civil work in progress

PPA to be executed closer to COD

FY17

South Africa Wind 229 Financial closure completed

PPA with Eskom for 20 years

FY17

Total 800

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Under-development Projects

1. Which are the projects in advanced stages of development in India? What is the expected capacity that they will add?

Kalinganagar (Orissa): 450 MW (Coal) Dugar (Himachal Pradesh): 380 MW (Hydro) Begunia (Orissa): 1,320 MW (Coal) Tiruldih (Jharkhand): 1,980 MW (Coal) Maithon Phase II (Jharkhand): 1,320 MW (Coal) Mundra Phase II (Gujarat): 1,600 MW (Coal) Dehrand (Maharashtra): 1,600 MW (Coal) The Indian projects under development amount to 8,650 MW

2. What is the status of completion of each of the projects under development in India?

Kalinganagar Phase II: Will commence construction depending upon demand from Tata Steel

Dugar: Approval of the detailed project report is pending Begunia: Land acquisition in progress Tiruldih: Land acquisition in progress Maithon Phase II: Land has been obtained and environmental

impact assessment is in progress Mundra Phase II: Land has been obtained Dehrand: Land acquisition in progress

3. Which are the projects in advanced stages of development out of India? What is the expected capacity that they will add?

Georgia (Phase II and III): 215 MW (Hydro) Sorik Marapi, Indonesia: 240 MW (Geothermal)

4. What is the status of completion of each of the projects under development out of India?

Georgia (Phase II and III): In planning stage Sorik Marapi, Indonesia: Project in exploration phase; PPA

negotiation in progress with Indonesia’s State Power Off-taker

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Capacity under development

Capacity

Project Fuel (MW) Status

Kalinganagar Coal 450 In planning stage

Dugar Hydro 380 Approval of the detailed project report is pending

Begunia Coal 1,320 Land acquisition in progress

Tiruldih Coal 1,980 Land acquisition in progress

Maithon Phase II Coal 1,320 Land has been obtained and environmental impact assessment is in progress

Mundra Phase II Coal 1,600 Land has been obtained

Dehrand Coal 1,600 Land acquisition in progress

Georgia Phase II Hydro 215 In planning stage

Sorik Marapi, Indonesia Geothermal 240 Project in exploration phase

Vietnam Coal 1,320 In planning stage

Total 10,425

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