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KEC International Limited

KEC International Limited. Corporate Presentation April 2010. Vision statement. To be a global leader in Power Transmission EPC business and a significant player in other related businesses, providing superior value to all stakeholders. Track record of proven successes. UAE. LIBYA.

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KEC International Limited

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  1. KEC International Limited Corporate Presentation April 2010

  2. Vision statement To be a global leader in Power Transmission EPC business and a significant player in other related businesses, providing superior value to all stakeholders

  3. Track record of proven successes UAE LIBYA ETHIOPIA ETHIOPIA First 400 KV D/C design for several countries – Ethiopia, Libya, UAE

  4. Track record of proven successes SAUDI ARABIA KAZAKHSTAN AFGHANISTAN Working under extreme conditions: 268km access road in Saudi Arabia, -40˚C temp in Kazakhstan, War-torn Afghanistan

  5. Company profile

  6. Company overview • Leading transmission line EPC Company in the world • End to end presence in every aspect of power supply chain, post generation • Established in 1945, taken over by RPG Group in 1982 • Global footprint - client base spread over 40 countries • Currently executing projects in over 20 countries • Strong presence in India, South Asia, Middle East, Africa & Central Asia • Well balanced and diversified order book • Listed on the BSE and NSE • 2008-09 financial summary: • Sales: Rs.34.27bn • PAT: Rs.1.16bn

  7. Historical milestones RPG Cables merges with KEC; Largest tower Testing Station inaugurated in Butibori 2010 Turnover of Rs. 3,427 crores, net profit of Rs. 116 crores 2009 Merger of RPG Transmission Limited and NITEL. Telecom business started 2007 Turnover crosses Rs. 2,000 crores and net profit crosses Rs. 100 crores 2006 Turnover crosses Rs. 1,000 crores 1999 Name changed to KEC International Limited 1984 Tower testing unit at Vashi – largest in the country, 3rd of its kind in the world inaugurated 1983 1982 Taken over by RPG group First 400KV line in India successfully completed 1975 Full turnkey transmission line project awarded in Sudan 1968 First Indian company to get a Railway Electrification order 1961 First international order received from New Zealand 1960 Fabrication plant started in Bombay in collaboration with R Foures, France for supply to BhakraNangal Dam project 1950 KamaniEngg. Corp. established for manufacture, enameling and trading for Hollowware 1945

  8. Business units Power transmission Distribution & design Cable Railways Telecom • Turnkey transmission lines upto 1200KV • Tower testing upto 1200KV • Substation • Distribution • Design services • Balance of plant • Power & Control, Telecom and Instrumentation cables • Top 3 in EHV cables • Railway electrification • Earthwork • Bridgework • Platform Construction • Track laying • Signaling • Telecom towers • SCADA • OPGW Network • Hotline stringing

  9. Presence across power supply value chain

  10. Projects in every corner of the world Turnkey projects Tower supply projects * Indicates current projects

  11. Clientele Africa Middle-East North America CIS South East Asia Asia/ India

  12. Cable Clientele

  13. Key success factors Diversified worldwide client base and robust order backlog Excellent vendor relationships & volume based procurements Strong prequalification Status The advantage Six decades of experience working in all types of terrains Large capacity for tower manufacturing & supply with ISO 9001 | ISO 14001 | OHSAS 18001 Dedicated, skilled work force with cross country project execution capability State of the art designing capabilities Diversified portfolio: Transmission, Distribution, Cable, Telecom & Railways

  14. Tower manufacturing & design capabilities • Manufacturing plants at Jabalpur, Jaipur and Nagpur for transmission & telecom towers • ISO 9001 | ISO 14001 I OHSAS 18001 certified to give world class manufacturing quality • Manufacturing Capacity Owned :151,000 MT Value Added Partners : 60,000 MT • Experience of supplying transmission line towers to developed markets like USA, Canada & Australia BUTIBORI MUMBAI • A strong team of over 100 design experts • Design facilities equipped with latest software like BOCAD, PLS Tower, PLS CAD, Google Earth • Fully equipped to provide computerised engineering solutions, 3D analysis and design for optimising steel usage • Providing Substation design solutions to clients in US

  15. Tower testing capabilities • Highest –capacity tower testing station in the world at Nagpur • Sophisticated Test Station at Butibori with SCADA and PRFIBUS system controls • Capable of testing towers upto 1,200KV, guyed towers upto 765 KV and monopoles of 400 KV • Three other tower testing stations - Jabalpur, Jaipur, Vashi already providing tower testing services to overseas customers • Over 2,200 tower tests till date BUTIBORI

  16. Cable manufacturing facilities • High tension power cables • Installed capacity: 1,000km • Leading manufacturer and pioneer in introducing XLPE cables in India THANE • Low tension power cables • Installed capacity: 10,000km • Enjoys cheapest power tariff and sales tax benefits SILVASSA • Telecom & Railway cables • Jelly filled telecom: 1.2 mm CKM • Optic fibre cables: 0.36mm CKM • LT power cables: 5,000km • Railway cables: 1,000km • Instrumentation cables: 2,400km MYSORE 16

  17. Project management capabilities • Team of highly experienced project managers and engineers • Successfully executed projects in diverse terrains • Deserts: UAE, Algeria, Egypt, India, Saudi Arabia (40°) • Mountains: India, Lebanon, Malaysia, Mozambique • Frosty conditions: Kashmir, Afghanistan, Kazakhstan (-40°) • Rivers: Brahmaputra, Nile, Ganges, Rihand • Challenging locations: Afghanistan, Iraq • Currently executing more than 100 projects • Possess 69 strong fleet of TSE equipments

  18. KEC Training Institute • New Training institute with modern facilities for residential and non residential training set up in Butibori, Nagpur • Availability of skilled and capable manpower in Power Sector across various countries in the world is a concern • With the immense opportunities in the Indian and Global Power T&D industry, KEC recognizes it as one critical factor of success in this new decade • Objective is to create a large pool of supervisory talent for T & D industry and train them in the latest technology and techniques in the transmission field BUTIBORI BUTIBORI

  19. Awards & recognition EEPC India Gold Trophy for Top Exporter Award for 2006-07 in Merchant Exporter Category (Regional) for 2007-08 in Merchant Exporter Category (All India)

  20. RPG Group overview

  21. Well diversified multi-national conglomerate 8 Business sectors I 20+ companies I 40,000+ employees I 400,000+ shareholders

  22. KEC is a significant value driver for the Group Rs. Million * Estimated market capitalisation as of March 12, 2010

  23. Financial Overview 23

  24. 5-year financial summary CAGR: 29% Rs. Million CAGR: 24% Rs. Million CAGR: 31% Rs. Million

  25. Q3 FY 2010 financial summary • Consistent YoY growth despite challenging market conditions

  26. 9M FY 2010 financial summary • Strong profitability growth driven by cost management and operating discipline

  27. Shareholding pattern • Number of shares: >43000 • Promoter shareholding currently at 42% • DII/FII forms largest section of shareholders

  28. Attractive business prospects 28

  29. Order book breakdown BY BUSINESS UNIT BY GEOGRAPHY

  30. Order book growth - YoY Rs. million International South Asia Rs. million Rs. million Total

  31. Opportunities • Strong order book with well balanced geographical and business spread • Increased spending on Transmission in Middle East, Africa and Africa; opportunities in countries where KEC not yet present • PGCIL spending on track; SEBs picking up • Additional allocation to APDRP & RGGVY to intensify Distribution growth • Cable opportunities in underground cable laying and export market through KEC’s International Division • With the advent of 3G, large scale opportunities for telecom in the offing • Building PQs to participate in the large Railway projects announced by the Government

  32. Challenges • Delay in Government spending on power • Volatile commodity prices (steel, zinc, aluminum, cement) • Volatile US dollar • Over capacities & competition from new players • Availability of quality manpower to cater to growth in business

  33. Opportunities – TransmissionIndia & South Asia • India • PGCIL - tenders to be floated for about Rs.5000 crs (USD 1bn) p.a. in the 11th Five Year Plan • Transmission capacity increase from 14,000MW to 38,000MW in 11th Plan; to 75,000MW in 12th Plan • State Electricity Boards - coming up with investments in 400KV Transmission lines • Private Players increasing their spends in Power projects • 4 Ultra Mega Power Projects (UMPPs) awarded by the Ministry of Power to private players • BOO transmission projects to contribute significantly • Total XIth plan outlay for Transmission Rs.140,000 crs ( USD 28bn) [Central Rs.75000 crs., States Rs.65000 crs.] • Nepal / Bhutan • Opportunity in Transmission, Distribution & Hydro projects • Bangladesh/Sri Lanka • Mid size - small projects being floated

  34. Opportunities – TransmissionInternational Est. T&D investments 2007 - 2012* • IEA estimates USD 6.1 trillion of investments in T&D sectors during 2005-2030 (transmission USD1.8tn, distribution USD4.3tn) • China and India expected to account for 40% of that spend

  35. Opportunities - Distribution • 11th Five Year Plan • Continue with APDRP* scheme to reform the urban distribution and reduce the AT&C losses across India to less than 15% levels • Continue with RGGVY* to achieve 100% village and household electrification, to achieve `Power for all by 2012' National Electricity Policy target • APDRP* • Rs.40000 crs (USD 8bn) to be invested in transmission and distribution • RGGVY*: Power for All by 2012 • Electrification of villages: Outlay Rs. 24000 crs (USD 4.8bn) & Electrification of all rural households: Outlay Rs.16000 crs. (USD 3.2bn) by 2012 • Additional allocations by Government • Total 594,000 villages; approx. 475,000 electrified; 119,000 un-electrified • Household electrification program • Total households 138mn; electrified 60mn; un-electrified 78mn • Large scale opportunities in Africa and Middle East • Building PQs for high end substations APDRP: Accelerated Power Development Reforms Programme RGGVY: Rajiv Gandhi GrameenVidhyootikaranYojana

  36. Opportunities - Cable • Around Rs. 77000 crs. (USD 15.4bn) market opportunity in India based on current 11th Plan estimates • Cable opportunities to expand due to increase in underground cable laying projects • With 3G in the offing, demand for telecom optical fibre cables to go up • Value additions to KEC distribution division by sourcing cable products internally • KEC ‘s international SBU to leverage its reach for export of cables to various countries in Middle East and Africa

  37. Opportunities - Railways • Large Potential in the Indian Railways sector • 11th Plan Outlay (2008-2012) – Rs. 200000 crs. (USD 50bn) • Major Projects- Eastern & Western Freight Corridors, Monorails in metros, Delhi–Mumbai Industrial Corridor (DMIC) • KEC building PQs to participate in huge opportunities within composite project space - earthwork, platform construction, signaling, etc. • Already won small orders in composite project space • Major investments in Railways planned by countries in Gulf, Africa and South East Asia

  38. Opportunities - Telecom • Domestic opportunities • Current Indian mobile subscriber base in excess of 525mn • 10-12 million are being added every month • Auction for 3G spectrum in the offing • Increased bandwidth and transmission requirements, strong upside for tower manufacturers • Industry forecasts indicate that more than 350,000 towers with estimated capex of Rs. 60000 crs. (USD 12bn) will be required in the next two years • International opportunities • Africa and Middle East, where subscriber growth continues • Currently bidding for tower requirements in Greece and Spain with service providers • KEC to leverage its experience in South Africa to build markets across less penetrated African countries

  39. T&D market players India Asia Pacific Middle East Europe Turkey Africa • KEC • Kalpataru • Jyoti • L&T • Gammon • Tata Projects • Isolux • Inabensa • Cobra • I Comm • Aster • EMCO • Bajaj • Deepak Cables • EMC • Best & Crompton • Hyundai • Harbin Power • HG Power • Hyosung Power • Sumitomo • JPPC • Fujikura • Xlan • NCC • ETA • Gulfar • Hidada • Al Babtein • Zamil • MEEDCO • Inabensa • Cobra • Isolux • Elecnor • Electromontaz • Energoinvest • ABB • SAG • Belfour Betty • Emtamitas • Sa-Ra • STFA • Pivot • Kahrif • Karakib • Transdeco • Transel • Hidelco • Elject • Pivot • Energo Nigeria

  40. Cable market players India International • KEC (RPG Cables) • Universal • Finolex • Diamond • KEI • Polycab • NICCO • Ravin • Torrent • CCI • Havells • Nexans: France • Prysmian: Italy • General Cables: USA • J Power Systems: Japan • Brugg, Switzerland • Southwire, USA • NKT Cables, Germany • LS Cable, Korea • Taihan, Korea

  41. Future growth plans

  42. Multi-pronged growth strategy EPC Consolidate Transmission Distribution Telecom Grow Substation Railways Asset Ownership BOO Transmission Telecom Build scale Cable manufacturing Cable

  43. Key drivers of future growth • Focus on Delivery, Cost and Profitability • Complete Ownership and Accountability • Superior Quality and Safety standards • Cross functional Teamwork • Empower Performance

  44. Thank You

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