idfc corporate presentation 9mfy13 _corporate presentation_9mfy13.pdf · omkar goswami independent...

CorporateCorporatePresentationPresentation

The to unlocking Indian Infrastructure t itopportunity…

Click to edit Master title styleIndian Infrastructure – directionally right but yet to regain momentum…1

IDFC riding a Megatrend within a Megatrend2

IDFC ‐ Stakeholders3

IDFC ‐ Financials4

IDFC ‐ Unique Proposition5

3

Indian Infra space is complex and demandingIndian Infra space is complex and demandingIndian Infra space is complex and demanding…..Indian Infra space is complex and demanding….. Public Sector not keeping pace

with Private Sector Delivery

Extremely competitive Aggressive expectations of

returns from infra assets(coal, offtake) Execution capabilities

established Stretched balance sheets

$$IDFC

Governance

Supportive Complex regulations

Shattered infrastructure valuations in public markets

Valuation expectations of sponsors

Governance Transparency

4

Complex regulations Pace of reforms slow

and private capital providers yet to converge

Asset sales the only way out?

The Indian Infrastructure story is far from overThe Indian Infrastructure story is far from overClick to edit Master title style

The Indian Infrastructure story is far from over…..The Indian Infrastructure story is far from over…..

Capacity addition at ~7% every

Per capita consumption (w atts)

13,647

Capacity addition at 7% every year

But per capita consumption far

below global averagePerennially Starved!

Power

2 456

1/3rd of China, below global averagePerennially Starved!

67% capacity addition in major

2,456 1/20th of USA

IndiaChinaUSA

Ports

67% capacity addition in major ports during 11th plan period..

…but still capacity utilisation at

85% 70%

67% increase in major ports capacity (mn tons)

841

505

Choked!

Ports 85%+ vs 70% norm

Average time for clearing cargo

i 20 d (5x slower than

505

5

is ~20 days (5x slower than Singapore) FY07 FY12E

The Indian Infrastructure story is far from over…..The Indian Infrastructure story is far from over…..

Click to edit Master title style

The Indian Infrastructure story is far from over…..The Indian Infrastructure story is far from over…..~5000km of highw ays added in past 4 years

71,772

~5,000km of highways added over past 4 years….

But still, 2% of Indian roads

Woefully short!

Roads

66,754

,

carry 40% of traffic!

In single year of

Chi 2Woefully short!

Mar '08 Mar '12

2011, China added 2x length

of highways that India added in

past 4 years

Railways

India's rail track length per sqkm area is 1/3rd of global average

125

area

Only ~3% increase in route length (km) over past decade

Only ~5% increase in track

Lagging behind global standards

35km /

1,00

0km

ylength (km) over past decade

Today, India’s rail track length per sq km area is

6

Global Average India

length per sq km area is

1/3rd global average

Infra recovery seems round the cornerInfra recovery seems round the cornerInfra recovery seems round the corner…Infra recovery seems round the corner…

Government has communicated strong intent Government has communicated strong intent to revive reforms (National Investment Board)1

L di i t t f Long pending appointments of heads of major PSUs underway2

Debt restructuring scheme for Debt restructuring scheme for SEBs to revive their finances3

Land acquisition bill to be introduced to Land acquisition bill to be introduced to Parliament post Cabinet approval4

PMO intervening to resolve FSA deadlock between Coal India 5

7

gand power producers5






8

Megatrend within a MegatrendMegatrend within a MegatrendMegatrend within a MegatrendMegatrend within a Megatrend

FY06

5.2

FY12

8.4

FY17E

10

Infrastructure Spend to Rise to ~10% of

GDP

Public Sector Private Sector

The Megatrend within a

4,500

6,000

Public Sector Private Sector

Private sector infra investments to outpace

public sectorwithin a

megatrend… Private Sector Participation

1,500

3,000

9

0FY10 FY11 FY12E FY13E FY14E FY15E FY16E FY17E

IDFC poised to ride the Megatrend within a Megatrend IDFC poised to ride the Megatrend within a Megatrend IDFC poised to ride the Megatrend within a Megatrend IDFC poised to ride the Megatrend within a Megatrend

IDFC

Participation in policy making at multiple levels – Centre, State and Regulators

Li i ith li k d i t f d fti li iIDFC

Government

Liaison with policy makers and inputs for drafting policies

Advisory to policy makers - orient decision makers to ground realities

Training the execution arm(bureaucracy) in creating PPP capacities

$$

IDFC

FULL SERVICES FRANCHISE FOR ALL PRODUCTS AND SERVICES FOR INFRASTRUCTURE ACROSS THE ENTIRE VALUE CHAIN

$$

IDFC

Private companies

Enable private sector participation in infrastructure opportunity by providing capital (debt and equity) to developers

Help private infrastructure companies to raise capital

Advice on participation in infrastructure opportunity in right segments and on scale to ensure optimum profitability

IDFC

segments and on scale to ensure optimum profitability

Developed strong relationships with infrastructure developers across categories and market sizes

Ability to syndicate both debt and equity for clients

10

IDFC

Capital Markets

Participate as an investor (through its various funds) and lender (from the balance sheet)

Trusted partner (several rounds of successful fund raising)






11

IDFC has evolved and grown with Indian InfraIDFC has evolved and grown with Indian InfraIDFC has evolved and grown with Indian Infra IDFC raises ` 1,451 cr from 7.3 lakh retail investors in LT Infra Bonds

IDFC and Natixis Global Asset Management enter into a Strategic Partnership. NGAM acquires a 25% minority stake in the IDFC AMC & the Trustee company

20112011

20102010 Raises additional capital of ` 2,654 cr through a QIP & Preferential Allotment

IDFC first NBFC to be classified as Infrastructure Finance Company (IFC) by RBI.

q y p y

20092009

20082008

IDFC becomes part of Nifty 50

Forays into investment banking by acquiring controlling stake in SSKI

Enters into asset management by acquiring the AMC business of Standard Chartered Bank

Successfully raises ` 3,837 cr for India Infrastructure Fund (IDFC Project Equity)

20072007

Successfully raises ` 3,837 cr for India Infrastructure Fund (IDFC Project Equity)

Successfully raises ` 3,160 cr for our third infrastructure focused Private Equity Fund

Raises additional capital of ` 2,100 cr through a QIP at ` 127 per share

20062006

20052005

20042004

Successfully raises ` 1,988 cr for our second infrastructure focused Private Equity Fund

Undertakes initial public offering of equity shares at ` 34 per share

Successfully raises `844 cr for the India Development Fund Our first infrastructure focused Private Equity Fund

12

20042004

19971997

Successfully raises `844 cr for the India Development Fund, Our first infrastructure focused Private Equity Fund.

Incorporated in Chennai as a PPP model based on the recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan

Shareholding & Board of Directors Shareholding & Board of Directors Solid PedigreeSolid PedigreeShareholding & Board of Directors Shareholding & Board of Directors –– Solid PedigreeSolid PedigreeAn exemplar of a successful public private partnership

Deepak Parekh, Non-executive Chairman, HDFC Non-executive Chairman

GoI, 17.26%

Corporate Bodies, 5.41% MF, 3.18%

Shareholding ( Dec 31, 2012)

Sunil Soni, Additional Secretary, Department of Financial Services,

Ministry of Finance

Nominees of Ministry of Finance, Government of

India

S R t ti f Nominee of Domestic and

GoI, 17.26%

Retail, 8.10%

Joseph Dominic Silva, Representative of Khazanah

Nominee of Domestic and Foreign Institutional

Shareholders

S. H. Khan

S S Kohli

FIs / Insurance Co / Banks, 12.10%

S. S. Kohli

Shardul Shroff

Gautam Kaji

Omkar Goswami

Independent Directors

% of Top 10 shareholders

Sr No Name Category Dec-12 Sep-12

FII / FDI, 53.94%

Omkar Goswami

Donald Peck

Marianne Økland

Vi Ch i &

1 Government of India Promoter 17.26% 17.3%2 Sipadan Investments (Mauritius) Ltd. FII 9.98% 10.4%3 Life Insurance Corporation of India FI 9.44% 10.0%4 J.P. Morgan Asset Management FII 3.04% 2.9%6 The Royal Bank of Scotland FII 2.85% 2.6%5 Abu Dhabi Investment Authority FII 2 45% 2 2%

13

Rajiv B. Lall Vice Chairman & Managing Director

Vikram Limaye Deputy Managing Director

5 Abu Dhabi Investment Authority FII 2.45% 2.2%7 Actis Hawk Ltd FII 2.02% 2.0%8 Vanguard FII 1.86% 1.9%9 Flagship Indian Investment Company (Mauritius) Ltd FII 1.81% 1.7%

10 Government of Singapore FII 1.72% 2.0%

Core Team Core Team –– Ability to Attract the Best Committed to Indian InfraAbility to Attract the Best Committed to Indian InfraCore Team Core Team Ability to Attract the Best Committed to Indian InfraAbility to Attract the Best Committed to Indian InfraRajiv Lall Vice Chairman and Managing Director

Vikram Limaye Deputy Managing Director

Sunil Kakar Group Chief Financial OfficerSunil Kakar Group Chief Financial Officer

Sadashiv Rao Chief Risk Officer

Animesh KumarGroup Head - Human Resources, Corporate Communication and

Corporate Services, Co-CEO - IDFC Foundation

Rajeev Uberoi Group General Counsel

Shared Services

Rajeev Uberoi Group General Counsel

Vinayak Mavinkurve Group Head Project Finance

Sanjay Grewal Group Head Project Finance

Fixed Income & T

K Rajagopal Head - Fixed Income & Treasury

Project Finance

TreasuryK Rajagopal Head Fixed Income & Treasury

Investment Banking & Institutional Broking

Tapasije Mishra CEO, IDFC Capital & Securities

Public Market Asset Management

Naval Bir Kumar Vice Chairman, IDFC MF

M. K. Sinha Managing Partner and CEO, IDFC Alternatives

Satish Mandhana Managing Partner and CIO, IDFC Alternatives

Cherian Thomas CEO - IDFC Foundation

P d Si h G H d f P bli S t I iti ti

Alternate Assets Management

IDFC F d ti

14

Pradeep Singh Group Head of Public Sector Initiatives

Ritu Anand Group Head – Policy & Chief Economist

IDFC Foundation

The first to be classified as an IFCThe first to be classified as an IFCThe first to be classified as an IFCThe first to be classified as an IFC IFCs are NBFCs with 75% of their total assets deployed in infrastructure loans

Net owned funds of Rs 3bn or more

A minimum credit rating of ‘A’

Infrastructure Finance Company

A minimum credit rating of A

CRAR of 15% and minimum Tier-1 capital of 10%norms

4040

Single Borrow er Single Group

Enhanced Exposure Norms

Enhanced Exposure Norms

Exposure limit for lending to infrastructure projects (% of owned

f d )

15

2525

10

20

30

40

B k ’ l di t IFC i d f 15% f it l f d (Ti 1+2) t 20%

funds)

0

10

SCB IFC

Banks’ cap on lending to IFCs raised from 15% of capital funds (Tier 1+2) to 20%

Risk weights of banks’ exposure to IFCs linked to their credit rating

IFCs allowed ECBs (including outstanding ECBs) under the automatic route upto 50% of net owned funds and approval route available for beyond that

Better access to bank funds and ECBs

15

Refinance from IIFCL

Business Structure Business Structure –– Full Services Franchise for InfraFull Services Franchise for InfraBusiness Structure Business Structure Full Services Franchise for InfraFull Services Franchise for Infra

Project Finance Fixed Income & Treasury Investment Banking & Institutional Broking

•Loan Book ~ ` 54,104 crore(CAGR of ~ 30% over 6 years)

•Major Sectors – Energy (42%) Transport (23%) Telecom

•Treasury Operations Liquidity Management

Debt Trading (Money market instruments Bonds)

•Investment Banking

•Institutional Broking

•IDFC Research(42%), Transport (23%), Telecom (23%)

•Project Loans, Corporate Loans, Structured Products, Non-Funded products

instruments, Bonds) Book size of ` 8,265 crore as on

December 2012

•Equity Trading

•Debt Capital Market

Coverage of ~ 240 companies across 27 sectors

Products, Non Funded products

•Assets duration : 2.0 years

•Gross NPAs : 0.26%, Net NPAs : 0.12%

p Registered with SEBI as Category-I

Merchant Banker

•Debt Syndication Structuring, managing and

arranging loan funds for infrastructure projects & sponsors

•Structured Debt Product

16

NUMBER OF EMPLOYEES AT IDFC GROUP IS ~559 : The largest pool of human talent focused on infrastructure in the country

Business Structure Business Structure –– Full Services Franchise for InfraFull Services Franchise for InfraPublic Markets Asset

ManagementAlternate Assets

Management IDFC Foundation

•Acquired from Standard Chartered in 2008 Natixis Global Asset Management

acquires 25% minority stake

•AUMs : ` 8,172 crore

•Private Equity Established in 2003 AUM ` 4 335 crore in 3 F nds

•Policy AdvocacyIndia Infra Report 2012 : Education

India Rural Development Report

•Capacity Building & Programmeq y

•AUMs : $ 5.4 bn

•Debt to Equity : 80:20

•Market Share of 3.8% as of December 2012

AUM : ` 4,335 crore in 3 Funds

37 Investments with 10 full exits

•Project Equity Established in 2007 AUM : ` 3 837 crore in 1 Fund

•Capacity Building & ProgrammeManagementTraining Govt officials in PPP Model

Advisory Services

Project Development Fund – Triple IDecember 2012 Debt : 4.3%

Equity 2.7%

•Ranked 10th as of September 2012 based on Avg AUMs

AUM : ` 3,837 crore in 1 Fund

68% of the fund committed

14 Investments

•Real Estate Established in 2010

Project Development Fund Triple I

Capacity Building : I-Cap

•iCareSneha, Masoom

•JVs

SHARED SERVICES

•No of investors : 1 million +

•Flagship scheme : Premier Equity Fund

Established in 2010

Fund raising in process

Seed assets in place

J sDIMTS (with GNCTD), iDECK

(Karnataka), Udec (Uttarakhand)

17

SHARED SERVICESHR, IT, Finance, Legal & Compliance, Corporate Communication, Risk Management, Facilities, etc.

Strong relationships across InfraStrong relationships across InfraStrong relationships across InfraStrong relationships across Infra

Shapoorji IPallonji

18

Punj Lloyd Ltd

Indian Infrastructure – directionally right but yet to regain momentum…1





19

Impressive growth Impressive growth Balance Sheet Approvals and DisbursementsBalance Sheet Approvals and DisbursementsImpressive growth Impressive growth -- Balance Sheet, Approvals and DisbursementsBalance Sheet, Approvals and Disbursements

Robust 31% CAGR in balance sheet size….. ...leading to strong 30% CAGR in outstanding disbursements

Balance Sheet ($bn)11.9

12

13.6

16Total cumulative outstanding approvals ($bn) Outstanding disbursements ($bn)

5.7 6

6.8

9.6

6

9

8.6

11.4

8.2

10.5

8

12

2.4

3.6

3

6

3.44.4

6.66

2.23.1

4.6 4.5

6.2

4

8

0FY06 FY07 FY08 FY09 FY10 FY11 FY12

0FY06 FY07 FY08 FY09 FY10 FY11 FY12

20

Robust Asset QualityRobust Asset QualityRobust Asset QualityRobust Asset QualityPrudential Provisioning Norms : Loan Loss

Reserves at 1.5%

Robust credit selection processes and strong risk management practices have been

a focus

0.50 5

0.6Gross NPAs (%) Net NPAs (%)

3.0%

0.4

0.3 0.30.3

0.4

0.52.3%

1.6%

1 1%

1.8% 1.8%1.6% 1.5%

1.5%

2.0%

2.5%

0.2 0.2 0.20.2 0.2

0.1 0.10.1

0.2

1.1%

0.0%

0.5%

1.0%

FY06 FY07 FY08 FY09 FY10 FY11 FY120 0 00

FY06 FY07 FY08 FY09 FY10 FY11 FY12-0.5%

FY06 FY07 FY08 FY09 FY10 FY11 FY12

21

Strong operating performanceStrong operating performanceStrong operating performanceStrong operating performance

Current NIMs ~4% 38% CAGR in NII driving 26% CAGR in PAT

450NII PAT ($m)NIMs

4.2 4.3

5.0

413208

251

304

270

360

3.23

3.33.5

3.9

3.0

4.0

6084

136180

218

322

413

7698

145 147

90

180

1.0

2.0

600

FY06 FY07 FY08 FY09 FY10 FY11 FY120.0


22

Strong operating metricsStrong operating metricsStrong operating metricsStrong operating metricsBest-in-Class RoAs and RoEs gaining

tractionOperational Efficiencies Playing Out : Cost/ Income well positioned and trending down

26 0%30.0%6.2 x

17.0%17.7%

15.7% 12.5%15.8%

12 9%13.0%

14 0%

16.0%

18.0%

20.0%7.0%

19.2%

23.6%26.0%

20.9%

17.5%

15.0%

20.0%

25.0%

3.8%3.3% 3.1%

2.6%

3.4%3.0% 2.9%

4.8 x5.2 x

5.0 x5.0 x

4.4 x

5.0 x12.9%

6.0%

8.0%

10.0%

12.0%

14.0%

10.2%11.5%

5.0%

10.0%

15.0%

0.0%

2.0%

4.0%

0.0%


R A L (Cl i ) R E0.0%


GOING FORWARD : Potential RoAs ~2.6 to2.8%; Potential Leverage

RoA Leverage (Closing) RoE

23

~ 6.25x and Potential RoEs ~16 to18%

Financials Update : Balance Sheet : Strong 9MFY13Financials Update : Balance Sheet : Strong 9MFY13(Amounts in ` crore)

Particular 31-Dec-12 30-Sep-12 31-Mar-12 31-Dec-11% Growth

pY-o-Y Q-o-Q

Networth 13,614 13,152 12,285 12,430 10% 4%

Borrowings 51,634 53,680 46,435 43,729 18% -4%

Current Liabilities 3,675 2,998 2,259 1,858 98% 23%

TOTAL LIABILITIES 68,923 69,831 60,979 58,016 19% -1%

Net Loan Book 53,325 53,381 48,185 43,826 22% 0%

Gross Loan Book 54,104 54,137 48,888 44,476 22% 0%

Less Provision 779 756 704 651 20% 3%

Treasury1 8,265 9,014 6,612 6,661 24% -8%

Consol Equity1,2 3,029 2,999 2,993 2,999 1% 1%

Current Assets 4,304 4,436 3,189 4,530 -5% -3%

TOTAL ASSETS 68,923 69,831 60,979 58,016 19% -1%

24

1 Net of provision

2 Goodwill on consolidation as of Dec 31, 2012 - ` 957 crore

Financials Update : P&L : Solid 9MFY13Financials Update : P&L : Solid 9MFY13(Amounts in` crore)

Particular 9MFY13 9MFY12 % Growth Q3FY13 Q2FY13 Q3FY12% Growth

Q3 Vs Q3 Q3 Vs Q2Net Interest Income 1,921 1,511 27% 656 643 536 22% 2%Loans 1,762 1,340 31% 611 596 473 29% 2%Treasury 159 171 -7% 45 47 63 -28% -4%

Non-Interest Income 519 726 -28% 171 203 222 -23% -15%Principal Gains 58 321 -82% 7 49 91 -92% -85%Asset Management 220 221 0% 87 69 68 28% 27%Mutual Fund 120 93 29% 45 40 35 28% 13%Alternatives 100 127 -22% 42 29 33 28% 45%Fees 87 90 -4% 29 29 22 36% 1%VC Gain & Carry 13 37 -66% 13 0 11 14% na

Investment Banking & Broking 39 44 -12% 8 21 9 -12% -61%Investment Banking 17 13 31% 1 13 2 -31% -89%Institutional Broking 22 31 -29% 7 8 7 -7% -13%

Fixed Income* 62 46 35% 30 19 22 37% 53%Fixed Income 62 46 35% 30 19 22 37% 53%Loan Book Related fees 141 95 49% 39 44 32 21% -12%Other Income 18 18 2% 7 5 3 164% 56%

OPERATING INCOME 2,459 2,255 9% 834 850 760 10% -2%OPERATING EXPENSES 374 372 0% 134 124 127 5% 8%HR 214 215 0% 80 68 73 10% 17%N HR 160 158 2% 54 55 55 1% 2%Non-HR 160 158 2% 54 55 55 -1% -2%

Provisions 185 201 -8% 52 30 98 -47% 73%Loans 100 110 -9% 34 27 57 -40% 25%Investments 85 90 -6% 18 3 41 -56% 535%

PBT 1,900 1,682 13% 648 697 535 21% -7%Tax, Minority int, etc 590 463 27% 196 220 154 27% -11%

25

PAT 1,310 1,219 7% 452 477 381 19% -5%

PAT (net of principal gains) 1,253 945 33% 445 428 294 51% 4%* Includes Fees & Treasury trading gains

Indian Infrastructure – directionally right but yet to regain momentum…1





26

IDFC is uniquely positioned IDFC is uniquely positioned –– Mirrors the Infra Opportunity!Mirrors the Infra Opportunity!IDFC is uniquely positioned IDFC is uniquely positioned Mirrors the Infra Opportunity!Mirrors the Infra Opportunity!

Franchise amalgamates

Government sponsorship

Infrastructure Internationally diversified

shareholder base

Professional management

27

IDFC poised to ride the next infra wave of investments IDFC poised to ride the next infra wave of investments IDFC poised to ride the next infra wave of investments IDFC poised to ride the next infra wave of investments

S l i li dStrongly capitalized Capital Adequacy Ratio at 22.4% Tier-1 capital 20%

Infrastructure set to witness i d l l f i i

Sale of assets by existing private players to deleverage stretched balance sheets

Capital raising by private developers to fund next phase of infrastructure investmentsincreased levels of activity infrastructure investments

Consolidation among existing industry players Emergence of new entrants in the infrastructure space –

both domestic and foreign

28

BestBest--inin--class franchise…best placed to harvest the infra opportunityclass franchise…best placed to harvest the infra opportunityp pp yp pp y

Can tap opportunities and identify risks early

Robust systems and processes and highest standards in transparency and

governanceg

Calibrated growth over time resulting in stronger balance sheet (grew only 2%

Superior underwriting skills – market recognizes and respects that

g (g yin FY2009) : ~80% of portfolio relates

to operational assets

Robust Asset Quality – low NPAs IDFC

IFC benefits on borrowings : Well positioned on the liabilities side of the

balance sheet Superior operating metrics –

cost/ income progressively trending down

Exemplar PPP – Strong Government ownership, ~50% overseas

shareholders, professionally managed d t b t B d i I di

Talent focused firm : has the largest pool of human talent focused on

infrastructure in India

29

and amongst best Boards in India

Thank you

30

idfc corporate presentation 9mfy13 _corporate presentation_9mfy13.pdf · omkar goswami independent...

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