For Official Use
Investor PresentationJune 2018
Exchange: A Competitive ‘Market’
Exchanges provide a transparent, competitive and efficient platform fortransactions in any market – Stock or commodity. Same is true for powersector.
The concept of Exchanges in Power Sector was initially introduced in 1990-91in Europe.
Now, worldwide Power Exchanges are operating in almost 40 countries.
Power Exchanges are most preferred option for sale and purchase of Power.
In India, after Electricity Act, 2003 market framework for Exchangeoperations was put in place.
Exchanges in India started operations from 2008.
IEX, India’s leading Power Exchange
Inception in June 2008
Operating under the Regulatory oversight of Central ElectricityRegulatory Commission (CERC)
Transparent online market platform for delivery based trading
Flexible trading with separate price discovery for 96 time-blocks of15 min each for Day-Ahead Market
Technology buy out: On May 16, 2017, IEX acquired tradingsoftware along with the team
IEX became publically listed on 23rd October 2017
3
Company Snapshot
Market Share: 97%
Average daily trade: 5000+ MW
High Participation: 6200+
3900+ Industries I 50 Discoms (all) I 100+ ESCert Entities
400+ Generators I 1500+ RE Generators & Obligated entities
Competition
LiquidityTransparency
Market Share-FY 18 (DAM & TAM)Average Daily Trade- FY18
4
IEX Market Segments
Day-Ahead Marketsince June,08
• Delivery for next day• Price discovery: Closed , Double-sided Auction
Term-Ahead Contracts since Sep’09
• For delivery up to 11 days• Daily Contracts, Weekly Contracts
Renewable Energy Certificatessince Feb’11
Energy Saving Certificatessince 27th Sept’17
Intraday Market & Day-Ahead ContingencyRound the clock since Jul’15
• Intraday: For Delivery within the same day• Day Ahead Contingency: Another window for next day• Gate closure : 3 hours
• Green Attributes as Certificates• Sellers : RE generators not under feed in tariffs• Buyers: Obligated entities; 1MWh equivalent to 1 REC
• 1 ESCert = 1 mtoe (metric Tonne of Oil Equivalent)• Trading Session on every Tuesday of the Week• Trading time 1300 hrs to 1500 hrs
5
Auction Continuous
IEX Volume Growth : Strong trend line
6,214
12,71214,415
22,811
29,270 28,363
34,397
40,528
46,214
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
Cle
are
d V
olu
me
(M
U)
Electricity Volume
6
Source: IEX Data (DAM+TAM)
SECTOR OVERVIEW &
IMPACT ON POWER EXCHANGE
Generation Transmission Distribution
7
Installed Generation Capacity of India
71112
130 145165
185 192 19715
2021
2324
26 26 26
4
55
5
6
6 7 7
35
3939
41
41
4344 45
8
2428
29
32
3957
69
132
200223
243268
298
327344
0
50
100
150
200
250
300
350
400
End of 10thPlan
End of 11thPlan
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
Cap
acit
y (G
W)
Coal Gas & Diesel Nuclear Hydro RES
Generation
8
Category Installed
Capacity (MW)PLF
Generation (BUs) FY-18
Feasible PLF
Possible Generation (BUs)
Coal 197172 60% 986 80% 1382Gas 24897 23% 50 20% 44
Diesel 838 3% 0.24 0% 0
Hydro 45293 32% 126 33% 131Nuclear 6,780 64.5% 38 80% 48
RE 69022 17% 102 18% 109
Total 344,002 1302 1713
Installed Capacity (March 2018) & Generation (FY 2017-18)
Installed capacity has increased at a CAGR of 9.5 % i.e. from 199 GW in FY 12 to 344 GW inFY 18.; enough to meet the demand of next 5 years at a growth rate of 6%
In last 6 years, Peak demand met increased at a CAGR of 5.6 % and energy supply hasgrown at 5.8% CAGR which is much below growth of capacity addition.
Above has resulted into surplus capacity, PLF for thermal power plants for FY 18 is 61% only. Further capacity addition of 50,000 MW of conventional power and more than 1,00,000
MW of Renewable power expected during 13th Plan
Source: CEA
9
Generation
Installed capacity has grown at a faster pace compared to demand
Highgeneration, increased competition : Pushed prices down at Exchange
10
1,3
34
1,9
19
2,8
42
4,4
56
4,7
37
4,9
42
4,9
07
5,4
45
6,5
22
1,3
02
2,3
71
2,5
39
3,9
56
5,7
41
4,6
89
6,4
34
8,8
06
8,3
28
70
4
1,3
47
1,5
71
2,5
54
3,3
02
3,2
12
3,8
78
4,5
47
5,1
28
5.19
3.56 3.54 3.49
2.80
3.51
2.732.41
3.26
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
Purchase Bid (MW) Sell Bid (MW) Cleared Volume (MW) MCP (Rs/kWh)
Increase in generation capacity pushed the prices down except FY 18 when prices increased primarily due to coal shortage
Volume Lost due to Congestion lowered and price convergence in regions
Market Clearing Volume (MU)
Cleared volume (MU)
Curtailed Volume(MU)
Curtailment (%)
FY13-14 34,230 28,925 5,306 15%
FY14-15 31,227 28,131 3,096 10%
FY15-16 36,210 34,067 2,144 6%
FY 16-17 41,310 39,784 1,526 3.7%
FY 17-18 45121 44925 83 0.4%
With transmission augmentation, congestion has reduced and ONE NATION ONE GRID ONE PRICE achieved on 90% days in the FY 18.
Reduced congestion has increased reliability in sourcing power from exchanges
11
4.375.13
6.86
4.73 5.113.79
2.79 3.313.49 3.27 3.132.55
3.23 2.77 2.58 3.253.48 3.27 3.07 2.52 3.07
2.46 2.293.23
0.00
2.00
4.00
6.00
8.00
FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18Avg
MC
P (
Rs/
kWh
)
South (S1) North (N2) RoI (W2)
New Schemes by the GoI
• Government of India initiatives like ‘Saubhagya’, ‘24*7 Power
Supply’ and ‘Rural Electrification’ has boosted power demand in
the Country
• Another major initiative UDAY is helping DISCOMs to achieve
financial stability and increase power purchase capability
• These initiatives have resulted in increase in overall electricity
demand by 6.1% in last fiscal
• In last fiscal some states witnessed very high growth in demand
like Telangana – 14%, DVC – 14%, UP – 12%, Chhattisgarh – 9%,
Maharashtra, AP, Odisha, J&K – 8%.
Distribution
12
Increase in demand is helping short term market grow
Source: CEA, World Bank
To bring per capita close to global average, 3X power generation will be required : POTENTIAL FOR GROWTH
13,246
7,289 7,081 6,486
3,044 3,298 2,438 1075
US France Germany Russia Global Average
China Brazil India
kWh
Per Capita consumption
• With expected thrust on economic and industrial development and 24/7 power supply, Per Capita consumption bound to increase
DistributionPer capita consumption very low compared to world average
13
Power Exchange across Globe:Enormous potential to grow for India compared to international benchmarks
INDIA TRADES ~3% OF ITS OVERALL CONSUMPTION ON EXCHANGE MARKETS COMPARED TO 15-91% GLOBALLY GLOBAL BENCHMARKS ON PENETRATION OF ST MARKETS
Indian markets still at a nascent stage and high potential for growth for the Indian Power Exchanges
14
VOLUME IN BU (Billion Units)
MARKET SNAPSHOT
15
India Power Sector I Key Market Segments
Source: CERC MMC Report
Long Term Short Term
Long-term Power Purchase Agreements
(PPA)
Bilateral & Banking Transactions
Deviation settlement/Unscheduled Interchange
89.4% 4.8% 3.8% 2.0%
Exchanges (Only up to 11 days) Day Ahead Contingency DailyWeekly Day Ahead Market
Short Term Power market is at 10.6 %, Power Exchange volume in the segment have been growing significantly
Up to 25 yearsOTC:
Intraday to 1 yearExchanges:
Intraday – 11 daysReal Time
1,202,971 MU
1,075,354 MU 57,835 MU 45,572 MU 24,209 MU
All values for FY18
16
Short term market snapshot (Billion Units)
17
Source: CERC MMC Report
56.0
40.0
23.2
57.8
45.6
24.2
Direct/Banking &Trader
Power Exchanges DSM
FY 17 FY 18
119.2
1157.9
127.6
1203.0
Short Term Total Generation
4%
7%
4%
14%
Overall generation in the country, increased by 5.32% in FY 18
3%
FY18_Product Wise IEX’s Volume Growth (Billion Units)
18
0.0
4.6
40.5
45.1
1.3
9.3
46.2
56.8
ESCert* REC Electricity Trade (DAM &TAM)
Total
FY 2017 FY 201814%
26%
102%
*Note – Energy Saving Certificates (Escerts) trading started from September 2017 on IEX
Monthly Price Trend (Avg. MCP) (Rs./unit)
2.52.3
3.2 3.2
2.6
3.4
2.9
2.6 2.5
2.92.6
2.6
2.9
2.72.6
2.1 2.1
2.72.5
2.32.6
2.8 3.0
2.7
2.82.9
2.6 2.5
3.1
4.1 4.1
3.5
3.03.2 3.2
4.0
0.0
1.0
2.0
3.0
4.0
5.0
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY2015-16 FY2016-17 FY2017-18
19
Source: IEX data
FY 16 : 2.73FY 17 : 2.42FY 18 : 3.26
Strong and Growing Base of Participants
Participation has shown significant growth over the years
20
Average registered participants has been growing
0500
100015002000250030003500400045005000
Jun
-08
Sep
-08
Dec
-08
Mar
-09
Jun
-09
Sep
-09
Dec
-09
Mar
-10
Jun
-10
Sep
-10
Jan
-11
May
-11
Au
g-1
1Ja
n-1
2A
pr-
12
Sep
-12
Feb
-13
May
-13
Oct
-13
Mar
-14
Oct
-14
Jan
-15
Jul-
15
Jan
-16
Sep
-16
Sep
-17
Dec
-17
Open Access Volumes have shown rapid growth
Open Access Consumers Present Across States And Spread Across Industries
Haryana, 476
Gujarat, 533
Rajasthan, 328
Punjab, 428
Karnataka, 247Telangana, 224
Tamil Nadu, 820
Andhra Pradesh, 487
Uttarakhand, 125 Others, 300
As on Mar'18
-
500
1,000
1,500
2,000
2,500
3,000
De
c'1
4
Feb
'15
Ap
r'1
5
Jun
'15
Au
g'1
5
Oct
'15
De
c'1
5
Feb
'16
Ap
r'1
6
Jun
'16
Au
g'1
6
Oct
'16
De
c'1
6
Feb
'17
Ap
r'1
7
Jun
'17
Au
g'1
7
Oct
'17
De
c'1
7
Feb
'18
Drawal (MUs)
0
100
200
300
400
500
600
Paper Textile Chemical Metal AutoComp
Cement Other
FY 14-15 FY 15-16 FY16-17 FY 17-18
OPPORTUNITIES & CHALLENGES FOR EXCHANGE OPERATIONS
21
IEX | Key Growth Drivers for the Power Exchange Market Efficient price discovery has been the biggest growth driver for exchanges in the past
♦ Discoms can source cheaper power through Exchange to meet shortages
♦ Industries can source competitive power to reduce their input costs
♦ Prices at Exchange always lower than Bilateral contracts
Efficient Price
discovery
22
1214
22
29 28
34
40
45
28
36 36 35 35 3534
41
3.58 3.47 3.73
2.89 3.46
2.71 2.49 3.26
4.744.23 4.34 4.27 4.30 4.13
3.54 3.61
-1
1
2
3
4
5
6
7
8
-
5
10
15
20
25
30
35
40
45
FY 11 FY12 FY13 FY14 FY15 FY16 FY 17 FY 18
IEX Volume Trader Volume IEX Wt. Avg Price Bilateral Price
Source: CERC MMC Reports
IEX | Key Growth Drivers for the Power Exchange Market Exchange provides flexibility to purchase power as per requirement throughout theyear
Option available to Buy/Sell different quantum for each 15 mins time block. Minimumbid quantum can be as low as 0.1 MW
Flexibility
23
-
10
20
30
40
50
60
Mill
ion
Un
its
Gujarat Buy Volume for April-18
IEX | Key Growth Drivers for the Power Exchange Market 24
0
400
800
1200
1600
2000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
MW
Gujarat Buy Volume on 1st May, 2018
IEX | Key Growth Drivers for the Power Exchange Market 25
0
200
400
600
800
1000
1200
1400
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94
Bid
Qu
anti
ty (
MW
)
Time Block
Bihar Buy Volume on 3rd June,2018
IEX | Key Growth Drivers for the Power Exchange Market 26
0
100
200
300
400
500
600
700
800
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94
Bid
Qu
anti
ty (
MW
)
Time Block
Uttar Pradesh Buy Volume 3rd June,2018
IEX | Key Growth Drivers for the Power Exchange Market 27
0
5000
10000
15000
20000
25000
30000
35000
1-M
ay-18
3-M
ay-18
5-M
ay-18
7-M
ay-18
9-M
ay-18
11
-May-1
8
13
-May-1
8
15
-May-1
8
17
-May-1
8
19
-May-1
8
21
-May-1
8
23
-May-1
8
25
-May-1
8
27
-May-1
8
29
-May-1
8
31
-May-1
8B
id Q
uan
tity
(M
wh
)
Telangana Sell Volume for May-18
IEX | Key Growth Drivers for the Power Exchange Market 28
Telangana Sell Volume on 5th May,18
0
500
1000
1500
2000
2500
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94
Bid
Qu
anti
ty (
MW
)
Time Block
IEX | Key Growth Drivers for the Power Exchange Market 29
580
600
620
640
660
680
700
720
740
760
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94
Bid
Qu
anti
ty (
MW
)
Time Block
Sembcorp IPP Sell Volume on 9th Oct,17
IEX | Key Growth Drivers for the Power Exchange Market
Improvement in
transmission
infrastructure
♦ With more transmission capacity augmentation, the loss in volume due tocongestion is expected to be further reduced
♦ Congested volume reduced from 11% in FY 12 to 0.4% in FY 18
♦ This gives comfort that power can be purchased when required and will result inless dependence on bilateral agreement. Bilateral volumes can shift to IEX
♦ Guidelines of Ministry of Power and CERC draft regulations allow for grid connectedneighboring countries like Bhutan, Nepal and Bangladesh to trade power throughthe Term Ahead Market of the Exchanges
Cross Border
Trade
♦ Exchange also gives an option to replace costly PPAs (Portfolio Optimization) and
flexibility in procurement of power
♦ Discoms can replace high variable cost power under PPA with Exchange power and
achieve savings
Phasing out of
Old plants
Portfolio Optimization by
Discoms
30
♦ Phasing out of all vintage and inefficient plants’ will shift demand to the short term
market
Increased demand will push Discoms to harness short term and exchange markets
• MoPNG Minister Mr Dharmendra Pradhan announcedintent of the govt. to have a gas trading platform this year.
• OIDB (Oil India Development Board) awarded KPMG theconsultancy assignment to develop a framework for gastrading hub.
• On the direction of the Ministry, PNGRB (Petroleum andNatural Gas Board) has appointed CRISIL to assist indeveloping market rules and regulation for a gas tradinghub/exchange in India.
31
• Considering the similaritybetween Electricity andNatural Gas as commodity,IEX is best placed to offer thisplatform for the Gas Sector.
• IEX will be working with thetop consulting firms to ensurewe are launch ready onceconducive framework is inplace.
GAS Exchange
IEX | Other Growth Drivers for the Power Exchange Market
IEX | Other Growth Drivers for the Power Exchange Market
New products and market segments
Forward and Future Contracts
Participants on Power Exchanges in India currently lack hedgingoptions in the form of futures & forwards which are common inglobal markets.
With increased liquidity in the spot market, GoI & regulatorshave started discussing introduction of forward & future marketin electricity. This will be a business opportunity for IEX in thefuture.
Introduction of better intraday regulations & ancillary servicemarket, for balancing closer to real time, will also help PowerExchanges gain share of the UI electricity volumes
Intraday & Ancillary Market
32
States blocking Open Access
Increasing CSS by some States
Additional surcharge introduced in few states such as Rajasthan, HP, Punjab and DNH reducing viability for OA consumers, Non-issuance of NoC (UP, WB)
DEEP Platform offering competitive pricesE-bidding portal (DEEP) launched by GoI to facilitate short term procurement of power by
DISCOMS
Low liquidity in Term Ahead Products at IEX.
Volumes traded in Intra Day, DAC and other TAM products is low. In last fiscal year, the growth in TAM was 85% Y-o-Y
Coal Price and Availability
High international coal prices and low domestic coal availability has resulted reduced sell bids
Challenges to growth of Exchanges 33
With separation of content and carriage as expected in EA Amendment, tariff and non tariff barriers on Open Access are expected to reduce
IEX prices still more competitive, there is more flexibility on Exchange for power purchase
At present gate closure is 3 hours. Internationally, gate closure is half hour. We are working with CERC to reduce gate closure time. Liquidity will increase with reduced gate closure
Buy bid increased by 20% and sell bid decreased by 5%
Short Term Market Volumes on a rise
34
Source: CRISIL
CRISIL Short-term power market forecast (in billion units / percentage)
119.2142.6
163.4
194.3
237.5
300
40.5 48.960.9
76.297.7
126.4
10.3%
11.8%13.1%
15.0%
17.5%
21.1%
FY17 FY18E FY19E FY20E FY21E FY22E
Short term Volume Potential (BU) IEX Volume (BU) Short term volume/ Total generation
IEX Volume update for all current product segments vis-à-vis last year
Product CategoryApr-Mar – Million Units
FY 16-17 FY 17-18 % change
Day Ahead Market 39783 44,842 13%
Term Ahead Market 744 1,372 85%
Total Electricity 40527 46214 14%
REC 4619 9328 102%
ESCert Nil 1299
Total 45146 56841 26%
35
Stellar Financial Performance: IEX
Value in INR Crores
36
Particular FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
Revenue 71 138 174 177 200 233 256
Operating Expenditure
19 33 38.5 41 50 55 46
Operating Profit (EBITDA)
52 105 135.5 136 150 178 210
EBITDA % 73% 76% 78% 77% 75% 76% 82%
PBT 48 93 133 133 147 174 200
PAT 34 66 92 90 100 114 132
• Financials results up to FY 2015-16 are audited as per I-GAAP and FY 2016-17 & FY 2017-18 are audited as per Ind AS.
• Dividend of RS 22/ share declared for the FY 18 ; Cash outflow is 61% (incl. DDT) of total profit
Top 10 shareholders of IEX (As on 31st March,2018)
SL No. Name of Shareholder% of Total Equity
Share Capital
1 TVS SHRIRAM GROWTH FUND 15.00%
2 DCB POWER VENTURES LIMITED 10.00%
3AGRI POWER AND ENGINEERING SOLUTIONS PRIVATE LIMITED 4.99%
4 WESTBRIDGE CROSSOVER FUND, LLC 4.75%
5 RIMCO (MAURITIUS) LIMITED 4.50%
6 RURAL ELECTRIFICATION CORPORATION LTD 4.12%
7 ADANI TRADEX LLP 4.12%
8 SIGULER GUFF NJDM INVESTMENT HOLDINGS LTD 3.02%
9 LIGHTSPEED VENTURE PARTNERS VIII MAURITIUS 3.00%
10 INDIA BUSINESS EXCELLENCE FUND - IIA 2.68%
Others 43.82%
TOTAL 100.0%
37
Awards & Accolades “Investor Relations Award 2018 - Best IPO in Mid Cap Segment”
IR Society of India
“Best CFO Award in 100-500 turnover category”- 2018The Financial Express
“Leaders in Power Market Development”- 2014 I 2015Council of Power Utilities
“Exchange of the Year”- 2014Power Business View, a First View Group Venture
“Best Performing Power Exchange - 2014India Power Award
“Best Power Exchange in India” – 2012 I 2013 I 2014 I 2015Enertia Foundation –
“Best Performing Power Trading Company/Exchange” – 2012 I 2013 I 2014Power line
“Innovators in Product and Technology”- 2013 I 2014Inc. India
“Best E- Enabled Consumer Platform” - 2009Inc. India
38
39
THANK YOU