Sterlite Technologies Limited

www.sterlitetechnologies.com

Disclaimer
Certain words and statements in this communication concerning Sterlite Technologies Limited (the Company) and its prospects, and other statements
relating to the Companys expected financial position, business strategy, the future development of the Companys operations and the general economy
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Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements of the
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Such forward-looking statements are based on numerous assumptions regarding the Companys present and future business strategies and the
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The important factors that could cause actual results, performance or achievements to differ materially from such forward-looking statements include,
among others, changes in government policies or regulations of India and, in particular, changes relating to the administration of the Companys
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The information contained in this presentation is only current as of its date and has not been independently verified. No express or implied
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Sterlite Technologies: One of the leading global providers

of solutions in telecom and power transmission
Overview

Shares the same lineage as the US$ 16 bn* Vedanta Group

Have three business segments Telecom, Power and Power Transmission
Manufacturing operations in India, China and Brazil

Operations on a global scale with presence in India and overseas markets

Net Revenue of Rs. 25,639 mn and EBITDA of Rs. 2,754 mn **

Key facts
6 of the global top 10 telecos
Utilise Sterlites innovative solutions

35% of Sterlites consolidated revenues

are from international markets

1300+ full time employees

led by an experienced management team

Center of Excellence
47 patents in USA, EU, India, China

*FY14 revenues
** in FY14 (consolidated)

Telecom & Power : Products + Engineering Solutions + Infrastructure Development

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Our business verticals

Telecom

Offering

Key Markets

Major
competitors
Key FY14
Financials
(Rs. mn)*

Optical fibers & preform

Fiber optic cables
Data Cables
System integration and
FTTH solutions

Power

Power conductors
HV/EHV cables
OPGW
Rods & accessories

Power Transmission

6 projects across 11 states

won through competitive
bidding on BOOM basis
5000 km circuit
transmission lines and 3
substations

India, China and Europe

India, Europe, Africa and

Middle East

India

Corning (US) and Prysmian

(Italy)

Apar Industries (India) and

Midal (Middle East)

Power Grid (India) and L&T

(India)

Revenue: 11,049
EBITDA: 1,812

Revenue: 15,869
EBITDA: 819

Revenue: 541
EBITDA: 363

* Consolidated financials before inter-segment eliminations

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Global presence ensures proximity to our clients

Manufacturing locations - Telecom

Optical Fiber (Capacity: 20 mn fkm)

Aurangabad and Haimen, Jiangsu Province
(China)
Optical Fiber Cable (Capacity: 8 mn fkm)
Silvassa and Curitiba (Brazil)
Structured data cables Silvassa

Manufacturing locations Power

Sales

Manufacturing

Market presence

Conductors (Capacity: 160,000 MT)

Silvassa, Haridwar and Jharsuguda
Power cables Haridwar

JV Details

China - 75%:25% with Tongguang for

drawing optic fiber
Brazil - 50:50 JV with Conduspar for fiber
cabling

Sales Offices

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China, India, Netherlands, Russia, South

Africa, Turkey, UAE, UK

Company structure and shareholding pattern

Volcan
Investments

SCPE

STL

Rs. 25,639 mn in FY14

(as on June 30, 2014)

45%

53.2%

STL Consolidated net revenues of

Shareholding Pattern

Public
shareholders

Minority Investment

Telecom
division

Power Products
division

Grid Projects
subsidiary

100%

Brazil JV

China JV

Others
35.7%
100%

SGL 1

SGL 2

ENICL

RAPP

BDTCL

PKTCL

JTCL

NRSS

Division
SCPE: Standard Chartered Private Equity
ENICL : East-North Interconnection company Limited
BDTCL: Bhopal-Dhule Transmission Company Limited
JTCL: Jabalpur Transmission Company Limited,
RAPP: Rajasthan Atomic Power Project "RAPP-Unit 7, 8"
PKTCL: Purulia & Kharagpur Transmission Company Limited (ERSS)
NRSS: Northern Region Strengthening Scheme project (NRSS 29)

Promoter
54.7%

DII
8.4%
FII
1.2%

Note:
1.There are other legal entities which are not shown here, do not contribute materially to the group
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STL offers a unique proposition

Strong Global Play

Attractive Industry
Dynamics

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One of the few global players with a 20m fkm fully integrated plant at a single location that
manufactures preform used for optic fibre cables, similarly global capacities of 160,000MT for
manufacturing power conductors
Global entrenchment with reputed clients
6 of the top 10 telcos of the world are clients for the telecom business
Significant contributor to Indias National Grid
Growth in exports reflective of global competitiveness
35% of the FY14 consolidated revenues were from international markets
Telecom
Global fiber market to continue to grow, driven by an exponential increase in data
consumption
India at inflection point and fiber market poised for significant growth led by mobile 4G
telco rollouts, increase in data consumption and govt. initiatives such as NOFN projects
and smart cities
Power
Transmission sector would require huge investments commensurate with spend in
generation sector creation of additional evacuation capacity, strengthening of existing
regional networks and development of a National Grid
Increased focus on export business to sustain growth received large order from Latin
American client in FY14
Shift towards higher voltage level and newer technologies for new transmission lines

STL offers a unique proposition

Power Transmission
Largest company in private transmission sector* with 6 transmission projects awarded on
BOOM basis
High Execution Visibility: Cash flows from business commenced in FY14; 2 projects to start
operations by end of FY15 while 3 more expected to be operational in FY16
GoI to continue focus on PPP for adding transmission capacity and around 10 future
projects coming up for bidding - STL is well positioned to leverage on its strengths for the
opportunity

Full control over the value chain allowing for cost advantage
Global scale of capacity with no significant capex requirement in the product business in the
near future
Strategic manufacturing presence in India, China and Brazil

Presence across three business verticals

Revenue diversified across customers and geographies
Mix of higher growth (telecom and power) and stable annuity (power transmission) businesses

Strategic JVs with established international players in various segments

Standard Chartered Private Equity is an investor in the transmission business
First foreign investment in Indias power transmission sector
Management team with strong business and domain knowledge from a global pool

Attractive Industry
Dynamics (Contd.)

Fully integrated
operation

Diversified Business
Model

Reputed Partners and

Strong Management

* In terms of number of projects

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Telecom business
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Our telecom business

Products

Solutions

Optical fibers & preform

System and network

Fiber optic cables

integration

Structured data cables

FTTH solutions

Key metrics (FY 14)

Fiber capacity : 20m fKm

Key Customers
Leading Telecom Service

Cabling capacity : 8m fkm

Providers globally in India,

Volume of fiber sold : 13.8m fKm

China and Europe

Volume of fiber cable sold : 5.2m fKm

Internet Service Providers

Consolidated revenue of Rs. 11,049 mn and

MSO/CATV Operators

EBITDA of Rs. 1,812 mn

Govt. of India agencies

Full control over the entire value chain

Raw materials

Preform

Silica
Power
Certain natural gases

Core rod + cladding

India facility exports 4m
fkm equivalent preform
to Chinese JV

Optic fiber

Optic fiber cable

16m fkm drawing out of

India
4m fkm drawing in China

Nearly 8m of fkm in India

being increased to 10m fkm
Initial 0.5m fkm capacity in
Brazil

Increasing margins as vertical integration and technology becomes the differentiator

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Data consumption continues to grow fiber demand

Various economies at
different stages of fiber
deployment should help
sustain global growth

India at the
inflection point
where China was
in 2005

Mobile data to
grow 44% CAGR
vs 15% for fixed
internet

Source : Industry Estimates

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Leveraging the growth in India

STL Project highlights
National Optic Fibre Netwrok (NOFN)

NOFN and
NFS

Fiberisation
of towers

Secured largest share within the

country for cable supply

Network for Spectrum (NFS)

Broadband
Highways
and Smart
Cities

Universal
mobile
connectivity

Digital
India

Turnkey deployment of network in

J&K worth Rs. 16,500 mn and supply
of cable worth Rs. 3,000 mn to other
participants

Private Telco rollout

3G/4G telco
rollout

Digitisation
of cable tv
services

Ongoing supply of OFC to RelianceJio,

Bharti Airtel and other Indian
operators

Long term sustainable demand going forward

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Product mix and order book

Volumes

Order Book
25,000
21,876

Rs Mn

20,000

15,000

10,000

5,000

3,300

3,200

Q1 FY14

Q2 FY14

3,450
2,000

Q3 FY14

Q4 FY14

Q1 FY15

Telecom order book

Source : Company
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Power business
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14

Our offerings
Products
Conductors
Full range conductors from ACSR to high performance conductors
Amongst the largest, fully integrated facilities globally
HV/EHV Cables

Voltage grade from 6.6 kV to 220 kV

Conductors: Aluminum and Copper; Sizes - Single Core (up to 2000

sq-mm) Multi Core (up to 630 sq-mm).

OPGW (Optical Ground Wire)

Leveraging core expertise in power conductors & fiber optic
cables

Key Metrics (2014)

Capacity : 160,000 MT
Volume of conductor sold : 94,587MT
Order book of Rs. 22,160 mn as at June 30, 2014 of which
exports constitute 55%

Solutions
Engineering T&D networks & re-conductoring
solutions
Tower designing, route optimization
Manufacture, inventory management
Installation & service

Helped clients to increase the efficiency of their existing

infrastructure

Key Customers
Supplier to PGCIL and major power companies across
the globe
Select state electricity boards and discoms

Consolidated revenue of Rs. 15,869 mn and EBITDA of

Rs. 819 mn
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India demand dominated by PGCIL

PGCIL Approvals and Ordering trend

Total investments approved: Rs. 1,016 bn

Q1FY15 had highest investment approval in the last two years

PGCIL- CWIP

Conductor Volume in KMT

(Rs. bn)

PGCIL Capex

80

70.4

PGCIL
150

40.6
40

40.5

(KMT)

(Rs. bn)

60

28.0

20

100

Exports & Non PGCIL

124
70
54

FY11
Source : PGCIL filings, Company

FY12Conductor

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FY13

FY14

135

137

62

63

94
58

50

STLTotal Conductor Volume

73

74

FY12

FY13

36

FY11

FY14
16

A strong and diversified order book

24.0

Order book for power segment (in Rs. Bn)

25.0
21.8

Recent initiatives
21.8

22.2

12.4

12.5

20.0

15.0

15.0

11.1

13.1

4.4

10.0
4.9

6.8

7.5

3.8
Q2 FY14

6.5

7.0

3.4

2.9

2.6

Q3 FY14

Q4 FY14

Q1 FY15

5.0
5.6
Q1 FY14

PGCIL

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Others

Focus on export markets: Received

large order from Latin American
client in FY14
Focused on orders from Indian
clients over the past few years
Develop
high
specification
products for EHV and HV
transmission projects

Exports

17

Power transmission infrastructure

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18

New business vertical entered in 2010

Overview
Policy changes transforming the Indian power sector
Transmission sector opened up for private participation
Fixed annuity driven model for a period of ~35 years with relatively high quality of receivables

Value proposition for Sterlite

New growth opportunity in the transmission sector
Leverage capabilities in engineering transmission networks and Project Management Skills
Asset Monetization after COD and equity rotation to generate returns for shareholders
Opportunity for additional revenue generation in future from alternate sources
Lower risk profile as compared to other segments within the power sector
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Connecting key generating centers with load centers

Build-Own-Operate-Maintain (BOOM) Model with

6 Projects in Portfolio

Revenue expected from 3 projects by FY16

and all 6 projects by FY20

5000 Km circuit transmission lines & 3 substations

across 11 states

Estimated capital expenditure of Rs 80,000 mn

SCPE has entered into agreements for a Rs. 5 bn

equity investment (of which Rs. 4.5 bn already
invested) - the first foreign investment into Indias
power transmission sector

Indias first 765 kv D/C transmission line

Indias first Ultra Mega Transmission Project,

Purnea-Bihar Sharif line commissioned in Sep 13

Recently commissioned 765KV sub-station for

BDTCL

Amargarh

Jalandhar

4
Kota

Shujalpur

Siliguri
Bihar
Sharif

Bongaigaon

Purnia

Bina
Jabalpur
Dharamjaygarh

Indore
Vadodara

Bhopal

Dhule

Chaibasa

Ranchi
Purlia
Kharagpur

Aurangabad

3
765 KV D/C
765 KV S/C
400 KV D/C
2x1500 mVA,
765/400 kV Substation
400/220 kV Substation
Note: Map is representative of project locations and transmission lines not to scale

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20

Infrastructure project details

Pre-bid steps
Business Model

Execution

Post COD

Detailed route planning

Strong project management

Monetization and asset rotation

leverage in house engineering

capabilities

Use global vendors and

international best practices

Financial engineering

Network planning and detailed

cost estimates

Project name

1
2
3
4

5
6

East North
Interconnect
Jabalpur
transmission
Bhopal Dhule

States covered

Expected
operation by

Approx. Level
Tariff (Rs Mn)^

450

Dec-14#

1,180

610

Jun-15

1,400

990

Mar-15

2,000

1 * 400 kV double circuit

200

Mar-16

400

2 * 400 kV double circuit

270

Mar-16

600

3 * 400 kV double circuit

1 substation

440

Jul-18

4,400

Assam, Bihar & West Bengal

2 * 400 kV double circuit

Chhattisgarh, Madhya
Pradesh

1 * 765 kV single circuit

1 * 765 kV double circuit
4 * 765 kV single circuit
2 * 400 kV double circuit
2 sub stations

Madhya Pradesh,
Maharashtra & Gujarat

Rajasthan Atomic
Rajasthan & Madhya Pradesh
Power
Purulia &
West Bengal &Jharkhand
Kharagpur
NRSS 29

Line length
(kms)

Other details

Punjab & Jammu & Kashmir

# One line operational in FY14 and generating revenues

^ Levelised tariff for 25 years for East North Interconnect project; 35 years for all other projects
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Financials
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22

Our consolidated financials

Net Revenue

EBITDA & EBITDA Margin

Decline in FY14 due to sluggish ordering in power segment

Net Debt*

Cumulative contribution by STL in Transmission Projects

Increase in Net Debt due to funding of transmission projects

* Gross Debt - Cash

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The Way Forward

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Business Strategy

Continue to focus and leverage our preform manufacturing capabilities

Continue to increase share of cabling in overall telecom product mix (37% in FY14 and

Telecom Business

Power Business

46% in Q1FY15)

Increase penetration in global accounts

Leverage the business opportunities in India

Maintain strong presence in the Indian market and across customer segments

Deeper penetration in export markets

Focus on increasing sales of high performance conductors and taking up selective

turnkey solutions

Power Transmission

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Focus on execution of existing projects

Selectively monetize assets post CoD

Strategically continue to bid for transmission projects in India

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Appendix
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Evolution from products to an engineering company

Optical fiber facility
set-up at Aurangabad

Acquisition of power
conductors business

Incorporated
Copper telecom
cables Facility

1995

1988

2006

1993
Fiber
optic
cables
facility
setup

JV with TG for fiber facility in

China
Set-up of EHV power cables
facility at Haridwar

2000
Demerger from
Sterlite Industries

Erstwhile Sterlite Industries

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2012

2010
Commencement of
Grid business

Secured prestigious NFS

project to implement end
to end OF Network for
Defense services
Added sixth UMTP project
JVA with Viscas Japan for
extra-high voltage cables

2014

2013
JV with Conduspar in
Brazil for fiber cable
Commissioned Indias
first UMTP (in record
26 months)

Sterlite Optical Technologies renamed to Sterlite Technologies

27

Professional Management Team

Pravin Agarwal, Whole time Director
(30+ years experience)

Closely involved with the Sterlite

Groups operations in India since its
inception

Has rich experience in general

management and commercial matters

Dr. Anand Agarwal, CEO

(19 years experience)

Joined Sterlite in 1995 and B. Tech. in

Metallurgical Engineering from IITKanpur, Masters and Ph.D. from the
Rensselaer Polytechnic Institute, USA

Anupam Jindal, CFO

(18 years experience)

Joined the Sterlite Group in 1998 and is

Chartered Accountant from the ICAI

His key focus areas have been Finance,

Treasury, Accounts and MIS.

K. S. Rao, COO Telecom & Power

Conductors (21 years exp)

Joined Sterlite in 1993 and holds a

Bachelors degree in Mechanical
Engineering

His key focus areas have been

engineering, mfgr, product and
business development

Pratik Agarwal Head-Infrastructure

Business (10+ years experience)

He leads strategic business initiatives in

the infrastructure ownership space

Completed his B.Eco from Wharton,

Pennsylvania and MBA from London
Business School

Ajay Bhardwaj, COO Grid Business

(30 years experience)

Joined Sterlite in 2011

Worked in senior capacities in various

organisations ion projects in T&D,
Energy Management Systems.

An electrical Engineer from IIT-Roorkee

Ankit Agarwal Global Head - Telecom

Products (7+ years experience)

Also responsible for identifying and

executing strategic opportunities
globally for Sterlite

Holds a Bachelors degree from Univ. of

Southern California and MBA from
London Business School.

Vijay Jain, COO Networks Business

(20 years experience)

Joined Sterlite in 2011 and has 8

patents to his credit.

M. Tech. degree from IIT-Kharagpur & a

Montreal PG

Rajendra Mishra, COO - Power Cables

(24 years experience)

Joined Sterlite in 2008 and holds a

Bachelors degree in Electrical and
Electronics Engineering from REC,
Suratkal

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Our recent financial performance (Q1 2014/15)

Standalone

Consolidated

Standalone

June 14

June 14

Mar 14

Mar 14

(Unaudited)

(Unaudited / Unreview ed)

(Audited)

(Audited)

Quarter ended

Consolidated
Year ended

Segm ent Revenue

Telecom Product and Solutions

32,160

33,232

107,671

110,486

Pow er Product and Solutions

22,908

22,908

158,687

158,687

Pow er Transmission Grid

1,611

Inter-segment elimination
Total

5,413

(1,207)

(24,488)

55,068

56,544

266,358

250,098

6,954

6,998

18,668

18,123

174

44

8,456

8,193

Profit before interest,depreciation and tax

Telecom Product and Solutions
Pow er Product and Solutions
Pow er Transmission Grid

1,635

Unallocable
Total

3,633

(161)

7,128

8,678

27,124

29,788

5,034

4,641

11,320

9,374

5,516

5,253

Profit before Interest and Tax

Telecom Product and Solutions
Pow er Product and Solutions

(573)

Pow er Transmission Grid

(703)
1,055

Unallocable

2,014

(5)

(184)

Total

4,461

4,988

16,836

16,457

Net Interest Cost

2,966

5,630

9,528

17,978

Profit / (loss) before tax

1,495

7,308

(1,521)

(642)

Capital Em ployed
Telecom Product and Solutions
Pow er Product and Solutions

109,712

122,554

108,790

43,536

41,789

37,546

Pow er Transmission Grid

395,605

121,714
33,140
373,190

Unallocable

119,527

10,813

108,190

20,250

Total

272,775

570,761

254,526

548,294

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