CS House of Debt 13 Aug 2013 PDF

Equity Research / Asia Pacific / India Financials 13 August 2013
India Financial Sector

SECTOR REVIEW IDEAS ENGINE SERIES
House of debtrevisited
Debt levels up 15% over FY12: We revisit the ten corporate groups featured in our 2012 House of Debt report (link), and find their debt levels are up another 15% even as profitability continues to be under pressure. For most of them the debt increase has outpaced capex and asset sales are yet to take off. The rising stress is visible with some loans of Lanco, JPA, and Reliance ADA already being restructured. Debt servicing ratios under pressure: Debt coverage ratios have further deteriorated with P&L interest cover at groups such as Essar, GMR, GVK and Lanco already under 1. Interest cover at Adani and Jaypee have also fallen to <1.5. Debt servicing strain is likely to intensify further as: (1) capitalised interest is a further 30-250% higher and (2) 40-70% of loans are forex. Increase in liabilities on account of the currency was larger than the FY13 PAT and with the currency down another 12% YTD, stress will now be even higher. FY14: The year of reckoning? With over 13,000 MW of power capacity from these groups scheduled to be commissioned, the current year will be critical. Companies such as Reliance Power, GVK Power, Adani Power and GMR Infra would see their operating capacities almost double if the projects were to come on stream as expected. However, project delays could result in more debt being restructured. The cash flow strain is also likely to intensify as debt repayments are 30-150% higher YoY in FY14 and repayments due are 2-18x their FY13 profits. Therefore, we continue to remain UNDERWEIGHT on Indian banks despite their recent stock price fall and cautious on corporate lenders such as SBI, ICICI, Yes Bank, Union Bank, PNB and Bank of India.
Kush Shah 91 22 6777 3862 kush.shah@credit-suisse.com
Debt up 15% YoY even as profitability pressures continue in FY13

7,000 Rs bn Borrowings of 10 corporate groups 6,310
6,000 5,000
4,000 3,000 2,000 1,000 0 993 1,437 2,775 2,174 3,650
5,474
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FY07
FY08
FY09
FY10
FY11
FY12
FY13
Source: Company data, Credit Suisse research
P&L interest cover has dropped YoY
2.5
2 1.5 1 0.5
FY12
FY13
0
Adani Ent Jaypee Associates Lanco Infra GVK Infra
RESEARCH ANALYSTS Ashish Gupta 91 22 6777 3895 ashish.gupta@credit-suisse.com
Prashant Kumar 91 22 6607 3942 prashant.kumar.3@credit-suisse.com
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Leverage continues to rise

Figure 1: Debt at following ten groups up 15% YoY, interest cover drops further
Rs mn, unless stated otherwise Adani Group Essar Group GMR Group GVK Group Jaypee Group JSW Group* Lanco Group Reliance ADA Group Vedanta Group Videocon Group# Gross debt FY12 FY13 692,011 811,220 852,244 984,128 360,289 408,249 209,574 252,640 535,878 636,541 374,636 415,750 313,934 390,340 914,967 1,135,439 947,244 996,108 272,834 272,834 5,473,611 6,310,247 EBITDA FY13 60,085 117,523 24,772 6,451 69,222 26,958 25,820 138,495 421,116 890,440 EBIT FY13 37,106 79,129 14,374 2,939 54,862 18,511 14,562 91,123 262,592 575,198 PAT 16,130 (34,676) 881 (3,360) 4,618 (1,676) (10,733) 47,423 220,512 239,119 Interest coverage (x) FY12 FY13 2.1 1.1 0.6 0.9 0.4 0.7 1.0 0.4 1.5 1.2 1.7 2.0 1.2 0.6 1.3 1.3 4.0 3.6 0.2 N/A 1.6 1.4 Debt/EBITDA (x) FY12 FY13 12.5 10.3 11.7 7.3 18.8 14.3 18.0 25.1 8.8 8.7 3.9 14.7 16.3 13.4 6.3 6.9 1.8 0.8 20.0 N/A 6.3 5.6 Debt/equity (x) FY12 FY13 3.2 2.9 2.0 2.4 4.1 4.9 3.5 5.1 4.4 4.8 1.4 1.5 6.4 9.4 0.8 1.1 0.7 0.5 3.6 N/A 1.6 1.8
* Data for Jun-13 # Data not available for FY13, debt levels assumed to be constant. Source: Company data, Credit Suisse research,
Figure 2: Debt increase in FY13 has outpaced capex

180% Net debt increase as a % of Capex
Figure 3: P&L interest cover (x) has dropped YoY

2.5 2.0 1.5 FY12 FY13
Figure 4: Capitalised interest is another 30-250% of P&L int.

300% 250% 200% 150%
Capitalised int as a % of PnL interest
150%
120% 90%
60%
30% 0% Reliance Comm Reliance Power Reliance GVK Power JP JP Power Infra Associates Venture
1.0
100% 50% 0%
Adani Ent Jaypee Associates Lanco Infra GVK Infra
0.5
-
Reliance Power GVK Power & Infra
JP Power Venture
JP Associates
Adani Power

80% Foreign currency loans as a % of total loans 60%

140% Capacity coming up in FY14 as a % of FY13 capacity 120%
Figure 5: High %of forex loans in FY13 adding to debt burden Figure 6: Large share of capacity adds in FY14
Figure 7: Significant debt repayments coming up in FY14

300% 250% 200% 150% 100% Increase in Debt repayments (YoY %)
100% 80%
60%
40%
20%
40% 20%
50% 0%
Reliance GVK Power Power Adani Power GMR Infra Jaypee Vedanta Lanco Essar Power
0% Reliance Comm Adani Enterprise Reliance Power JSW Steel Adani Power Reliance Infra
0%
GVK Power
JP Power Adani Ent GMR Infra
Adani Power
R Comm
JSW Energy
IDEAS ENGINE India Financial Sector
House of debt
Debt levels up another 15% YoY
A year after our 2012 House of Debt report, we revisit the ten corporate groups featured in our earlier report. Over the past year, debt levels at these groups have risen by 15% YoY even as profitability continues to be under pressure. The largest increases have been at groups such as GVK, Lanco and ADA where the gross debt levels are up 24% YoY. For most of these corporate groups, the debt increase even outpaced capex. Asset sales key for de-leveraging for most of thesehave still not taken-off; only GMR and Videocon have had some success on that front. However, despite asset sales, GMR's debt is up 15% YoY. The increasing stress is visible with some loans of Lanco, JPA and Reliance ADA having already come up for restructuring.
Figure 8: Average loan growth in FY13 has been at 15%

30% 25%
20% 15% 10% 5% 5% 0% Lanco Group Reliance GVK Group ADA Group Jaypee Group Adani Essar Group GMR Group JSW Group Enterprise Vedanta Group 24% 24%
24%
19%
17%
15% 13% 11%
Debt servicing ratios under pressure

Debt servicing ratios for most of the firms have deteriorated YoY. Interest cover ratios at groups such as Essar, GMR, GVK and Lanco are already under 1. Interest cover ratios at Adani and Jaypee have also fallen to <1.5. We believe debt servicing strain is likely to intensify further given that currently capitalised interest for most of these companies is 30250% higher. Moreover, 40-70% of many of these groups' debt is forex denominated, and with INR depreciation the increase in liabilities on account of the currency depreciation was larger than FY13 PAT. With the currency down another 12% YTD, debt stress should now be even higher.
YoY Loan growth %
Figure 9: Provisions on account of large corporates still low compared to other sectors
14
12 10 8 6 4 2 0 Agri Mid Corporate SME FY11 Retail FY12 FY13 Int. 1Q14 Large Corporate Total SBI Gross NPA break-up (%)
FY14: The year of reckoning?

With over 13,000 MW of power capacity from these groups scheduled to be commissioned the current year will be critical. Companies such as Adani Power, Reliance Power and GMR Infra would see their operating capacities double if the projects were to come on stream as expected. However, delays in these projects could result in more of their debt being restructured. The cash flow strain is also likely to intensify as debt repayments are 30-150% higher YoY in FY14 and repayments due are 2-18x their FY13 profits. While Indian bank NPAs have already moved up from 2.5% to 4% of loans, most of these has been on account of rising delinquencies in agri, SME and mid-corporates. Large corporate NPLs are still low; for example 1.7% at SBI, where 5.6% of total loans are now NPLs. As a study of these ten groups reveals, the overleverage in the large corporate segment is high and is a potential source of additional asset quality stress for banks. As also highlighted in our recent reports, Restructuring: A panacea or postponement and A growing problem corporate asset quality issues are likely to persist and we continue to remain Underweight on the Indian Banks despite the recent stock price fall and cautious on corporate lenders such as SBI, ICICI Bank, Yes Bank, Union Bank, PNB, and Bank of India.
Top ten firms' debts continue to rise

Loans to these firms up 15% YoY
A year after our 2012 House of Debt report, we revisit the ten corporate groups that featured in our earlier report. Over the past year, profitability at most of these groups has continued to be under pressure and their aggregate debt levels have increased by a further 15% in FY13. Among the largest increases have been at GVK, Lanco and ADA where the gross debt levels are up another 24%.
Figure 10: Average loan growth in FY13 has been at 15% YoY
30% 25%
20% 15% 10% 5% 5% 0% Lanco Group Reliance GVK Group ADA Group Jaypee Group Adani Essar Group GMR Group JSW Group Enterprise Vedanta Group 24% 24%
Figure 11: Share of banking system loans at 13%

14%
Share in system loans (%) 12% 10% 8%
13%
13%
10%
9%
8%
6% 4% 6%
7%
2%
24%
19%
0% FY07
17% 15% 13% 11%
FY08
FY09
FY10
FY11
FY12
FY13
While many of these groups have projects under construction, the net debt increase has been larger than capex spend during the year.
Figure 12: Debt increase in FY13 has outpaced capex
180% 150% 120% 90% 60% 30% 0% Reliance Comm
Net debt increase as a % of Capex
YoY Loan growth %
Reliance Power
Reliance GVK Power JP JP Power Infra Associates Venture
Figure 13: Net debt increase sharper than capex (as per cash flow statement)
Company name (Rs mn) Reliance Comm Reliance Power Reliance Infra GVK Power & Infra JP Associates JP Power Venture Source: Company data Capex 21,140 89,130 40,476 33,559 123,055 83,555 Increase in net debt Net debt increase as a % of capex 36,190 171% 103,866 117% 46,905 116% 38,811 116% 101,433 82% 65,167 78%
Figure 14: Asset sales have not yet been strong enough to drive deleveraging
Asset sold Adani Abbott Point Terminal in Australia, acquired two years ago for US$235 mn along with debt of US$2 bn, sold to the promoters. Believed to be sold back at the acquisition price. Jan-13 Particulars Date Amount (Rs mn) Undisclosed
GMR GMR Energy (Singapore) Pte Ltd Tshedza Mining Resource (Pty) Ltd GMR Jadcherla Expressways Ltd Videocon Mozambique Sold 10% stake in Mozambiques Rovuma-1 area for US$3 bn Jun-13 148,500 800 MW of natural gas power plants in Singapore. Mar-13 Asset is 96% complete. Sale of 50% stake in the company. The company Mar-13 holds the licence for the development of Eloff mines in South Africa. Estimated to receive ~US$100 mn Sale of 74% stake in the company which operates the Mar-13 Farukhnagar-Jadcherla highway in Andhra Pradesh 16,160 Undisclosed
Projects already undergoing restructuring Lanco Infratech has already begun talks with banks for the restructuring of Rs75 bn of debt in the standalone business. Banks have also restructured part of the debt for Reliance Powers 3,960 MW Sasan UMPP that is expected to commission most units in FY14. Jaiprakash Associates Rs32 bn 500 MW Bina-I has undergone restructuring during the quarter, with PNB restructuring Rs11 bn of the loan during 1Q FY14.
2,060
Asset sales yet to take off

Asset sales will likely be key to deleveraging While several groups have been looking to deleverage, only a couple of asset sales were successfully concluded over the past year. Even after an asset sale, GMR Infras debt levels have increased by 13% from Rs360 bn to Rs408 bn. While Adani Ports has sold Abbott Point asset to the promoters, it still has an outstanding corporate guarantee for US$800 mn, as a result of which its liability hasnt reduced significantly. Videocon has be en successful in selling a large asset, which should result in debt levels reducing for the firm.
Debt servicing ratios under pressure

With rising debt levels, interest cover for most of the groups has declined further. Aggregate interest cover for these top ten groups has dropped from 1.6x to 1.4x. Interest cover ratios at groups such as Essar, GMR, GVK and Lanco are already under 1. Interest cover at Adani and Jaypee have also fallen to <1.5x. Interest coverage ratio has come down from 1.2x to 0.6x for Lanco Infratech, as its interest cost has increased 130%, while EBIT has risen only 14%. Similarly, for GVK infra, the coverage ratio has come down from 1.0x to 0.4x; its EBIT has declined by 32% while expensed interest cost is up 55%.
Figure 15: Interest cover has come down sharply, with Lanco and GVK well below 1x
2.5
Figure 16: Capitalised interest for certain groups is greater than expensed interest
FY13 (Rs mn) Expensed interest Capitalised interest as % of expensed interest 250% 152% 92% 73% 32%
Reliance Power GVK Power & Infra JP Power Venture JP Associates Adani Power
5,853 7,079 12,126 45,688 17,029
14,655 10,677 11,147 33,315 5,510
2.0
Figure 17: Capitalised interest is another 30-250% of the P&L expensed interest 300% Capitalised int as a % of PnL interest 250%
200%
1.5
150%
1.0
100% 50% 0% Reliance Power GVK Power & Infra

0.5
Adani Ent Jaypee Associates FY12 FY13 Lanco Infra GVK Infra
JP Power Venture
JP Associates
Adani Power
Interest cost significantly higher after considering capitalised interest The interest cover calculations above only take into account the interest costs being currently expensed on the P&L. As most of these groups have capacities under construction, a large share of interest expense is also currently capitalised. With capitalised interest currently 30250% higher than the P&L expense, the interest burden may also sharply rise as projects come on stream. Reliance Power has a P&L interest of Rs5.8 bn, whereas its capitalised interest is Rs14.7 bn, which would bring down the interest cover from 2.4x to 0.7x at the current profit levels.
Currency depreciation adding to the debt burden Many corporates' loans are 40-70% foreign currency denominated; therefore, the sharp depreciation in the rupee is adding to their debt burden. Adani Enterprise and Reliance Comm have the largest percentage of borrowings through forex loans.
Figure 18: High share of forex loans adding to the debt burden
80%
60%
40%
20%
0% Reliance Comm Adani Enterprise Reliance Power JSW Steel Adani Power Reliance Infra Foreign currency loans as a % of total loans
Weakening rupee could cause further pain in FY14 With the 6.7% currency depreciation in FY13, corporates such as Reliance Comm, Adani Enterprise and JP Associates, have seen a forex hit equivalent to their FY13 PAT. With the INR down 12% since Mar-13, the liabilities on account of this must have increased further.
Figure 19: Forex impact likely to be larger in FY14 with 12% INR dep in since 31 Mar
Rs mn FY13 rise in liabilities due to forex 24,755 4,554 6,380 5,874 3,398 802 FY13 PAT Forex impact as a % of FY13 PAT 153% 99% 95% 58% 35% N/A
Adani Enterprise JP Associates Reliance Communications Reliance Power JSW Steel GVK Power & Infra
16,130 4,618 6,720 10,115 9,631 (3,360)
FY14: The year of reckoning?

These ten groups have 13,242 MW of power capacity (project cost of over Rs791 bn) due for commissioning in FY14. Companies such as Adani Power, Reliance Power and GMR Infra would see their operating capacities almost double if the projects were to come on stream as expected. The timely commissioning of the same would be important for t he companies ability to service the debt taken for the projects. With capitalised interest currently 30-250% higher, the P&L interest burden may also sharply rise as the project starts.
Figure 20: A large share of capacity adds in FY14E
140% 120% 100% 80% 60% 40% 20% 0% Reliance Power GVK Power Adani Power GMR Infra Jaypee Vedanta Lanco Essar Power
Figure 21: Significant share of capacity expected to come on-stream in FY14

Company Adani Power Particulars Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Operating capacity Expected commissioning in FY14 Total Project capex (Rs bn) 225 Capacity (MW) 5,280 3,960 9,240 3,910 390 4,300 2,083 1,350 3,433 900 870 1,770 2,200 1,320 3,520 3,140 3,140 4,000 732 4,732 2,460 3,385 5,845 2,400 1,320 3,720
Essar Power
25
GMR Infra
83
GVK Power
74
Jaypee
100
JSW Energy
Capacity coming up in FY14 as a % of FY13 capacity
Lanco
Source: Company data, Credit Suisse research Reliance Power
33
165
Vedanta
86
Debt repayments are 30-150% higher YoY Debt repayment commitments are also higher in FY14. FY13 annual reports of many of the groups (Essar, Lanco, GMR, Videocon, Vedanta) are still to be published. The annual reports that have been already published reveal a sharp 30-150% rise in debt repayment liabilities in FY14, for companies such as Adani Enterprises, GMR Infra and JP Power. Debt repayments in FY14 for GVK power are up ~300% to Rs15 bn while it made a loss after tax of Rs3.4 bn in FY13. With debt repayments for most of the companies 3-5x their FY13 annual profits and FCF for most groups still negative, banks will likely need to refinance/restructure most of these loans. Many of the groups (Essar Oil US$200 mn, Essar Steel US$260 mn, Reliance Comm US$500 mn, Reliance Infra US$250 mn and Vedanta Aluminium US$407 mn) also have ECBs maturing in FY14.
Figure 22: Significant debt repayments coming up in FY14 300%
Figure 23: Refinancing needs are large in FY14 given inadequate profitability
Debt repayments due in FY13 GMR Infrastructure JP Associates Reliance Comm JP Power Venture Adani Enterprise JSW Steel GVK Power & Infra JSW Energy Reliance Power 33,467 82,174 31,180 8,378 39,702 64,178 3,729 7,050 8,023 FY14 55,144 82,762 40,690 20,266 73,597 25,999 14,788 8,771 7,588 % YoY 65% 1% 31% 142% 85% -59% 297% 24% -5% FY13 PAT FY14 repayments as a % of FY13 PAT 881 6.258% 4,618 1.792% 6,720 606% 3,512 577% 16,130 456% 9,631 270% (3,360) N/A 9,037 97% 10,115 75%
Large corporates still not forming part of banking system NPAs While Indian bank NPAs have already moved up from 2.5% to 4% of loans, most of these has been on account of rising delinquencies in agri, SME and mid-corporates. Large corporate NPLs are still low; for example, 1.7% at SBI, where 5.6% of total loans are now NPLs. As a study of these ten groups reveals, the overleverage in the large corporate segment is high and is a potential source of additional asset quality stress for banks. As also highlighted in our recent reports, Restructuring: A panacea or postponement and A growing problem corporate asset quality are likely to persist and we continue to remain Underweight on Indian Banks despite the recent stock price fall and cautious on corporate lenders like SBI, ICICI Bank, Yes Bank, Union Bank, PNB, and Bank of India.
250% 200%
Increase in Debt repayments (YoY %)
150%
100% 50% 0%
GVK Power
JP Power Adani Ent GMR Infra
Adani Power
R Comm
JSW Energy
Summary of analysis
In the section below, we look at each of the ten groups in detail, analysing the the group structure, and the changes in the interest cover, Debt/EBITDA and Debt/Equity ratios for each of the companies within the group. We also highlight the key projects for each of the groups, both for their operating as well as their upcoming projectsAs mentioned earlier, expansions in FY14 expected to add 50-130% of FY13 operating capacity. Also while we have seen expensed interest costs rising, we have also looked at the increases in overall interest cost (including capitalised interest) which would start flowing through into the Pnl on the commissioing of new capacities, causing interest coverage ratios to detiororate further. We also look at the asset sales and the assets on the block, which could help these companies, to service the debt repayments likely to be due in FY14, with debt repayments up 30-150% compared to FY13.
Figure 24: A large share of capacity adds in FY14

140% 120% 100% 80% 60% 40% 20% 0% Reliance Power GVK Power Adani Power GMR Infra Jaypee Vedanta Lanco Essar Power
Capacity coming up in FY14 as a % of FY13 capacity
Figure 25: Debt at following ten groups up 15% YoY, interest cover drops further
Rs mn, unless stated otherwise Gross debt EBITDA EBIT PAT Interest coverage (x) FY12 FY13 FY13 FY13 FY12 FY13 Adani Group 692,011 811,220 60,085 37,106 16,130 2.1 1.1 Essar Group 852,244 984,128 117,523 79,129 (34,676) 0.6 0.9 GMR Group 360,289 408,249 24,772 14,374 881 0.4 0.7 GVK Group 209,574 252,640 6,451 2,939 (3,360) 1.0 0.4 Jaypee Group 535,878 636,541 69,222 54,862 4,618 1.5 1.2 JSW Group* 374,636 415,750 26,958 18,511 (1,676) 1.7 2.0 Lanco Group 313,934 390,340 25,820 14,562 (10,733) 1.2 0.6 Reliance ADA Group 914,967 1,135,439 138,495 91,123 47,423 1.3 1.3 Vedanta Group 947,244 996,108 421,116 262,592 220,512 4.0 3.6 Videocon Group# 272,834 272,834 0.2 N/A 5,473,611 6,310,247 890,440 575,198 239,119 1.6 1.4 * Data for Jun-13 # Data not available for FY13, debt levels assumed to be constant. Source: Company data, Credit Suisse research, Debt/EBITDA (x) FY12 12.5 11.7 18.8 18.0 8.8 3.9 16.3 6.3 1.8 20.0 6.3 FY13 10.3 7.3 14.3 25.1 8.7 14.7 13.4 6.9 0.8 N/A 5.6 Debt/equity (x) FY12 FY13 3.2 2.9 2.0 2.4 4.1 4.9 3.5 5.1 4.4 4.8 1.4 1.5 6.4 9.4 0.8 1.1 0.7 0.5 3.6 N/A 1.6 1.8
10
Adani Group
Figure 26: Adani group structure and debt
Bold % indicate total promoter group holding (xx%) indicate previous year holding %
ADANI GROUP
Estimated Group Debt Rs. 810 bn (Rs. 690 bn)
Abbott Point, Australia 120 bn
100%
Gautam Adani & promoter groups

75% (80%)
Corporate Guarantee USD 800 mn
Adani Enterprises Ltd 691 bn (692 bn)
75% (77.5%)
69% 75% (70.25%)
100%
100%
Adani Port & SEZ 116 bn (176 bn)
Adani Power 418 bn (386 bn)
Adani Mining Pty, Australia
Adani Global Pte Ltd Singapore
Source: BSE, company data, Credit Suisse research
Adani is a diversified business conglomerate in the infrastructure and commodities space with interest in power, trading, energy, ports, mining and oil & gas, among others. Adani Power had 5,280 MW of operating power capacity at the end of FY13, 1,980 MW has been commissioned so far in FY14, while 1,980 MW is currently under construction and is
expected to be commissioned during the year. The projects could face problems due to fuel supply issues, lack of LoAs and pressure on profitability. Adani Ports Mundra port is the largest port in India, in terms of cargo handled and it is in the process of building ports in other parts of India.
11
A sharp decline in interest coverage While debt levels have remained flat for Adani Enterprise, which is the holding company for the group, it has witnessed deterioration in its interest cover over the last year to 1.1x (2.1x in FY12) on account of a 91% rise in interest costs to Rs35 bn even as profitability stagnated. Moreover, with the currency depreciation, liabilities for the group increased Rs24.7 bn, 153% of FY13 PAT, with forex loans accounting for 65% of total loans outstanding. During 1Q FY14, the company had forex loss of Rs4.2 bn in the P&L, while it was Rs3 bn in FY13. Also interest costs for the quarter were up 74% YoY. On a consolidated basis, Adani Enterprises has Rs74 bn of debt repayments in FY14.
Figure 27: Trend in gross borrowings
Gross debt (Rs mn) Adani Enterprise Adani Ports Adani Power FY07 43,529 12,822 FY08 61,041 20,655 10,112 FY09 120,842 28,957 49,897 FY10 174,389 37,062 105,855 FY11 331,013 35,953 245,027 FY12 692,011 175,650 386,003 FY13 691,220 115,858 417,954
Adani Ports has strong cash flows from its operating business, but was burdened with the debt on acquisition of Abbott Point asset in Australia for US$2 bn (AU$1.8 bn) in May-11. Over the past year, the company sold the Australian asset (Abbott Point) to the promoter (Gautam Adani) for the same value at which it was acquired two years ago. This has helped reduce the debt at Adani Port & SEZ. Adani Ports has given a corporate guarantee amounting to Rs45.6 bn (US$800 mn). It has also been looking to acquire Dharma port from L&T and the Tata group for Rs55 bn and is looking to invest Rs300 bn during the year in new port assets, to continue its expansion.
Figure 28: Adani Power continues to face issues in operational assets, as well as upcoming projects
Project Mundra Phase I Mundra Phase II Mundra Phase III Mundra Phase IV Tiroda I Capacity Est cost Est. CoD Power Remarks/ issues (MW) (Rs bn) Source 660 22 Operational Imported Profit squeeze on use of expensive spot coal as Indonesian mines output not ramping up 660 22 Operational Imported Profit squeeze on use of expensive spot coal as Indonesian mines output not ramping up 1,320 59 Operational Imported Committed tariff is unviable. Applied for PPA renegotiation, case pending in Supreme Court 1,980 106 Operational Linkage Likely to face profitability pressures due to domestic fuel deficits 1,320 93 Operational Captive Captive coal mine for 800 MW awaiting environmental clearances; however, tapering linkage available. Could face issues later. 1,320 62 FY14 Linkage Lacks LoA, commissioned in FY14, will remain under-utilised 660 70 Operational Linkage Lacks LoA but likely to commission in 660 FY14 FY14, will remain under-utilised 9,240 434
Problems for the group have largely been on account of issues faced at Adani Power, where the company had an EBIT loss of Rs3.3 bn in FY13 (against a profit of Rs7.3 bn in FY12). At the PAT level, its loss widened from Rs3 bn to Rs23 bn and FCF stood at negative Rs45 bn, which is of concern given the Rs42 bn of debt repayments coming up for Adani Power in FY14. With 3,960 MW of capacity due for commissioning in FY14, the currently capitalised interest (32% of FY13 P&L interest) burden will also weigh on the companies profitability. In the first quarter, Adani Power commissioned 1,980 MW of capacity, and is expected to commence operations in two of its under-construction plants (1,320 MW Tiroda Phase II and the 660MW 2nd unit of Kawai), both of which have fuel supply issues as they lack LOAs and are likely to remain under-utilised. Notably, loans for these projects have been secured against the entire balance sheet of Adani Power.
Tiroda II Kawai Total
Figure 29: Key financials, changes from FY12 to FY13

Rs mn, unless stated otherwise Adani Enterprise Adani Ports Adani Power Source: Company data, Credit Suisse research Gross debt 691,220 115,858 417,954 Equity 214,586 63,963 42,934 EBITDA 60,085 23,760 9,596 EBIT 37,106 19,540 (3,301) PAT 16,130 16,232 (22,950) Interest coverage (x) FY12 2.1 5.1 0.8 FY13 1.1 3.6 (0.2) Debt/EBITDA (x) FY12 12.5 9.4 26.7 FY13 10.3 4.5 41.8 Debt/equity (x) FY12 3.2 3.4 5.9 FY13 2.9 1.7 9.3
12
Essar Group
Figure 30: Essar group structure and debt
ESSAR GROUP
Essar Global Ltd,
76.74%
Essar Energy Plc, UK 524 bn (421 bn)
98.3%
89.5%
Essar Steel Holdings Ltd
Essar Projects Ltd
Essar Shipping & Logistics Ltd, Cyprus
Essar Power Ltd 180 bn (154 bn)
Essar Oil 260 bn (177 bn)
51.29%
13.2%
61.2% (69.3%)
71.03% 75% (79.7%)
Essar Steel Ltd 351 bn (320 bn)

Essar Ports Ltd 56 bn (55 bn)
Essar Shipping Ltd 53 bn (56 bn)
Essar Group is involved in a large number of businesses, including power, steel, ports and oil. Essar Power has 3,910 MW of operating capacity, 2,790 MW of which is currently under construction. Essar Ports currently has 104 mn tpa operational capacity, while another 54 mn
tpa is expected to be ready by FY15. Essar Oil has 20 mn t operational capacity and does not have any immediate plans of expansion. Essar Steel has increased its capacity from 4.6 mn t to 10 mn t and is in the process of integrating the same.
13
Interest coverage remains below 1, debt-to-equity increasing Group debt is estimated (annual reports are still to be published) to have increased 15% YoY to Rs985 bn. Interest coverage for Essar Group improved marginally from 0.6x to 0.9x, on account of improving profitability at Essar Energy Plc, where losses decreased from US$764 mn to US$175 mn. Interest cost for the group increased from Rs58.5 bn to Rs92.8 bn over the past year. The group has reduced its stake in Essar Ports and Essar Shipping to 75% in order to comply with SEBI guidelines. The group has also pledged 100% of its stake in these two companies. Essar Oils EBITDA improved from Rs21 bn in FY12 to Rs36 bn in FY13, on account of a 50% increase in production volumes; however, the increased interest burden, resulted in losses after tax remaining flat YoY, at Rs12 bn. The P&L interest went up from Rs13.7 bn in FY12 to Rs34.2 bn in FY13; this was also driven by the interest component of the Rs60 bn sales tax claim received by the company during the year. Essar Oil currently does not have any capex plans. Essar Oil and Essar Steel have US$200 mn and US$260 mn of ECBs maturing in FY14. Last year the group sold a minority stake in Equinox Realty for ~Rs10 bn, and was also looking to sell a stake in its outsourcing company Aegis Ltd.
Gross debt (Rs mn) Essar Energy Plc Essar Steel (Consol) Essar Oil Essar Ports Essar Shipping# Total FY07 140,668 72,206 85,714 32,976 245,850 FY08 170,374 62,581 98,153 41,701 274,655 FY09 134,613 74,764 100,317 67,389 276,765 FY10 170,995 184,014 103,537 75,075 430,084 FY11 247,368 266,695 145,469 44,815 49,891 608,769 FY12 420,558 320,259 177,244 55,051 56,376 852,244 FY13 523,974 351,050 259,862 55,809 53,295 984,128
However, Essar Steel continues to face increasing challenges as steel production has still not ramped up. Production in FY13 was at 5.5 MT vs 4.6 MT in FY12. With debt levels rising, interest expense was up 40%, interest coverage has dropped to 0.1x and PAT loss has widened to Rs27.9 bn in FY13 from Rs12.5 bn. Essar Power has 3,910 MW of operating capacity and has ~2,790 MW of capacity under construction. The company has issues with the upcoming projects, mainly on account of environmental and mining clearances. The company has debt (excluding working capital loans) of ~Rs180 bn with ~Rs21 bn due in FY14. Essar Ports is in the process of expanding its capacity, and its 20 MTPA at Salaya is expected to commence in Mar-14, while it will commence construction on its 14 MTPA coal terminal at Paradip shortly. The company will be putting in capex over the next few years and debt levels should rise.
Figure 32: 65% of upcoming capacity expansions facing issues
Project Salaya I Mahan I Tori I Tori II Total Capacity Est cost Est. CoD (MW) (Rs bn) 1,200 48 Operational 1,200 1,200 600 4,200 65 60 30 203 Operational FY15 FY15 Power source Imported Captive Captive Captive Remarks/ issues Committed tariff is unviable. Trying for PPA renegotiation Captive coal mine awaiting environmental clearances Captive coal mine awaiting environmental clearances Captive coal mine awaiting environmental clearances
# Demerged in 2010. Source: Company data, Credit Suisse research

Rs mn, unless stated otherwise Essar Energy Plc Essar Steel (standalone) Essar Oil Essar Ports Essar Shipping Total Gross debt 523,974 291,050 259,862 57,370 53,295 925,689 Equity 197,412 71,035 11,070 27,270 67,681 363,399 EBITDA 80,130 18,223 36,507 11,408 7,762 117,523 EBIT 63,492 2,601 23,547 8,968 4,069 79,129 PAT (10,500) (27,849) (11,800) 3,316 358 (34,676) Interest coverage (x) FY12 0.5 0.4 1.0 1.6 1.0 0.6 FY13 1.2 0.1 0.7 1.8 1.1 0.9 Debt/EBITDA (x) FY12 13.4 13.3 7.5 6.1 7.7 11.7 FY13 5.9 15.6 6.5 5.0 6.8 7.3 Debt/equity (x) FY12 1.8 2.8 7.2 2.5 1.0 2.0 FY13 2.4 4.0 21.3 2.1 0.8 2.4
# Demerged in 2010.Source: Company data, Credit Suisse research
14
GMR Group
Figure 34: GMR group structure and debt
GMR GROUP
GMR Holdings Private Limited
70.30% 71.64%
GMR Infrastructure Ltd 408 bn (360 bn)
100%
97.9%
98%
GMR Highways Ltd.
GMR Energy Limited
GMR Airports Holding Limited

52.8% (53.5%) 61.2% (63%)
100%
74%
100%
51%
GMR Ulundurpet
GMR Hyderabad Vijayawada
GMR Chattisgarh Energy
GMR Power Corporation
Delhi International Airport Private Limited
GMR Hyderabad International Airport Limited
GMR is an infrastructure-focussed group with interests in airports, energy and roads. The company has developed and operates airports at Delhi, Hyderabad and Turkey. GMR has 2,100 MW of power capacity operational and another 3,300 MW under construction, for
which Rs185 bn has been spent and another Rs64 bn is required to be spent. The company has eight operational highway projects and another three are under way with a project cost of Rs157 bn, of which Rs30 bn is yet to be spent.
15
Interest coverage improves, while debt-to-equity rises Debt levels for the company were up 13% YoY to Rs408 bn. Interest cover and debt-toEBITDA improved, with higher profitability; however, debt-to-equity deteriorated from 4.1x to 4.9x over the year. Interest cost was up 27% YoY to Rs21 bn. The company has been focusing on asset sales in order to reduce debt levels. In FY13, the company sold its 800 MW natural gas power plant in Singapore for Rs16 bn and its road project for Rs2 bn. The company also sold its 50% stake in Eloff mines in South Africa which is estimated to bring in US$100 mn. They are also looking to sell its road assets for ~Rs11 bn. GMR was one of the more successful groups in terms of progress on asset sales in FY13, despite which the debt for the company increased by ~Rs48 bn to Rs408 bn during the year. The company has Rs55 bn of debt repayments due in FY14 (Rs33 bn in FY13) and EBITDA of Rs25 bn in FY13. PAT of Rs881 mn for the year was on account of exceptional gains of Rs7.8 bn.
Rs mn GMR Infrastructure FY08 79,769 FY09 125,004 FY10 211,713 FY11 244,296 FY12 360,289 FY13 408,249
Figure 36: Key assets to watch

Project Emco Energy Capacity Est cost (MW) (Rs bn) 600 40 Est. CoD Unit I Operational, Unit II Jul13 FY15 FY13/14 FY17 6 Operational Power source Linkage Remarks/ issues
Chattisgarh Kamalanga
1,320 1,050 350
83 63
Kakinada
235
Vemagiri I Vemagiri Phase II
388 768
12 41
Operational Ready
Total
4,711
245 Under construction
FSA signed for 200 MW, LoA exists for another 370 MW. FSA likely to be signed for another 200 MW (rest 200 MW is merchant, so no FSA). Linkage Lacks LoA, faces fuel risk Captive Firm linkage for 500 MW & tapering linkage for 550 MW. FSA signed for 500 MW, there could be delays in captive coal production. Gas based Operating at low PLF due to lower gas supplies. Rs6 bn spent on relocating plant from Mangalore to Kakinada. Gas based Operating at low PLF due to lower gas supplies. Gas based Applied for debt restructuring, project commissioning pushed back by two years, banks have funded an additional Rs6 bn as project cost has gone up from Rs32 bn to Rs40 bn.
The company has gas projects (67% of operating power capacity), which are facing issues on account of limited gas supply; however, the company has now shifted focus and is not looking to start new projects but complete the ongoing projects. It plans to commission 1,350 MW of power projects during the current year, and the 1,320 MW Chattisgarh project in FY15. Already banks have extended the tenor of loans at their Vemagiri-II project and funded the increased interest during the construction period with additional loans of Rs8 bn.
Kishangarh- 555 km Ahmedabad
6 lane highway
The company has terminated the project.

Rs mn, unless stated otherwise GMR Infrastructure Source: Company data, Credit Suisse research Gross debt 408,249 Equity 72,782 EBITDA 24,772 EBIT 14,374 PAT 881 Interest coverage (x) FY12 0.4 FY13 0.7 Debt/EBITDA (x) FY12 18.8 FY13 14.3 Debt/quity (x) FY12 4.1 FY13 4.9
16
GVK Group
Figure 38: GVK group structure and debt
GVK GROUP
(xx%) indicate previous year holding %
Indira Krishna Reddy & Family
54.25%
GVK Power & Infrastructure Ltd 186 bn (143 bn)
74%
51%
100%
100%
GVK Energy Ltd 9 bn (9 bn)
Mumbai Intl Airport Pvt Ltd 52 bn (38 bn)

28bn corporate guarantee
10%
GVK Airport Developers Private Ltd 28 bn (26 bn)
Bangalore Airport & Infra Dev Pvt Ltd
43%
GVK Coal Developers (Singapore) Pte Ltd 62 bn (55 bn)

Bangalore International Airport Limited 12 bn (12 bn)
GVK is a diversified conglomerate with interests across energy, airports, transportation and hospitality. The group owns 900 MW operational power plants and has around ~3,000 MW projects under various stages of construction and development. GVK acquired 79% in Alpha coal mines and 100% in Kevin coal mines from Hancock in Australia with 8 bn t reserves and
capacity of 60 mn t per year, for US$1.26 bn, with further planned investment of US$10 bn, of which 10% is owned by GVK and the balance is owned by the promoters. GVK has also developed and operates the Bangalore Airport and the Mumbai International Airport, while its also constructing airports in Bali and Java.
17
Increasing debt levels result in a fall in interest coverage Debt levels have increased by ~Rs50 bn (24% YoY), while EBIT has declined, leading to a fall in interest coverage from 1.0x to 0.4x and increase in debt/EBITDA from 18x to 25x. While debt has increased by 24%, total interest cost (including capitalised interest) is up 64% to Rs17.8 bn in FY13, with capitalised interest at Rs10.6 bn compared with P&L interest of Rs7.1 bn. The company has been looking to sell a 26% stake in its Mumbai and Bangalore airports for ~Rs34 bn, in order to reduce debt levels and bring down gearing for the company. The company invested US$1.26 bn for the Hancock coal mines in Australia, which was entirely debt funded. In FY14, debt repayments are 297% higher and amount to Rs14.8 bn while the company made loss after tax of Rs3.4 bn in FY13. The company has also provided a corporate guarantee for Rs28 bn for securing the loans taken by GVK Coal Developers (Singapore) Pte Limited.
Rs mn GVK Power & Infra FY07 17,321 FY08 12,910 FY09 29,798 FY10 50,577 FY11 62,458 FY12 209,574 FY13 259,640
Figure 40: Gas-based projects continue to face issues on account of low supply
Project JP I JP II Gautami Power Total Shivpuri Dewas Capacity Est cost Est. CoD (Rs bn) 217 MW 8 Operational 220 MW 464 MW 901 MW 332 kms 9 18 35 Operational Operational Power source Remarks/ issues Gas based Gas based Gas based Operating at low PLF due to lower gas supplies Operating at low PLF due to lower gas supplies Operating at low PLF due to lower gas supplies
Under 4 lane highway Delayed due to delays in land Construction acquisition
All operational power plants for the company are gas based and have been under-utilised due to issues with gas supplies. PLF for JP-II and Gautami fell sharply in 4Q FY13 and were at 4% and 8%, respectively, on account of limited gas supply from KG-D6. PLF for gas-based power plants fell from 66% in FY12 to 40% in FY13, while PLF of coal-based power plants has also declined from 73% in FY12 to 60% in FY13. The groups operating capacity will nearly double in FY14. The 540 MW Goindwal Sahib thermal plant is under construction and expected to be commissioned towards the end of CY13, while the 330 MW Alkananda project is also close to completion. The company also reportedly entered into a deal with Aurizon to sell a 51% stake in the Australian coal mines for an undisclosed sum. The company has recently received environmental clearance for the US$4.2 bn Kevin Corner mine.

Rs mn, unless stated otherwise GVK Power & Infra Source: Company data, Credit Suisse research Gross debt 185,440 Equity 31,453 EBITDA 6,451 EBIT 2,939 PAT (3,360) Interest coverage (x) FY12 1.0 FY13 0.4 Debt/EBITDA (x) FY12 18.0 FY13 25.0 Debt-equity (x) FY12 3.5 FY13 5.1
18
Jaypee Group
Figure 42: Jaypee group structure and debt
JAYPEE GROUP
Estimated Group Debt Rs 640 bn (Rs. 535 bn)
JP Infraventures Private Limited
32.34% 44.7% (33.75%)
Total Promoter stake has reduced from 46.76% to 44.74%
Jaiprakash Associates Ltd 637 bn (536 bn)
4.28% (8.18%)
100%
100%
90.5%
60.7% 65% (67.93%)
Jaypee Ganga Infrastructure Corporation Ltd
Jaypee Cement Corp Ltd
Jaypee Sports Intl Ltd
Jaiprakash Power Ventures Ltd 230 bn (166 bn)
Jaypee Group is an integrated infrastructure (expressways, hotels) conglomerate in India with exposure to power generation, cement, construction and the real estate sector. It is the largest hydropower player with 1.7 GW operational capacity. It has 500 MW of operational
coal based capacity and another 3 GW of coal capacity under construction. The group is one of the largest cement producers in India with 32.6 mn tpa of operational capacity. The Group has also undertaken real estate projects and expressway projects.
19
Interest costs rise, coverage ratios decline In FY13, debt levels for the group went up another 19% with continued capex at JPVL. Therefore, despite JPVL raising Rs35 bn of equity, JPA raising Rs5.3 bn from its QIP and Rs5.6 bn from the OFS of its real estate subsidiary, the debt levels have risen by Rs100 bn. Expensed interest costs were up 45% to Rs46 bn during the year, resulting in a decline in interest coverage to 1.2x. Moreover, capitalised interest is another 70% of expensed interest for JPA now and the total interest (including capitalised interest) has increased from Rs52 bn to Rs79 bn. Jaiprakash Associates has pledged 78% of its holding in its real estate subsidiary and 73% of its holding in Jaiprakash Power, and it has reduced its stake from 83.2% to 71.6% and 67.9% to 60.7%, respectively.
Rs mn JP Associates JP Power Venture FY07 80,952 10,698 FY08 115,832 9,001 FY09 194,788 9,889 FY10 352,711 68,660 FY11 444,450 133,459 FY12 535,878 165,173 FY13 636,541 230,149
Figure 44: Projects under construction, facing issues likely to be delayed

Project Karchana Phase I Bara Phase I Total Capacity (MW) 1,320 Est cost Est. CoD Power Remarks/ issues (Rs bn) source 69 FY17 Linkage Project stalled due to land acquisition coal issues, however limited capex implemented so far 108 FY15/16 Linkage Could face issues on procuring FSA for coal entire 1.98 GW if project is not commissioned by Mar-15. 177
1,980 3,300
The company is looking to sell 9.8 mn tonnes of its cement plants in Andhra Pradesh and Gujarat for ~Rs90 bn; however, it hasnt been able to close the deal in over a year, on account of valuation differences. The company has repayments of the Rs83 bn coming up in FY14, while the company had negative FCF of Rs69 bn in FY13, on account of capex of Rs123 bn. Jaiprakash Power is expected to commence operations on its 1,320 MW Nigire project in FY14, which would increase capacity by 60%, and help improve cash flows. Also its 1,980 MW Bara-I project is likely to get 80% FSA, which would be positive for the company versus the earlier 660 MW of FSA.

Rs mn, unless stated otherwise JP Associates JP Power Venture Source: Company data, Credit Suisse research Gross debt 636,541 230,149 Equity 125,530 64,602 EBITDA 69,222 19,968 EBIT 54,862 16,203 PAT 4,618 3,512 Interest coverage (x) FY12 1.5 1.5 FY13 1.2 1.3 Debt/EBITDA (x) FY12 8.8 10.1 FY13 8.7 11.1 Debt/equity (x) FY12 4.4 2.9 FY13 4.8 3.4
20
JSW Group
Figure 46: JSW group structure and debt
JSW GROUP
Bold % indicate total promoter group holding
(xx%) indicate previous year holding %
JSW Group (Sajjan Jindal)
Estimated Group Debt Rs 415 bn (Rs 375 bn)
JSW Cement
Jindal South West Holdings Ltd
JSW Investments Pvt Ltd
Sun Investments Pvt Ltd
7.2% 35.8%
3%
32.4%
16.5%
JSW Steel (post Ispat merger) 310 bn (207 bn)
4.8%
JSW Energy 106 bn (100 bn)
Overseas Subs
Overseas Subs
JSW Natural Resources Ltd

JSW Steel Netherlands (Holding co)
JSW is a diversified conglomerate with interests in steel, energy, minerals & mining, infrastructure and logistics. JSW Steel acquired a controlling interest in Ispat Industries at an enterprise value of US$3 bn in 2010 to become the largest steel producer in India. It currently has 14.3 mn tpa of steel capacity. The company has plans of expanding capacity by 10 mn
tpa in the next 3-4 years. JSW Energy has an operational capacity of 3,140 MW, with a target of increasing the installed capacity to 11,770MW by 2016. The group has also set up a 5.2 mn t cement plant, and plans to set up cement plants adjacent to all steel plants to utilise the slag and increase its presence in the cement industry.
21
Steel drags profitability, energy improves JSW Steel merged with JSW Ispat during 1Q FY14, and now the debt levels for the merged entity are up to Rs310 bn in Jun-13 compared to Rs280 bn in Mar-13. Moreover, 40% of JSW Steel debt is foreign currency denominated; during 1Q FY14, the company had forex loss of Rs8.6 bn against a loss of Rs3.7 bn in FY13. Interest cost for the group has remained largely flat YoY. However, the falling profitability at JSW Steel has lowered its interest cover to 2.2x in FY13 and this dropped further to 1.8x in 1Q FY14 post-merger. Profitability at JSW Energy has improved, however, and so have its debt servicing ratios. JSW Steel has debt repayments of Rs26 bn in FY14, whereas JSW Energy's debt repayments are 24% YoY higher at Rs9 bn. JSW Steel also has US$185 mn of ECBs maturing in FY14.
Rs mn JSW Steel JSW Ispat JSW Energy Total FY07 41,730 83,155 7,071 131,956 FY08 121,362 72,250 22,727 216,339 FY09 165,502 73,558 59,272 298,332 FY10 161,730 71,859 78,701 312,291 FY11 186,000 69,341 96,380 351,721 FY12 206,826 67,878 99,933 374,636 FY13 216,461 63,295 103,766 383,521 FY14* 309,500 106,250 415.750
* Jun-13, JSW Steel and JSW Ispat were merged. Source: Company data, Credit Suisse research.
JSW Energy has 3,140 MW of operating capacity and aims to increase the capacity to 11,770 MW by FY16. EBITDA and PAT increased sharply from FY12 to FY13, with PAT increasing from Rs1.7 bn to Rs9 bn.
Project Ratnagiri Total Salboni, West Bengal Capacity Est cost Est. CoD (Rs bn) 1,200 MW 50 Operational 1,200 MW 10 MT Power Source Imported Remarks/ issues Committed tariff is unviable. Trying for PPA renegotiation for 300 MW
Steel plant Land acquisition problems in West Bengal
Figure 49: Key financials, changes from FY12 to 1QFY14

Rs mn, unless stated otherwise JSW Steel* JSW Energy* Total Gross debt 309,500 106,250 415,750 Equity 207,682 64,320 272,002 EBITDA 17,730 9,228 26,958 EBIT 11,291 7,220 18,511 PAT (3,818) 2,143 (1,676) Interest coverage (x) FY12 3.0 1.5 1.7 FY13 1.8 2.6 2.0 Debt/EBITDA (x) FY12 2.8 5.7 3.9 FY13 4.1 2.9 3.7 Debt/equity (x) FY12 1.0 1.6 1.4 FY13 1.4 1.7 1.5
* 1Q FY14 annualised. Source: Company data, Credit Suisse research,
22
Lanco Group
Figure 50: Lanco group structure and debt
Lanco Group
Lanco Group Ltd

LM Rao, GB Rao, L Sridhar, L Rajagopal
56.2% 70.8%
12.3%
Subs
Lanco Infratech Ltd 351 bn (313 bn)
Lanco Power Pvt Ltd (LPPL)

Subs
Subs Subs Subs Subs Subs
Subs
Lanco International Pte Ltd (EPC)
Lanco Hydro Power Ltd (LHPL)
Lanco Thermal Power Ltd (LTPL)

Subs
Lanco Solar Pvt Ltd (LSPL)

Subs Subs
Real Estate Companies
Natural resources Cos Lanco Resource Int Griffin Coal Mining Co (Australia) 39 bn
Infrastructure Companies
Subs
Amarkantak (LPL)
Anpara
Udupi
(imported coal)
Kondapalli (LKPL)
(KG D6 gas)
3 Highway projects in UP & Karnataka
Lanco is a diversified business group with balance sheet size of US$6.9 bn, and operates in the construction (EPC), power, solar, natural resources and infrastructure sectors. Lanco has emerged as one of the largest IPPs (Independent Power Project) in India with 4,732 MW of operating capacity and 4,636 MW of capacity under construction, expected to be completed
by FY16. It had an EPC order book of US$5.3 bn as of Mar-13. Lancos road portfolio consists of three highway projects of total length of about 443 km, of which two projects of 81 and 82 km have been completed, while the 280 km project has achieved financial closure.
23
Rising debt levels and interest burden necessitate restructuring Lanco debt levels have gone up 12% in FY13 to Rs351 bn. P&L interest costs for the group have gone up 130%, resulting in losses of Rs10.7 bn for the company and debt-to-equity is now 9.4x (up from 6.4x in FY12). The results for the Jun-13 quarter saw interest costs increase by 36% to Rs6.7 bn and reported losses at Rs5.8 bn. As the P&L interest cost increased from Rs10.5 bn in FY12 to Rs24.2 bn in FY13, interest cover declined from 1.2x to 0.6x. Moreover, capitalised interest in FY12 was Rs9.6 bn (92% of P&L interest); however, the FY13 annual report is still awaited. We estimate the group has debt repayments of ~Rs18 bn due in FY14. The company has been looking to sell a number of assets (power plants and exit the road business) to help deleverage; however, it has not yet been able to close a deal. It has now approached the bankers for restructuring the holding company debt of Rs75 bn.
Rs mn Lanco Infratech FY07 17,099 FY08 31,650 FY09 55,970 FY10 83,614 FY11 166,517 FY12 313,934 FY13 351,340
Figure 52: Many projects facing fuel supply issues

Capacity Est cost Est. CoD (MW) (Rs bn) Amarkanatak II 300 15 Operational Anpara 1,200 56 Project Power Source Linkage Remarks/ issues
Vidarbha
1,320
66
Babandh
1,320
75
Kondapalli Phase II Kondapalli Phase III Total
366 732 5,238
12 33 257
Amarkantak-II has applied for PPA renegotiation, is under litigation. Operational Linkage Project's tariff aggressively bid, coal handling logistics at the plant yet to be implemented, likely to incur losses. FY16 Linkage LoA present but project might slip beyond FY15 and thus faces risk of denial for FSA. FY16 Captive Captive coal mine for 1 GW, risk of deallocation exists as progress on the mine has been weak. Mine has 5 Joint owners. Operational Gas based Almost dormant on account of the fall in KG-D6 gas supplies. Operational Gas based Awaiting gas supplies.
Most of Lancos projects are currently loss making. The Kondapalli II & III projects are lying idle on account of low gas supplies from KG-D6, and could also require restructuring. Lanco had accquired the Griffin coal mines for A$760 mn in Mar-11. The company now plans to spend A$1 bn to increase the production capacity from 4 mn tpa o 16 mn tpa by FY17. In Apr-13, the company agreed to pay a A$7.5 mn fine to settle a A$3.5 bn lawsuit filed against the company.

Rs mn, unless stated otherwise Lanco Infratech Source: Company data, Credit Suisse research Gross debt 351,340 Equity 36,725 EBITDA 25,820 EBIT 14,562 PAT (10,733) Interest coverage (x) FY12 1.2 FY13 0.6 Debt/EBITDA (x) FY12 16.3 FY13 13.4 Debt/equity (x) FY12 6.4 FY13 9.4
24
Reliance ADA Group

Figure 54: Reliance ADA group structure and debt
Reliance ADA GROUP

Estimated Group Debt Rs 1,140 bn (Rs 915 bn)
ADA Group Holding Cos
65%
Reliance Innoventures Private Limited
100%
AAA Project Ventures
AAA Communication Pvt Ltd
AAA Enterprises Pvt Ltd
Reliance Land Pvt Ltd
40.4% 48.5% (47.8%)
19.16% 75% (22.08%)
35.03% 67.86%
40.07% 54.14%
44.66%
Reliance Infra 226 bn (181 bn)

36.5% (38.41%)
Reliance Power 275 bn (147 bn)
Reliance Comm 408 bn (383 bn)
Reliance Cap 230 bn (198 bn)
18.5%
Reliance Mediaworks
Reliance ADAG is a diversified conglomerate with presence in many sectors including telecom, financial services, power, infrastructure and entertainment. Reliance Communications is an integrated telecom player with a retail customer base of about 2.5 mn. Reliance Power, the power generation arm, currently has a generation capacity of 2,460 MW and has 5,700 MW under construction. Reliance Infrastructure has 11 road projects totalling
970 km of which eight are operational and three are under construction and worth about Rs83 bn. The metro system in Delhi has commenced operations, while the Mumbai metro is expected by 3Q FY14. The group is also setting up two cement plants of 5 mn t each at a cost of Rs66 bn. It also has an EPC order book of Rs102 bn.
25
Debt-to-equity increases to 1.1x and debt-to-EBITDA to 7x The groups debt has increased by Rs225 bn (24%) leading to an increase in debt-to-equity to 1.1x and debt-to-EBITDA increased from 6.3x to 7x over the past year. Increased profits from Reliance Power have helped maintain interest cover at 1.3x. A large part of the debt increase is on account of the continuing capex at Reliance Power and Reliance Infra. Notably though the debt increase in both these companies has been in excess of the capex during the year. RComm, RPower and RInfra have forex debt of 70%, 52% and 28% respectively. In FY13, RComm had Rs6.4 bn of forex losses (95% of FY13 PAT) which were adjusted from the general reserve, while R Power had capitalised forex losses of Rs5.8 bn (58% of FY13 PAT). RComm and RInfra have US$500 mn and US$250 mn respectively of ECBs maturing in FY14. Reliance Communication which has Rs40 bn of debt due in FY14, is enter into an agreement with Reliance Jio Infocomm to lease out telecom towers for ~Rs30 bn. It is also looking to sell the international cable business for Rs70 bn and the DTH business for Rs25 bn and plans to spin off its real estate business in the hopes of raising ~Rs120 bn, and reduce its leverage. Reliance Communication has entered into a tower sharing deal which would result in inflows of Rs120 bn over the tenure of the agreement (time frame not specified) and RCom has also entered into an agreement for sharing its optic fibres for a one-time payment of Rs12 bn. As per the company press release, RComm has repaid two ECB loans of US$ 500 mn each and made scheduled repayments for another US$207 mn loan during 1Q FY14.
Rs mn Reliance Infra Reliance Power Reliance Comm Reliance Capital Total FY07 66,502 174,383 14,030 254,915 FY08 59,036 4,483 258,217 93,262 414,998 FY09 101,054 13,325 391,623 141,071 647,072 FY10 85,839 22,406 297,154 145,193 550,592 FY11 123,052 73,348 390,714 201,536 788,650 FY12 FY13 182,897 219,762 150,650 275,107 383,030 415,470 198,390 225,100 914,967 1,135,439
Reliance Powers phase-I of the Samalkot plant (1,000 MW) has been commissioned; however, due to low supply of gas from KG-D6, the plant is operating at low PLF and is expected to incur losses of Rs4.0-7.7 bn from FY15 to FY17. The company has commissioned the 1st phase (660 MW) of the Sasan project, and the balance 3,300 MW is expected to be commissioned during FY14. It has already restructured Rs145 bn of loan taken for the Sasan project. The company had capitalised interest of Rs14.7 bn as against expensed interest of Rs5.8 bn, which would start shifting to the P&L with the commissioning of projects. Total interest costs (including capitalised interest) are up 70% YoY. Reliance Infra is also entering the cement business and plans to spend Rs66 bn in setting up 10 mn t of cement capacity, with 5 mn t in Madhya Pradesh and 5 mn t in Maharashtra expected to come up in FY14 and FY15 respectively. They also have 11 road projects, eight of which are operational and the remaining are expected to be operational in FY14.
Figure 56: Reliance Power projects have fuel supply risk
Capacity Est cost Est. CoD (MW) (Rs bn) Krishnapatnam 4,000 240 FY17 Samalkot Expansion Total 1,000 1,400 6,400 100 340 Ready FY15 Project Power source Imported Remarks/ issues
Project stalled, only Rs1.5bn capex incurred till date. Gas based 1,000MW has been commissioned, however is not operational, since it is awaiting gas supplies.

Rs mn, unless stated otherwise Reliance Infra Reliance Power Reliance Comm Reliance Capital Total Gross debt 219,762 275,107 415,470 225,100 1,135,439 Equity 261,210 185,811 338,500 119,710 905,231 EBITDA 29,656 17,129 59,420 32,290 138,495 EBIT 24,145 14,278 20,970 31,730 91,123 PAT 22,468 10,115 6,720 8,120 47,423 Interest coverage (x) FY12 1.8 1.7 1.1 1.2 1.3 FY13 1.4 2.4 0.8 1.4 1.3 Debt/EBITDA (x) FY12 5.0 19.6 5.7 6.1 6.3 FY13 6.5 13.2 6.0 6.2 7.0 Debt/equity (x) FY12 0.6 0.7 0.9 1.4 0.8 FY13 0.7 1.2 1.1 1.7 1.1
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Vedanta Group
Figure 58: Vedanta group structure and debt
VEDANTA GROUP (post restructuring)

Volcan, Bahamas
Estimated Group Debt Rs 995 bn (Rs 950 bn)
Vedanta Resources Plc 996 bn (935 bn)
79.4%
70.5%
53.1% (54.6%)
55.1% (54.6%)
38.7%
Konkola Copper Mines
Vedanta Aluminum
29.5%
Sterlite Industries 202 bn (157 bn)
Sesa Goa 45 bn (37 bn)
100%
Liberia Iron Ore Assets

51% 64.9% 100%
74%
100%
100%
20.1%
Bharat Aluminium
Hind Zinc Nil
Skorpion and Lisheen
Black Mountain
Sterlite Energy
Australian Copper Mines
Cairn India Ltd 0 bn (13 bn)
Vedanta Resources is a global diversified resources company headquartered in London. It is the largest mining and non-ferrous metals company in India, with mining operations in Australia and Zambia. Copper, zinc, aluminium, lead and iron ore are its main products. Vedanta entered the power generation space by developing power stations in Orissa (2,400
MW) which has been completed and Punjab (1,980 MW), which is expected to be completed by 2Q FY14. The Group has a capex plan of US$21 bn over a period of 3-4 years. The company has spent US$14.5 bn up to Mar-13, including US$1.67 bn in FY13.
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Interest cover declines, led largely by Sesa Goa The group debt levels were relatively stable in FY13. However, interest cover declined from 4.0x to 3.6x mainly on account of decline in profitability of Sesa Goa due to the mining ban. Sesa Goas interest cover reduced from 7.8x to 0.6x in FY13, and debt-to-EBITDA has increased from 0.9x to 9.2x. Sesa Goa has short-term debt amounting to Rs33 bn as of Mar-13, while it had negative FCF for FY13 of Rs6 bn and OCF of Rs222 mn. Cairn India is looking to spend ~US$3 bn on capex between FY14 and FY16 with ~80% expected to be spent towards the Rajasthan asset. The company has cash of US$2.6 bn on its balance sheet and is unlikely to require any debt for its capex.
Rs mn Vedanta Resources Cairn Total FY07 94,974 5,179 100,153 FY08 163,576 3,124 166,700 FY09 281,320 43,564 324,883 FY10 449,548 34,007 483,555 FY11 536,388 26,782 563,170 FY12 934,725 12,518 947,243 FY13 996,108 996,108

Project Lanjigarh I Refinery Lanjigarh II Refinery Jharsuguda Smelter II Capacity 1 mt 3 mt 1.25 mt Est cost (US$ bn) 1 1.6 2.9 Est. CoD Remarks/ issues
BALCO Al Korba III smelter BALCO Korba CPP Talwandi Sabo power plant Total
0.375 mt 1,200 MW 1,320 MW 660 MW
0.8 1.1 2.1 11.9
Completed Plant has been shut since Dec-12 due to unavailability of Bauxite. On hold FY14 US$2.5 bn of the est capex of US$2.9 bn has been spent. Issue with bauxite mining. FY14 Metal tapping delayed. Awaiting approvals FY14 FY15
Little clarity on coal linkage for the upcoming units.
Vedanta Aluminium has a 1MT refinery in Orissa, which has been idle since Dec-12 on account of issues with bauxite mining. The company has invested ~US$6.7 bn in capex at the Orissa plant and has ~US$4 bn of debt. However, due to lack of clearances, 1.25 ktpa of the 1.75 ktpa smelter capacity is idle. EBITDA for FY13 was Rs9.7 bn, while loss after tax was Rs2.2 bn. EBITDA for 1Q FY14 was Rs2.6 bn while interest costs were Rs7.65 bn and loss after tax was Rs8.8 bn. As the repayments of the US$4 bn loans at Vedanta Aluminium are likely to commence (US$407 mn ECB maturing in FY14), the group has initiated efforts for refinancing the same and taking it on Sterlite Industries (post-merger) balance sheet.

Rs mn, unless stated otherwise Vedanta Resources Plc Sterlite Sesa Goa Hind Zinc Cairn Total Source: Company data, Credit Suisse research Gross debt 996,108 201,847 45,092 4 0 996,108 Equity 263,904 509,552 174,754 322,757 476,994 740,898 EBITDA 290,784 104,689 4,655 64,816 130,332 421,116 EBIT 150,720 84,371 2,680 58,346 111,872 262,592 PAT 99,948 60,603 22,803 68,995 120,564 220,512 Interest coverage (x) FY12 2.5 9.4 7.8 391.3 34.2 4.0 FY13 2.1 9.1 0.6 200.5 162.9 3.6 Debt/EBITDA (x) FY12 2.8 (0.7) 0.9 (3.0) (0.8) 1.6 FY13 1.8 (0.4) 9.2 (3.3) (1.2) 0.8 Debt/equity (x) FY12 2.3 (0.2) 0.2 (0.7) (0.2) 0.6 FY13 2.0 (0.1) 0.2 (0.7) (0.3) 0.5
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Videocon Group
Figure 62: Videocon group structure and debt
Videocon Group
Videocon (Promoter Holding cos)
69.38% (68.24%)
Estimated Group Debt Rs. 280bn
Trend Electronics
18.8% 1.0%
Videocon Ind Ltd 273 bn (273 bn)
5.0% 0.14%
Value Industries
100%
25%
50% (JV)
IBV Brasil Petroleo Private Ltd

Ravva Oil & Gas Field Joint Venture
100%
100% 50% (JV)
100%
Videocon International Electronics
Pipavav Energy Private Ltd
Videocon Energy Ventures Videocon Infinity infra (JV 50%)
Block 56 Oman Joint Venture
Videocon Telecommunications
Source: BSE, Company data, Credit Suisse research
Videocon is an industrial conglomerate with an annual turnover of US$4 bn, making it the largest consumer electronic and home appliance company in India. The group has diversified interest in mobile phones, oil & gas, telecommunications and DTH services. It has expanded its footprints globally with manufacturing facilities in China, Poland and Turkey. An important asset for the group is its Ravva oil field, in which Videocon holds 25%. The oil field can produce around 50,000 barrels of oil per day at peak production; however, production in Sep12 had fallen to 23,000 barrels per day. Debt likely to come down on account of asset sale The company has sold its 10% stake in the Mozambique block to Oil India and OVL for US$2.5 bn in Jun-13, which would help reduce debt by Rs100 bn.
The company has changed its year ending from December to June; hence, the latest consolidated financials available are for Dec-11, while we await the annual report for Jun-13.
Figure 63: Key financialsFY12
Rs mn Videocon Ind Debt Cash Equity EBITDA Interest 272,916 12,226 77,929 15,420 PAT Net debt Int Debt/ cover EBITDA 260,690 1.0 16.9 D/E 3.3
15,564 (13,585)

Rs mn FY07 FY08 FY09 FY10 121,136 FY11 144,199 FY12 272,834 FY13 N/A Videocon Ind 62,832 69,988 113,852 Source: Company data, Credit Suisse research
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Companies Mentioned (Price as of 12-Aug-2013)

Adani Ports (APSE.NS, Rs144.35) Adani Power Ltd (ADAN.BO, Rs36.2) Cairn India Ltd (CAIL.BO, Rs301.2) Essar Energy Plc (ESSR.L, 131.0p) Essar Oil (ESRO.BO, Rs54.8) Essar Ports Ltd (ESRS.NS, Rs65.0) Essar Shipping (ESPL.BO, Rs15.0) GMR Infrastructure Ltd (GMRI.BO, Rs12.86) GVK Power & Infrastructure (GVKP.BO, Rs7.23) JSW Energy (JSWE.BO, Rs38.2) JSW Steel Ltd (JSTL.BO, Rs518.45) Jaiprakash Associates Ltd. (JAIA.BO, Rs31.45) Jaiprakash Power Ventures Ltd (JAPR.BO, Rs10.95) Lanco Infratech (LAIN.NS, Rs5.5) Reliance Capital Ltd (RLCP.BO, Rs335.05) Reliance Communication Ltd (RLCM.BO, Rs126.3) Reliance Infrast (RLIN.BO, Rs350.5) Reliance Power Ltd (RPOL.BO, Rs73.0) Vedanta Resources PLC (VED.L, 1266.0p) Videocon (VEDI.BO, Rs171.95)
Disclosure Appendix
Important Global Disclosures
I, Ashish Gupta, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities
As of December 10, 2012 Analysts stock rating are defined as follows:

Outperform (O) : The stocks total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stocks total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stocks total return is expected to underperform the relevant benchmark* over the next 12 months.
*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stocks total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stocks total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, w ith Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stocks total return relative to the average total return of the relevant country o r regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and C anadian ratings were based on (1) a stocks absolute total return potential to its current share price and (2) the relative a ttractiveness of a stocks total return potential within an analysts coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10 -15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stocks total return relative to the average total return of the relevant country or regional benchmark.
Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.
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Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts sector weightings are distinct from analysts stock ratings and are based on the analysts expectations for the fundamentals and/or valuation of the sector* relative to the groups historic fundamentals and/or valuation: Overweight : The analysts expectation for the sectors fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analysts expectation for the sectors fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analysts expectation for the sectors fundamentals and/or valuation is cautious over the next 12 months.
*An analysts coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.
Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution
Rating
Versus universe (%)
Of which banking clients (%)
Outperform/Buy* 42% (53% banking clients) Neutral/Hold* 40% (50% banking clients) Underperform/Sell* 15% (39% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meaning s are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy o r sell a security should be based on investment objectives, current holdings, and other individual factors.
Credit Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, th e sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research and analytics/disclaimer/managing_conflicts_disclaimer.html Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties. Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.
See the Companies Mentioned section for full company names
The subject company (VED.L, CAIL.BO, ESRO.BO, ADAN.BO, RPOL.BO, JAPR.BO, JAIA.BO, RLCM.BO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (JAPR.BO, JAIA.BO) within the past 12 months. Credit Suisse provided non-investment banking services to the subject company (VED.L, ESRO.BO) within the past 12 months Credit Suisse has managed or co-managed a public offering of securities for the subject company (JAPR.BO, JAIA.BO) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (JAPR.BO, JAIA.BO) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (CAIL.BO, ESRO.BO, ADAN.BO, RPOL.BO, JAPR.BO, JAIA.BO, RLCM.BO) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (VED.L, ESRO.BO) within the past 12 months
Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (VED.L, CAIL.BO, ADAN.BO, RPOL.BO, JAPR.BO, JAIA.BO, RLCM.BO) within the past 12 months
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Equity Research / Asia Pacific / India Financials 13 August 2013

India Financial Sector

Debt up 15% YoY even as profitability pressures continue in FY13

Source: Company data, Credit Suisse research

P&L interest cover has dropped YoY

RESEARCH ANALYSTS Ashish Gupta 91 22 6777 3895 ashish.gupta@credit-suisse.com

Prashant Kumar 91 22 6607 3942 prashant.kumar.3@credit-suisse.com

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS

BEYOND INFORMATION Client-Driven Solutions, Insights, and Access

Leverage continues to rise

Figure 2: Debt increase in FY13 has outpaced capex

Figure 3: P&L interest cover (x) has dropped YoY

Figure 4: Capitalised interest is another 30-250% of P&L int.

Capitalised int as a % of PnL interest

Reliance Power GVK Power & Infra

Source: Company data, Credit Suisse research

Source: Company data, Credit Suisse research

Source: Company data, Credit Suisse research

Figure 7: Significant debt repayments coming up in FY14

JP Power Adani Ent GMR Infra

Source: Company data, Credit Suisse research

Source: Company data, Credit Suisse research

Source: Company data, Credit Suisse research

IDEAS ENGINE India Financial Sector

Figure 8: Average loan growth in FY13 has been at 15%

15% 13% 11%

Debt servicing ratios under pressure

YoY Loan growth %

Source: Company data, Credit Suisse research

FY14: The year of reckoning?

Source: Company data, Credit Suisse research

Top ten firms' debts continue to rise

Figure 11: Share of banking system loans at 13%

Source: Company data, Credit Suisse research

180% 150% 120% 90% 60% 30% 0% Reliance Comm

Net debt increase as a % of Capex

YoY Loan growth %

Source: Company data, Credit Suisse research

Reliance GVK Power JP JP Power Infra Associates Venture

Source: Company data, Credit Suisse research

IDEAS ENGINE India Financial Sector

Asset sales yet to take off

Source: Company data, Credit Suisse research

IDEAS ENGINE India Financial Sector

Debt servicing ratios under pressure

5,853 7,079 12,126 45,688 17,029

14,655 10,677 11,147 33,315 5,510

Source: Company data, Credit Suisse research

100% 50% 0% Reliance Power GVK Power & Infra

Source: Company data, Credit Suisse research

IDEAS ENGINE India Financial Sector

Source: Company data, Credit Suisse research

16,130 4,618 6,720 10,115 9,631 (3,360)

Source: Company data, Credit Suisse research

IDEAS ENGINE India Financial Sector

FY14: The year of reckoning?

Figure 21: Significant share of capacity expected to come on-stream in FY14

Capacity coming up in FY14 as a % of FY13 capacity

Source: Company data, Credit Suisse research Reliance Power

Source: Company data, Credit Suisse research

IDEAS ENGINE India Financial Sector

Source: Company data, Credit Suisse research

Increase in Debt repayments (YoY %)