CESC – visit presentation Marwadi Shares and Finance Ltd. 17 August 09

Presentation topics  Power generation process  The commercial aspect – Generation  The commercial aspect – T&D  Retail business  Visit based recommendation

Power generation process

Budge Budge Facility – 225 acre Coal to electricity Coal handling station (200 mm) Stock yard – 15 days inventory (11 lac. ton) Coal crusher (Primary - 100, Secondary - 20) Coal grinded into powder form (75 microns) 2 fans to supply coal to Boilers Water treatment plant (2 nd raw material) Water source: River Hoogli (daily 30,000 kl)

Cont… Alum treatment to clear mud contents Still carry chemical substances Other treatment to clean chemicals Passed to Boilers which is 55 mtr in length Boiler view from top Pulverized 75 microns burning coal Heat transferred to water tubes

Cont… Steam is created through this process This steam is passed to turbine by duct High, intermediate and low pressure duct Thermal energy transferred to mechanical Coil rotates the shaft, which is extended into Generator Magnetic field is created; mechanical energy is transferred to electric energy

Cont… Turbine Generator

Generation to Transmission Transformers at power station Steps up 16.5 Kv to 132 Kv

Generation to Transmission Transformer to Switch yard, which is connected to transmission towers Our guide

Transmission to distribution Transmission lines from plant Sub station. No 5 – 132 Kv To step down transformer – 11 Kv, 6 Kv 230 volts single phase customer 440 volts three phase customer Substation Step-down transformer

The commercial aspect – Generation

Generation segment Four generation facility with a total capacity of 975 MW (10% auxiliary consumption) Combined PLF maintained at 97% (3 plants) Case II operator Forms 55% of the total assets 14% RoE + incentives and normative gains All other costs pass through

Cont…coal economics Internal source (ICML): 55% Domestic and international: 40% and 5% ICML capacity left: ~50 mln ton Annual extraction: ~2.5 mln ton Coal usage for every unit of electricity: 0.6 kg 15 day inventory maintained at every plant Cost – Internal: Rs 1100 (Rs freight) Domestic: CIL, International: ~1.5*Domestic

Capacity addition plans - Generation Budge Budge III ready to be commissioned; Latest in 3 months Plant locationPurposeSizeComm. DateStatus Haldia - IPPA600 MW EPC in months time Dumka, JharkhandMerchant1000 MW Coal linkage done Dhenkanal, orissaMerchant600 MW x MOU signed WB and othersMerchant1000 MW MOU with Bihar

The commercial aspect – T&D

T&D segment ckt km T&D line 567 sq. km area, 2.3 mln customers Forms 45% of the total assets 15% RoE + incentives and normative gains T&D loss reduced to 14% Peak system demand: 1500 MW

Capacity addition plans – T&D Maintenance capex of Rs 300 Cr./yr 220/132 Kv network augmentation to reduce T&D loss Rs 450 Cr to be spent by 2011 Investment equally split between FY10 and FY11 National grid connectivity for power export

Retail business

Retail – Snapshot 3 formats (Hyper, Super and Daily) Targeted at SEC A/B+ ~20 private labels and 30,000 SKU Total stores: 251; Area: 1.13 mln sq. ft Revenue/sq. ft: Rs 750 Inventory: 35 days Pilferage: 1% Still loss making Store level loss: Rs 4 Cr/mnt; Overall: 17 Cr/mnt

Segmental bifurcation SegmentsCompositionGross margin Bakery Dairy8%25% F&V9%10% Apparel6%35% HWP7%35% Electronics6%10% Staples20%10% FMCG44%20%

Strategy FY10: Rs 1000/sq ft; FY10: Rs 1200/sq ft Volume push, rationalization Expansion through ‘Hyper’ stores (13 cities Gross margin: 17%; Plans to increase to 20% Change in product mix To focus on Apparels Store level breakeven by FY10 Overall breakeven by FY11

Visit based recommendation

Visit excerpts Stable cash flow power business Aggressive growth plans to tap opportunities Retail story; better economic sentiments to keep the stock momentum Retail KPI to only get better from here Post two year it will be again a power story Good long term story