Tata Cleantech Capital Limited (TCCL) Overview on Energy Savings Company (ESCO) Date: 20-06-2018
Index • Tata Group • Brief on sustainable energy • Tata Cleantech Capital Limited (TCCL) – Introduction • TCCL’s Offerings • Project Evaluation Mechanism • Case Study – ESCO project at Hospital 1 of 11
Tata Group : Sustainability and addressing Climate change Tata Group is India’s largest business group with 66% equity of the principal investor holding company vested with private philanthropic trusts Sustainability and giving back to society is integral to the business philosophy of the group Climate change steering committee set-up by the group in 2008 for articulating a climate change policy for all Tata group companies Climate change agenda was further expanded with setting-up of Tata Sustainability Group (TSG) in 2014, which is a group- level resource working with Tata companies across the world in the sphere of sustainability Tata Group became part of Indian Prime Minister's low carbon committee and member in the Steering Committee of 'Caring for Climate' initiative of the United Nations Global Compact and United Nations Environment Program Several Tata companies like TCS, Tata Steel, Tata Chemicals, Tata Power and Tata Global Beverages Limited have been recognized and listed in the Carbon Disclosure Leadership Index 2 of 11
Tata Group : Climate Change Initiatives • Carbon footprint estimated and carbon strategy developed for 51 Tata Group companies • App. 400 champions have been trained across the group to drive and accelerate the climate change agenda • About 200 water champions also trained across the group • Key climate change initiatives in Tata Group: • Most Tata companies have adopted energy-efficient systems such as lighting, variable frequency drives for motors, star-rated appliances and waste heat recovery systems • ~20% of Tata power portfolio is from renewable sources; renewable energy (wind and solar power) portfolio stands at ~2.2 GW, making Tata Power one of the largest renewable energy players in India • Greening of Tata owned buildings, including the headquarters at Bombay House - the first heritage building in India to be certified with an IGBC Gold Rating • Creating green data centres by Tata Communications and TCS • Awareness drive through Energy Clubs in schools covering 5.2 million students • Water foot printing of 12 major Tata manufacturing facilities carried out as Water Footprint Assessment (WFA) methodology and water / waste water management strategy developed • Incorporation of Tata Cleantech Capital Limited, in Joint Venture with IFC, Washington, to fund green initiatives 3 of 11
TCCL : Introduction TCCL is the first of its kind Clean tech focused Infrastructure Finance Company (IFC) registered with Reserve Bank of India, established as a JV between Tata Capital Ltd and IFC, Washington, a member of the World Bank Group 19.5% 80.5% Developed strong expertise and credibility over the years • Participated in funding of ~ 4.83 GW Renewable Energy Generation since inception – saving over 7.7 million tons of CO 2 emission annually. • Funded projects under Energy Efficiency and water space. • 139 contracts executed out of which 53 contracts have already been repaid. • As on April 30, 2018 aggregate portfolio of ₹ 3,392 crore (USD 514 million) in cleantech sector with Nil over-dues / NPA • AA+ rating by CRISIL and CARE • Executed a number of marquee assignments in financial and clean-tech advisory 5 of 11
Index • Tata Group • Brief on sustainable energy • Tata Cleantech Capital Limited (TCCL) – Introduction • TCCL’s Offerings • Project Evaluation Mechanism • Case Study – ESCO project at Hospital 1 of 11
TCCL Offering’s : Financial Products available for Energy Efficiency Company’s Short Term Loans Leasing Solutions Project Finance Loan backed by SIDBI LOC backed Non Fund PFRS Schemes Products Customized Anchor based Vendor Working Capital Loans Financing Programs. 6 of 11
Index • Tata Group • Brief on sustainable energy • Tata Cleantech Capital Limited (TCCL) – Introduction • TCCL’s Offerings • Project Evaluation Mechanism • Case Study – ESCO project at Hospital 1 of 11
TCCL : Project Evaluation Mechanism ESCO Contract Counterparty/Client • Financial Viability of • Validation of Assumptions • Promoter / Group Underlying Project. taken while designing the Background of ESCO’s. payback period. • Promoter / Group • Consumption History Background of ESCO’s • Deemed Generation (Detail about the size of Clause. premises, Occupancy rates • Credential of KMP (Key , Seasonal variances , etc.). Management Person) • Legal Strength of Underlying Contract. • Credit worthiness through • Securitizing / Financial Statement. Collateralizing of the • Termination Mechanism project asset and protection of Lenders • Current Tariff Analysis. Rights under the • Credit Rating Report • Credit Rating Rational. agreement. • Importance of the project • Payment security for the counterparty. mechanism 7 of 11
TCCL : Project Evaluation Mechanism Expectations from Level of Investment Turn-around-time ESCO’s & Commercials • Typical TAT is Upto 2- 3 • Ensure financial viability of • Varies from Project weeks from start of the the project. to Project Application till the final • Deemed generation • TCCL exposure is stage . • Underlying contracts legally related to the binding. • Strictly basis risk and • Termination mechanism Guidelines from RBI well defined. return matrix • Avoid Aggressive bidding. • Approach well in time. 8 of 11
Index • Tata Group • Brief on sustainable energy • Tata Cleantech Capital Limited (TCCL) – Introduction • TCCL’s Offerings • Project Evaluation Mechanism • Case Study – ESCO project at Hospital 1 of 11
Case Study Loan Tenor of 2.5 years including Five Year Contract including commissioning period of 3 months. O&M. ‘A’ Rated Loan amount of 70% of project cost Deemed Generation Clause. Reputed hospital Project Assets charged to Lenders Well defined and Agreed Personal Guarantee of ESCOs Termination Mechanism. Payback period of 3 years promoters. 3 months EMIs as DSRA Ownership of the equipments Ownership of the equipments installed with ESCO. Payment security revolving LC. installed with ESCO. Tripartite Escrow setup 8 of 11
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