Investor presentation december 2011

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INVESTOR PRESENTATION

December 2011


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These presentation materials have been prepared by Tulip Telecom Limited (the “Company” or “Tulip”) solely for the use at this presentation and have not been independently verified.

You agree to keep the contents of this presentation strictly confidential. This presentation material is highly confidential, is being presented solely for your information and may not be copied,

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Canada or Japan. Further, this presentation may only be distributed to (1) to qualified institutional buyers (as defined in Rule 144A of the United States Securities Act of 1933, as amended

(the “Securities Act”), and (2) to non-U.S. persons (as defined in Regulation S under the Securities Act) outside the United States.

No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained

in this presentation. Neither the Company nor any of its affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information

presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice and its

accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date hereof.

This presentation should not be construed as legal, tax, investment or other advice.

In addition, certain information and statements made in this presentation contain “forward-looking statements.” Such forward-looking statements can be identified by the use of forward-looking

terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,” “p lanned,” “project,” “trend,” and similar expressions. All forward-looking

statements are the Company’s current expectation of future events and are subject to a number of factors that could cause actual results to differ materially from those described in the

forward-looking statements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements.

Certain data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the Company does not

make representations as to, and assumes no responsibility or liability for, the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change

based on various factors.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities of the Company and neither any part of this presentation nor any information or

statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

By participating in this presentation, you agree to be bound by the foregoing limitations.

Disclaimer


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Agenda

Overview

Investment highlights

Appendix

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Tulip Telecom overview

Source: Frost and Sullivan

Note: US$1 = INR49

Overview

Established in 1992 as Tulip Software Private Limited

Market capitalization of US$433mm as on November 11, 2011 on the National Stock Exchange of India Limited

Dedicated focus on providing data services to enterprise customers only

Provides enterprise connectivity services through its wireless & optic fibre last mile network along with data centers &

managed services

Widespread presence across India: 2,000+ cities & towns through wireless network and 300 cities through fibre network

Leased and owned fibre network of 16,500+ kms

Leading presence in the domestic MPLS/ IP VPN segment with a market share of 33.4%

Building one of the largest single site third-party data centers in Bangalore – potential floor space of approximately

900,000 sq. ft. floor space with up to approximately 12,000 racks

Revenue of US$480mm & US$277mm and EBITDA of US$135mm & US$79mm, respectively for FY11 & 1HFY12


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Additional focus towards high margin managed services and data

infrastructure business

IPLC: International Private Leased Circuits; DLC: Domestic Leased Circuits; VSAT: Very Small Aperture Terminal 1 Includes both domestic & international

Enterprise Telecom Market

Managed services Data services

Managed

network

Managed

security

Hosted Unified

Communication

Data center

Management

IPLC DLC MPLS/

VPN1 Internet VSAT &

Ethernet

Fibre Wireless

Mobile services Fixed services

Main business focus area till 2009

Developing capabilities to further broaden the target market

Expansion of target market by laying own intra-city last mile fibre network in 2009

Data center Network

Integration Cloud

computing


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Additional focus towards high margin managed services and data

infrastructure business (cont’d)

Core area of operation with expertise in

providing data connectivity over a wireless

network

Services include internet provisioning, rural

connectivity solutions and virtual private

networks

Tulip sources whole sale fibre bandwidth for

inter-city connectivity on lease from multiple

inter-city service providers

Competitive advantage lies in providing high

uptimes due to the sourcing of fibre

bandwidth from multiple vendors

Significant opportunity in third-party data

center services

Tulip already focusing on growing its data

center business

Bundling of data services along with data

center provides additional competitive

advantage

Managed services + Data infrastructure Wireless VPN Fibre Network Rollout

2002 2009

2011 onwards

Responsible for setting up the „Akshaya

Network‟, a rural wireless network in

Mallapuram, Kerala

Wireless network across India; 2,000+

cities & towns

Own intra-city fibre network – access

to 300 cities & towns

Expansion of addressable market

Approximately 80% of our income

(FY11) from new customers was

attributable to fibre connectivity

Acquired ~900,000 sq.ft. of space in

Bangalore

Entered into agreements with two

leading global IT service providers

Aim to provide full bouquet of

managed services


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Key strategic themes to drive future growth

Attain leadership position in the high growth data center market

Transition from being a data connectivity provider to providing a broad suite of enterprise data services

Expand our optic fibre network and increase our market share

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1

3

Focus on government clients 4

Strengthen service delivery, assurance and internal processes to support growth 5


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Tulip’s progress has been recognized by both its customers and

the Industry

Key awards

BFSI

Telecom

Corporates

SWAN Projects

Haryana, West Bengal

Select customers

More than 2,400 large, medium & small enterprise customers

Government

Frost & Sullivan award for the „Largest

MPLS/ VPN Provider‟ in 2007, 2008 & 2010

Communication, Multimedia & Infrastructure

award for the „Largest Indian Enterprise

Telecommunication Company‟ in 2011

Won a position in the Forbes‟ „Best under a

Billion List‟ in 2010

Gold certification from Cisco in 2009

8th „Hot Growth Company‟ by

Businessweek in 2010

Dun & Bradstreet award for top Indian

company for „Telecom Equipment and

Support Services‟ in 2010

Dataquest award for Best e-Government

Vendor

Outstanding Entrepreneurship Award

Winner - Asia Pacific Entrepreneurship

Awards 2011 India

R-APDRP Projects

Uttar Pradesh, Punjab,

Uttarakhand, Gujarat &

Andhra Pradesh


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Agenda

Overview


Appendix

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Tulip: Key investment themes

Established presence in the high

growth Indian EDC market

One of the leading players in the

enterprise data connectivity

industry

Expanding data center capabilities,

leverage capabilities to offer

diversified enterprise data services

Strong management team

Robust financial performance

Variety of customers across

business segments

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3

2

5

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Established presence in the high growth Indian EDC market 1

Overview

Strong future growth in EDC market (US$mm)

Indian enterprise data connectivity market to grow in the future

CAGR (FY11 - 16): 13% from US$1.4bn in FY11 to about US$2.5bn in FY16

Key segments: International private leased circuit (IPLC), domestic leased circuit (DLC),

MPLS/ VPN, VSAT and internet

MPLS being a cost efficient and scalable solution is the highest contributor to the

enterprise data connectivity market and is expected to grow at a CAGR of 18% till

Fiscal 2016

Domestic MPLS/VPN accounts for ~87% of the total MPLS/VPN market (US$497mm in

FY2011) of which Tulip Telecom accounts for ~33.4%

MPLS/ VPN

42.6%

Source: Frost & Sullivan

Note: US$1 = INR49.0

Key segments of the market

IPLC

Enterprise Data

Connectivity (EDC)

US$1,359mm

DLC MPLS/IP

VPN Internet VSAT Ethernet

Fibre Wireless

Others

57.4%

FY2011 EDC Market

US$1,359mm

579

1,309

FY2011 FY2016

MPLS/ VPN market Enterprise Data Connectivity

1,359

2,469

FY2011 FY2016


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Key customer segments driving the EDC market in India 1

BFSI

Retail & FMCG

Government

IT/ITeS

Manufacturing

Telecom

Computerization of RRB‟s

Intra-bank connectivity

Expansion of branch network

ATM connectivity for additional services

Real time connectivity for usage of enterprise applications

Connectivity to warehouses

Bandwidth required per store

Improving connectivity in rural India

e-Governance initiatives

High speed connectivity to remain connected to clients

Voice channels

Rising BPO/KPO industry

Driven by enterprise applications such as ERP, SCM, CRM

Investments in IP-VPN & VOIP

E-Business to drive cost efficiencies and economies of scale

Usage of DLC as backhaul & NLD Traffic carriage

ILD expected to increase with increase in voice traffic

We believe the following factors would drive growth in the EDC market


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One of the leading players in the enterprise data connectivity industry

Strong

pan-India

presence

Last-mile

wireless

connectivity

Widespread presence across India: 2,000+ cities and

towns through wireless network & 300 cities through optic

fibre

Inter & intra city optic fibre network of approximately

16,500kms

Leases inter-city optic fibre network

#1 player in domestic MPLS/ VPN

Last mile wireless connectivity through the spectrum

allotted in the 2.8 / 3.3 GHz

Tie-ups with telcos to lease bandwidth for inter-city data

transfer

Uptime of ~99.9%

Competitive advantage in providing high uptimes due to

the sourcing of fibre bandwidth from multiple vendors

Central NOC in New Delhi

Redundant NOC in Mumbai Regional

NOC‟s in all Class B cities

ISDN RAS in all Class A & B Cities

Data center

High Capacity fibre

Point to Point Wireless

Mumbai

Delhi

A

B

C

D

Pune

Ahmedabad Chennai

Bangalore

Hyderabad

Kochi

Chandigarh

Bhopal Kolkata

Lucknow

Rural

network

Rural

network

Ahmedabad

Hyderabad

Kochi

Kolkata

Lucknow

Delhi

Mumbai Pune

Chandigarh

Bhopal

Data center

High capacity

fibre

Point to Point

Wireless

Chennai Bangalore

Extensive network reach

Expansion by

investing in

last mile fibre

Given limited bandwidth capabilities of wireless network,

expanded into setting up own last-mile optic fibre

network in 2009

Increased addressable market from ~US$0.6bn to

~US$1.4bn

Fibre segment contributes significantly to new order

inflow

Map not to scale

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Tulip leverages on existing fibre network setup of other telcos & utilities for

its pan-India presence…

Telcos with national fibre

Utilities with national fibre

Tulip has significant fibre capacity leased from national players like Reliance Infocomm, Vodafone, Powergrid, Bharti Airtel, Idea Cellular, Tata Indicom, Rail Tel, SAIL

and BSNL

Delhi

Mumbai

Chennai

Bangalore

Inter-City Primary Link Inter-City Redundant Link High End Router

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… And has entered into agreements with global providers for a worldwide

reach

Chennai

Singapore

New York

Los Angeles

Operational POP’s

London

Mumbai

International expansion

Map not to scale

■ Set-up POPs in East and West Coast of USA, London, Singapore, Mumbai & Chennai

■ In FY11, the Company entered into a global joint marketing agreement with Hutch to jointly provide IP VPN and Virtual

Private LAN services to Indian customers with global connectivity needs

■ Gained access to 200,000kms of Hutchison‟s fibre network spread across 190 countries

■ Commenced delivery of orders across BFSI, Government and Private Sector leveraging the above network

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Tulip plans to be a market leader in data center management and expand its

portfolio of managed services

Note: US$1:INR49.0 1 LEED: Leadership in Energy & Environmental Design

Existing data centers

Tier III compliant & operational data centers with total floor space of ~90,000 sq

ft in Delhi, Bangalore and Mumbai

ISO 20000-1 and 27001 certified

We believe that our data centers provide our customers with world class

infrastructure to co-locate their business critical IT equipment

Key customers

New under construction data center at Bangalore

Acquired in FY11, we believe it to be one of the largest single site third-party

data centers in the world

Facility has potential floor space of ~900,000 square feet and can house up to

approximately 12,000 racks

Expected capital expenditure of US$184mm over three years of which

~US$74mm has been spent as of September 30, 2011

Proposed facility to be LEED1 certified and would be Tier IV & III compliant

Appointed IBM as the design consultant & Schnabel AG, Germany as a peer

review consultant

Peak level full capacity power requirement will be ~80MW

Recently entered into an agreement with two leading global IT service provider

for providing floor space at the facility for a period of 5 years

Commenced operations by providing floor space to a leading IT service provider

and have further accelerated the deployment of furture floor space

Managed services

Software and hardware co-location services

Cloud enabling services

Managed services

Disaster recovery and business continuity services

Managed router solutions

Managed voice solutions

Managed information

security services

Server management

Network management

Database administration

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Variety of customers across business segments

Pre-rollout client acquisition ensures quick breakeven

Focus on Enterprises/Corporates

End-to-end offerings help cross selling services

Tulip typically surveys and identifies potential customers with minimum connects for

quick break-even

Tulip believes that this model enables POPs that are rolled out are profitable

Dedicated focus on enterprise customers

Includes large, medium and small enterprises across business verticals, such as BFSI,

consumer goods, IT, logistics, media and telecommunications

Provides fast & immediate connectivity options with target uptimes of ~99.9%

Presence in network integration, network management, data center, SWAN, etc enables

it to cross sell its high profit data services to customers

BFSI

Telecom

Corporates

SWAN Projects

Haryana, West Bengal

Select customers

Government

R-APDRP Projects

Uttar Pradesh, Punjab,

Uttarakhand, Gujarat &

Andhra Pradesh

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Led by competent and visionary management

Lt. Col.H.S. Bedi Chairman & Managing director

Lt. Col. H.S. Bedi,VSM, (an ex-army personnel) is the Chairman &

Managing Director of the Company

Served in the Indian Army

Deepinder Bedi Executive Director

Mr. Deepinder Singh Bedi is an Executive Director of the Company

Responsible for all marketing and sales support activities within the

Company

Sanjay Jain Chief Executive Officer

Mr. Sanjay Jain is the Chief Executive Officer (CEO) of the

Company

He is responsible for driving the business augmentation and

service excellence for the Company Rahul Ahuja

Chief Financial Officer

Mr. Rahul Ahuja is the Chief Financial Officer (CFO) of the

Company

He is responsible for the financial and operational functions of the

Company

Rajesh Duggal President – Govt Business

Mr. Rajesh Duggal is the President - Government Business

He is responsible for leading the Government, Defense and PSU

business

Jitendra Israni Chief Service Officer

Mr. Jitendra Israni is the Chief Service Officer (CSO) of the

Company

He is responsible for efficient delivery of services to the customers

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Deepak Khanna President - Enterprise Business

Mr. Deepak Khanna is the President - Enterprise Business

He is responsible for leading enterprise business

Sanjay Verma President - Govt Business

Mr. Sanjay Verma is the President – Managed Services

He is responsible for leading managed services business for the

domestic and international markets

Mr. Ashu Malhotra is the HR Head of the company.

He is responsible for end to end HR Life Cycle of the firm

Ashu Malhotra

Head- HR

http://www.ingvysyabank.com/index.aspx


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Robust financial performance

Revenue (US$mm) EBITDA (US$mm) and Capex (US$mm)

Note: Capex includes purchase of fixed assets and capital work-in-progress, purchase of goodwill & investment in JVs/ subsidiaries

US$1 = INR49.0

329.5

401.3

276.9

479.8

FY2009 FY2010 FY2011 H1FY12

PAT (US$mm) and margin (%)

51.147.3

62.5

33.7

15.5%11.8% 13.0% 12.2%

28.6%

28.2%26.7%

20.9%

0

20

40

60

80

FY2009 FY2010 FY2011 H1FY12

0.0%

25.0%

50.0%

75.0%

PAT % EBITDA margin % PAT margin

Key comments

68.7

107.2

135.3

79.2

150.3

51.1

182.6

87.2

FY2009 FY2010 FY2011 H1FY12

EBITDA Capex

■ Revenue of US$480mm in FY11 with a 09-11 CAGR of 20.7%

■ Achieved revenue growth of 22.2% in H1FY12 over H1FY11

■ Revenue growth expected to continue with the ongoing fibre roll-out &

expansion in to data center business

■ EBITDA of US$135mm in FY11 with a 40.3% 09-11CAGR

■ Increased EBITDA margin of 20.9% in FY09 to 28.6% in H1FY12

■ Business mix has shifted towards the high margin enterprise data

services

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Profit & Loss Statement

All figures in US$mm 2008–09 2009–10 2010–11 H1’FY11 H1’FY12

Sales 329.5 401.3 479.8 226.7 276.9

% growth 21.8% 19.6% 22.2%

EBITDA 68.7 107.2 135.3 62.2 79.2

% margin 20.9% 26.7% 28.2% 27.5% 28.6%

EBIT 60.3 79.6 100.3 46.0 59.0

% margin 18.3% 19.8% 20.9% 20.3% 21.3%

Profit before tax 68.9 65.6 83.0 38.4 44.7

% margin 20.9% 16.4% 17.3% 16.9% 16.2%

Profit after tax 51.1 47.3 62.5 29.0 33.7

% margin 15.5% 11.8% 13.0% 12.8% 12.2%


P&L (US$ in millions)

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Balance sheet

Balance sheet (US$ in millions)

All figures in US$mm 2008–09 2009–10 2010–11 Sep „11

Shareholder's equity 139.2 189.4 247.5 281.2

Loan funds 229.1 248.8 362.6 453.2

Secured Loans 104.9 111.8 250.9 313.0

Unsecured Loans 124.1 137.0 111.7 140.2

Deferred Tax Liability (Net) 0.2 0.6 0.6 0.7

Total Liabilities 368.4 438.7 610.7 735.1

Goodwill 0.0 0.0 25.4 25.4

Fixed assets (including CWIP) 247.9 271.4 361.9 428.8

Investments 0.0 0.0 31.6 31.7

Net Current Assets 120.4 167.3 191.7 247.1

Misc Exp (not yet written off) 0.1 0.1 0.1 2.1

Total assets 368.4 438.7 610.7 735.1


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Conclusion

Continues to grow the addressable market

One of the leading MPLS/VPN provider in India

Increasing wallet share from existing customers by expanding into managed services segment

Geared up to offer services in emerging areas such as cloud computing

Consistently increasing customer stickiness


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Agenda

Overview


Appendix

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Regulatory framework

Key categories Rules and regulations

Internet service

provider (ISP)

Virtual Private Network

(VPN)

NLD & ILD License

FDI limit of 74% with 49% allowed under automatic route and above that under the government route

One-time entry fee for new ISP license is INR3mm for Category A and INR1.5mm for Category B ISPs; no new Category C licenses

are being issued

Annual license fee of 6% of Adjusted Gross Revenue (“AGR”)


One-time non-refundable entry fee of INR100mm, INR20mm and INR10mm for Category A,B and C respectively

Annual license fee of 6% of Adjusted Gross Revenue (“AGR”) generated under the license


Entry Fee for new NLD license is INR25mm

Annual license fee of 6% of AGR

Source: DoT website, research reports

Note: Category, A“: All India ISP License; Category „B“: 20 territorial Telecom Circles, four Metro Districts- Delhi, Mumbai, Calcutta or Chennai and four major Telephone

Districts- Ahmedabad, Bangalore, Hyderabad or Pune; Category „C“: License in any Secondary Switching Areas (SSA) of DOT with geographical boundaries as on 1.4.98 (Revenue district in most cases)


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Focus on the government segment to reap benefits

Note: US$1:INR49.0; SWAN indicates state wide area network

Tulip has currently

undertaken 4 SWANs

Financial inclusion

initiatives

IT solutions offered

under APDRP would

require a robust

connectivity backbone

■ Utilities/State Electricity Boards incur large losses annually in

transmission and distribution

■ Government has launched Revised Accelerated Power

Development and Reforms Programme (R-APDRP)

■ Tulip has been granted 4 SWAN projects - on BOOT basis, which

involves supply & installation of network equipments and

operation & maintenance of projects for 5 years.

■ The revenues are recognized over quarterly installments, post

completion of the SWAN project

■ Involved in various eGovernance initiatives of the Government of

India, which aim to improve the infrastructure in rural areas Initiatives undertaken by the State and Central

governments

Accelerated Power Development & Reforms

Program (APDRP)

Won the five R-APDRP projects in states of Uttar

Pradesh, Gujarat, Uttarakhand, Andhra Pradesh

and Punjab with a combined value of US$49mm to

be spread over 3 to 5 years

Won SWAN projects in states of Haryana, West

Bengal, Assam and Madhya Pradesh with

aggregate project size of US$52mm


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Profit & Loss Statement

All figures in INR mm 2008–09 2009–10 2010–11 H1’FY11 H1’FY12

Sales 16,144 19,664 23,511 11,107 13,568

% growth 21.8% 19.6% 22.2%

EBITDA 3,367 5,255 6,631 3,050 3,880

% margin 20.9% 26.7% 28.2% 27.5% 28.6%

EBIT 2,953 3,902 4,917 2,255 2,892

% margin 18.3% 19.8% 20.9% 20.3% 21.3%

Profit before tax 2,835 3,216 4,065 1,881 2,192

% margin 17.6% 16.4% 17.3% 16.9% 16.2%

Profit after tax 2,505 2,316 3,064 1,421 1,653

% margin 15.5% 11.8% 13.0% 12.8% 12.2%

P&L (INR in millions)


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Balance sheet

Balance sheet (INR in millions)

All f igures in INR mm 2008–09 2009–10 2010–11 Sep „11

Shareholder's equity 6,819 9,279 12,125 13,779

Loan funds 11,224 12,191 17,769 22,206

Secured Loans 5,141 5,476 12,296 15,339

Unsecured Loans 6,083 6,715 5,473 6,868

Deferred Tax Liability (Net) 9 29 32 35

Total Liabilities 18,053 21,499 29,926 36,019

Goodwill 0 0 1,244 1,244

Fixed assets (including CWIP) 12,148 13,296 17,732 21,011

Investments 0 0 1,549 1,555

Net Current Assets 5,901 8,198 9,395 12,108

Misc Exp (not yet written off) 4 4 4 102

Total assets 18,053 21,499 29,926 36,019

Investor presentation december 2011

Investor Relations

Transcript of Investor presentation december 2011