1 Agenda Steel Scenario Project updates Performance Highlights - - PowerPoint PPT Presentation

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Agenda

• Steel Scenario
• Project updates
• Performance Highlights
• Quarterly Developments
• Way Forward

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Steel Scenario…

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5.1 3 7.9 5 2.7 8 4.1 1.7 6.9 3.9 1.4 6.7 1 2 3 4 5 6 7 8 9 World Advanced Economies Emerging Economies % 2006 2007 2008E 2009E

International Commodity Prices

Source: IMF/ RBI

Global Commodity prices firmed up further during the first quarter of 2008-2009 led by sharp increase in Crude oil prices and US dollar weakening. The slowdown in the global growth is expected to continue in 2008. The pace of decline abates in 2009.

GDP Growth

1 3 5 7 9 11 2002 2003 2004 2005 2006 2007 2008E

% Emerging & Developing Economies Developed Economies

CPI Inflation

Increased inflationary pressures driven by rising food and energy prices, and persisting global imbalances

Global Slowdown & Rising Inflation

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230.1 263.4 314.9 355.7 417.8 460.6 521 578.6 637.9

150 250 350 450 550 650 750 2001 2002 2003 2004 2005 2006 2007 2008E 2009E

BRIC’s apparent consumption of steel is est. to grow at a CAGR of 11% between 2007 and 2009 Consumption Drivers: infrastructure spending, Construction, growing Industrial Sector, Auto & Capital Goods.

Demand for Steel to Sustain

Source: IISI/WSD

FAI/GDP As per WSD, 80% of the FAI gets invested into Infrastructure, Construction and Capital goods.

CAGR 11% CAGR 14.6%

MT

• App. Steel consumption- BRIC

21.1 47.6 16.9 16.7 44.4 35.9 17.9 36.3

10 15 20 25 30 35 40 45 50

BRAZIL RUSSIA INDIA CHINA

%

2006 2007

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776.9 828.6 886.2 976.8 1 031 .4 1 1 24.6 1 208.5 1 282 1 363

650 750 850 950 1050 1150 1250 1350 1450 2001 2002 2003 2004 2005 2006 2007 2008E 2009E

MT

CAGR 7.6% CAGR 6.2%

World app. steel consumption is

• est. to grow at a CAGR of 6.2%

between 2007 and 2009, with strong demand from emerging economies.

Source: IISI

35.4 44.3 49.2 53.6

30 35 40 45 50 55

2006 2007 2008E 2009E MT

CAGR 10%

In M.E. apparent consumption of steel is

• est. to grow at a CAGR of 10% between

2007 and 2009. Steel consumption has grown at whopping 25% for the year 2007. Consumption Drivers: Oil & Gas, expanding construction activities.

• App. Steel consumption- Middle East
• App. Steel consumption- World

25%

Demand for Steel to Sustain

Contd…

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521 1208.5 578.6 1282 637.9 1363 400 800 1200 1600 BRIC World MT 2007 2008E 2009E

CAGR 11% CAGR 6.2%

Capacity addition between 2007 and 2009 is est. to grow at a CAGR of 8.2% for BRIC and 6 % for World.

Source: IISI/ SBB

Growth in Demand outpacing growth in Capacity addition Capacity Apparent Steel Consumption

Capacity addition not in pace

• App. Steel Consumption between

2007 & 2009 is est. to grow at a CAGR of 11% for BRIC and 6.2 % for world

733 1564 803 1654 868 1759 400 800 1200 1600 2000 BRIC World MT 2007 2008E 2009E

CAGR 8.2% CAGR 6%

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70.0 80.0 90.0 100.0 110.0

Jan 2001 Jun 2001 Nov 2001 Apr 2002 Sep 2002 Feb 2003 Jul 2003 Dec 2003 May 2004 Oct 2004 Mar 2005 Aug 2005 Jan 2006 Jun 2006 Nov 2006 Apr 2007 Sep 2007 Feb 2008

North America Japan

Jun 2008

Jan 2001 =100

72% 76% 80% 84% 88% 92% 1995 1997 1999 2001 2003 2005 2007 2009E 2011E

Low Inventory level on account of supply shortage High capacity utilization on account of high finished steel prices and low inventory level

Capacity utilization

Source: CRU/ TEX/ SBB

Inventory

Capacity addition not in pace

Contd…

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8.06 7.28

3.00 4.00 5.00 6.00 7.00 8.00 9.00

Jan 07- Jun 07 Jan 08- Jun 08

MT

67.56 65.08 30 40 50 60 70

Jan 07- Jun 07 Jan 08- Jun 08 MT

China’s Export quota for coke reduced to 12.01 Mt for 2008 against 14mt in 2007 on account of tight supply of Coal and pollution issue. 11Mt of Metallurgical coal was lost due to Queensland floods

Source: CRU/ TEX

Australia- Coal Export China-Coke Export

Tight Supply of Raw Materials

3.67% 9.68%

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1,000 3,000 5,000 7,000 9,000 11,000 JAN-06 MAR-06 MAY-06 JUL-06 SEP-06 NOV-06 JAN-07 MAR-07 MAY-07 JUL-07 SEPT-07 NOV-07 JAN-08 MAR-08 MAY-08

Baltic Dry Index

Resulting Raw material super Cost Push. Current spot prices are up by 371% for Coke, 311% for Coal and 137% for iron

• re from April 2007 level.

Freight rate at record high

Spot freight rates for iron ore from Brazil to China reported as high as $108/tonne. W. Australia-China spot rates at $ 45-46/t.

50 100 150 200 250 300 350 400

APR-07 JUN-07 AUG-07 OCT-07 DEC-07 FEB-08 APR-08 JUN-08

Iron ore Spot Coke Spot Coking Coal Contract

Source: CRU/ TEX/ SBB

Apr 2007 =100

Tight Supply of Raw Materials

Contd…

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7.95 Nucor Arcelor Mittal Bao Steel Posco Severstal SDI Tata/Corus NLMK JSW Steel EZZ CSN 7.82 7.77 7.61 7.53 7.52 7.50 7.36 7.45 7.29 7.29 Source: WSD- Ranking as on June 2008

Ranked 8th among top 31 “World-Class” Steelmakers

• June 2007,

Ranked 8th among the top 26

• Dec 2007,

Ranked 9th among the top 30

• June 2008,

JSW Jumps one slot up to no. 8th position among the top 31

Low Cost Operation with 100% Captive Raw material Global Size & Efficient Operation Potential to improve further due to:

• Scaling up Capacities.
• Increasing Raw Material Security

Efficient & Low Conversion Cost

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Emerging as a Global Player

FY 2008 4.8 MT Iron Ore – 25% Coal – 0% Brown field South India 9% Capacity Raw Material Integration Growth Route Steel Making Facilities Market Share in India FY 2020 32 MT Iron Ore – 72% Coal – 50% Brownfield/Greenfield Dispersed 17%

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Raw material Integration

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Iron Ore Mine :South America

Location : Chile Total Area : 26,245 Ha Cost of Acquisition : USD 252 Mio Output/Year : 20MTPA

(Capacity: 6 MT – FY 2010, ramp up to 20 Mtpa)

Port : Right to use existing Caldera port. Management Structure: Mining Rights with JV Company, of which 70% stake is held by JSWSL. (Share of output to JSWSL 100% at L.T. reference price) Present Status:

• Mine development Capex of USD 130 Mio tied up.
• Drilling in progress.
• Environmental Clearance for opening Bellavista mine

awaited.

• Basic Engineering for Beneficiation plant in progress.
• Beneficiation Plant ordered.
• Mining Plan at final stage.
• Feasibility study for construction of new port under progress.

16 Location : Mozambique-Coal Block : PLOT-1127 L Plot -2214 L,1053 L & 1370 L Total Area : 45,460 Ha Expected Reserve: 188.6 Mt for Plot -1127L , reserves for remaining plots is yet to be established. Present Status: Company continues to work on obtaining various approvals Railway construction from port to mine is under progress.

Coal Block: Mozambique

Plot 1053L Plot 1127L Plot 2214L Plot 1370L Port Beira

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Coal Block: Jharkhand

Location : Rohne Total Area : 1,254 Ha Mine Type : Open Cast Exploration Status : Fully Explored Expected Resources : 410 Mt Mineable Reserve : 250 Mt Output/Year : 8 MTPA Management Structure: Allotted to JV Company of which 69% of

• utput accrues to JSW.

Present Status:

• The Coal Block has been fully explored.
• MOC has allocated the coal block to JV Co.
• Mining plan preparation is under progress.
• Application for TOR (terms of Reference) submitted.

Coal Block Steel Plant

Proposed Plant location Rohne Coal Block

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West Bengal

Project update

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Project Details: Location: Salboni, West Bengal Distance from Port:140 Km from Haldia port & 120 Km from kolkata airport. Capacity : 6 MTPA ( Steel plant) Phase 1A : Beneficiation plant 8 MTPA Pellet Plant 6 MTPA (part of steel plant) Tax Benefit: The project will be eligible for tax benefit

• n approval as SEZ unit.

Phase 1A : Project cost : Rs. 4000 Cr. ( incl. 800 Cr. in coal mining & development) Equity : Rs. 1333 Cr. Debt : Rs. 2667 Cr. Present Status: Land Acquisition completed.

• MOEF clearance received from Central Govt.
• Rail Transport clearance has been obtained.
• Construction of boundary wall under progress
• Iron Ore supply agreement signed.
• Exp. Commissioning: FY 2012

West Bengal Project update

Proposed Plant location

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Perform ance Highlights…

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Highlights – Q1 FY09

Weighted Average Cost of Borrowings 7.63 % Weighted Average Cost of Borrowings 7.63 %

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Production – Q1 FY09

0.975 0.593 0.092 0.802 0.674 0.078 0.2 0.4 0.6 0.8 1 1.2 Crude Steel Rolled : Flat Rolled : Long Mn Tonnes Q1 '08 Q1 '09

22 22%

• 12%

18%

HSM shutdown of 17 days for modernisation restricted output of HSM shutdown of 17 days for modernisation restricted output of Rolled flat products. Rolled flat products.

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13%

0.168 0.032 0.614 0.075 0.722 0.582 0.067 0.817 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 Semis Rolled:Flat Rolled:Long Total Sales Mn Tonnes Q1 '08 Q1 '09

419%

• 5%
• 11%

Saleable Steel Sales – Q1 FY09

Excess slabs available for sale due to HSM shutdown for modernis Excess slabs available for sale due to HSM shutdown for modernisation ation

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Sales Realisation – Q1 FY09

24 30482 41168 5000 10000 15000 20000 25000 30000 35000 40000 45000 Blended Realisation

• Rs. / T

Q1 '08 Q1 '09 35%

25 25

19001 30607 5000 10000 15000 20000 25000 30000 35000 Blended Cost

• Rs. / T

Q1 '08 Q1 '09

61%

Cost of Production – Q1 FY09

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Imported Coke (Vijaynagar Works)

10550 22850 5000 10000 15000 20000 25000

• Rs. / T

Q1 '08 Q1 '09

26 117%

• ve

Iron Ore fines (Vijaynagar Works)

1393 2674 500 1000 1500 2000 2500 3000

• Rs. / T

Q1 '08 Q1 '09

92%

• ve

Raw Material Price Movements

China FOB $ 212 / t to $ 605 / t up by 185 % China FOB $ 212 / t to $ 605 / t up by 185 % CIF China $ 100 / t to $ 186 / t up by 86 % CIF China $ 100 / t to $ 186 / t up by 86 %

27 Fluxes Consumption - BF (Vijaynagar Works) 148.5 83.9 20 40 60 80 100 120 140 160 Kg / t CS Q1 '08 Q1 '09

27 43%

+ ve

Fuel Consumption - BF (Vijaynagar Works)

46 57 584 630 574 632

100 200 300 400 500 600 700 Coke Coal Inj Total Mn Tonnes Q1 '08 Q1 '09

+ ve

Increase in Coal Injection over Coke Increase in Coal Injection over Coke

Operating Parameters

28 Power Generation (Vijaynagar Works) 139.4 149.1 134 136 138 140 142 144 146 148 150 Mw Q1 '08 Q1 '09

28 7%

+ ve

LD Gas Recovery (Vijaynagar Works)

82 88

79 80 81 82 83 84 85 86 87 88 89 M3 / t of LS Q1 '08 Q1 '09

+ ve

7%

Operating Parameters

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Financials – Q1 FY09

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Operating EBITDA Analysis

Q1 FY 08 Q1 FY 09 EBIDTA (Rs. Cr.) 922.76 660.09 229.95 890.04 22.7% Forex Gain (60.15) LOP Claim (18.75) Forex Loss

• Op. EBIDTA (Rs. Cr.)

843.86

• Op. EBIDTA (%)

34.4% 890.04 843.86 700 740 780 820 860 900 Q1 FY 08 Q1 FY 09

• Rs. Cr.

5 . 5 %

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Operational Performance - USA

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Financial Performance - USA

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Unrealised contribution on incremental inventory : Rs. 19 Cr. Unrealised contribution on incremental inventory : Rs. 19 Cr. for Q1 09 and Nil in Q1 08 for Q1 09 and Nil in Q1 08

Financial Summary- Consolidated

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Quarterly Developm ents

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Quarterly developments – Q1 FY09

• Successfully completed modernization of Hot Strip Mill with increase in

HR Coil manufacturing capacity from 2.5 MTPA to 3.2 MTPA.

• Commissioned 1st block of Coke Ovens (56 ovens) on 27th June’08.
• Expansion project to increase the capacity to 6.8 MTPA at Vijayanagar is

progressing satisfactorily and is expected to be on stream September 2008.

• New HSM #2 (Phase I- 3.5 Mtpa) :Major and Long delivery packages

finalised, Civil and Structural work is ahead of schedule. Exp. Commissioning by Oct 2009.

• Colour Coating Line-2 (0.1 Mtpa) : Cold trial is expected in Aug-08.
• 30 MW Power Plant: Major Order placed, Boiler & Chimney erection work

under progress. Exp. Commissioning by Oct 2008.

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Awards & Recognitions

• Greentech Safety Award 2007:

Gold Award in Metal and Mining Sector for Outstanding Achievement in Safety Management by Greentech Foundation (10th April 2008, Mumbai).

• G3 Awards for Good Green Governance 2007:

JSW Steel received winners trophy in the manufacturing category by SRISHTI, New Delhi (22nd April 2008).

• TERI Environment Award 2008:

Certificate of appreciation in recognition of efforts towards environmental management and innovative initiatives (June 2008).

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PROJECT CHEETAH : Bird’s Eye View

CIVIL

Balance 1.91 %

Actual 98.09%

STRUCTURAL

Balance Erection 0.11 %

EQUIPMENT

Balance 25%

REFRACTORY

Balance 20%

PIPING

Balance 23%

CABLING

Balance 36.53 %

CIVIL

Balance 1.91 %

Achieved 98.09 % Achieved 75 % Achieved 63.47 % Achieved 80 % Achieved 77 % Fabrication Total 99.89 %

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COKE OVEN # 3 : BATTERY

July’ 07 July’ 08

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DESULFURISATION & REGENERATION TOWERS COKE OVEN # 3: July’ 07 July’ 08

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COKE OVEN # 3: GAS HOLDER

July’ 07 July’ 08

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LCP: KILN

Sept ‘07 July‘08

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July’08 May’07

BF # 3 : Over All view

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BOF :CONVERTER # 1

May 2007 July 2008

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BOF : SECONDARY DEDUSTING

June 2007 July 2008

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CCP: BILLET CASTER

July 2007 July 2008

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WRM MILL AND STELMOR AREA

July’ 07 July ’ 08

R.S.M N.T.M. STELMOR

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BAR MILL COOLING BED

July ‘07 July ‘ 08

48 32 MTPA by 2020 Market Share Global Presence Raw Material I ntegration Strong Financials Diversified Product Profile

Sustainable GROWTH……… ……….Creating VALUE

Consolidate position in domestic steel industry with focus on enhancing capacities at competitive cost Achieve significant position in domestic market. Expand Global Presence with Value addition closer to market. Raw material Integration to protect from cost fluctuations Strong financials to support Growth Enhance Value through Rich Product mix.

Way Forward…

Way Forward

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Q & A Session…

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Forward Looking and Cautionary Statement

Certain statements in this report concerning our future growth prospects are forward looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward looking statements. The risk and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition within Steel industry including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our internal operations, reduced demand for steel, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which the Company has made strategic investments, withdrawal of fiscal/governmental incentives, impact of regulatory measures, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward looking statements that may be made from time to time by or on behalf

• f the company.