1 Agenda 2 Mega boosters from Governments worldwide Massive - - PowerPoint PPT Presentation

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Agenda

2

Global Response

• Governments infusing capital into financial institutions
• Globally coordinated interest rate cuts
• IMF provides bridge loan to meet foreign exchange requirements
• Coordinated measures at G20 summit

Massive Government Stimulus

(Totaling ~ USD 1.96 trillion)

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Mega boosters from Governments worldwide

Brazil 3.6

Source: IDFC/SSKI

105

S weden 1.8 US A 850

China 586

India 4.0 Portugal 2.8 Chile 2.0 Australia 7.4 Hungary 6.9 Mexico 5.8 Italy 8.0 Korea 8.0 Netherland 7.6 France 33 UK 29.7 S pain Russia 186 Japan Germany (US$ bn)

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Easing liquidity, inflationary pressure off, commodity prices down…

Sinking Commodity Price Indices

Feb-09

Headline inflation down Petroleum prices at Jan05 low

(U.S. dollars a barrel) Source: IMF / Bloomberg

%

Apr-09 Mar-09

Lowering TED Spread

bps 4

Indications of economic recovery

Improving business confidence

Manufacturing Purchasing Managers Index

Smart money returning to market due to attractive valuation

University of Michigan

US Business confidence Index World Stock Indices

% change from Dec 31st 2008 to Apr 29,2009 Source: IMF / Bloomberg

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Emerging economies to lead revival

Industrial Production Growth y‐o‐y

%

Feb-09

GDP Growth y‐o‐y

%

Consumer prices Growth y‐o‐y

%

Retail Sales Growth y‐o‐y

%

F e b

• 9

6

Source: IMF

Steel Scenario Steel Scenario Steel Scenario

7

Quick supply side corrections ensure no glut in market

World monthly crude steel production

(y‐o‐y % change)

Global Steel: Capacity utilization ( % )

8

Source: Worldsteel/ WSD

Widened spread between Production and Apparent consumption …Indicating destocking of Inventory

Crude Steel Production Vs. Apparent consumption

(MnT) 9

Source: WSD

Global steel Industry tumbling down the cost curve… due to fall in raw material prices

World Cost Curve for Hot Rolled Band

Source: WSD

10

…Steel prices seem to have bottomed out.

Scrap price movement… Steel price movement

USD / ton USD / ton Shredded / Rotterdam export FOB $/t

Margins may not come under pressure

Source: Worldsteel

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Indian ‐ Scenario Indian Indian ‐ ‐ Scenario Scenario

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India … among the first to turn the corner

GDP growth est. (%) GFCF % of GDP

Source: OECD/ IMF

Data for 2007

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India: Manufacturing PMI Industrial Production 2009F

(Y‐o‐Y % change)

Source: Citi investment research and analysis.

India better placed than others

Y‐o‐Y % change in Crude Steel Production

(Jan 09‐Mar 09)

% %

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Source: Bloomberg/ Worldsteel

Performance highlights Performance highlights Performance highlights Performance highlights

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Highlights

Particulars

Q4 FY09 FY 09 Q4 FY09 vs. Q4 FY08 FY 09 vs. FY 08 Volume : Crude Steel Production 0.966 3.724 ‐ 3 % 3 % : Saleable Steel 1.062 3.428 5 % 1 % Net Sales 3,275.02 14,001.25 ‐ 7 % 23 %

EBITDA Margin

15.1 % 21.8 %

EBITDA

• Rs. 503 Cr.
• Rs. 3,093 Cr.

Net Profit

• Rs. 49 Cr.
• Rs. 458 Cr.

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Production – Q4 FY09

Q4 '08, 0.993 Q4 '09, 0.966 Q3 '09, 0.782 0.00 0.20 0.40 0.60 0.80 1.00 1.20

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Q4 '08, 0.775 Q4 '09, 0.826 Q3 '09, 0.622 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Rolled : Flat

YoY % QoQ %

7% 33% Rolled : Long

YoY % QoQ %

‐3% 6%

Q4 '08, 0.236 Q4 '09, 0.322 Q3 '09, 0.266 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35

CR / CRCA

YoY % QoQ %

36% 21%

Q4 '08, 0.187 Q4 '09, 0.230 Q3 '09, 0.197 0.00 0.05 0.10 0.15 0.20 0.25

GI / GL

YoY % QoQ %

23% 17% Crude Steel

YoY % QoQ %

‐3% 24%

All No are in Mn Tonnes

Production – FY 08­09

‐6% %0

FY 07‐ 08, 0.862 FY 08‐ 09, 1.045 0.00 0.20 0.40 0.60 0.80 1.00 1.20

FY 07‐ 08, 0.764 FY 08‐ 09, 0.745 0.000 0.100 0.200 0.300 0.400 0.500 0.600 0.700 0.800 0.900

FY 07‐ 08, 0.329 FY 08‐ 09, 0.330 0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350

FY 07‐ 08, 2.943 FY 08‐ 09, 2.764 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

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Crude Steel

YoY %

3% Rolled : Flat

YoY %

Rolled : Long

YoY %

CR / CRCA

YoY %

21% GI / GL

YoY %

‐3%

FY 07‐ 08, 3.627 FY 08‐ 09, 3.724 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00

All No are in Mn Tonnes

Saleable Steel Sales – Q4 FY09

Q4 '08, 0.556 Q4 '09, 0.525 Q3 '09, 0.331 0.00 0.10 0.20 0.30 0.40 0.50 0.60

Q4 '08, 0.123 Q4 '09, 0.110 Q3 '09, 0.060 0.000 0.020 0.040 0.060 0.080 0.100 0.120 0.140 Q4 '08, 0.081 Q4 '09, 0.096 Q3 '09, 0.079 0.00 0.02 0.04 0.06 0.08 0.10 0.12

HR Coils & Plates

YoY % QoQ %

‐ 6% 59% Rolled : Long

YoY % QoQ %

19% 22% Semis

YoY % QoQ %

‐10% 83%

Q4 '08, 0.249 Q4 '09, 0.330 Q3 '09, 0.241 0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350

Value Added (CR/GI/PPGI)

YoY % QoQ %

32% 37%

Q4 '08, 1.009 Q4 '09, 1.062 Q3 '09, 0.711 0.00 0.20 0.40 0.60 0.80 1.00 1.20

Total Sales

YoY % QoQ %

5% 49%

All No are in Mn Tonnes 19

Saleable Steel Sales – FY 08 ­ 09

FY 07‐ 08, 1.962 FY 08‐ 09, 1.599 0.00 0.50 1.00 1.50 2.00 2.50 FY 07‐ 08, 0.291 FY 08‐ 09, 0.293 0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350

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FY 07‐ 08, 3.405 FY 08‐ 09, 3.428 0.000 0.500 1.000 1.500 2.000 2.500 3.000 3.500 4.000

Total Sales 1% HR Coils & Plates Rolled : Long

FY 07‐ 08, 0.291 FY 08‐ 09, 0.542 0.1 0.2 0.3 0.4 0.5 0.6

Semis

YoY %

86%

FY 07‐ 08, 0.861 FY 08‐ 09, 0.994 0.00 0.20 0.40 0.60 0.80 1.00 1.20

Value Added (CR/GI/PPGI)

YoY %

15% ‐ 19%

YoY %

1%

YoY % YoY %

All No are in Mn Tonnes

Sales Realisation v/s Cost of Production – Q4 FY09

Cost, 23740 Cost, 25026 Cost, 29446 FX Loss, 1747 FX Loss, 1582 FX Loss, 274 5000 10000 15000 20000 25000 30000 35000 Q4 '08 Q4 '09 Q3 '09

Blended Cost (Rs. / t)

YoY % QoQ %

11% ‐ 15%

24,014 26,608 31,193

Q4 '08, 32965 Q4 '09, 27881 Q3 '09, 34946 5000 10000 15000 20000 25000 30000 35000 40000

Blended Realisation (Rs. / t)

YoY % QoQ %

‐ 15% ‐ 20%

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Sales Realisation v/s Cost of Production – FY 08­09

49%

YoY %

FY 08, 30892 FY 09, 37117 5000 10000 15000 20000 25000 30000 35000 40000

Blended Realisation (Rs. / t)

YoY %

20%

Cost, 21226 Cost, 29062 FX Loss, 2177 FX Loss, ‐ 199 ‐5000 5000 10000 15000 20000 25000 30000 35000 FY 07‐08 FY 08‐09

FX Gain,

21,027 31,239

Blended Cost (Rs. / t)

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Iron Ore Price Movements – Q4 FY09

YoY % QoQ %

‐ 49 % 49 % Rs / t

Q4 '08, 2851 Q4 '09, 1461 Q3 '09, 982 500 1000 1500 2000 2500 3000 QoQ YoY Rs / t cs ‐777 2257 Total (Rs Cr) ‐75 218

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Operating Parameters (Vijayanagar) – Q4 FY09

Q4 '08, 661 Q4 '09, 612 Q3 '09, 628 580 590 600 610 620 630 640 650 660 670

Fuel – Blast Furnace

YoY % QoQ %

‐ 7% ‐ 3% Cost Impact

QoQ YoY Rs per t cs ‐392 ‐432 Total (Rs Cr) ‐30.34 ‐33.43 62.19% 99.00% 94.20% 37.81% 1.00% 5.80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q4 '08 Q4 '09 Q3 '09 Own Bought

Coke Consumption Cost Impact

QoQ YoY Rs per t cs ‐300 ‐2,186 Total (Rs Cr) ‐23.22 ‐169.20

Q4 '08, 379 Q4 '09, 342 Q3 '09, 309 50 100 150 200 250 300 350 400

Fluxes Consumption Sinter + Bfc

YoY % QoQ %

‐10% 11%

Kg / t Kg / t

Q4 '08, 62 Q4 '09, 111 Q3 '09, 118 20 40 60 80 100 120 140

LD Gas Recovery

M3 / t

• f LS

YoY % QoQ %

79% ‐ 6%

QoQ YoY Rs per t cs ‐19 51 Total (Rs Cr) ‐1.47 3.95

Cost Impact Cost Impact

QoQ YoY Rs per t cs 11 ‐12 Total (Rs Cr) 0.85 ‐0.93

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Operating Parameters (Vijayanagar) – FY 08­09

‐4%

FY 07‐ 08, 70 FY 08‐ 09, 101 20 40 60 80 100 120

FY 07‐ 08, 341 FY 08‐ 09, 365 50 100 150 200 250 300 350 400

Fuel – Blast Furnace

71.00% 76.00% 29.00% 24.00% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FY 07‐08 FY 08‐09 Own Bought

Coke Consumption

YoY %

Cost Impact

YoY Rs per t cs ‐191 Total (Rs Cr) ‐58.8

Cost Impact

YoY Rs per t cs ‐185 Total (Rs Cr) ‐56.95

YoY %

7%

Kg / t Kg / t M3 / t

• f LS

YoY %

‐44% Fluxes Consumption Sinter + Bfc LD Gas Recovery

FY 07‐ 08, 652 FY 08‐ 09, 627 100 200 300 400 500 600 700

Cost Impact Cost Impact

YoY Rs per t cs 16 Total (Rs Cr) 4.93 YoY Rs per t cs ‐32 Total (Rs Cr) ‐9.85

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Financial Performance Financial Performance Financial Performance Financial Performance

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EBITDA Analysis – Q4 and FY09

• Rs. Cr.

Q4 FY 09 Q4 FY 08 FY 09 FY 08

EBITDA 503.40 951.23 3,092.67 3,506.85

EBITDA Margin 15.1 % 26.7 % 21.8 % 30.3 %

Less : CER income (48.58) (48.58) (111.11) Less : FCCB gain & Others (97.30) (102.39) (5.64) Adjusted EBITDA 357.52 951.23 2,941.70 3,390.10

Adjusted EBITDA Margin 10.9 % 26.7 % 20.8 % 29.6 %

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Subsidiary Performance Subsidiary Performance Subsidiary Performance Subsidiary Performance

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Operational Performance ­ USA

PRODUCTION (NT) SALES (NT)

Q4 FY 09 FY 2008‐09 Q4 FY 09 FY 2008‐09

Plate Mill 44,061 343,691 26,986 199,861 Pipe Mill 9,065 137,626 9,942 143,508 $ Mio Particulars

Q4 FY 09 FY 2008‐09

a) Turnover 30.31 500.92 b) EBITDA + Other Income Write down of Inventory (18.93) (58.35) 70.58 (58.35) Profit Before Tax (96.68) (64.74) e) Profit After Tax (61.1) (36.97)

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Standalone Financials Q4 and FY 09

• Rs. Cr

Particulars

Q4 FY 09 Q4 FY 08 FY 09 FY 08

Total Income

3,328.80 3,568.20 14,158.42 11,566.61

EBITDA

503.40 951.23 3,092.67 3,506.85

Cash Profit

288.55 816.58 2,295.42 3,066.41

Profit Before Tax

75.52 532.10 677.63 2,484.12

Profit After Tax

49.20 370.18 458.50 1,728.19

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Consolidated Financials Q4 and FY 09

• Rs. Cr

Particulars

Q4 FY 09 Q4 FY 08 FY 09 FY 08

Total Income

3,622.08 4,291.37 16,104.71 12,605.23

EBITDA

333.25 1,061.72 3,253.50 3,631.74

Cash Profit

21.38 842.30 2,097.88 3,058.74

Profit Before Tax

(230.39) 527.87 315.33 2,424.25

Profit After Tax

(39.93) 356.79 274.91 1,640.04

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• Adj. Long Term Debt Gearing ­ Standalone
• Adj. Long Term Debt & Networth

7,959 3,828 5,542 678 (1,000) 1,000 3,000 5,000 7,000 9,000 11,000 Adj LT Debt Networth

Standalone Gearing of 1.24

FX Loss

10,047

FCL RTL 32

• Rs. Cr.

X

4,480 5,073 5,231 5,542 3,999 3,978 3,944 3,828 118 426 678 538 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Q1 '09 Q2 '09 Q3 '09 Q4 '09

RTL FCL FX LOSS

1.02 1.15 1.2 1.24 2.15 2.37 2.73 3.3 0.5 1 1.5 2 2.5 3 3.5

D:E Adj LT Debt/EBITDA

9,713 9,476 8,597 10,047

• Rs. Cr.

Q1 ’09 Q2 ’09 Q3 ’09 Q4 ’09 Wt Avg Cost of Debt (%) 7.63 8.35 8.29 8.22 FD & MF (Rs. Cr.) 635 206 90 190

• Adj. Long Term Debt Gearing ­ Consolidated
• Adj. Long Term Debt & Networth

33 8,077 7,376 5,627 1,628 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Adj LT Debt Networth

Consolidated Gearing of 1.79

FX Loss FCL RTL

14,631

• Rs. Cr.

4,515 5,130 5,301 5,627 7,864 7,376 7,563 7,650 1,628 1,289 1,064 458 2000 4000 6000 8000 10000 12000 14000 16000 Q1 '09 Q2 '09 Q3 '09 Q4 '09

RTL FCL FX LOSS

X

14,185 13,844 12,838 14,631 Q1 ’09 Q2 ’09 Q3 ’09 Q4 ’09 Wt Avg Cost of Debt (%) 7.03 7.42 7.42 7.16 FD & MF (Rs. Cr.) 635 206 90 190

Volume Guidance

Steel Production Saleable Steel Sales Saleable Steel Product wise

72% 70% 78% 426% 40% 34

Marketing Highlights Marketing Highlights Marketing Highlights

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Diversified Product Range

• Strong presence in value added products
• Wide range of flat products to meet customized needs
• Increasing presence in Long Products segments
• Technological superiority of products.

Diversified Product Range

• Strong presence in value added products
• Wide range of flat products to meet customized needs
• Increasing presence in Long Products segments
• Technological superiority of products.

Strong Customer Organization Relationships

• Long standing relationships with leading companies in India

& International customers

Strong Customer Organization Relationships

• Long standing relationships with leading companies in India

& International customers

Leading Player in India

• Significant market share in

South & West India

Leading Player in India

• Significant market share in

South & West India

High resilience to Market Dynamics

• Product Mix Diversity
• Flexibility to shift across locations

High resilience to Market Dynamics

• Product Mix Diversity
• Flexibility to shift across locations

Key Marketing Strengths

Key Marketing Strengths

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Diversified Product Range: Product­Mix Leverage

Plain / Pre‐painted Galvalume Plain / Pre‐painted Galvalume Alloy Steel Alloy Steel 7.8 Mtpa

Flat 5.3 mtpa (68%) Long 2.5 mtpa (32%)

Installed Capacity ‐ Mar‐09

D I V E R S I F I E D Product‐Mix M A X I M I S I N G Value‐Addition

F L A T F L A T

Plain / Pre‐painted Galvanized Plain / Pre‐painted Galvanized

L O N G L O N G

Spring Steel Flat Spring Steel Flat Cold Rolled Closed Annealed / Full Hard Cold Rolled Closed Annealed / Full Hard HR Pickled & Oil / Skin Passed HR Pickled & Oil / Skin Passed Plates Plates Hot Rolled Hot Rolled Slab Slab Round Bars Round Bars Wire Rod Wire Rod Rebar Rebar Billet / Bloom Billet / Bloom

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Sectoral Distribution of Domestic Sales

HR FLATS HR FLATS

~ 75 ‐ 80% Sales to infrastructure and Engineering Sector

CRCA CRCA COATED COATED

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Sectoral Distribution of Domestic Sales

Wire Rod Wire Rod Rebar Rebar

JSW Steel is the only Indian producer having capability to make Wire Rod coils weighing 2.5 MT Sector dominated by regionalised secondary steel producers. Wide range of rebar products

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Strong Customer Base

DOMESTIC SALES NETWORK

• 2/3rd of Domestic sales to Direct Manufacturers and balance through Trade Segment
• Expanding reach Pan India through

‐ Exclusive retail outlets, JSW Shoppe (currently 50, plans to increase further) ‐ Own Stock Yards (24) ‐ Dealer tie‐ups (324) ‐ Consignment Agents (9) ‐ Service Centre

• Expanding customer base by new addition of plate & pipe manufacturers and converters
• Long Standing Relationships with key customers in India

DOMESTIC SALES NETWORK

• 2/3rd of Domestic sales to Direct Manufacturers and balance through Trade Segment
• Expanding reach Pan India through

‐ Exclusive retail outlets, JSW Shoppe (currently 50, plans to increase further) ‐ Own Stock Yards (24) ‐ Dealer tie‐ups (324) ‐ Consignment Agents (9) ‐ Service Centre

• Expanding customer base by new addition of plate & pipe manufacturers and converters
• Long Standing Relationships with key customers in India

EXPORT SALES NETWORK

• Through leading international customers and trade partners across the world
• Exporting to about 100 countries meeting customized requirements
• Growing Focus for exports to newer markets like Asia Africa and South America

EXPORT SALES NETWORK

• Through leading international customers and trade partners across the world
• Exporting to about 100 countries meeting customized requirements
• Growing Focus for exports to newer markets like Asia Africa and South America

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Project Highlights Project Highlights Project Highlights

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Major Projects under Progress

Vijayanagar Works

10 MTPA Expansion 10 MTPA Expansion New Hot Strip Mill (Phase I) New Hot Strip Mill (Phase I) Beneficiation (Phase II) Beneficiation (Phase II) 300 MW Power Plant 300 MW Power Plant 30 MW Power Plant 30 MW Power Plant Blooming Mill Blooming Mill Railway Siding Railway Siding

March 11 March 11 Q1 FY 10 Q1 FY 10 Dec 09/ Mar10 Dec 09/ Mar10 March 10 March 10

Vasind & Tarapur Salem Works

Beneficiation (Phase I) Beneficiation (Phase I)

March 10 March 10

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Project Cheetah Project Cheetah Commissioned Commissioned Project Cheetah Project Cheetah Commissioned Commissioned

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Blast Furnace

Commissioned in Feb’09. Largest in India. Rated Capacity: 7,800 TPD

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Steel Making Shop

Commissioned in Jan’09. Rated Capacity: 175 tonnes

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Billet Caster

Commissioned in Jan’09. 8 Strand Billet Caster with open Casting Rated Capacity: 1.7 MTPA

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Slab Caster

Commissioned in Jan’09. Capable of casting 2,200 mm wide slabs Rated Capacity: 1.6 MTPA

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Wire Rod Mill

Wire Rod Mill commissioned in Nov’09. Wire Rod Mill supported with “Stelmor” for producing wire rod for special applications. Rated Capacity: 0.6 MTPA

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Bar Rod Mill

Bar Rod Mill commissioned in Mar’09 Rated Capacity: 1 MTPA Under Stabilization

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Coke Oven

All four batteries of this Recovery type

• f oven are operational with most

superior quality of Coke.

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Q & A

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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, our ability to commission mines within contemplated time and costs, our ability to raise the finance within time and cost 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

• utside 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 of the company.

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