Analyst Meet Presentation Q3 FY11 Agenda Key Developments - - PowerPoint PPT Presentation

Analyst Meet Presentation Q3 FY11

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Agenda

Key Developments Economic and Steel Scenario Performance Highlights Projects Update Update on Ispat

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Key Developments

 An inorganic growth opportunity providing access to 3.3 mtpa state of the art facilities  Quick turnaround due to significant operational synergies  Poised to be the largest steel producer in India by Crude steel capacity

Ispat Acquisition

 Total investment: ` 210 crores  Access to approximately 700 acres land, buildings and equipments pertaining to proposed 0.5 mtpa integrated steel plant located close to JSW‟s Vijayanagar Plant

Bellary Steel‟s assets purchase

 Commenced iron ore mining operations in Chile in Nov 2010 and 1st shipment is expected in Q1 FY12

Chile Update

 Highest ever quarterly crude steel production : 1.64 mtpa  Highest ever quarterly sales volume : 1.59 mtpa  Highest ever gross turnover: ` ` 6,286 crores

Highest ever production and Sales#

# Production and sales figures are for standalone operations

 Coke oven “Battery B” commissioned in Dec 2010

Coke oven

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Economic & Steel

Scenario

• 0.6

1.9 2.5 3.1 3.9 4.2 4.6 4.8

• 3.2

0.0 0.6 1.3 2.1 2.3 2.6 2.7 2.5 4.0 4.7 5.1 6.0 6.3 6.8 7.1

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10

Annual GDP growth (% YoY) World

• Adv. economies
• Emg. and developing economies

2009 Actual 2010 GDP Forecast Dates

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Global Economy

Source: IMF, Reuters

Global economy remains on recovery path, IMF has continuously upgraded GDP forecast for 2010

30 35 40 45 50 55 60 65 70 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 US PMI-Mfg EU UK China

The Purchasing Managers‟ Indices in global economies continue to remain above 50

Wholesale price index Industrial production

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Indian Economy

Source: Reuters, MOSPI, Office of the Economic Adviser

IIP Power Cement

90 95 100 105 110 115 120 125 130 135 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 3MMA, Apr 2009 = 100

Overall Food Fuel & Power

100 105 110 115 120 125 130 135 140 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 WPI, 3MMA, Apr 2009 = 100

Even though rising inflation and fluctuating industrial production numbers are areas of concern……

…… Non Food Credit is growing and vehicle sales is also up trending post festival month. 7

Indian Economy Contd…

35 40 45 50 55 60 65 94 96 98 100 102 104 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10

Composite Leading Indicator Purchasing Managers' Index

90 100 110 120 130 140 150 160 170 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Vehicle Sales Non food credit Apr 2009 =100

Source: OECD, Reuters, SIAM

……However, the composite Leading Indicator (CLI) and Purchasing Managers‟ Index are above 100 and 50 respectively, indicating that economy is expanding ……

113 108 122 120 125 118 114 113 112 117 115 116 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10

Finished Steel Demand (% YoY growth) Crude Steel Production

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Global Steel Trends

Source: World Steel (All figures are in million tonnes)

13% 9% 7% 8%

5% 5% 4% 14% World BRIC China India 2010 E 2011 E

Year World BRIC China India 2009 1125 641 542 55 2010 E 1272 696 579 60 2011 E 1340 730 599 68 Global Finished Steel Demand Steel demand outlook remains robust with Industry exercising supply side discipline …… …… India to lead in terms of demand growth

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Raw Material prices firming up…

Iron ore and Scrap prices are up by more than 25% since Sep 2010.

Source: SBB

Spot Coking coal prices jumped by ~20 % since Sep 2010 due to floods in Australia.

91 177 130 183 265 448 324 383 345 480 250 300 350 400 450 500 80 100 120 140 160 180 200 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Indian Iron Ore 63% Fe dry / China import CFR N.China port Scrap / Shredded / Rotterdam export FOB (RHS) 300 129 200 225 209 225 139 115 238 195 223 243 100 150 200 250 300 350 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Coking coal contract Australian Spot HCC FOB -monthly average

Despite this JSW has secured its entire coking coal requirement for Q4FY11 at quarterly contract prices.

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…. Leading to increase in HRC prices

573 781 627 859 563 752 658 726 505 710 550 780 475 685 585 653 450 500 550 600 650 700 750 800 850 900 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 N.America domestic FOB US Midwest mill Europe import CIF S.European port Russia Black Sea export FOB China export FOB Shanghai

Source: SBB (All figures are in USD/ton)

Prices are up trending due to sharp cost push from raw materials as well as robust demand

Indicating margin improvement in Q4 FY11

49 46 54 47 50 3.7% 7.2% 10.9% 3.6% 6.0% 5.7% 0% 2% 4% 6% 8% 10% 12% 40 42 44 46 48 50 52 54 56 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Finished Steel Production Exports as a % of Finished Steel Production

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China Steel Market… reduced competitiveness

Source: Mysteel, World Steel (Production figures are in million tonnes)

Removal of export rebate resulted in reduced competitiveness Increased iron ore prices, pressure of interest cost and currency will keep competitiveness low

9M Production vs. Consumption Monthly Imports vs. Exports

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Indian Steel Market … reduced import pressure

38.9 41.0 41.5 44.4 Finished Steel Production* Apparent Steel Consumption* Apr -Dec' 09 Apr - Dec' 10 7% 8% 0.57 0.97 0.26 0.18 0.55 0.18 0.29 0.0 0.2 0.4 0.6 0.8 1.0 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Import Export

Source: JPC (All figures are in million tonnes) * Production and consumption data has been netted off for double counting effect.

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Performance

Highlights

0.237 0.281 0.264 Q3 '10 Q3 '11 Q2 '11

Rolled : Long

1.469 1.636 1.571 Q3 '10 Q3 '11 Q2 '11

Crude Steel

YoY % QoQ % 33%

• 2%

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Production – Q3 FY 11

0.941 1.249 1.271 Q3 '10 Q3 '11 Q2 '11

Rolled : Flat

YoY % QoQ % 19% 6% YoY % QoQ % 11% 4%

All figures are in million tonnes

0.635 0.855 9M FY 10 9M FY 11

Rolled : Long

4.386 4.780 9M FY 10 9M FY 11

Crude Steel

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Production – 9M FY 11

2.735 3.613 9M FY 10 9M FY 11

Rolled : Flat

YoY % 9%

All figures are in million tonnes

YoY % 32% YoY % 35%

0.401 0.433 0.451

Q3 '10 Q3 '11 Q2 '11

Value Added

1.425 1.593 1.583 Q3 '10 Q3 '11 Q2 '11

Total Sales

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Saleable Steel Sales – Q3 FY11

0.908 1.240 1.215

Q3 '10 Q3 '11 Q2 '11

Rolled : Flat

YoY % QoQ % 12% 1%

All figures are in million tonnes

YoY % QoQ % 37% 2% YoY % QoQ % 8%

• 4%

0.272 0.077 0.086

Q3 '10 Q3 '11 Q2 '11

Semis

YoY % QoQ %

• 72%
• 11%

0.245 0.276 0.281

Q3 '10 Q3 '11 Q2 '11

Rolled : Long

YoY % QoQ % 13%

• 2%

1.146 1.231

9M FY 10 9M FY 11

Value Added

4.200 4.367 9M FY 10 9M FY 11

Total Sales

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Saleable Steel Sales – 9M FY11

2.633 3.314

9M FY 10 9M FY 11

Rolled : Flat

All figures are in million tonnes

0.988 0.270

9M FY 10 9M FY 11

Semis

0.579 0.783

9M FY 10 9M FY 11

Rolled : Long

YoY % 4% YoY % 26% YoY % 7% YoY % 35% YoY %

• 73%

0.994 0.344 Others JSW Shoppe

177 344

Q3 FY10 Q3 FY11

(In „000 tonnes) Sales through JSW Shoppe - Q3 FY11 % Share through JSW Shoppe - Q3 FY11

Retail Shoppe Sales

Rolled: Long Rolled: HR Products

43%

Domestic sales excluding semis, mnt, % Share

Value Added: Flat 94% 74%

26% 43% 43% 14%

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Financials – Q3 FY11 (Standalone)

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Particulars Q3 FY 11 Q3 FY 10 Growth ` Cr. ` ` Cr. %

Net Sales

5,771 4,588 26%

• Op. EBITDA (excl. Fx Variance)

1,000 1,119

• 11%
• Op. EBITDA Margin (excl. Fx Variance)

17.2% 24.2%

EBITDA

1,008 1,221

• 17%

EBITDA Margin

17.4% 26.5%

Less: Net Finance Charges

132 217

• 39%

Less: Depreciation

346 286 21%

Profit Before Tax

530 718

• 26%

Profit after Tax

382 514

• 26%

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Financials – 9M FY11 (Standalone)

Particulars 9M FY 11 9M FY 10 Growth ` Cr. ` ` Cr. %

Net Sales

16,131 13,035 24%

• Op. EBITDA (Excl. Fx Variance)

3,130 3,059 2%

• Op. EBITDA Margin (Excl. Fx Variance)

19.2% 23.3%

EBITDA

3,198 3,375

• 5%

EBITDA Margin

19.7% 25.7%

Less: Net Finance Charges

542 665

• 18%

Less :Depreciation

996 838 19%

Profit Before Tax

1,660 1,872

• 11%

Profit After Tax

1,178 1,306

• 10%

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EBITDA MOVEMENT – Q3 FY 11 (Standalone)

` Cr.

1,221 1,008

128

• 936

545 143 1

• 94

EBIDTA Q3 FY10 Volume Cost NSR Mix CER/Others Foreign Exchange EBIDTA Q3 FY11

USD mn

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Operational & Financial Performance – US Plate & Pipe Mill

Production (NT) Q3 FY11 Q3 FY10

Plate Mill 30,323 49,210 Pipe Mill 15,442 27,800

Sales (NT) Q3 FY11 Q3 FY10

Plate Mill 21,283 24,252 Pipe Mill 15,446 24,460

Particulars Q3 FY11 Q3 FY10

Turnover 34.58 43.68 EBITDA + Other Income 1.67 (8.40) Profit After Tax (12.93) (10.99)

Financials Q3 FY 11 (Consolidated)

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Particulars Q3 FY11 Q3 FY10 Growth

` Cr. ` Cr. % Total Income

6,003 4,823 24%

EBITDA

1,020 1,181

• 14%

Less: Net Finance Charges

197 257

• 23%

Less :Depreciation

391 330 18%

Profit Before Tax

433 594

• 27%

Profit After Tax

292 430

• 33%

Financials – 9M FY11 (Consolidated)

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Particulars 9M FY 11 9M FY 10 Growth

` Cr. ` Cr. % Total Income

16,833 13,593 24%

EBITDA

3,285 3,184 3%

Less: Net Finance Charges

728 855

• 15%

Less :Depreciation

1,131 972 16%

Profit Before Tax

1,426 1,356 5%

Profit After Tax

960 987

• 2%

12,188 12,147 208 876 (704) (408) (13) Net Debt as on Sep'10 New Loan Taken Movement in FD / MF Repayments Prepayments Foreign Exchange Net Debt as on Dec'10

Net Debt Movement (Consolidated)

Cash and Cash equivalent - ` 470 Crs. FD/Mutual Fund - ` 1,675 Crs.

` Cr.

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* Not Annualized

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Financial Ratios

Particulars (Standalone) Q3 FY 11 Q3 FY 10

EBITDA Margin 17.4% 26.5% PAT Margin 6.6% 11.2% Diluted EPS (`) * 16.97 27.04 ROCE 9.15% 16.52%

Particulars 31.12.2010 30.9.2010

Net Total Debt/Equity (x) 0.47 0.48 Net Total Debt/EBITDA (x) 1.77 1.64 Net Total Debt/Equity-Consolidated (x) 0.74 0.80 Net Total Debt/EBITDA-Consolidated (x) 2.68 2.65

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Ispat - update

 On receipt of approval from SEBI, Open Offer formalities will be completed

Open Offer

 Ispat‟s Shareholders‟ approval received  CDR Lender‟ approval received  Stock exchanges‟ in principle approval received  Preferential allotment of 108.66 mn Equity Shares to JSW completed on January 24, 2011 following total investment of ` ` 2,157 crores

Preferential Allotment of Equity shares

 Operations at Ispat‟s Dolvi plant has been recommenced and the plant is operating close to rated capacity  Work is in progress to capture synergies

Plant Operations

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Projects

Update

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SMS

As on Sep 10 As on Dec 10

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Coke Oven

As on Sep 10 As on Dec 10

Battery “B” commissioned in December 2010

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Blast Furnance

As on Sep 10 As on Dec 10

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Sinter Plant

As on Sep 10 As on Dec 10

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Beneficiation Plant

As on Sep 10 As on Dec 10

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LCP

As on Sep 10 As on Dec 10

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RMHS

As on Sep 10 As on Dec 10

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,

• ur

ability to attract and retain highly skilled professionals, time and cost

• verruns
• n

fixed-price, fixed-time frame contracts, our ability to commission mines within contemplated time and costs,

• ur

ability to raise the finance within time and cost client concentration, restrictions on immigration, our ability to manage our internal

• perations, reduced demand for steel, our ability to successfully complete and

integrate potential acquisitions, liability for damages

• n
• ur

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 of the company.

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Thank you