Analyst Meet Presentation Q3 FY11
Agenda Key Developments Economic and Steel Scenario Performance Highlights Update on Ispat Projects Update 2
Key Developments Highest ever production and Sales # Highest ever quarterly crude steel production : 1.64 mtpa Highest ever quarterly sales volume : 1.59 mtpa Highest ever gross turnover: ` ` 6,286 crores Chile Update Commenced iron ore mining operations in Chile in Nov 2010 and 1 st shipment is expected in Q1 FY12 Coke oven Coke oven “Battery B” commissioned in Dec 2010 Ispat Acquisition 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 Bellary Steel‟s assets purchase 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 3 # Production and sales figures are for standalone operations
Economic & Steel Scenario 4
Global Economy Global economy remains on recovery The Purchasing Managers‟ Indices in global path, IMF has continuously upgraded economies continue to remain above 50 GDP forecast for 2010 Annual GDP growth (% YoY) 70 7.1 6.8 65 6.3 6.0 5.1 60 4.8 4.7 4.6 4.2 4.0 3.9 55 3.1 2.7 2.6 2.5 2.5 2.3 2.1 1.9 50 1.3 0.6 45 0.0 -0.6 40 35 2010 GDP Forecast Dates -3.2 Jan-09 Oct-09 Jan-10 Oct-10 Apr-09 Jul-09 Apr-10 Jul-10 30 2009 Actual Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 World Adv. economies US PMI-Mfg EU UK China Emg. and developing economies Source: IMF, Reuters 5
Indian Economy Wholesale price index Industrial production 140 135 3MMA, Apr 2009 = 100 WPI, 3MMA, Apr 2009 = 100 Food 135 130 125 130 IIP 120 125 Fuel & Power 115 120 110 115 Overall 105 Power 110 100 105 95 100 Cement 90 Apr-09 Oct-09 Apr-10 Oct-10 Jul-09 Jan-10 Jul-10 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Source: Reuters, MOSPI, Office of the Economic Adviser Even though rising inflation and fluctuating industrial production numbers are areas of concern…… 6
Indian Economy Contd … ……However, the composite Leading Indicator (CLI) and Purchasing Managers‟ Index are above 100 and 50 respectively, indicating that economy is expanding …… 170 104 65 Apr 2009 =100 Vehicle Sales 160 Purchasing Managers' Index 60 102 150 55 140 100 130 50 98 120 Non food credit 45 110 Composite Leading 96 Indicator 40 100 94 35 90 Sep-07 Sep-08 Sep-09 Sep-10 Jan-07 May-07 Jan-08 May-08 Jan-09 May-09 Jan-10 May-10 Apr-09 Oct-09 Feb-10 Apr-10 Oct-10 Jun-09 Aug-09 Dec-09 Jun-10 Aug-10 Dec-10 Source: OECD, Reuters, SIAM …… Non Food Credit is growing and vehicle sales is also up trending post festival month. 7
Global Steel Trends Finished Steel Demand (% YoY growth) Crude Steel Production 125 14% 13% 122 120 9% 118 8% 117 7% 116 5% 5% 114 113 115 4% 113 112 World BRIC China India 2010 E 2011 E 108 Global Finished Steel Demand Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Year World BRIC China India 2009 1125 641 542 55 2010 E 1272 696 579 60 2011 E 1340 730 599 68 Source: World Steel (All figures are in million tonnes) Steel demand outlook remains robust with Industry exercising supply side discipline …… …… India to lead in terms of demand growth 8
Raw Material prices firming up … Spot Coking coal prices jumped by Iron ore and Scrap prices are up by ~20 % since Sep 2010 due to floods in more than 25% since Sep 2010. Australia. 200 500 350 480 183 177 180 300 450 300 448 160 400 243 250 238 225 383 223 140 200 130 225 350 200 209 345 120 195 324 300 100 91 150 139 129 265 80 250 115 100 Oct-09 Nov-09 Dec-09 Apr-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-10 Feb-10 Mar-10 May-10 Jun-10 Jul-10 Jan-11 Jul-09 Jul-10 Jan-09 Mar-09 May-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Sep-10 Nov-10 Jan-11 Indian Iron Ore 63% Fe dry / China import CFR N.China port Coking coal contract Scrap / Shredded / Rotterdam export FOB (RHS) Australian Spot HCC FOB -monthly average Source: SBB Despite this JSW has secured its entire coking coal requirement for Q4FY11 at quarterly contract prices. 9
…. Leading to increase in HRC prices Prices are up trending due to sharp 900 cost push from raw materials as 859 well as robust demand 850 800 780 781 750 726 752 710 700 658 653 650 685 627 585 600 573 563 550 550 505 500 475 450 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Mar-10 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) Indicating margin improvement in Q4 FY11 10
China Steel Market … reduced competitiveness Increased iron ore prices, pressure of interest cost and currency will keep 56 12% competitiveness low 54 10.9% 54 10% 52 50 8% 7.2% 50 49 48 6% 47 6.0% 5.7% 46 4% 46 Removal of export rebate 3.6% 3.7% 44 resulted in reduced competitiveness 2% 42 40 0% Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Mar-10 Finished Steel Production Exports as a % of Finished Steel Production Source: Mysteel, World Steel (Production figures are in million tonnes) 11
Indian Steel Market … reduced import pressure 9M Production vs. Consumption Monthly Imports vs. Exports 8% 1.0 44.4 0.97 7% 41.5 41.0 0.8 38.9 0.6 0.55 0.57 0.4 0.29 0.26 0.2 0.18 0.18 0.0 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 Finished Steel Production* Apparent Steel Consumption* Apr -Dec' 09 Apr - Dec' 10 Import Export Source: JPC (All figures are in million tonnes) * Production and consumption data has been netted off for double counting effect. 12
Performance Highlights 13
Production – Q3 FY 11 33% -2% 11% 4% YoY % QoQ % YoY % QoQ % 1.271 1.249 1.636 1.571 0.941 1.469 Q3 '10 Q3 '11 Q2 '11 Rolled : Flat 19% 6% YoY % QoQ % 0.281 0.264 0.237 Q3 '10 Q3 '11 Q2 '11 Crude Steel Q3 '10 Q3 '11 Q2 '11 Rolled : Long All figures are in million tonnes 14
Production – 9M FY 11 32% 9% YoY % YoY % 3.613 4.780 2.735 4.386 9M FY 10 9M FY 11 Rolled : Flat 35% YoY % 0.855 0.635 9M FY 10 9M FY 11 Crude Steel 9M FY 10 9M FY 11 Rolled : Long All figures are in million tonnes 15
Saleable Steel Sales – Q3 FY11 37% 2% 12% 1% YoY % QoQ % -4% 1.240 8% YoY % QoQ % 1.215 QoQ % YoY % 1.593 1.583 0.451 0.433 0.908 1.425 0.401 Q3 '10 Q3 '11 Q2 '11 Q3 '10 Q3 '11 Q2 '11 Value Added Rolled : Flat -72% 13% -2% YoY % 0.272 YoY % QoQ % 0.281 0.276 -11% 0.245 Q3 '10 Q3 '11 Q2 '11 QoQ % 0.086 Total Sales 0.077 Q3 '10 Q3 '11 Q2 '11 Q3 '10 Q3 '11 Q2 '11 Rolled : Long Semis All figures are in million tonnes 16
Saleable Steel Sales – 9M FY11 26% 4% YoY % 7% YoY % 3.314 4.367 YoY % 1.231 4.200 2.633 1.146 9M FY 10 9M FY 11 9M FY 10 9M FY 11 Value Added Rolled : Flat -73% 35% YoY % YoY % 0.988 0.783 0.579 9M FY 10 9M FY 11 0.270 Total Sales 9M FY 10 9M FY 11 9M FY 10 9M FY 11 Rolled : Long Semis All figures are in million tonnes 17
Retail Shoppe Sales Sales through JSW Shoppe - Q3 FY11 % Share through JSW Shoppe - Q3 FY11 (In „000 tonnes) Value Added: 43% Flat 94% 344 Domestic sales Rolled: Long 14% 0.994 excluding semis, 0.344 mnt, 74% % Share 43% 177 26% Rolled: HR 43% Products Q3 FY10 Q3 FY11 Others JSW Shoppe 18
Financials – Q3 FY11 (Standalone) Particulars Q3 FY 11 Q3 FY 10 Growth ` Cr. ` ` Cr. % 5,771 4,588 26% Net Sales 1,000 1,119 -11% Op. EBITDA (excl. Fx Variance) 17.2% 24.2% Op. EBITDA Margin (excl. Fx Variance) 1,008 1,221 -17% EBITDA 17.4% 26.5% EBITDA Margin 132 217 -39% Less: Net Finance Charges 346 286 21% Less: Depreciation 530 718 -26% Profit Before Tax 382 514 -26% Profit after Tax 19
Financials – 9M FY11 (Standalone) Particulars 9M FY 11 9M FY 10 Growth ` Cr. ` Cr. ` % 16,131 13,035 24% Net Sales 3,130 3,059 2% Op. EBITDA (Excl. Fx Variance) 19.2% 23.3% Op. EBITDA Margin (Excl. Fx Variance) 3,198 3,375 -5% EBITDA 19.7% 25.7% EBITDA Margin 542 665 -18% Less: Net Finance Charges 996 838 19% Less :Depreciation 1,660 1,872 -11% Profit Before Tax 1,178 1,306 -10% Profit After Tax 20
EBITDA MOVEMENT – Q3 FY 11 (Standalone) ` Cr. 128 1,221 143 1 1,008 545 -94 -936 EBIDTA Volume Cost NSR Mix CER/Others Foreign EBIDTA Q3 FY10 Exchange Q3 FY11 21
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 21,283 24,252 Plate Mill Pipe Mill 15,446 24,460 USD mn Particulars Q3 FY11 Q3 FY10 Turnover 34.58 43.68 EBITDA + Other Income 1.67 (8.40) Profit After Tax (12.93) (10.99) 22
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