Analyst Meet Presentation Q2 FY11 Analyst Meet Presentation Q2 - - PowerPoint PPT Presentation

Analyst Meet Presentation Q2 FY11 Analyst Meet Presentation Q2 FY11

Key Developments Economic and Steel Scenario Performance Highlights Projects Update

Agenda

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Key Developments

3

FCD of ` 4800 Crores issued to JFE converted to 32mn equity shares

 Debt prepayment of ` 2,603 crores  ` 2,197 crores currently invested in MFs/FDs will be used in lieu

• f tied up loans draw down for Capex

Coke Oven 4 (Battery A) commissioned on 4th Oct 2010 Generation from 300 MW captive power plant started Highest ever quarterly sales – by volume (1.583mnt) and value (` 6,184 crores)

Strengthening Balance Sheet

Potential Equity Infusion of ` 2,488 Crores over 21 months

 ` 1,588 Crores – Promoters warrants  ` 600 crores – 3mn GDRs plus 1mn shares to JFE  ` 300 crores – 2mn shares to JFE on conversion of outstanding FCCBs

4

Consolidated total net debt - equity ratio has improved to 0.80 at Sep’ 2010 end from 1.60 at Jun’ 2010 end Impact of FCCBs conversion

 Outstanding FCCBs – ` 1,230 crores, if converted will simultaneously increase equity and reduce debt.

Consolidated weighted average debt cost has come down by 58bps to 6.13% during Q2 FY11

Awards

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Global HR Excellence Awards – organisation with innovative practices from APHC Fastest Growing Steel Company from ASAPP Media

Information Group

Star Performer 2008-09 – Basic Iron and Steel Large Enterprise from EEPC Regional Award 2007-08 Gold Trophy –Large Enterprise Top Exporter from EEPC

APHC - ASIA Pacific Human Resource Management Congress EEPC –Engineering Exports Promotion Council

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Economic & Steel

Scenario

Global Economy

• 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

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

Source: IMF

• 2.9

4.9

• 4.8

2.9 0.3 8.1

• 6
• 4
• 2

2 4 6 8 10 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10

World

• Adv. economies
• Emg. and developing economies

Actual Quarterly GDP growth (% YoY)

7

Source: MOSPI, Reuters, SIAM

Indian Economy

5.8% 6.0% 8.6% 6.5% 8.6% 8.8% Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 GDP (% YoY) Power 90 100 110 120 130 140 150 160 170 180 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Vehicle Sales Non-Food Credit Vehicle Sales Non-Food Credit 3MMA, Jan 2009 = 100 Aug- 10

GDP growth remains robust and domestic consumption growth is intact

8

Source: WSA

Global Steel Trends

Crude Steel Production (mnt) Steel Demand (% YoY growth)

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 Steel Demand (mnt)

9

121 121 125 118 114 113 112 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10

573 781 634 563 752 715 505 710 623 475 685 610 450 500 550 600 650 700 750 800 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

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)

HRC Prices

Producers raised prices in April & May to cover higher raw material costs

10

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

Raw Material Prices

91 177 130 155 163 249 200 218 265 448 324 383 345 395 495 435 200 250 300 350 400 450 500 60 90 120 150 180 210 240 270 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

Indian Iron Ore 63% Fe dry / China import CFR N.China port Australian Spot HCC FOB (RHS) Scrap / Shredded / Rotterdam export FOB (RHS) China Coke export FOB (RHS)

11

2.9 2.5 3.3 4.3 5.0 5.7 4.6 2.8 3.0 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10

Source: Mysteel, WSA (All figures are in million tons )

Chinese Steel Market

Production vs. consumption (mnt)

49

46

54 47 43 53 45 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

Finished Steel Production Apparent Steel Consumption

Monthly Exports (mnt)

Monthly finished steel production reduced to 46.5mnt in Sep’ 10 from 54.5mnt in May’ 10 Withdrawal

• f

export rebate in July coupled with reduced production resulted in lower exports

12

0.68 0.68 0.62 0.73 0.68 0.68 0.97 0.82 0.97 1.01 0.46 0.36 Oct' 09 Nov' 09 Dec' 09 Jan' 10 Feb' 10 Mar' 10 Apr' 10 May' 10 Jun' 10 Jul' 10 Aug' 10 Sep' 10 25.9 27.2

27.0 29.8

Finished Steel Production Apparent Steel Consumption Apr -Sep' 09 Apr - Sep' 10

4% 10%

Source: JPC (All figures are in million tons )

Indian Steel Market

H1 Production vs. Consumption (mnt) Monthly Imports (mnt)

*Production and consumption figures netted off for double counting effect

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Highlights

Operating & Financial

14

1.541 1.571 1.574 Q2 '10 Q2 '11 Q1 '11

Crude Steel

2%

• 0.217

0.264 0.309 Q2 '10 Q2 '11 Q1 '11

Rolled : Long

22%

• 15%

0.923 1.271 1.093 Q2 '10 Q2 '11 Q1 '11

Rolled : Flat

38% 16%

Production – Q2 FY 11

All numbers are in million tons

YoY % QoQ % YoY % QoQ % YoY % QoQ %

15

0.399 0.573 H1 '10 H1 '11

Rolled : Long

44% 1.794 2.364 H1 '10 H1 '11

Rolled : Flat

32% 2.917 3.144 H1'10 H1'11

Crude Steel

8%

Production – H1 FY 11

YoY % YoY % YoY %

16

All numbers are in million tons

0.179 0.281 0.225 Q2 '10 Q2 '11 Q1 '11

Rolled : Long

57% 25% 0.405 0.086 0.107 Q2 '10 Q2 '11 Q1 '11

Semis

• 79%
• 20%

0.379 0.451 0.346 Q2 '10 Q2 '11 Q1 '11

Value Added

19% 30%

0.870 1.215 0.859

Q2 '10 Q2' 11 Q1 '11

Rolled : Flat

40% 41% 1.454 1.583 1.191

Q2 '10 Q2 '11 Q1 '11

Total Sales

9% 33%

Saleable Steel Sales – Q2 FY 11

YoY % QoQ % YoY % QoQ % YoY % QoQ % YoY % QoQ % YoY % QoQ %

17

All numbers are in million tons

0.334 0.506 H1 '10 H1 '11

Rolled : Long

51% 0.716 0.193 H1 '10 H1 '11

Semis

• 73%

0.745 0.797

H1 '10 H1 '11

Value Added

7% 1.725 2.074

H1 '10 H1 '11

Rolled : Flat

20% 2.775 2.774 H1 '10 H1 '11

Total Sales

Saleable Steel Sales – H1 FY 11

YoY % YoY % YoY % YoY %

18

All numbers are in million tons

Focus on Retail Sales

0.322 0.901 JSW Shoppe

Rolled: Long Rolled: HR Products

45% 14% 41% % Share through JSW Shoppe-Q2 FY 11

(Excluding Semis) MnT, % Share

74% 26% Sales through JSW Shoppe-Q2 FY 11

(In ‘000 tons)

Q2 FY 10 Q2 FY 11 128 322 152%

Value Added: Flat

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Financials – Q2 FY11 (Standalone)

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Particulars Q2 FY 11 Q2 FY 10 Growth ` Cr. ` ` Cr. %

Net Sales 5,713 4,554 25%

• Op. EBITDA (excl. Fx Variance)

998 1,189

• 16%
• Op. EBITDA Margin (excl. Fx Variance)

17.3% 26.0% EBITDA 1,156 1,167

• 1%

EBITDA Margin 20.0% 25.5% Less: Net Finance Charges 199 228

• 13%

Less: Depreciation 332 281 19% Profit Before Tax 624 658

• 5%

Profit after Tax 445 452

• 1%

Financials – H1 FY11 (Standalone)

21

Particulars H1 FY 11 H1 FY 10 Growth ` Cr. ` ` Cr. %

Total Income 10,360 8,448 23%

• Op. EBITDA (Excl. Fx Variance)

2,130 1,940 10%

• Op. EBITDA Margin (Excl. Fx Variance)

20.4% 22.8% EBITDA 2,190 2,154 2% EBITDA Margin 20.9% 25.4% Less: Net Finance Charges 410 448

• 8%

Less :Depreciation 650 552 18% Profit Before Tax 1,130 1,154

• 2%

Profit After Tax 796 792 1%

` Cr.

EBITDA MOVEMENT – Q2 FY 11 (Standalone)

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1,167 1,156 98 (1014) 536 206 (16) 179 EBIDTA Q2'10 Volume Cost NSR Mix CER/Other Income Fx Variance EBIDTA Q2'11

Operational & Financial Performance - USA

USD Mn

23

Production (NT) Q2 FY 11 Q2 FY 10 Growth Plate Mill

37,699 48,895

• 23%

Pipe Mill

9,495 16,845

• 44%

Sales (NT) Q2 FY 11 Q2 FY 10 Growth Plate Mill

23,040 38,689

• 40%

Pipe Mill

11,970 17,822

• 33%

Particulars

Q2 FY 11 Q2 FY 10

Turnover 36.40 41.49 EBITDA + Other Income 0.85 (21.03) Profit After Tax (13.14) (25.13)

Financials Q2 FY 11 (Consolidated)

24

Particulars Q2 FY 11 Q2 FY 10 Growth

` Cr. ` Cr. %

Total Income

5,972 4,757 26%

EBITDA

1,186 1,075 10%

Less: Net Finance Charges

261 301

• 13%

Less :Depreciation

379 326 16%

Profit Before Tax

546 449 21%

Profit After Tax

373 323 16%

Financials – H1 FY11 (Consolidated)

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Particulars H1 FY 11 H1 FY 10 Growth

` Cr. ` Cr. % Total Income 10,830 8,770 23% EBITDA 2,265 2,003 13% Less: Net Finance Charges 531 598

• 11%

Less :Depreciation 740 642 15% Profit Before Tax 993 762 30% Profit After Tax 669 557 20%

Net Total Debt Movement (Consolidated)

Cash and Cash equivalent - ` ` 544 Crs. FD/Mutual Fund - ` 2,477 Crs.

` Cr.

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16,510 12,188 569 (377) (2330) (334) (1850) Net Total Debt as

• n Jun'10

New Loan Taken Repayments Prepayments Fx Variance Movement in FD/MF Net Total Debt as

• n Sep'10

* Not Annualized

Financial Ratios

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Particulars Q2 FY 11 Q2 FY 10

EBITDA Margin 20.0% 25.5% PAT Margin 7.7% 9.9% Diluted EPS (`) -Standalone* 23.13 23.69 ROCE 12.1% 16.3%

Particulars 30.9.2010 30.06.2010

Net Total Debt/Equity (x) 0.48 1.15 Net Total Debt/EBITDA (x) 1.64 2.59 Net Total Debt/Equity-Consolidated (x) 0.80 1.60 Net Total Debt/EBITDA-Consolidated (x) 2.65 3.61

Update

Projects

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West Bengal Projects – overview

29

Projects Zero date Implementation period

4.5 mtpa Greenfield HRC plant Apr 2011 36 months 660 MW power plant (26% stake in SPV) Apr 2011 36 months 2.4 mtpa Kulti Sitarampur coking coal mines development Jan 2011 39 months 2.6 mtpa Ichhapur thermal coal mines development (26% stake in SPV) Jan 2011 39 months

JSWSL - JSW Steel Limited WBIDC - West Bengal Industrial development corporation limited/ WBMDTC - West Bengal mineral development and trading corporation limited RTL - Rupee term loan, FCL –Foreign currency loans, ECB – External commercial borrowing

West Bengal Projects – financing

30

Means of Financing ` crores

Equity

JSWSL/Strategic Partners/IPO 5,327 WBIDC/WBMDTC 6

Debt - RTL/FCL/ECB*

10,667

Total

16,000

Investments ` crores

Steel Project cost (Debt to Equity – 2:1)

15,350

Equity stake in Power plant SPV - project cost ` 3,300 crores (Debt to Equity – 3:1)

215

Equity stake in coking coal mines SPV - project cost ` 1,350 crores (Debt to Equity – 3:1)

337

Equity stake in thermal coal mines SPV - project cost ` 1,500 crores (Debt to Equity – 3:1)

98

Total

16,000

JSWSL JSWBSL JSWEBL WBIDCL/ WBMDTC

JSWEL

SPV 1 SPV 2

West Bengal Projects: structure

31

JSWSL – JSW Steel Ltd. JSWEL – JSW Energy Ltd. WBIDCL – West Bengal Industrial development corporation limited WBMDTC – West Bengal mineral development and trading corporation limited JSWBSL – JSW Bengal Steel Ltd. (implementing steel project) JSWEBL – JSW Energy (Bengal) Ltd. (implementing power project) SPV 1 – Implementing development of coking coal mines SPV2 – Implementing development of thermal coal mines

94% (Min) 6% (Max) 26% Subsidiary 100% Proposed 74% Subsidiary 100% Proposed

As on Jun 10 As on Sep 10

Blast Furnace

32

As on Jun 10 As on Sep 10

SMS (Phase II)

33

As on Jun 10 As on Sep 10

Beneficiation Plant

34

As on Jun 10 As on Sep 10

LCP

35

Q & A Session

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Forward Looking and Cautionary Statement

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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 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

• n behalf of the company.

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Thank you