JSW Steel Limited [[US$ million] Senior Notes Offering] March 2017 - - PowerPoint PPT Presentation
JSW Steel Limited [[US$ million] Senior Notes Offering] March 2017 - - PowerPoint PPT Presentation
JSW Steel Limited [[US$ million] Senior Notes Offering] March 2017 Disclaimer This presentation and accompanying slides (the Presentation) is strictly confidential and is not for release, distribution or publication, whether directly or
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Disclaimer
This presentation and accompanying slides (the “Presentation”) is strictly confidential and is not for release, distribution or publication, whether directly or indirectly, in whole or part, into or in the United States, Australia, Canada, Japan, India or any other jurisdiction in which such release, distribution or publication would be unlawful. This Presentation has been prepared by JSW Steel Limited (the “Company”), and has not been independently verified. No representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information contained in this Presentation. None of the Company, the Joint Lead Managers nor any of their affiliates, advisers or representatives accepts any liability whatsoever for any actual or consequential loss or damages howsoever arising from the provision
- r use of any information contained in this Presentation. The statements contained in this document speak only as at the date as of which they are made, and the Company and the Joint Lead Managers expressly disclaim
any obligation or undertaking to supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events, conditions or circumstances on which any such statements are based. None of the Company, its management, the Joint Lead Managers and their respective advisers undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or to correct any inaccuracies in any such information which may become apparent. This Presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company and/or its management, directors and officers with respect to the consolidated results of operations, financial condition, cash flows and prospects of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” or any other words with similar meaning or intent. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions including but not limited to price fluctuations, actual demand, exchange rate fluctuations, competition, environmental risks, change in legal, financial and regulatory frameworks, political risks and factors beyond the Company’s control. The This Presentation is being presented by the Company solely for your information and for your use and may not be copied, disclosed, reproduced or redistributed to any other person in any manner without the Company’s prior consent in each instance. This presentation is for information purpose only and does not constitute or form part of an offer, solicitation or invitation of any offer to buy or subscribe for any securities of the Company, in any jurisdiction, nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract, commitment or investment decision whatsoever. No securities of the Company may be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been and will not be registered under the Securities Act, or with any security regulatory authority of any state of the United States. Any decision to purchase or subscribe for any securities of the Company should be made solely on the basis of information contained in an offering memorandum issued by the Company in respect of the offering of such securities after seeking appropriate professional advice, and no reliance should be placed on any information other than that contained in such
- ffering memorandum. Certain numbers in this presentation have been rounded off for ease of representation. Investors should be aware that certain financial data included in the presentation are “Non-GAAP financial
measures”. The disclosure of such Non-GAAP financial measures in the manner included in the following material would not be permissible in a registration statement under the Securities Act and investors are cautioned not to place undue reliance on any Non-GAAP financial measures and ratios included in the following presentation. The Notes are not being offered or sold to any person in India and this presentation should not be transmitted to any person in India. No public offering or private placement of the Notes is being made by the Company in
- India. This presentation is being made to you on the basis that you have confirmed to the company and joint lead managers, that you are not a resident of the United States or India. By participating in this Presentation
- r by accepting any copy of the slides presented, you agree to be bound by the foregoing limitations. In addition, by electing to view this presentation, you represent and agree that (i) you consent to delivery of the
attached preliminary offering memorandum and any amendments or supplements thereto by electronic transmission, (ii) you will not print, copy, videotape, record, hyperlink or otherwise attempt to reproduce or re- transmit (in any form, including hard copy or electronic distribution format) the contents of the internet roadshow presentation, (iii) the confidential password assigned to your organization has not been, and will not be, disclosed to any person or entity other than an employee or director of that organization or a person authorized to receive it, (v) you are accustomed to receiving the type of information contained in this presentation and (vi) you are not resident in the United States and, to the extent you purchase the securities described in the attached preliminary offering memorandum, you will be doing so pursuant to Regulation S under the Securities Act
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Agenda
Overview Credit Highlights Financial Highlights Business Environment Appendix 1 2 3 4 5
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Agenda
- 1. Overview
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* Listed company with market capitalization of $6.5 billion as of 27-Mar-17 (translated at 1USD =67 INR) ^ Listed company with market capitalization of $1.5 billion as of 27-Mar-17 (translated at 1USD =67 INR)
JSW Group – overview
- Among India’s leading
integrated steel producers (Steel making capacity: 18 MTPA)
JSW Steel*
- Engaged in development
and operations of ports (Operational capacity: 45 MTPA)
JSW Infrastructure
- Manufacturer of PSC,
OPC and GGBS (Operational plants capacity: 6.4 MTPA)
JSW Cement
- Engaged across the value
chain of power business (Operational plants capacity: 4,531 MW)
JSW Energy^
Presence across the core sectors
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JSW Steel – Among India’s leading steel manufacturer
One of the leading steel players in India Integrated manufacturing process Diversified product portfolio Strong distribution network and export presence Global presence Technological competence
- Combination
- f
state-of- the-art steel making technologies: Corex, DRI, Blast Furnace
- International presence in mining assets
(Chile, US and Mozambique) and value- added facilities (Plate and Pipe mill in US)
- Integrated
steel manufacturing facilities – from raw material processing plants to value-added product capacities
- Installed capacity 18 MTPA, at
strategic locations in South and West India
- Pan
India marketing and distribution network, export presence in ~100 countries across 5 continents
- Extensive portfolio of products – HR,
CR, galvanneal, galvanized/galvalume, pre-painted, tinplates, electrical steel (CRNO), TMT bars, wire rods, special steel bars, rounds and blooms
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Consistently ranked in top 10 global steel-makers
8.02 Posco 7.77 Nippon Sumitomo 7.74 Nucor 7.57 SDI 7.42 NLMK 7.22 JSW Steel 7.36 Voestalpine 7.34 Gerdau 7.24 JFE 7.41 Severstal
Source: World Steel Dynamics (WSD) as on June 2016 based on weighted average score (1) Ranking among top 37 “World Class” Steelmakers as per weighted average score, (2) Sorted by highest to lowest weighted average score, 1 being least favorable and 10 being most favorable
Ranked ahead of all other Indian players Achieved the best rating on number of key parameters
Parameter Score (2) Conversion Costs; Yields 10 Expanding Capacity 10 Location in High-growth Markets 10 Labor Cost 10
7.22 6.99 6.65 6.57 5.63 JSW Tata Steel JSPL SAIL Essar 10 14 24 25 36 Ranking (1) Weighted average score
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Translated at USD/ INR = 66.3329 (RBI reference rate as on Mar 31, 2016) (1) Includes Other Income
Transformational journey to market leadership
Unrelenting progress through the economic cycles
1.6 7.8 18.0 FY 2002 FY 2010 FY 2016
Capacity (MTPA)
262 2,939 6,313 FY 2002 FY 2010 FY 2016
Revenue (USD mn)
42 627 941 FY 2002 FY 2010 FY 2016
EBITDA (USD mn) (1)
80 3,485 4,676 FY 2002 FY 2010 FY 2016
Market Cap (USD mn)
59x increase in market-value
- Adopting industry
leading technologies Technology Corex Corex, BF Corex, BF, DRI
- Continuously expanding
product canvas with focus on high-end value-added products Product Mix Flats Flats, long, special steel and value added Flat, long, special steel, value added, AHSS for automotive, electrical steel
FY 2002 FY 2010 FY 2016
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(1) Southern Iron and Steel Company, (2) Amba River Coke Limited, (3) Praxair India Private Limited, (4) JSW Praxair Oxygen Private Limited
Combination of Organic and Inorganic growth
Key Projects in progress/pipeline: Salem Works capacity expansion to 1.2MTPA 0.2MTPA Tin plate mill at Tarapur Complex Pipe Conveyor System for Iron ore and new Water
Reservoir at Vijayanagar
1.5MTPA Coke Oven at Dolvi Coke Projects Ltd. Continuously evaluating opportunities to deliver value enhancing growth
2016
- 18 MTPA (Vijayanagar and Dolvi capacity
increased to 12 and 5 MTPA respectively)
- Won Moitra coal mine in Jharkhand
2002
- 1.6 MTPA
2005
- 2.5 MTPA
- Color Coating Line
- Acquired EURO IKON
2007
- 4.8 MTPA
- CRM of 1.0 MTPA
- Acquired Plate and Pipe Mill in US
- Coal mining concessions in Mozambique
2008
- Acquired Iron Ore
mines in Chile 2009
- 7.8 MTPA
2006
- 3.8 MTPA
2010
- JSW-JFE Strategic Partnership
- 3.5 MTPA of HSM II
- Coal mining concessions in US
2011
- Acquired 49.3%
stake in Ispat 2012
- HSM II Capacity
Expansion to 5 MTPA 2004
- Acquired SISCOL(1)
2013
- 14.3 MTPA post
Ispat merger 2014
- New CRM2—Phase I
- 4 MTPA—Pellet Plant(2)
- 1 MTPA—Coke Oven Plant(2)
- Acquired 50% stake in Vallabh Tinplate
- Acquired Welspun Maxsteel
2015
- New CRM2—Phase 2
- 0.2MTPA Electrical Steel Mill
2017
- Bought-out Praxair’s(3) 74% stake in
the industrial gases joint venture(4)
- Won 5 iron ore mines in Karnataka
(111 Mn tonnes estimated resources)
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(1) Translated at USD/ INR = 44.65 (RBI reference rate as on Mar 31, 2011)
JSW – JFE strategic partnership
One of the largest FDI in the Indian Metals and Mining space – Equity infusion by JFE of Rs. 5,410 Crores (~US$1.2 bn) (1) for 14.99% equity stake Deleveraged Balance Sheet to support next phase of growth Access to cutting edge technologies and fast growing automotive steel market Operational excellence to result in cost reduction
JSW Steel:
Focused expansion plans in India Optimized capital structure through deleveraging Access to cutting edge technologies
JFE:
Presence in growing Indian market Future growth through equity participation Strategic production base in India for existing automobile customers
Benefits to JSW Steel:
Access to fast growing auto steel market Technical know-how for electrical steel manufacturing Short learning curve Application engineering New product development Benchmarking and personnel training
Operational excellence and cost reduction for sustainable business operations by:
Improvement in quality, productivity, yield , and energy efficiency Sharing best maintenance, environment management, and safety practices Benchmarking, training and talent sharing Standardization of processes
Value creation for both the partners Technology agreements General technical assistance agreements
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Balanced corporate strategy
Selective Growth Diversification of Product Profile and Customer Base Backward & Forward Integration, and Focus on Resource Optimization Prudent balance sheet management Sustainability with focus on Quality, R&D and Innovation
Maintain market share through selective organic and inorganic growth Undertake brownfield expansions at low specific investment cost per ton Consider inorganic opportunities that are value accretive Increase proportion of high margin value-added products Diversify customer base, both within India and abroad Continue to focus on rural markets in India Continue to evaluate raw material assets in India and abroad to secure key raw material supplies and reduce cost of production by targeting strategic tie-ups and investments Focus on cost reduction and energy efficiency Continuously seek to improve financial profile Manage capacity expansion and debt profile to capture market
- pportunities without excessive risk
Committed to sustainable and eco-friendly technologies to drive growth Focus on Quality, R&D and Innovation to drive cost efficiency and new product development
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Strong and balanced Board comprising experts of eminence & integrity
Savitri Devi Jindal Naveen Raj Singh Nominee Director of KSIIDC Executive Directors Independent Directors Nominee Directors Chairperson—Emeritus Sajjan Jindal Chairman & Managing Director Seshagiri Rao M.V.S Joint Managing Director & Group CFO
- Dr. Vinod Nowal
- Dy. Managing Director
Jayant Acharya Director (Commercial & Marketing)
- Dr. Vijay Kelkar
Ex-Finance Secretary, Ex- Secretary of MoP&G, Ex- Chairman Finance Commission Promoter Director
Board fundamentally committed to sustainable business
Haigreve Khaitan Senior Partner at M/s. Khaitan & Co, India's one of the oldest and full service law firm Malay Mukherjee 40yrs of rich experience in mining and steel industry Seturaman Mahalingam CA, Ex-CFO of TCS, Ex member
- f the Tax Administration
Reform Commission Kannan Vijayaraghavan, FCA and Certified Management Consultant
- Dr. Punita Kumar Sinha
Former CIO at The Asia Tigers Fund Hiromu Oka Nominee Director of JFE Steel Corporation
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Agenda
- 2. Credit Highlights
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A platform of strength and agility
Strong fundamentals to boost India steel demand 1 Multi-location manufacturing facilities 2 Diversified product profile 3 Domestic market leader with strong export presence 4 Strong sales and marketing platform 5 Focus on operational efficiency 6 Strategic expansion aided by strong project execution 7 Proven ability to acquire and turnaround assets 8 Robust financial profile 9
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(200) 200 400 600 800 1,000 1,200 1,400 10,000 20,000 30,000 40,000 50,000 60,000 70,000
(1) Reserve Bank of India, (2) World Steel Association, IMF (World Economic Outlook – 2016), (3) World Steel Association (Short range outlook – Oct 2016), (4) Bubble size represents total steel demand of respective country
Strong fundamentals to boost India steel demand
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5.6% 6.6% 7.2% 7.6% 6.9% 7.4% FY13 FY14 FY15 FY16 FY17E FY18E India GDP growth %(1)
- Strong economic growth with improving fundamentals
India’s GDP growth continues to register stellar performance in a world seeing sluggish growth Though impacted temporarily by demonetization, economy expected to jump back with declining fiscal deficit, benign inflation, lower oil prices and easing interest rate trajectory
China India Brazil Mexico Russia Italy Japan South Korea France Canada Germany USA
- Government reforms to boost industry growth
Various measures in different sectors, easing FDI norms and initiatives such as ‘Make in India’ aim at driving growth & development The finance minister in his recent budget speech, stressed on continuing with economic reforms along with increase in public investment in infrastructure and development projects ~$60 Bn was allocated for infrastructure development in 2017-18
- India steel consumption to rise at a faster rate
- India’s steel consumption was ~84MT in 2016 and is forecast to
increase to ~89MT in 2017(3)
- Potential for substantial growth in steel consumption(2)(4)
- World Per Capita Consumption was ~206 Kgs in 2016.
- India Per Capita Consumption was ~64 Kgs in 2016.
Per capita Steel Consumption in 2016 (Kg.) GDP per capita in 2016 ($)
With the growth in economy, JSW Steel is well positioned to be part of the India growth story
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*JSW Steel Coated Products Limited ^ JSW Steel (Salav) Limited
Multi-location manufacturing facilities
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Dolvi: 5 MTPA
- 3.5 MTPA Blast Furnace
- 1.6 MTPA gas based DRI
- 55 MW Power Plant
Salem: 1 MTPA
- 1 MTPA Blast Furnaces
- 0.5 MTPA Blooming
Mill
- 60 MW Power Plant
Kalmeshwar (JSCPL*)
- 0.58 MTPA GP/GC
- 0.19 MTPA Colour
Coating Line Vasind & Tarapur (JSCPL*)
- 1.18 MTPA GP/GC
- 0.5 MTPA Colour
Coating Line
- 30 MW Power Plant
Vijayanagar: 12 MTPA
- 1.7 MTPA Corex
- 10.4 MTPA Blast
Furnaces
- 854 MW Power Plant
Salav: 0.9 MTPA DRI (^)
- JSW Steel ownership: 100%
US coal mines
- JSW Steel ownership: 90%
- Capacity: 1.2 Net MTPA Plates and
0.55 Net MTPA Pipes
- Acquired in 2007
- Opportunity for diversification in
terms of products, markets and geographies US plate and pipe mill
- JSW Steel ownership: 70%
- Started operations in FY11
- Under care and maintenance
Chile iron
- re mines
- JSW Steel ownership: 100%
- Early stage development in
progress Mozambique
coal mines
Strategic overseas presence Geographically diversified with manufacturing facilities in South and West India
Leveraging locational advantage to increase market share strategically
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Diversified Product Profile
Wide Offering of Flat and Long Products Developing New Products, Capturing Niche Markets Continuously Increasing Value Added Products
GC/GL /GI Bars / Rods Slabs Color Coated HRC Billets HR Plates RCS / Blooms CRC Wire Rods
AHSS for Automotive
Enhanced focus on cold rolled, galvanised and galvanneal products for body panels of automobiles Manufactured at a new CRM2 complex
Color Coated Products
Largest color coated facility to address construction, warehousing and roofing requirements State-of-the-art color coating line for appliance grade products used in consumer durables
Electrical Steel
Commissioned Cold Rolled Non-grain Oriented (CRNO) steel plant to address domestic demand by substituting imports of high grade electrical steel Diversified portfolio to address growing demand for value-added steel Commissioned new facilities to further enrich product mix Leveraging JFE Steel’s well-established manufacturing technology for advanced high strength steel (AHSS) for automotive
3
Continuously enriching product mix
18 77% 85% 84% 76% 88% 79% 23% 15% 16% 24% 12% 21% FY08 FY10 FY12 FY15 FY16 9MFY17
(1) Joint Plant Committee, (2) As at March 31, 2016
Domestic market leader with strong export presence
11.4% 13.4% 6.9% 3.3% India Finished Steel Consumption Growth(1) JSW Export Turnover as % of Total JSW Domestic Turnover as % of Total
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- Penetrating further to capture growing domestic demand with
unique marketing strategy –nationwide retail network (JSW Connect, JSW Shoppe, JSW Explore as well as non-exclusive retailers) of more than 6,500(2) outlets pan India
- Among fastest growing players in India (domestic sales surged
by 20% YoY in FY16 vs. apparent steel demand growth of 4.5% in India)
- One of the largest exporter of steel products from India with
export presence in over 100 countries
- Ability to re-align sales effort and shift between domestic and
export market as per market conditions – strategically reduced share of exports to 12% of total sales in FY16, as global steel consumption declined 3% YoY in CY15. Exports have again recovered in FY17
Flexibility to shift between domestic and international markets based on market conditions
4.5% 3.4%
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Multi-sectoral volume growth
Optimizing market mix and product mix to derive maximum benefit from sector growth Leveraging export presence New product approvals for Original Equipment Manufacturers (OEMs) and automotive customers Increase in value added products leading to incremental growth in focus sectors and also facilitating import substitution Establishing presence in key sectors such as solar, appliances, and automotive Focused on Retail Sales – increased reach and penetration
Strong sales and marketing platform
Segmented approach to address different retail segments
Metro / Urban Urban / Semi- urban Semi- urban / Rural ‘JSW explore’
- Branded,
multiple product service center for steel solutions
- Just-in-time
solution with in-house profiling lines and Value Added Services
- Franchisee Model
‘JSW Shoppe’
- Steel distribution
- Enhanced customer experience
‘JSW Shoppe Connect’
- Smaller retail format linked to JSW
explore/Shoppe
- Last mile link to talukas/rural areas
- Sales to end consumers and MSMEs
Increased customer focus and market penetration
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(1) Total production (12.56MT) divided by total no. of employees on Company payroll (11,904) in FY16
Focus on operational efficiency
- Coke Making: Recovery and Non-recovery
Coke Ovens
- Agglomeration: Sintering, Pelletisation and
Beneficiation Plants
- Iron Making: Blast Furnace, Corex, Sponge
Iron (DRI)
- Steel Making: Basic Oxygen Furnace (BOF),
Electric Arc Furnace (EAF), Conarc
- Casting: Continuous Casting, Thin Slab
Casting, Billet Casting
- Improving
labor productivity: Current production of ~1,055 tons/ employee(1)
- In-house training programs internal
faculty
- Continuously investing, building and
enhancing competencies
- Integrated manufacturing facilities: From
pelletisation/beneficiation to downstream value-add capabilities
- Dedicated port and railway siding for
logistics support
- Assured power supply through captive
power plants, arrangements with JSW Energy and the power grid
Diverse blend of technology High labour productivity Integrated operations
- Procurement optimization leading to rationalized raw material costs
- Focus on process improvements
- Waste gas utilization for power generation
- Solid waste management and zero effluent discharge
- Efficient operations resulting in low conversion cost
Best in class profitability
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High level of integration and technological expertise leading to reduced production cost and time
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(1) Translated at USD/INR = 67.9547 RBI Reference as on December 31, 2016
Strategic expansion aided by strong project execution 7
Focus on low cost and returns accretive brownfield projects to capitalise on expected demand growth
Strong project execution capabilities …
Experienced in-house project management team Supported by cross-functional team (commercial, finance and legal department) Established long-term relationship with key domestic and international suppliers Savings in procurement cost by negotiating firm prices for follow-on orders
… at low specific investment cost(1)
Low specific investment cost of $534/ton of capacity expansion shows cost and project management efficiency
Major new & on-going Projects
- Vijayanagar Works:
Pipe conveyor system for Iron ore and new water reservoir
- Dolvi Works:
1.5mtpa Coke Oven at Dolvi Coke Projects Ltd.
- Salem Works:
Capacity expansion from 1 MTPA to 1.2 MTPA by setting up certain new facilities and debottlenecking/modification of existing facilities Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven and Turbo Generator
- Tarapur Works:
Setting up 0.2MTPA Tin plate mill
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(1) Implemented in a wholly owned subsidiary Amba River Coke Limited
Proven ability to acquire and turnaround assets
December 2010 Completed Initiatives—FY2011–2015 FY2016-2017
- Inability to service existing debt
- Inadequate cashflows
- Corporate debt restructuring (CDR) case
- Exit from CDR
- Generating positive profit after tax
- Plant under maintenance
- Loss making at EBITDA level
- High interest cost
- Financially distressed
- Infusion of equity
- Alignment of marketing strategies resulting in freight
synergies and VAT benefits
- Reduction of high cost working capital funding
- Refinancing of existing debt
- Electricity sourcing from JSW Energy at competitive
prices
- Commissioning of 4MTPA pellet plant(1), 1MTPA coke
- ven(1), waste gas based 55MW power plant, railway
siding, and lime calcination plant
- Capacity expanded to 5MTPA, ramp-
up/stabilization is underway
- 1.5mtpa Coke Oven at Dolvi Coke
Projects Ltd. is being set-up
- Further operational
improvements underway
- Operational improvements underway
Case Study: Turnaround strategy at JSW Ispat’s Dolvi plant JSW Steel has a proven track record of acquiring troubled assets and turning them around in record time by closely integrating them with its existing operations, thus creating synergies and optimizing cost
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Able to leverage an acquisition to maximum value accretion through application of knowledge and experience
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(1) EBITDA of 9months FY17 annualized for 9MFY17 ratio, (2) Net debt excludes Acceptances, (3) As of 31st December 2016
Robust financial profile
Superior profitability supported by efficient operations Strong track record of volume growth Well managed leverage profile(1), (2)
Achieved significant sales growth despite weak economic and sluggish domestic demand
Resilient operations with improved EBITDA margin marked by several productivity and cost improvement measures
While FY16 EBITDA was impacted by weak steel pricing due to steel supply glut and planned shutdowns; there has been large margin expansion in FY17
Leverage has significantly improved this fiscal with steep growth in profitability
Adequate liquidity levels owing to prearranged funding in place for capacity expansions and a committed working capital facility
11.9 12.0 12.1 8.8 10.8
FY14 FY15 FY16 9MFY16 9MFY17
Standalone sales volume (MT) 17.9% 17.7% 14.5% 14.5% 23.4%
FY14 FY15 FY16 9MFY16 9MFY17
EBITDA margins
3.7x 3.8x 6.4x 3.7x FY14 FY15 FY16 9MFY17
Net Debt/ EBITDA
9
Diverse sources of funding(3)
Financial flexibility to raise capital
Strong relationships with over 50 banks/financial institutions with access to low cost credit
Healthy mix with 37% of debt being foreign currency INR debt 63% Foreign currency debt 37% Bonds & debentures 25% Loans and others 75%
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Agenda
- 3. Financial highlights
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1,368 1,403 906 668 1,357 FY14 FY15 FY16 9MFY16 9MFY17 7,645 7,906 6,251 4,618 5,813 FY14 FY15 FY16 9MFY16 9MFY17
Solid earnings momentum and cashflows
Operating revenue(1) EBITDA(1)
17.9%
($ in millions) ($ in millions, EBITD A margin (%))
17.7% 14.5% 14.5% 23.4%
EBITDA/ Tonne(2), (3) EBITDA less Capex(1)
508 400 133 775 FY14 FY15 FY16 9MFY17 6.6%
Rs/ Tonne ($ in millions, as a % of revenue from operations)
5.1% 2.1% 13.3%
Translated at 1 USD = 67 INR (1) Consolidated financials, (2) Standalone entity, (3) FY15 as per Indian GAAP, FY16 and FY17 as per Ind-AS
6,988 5,469 5,398 5,400 4,059 5,892 9,276 7,077 7,717 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
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Translated at 1 USD = 67 INR (1) EBITDA of 9months FY17 annualized for 9MFY17 ratio, (2) Net debt excludes acceptances, (3) As of 31st Dec,2016: Excludes unamortized fees and actual redeemable value of preference shares
Leverage and Debt Maturity profile
3.7x 3.8x 6.4x 3.7x FY14 FY15 FY16 9MFY17
Net debt / EBITDA(1), (2) Maturity profile of long term borrowings(3)
1,127 667 2,819 1,278 <1 year 1 – 2 years 2 – 5 years >5 years 5,188
(x) ($ in millions)
5,670 5,890 6,804
Prudent financial guidelines
Strong YoY profitability improvement-> reduction in net debt / EBITDA 109 286 110 197
Diversify funding sources Maintain adequate liquidity levels Improve debt maturity profile
Total Debt(1) (US$ mn) Total Cash(1) (US$ mn) Net debt / EBITDA Current refinancing to improve maturity and diversify funding sources
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Agenda
- 4. Business Environment
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Source: JPC and JSW Steel, All figures are in million tonnes, ^Average monthly imports during FY16, * Apparent finished steel consumption net of double counting effect
Indian economy and steel industry
- Imports in February 2017 (0.491 mt) were down by 46%
- ver February 2016 and by 19% over January 2017
- Given such trends in export-import, India emerged as a
net exporter of total finished steel during February 2017 as well as April-February 2016-17
- Crude steel production increased by 8.8% YoY whereas
apparent finished steel consumption grew by 3.4% YoY in 9MFY17
- Expect
digital push and re-monetization to restore normalcy in demand
- Government’s
thrust to stimulate infrastructure investment and consumption growth via higher public spending will be key ahead
66.52 59.54 72.35 61.54 Crude Steel Production Apparent Finished Steel Consumption* 9MFY16 9MFY17
8.8% 3.4%
1,058 733 618 693 576 648 690 587 634 841 602 491
FY16^ Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17
Monthly steel imports (in '000 tons)
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47 50 53 56 59 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 US Eurozone Japan China PMI Manufacturing
Source: Bloomberg, IMF and JSW Steel
Global economy
Global economy is projected to grow by 3.4% in CY17
- Recent data indicate US growth recovery is robust
enough for Fed to carry out two more hikes this year, following the recent widely anticipated hike
- Euro area growth remains resilient in the face of Brexit
shock; political risk in the coming year to be watched out for
- Japan growth improved in 3QCY16, manufacturing PMI
remained above 50 for 4th consecutive month
- China growth rate in 4QCY16 at 6.8% YoY was a bit
stronger than expected, supported by continued policy stimulus
- However, overall Global growth expectations remain
unchanged amidst uncertainty around the US policies and their implications for the global economy
3.1% 1.6% 1.6% 1.7% 0.9% 4.1% 6.6% 6.7% 3.4% 1.9% 2.3% 1.6% 0.8% 4.5% 7.2% 6.5%
World AMEs US Euro Area Japan EMEs India China 2016 2017 GDP growth - IMF projections for 2016 and 2017 (%YoY)
30
Source: SBB, ISSB, MySteel, Bloomberg and JSW Steel
Global steel scenario
Continued trade restrictions to influence global steel trade
- Exports from China, Japan, Korea and Russia
remained at elevated levels in CY16. In recent months capacity closure in China leading to some normalisation
- Japanese and Korean exports continue to be at a
discount to their domestic market prices
- Coking coal contract prices have settled after
sharp volatility in 2HCY16 and Iron ore price remains at elevated level. This raw material push will support steel prices
- 60
120 180 240 300
- 125
250 375 500 625 750
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17
Hard coking coal FOB - RHS Korea - Domestic Japan - Domestic China - export FOB Japan & Korea - export FOB Iron ore China CFR -RHS
$/tonne $/tonne
157 194 214 210 60 120 180 240 CY13 CY14 CY15 CY16 China Japan Korea Russia Steel exports (mn tonnes)
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Conclusion
Macro environment is improving
Various measures undertaken by Government of India to provide a competitive environment for the industry Increased Government focus on stimulating the investment cycle bodes well for steel demand growth Revival in global steel prices based on factors like recovery in apparent steel consumption in China, increase in steel capacity closure targets by China and raw material cost push Against earlier scenario of high imports, India now emerging as a net steel exporter
JSW Steel well placed to capitalize
Successful expansion undertaken at Vijayanagar Works Diverse product portfolio with increasing share of value added products Pioneer in introducing leading technologies and cost efficiency measures in India leading to higher quality and lower cost Continues towards securing raw material supplies with recent wins in auctions of coal and iron
- re mines
Robust financial profile
Efficient scale of operations with one of the lowest conversion costs in the industry Strong metrics compared to peers Prudent financial guidelines leading to improved leverage and liquidity levels
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Agenda
- 5. Appendix
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Particulars (US$ Mn) FY14 FY15 FY16 9MFY16 9MFY17
Operating Revenue(1) 7,645 7,906 6,251 4,618 5,813 Operating EBITDA 1,368 1,403 906 668 1,357 % margin 17.9% 17.7% 14.5% 14.5% 23.4% Profit before tax 195 379 (354) (414) 557 Profit after tax 67 268 (111) (94) 383 Shareholder’s equity(2) 3,299 3,455 3,231 3,129 Net Debt(3) 5,079 5,384 5,780 6,607 Net Debt/ EBITDA 3.7x 3.8x 6.4x 3.7x(4) Net Debt/ Equity 1.5x 1.6x 1.8x 2.1x
Consolidated financials
FY14, FY15 and FY16 financials as per Indian GAAP; 9MFY16 and 9MFY17 financials as per Ind-AS Translated at 1 USD = 67 INR (1) Operating Revenue is net of excise and includes “other operating income”, (2) Includes minority interest, (3) Net debt excludes acceptances, (4) EBITDA
- f 9months FY17 annualized for 9MFY17 ratio
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Particulars (US$ Mn) FY14 FY15 FY16 9MFY16 9MFY17
Crude steel production (MT) 12.17 12.63 12.56 9.36 11.7 Saleable Steel sales (MT) 11.86 12.03 12.13 8.84 10.82 Operating Revenue(1) 6,761 6,879 5,479 4,054 5,449 Operating EBITDA 1,311 1,324 854 662 1,287 % margin 19.4% 19.2% 15.6% 16.3% 23.6% EBITDA/ Ton (Rs/MT) 7,408 7,372 4,719 5,014 7,973
Standalone financials
FY14, FY15 and FY16 financials as per Indian GAAP; 9MFY16 and 9MFY17 financials as per Ind-AS Translated at 1 USD = 67 INR (1) Operating Revenue is net of excise and includes “other operating income”
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FY16 performance on sustainability metrics
71%
Waste heat utilized
98.5%
Waste gases utilization
943,808 MT
Scrap recycled
9%
Decrease in LTIFR over FY 15
3.51 Mn GJ
Energy saved
30%
Recycled & reused water
0%
Liquid discharged from our Plants
1897 MT
Waste recycled
Awards in 2016:
‘Golden Peacock Innovative Product’ Award ‘Steelie Award 2016’ in the innovation category for “the development of advanced high strength automotive steels with speed and innovation” by the World Steel Association The National Award for Supply Chain and Logistics Excellence under steel industry Category by CII Accreditation with level 5 for Total Cost Management (TCM) Maturity Model Assessment by TCM division of CII 2nd Prize in the National Energy Conservation Awards 2016 to Vijayanagar Works in “Integrated Steel Sector” and Kalmeshwar Works in “Steel Re-Rolling Mills Sector” by ‘Bureau of Energy Efficiency’ of India
Awards in 2015:
Porter’s Prize for ‘Leveraging Unique Activities’ JSW Group received Porter’s Prize for ‘Creating Shared Values’
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