JSW Steel Limited Investor Presentation July 2015
2
Agenda
Overview Value Proposition Performance Overview
Business Environment
3 * Listed company
** USD/ ` = 63.7549 (RBI reference rate as on Jun 30, 2015)
JSW Group – overview
USD 11 billion group with presence across the core sectors
JSW Steel*: India’s leading integrated steel producer. (Steel Capacity: 14.3MTPA )
JSW Energy*: Engaged across the value chain of power business(Operational plant 3,140 MW)
JSW Infrastructure: Engaged in development and operations of ports
JSW Cement: PSC/GGBS cement plant of 6 MTPA capacity
JSoft Solutions: An IT & ITES arm of JSW group
JSW Steel 3,307
JSW Energy 2,529
As on Jun 30, 2015
Group market cap ($5,836 mn**)
Cash Profit= PAT + Depreciation All figures are in USD millions USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015)
JSW Group FY 2014-15
Gross Turnover: 10,782
EBITDA: 2,165
Profit after Tax: 520
Cash Profit: 1,221
4
JSW Steel – India’s leading steel manufacturer
Leading steel manufacturer
in India
Integrated manufacturing
process
Diversified product portfolio
Strong distribution network and
export presence
Global presence
Technological competence
Combination of 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 14.3 MTPA, at six strategic locations in South and West India
Pan India marketing and distribution network, export presence in ~100 countries across the 5 continents
Extensive portfolio of products – HR, CR, galvanized/galvalume, pre-painted, TMT bars, wire rods, special steel bars, tinplates, rounds and blooms
5 (1) Calculated as consolidated EBITDA / Saleable steel, (2) From 31st March 2002 to 31st March 2015,
(3) USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015)
Transformational journey to market leadership
Unrelenting progress through the economic cycles
FY 2002 FY 2010 FY 2015
CAGR FY’02–15: 30% Revenue (USD mn)
277 3,114 8,463
CAGR FY’02–15: 31% EBITDA
(USD mn) 45 664 1,502
CAGR FY’02–15: 18% FY 2016 expected capacity of 18MTPA
Capacity (MTPA) 1.6 7.8 14.3
Significant value creation with 42x increase in market value(2)
Market Cap (USD mn)
84 3,693 3,501
Adopting industry leading technologies Technology Corex Corex, BF Corex, BF, DRI
CAGR FY’02–15: 19% Production (MTPA) 1.3 6.0 12.6
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 & high value-added auto grade
CAGR FY’02–15: 10% EBITDA/ton(1)
(USD/ton) 35 116 125
6 (1) Southern Iron and Steel Company, (2) Amba River Coke Limited
(3) Subject to regulatory approval
Combination of Organic and Inorganic growth
2002
1.6 MTPA
2005
2.5 MTPA
Color Coating Line
Acquired EURO IKON
2007
4.8 MTPA
CRM of 1.0 MTPA
Acquisition of Plate and Pipe Mill in US
Coal mining concessions in Mozambique
2008
Iron Ore mines acquired 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
Acquisition of 49.3% stake in Ispat 2012
HSM II Capacity Expansion to 5 MTPA 2004
Acquired SISCOL(1)
2013
14.3 MTPA post Ispat merger
FY2016/17
18 MTPA
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
Key Projects in progress/pipeline:
Dolvi Works capacity expansion to 5MTPA
Vijayanagar Works capacity expansion to 12MTPA(3)
Salem Works capacity expansion to 1.2MTPA
0.2MTPA Tin plate mill at Tarapur Compalex
Continuously evaluating opportunities to deliver value enhancing growth
2015
New CRM2—Phase 2
0.2MTPA Electrical Steel Mill
7
One of the largest FDI in the Indian Metals and Mining space – Equity infusion by JFE of `5,410 Crores (~$1.2 bn) 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 – JFE strategic partnership
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
Short learning curve
Application engineering
New product development
Benchmarking and personnel training
Operational excellence and cost reduction 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 Automotive technology agreements General technical assistance
agreements for sustainable business operations
8
Balanced corporate strategy
Selective
Growth
Diversification of Product Profile and
Customer Base
Focus on Resource Optimization
Strengthening Backward and Forward Integration
Prudent Balance Sheet Management
Maintain market share of 13–14% 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
Committed to sustainable and eco-friendly technologies to drive growth
Focus on cost reduction and energy efficiency
Continue to evaluate raw material assets in India and abroad to secure key raw material supplies and to reduce cost of production by targeting strategic tie-ups and investments
Continuously seeks to improve financial profile
Manage capacity expansion and debt profile to capture market opportunities without excessive risk
9
Strong and balanced Board comprising experts of eminence & integrity
Savitri Devi Jindal
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)
Naveen Raj Singh Nominee Director of KSIIDC
Kyoichi Kameyama Nominee Director of JFE Steel Corporation
Kannan Vijayaraghavan, FCA and Certified Management Consultant
Dr. Punita Kumar Sinha Chief Investment Officer at Asia Tigers
Uday Madhav Chitale Senior Partner at M/s. M.P. Chitale & Co., Chartered Accountants
Dr. Vijay Kelkar Ex Finance Secretary, Ex Secretary of MoP&G, Ex Chairman Finance Commission
Malay Mukherjee 40yrs of rich experience in mining and steel industry
Executive Directors Independent Directors Nominee Directors Chairperson—Emeritus
Promoter Director
Board fundamentally committed to sustainable business
10
Agenda
Overview Value Proposition Performance Overview
Business Environment
11
A platform of strength and agility
1 Strong fundamentals to boost India steel demand
2 Multi-location manufacturing facilities in India
3 Strategic overseas presence
4 Diversified product profile
5 Domestic market leader with strong export presence
6 Strong sales and marketing platform
7 Focus on operational efficiency
8 Strategic expansion aided by strong project execution
9 Proven ability to acquire and turnaround assets
10 Robust financial profile
12
(200)
0
200
400
600
800
1,000
1,200
1,400
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
(1) Reserve Bank of India, (2) World Steel Association, World Bank, IMF, (3) World Steel Association, (4) 12th Five-Year Plan (India), (5) IHS Automotive, (6) Bubble size represents total steel demand of respective country
1
5.1% 6.9% 7.3% 7.5%
FY13 FY14 FY15 FY16E
Decisive mandate in India general elections
Strong investor confidence and raised expectations of fast-paced decision-making and economic reforms
China
India Brazil
Mexico Russia
Taiwan
Italy
Japan
South Korea
France
Canada
Germany
USA
Strong fundamentals to boost India steel demand
Upturn in overall GDP growth(1)
• (%)
Infrastructure sector is a key focus area for the new government
Infrastructure investment expected to reach ~$1 trillion during 2012-2017(4)
New government is focused to give impetus to infrastructure sector
Automobile sector expected to turn around
India projected to become 3rd largest automotive market in the world by 2016(5)
Faster economic growth and government's policies is likely to drive volumes and revive the automobile sector
With the growth in economy, JSW Steel is well positioned to be part of the India growth story
India steel consumption to rise at a faster rate
o India’s steel consumption was 75MT in 2014 and is expected to rise to ~80MT in 2015 and ~86MT in 2016(3)
Potential for substantial growth in steel consumption(2)(6)
o World Per Capita Consumption is ~225 Kgs. o India Per Capita Consumption is ~58 Kgs.
Per
cap
ita
Stee
l Co
nsu
mp
tio
n in
20
13
(K
g.)
GDP per capita in 2013 ($)
13 *JSW Steel Coated Products Limited
Multi-location manufacturing facilities in India
Leveraging locational advantage to increase market share strategically in the Southern and Western regions of India
2
Dolvi: 3.3 MTPA
2 MTPA Blast Furnace 1.6 MTPA DRI 3.6 MTPA Twin Shell ConArc 55 MW Power Plant
Salem: 1 MTPA
1 MTPA Blast Furnaces 0.5 MTPA Blooming Mill 60 MW Power Plant
Kalmeshwar (JSCPL*)
0.61 MTPA GP/GC 0.19 MTPA Colour Coating Line
Vasind & Tarapur (JSCPL*)
0.32 MTPA HR Plates 1.2 MTPA GP/GC 0.5MTPA Colour Coating Line 30 MW Power Plant
Vijayanagar: 10MTPA
1.65 MTPA Corex 8.4 MTPA Blast Furnaces 855 MW Power Plant
14
Strategic overseas presence
JSW Steel ownership: 100% 5 mining licenses awarded Early stage development in progress
Mozambique coal mines
JSW Steel ownership: 70% Acquisition cost: $252mn Started operations in FY11 Maritime concession to develop cape size
port in North Caldera
Chile iron ore mines
JSW Steel ownership: 90% Acquisition cost: $810mn 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: 100% Acquisition cost: $70mn 2 of 7 mines are operational Alloy Dock—Load Out Facility
US coal mines
3
Strategic overseas presence for backward integration and value-added facilities
15
Wide Offering of Flat and Long
Products
Developing New Products, Capturing
Niche Markets
Continuously Increasing Value Added Products
GC
TMT
Slabs
Color Coated
HRC
Billets
HR Plates
Blooms
CRC
Wire Rods
Automotive Grade Steel
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 high value-added products for auto-grade steel
Diversified Product Profile 4
Continuously enriching product mix
16 (1) World Steel Association. India finished steel consumption data for calendar year (CY07 corresponds to FY08).
12.9% 12.6% 7.6% 1.8% India Finished Steel Consumption Growth(1)
JSW Export Turnover as % of Total
JSW Domestic Turnover as % of Total
Domestic market leader with strong export presence 5
Penetrating further to capture growing domestic demand with unique marketing strategy – unique nationwide retail network of more than 450 outlets of JSW Shoppe and JSW Explore
Leadership position in India and largest exporter of steel products out of India
Ability to re-align sales effort and shift between domestic and export market as per market conditions
Exports to high demand regions such as Asia, Middle East, Europe and the US – presence in over 100 countries
Flexibility to shift between domestic and international markets based on market conditions
77% 85% 84% 75% 76%
23% 15% 16% 25% 24%
FY08 FY10 FY12 FY14 FY15
2.2%
17
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
Focused on Retail Sales – increased reach and penetration
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
6 Strong sales and marketing platform
18 (1) Total production (12.63MT) divided by total no. of employees on Company payroll (12,271) in FY15
Coke Making: Recovery and Non-recovery Coke Ovens
Agglomeration: 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 ~1,029 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
100% assured power supply through captive power plants and arrangements with JSW Energy and the power grid
Diverse blend of technology High labour productivity Integrated operations
Reduced raw material costs
Focus on process improvements
Waste gas utilization for power generation
Efficient operations resulting in low conversion cost
Resulting in operational efficiency
7 Focus on operational efficiency
High level of integration and technological expertise leading to reduced production cost and time
19 (1) Vijayanagar works expansions
Strategic expansion aided by strong project execution 8
Focus on low cost and returns accretive brownfield projects to capitalise on expected demand recovery
1.6 Mtpa • FY 2003 • USD 923/mt
2.5 Mtpa • FY 2006 • USD 682/mt
3.8 Mtpa • FY 2007 • USD 550/mt
7.8 Mtpa • FY 2009 • USD 559/mt
11 Mtpa • FY 2012 • USD 545/mt
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)
Reduced specific investment cost/ton of capacity expansion shows cost efficiency
Major on-going Projects
Vijayanagar Works:
Capacity expansion from 10 MTPA to 12 MTPA by setting up certain new facilities and debottlenecking/ modification of existing facilities
50,000 TPA capacity Service Center to handle the products of Electrical Steel Complex
Dolvi works:
Capacity expansion from 3.3 MTPA to 5 MTPA by setting up certain new facilities and debottlenecking/ modification of existing facilities
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
20 (1) Implemented in a wholly owned subsidiary Amba River Coke Limited.
December 2010 Completed Initiatives—FY2011–2015 Road Ahead
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 oven(1), waste gas based 55MW power plant, railway siding, and lime calcination plant
Capacity expansion to 5MTPA
Further operational improvements underway
Operational improvements underway
Profitability to improve substantially
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
9 Proven ability to acquire and turnaround assets
Able to leverage an acquisition to maximum value accretion through application of knowledge and experience
21 Refer next slide
Robust financial profile 10
Strong track record of volume and revenue growth
Achieved significant sales growth despite weak economic and sluggish domestic demand in past 2 years
Superior profitability supported by efficient operations
Resilient operations with improved EBITDA margin marked by several productivity and cost improvement measures in FY14 and FY15
Well-capitalized balance sheet
Adequate liquidity levels owing to prearranged funding in place for capacity expansions and a committed working capital facility
Financial flexibility to raise capital
Diverse sources of funding
Strong relationships with over 50 banks/financial institutions with access to low cost credit
Healthy mix of local and foreign currency debt
Strong positioning as compared to peers*
Strong EBITDA margins, low leverage and higher returns on invested capital as compared to global peers
22
Financials as of FY14 (FY ending December) for all peers except JSW Steel and Tata Steel (FY15 ending March) and ThyssenKrupp (FY14 ending September), (1) Calculated as EBITDA/ Revenue, where EBITDA is post adjustment of any one-off items, (2) Calculated as EBIT/ Average Capital Employed (net worth + long-term borrowings + short-term borrowings + current maturity of long-term borrowings + net deferred tax liabilities)
Strong positioning compared to peers
EBITDA Margin (1)
(%)
Net Debt/EBITDA (x)
17.8% 19.2%
26.6% 25.2% 19.5% 17.8% 16.0%
12.0% 9.9% 9.1% 9.1% 6.7% 5.9% 5.1%
JSW Steel(Consolidated)
JSW Steel(Standalone)
Severstal CSN MagnitogorskIron and Steel
Evraz Hyundai Steel Gerdau Nucor Tata Steel Arcelormittal SteelDynamics
US Steel ThyssenKrupp
3.81x 2.97x
0.69x 1.31x 1.49x 1.66x 2.06x 2.18x 2.21x
2.67x
4.30x 4.56x 5.22x 5.54x
JSW Steel(Consolidated)
JSW Steel(Standalone)
Severstal MagnitogorskIron and Steel
ThyssenKrupp Nucor US Steel Arcelormittal Evraz Gerdau Hyundai Steel SteelDynamics
CSN Tata Steel
Return on Average Capital Employed(2)
(%)
9.67% 11.02%
17.78% 17.51%
11.93% 9.13%
7.53% 6.20% 5.77% 5.60% 5.57% 5.47% 5.41%
0.02%
JSW Steel(Consolidated)
JSW Steel(Standalone)
Severstal Evraz ThyssenKrupp MagnitogorskIron and Steel
CSN Arcelormittal Gerdau Tata Steel Hyundai Steel SteelDynamics
US Steel Nucor
23
Agenda
Overview Value Proposition Recent Performance
Business Environment
24 USD/ ` = 63.7549 (RBI reference rate as on Jun 30, 2015)
Key highlights – 1QFY16
Standalone performance
Gross Turnover: `11,067 crore/US$ 1,736 mn
Net Sales: `9,982 crore/US$ 1,566 mn
Operating EBITDA: `1,505 crore/US$ 236 mn
Highest ever quarterly Crude Steel production: 3.40 million tonnes
Saleable Steel sales: 3.11 million tonnes
Net Debt to Equity: 1.13x and Net Debt to EBITDA: 3.66x
Consolidated performance
Gross Turnover: `12,556 crore/US$ 1,969 mn
Net Sales: `11,382 crore/US$ 1,785 mn
Operating EBITDA: `1,627 crore/US$ 255 mn
Net Debt to Equity: 1.66x and Net Debt to EBITDA: 4.51x
Key update Commenced commercial production at 2nd Continuous Annealing Line
(CAL-2) – part of the new 2.3 MTPA CRM complex at Vijayanagar
25
3.10 3.40
3.06
1QFY15 1QFY16 4QFY15
Crude Steel Production
Quarterly volumes – standalone
YoY
+10%
1QFY15 1QFY16 4QFY15
Flat 2.43 2.50 2.47
Long 0.52 0.69 0.48
2.88 3.11 3.06
1QFY15 1QFY16 4QFY15
Saleable Steel Sales
YoY
+8%
1QFY15 1QFY16 4QFY15
Flat 2.32 2.40 2.44
Long 0.47 0.62 0.55
Semis 0.08 0.08 0.08
QoQ
+11%
QoQ
+1%
All figures are in million tonnes
26 Source: JPC and JSW Steel, * Domestic sales in million tonnes
^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)
Quarterly sales highlights – consolidated
Highest ever domestic sales of 2.66 million tonnes – grew by 27%YoY
Exports strategically moderated to 14% of total sales as planned, and yet mix improved with higher exports of value added products
Retail sales grew 77%YoY whereas OEM/Industrial sales was up 13%YoY
Value-added & Special Products sales grew 31%
63% 57% 60%
23% 32% 28% 14% 11% 13% 2.09* 2.66* 2.36*
27% 24%
2.86^ 3.11^ 3.10^
1QFY15 1QFY16 4QFY15
OEM/Industrial Retail Auto Exports
14%
71% 65% 66%
29% 35% 34%
1QFY15 1QFY16 4QFY15
Value added & special Products Other products
27
514
653
842
3QFY15 4QFY15 1QFY16
Retail sales (‘000 tonnes)
Quarterly retail sales highlights – consolidated
Color Coated steel sales grew 17%YoY, Individual residential and Industrial segments were major contibutors
TMT sale grew 116%YoY, Residential (both individual and real estate) and Commercial segments were major contributors
57% 58% 55%
43% 42% 45%
3QFY15 4QFY15 1QFY16
Retail - Others Sales Retail - Branded Sales
Key retail initiatives:
Network expansion
Brand building activities
Influencer engagement program
+27%
+29%
28
New product development/approvals in 1QFY16
Steel Type: AHSS 980 CRC
End use: Crash components of Passenger Car
Steel Type: IF grade CRCA
End use: Trunk lid of passenger Car
Steel Type: SP781/782/783 Galvaneal Steel
End use: Inner components of Passenger Car
Steel Type: Micro-alloyed steel
End use: Connecting rod for railway locomotive/passenger cars
Steel Type: HR1030M- HRC
End use: Commercial vehicle brake assembly support
Steel Type: SAE 1070 alloy steel
End use: Cam shaft for railway locomotive
29
Particulars 1QFY16 1QFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 11,067 1,736 12,401 1,945
Net Sales 9,982 1,566 11,370 1,783
Operating EBITDA 1,505 236 2,461 386
Other Income 92 14 98 15
Finance Cost 653 102 723 113
Depreciation 752 118 663 104
Exceptional Items (146) - - -
Profit Before Tax 46 7 1,173 184
Tax 15 2 371 58
Profit after Tax 31 5 801 126
Diluted EPS (`)* 0.92 32.81
*Not Annualized
USD/ ` = 63.7549 (RBI reference rate as on Jun 30, 2015)
1Q Financials – standalone
30
2,461
1,505
193
(2,139)
1,019
(29)
EBITDA1QFY15
Volume NSR Cost Others EBITDA1QFY16
$386
$30
($336)
($5)
$160 $236
USD/ ` = 63.7549 (RBI reference rate as on Jun 30, 2015)
Operating EBITDA movement – standalone
` crore
31
Volumes 1QFY16 1QFY15
Production* 0.39 0.40
Sales 0.40 0.40
` crore
*Including Job Work
Operational performance – JSW Steel Coated Products
Million tonnes
Key P&L data 1QFY16 1QFY15
Turnover 2,132 2,505
Operating EBITDA 111 95
Profit after Tax 26 7
32
Sales (net tonnes) 1QFY16 1QFY15
Plate Mill 48,076 95,506
Pipe Mill 17,157 9,230
Production (net tonnes) 1QFY16 1QFY15
Plate Mill 58,118 102,694
Utilization (%) 23% 42%
Pipe Mill 13,541 8,129
Utilization (%) 10% 6%
USD mn
Net tonnes = 0.907 metric tonnes
Operational performance – US Plate & Pipe Mill
Key P&L data 1QFY16 1QFY15
Turnover 52.47 99.17
EBITDA + Other Income (9.40) 4.02
Profit after Tax (25.47) (10.39)
33
Particulars 1QFY16 1QFY15
Production (Tonnes) 83,774 220,736
Sales (Tonnes) 160,667 325,522
Turnover 8.43 32.08
Operating EBITDA 0.68 (0.35)
Profit after Tax (1.92) (1.59)
Operational performance – Chile
USD mn
34
Particulars 1QFY16 1QFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 12,556 1,969 14,153 2,220
Net Sales 11,382 1,785 13,067 2,050
Operating EBITDA 1,627 255 2,612 410
Other Income 26 4 54 8
Finance Cost 822 129 844 132
Depreciation 939 147 795 125
Exceptional Items (1) - - -
Profit Before Tax (108) (17) 1,026 161
Tax 17 3 383 60
Share of Associates and Minority Interest (18) (3) 13 2
Profit after Tax (107) (17) 656 103
Diluted EPS (`)* (4.77) 26.82
*Not Annualized
USD/ ` = 63.7549 (RBI reference rate as on Jun 30, 2015)
1Q Financials – consolidated
35
35,805
37,953 3,132
(951)(566)
312 221
Net Debt*
as on Mar'15
New Loan Taken Repayments Pre-payments Fx Impact Movement in
FD / MF
Net Debt*
as on Jun'15
$5,616
$491
($149)($89)
$49 $35 $5,953
*Net Debt excludes Acceptances
USD/ ` = 63.7549 (RBI reference rate as on Jun 30, 2015)
Net debt movement – consolidated
` crore/$mn
Particulars 30.06.2015 31.03.2015
Cash & cash equivalent (` crore) 1963 2184
Net Debt/Equity (x) 1.66 1.55
Net Debt/EBITDA (x) 4.51 3.81
36
Agenda
Overview Value Proposition Recent Performance
Business Environment
37 Source: Bloomberg, IMF and JSW Steel
Global economy
IMF has revised down 2015 global GDP growth projection to 3.3%
US growth appears to have softened in 2QCY15, however, housing and non residential construction data remain encouraging
Europe continues to grow at a moderate pace supported by large monetary stimulus and lower oil prices; aversion of ‘Grexit’ to provide near term confidence
Japan widely expected to have contracted in 2QCY15 – industrial production as well as domestic consumption remained subdued
China 2QCY15 GDP grew at 7%YoY, however, economy continues to slow with contraction in FAI and real estate market
Global economic growth outlook has moderated
-10
-5
0
5
10
15
Jun
-11
De
c-1
1
Jun
-12
De
c-1
2
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
IIP
(%
Yo
Y)
US Eurozone Japan China3
.4%
1.8
%
2.4
%
0.8
%
-0.1
%
4.6
%
7.3%
7.4
%
3.5
%
2.4
%
3.1% 1.5
%
1.0
% 4.3
%
7.5
%
6.8
%
3.3
%
2.1
%
2.5
% 1.5
%
0.8
% 4.2
%
7.5
%
6.8
%
World AMEs US EuroArea
Japan EMEs India China
2014A 2015P (Apr 15) 2015P (July 15)
GDP growth - 2014 actual vs. projections for 2015
38 Source: World Steel Association, Bloomberg and JSW Steel
Global steel scenario
World Crude Steel production in 1HCY15 was lower by 2% – almost all the regions witnessed a decline
However, weaker Chinese demand and resultant jump in steel exports is driving a global supply glut
Regional HRC prices remain under pressure driven by surging exports from steel-surplus countries, moderating demand, lower iron ore and coal prices, and currency volatility
Weaker global demand and rising exports from steel-surplus countries an area of concern
-6.9
-6.9
-4.9
-4.7 -4.3
-1.5
-1.3
-2.0
0.5 4.2
N. A
mer
ica
CIS
Ko
rea
Jap
an
Oth
er E
uro
pe
MEA
Ch
ina
Wo
rld
EU
Ind
ia
Global crude steel production - 1HCY15 (% YoY growth)
300375450525600675750825
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
North America ExW Europe ExWBlack Sea export FOB China export FOB
HR
C p
rice
s ($
/to
nn
e)
20
40
60
80
100
120
-20%
-10%
0%
10%
20%
30%
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
China apparent steel consumption (%YoY growth)
China steel Exports (annualized, mn tonnes) -RHS
39 * This is not an exhaustive list, ** Tapering to 21.13% by Jun 2017, AD – anti dumping duty, CVD – countervailing duty, SD- safeguard duty, Tariffs (rate of duty) are applicable to specific product grades and varies for different exporting countries
Accelerating trade remedial measures
Imposed by* Range of AD/CVD/SD Imposed upon
Australia 7.8%-33.8% Japan, Vietnam, Finland, India and Sweden
Brazil US$211.56-746.41 per metric ton China,Ukraine and Sweden
Canada 3.8%-59.7% China, Japan, Korea,Taiwan, Ukraine, Brazil, Denmark, Indonesia, Italy, and Turkey
Canada Under investigation - AD/CVD Russia and India
Egypt 7.30% China, Ukraine and Turkey
European Union 24.00% China, Japan, Korea, Russia and US
European Union Under investigation - AD China and Russia
Indonesia 5.9-55.6% China, Japan, Korea, Vietnam and Taiwan
Mexico 65.99%-103.41% China
Malaysia 2.19% to 25.4% China and Indonesia
Thailand 2.65%-31.92% China, Japan, Korea, Taiwan, Russia, Ukraine, South Africa, Kazakhstan, India, Venezuela, Argentina, Algeria, Indonesia, Slovak and Romania
Thailand Safeguard Duty of 34.01%** All Countries
US 6.88%-407.52% China, Japan, Korea, Russia, Taiwan, Ukraine, Vietnam, Mexico, Turkey, Germany, India, Saudi Arabia and Sweden
US Under investigation -AD/CVD China, South Korea, Taiwan, India and Italy
40 Source: JPC and JSW Steel
All figures are in million tonnes, * Apparent finished steel consumption net of double counting effect
Indian economy and steel industry
Domestic steel industry continues to suffer from surge in imports – especially from China, Korea, and Japan; consumption of domestically produced steel was down by 0.4%YoY in 1QFY16 as total steel imports were up by 57%YoY
1QFY16 Finished steel exports fell by 32%YoY. Excess availability is driving an inventory build-up across the system
Improving supply of iron ore with approval of new mining capacities should ease domestic iron ore prices
Activity levels show modest pick-up, industrial production growth continues, albeit at a slow pace.
Public spending on a few infrastructure segments seems to be picking up, momentum needs to be sustained in 2HFY16 for an actual uptick in investment cycle
Tighter liquidity conditions, leveraged corporate balance sheets and progress of monsoon are key risks
Elevated level of steel imports a concern
22.318.8 18.6
22.520.1
18.5
Crude SteelProduction
Finished SteelConsumption*
Consumption ofdomestically
produced steel1QFY15 1QFY16
0.6%6.9%
-0.4%
1.76
0.480.29
0.42
2.77
0.720.59 0.62
Total China Japan Korea
Total Steel Imports
1QFY15 1QFY16
57%
49%105% 49%
41
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 on behalf of the company.
Forward looking and cautionary statement
42
Thank you