V K MehtaExecutive Director

Long products & International Trade

Indian Steel Markets 201115-16th March 2011

Gurgaon

Construction

• Construction as a sector can broadly be divided into three major categories:

CONSTRUCTION

Infrastructure Real Estate Industrial

Roads, Railways,Bridges, Ports,

Airports, Power,Irrigation

Commercial,Retail,

Housing

Metal RefineriesFertilizers,

Petrochemicals,Cement, Oil & Gas

Dominant Steel

Consuming

Sector

Double

digit

growth

~10.5% in

FY 11-12

Still

predominantly

Cement based

“Ready to use

raw m

ateria

ls,

prefab

constr

uction

gaining

momentum

IndianConstructio

n

Distinct shift towards quality &

quality raw materials

Source: CRISIL Research

Construction & infrastructure contribute to >60% of steel consumption

Expected to cross $100 billion from FY 2011-12 onward

Source: Indian Economy, SAIL Research

In $ billion

Investment as % of GDP constantly rising

Source: Juggernaut is starting to roll…., India: Construction: Infrastructure, Goldman Sachs via Thomson Research, 11.10.10

Sector Key Opportunities

Power Government targets adding 100,000MW capacity by 2012Both generation and transmission capacities being enhanced significantly

Oil & gas Pipeline network, city gas distribution, refinery infrastructure installation & upgrading

Road & highways

National Highway Development Program (NHDP)Plans to construct and upgrade >50,000 km of national highway by Dec 2015

Railways Dedicated Rail Freight Corridor (DRFC) network expansion lagging freight growth; this needs to be expedited

Ports Port traffic is estimated to increase by a CAGR of about 12% during 2010-12

Water & waste management

The Jawaharlal Nehru National Urban Renewal Mission is expected to increase steel consumption

04/10/23 8

POWER

WORLD AVERAGE PER CAPITA CONSUMPTION

AT 2500 kwh / YEAR

INDIA - INSTALLED CAPACITY DISTRIBUTION

THERMAL : 65%

HYDRO-POWER : 25%

NUCLEAR : 2.9%

OTHERS (RES) : 7.7%

Opportunity for steel use in power generation, transmission and distribution

Source. : MoP

Source. : MoP

Power Sector

Power sector is one of biggest steel user

Source: IDFC-SSKI Research

Traffic load in million tons

Tardy growth of 3% in railways network in 15 yrs.Railways’ share only 30%, despite being cheap & faster.Container operations still insignificant at 1%.

Category Short term target (10-11 to

11-12)

Long term target (12-13 to

19-20)

Total target

Doubling (Indl DFC)

1000 kms 11000 kms 12000 kms

Gauge conversion

2500 kms 9500 kms 12000 kms

New Lines 1000 kms 24000 kms 25000 kms

Electrification 2000 kms 12000 kms 14000 kms

New Wagons 33909 255227 289136

High Speed Corridors

--- 2000 kms 2000 kms

The vision call for around $ 310 billion of investment over next 10 years

Source: Ministry of Railways

04/10/23 11

Source. : Dept. Of Road Transport & H’ways

Transport – Road Network

Plan 20 Km of NH per day

Road Type

Length 000’km

% share

of total

length

Traffic Distribution

National / Express Highways

70.7 2% 40%

State Highways

132.0 4% 40%

Major & District Roads

467.8 14%

20%Rural & Other Road

2,650.0 80%

Total 3320.4 100% 100%

Projects under implementation NHDP-I & II – $14.3 billion NHDP- III - $17.8 billion NHDP -IV – $ 6.1 billion NHDP –V – $ 9.1 billion NHDP –VI – $ 3.7 billion

In million tons

Source: india Transportation: sea & Land Cargo.. Nomura International Ltd Via Thomson Research

GOI FY12 plan is 1 billion tons

Transport – Airports

Source: Min of Aviation

At Airports in Lakhs

in ‘000 tons

More & more modern & private airports

As per estimates the steel consumption in airport building likely to grow >20%

Development of Tier-II city airports will sustain consumption growth.

Steel intensive construction

Indian economy is estimated to grow @8.6% in 2010-11& @9.0% in 2011-12.

Construction growth is stunted @ 7-8% presently.

Distinct surplus of construction steel in India High inflation ( expected at 9%) is a huge

concern. Credit squeeze also adversely affecting construction.

High-end reality (Commercial, retail & housing) severely impacted.