Analyst Meet Presentation Q1 FY11 n

8/8/2019 Analyst Meet Presentation Q1 FY11 n

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AnalystMeetPresentationQ1FY11

Analyst Meet PresentationQ1 FY 2011


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Economic and IndustryScenario

Operating Highlights

Financial Performance

Key Developments

Project Progress

Agenda


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Key Developments

Strategic Collaboration with JFE

Leapfrogs to 2nd

rank amongst 35 worldclass steelmakers

Blooming Mill at Salem commissionedon July 19, 2010


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JSW JFE Partnership


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Overview

Game Changer for JSW

At Over $1 bn, Transaction Is One Of The Largest

FDI In The Indian Metals And Mining Space

Japan-India Strategic Transactions

Preferential Allotments By An Indian Company

Access To Cutting Edge Technologies

Access To Fast-Growing Automotive Market

Lower Cost Of Production By Operational Excellence

Deleveraged Balance Sheet To Fuel Next Phase Of Growth


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Indias Largest Private Sector SteelMaker with 11 MTPA Capacity By FY2011

Achieved CAGR Of 39% (Last 5 Years)in Production

Worlds Fifth* Largest Steel Maker With~30 MTPA Capacity

Operational Excellence With State-of-the-Art Technology

* Source: World Steel Association Based on 2009 production

Strategic Intent

Value Creation for Both Partners

Aggressive Expansion Plans in India

Optimize Capital StructureThrough Deleveraging

Technology For Operational Excellenceand Production Of

Automotive Steel Products

Strategic Production Base In India forExisting Automobile Customers

Presence in Fast-Growing Indian Market

Future Growth through EquityParticipation in India


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Strategic Collaboration Agreement - Nov 2009

Subscription Agreement

Foreign Collaboration Agreement

Automotive Technical Assistance Agreement

Substrate Supply Agreement

General Technical Assistance Agreement forPlant Performance Improvement

Next Phase of Collaboration

Giant Leap Towards Global Leadership


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Automotive Technology Agreements

Technology for AutomotiveSteel in CRM-1

Substrate from JFE

Technology toManufacture Substrate at

Vijaynagar

Project Consultancy to

Build Modern CRM2

Benefits to JSW Access to Fast Growing

Auto Market

Short Learning Curve

Application Engineering

New ProductDevelopment

Benchmarking and

Training of Personnel

Access To The Cutting Edge Technologies


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Safety Practices

Training

Talent Sharing

Maintenance Practices

Fuel Rate Reduction

Productivity Improvement

Standardization of Process

Environment Management

Benchmarking

Energy Efficiency

Yield Improvement

General TechnicalAssistance Agreements

Quality Improvement Operational

Excellence

Higher

Productivity

Lower Cost of

Production

Short learning

Curve

Sustainable Business Operations


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Initial Subscription Amount: ` 4800 crores

Investment Structure

CP>=CP>= ` 1,365

32mn shares

@ ` 1,500

Fully ConvertibleDebenture

Tranche I

1mn shares + 3 mn GDRsMin. proceeds of ` 600 cr

Tranche II

Tranche III

On maturity, 36mnshares @ ` 1,331

Up to 2mn shares on conversion of current o/s FCCBs into sharesMin. proceeds of ` 300 cr

JFE holdingJFE holding

14.99%14.99%

JFE holdingJFE holding

14.99%14.99%

InstrumentDetermination

Event

Trigger Event

* CPmeans Avg closing price in 2 consecutive weeks/10 days or closing price during 5 consecutive days

7 days prior to closing

18 Months

CP =CP>=`

1,365 CP


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FCD: Terms

Tenure: 18 months

Compulsorily Convertible into equity shares on occurrence of the TriggerEvent or maturity

Further, JFE has option to convert at any time @`1500/ share

Interest of 4.5% pa payable in arrears on conversion date Non-transferable and not listed

Tranche I -` 4,800 Cr

Equity Shares and GDRs issued at Higher of `1500 per share/GDR or10% premium to SEBI floor price

GDR Terms

Non Voting Rights, Non-transferable and not listed

Fungible into equity shares on conversion of Promoter Warrants

Tranche II -` 600 Cr

Equity shares issued on conversion of outstanding FCCBs into equityshares at higher of `1,500 per share or 10% premium to SEBI floor

price

Tranche III -` 300 Cr

Equity Infusion In Tranche II & III At PremiumTo SEBI Price With A Floor Price Of ` 1,500

Terms of the Securities


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Right to nominate JFE nominee on the Board of JSW

Nominee Director

Right to maintain upto14.99% share or prevailingshareholding, if shareholding falls below 14.99%

Price: Issuance Price /10% premium in case ofissuance to promoters

Anti Dilution Right

Rights to JFE


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Jul 27 Aug 26 Sep 09Aug 31

Instrument Determination

Board Approval &Announcement

Closing Settlement/Allotment

Shareholder s Approval

Process and Timeline


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JSW achieved a 10 out of 10 rating onfollowing parameters

Conversion costs; Yields

Expanding capacity

Location in high growth markets

Labor cost

7.53

NLMK

NucorJSWSteel

Posco

Severstal

TATA/Corus

CSN

Usiminas

7.30

7.25

7.23

7.23

7.16

7.10

7.05

7.09

7.01

SAIL

Gerdau

Source: WSD Rankingoftop35WorldClass Steelmakers asonJune2010.

Global size andefficient operation

Leapfrogs to 2nd Position from 7th Earlier


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Blooming Mill Phase-I commissioned

Entering High - end Auto Forging Market


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0.6

1.9

2.5

3.1

3.94.2

4.6

3.2

0.0

0.6

1.3

2.1 2.32.62.5

4.0

4.7 5.1

6.06.3

6.8

4.0

2.0

0.0

2.0

4.0

6.0

8.0

Jan09 Apr09 Jul09 Oct09 Jan10 Apr10 Jul10

%Growth

World Adv.economies Emerginganddevelopingeconomies

2009

Actual ForecastDates

Source:IMF

Global economic measures indicatecontinuing growth

Continuously Improving GDP Growth Forecasts for 2010


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While lead indicators are strong

80

90

100

110

120

130

140

150

160

170

180

Jan

09

Feb

09

Mar09

Apr09

May

09

Jun

09

Jul09

Aug

09

Sep

09

Oct09

Nov

09

Dec

09

Jan

10

Feb

10

Mar10

Apr10

May

10

CLI

IIP

VehicleSales

NonFoodCredit

Index, Jan 2009 = 100

Source:CSO,Reuters,SIAMCLI: Composite Lead Index

95

100

105

110

115

120

125

Jan'09

Feb'09

Mar'09

Apr'09

May'09

Jun'09

Jul'09

Aug'09

Sep'09

Oct'09

Nov'09

Dec'09

Jan'10

Feb'10

Mar'10

Apr'10

May'10

Jun'10

Food

Overall

Fuel

Index, Jan 2009 = 100

Indian Economy

WPI is an area of concern


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4.4

15.0

6.7

4.2

Import Export

34%

257%

129.0

133.4

160.4

151.4

Production Consumption

24%13%

Source:WSA

0

1

2

3

4

5

6

0

20

40

60

80

100

120

140

Jan'08

Apr'08

Jul'08

Oct'08

Jan'09

Apr'09

Jul'09

Oct'09

Jan'10

Apr'10

India(RHS)

World

Worldex.

China

China

Jun'10

Apr Jun'09 Apr Jun'10

Steel Trends

Crude Steel Production (MnT) Chinese Steel (MnT)


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Source:SBB

300

400

500

600

700

800

900

Jan09 Mar09 May09 Jul09 Sep09 Nov09 Jan10 Mar10 May10 Jul10

USD/t

on

N.AmericadomesticFOBUSMidwestmill EuropeimportCIFS.Europeanport ChinadomesticShanghai(incl.17%vat)

678

671

752

781

426424

463

657

573

HRC Prices

Touched yearly high at the quarter beginning but softened later on..


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0

100

200

300

400

500

600

0

50

100

150

200

250

Jun09

Jul09

Aug09

Sep09

Oct09

Nov09

Dec09

Jan10

Feb10

Mar10

Apr10

May10

Jun10

Jul10

USD

/ton

USD

/ton

IndianIronOre63%Fedry/ChinaimportCFRN.Chinaport AustralianSpotHCCFOB

Scrap/Shredded

/Rotterdam

export

FOB

(RHS) China

Coke

export

FOB

(RHS)

IronOre

Coke

Scrap

CokingCoal

177

124

448

333

237

211495

465

Source:SBB, DeutscheBankResearch

. Impact partially redeemedby reducing raw material prices

Indian Steel Market:


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1.5

0.7

2.7

0.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Import Export

AprJun'09 Apr Jun'10

75%

15%

Source:JPC

12.9

13.313.3

14.9

10.0

11.0

12.0

13.0

14.0

15.0

16.0

FinishedSteelProduction ApparentSteel

Consumption

AprJun'09 Apr Jun'10

3%

12%

Indian Steel Market:Demand continues to be strong

Production Vs. Consumption (MnT) Import Vs. Export (MnT)

Q


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Q1'10,1.376

Q1'11,1.574

0.000.200.400.600.801.001.201.401.601.80

CrudeSteel

YoY%

14%

Q1'10,0.871

Q1'11,

1.093

0.00

0.50

1.00

1.50

Rolled:Flat

YoY%

26%

Q1'10,

0.181

Q1'11,

0.309

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

Rolled:Long

YoY%

71%

Production Q1 FY 11

AllNumbersareinMnTonnes

S l bl S l S l Q1 FY 11


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Q1'10,

0.154

Q1'11,

0.225

0.00

0.05

0.10

0.15

0.20

0.25

Q1'10,

1.321Q1'11,

1.191

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

TotalSales

YoY%

10%Q1'10,0.855

Q1'11,0.859

0.000.200.400.600.801.00

Rolled:Flat

Q1'10,0.311

Q1'11,0.107

0.000

0.050

0.100

0.150

0.200

0.250

0.300

0.350

Semis

YoY%

66%

Q1'10,

0.366Q1'11,

0.346

0.00

0.10

0.20

0.30

0.40

ValueAdded(CR/GI/PPGI)

YoY%

5%

Rolled:Long

YoY%

46%

AllNumbersareinMnTonnes

Saleable Steel Sales Q1 FY 11


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Performance

Financial

Fi i l Q1 FY 11 (St d l )


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Particulars Q1FY11 Q1FY10 Growth

NetSales 4,647 3,894 19%

Op.EBITDA (excl.Fx Variance) 1,093 747 46%

Op.EBITDAMargin(excl.FxVariance) 23.6% 19.1%

EBITDA 1,038 988 5%

EBITDAMargin 22.2% 25.2%

Less:Interest 214 221 3%

Less:Depreciation 317 272 17%

ProfitBeforeTax 506 496 2%

ProfitafterTax 350 340 3%

` Cr.

Financials Q1 FY 11 (Standalone)

EBITDA MOVEMENT Q1 FY 11


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` Cr.

988

(71)

(550)

871

8548

(333)

1038

EBITDA Q1'10 Volume Cost NSR Mix impact CER/Others FX Impact EBITDA Q1'11

EBITDA MOVEMENT Q1 FY 11

Operational & Financial Performance USA


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PRODUCTION(NT) Q1FY11 Q1FY10 Growth

PlateMill 38,408 27,727 39%

PipeMill 12,033 5,432 120%

SALES(NT) Q1FY11 Q1FY10 Growth

PlateMill 34,986 14,376 143%

PipeMill 12,927 4,308 200%

Particulars Q1 FY11 Q1 FY10

Turnover 42.59 17.97

EBITDA+OtherIncome 7.94 (13.74)

ProfitAfterTax (7.36) (19.92)

USDMn

Operational & Financial Performance - USA

Consolidated Financials Q1 FY 11


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Particulars Q1FY11 Q1FY10 Growth

TotalIncome 4,858

4,014

21%

EBITDA 1,082 928 17%

Less:Interest 273 298 8%

Less:Depreciation 361 317 14%

ProfitBeforeTax 447 313 43%

ProfitAfterTax 295 234 26%

` Cr.

Consolidated Financials Q1 FY 11

Long term Debt Movement Consolidated


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1414314606800

(484)

224

(77)

NetLTDebtason

Mar'10

NewLoanTaken Repayments FxVariance Movementin

FD/MF

NetLTDebtason

Jun'10

` Cr.

Long term Debt Movement - Consolidated

Working Capital loan - ` 2,837 Crs.Cash and Cash equivalent - ` 926 Crs.

FD/Mutual Fund ` 246 Crs.

Financial Ratios


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*Not

Annualized

Financial Ratios

Particulars Q1FY11 Q1FY10

Op.EBITDAMargin(excl.Fx Variance) 23.6% 19.1%

PATMargin 7.5% 8.7%

DilutedEPS(`) 18.12* 17.72*ROCE 11.80% 13.72%

Particulars 30.06.2010 31.03.2010

NetL.T.Debt/Equity(x) 1.02 1.07

NetL.T.Debt/EBITDA(x) 2.31 2.36

NetL.T.Debt/Equity Consolidated(x) 1.41 1.49

NetL.T.Debt/EBITDA Consolidated(x) 3.19 3.38


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Progress

Project

BENEFICIATION PLANT


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As on Mar 10 As on June 10

BENEFICIATION PLANT


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BLAST FURNACE


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As on June 10As on Mar 10

BLAST FURNACE

SMS (Phase II)


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As on Mar 10 As on June 10

SMS (Phase II)

Q & A Session


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Q & A Session

Forward Looking and Cautionary Statement


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Certain statements in this report concerning ourfuturegrowthprospects areforward looking

statements,which involveanumberofrisks,anduncertaintiesthatcouldcauseactualresultsto

differ

materiallyfrom

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 inearnings,ourabilitytomanagegrowth, intensecompetitionwithinSteel industry

includingthosefactorswhichmayaffectourcostadvantage,wageincreasesinIndia,ourabilityto

attract and retain highly skilledprofessionals, time and cost overruns onfixed-price,fixed-time

framecontracts,

our

ability

to

commission

mines

within

contemplated

time

and

costs,

our

ability

to

raisethefinancewithintimeandcostclientconcentration,restrictionsonimmigration,ourability

tomanageourinternaloperations,reduceddemandforsteel,our abilitytosuccessfullycomplete

andintegratepotentialacquisitions,liabilityfordamagesonourservicecontracts,thesuccessof

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

intellectualproperty andgeneraleconomicconditionsaffecting our industry.Thecompanydoes

notundertaketoupdateanyforwardlookingstatementsthatmaybemadefromtimetotimeby

oronbehalfofthecompany.

Forward Looking and Cautionary Statement


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Thank you

Analyst Meet Presentation Q1 FY11 n

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