Analyst Meet Presentation Q4 FY11
Analyst Meet Presentation
Q4 FY11
2
Agenda
Key Highlights
Steel Scenario
Projects Update
Performance Review
Guidance
3
Key Highlights
4
A year of many successes..
Equity infusion by JFE of ` 5,410 Crores (~$1.2 bn) for 14.99% equity stake, one of the largest
FDI in the Indian Metals and Mining space
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
Acquired 49.3% stake for ` 2,357 Crores ($528 mn) including open offer
Access to 3.3 mtpa state of the art HRC facilities in Western region - India’s fastest growing
steel market
Production in Mar 2011 quarter was near rated capacity, generated positive PAT for the quarter
Plant integration and cost efficiency program are underway
Ispat Acquisition
USD/ ` = 44.65 (RBI reference rate as on 31.03.11)
5
Best ever performance…
Highest ever crude steel production: Q4FY11 – 1.65* million tonnes, FY11 – 6.43* million
tonnes
Highest ever sales volume: Q4FY11 – 1.73 million tonnes, FY11 – 6.10 million tonnes
Highest ever gross turnover: Q4FY11 – ` 7,615 Crores, FY11 – ` 25,131 Crores
Highest ever EBITDA: Q4FY11 – ` 1,658 Crores, FY11 – ` 4,856 Crores
Highest ever Net Profit Q4 FY11 - ` 833 Crores
Key performance highlights
Strengthened Balance sheet – consolidated net debt to equity ratio improved to 0.84 at FY11
end from 1.65 at FY10 end
Consolidated weighted average debt cost has come down to 6.56% in FY11 from 6.77% in
FY10
Improved financials
* Excludes 0.079 million tonnes produced from trial run of Casters of 3.2 million tonnes expansion project
6
Other milestones
JSW, with Ispat acquisition, is poised to be the largest steel producer in India by crude steel
capacity
Chile Iron ore mine: Commenced mining operations in Nov 2010 and shipped 1st consignment
in Apr 2011.
Blooming mill: Commissioned Phase I in Jul 2010 and Phase II (4 stands out of 8) in Mar 2011
at Salem. Entry to high–end auto forging steel, have bagged order from Honda for crank shafts.
Beneficiation Plant – 2: Commissioned Phase I (1,500 TPH). It will enable the plant to use low
grade iron ore thus reducing iron ore cost and also lead to increase in productivity.
CPP – 3: Commissioned 300 MW power plant. Now, all steel production/facilities of JSW
source 100% of their power requirement from captive power plants.
7
SteelScenario
81
143130
191
174186
255
370
448
324
478
425 420
100
150
200
250
300
350
400
450
500
0
50
100
150
200
250
Jan-0
9
Ap
r-09
Jul-09
Oct-
09
Jan-1
0
Ap
r-10
Jul-10
Oct-
10
Jan-1
1
Ap
r-11
Indian Iron Ore 63% Fe dry / China import CFR N.China port
Scrap / Shredded / Rotterdam export FOB (RHS)
139
115
248
195
223
370
328
50
100
150
200
250
300
350
400
Jan-0
9
Ap
r-09
Jul-09
Oct-
09
Jan-1
0
Ap
r-10
Jul-10
Oct-
10
Jan-1
1
Ap
r-11
Coking coal contract Australian Spot HCC FOB
300
200
225 2
09 225
330
129
8
Raw Material prices have risen sharply….
Source: SBB (All figures are USD/tonne)
Q4FY11 Iron ore spot prices averaged $183/t vs. $134/t in
Q4FY10 (up by ~37% YoY)
FY11 Iron ore prices averaged $164/t vs. $99/t in FY10 (up
by ~65% YoY)
Iron ore price surged to $191/t in Feb 2011 whereas scrap
prices averaged $478/t in Jan 2011
Q4FY11 coking coal spot prices averaged $313/t vs. $216/t
in Q4FY10 (up by ~45% YoY)
FY11 prices averaged $243/t vs. $165/t in FY10 (up by
~47% YoY)
Coking coal spot prices surged to $370/t in Feb
2011, leading Q1FY12 contract prices to $330/t (up by
~47% QoQ)
593
752
658
839830
545
710
550
583
776
710
535
685585
608
763 715
650
781
627
962 943
500
550
600
650
700
750
800
850
900
950
1000
Jan-1
0
Feb
-10
Mar-
10
Ap
r-10
May-1
0
Jun-1
0
Jul-10
Aug
-10
Sep
-10
Oct-
10
No
v-1
0
Dec-1
0
Jan-1
1
Feb
-11
Mar-
11
Ap
r-11
May-1
1
Europe import CIF S.European port Russia Black Sea export FOB
China export FOB Shanghai N.America domestic FOB US Midwest mill
9
…. Leading to increase in Steel prices
Source: SBB, World Steel Association, WSD, Mysteel (All figures are in USD/ton)
HRC prices rose as raw material prices
for Q1FY11 went up.
Global steel production jumped above ~1460 million
tonnes (annualized) in Apr –May 2010, resulting in
higher inventories.
Finished goods price movement witnessed
disconnect from raw materials prices.
Prices dropped in May –Jul 2010 and remained soft.
HRC prices went up in Feb and Mar 2011
reflecting imminent cost push from higher raw
material prices.
The prices softened from mid Mar 2011 to
Apr 2011 but have stabilized now.
1,336
1,411
1,439
1,466 1,467
1,440
1,347
1,332
1,367
1,382
1,395
1,368
1,495
1,540
1,523
Jan-1
0
Feb
-10
Mar-
10
Ap
r-10
May-1
0
Jun-1
0
Jul-10
Aug
-10
Sep
-10
Oct-
10
No
v-1
0
Dec-1
0
Jan-1
1
Feb
-11
Mar-
11
World Crude Steel Production - Annualized
13.2
%
8.0
%
5.1
%
9.6
%
5.9
%
5.7
%
5.0
%
13.3
%
6.0
%
6.2
%
5.0
%
14.3
%
World BRIC China India
2010 2011 F 2012 F
Finished Steel Demand Outlook (% YoY growth)
10
Global Steel Trends
Source: World Steel (All figures are in million tonnes)
Year World BRIC China India
2009 1134 647 548 55
2010 1284 699 576 61
2011 F 1359 739 605 69
2012 F 1441 785 635 79
Global Finished Steel Demand
Production reached 1540 million tonnes in Feb
2011, reflecting significant improvement in steel
prices.
However Mar 2011 witnessed small supply side
correction.
Global steel demand growth was strong in 2010
on the back of low base.
Going forward demand outlook remains
favourable, Indian steel industry is projected to
capture double digit growth.
11
China Steel Market
Source: Mysteel, World Steel Association, JSW Steel (All figures are in million tonnes)
600
654
566
687679
567
643
547
649
618
644
500
520
540
560
580
600
620
640
660
680
700
Ja
n-1
0
Fe
b-1
0
Ma
r-1
0
Ap
r-1
0
Ma
y-1
0
Ju
n-1
0
Ju
l-1
0
Au
g-1
0
Se
p-1
0
Oct-
10
No
v-1
0
De
c-1
0
Ja
n-1
1
Fe
b-1
1
Ma
r-1
1
Finished Steel Production Apparent Steel Consumption
2.9
2.5
3.3
4.3
5.0
5.7
4.6
2.8
3.0
2.9 2.9
2.9
3.1
2.5
4.9
Ja
n-1
0
Fe
b-1
0
Ma
r-1
0
Ap
r-1
0
Ma
y-1
0
Ju
n-1
0
Ju
l-1
0
Au
g-1
0
Se
p-1
0
Oct-
10
No
v-1
0
De
c-1
0
Ja
n-1
1
Fe
b-1
1
Ma
r-1
1
Monthly Exports
China steel market registered negative demand growth in Q2 FY11, demand remained low in Q3 FY11
due to increased interest rates and slowing real estate growth
Production growth was low in Q3 FY11, reflecting reduced competitiveness due to removal of export
rebate, increased iron ore prices and currency appreciation.
Production peaked in Feb 2011 with rising steel prices but lower exports led to increase in inventories.
0.57
0.97
0.23
0.46
0.18
0.32
0.18
0.30 0.30
0.0
0.2
0.4
0.6
0.8
1.0
Oct-
09
No
v-0
9
Dec-0
9
Jan-1
0
Feb
-10
Mar-
10
Ap
r-10
May-1
0
Jun-1
0
Jul-10
Aug
-10
Sep
-10
Oct-
10
No
v-1
0
Dec-1
0
Jan-1
1
Feb
-11
Mar-
11
Import Export
56.3
59.3
62.7
65.6
Finished Steel Production* Real Steel Consumption*
FY10 FY11
11.3%
10.6%
12
Indian Steel Market
Source: JPC (All figures are in million tonnes)
* Production and consumption data has been netted off for double counting effect.
Finished steel production in FY11 increased by 11.3% YoY.
Real steel consumption in FY11 grew by 10.6% YoY.
Imports in FY11 declined by 7.9% YoY to 6.8 million tonnes.
13
PerformanceReview
0.974
1.3271.249
Q4 '10 Q4 '11 Q3 '11
Rolled : Flat
0.322
0.279 0.282
Q4 '10 Q4 '11 Q3 '11
Rolled : Long
1.600
1.647 1.636
Q4 '10 Q4 '11 Q3 '11
Crude Steel
YoY % QoQ %
36% 6%
14
Production – Q4 FY 11
YoY % QoQ %
-13% -1%
YoY % QoQ %
3% 1%
* Excludes 0.079 million tonnes produced from trial run of Casters of 3.2 million tonnes expansion project
All figures are in million tonnes
*
0.957
1.134
FY 10 FY 11
Rolled : Long
5.987
6.427
FY 10 FY 11
Crude Steel
15
Production – FY 11
3.709
4.940
FY 10 FY 11
Rolled : Flat
YoY %
7%YoY %
33%
YoY %
18%
*
* Excludes 0.079 million tonnes produced from trial run of Casters of 3.2 million tonnes expansion project
All figures are in million tonnes
0.3980.414
0.433
Q4 '10 Q4 '11 Q3 '11
Value Added
1.519
1.733
1.593
Q4 '10 Q4 '11 Q3 '11
Total Sales
16
Saleable Steel Sales – Q4 FY11
0.964
1.3861.240
Q4 '10 Q4 '11 Q3 '11
Rolled : Flat
YoY % QoQ %
14% 9%
YoY % QoQ %
44% 12%
YoY %QoQ %
4%-4%
0.261
0.074 0.077
Q4 '10 Q4 '11 Q3 '11
Semis
YoY %
QoQ %
-72%
-4%
0.295
0.272 0.276
Q4 '10 Q4 '11 Q3 '11
Rolled : Long
YoY % QoQ %
-8% -1%
All figures are in million tonnes
1.544
1.645
FY 10 FY 11
Value Added
5.720
6.099
FY 10 FY 11
Total Sales
17
Saleable Steel Sales – FY11
3.597
4.700
FY 10 FY 11
Rolled : Flat
1.249
0.344
FY 10 FY 11
Semis
0.874
1.055
FY 10 FY 11
Rolled : Long
YoY %
7%
YoY %
31%
YoY %
7%
YoY %
21%
YoY %
-72%
All figures are in million tonnes
174
280
31 Mar 2010 31 Mar 20113.780
1.123
Others JSW Shoppe635
1123
FY10 FY11
18
Retail Shoppe
Rolled: Long
Rolled: HR
Products
43%
Domestic sales
excluding semis
(Million tonnes,
% Share)
Value Added:
Flat
77%
77%23%
46%
39%
15%
61%
Sales through JSW Shoppe (In ‘000 tonnes)
No. of JSW Shoppe % Share through JSW Shoppe –FY11
Financials – standalone
19
` Cr.
Particulars Q4 FY 11 Q4 FY 10Growth
(%)FY 11 FY 10
Growth
(%)
Net Sales 7,032 5,167 36% 23,163 18,202 27%
EBITDA 1,658 1,427 16% 4,856 4,802 1%
EBITDA Margin 23.3% 27.4% 20.8% 26.2%
Net Finance Charges 153 194 -21% 695 859 -19%
Depreciation 383 285 34% 1,379 1,123 23%
Profit Before Tax 1,123 948 18% 2,782 2,820 -1%
Profit after Tax 833 717 16% 2,011 2,023 -1%
Diluted EPS 36.67* 37.75* -3% 96.33 105.94 -9%
* Not Annualized
1,427
1,658 184
(993)
932
145 60
(97)
EBIDTA Q4 FY 10 Volume Cost NSR Mix CER/Others FX Impact EBIDTA Q4 FY11
20
EBITDA MOVEMENT – Q4 FY 11 (Standalone)
` Cr.
4,802 4,856 281
(3,475)
2,943
586 65
(346)
EBIDTA FY 10 Volume Cost NSR Mix CER/Others FX Impact EBIDTA FY11
21
EBITDA MOVEMENT – FY 11 (Standalone)
` Cr.
Particulars Q4 FY 11 Q4 FY 10 FY 11 FY 10
Turnover 27.75 56.83 141.33 159.87
EBITDA + Other Income 4.57* 2.25 14.69* (40.92)
Profit After Tax (16.25) (12.90) (50.00) (70.03)
Sales (NT) Q4 FY 11 Q4 FY 10 FY 11 FY 10
Plate Mill 27,627 42,297 106,936 119,614
Pipe Mill 4,875 25,917 45,217 72,508
Production (NT) Q4 FY 11 Q4 FY 10 FY 11 FY 10
Plate Mill 12,197 69,444 119,887 195,275
Pipe Mill 4,776 23,788 42,148 73,969
USD mn
22
Operational & Financial Performance – US Plate & Pipe Mill
* Excluding one time inventory write –down of USD 7.21 mn
Production (million tonnes) Jan - Mar`11 Oct - Dec`10 Growth (%)
HR Coils 0.729 0.262 179%
Capacity Utilization 88% 32%
23
Operational & Financial Performance – Ispat Industries
Sales (million tonnes) Jan - Mar`11 Oct - Dec`10 Growth (%)
HR Coil 0.672 0.229 194%
Value Added Products 0.040 0.047 -15%
Particulars Jan - Mar`11 Oct - Dec`10 Growth (%)
Net Sales 2647 961 175%
EBITDA 407 (157) -ve to +ve
EBITDA Margin 14.9% -16.1%
Net Finance Charges 188 287 -34%
Depreciation 148 146 1%
Profit before Tax 70 (590) -ve to +ve
Profit after Tax 70 (409) -ve to +ve
` Cr.
Financials – consolidated
24
` Cr.
Particulars Q4 FY 11 Q4 FY 10Growth
(%)FY 11 FY 10
Growth
(%)
Gross Sales 7,792 5,844 33% 25,868 20,211 28%
EBITDA 1662 1,419 17% 4,947 4,603 7%
Net Finance Charges 217 249 -13% 945 1,104 -14%
Depreciation 429 327 31% 1,560 1,299 20%
Profit Before Tax 1016 844 20 % 2,442 2,200 11%
Profit After Tax 794 611 30 % 1,754 1,598 10%
15,656
14,156
7598
(4450)
(2739) (108)
(1801)
Net Debt as on
Mar'10
New Loan Taken Repayments Prepayments FX Impact Movement in FD/
MF
Net Debt as on
Mar'11
Net Debt Movement – consolidated
` Cr.
25
Cash and Cash equivalent - ` 2,318 Crores
Particulars FY11 Q4FY 11 Q3FY 11
EBITDA Margin 20.8% 23.3% 17.4%
PAT Margin 8.6% 11.7% 6.6%
Diluted EPS (`) 96.33 36.67* 16.97*
ROCE 12.6% 17.0% 9.2%
* Not Annualized
26
Financial Ratios
Particulars 31.03.2011 31.12.2010
Net Total Debt/Equity (x) 0.57 0.47
Net Total Debt/EBITDA (x) 2.05 1.77
Net Total Debt/Equity-Consolidated (x) 0.84 0.74
Net Total Debt/EBITDA-Consolidated (x) 2.90 2.68
27
Projects update
28
10 MTPA to 12 MTPA expansion at Vijaynagar
Debottlenecking of existing furnaces to augment Hot Metal capacity.
Set up new melt shop (SMS-3) comprising of Electric Arc Furnace and slab caster
to produce special grade thin slabs.
Total project cost – ` 2,695 Crores, Debt to Equity ratio – 2:1.
Expected completion by Jun 2013.
29
West Bengal poject
Construction of boundary wall is almost completed.
Commenced work on water pipeline and township
Development of coking coal and thermal coal mines is in full swing
Awarded contract to Hatch-CISDI International to provide consultancy services for preparation
basic design of the Integrated Steel Plant
Negotiations for Major equipment packages are in progress
Completed boundary wall Township work in progress
30
Ongoing projects summary
Coke Oven – 4: commissioned 2 batteries (total batteries - 4 and capacity - 1.92 MTPA). Coke
Oven – IV will ensure 100% captive coke generation.
Sinter Plant – 3: commissioned 5.75 MTPA capacity in Mar 2011. Plant – 4 of 2.4 MTPA
capacity will be commissioned in Q1 FY12. It will help to: increase productivity, substitute lump
consumption, and reduce fuel rate.
Steel Melting Shop: casters and converters have been commissioned.
Blast furnace – 4 (3.2 MTPA): will be commissioned in Q1 FY12.
3.2 MTPA expansion project
Have ordered major equipments like Pickling cum coupled tandem cold rolling mill, Continuous
Annealing line, Continuous Galvanizing Line and Acid Re-generation Plant.
Have completed 15% excavation and finalized Civil works orders.
Cold Rolling Mill - 2
Beneficiation Plant – 2 phase II (1,500 TPH), Pellet Pant – 2, CPP – 4 (300 MW captive
thermal power plant), and HSM –2 phase II will be commissioned in FY12.
Other projects
Coke Oven – 4: 2 out of 4 batteries ( total capacity of 4 batteries- 1.92 MTPA) have been commissioned.
Q3 FY11 Q4 FY11
31
3.2 MTPA expansion project progress
Q3 FY11 Q4 FY11
Sinter plant: Plant 3 of 5.75 MTPA capacity have been commissioned in Mar 2011. Plant IV of 2.4 MTPA
capacity will be commissioned in Q1 FY12.
Q3 FY11 Q4 FY11
Steel Melting Shop: Casters, converters and LHFs have been commissioned.
Blast furnace – 4: will be commissioned by Q1 FY12 end.
Q3 FY11 Q4 FY11
32
3.2 MTPA expansion project progress
33
Other projects' progress
Q3 FY11 Q4 FY11
Blooming Mill: Phase II (4 stands out of 8): commissioned in Mar 2011.
Beneficiation Plant – 2: Phase I (1,500 TPH) has been commissioned, Phase II (1,500 TPH) will be
commissioned in FY12.
Q3 FY11 Q4 FY11
34
Guidance
6.10
9.00
FY11 FY12 E
Saleable Steel Sales
35
Guidance for FY12
6.43
8.75
FY11 FY12 E
Crude Steel Production
36%48%
0.34 1.06
4.70
0.88 1.54
6.58
Semis Rolled Long Rolled Flat
Saleable Steel Sales – Product wise
YoY %
45%
YoY %
40%
YoY %
156%
FY11FY12 E
36
Q & A Session
37
Forward Looking and Cautionary Statement
Certain statements in this report concerning our future growth prospects areforward looking statements, which involve a number of risks, and uncertaintiesthat could cause actual results to differ materially from those in such forwardlooking statements. The risk and uncertainties relating to these statementsinclude, but are not limited to risks and uncertainties regarding fluctuations inearnings, our ability to manage growth, intense competition within Steelindustry including those factors which may affect our cost advantage, wageincreases in India, our ability to attract and retain highly skilledprofessionals, time and cost overruns on fixed-price, fixed-time framecontracts, our ability to commission mines within contemplated time andcosts, our ability to raise the finance within time and cost clientconcentration, restrictions on immigration, our ability to manage our internaloperations, reduced demand for steel, our ability to successfully complete andintegrate potential acquisitions, liability for damages on our servicecontracts, the success of the companies in which the Company has madestrategic investments, withdrawal of fiscal/governmental incentives, impact ofregulatory measures, political instability, legal restrictions on raising capital oracquiring companies outside India, unauthorized use of our intellectualproperty and general economic conditions affecting our industry. The companydoes not undertake to update any forward looking statements that may be madefrom time to time by or on behalf of the company.
38
Thank you