JSW Steel Limited Investor Presentation Nov 2016 Agenda
Overview Value Proposition Performance Business Overview Environment
2 JSW Group – overview
Presence across the core sectors Market cap of listed businesses ($8,068 mn^)
JSW Steel*: India’s leading integrated steel producer (Steel making capacity: 18 MTPA) JSW Energy 1,797 JSW Energy*: Engaged across the value chain of power business (Operational plants’ capacity: 4,531 MW) JSW Steel 6,271 JSW Infrastructure: Engaged in development and operations of ports (Operational capacity: 45 MTPA)
JSW Cement: Manufacturer of PSC, OPC and GGBS cement (Operational plants’ As on Sep 30, 2016 capacity: 6.4 MTPA)
* Listed company ^ USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) 3 JSW Steel – India’s leading steel manufacturer
. Integrated steel manufacturing . Installed capacity 18 MTPA, at facilities – from raw material strategic locations in South and processing plants to value-added West India Leading steel Integrated product capacities manufacturer manufacturing in India process
. Pan India marketing and Strong . Combination of state-of- distribution network, export distribution the-art steel making Technological technologies: Corex, DRI, presence in ~100 countries across network and the 5 continents competence Blast Furnace export presence
Diversified . Extensive portfolio of products – HR, Global CR, galvanized/galvalume, pre-painted, product presence . International presence in mining assets tinplates, electrical steel (CRNO) TMT portfolio (Chile, US and Mozambique) and value- bars, wire rods, special steel bars, added facilities (Plate and Pipe mill in US) rounds and blooms
4 Transformational journey to market leadership
FY 2002 FY 2010 FY 2016 . CAGR FY’02–16: 19% Capacity (MTPA) 1.6 7.8 18.0 . Capacity increased to 18MTPA in Mar’16
Production (MTPA) 1.3 6.0 12.6 . CAGR FY’02–16: 18%
Revenue 262 2,939 6,313 . CAGR FY’02–16: 26% (USD mn) EBITDA 42 627 941 . CAGR FY’02–16: 25% (USD mn) EBITDA/ton(1) 33 110 77 . CAGR FY’02–16: 6% (USD/ton) Market Cap . Significant value creation with 59x increase in 80 3,485 4,676 (USD mn) market value(2)
Technology Corex Corex, BF Corex, BF, DRI . Adopting industry leading technologies
Flats, long, special Flat, long, special steel . Continuously expanding product canvas with Product Mix Flats steel and value & high value-added focus on high-end value-added products added auto, electrical grade
Unrelenting progress through the economic cycles
(1) Calculated as consolidated EBITDA/Saleable steel sales, (2) From 31st March 2002 to 31st March 2016, (3) USD/ ` = 66.3329 (RBI reference rate as on Mar 31, 2016) 5
Combination of Organic and Inorganic growth
Key Projects in progress/pipeline: 2016 Salem Works capacity expansion to 1.2MTPA . 18 MTPA (Vijayanagar Works and 2015 Dolvi Works capacity increased to 12 0.2MTPA Tin plate mill at Tarapur Complex and 5 MTPA, respectively) . New CRM2—Phase 2 Pipe Conveyor System for Iron ore and new Water . 0.2MTPA Electrical Steel Mill Reservoir at Vijayanagar 2014 2013 . New CRM2—Phase I 1.5mtpa Coke Oven at DCPL (Dolvi Works) . 14.3 MTPA post . 4 MTPA—Pellet Plant(2) 2011 Ispat merger . 1 MTPA—Coke Oven Plant(2) . Acquisition of 49.3% stake in Ispat 2012 . Acquired 50% stake in Vallabh Tinplate 2009 . HSM II Capacity . Acquired Welspun Maxsteel 2006 . 7.8 MTPA 2004 2010 Expansion to 5 MTPA (1) . 3.8 MTPA . Acquired SISCOL . JSW-JFE Strategic Partnership 2008 . 3.5 MTPA of HSM II . Iron Ore mines 2002 2005 2007 acquired in Chile . Coal mining concessions in US . 1.6 MTPA . 2.5 MTPA . 4.8 MTPA . Color Coating Line . CRM of 1.0 MTPA . Acquired EURO IKON . Acquisition of Plate and Pipe Mill in US . Coal mining concessions in Mozambique Continuously evaluating opportunities to deliver value enhancing growth
(1) Southern Iron and Steel Company, (2) Amba River Coke Limited 6 JSW – JFE strategic partnership
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
General technical assistance Value creation for both the partners Automotive technology agreements agreements JSW Steel: Benefits to JSW Steel: Operational excellence and cost reduction Focused expansion plans in India Access to fast growing auto steel market for sustainable business operations by: Optimized capital structure through Short learning curve Improvement in quality, productivity, yield , deleveraging Application engineering and energy efficiency Access to cutting edge technologies New product development Sharing best maintenance, environment JFE: Benchmarking and personnel training management, and safety practices Presence in growing Indian market Benchmarking, training and talent sharing Future growth through equity Standardization of processes participation Strategic production base in India for existing automobile customers
7 Balanced corporate strategy
Maintain market share of 14-15% through selective organic and inorganic growth Selective Undertake brownfield expansions at low specific investment cost per ton Growth Consider inorganic opportunities that are value accretive Diversification of Increase proportion of high margin value-added products Product Profile and Diversify customer base, both within India and abroad Customer Base Continue to focus on rural markets in India
Backward & Forward Continue to evaluate raw material assets in India and abroad to secure key raw material supplies and to reduce cost of production by Integration, and Focus on targeting strategic tie-ups and investments Resource Optimization Focus on cost reduction and energy efficiency
Continuously seeks to improve financial profile Prudent Financial Principles Manage capacity expansion and debt profile to capture market opportunities without excessive risk
Committed to sustainable and eco-friendly Sustainability with focus on Quality, R&D and technologies to drive growth Innovation Focus on Quality, R&D and Innovation to drive breakthrough cost efficiency
8 Strong and balanced Board comprising experts of eminence & integrity
Chairperson—Emeritus Executive Directors Independent Directors Nominee Directors
Seshagiri Rao M.V.S Malay Mukherjee Naveen Raj Singh1 Savitri Devi Jindal Joint Managing Director & 40yrs of rich experience in Nominee Director of KSIIDC Group CFO mining and steel industry 2 Promoter Director Kannan Vijayaraghavan, Kyoichi Kameyama Dr. Vinod Nowal FCA and Certified Nominee Director of JFE Sajjan Jindal Dy. Managing Director Management Consultant Steel Corporation Chairman & Managing Director Jayant Acharya Dr. Vijay Kelkar Director (Commercial & Ex-Finance Secretary, Ex- Marketing) Secretary of MoP&G, Ex- Chairman Finance Commission Dr. Punita Kumar Sinha Former CIO at The Asia Tigers Fund Haigreve Khaitan Senior Partner at M/s. Khaitan & Co, India's one of the oldest and full service law firm Seturaman Mahalingam CA, Ex-CFO of TCS, Ex member of the Tax Administration Reform Commission
Board fundamentally committed to sustainable business
Following changes are yet to approved by JSW Steel ‘Board of Directors’: 1) KSIIDC has nominated Mr. Pankaj Kumar Pandey in place of Mr. Naveen Raj Singh, 9 2) JFE Steel Corporation has nominated Mr. Hiromu Oka in place of Mr. Kyoichi Kameyama FY16 performance on sustainability matrixes
Waste heat Award in 2016: Waste gases 98.5% 71% utilization utilized JSW Steel received ‘Golden Peacock Innovative Product’ Award
943,80 3.51 Energy saved Awards in 2015: Scrap recycled 8 MT Mn GJ JSW Steel awarded Porter’s Prize for ‘Leveraging Unique Activities Decrease in Liquid LTIFR over FY 9% 0% discharged from JSW Group received Porter’s Prize for 15 our Plants ‘Creating Shared Values’
Recycled & 30% 1897 reused water MT Waste recycled
10 Agenda
Overview Value Proposition Performance Business Overview 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 1 Strong fundamentals to boost India steel demand
. Decisive mandate in India general elections . Potential for substantial growth in steel consumption(2)(6) Strong investor confidence and raised expectations of fast-paced o World Per Capita Consumption is ~207 Kgs. decision-making and economic reforms o India Per Capita Consumption is ~61 Kgs.
. Upturn in overall GDP growth(1) 1,400 • (%) (Kg.) 7.2% 7.6% 7.6% 7.8% 1,200 South Korea
6.6% 2015 5.6% 1,000 800 China 600 Japan Germany
FY13 FY14 FY15 FY16 FY17E FY18E . Infrastructure sector is a key focus area for the new 400 Italy Canada Russia USA government 200 Mexico France Brazil Infrastructure investment expected to reach ~$1 trillion during 0 India (4) 2012-2017 (200) New government is focused to give impetus to infrastructure sector 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 . capita Consumption PerSteel in Automobile sector expected to turn around GDP per capita in 2015 ($) India projected to become 3rd largest automotive market in the . world by 2016(5) India steel consumption to rise at a faster rate Faster economic growth and government's policies is likely to drive o India’s steel consumption was 61MT in 2015 and is expected to (3) volumes and revive the automobile sector rise to ~64MT in 2016 and ~67MT in 2017 With the growth in economy, JSW Steel is well positioned to be part of the India growth story
(1) Reserve Bank of India, (2) World Steel Association, World Bank, IMF, (3) World Steel Association and IMF, (4) 12th Five-Year Plan (India), (5) IHS Automotive, (6) Bubble size represents total steel demand of respective country 13
2 Multi-location manufacturing facilities in India
Vasind & Tarapur (JSCPL*) Dolvi: 5 MTPA . 1.18 MTPA GP/GC . 3.5 MTPA Blast Furnace . 0.5 MTPA Colour Coating Line . 1.6 MTPA gas based DRI . 30 MW Power Plant . 55 MW Power Plant
Salav: 0.9 MTPA DRI
Kalmeshwar (JSCPL*) . 0.58 MTPA GP/GC . 0.19 MTPA Colour Coating Line Vijayanagar: 12 MTPA
. 1.7 MTPA Corex Salem: 1 MTPA . 10.4 MTPA Blast Furnaces . 855 MW Power Plant . 1 MTPA Blast Furnaces . 0.5 MTPA Blooming Mill . 60 MW Power Plant
Leveraging locational advantage to increase market share strategically in the Southern and Western regions of India
*JSW Steel Coated Products Limited 14 3 Strategic overseas presence
US coal mines . JSW Steel ownership: 100% . Acquisition cost: $70mn
US plate and pipe mill . 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
Mozambique coal mines Chile iron ore mines . JSW Steel ownership: 100% . JSW Steel ownership: 70% . Early stage development in progress . Acquisition cost: $252mn . Started operations in FY11 . Maritime concession to develop cape size port in North Caldera Strategic overseas presence for backward integration and value-added facilities
15 4 Diversified Product Profile
Slabs HRC HR Plates GC CRC Wide Offering of Flat and Long Products Color Billets Blooms TMT Wire Rods Coated
Continuously Diversified portfolio to address growing demand for value-added steel Increasing Value Commissioned new facilities to further enrich product mix Added Products Leveraging JFE Steel’s well-established manufacturing technology for high value-added products for auto-grade steel
Automotive Grade Enhanced focus on cold rolled, galvanised and galvanneal products for body panels of automobiles Steel Manufactured at a new CRM2 complex Developing New Color Coated Largest color coated facility to address construction, warehousing and roofing Products, Capturing requirements Niche Markets Products State-of-the-art color coating line for appliance grade products used in consumer durables
Commissioned Cold Rolled Non-grain Oriented (CRNO) steel plant to address domestic Electrical Steel demand by substituting imports of high grade electrical steel Continuously enriching product mix
16 Domestic market leader with strong export 5 presence
. Penetrating further to capture growing domestic demand with unique marketing strategy – unique nationwide retail network India Finished Steel 11.4% 13.4% 6.9% 3.3% 4.5% Consumption Growth(1) (JSW Connect, JSW Shoppe, JSW Explore as well as non- exclusive retailers) of more than 6,583 outlets with footprints 15% 12% across 495 districts 23% 16% 24% JSW Export Turnover as % . Leadership position in India (domestic sales surged by 20%YoY of Total in FY16 vs. apparent steel demand growth of 4.5% in India) and largest exporter of steel products out of India 85% 84% 88% JSW Domestic Turnover as 77% 76% % of Total . Exports to high demand regions such as Asia, Middle East, Europe and the US – presence in over 100 countries
. Ability to re-align sales effort and shift between domestic and export market as per market conditions – strategically FY08 FY10 FY12 FY15 FY16 reduced share of exports to 12% of total sales as global steel consumption declined 3%YoY in CY15
Flexibility to shift between domestic and international markets based on market conditions
(1) Joint Plant Committee 17 6 Strong sales and marketing platform
Multi-sectoral volume growth Segmented approach to address different retail segments Optimizing market mix and product mix to derive ‘JSW explore’ maximum benefit from sector growth . Branded, multiple product service Metro / center for steel solutions Leveraging export presence Urban . Just-in-time solution with in-house profiling lines and Value Added Services New product approvals for Original Equipment . Franchisee Model Manufacturers (OEMs) and automotive customers Increase in value added products leading to Urban / ‘JSW Shoppe’ incremental growth in focus sectors and also Semi- . Steel distribution facilitating import substitution urban . Enhanced customer experience Focused on Retail Sales – increased reach and penetration ‘JSW Shoppe Connect’ Semi- . Smaller retail format linked to JSW urban / explore/Shoppe Rural . Last mile link to talukas/rural areas . Sales to end consumers and MSMEs
Increased customer focus and market penetration
18 7 Focus on operational efficiency
Diverse blend of technology High labour productivity Integrated operations
. Coke Making: Recovery and Non-recovery . Improving labor productivity: Current . Integrated manufacturing facilities: From Coke Ovens production of ~1,055 tons/ employee(1) pelletisation/beneficiation to downstream . Agglomeration: Pelletisation and . In-house training programs internal value-add capabilities Beneficiation Plants faculty . Dedicated port and railway siding for . Iron Making: Blast Furnace, Corex, Sponge . Continuously investing, building and logistics support Iron (DRI) enhancing competencies . 100% assured power supply through . Steel Making: Basic Oxygen Furnace (BOF), captive power plants and arrangements Electric Arc Furnace (EAF), Conarc with JSW Energy and the power grid . Casting: Continuous Casting, Thin Slab Casting, Billet Casting
Resulting in operational efficiency . Reduced raw material costs . Focus on process improvements . Waste gas utilization for power generation . Efficient operations resulting in low conversion cost
High level of integration and technological expertise leading to reduced production cost and time
(1) Total production (12.56MT) divided by total no. of employees on Company payroll (11,904) in FY16 19 8 Strategic expansion aided by strong project execution
Strong project execution capabilities …. Major new & on-going Projects Experienced in-house project management team . Vijayanagar Works: Supported by cross-functional team (commercial, finance and legal Pipe conveyor system for Iron ore and new water reservoir department) Established long-term relationship with key domestic and international . Dolvi Works: suppliers 1.5mtpa Coke Oven at DCPL (Dolvi Works) Savings in procurement cost by negotiating firm prices for follow-on orders . Salem Works: … at low specific investment cost(1) Capacity expansion from 1 MTPA to 1.2 MTPA by setting up Reduced specific investment cost/ton of capacity certain new facilities and debottlenecking/ modification of existing expansion shows cost efficiency facilities
Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven and Turbo Generator 7.8 MTPA 11 MTPA . Tarapur Works: 3.8 MTPA • FY 2009 • FY 2012 • FY 2007 • USD 559/mt • USD 545/mt Setting up 0.2MTPA Tin plate mill 2.5 MTPA • USD 550/mt • FY 2006 1.6 MTPA • USD 682/mt • FY 2003 • USD 923/mt Focus on low cost and returns accretive brownfield projects to capitalise on expected demand recovery
(1) Vijayanagar works expansions 20 9 Proven ability to acquire and turnaround assets
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 Case Study: Turnaround strategy at JSW Ispat’s Dolvi plant December 2010 Completed Initiatives—FY2011–2015 FY2016-2017 . Plant under maintenance . Infusion of equity . Capacity expanded to 5MTPA, ramp- . Loss making at EBITDA level . Alignment of marketing strategies resulting in freight up/stabilization is underway . High interest cost synergies and VAT benefits . Further operational . Financially distressed . Reduction of high cost working capital funding improvements underway . 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
. Inability to service existing debt . Exit from CDR . Operational improvements underway . Inadequate cashflows . Generating positive profit after tax . Corporate debt restructuring (CDR) case
Able to leverage an acquisition to maximum value accretion through application of knowledge and experience
(1) Implemented in a wholly owned subsidiary Amba River Coke Limited. 21 10 Robust financial profile
Strong track record Achieved significant sales growth despite weak economic and sluggish domestic demand in of volume growth past 2 years
Resilient operations with improved EBITDA margin marked by several productivity and cost Superior profitability improvement measures in FY14 and FY15 supported by efficient operations FY16 EBITDA was under pressure amidst weak steel pricing due to steel supply glut and shutdowns but it should improve in FY17
Well-capitalized Adequate liquidity levels owing to prearranged funding in place for capacity expansions and a balance sheet committed working capital facility
Diverse sources of funding Financial flexibility to Strong relationships with over 50 banks/financial institutions with access to low cost credit raise capital Healthy mix of local and foreign currency debt
22
Historical EBITDA per ton – JSW Steel Standalone
10,793 10,793
9,546 9,546
9,276 9,276
8,686 8,686
8,545 8,545
8,534 8,534
8,402 8,402
8,340 8,340
8,052 8,052
7,478 7,478
7,151 7,151
7,137 7,137
7,077 7,077
7,028 7,028
6,988 6,988
6,985 6,985
6,887 6,887
6,859 6,859
6,569 6,569
6,279 6,279
6,268 6,268
6,054 6,054
5,892 5,892
5,469 5,469
5,400 5,400
5,398 5,398
EBITDA (Rs per ton) per (Rs EBITDA
3,443 3,443
1QFY11 2QFY11 1QFY12 2QFY12 4QFY12 1QFY13 4QFY13 3QFY14 4QFY14 2QFY15 3QFY15 2QFY16 3QFY16 1QFY17 2QFY17 4QFY10 3QFY11 4QFY11 3QFY12 2QFY13 3QFY13 1QFY14 2QFY14 1QFY15 4QFY15 1QFY16 4QFY16
23 Agenda
Overview Value Proposition Performance Business Overview Environment
24 Key highlights – 2QFY17
Highest ever quarterly Crude Steel production: 3.98mn tonnes Highest ever quarterly Saleable Steel sales: 3.84mn tonnes Standalone Total Income from Operation: `13,357 crore performance Operating EBITDA : `2,718 crore Net Debt to Equity: 1.75x and Net Debt to EBITDA: 4.41x
Total Income from Operation: `14,421 crore Consolidated Operating EBITDA : `2,959 crore performance Net Debt to Equity: 2.15x and Net Debt to EBITDA: 4.82x
The Board has approved to sub-divide (split) the equity shares of the Company having a face value of `10/- (Ten only) each into ten equity shares of face value of `1/- (One Only) each Declared as preferred bidder for 5 Category 'C' Iron Ore Mines in Karnataka with estimated Key update resources of about 111 million tonnes Acquired 74% stake in JSW Praxair Oxygen Private Limited for consideration of `240 crores Awarded ‘Steelie Award 2016’ (in the innovation category) by the World Steel Association “for the development of advanced high strength automotive steels with speed and innovation”
25 Quarterly volumes – standalone
Crude Steel Production Saleable Steel Sales 20% 15% 22% 3% QoQ YoY QoQ YoY 3.98 3.87 3.84 3.25 3.19 3.34
2QFY16 2QFY17 1QFY17 2QFY16 2QFY17 1QFY17
2QFY16 2QFY17 1QFY17 2QFY16 2QFY17 1QFY17 Flat 2.57 2.86 2.74 Flat 2.50 2.80 2.48 Long 0.64 0.79 0.85 Long 0.65 0.81 0.74 Semis 0.03 0.23 0.12
All figures are in million tonnes 26 Half yearly volumes – standalone
Crude Steel Production Saleable Steel Sales 18% 14% YoY YoY 7.85 7.17 6.65 6.29
1HFY16 1HFY17 1HFY16 1HFY17
1HFY16 1HFY17 1HFY16 1HFY17 Flat 5.07 5.60 Flat 4.91 5.28 Semis 1.33 1.64 Long 1.28 1.55 Semis 0.11 0.35
All figures are in million tonnes 27 Quarterly sales highlights – consolidated
3.14^ 3.82^ 3.30^ 10% 26% 19% 1.07 1.28 1.15 2.82* 2.83* 2.68* 13% 12% 13% 2.07 2.54 2.15 35% 36% 32%
53% 52% 56%
2QFY16 2QFY17 1QFY17 2QFY16 2QFY17 1QFY17 Other products Value added & special Products OE Retail Auto Exports
Value added & special products exports grew by 67%YoY Overall value added & special products sales grew by 20%YoY; Branded steel product’s sales grew by 11%YoY TMT sales grew 40%, CRCA sales grew 26%YoY and Coated sales grew 22%YoY
Focused efforts towards value added & special products sales
All figures are in million tonnes, * Domestic sales, ^ Total sales (JSW Steel Standalone + JSW Steel Coated Products after netting-off inter-company sales), Value added & special products include HRPO, CRFH, CRCA, ES, Galvanised, 28 Colour Coated, and special bars and rounds Quarterly retail sales highlights – consolidated Retail sales (‘000 tonnes) Network expansion and Influencer programme 976 1,027 846 43% 45% 52%
57% 55% 48% Added 240 new Retailers to the network Engaged with 2,800+ influencer/ retailers through 292 influencer meets 2QFY16 2QFY17 1QFY17 280 engineers visited Vijayanagar works through 7 Others Branded Sales plant visits
Branded steel product’s sales increased 11%YoY from 418 thousand tonnes to 466 thousand tonnes TMT sales grew 44%YoY – Individual Residential and Commercial Construction were major contributors Galvalume sales grew 27%YoY – Individual Residential and Industrial Construction were major contributors, and Colour Coated sales grew 20%YoY – Individual Residential segment was major contributor
29 Automotive, Appliance and General Eng. grade approvals
Applications Components Grades Approved Hood 270F 340P 270F 340P JSC340HN Roof 270F 590R Doors 270F JSC270DU 270F JAC270DU SGARC40 Body side outer 270F 270F JAC340P BIW (Inner) 980Y 590R 440W Floor 270F HX220YD Structural 980Y 590Y 590R BSK46 SAPH 370 Automotive Reinf. Pillar 980Y HX180YD SGARC440 Wheels SPFH440 SPFH590 SAPH 590 HR 750 Engine SCM435 S36CV 86B45 SAE1070 SAE4140 SAE1018 EN1APB 16MnCr5LSi Transmission 16MnCr5 SAE4124 SAE8822 SAE5160 SAE4145 20MnCr5Ni Axels 150M36 Tractor 815M17 Suspension 51CrMoVn Bearings 100CrMnSi6-4 Front Panel EDD IF Appliance Side Panel D DD Cylinder Cell IS15194 HS345 General Eng. Structural SS540 MSL I Gr6
CR Coated HRPO HR Alloy Steel Longs
Indicates new grade approval in 2QFY17 Above mentioned approved grades are the highest among the specific product/grade-group; the lower grades upto the 30 highest grades are also approved.
2Q Financials – standalone
Particulars 2QFY17 2QFY16 ` Crores USD mn ` Crores USD mn Total Income from Operations 13,357 2,004 10,893 1,634 Operating EBITDA 2,718 408 1,723 258 Other Income 53 8 106 47 Finance Cost 916 137 804 121 Depreciation 788 118 713 107 Exceptional Items - - 116 17 Profit Before Tax 1,066 160 196 29 Tax 395 59 51 8 Profit after Tax 672 101 145 22 Diluted EPS (`)* 27.78 5.98
USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) * Not Annualized 31 1H Financials – standalone
Particulars 1HFY17 1HFY16 ` Crores USD mn ` Crores USD mn Total Income from Operations 25,379 3,807 22,106 3,316 Operating EBITDA 5,816 872 3,399 510 Other Income 96 1 199 14 Finance Cost 1,779 267 1,594 239 Depreciation 1,532 230 1,410 212 Exceptional Items - - 262 39 Profit Before Tax 2,602 390 333 50 Tax 848 127 75 11 Profit after Tax 1,754 263 258 39 Diluted EPS (`)* 72.56 10.66
USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) * Not Annualized 32 Operating EBITDA movement – standalone
` crore/ USD mn
$77 $10 $408 514 65 2,718 (21) $9 $57 ($3) 377 59 $258 1,723
EBITDA 2QFY16 Volume NSR Cost Others Ind-AS Impact in EBITDA as per Ind-AS 2QFY17 vs. 2QFY16 2QFY17
USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) 33 Operational performance – JSW Steel Coated Products
Million tonnes Volumes 2QFY17 2QFY16 1HFY17 1HFY16 Production 0.45 0.36 0.86 0.75 Sales 0.44 0.37 0.84 0.77
` crore Key P&L data 2QFY17 2QFY16 1HFY17 1HFY16 Total Income from Operations 2,389 1,930 4,583 4,064 Operating EBITDA 167 102 326 213 Profit after Tax 79 27 153 61
34 Operational performance – US Plate & Pipe Mill
Production (net tonnes) 2QFY17 2QFY16 1HFY17 1HFY16 Plate Mill 48,787 58,312 86,646 1,16,430 Utilization (%) 20% 25% 18% 24% Pipe Mill 12,249 16,043 16,847 29,584 Utilization (%) 9% 12% 6% 11%
Sales (net tonnes) 2QFY17 2QFY16 1HFY17 1HFY16 Plate Mill 30,925 41,947 58,468 90,023 Pipe Mill 12,564 17,957 18,182 34,754
USD mn Key P&L data 2QFY17 2QFY16 1HFY17 1HFY16 Revenue from Operations 37.31 53.41 62.57 105.88 EBITDA + Other Income 0.22 (3.09) (5.23) (12.49)
Net tonnes = 0.907 metric tonnes 35 2Q Financials – consolidated
Particulars 2QFY17 2QFY16 ` Crores USD mn ` Crores USD mn
Total Income from Operations 14,421 2,163 11,993 1,799 Operating EBITDA 2,959 444 1,793 269 Other Income 30 5 49 7 Finance Cost 965 145 938 141 Depreciation 892 134 832 125 Exceptional Items - - 1 0 Profit Before Tax 1,132 170 71 11 Tax 473 71 47 7 Share of Associates, JV and non-controlling Interest 68 10 33 5 Profit after Tax 726 109 56 8 Diluted EPS (`)* 30.05 2.33
USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) * Not Annualized 36 1H Financials – consolidated
Particulars 1HFY17 1HFY16 ` Crores USD mn ` Crores USD mn
Total Income from Operations 27,307 24,640 4,096 3,696 Operating EBITDA 6,228 934 3,500 525 Other Income 63 9 85 13 Finance Cost 1,900 285 1,854 278 Depreciation 1,723 258 1,664 250 Exceptional Items - - 2 0 Profit Before Tax 2,668 400 64 10 Tax 924 139 50 8 Share of Associates, JV and non-controlling Interest 92 14 63 9 Profit after Tax 1,835 275 77 12 Diluted EPS (`)* 75.93 3.21
USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) * Not Annualized 37 Net debt movement – consolidated
` crore/ USD mn
$6,804 $141 $26 $6,591 45,355 939 170 43,937 1,359 239 929 $204 $36 $139
Net Debt* New Loan Taken New Finance Repayments Fx Impact Movement in Net Debt* as on Jun'16 Lease Obligation FD/MF as on Sep'16
Particulars 30.09.2016 30.06.2016 Cash & cash equivalent (` crore) 1,963 1,032 Net Debt/Equity (x) 2.15 2.27 Net Debt/EBITDA (x) 4.82 5.69
USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016) *Net Debt excludes Acceptances 38 Agenda
Overview Value Proposition Performance Business Overview Environment
39 Global economy
GDP growth - 2015 actual vs. projections for 2016 (%YoY) 2015A . Global growth expectations marked down primarily due
2016P (Jan'16) to weaker US growth 7.6%
2016P (Oct'16) 7.6%
7.5%
6.9% 6.6%
6.5% . Recent data and sustained accommodative policy stance
2.0%
1.9%
2.1%
1.6%
1.7%
1.5%
1.6% 4.2%
4.1% indicate US growth recovery continues to moderate
4.0%
2.6%
3.2% 3.2% 3.1% 0.5% 0.5% 2.4% 0.5% . Euro area growth continues to be supported by World AMEs US Euro Japan EMEs India China Area expansionary monetary policy and subdued commodity prices; uncertainty around the impact of ‘Brexit’ remains Index of Industrial Production (% YoY) an area of concern 12 US Eurozone . 9 Japan China Japan growth was weaker in 2QCY16, continues to be 6 weighed down by weaker external demand and private 3 investment 0 -3 . China growth rate remains within the official target -6 range of 6.5%-7.0%, but rebalancing and associated spill-
overs continue to be pertinent
Sep-13 Sep-15 Sep-16 Sep-14
Mar-13 Mar-14 Mar-15 Mar-16 Global economic growth outlook remains range-bound
Source: Bloomberg, IMF and JSW Steel 40 Global steel scenario Annualized steel exports (mn tonnes) China Japan ~216mn Korea Russia ~194mn tonnes ~214mn tonnes tonnes* . Exports from China, Japan, Korea and Russia 240 ~157mn tonnes continue to flood global steel markets 180 120 . Japanese/Korean exports continue to be at a sharp 60 discount to their domestic market prices 0 . Coking coal prices surge rapidly due to physical
market tightness in recent months, compressing
Jul-13 Jul-14 Jul-15 Jul-16
Jan-14 Jan-15 Jan-16 Jan-13 steel spreads. Not likely to sustain at such high 825 250 levels over the medium term 700 200 575 150 . Steel spreads squeezed with high coal prices. 450 100
$/tonne However, steel prices in Asia and Europe have $/tonne 325 50 started moving up in recent weeks
200 -
Jul-12 Jul-13 Jul-14 Jul-15 Jul-16
Jan-12 Jan-14 Jan-15 Jan-16 Jan-13 Hard coking coal FOB - RHS North America ExW Korea - Domestic Japan - Domestic China - export FOB Japan & Korea - export FOB Steel prices to reflect movement in raw material prices
Source: SBB, ISSB, MySteel, Bloomberg and JSW Steel *9M annualized exports 41 Indian economy and steel industry
Monthly steel imports (in '000 tons) 1,058 Imports have come down by only 35% against the . Progress on effective trade remedial measures is expectations of 50% decline imperative for the health of the industry - steel imports 733 693 690 618 648 have again increased in Aug-Sep’16 after declining in 576 Jul’16 . Crude steel production increased by 7.5%YoY whereas apparent finished steel consumption grew by 3.6%YoY in FY16^ Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 1HFY17 . Government spending data, thrust on renewable energy 7.5% 3.6% sector, better credit deployment in the roads sector, higher than budgeted Railway Capex, robust port traffic 44.62 47.99 39.56 40.98 growth point towards an improving demand environment . Normal monsoon and Seventh Pay Commission awards are likely to drive consumer discretionary spending in the Crude Steel Production Apparent Finished Steel on-going festive season Consumption* 1HFY16 1HFY17 Steel demand growth outlook is gradually improving
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 42 Forward looking and cautionary statement
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.
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