JSW Steel Limited Investor Presentation May 2015 Agenda
Overview Value Proposition Performance Business Overview Environment
2 JSW Group – overview
USD 11 billion group with presence across the core sectors
JSW Energy*: Engaged across JSW Infrastructure: Engaged in JSW Steel*: India’s leading the value chain of power development and operations integrated steel producer. (Operational plant (Goa, Jaigarh, and (Steel Capacity: 14.3MTPA ) business of ports. 3,140 MW) Dharamtar Port) JSW Aluminium: A foray to JSW Cement: Slag cement set up alumina refinery and JSoft Solutions: An IT & ITES plant of 5.3 MTPA capacity develop and operate bauxite arm of JSW group mines
Group market cap ($6,624 mn**) JSW Group FY 2014-15 Gross Turnover: 10,782 EBITDA: 2,165 JSW Energy Profit after Tax: 520 3,123 JSW Steel Cash Profit: 1,221 3,501 Cash Profit= PAT + Depreciation All figures are in USD millions USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) As on Mar 31, 2015
* Listed company ** USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 3 JSW Steel – India’s leading steel manufacturer
. Integrated steel manufacturing . Installed capacity 14.3 MTPA, facilities – from raw material at six strategic locations in Leading steel processing plants to value- South and West India Integrated manufacturer manufacturing added product capacities in India process
. Pan India marketing and distribution network, export Strong . Combination of state-of- presence in ~100 countries distribution across the 5 continents Technological the-art steel making network and competence technologies: Corex, DRI, export Blast Furnace presence
Diversified Global product presence . Extensive portfolio of products – portfolio . International presence in mining HR, CR, galvanized/galvalume, pre- assets (Chile, US and Mozambique) painted, TMT bars, wire rods, and value-added facilities (Plate and special steel bars, tinplates, rounds Pipe mill in US) and blooms
4 Transformational journey to market leadership
FY 2002 FY 2010 FY 2015
. CAGR FY’02–15: 18% Capacity (MTPA) 1.6 7.8 14.3 . FY 2016 expected capacity of 18MTPA
Production (MTPA) 1.3 6.0 12.6 . CAGR FY’02–15: 19%
Revenue 277 3,114 8,463 . CAGR FY’02–15: 30% (USD mn)
EBITDA 45 664 1,502 . CAGR FY’02–15: 31% (USD mn)
EBITDA/ton(1) 35 116 125 . CAGR FY’02–15: 10% (USD/ton)
Market Cap . Significant value creation with 42x increase in 84 3,693 3,501 (USD mn) market value(2)
Technology Corex Corex, BF Corex, BF, DRI . Adopting industry leading technologies
Flats, long, special Flat, long, special . Continuously expanding product canvas with Product Mix Flats steel and value steel & high value- focus on high-end value-added products added added auto grade
Unrelenting progress through the economic cycles
(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) 5
Combination of Organic and Inorganic growth
Key Projects in progress/pipeline: FY2016/17 . 18 MTPA Dolvi Works capacity expansion to 5MTPA Vijayanagar Works capacity expansion to 12MTPA(3) 2015 . New CRM2—Phase 2 Salem Works capacity expansion to 1.2MTPA . 0.2MTPA Electrical Steel Mill 0.2MTPA Tin plate mill at Tarapur Compalex 2014 2013 . New CRM2—Phase I . 14.3 MTPA post (2) Ispat merger . 4 MTPA—Pellet Plant 2011 . 1 MTPA—Coke Oven Plant(2) . Acquisition of 49.3% . Acquired 50% stake in Vallabh Tinplate stake in Ispat 2012 2009 . Acquired Welspun Maxsteel . HSM II Capacity . 7.8 MTPA 2006 Expansion to 5 MTPA 2004 2010 (1) . 3.8 MTPA . Acquired SISCOL . JSW-JFE Strategic Partnership 2008 . 3.5 MTPA of HSM II . Iron Ore mines 2007 . Coal mining concessions in US 2002 2005 acquired in Chile . 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 (3) Subject to regulatory approval 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 for sustainable business operations JSW Steel: Benefits to JSW Steel: Operational excellence and cost Focused expansion plans in India Access to fast growing auto steel reduction by: Optimized capital structure through market Improvement in quality, productivity, deleveraging Short learning curve yield , and energy efficiency Access to cutting edge technologies Application engineering Sharing best maintenance, environment JFE: New product development management, and safety practices Presence in growing Indian market Benchmarking and personnel training 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 13–14% through selective organic and inorganic growth Undertake brownfield expansions at low specific investment cost per ton Selective Consider inorganic opportunities that are value accretive Growth
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
Committed to sustainable and eco-friendly technologies to drive Focus on Resource Optimization growth Focus on cost reduction and energy efficiency
Continue to evaluate raw material assets in India and abroad Strengthening Backward and Forward to secure key raw material supplies and to reduce cost of Integration production by targeting strategic tie-ups and investments
Continuously seeks to improve financial profile Prudent Balance Sheet Management Manage capacity expansion and debt profile to capture market opportunities without excessive risk
8 Strong and balanced Board comprising experts of eminence & integrity
Chairperson—Emeritus Executive Directors Independent Directors Nominee Directors
Seshagiri Rao M.V.S Kannan Vijayaraghavan, Naveen Raj Singh Savitri Devi Jindal Joint Managing Director & FCA and Certified Nominee Director of Group CFO Management Consultant KSIIDC Dr. Punita Kumar Sinha Kyoichi Kameyama Promoter Director Dr. Vinod Nowal Chief Investment Officer at Nominee Director of JFE Dy. Managing Director Sajjan Jindal Asia Tigers Steel Corporation Chairman & Managing Jayant Acharya Director Dr. Saibal Kanti Gupta Director (Commercial & Retired Professor at IIT, Marketing) Bombay
Sudipto Sarkar Senior Advocate, Calcutta High Court 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
Board fundamentally committed to sustainable business
9 Sound Corporate Governance
Ensures regular review of audit plans, significant audit findings, adequacy of internal audit system, Audit Committee compliance with regulations by the Company and its subsidiaries Comprises of four Non-Executive Directors Identifies qualified persons and recommends to the Board the appointment, removal and evaluation of Nomination and Directors Remuneration Responsible for drafting policy on specific remuneration packages for Executive Directors and Committee approving the payment of remuneration to managerial personnel Stakeholders Responsible for the functioning of the investor grievances redressal system Relationship Committee Comprises of four Non-Executive Directors Project Review Closely monitors the progress of projects; ensuring timely completion within the budgeted outlay Committee Continuously reviews new strategic initiatives Periodically reviews risk assessment and minimization procedures Risk Management Committee Has formed a sub-committee—“Capex Risk Evaluation Committee” to evaluate the risks associated with capex proposals including mergers and acquisitions Corporate Social Formulates and recommends to the Board a CSR Policy including list of projects and programs Responsibility (CSR) Strong commitment towards society, the total spending on CSR activities was ~2.3% of net profit in Committee FY14 Business Responsibility Responsible for the adoption of “National Voluntary Guidelines on Social, Environmental and Economic / Sustainability Responsibilities of Business” (NVGs) Reporting Committee Policies created for or linked to the nine key principles of the NVGs
All key committees in place, having adequate independent director representation
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 Strong investor confidence and raised expectations of fast- consumption(2)(6) paced decision-making and economic reforms o World Per Capita Consumption is ~225 Kgs. o India Per Capita Consumption is ~58 Kgs. . Upturn in overall GDP growth(1) 1,400 • (%)
6.9% 7.4% 7.5% 1,200 South Korea 5.1% 1,000 800 China Taiwan 600 Japan
FY13 FY14 FY15AE FY16E Germany
400 Italy . Infrastructure sector is a key focus area for the new Canada government 200 Russia USA Infrastructure investment expected to reach ~$1 trillion Mexico France 0 Brazil during 2012-2017(4) India (200) New government is focused to give impetus to infrastructure 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 sector 2013(Kg.) in Consumption Steel capita Per . Automobile sector expected to turn around GDP per capita in 2013 ($) India projected to become 3rd largest automotive market in . India steel consumption to rise at a faster rate the world by 2016(5) o India’s steel consumption was 74MT in 2013 and is Faster economic growth and government's policies is likely expected to rise to ~76MT in 2014 and ~81MT in 2015(3) 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
(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 13
2 Multi-location manufacturing facilities in India
Vasind & Tarapur (JSCPL*) Dolvi: 3.3 MTPA . 0.32 MTPA HR Plates . 2 MTPA Blast Furnace . 1.2 MTPA GP/GC . 1.6 MTPA DRI . 0.5MTPA Colour Coating Line . 3.6 MTPA Twin Shell ConArc . 30 MW Power Plant . 55 MW Power Plant
Kalmeshwar (JSCPL*) . 0.61 MTPA GP/GC . 0.19 MTPA Colour Coating Line Vijayanagar: 10MTPA
. 1.65 MTPA Corex Salem: 1 MTPA . 8.4 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 . 2 of 7 mines are operational . Alloy Dock—Load Out Facility
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% . 5 mining licenses awarded . Acquisition cost: $252mn . Early stage development in progress . 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
Diversified portfolio to address growing demand for value-added steel Continuously Commissioned new facilities to further enrich product mix Increasing Value Added Products Leveraging JFE Steel’s well-established manufacturing technology for high value-added products for auto- grade steel
Enhanced focus on cold rolled, galvanised and galvanneal products for body Automotive panels of automobiles Grade Steel Manufactured at a new CRM2 complex Developing New Largest color coated facility to address construction, warehousing and roofing Products, Capturing Color Coated requirements Niche Markets Products State-of-the-art color coating line for appliance grade products used in consumer durables
Establishing Cold Rolled Non-grain Oriented (CRNO) steel plant to address Electrical Steel domestic 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 India Finished Steel 12.9% 12.6% 7.6% 1.8% 2.2% Consumption Growth(1) demand with unique marketing strategy – unique nationwide retail network of more than 450 outlets of 15% JSW Shoppe and JSW Explore 23% 16% 25% 24% JSW Export Turnover as % of Total . Leadership position in India and largest exporter of steel products out of India 85% 77% 84% 75% 76% JSW Domestic Turnover . Ability to re-align sales effort and shift between as % of Total domestic and export market as per market conditions . Exports to high demand regions such as Asia, Middle FY08 FY10 FY12 FY14 FY15 East, Europe and the US – presence in over 100 countries
Flexibility to shift between domestic and international markets based on market conditions
(1) World Steel Association. India finished steel consumption data for calendar year (CY07 corresponds to FY08). 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 center for steel solutions Leveraging export presence Metro / Urban . Just-in-time solution with in-house profiling lines and Value Added New product approvals for Original Equipment Services Manufacturers (OEMs) and automotive customers . Franchisee Model Increase in value added products leading to incremental growth in focus sectors and also ‘JSW Shoppe’ facilitating import substitution Urban / Semi- . Steel distribution Focused on Retail Sales – increased reach and urban . Enhanced customer experience penetration
‘JSW Shoppe Connect’ Semi- . Smaller retail format linked to JSW explore/Shoppe urban / . Last mile link to talukas/rural areas Rural . 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- . Improving labor productivity: . Integrated manufacturing facilities: recovery Coke Ovens Current production of ~1,096 tons/ From pelletisation / beneficiation to . Agglomeration: Pelletisation and employee(1) downstream value-add capabilities Beneficiation Plants . In-house training programs internal . Dedicated port and railway siding for . Iron Making: Blast Furnace, Corex, faculty logistics support Sponge Iron (DRI) . Continuously investing, building and . 100% assured power supply through . Steel Making: Basic Oxygen Furnace enhancing competencies captive power plants and (BOF), Electric Arc Furnace (EAF), Conarc arrangements with JSW Energy and . Casting: Continuous Casting, Thin Slab the power grid 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 (12.17MT) divided by total no. of employees on Company payroll (11,099) in FY14 19 Strategic expansion aided by strong project 8 execution
Strong project execution capabilities …. Major on-going Projects Experienced in-house project management team . Vijayanagar Works: Supported by cross-functional team (commercial, finance and legal Capacity expansion from 10 MTPA to 12 MTPA by setting up department) certain new facilities and debottlenecking/ modification of Established long-term relationship with key domestic and existing facilities international suppliers 50,000 TPA capacity Service Center to handle the products Savings in procurement cost by negotiating firm prices for follow-on of Electrical Steel Complex orders . Dolvi works: (1) … at low specific investment cost Capacity expansion from 3.3 MTPA to 10 MTPA to 5 MTPA Reduced specific investment cost/ton of capacity by setting up certain new facilities and debottlenecking/ expansion shows cost efficiency modification of existing facilities . Salem Works: Capacity expansion from 1 MTPA to 1.2 MTPA by setting up 7.8 Mtpa 11 Mtpa certain new facilities and debottlenecking/ modification of • FY 2009 3.8 Mtpa • FY 2012 existing facilities • USD 559/mt • FY 2007 • USD 545/mt • USD 550/mt . Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven 2.5 Mtpa and Turbo Generator • FY 2006 • USD 682/mt . Tarapur Works: 1.6 Mtpa • FY 2003 Setting up 0.2MTPA Tin plate mill • 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 Road Ahead
. Plant under maintenance . Infusion of equity . Capacity expansion to 5MTPA . Loss making at EBITDA level . Alignment of marketing strategies resulting in . Further operational . High interest cost freight synergies and VAT benefits improvements underway . Financially distressed . 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
. Inability to service existing debt . Exit from CDR . Operational improvements underway . Inadequate cashflows . Generating positive profit after tax . Profitability to improve substantially . 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 of Achieved significant sales growth despite weak economic and sluggish domestic volume and revenue demand in past 2 years growth Superior profitability Resilient operations with improved EBITDA margin marked by several supported by efficient productivity and cost improvement measures operations Prudent financial ratios across liquidity, leverage and profitability parameters Well-capitalized balance sheet Adequate liquidity levels owing to prearranged funding in place for capacity expansions and a committed working capital facility
Diverse sources of funding Financial flexibility to Strong relationships with over 50 banks/financial institutions with access to low raise capital cost credit Healthy mix of local and foreign currency debt
Strong positioning as Strong EBITDA margins, low leverage and higher returns on invested capital as compared to peers compared to global peers
22 Strong positioning compared to peers
EBITDA Margin (1) (%) 26.6% 25.2% 19.6% 19.5% 18.1% 17.8% 16.0% 12.0% 9.2% 9.1% 6.7% 5.9% 5.1%
JSW Steel JSW Steel Severstal CSN Magnitogorsk Evraz Hyundai Steel Gerdau Tata Steel Arcelormittal Steel Dynamics US Steel ThyssenKrupp (Consolidated) (Standalone) Iron and Steel
Net Debt/EBITDA (x) 5.2x 5.5x 4.3x 4.6x 3.8x 3.0x 2.7x 2.1x 2.2x 2.2x 1.3x 1.5x 0.7x
JSW Steel JSW Steel Severstal Magnitogorsk ThyssenKrupp US Steel Arcelormittal Evraz Gerdau Hyundai Steel Steel CSN Tata Steel (Consolidated) (Standalone) Iron and Steel Dynamics
Return on Average Capital Employed(2) (%) 17.8% 17.5% 11.0% 11.9% 9.7% 9.1% 7.5% 6.2% 5.8% 5.6% 5.6% 5.5% 5.4%
JSW Steel JSW Steel Severstal Evraz ThyssenKrupp Magnitogorsk CSN Arcelormittal Gerdau Tata Steel Hyundai Steel Steel Dynamics US Steel (Consolidated) (Standalone) Iron and Steel
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- 23 term borrowings + current maturity of long-term borrowings + net deferred tax liabilities)
Agenda
Overview Value Proposition Recent Business Performance Environment
24 Key highlights – 4QFY15
Gross Turnover: `11,893 crore/USD 1,900 mn Net Sales: `10,785 crore/USD 1,723 mn Standalone Operating EBITDA: `1,673 crore/USD 267 mn performance Crude Steel production: 3.06 million tonnes Saleable Steel sales: 3.06 million tonnes Net debt to equity: 1.02x and Net debt to EBITDA: 2.97x
Gross Turnover: `13,534 crore/USD 2,162 mn Consolidated Net Sales: `12,364 crore/USD 1,975 mn performance Operating EBITDA: `1,683 crore/USD 269 mn Net debt to equity: 1.55x and Net debt to EBITDA: 3.81x
CAL-2 (0.95MTPA) at Cold Rolling Mill Complex–2 in Vijayanagar Key update commissioned in Mar 2015 Electrical Steel Mill (0.2MTPA) at Vijayanagar commissioned in Apr 2015
USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 25 Quarterly volumes – standalone
Crude Steel Production Saleable Steel Sales -3% -3% -1% 1% YoY QoQ YoY QoQ 3.10 3.15 3.06 3.17 3.06 3.03
4QFY14 4QFY15 3QFY15 4QFY14 4QFY15 3QFY15
4QFY14 4QFY15 3QFY15 4QFY14 4QFY15 3QFY15 Flat 2.49 2.47 2.56 Flat 2.47 2.44 2.44 Long 0.48 0.48 0.50 Long 0.50 0.55 0.47 Semis 0.13 0.08 0.12
All figures are in million tonnes 26 Full year volumes – standalone
Crude Steel Production Saleable Steel Sales 2% 4% YoY YoY 11.86 12.03 12.17 12.63
FY14 FY15 FY14 FY15
FY14 FY15 FY14 FY15 Flat 9.74 10.07 Flat 9.71 9.66 Long 1.83 2.06 Long 1.81 1.98 Semis 0.34 0.39
All figures are in million tonnes 27 Full year sales highlights – consolidated
11.85^ 12.08^ 26% 26% 24% 33%
8.75* 8.92* 76% 67% 11% 14% 23% 25% 66% 61%
FY14 FY15 FY14 FY15 Value added & special Products Other products OEM Retail Auto Exports
Long products sales grew 9%YoY Sales to Auto sector grew 28%YoY Value-added & Special Products sales grew 38%YoY, Cold-rolled products sales surged 54%YoY and Coated products sales increased 20%YoY
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) 28 Full year retail sales highlights – consolidated
Retail sales (‘000 tonnes) 34% 35%
2,186 2,020 66% 65%
FY14 FY15 FY14 FY15 Retail - Others Sales Retail - Branded Sales
Retail Sales grew 8%YoY Long products sales increased 20%YoY, TMT sales grew 22% and WRC sales grew 17%YoY Cold-rolled products sales surged 45%YoY, Coated products sale grew 4%YoY
29 New product development/approvals in 4QFY15
Steel Type: SPRC35- Steel Type: IF Grade Steel Type: HR750- HRC IF/ EDD CRC Galvaneal End use: Exposed Panels of End use: Fuel Tank of two End use: Commercial Vehicle Passenger Cars wheelers Wheels
Steel Type: Micro-Alloyed Steel Type: D- Grade PPGI Steel Type: SAE 52100 Alloy High Strength 38MnS5 Steel Bar End use: Crank Shaft of End use: Refrigerator Door End use: Bearing Ring Commercial Vehicles
30 Recognitions and accolades- FY15
Prime Minister Trophy for 2012-13 Zero Defect Supplies Best Supplier Award - by the Ministry of Steel, India - by Toyota Kirloskar Motors - by TATA Motors
State Export Excellence Award- 2013-14 Star Performer- 2014 Best Delivery Supplier - by the Government of Karnataka - by Haier Appliances - by FAG Schaeffler
31 4Q Financials – standalone
Particulars 4QFY15 4QFY14 ` Crores USD mn ` Crores USD mn Gross Turnover 11,893 1,900 13,330 2,130 Net Sales 10,785 1,723 12,255 1,958 Operating EBITDA 1,673 267 2,496 399 Other Income 161 26 77 12 Finance Cost 685 109 690 110 Depreciation 710 113 706 113 Exceptional Items (105) (17) - - Profit Before Tax 335 54 1,177 188 Tax 146 23 375 60 Profit after Tax 189 30 802 128 Diluted EPS (`)* 7.46* 32.84*
*Not Annualized USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 32
Full year financials – standalone
Particulars FY15 FY14 ` Crores USD mn ` Crores USD mn Gross Turnover 49,658 7,934 48,527 7,753 Net Sales 45,352 7,246 44,529 7,114 Operating EBITDA 8,872 1,417 8,783 1,403 Other Income 467 75 331 53 Finance Cost 2,909 465 2,740 438 Depreciation 2,785 445 2,726 436 Exceptional Items (396) (63) (1,692) (270) Profit Before Tax 3,249 519 1,955 312 Tax 1,082 173 621 99 Profit after Tax 2,166 346 1,335 213 Diluted EPS (`) 88.24 53.86
USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 33 Operating EBITDA movement – standalone
` crore/ USD mn $399 2,496 (28) ($4)
$86 $267 537 1,673 (16) ($3)
(1,316) ($210)
EBITDA Volume NSR Cost Others EBITDA 4QFY14 4QFY15
USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 34 Operational performance – JSW Steel Coated Products
Million tonnes Volumes 4QFY15 4QFY14 FY15 FY14 Production* 0.37 0.43 1.54 1.57 Sales 0.39 0.44 1.57 1.58
` crore Key P&L data 4QFY15 4QFY14 FY15 FY14 Turnover 2,193 2,735 9,506 9,353 Operating EBITDA 58 94 336 331 Profit after Tax (26) 35 (25) 51
*Including Job Work 35 Operational performance – US Plate & Pipe Mill
Production (net tonnes) 4QFY15 4QFY14 FY15 FY14 Plate Mill 72,482 1,10,407 3,61,525 3,91,281 Utilization (%) 30% 44% 36% 39% Pipe Mill 14,015 15,782 52,795 44,766 Utilization (%) 10% 11% 10% 8%
Sales (net tonnes) 4QFY15 4QFY14 FY15 FY14 Plate Mill 63,960 94,680 3,09,373 3,42,335 Pipe Mill 13,380 15,672 57,351 53,141
USD mn Key P&L data 4QFY15 4QFY14 FY15 FY14 Turnover 80.85 106.23 354.28 354.50 EBITDA + Other Income 0.13 (4.00) 6.24 (7.18) Profit after Tax (16.91) (18.69) (56.09) (64.53)
Net tonnes = 0.907 metric tonnes 36 Operational performance – Chile
USD mn Particulars 4QFY15 4QFY14 FY15 FY14
Production (Tonnes) 1,55,033 2,36,640 8,18,671 9,04,658
Sales (Tonnes) 1,50,536 1,49,443 9,21,206 7,53,841
Turnover 5.79 16.77 70.30 87.86
Operating EBITDA (10.27) 1.32 (18.83) 12.75
Profit after Tax (11.24) (0.25) (21.90) 4.69
37 4Q Financials – consolidated
Particulars 4QFY15 4QFY14 ` Crores USD mn ` Crores USD mn Gross Turnover 13,534 2,162 15,242 2,435 Net Sales 12,364 1,975 14,088 2,251 Operating EBITDA 1,683 269 2,529 404 Other Income 18 3 1 0 Finance Cost 858 137 784 125 Depreciation 898 143 824 132 Exceptional Items (26) (4) - - Profit Before Tax (81) (13) 922 147 Tax (112) (18) 459 73 Share of Associates and Minority Interest 31 5 21 3 Profit after Tax 62 10 483 77 Diluted EPS (`)* 2.23* 19.64*
*Not Annualized USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 38 Full year financials – consolidated
Particulars FY15 FY14 ` Crores USD mn ` Crores USD mn Gross Turnover 56,572 9,038 54,621 8,727 Net Sales 52,051 8,316 50,409 8,054 Operating EBITDA 9,402 1,502 9,165 1,464 Other Income 111 18 86 14 Finance Cost 3,493 558 3,048 487 Depreciation 3,434 549 3,183 509 Exceptional Items (47) (8) (1,713) (274) Profit Before Tax 2,539 406 1,308 209 Tax 819 131 920 147 Share of Associates and Minority Interest 77 12 64 10 Profit after Tax 1,797 287 452 72 Diluted EPS (`) 72.93 17.35
USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 39 Net debt movement – consolidated
$459 ` crore/ USD mn 2,875 $6,321 39,563 (3,318) $5,720 35,805 ($530) (1,562) (190) ($250) ($30) (1,563) ($250)
Net Debt* New Loan Taken Repayments Pre-payments Fx Impact Movement in Net Debt* as on Dec'14 FD / MF as on Mar'15
Particulars 31.03.2015 31.12.2014 Cash & cash equivalent (` crore) 2184 621 Net Debt/Equity (x) 1.55 1.70 Net Debt/EBITDA (x) 3.81 3.86
*Net Debt excludes Acceptances USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015) 40 Agenda
Overview Value Proposition Recent Business Performance Environment
41 Global economy 60 . IMF maintains 2015 global GDP growth projection at 3.5% 55
. US continues to grow – consumer sentiment, labour PMI markets and recent housing print remain encouraging 50
. Europe shows signs of improvement, supported by large 45
monetary stimulus and lower oil prices
Jul-11 Jul-12 Jul-13 Jul-14
Jan-13 Jan-12 Jan-14 Jan-15
Oct-11 Oct-12 Oct-13 Oct-14
Apr-12 Apr-13 Apr-14 Apr-15 . Japan benefits from rising external trade, overall growth Apr-11 remains muted due to subdued private consumption US Eurozone Japan China
. Chinese economic growth is moderating as previous GDP growth - 2014 actual vs. projections for 2015 excesses in property, credit and investment continue to 2014 2015P
unwind
7.5%
7.4%
7.2% 6.8%
. Volatility in energy prices, currency adjustments, and
4.6% 4.3%
swings in capital flows can potentially impact different 1.5%
3.5%
1.0%
3.4%
0.9%
3.1%
2.4% 2.4%
countries in varying degrees 1.8%
0.1% - World AMEs US Euro Japan EMEs India China Area Global economic growth indicators are moderately positive
Source: Bloomberg, IMF and JSW Steel 42 Global steel scenario Steel demand growth outlook (%YoY) Chinese monthly steel exports (mn tonnes, annualized) 11.7 140 2014 2015F 120 100 6.2 5.0 80 4.5 4.1 2.1 2.2 60 0.6 0.5 40 20 -0.4 -0.5 0
-3.3
Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14
Apr-13 Apr-10 Apr-11 Apr-12 Apr-14 Apr-15 World EU US MENA India China Apr-09
775 700 . World Crude Steel production in 1QCY2015 fell by 1.8%, 625 550 . World Steel Association forecast marginal demand growth 475 of 0.5% in CY2015 400 . Rising steel exports from China result in supply glut 325
HRC prices($/tonne)HRC . Regional HRC prices remain under pressure driven by
lower demand and lower iron ore and coal prices, and
Jul-13 Jul-14
Jan-15 Jan-14
Oct-13 Oct-14
Apr-13 Apr-14 Apr-15 North America ExW Europe ExW currency fluctuation Black Sea export FOB China export FOB Rising steel exports from China an area of concern
Source: World Steel Association, Bloomberg and JSW Steel 43 Indian economy and steel industry
8.0% 3.1% 88.3 . Domestic steel industry faced headwinds of a 71%YoY 81.7 surge in finished steel imports (especially from China, 76.4 FY14 74.1 Korea, Japan and Russia) in FY15, when apparent FY15 consumption increased only 3.1%YoY.
. Finished steel exports in FY15 decreased by 8.1%YoY
Crude Steel Production Apparent Finished Steel . Domestic iron ore availability is expected to improve Consumption* with restart of closed mines
. Overall activity levels show mixed signs, inflation remains Total Steel Imports 232% modest and there are initial signs of pick up in capital goods and medium & heavy commercial vehicle segment 48% – actual uptick in investment cycle is yet to be seen 3.61 46% 18% 55% 2.65 . Tighter liquidity conditions, slowing rural demand due to
recent unseasonal rains, leveraged corporate balance
1.93
1.60
1.79 1.36
1.32 sheets and below-normal monsoon forecast are key risks
0.15 0.23 1.09
China Japan Korea Russia Rest of the FY14 FY15 World Investment cycle expected to pick up in 2HFY16, rising steel imports a concern
Source: JPC and JSW Steel All figures are in million tonnes, * Net of double counting effect 44 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.
45 Thank you
46