Agenda. Overview. Key Highlights. Performance Review. Projects Update and Guidance. Steel Scenario

Transcription

1 May 2011

2 Agenda Overview Key Highlights Performance Review Projects Update and Guidance Steel Scenario 2

3 JSW Group Overview A USD 7 billion group with diversified interests in Steel, Energy, Minerals and Mining, Infrastructure and Logistics, Cement, Aluminium and Information Technology JSW Steel India s leading integrated steel producer. Poised to become the largest steel producer # in India by crude steel capacity (with 3.2 MTPA expansion by June 2011) JSW Energy Engaged across the value chain of power business: generation, transmission, trading manufacturing of STG and coal mining JSW Infrastructure Engaged in development and operations of ports JSW Aluminium A foray to set up alumina refinery, and develop and operate bauxite mines. JSW Cement Operating 0.6 MTPA Portland Slag cement plant, to set up another 4.4 MTPA capacity by 2011 end JSoft Solutions An IT & ITES arm of JSW group Expanding Presence across key infrastructure sectors Listed company # Including 3.3 MTPA of Ispat 3

4 JSW Steel at a glance India s leading integrated steel producer Steel making capacity of 7.8 MTPA 4 manufacturing facilities in India Slabs HR Coils Hot Rolled Plates Vasind & Tarapur Vijayanagar Galvanized Coils CR Coils Salem International Presence US, Chile and Mozambique Ranked 2 nd among top 35 World Class steelmakers by World steel Dynamics Color Coated Products SAW Pipes Long Products Plates 4

5 Transformation FY 2002 FY 2011 (Consolidated) CAGR 1.60 Capacity (MTPA) % * 1.46 Production (MnT) % 1,736 $ 387 Turnover ( ` crores /USD mn) 23,900 $5,353 34% 281 4,947 $ 63 EBITDA ( ` crores /USD mn) $ 1,108 38% (351) 1,754 PAT ( ` crores /USD mn) ($78) $ 393 Execution Transformation Product Mix * CAGR calculation based on capacity of 7.8 MTPA in April 2009 USD/ ` = (RBI reference rate as on ) 5

6 Scale Integration Product Mix Value drivers 38,636 $7,802 CAGR 22% 5,843 $ 1, $ 58 5,585 $ 1, MTPA 20,444 $ 4,579 14,392 $ 3, MTPA 63% Market Capitalization (` Cr./ USD mn) Total Debt + Minority Interest Cash & cash equivalents Current Investments (` Cr. / USD mn) USD/ ` = (RBI reference rate as on ) 6

7 Scale One of the fastest growing steel company in the world, have delivered 10x growth in 10 years. 0.8 MTPA 2.5 MTPA Overseas acquisitions in US and Mozambique New HSM, Coking Coal mines in USA 16 MTPA* MTPA 3.8 MTPA Commissioning of HSM CAGR 19% 3.8 MTPA Iron ore mines In Chile 11 MTPA* CAGR 9% 13 MTPA* 2 MTPA expansion at Vijayanagar by June 2013 at low intensity capex of ` 2,695 cores ($604 mn). Further 3 MTPA expansion at West Bengal by Excluding 3.3 MTPA of Ispat Industries. USD/ ` = (RBI reference rate as on ) 7

8 Integration Dedicated Port Industrial Gases Calcium carbide Captive Solid waste utilization with combination of technologies Coke Power Corex and Blast Furnace Recovery and Non Recovery Coke oven Sinter and Pellet Best conversion cost Portfolio of Raw Material Assets Iron Ore Coking Coal Thermal Coal Chile USA Mozambique Karnataka Jharkhand Orissa Tamilnadu West Bengal Jharkhand Prospects of higher Integration of Raw material gradually 8

9 Product Mix # 2002 Q4 FY11 Slabs HR Coils 68% 32% Flat Long 60% 40% 100% HR Coils HR Plate/Cold Rolled/ Galvanised /Color Coated Rolled Products FY12 77% Flat 25% 75% HR Plate/Cold Rolled/ Galvanized /Color Coated HR Coils 23% Long 100% Rolled Products # Based on capacity 9

10 Ranked at 2nd Position JSW achieved a 10 out of 10 rating on following parameters Efficient & low conversion cost Conversion costs; Yields Posco Expanding capacity Location in high growth markets Labor cost CSN SAIL Nucor 7.25 JSW Steel TATA/Corus NLMK Global size and efficient operation Usiminas 7.16 Severstal 7.10 Gerdau Source: WSD Ranking of top 35 World Class Steelmakers as on June

11 Key Highlights 11

12 A year of many successes.. JSW JFE strategic partnership 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 Ispat Acquisition 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 USD/ ` = (RBI reference rate as on ) 12

13 Best ever performance Key performance highlights Highest ever crude steel production: Q4FY * million tonnes, FY * million tonnes Highest ever sales volume: Q4FY million tonnes, FY million tonnes Highest ever gross turnover: Q4FY11 ` 7,615 Crores ($1,705mn), FY11 ` 25,131 Crores ($5,628 mn) Highest ever EBITDA: Q4FY11 ` 1,658 Crores ($371mn), FY11 ` 4,856 Crores ($1,088mn) Highest ever Net Profit Q4 FY11 - ` 833 Crores ($187mn) * Excludes million tonnes produced from trial run of Casters of 3.2 million tonnes expansion project Improved financials 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 USD/ ` = (RBI reference rate as on ) 13

14 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 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. 14

15 Performance Review 15

16 Production Q4 FY % 1% YoY % QoQ % * % 6% YoY % QoQ % Q4 '10 Q4 '11 Q3 '11 Rolled : Flat % -1% YoY % QoQ % Q4 '10 Q4 '11 Q3 '11 Crude Steel * Excludes million tonnes produced from trial run of Casters of 3.2 million tonnes expansion project All figures are in million tonnes Q4 '10 Q4 '11 Q3 '11 Rolled : Long 16

17 Production FY 11 33% 7% YoY % * YoY % FY 10 FY 11 Rolled : Flat 18% YoY % FY 10 FY 11 Crude Steel FY 10 FY 11 Rolled : Long * Excludes million tonnes produced from trial run of Casters of 3.2 million tonnes expansion project All figures are in million tonnes 17

18 Saleable Steel Sales Q4 FY11 14% 9% YoY % QoQ % % 12% YoY % QoQ % % YoY % % QoQ % Q4 '10 Q4 '11 Q3 '11 Total Sales All figures are in million tonnes Q4 '10 Q4 '11 Q3 '11 Rolled : Flat % -1% YoY % QoQ % Q4 '10 Q4 '11 Q3 '11 Rolled : Long Q4 '10 Q4 '11 Q3 '11 Value Added -72% YoY % % QoQ % Q4 '10 Q4 '11 Q3 '11 Semis 18

19 Saleable Steel Sales FY % YoY % % YoY % % YoY % FY 10 FY 11 Rolled : Flat FY 10 FY 11 Value Added 21% YoY % % YoY % FY 10 FY 11 Total Sales FY 10 FY 11 Rolled : Long FY 10 FY 11 Semis All figures are in million tonnes 19

20 Retail Shoppe No. of JSW Shoppe % Share through JSW Shoppe FY11 61% % Value Added: Flat 31 Mar Mar 2011 excluding semis % 23% Sales through JSW Shoppe (In 000 tonnes) 77% 1123 Domestic sales (Million tonnes, % Share) 15% 43% 39% Rolled: Long Rolled: HR Products 635 Others JSW Shoppe FY10 FY11 20

21 Financials Q4 FY11 (standalone) Particulars Q4 FY 11 Q4 FY 10 Growth ` Cr. USD mn ` Cr. USD mn (%) Net Sales 7,032 1,575 5,167 1,028 36% EBITDA 1, , % EBITDA Margin 23.3% 27.4% Net Finance Charges % Depreciation % Profit Before Tax 1, % Profit after Tax % * Not Annualized USD/ ` = (RBI reference rate as on ) 21

22 EBITDA MOVEMENT Q4 FY 11 (Standalone) ` Cr. $32 1,427 $4 184 $ $3 145 $1 60 (97) ($2) $37 1,658 (993) ($22) EBITDA Q4FY 10 Volume Cost NSR Mix CER/Others FX impact EBITDA Q4FY11 USD/ ` = (RBI reference rate as on ) 22

23 Financials FY11 (standalone) Particulars FY 11 FY 10 Growth ` Cr. USD mn ` Cr. USD mn (%) Net Sales 23,163 5,188 18,202 4,077 27% EBITDA 4,856 1,088 4,802 1,075 1% EBITDA Margin 20.8% 26.2% Net Finance Charges % Depreciation 1, , % Profit Before Tax 2, , % Profit after Tax 2, , % * Not Annualized USD/ ` = (RBI reference rate as on ) 23

24 EBITDA MOVEMENT FY 11 (Standalone) ` Cr. $6 $13 $1 $ $109 4,802 $66 4,856 2,943 (346) ($8) (3,475) ($78) EBITDA FY10 Volume Cost NSR Mix CER/Others FX impact EBITDA FY11 USD/ ` = (RBI reference rate as on ) 24

25 Financials Q4 FY11 (Consolidated) Particulars Q4 FY 11 Q4 FY 10 Growth ` Cr. USD mn ` Cr. USD mn (%) Net Sales 7,792 1,745 5,844 1,309 33% EBITDA , % Net Finance Charges % Depreciation % Profit Before Tax % Profit after Tax % * Not Annualized USD/ ` = (RBI reference rate as on ) 25

26 Financials FY11 (Consolidated) Particulars FY 11 FY 10 Growth ` Cr. USD mn ` Cr. USD mn (%) Net Sales 25,868 5,794 20,211 4,527 28% EBITDA 4,947 1,108 4,603 1,031 7% Net Finance Charges , % Depreciation 1, , % Profit Before Tax 2, , % Profit after Tax 1, , % * Not Annualized USD/ ` = (RBI reference rate as on ) 26

27 Net Debt Movement consolidated $ ` Cr. $351 15,656 (4450) ($100) (2739) (108) ($61) ($2) (1798) ($40) $317 14,159 Net Debt as on Mar'10 New Loan Taken Repayments Prepayments Forex Gain Movement in FD/ MF Net Debt as on Mar'11 Cash and Cash equivalent - ` 2,318 Crores ($519 mn) USD/ ` = (RBI reference rate as on ) 27

28 Financial Ratios Particulars FY11 Q4FY 11 Q3FY 11 EBITDA Margin 20.8% 23.3% 17.4% PAT Margin 8.6% 11.7% 6.6% Diluted EPS (`) * 16.97* ROCE 12.6% 17.0% 9.2% * Not Annualized Particulars Net Total Debt/Equity (x) Net Total Debt/EBITDA (x) Net Total Debt/Equity-Consolidated (x) Net Total Debt/EBITDA-Consolidated (x)

29 Projects update 29

30 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 ($604 mn), Debt to Equity ratio 2:1. Expected completion by Jun

31 West Bengal project 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 31

32 Ongoing projects summary 3.2 MTPA expansion project Coke Oven 4: commissioned 2 batteries (total batteries - 4 and capacity MTPA). Coke Oven IV will ensure 100% captive coke generation. Sinter Plant 3: commissioned 5.75 MTPA capacity in Mar 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. Cold Rolling Mill - 2 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. Other projects Beneficiation Plant 2 phase II (2,000 TPH), Pellet Pant 2, CPP 4 (300 MW captive thermal power plant), and HSM 2 phase II will be commissioned in FY12. 32

33 3.2 MTPA expansion project progress Coke Oven 4: 2 out of 4 batteries ( total capacity of 4 batteries MTPA) have been commissioned. Q3 FY11 Q4 FY11 Sinter plant: Plant 3 of 5.75 MTPA capacity have been commissioned in Mar Plant IV of 2.4 MTPA capacity will be commissioned in Q1 FY12. Q3 FY11 Q4 FY11 33

34 3.2 MTPA expansion project progress Steel Melting Shop: Casters, converters and LHFs have been commissioned. Q3 FY11 Q4 FY11 Blast furnace 4: will be commissioned by Q1 FY12 end. Q3 FY11 Q4 FY11 34

35 Other projects' progress Blooming Mill: Phase II (4 stands out of 8): commissioned in Mar Q3 FY11 Q4 FY11 Beneficiation Plant 2: Phase I (1,500 TPH) has been commissioned, Phase II (2,000 TPH) will be commissioned in FY12. Q3 FY11 Q4 FY11 35

36 Guidance 36

37 Guidance for FY12 Crude Steel Production Saleable Steel Sales 36% % FY11 FY12 E FY11 FY12 E Saleable Steel Sales Product wise 40% YoY % % 156% YoY % YoY % FY11 FY12 E Semis Rolled Long Rolled Flat 37

38 Steel Scenario 38

39 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr Raw Material prices have risen sharply. 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) 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 Coking coal contract Australian Spot HCC FOB Indian Iron Ore 63% Fe dry / China import CFR N.China port Scrap / Shredded / Rotterdam export FOB (RHS) Source: SBB (All figures are USD/tonne) 39

40 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11. Leading to increase in Steel prices HRC prices rose as raw material prices for Q1FY11 went up. 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 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 Europe import CIF S.European port China export FOB Shanghai Russia Black Sea export FOB N.America domestic FOB US Midwest mill Source: SBB, World Steel Association, WSD, Mysteel (All figures are in USD/ton) 40

41 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar % 5.7% 5.1% 5.0% 5.0% 6.0% 6.2% 8.0% 9.6% 13.2% 13.3% 14.3% Global Steel Trends Production reached 1540 million tonnes in Feb 2011, reflecting significant improvement in steel prices. However Mar 2011 witnessed small supply side correction. 1,540 Finished Steel Demand Outlook (% YoY growth) 1,495 1,466 1,467 1,439 1,440 1,411 1,395 1,382 1,367 1,368 1,347 1,336 1,332 World Crude Steel Production - Annualized Source: World Steel (All figures are in million tonnes) 1,523 World BRIC China India F 2012 F Global Finished Steel Demand Year World BRIC China India F F 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. 41

42 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar China Steel Market 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 Finished Steel Production Apparent Steel Consumption Monthly Exports Source: Mysteel, World Steel Association, JSW Steel (All figures are in million tonnes) 42

43 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Indian Steel Market 10.6% 11.3% Finished Steel Production* Real Steel Consumption* FY10 FY11 Import Export 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. Source: JPC (All figures are in million tonnes) * Production and consumption data has been netted off for double counting effect. 43

44 Q & A Session 44

45 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 bemade from time to time by or on behalf of the company. 45

46 Thank you 46