India Growth Story Steel Market Asia Conference 2012 19 th -20 th November - 2012 Intercontinental Grand Stanford - Hong Kong Ashok Bhardwaj (Director - Marketing) JSW Steel Limited
India Urbanization Rate 1,400 1,200 Fig s in Mn. No s 1,210 35% 30% 1,000 25% 800 20% 600 15% 400 361 10% 200 5% - 1951 1961 1971 1981 1991 2001 2007 2008 2009 2010 2011 0% Source : Census India %-Urban Indian Urban Population Growth is double of its total Population Growth. Emerging as global hub for skilled and cheap labor force 2
India Investment & Savings Rate 45.0% %- of GDP 40.0% 35.0% 30.0% 25.0% Investment Investment 35.4% 20.0% 15.0% 10.0% 8.4% 5.0% 0.0% 1951 1961 1971 1981 1991 2001 2007 2008 2009 2010 2011 Source : Planning Commission Investment Savings Investment Driven Economy strongly supported by high Saving rate. 2 nd Highest Saving Rate in the World after China. 3
Indian Economy Unfolding %-GDP Share GDP US$-Bn Agriculture Industry Services GDP Source: CSO Transformed from Farm to Non-Farm Manufacturing slated to stimulate onward Economic Growth 5
Growing Emphasis on Manufacturing %-Share in GDP 25% 16% Source : CSO / National Manufacturing policy 2010 2022 -Projected Intensity of Industrialization leverages growth of core commodities including steel simultaneously creating 100 million employment opportunity. May 2012 6
Infrastructure & Construction Sector US$-Bn 1,000 514 218 10th Plan 11th Plan 12th Plan Source : Plan Documents Government agenda is to allow more private sector participation through PPP Model During 12th Plan period half of the investments is expected from private sector
India Foreign Direct Investment & Forex Reserves Forex-Reserves (US$-Bn) 300 250 200 150 100 Foreign Inv. Inflows Forex Reserves Foreign Investment Inflows (US$-Bn) 70 60 50 40 30 20-50 Source: RBI / DIPP 1991-92 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 10 - As per UN Report India Ranked 3 rd most favored destination for FDI after China & USA
Consumer Durable Market Size US$-6.3 Bn 67% 51% Market Size US$-12.5Bn 49% 33% 2010-11 2014-15 Source : IBEF Rural Urban Consumer Durable Market expected to double from $-6.3 Bn to $-12.5 Bn Demand from semi urban and rural areas is expected to expand with rising rural middle class
Automotive Production Growth Fig s in Mn. No s Fig s in Mn No s 21.0 4- Wheeler 16x 2/3- Wheeler 12x 6.5 1.8 0.4 1993-94 1994-95 1995-96 1996-97 1997-98 1988-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2015-16 Source : SIAM / ACMA 4-Wheeler 2/3 Wheeler India is Graduated to 5 th largest producer of Passenger vehicle after replacing Brazil In C.Y 2011 Emerging Global & regional Hub or lead country for vehicle Programmes
Opportunities Next decade will drive significant growth in the Indian steel industry Thrust on Infrastructure Projected Investments in Infrastructure Sector in 12 th five year plan - $1 trillion Untapped rural market Urbanization Urbanization in India will increase to 40% in 2030 from current 30% Favorable Demography Availability of skilled manpower More than 50% of India s population <24 years of age India a unique and compelling geography for steel producers Favorable Policy Initiatives Proposed land acquisition bill will unleash Greenfield expansion Provision of auctioning of raw material resources in new MMDR bill would unlock the value New Manufacturing Policy envisage share of Manufacturing sector in GDP to 25% by 2022 from 15% presently 12
Strong Demand & Policy Support Driving Investment Growing Demand Policy Support Increasing Investments Growing Demand in construction Industry Inviting 100 Percent FDI in Steel sector Resulting Rising Investments From domestic & Foreign players Growing Demand in Auto Industry Government is Encouraging R&D activities in steel sector Increase in number of MoU s signed to boost investment Increased Custom Duty on selected Steel products FDI of around $-60 Bn Committed May 2012
Indian Steel Demand 120.0 100.0 80.0 60.0 40.0 20.0 Fig s in Mn.T 4.0 3.0 2.0 1.0 - (1.0) (2.0) (3.0) (4.0) - 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 (5.0) Source : JPC / Ministry of Steel Demand Net Import Steady Demand with declining imports indicating the domestic dependency. Source : Planning Commission 17
Indian Steel Demand Segregation F.Y 2011-12 Fig s in Mn.T Products 2011-12 2016-17 Longs 51% Flats 49% HR 17 29 Value Added 15 24 Total : 71 MnT F.Y 2016-17 Flats 32 54 Longs 34 54 Longs 51% Flats 49% Alloy 3 5 Total : 113 Total 71 113 Source : JPC / Ministry of Steel 18
Indian Steel Demand Drivers Auto 10% Other Transport 2% Packaging 3% F.Y 2011-12 12 th Five Year Plan Opportunity Parameter Unit 2016-17 Power Capacity MW 76,000 Engg. & Fabrication 22% Total : 71 MnT Infra. & Construction 63% Port Capacity Rail Traffic MnT 2,289 MnT 1,499 Rail Wagons No s 105,659 Auto 13% Other Transport 2% Packaging 3% F.Y 2020-21 NHDP Km/Day 20 Cement Capacity MnT 443 Engg. & Fabrication 21% Infra. & Construction 61% Capital Goods Rs.Cr. 681,000 Total : 155 MnT Urban Infra. Rs.Cr. 388,308 Source : World Steel Association
India Per Capita Consumption of Steel 37 42 46 51 51 55 Kg/ Capita 58 CAGR +8% 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Source : JPC/CSO Low per capita consumption in the rural and semi urban areas
Indian Steel Industry Challenges Raw Material Infrastructure & Logistics Technology Highly Dependent on Imported Coking Coal & Scrap Poor Roads & Railway Infrastructure, Ports are poorly Developed Low Investment in R&D, still Dependent On high grade steel Rising Imports Low Per Capita Consumption Quality Steel Imports under concessional duty Rates from FTA Countries Rural Areas are having low per Capita consumption of around 12 kg. Quality steel is required to built Better infrastructure. Unexplored Rural Market Vast land area and 70% rural Population.
Opportunity for Innovative Initiatives Technology To leverage Global competitiveness R&D initiatives Raw Material, Energy, Emission & Waste Management Supply Chain Management Rural penetration High Cement to Steel Ratio Immense opportunity for Steel-Penetration Value from Volume development of Value-Added steel & Services Branding
JSW Steel Limited 23
JSW Group : Verticals.Expanding Presence across key infrastructure sectors Steel JSW Steel Limited Power JSW Energy Limited Cement JSW Cement Limited Aluminum JSW Aluminum Limited Infrastructure JSW Infrastructure Limited Services J Soft Solutions Limited Listed company JSW FOUNDATION
JSW Steel Limited At A Glance JSW Steel Limited ( JSW ) is the flagship company of JSW Group, part of the larger O P Jindal Group India s largest integrated steel Company in terms of installed capacity of 14.3MTPA* Focused steel manufacturer with integration across the value chain from iron ore to galvanized/galvalume and colour coated products Only flat steel producer in South India Largest producer of galvanized steel in India and largest Indian exporter of galvanized products with presence in over 100 countries across 5 continents Strategically located manufacturing facilities at Vijayanagar in Karnataka, Vasind and Tarapur in Maharashtra and Salem in Tamil Nadu Acquired 49.30% stake in Ispat Industries Limited (renamed as JSW Ispat Steel Ltd) having a steel manufacturing capacity of 3.3 MTPA with manufacturing facilities at Dolvi and Kalmeshwar in Maharashtra Has equity participation in Coal mining projects allotted by Government of India jointly with other industry players Wide spectrum of flat and long products Slabs to Colour Coated products Billets / Blooms to Rolled Long International Presence - Strategic presence in North & South America, CIS and Africa Mining: Iron Ore mining concessions in Chile Acquisition of Coking coal mines in the USA Coal/Iron ore mining concessions in Mozambique Investment in Plate and pipe mill in USA (JSW Steel USA) 25
JSW Steel 6th Amongst Top 35 World Class Steelmakers JSW Steel achieved the topmost ranking amongst Indian Steelmakers ahead of competitors like SAIL, Tata Steel, Essar Steel, and Vizag Steel JSW Steel achieved the highest rating of 10 on the following parameters Parameter Score Posco Conversion Costs; Yields 10 Expanding Capacity 10 Location in High-Growth Markets 10 Labor Cost 10 Bao Steel Severstal CSN NLMK Overall Ranking 6 JSW Steel SAIL Nippon Nucor Sumitomo Source: World Steel Dynamics (WSD) Ranking of top 35 World Class Steelmakers as on June 2012 28