Professional Documents
Culture Documents
Investor Presentation
November 2014
Agenda
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.
(Steel Capacity: 14.3MTPA )
business(Operational plant of ports. (Goa, Jaigarh, and
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
* Listed company
** USD/ ` = 61.6135 (RBI reference rate as on Sep 30, 2014) 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 added product capacities
manufacturing
in India process
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
Revenue
282 3,164 8,313 CAGR FY’02–14: 33%
(USD mn)
EBITDA
46 675 1,488 CAGR FY’02–14: 34%
(USD mn)
EBITDA/ton(1)
36 118 125 CAGR FY’02–14: 20%
(USD/ton)
Technology Corex Corex, BF Corex, BF, DRI Adopting industry leading technologies
(1) Calculated as consolidated EBITDA / Saleable steel, (2) From 31st March 2002 to 31st March 2014, (3) USD/ ` =
61.61 5
Combination of Organic and Inorganic growth
FY2016
Key Projects in progress/pipeline:
18 MTPA
Dolvi Works capacity expansion to 5 MTPA
Vijayanagar Works capacity expansion to 12 MTPA(3) 2014
Phase II of new Cold Rolling Mill (CRM-2) at Vijayanagar Works New CRM2—Phase I
4 MTPA—Pellet Plant(2)
0.2MTPA Electrical Steel facility at Vijayanagar Works 2013
1 MTPA—Coke Oven Plant(2)
14.3 MTPA post
Ispat merger Acquired 50% stake in
Vallabh Tinplate
2011 Acquired Welspun Maxsteel
Acquisition of 49.3%
2012
stake in Ispat
2009 HSM II Capacity
Expansion to 5 MTPA
2006 7.8 MTPA 2010
2004
3.8 MTPA JSW-JFE Strategic Partnership
Acquired SISCOL(1)
3.5 MTPA of HSM II
2008
Iron Ore mines Coal mining concessions in US
2002 2005 2007
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
(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
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
8
Strong and balanced Board comprising experts of
eminence & integrity
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
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
Has formed a sub-committee—“Capex Risk Evaluation Committee” to evaluate the risks associated
Committee
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
10
Agenda
11
A platform of strength and agility
1 Strong fundamentals to boost India steel demand
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
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
Leveraging locational advantage to increase market share strategically in the Southern and Western regions of India
15
4 Diversified Product Profile
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
16
Domestic market leader with strong export
5 presence
15% 16% JSW Export Turnover as Penetrating further to capture growing domestic
23% 25% % of Total demand with unique marketing strategy – unique
nationwide retail network of more than 450 outlets of
JSW Shoppe and JSW Explore
77% 85% 84% JSW Domestic Turnover
75% Maintaining leadership position in India – 13.2% share in
as % of Total
India in FY14
Ability to re-align sales effort and shift between
FY08 FY10 FY12 FY14 domestic and export market as per market conditions
Largest exporter of steel products out of India
Indian apparent steel use remained flat at 1.8% in CY13
Exports to high demand regions such as Asia, Middle
Global apparent steel consumption grew by 3.6% in CY13 East, Europe and the US – presence in over 100
JSW recalibrated its strategy and focused on ramping up countries
exports resulting into higher growth in volumes
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
Leveraging export presence center for steel solutions
Metro /
New product approvals for Original Equipment Just-in-time solution with in-house
Manufacturers (OEMs) and automotive customers Urban profiling lines and Value Added
Increase in value added products leading to incremental Services
growth in focus sectors and also facilitating import Franchisee Model
substitution
Focused on Retail Sales – increased reach and penetration
Urban / ‘JSW Shoppe’
Semi- Steel distribution
Significant growth in retail outlets (“JSW Shoppe”)
urban Enhanced customer experience
450
350
18
7 Focus on operational efficiency
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 Continuous Annealing Line (CAL-2) of 0.95 MTPA
department)
0.2 MTPA non-grain oriented Electrical Steel Project
Established long-term relationship with key domestic and
Capacity expansion from 10 MTPA to 12 MTPA by setting up
international suppliers
certain new facilities and debottlenecking/ modification of
Savings in procurement cost by negotiating firm prices for follow-on existing facilities
orders
50,000 TPA capacity Service Center to handle the products
… at low specific investment cost(1) of Electrical Steel Complex
Reduced specific investment cost/ton of capacity
Dolvi works
expansion shows cost efficiency
Capacity expansion from 3.3 MTPA to 10 MTPA to 5 MTPA
by setting up certain new facilities and debottlenecking/
modification of existing facilities
7.8 Mtpa 11 Mtpa Modification of Tunnel Furnace to replace natural gas with
3.8 Mtpa • FY 2009 surplus coke oven gas
• FY 2012
• USD 559/mt
• FY 2007 • USD 545/mt Modification of DRI plant to use coke oven gas as partial
• USD 550/mt
2.5 Mtpa replacement of natural gas
• FY 2006
• USD 682/mt Salem Works
1.6 Mtpa Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven
• FY 2003 and Turbo Generator
• USD 923/mt
Focus on low cost and returns accretive brownfield projects to capitalise on expected demand recovery
Able to leverage an acquisition to maximum value accretion through application of knowledge and experience
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 (CY13/FY14)(1)
(%)
31.2%
17.9% 19.4%
15.5% 14.9% 12.6% 12.0% 11.0% 10.9% 9.6% 8.0%
4.6% 3.0%
JSW Steel JSW Steel CSN Severstal Magnitogorsk Evraz Gerdau Tata Steel Hyundai Steel Steel Dynamics Arcelor US Steel ThyssenKrupp
(Consolidated) (Standalone) Iron and Steel Mittal
Total Debt/EBITDA
(x)
8.8x
7.6x
4.9x 5.0x 5.1x
3.8x 4.3x
3.1x 3.0x 3.5x 3.5x
2.3x 2.6x
JSW Steel JSW Steel Severstal Magnitogorsk Steel Gerdau Arcelor Mittal Evraz US Steel Tata Steel CSN ThyssenKrupp Hyundai
(Consolidated) (Standalone) Iron and Steel Dynamics Steel
JSW Steel JSW Steel CSN Severstal Tata Steel Steel Dynamics Gerdau ThyssenKrupp Evraz Group Hyundai Steel Magnitogorsk Arcelor Mittal US Steel
(Consolidated) (Standalone) Iron & Steel
Financials as of FY13 (FY ending December) for all peers except JSW Steel and Tata Steel (FY14 ending March) and
ThyssenKrupp (FY13 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
24
Key highlights – 2QFY15
25
2Q volumes – standalone
Crude Steel Production Saleable Steel Sales
11% 6% -2% 7%
YoY QoQ YoY QoQ
3.30 3.13 3.07
3.10 2.88
2.98
Domestic sales grew 10%QoQ vs. all India steel demand growth of 0.9%QoQ in 2QFY15
Share in all India steel export sales increased to 62% in 2QFY15 vs. 54% in 1QFY15
Share of Value-added & Special Products sales increased to 33% in 2QFY15 vs. 29% in 1QFY15
Sales to Auto sector grew 52%YoY and 13%QoQ
Cold-rolled products sales grew 75%YoY and 42%QoQ;
Coated products sales increased by 25%YoY and 9%QoQ
549 543
476 64% 62% 59%
29
New product development/approvals for Auto &
White goods
Steel Type: Micro-Alloyed Steel Type: High Strength Steel Type: High Strength
High Strength Steel Steel, 440 Mpa Steel Dual Phase, 590 Mpa
End use: Engine Bracket/ End use: Rail roof side inner/ End use: Front Frame/ Rear
Suspension Mounting Body Pillars cross members/ Twist Beams
Steel Type: Carbon Steel- Steel Type: Medium Carbon Steel Type: Ultra-low carbon
Coated Steel high strength steel, 340 Mpa
End use: Body panels/Side End use: Brake pad/ Web End use: Door Panels
Cabinet for White goods
30
2Q Financials – standalone
*Not Annualized
USD/ ` = 61.6135 (RBI reference rate as on Sep 30, 2014) 31
1H Financials – standalone
*Not Annualized
USD/ ` = 61.6135 (RBI reference rate as on Sep 30, 2014) 32
Operating EBITDA movement – standalone
` crore/ USD mn
$104
639 $14
89 $394
$363 2,430
(278)
2,234 (212)
($45)
(43) ($3)
($7)
Million tonnes
Volumes 2QFY14 2QFY15 1HFY14 1HFY15
Production* 0.35 0.41 0.69 0.81
Sales 0.39 0.41 0.72 0.81
` crore
USD mn
Particulars 2QFY14 2QFY15 1HFY14 1HFY15
Production (Tonnes) 215,224 2,24,387 424,847 4,45,123
36
2Q Financials – consolidated
Particulars 2QFY14 2QFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 13,866 2,250 14,859 2,412
Net Sales 12,796 2,077 13,692 2,222
Underlying EBITDA 2,348 381 2,812 456
Provision due to Coal blocks de-allocation - - 21 3
Operating EBITDA 2,348 381 2,791 453
Other Income 51 8 26 4
Finance Cost 756 123 855 139
Depreciation 803 130 851 138
Exceptional Items (851) (138) - -
Profit Before Tax (11) (2) 1,112 180
Tax 119 19 374 61
Share of Associates and Minority Interest 14 2 11 2
Profit after Tax (116) (19) 749 122
Diluted EPS (`)* (5.12) 30.63
*Not Annualized
USD/ ` = 61.6135 (RBI reference rate as on Sep 30, 2014) 37
1H Financials – consolidated
Particulars 1HFY14 1HFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 25,021 4,061 29,012 4,709
Net Sales 22,937 3,723 26,759 4,343
Underlying EBITDA 4,227 686 5,424 880
Provision due to Coal blocks de-allocation - - 21 3
Operating EBITDA 4,227 686 5,403 877
Other Income 70 11 80 13
Finance Cost 1,474 239 1,699 276
Depreciation 1,553 252 1,646 267
Exceptional Items (1,713) (278) - -
Profit Before Tax (442) (72) 2,138 347
Tax 87 14 756 123
Share of Associates and Minority Interest 32 5 23 4
Profit after Tax (497) (81) 1,405 228
Diluted EPS (`)* (21.25) 57.44
*Not Annualized
USD/ ` = 61.6135 (RBI reference rate as on Sep 30, 2014) 38
Net debt movement – consolidated
` crore/ USD mn
$338
2,083
$5,822 $44 $5,803
35,870 273 35,756
(2,450) (20)
($398) ($3)
Net Debt* New Loan Taken Repayments Fx Impact Movement in Net Debt*
as on Jun'14 FD / MF as on Sep'14
40
Global economy
60
55
2014 global growth projection revised down to 3.3%
PMI
Recent print suggests moderation in US activity levels post 50
strong growth in 2QCY14
45
Feeble consumption, lower exports and very low inflation
Jan-12
Jan-13
Jan-14
Jul-11
Jul-12
Jul-13
Jul-14
Apr-11
Apr-12
Apr-13
Apr-14
Oct-11
Oct-12
Oct-13
in Eurozone do not bode well
US Eurozone Japan China
After a sharp decline in 2QCY14 Japanese demand is likely
to sustain moderate growth
15
Chinese government re-affirms commitment to prevent a 10
IIP (% YoY)
sharper slowdown, but no growth acceleration in sight 5
Jul-11
Jul-12
Jul-13
Jul-14
Jan-12
Jan-13
Jan-14
Apr-11
Apr-12
Apr-13
Apr-14
Oct-11
Oct-12
Oct-13
US Eurozone Japan China
Global economic recovery hinged upon US consumption, policy support in Europe and China
6.1
2015F (Oct'14) 80
6.7
6.6
6.0
60
40
4.0
4.0
20
3.3
3.4
3.3
3.1
3.0
2.9
1.5
0
1.0
1.9
Mar-12
Oct-11
Sep-09
Sep-14
Nov-13
Jul-10
Jun-13
Aug-12
Dec-10
May-11
Feb-10
Apr-09
Apr-14
Jan-13
EU US MENA India China
Mar-14
Dec-12
Dec-13
Sep-13
Sep-14
Jun-13
Jun-14
Weak demand and rising steel exports from China an area of concern
20.5 21.1
18.5 18.6 1QFY15
2QFY15 2QFY15 Crude Steel production increased by 2.6%QoQ
2.2
Improvement in overall activity levels seem to be
-11.1%
getting right-shifted - while medium term business
1.7 1QFY15
sentiment remains strong, expected revival of
1.4 2QFY15
1.3 investment cycle now appears likely in FY16
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.
44
Thank you
45