Global Outlook to be a year of Challenges. Unemployment rate (% of total labor force) GDP Growth Est. for 2009 (% change)

Transcription

1 Q3, FY 2009

2 Agenda 2

3 Global Outlook % Fall in Baltic dry and Commodity Indices (Oct-Dec 08) Unemployment rate (% of total labor force) GDP Growth Est. for 2009 (% change) 2009 to be a year of Challenges Source: IMF/Bloomberg/ UN report on WESP

4 Global Economy TED Spread Emerging market sovereign bond spread (%) bps TED spread is the difference between the interest rates on interbank loans and short term U.S. government debt ("T-bills"). Central Banks Have Responded With Coordinated Global Rate Cuts IIP growth still positive for India and China % YoY (Nov/Dec08) (%) Glimmers of Hope: Improving liquidity, risk appetite, reduced interest rates and +ve IIP growth for Chindia Source: Bloomberg, IMF, Fxstreet.com 4

5 Economic Stimulus package - Worldwide Total Stimulus Package amounts to ~ 2.6% of World GDP & more tranches could follow 5

6 Steel Scenario 6

7 Apparent steel demand to recover Supply side Correction 30% fall from the peak level Fall in Steel Prices > 50% from the peak level ($/ton) 30% 55% 51% 55% World crude steel production 2008 (MnT) China : Dealer Inventories and HRC Prices Demand seems to recover in China RMB/t 0,000 tonnes China: Crude steel production (Mnt) Supply side measures, Steel price correction & bottoming out inventory set the stage for demand improvement Source: IISI/SBB/Mysteel 7

8 Margins poised to improve Raw Material spot prices ($/ton) Price fall arrested $/ton 55% 63% 65% 60% 50% Coking coal contract prices ($/ton) Iron ore contract prices ($/ton) Fall in spot raw material prices, expected correction in contract prices & arrest of finished steel price decline to improve margins for steel companies. Source: IISI/SBB/Bloomberg 8

9 INDIA: Govt. Measures (Oct-Dec08) Govt. takes proactive measures to support steel industry 9

10 India: Steel Demand-Supply Scenario Crude Steel Production (MnT) Imports of finished steel (Mnt) Exports of finished steel (Mnt) Apparent Finished Steel Consumption (Mnt) Declining attractiveness of import will lead to higher demand for Indigenous steel Source: IISI/JPC 10

11 Performance highlights 11

12 Highlights Q3 FY09 Particulars (YoY) Q3 Volume : Crude Steel Production 18 % : Saleable Steel 18 % Net Sales 1 % Blended : Sales Realisation 16 % : Cost of Production 51 % EBITDA Margin 15.3 % EBITDA before exceptional items Forex Loss Net Profit / (Loss) Rs Cr. Rs.. (177) Cr. Rs.. (128) Cr. Weighted Avg. Cost of Borrowing 8.29% 12

13 Production Q3 FY09 17% 14% 0% + 20% YoY% QoQ% YoY% QoQ% % 22% YoY % QoQ % Q3 '08, Q2 '09, Q3 '08, Q3 '09, Q3 '08, Q3 '09, Q2 '09, Rolled : Flat Q3 '09, Rolled : Long Q2 '09, % + 19% + 4% + 25% Q3 '08, YoY% QoQ% Q3 '09, Q2 '09, Q3 '08, 0.19 YoY% Q3 '09, QoQ% Q2 '09, Crude Steel All fig. in Million Tonnes 0 CR / CRCA 0 GI / GL 13

14 Saleable Steel Sales Q3 FY09 32% 10% + 14% + 52% YoY % QoQ % YoY% QoQ% % 15% Q3 '08, YoY % QoQ % Q3 '09, Total Sales Q2 '09, Q3 '08, Q3 '09, HR Coils & Plates Semis Q3 '08, Q3 '09, 0.06 Q2 '09, % 70% YoY % QoQ % Q2 '09, Q3 '08, Rolled : Long Q3 '08, 0.22 Q3 '09, Q2 '09, % + 12% YoY% QoQ% Q3 '09, Q2 '09, Value Added (CR/GI/PPGI) All fig. in Million Tonnes 14

15 Sales Realisation v/s Cost of Production Q3 FY % 25% + 51% 14% YoY% Q3 '08, Q3 '09, QoQ% Q2 '09, YoY % QoQ % 20,653 31,193 36,198 FX Loss, 1747 FX Loss, Cost, Cost, Cost, FX Gain, Loss, 179 Q3 '08 Q3 '09 Q2 '09 Blended Realisation (Rs. / t) Blended Cost (Rs. / t) 15

16 Iron Ore Price Movements Q3 FY09 52 % 63 % Rs./Ton YoY % QoQ % Q3 '08, 2042 Q3 '09, 982 Q2 '09, 2665 QoQ YoY Rs / t cs 3,693 1,705 Total (Rs Cr) Q3 08 Q3 09 Q2 09 China FOB ($) % Change 59 % 53 % 0 16

17 Operating Parameters (Vijayanagar) Q3 FY09 8% 2% Own Bought Rs per t cs Total (Rs Cr) Cost Impact QoQ YoY 527 1, MT / t Q3 '08, 680 YoY% Q3 '09, 628 Fuel Blast Furnace QoQ% Q2 '09, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 45.48% 54.52% 5.80% 94.20% 33.70% 66.30% Q3 '08 Q3 '09 Q2 '09 Coke Consumption Rs per t cs Total (Rs Cr) Cost Impact QoQ YoY 1,368 1, Rs per t cs Total (Rs Cr) Cost Impact QoQ YoY 8 (1) 0.53 (0.07) Kg / t Q3 '08, % 9% YoY % QoQ % Q3 '09, 309 Q2 '09, 340 M 3 / t of LS Q3 '08, % + 31% YoY % QoQ % Q3 '09, 118 Q2 '09, 90 Rs per t cs Total (Rs Cr) Cost Impact QoQ YoY Fluxes Consumption Sinter + Bfc 0 LD Gas Recovery 17

18 Standalone Financials Q3 FY09 Rs. Cr. Q3 FY 09 Q3 FY 08 Turnover 3, , EBITDA before exceptional items EBITDA Margin 15.3 % 29.0 % EBITDA Cash Profit Profit Before Tax (190.72) Net Profit (127.50) EPS : Diluted (8.93)

19 Subsidiary Performance 19

20 Operational Performance - USA PRODUCTION (NT) SALES (NT) Q3 FY 09 YTD Dec 08 Q3 FY 09 YTD Dec 08 Plate Mill 47, ,630 27, ,875 Pipe Mill 27, ,560 28, ,566 20

21 Financial Performance - USA $ Mio Particulars Q3 FY 09 YTD Dec 08 Turnover EBITDA + Other Income % % Cash Profit Profit Before Tax (5.18) Profit After Tax (2.78)

22 Financials Q3 FY 09 Rs. Cr. Particulars JSW Steel Ltd (Standalone) JSW Steel Ltd (Consolidated) Total Income 2, , EBITDA before exceptional items Cash Profit Profit Before Tax (190.72) (265.30) Profit After Tax (127.50) (187.83) 22

23 Adj Long Term Debt Gearing - Standalone Rs. Cr. 11,000 9,000 Adj Long Term Debt & Networth 9, FX Loss Rs. Cr , , , X 3 7,000 5,000 3,000 1,000 3,944 5,231 FCL RTL 7, , , , ,978 3, Adj LT Debt Networth (1,000) Standalone Gearing of 1.20 Q4 08 Q1 09 Q2 09 Q3 09 Wt Avg Cost of Debt (%) FD & MF (Rs. Cr.) ,068 4,480 5,073 5, Q4 '08 Q1 '09 Q2 '09 Q3 ' D:E Adj LT Debt/EBITDA RTL FCL FX LOSS 23

24 Adj Long Term Debt Gearing Consolidated 15,000 13,000 11,000 Adj Long Term Debt & Networth 1,289 FX Loss ,271 12, ,844 1,064 14,153 1,289 X Rs. Cr. 9,000 7,000 5,000 3,000 1,000 7,563 5,301 FCL RTL 8,049 Rs. Cr ,204 7,864 7,650 7, (1,000) Adj LT Debt Networth Consolidated Gearing of 1.75 Q4 08 Q1 09 Q2 09 Q3 09 Wt Avg Cost of Debt (%) FD & MF (Rs. Cr.) ,096 4,515 5,130 5,301 0 (29) 1000 Q4 '08 Q1 '09 Q2 '09 Q3 ' RTL FCL FX LOSS D:E Adj LT Debt/EBITDA 24

25 Project Commissioning Schedule Major Projects Original Schedule Revised Schedule 25

26 Focus : Rural-Market Coated Products Q-1 Q-2 Q-3 DOMESTIC 42% Green-Revolution ~ Rural prosperity 39% 35% Q-3, Domestic Sales up + 14% Y-o-Y F O C U S Rural-Marketing 34% 34% 33% Q-1 Q-2 Q-3 F.Y F.Y % EXPORTS 66% 67% Global-Integration ~ Exports 65% F O C U S 61% Strategic Q-1 Q-2 Q-3 Ref. : JSW Steel Limited 58% 26

27 JSW Steel - Marketing Strategy : Today Automobile High Cost Housing & Real Est. Capital Expenditure Pvt. Spending Capital Expenditure Govt. / Public Spending Rural Demand Low & Middle Income Housing Exports Currency Depreciation Import substitution Maximising sales of Value-Added products Capitalising Rural demand Focus on bulk project orders Expanding exports across geographies 27

28 PROJECT UPDATES 28

29 3 MTPA Expansion: Project Status Expected commissioning in Feb/March 2009 BOF-CCP Integrated trials on the verge of completion. Coke Oven All 4 Batteries successfully commissioned Blast Furnace Integrated trials going on and blowing by Feb 09 Wire Rod Mill: Commissioned in Nov. 08 Bar Rod Mill: Exp. Commissioning in Mar 09 Sinter Plant Commissioned in Aug. 08 Ready to feed Blast Furnace Lime Calcinations Plant Unit already commissioned, ready to feed SMS. 29

30 BLAST FURNACE Largest Furnace in India Volume = 4019 m3 Capacity of 2.8 MTPA. Technology supplier : Siemens VAI,UK. Furnace Proper completion has taken 540 days to complete Refractory and other Testing jobs. 30

31 BLAST FURNACE : FURNACE TUYERE PLATFORM The 2.8 MTPA furnace has 36 Tuyeres Blowing Staves are CI & Copper The SGP is RASA type 3131

32 BLAST FURNACE: CONTROL ROOM 32

33 SMS : Converter 1 Supplier : SMS DEMAG / SMS MEVAC Capacity : 2.81 MTPA 2 * 175 Tons Converter 33

34 BILLET CASTER- RUNOUT Supplier : SMS Demag Capacity : 1.7 MTPA Type : 8 Strand Max Speed : 3.2 m/s 34

35 SLAB CASTER- RUNOUT Technology : SMS Demag / Concast AG Capacity : 1.6 MTPA Max Speed : 2.5 m/s Slab Size : 2200 mm Wide/ 300 mm Thick 35

36 LCP : KILN Supplier : Cimprogetti Capacity : 300 TPD 36

37 SINTER PLANT: SINTER MACHINE Supplier : Outokumpu, Germany Capacity : 2.3 MTPA Area : 204 m2 37

38 WIRE ROD MILL Supplier : MORGAN Capacity : 0.6 MTPA Product Mix : Plain Rod : mm Rebar : 6,8 & 10 mm 38

39 COKE OVEN : COKE PRODUCT Supplier : MECC,China Capacity : 1.5 MTPA (Largest in its kind) Type : Recovery / Stamp Charged 4 Batteries (4 * 56 ovens) 39

40 HSM 3.5 MTPA: FINISHING MILL FOUNDATION Supplier : MHI, Japan Capacity (Phase 1) : 3.5 MTPA Size : L = 4.6 to 11 m W= 900 to 2150 mm T = 220 to 260 mm Thick Slab Wt Max : 36 T 40

41 HSM 3.5 MTPA : FURNACE AREA 41

42 Pouring of hot metal 42

43 Hot Metal in Converter 43

44 Hot Metal in Converter 44

45 Project Progress: Downstream 30 MW Power Project : Expected commissioning by March 2009 Railway Siding: Expected commissioning by FY

46 Consolidate position in domestic steel industry with focus on enhancing capacities at competitive cost Way Forward Sustainable GROWTH...Creating VALUE Raw material Integration to protect from cost fluctuations Enhance Value through Rich Product mix. Achieve significant position in domestic market. Strong financials to support Growth 46

47 Q & A 47

48 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. 48