Post on 10-Apr-2018
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Consolidated Financial ResultsQuarter Ended 30th June 2010
Analyst Meet Mumbai
1
A global player A product pioneer
A Corporate Citizen
,
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
2
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
3
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Tata Steel Group Safety Performance
Lost time injury frequency rate was 0.65,
a 22% improvement over average FY10
On track to achieve our vision target of 0.4
In the June10 quarter, 1 tragic fatality
Lost Time Injury Frequency (LTIF)
3.06
2.35
2.1
2
2.5
3
3.5
4
occurred at Scunthorpe in UK
H&S teams are being established across
the group to further accelerate learning and
improve risk control systems
1.31
0.95
0.65
0
0.5
1
1.5
YE Mar'06 YE Mar'07 YE Mar'08 YE Mar'09 YE Mar'10 QE Jun'10
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Group Financial Highlights Quarter Ended
30th June10Deliveries Turnover US$ MnMn T
5.356.05
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
Jun'09 Jun'10
5,016
5,856
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jun'09 Jun'10
5
EBITDA PAT *
Conversion Rate USDINR 46.44 ; * PAT after Minority Interest and Share of Associates
US$ Mn US$ Mn
44
975
-
200
400
600
800
1,000
1,200
Jun'09 Jun'10 -476
393
-600
-500
-400
-300
-200
-100
-
100
200
300
400
500
Jun'09 Jun'10
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
6
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70
80
90
100
110
120
130
60
65
70
75
80
85
90
95
100
Global steel market has returned to pre-
crisis levels due to ChinaGlobal Crude Steel Consumption & Capacity UtilisationMt Per cent
Capacity Utilisation (RHS)
2007-08 2008-09 2009-10
Macro economy
Global recovery has continued, butsigns of slowdown in China
Recovery in Europe has continuedbut has been slow
Indias growth remains robust
Global steel market
2010-11
Crude Steel Consumption (LHS)
40
60
80
100
120
140
160
Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10
EU27 CIS
USA China
India
60
Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10
55
Source: World Steel Association
Crude steel production (Index, April 2007 = 100)
45% YoY in the June10quarter, with continued strength inChina and India and end ofdestocking in mature markets
Steel using sectors likely to slow incoming quarter as inventoryadjustment boost and fiscal stimuluswanes
Increased uncertainty around near-term outlook in China and furtherslowdown is expected with policy
tightening having an impact 7
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200
400
600
800
1,000
1,200
1,400 India (Mumbai)
Chinese domestic (incl VAT)
USA domestic (FOB Gulf)
Russia export (FOB Black Sea)
Germany domestic
HRC price, US$/tonne
Global steel prices have declined in recent
months Price developments
Steel spot prices have eased in
recent months
Reflects signs of a slowdown in
Jan-07 Jan-08 Jan-09 Jan-10
Source: CRU
Rebar (US$/tonne)
200
400
600
800
1,000
1,200
1,400
1,600
Jan-07 Jan-08 Jan-09 Jan-10
East As ia import (CFR)
Chinese domestic (incl VAT)
USA domestic (FOB Midw est)
CIS export (FOB Black Sea)
Germany domestic
na, seasona wea ness an
market uncertainty
Indian steel prices recently have
shown an uptick
8
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0
50
100
150
200
250
- - - - - - - -
Indian spot CIF China
Australia contract CIF China
Australia contract FOB
Iron ore fines price (US cents/tonne)^
Raw material contract prices higher in
September quarter but spot prices lower Raw material developments
Quarterly iron ore contracts rose in
June quarter and further in
September quarter
Iron ore spot prices have stabilised
in recent weeks, following large
$140/tonne*
- - - - - - - -
0
50
100
150
200
250
300
350
400
450
Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10
Spot FOB Australia
Contract FOB Australia
Source: CRU, Tata Steel Group
Premium hard coking coal price (FOB Australia) (US$/tonne)
*Spot price early August. ^Not adjusted for quality or other premiuma s rom pr pea u rema n
below September quarter contract
prices
Quarterly coking coal contract price
also higher in September quarter
Coking coal spot price at levels
slightly below contract price
9
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
10
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European economic environment remains
uncertain
-8
-6
-4
-2
0
2
4
6
UK Spain
Germany Eurozone
European GDP (quarterly, Y/Y % change)Mt
Economic Update
Recovery is continuing but has been
tentative so far
Southern Europe lagging Northern
Europe
Recovery so far has benefited from
Source: Thomson Datastream, Oxford Economics
Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
0
20
40
60
80
100
120
140
160
0 2 4 6 8 10 12
2010 2015
European Public Debt and Fiscal Deficits (% of GDP)temporary boost from inventoryadjustment and previous fiscal stimulus
Significant headwinds remain
Sovereign debt and fiscal crisis not fully
resolved and large spending cuts
pending/ underway
Unemployment is high
Bank lending remains weak
Public Debt (%)
Fiscal deficit (%)
UKUK
Germany
Greece
Greece
SpainGermany
Spain Deficit Reduction Plans
11
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European steel consuming sectors are
recovering but from a low base
20
30
40
50
60
70
Engineering
Automotive
Purchasing Managers Index EU sectorsAbove 50 = Expansion
Below 50 = Contraction
End-use sectors recovering, butfrom a low base
UK auto production is forecast to grow
by 24% in 2010
EU industrial engineering continues to
recover
20
30
40
50
60
70
00 01 02 03 04 05 06 07 08 09 10
UK
EU
Purchasing Managers Index UK & EU construction
Source: Markit
Construction remains generally weak
Macro risks
Slowdown in China will impact
European engineering exports
Construction at further risk from
Government spending cuts
Above 50 = Expansion
Below 50 = Contraction
12
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European steel market stronger in the June
quarter, but has softened in September quarter
1.4
1.6
1.8
2.0
2.2
2.4
2.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
European Steel Service Centre Physical Strip Product StocksMt Months supply
Monthssupply
Stock levels
Market update
European steel consumption was up
33% YoY in June quarter
Key steel consuming sectors, except
construction, are recovering
Source: EASSC, Eurofer
Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09
0
1
2
3
4
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10
0
5
10
15
20
25
Imports into EU27Share (%)Imports (mt)
Importshare
Imports
oc s rema n ow n a so u e erms
European steel prices have declined in
recent months
Imports
Imports into EU remain relatively low
and import share has fallen
EU27 remains a net exporter, which
helping to support capacity utilisation
13
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Turnaround Story Tata Steel Europe
Production Deliveries Mn TMn T
2.84
3.74
0.00
0.50
1.00
1.502.00
2.50
3.00
3.50
4.00
Jun'09 Jun'10
3.11
3.71
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Jun'09 Jun'10
32%32%19%19%
14
Turnover EBITDA
Conversion Rate USDINR 46.44
US$ Mn US$ Mn
3,279
3,814
-
500
1,000
1,5002,000
2,500
3,000
3,500
4,000
4,500
Jun'09 Jun'10 -399
293
-500
-400
-300
-200
-100
-
100
200
300
400
Jun'09 Jun'10
US$
535
Mn
US$
535
Mn
US$
692
Mn
US$
692
Mn
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Operating Performance Trend Tata Steel
Europe
5.2 4.9
3.4
2.7
2.8
4.0 4.2 3.7 3.7
6.4 5.6
4.3
3.63.1
3.8 3.7 3.8 3.7
7,096
7,049
5,623
3,825
3,279 3,611 3,608 3,680 3,814
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Jun'08 Sep'08 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
Production, Deliveries & Turnover
15
Production (Mn T) Deliveries (Mn T) Turnover (US$ Mn)
802
1044
380
-308-399 -388
142
354 293433
758
88
-1,318
-715-831
-152
38 70
-1500
-1000
-500
0
500
1000
1500
Jun'08 Sep'08 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
EBITDA (US$ Mn) PBT(US$ Mn)Conversion Rate USDINR 46.44
EBITDA & PBT
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Quarterly Trend in Tata Steel Europe
Raw Materials Costs Per TonneAverage Selling Prices US$ / T US$ / T
12%12%9%9%
319356
0
50
100
150
200
250
300
350
400
' '
9241,008
-
200
400
600
800
1,000
1,200
' '
16
Deliveries Mn TUS$ Mn
Conversion Rate: GBPUSD 1.4569 & USDINR 46.44
EBITDA
Drop In EBITDA due to:
a) IJmuiden Fireb) Adverse Currency
movement due to depreciation in theJun10 quarter
354
293
0
50
100
150
200
250
300
350
400
Mar'10 Jun'10
17%17%
3.8 3.7
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Mar'10 Jun'10
2%2%
ar un
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Operating Performance Tata Steel Europe
Long ProductsStrip Products Distribution &Building
1.2
1.81.6
0.2
0.4
0.6
0.8
1
1.21.4
1.6
1.8
2
Deliveries (MnT)
0.91.0
1.1
0.2
0.4
0.6
0.8
1
1.2
Deliveries (MnT)
0.8 0.81.0
0.10.2
0.2
0.4
0.6
0.8
1.0
1.2 Deliveries Exc TCP(MnT) TCP Sales
0.91.0
1.0
17
Steel Capacity Utilization
Capacity Utilization is restated for the previous quarters excluding production at TCP
0
Jun'09 Mar'10 Jun'10
0
Jun'09 Mar'10 Jun'10
53%
80%90%
0%
10%
20%
30%
40%
50%60%
70%
80%
90%
100%
Jun'09 Mar'10 Jun'10
0.0
Jun'09 Mar'10 Jun'10
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Positioning for the future: One Company-
Tata Steel Europe Customer First
Group Marketing function established
Marketing sales and distribution teamsaligned directly with key market sectors
Supply Chain Project
Customers & markets
Sales &marketing sector teams
18
an- uropean n egra e supp y c a n
optimisation
Operations Efficiency
Steel production organised around three
hubs with manufacturing optimisedthroughout Europe
Pilot launched in Long EU operations hub
Strip MLE Strip UK Long EU
Supply Chain
Operations hubs Implementation in a phased and structured manner
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Outlook for Tata Steel Europe
Long-term recovery in most steel using sectors is continuing, particularly engineering
and automotive. Outlook for construction remains weak in the near term
However, some softness currently being experienced in European apparent demand
and steel prices due to summer period and market uncertainty. Meanwhile, European
19
sovereign debt / banking sector concerns and Governments aggressive fiscal cuts
present an additional risk to the outlook
Raw material contract prices have risen for both iron ore and coking coal for the
September quarter. Spot prices are currently below contract prices, however the
outlook remains uncertain 19
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
20
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Indian Steel Consumption Vs Production
Indian Market update
Indian steel using sectors remain strong
World Steel forecasts Indian apparent
finished steel consumption to rise by13.9% to 63 mmt in FY10
Domestic market remains tight as supply
response remains constrained
Indian & South East Asian Steel Market
0
2
4
6
8
10
12
14
16
Production Consumption
Million tonnes per quarter
Up 7.2 per cent Y/YDown 5.2 per cent Q/Q
Up 16.6 per cent Y/YUp 4 per cent Q/Q
Mar 10 Jun 10 Jun 09 Jun 09Jun 10Mar 10
21Source: Tata Steel Group
India continues to be net importer of steel
South East Asian Market update
Recovery in activity continues in South
East Asia
Chinese steel market is showing clear
signs of slowdown
21
Indian Steel Imports Vs. Exports
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Imports Exports
Million tonnes per quarter
Up 80 per cent Y/YUp 44 per cent Q/Q
Down 21 per cent Y/YDown 48 per cent Q/Q
Mar 10 Mar 10Jun 10 Jun 10Jun 09 Jun 09
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Operating Performance Tata Steel India
Production DeliveriesMn T
Mn T
1.54 1.69 1.59
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Jun'09 Mar'10 Jun'10
1.421.70
1.40
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Jun'09 Mar'10 Jun'10
22
US$ Mn /US$Turnover EBITDA & EBITDA/T*
Conversion Rate USDINR 46.44 ; *EBITDA / T excludes Profit on Sale of Investments
US$ Mn
1,209
1,5801,411
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jun'09 Mar'10 Jun'10
385
775
638
269
390453
-
100
200
300400
500
600
700
800
900
Jun'09 Mar'10 Jun'10
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Steel Division Tata Steel India
Flat Products Long Products
848
946
785
637
733 803
600
700
800
900
1000
570
753
614601622 671
500
600
700
800
23
0
100
200
300
400
500
Jun'09 Mar'10 Jun'10
Sales Tonnage ('000 T) Net Realisation (US$/T)
0
100
200
300
400
Jun'09 Mar'10 Jun'10
Sales Tonnage ('000 T) Net Realisation (US$/T)
Conversion Rate USDINR 46.44
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Ferro Alloys & Minerals Division Tata Steel
India Capacity Utilization rates of Stainless Steel mills &
Fe Cr production has increased YoY and QoQ.
However, due to seasonal production cuts and
restricted demand in China , drop in demand is
847
1,091 1,0941,152
1,437
16
25
30
44
20
25
30
35
40
45
50
600
800
1000
1200
1400
1600
24
witnessed in recent times. Demand is expected to
revive from Sep10 onwards
Ferro Chrome prices are likely to remain firm , with
an expected increase in prices towards end
Sep10
Conversion Rate USDINR 46.44
309 347
406
302
4
-
5
10
15
0
200
400
Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
Ferro Alloys Deliveries ('000t)
Ferro Alloys FAMD Ferro Chrome NR (US$/t)
Ferro Alloys FAMD Operating Profit (US$ Mn)
Ferro Chrome NR in Jun10 is 109 c/lb
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Key Events & Awards
CSR Excellence Award 2010 by ASSOCHAM (Associated Chambers of Commerce &
Industry of India)
FE- EVI Green Business Leadership Award in the iron & Steel category for the year
2009-10
Five HR awards by Asias Best Employer Brand Awards 2010 for Talent
25
Management, Best HR Strategy in line with Business, Excellence in Training, CEO with HR
Orientation and HR Leadership Award
Rashtriya Khel Protsahan Puruskar-2010 award for outstanding contribution in the field of
sports in the category of Financial Support for Sports Excellence
Received prospecting license for iron ore in Ankua region in Jharkhand for our
expansion programmes
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Operating Highlights South East AsiaDeliveries EBITDANat Steel
Mn T
US$ Mn
0.54 0.570.61
-
0.10
0.20
0.30
0.40
0.50
0.60
0.70
' ' '
9 10
20
-
5
10
15
20
25
' ' '
26Conversion Rate USDINR 46.44
Tata Steel Thailand
Deliveries EBITDAMn T US$ Mn
0.26
0.340.30
-
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
Jun'09 Mar'10 Jun'10
1
3
12
-123456789
10111213
Jun'09 Mar'10 Jun'10
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Outlook Tata Steel India & S.E. Asia
Tata Steel India
Companys ambitious 3 Mtpa Brownfield expansion at Jamshedpur is on schedule
Domestic steel demand shows strong momentum driven by strong recovery in steel intensive
sectors such as auto, construction and infrastructure.
Indian steel market remains tight in 2010
Declining Chinese exports in 2H 2010, raises higher possibility of regional price rise on tighter
27
demand and supply balance
Natsteel
Construction activity in Singapore is expected to continue steady recovery, with activity forecast
up 4.7% in 2010 and 8.0% in 2011
Thailand
Thailand shows recovery despite the lingering political crisis. The export led pattern of growth and
continuing rise in private sector investment should result in expansion of output by supporting
industries such as auto parts makers and component suppliers
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Group Financial Performance Q1 FY11
Tata Steel TSEurope
NSH* TSTH Tata SteelGroup(**)
Deliveries (Mnt ) 1.399 3.710 0.609 0.297 6.049
Turnover 1,411 3,814 375 188 5,856
EBITDA 638 293 20 12 975
Figures in US $ Mn unless specified
29
(*) NSH shows Steel Operations (**) Includes other JVs, Subsidiaries & share of profit of Associates of the Tata Steel Group (***) Conversion
Rate USDINR 46.44
EBITDA margin (%) 45.2 7.7 5.3 6.4 16.6
EBITDA / tonne (US$) 456 79 33 40 161
PBT 508 70 8 2 601
PAT 340 33 11 1 393
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Group EBITDA Trend
44 87 732 1,148 975
US $ Mn
800
1,000
1,200
30
Reported EBITDA
Conversion Rate : USDINR - 46.44
4 887 125
440 79
646
,971
-
200
400
Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
Profit on Sale Of Investments(US$ Mn) Operational EBITDA (US$ Mn)
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EBITDA Trend Tata Steel India
500
600
700
800
900385 430 521 775 638
US $ Mn
31
4 18113 4
381 430503
662 634
-
100
200
300
400
Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
Profit on Sale Of Investments(US$ Mn) Operational EBITDA (US$ Mn)
Reported EBITDA
Conversion Rate : USDINR - 46.44
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EBITDA Analysis Tata Steel Europe
Q4 FY10 Q1 FY11
Reported EBITDA 354 293
Add/(Less): Translation impact Q-o-Q on account ofdepreciation of``` - 42
Add: Impact on account of fire at IJmuiden in Jun10quarter (Increased Maintenance)
- 15
Figures in US $ Mn unless specified
32
Add/(Less): Loss/(Gain) Foreign Exchange RevaluationImpact on Loans
(6) 40
Underlying Operational EBITDA 348 390
Deliveries (Mn T) 3.8 3.7
Underlying Operational EBITDA /T ($) 92 105
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Group Debt PositionUS $ Mn
11,434
Gross Debt Net Debt
9,55111,804 9,843
774 935
10,000
12,000
14,000
522 644
8,000
10,000
12,000
(*) Others include JVs, Subsidiaries & share of profit of Associates of the Tata Steel GroupConversion Rate : USDINR - 46.44
33
5,435 5,743
, ,
-
2,000
4,000
6,000
,
Mar'10 Jun'10
Tata Steel India Tata Steel Europe Others
4,368 4,722
, ,
-
2,000
4,000
6,000
Mar'10 Jun'10
Tata Steel India Tata Steel Europe Others
Increase in GrossDebt primarily onaccount of workingcapital financing
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Gross Debt Movement & Net Debt Position
34Cash & Cash Equivalents include current investments
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Pensions- Tata Steel EuropeSurplus Pension Funds BSPS & SPH
US$ Mn
636681
646
388
268
200
300
400
500
600
700
800
35
Asset Mix in BSPS
Aggregate size of BSPS as on Jun10
quarter : 11 Bn 28% 29% 30% 28% 27%
4% 4% 4% 5% 6%
66% 64% 64% 64% 65%
2% 3% 2% 3% 2%
0%
20%
40%
60%
80%
100%
120%
Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
Equities Real estate Bonds Cash
0
100
Jun'09 Sep'09 Dec'09 Mar'10 Jun'10
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
36
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Financing Portfolio & Capital Raising
Equity RaisingEquity Raising Raised `1,069.20 Crs (US$ 230 Mn) through preferential allotment issue of
shares and warrants to Tata Sons in July10
Debt
Pre/Repayment
Debt
Pre/Repayment
Tata Steel Europe prepaid 112.5 Mn in May10
Repaid
`1,020 Crs (US$ 220 Mn) in Q1 FY11
Fund RaisingFund Raising
Contracted US$ 350 Mn loan for working capital purposes
Finalized commitment to raise ` 3,000 Crs ( US$ 646 Mn), 20 year Non
Convertible Debentures to fund the rowth ro ects
37
Steps taken to refinance part of Tata Steels Group debt
Portfolio
Review
Portfolio
Review
NatSteel Holdings Pte. Ltd. has sold its entire 27.03% stake in Southern Steel
Berhad, Malaysia to Signaland Sdn Bhd at a total consideration of ~US$ 72 Mn
Other
Developments
Other
Developments
RML is raising capital of A$ 337 Mn through private placement of ~A$ 102 Mnand non- renounceable rights issue of A$ 235 Mn
Tata Steel maintains its holding at the pre-rights level of 21.15% by subscribing to
its share in private placement and the rights issue at an investment of around A$
72 Mn
RML is taking steps which will find long term solutions to logistics
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Agenda
Introduction and Consolidated Highlights
Global Business Environment
Performance of European Operations
Performance of Indian and South East Asian O erations
Group Financial Performance
Financing Portfolio and Capital Raising
Business Outlook
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Business Outlook
Steel market fundamentals to remain cautious in 2H depending on Chinese
consumption. Modest recovery in steel pricing in end 2010 into 2011 as Chinese
demand is expected to improve due to reversal in policies and new investments made
US still in recovery mode and signs of regional weakness remained in Europe
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A sustained period of high, volatile raw material prices is likely
Indian steel demand remains robust backed by strong GDP growth forecast of +8%.
Auto demand is expected to be 18-20% higher in FY11
Singapore & Thailands economy remain on track
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Thank You
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