JSW Steel Limited€¦ · and GGBS cement (Operational plants’ capacity: 6MTPA) 4 JSW Steel –...
Transcript of JSW Steel Limited€¦ · and GGBS cement (Operational plants’ capacity: 6MTPA) 4 JSW Steel –...
JSW Steel Limited Investor Presentation February 2016
2
Agenda
Overview Value Proposition Performance Overview
Business Environment
3 * Listed company
** USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
JSW Group – overview
USD 11 billion group with presence across the core sectors
JSW Steel 3,762
JSW Energy 2,103
As on Dec 31, 2015
Group market cap ($5,865 mn**)
Cash Profit= PAT + Depreciation All figures are in USD millions USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015)
JSW Group FY 2014-15
Gross Turnover: 10,782
EBITDA: 2,165
Profit after Tax: 520
Cash Profit: 1,221
JSW Steel*: India’s leading integrated steel producer (Steel making capacity: 14.3MTPA)
JSW Energy*: Engaged across the value chain of power business (Operational plants’ capacity: 4,531 MW)
JSW Infrastructure: Engaged in development and operations of ports (Operational capacity: 33MTPA)
JSW Cement: Manufacturer of PSC, OPC and GGBS cement (Operational plants’ capacity: 6MTPA)
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JSW Steel – India’s leading steel manufacturer
Leading steel manufacturer
in India
Integrated manufacturing
process
Diversified product portfolio
Strong distribution network and
export presence
Global presence
Technological competence
Combination of state-of-the-art steel making technologies: Corex, DRI, Blast Furnace
International presence in mining assets (Chile, US and Mozambique) and value-added facilities (Plate and Pipe mill in US)
Integrated steel manufacturing facilities – from raw material processing plants to value-added product capacities
Installed capacity 14.3 MTPA, at six strategic locations in South and West India
Pan India marketing and distribution network, export presence in ~100 countries across the 5 continents
Extensive portfolio of products – HR, CR, galvanized/galvalume, pre-painted, tinplates, electrical steel (CRNO) TMT bars, wire rods, special steel bars, rounds and blooms
5 (1) Calculated as consolidated EBITDA / Saleable steel, (2) From 31st March 2002 to 31st March 2015,
(3) USD/ ` = 62.5908 (RBI reference rate as on Mar 31, 2015)
Transformational journey to market leadership
Unrelenting progress through the economic cycles
FY 2002 FY 2010 FY 2015
CAGR FY’02–15: 30% Revenue (USD mn)
277 3,114 8,463
CAGR FY’02–15: 31% EBITDA
(USD mn) 45 664 1,502
CAGR FY’02–15: 18% FY 2016 expected capacity of 18MTPA
Capacity (MTPA) 1.6 7.8 14.3
Significant value creation with 42x increase in market value(2)
Market Cap (USD mn)
84 3,693 3,501
Adopting industry leading technologies Technology Corex Corex, BF Corex, BF, DRI
CAGR FY’02–15: 19% Production (MTPA) 1.3 6.0 12.6
Continuously expanding product canvas with focus on high-end value-added products
Product Mix Flats Flats, long, special
steel and value added
Flat, long, special steel & high value-added auto grade
CAGR FY’02–15: 10% EBITDA/ton(1)
(USD/ton) 35 116 125
6 (1) Southern Iron and Steel Company, (2) Amba River Coke Limited
Combination of Organic and Inorganic growth
2002
1.6 MTPA
2005
2.5 MTPA
Color Coating Line
Acquired EURO IKON
2007
4.8 MTPA
CRM of 1.0 MTPA
Acquisition of Plate and Pipe Mill in US
Coal mining concessions in Mozambique
2008
Iron Ore mines acquired in Chile
2009
7.8 MTPA 2006
3.8 MTPA 2010
JSW-JFE Strategic Partnership
3.5 MTPA of HSM II
Coal mining concessions in US
2011
Acquisition of 49.3% stake in Ispat 2012
HSM II Capacity Expansion to 5 MTPA 2004
Acquired SISCOL(1)
2013
14.3 MTPA post Ispat merger
FY2016/17
18 MTPA
2014
New CRM2—Phase I
4 MTPA—Pellet Plant(2)
1 MTPA—Coke Oven Plant(2)
Acquired 50% stake in Vallabh Tinplate
Acquired Welspun Maxsteel
Key Projects in progress/pipeline:
Dolvi Works capacity expansion to 5MTPA
Vijayanagar Works capacity expansion to 12MTPA
Salem Works capacity expansion to 1.2MTPA
0.2MTPA Tin plate mill at Tarapur Complex
Continuously evaluating opportunities to deliver value enhancing growth
2015
New CRM2—Phase 2
0.2MTPA Electrical Steel Mill
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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
JSW – JFE strategic partnership
JSW Steel:
Focused expansion plans in India
Optimized capital structure through deleveraging
Access to cutting edge technologies
JFE:
Presence in growing Indian market
Future growth through equity participation
Strategic production base in India for existing automobile customers
Benefits to JSW Steel:
Access to fast growing auto steel market
Short learning curve
Application engineering
New product development
Benchmarking and personnel training
Operational excellence and cost reduction by:
Improvement in quality, productivity, yield , and energy efficiency
Sharing best maintenance, environment management, and safety practices
Benchmarking, training and talent sharing
Standardization of processes
Value creation for both the partners Automotive technology agreements General technical assistance
agreements for sustainable business operations
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Balanced corporate strategy
Selective
Growth
Diversification of Product Profile and
Customer Base
Focus on Resource Optimization
Strengthening Backward and Forward Integration
Prudent Balance Sheet Management
Maintain market share of 14-15% through selective organic and inorganic growth
Undertake brownfield expansions at low specific investment cost per ton
Consider inorganic opportunities that are value accretive
Increase proportion of high margin value-added products
Diversify customer base, both within India and abroad
Continue to focus on rural markets in India
Committed to sustainable and eco-friendly technologies to drive growth
Focus on cost reduction and energy efficiency
Continue to evaluate raw material assets in India and abroad to secure key raw material supplies and to reduce cost of production by targeting strategic tie-ups and investments
Continuously seeks to improve financial profile
Manage capacity expansion and debt profile to capture market opportunities without excessive risk
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Strong and balanced Board comprising experts of eminence & integrity
Savitri Devi Jindal
Sajjan Jindal Chairman & Managing Director
Seshagiri Rao M.V.S Joint Managing Director & Group CFO
Dr. Vinod Nowal Dy. Managing Director
Jayant Acharya Director (Commercial & Marketing)
Naveen Raj Singh Nominee Director of KSIIDC
Kyoichi Kameyama Nominee Director of JFE Steel Corporation
Kannan Vijayaraghavan, FCA and Certified Management Consultant
Dr. Punita Kumar Sinha Former CIO at The Asia Tigers Fund
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
Malay Mukherjee 40yrs of rich experience in mining and steel industry
Executive Directors Independent Directors Nominee Directors Chairperson—Emeritus
Promoter Director
Board fundamentally committed to sustainable business
Haigreve Khaitan Senior Partner at M/s. Khaitan & Co, India's one of the oldest and full service law firm
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Agenda
Overview Value Proposition Performance Overview
Business Environment
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A platform of strength and agility
1 Strong fundamentals to boost India steel demand
2 Multi-location manufacturing facilities in India
3 Strategic overseas presence
4 Diversified product profile
5 Domestic market leader with strong export presence
6 Strong sales and marketing platform
7 Focus on operational efficiency
8 Strategic expansion aided by strong project execution
9 Proven ability to acquire and turnaround assets
10 Robust financial profile
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(200)
0
200
400
600
800
1,000
1,200
1,400
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000
(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
1
5.1% 6.9% 7.3% 7.5%
FY13 FY14 FY15 FY16E
Decisive mandate in India general elections
Strong investor confidence and raised expectations of fast-paced decision-making and economic reforms
China
India Brazil
Mexico Russia
Taiwan
Italy
Japan
South Korea
France
Canada
Germany
USA
Strong fundamentals to boost India steel demand
Upturn in overall GDP growth(1)
• (%)
Infrastructure sector is a key focus area for the new government
Infrastructure investment expected to reach ~$1 trillion during 2012-2017(4)
New government is focused to give impetus to infrastructure sector
Automobile sector expected to turn around
India projected to become 3rd largest automotive market in the world by 2016(5)
Faster economic growth and government's policies is likely to drive volumes and revive the automobile sector
With the growth in economy, JSW Steel is well positioned to be part of the India growth story
India steel consumption to rise at a faster rate
o India’s steel consumption was 76MT in 2014 and is expected to rise to ~82MT in 2015 and ~88MT in 2016(3)
Potential for substantial growth in steel consumption(2)(6)
o World Per Capita Consumption is ~225 Kgs. o India Per Capita Consumption is ~58 Kgs.
Per
cap
ita
Stee
l Co
nsu
mp
tio
n in
20
13
(K
g.)
GDP per capita in 2013 ($)
13 *JSW Steel Coated Products Limited
Multi-location manufacturing facilities in India
Leveraging locational advantage to increase market share strategically in the Southern and Western regions of India
2
Dolvi: 3.3 MTPA
2 MTPA Blast Furnace 1.6 MTPA DRI 3.6 MTPA Twin Shell ConArc 55 MW Power Plant
Salem: 1 MTPA
1 MTPA Blast Furnaces 0.5 MTPA Blooming Mill 60 MW Power Plant
Kalmeshwar (JSCPL*)
0.58 MTPA GP/GC 0.19 MTPA Colour Coating Line
Vasind & Tarapur (JSCPL*)
1.18 MTPA GP/GC 0.5 MTPA Colour Coating Line 30 MW Power Plant
Vijayanagar: 10MTPA
1.65 MTPA Corex 8.4 MTPA Blast Furnaces 855 MW Power Plant
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Strategic overseas presence
JSW Steel ownership: 100% 5 mining licenses awarded Early stage development in progress
Mozambique coal mines
JSW Steel ownership: 70% Acquisition cost: $252mn Started operations in FY11 Maritime concession to develop cape size
port in North Caldera
Chile iron ore mines
JSW Steel ownership: 90% Acquisition cost: $810mn Capacity: 1.2 Net MTPA Plates and 0.55
Net MTPA Pipes Acquired in 2007 Opportunity for diversification in terms
of products, markets and geographies
US plate and pipe mill
JSW Steel ownership: 100% Acquisition cost: $70mn 2 of 7 mines are operational Alloy Dock—Load Out Facility
US coal mines
3
Strategic overseas presence for backward integration and value-added facilities
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Wide Offering of Flat and Long
Products
Developing New Products, Capturing
Niche Markets
Continuously Increasing Value Added Products
GC
TMT
Slabs
Color Coated
HRC
Billets
HR Plates
Blooms
CRC
Wire Rods
Automotive Grade Steel
Enhanced focus on cold rolled, galvanised and galvanneal products for body panels of automobiles
Manufactured at a new CRM2 complex
Color Coated Products
Largest color coated facility to address construction, warehousing and roofing requirements
State-of-the-art color coating line for appliance grade products used in consumer durables
Electrical Steel Commissioned Cold Rolled Non-grain Oriented (CRNO) steel plant to address
domestic demand by substituting imports of high grade electrical steel
Diversified portfolio to address growing demand for value-added steel
Commissioned new facilities to further enrich product mix
Leveraging JFE Steel’s well-established manufacturing technology for high value-added products for auto-grade steel
Diversified Product Profile 4
Continuously enriching product mix
16 (1) Joint Plant Committee
11.4% 13.4% 6.9% 0.8% India Finished Steel Consumption Growth(1)
JSW Export Turnover as % of Total
JSW Domestic Turnover as % of Total
Domestic market leader with strong export presence 5
Penetrating further to capture growing domestic demand with unique marketing strategy – unique nationwide retail network (JSW Connect, JSW Shoppe, JSW Explore as well as non-exclusive retails) of more than 4,700 outlets with footprints across 495 districts
Leadership position in India and largest exporter of steel products out of India
Ability to re-align sales effort and shift between domestic and export market as per market conditions
Exports to high demand regions such as Asia, Middle East, Europe and the US – presence in over 100 countries
Flexibility to shift between domestic and international markets based on market conditions
77% 85% 84% 75% 76%
23% 15% 16% 25% 24%
FY08 FY10 FY12 FY14 FY15
3.3%
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Multi-sectoral volume growth
Optimizing market mix and product mix to derive maximum benefit from sector growth
Leveraging export presence
New product approvals for Original Equipment Manufacturers (OEMs) and automotive customers
Increase in value added products leading to incremental growth in focus sectors and also facilitating import substitution
Focused on Retail Sales – increased reach and penetration
Segmented approach to address different retail segments
Metro / Urban
Urban / Semi-urban
Semi-urban /
Rural
‘JSW explore’ Branded, multiple product service
center for steel solutions Just-in-time solution with in-house
profiling lines and Value Added Services
Franchisee Model
‘JSW Shoppe’
Steel distribution
Enhanced customer experience
‘JSW Shoppe Connect’ Smaller retail format linked to JSW
explore/Shoppe Last mile link to talukas/rural areas Sales to end consumers and
MSMEs
Increased customer focus and market penetration
6 Strong sales and marketing platform
18 (1) Total production (12.63MT) divided by total no. of employees on Company payroll (12,271) in FY15
Coke Making: Recovery and Non-recovery Coke Ovens
Agglomeration: Pelletisation and Beneficiation Plants
Iron Making: Blast Furnace, Corex, Sponge Iron (DRI)
Steel Making: Basic Oxygen Furnace (BOF), Electric Arc Furnace (EAF), Conarc
Casting: Continuous Casting, Thin Slab Casting, Billet Casting
Improving labor productivity: Current production of ~1,029 tons/ employee(1)
In-house training programs internal faculty
Continuously investing, building and enhancing competencies
Integrated manufacturing facilities: From pelletisation / beneficiation to downstream value-add capabilities
Dedicated port and railway siding for logistics support
100% assured power supply through captive power plants and arrangements with JSW Energy and the power grid
Diverse blend of technology High labour productivity Integrated operations
Reduced raw material costs
Focus on process improvements
Waste gas utilization for power generation
Efficient operations resulting in low conversion cost
Resulting in operational efficiency
7 Focus on operational efficiency
High level of integration and technological expertise leading to reduced production cost and time
19 (1) Vijayanagar works expansions
Strategic expansion aided by strong project execution 8
Focus on low cost and returns accretive brownfield projects to capitalise on expected demand recovery
1.6 Mtpa • FY 2003 • USD 923/mt
2.5 Mtpa • FY 2006 • USD 682/mt
3.8 Mtpa • FY 2007 • USD 550/mt
7.8 Mtpa • FY 2009 • USD 559/mt
11 Mtpa • FY 2012 • USD 545/mt
Strong project execution capabilities ….
Experienced in-house project management team
Supported by cross-functional team (commercial, finance and legal department)
Established long-term relationship with key domestic and international suppliers
Savings in procurement cost by negotiating firm prices for follow-on orders
… at low specific investment cost(1)
Reduced specific investment cost/ton of capacity expansion shows cost efficiency
Major on-going Projects
Vijayanagar Works:
Capacity expansion from 10 MTPA to 12 MTPA by setting up certain new facilities and debottlenecking/ modification of existing facilities
50,000 TPA capacity Service Center to handle the products of Electrical Steel Complex
Dolvi works:
Capacity expansion from 3.3 MTPA to 5 MTPA by setting up certain new facilities and debottlenecking/ modification of existing facilities
Salem Works:
Capacity expansion from 1 MTPA to 1.2 MTPA by setting up certain new facilities and debottlenecking/ modification of existing facilities
Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven
and Turbo Generator
Tarapur Works:
Setting up 0.2MTPA Tin plate mill
20 (1) Implemented in a wholly owned subsidiary Amba River Coke Limited.
December 2010 Completed Initiatives—FY2011–2015 Road Ahead
Inability to service existing debt
Inadequate cashflows
Corporate debt restructuring (CDR) case
Exit from CDR
Generating positive profit after tax
Plant under maintenance
Loss making at EBITDA level
High interest cost
Financially distressed
Infusion of equity
Alignment of marketing strategies resulting in freight synergies and VAT benefits
Reduction of high cost working capital funding
Refinancing of existing debt
Electricity sourcing from JSW Energy at competitive prices
Commissioning of 4MTPA pellet plant(1), 1MTPA coke oven(1), waste gas based 55MW power plant, railway siding, and lime calcination plant
Capacity expansion to 5MTPA
Further operational improvements underway
Operational improvements underway
Profitability to improve substantially
Case Study: Turnaround strategy at JSW Ispat’s Dolvi plant
JSW Steel has a proven track record of acquiring troubled assets and turning them around in record time by closely integrating them with its existing operations thus creating synergies and optimizing cost
9 Proven ability to acquire and turnaround assets
Able to leverage an acquisition to maximum value accretion through application of knowledge and experience
21 *Refer next slide
Robust financial profile 10
Strong track record of volume and revenue growth
Achieved significant sales growth despite weak economic and sluggish domestic demand in past 2 years
Superior profitability supported by efficient operations
Resilient operations with improved EBITDA margin marked by several productivity and cost improvement measures in FY14 and FY15
Well-capitalized balance sheet
Adequate liquidity levels owing to prearranged funding in place for capacity expansions and a committed working capital facility
Financial flexibility to raise capital
Diverse sources of funding
Strong relationships with over 50 banks/financial institutions with access to low cost credit
Healthy mix of local and foreign currency debt
Strong positioning as compared to peers*
Strong EBITDA margins and higher returns on invested capital as compared to global peers
22
Source: Bloomberg, Financials as of FY14 (FY ending December) for all peers except JSW Steel and Tata Steel (FY15 ending March) and ThyssenKrupp (FY14 ending September), (1) Calculated as EBITDA/ Revenue, (2) Calculated as EBIT/ Average Capital Employed
Strong positioning compared to peers
EBITDA Margin (1)
(%)
26.4% 23.4% 22.9%
19.4% 18.8% 17.9% 16.0%
13.3% 12.1% 11.8% 11.0% 10.4% 10.0% 9.9% 9.9% 8.8% 8.3% 8.1% 5.9% 5.5%
Severstal CSN NLMK MMK JSW Steel ChinaSteel
Hyundai Evraz Nipppon Gerdau SAIL JFE Baoshan Nucor Posco Arcelor Hebei Tata Steel US Steel Thyssen
Return on Average Capital Employed(2)
(%) 18.30%
14.20%
11.50% 10.20% 9.70%
8.10% 7.50% 6.60% 6.50% 6.30% 6.20% 6.00% 5.40% 5.40% 5.10% 5.00% 4.90% 4.80% 4.40% 3.70%
Severstal NLMK JSW Steel Nucor MMK Evraz Hebei Hyundai JFE Thyssen Nipppon Baoshan ChinaSteel
CSN Posco Gerdau Tata Steel SAIL US Steel Arcelor
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Agenda
Overview Value Proposition Recent Performance
Business Environment
24 USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
Key highlights – 3QFY16
Standalone performance
Crude Steel production: 2.70 million tonnes
Saleable Steel sales: 2.55 million tonnes
Gross Turnover: `8,076crore/ US$1,218 mn
Net Sales: `7,207 crore/ US$1,087 mn
Operating EBITDA: `878crore/ US$132 mn
Net Debt to Equity: 1.48x and Net Debt to EBITDA: 5.67x
Consolidated performance
Gross Turnover: `9,562crore/ US$1,442 mn
Net Sales: `8,621 crore/ US$1,300 mn
Operating EBITDA: `892 crore/ US$134 mn
Net Debt to Equity: 1.83x and Net Debt to EBITDA: 6.66x
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3.17
2.70
3.25
3QFY15 3QFY16 2QFY16
Crude Steel Production
Quarterly volumes – standalone
YoY
-15%
3QFY15 3QFY16 2QFY16
Flat 2.56 1.87 2.57
Long 0.50 0.63 0.64
3.03
2.55
3.19
3QFY15 3QFY16 2QFY16
Saleable Steel Sales
YoY
-16%
3QFY15 3QFY16 2QFY16
Flat 2.44 1.86 2.50
Long 0.47 0.66 0.65
Semis 0.01 0.03 0.03
QoQ
-17%
QoQ
-20%
All figures are in million tonnes
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9.57 9.36
9MFY15 9MFY16
Crude Steel Production
8.97 8.84
9MFY15 9MFY16
Saleable Steel Sales
All figures are in million tonnes
9M volumes – standalone
YoY
-2%
9MFY15 9MFY16
Flat 7.60 6.94
Long 1.58 1.96
9MFY15 9MFY16
Flat 7.22 6.77
Long 1.43 1.93
Semis 0.32 0.15
YoY
-1%
27 Source: JPC and JSW Steel, * Domestic sales in million tonnes
^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)
Quarterly sales highlights – consolidated
Increase in Retail sales by 82%YoY helped overall domestic sales to grow by 8%YoY despite the planned shut downs at all upstream locations
Product mix improved with value added products sales reaching 36% of total sales despite lower exports
TMT sales grew 107%YoY and CRCA sales grew 18%YoY
61% 49% 53%
24% 40% 35% 15% 11% 13% 2.16* 2.34* 2.82* 29%
12% 10% 3.03^ 2.67^ 3.14^
3QFY15 3QFY16 2QFY16
OE Retail Auto Exports
65% 64% 66%
35% 36% 34%
3QFY15 3QFY16 2QFY16
Value added & special Products Other products
28 Source: JPC and JSW Steel, * Domestic sales in million tonnes
^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)
9M sales highlights – consolidated
Increase in Retail sales by 80%YoY helped overall domestic sales to grow by 19%YoY despite the planned shut downs in 3QFY16 at all upstream loactions and lower exports
Product mix improved with value added products sales reaching 35% of total sales
62% 53%
23% 35% 15% 12% 6.56* 7.82*
27% 12%
8.98^ 8.93^
9MFY15 9MFY16
OE Retail Auto Exports
67% 65%
33% 35%
9MFY15 9MFY16Value added & special ProductsOther products
29
Quarterly retail sales highlights – consolidated
57% 55% 57%
43% 45% 43%
3QFY15 3QFY16 2QFY16
Retail - Branded SalesRetail - Others Sales
Branded steel product’s sale grew 4% YoY to 45% of total Retail sales
TMT sale grew 220%YoY – Individual residential, real estate, commercial were major contibutors
HR CTL sale grew 60%YoY; Coated Steel sale grew 38%YoY – General engineering, construction and individual residential projects were major contibutors
Increased retailer network by 1,083 to 5,783 during the quarter
Retail sales grew by 82%YoY
514
936 976
3QFY15 3QFY16 2QFY16
Retail sales (‘000 tonnes)
+82%
-4%
30 Above mentioned approved grades are the highest among the specific product/grade-group; the lower grades upto the highest grades are also approved.
Automotive and appliance grade approvals
Applications Components
Hood 270F 340P 270F 340P
Roof 270F 590R
Doors 270F 270F
Body side outer 270F 270F
BIW (Inner) 980Y 590R 440W
Floor 270F
Structural 980Y 590Y 590R
Reinf. Pillar 980Y
Wheels SPFH440 SPFH590 SAPH 590 HR 750
Engine SCM435 S36CV 86B45 SAE1070 SAE4140
Transmission 16MnCr5 SAE4124 SAE8822 SAE5160 SAE4145
Suspension
Front Panel EDD IF
Side Panel D DD
Cold Rolled Coated HRPO
Hot Rolled Alloy Steel Longs
Appliance
Grades Approved
Automotive
20MnCr5Ni
51CrMoVn
31
Exceptional items related to overseas assets
Particulars Standalone Consolidated
JSW Steel (USA) Inc - US Plate & Pipe Mill 537 140
Periama Holding LLC and its subsidiaries – US Coal 53 27
JSW Panama (Holding) Corporation and its subsidiaries - Chile
183 161
JSW Steel (Netherlands) BV 99 0
Total 871 327
Rs. Crores Equivalent 5,596 2,121
A provision for diminution in value of investments and loans and advances of `5,596crore (at standalone level) and `2,121crore (at consolidated level) related to overseas assets has been made during the quarter
USD mn
32
Particulars 3QFY16 3QFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 8,076 1,218 12,368 1,865
Net Sales 7,207 1,087 11,310 1,705
Operating EBITDA 878 132 2,117 319
Other Income 96 14 88 13
Finance Cost 663 100 781 118
Depreciation 642 97 712 107
Exceptional Items (5,597) (844) (102) (15)
Profit Before Tax (5,928) (894) 611 92
Tax (1,786) (269) 196 30
Profit after Tax (4,142) (624) 415 63
USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
3Q Financials – standalone
33
Particulars 9MFY16 9MFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 29,923 4,512 37,765 5,694
Net Sales 26,841 4,047 34,566 5,212
Operating EBITDA 3,948 595 7,198 1,085
Other Income 294 44 306 46
Finance Cost 1,991 300 2,224 335
Depreciation 1,904 287 2,075 313
Exceptional Items (5859) (883) (291) (44)
Profit Before Tax (5,511) (831) 2,914 439
Tax (1,641) (247) 936 141
Profit after Tax (3,870) (583) 1,978 298
USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
9M Financials – standalone
34 USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
Operating EBITDA movement – standalone
` crore/ USD mn
2,117
878
(332)
1,406
(2,350)
23 14
EBITDA3QFY15
Volume Cost NSR Mix Others EBITDA3QFY16
$319
($50)
$212
($354)
$3 $2 $132
35
Volumes 3QFY16 3QFY15 9MFY16 9MFY15
Production* 0.33 0.36 1.11 1.17
Sales 0.34 0.37 1.14 1.18
` crore
*Including Job Work
Operational performance – JSW Steel Coated Products
Million tonnes
Key P&L data 3QFY16 3QFY15 9MFY16 9MFY15
Turnover 1,629 2,270 5,687 5,042
Operating EBITDA 38 65 250 268
Profit after Tax (22) (18) 26 1
36
Sales (net tonnes) 3QFY16 3QFY15 9MFY16 9MFY15
Plate Mill 36,192 63,822 1,26,215 2,45,413
Pipe Mill 12,421 18,101 47,175 43,972
Production (net tonnes) 3QFY16 3QFY15 9MFY16 9MFY15
Plate Mill 48,547 83,601 1,64,978 2,89,043
Utilization (%) 20% 34% 23% 39%
Pipe Mill 13,217 18,898 42,800 38,780
Utilization (%) 10% 14% 10% 9%
USD mn
Net tonnes = 0.907 metric tonnes
Operational performance – US Plate & Pipe Mill
Key P&L data 3QFY16 3QFY15 9MFY16 9MFY15
Turnover 39.58 79.81 145.45 267.72
EBITDA + Other Income (4.89) (0.46) (17.38) 6.10
Profit after Tax (15.37) (16.09) (60.09) (39.19)
37
Particulars 3QFY16 3QFY15 9MFY16 9MFY15
Production (Tonnes) - 2,18,515 83,774 6,63,638
Sales (Tonnes) - 2,24,123 1,60,667 7,70,670
Turnover - 14.20 8.60 64.51
Operating EBITDA (0.32) (6.45) (0.12) (8.56)
Profit after Tax (0.63) (6.38) (3.92) (13.04)
Operational performance – Chile
USD mn
38
Particulars 3QFY16 3QFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 9,562 1,442 14,026 2,115
Net Sales 8,621 1,300 12,927 1,949
Operating EBITDA 892 134 2,296 346
Other Income 23 3 13 2
Finance Cost 811 122 937 141
Depreciation 773 117 890 134
Exceptional Items (2,122) (320) - -
Profit Before Tax (2,792) (421) 482 73
Tax (1,810) (273) 175 26
Share of Associates and Minority Interest 58 9 22 3
Profit after Tax (923) (139) 329 50
USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
3Q Financials – consolidated
39
Particulars 9MFY16 9MFY15
` Crores USD mn ` Crores USD mn
Gross Turnover 34,045 4,512 43,038 5,694
Net Sales 30,746 4,047 39,686 5,212
Operating EBITDA 4,248 595 7,720 1,085
Other Income 87 44 93 46
Finance Cost 2,469 300 2,635 335
Depreciation 2,394 287 2,536 313
Exceptional Items (2,124) (883) (21) (44)
Profit Before Tax (2,652) (831) 2,620 439
Tax (1,651) (247) 932 141
Share of Associates and Minority Interest 88 (583) 46 298
Profit after Tax (913) 4,512 1,734 5,694
USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
9M Financials – consolidated
40 *Net Debt excludes Acceptances
USD/ ` = 66.3260 (RBI reference rate as on Dec 31, 2015)
Net debt movement – consolidated
` crore/ USD mn
Particulars 31.12.2015 30.09.2015
Cash & cash equivalent (` crore) 1,161 1,378
Net Debt/Equity (x) 1.83 1.72
Net Debt/EBITDA (x) 6.66 5.32
39,008
39,483 567
(460)
151 217
Net Debt*
as on Sep'15
New Loan Taken Repayments Fx Impact Movement in FD/MF Net Debt*
as on Dec'15
$5,881 $85
($69)
$23 $33 $5,953
41
Agenda
Overview Value Proposition Recent Performance
Business Environment
42 Source: Bloomberg, IMF and JSW Steel
Global economy
Global economic outlook remains fragile, IMF revises down 2016 global GDP growth yet again to 3.4%.
Downside risk persists with 1) slowdown and rebalancing in China, 2) global trade imbalances driven by a sharp drop in commodity prices as well as weakening currencies, 3) limited room for further monetary stimulus, and 4) uncertainty around monetray tightening by US
Expectations of a pick-up in global growth momentum is waning
3.1
%
1.9
%
2.5
%
1.5
%
0.6
% 4.0
%
7.3
%
6.9
%
3.8
%
2.4
%
3.1
% 1.6
%
1.2
% 4.7
%
7.5
%
6.3
%
3.4
%
2.1
%
2.6
%
1.7
%
1.0
%
4.3
%
7.5
%
6.3
%
World AMEs US EuroArea
Japan EMEs India China
2015E (Jan'16) 2016P (Apr'15)
2016P (Jan'16)
GDP growth - 2015 estimates and 2016 projections by IMFGDP growth - 2015 estimates and 2016 projections by IMF
60
100
140
180
220
De
c-1
2
Mar
-13
Jun
-13
Sep
-13
De
c-1
3
Mar
-14
Jun
-14
Sep
-14
De
c-1
4
Mar
-15
Jun
-15
Sep
-15
De
c-1
5All CommodityFuel (Energy)Metals
IMF World Commodity Price Index, 2005=100
25
50
75
100
125
De
c-1
2
Mar
-13
Jun
-13
Sep
-13
De
c-1
3
Mar
-14
Jun
-14
Sep
-14
De
c-1
4
Mar
-15
Jun
-15
Sep
-15
De
c-1
5
BRL/USD INR/USDJPY/USD RUB/USDEUR/USD CNY/USD
Key currencies' movement against USD - Dec 31, 2012=100
43 Source: World Steel Association, World Steel Dynamics, Bloomberg and JSW Steel
Global steel scenario
World Crude Steel production in CY2015 fell by 2.9%, as capacity utilization in Dec’15 dropped below 65% – most regions continue to witness a decline
Global steel demand continues to weaken with lower investment activities
Steel exports from steel-surplus countries (as domestic demand falls faster than production cuts) are at elevated levels
Predatory pricing is intensifying trade measures to check surging imports and pricing pressure
40
60
80
100
120
140
-20%
-10%
0%
10%
20%
30%
De
c-1
3
Mar
-14
Jun
-14
Sep
-14
De
c-1
4
Mar
-15
Jun
-15
Sep
-15
De
c-1
5
China apparent steel consumption (%YoY growth)
China steel Exports (annualized, mn tonnes) -RHS
-8.6
-4.8 -4.3
-2.7
-2.5
-2.3 -1.8
-2.9
2.9
-6.8 -5
.1
-5.8
-3.4
-1.4
-2.1
-0.7
-2.5
3.1
N. A
me
rica
Japa
n
CIS
Kor
ea
S. A
me
rica
Chin
a
EU
Wor
ld
Ind
ia
9MCY15 CY15
Global crude steel production (% YoY Change)
220300380460540620700
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
Oct
-15
Jan
-16
North America ExW North Europe ExWBlack Sea export FOB China export FOB
HR
C p
rice
s ($
/to
nn
e)
44 Source: JPC and JSW Steel
All figures are in million tonnes, * Apparent finished steel consumption net of double counting effect
Indian economy and steel industry
Consumption of domestically produced steel fell by 1.2%YoY in 9MFY16 as total steel imports surged by 29%YoY
9MFY16 Finished steel exports fell by 30%YoY.
Steel industry is grappling with headwinds of insipid demand, excess supply and pricing pressure driven by surge in imports at predatory pricing
Consumer discretionary spending, public capex (highways, ports, power transmission, etc.) and foreign direct investment have continued to improve, supporting a gradual growth recovery
However, weaker exports and private capex have been a drag
Progress on policy reforms coupled with government’s measures to pump prime the economy bode well for steel demand over the medium term
Adequate measures urgently required to check unbridled and unfair imports of steel
66.556.5 54.1
67.158.9
53.5
Crude SteelProduction
Finished SteelConsumption*
Consumption ofdomestically
produced steel9MFY15 9MFY16
0.9%4.4%
-1.2%
1.76 0.48 0.29 0.42
2.430.86
0.36 0.44
2.80
1.24
0.400.55
3Q 2Q 1Q
FY15 FY16
Total Steel Imports
FY15 FY16
China
FY15 FY16
Korea
FY15 FY16
Japan
2.770.72 0.59 0.62
3.16
0.870.58 0.90
3.11
1.08
0.510.75
45
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.
Forward looking and cautionary statement
46
Thank you