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Agenda • Steel Scenario • Project updates • Performance Highlights • Quarterly Developments • Way Forward 2
3 Steel Scenario…
Global Slowdown & Rising Inflation GDP Growth 9 8 7.9 8 6.9 6.7 7 6 5.1 5 5 4.1 3.9 The slowdown in the global growth is % 4 3 2.7 expected to continue in 2008. The pace of 3 1.7 1.4 2 decline abates in 2009. 1 0 World Advanced Economies Emerging Economies International Commodity Prices 2006 2007 2008E 2009E Global Commodity prices firmed up further during the first quarter of 2008-2009 led by sharp increase in Crude oil prices and US dollar weakening. CPI Inflation 11 9 Emerging & Developing Economies 7 Increased inflationary pressures driven by % rising food and energy prices, and persisting 5 global imbalances Developed Economies 3 1 2002 2003 2004 2005 2006 2007 2008E 4 Source: IMF/ RBI
Demand for Steel to Sustain FAI/GDP 50 47.6 44.4 45 40 36.3 35.9 As per WSD, 80% of the FAI gets invested 35 % 30 into Infrastructure, Construction and 25 21.1 Capital goods. 17.9 20 16.9 16.7 15 10 BRAZIL RUSSIA INDIA CHINA App. Steel consumption- BRIC 2006 2007 CAGR 11% BRIC’s apparent consumption of steel 750 is est. to grow at a CAGR of 11% 637.9 650 578.6 between 2007 and 2009 CAGR 14.6% 521 550 460.6 Consumption Drivers: 417.8 450 MT infrastructure spending, Construction, 355.7 314.9 350 growing Industrial Sector, Auto & 263.4 230.1 Capital Goods. 250 150 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 5 Source: IISI/WSD
Demand for Steel to Sustain Contd… In M.E. apparent consumption of steel is App. Steel consumption- Middle East est. to grow at a CAGR of 10% between 2007 and 2009. CAGR 10% 53.6 Steel consumption has grown at 55 25% 49.2 whopping 25% for the year 2007. 50 44.3 45 MT Consumption Drivers: Oil & Gas, 40 35.4 expanding construction activities. 35 30 2006 2007 2008E 2009E App. Steel consumption- World CAGR 6.2% 1450 1 363 World app. steel consumption is CAGR 7.6% 1 282 1350 1 208.5 est. to grow at a CAGR of 6.2% 1250 1 1 24.6 between 2007 and 2009, with 1150 1 031 .4 MT 1050 976.8 strong demand from emerging 886.2 950 economies. 828.6 776.9 850 750 650 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 6 Source: IISI
Capacity addition not in pace Capacity CAGR 6% 2000 1759 1654 1564 1600 CAGR 8.2% Capacity addition between 1200 MT 868 803 2007 and 2009 is est. to grow 733 800 at a CAGR of 8.2% for BRIC 400 and 6 % for World. 0 BRIC World 2007 2008E 2009E Apparent Steel Consumption CAGR 6.2% App. Steel Consumption between 1600 1363 2007 & 2009 is est. to grow at a 1282 1208.5 CAGR 11% 1200 CAGR of 11% for BRIC and 6.2 % for world MT 800 637.9 578.6 521 Growth in Demand outpacing 400 growth in Capacity addition 0 BRIC World 2007 2008E 2009E 7 Source: IISI/ SBB
Capacity addition not in pace Contd… Capacity utilization 92% 88% High capacity utilization on 84% account of high finished steel 80% prices and low inventory level 76% 72% 1995 1997 1999 2001 2003 2005 2007 2009E 2011E Inventory 110.0 Jan 2001 =100 100.0 Low Inventory level on 90.0 account of supply shortage 80.0 70.0 Jan 2001 Jun 2001 Nov 2001 Feb 2003 Jul 2003 Dec 2003 May 2004 Oct 2004 Mar 2005 Jan 2006 Jun 2006 Nov 2006 Feb 2008 Sep 2002 Sep 2007 Jun 2008 Apr 2002 Aug 2005 Apr 2007 North America Japan 8 Source: CRU/ TEX/ SBB
Tight Supply of Raw Materials Australia- Coal Export 3.67% 67.56 70 65.08 11Mt of Metallurgical coal was 60 lost due to Queensland floods MT 50 40 30 China-Coke Export Jan 07- Jun 07 Jan 08- Jun 08 9.00 9.68% China’s Export quota for coke 8.06 8.00 7.28 reduced to 12.01 Mt for 2008 7.00 against 14mt in 2007 on account of MT 6.00 tight supply of Coal and pollution 5.00 issue. 4.00 3.00 Jan 07- Jun 07 Jan 08- Jun 08 9 Source: CRU/ TEX
Tight Supply of Raw Materials Contd… Baltic Dry Index 11,000 Freight rate at record high 9,000 7,000 Spot freight rates for iron ore from 5,000 Brazil to China reported as high as 3,000 $108/tonne. W. Australia-China spot 1,000 SEPT-07 JUL-06 SEP-06 JUL-07 rates at $ 45-46/t. JAN-06 MAR-06 NOV-06 JAN-07 MAR-07 NOV-07 JAN-08 MAR-08 MAY-06 MAY-07 MAY-08 400 350 Resulting Raw material super Cost 300 Apr 2007 =100 Push. 250 Current spot prices are up by 371% for 200 Coke, 311% for Coal and 137% for iron 150 ore from April 2007 level. 100 50 APR-07 JUN-07 AUG-07 OCT-07 DEC-07 FEB-08 APR-08 JUN-08 Iron ore Spot Coke Spot Coking Coal Contract 10 Source: CRU/ TEX/ SBB
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Ranked 8th among top 31 “World-Class” Steelmakers • June 2007, Low Cost Operation with Ranked 8th among the top 26 100% Captive Raw material Severstal • Dec 2007, Ranked 9th among the top 30 Posco • June 2008, Bao Steel JSW Jumps one slot up to no. 8 th 7.95 position among the top 31 Arcelor Mittal 7.82 NLMK 7.77 Nucor 7.61 Efficient & Low Conversion Cost Tata/Corus 7.53 JSW Steel 7.52 Global Size & Efficient Operation SDI 7.50 EZZ 7.45 CSN 7.36 Potential to improve further due to: • Scaling up Capacities. 7.29 • Increasing Raw Material Security 7.29 12 Source: WSD- Ranking as on June 2008
Emerging as a Global Player FY 2008 FY 2020 Capacity 32 MT 4.8 MT Raw Material Integration Iron Ore – 25% Iron Ore – 72% Coal – 50% Coal – 0% Growth Route Brown field Brownfield/Greenfield Steel Making Facilities South India Dispersed Market Share in India 9% 17% 13
Raw material Integration 14
Iron Ore Mine :South America Location : Chile Total Area : 26,245 Ha Cost of Acquisition : USD 252 Mio Output/Year : 20MTPA (Capacity: 6 MT – FY 2010, ramp up to 20 Mtpa) Port : Right to use existing Caldera port. Management Structure: Mining Rights with JV Company, of which 70% stake is held by JSWSL. (Share of output to JSWSL 100% at L.T. reference price) Present Status: � Mine development Capex of USD 130 Mio tied up. Drilling in progress . � � Environmental Clearance for opening Bellavista mine awaited. � Basic Engineering for Beneficiation plant in progress. � Beneficiation Plant ordered. � Mining Plan at final stage. � Feasibility study for construction of new port under progress. 15
Coal Block: Mozambique Plot 1370L Location : Mozambique-Coal Block : PLOT-1127 L Plot -2214 L,1053 L & 1370 L Plot 1053L Total Area Plot 1127L : 45,460 Ha Expected Reserve: 188.6 Mt for Plot -1127L , reserves for Plot 2214L Port Beira remaining plots is yet to be established. Present Status: � Company continues to work on obtaining various approvals � Railway construction from port to mine is under progress. 16
Coal Block: Jharkhand Rohne Location : Rohne Total Area : 1,254 Ha Coal Block Mine Type : Open Cast Exploration Status : Fully Explored Expected Resources : 410 Mt Mineable Reserve : 250 Mt Output/Year : 8 MTPA Management Structure: Allotted to JV Company of which 69% of output accrues to JSW. Proposed Plant location Present Status: � The Coal Block has been fully explored. � MOC has allocated the coal block to JV Co. Coal Block � Mining plan preparation is under progress. Steel Plant � Application for TOR (terms of Reference) submitted. 17
West Bengal Project update 18
West Bengal Project update Project Details: Location : Salboni, West Bengal Distance from Port :140 Km from Haldia port & 120 Km from kolkata airport. Capacity : 6 MTPA ( Steel plant) Phase 1A : Beneficiation plant 8 MTPA Pellet Plant 6 MTPA (part of steel plant) Tax Benefit : The project will be eligible for tax benefit on approval as SEZ unit. Phase 1A : Project cost : Rs. 4000 Cr. ( incl. 800 Cr. in coal mining & development) Equity : Rs. 1333 Cr. Debt : Rs. 2667 Cr. Proposed Present Status : Plant Land Acquisition completed. � MOEF clearance received from Central Govt. location � Rail Transport clearance has been obtained. � Construction of boundary wall under progress � Iron Ore supply agreement signed. Exp. Commissioning: FY 2012 19
Perform ance Highlights… 20
Highlights – Q1 FY09 Weighted Average Cost of Borrowings 7.63 % Weighted Average Cost of Borrowings 7.63 % 21 21
Production – Q1 FY09 22% - 12% 1.2 0.975 1 0.802 0.8 Mn Tonnes 0.674 0.593 0.6 0.4 18% 0.2 0.092 0.078 0 Crude Steel Rolled : Flat Rolled : Long Q1 '08 Q1 '09 HSM shutdown of 17 days for modernisation restricted output of Rolled flat products. Rolled flat products. HSM shutdown of 17 days for modernisation restricted output of 22 22
Saleable Steel Sales – Q1 FY09 13% 0.9 - 5% 0.817 0.8 0.722 0.7 0.614 0.582 0.6 Mn Tonnes 419% 0.5 0.4 0.3 - 11% 0.168 0.2 0.075 0.067 0.1 0.032 0 Semis Rolled:Flat Rolled:Long Total Sales Q1 '08 Q1 '09 Excess slabs available for sale due to HSM shutdown for modernisation ation Excess slabs available for sale due to HSM shutdown for modernis 23 23
Sales Realisation – Q1 FY09 35% 45000 41168 40000 35000 30482 30000 Rs. / T 25000 20000 15000 10000 5000 0 Blended Realisation Q1 '08 Q1 '09 24 24
Cost of Production – Q1 FY09 35000 61% 30607 30000 25000 19001 Rs. / T 20000 15000 10000 5000 0 Blended Cost Q1 '08 Q1 '09 25 25
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