1
Agenda 2
Mega boosters from Governments worldwide Massive Government Stimulus (Totaling ~ USD 1.96 trillion) (US$ bn) US A 850 China 586 Russia 186 105 Japan Germany 69 France 69 33 S pain 14 14 UK Netherland India Brazil Korea Italy S weden Australia Hungary 29.7 7.6 Mexico Chile Portugal 4.0 3.6 8.0 8.0 1.8 7.4 6.9 5.8 2.0 2.8 Global Response • Governments infusing capital into financial institutions • Globally coordinated interest rate cuts • IMF provides bridge loan to meet foreign exchange requirements • Coordinated measures at G20 summit Source: IDFC/SSKI 3
Easing liquidity, inflationary pressure off, commodity prices down… Petroleum prices at Jan05 low Sinking Commodity Price Indices (U.S. dollars a barrel) Mar-09 Apr-09 Headline inflation down Lowering TED Spread % bps Feb-09 Source: IMF / Bloomberg 4
Indications of economic recovery Improving business confidence US Business confidence Index Manufacturing Purchasing Managers Index University of Michigan Smart money returning to market due to attractive valuation World Stock Indices % change from Dec 31 st 2008 to Apr 29,2009 5 Source: IMF / Bloomberg
Emerging economies to lead revival % GDP Growth y ‐ o ‐ y Industrial Production Growth y ‐ o ‐ y % Feb-09 Retail Sales Growth y ‐ o ‐ y Consumer prices Growth y ‐ o ‐ y % % 9 0 - b e F 6 Source: IMF
Steel Scenario Steel Scenario Steel Scenario 7
Quick supply side corrections ensure no glut in market World monthly crude steel production Global Steel: Capacity utilization ( % ) (y ‐ o ‐ y % change) 8 Source: Worldsteel/ WSD
Widened spread between Production and Apparent consumption …Indicating destocking of Inventory Crude Steel Production Vs. Apparent consumption (MnT) 9 Source: WSD
Global steel Industry tumbling down the cost curve… due to fall in raw material prices World Cost Curve for Hot Rolled Band 10 Source: WSD
…Steel prices seem to have bottomed out. Scrap price movement… Steel price movement USD / ton USD / ton Shredded / Rotterdam export FOB $/t Margins may not come under pressure Source: Worldsteel 11
Indian ‐ Scenario Indian ‐ ‐ Scenario Scenario Indian 12
India … among the first to turn the corner GFCF % of GDP GDP growth est. (%) Data for 2007 Industrial Production 2009F India: Manufacturing PMI (Y ‐ o ‐ Y % change) Source: Citi investment research and analysis. 13 Source: OECD/ IMF
India better placed than others Y ‐ o ‐ Y % change in Crude Steel Production (Jan 09 ‐ Mar 09) % % 14 Source: Bloomberg/ Worldsteel
Performance highlights Performance highlights Performance highlights Performance highlights 15
Highlights Q4 FY09 vs. FY 09 vs. Particulars Q4 FY09 FY 09 Q4 FY08 FY 08 Volume : Crude Steel Production 0.966 3.724 ‐ 3 % 3 % : Saleable Steel 1.062 3.428 5 % 1 % Net Sales 3,275.02 14,001.25 ‐ 7 % 23 % EBITDA Margin 15.1 % 21.8 % EBITDA Rs. 503 Cr. Rs. 3,093 Cr. Net Profit Rs. 49 Cr. Rs. 458 Cr. 16
Production – Q4 FY09 7% 33% ‐ 3% 6% YoY % QoQ % YoY % QoQ % ‐ 3% 24% Q4 '08, Q4 '09, 0.9 YoY % QoQ % 0.775 0.826 0.8 Q3 '09, 1.20 0.7 0.622 0.6 Q4 '08, Q4 '09, 0.5 0.993 0.966 1.00 0.4 0.3 Q3 '09, 0.2 0.782 0.80 0.1 0 Rolled : Flat Rolled : Long 0.60 36% 21% 23% 17% YoY % QoQ % YoY % QoQ % Q4 '09, Q4 '09, 0.40 0.35 0.25 Q3 '09, Q3 '09, 0.322 Q4 '08, 0.230 Q4 '08, 0.197 0.30 0.266 0.187 0.20 0.236 0.25 0.20 0.15 0.20 0.15 0.10 0.00 0.10 0.05 Crude Steel 0.05 0.00 0.00 CR / CRCA GI / GL All No are in Mn Tonnes 17
Production – FY 08 09 ‐ 6% %0 3% YoY % YoY % YoY % FY 07 ‐ FY 08 ‐ FY 07 ‐ FY 08 ‐ 08, 09, FY 08 ‐ 08, FY 07 ‐ 3.50 09, 0.350 0.329 0.330 09, 2.943 08, 4.00 2.764 3.00 0.300 3.724 3.627 2.50 0.250 3.50 2.00 0.200 1.50 0.150 3.00 1.00 0.100 0.50 0.050 2.50 0.00 0.000 Rolled : Long Rolled : Flat 2.00 ‐ 3% 21% 1.50 YoY % YoY % FY 08 ‐ FY 07 ‐ FY 08 ‐ 09, 1.00 0.900 08, 09, 1.20 FY 07 ‐ 1.045 0.800 0.764 0.745 08, 1.00 0.862 0.700 0.50 0.80 0.600 0.500 0.60 0.00 0.400 0.40 0.300 Crude Steel 0.200 0.20 0.100 0.00 0.000 GI / GL All No are in Mn Tonnes CR / CRCA 18
Saleable Steel Sales – Q4 FY09 19% 22% ‐ 6% 59% YoY % QoQ % YoY % QoQ % Q4 '08, 5% 49% Q4 '09, 0.12 Q4 '09, 0.556 0.60 0.525 0.096 Q4 '08, YoY % QoQ % Q3 '09, 0.10 0.50 0.081 0.079 1.20 Q3 '09, Q4 '09, 0.08 0.40 0.331 Q4 '08, 1.062 0.06 1.009 0.30 1.00 0.04 0.20 0.10 0.02 Q3 '09, 0.80 0.00 0.00 0.711 Rolled : Long HR Coils & Plates ‐ 10% 83% 32% 37% 0.60 YoY % QoQ % YoY % QoQ % Q4 '09, Q4 '08, 0.40 0.140 0.330 Q4 '09, 0.350 0.123 Q4 '08, 0.110 Q3 '09, 0.120 0.300 0.249 0.241 0.100 0.250 0.20 Q3 '09, 0.080 0.200 0.060 0.150 0.060 0.00 0.100 0.040 0.050 0.020 Total Sales 0.000 0.000 Semis Value Added (CR/GI/PPGI) All No are in Mn Tonnes 19
Saleable Steel Sales – FY 08 09 ‐ 19% 1% YoY % 1% YoY % FY 07 ‐ FY 08 ‐ FY 07 ‐ YoY % 2.50 08, 09, 08, 0.350 FY 08 ‐ 0.291 0.293 1.962 09, 0.300 2.00 1.599 0.250 FY 08 ‐ FY 07 ‐ 4.000 1.50 0.200 09, 08, 3.428 3.405 0.150 1.00 3.500 0.100 0.50 0.050 3.000 0.000 0.00 Rolled : Long HR Coils & Plates 2.500 86% 15% 2.000 YoY % YoY % FY 08 ‐ FY 08 ‐ 1.500 09, FY 07 ‐ 09, 1.20 0.6 0.542 08, 0.994 1.000 1.00 0.5 0.861 FY 07 ‐ 0.80 08, 0.4 0.500 0.291 0.60 0.3 0.000 0.2 0.40 0.1 0.20 Total Sales 0 0.00 Semis Value Added (CR/GI/PPGI) All No are in Mn Tonnes 20
Sales Realisation v/s Cost of Production – Q4 FY09 11% ‐ 15% ‐ 15% ‐ 20% YoY % QoQ % YoY % QoQ % 24,014 26,608 31,193 40000 Q3 '09, 35000 FX Loss, Q4 '08, 34946 1747 35000 32965 FX Loss, 30000 Q4 '09, 1582 FX Loss, 30000 27881 274 25000 25000 20000 20000 Cost, 15000 15000 29446 Cost, Cost, 25026 23740 10000 10000 5000 5000 0 0 Blended Realisation (Rs. / t) Q4 '08 Q4 '09 Q3 '09 Blended Cost (Rs. / t) 21
Sales Realisation v/s Cost of Production – FY 08 09 49% 20% YoY % YoY % FY 09, 40000 31,239 21,027 37117 35000 FX Loss, 2177 35000 FY 08, 30892 30000 30000 25000 25000 20000 20000 Cost, 15000 29062 15000 Cost, 10000 21226 10000 5000 5000 0 FX Loss, ‐ FX Gain, 0 199 ‐ 5000 FY 07 ‐ 08 FY 08 ‐ 09 Blended Realisation (Rs. / t) Blended Cost (Rs. / t) 22
Iron Ore Price Movements – Q4 FY09 ‐ 49 % 49 % YoY % QoQ % Rs / t Q4 '08, 3000 2851 2500 QoQ YoY Rs / t cs ‐ 777 2257 Total (Rs Cr) ‐ 75 218 2000 Q4 '09, 1461 1500 Q3 '09, 982 1000 500 0 23
Operating Parameters (Vijayanagar) – Q4 FY09 ‐ 7% ‐ 3% Own Bought 100% YoY % QoQ % 1.00% 5.80% Kg / t 90% Q4 '08, 670 37.81% 80% Cost Impact Cost Impact 661 660 70% 650 60% QoQ YoY QoQ YoY Q3 '09, 50% 99.00% 640 94.20% Rs per ‐ 392 ‐ 432 Rs per ‐ 300 ‐ 2,186 628 40% 630 Q4 '09, t cs t cs 62.19% 30% 620 612 Total ‐ 30.34 ‐ 33.43 Total ‐ 23.22 ‐ 169.20 20% 610 (Rs Cr) (Rs Cr) 10% 600 0% 590 Q4 '08 Q4 '09 Q3 '09 580 Coke Consumption Fuel – Blast Furnace ‐ 10% 11% 79% ‐ 6% M 3 / t YoY % QoQ % YoY % QoQ % of LS Kg / t Q4 '08, Cost Impact Cost Impact Q4 '09, Q3 '09, 400 379 140 Q4 '09, Q3 '09, 342 118 111 350 309 QoQ YoY 120 QoQ YoY 300 100 Rs per 11 ‐ 12 Rs per ‐ 19 51 Q4 '08, 250 t cs 80 t cs 62 200 60 Total 0.85 ‐ 0.93 Total ‐ 1.47 3.95 150 (Rs Cr) (Rs Cr) 40 100 20 50 0 0 Fluxes Consumption Sinter + Bfc LD Gas Recovery 24
Operating Parameters (Vijayanagar) – FY 08 09 ‐ 4% Own Bought 100% YoY % Kg / t FY 07 ‐ FY 08 ‐ 90% 24.00% 29.00% 08, 652 700 09, 627 80% Cost Impact Cost Impact 70% 600 60% YoY YoY 500 50% Rs per ‐ 185 Rs per ‐ 191 400 40% 76.00% 71.00% t cs t cs 30% 300 Total ‐ 56.95 20% Total ‐ 58.8 200 (Rs Cr) 10% (Rs Cr) 100 0% 0 FY 07 ‐ 08 FY 08 ‐ 09 Fuel – Blast Furnace Coke Consumption 7% ‐ 44% M 3 / t YoY % YoY % Kg / t of LS FY 08 ‐ FY 07 ‐ Cost Impact Cost Impact FY 08 ‐ 400 09, 365 120 08, 341 09, 101 350 YoY 100 YoY FY 07 ‐ 300 Rs per 16 Rs per ‐ 32 80 08, 70 250 t cs t cs 200 60 Total 4.93 Total ‐ 9.85 150 40 (Rs Cr) (Rs Cr) 100 20 50 0 0 Fluxes Consumption Sinter + Bfc LD Gas Recovery 25
Financial Performance Financial Performance Financial Performance Financial Performance 26
EBITDA Analysis – Q4 and FY09 Rs. Cr. Q4 FY 09 Q4 FY 08 FY 09 FY 08 EBITDA 503.40 951.23 3,092.67 3,506.85 EBITDA Margin 15.1 % 26.7 % 21.8 % 30.3 % Less : CER income (48.58) (48.58) (111.11) Less : FCCB gain & Others (97.30) (102.39) (5.64) Adjusted EBITDA 357.52 951.23 2,941.70 3,390.10 Adjusted EBITDA Margin 10.9 % 26.7 % 20.8 % 29.6 % 27
Subsidiary Performance Subsidiary Performance Subsidiary Performance Subsidiary Performance 28
Operational Performance USA PRODUCTION (NT) SALES (NT) Q4 FY 09 FY 2008 ‐ 09 Q4 FY 09 FY 2008 ‐ 09 Plate Mill 44,061 343,691 26,986 199,861 Pipe Mill 9,065 137,626 9,942 143,508 $ Mio Particulars Q4 FY 09 FY 2008 ‐ 09 a) Turnover 30.31 500.92 b) EBITDA + Other Income (18.93) 70.58 Write down of Inventory (58.35) (58.35) Profit Before Tax (96.68) (64.74) e) Profit After Tax (61.1) (36.97) 29
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