Analyst Meet Presentation Q2 FY11 Analyst Meet Presentation Q2 FY11
Agenda Key Developments Economic and Steel Scenario Performance Highlights Projects Update 2
Key Developments Highest ever quarterly sales – by volume (1.583mnt) and value ( ` 6,184 crores) FCD of ` 4800 Crores issued to JFE converted to 32mn equity shares Debt prepayment of ` 2,603 crores ` 2,197 crores currently invested in MFs/FDs will be used in lieu of tied up loans draw down for Capex Coke Oven 4 (Battery A) commissioned on 4th Oct 2010 Generation from 300 MW captive power plant started 3
Strengthening Balance Sheet Consolidated total net debt - equity ratio has improved to 0.80 at Sep’ 2010 end from 1.60 at Jun’ 2010 end Consolidated weighted average debt cost has come down by 58bps to 6.13% during Q2 FY11 Potential Equity Infusion of ` 2,488 Crores over 21 months ` 1,588 Crores – Promoters warrants ` 600 crores – 3mn GDRs plus 1mn shares to JFE ` 300 crores – 2mn shares to JFE on conversion of outstanding FCCBs Impact of FCCBs conversion Outstanding FCCBs – ` 1,230 crores, if converted will simultaneously increase equity and reduce debt. 4
Awards Fastest Growing Steel Company from ASAPP Media Information Group Global HR Excellence Awards – organisation with innovative practices from APHC Star Performer 2008-09 – Basic Iron and Steel Large Enterprise from EEPC Regional Award 2007-08 Gold Trophy – Large Enterprise Top Exporter from EEPC APHC - ASIA Pacific Human Resource Management Congress EEPC – Engineering Exports Promotion Council 5
Economic & Steel Scenario 6
Global Economy Global economy remains on recovery path, GDP forecast for 2010 continuously upgraded 10 Annual GDP growth (% YoY) Actual Quarterly GDP growth (% YoY) 7.1 8.1 8 6.8 6.3 6.0 6 5.1 4.9 4.8 4.7 4.6 4.2 4 4.0 3.9 2.9 3.1 2 2.7 2.6 2.5 2.5 2.3 0.3 2.1 1.9 0 1.3 0.6 -2 0.0 -0.6 -2.9 -4 -4.8 2010 GDP Forecast Dates -6 -3.2 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Jan-09 Oct-09 Jan-10 Oct-10 Apr-09 Jul-09 Apr-10 Jul-10 2009 Actual World World Adv. economies Adv. economies Emg. and developing economies Emg. and developing economies Source: IMF 7
Indian Economy GDP growth remains robust and domestic consumption growth is intact 180 Vehicle Sales Vehicle Sales GDP (% YoY) 3MMA, Jan 2009 = 100 8.8% 170 8.6% 8.6% 160 150 6.5% 6.0% 5.8% 140 130 Non-Food Credit Non-Food Credit 120 110 Power 100 90 Jan-09 Mar-09 May-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-09 Jul-10 Aug- 10 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Source: MOSPI, Reuters, SIAM 8
Global Steel Trends Crude Steel Production (mnt) Steel Demand (% YoY growth) 125 14% 13% 121 121 118 9% 8% 7% 114 5% 5% 113 4% 112 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 World BRIC China India 2010 E 2011 E Global Steel Demand (mnt) Year World BRIC China India 2009 1125 641 542 55 2010 E 1272 696 579 60 2011 E 1340 730 599 68 Source: WSA 9
HRC Prices 800 781 Producers raised prices in April & 750 May to cover higher 752 raw material costs 710 715 700 685 650 634 623 600 573 610 550 563 505 500 475 450 Jun-10 Jul-10 Aug-10 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Apr-10 May-10 Sep-10 Oct-10 Mar-10 N.America domestic FOB US Midwest mill Europe import CIF S.European port Russia Black Sea export FOB China export FOB Shanghai Source: SBB (All figures are in USD/ton) 10
Raw Material Prices 495 270 500 249 240 450 435 218 448 210 400 383 200 395 177 180 350 345 155 163 150 324 300 130 120 265 250 90 91 60 200 Nov-09 Dec-09 May-10 Oct-09 Jan-10 Feb-10 Mar-10 Apr-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Indian Iron Ore 63% Fe dry / China import CFR N.China port Australian Spot HCC FOB (RHS) Scrap / Shredded / Rotterdam export FOB (RHS) China Coke export FOB (RHS) Source: SBB , Macquarie Research (All figures are in USD/ton) 11
Chinese Steel Market Production vs. consumption (mnt) Monthly Exports (mnt) Withdrawal of export rebate in July Monthly finished steel production reduced to coupled with reduced production resulted 46.5mnt in Sep’ 10 from 54.5mnt in May’ 10 in lower exports 5.7 56 54 5.0 54 53 4.6 4.3 52 50 3.3 49 3.0 48 2.9 2.8 46 2.5 47 46 45 44 43 42 40 May-10 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Jun-10 Jul-10 Aug-10 Sep-10 Apr-10 May-10 Jul-10 Jan-10 Feb-10 Mar-10 Jun-10 Aug-10 Sep-10 Finished Steel Production Apparent Steel Consumption Source: Mysteel, WSA (All figures are in million tons ) 12
Indian Steel Market H1 Production vs. Consumption (mnt) Monthly Imports (mnt) 29.8 10% 1.01 0.97 0.97 4% 27.2 27.0 0.82 0.73 25.9 0.68 0.68 0.68 0.68 0.62 0.46 0.36 Oct' 09 Finished Steel Production Apparent Steel Consumption Nov' 09 Dec' 09 Jan' 10 Feb' 10 Mar' 10 Apr' 10 May' 10 Jun' 10 Jul' 10 Aug' 10 Sep' 10 Apr -Sep' 09 Apr - Sep' 10 Source: JPC (All figures are in million tons ) * Production and consumption figures netted off for double counting effect 13
Operating & Financial Highlights 14
Production – Q2 FY 11 -- 2% 38% 16% QoQ % YoY % YoY % QoQ % 1.574 1.571 1.271 1.541 1.093 0.923 Q2 '10 Q2 '11 Q1 '11 Rolled : Flat -15% QoQ % 22% 0.309 YoY % 0.264 0.217 Q2 '10 Q2 '11 Q1 '11 Q2 '10 Q2 '11 Q1 '11 Crude Steel Rolled : Long All numbers are in million tons 15
Production – H1 FY 11 32% YoY % 8% 2.364 YoY % 3.144 1.794 2.917 H1 '10 H1 '11 Rolled : Flat 44% YoY % 0.573 0.399 H1'10 H1'11 Crude Steel H1 '10 H1 '11 Rolled : Long All numbers are in million tons 16
Saleable Steel Sales – Q2 FY 11 40% 41% 30% 19% YoY % QoQ % YoY % QoQ % 33% 9% 1.215 0.451 QoQ % YoY % 0.379 0.346 1.583 0.870 0.859 1.454 1.191 Q2 '10 Q2' 11 Q1 '11 Q2 '10 Q2 '11 Q1 '11 Rolled : Flat Value Added 25% 57% -79% YoY % QoQ % YoY % 0.281 0.405 0.225 0.179 -20% QoQ % Q2 '10 Q2 '11 Q1 '11 0.107 0.086 Total Sales Q2 '10 Q2 '11 Q1 '11 Q2 '10 Q2 '11 Q1 '11 Semis Rolled : Long All numbers are in million tons 17
Saleable Steel Sales – H1 FY 11 7% 20% YoY % YoY % 2.775 2.774 0.797 2.074 0.745 1.725 H1 '10 H1 '11 H1 '10 H1 '11 Rolled : Flat Value Added -73% 51% YoY % YoY % 0.716 0.506 0.334 0.193 H1 '10 H1 '11 Total Sales H1 '10 H1 '11 H1 '10 H1 '11 Rolled : Long Semis All numbers are in million tons 18
Focus on Retail Sales % Share through JSW Shoppe-Q2 FY 11 Sales through JSW Shoppe-Q2 FY 11 (In ‘000 tons) (Excluding Semis) MnT, % Share 45% Value Added: Flat 74% 322 26% 152% 0.901 Rolled: 0.322 14% Long 128 Rolled: HR 41% Products Q2 FY 10 Q2 FY 11 JSW Shoppe 19
Financials – Q2 FY11 (Standalone) Particulars Q2 FY 11 Q2 FY 10 Growth ` Cr. ` ` Cr. % Net Sales 5,713 4,554 25% Op. EBITDA (excl. Fx Variance) 998 1,189 -16% Op. EBITDA Margin (excl. Fx Variance) 17.3% 26.0% EBITDA 1,156 1,167 -1% EBITDA Margin 20.0% 25.5% Less: Net Finance Charges 199 228 -13% Less: Depreciation 332 281 19% Profit Before Tax 624 658 -5% Profit after Tax 445 452 -1% 20
Financials – H1 FY11 (Standalone) Particulars H1 FY 11 H1 FY 10 Growth ` Cr. ` ` Cr. % Total Income 10,360 8,448 23% Op. EBITDA (Excl. Fx Variance) 2,130 1,940 10% Op. EBITDA Margin (Excl. Fx Variance) 20.4% 22.8% EBITDA 2,190 2,154 2% EBITDA Margin 20.9% 25.4% Less: Net Finance Charges 410 448 -8% Less :Depreciation 650 552 18% Profit Before Tax 1,130 1,154 -2% Profit After Tax 796 792 1% 21
EBITDA MOVEMENT – Q2 FY 11 (Standalone) ` Cr. 98 1,167 1,156 179 206 (16) 536 (1014) EBIDTA Q2'10 Volume Cost NSR Mix CER/Other Fx Variance EBIDTA Q2'11 Income 22
Operational & Financial Performance - USA Production (NT) Q2 FY 11 Q2 FY 10 Growth Plate Mill 37,699 48,895 -23% Pipe Mill 9,495 16,845 -44% Sales (NT) Q2 FY 11 Q2 FY 10 Growth Plate Mill 23,040 38,689 -40% Pipe Mill 11,970 17,822 -33% USD Mn Particulars Q2 FY 11 Q2 FY 10 Turnover 36.40 41.49 EBITDA + Other Income 0.85 (21.03) Profit After Tax (13.14) (25.13) 23
Financials Q2 FY 11 (Consolidated) Particulars Q2 FY 11 Q2 FY 10 Growth ` Cr. ` Cr. % Total Income 5,972 4,757 26% EBITDA 1,186 1,075 10% Less: Net Finance Charges 261 301 -13% Less :Depreciation 379 326 16% Profit Before Tax 546 449 21% Profit After Tax 373 323 16% 24
Financials – H1 FY11 (Consolidated) Particulars H1 FY 11 H1 FY 10 Growth ` Cr. ` Cr. % Total Income 10,830 8,770 23% EBITDA 2,265 2,003 13% Less: Net Finance Charges 531 598 -11% Less :Depreciation 740 642 15% Profit Before Tax 993 762 30% Profit After Tax 669 557 20% 25
Net Total Debt Movement (Consolidated) ` Cr. 569 16,510 (377) (2330) (334) 12,188 (1850) Net Total Debt as New Loan Taken Repayments Prepayments Fx Variance Movement in Net Total Debt as on Jun'10 FD/MF on Sep'10 Cash and Cash equivalent - ` ` 544 Crs. FD/Mutual Fund - ` 2,477 Crs. 26
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