Investor / Analyst Presentation Jindal Steel and Power Ltd November 2013 Jindal Steel & Power Limited 1
Safe Harbour Statement This presentation may include statements, which may constitute forward-looking statements. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, business development, market position, expenditures, and financial results, are forward looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise. While every effort is made to ensure that this presentation conforms with all applicable legal requirements, the company does not warrant that it is complete, comprehensive or accurate, or commit to its being updated. No part of the information provided herein is to be construed as a solicitation to make any financial investment and is provided for information only. Any person/ party intending to provide finance / invest in the shares/businesses of the Company shall do so after seeking their own professional advice and after carrying out their own due diligence procedure to ensure that they are making an informed decision. In no event shall the company be liable for any damages whatsoever, whether direct, incidental, indirect, consequential or special damages of any kind or including, without limitation, those resulting from loss of profit, loss of contracts, goodwill, data, information, income, expected savings or business relationships arising out of or in connection with the use of this presentation. Jindal Steel & Power Limited 2
Economic & Industry Overview Jindal Steel & Power Limited 3
Global Steel Outlook: India a leader in steel production… • One of the largest producers globally… (Production data for FY 2012) 717 4 th largest producer 107 89 MT 78 70 69 43 (China) (Japan) (US) (India) (Russia) (South Korea) (Germany) • … supported by deep domestic iron ore reserve base 35,000 5 th largest Iron ore reserves in 29,000 the world (Australia) 25,000 23,000 MT 17,000 16,000 14,000 7,200 7,000 6,900 6,300 4,500 2,100 2,300 1,000 650 (Australia) (Brazil) (Russia) (China) (India) (US) (Canada) (South Africa) Crude ore reserves Iron content Source: World Steel Association, US Geographical Survey, Mineral Commodity Summaries Jindal Steel & Power Limited 4
Global Steel Industry - Production World ('000 MT) 4.6% World Crude Steel Production in 140,000 Q2 up by 4.6% (vs Q2 12-13) 2.7% 6.1% 135,000 5.2% For H1, World’s production up by 130,000 3.6% (vs H1 12-13) 125,000 120,000 115,000 110,000 Jan Feb Mar Apr May Jun Jul Aug Sep FY 12 FY 13 China ('000 MT) 10% India ('000 MT) 3.2% 70,000 7,000 12.8% 11% 6,800 6.5% 4.3% 0.9% 65,000 6,600 4.7% 6,400 60,000 6,200 6,000 55,000 5,800 5,600 50,000 Jan Feb Mar Apr May Jun Jul Aug Sep Jan Feb Mar Apr May Jun Jul Aug Sep FY 12 FY 13 FY 12 FY 13 India’s Production in Q2 up by 3.2% ( vs Q2 12-13) China’s Steel production in Q2 up 10% ( vs Q2 12-13) For H1, World’s production up by 2.7% ( vs H1 12-13) For H1, China’s production up by 8.7% ( vs H1 12-13) Jindal Steel & Power Limited 5
Performance & Capacity Utilization showing signs of Improvement For Jan to Sep, 2013 3.4% improvement in September Jindal Steel & Power Limited 6
Price trend - Finished Product: IN Q2 WE SAW: Global Price Trend - Finished Product ($ / ton) FOB Black sea 4.7% decrease in HR Coil 700 0.5% increase in HR plates 650 Rebar 0.8% increase in Rebar 600 Plate 550 500 Coil 450 400 Indian Price Trend HR Coil ExW, Basic Rs/ton TMT Rebar ExW, Basic Rs/ton 45000 Rebar 40000 Billet 125mm ExW Raipur, Basic Rs/ton 35000 Sponge Iron 88 Mtz, 78 FeM Coil ExW Raipur, Basic Rs/ton 30000 25000 Billet Sponge 20000 IN Q2 WE SAW: Iron 15000 8.7% increase in HR Coil 0.57% Decrease in Billet 5.45% increase in Sponge Iron Jindal Steel & Power Limited 7
Price Trends – Raw Material International Market Pellet 65.5 Fine 63.5 HCC LV FOB, Brazil FOB, Australia CFR China 170 PELLETS 160 International Price went up 150 from 143$ (June) to 161$ (Sep) US$/MT 140 130 Domestic prices went down 120 from Rs 6750 (June) to Rs 6350 in Jul and Aug. It rose back to 110 7000+ in Sep due to strong 100 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Current exports Domestic Market COKING COAL Pellet 63.5 Lump 65 Lump 63 Prime Hard Coking coal 8000 increased from 135$ (June) to 7500 151$ (Sep) Rs/MT (FOR Barbil) 7000 6500 6000 5500 5000 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Current Jindal Steel & Power Limited 8
India is a growing economy driven by domestic consumption Savings and investment trends Gross national savings (% of GDP) Total investment (% of GDP) Source: Government of India Press Note: Quarterly estimates of Gross Domestic Product for the first and the second quarter of 2012-13 Infrastructure investment as % of GDP Sector-wise infrastructure investment (INRbn) Electricity Roads & Bridges Telecom Railways Irrigation Water & Sanitation 9.0% 8.6% 8.4% Ports Airports Storage 8.1% 7.7% 7.4% 7.3% 7.3% 56,317 Gas 60,000 6.8% 6.3% 50,000 40,000 30,000 23,860 20,000 9,061 10,000 0 FY08 FY09 FY10 FY11 FY12E FY13P FY14P FY15P FY16P FY17P X Plan XI Plan XII Plan Source: Planning Commission of India Source: Planning Commission of India Note: X Plan investments at 2006-07 prices; XI and XII Plan investments at current prices Jindal Steel & Power Limited 9
India is expected to witness strong steel demand… India has one of the lowest per capita steel consumption in spite of being the 4 th largest steel producer in the world 2012 per capita consumption – (kg) 1,114.1 506.0 477.4 306.2 216.9 56.9 South Korea Japan China US World India Source: World Steel Association, Statistical Yearbook 2013 Note: Finished steel consumption With private sector contributing a significant share of the production Share of private sector in country's crude steel production (%) 77 76 75 72 68 67 FY07 FY08 FY09 FY10 FY11 FY12 Source: Ministry of Steel Jindal Steel & Power Limited 10
Snapshot of Indian Steel Industry Indian Steel Trend 94 100 87 78 75 80 66 60 57 78 51 74 60 48 71 66 58 54 40 51 46 43 20 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Capacity Production Indian Capacity Utilization Steel Consumption Growth (%) 91 91 91 16.0 92 90 89 13.3 12.9 90 88 14.0 88 11.9 11.4 88 86 12.0 86 10.0 83 % 84 6.8 8.0 82 6.0 80 4.1 4.0 78 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 2.0 0.4 Capacity Utilisation (%) 0.0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 RU - 25 April 2013 V0 Jindal Steel & Power Limited 11
How the Indian Industry fared Production of crude steel during H1, 13-14 was 39.6 Mt, (2.5 % up compared to H1 12 -13) Steel Demand in India registered a growth rate of only 0.8% in H1 2013 -14 Imports stood at 3.04 Mt during H1, 13-14, a decline of 22.8 % compared to last year Exports stood at 2.51 Mt during H1, 13-14, a growth of 6.0 % compared to last year Pellet prices rise back to Rs 7000+ levels in Sep’13 due to surge in pellet exports Pellet prices are again going downward as: Iron ore as well as pellet prices in the international market are corrected by US$5-10/MT Rupee appreciated by around Rs.7/$ compared to the previous month levels. Higher ocean freight (US$14/MT for China) Price differential between pellet and iron ore reduced as Buyers preferred cheaper iron ore with respect to pelle t. Jindal Steel & Power Limited 12
How the Indian Industry fared Long Products Sales in H1- FY13-14 vs FY 12-13 LONG % 15% PRODUCTS H1-FY 12-13 H-FY 13-14 change 16% Highest Sales % change 14% JSPL 1018 1170 15% 12% 10% SAIL 1961 2072 6% 8% 8% 6% 6% 6% Tata 1242 1212 -2% 4% JSW 589 636 8% 2% 0% RINL 1101 1172 6% JSPL SAIL Tata JSW RINL -2% FLAT % -2% -4% PRODUCTS H1-FY 12-13 H-FY 13-14 change Flat Products Sales in H1, FY13-14 JSPL 297 347 17% SAIL 2813 3167 13% 50% % change 43% 45% Tata 1604 2298 43% 40% 35% JSW 2915 3271 12% 30% 25% JSW (Ispat) 1264 1398 11% 17% 20% 13% 12% 15% 11% Essar 1869 1980 6% 10% 6% 5% 0% JSPL SAIL Tata JSW JSW (Ispat) Essar Source: JPC N.B.1 H1 JSPL L.P. growth highest; F.P. growth 2 nd highest Jindal Steel & Power Limited 13 N.B.2 Tata new HSM (3.0 MT) fully commissioned in FY 13-14
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