JSW Steel Limited Q4 FY 2018-19 Results Presentation May 24, 2019 - PowerPoint PPT Presentation

JSW Steel Limited Q4 FY 2018-19 Results Presentation May 24, 2019 Better Everyday 1

FY 2018 – 19 : A Record year  Crude Steel production: 16.69 million tonnes, up by 3% YoY Highest ever  Saleable Steel Sales: 15.60 million tonnes, up by 1% YoY Annual  performance Operating EBITDA : ₹ 18,952 crore, up by 28% YoY  PAT : ₹ 7,524 crore, up by 23% YoY  Commissioned pipe conveyor for iron ore at Vijayanagar to reduce logistics cost Project Highlights  Commissioned 0.25 MTPA Tin Plate facility at Tarapur  Board has recommended dividend at ₹ 4.10 per share  Strong Balance with Net Debt to Equity at 1.34x and Net Debt to EBITDA at 2.43x  Acquired oversees assets in US and Italy Key highlights  Completed acquisition of Monnet Ispat & Energy Limited in consortium with AION Capital Partners Limited  Vijayanagar works received the prestigious Deming Prize for excellence in Total Quality Management  JSW Steel included in the NIFTY50 Index, India’s premier index of the National Stock Exchange  Recognized as one of “Steel Sustainability Champions” (2018) by World Steel Association 2

Key highlights – Q4 FY19  Crude Steel production: 4.17 million tonnes, lower by 3% YoY  Saleable Steel Sales: 4.29 million tonnes, higher by 2% YoY Standalone performance  Operating EBITDA: ₹ 4,341 crores, down 14% YoY  PAT: ₹ 1,745 crores, lower by 22% YoY  Saleable Steel Sales: 4.31 million tonnes, up by 3% YoY  Operating EBITDA : ₹ 4,440 crores, lower by 16% YoY Consolidated performance  PAT : ₹ 1,495 crores, lower by 48% YoY  Net Debt to Equity: 1.34x and Net Debt to EBITDA: 2.43x  Commissioned 0.25 MTPA Tin Plate facility at Tarapur Key Updates  Commissioned pipe conveyor facility at Vijayanagar to reduce logistics cost 3

Agenda Financial Business Operational Guidance Performance Environment Performance & Appendix 4

Global economy GDP growth - 2018 and projections for 2019 (%YoY)  IMF revises global GDP forecast for 2019 yet again to 3.3% 2018 2019 (from 3.5% in Jan 2019) 7.3% 7.1% 6.6% 6.3%  US growth momentum sustains, though outlook has softened 4.5% 4.4% as fiscal impulse fades away. Fed’s decision to hold interest 3.6% 3.3% 1.0% 2.9% 0.8% rates for 2019 bodes well for a sustained recovery 2.3% 2.2% 1.8% 1.8% 1.3%  Euro area growth underpinned by weak industrial growth, World AMEs US Euro Area Japan EMDEs India China subdued private consumption and trade / political uncertainties Index of Industrial Production (%YoY) 11  Japan faces tailwinds from domestic spend and healthy private US Eurozone China Japan consumption, notwithstanding external trade weakness 6  Chinese growth picked up in Q1 CY2019, aided by policy support. Further fiscal and monetary policy measures likely to 1 stabilise growth -4  Escalation of trade tensions pose risks to growth outlook Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Global growth softening, modest recovery expected in the medium term Source: IMF ( April 2019),Eurostat, METI Japan, Federal Reserve, NBS China 5

Global steel China Steel Production and Export 100 12 Global finished steel demand growth estimates (%YoY) China Crude Steel Production (LHS) Exports (RHS) India is the fastest growing 10 80 steel market CY18 CY19F 8 8.3 60 7.1 6 40 4 20 2.2 2.1 * 2.0 2 1.7 1.3 1.0 0 0 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 World China World ex/China India Raw Material Price Trend HRC prices US$/t HCC Premium LV (USD$/mT) (RHS) Iron Ore 62% Fe ($/dmt) (LHS) N.America ExW N.Europe ExW 1,000 120 400 China FOB Black Sea FOB 800 300 80 200 600 40 100 400 0 0 200 Mar-16 Sep-16 Mar-17 Oct-17 Apr-18 Nov-18 May-19 Mar-16 Sep-16 Mar-17 Oct-17 Apr-18 Nov-18 May-19 Strong Chinese output amidst moderating global demand is a source of risk Source: WSA , Bloomberg, Platts Note : * China continued to close most of its outdated induction furnaces in 2017, a category which was not captured in official statistics. While nominal 6 steel demand growth in 2018 stood at 7.9%, the dynamics of steel using sectors suggest growth of 2.0% in real terms. Accordingly, real global growth in 2018 is 2.1%.

Indian economy Industry (GVA) Growth and Gross Fixed Capital Formation  Gross fixed capital (GFC) formation continues to grow with a rise (YoY) in government spending on infrastructure – likely to get an Industry (GVA) Growth (YoY) Gross Fixed Capital Formation (YoY) impetus with a stable government formation 14.4% 12.5% 10.6%  IIP growth and manufacturing PMI has weakened recently, 10.0% 10.0% 9.1% 8.8% 8.0% 7.1% 6.9% 6.8% 6.3% expected to pick up in second half post-monsoon 6.1% 6.1% 0.8% 0.1%  Automotive and consumer durable volumes have corrected sharply, recovery expected from H2 FY2020 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 FY 19E Total Vehicle Production vs. IIP  With a stable government, announced outlays of INR ~1 trillion IIP - Use Based (Consumer Index) 170 IIP (YoY) (lhs) in the Interim Budget expected to spur rural spending and aid Durables Non-Durables overall consumer demand. Total Vehicle Production ( '000s) 10% (rhs) 150 2400  Expectations of a normal monsoon is positive for rural demand 6% 1600 130  Volatility in crude oil prices poses a risk to inflation 2% 800  Tight liquidity and lack of credit availability remains a source of -2% 0 110 risk Mar-16 Dec-16 Sep-17 Jun-18 Mar-19 Mar-16 Dec-16 Sep-17 Jun-18 Mar-19 Stable government formation likely to spur investment and end user demand Source: CSO India, SIAM 7

Indian steel - Q4 FY2019 Production and Exports (Mnt) Imports (Mnt) Consumption (mt) -17.0% 30.7% 2.13 2.59 2.15 1.63 0.36% 8.8% 0.21 0.58 27.51 0.47 27.41 26.56 0.25 24.41 1.93 2.02 1.39 1.69 Crude Steel Production Finished Steel Consumption 4Q 18 4Q 19 4Q 18 4Q 19 Finished Semis Finished Semis 4Q 18 4Q 19 Exports (kt) from Japan and South Korea Post Section 232 Post Section 232 Imports in India Imports reduced by 275 kt increased by 264 kt 1,231 India 1,070 956 USA 806 Q1 CY 18 Q1 CY 19 Q1 CY 18 Q1 CY 19 Diversion of steel imports from surplus countries to India needs active monitoring Source: JPC, FTD (US Census Bureau) 8

Indian steel – FY2019 Production and Consumption (mt) Imports (Mnt) Exports (Mnt) 4.6% -26.4% 3.3% 7.5% 8.40 8.79 11.61 8.54 1.99 0.95 0.92 106.56 103.13 97.54 2.18 90.71 9.62 7.84 7.48 6.36 Crude Steel Production Finished Steel Consumption FY 18 FY 19 FY 18 FY 19 Finished Semis FY18 FY19 Finished Semis Exports (kt) from Japan and South Korea Post Section 232 Post Section 232 The imports have Imports have reduced increased by 530 kt by 1,251 kt 4,855 India USA 4,290 3,604 3,760 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 Domestic steel demand likely to grow by 6.5% – 7% in FY2020 Source: JPC, FTD (US Census Bureau) 9

Agenda Business Operational Financial Guidance Environment Performance Performance & Appendix 10

Quarterly volumes- standalone Steel Sales Crude Steel Production +17% -1% +2% -3% QoQ QoQ YoY YoY 4.31 4.29 4.23 4.22 4.17 3.68 Q4 FY18 Q4 FY19 Q3 FY19 Q4 FY18 Q4 FY19 Q3 FY19 Q4 FY18 Q4 FY19 Q3 FY19 Q4 FY18 Q4 FY19 Q3 FY19 Flat Flat 2.97 3.08 2.61 2.98 3.01 2.90 Long Long 1.04 1.04 0.89 1.07 0.99 1.04 Semis 0.21 0.18 0.17 All figures are in million tonnes 11

FY2019 volumes-standalone Steel Sales Crude Steel Production +1% +3% YoY YoY 15.76 16.69 15.62 16.27 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 Flat 11.17 11.29 Flat 11.44 11.74 Long 3.55 3.69 Long 3.56 3.87 Semis 0.90 0.78 All figures are in million tonnes 12

Quarterly sales highlights – consolidated +3% +19% YoY QoQ 4.31^ 3.62^ 4.18 15% 22% 10% 3.55* 43% 3.37* 45% 53% 3.27* 15% 12% 16% 29% 31% 27% 22% 21% 16% 56% 56% 56% 35% 34% 31% Q4 FY18 Q4 FY19 Q3 FY19 Q4 FY18 Q4 FY19 Q3 FY19 OE Retail Auto Exports VA Special prodcuts Other products  Sales grew by 3% YoY, 19% QoQ.  Despite sales to Auto segment declining by 22% QoQ due to sluggish demand and elevated dealer inventories, VA & Specials sales increased by 16kT QoQ All figures are in million tonnes. * Domestic sales, ^ Total sales (JSW Steel Standalone + JSW Steel Coated Products after netting-off inter- company sales). Value added and Special products (VASP) include HRPO, CRFH, CRCA, ES, Galvanised, Colour Coated and Special Bars and 13 Rounds. Special products include HR special, TMT Special and WR Special