JSW Steel Limited 3QFY16 Results Presentation January 29, 2016 Key - PowerPoint PPT Presentation

JSW Steel Limited 3QFY16 Results Presentation January 29, 2016

Key highlights – 3QFY16  Crude Steel production: 2.70 million tonnes  Saleable Steel sales: 2.55 million tonnes  Gross Turnover: ` 8,076crore Standalone  Net Sales: ` 7,207 crore performance  Operating EBITDA: ` 878crore  Net Debt to Equity: 1.48x and Net Debt to EBITDA: 5.67x  Gross Turnover: ` 9,562crore  Net Sales: ` 8,621 crore Consolidated  Operating EBITDA: ` 892 crore performance  Net Debt to Equity: 1.83x and Net Debt to EBITDA: 6.66x 2

Agenda Business Operational Financial Projects Update Environment Performance Performance 3

Global economy GDP growth - 2015 estimates and 2016 projections by IMF GDP growth - 2015 estimates and 2016 projections by IMF  Global economic outlook remains fragile, IMF revises 2015E (Jan'16) 2016P (Apr'15) 7.5% 7.5% down 2016 global GDP growth yet again to 3.4%. 7.3% 6.9% 2016P (Jan'16) 6.3% 6.3%  Downside risk persists with 1) slowdown and rebalancing 4.7% 1.7% 1.6% 4.3% 1.2% 4.0% 3.8% 1.0% 3.4% in China, 2) global trade imbalances driven by a sharp 3.1% 3.1% 2.5% 2.6% 1.5% 0.6% 2.4% 2.1% 1.9% drop in commodity prices as well as weakening currencies, 3) limited room for further monetary stimulus, and 4) uncertainty around monetray tightening by US World AMEs US Euro Japan EMEs India China Area IMF World Commodity Price Index, 2005=100 Key currencies' movement against USD - Dec 31, 2012=100 125 220 100 180 75 140 All Commodity BRL/USD INR/USD Fuel (Energy) JPY/USD RUB/USD Metals 50 100 EUR/USD CNY/USD 60 25 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Expectations of a pick-up in global growth momentum is waning Source: Bloomberg, IMF and JSW Steel 4

Global steel scenario China apparent steel consumption (%YoY growth) Global crude steel production (% YoY Change) China steel Exports (annualized, mn tonnes) -RHS 30% 140 3.1 2.9 9MCY15 CY15 20% 120 -0.7 -4.3 10% 100 -4.8 -1.4 -5.1 -1.8 -2.1 -5.8 -2.3 -2.5 -2.5 -2.7 -3.4 -2.9 -6.8 0% 80 -8.6 -10% 60 -20% 40 S. America World N. America Japan CIS Korea China EU India Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Mar-14 Sep-14 Mar-15 Sep-15  World Crude Steel production in CY2015 fell by 2.9%, as HRC prices ($/tonne) 700 capacity utilization in Dec’ 15 dropped below 65% – most 620 540 regions continue to witness a decline 460  Global steel demand continues to weaken with lower 380 300 investment activities 220  Jan-14 Jan-15 Jan-16 Steel exports from steel-surplus countries (as domestic Apr-14 Jul-14 Oct-14 Apr-15 Jul-15 Oct-15 demand falls faster than production cuts) are at elevated levels North America ExW North Europe ExW Black Sea export FOB China export FOB Predatory pricing is intensifying trade measures to check surging imports and pricing pressure Source: World Steel Association, World Steel Dynamics, Bloomberg and JSW Steel 5

Indian economy and steel industry 0.9% 4.4% -1.2%  Consumption of domestically produced steel fell by 66.5 67.1 1.2%YoY in 9MFY16 as total steel imports surged by 58.9 56.5 54.1 53.5 29%YoY  9MFY16 Finished steel exports fell by 30%YoY.  Steel industry is grappling with headwinds of insipid Crude Steel Finished Steel Consumption of demand, excess supply and pricing pressure driven by Production Consumption* domestically surge in imports at predatory pricing produced steel 9MFY15 9MFY16  Consumer discretionary spending, public capex (highways, ports, power transmission, etc.) and foreign direct investment have continued to improve, 3Q 2Q 1Q supporting a gradual growth recovery 3.11 2.80  However, weaker exports and private capex have been 3.16 1.08 1.24 a drag 0.75 2.43 0.51 0.87 0.55 0.90  0.86 0.40 0.58 Progress on policy reforms coupled with government’s 2.77 0.44 1.76 0.36 0.72 0.62 0.59 0.48 0.42 0.29 measures to pump prime the economy bode well for FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 steel demand over the medium term Total Steel China Japan Korea Imports Adequate measures urgently required to check unbridled and unfair imports of steel Source: JPC and JSW Steel 6 All figures are in million tonnes, * Apparent finished steel consumption net of double counting effect

Agenda Business Operational Financial Projects Update Environment Performance Performance 7

Quarterly volumes – standalone Saleable Steel Sales Crude Steel Production -17% -20% -15% -16% QoQ QoQ YoY YoY 3.25 3.19 3.17 3.03 2.70 2.55 3QFY15 3QFY16 2QFY16 3QFY15 3QFY16 2QFY16 3QFY15 3QFY16 2QFY16 3QFY15 3QFY16 2QFY16 Flat 2.56 1.87 2.57 Flat 2.44 1.86 2.50 Long 0.47 0.66 0.65 Long 0.50 0.63 0.64 Semis 0.01 0.03 0.03 All figures are in million tonnes 8

9M volumes – standalone Saleable Steel Sales Crude Steel Production -2% -1% YoY YoY 8.97 8.84 9.57 9.36 9MFY15 9MFY16 9MFY15 9MFY16 9MFY15 9MFY16 9MFY15 9MFY16 Flat 7.22 6.77 Flat 7.60 6.94 Long 1.43 1.93 Long 1.58 1.96 Semis 0.32 0.15 All figures are in million tonnes 9

Quarterly sales highlights – consolidated 3.03^ 2.67^ 3.14^ 35% 36% 34% 10% 12% 29% 2.82* 2.34* 2.16* 66% 65% 64% 11% 13% 15% 40% 35% 24% 61% 53% 49% 3QFY15 3QFY16 2QFY16 3QFY15 3QFY16 2QFY16 Value added & special Products Other products OE Retail Auto Exports  Increase in Retail sales by 82%YoY helped overall domestic sales to grow by 8%YoY despite the planned shut downs at all upstream locations  Product mix improved with value added products sales reaching 36% of total sales despite lower exports  TMT sales grew 107%YoY and CRCA sales grew 18%YoY Source: JPC and JSW Steel, * Domestic sales in million tonnes 10 ^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)

9M sales highlights – consolidated 8.98^ 8.93^ 33% 35% 12% 27% 7.82* 6.56* 67% 65% 12% 15% 35% 23% 62% 53% 9MFY15 9MFY16 Value added & special Products 9MFY15 9MFY16 Other products OE Retail Auto Exports  Increase in Retail sales by 80%YoY helped overall domestic sales to grow by 19%YoY despite the planned shut downs in 3QFY16 at all upstream loactions and lower exports  Product mix improved with value added products sales reaching 35% of total sales Source: JPC and JSW Steel, * Domestic sales in million tonnes 11 ^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)

Quarterly retail sales highlights – consolidated Retail sales (‘000 tonnes ) Retail - Branded Sales Retail - Others Sales -4% 43% 45% 43% 976 936 +82% 57% 57% 55% 514 3QFY15 3QFY16 2QFY16 3QFY15 3QFY16 2QFY16  Branded steel product’s sale grew 4% YoY to 45% of total Retail sales  TMT sale grew 220%YoY – Individual residential, real estate, commercial were major contibutors  HR CTL sale grew 60%YoY; Coated Steel sale grew 38%YoY – General engineering, construction and individual residential projects were major contibutors  Increased retailer network by 1,083 to 5,783 during the quarter Retail sales grew by 82%YoY 12

Automotive and appliance grade approvals Applications Components Grades Approved Hood 270F 340P 270F 340P Roof 270F 590R Doors 270F 270F Body side outer 270F 270F BIW (Inner) 980Y 590R 440W Floor 270F Automotive Structural 980Y 590Y 590R Reinf. Pillar 980Y Wheels SPFH440 SPFH590 SAPH 590 HR 750 Engine SCM435 S36CV 86B45 SAE1070 SAE4140 Transmission 16MnCr5 SAE4124 SAE8822 SAE5160 SAE4145 20MnCr5Ni Suspension 51CrMoVn Front Panel EDD IF Appliance Side Panel D DD Cold Rolled Coated HRPO Hot Rolled Alloy Steel Longs Above mentioned approved grades are the highest among the specific product/grade-group; the lower grades 13 upto the highest grades are also approved.

Agenda Business Operational Financial Projects Update Environment Performance Performance 14

Exceptional items related to overseas assets A provision for diminution in value of investments and loans and advances of ` 5,596crore (at standalone level) and ` 2,121crore (at consolidated level) related to overseas assets has been made during the quarter USD mn Particulars Standalone Consolidated JSW Steel (USA) Inc - US Plate & Pipe Mill 537 140 Periama Holding LLC and its subsidiaries – US Coal 53 27 JSW Panama (Holding) Corporation and its 183 161 subsidiaries - Chile JSW Steel (Netherlands) BV 99 0 Total 871 327 Rs. Crores Equivalent 5,596 2,121 15

Financials – standalone ` crore Particulars 3QFY16 3QFY15 9MFY16 9MFY15 Gross Turnover 8,076 12,368 29,923 37,765 Net Sales 7,207 11,310 26,841 34,566 Operating EBITDA 878 2,117 3,948 7,198 Other Income 96 88 294 306 Finance Cost 663 781 1,991 2,224 Depreciation 642 712 1,904 2,075 Exceptional Items (5,597) (102) (5859) (291) Profit Before Tax (5,928) 611 (5,511) 2,914 Tax (1,786) 196 (1,641) 936 Profit after Tax (4,142) 415 (3,870) 1,978 16

Operating EBITDA movement – standalone ` crore 1,406 2,117 (332) 23 878 14 (2,350) EBITDA Volume Cost NSR Mix Others EBITDA 3QFY15 3QFY16 17