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TRANSCRIPT
Page 2
India – Our business in context
50 : 50 Joint Venture with Tata Steel Tata BlueScope SteelAll agreements finalised 29th May 2006
Will cover all facilities, including:Bhiwadi – LYSAGHT™ rollforming facilityJamshedpur - Metal coating and paint linePune – LYSAGHT™ rollforming facilities
– BUTLER™ PEB and design centreChennai – LYSAGHT™ rollforming facilityColumbo – LYSAGHT™ rollforming facilities
Why JV and not 100%?Great brand recognition of TataBlueScope Steel has trading but limited operating experience in IndiaTata Steel have strong growth ambitions, and a marketing/branding ethos like BlueScope.
Page 3
• Joint Venture Board
• Joint Venture Company Management
Pune
Bhiwadi
Chennai
Jason Ellis (BSL)President Building Solutions
Shantanu Pal (Tata)Chief, Coated Steel
Shyam Sunder (BSL)CFO
Chetan Tolia (Tata)
CEO
India – Joint venture company structure
Chetan Tolia (Tata)CEO
BSLX3 Directors
Kathryn Fagg (BSL)Chairperson
TataX3 Directors
• Head office located in Pune
Page 4
India – Steel industry in review
FY06 (e) total Indian steel production 42 million tonnes
5 major steel companies
SAIL – 14.6 mtpa
Tata Steel – 8.5 mtpa globally with 5.0 mtpa in India
Essar – 3.0 mtpa
ISPAT – 3.0 mtpa
JSW – 1.3 mtpa
Plus a number of greenfield projects announced
Advantage of local iron ore resources
Generally import thermal and coking coal requirements.
Tata Steel
A flagship company of over US$ 22 billion Tata Group
Founded 1907
Jamshedpur steel works, Jharkhand
- Brownfield expansion underway (5 to 6.8 mtpa)
Number of greenfield projects announced
Both Tata Steel and BlueScope Steel ranked in world’s top 10 steel companies two years in a row (World Steel Dynamics)
Captive iron ore mines and colleries
Leading long products producer / distribution in South Asia
Page 5
India – Economy
EconomyStrong growth continuesMonsoon has arrived early promising a good year.Continued momentum in reform and privatisation progress is key
Population1.095 billion (June 2006 estimate)
PoliticalEconomic reform underway, but slowContinued changing landscape does not help
Foreign Direct Investment, India
02000400060008000
100001200014000
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007
US$m
illio
n
TargetEstimatedActual
Source: Reserve Bank of India, Press reports
GDP growth (real) - India
0
2
4
6
8
10
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007
%EstimatedActual
Source: IMA Asia
Page 6
India – Economy
0
20
40
60
80
100
120
140
160
Brazil Mexico China India now India 2011
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,000
1950/51
1953/54
1956/57
1959/60
1962/63
1965/66
1968/69
1971/72
1974/75
1977/78
1980/81
1983/84
1986/87
1989/90
1992/93
1995/96
1998/99
2001/02
INR
(bil)
Scope for steel consumption growth in India is large
Even at aggressive growth forecasts, per capita consumption lags well behind other growing economies
Forecast range*
India Gross Fixed Capital Formation: (GFCF)
* Source: Indian Steel Perspectives 2025, R.K. Sinha, S.C. Suri - 2003
Steel Consumption kg/capita
India’s economy is one of the fastest growing in the world.
Page 7
India – New project developments
Approvals
December 2004 (total cost A$100m (BSL’s share A$50m))
− Pune - BUTLER™ PEB facility and design centre
- LYSAGHT™ rollforming facility
− Chennai - LYSAGHT™ rollforming facility
− Bhiwadi (New Delhi) – LYSAGHT™ rollforming facility
November 2005
− JV agreement signed
− Investment approved for Jamshedpur metal coating and paint line (total cost A$265m (BSL’s share
A$132.5m)
All facilities will be owned by the Joint Venture (BlueScope’s share 50%)
Page 8
India – Pune Project Update
BUTLER™ PEB facility and Design Centre
LYSAGHT™ rollforming facility
Original scheduled completion second half CY2006
Commissioning commenced April 2006
First order despatched May 2006
Page 9
India – Chennai project update
LYSAGHT™ sales & rollforming facility
Original scheduled completion - mid CY2007
Likely completion - fourth quarter CY2006
Construction status (using Butler PEB)Earthworks completePrimary framing completeSecondary framing completeRoof & wall under way
Page 10
India – Bhiwadi (New Delhi) project update
LYSAGHT™ sales & rollforming facility
Original scheduled completion – mid CY2007
Likely completion – last quarter CY2006
Construction status (using Butler PEB)Civil, electrical, mechanical, structural now complete10% of equipment is now installed & commissionedOperating licenses under way
Page 11
India – Jamshedpur metal coating and paint line facilities
Coated manufacturing facilities (100%)250ktpa metal coating line150ktpa paint lineSlit / recoil linePackaging line
Original scheduled completion – mid CY2008
Likely completion – fourth quarter CY2008
Delay due to additional engineering and local approvals
Construction statusSite secured and site office establishedSite leveling >30% completeBoundary wall construction commencedEnvironmental License Public Hearing complete
Page 12
India – Feedstock sources
Sources1. Cold rolled coil for the coating line:
Primary source will be from the neighbouring Tata Steel facilityBackup supply is available from other Indian steel manufacturers
2. Rollforming facilities:Currently sourcing metallic coated and pre-painted steel from BlueScope Steel’s Asian and Australasian networkThe JV coating facility at Jamshedpur will be the primary source of metallic coated and pre-painted steel from 2009Other steel inputs are sourced locally or from Australia
Other influencesTariff regime
Indian steel import tariffs are low, at or near WTO levels.no import restrictions for coated steel
Page 13
India – Metal coating line production current expected ramp up profile
Full capacity achieved by 2012
0
50
100
150
200
250
300
FY2007 FY2008 FY2009 FY2010 FY2011
Imports Prime Product Non-PrimeNAMEPLATE CAPACITY 250,000 tpa
000’s tonnes
Page 14
India – Paint line production current expected ramp up profile
NAMEPLATE CAPACITY 150,000 tpa
000’s tonnes
020406080
100120140160
FY2007 FY2008 FY2009 FY2010 FY2011
Imports Prime Product Non-Prime
Full capacity achieved by 2012
Page 15
India – Our markets
0
5
10
15
20
25
JuneQ'04
SepQ'04
DecQ'04
MarQ'04
JuneQ'05
SepQ'05
DecQ'05
% G
DP R
eal
Source: Reserve Bank of India
Construction Sector Growth - India
Reinforced Concrete45%
Steel29%
Others5%
Asbestos Sheet21%
* Industrial Building, Roofing and Walling (Source: Tata BlueScope Steel analysis)
Intermaterial Share*2003/4
Industrial / commercial construction segment is the fastest growing but residential remains the biggestIndustrial construction while only 10% of total construction investment, is expected to grow at CAGR of 33% over the next 5 years (source: CRIS Infac)
Page 16
India – Our markets (cont.)
Steel component of South Asia construction segment in context
Product Mix Domestic Supply vs Imports (indicative)Metal Coated Domestic 0%(Premium segment) Imports 100%Painted Domestic 50%
Imports 50%PEB Domestic 80%(Organised Segment) Imports 20%
South Asia includes India, Sri Lanka, Maldives, Pakistan, Bangladesh, Nepal and BhutanCurrently the largest domestic PEB company is Kirby Building Systems
Page 17
India – Our markets (cont.)
Current principal markets are located in:South and west, however strong demand is now being seen in the east as further natural resources are developed
Other regional opportunitiesBangladesh and Pakistan are strong and growing construction marketsBlueScope Steel products are well established in Sri Lanka and Maldives
Channels to marketDirect to building ownersConstruction contractorsRetail / distribution opportunities
Page 18
India – Brand recognition
Coated steel: 4 of the 8 most recognised brands are associated with Tata BlueScope Steel:
46% Tata BlueScope Steel41% BlueScope Steel20% COLORBOND® coated steel19% ZINCALUME® coated steel
Building solutions: 4 of the 8 most recognised brands are associated with TataBlueScope Steel:
42% Tata BlueScope Steel38% BlueScope Steel Building Solutions17% BUTLER™ buildings13% LYSAGHT™ building products
“Tata Steel” is the most widely recognised brand across ALL categories
Source: AC Neilson Brand Awareness Survey, May 2006
Page 19
India – Product flow
Metal Coating Line
Colour Coating Line
Roll Forming Lines
Beam Fabricaton Line
Cold Rolled Coilfrom
Tata Steel
Zinc/Aluminiumcoated steel
Colour coatedsteel
Roll-formed roofingand walling solutions
Pre-EngineeredMetal Buildings
Page 20
India – Our coated steel products
POWER BRANDS - accounting for the majority of mix Alternate products, for specific applications
Bare
AZ70 Zinc / Aluminiumcoated steel
(Truss, GI substitute)
AZ150 Zinc / Aluminiumcoated steel
(Economical colour coated steel)
TEXTURA™(woodgrain finish coated steel)
INTERBOND™(for interior, false ceiling applications)
Pain
ted COLORBOND® range of coated
steel products:COLORBOND® Ultra
COLORBOND® XRWCOLORBOND® XPD
COLORBOND® Metallic
Page 21
India – Our building solutions products
Pre-Engineered Buildings
Best in class, premium quality metal buildings for industrial and commercial segments
Lower priced metal buildings for industrial and commercial segments
Range of buildings from cold formed steel structural elements – light buildingsSMARTBUILDTM
Roofing & Walling
Range of top quality roofing and walling solutions
Page 22
India – Opportunities / challenges
Opportunities
Rapid growth in industrial and commercial buildings – the primary target for both the coated steel and building solutions businesses
Eastern India is growing rapidly (from a buildings perspective)
Development of South Asian Association for Regional Cooperation (SAARC) countries (in particular Bangladesh and Pakistan) will offer many opportunities to Tata BlueScope Steel
Challenges
Skilled employee retention is challenging
Tax : sound indirect tax management is more of a competitive advantage in India as opposed to a compliance issue
Rapid growth but poor infrastructure makes a difficult business environment for start ups such as Tata BlueScope Steel for basic goods and services
Page 23
India – Summary
Tata BlueScope Steel 50/50 Joint Venture is establishing a good base for growth in SAARC countries
Downstream business (Buildings Solutions Division)
Facilities coming on stream now
Market reaction to commencement of operations has exceeded our expectations
Midstream business (Coated Steel Division)
Demand for flat steel in construction is growing at a high rate, off a low base
Market seeding program (importing) is accelerating to keep up with domestic demand growth
Construction activity has commenced for the domestic coating line facility
Tata BlueScope Steel challenge is to meet the high expectations of the market, not only in India but also in the other SAARC countries.