results presentation - jsw steel ltd source: world steel association, steel business briefing *...

1

Results Presentation Quarter Ended Sep 30, 2012

2

Agenda

Business Environment

Operational Performance

Financial Performance

Projects Update

3

Agenda




Projects Update

4

Global economy is expected to grow at 3.3%

Global economy

Source: Reuters, Industry data, IMF

Global economic condition remained fragile, manufacturing was further slowed down

United States – recovery has been subpar

Euro Area – economic weakness continued with sovereign debt issue

China – GDP growth slowed down to 7.4% YoY in Jun-Sep 2012

However:

Fed’s open-ended bond-buying program should strengthen US growth

ECB’s bond market intervention program has reduced risks of a near-term break-up of the euro area

Better-than-expected Sep 2012 data suggest stabilizing economic condition in China

-25.0

-15.0

-5.0

5.0

15.0

25.0

Ap

r-07

Sep

-07

Feb

-08

Jul-

08

De

c-08

May

-09

Oct

-09

Mar

-10

Au

g-10

Jan

-11

Jun

-11

No

v-11

Ap

r-12

Sep

-12

Euro Zone US Japan China India

Industrial Production (% YoY growth)

5

-30%

-10%

10%

30%

Ap

r-0

7

Au

g-0

7

Dec

-07

Ap

r-0

8

Au

g-0

8

Dec

-08

Ap

r-0

9

Au

g-0

9

Dec

-09

Ap

r-1

0

Au

g-1

0

Dec

-10

Ap

r-1

1

Au

g-1

1

Dec

-11

Ap

r-1

2

Au

g-1

2

Overall IIP Consumer GoodsElectricity Capital Goods

Indian economy

Source: Central Statistical Organisation, Reuters

Reforms/policy actions to provide impetus to investment cycle

GDP growth at 5.5% during Q1FY13, economic conditions remained on edge in Q2FY13

August IIP has shown an uptick after 2 months, rapid fall in Capital Goods seems over, Consumer Goods demand to improve in festive season

Overall WPI Inflation at 7.81% hit a 10 month high but food inflation has come down to 7.9%.

Growth inducing measures from GoI are encouraging

-15%

-5%

5%

15%

25%

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Ch

ange

-%

Yo

Y

Overall WPI Food Fuel Index

6 Source: World Steel Association, Steel Business Briefing * Demand growth outlook by World Steel Association

World crude steel production grew by just ~0.6% in Jan-Sep 2012 compared with demand growth outlook* of 2.1% in CY12

Capacity utilization has dropped below 80%

HRC prices continued to fall during Aug-Sep 2012, after remaining range bound in Jul 2012, due to lower demand amidst fragile economic conditions

However prices have improved both in US and China during the last fortnight

Supply side responds to fragile demand

Global steel scenario

320

410

500

590

680

770

860

Ap

r-09

Jul-

09

Oct

-09

Jan

-10

Ap

r-10

Jul-

10

Oct

-10

Jan

-11

Ap

r-11

Jul-

11

Oct

-11

Jan

-12

Ap

r-12

Jul-

12

Oct

-12

HR

C p

rice

s ($

/to

nn

e)

North America Domestic ExW Europe import CIF

Black Sea export FOB China export FOB

-8%

2%

12%

22%

32%

42%

85

95

105

115

125

135

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-10

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-11

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

World crude steel production (million tonnes)% YoY production growth

7

-0.40

-0.20

0.00

0.20

0.40

0.60

Ap

r-07

Sep

-07

Feb

-08

Jul-

08

De

c-08

May

-09

Oct

-09

Mar

-10

Au

g-10

Jan

-11

Jun

-11

No

v-11

Ap

r-12

Sep

-12

New orders PMI minus Finished inventories PMICrude steel production (% YoY)

China

Source: World Steel Association, MySteel, National Bureau of Statistics of China

GDP growth slowed down to 7.4% YoY during Jul-Sep 2012

Improved trade and other economic data in Sep 2012 indicates economic stabilization is on track

Retail sales, Industrial production have improved, Urban FAI and real estate investment growth are stabilizing, and Inflation is below 2%

However, jury is still out – this momentum needs to be sustained

Crude Steel production is up just 1.3% in 9MCY12, warehouse inventories to finished steel consumption ratio is low

Moving towards Economic stabilization?

1.5

2.8

4.0

5.3

6.5

7.8

10

12

14

16

18

20

No

v-10

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-11

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

Retail Sales of consumer goods (% YoY)

Consumer price index (% YoY, RHS)

8

20

5 22

1

33

0

31

0

28

0

23

0

20

5 22

1

17

0

120

160

200

240

280

320

360

Oct

-10

Jan

-11

Ap

r-11

Jul-

11

Oct

-11

Jan

-12

Ap

r-12

Jul-

12

Oct

-12

Australian HCC Quaterly Contract FOBAustralian Spot HCC FOB

Source: Steel Business Briefing, Platt‘s, Industry data, JSW Steel (All figures are in USD/tonne)

Raw material prices to remain range bound

HCC quarterly contract prices are settled at ~$165-170/t for 3QFY12

HCC spot prices fell to ~$140/t by mid Sep 2012 due to lower demand with steel prices bottoming in Aug 2012

Since then HCC spot prices have gradually moved up to $148/t with improved Chinese steel prices and demand after Chinese holidays

Iron ore prices too now range bound at $110-120/t after touching ~$85-90/t in Aug-Sep 2012

Raw material prices

80

100

120

140

160

180

200

Jun

-11

Au

g-11

Sep

-11

No

v-11

Jan

-12

Mar

-12

May

-12

Jul-

12

Au

g-12

Oct

-12

IODEX 62% Fe $/dmt / North China import CFR

9

India steel scenario

Source: Joint Plant Committee (All figures are in million tonnes)

Consumption continues to be encouraging, imports are a concern

Apparent finished steel consumption grew by 5.4% in 1HFY13

Finished steel production grew by 2.6% in 1HFY13

1HFY13 steel imports jumped by 36.5% to 3.94 million tonnes whereas steel exports marginally increased by 4.8% to 2.37 million tonnes

Imports have surged from countries under FTA like South Korea and Japan

36.4

1

37.5

4

37.3

5

39.5

7

Finished Steel Production Apparent Finished Steel Consumption

1HFY12 1HFY13

2.6%5.4%

2.88

2.26

3.94

2.37

Import Export

1HFY12 1HFY13

36.5%

4.8%

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Agenda




Projects Update

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Key highlights

* Standalone basis

High Coated Galvanized steel for solar panel modules.

2H Pencil hard pre-painted steel for Whirlpool

Steel for transmission components for tractors of John Deere

Steel for Tubes & Hub bearing for FAG India Bearings

Hot & Cold Rolled C-Mn steel for structural members for PV's of Hyundai & Toyota

New product

approvals

Highest ever crude steel production: 2.17 million tonnes

Saleable steel sales: 2.17 million tonnes

Net turnover*: ` 8,834 crores (16% YoY)

Operating EBIDTA*: ` 1,525 crores (18% YoY)

PAT*: ` 822 crores

Operational/ financial

Total 33.3 million tonnes of iron ore was sold through e-auctions till Oct 19, 2012

The company purchased 19.8 million tonnes of iron ore in e-auctions and received ~92% of it till Oct 19, 2012

Iron ore e-auction

update

12

0.34

0.45 0.44

2QFY12 2QFY13 1QFY13

Rolled : Long

1.30 1.45

1.61


Rolled : Flat 1.74

2.17 2.14


Crude Steel

YoY QoQ

12% -10%

Production – 2QFY13

All figures are in million tonnes

YoY QoQ

29% 2%

YoY QoQ

25% 1%

13

0.69

0.88

1HFY12 1HFY13

Rolled : Long

3.42

4.31

1HFY12 1HFY13

Crude Steel

Production – 1HFY13


2.49

3.06

1HFY12 1HFY13 Rolled : Flat

YoY %

26%

YoY %

23%

YoY %

28%

14

0.42 0.42 0.41


Value Added

1.88

2.17 2.11


Total Sales

Saleable steel sales – 2QFY13


1.47

1.66 1.67


Rolled : Flat

YoY QoQ

15% 3%

YoY QoQ 13% -1%

YoY

1%

QoQ

3%

0.08

0.11

0.05

2QFY12 2QFY13 1QFY13 Semis

YoY QoQ

39% 98%

0.34 0.40 0.38


Rolled : Long

YoY QoQ 19% 6%

15

2.75

3.33

1HFY12 1HFY13

Rolled : Flat

0.82 0.83

1HFY12 1HFY13

Value Added

3.60

4.28

1HFY12 1HFY13

Total Sales

Saleable Steel Sales – 1HFY13


0.22

0.16

1HFY12 1HFY13

Semis

0.63

0.79

1HFY12 1HFY13

Rolled : Long

YoY %

19% YoY %

21%

YoY %

1%

YoY %

25%

YoY %

-26%

16

315

370

30 Sep 2011 30 Sep 2012

1.19 0.38

Others JSW Shoppe

JSW Shoppe

Rolled: Long

Rolled: HR Products

43%

Domestic sales

excluding semis

(million tonnes,

% Share)

Value Added: Flat

76%

24%

39%

34%

26%

% Share through JSW Shoppe – 2QFY13

17%

JSW Shoppe has expanded footprint to 157 districts

No. of JSW Shoppe

17

Agenda




Projects Update

18

Financials – standalone

*Forex gain/(loss)

** Not Annualized

Particulars 2QFY13 2QFY12 Growth 1HFY13 1HFY12 Growth

Gross Turnover 9,657 8,243 17% 19,567 15,869 23%

Net Sales 8,834 7,625 16% 17,864 14,690 22%

Operating EBITDA 1,525 1,296 18% 3,298 2,726 21%

Other Income 78 38 108% 151 85 76%

Finance Cost 421 263 60% 827 491 68%

Depreciation 481 404 19% 949 792 20%

Exceptional Items* 422 (485) (170) (520)

Profit Before Tax 1,124 182 518% 1,502 1,008 49%

Tax 302 55 453% 411 303 36%

Profit after Tax 822 127 547% 1,091 705 55%

Diluted EPS (`)** 36.49 5.33 48.18 30.89

` Crores

19

1,296

1,525 201

93

(130) (4)

69

EBITDA2QFY12

Volume NSR Cost Mix Others EBITDA2QFY13

Operating EBITDA movement – standalone

` Crores

20

14,022 14,586

1,422

(592)(353)

87

Net Debt*as on Jun'12

New Loan Taken Repayments Forex Gain Movement in FD / MF

Net Debt*as on Sep'12

Net debt movement – standalone

* Net Debt excludes Acceptances

` Crores

Particulars 30.09.2012 30.06.2012

Cash & cash equivalent (` Crores) 2,338 2,424

Net Debt/Equity (x) 0.75 0.75

Net Debt/EBITDA (x) 2.35 2.35

21

Particulars Jul-Sep’12 Jul-Sep’11 Apr-Sep’12 Apr-Sep’11

Income from operations 2,640 2,636 5,614 5,100

EBITDA (Including VAT benefits) 205 182 659 586

Net profit After Tax 122 (345) 601 (1,480)

Sales (million tonnes) Jul-Sep’12 Jul-Sep’11 Apr-Sep’12 Apr-Sep’11

HR Coils 0.59 0.62 1.24 1.20

Downstream products 0.08 0.09 0.16 0.16

Production (million tonnes) Jul-Sep’12 Jul-Sep’11 Apr-Sep’12 Apr-Sep’11

HR Coils 0.64 0.61 1.33 1.21

Downstream products* 0.09 0.10 0.18 0.17

` Crores

Operational performance – JSW Ispat Steel Ltd

* Saleable production

22

Particulars 2QFY13 2QFY12 1HFY13 1HFY12

Turnover 87.76 100.51 191.43 162.46

EBITDA + Other Income 2.89 6.46 9.28 10.13

Profit After Tax (13.39) (7.62) (21.55) (16.98)

Sales (net tonnes) 2QFY13 2QFY12 1HFY13 1HFY12

Plate Mill 53,875 68,818 122,616 115,692

Pipe Mill 24,590 16,369 46,669 26,085

Production (net tonnes) 2QFY13 2QFY12 1HFY13 1HFY12

Plate Mill 79,172 100,811 177,185 157,625

Utilization (%) 31% 37% 35% 30%

Pipe Mill 29,479 16,855 51,490 25,841

Utilization (%) 21% 12% 19% 9%

USD mn

Operational performance – US Plate & Pipe Mill

Net tonnes = 0.907 metric tonnes

23

Operational performance – Chile

USD mn

Particulars 2QFY13 2QFY12 1HFY13 1HFY12

Production (Tonnes) 170,744 202,507 365,630 379,366

Sales (Tonnes) 147,734 147,807 490,983 342,154

Turnover 16.31 25.56 61.06 59.85

EBIDTA (0.07) 8.41 8.41 19.94

Profit after Tax (1.63) 4.57 3.64 12.50

24

Financials – consolidated

*Forex gain/(loss)

Particulars 2QFY13 2QFY12 Growth 1HFY13 1HFY12 Growth

Gross Turnover 10,297 8,752 18% 21,078 16,747 26%

Net Sales 9,475 8,134 16% 19,377 15,566 24%

Operating EBIDTA 1,531 1,399 9% 3,440 2,891 19%

Other Income 28 15 89% 59 30 96%

Finance Cost 483 315 53% 943 593 59%

Depreciation 547 460 19% 1,080 904 20%

Exceptional Items* 424 (486) (171 ) (521)

Profit Before Tax 953 153 523% 1,304 903 44%

Tax 336 63 434% 486 321 52%

Share of Associates and Minority Interest

74 (760) (77) (766)

Profit after Tax 691 (669) -ve to +ve 741 (184) -ve to +ve

` Crores

25

Net debt movement – consolidated

` Crores

* Net Debt excludes Acceptances

Particulars 30.09.2012 30.06.2012

Cash & cash equivalent (` Crores) 2,467 2,539

Net Debt/Equity (x) 1.04 1.09

Net Debt/EBITDA (x) 2.75 2.81

18,389 18,369

1,439

(918)

(613)

72

Net Debt*as on Jun'12

New Loan Taken Repayments Forex Gain Movement in FD / MF

Net Debt*as on Sep'12

26

Karnataka Iron ore update

On approval of Reclamation & Rehabilitation (R & R) plans by CEC, 3 mines in category ‘A’ (capacity of 1.4 MTPA) have restarted production. Balance 8 mines (capacity of 3.3 MTPA) are in various stages of approval and expected to commence production during Oct-Dec quarter.

The R&R plans for 3 mines in category ‘B’ are approved. The R&R plans are under preparation for remaining mines in this category. However, the Hon’ble Supreme Court has stipulated certain conditions for category ‘B’ mines to consider re-commencement of mining.

The CEC has recommended to cancel Category ‘C’ mines and auction them to end users.

27

Agenda




Projects Update

28

Projects' update

HSM – 2 (Phase II): Commissioned on Oct 14, 2012

29

Projects' progress contd..

Beneficiation Plant – 2 (Phase II): 6 (out of 7) modules have been commissioned by Sep 2012

30


Cold Rolling Mill -2: Phase I will be commissioned by FY14 and Phase II by FY15

31


4th Stove both at Blast Furnace 3 & 4 : will be commissioned by 3QFY13

Coke oven plant (at Dolvi for JSW Ispat): will be commissioned in FY14

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Pellet plant (at Dolvi for JSW Ispat): will be commissioned in FY14


Colour coating line at Vasind Auto inspection line Phase 2 at Salem

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Forward looking and cautionary statement

Certain statements in this report concerning our future growth prospects are forward looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward looking statements. The risk and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition within Steel industry including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, our ability to commission mines within contemplated time and costs, our ability to raise the finance within time and cost client concentration, restrictions on immigration, our ability to manage our internal operations, reduced demand for steel, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which the Company has made strategic investments, withdrawal of fiscal/governmental incentives, impact of regulatory measures, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward looking statements that may be made from time to time by or on behalf of the company.

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Thank you

results presentation - jsw steel ltd source: world steel association, steel business briefing *...

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