A Blueprint

of

Indian Steel Industry

Wootz Steel (400-420 A.D.)

“Wootz was the first High Quality Steel made anywhere in the world. According to travelers to the East, the Damascus Swords were made by forging small cakes of Steel that were manufactured in South India. This Steel was called “Wootz”. It was a 1000 years before Steel as good was made anywhere in the West. “

Indian Steel Industry

- An Overview

India – A Few Statistics World’s Biggest Democracy

Population – 1.045 Billion

Area -3.16 Million Sq Kms (7th Largest)

GDP - $512 Billion

Became independent on Aug 15, 1947

Recent Past of Steel- Controlled Regime- Till 1991

3 Integrated Producers with full “control” by Government

Secondary Steel producers only in long products.

Controlled Imports with restrictions on end use, duty of upto 150%

Continuous situation of shortage for the last 35 years

In 1992, SAIL only manufacturer of HR Coils.

Total Steel Capacity 14 Million MT

Recent Past – Decontrol & Growth 1994-99

In 1991-94, Indian Economy was Liberalized, & all Manufacturing (Incl Steel) was de-licensed

4 New Steel Plants -1993-1998 Total Capacity increased 6 Million Tons

Customs Duties reduced from 150% to 15%(Currently5%)

Imports were freely allowed Downstream Activities increased

Galvanized Coils & Cold Rolling-Approx 10 Plants Pipes-Apprx 15 Plants

Metallics – Only 4 DRI Plants

Total Steel Capacity 25 Million MT

Recent Past - Stagnation 1999-2002

The World Market Collapsed Demand for all commodities, including Steel Collapsed The Far East & Russian Currencies Collapsed These led to Over Capacities in Steel, in World Market Customs Duties being Low, India was not Insulated New Capacities continued to be added, based on Old

Projected Growth India Starts Exporting Steel Prices reached all time LOW

Total Steel Capacity 27 Million MT

Today – A New Confidence2002 onwards

The ‘New Boom’ triggered by the US announcement of Sec 201, placed India in a strong position in the USA Market

Quality a Gainer, since the Quantities were guaranteed

Cautious approach to Growth, after the depression of last 5 years

India emerges as a World Force in Value added Steels, for example Thin Gauge GP. Large Dia API Pipes

Total Steel Capacity 36 Million MT

Indian Steel Growth-Slowly, Steadily

1.1 1.1 1.623.23

5.056.75

9.36

12.02

14.3

24.226.2

36.5

0

5

10

15

20

25

30

35

40

Stagnation

Controlled Regime

Decontrol

Con

fiden

ce

1951 20051991

Upstream & Metallics - India’s Potential

Iron ore Reserves of 13.46 Billion MT (131 Years)

Current Mining of 102 Million MT Exports of Iron ore 48 Million MT Pelletisation-Currently 3 Plants, & 3 more

plants being implemented DRI –India #1 in the world- Nearly 11

Million MT in 2005, & Capacity of 2 Million being added

5 Mini Blast Furnaces upto 550 M3 are also being setup

Downstream Capacities-Value, Not Volume Pre Painted & Galvanized Coils

1.60 Mill MT New Cap in Galvanized has been Planned , increase of 35%

0.24 Million MT Capacity in Prepainted has been Planned , increase of 300%

This includes Required Cold Rolled Capacities also Total Galvanized Capacity will become 6.39 Million

MT by 2006 Pipes

DSAW, Spiral welded API Pipes Capacity Addition is already taken place - Capacity is now 2.12 Million MT, from 324,000MT in 2000

ERW Pipe growth is steady, at 10-12% Per Annum, & currently it is 1.49 Million MT

DI & CI Pipes – Capacities being added

Composition of Steel Production -A Value Proposition

Long Products

HR

Plate

CR

GP

Pipe

HR

Quantity

%age

LongProds.

13.928 42%

HR 7.254 22%

Plates 1.832 5%

CR 2.251 7%

GP 4.790 14%

Pipes 3.616 11%

Total 33.670 100%

Pipe Production For ERW Pipes from ½” – 16”

Capacity 3.16 Million Tons Per Annum Capacity utilization 70-75% Percentage of Black to Galvanized 60 – 40 % Export Quantity 0.45 Million Tons per annum.

For DSAW/SW Pipes 18” – 36” Capacity 2.12 Million Tons Per Annum Capacity utilization % 75 – 80 Export Quantity 0.5 Million Tons per annum

Indian Steel Industry

- A Future Giant?

India - A Future Giant?

Objectives of the National Steel Policy:To increase steel making capacity

From 35 million tons in 2004

to 60 million tones in 2012

to 100 million tons in 2020

India - A Future Giant? Strengths

Iron Ore reserves of Trained Manpower Stable & Vibrant

Democracy Market – A strong

Middle Class Overall economical

Growth is sustainable Global Location for

Exports Indians already

making 120 Million MT

Weaknesses Capital Availability Lack of Proper

Infrastructure Resources Like Coke,

Coal Plant & Machinery

Availability Government Policies

Vacillation Inconsistent Growth

Rates Manpower Shortage

since Indians already make 120 million MT

Immediate New Capacities Planned

Greenfield and Brownfield Capacity addition plan announced 6 Plants of 2 Million Tons & Up (Flat & Long Products) 87 Plants of 100,000 to 200,000 (all Long) All existing plants enhancing their Capacities, by 10-15%

Global majors like POSCO & Mittal Group have shown in putting up Integrated steel mills in India.

It is estimated that if all the plans fructify, Indian Steel capacity will be 60 million MT by 2012, which needs an investment of over USD 17 Billion

To reach 100 million MT by 2020, total required investment will be USD 37 Billion

Demand Indicators

Automobiles HCV’s/LCV’s- Growth 25% last 2 years , per

Annum Passenger Cars & 2 Wheelers-Growth 21% last 2

years , per Annum Exports of 800,000 Passenger vehicles projected by 2008

Housing Growth of 19% in organized sector Growth in Rural sector & Unorganized sector is

not measured. GDP Growth is currently 6.2%, from high of 8.5%

last year Manufacturing Sector Growth is 9.0% current year Capital Goods Industry Growth is 14.4%

Apparent Steel Consumption in India during 2003 - 2004

Production

Import Total Availability Export App Cons/capita

36.10 1.82 37.92 5.15 32.77

The total domestic Consumption is 32.7 million tons

Export at 5.15 Million Tons is 14.3% of Production

Can India Sustain 100 Million MT Consumption?

YearPopulation (Millions)

Growth over Previous decade (actual) and forecasted growth rates (beyond 2001)

Apparent Steel Consumption (Million MT)

Estimated Per Capita Steel consumption (KG)

1981 683 24.7% 17.658 25.85

1991 846 23.9% 23.658 27.41

2001 1027 21.4% 29.191 28.42

2011 1222 19% 62.600 63.04

2021 1429 17% 103.000 138.03

Projected Growth Rates in Per Capita Steel Consumption

GLOBAL EXPERIENCE-Benchmarking

Country Current Per Capita Consumption (KG)

South Korea 917

Japan 562

Germany 407

USA 309

Malaysia 307

China 163

World Average 144

India 29

CHALLENGES – AN OVERVIEW

A sustained growth of GDP at 6% and steel consumption at 7% for the next 16 years

Financing Greenfield Projects for the Long Term- An Investment of $37 Billion

Reaching Per Capita Growth of 138 Kgs, against Historical Consumption of 30 Kgs, & Lesser

Exporting 5 Million Tons till 2012 if consumption grow at 6% per annum and 8 Million Tons by 2020.

GLOBAL EXPERIENCE-Benchmarking

Developed countries like USA, Russia, Japan went through a manufacturing led growth, with thrust on value added steel production.

Chinese experience was building capacities slowly to match higher domestic demand.

Being highly Populated, a healthy Mix of Both strategies will be followed by India

Introduction to Lloyds

-A Quick Sales Spiel

Lloyds Group in Steel One of the top 100 Companies in India One of the top 10 steel producers in India 5 Manufacturing Units Totally Integrated Operations-

From DRI to Value Added Steels API HR Coils, Commodity HR Coils Galvanized Coils Galvanized Pipes, & API Pipes

Exported 120,000 MT of Galvanized Coils & Pipes to the USA between Mar 2002 & Dec 2004

Total Employees Currently – 2761 Total Sales Mar ‘2005 Apprx $383 Million

Lloyds Group in Steel 5 DRI Kilns-Capacity 225,000 MTPA

Currently 150,000 Scrap Trading Company-300,000MTPA 2 EAF’s, 60MT Capacity 2 Slab Casters

#2 will be commissioned by Dec 2005 One 4 Hi-Steckle Mill, Allied Facilities 2 Cold Rolling Mills, Allied Facilities 2 Galvanizing Lines

#2 will be commissioned by April 2005 3 ERW Pipe Mills

From ½ “ to 14” 2 Galvanizing Lines

Lloyds Group in Steel-Value Added Product Range Hot Rolled Coils & Plates

Coils from 2mm (0.08”) to 16mm (0.63”) Plates Upto 60mm (2.36”) Structural Grades, Pipe Grades, Cold Rolling

Grades Special Steels like API (Upto X-70), HSLA, High

Tensile, Hi Manganese , Boiler Quality

Galvanized Coils 0.23mm (0.009”) to 1.50mm(0.059”)

ERW Pipes ½” to 14” Galvanized, Black (Gr A, GrB, API)

Lloyds Group in Steel

LloydsIn

Steel

225,000 MT DRI

(5 Kilns LMEL)

225,000 MT Purchased DRI

& Pig Iron200,000

Scrap

240,000 MT Galvanized

Coils

60,000 MT Galvanized & Black Pipes

200,000 MT HR Special Coils

& Plates

100,000 MTHR Coils

(Commodity)

Thank You