Investor/Analyst Presentation [Company Update]

8/20/2019 Investor/Analyst Presentation [Company Update]

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JSW Steel Limited

3QFY16 Results PresentationJanuary 29, 2016


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Key highlights – 3QFY16

Standaloneperformance

Crude Steel production: 2.70 million tonnesSaleable Steel sales: 2.55 million tonnesGross Turnover: ` 8,076croreNet Sales: ` 7,207 croreOperating EBITDA: ` 878croreNet Debt to Equity: 1.48x and Net Debt to EBITDA: 5.67x

Consolidatedperformance

Gross Turnover: ` 9,562croreNet Sales: ` 8,621 croreOperating EBITDA: ` 892 croreNet Debt to Equity: 1.83x and Net Debt to EBITDA: 6.66x


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Agenda

BusinessEnvironment

OperationalPerformance

FinancialPerformance

Projects Update


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4Source: Bloomberg, IMF and JSW Steel

Global economy

Global economic outlook remains fragile, IMF revisesdown 2016 global GDP growth yet again to 3.4%.

Downside risk persists with 1) slowdown and rebalancingin China, 2) global trade imbalances driven by a sharpdrop in commodity prices as well as weakeningcurrencies, 3) limited room for further monetary stimulus,and 4) uncertainty around monetray tightening by US

Expectations of a pick-up in global growth momentum is waning

3 . 1 %

1 . 9 % 2 .

5 % 1 . 5 %

0 . 6 %

4 . 0 %

7 . 3 %

6 . 9 %

3 . 8 %

2 . 4 % 3 .

1 % 1 .

6 %

1 . 2 % 4

. 7 %

7 . 5

%

6 . 3 %

3 . 4 %

2 . 1 %

2 . 6 %

1 . 7 %

1 . 0 % 4 .

3 %

7 . 5

%

6 . 3 %

World AMEs US EuroArea

Japan EMEs India China

2015E (Jan'16) 2016P (Apr'15)

2016P (Jan'16)

GDP growth - 2015 estimates and 2016 projections by IMFGDP growth - 2015 estimates and 2016 projections by IMF

60

100

140

180

220

D e c - 1 2

M a r - 1 3

J u n - 1 3

S e p - 1 3

D e c - 1 3

M a r - 1 4

J u n - 1 4

S e p - 1 4

D e c - 1 4

M a r - 1 5

J u n - 1 5

S e p - 1 5

D e c - 1 5

All CommodityFuel (Energy)Metals

IMF World Commodity Price Index, 2005=100

25

50

75

100

125

D e c - 1 2

M a r - 1 3

J u n - 1 3

S e p - 1 3

D e c - 1 3

M a r - 1 4

J u n - 1 4

S e p - 1 4

D e c - 1 4

M a r - 1 5

J u n - 1 5

S e p - 1 5

D e c - 1 5

BRL/USD INR/USDJPY/USD RUB/USDEUR/USD CNY/USD

Key currencies' movement against USD - Dec 31, 2012=100


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5Source: World Steel Association, World Steel Dynamics, Bloomberg and JSW Steel

Global steel scenario

World Crude Steel production in CY2015 fell by 2.9%, ascapacity utilization in Dec’ 15 dropped below 65% – mostregions continue to witness a decline

Global steel demand continues to weaken with lowerinvestment activities

Steel exports from steel-surplus countries (as domesticdemand falls faster than production cuts) are at elevatedlevels

Predatory pricing is intensifying trade measures to check surging imports and pricing pressure

40

60

80

100

120

140

-20%

-10%

0%

10%

20%

30%

D e c - 1

3

M a r - 1

4

J u n - 1 4

S e p - 1 4

D e c - 1

4

M a r - 1

5

J u n - 1 5

S e p - 1 5

D e c - 1

5

China apparent steel consumption (%YoY growth)China steel Exports (annualized, mn tonnes) -RHS

- 8 . 6

- 4 . 8 - 4

. 3

- 2 . 7

- 2 . 5

- 2 . 3 - 1

. 8

- 2 . 9

2 . 9

- 6 . 8 -

5 . 1

- 5 . 8

- 3 . 4 -

1 . 4

- 2 . 1 -

0 . 7

- 2 . 5

3 . 1

N . A

m e r i c a

J a p a n

C I S

K o r e a

S . A m e r i c a

C h i n a

E U

W o r

l d

I n d i a

9MCY15 CY15

Global crude steel production (% YoY Change)

220300380460540620700

J a n - 1 4

A p r - 1

4

J u l - 1 4

O c t - 1

4

J a n - 1 5

A p r - 1

5

J u l - 1 5

O c t - 1

5

J a n - 1 6

North America ExW North Europe ExWBlack Sea expor t FOB China export FOB

r i c s ( t

)


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6Source: JPC and JSW Steel All figures are in million tonnes, * Apparent finished steel consumption net of double counting effect

Indian economy and steel industry

Consumption of domestically produced steel fell by

1.2%YoY in 9MFY16 as total steel imports surged by29%YoY

9MFY16 Finished steel exports fell by 30%YoY.

Steel industry is grappling with headwinds of insipiddemand, excess supply and pricing pressure driven bysurge in imports at predatory pricing

Consumer discretionary spending, public capex

(highways, ports, power transmission, etc.) and foreigndirect investment have continued to improve,supporting a gradual growth recovery

However, weaker exports and private capex have beena drag

Progress on policy reforms coupled with government’s measures to pump prime the economy bode well forsteel demand over the medium term

Adequate measures urgently required to check unbridled and unfair imports of steel

66.5 56.5 54.167.1 58.9 53.5

Crude SteelProduction

Finished SteelConsumption*

Consumption of domestically

produced steel9MFY15 9MFY16

0.9%4.4%

-1.2%

1.76 0.48 0.29 0.42

2.430.86

0.36 0.44

2.80

1.24

0.40 0.55

3Q 2Q 1Q

FY15 FY16Total Steel

Imports

FY15 FY16China

FY15 FY16Korea

FY15 FY16Japan

2.770.72 0.59 0.62

3.16

0.87 0.58 0.90

3.11

1.080.51

0.75


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Agenda

BusinessEnvironment

OperationalPerformance

FinancialPerformance

Projects Update


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3.17

2.70

3.25

3QFY15 3QFY16 2QFY16

Crude Steel Production

Quarterly volumes – standalone

YoY-15%


Flat 2.56 1.87 2.57

Long 0.50 0.63 0.64

3.03

2.55

3.19


Saleable Steel Sales

YoY-16%


Flat 2.44 1.86 2.50

Long 0.47 0.66 0.65

Semis 0.01 0.03 0.03

QoQ-17%

QoQ-20%

All figures are in million tonnes


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9.57 9.36

9MFY15 9MFY16

Crude Steel Production

8.97 8.84

9MFY15 9MFY16

Saleable Steel Sales

All figures are in million tonnes

9M volumes – standalone

YoY-2%

9MFY15 9MFY16

Flat 7.60 6.94

Long 1.58 1.96

9MFY15 9MFY16

Flat 7.22 6.77

Long 1.43 1.93

Semis 0.32 0.15

YoY-1%


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10Source: JPC and JSW Steel, * Domestic sales in million tonnes^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)

Quarterly sales highlights – consolidated

Increase in Retail sales by 82%YoY helped overall domestic sales to grow by 8%YoY despite the plannedshut downs at all upstream locations

Product mix improved with value added products sales reaching 36% of total sales despite lowerexports

TMT sales grew 107%YoY and CRCA sales grew 18%YoY

61%49% 53%

24% 40% 35%15% 11% 13%2.16* 2.34* 2.82*29%

12% 10%3.03^ 2.67^ 3.14^


OE Retail Auto Exports

65% 64% 66%

35% 36% 34%


Value added & special Products Other products


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11Source: JPC and JSW Steel, * Domestic sales in million tonnes^ Total sales in million tonnes – JSW Steel Standalone + JSW Steel Coated Products (net-off inter-company sales)

9M sales highlights – consolidated

Increase in Retail sales by 80%YoY helped overall domestic sales to grow by 19%YoY despite theplanned shut downs in 3QFY16 at all upstream loactions and lower exports

Product mix improved with value added products sales reaching 35% of total sales

62%53%

23% 35%15% 12%6.56* 7.82*27%

12%8.98^ 8.93^

9MFY15 9MFY16

OE Retail Auto Exports

67% 65%

33% 35%

9MFY15 9MFY16Value added & special ProductsOther products


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Quarterly retail sales highlights – consolidated

57% 55% 57%

43% 45% 43%


Retail - Branded Sales

Retail - Others Sales

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 individualresidential projects were major contibutors

Increased retailer network by 1,083 to 5,783 during the quarter

Retail sales grew by 82%YoY

514

936 976


Retail sales (‘000 tonnes )

+82%

-4%


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13 Above mentioned approved grades are the highest among the specific product/grade-group; the lower gradesupto the highest grades are also approved.

Automotive and appliance grade approvals

Applications Components

Hood 270F 340P 270F 340PRoof 270F 590RDoors 270F 270FBody side outer 270F 270FBIW (Inner) 980Y 590R 440WFloor 270FStructural 980Y 590Y 590R

Reinf. Pillar 980YWheels SPFH440 SPFH590 SAPH 590 HR 750Engine SCM435 S36CV 86B45 SAE1070 SAE4140Transmission 16MnCr5 SAE4124 SAE8822 SAE5160 SAE4145SuspensionFront Panel EDD IFSide Panel D DD

Cold Rolled Coated HRPOHot Rolled Alloy Steel Longs

Appliance

Grades Approved

Automotive

20MnCr5Ni51CrMoVn


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Agenda

BusinessEnvironment OperationalPerformance FinancialPerformance Projects Update


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Exceptional items related to overseas assets

Particulars Standalone Consolidated

JSW Steel (USA) Inc - US Plate & Pipe Mill 537 140

Periama Holding LLC and its subsidiaries – US Coal 53 27JSW Panama (Holding) Corporation and itssubsidiaries - Chile

183 161

JSW Steel (Netherlands) BV 99 0

Total 871 327

Rs. Crores Equivalent 5,596 2,121

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 assetshas been made during the quarter

USD mn


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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


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Operating EBITDA movement – standalone

crore

2,117

878

(332)

1,406

(2,350)

23 14

EBITDA3QFY15

Volume Cost NSR Mix Others EBITDA3QFY16


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Volumes 3QFY16 3QFY15 9MFY16 9MFY15

Production* 0.33 0.36 1.11 1.17

Sales 0.34 0.37 1.14 1.18

crore

*Including Job Work

Operational performance – JSW Steel CoatedProducts

Million tonnes

Key P&L data 3QFY16 3QFY15 9MFY16 9MFY15

Turnover 1,629 2,270 5,687 5,042

Operating EBITDA 38 65 250 268

Profit after Tax (22) (18) 26 1


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Sales (net tonnes) 3QFY16 3QFY15 9MFY16 9MFY15

Plate Mill 36,192 63,822 1,26,215 2,45,413

Pipe Mill 12,421 18,101 47,175 43,972

Production (net tonnes) 3QFY16 3QFY15 9MFY16 9MFY15

Plate Mill 48,547 83,601 1,64,978 2,89,043Utilization (%) 20% 34% 23% 39%

Pipe Mill 13,217 18,898 42,800 38,780

Utilization (%) 10% 14% 10% 9%

USD mn

Net tonnes = 0.907 metric tonnes

Operational performance – US Plate & Pipe Mill

Key P&L data 3QFY16 3QFY15 9MFY16 9MFY15

Turnover 39.58 79.81 145.45 267.72EBITDA + Other Income (4.89) (0.46) (17.38) 6.10

Profit after Tax (15.37) (16.09) (60.09) (39.19)


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Particulars 3QFY16 3QFY15 9MFY16 9MFY15

Production (Tonnes) - 2,18,515 83,774 6,63,638

Sales (Tonnes) - 2,24,123 1,60,667 7,70,670

Turnover - 14.20 8.60 64.51

Operating EBITDA (0.32) (6.45) (0.12) (8.56)

Profit after Tax (0.63) (6.38) (3.92) (13.04)

Operational performance – Chile

USD mn


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Financials – consolidated

Particulars 3QFY16 3QFY15 9MFY16 9MFY15Gross Turnover 9,562 14,026 34,045 43,038

Net Sales 8,621 12,927 30,746 39,686

Operating EBITDA 892 2,296 4,248 7,720

Other Income 23 13 87 93

Finance Cost 811 937 2,469 2,635

Depreciation 773 890 2,394 2,536

Exceptional Items (2,122) - (2,124) (21)

Profit Before Tax (2,792) 482 (2,652) 2,620

Tax (1,810) 175 (1,651) 932

Share of Associates and Minority Interest 58 22 88 46

Profit after Tax (923) 329 (913) 1,734

crore


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22*Net Debt excludes Acceptances

Net debt movement – consolidatedcrore

Particulars 31.12.2015 30.09.2015

Cash & cash equivalent ( ` crore) 1,161 1,378Net Debt/Equity (x) 1.83 1.72

Net Debt/EBITDA (x) 6.66 5.32

39,00839,483567

(460)

151 217

Net Debt*as on Sep'15

New Loan Taken Repayments Fx Impact Movement in FD/MF Net Debt*as on Dec'15


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Agenda

BusinessEnvironment OperationalPerformance FinancialPerformance Projects Update


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Projects' update

Blast Furnace -1 reconstruction at Vijayanagar: expected to be commissioned in 4QFY16


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Projects' update contd. …

Blast Furnace reconstruction at Salem: expected to be commissioned in 4QFY16


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Projects' update contd. … Blast Furnace Modification at Dolvi: expected to be commissioned in 4QFY16

New sinter plant (2.5 MTPA) at Dolvi: expected to be commissioned in 4QFY16


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Projects' update contd. … New Billet Caster (1.5 MTPA) at Dolvi: expected to be commissioned in 4QFY16

New Bar Mill (1.4 MTPA) at Dolvi: expected to be commissioned in 4QFY16


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Certain statements in this report concerning our future growth prospects are forward looking statements, whichinvolve 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 torisks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competitionwithin Steel industry including those factors which may affect our cost advantage, wage increases in India, ourability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time framecontracts, our ability to commission mines within contemplated time and costs, our ability to raise the financewithin time and cost client concentration, restrictions on immigration, our ability to manage our internaloperations, 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 madestrategic investments, withdrawal of fiscal/governmental incentives, impact of regulatory measures, politicalinstability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of ourintellectual property and general economic conditions affecting our industry. The company does not undertake toupdate any forward looking statements that may be made from time to time by or on behalf of the company.

Forward looking and cautionary statement


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Thank you

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