Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Investor Day (2018)
59 slides from Tata Steel's investor day presentation, 2018
Slide 1: Tata Steel – Investor Day 2018: Roadmap 2025
Tata Steel – Investor Day 2018 Roadmap 2025 T. V. Narendran – Chief Executive Officer and Managing Director A–1
Slide 2: Safe harbour statement
Safe harbour statement Statements in this presentation describing the Company’s performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Imp
Slide 3: Agenda
Agenda A. Roadmap 2025 B. Focusing capital for long term value C. Tata Steel India: Marketing and Sales D. Tata Steel Kalinganagar: A significant milestone E. Bhushan Steel: The first 6 months F. Our Digital Journey A–3
Slide 4: Committed towards excellence in Safety, Health & Sustainability
Committed towards excellence in Safety, Health & Sustainability SAFETY HEALTH SUSTAINABILITY ▪ WSA has recognized Tata ▪ 17 Industrial Hygiene hazards ▪ Industry Leader in DJSI 2018 Steel’s Process Safety control projects implemented Assessment amongst 24 Management practices as one to minimize the
Slide 5: Our strategic objectives shape our business model
Our strategic objectives shape our business model 1 Industry leadership 2 Consolidate position as in steel global cost leader 3 Insulate revenues from 4 Future ready for a digital steel cyclicality and sustainable world Execution Technology Methodology Benchmarking A–5
Slide 6: Tata Steel India is scaling up to de-risk and drive returns
1 Tata Steel India is scaling up to de-risk and drive returns 2008: 28.1 MTPA Scale India capacity upto 30MTPA by 2025 18% 5.4 MTPA 30 MTPA 82% 5 MTPA Current: 33.2 MTPA1 ~5.6 MTPA 1 MTPA 13 MTPA 44% 56% Post tkTSE JV and TSK Phase – II: 26.8 MTPA2 8% Tata Steel India Bhushan Steel UML's steel TSK P
Slide 7: Tata Steel India is the industry leader
1 Tata Steel India is the industry leader ✓ Strong market presence and a leader in chosen market segments Preferred partner for customers ✓ Differentiated products and service offerings in attractive Segments ✓ ~69% of revenues through enriched and value added product mix in 1HFY19 Extensive steel M
Slide 8: Tata Steel India is the most integrated steel company and a global cost leader
2 Tata Steel India is the most integrated steel company and a global cost leader with benchmark operational efficiency Tata Steel Jamshedpur capacity utilization vs. peers (%) ✓ India’s most integrated steel manufacturer, with 110 94 95 103 103 103 93 current steel making capacity of 18.6 MTPA 90 89
Slide 9: Initiatives to insulate revenues from steel cyclicality
3 Tata Steel is pursuing several initiatives to insulate revenues 9 from steel cyclicality Initiatives Targets At least > 30% of total volume from Expansion of downstream products capacity downstream products Services and Solutions ~20% of revenue by 2025 Grow beyond Steel - New materials (Graphene,
Slide 10: Tata Steel is working towards being future ready
1 4 Tata Steel is working towards being future ready 0 Leverage digital technology Increase focus on R&D and technology Mainstreaming sustainability to become “Green” steel Safety Leadership: Achieve Zero LTI Industry leadership in CSR - license to operate R&D: Research & Development; LTI: Loss Time
Slide 11: Focusing capital for long term value
Tata Steel – Investor Day 2018 Focusing capital for long term value Koushik Chatterjee – Executive Director and Chief Financial Officer B–1
Slide 12: Agenda
Agenda A. Roadmap 2025 B. Focusing capital for long term value C. Tata Steel India: Marketing and Sales D. Tata Steel Kalinganagar: A significant milestone E. Bhushan Steel: The first 6 months F. Our Digital Journey B–2
Slide 13: Strategic imperatives for long term value creation
Strategic imperatives for long term value creation ▪ Focus on Indian markets Reshaping Tata ▪ Create sustainable portfolio in Europe Steel ▪ Generate higher operating cash flows for Balance Sheet redesign and shareholders returns ▪ Leverage Kalinganagar footprint by 5MTPA expansion ▪ Acquisition of
Slide 14: Drivers for long term value
Drivers for long term value Reduction of Cost reduction leverage for margin management Strategic Synergies from Divestments priorities acquisition Capital Enhance allocation organic cash efficiency flow from business B–4
Slide 15: ‘Shikhar 25’: delivering value through bottoms up margin management
‘Shikhar 25’: delivering value through bottoms up margin management ▪ A structured productivity and operational excellence Sustained improvement savings every year (Rs. Crores) program have offset adverse cost impact 3,400 ▪ Several initiatives across the organisation focuses 3,094 on continuous imp
Slide 16: Synergy potential from recent acquisitions
Synergy potential from recent acquisitions Bhushan Steel (Rs. Crores) Usha Martin’s Steel Business (Rs. Crores) NPV of synergies ~45,000 43,000+ 6,000+ NPV of synergies 5,500+ 35,200 4,300-4,700 Acquisition Raw Material Operational Sales & 24 months Replacement Acquisition Raw Other Selling, 36 mont
Slide 17: Bhushan Steel is a value-accretive acquisition
Bhushan Steel is a value-accretive acquisition which delivers several benefits to Tata Steel Additional capacity to retain market share in a growing market Higher downstream integration and value addition with a complementary product mix Closer access to key markets in North and West Monetization of
Slide 18: UML's steel business is the first step in building a longs portfolio
UML's steel business is the first step in building an attractive longs portfolio Strategic Rationale ▪ Long products business model requires 1 Retain long products market share in Tata leaner and flexible cost structure wire rods Sponge: a ▪ Comparatively smaller furnace and mill preferred configura
Slide 19: Capital allocation on focused capex
Capital allocation on focused capex Capex (Rs. Crores) Multiple capital efficient and value accretive options to consider in phased manner: India Growth Sustenance TSE New Ventures Others & Acquisitions 60,000 ▪ West Bokaro expansion ▪ Iron ore portfolio expansion 50,000 ▪ Kalinganagar expansion 40,
Slide 20: Capital raised from divestments will be used to deleverage
Capital raised from divestments will be used to deleverage ▪ Total capital raised through divestments in last 7 Cash flow from divestments (Rs. Crores) years was Rs. 19,400 crores 19,400 ▪ Other announced portfolio restructuring being pursued: o tk-TSE JV 5,076 4,698 o Sedibeng 3,611 3,223 o Cogent
Slide 21: Balance Sheet redesigned to support ROIC improvement
1 Balance Sheet redesigned to support ROIC improvement 1 Maturity Profile (FY18)1 (mn US$) 5,698 4,825 ▪ Leverage profile has flexible terms, diversified 2,729 funding sources and well spread maturities <2 years 2-5 years >5 years Strengthening leverage metrics Net Debt / EBITDA 8.9x ▪ Deleveraging
Slide 22: In conclusion, Tata Steel is well poised to create sustainable value
In conclusion, Tata Steel is well poised to create sustainable value Strong foundation from ‘Best in class’ assets and capabilities: ▪ Jamshedpur, Kalinganagar and Angul are strong & ‘best in class’ asset profiles ▪ Globally competitive cost position ▪ Strong leadership team and talent strength ▪ In
Slide 23: Tata Steel India: Marketing and Sales
Tata Steel – Investor Day 2018 Tata Steel India: Marketing and Sales Peeyush Gupta, VP – Marketing & Sales (India & SEA) C–1
Slide 24: Agenda
Agenda A. Roadmap 2025 B. Focusing capital for long term value C. Tata Steel India: Marketing and Sales D. Tata Steel Kalinganagar: A significant milestone E. Bhushan Steel: The first 6 months F. Our Digital Journey C–2
Slide 25: Demonstrated track record of superior growth as compared to the market
Demonstrated track record of superior growth as compared to the market Tata Steel Standalone sales (mn tons) [FY08-FY18 CAGR: 9.8%] 24 Market demand (mn tons) [FY08-FY18 CAGR: 5.7%] Differentiated & Innovative Partner 20 120 Collaborative Working Preferred Supplier 91 16 86 82 73 74 77 80 71 66 12 5
Slide 26: Present in ~85% of domestic carbon steel market
Tata Steel is present in ~85% of domestic carbon steel market and has a unique way of segmenting the market Sector-wise India steel demand Tata Steel domestic sales (Sector wise) 5% 3% Construction 2% 1% Construction 6% Capital Goods Capital Goods 13% Automotive Automotive 9% General Engg. 49% Gener
Slide 27: Automotive & Special products: Market leadership
Automotive & Special products: Market leadership driven by focus on technology and strong customer relationship Growth enabled by: Automotive vertical sales ✓ Faster localization 20% 41% 42% 43% 400 3000 ✓ Extensive network of steel processing centers 2500 407 350 ✓ 4 Hot Strip Mills, 3 Cold Roll Mi
Slide 28: Industrial Products, Project & Exports
Industrial Products, Project & Exports: Enriching product mix and shaping industry practices Industrial Products, Projects & Exports Sales Growth enabled by: 9000 25% ✓ Investments in Thin Slab Casting and Rolling Facility 8000 20% 7000 18% and Tata Steel Kalinganagar 6000 15% 14% 1151 10% 7% 5000 2
Slide 29: Branded Products & Retail
Branded Products & Retail: Using long term partnerships to deliver superior consumer experience Branded Products & Retail Sales Delivering delight to underserved market: 5000 50% ✓ Building customer capability (Qualithon, Skills4India) 45% ✓ Digitally enabled Finance solution “URJA” 4000 40% 41% 218
Slide 30: Services & Solutions: New initiative
Services & Solutions: New initiative to capture a value multiplier and insulate from revenue cyclicality Growth enabled by: 140 Service and Solutions business sales ✓ Leveraging Tata Steel ecosystem 120 45 ✓ Collaborations with industry experts & 100 37 manufacturing partners 80 60 75 65 40 12 28 Bu
Slide 31: Production hubs, stockyards and pan India distribution network
Multiple production hubs, world-class stockyards and a strong pan India distribution network is a unique competitive advantage BSL Khopoli + TSL Tarapore BSL Sahibabad ▪ Modern API & Large dia. Pipes for Hi end ▪ Niche downstream products for TSL ▪ Competitive exports brands ▪ Optimizing customer &
Slide 32: Bhushan Steel helps in consolidating our market leadership
Bhushan Steel helps in consolidating our market leadership Access to ▪ Complementary products through Bhushan Steel: New markets/ o Wider (>1540mm) & Thinner (<0.5 mm) Cold Rolled, Galvanized, Colour segments Coated o Hardened & Tempered products o API Tubes and Large dia. pipes ▪ Higher reach throu
Slide 33: Bhushan Steel helps in consolidating our market leadership
Bhushan Steel helps in consolidating our market leadership Common Processes: Reorganization of Bhushan Steel’s Marketing o Annual business planning o Channel management & Sales in customer facing segments o Monthly sales planning o Credit policy Tata Steel* and Bhushan Steel: FY18 Tata Steel* and Bh
Slide 34: India steel demand to remain strong in medium term
India steel demand to remain strong in medium term; utilization to improve with resolution of stressed assets Outlook: Demand-supply (mn tons) and capacity utilization (%) Opportunities 85-90% 81% 81% 1) Service & Solutions: Customers are ready to pay 180 80% for convenience 70% +6 to 8% 69% 140-155
Slide 35: Tata Steel Kalinganagar: a significant milestone
Tata Steel – Investor Day 2018 Tata Steel Kalinganagar: a significant milestone Rajiv Kumar – Vice President, Tata Steel Kalinganagar Operations D–1
Slide 36: Agenda
Agenda A. Roadmap 2025 B. Focusing capital for long term value C. Tata Steel India: Marketing and Sales D. Tata Steel Kalinganagar: A significant milestone E. Bhushan Steel: The first 6 months F. Our Digital Journey D–2
Slide 37: Tata Steel Kalinganagar Phase I
Tata Steel Kalinganagar Phase I D–3
Slide 38: TSK Phase I expansion has been a significant milestone
Tata Steel Kalinganagar Phase I expansion has been a significant 4 milestone in our journey 3 MTPA ▪ De-risked operations away from single location in India Greenfield ▪ Provides optionality of cost effective brownfield expansion expansion Key indicators Capabilities Lighter and high- ▪ Enabling exp
Slide 39: Focus is now on improving revenue stream and cost competitiveness
Focus is now on improving the revenue stream and cost competitiveness Capacity utilization (%) 98% 100% 75% ▪ TSK phase – I has now fully ramped 50% 25% 22% 0% 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 Commercialized products (no.) 60 45 56 35 40 27 ▪ Commercializing 188
Slide 40: Key product segment capability
Key product segment capability Sector Key applications Key commercialized grades Auto Wheel grade SPFH590 (High HER), SPFH540, SPFH440, KWL RIM & DISC, DP600, YST38, WIR019, Gr A CF (strength 250- 700MPa) Structural Long member & cross HS800, BSK46, E46, E34, E38, DP780,BIL55, Tisten55, member Tiste
Slide 41: TSK Phase II expansion is underway; adding downstream capability
Tata Steel Kalinganagar – Phase II expansion is underway; adding downstream capability ▪ 5 MTPA brownfield expansion including 2.2 CRM complex Width Thickness Capacity MTPA cold rolling complex, raw materials and capability (in mm) (in mm) (in MTPA) related facilities ▪ Total Capex: Rs. 23,500 crore
Slide 42: TSK Phase II expansion will create significant value
Tata Steel Kalinganagar Phase II expansion will create significant value Tentative capex spending (%) 42 34 ▪ Capex back ended with less than 25% to be spent in first 24 2 years Year 1 & 2 Year 3 & 4 Year 5 & beyond Productivity (TCS/FTE/Year) ▪ Productivity to improve significantly 1,951 738 918 98
Slide 43: TSK Phase II: Key features of the cold rolling mill complex
Tata Steel Kalinganagar – Phase II: Key features of the cold rolling 9 mill complex Pickling Line and ▪ High Quality Steel (IF1, High Strength Steel, DP-1180 MPa, TRIP2) Tandem Cold ▪ Strip Flatness (6 ~ 10 I Unit) rolling Mill ▪ IbA Analyser- data Acquisition, data analytics ▪ Labour Saving – de-st
Slide 44: Bhushan Steel: The first months
Tata Steel – Investor Day 2018 Bhushan Steel: The first 6 months Rajeev Singhal – Managing Director, Bhushan Steel E–1
Slide 45: Agenda
Agenda A. Roadmap 2025 B. Focusing capital for long term value C. Tata Steel India: Marketing and Sales D. Tata Steel Kalinganagar: A significant milestone E. Bhushan Steel: The first 6 months F. Our Digital Journey E–2
Slide 46: Bhushan Steel is an attractive asset
Bhushan Steel is an attractive asset ▪ One of the widest cold rolling mill of 1700 mm in India High Quality ▪ Superior Plant Layout Asset ▪ Leading process technology partners from Europe/Japan/USA ▪ Captive railway siding ▪ Proximity to markets, raw materials and ports Locational ▪ Close to Tata St
Slide 47: Value-added product manufacturing capability across locations
Value-added product manufacturing capability across 3 locations Angul Plant Locations UPSTREAM SMS HSM Angul SBBD Khopoli CRFH ✓ ✓ ✓ BOF HSM BF1 GL ✓ ✓ ✓ HM GP ✓ ✓ ✓ BF2 CCL ✓ ✓ ✓ CONARC CRCA ✓ ✓ ✓ 2.101 Slab 5.4 H&T ✓ ✓ DRI HTSS ✓ EAF Tube-ERW ✓ ✓ Tube-CEW ✓ Pooled/ pigged API Pipe ✓ 0.50 API Coat
Slide 48: We are working on addressing multiple challenges
We are working on addressing multiple challenges ▪ Improving safety standards through enhanced awareness, processes & equipment ▪ Elimination of hazards through improved use of technology Infrastructure & Operations ▪ Strengthening asset health with planned shutdowns & equipment refurbishment across
Slide 49: Integration is underway and several areas of synergy identified
Integration is underway and several areas of synergy have been identified 60+ initiatives being pursued with a potential of > Rs.1,500 Tier-1: Excellence crores per year at Tata Steel consolidated level over 2-3 years ▪ Stabilize current performance ▪ Raise to best demonstrated performance Operation
Slide 50: Our journey of improvement has begun
Our journey of improvement has begun Key enablers to achieve 5 MTPA by FY20 Structured operations excellence and productivity improvement efforts ▪ Improve safety performance ▪ Maximize throughput Debottleneck & Embed planned Capability decouple predictive building & ▪ Optimize resource consumption
Slide 51: We are committed to build on the progress made
We are committed to build on the progress made in these months Hot Rolled Sheets/ Coils Cold Rolled Sheets/ Coils Precision Tubes Capacity Utilisation % Capacity Utilisation % Capacity Utilisation % 66% 71% 86% 86% 58% 79% 66% 71% 86% 41% 75% 72% 74% 86% 72% 58% 79% 76% 76% 75% 74% FY17 FY18 H1FY19
Slide 52: Our Digital Journey
Tata Steel – Investor Day 2018 Our Digital Journey Jayanta Banerjee - Chief Information Officer F–1
Slide 53: Agenda
Agenda A. Roadmap 2025 B. Focusing capital for long term value C. Tata Steel India: Marketing and Sales D. Tata Steel Kalinganagar: A significant milestone E. Bhushan Steel: The first 6 months F. Our Digital Journey F–2
Slide 54: IT & Digital vision is aligned to organizational long term objectives
IT & Digital vision is aligned to organizational long term objectives Vision Mission Goal Governance Agility Financial • People Alacrity • Process • Infrastructure Steel Industry Cyber Intelligence Resilience Leader in • Systems leveraging Digital • Connectivity by 2025 • Decision Support Smart Oper
Slide 55: What best in class Business 4.0 might look like
What the best in class Business 4.0 might look like when enabled by Technology Intelligent Process Automation Insights driven Business decisions Event driven Risk Mitigation Scalable & Fungible Resources Outcomes based Commerce Business 4.0 Sensorization, Cloud first, EDM, Cyber- OCR, RPA, Augmented
Slide 56: IT & Digital strategy design principles
IT & Digital strategy design principles for enhanced stakeholder experience CUSTOMER EMPLOYEE MANAGEMENT SUPPLIER COMMUNITY SHAREHOLDER INSIGHTS DRIVEN Visualization Stakeholder Experience, Safety Artificial/Cognitive Autonomous Processes & Intelligence Foresights IIoT (Compute & Create), Near real
Slide 57: Components put in place for rapid scale-up of Business Transformation
Components put in place for rapid scale-up of Business Transformation Integrated Enterprise Capability Computing Data Architecture & Building in-house Data Infrastructure Technology Stack as Science capability managed services ~ 400 employees trained on Network augmentation Analytics, Data Engg, Agi
Slide 58: Key Initiatives in motion over next 30 months
Key Initiatives in motion to study & enable exploitation of large spend bases, revenue pools over next 30 months …driving Cost Reduction, Increased Productivity & Agility, Enhanced Stakeholder Experience and Reduced Time-to-Market Key Initiatives KPIs Impacted Desired Outcome Predictive Asset Mainte
Slide 59: Contact
Contact Investor enquiries : Sandep Agrawal Tel: +91 22 6665 0530 Email: Sandep.agrawal@tatasteel.com F–8