Tata Steel Limited · NSE:TATASTEEL

Tata Steel — Investor Presentation (June 2008)

56 slides from Tata Steel's investor presentation, Jun 26, 2008

  1. Slide 1: Tata Steel Group: Towards Growth & Globalisation

    Tata Steel Group Towards Growth & Globalisation Analyst Meet – Mumbai June 26, 2008 1

  2. Slide 2: Agenda

    Agenda  Key Highlights  Performance of Indian & South East Asian Operations  Performance of the UK & European Operations  Financial Performance & Financing  Integration & Long Term Strategy  External Environment & Market Outlook 2

  3. Slide 3: Key Highlights

    Key Highlights

  4. Slide 4: Key Highlights

    Key Highlights  Group Vision Launched  Integration synergies of US $450 mn to be exceeded  Acquisition Financing completed  Raw Material Initiatives  Strong Performance Improvement 4

  5. Slide 5: Performance of Indian & South East Asian Operations

    Performance of Indian & South East Asian Operations

  6. Slide 6: Operating Highlights - Indian Operations

    Operating Highlights - Indian Operations FY08 FY07  Crude Steel Production (mt) 5.01 5.05  Specific energy consumption 6.66 6.72 (Gcal/tss)  On time in full deliveries (OTIF)(%) 77 77  Power Consumption (kwhr/tss) 388 400  Fuel Rate (kg/thm) 577 578  Labour productivity (tcs/man/yr) 370 363 6

  7. Slide 7: Tata Steel – Deliveries & Turnover

    Tata Steel – Deliveries & Turnover Flat Products Long Products US$ US$ US$ US$ 2401 2168 1070 936 mn mn mn mn 3181 3108 1686 1601 Deliveries In „ 000 tons Deliveries 7

  8. Slide 8: Operating Highlights - Indian Operations

    Operating Highlights - Indian Operations  Steel Division – Jamshedpur  Cold Rolling Mill -Best ever annual saleable production of 1.54 mt  Hot Strip Mill - Best ever annual production of 3.27 mt  LD2 & Slab Caster Unit - Best ever annual production of 3.36 mt  Long New Bar Bill - Best ever perf

  9. Slide 9: Operating Highlights – Indian Operations

    Operating Highlights – Indian Operations STEEL DIVISION In mn tonnes 9

  10. Slide 10: Market share in Auto Sector

    Market share in Auto Sector TOTAL AUTOMOTIVE GALVANISED AUTO 900 44% 41% 41% 750 43% 600 41% 450 300 150 0 FY04 FY05 FY06 FY07 FY08 '000 Tonnes M arket Share (%) CR AUTO HR AUTO 10

  11. Slide 11: Continued focus on High Value Added Products

    Continued focus on High Value Added Products SPECIALITY WIRE RODS TISCON (HC+LC) TATA SHAKTEE TATA STEELIUM ( % segment ) 11

  12. Slide 12: Operating Highlights- Profit Centres

    Operating Highlights- Profit Centres  Bearings Division  Developed bearings for Tata Motors – Nano Project  Product Mix enrichment – 29 new bearings developed  Tubes Division  Signed up with Tata Motors for supply of critical Tubular components for the Nano Project - Hydroformed 12

  13. Slide 13: Market Initiatives in India

    Market Initiatives in India  Introduction of TISCON Fe 500 grade was highly successful with 100% conversion of project customers from Fe 415 to Fe 500  Regional Customisation : Super Ductile Tiscon launched for earthquake prone NE India  Segment Customisation : Retail Identity Programme (RIP) lau

  14. Slide 14: Key Performance Improvements – Indian Operations

    Key Performance Improvements – Indian Operations  Critical Chain Project Management ( TOC)  Reduction in duration of shutdowns in 33 projects Savings realised $ 9.25 mn  Solution for Sales (TOC)  Pull based replenishment process with stock buffers put in place to ensure no stock out at Distribut

  15. Slide 15: Key Performance Improvements – Indian Operations

    Key Performance Improvements – Indian Operations  ASPIRE PROJECTS  Increase in Clean Coal yield at 13% ash at West Bokaro Savings $ 7.25 mn  Reduction of overall sinter return fines at G BF from 32% to 20% Savings $ 3.32 mn  Improvement in gross yield of New Bar Mill Savings $ 0.68 mn  In addit

  16. Slide 16: Market Share of Branded Products

    Market Share of Branded Products Sale of Branded Products USD mn 16

  17. Slide 17: New Projects commissioned

    New Projects commissioned  H Blast Furnace – “Blown in” on 31st May 2008  Capacity 2.5 mtpa  Production of 7200 t of hot metal per day with a coke rate of 380 kg/thm and coal injection rate of 160 kg/thm  Energy recovery from the BF Gas through an expansion turbine (TRT)  3rd Billet Caster sche

  18. Slide 18: Operating Highlights South East Asian Operations – NatSteel Asia

    Operating Highlights South East Asian Operations – NatSteel Asia Finished Steel Production 1.75 1.68 MnMn tonnes tonnes  Record annual billet production in Singapore at 0.75mt Record annual Bar/Wire Rod production in Singapore at 0.74 mt 0.41 0.29 Increase in sales of 12.90% y-o-y at 2.5 mt in FY

  19. Slide 19: Operating Highlights South East Asian Operations – Tata Steel Thailand

    Operating Highlights South East Asian Operations – Tata Steel Thailand Finished Steel Production  Increase of 26% in annual liquid steel production at 1.39 mt Mn tonnes 1.40 Increase of 21% in annual finished 1.14 Steel production at 1.38 mt Increase of 29% in sales volume over FY 07 at 1.43 mt 0

  20. Slide 20: Key Performance Improvements – South East Asian Operations

    Key Performance Improvements – South East Asian Operations  TOP initiative : US $11 mn savings identified  Cost reduction  Energy consumption has decreased by 9% in Singapore, Vietnam and Xiamen  Oxygen Lancing Project to reduce power. US $ 1.5 Mn benefit  Maximized production volumes by 21% in

  21. Slide 21: Key Performance Improvements – South East Asian Operations

    Key Performance Improvements – South East Asian Operations  Containerized scrap : Benefit : 2.7 $ Mn  Better quality of scrap at lower prices  Strategic  Billet sourcing increased in Xiamen : From procurement Transactional to Relationship with 2-3 suppliers  Supplier confidence has increased wi

  22. Slide 22: CSR Highlights

    CSR Highlights  Improve the economic and social status of the community  Sustainable livelihood  Land & Water Management  Rural Enterprise Development  Vocational Training  Health & Environment  Conduct HIV/AIDS Awareness Programs  Maternal & Child Health Care Programs  Lifeline Express  E

  23. Slide 23: Performance of Tata Steel UK (Corus)

    Performance of Tata Steel UK (Corus)

  24. Slide 24: Operating Highlights – Tata Steel UK (Corus)

    Operating Highlights – Tata Steel UK (Corus) 2007-08 2006  Liquid Steel production(mt) 20.3 18.8  Deliveries (mt) 23.1 21.6  On time in full deliveries (OTIF)(%) 84 85  Energy consumption (GJ/t) 17.6 18.1  Environment -CO2 Emissions (t/tls) 1.84 1.85  Safety - Lost Time Injury Freq.(LTIF) 1.8

  25. Slide 25: Tata Steel UK – Operating Bridge

    Tata Steel UK – Operating Bridge US $ mn 1600 592 98 1553 1100 820 600 Net Price/Cost =43 100 FY 07 Price Cost Volume Other FY 08 & Sales Mix 25 25

  26. Slide 26: Performance Improvements year on year movement – US$mn

    Performance Improvements year on year movement – US$mn Target >600 576 376 2006 2007-08 2008 - 09 26

  27. Slide 27: Performance Improvements Strip Products

    Performance Improvements Strip Products  “ Project 2010” at Ijmuiden  Ijmuiden production at 7.5mt, target of 8mt  Port Talbot production at 4.4mt, target 5mt  Port Talbot BOS Gas Recovery Project  Volume Growth at Colors 27

  28. Slide 28: “Project 2010” at Ijmuiden on schedule

    “Project 2010” at Ijmuiden on schedule  Strategy 2010 comprises of several projects which include  Galvanising line No.3  Capacity expansion +530ktpa expected to be commissioned by Nov 2008  Cold Mill 22  Capacity expansion +800ktpa expected to be commissioned by June 2008  Heavy bending Hot S

  29. Slide 29: New Initiatives 2008-09 - Product Launches

    New Initiatives 2008-09 - Product Launches Strip Products:  Advanced High Strength Steels  DP600  DP800  Hot Rolled Steel Substrate – Ympress S700  Organic Coating – HPS200 Ultra Magizinc  Metallic Coating – Magizinc  Ymagine  Ymvit 29

  30. Slide 30: Performance Improvements Long Products

    Performance Improvements Long Products  Project “Starsign” at Scunthorpe  Scunthorpe production at 4.2mt, target of 4.5mt  Corus Engineering Steels - Restructuring benefits through de-bottlenecking and development  Scunthorpe – selective selling of premium rods & UK sections  CI supported impro

  31. Slide 31: Long Products – Major Capex Initiative £153m

    Long Products – Major Capex Initiative £153m “Starsign” – already commissioned in FY 08 Rail: Establishing a world class rail production facility at the existing MSM and an on-site service centre to improve customer service and offer rail lengths up to 120 m Rods: Developing the Rod Mill & MSM to en

  32. Slide 32: New Initiatives 2008-09 - Product Launches

    New Initiatives 2008-09 - Product Launches Long Products:  Long Rails 120mm  Rod Freecutting Steels  Engineering Steels for drill collar sector  Pipeplate for sour applications  Interstitial free steel for safety critical  EH46 plate grade for Aircraft Carrier contract 32

  33. Slide 33: Performance Improvements Distribution & Building Systems

    Performance Improvements Distribution & Building Systems  Mainland European volumes increase at Kalzip® Solar Systems Maastricht, Blume shipyard plate, Namascor packaging line  UK initiatives - Integration with upstream  Kalzip installer network and focus on Middle East & India 33

  34. Slide 34: Corporate Responsibility: Health, Safety and Environment

    Corporate Responsibility Health, Safety and Environment  Health & Safety  Remains our first priority with a 3-year plan launched in February 2008, supported by local initiatives  Our LTIF has fallen year-on-year since 2000 and is now at 1.8 LTIF  Environment  We have a climate change vision and

  35. Slide 35: Financial Performance & Financing

    Financial Performance & Financing

  36. Slide 36: Tata Steel Standalone

    Tata Steel Standalone US $ mn FY08 FY07 Change % Deliveries ( mt) 4.78 4.79 (0.2%) Turnover 5,005 4,494 11% EBIDTA 2,139 1,851 16% EBIDTA margin 43% 41% 2% 36

  37. Slide 37: Tata Steel PBT bridge

    Tata Steel PBT bridge (Figs in US $ mn) Financial numbers are as per Indian GAAP. 37

  38. Slide 38: Tata Steel UK (Corus) Financial Performance

    Tata Steel UK ( Corus) Financial Performance US $ mn FY08 FY 07 Deliveries (mt) 23.08 21.55 Turnover 23,935 20,919 EBIDTA 2,190 1,553 EBIDTA margin 9% 7% The nos. are in IFRS 38

  39. Slide 39: Consolidated Financial Performance

    Consolidated Financial Performance US $ mn 2007 - 08 Tata TSUK NSA TSTH Tata Steel Steel (Corus) Group (*) Deliveries (mt ) 4.78 23.08 2.49 1.43 31.99 Turnover 5,005 25,098 1,915 1,020 33,011 EBIDTA 2,139 2,274 57 126 4,640 EBIDTA margin 43% 9% 3% 12% 14% PBT 4,091 PBT margin 12% PAT 3,086 PAT margi

  40. Slide 40: NatSteel Asia Group Financial Performance

    NatSteel Asia Group Financial Performance US $ mn FY08 FY07 Change % Deliveries (mt) 2.49 2.21 13% Turnover 1,915 1,100 74% EBIDTA 57 49 16% EBIDTA margin 3% 4% (1%) 40

  41. Slide 41: Tata Steel Thailand Financial Performance

    Tata Steel Thailand Financial Performance US $ mn FY08 FY07 Change % Deliveries (mt) 1.43 1.12 27% Turnover 1,020 646 58% EBIDTA 126 72 75% EBIDTA margin 12% 11% 1% 41

  42. Slide 42: Key Group Ratios

    Key Group Ratios FY08 FY07 Change % EBIDTA Margin 14.08 % 31.14 % (54.78 %) Asset Turnover 108.61 % 77.02 % 41 % ROIC (pretax) 19.1 % 42 % 36 % EPS ( Diluted)-INR 162.96 64.66 152 % Net Debt / Equity 1.36 0.71 91.55% 42

  43. Slide 43: Funding for the acquisition

    Funding for the acquisition Group raised USD 10 billion in 2007 Cash from TSL US$1.09 bn Long Term Debt  All Bridge funding for the US$ 1.66 bn acquisition has now been termed April 2, 2007 out/ repaid USD Bn Tenor Cost p.a. Bridge Funding for Total Own Cash Acquisition a. Contribution from TSL 1.9

  44. Slide 44: Financing focus for the future

    Financing focus for the future  Strong Internal Generation through Continuous Improvement, Working Capital Management & Synergies  Sustenance capex and Brownfield expansion financed through Internal Generation  Raise Structured Equity for Greenfield Projects in the next 18 months  Re-organise Gr

  45. Slide 45: Integration & Synergies

    Integration & Synergies

  46. Slide 46: Synergies Identified at time of Acquisition

    Synergies Indentified at time of Acquisition  Synergies  Manufacturing  Increase BF productivity 57 %  Reduced coke consumption  Strengthening of CIP  Procurement  Combined buying 11 %  Rationalisation of Suppliers  Financing & Corporate 32 %  Restructuring of organisation  Refinancing To

  47. Slide 47: Integration Process

    Integration Process  Strategic & Integration Committee (SIC) Review  Focused integration teams setup in manufacturing departments of both entities  Integration Program Office setup  Synergy implementation review undertaken by business heads periodically  Engagement of external auditors to revie

  48. Slide 48: Long Term Strategy

    Long Term Strategy

  49. Slide 49: Long Term Strategy

    Long Term Strategy Strong Base in India • Global company • Multi Location • Dominant in 4 Primary steel making in countries rich in Iron Ore continents • Rank 6th in the • Amongst top 3 world and / or Coal / Gas • Auto & • Strong Brands Packaging & • Raw Material Overseas acquisitions in growing & m

  50. Slide 50: Coal Project - Mozambique

    Coal Project - Mozambique  Riversdale 35% JV stake with Riversdale Mining Ltd. in 25000 hectares Benga and Tete Tenement in Moatize region  Inferred coal resource ~ 1.94 billion tonnes in Benga Tenement  Offtake Agreement for 40% of coking coal on commercial terms.  Feasibility study & discussio

  51. Slide 51: Iron Ore Project - Ivory Coast

    Iron Ore Project - Ivory Coast  JV with State owned company Sodemi for exploring & developing Mt Nimba iron ore mine  75% stake in JV company Tata Steel Cote d‟Ivoire S.A.  Resource : > 750 mn tonnes of Itabirite Iron ore  Issue of Exploration license to SODEMI being considered by Ministry  Pro

  52. Slide 52: Limestone Project – Oman

    Limestone Project – Oman  Entered into 70:30 JV with Al Bahja Group by participating in its existing mining company, Al Rimal Mining LLC  Scope of JV : Mining of metallurgical grade limestone from Uyun Mine in Salalah, in Southern Oman  Estimated resource of ~ greater than 250 mn tonnes  Feasibi

  53. Slide 53: Growth Strategy – New Projects

    Growth Strategy – New Projects  2.9 mtpa expansion at Jamshedpur  6.0 mtpa greenfield project at Orissa  0.5 MTPA Mini Blast Furnace Project at Thailand 53

  54. Slide 54: 2.9 mtpa expansion - Jamshedpur

    2.9 mtpa expansion - Jamshedpur  Capacity Increase : HRC – 2.34 mtpa & Slab – 0.5 mtpa  Broad Facilities :  Upgradation of existing Blast Furnaces  Thin Slab Casting & Rolling Mill , 2.34 mtpa  Setting up a Pelletising Plant, 6mtpa  Contracts signed for supply of major equipments  Civil work

  55. Slide 55: Orissa Project - Kalinganagar

    Orissa Project - Kalinganagar  6 mtpa integrated steel making facility to be completed in two phases of 3mtpa each  Orders placed for Steel Melting Shop, Blast Furnace, Sinter Plant, Coke Plant and structural drawings for over 22,000 t have been released for fabrication  Orders for Hot Strip Mill

  56. Slide 56: Thailand - 0.5 mtpa Mini Blast Furnace Project

    Thailand - 0.5 mtpa Mini Blast Furnace Project  Tentative completion Sep 2009  Signed contract for machinery supply and contractor employment with Huatian Engineering & Technology Corpn.  Entitlement of tax incentives from Board of Investments, Thailand 56

Tata Steel — Investor Presentation (June 2008) on 6ix