Jsw Steel Limited · NSE:JSWSTEEL
Jsw Steel — Investor Presentation (2007)
33 slides from Jsw Steel's investor presentation, 2007
Slide 1: Steel Limited SVIPS 2007
SVIPS Steel Limited 2007 1
Slide 2: Forward Looking and Cautionary Statement
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
Slide 3: Agenda
Agenda Ò JSW Steel today Ò Key strategic initiatives Ò Industry dynamics Ò Corporate social responsibility Ò Benchmarks 3
Slide 4: JSW Steel - Today
JSW Steel - Today Crude steel production 3.00 2.70 2.50 2.25 1.88 million ton 2.00 1.61 1.43 1.50 1.00 0.78 0.50 - FY' 02 FY' 03 FY' 04 FY' 05 FY' 06 FY' 07E 80 & 120kms CAGR – 28% Mumbai port Vasind and Tarapur Goa port 416kms Vijayanagar 540kms Chennai port Ò Well located with proximity to source
Slide 5: JSW Steel – Today (Cont.)
JSW Steel – Today (Cont .) Raw materials Steelmaking & rolling Logistics / Utilities / Sales VMPL -Mining (Iron ore) Production facility at SWPL (Port) ÒIron ore production: 1.5 - 2 mt Vijayanagar Ò Cargo Handling Capacity – Ò Meeting 25% - 30% requirements ÒPellets : 5 mtpa 5 mtpa SWML – Mining ( D
Slide 6: Leading position in World market
Leading position in World market Geographical Sales distribution - 9M FY 2007 * Product mix - 9M FY 2007 * Africa Colour Coated 2% Asia 2% 9% Slabs Central America 15% 1% GPGC Europe 26% Domestic Market 17% 56% CR Coils Middle East 3% 8% HR Coils HR Plates South America 6% 48% * Tonnage basis USA 3%
Slide 7: Rich experience in project execution
Rich experience in project execution Integrated project commissioning delayed due 1.6 mtpa greenfield to delay in financial closure & start-up issues of Corex plant project Ò Setting up of blast furnace Ò State-of-art non recovery coke oven plant 0.9 mtpa brownfield Ò Captive power plant utilising w
Slide 8: Low specific investment cost
Low specific investment cost Expansion - Low investment cost * 8 1,000 923 6.8 900 7 800 6 682 700 550 551 million ton 5 US$ / ton 600 4 3.8 500 3 400 2.5 1.6 300 2 200 1 100 0 - Stage 1 Stage 2 Stage 3 Stage 4 E Capacity Investment/ton * * Specific investment cost considered upto HR Coil stage only
Slide 9: Stringent operating cost management
Stringent operating cost management HR Coil production cost trend Consolidated cash cost breakdown - 9M FY 2007 Overheads Iron ore Labour 3% 400 5% 16% 353 350 316 300 285 Other raw 232 material 250 206 $/ton 20% 200 150 100 50 Utility 7% - Coal FY 0 3 FY 0 4 FY 0 5 FY 0 6 Y07 Power 9M F 4% 45% Low
Slide 10: Low conversion cost
Low conversion cost Ò High plant utilisation factor Î Refractory relining life comparable with best in the world Ò Higher yields Î Caster yield at 98.8% amongst best in the world Ò Zero utilisation of petro fuels Î Corex gas used for in-house heating Ò High degree of plant integration Ò Low specific
Slide 11: Financial highlights
Financials highlights Turnover Historical performance FY 2003 – FY 2006 80 70.4 67.7 Ò Turnover CAGR – 34% 70 60.91 60 Ò EBIDTA CAGR – 44% 50 46.8 Rs. bn 27.9 Ò Average net cash accurals – Rs.11.54 bn 40 30 20 Ò Average ROCE – 18.73% 10 0 * 7 03 04 05 06 F Y0 Financial highlights – 9M FY 2007 FY FY
Slide 12: JSW Steel: Leading player in Indian steel industry
JSW steel : Leading player in Indian steel Industry Leading steel producer Ò One of the most modern plant with state- 50% NLMK Tata Steel Tenaris EBITDA margin of-art technology 40% Evraz Usinimas JSW Steel 30% Ò Amongst companies with best EBITDA Severstal Carpenter margins in the world 20% Mechel
Slide 13: Agenda
Agenda Î JSW Steel today Ò Key strategic initiatives Ò Industry dynamics Ò Corporate social responsibility Ò Benchmarks 13
Slide 14: Sustainable Growth Strategy
Sustainable Growth Strategy Strategic Objectives: Ò Consolidate position in domestic steel industry with focus on enhancing basic steel making capacity Ò Expand global presence with value addition closer to markets CREATE WORLD CLASS STEEL COMPANY Key elements Î Grow market share Î Improve vertical
Slide 15: Grow market share
Grow market share Current market Increase in Crude Steel production: Targeted market Share Ò Total investments: Rs. 54.50 bn Share 8% Ò Growth of production: 3.0 mtpa 12% Competitive advantages: Î Leverage existing infrastructure Î Low specific investment cost Î Enhance capacity to 6.8 mtpa by March
Slide 16: Grow market share (Key Projects)
Grow market share (Key Projects ) 2.8 mtpa expansion Ò Integrated steel production through BF- BOF route BF – 1 Upgradation Ò Upgradation of blast to increase production from 0.9 mtpa to 1.2 mtpa Ò Improve fuel efficiency with lower coke consumption 16
Slide 17: Increase vertical integration
Increase vertical integration Target Existing Target RAW PRODUCTS MATERIAL Iron ore: 50%– 60% Backward Iron ore : 25%-30% Longs : 22% Coal : 50% – 70% Slabs : 26% Downstream HR : 50% Integration Coal : 0% HR : 48% Fluxes : 85%-100% Value added: 28% Fluxes : 60%-85% Value added : 26% Striving for end
Slide 18: Diversify market share
Diversify market share Ò Total investments: Rs. 31.09 bn Ò Enhance rolled product output Ò Establish presence in long products Objective – Build presence across flat products and long products to improve realisation & de-risk business model Crude Crudesteel steel––6.8 6.8mtpa mtpa HR products CR pro
Slide 19: Diversify market share – Key projects
Diversify market share – Key projects Cold rolling mill complex Ò Production of auto grade CRCA products Ò Manufacture of value added HR products Hot Strip Mill Ò State-of-art HSM of 2200 mm width high quality products Ò Ability to expand to 5 mtpa Galvalume facility Ò Conversion of 4 galvanising li
Slide 20: Maintain sound financial profile
Maintain sound financial profile Ò Maintain gearing below 1 Ò Healthy mix of foreign currency and rupee debt Ò Reduce interest cost. Debt / EBIDTA Debt / equity 10.00 5.47 8.29 6 8.00 5 6.00 4 times 3.15 2.32 times 4.00 3 1.57 1.82 1.33 1.51 2 0.96 2.00 0.81 1 - 0 3* 7 Y0 Y0 4 Y0 5 Y0 6 F Y0 * 07 F
Slide 21: Projects under implementation – A summary
Projects under implementation – A summary Project Capacity Expected Cost Debt (mtpa) Date of (Rs. bn) (Rs. bn) Completion CRM 1.00 Q2, FY 08 10.00 6.00 2.8 mtpa 2.80 March ‘09 53.00 30.00 New HSM 2.00 Sep ‘09 20.00 12.00 BF-1 0.30 FY ‘09 1.50 - Upgradation HSM- Phase II 0.70 FY ‘08 0.75 - Galvalume
Slide 22: Vision
Vision Ò Dominant position in domestic steel industry Î 10 mtpa by 2010 at existing location Î Develop greenfield projects in West Bengal & Jharkhand Ò Scan opportunities for inorganic growth Î Acquire value added facilities abroad Î Expand geographical footprint Ò Secure key raw materials Achieve l
Slide 23: Agenda
Agenda Î JSW Steel today Î Key strategic initiatives 2008-2011 Ò Industry dynamics Ò Corporate social responsibility Ò Benchmarks 23
Slide 24: Consolidation – A global phenomena
Consolidation – A global phenomena Ò High degree of regional consolidation Region Players Market Share USA Arcelor-Mittal, Nucor & US Steel (3) 71% EU-15 Arcelor-Mittal,Riva, Thyssen, Corus (4) 70% Latin America Usinimas, Gerdau, Technit (3) 74% Japan Nippon, JFE, Sumitomo (3) 67% Russia Evraz, Seve
Slide 25: Steel Cycles
Steel Cycles Ò Steel cycles have become shorter due to quick supply side response Ò Periods of upturn longer than downturn Ò Previous troughs not visited in subsequent cycles Global Steel Index Note: 1 Includes Algoma, AK Steel, Chaparral Steel, Dofasco, IPSCO, Mittal Steel, Nucor, Oregon Steel, Ste
Slide 26: Agenda
Agenda Î JSW Steel today Î Key strategic initiatives 2008-2011 Î Industry dynamics Ò Corporate social responsibility Ò Benchmarks 26
Slide 27: Beyond business
Beyond business Making steel is our profession Generating smiles, our passion 27
Slide 28: The socially responsible citizen
The socially responsible citizen Our pledge to build enduring value for society has inspired us to setup the JSW Foundation which is working towards creating a caring culture to improve the quality of life of people who live around our plants. Wherever JSW Foundation sets up base, it supports the as
Slide 29: Agenda
Agenda Î JSW Steel today Î Key strategic initiatives 2008-2011 Î Industry dynamics Î Corporate social responsibility Ò Benchmarks 29
Slide 30: Valuations- EV / ton
Valuations- EV / ton EV / ton - Asian companies 1434 1600 1344 1400 1063 1059 1046 1200 933 747 719 US$/ton 1000 681 675 800 600 400 200 0 E O IL l l l l l ee e ee ee ee JF SC l SA l ee te ee St St St St os PO St St W n na ta Ba & po ew Ta JS hi n ip C N iro N ng an ga uh An W Source: Bloomberg, Mac
Slide 31: Valuations- PE multiple
Valuations- PE multiple PE multiple FY 07E - Asian companies 14 12.5 11.3 10.8 12 9.8 9.7 10 8.2 7.2 8 6.5 6.1 5.5 6 4 2 0 s l IL l O el E l el l ee ee ee al ee JF SC SA e te et St St St St St os M PO W n na e ta Ba o po b JS Ta m hi Ko ip ito C N m Su Source: Bloomberg, Macquarie Research 31
Slide 32: Merger - Valuations
Merger - Valuations Recent merger - Valuations 14 13.1 1,000 900 12 864 800 10 9 625 706 700 671 607 8.1 7.9 600 8 7.3 US $/t times 476 500 5.8 6 400 4 300 2.9 200 2 121 100 0 0 Tata-Corus Evraz-Oregon Esmark- Mittal-Arcelor Arcelore-Dofasco Mittal- Techint- Wheeling Kryvorizhstal Hylsamex Pittsburg
Slide 33: Conclusion
Conclusion Well positioned with: Ò Improving cost structure Ò Ability to scale capacities at low specific investment cost Ò Diverse range of products on offer Ò Established and deep knowledge of customer base Ò Aggressive growth plans with financial discipline Deliver returns on sustainable basis 33