Tata Steel Limited · NSE:TATASTEEL
Tata Steel — FY2003 Earnings Presentation
55 slides from Tata Steel's earnings presentation, Apr 3, 2003
Slide 1: Breaking The Commodity Cycle
Breaking The Commodity Cycle Press Conference by B. Muthuraman Managing Director, Tata Steel Kolkata, April 3, 2003
Slide 2: What Characterised FY’03 ?
qb TATA What Characterised FY’03 ? TATA STEEL
Slide 3: Global Scenario
FY’ 03 Global Scenario •Growth in China at 8% •Developing countries like India and Malaysia growing at 5 – 6% •Growth in Europe Slow •WTO •Lower tariffs, quotas •High import penetration •Privatisation of steel
Slide 4: Global Scenario – Steel Industry
FY’ 03 Global Scenario – Steel Industry •Chinese demand growing @ 21% •Crude steel ADC in China at 210 million tonnes •Protectionism led by US •HR prices boiling •Shortage of coke supply from china •Tightened metallic supply
Slide 5: Domestic Steel Industry
FY’ 03 Domestic Steel Industry •Buoyant prices •Debt recast by Financial Institutions for Essar, Ispat and JVSL •Exports upsurge •At 3.7 million tonnes in FY03 against 2.6 mt in FY’02 •WTO & Tariffs •Customs duty further lowered in this year’s budget to 25% for HR, CR, Wire Rods, Bars, Structural an
Slide 6: Indian Steel Industry: Growth In Production
FY’ 03 Indian Steel Industry: Growth In Production 11 9 10 10 10 9 9 9 8 8 7 7 7 6 5 3 1 0.4 Jul May Oct Jun Aug Sep Apr-Feb'02 Apr-Feb'03 Apr'02 Dec'02 Jan '03 Feb '03 -1 Nov -1 -3 Apr-Feb'02 Apr-Feb'03 % Change from last year
Slide 7: How Did Tata Steel Fare in FY’03 ?
How Did Tata Steel Fare in FY’03 ?
Slide 8: Markets
Markets Volume (‘000 MT) FP Sales CR + Galvanised Sales 2377 2564 859 2800 2271 1000 2400 800 693 2000 1600 600 485 1200 400 800 400 200 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 CR (OE) HR + CR (Auto) 300 273 400 313 200 150 300 177 210 98 200 100 100 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY03
Slide 9: CRCA Hi-End (Auto): The Supply Dashboard
CRCA Hi-End (Auto) : The Supply Dashboard Telco Hyundai Ford Mahindra & Mahindra 30 15 0.01 0.02 20 18 21 11 20 6 6 11 9 10 8 5 0.005 0.003 10 10 0 0 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 -5 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 Hindustan Motors Bajaj Auto LML Honda 10 15 4 1.5 10 1 1 6 10 3 5 2 2 2
Slide 10: CR OEM Market Shares – At # 1 Position
CR OEM Market Shares – At # 1 Position CRCA (Auto Direct) Market Share CRCA (Auto Ancilliaries) 40 32 35 28 30 30 25 18 15 18 20 20 15 10 10 10 5 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 CR (Appliances) CR (Low End) 20 25 21 15 13 20 15 8 9 15 10 8 10 5 5 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY03
Slide 11: Gaining Market Share In Focus Segments
Gaining Market Share In Focus Segments Volume (‘000 MT) Sales HR for Auto Segment Market Share (%) 200 174 80% 68% 160 118 125 135 52% 55% 53% 60% 120 40% 80 40 20% 0 0% FY'00 FY'01 FY'02 FY'03 FY'00 FY'01 FY'02 FY'03 Sales Galvanised for Construction Market Share (%) 200 18% 18% 130 12% 150 105 12%
Slide 12: Gaining Market Share In Focus Segments
Gaining Market Share In Focus Segments Volume (‘000 MT) Sales HC Wire Rods Market Share (%) 120 60% 90 45% 72 39% 80 40% 29% 50 40 20% 0 0% FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 Sales LC Wire Rods Market Share (%) 100 90 40% 31% 33% 83 27% 77 30% 20% 10% 0% 50 FY'01 FY'02 FY'03 FY'01 FY'02 FY03
Slide 13: Gaining Market Share In Focus Segments
Gaining Market Share In Focus Segments Volume (‘000 MT) Sales Tiscon Market Share (%) 500 399 446 5.1% 6% 4.8% 400 275 4% 3.2% 300 200 2% 100 0 0% FY'01 FY'02 FY'03 FY'01 FY'02 FY'03
Slide 14: Branding of Products
Branding of Products •Branded Cold Rolled Strips for the Distribution Market (TATA STEELIUM launched in February ‘03) •Embossed Tata Tiscon on our branded TMT Rebars (April’02) •Brand Protection Group set up in April’02 •Started Relationship building with channel members for Tata Shaktee GC Sheets •
Slide 15: Branding
Branding FY’02 FY’03 Branded Total Sale Branded Total Sale Sale Sale MT / % MT / % MT / % MT / % Flat Tata Shaktee GC 1,12,400 1,857,927 1,50,000 1,811,193 Products + Tata SteeliumCR % Sale 6 8 Long Tata Tiscon 1,52,631 1,046,232 1,95,000 1,030,100 Products % Sale 15 19 FP + LP Total Sale 2,65,031 2
Slide 16: Branding in Long & Flat Products
Branding in Long & Flat Products Volume (‘000 MT) Tata Shaktee GC + Tata Steelium CR Branded Sales (%) Branded Sales 160 150 112 10% 8% 120 6% 69 5% 80 5% 40 0 0% FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 Branded Sales Tata Tiscon Branded Sales (%) 250 19% 20% 195 15% 200 153 15% 11% 150 112 10% 100 5% 50
Slide 17: Branding of Products: Overall
Branding of Products: Overall Long Products + Flat Products Volume (‘000 MT) Branded Sales Branded Sales (%) 400 345 15% 12% 265 300 9% 180 10% 7% 200 100 5% 0 0% FY'01 FY'02 FY'03 FY'01 FY'02 FY'03
Slide 18: New Initiatives
New Initiatives •Customer Value Management •Large OE Customers •Work jointly with Key Customer Accounts in Automotive, Appliances and Furniture Industry •Retail Value Management •Retail customers through distribution channels •Initiatives taken to cover all distributors of ‘Tata Tiscon’ and ‘Tata Sh
Slide 19: New Products Developed
New Products Developed Hot Rolled Products • API 5 LX 52 / 60 - High Pressure line pipes for China. • API 5 LX 65 - Line Pipe for Jindal Saw Pipes. • DP Steel - Wheel Disc for Wheels India • SAPH 440 - For Hyundai Cold Rolled Products • BH 180 / 220 - Drawn Components for Hindustan Motor • CRCA YS >
Slide 20: New Products Developed
New Products Developed Galvanized Products • IFHS Zero spangle - Grade for Auto Sector • HSLA Zero spangle - for STEMCOR and CARGILL International for Decking and Construction Application. • Boron Treated (ASTM A 622 , Modified) Zero Spangle - for Roba Metals , Belgium and South East China for Appli
Slide 21: Raw Material Production (In Million Tonnes)
Raw Material Production (In Million Tonnes) West Bokaro Jharia 1.62 1.75 2 1.57 2 1.5 1.5 1.15 1.21 1.27 1 1 0.5 0.5 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 Iron Ore 10 7.73 8.50 7.24 5 0 FY'01 FY'02 FY'03
Slide 22: Iron Making Production (In Million Tonnes)
Iron Making Production (In Million Tonnes) Sinter Coke 6 4 5 3.87 3.90 3.85 3 2.33 2.307 2.31 4 3 2 2 1 1 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 Hot Metal 6 5 3.93 4.04 4.43 4 3 2 1 0 FY'01 FY'02 FY'03
Slide 23: Steel Production (In Million Tonnes)
Steel Production (In Million Tonnes) Crude Steel Finished Steel 5 4.10 4 3.07 3.40 3.57 3.75 2.78 4 3 3 2 2 1 1 0 0 FY'01 FY'02 FY'03 FY'01 FY'02 FY'03 Saleable Steel 4 3.96 3.64 3.43 3 FY'01 FY'02 FY'03
Slide 24: Hot Metal Production (In Million Tonnes)
0.5 1.5 2.5 3.5 4.5 0 1 2 3 4 5 88-89 2.24 89-90 2.27 90-91 2.32 91-92 2.40 92-93 2.44 93-94 2.60 94-95 2.92 95-96 3.24 96-97 3.44 3.51 97-98 98-99 3.63 99-00 3.89 Hot Metal Production (In Million Tonnes) 00-01 3.93 4.04 01-02 02-03 4.44
Slide 25: Raw Material Consumption (T / T of Saleable Steel)
Raw Material Consumption (T / T of Saleable Steel) 6 5 4.81 4.41 4.46 4.33 4.01 3.68 4 3.56 3.19 3 2 1 0 '90-91 '91-92 '92-93 '93-94 '94-95 '95-96 '96-97 '97-98 '98-99 '99-00 '00-01 '01-02 '02-03
Slide 26: Crude Steel Production (In Million Tonnes)
0 1 2 3 4 5 0.5 1.5 2.5 3.5 4.5 88-89 2.31 89-90 2.32 90-91 2.30 2.42 91-92 92-93 2.48 93-94 2.49 2.79 94-95 3.02 95-96 3.11 96-97 3.23 97-98 3.26 98-99 3.43 99-00 3.57 00-01 Crude Steel Production (In Million Tonnes) 01-02 3.75 02-03 4.10
Slide 27: No of Employees
No of Employees 100,000 0 20,000 40,000 60,000 80,000 FY '93 78,669 FY '94 76,436 FY '95 74,875 FY '96 72,252 FY '97 68,892 Rightsizing FY '98 64,753 FY '99 59,235 FY '00 52,167 FY'01 48,821 FY'02 46,234 FY'03 43,277
Slide 28: Labour Productivity (TCS / Man Year)
Labour Productivity (TCS / Man Year) 275 245 250 218 225 196 200 179 175 152 150 133 119 125 107 93 100 75 50 25 0 FY '95 FY '96 FY '97 FY '98 FY '99 FY '00 FY'01 FY'02 FY'03
Slide 29: Saleable Steel Production (In Million Tonnes)
0.5 1.5 2.5 3.5 4.5 0 1 2 3 4 5 86-87 1.91 87-88 1.91 88-89 1.94 89-90 1.97 90-91 1.94 2.04 91-92 92-93 2.12 93-94 2.15 94-95 2.45 95-96 2.70 96-97 2.82 97-98 3.01 98-99 3.10 99-00 3.29 00-01 3.43 Saleable Steel Production (In Million Tonnes) 01-02 3.64 02-03 3.96
Slide 30: Gross Working Capital (In Number of Days)
Gross Working Capital ( In Number of Days ) 140 128.2 120 122.2 123.7 96.6 99.2 100 108.0 78.0 80 60 40 20 0 1996 - 97 97-98 98-99 99-00 00-01 '01-02 '02-03 Inventory Net Debtors Gross WC
Slide 31: Operating Income and HRC Price Fluctuations
Operating Income and HRC Price Fluctuations 1400 $500 FY 01 1200 Till Q3 FY 03 Operating Income (Rs. Crores) $400 1000 FY 96 FY 97 FY 00 FY 02 HRC Price ($/MT) 800 FY 98 FY 99 $300 600 400 $200 200 0 $100 Prices : Metal Bulletin Operating Income CIS Europe China Latin America Operating Income = Gros
Slide 32: PBT and HRC Price Fluctuations
PBT and HRC Price Fluctuations 1000 $500 900 800 $400 Till Q3 700 FY 03 HRC Price ($/MT) PBT (Rs. Crores) FY 01 600 FY 96 FY 97 FY 00 500 $300 400 FY 98 FY 99 300 FY 02 $200 200 100 0 $100 PBT CIS Europe China Latin America Prices : Metal Bulletin
Slide 33: Raw Material & Iron Making
Raw Material & Iron Making •First time sale of Clean Coal from West Bokaro worth Rs 23 Crores •16% ash coal production in West Bokaro •Consistent Productivity of 40 t/m2/d (gross) at SP #2 in all months •100% replacement of Dunite by Pyroxenite
Slide 34: Raw Material & Iron Making
Raw Material & Iron Making •Highest ever Productivity at A-F Blast Furnaces at 1.74 t/m3/d •Having been upgraded for 1 mtpa, F Fce running at 1.3 mtpa consistently •Use of Sponge Iron in A-F Blast Furnaces has enabled •To achieve best ever Hot Metal production at 4.44 million tonnes •Reduction in Ra
Slide 35: Steel Plant Operations
Steel Plant Operations •Best ever Vessel life of 2105 heats •CRM crossed the 1 mt mark to produce 1.1 million tonnes •Best ever Productions at Wire Rod Mill and Merchant Mill •Closure of Bar Mill and Ingot Route •Plant specific energy consumption at 6.977 Gcal / tcs
Slide 36: Aspire
Aspire •TOP Initiative in Marketing •Customer Value Management •Retail Value Management •Customer Product Optimization to enrich the Product-Customer Mix •TPM at WRM, HSM and Tubes •Debottlenecking of capacities and enhanced outputs •Knowledge Management •Finalists of the MAKE (Most Admired Knowledg
Slide 37: Strategic Outsourcing
Strategic Outsourcing •Launched in line with our Vision •Finalising a JV with Vivendi of UK to look after water services at Jamshedpur •Engaged specialists in education area to run some of our schools in the township •Continuing this initiative, it is proposed to further identify some of the process
Slide 38: Tubes SBU
Tubes SBU •Best ever total sales at 0.19 million tonnes •Extension of Relationship building exercise - ‘Gold Club Distributor’ after ‘Tata Pipe Parivaar’ •Best ever collection at Rs 620 Crores •Savings of Rs 8 Crores through CLAP Initiatives (Cost Leadership Aspirational Plan) •Lowest ever Works var
Slide 39: Ferro Alloys & Minerals Division
Ferro Alloys & Minerals Division •Chrome Ore Production at 11.41 L Mt (86% higher than previous best) •Despatch from Sukinda at 50% higher than the previous best at 13.58 L Mt •Optimisation of Product / Market / Mix •FeCr and FeMn Exports Vs Domestic Sales •Leveraging Partnership with conversion age
Slide 40: Other Profit Centres
Other Profit Centres •Bearings conferred the Quality Rank No- 1 by Toyota Kirloskar Motors Ltd •Bearings sales increased by 11% over previous year •TGS procured external orders worth Rs 113 Crores •Rings Production and Sales crossed its previous best figures of 1995-96 •Power Business Division set u
Slide 41: How Do We See FY’04 ?
qb TATA How Do We See FY’04 ? TATA STEEL
Slide 42: Global Scenario
Global Scenario •Continued growth in Chinese economy •Steel supply deficiency •Tariff free quotas from 24th may •War will lead to high energy costs •Will boost inflation and cut into economic growth •Govts may impose inspection regimes on trade flows •Global logistics cost likely to go up •Impact on
Slide 43: Domestic Scenario
Domestic Scenario •Exports expected to decline •Attributed to subdued global growth and trade protectionism in developed countries •To promote steel exports govt has increased DEPB benefits • Demand for steel to rise •Promising budget for infrastructure •Tax relief in steel end-use sectors like auto
Slide 44: So, What Are Our Plans ?
qb TATA So, What Are Our Plans ? TATA STEEL
Slide 45: 03-04E Hot Metal Production (In Million Tonnes)
0.5 1.5 2.5 3.5 4.5 0 1 2 3 4 5 88-89 2.24 89-90 2.27 90-91 2.32 91-92 2.40 92-93 2.44 93-94 2.60 94-95 2.92 95-96 3.24 96-97 3.44 3.51 97-98 98-99 3.63 99-00 3.89 00-01 3.93 Hot Metal Production (In Million Tonnes) 4.04 01-02 02-03 4.44 03-04E 4.61
Slide 46: 03-04E Crude Steel Production (In Million Tonnes)
0 1 2 3 4 5 0.5 1.5 2.5 3.5 4.5 88-89 2.31 89-90 2.32 90-91 2.30 91-92 2.42 92-93 2.48 93-94 2.49 2.79 94-95 3.02 95-96 3.11 96-97 97-98 3.23 98-99 3.26 3.43 99-00 3.57 00-01 01-02 3.75 Crude Steel Production (In Million Tonnes) 02-03 4.10 03-04E 4.31
Slide 47: 03-04E Saleable Steel Production (In Million Tonnes)
0.5 1.5 2.5 3.5 4.5 0 1 2 3 4 5 86-87 1.91 87-88 1.91 88-89 1.94 89-90 1.97 90-91 1.94 2.04 91-92 92-93 2.12 2.15 93-94 94-95 2.45 95-96 2.70 96-97 2.82 97-98 3.01 98-99 3.10 99-00 3.29 00-01 3.43 01-02 3.64 Saleable Steel Production (In Million Tonnes) 02-03 3.96 03-04E 4.16
Slide 48: Plans For FY’04
Plans For FY’04 Revitalize the core Business for a sustainable future •Improved Product Mix and narrowing focus to select products •HR: CR: Galvanized :: 51: 34:14 against 53: 36: 11 in FY’03 •LCWR: Tiscon: HCWR :: 8: 48: 22 against 10: 44: 17 in FY’03 •Closure of Bar Mill •Customer / Product Mix En
Slide 49: Plans For FY’04
Plans For FY’04 Flat Products (% of Sales) HR CR 70 61 40 36 35 60 53 51 29 50 30 40 20 30 20 10 10 0 0 FY'02 FY'03 FY'04 E FY'02 FY'03 FY'04 E Galvanised 20 14 15 11 9 10 5 0 FY'02 FY'03 FY'04 E
Slide 50: Plans For FY’04
Plans For FY’04 Long Products (% of Sales) LCWR HCWR 12 10 25 22 8 8 20 17 15 6 10 7 5 0 0 FY'02 FY'03 FY'04 E FY'02 FY'03 FY'04 E TISCON 50 44 48 38 40 30 20 10 0 FY'02 FY'03 FY'04 E
Slide 51: Plans For FY’04
Plans For FY’04 Revitalize the core business for a sustainable future •Branding by Decommoditizing Steel •100% of Flat products to be sold through the distribution channel to be branded •Branded Products to increase from 14 to 28% in FY’04 •Strengthen Tata Tiscon and Tata Shaktee Brands in Rebar and
Slide 52: Plans For FY’04
Plans For FY’04 Revitalize the core Business for a sustainable future •Efforts towards remaining the lowest cost producer of Steel •Improved quality and volume of captive raw materials •Robust Planning for G Fce Up-gradation and Rebuilding •Increased manpower productivity from to 245 to 277 Cr. St.
Slide 53: Plans For FY’04
Plans For FY’04 Revitalize the core Business for a sustainable future •Balancing facilities for 1 million MT increased production • G Furnace upgrade • New Sinter plant • Facilities in Steel making shops • New Wire Rod mill • Additional 0.5 million mtpa of Flats and Longs
Slide 54: Plans For FY’04
Plans For FY’04 Venture into New Businesses that will own a share of our future •Iron Ore Business •Plans to utilise existing leases to expand volumes taking advantage of low cost mining operations •To serve markets in India, China, Korea and Japan •First Phase Production – 5 mtpa •Higher production
Slide 55: Thank You
qb TATA THANK YOU TATA STEEL