jsw steel limited...7 jsw – jfe strategic partnership one of the largest fdi in the indian metals...

JSW Steel Limited Investor Presentation Nov 2016

2

Agenda

Business Environment

Overview Performance Overview

Value Proposition

3 * Listed company

^ USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016)

JSW Group – overview

Presence across the core sectors

JSW Steel 6,271

JSW Energy 1,797

As on Sep 30, 2016

JSW Steel*: India’s leading integrated steel producer (Steel making capacity: 18 MTPA)

JSW Cement: Manufacturer of PSC, OPC and GGBS cement (Operational plants’ capacity: 6.4 MTPA)

JSW Infrastructure: Engaged in development and operations of ports (Operational capacity: 45 MTPA)

JSW Energy*: Engaged across the value chain of power business (Operational plants’ capacity: 4,531 MW)

Market cap of listed businesses ($8,068 mn^)

4

JSW Steel – India’s leading steel manufacturer

Leading steel manufacturer

in India

Integrated manufacturing

process

Diversified product portfolio

Strong distribution network and

export presence

Global presence

Technological competence

Combination of state-of-the-art steel making technologies: Corex, DRI, Blast Furnace

International presence in mining assets (Chile, US and Mozambique) and value-added facilities (Plate and Pipe mill in US)

Integrated steel manufacturing facilities – from raw material processing plants to value-added product capacities

Installed capacity 18 MTPA, at strategic locations in South and West India

Pan India marketing and distribution network, export presence in ~100 countries across the 5 continents

Extensive portfolio of products – HR, CR, galvanized/galvalume, pre-painted, tinplates, electrical steel (CRNO) TMT bars, wire rods, special steel bars, rounds and blooms

5 (1) Calculated as consolidated EBITDA/Saleable steel sales, (2) From 31st March 2002 to 31st March 2016,

(3) USD/ ` = 66.3329 (RBI reference rate as on Mar 31, 2016)

Transformational journey to market leadership

Unrelenting progress through the economic cycles

FY 2002 FY 2010 FY 2016

CAGR FY’02–16: 26% Revenue (USD mn)

262 2,939 6,313

CAGR FY’02–16: 25% EBITDA

(USD mn) 42 627 941

CAGR FY’02–16: 19% Capacity increased to 18MTPA in Mar’16

Capacity (MTPA) 1.6 7.8 18.0

Significant value creation with 59x increase in market value(2)

Market Cap (USD mn)

80 3,485 4,676

Adopting industry leading technologies Technology Corex Corex, BF Corex, BF, DRI

CAGR FY’02–16: 18% Production (MTPA) 1.3 6.0 12.6

Continuously expanding product canvas with focus on high-end value-added products

Product Mix Flats Flats, long, special

steel and value added

Flat, long, special steel & high value-added

auto, electrical grade

CAGR FY’02–16: 6% EBITDA/ton(1)

(USD/ton) 33 110 77

6

2016

18 MTPA (Vijayanagar Works and Dolvi Works capacity increased to 12 and 5 MTPA, respectively)

(1) Southern Iron and Steel Company, (2) Amba River Coke Limited

Combination of Organic and Inorganic growth

2002

1.6 MTPA

2005

2.5 MTPA

Color Coating Line

Acquired EURO IKON

2007

4.8 MTPA

CRM of 1.0 MTPA

Acquisition of Plate and Pipe Mill in US

Coal mining concessions in Mozambique

2008

Iron Ore mines acquired in Chile

2009

7.8 MTPA 2006

3.8 MTPA 2010

JSW-JFE Strategic Partnership

3.5 MTPA of HSM II

Coal mining concessions in US

2011

Acquisition of 49.3% stake in Ispat 2012

HSM II Capacity Expansion to 5 MTPA 2004

Acquired SISCOL(1)

2013

14.3 MTPA post Ispat merger

2014

New CRM2—Phase I

4 MTPA—Pellet Plant(2)

1 MTPA—Coke Oven Plant(2)

Acquired 50% stake in Vallabh Tinplate

Acquired Welspun Maxsteel

Key Projects in progress/pipeline:

Salem Works capacity expansion to 1.2MTPA

0.2MTPA Tin plate mill at Tarapur Complex

Pipe Conveyor System for Iron ore and new Water Reservoir at Vijayanagar

1.5mtpa Coke Oven at DCPL (Dolvi Works)

Continuously evaluating opportunities to deliver value enhancing growth

2015

New CRM2—Phase 2

0.2MTPA Electrical Steel Mill

7

JSW – JFE strategic partnership

One of the largest FDI in the Indian Metals and Mining space – Equity infusion by JFE of `5,410 Crores (~$1.2 bn) for 14.99% equity stake

Deleveraged Balance Sheet to support next phase of growth

Access to cutting edge technologies and fast growing automotive steel market

Operational excellence to result in cost reduction

JSW Steel:

Focused expansion plans in India

Optimized capital structure through deleveraging

Access to cutting edge technologies

JFE:

Presence in growing Indian market

Future growth through equity participation

Strategic production base in India for existing automobile customers

Benefits to JSW Steel:

Access to fast growing auto steel market

Short learning curve

Application engineering

New product development

Benchmarking and personnel training

Operational excellence and cost reduction for sustainable business operations by:

Improvement in quality, productivity, yield , and energy efficiency

Sharing best maintenance, environment management, and safety practices

Benchmarking, training and talent sharing

Standardization of processes

Value creation for both the partners Automotive technology agreements General technical assistance

agreements

8

Balanced corporate strategy

Selective

Growth

Diversification of Product Profile and

Customer Base

Backward & Forward Integration, and Focus on

Resource Optimization

Prudent Financial Principles

Sustainability with focus on Quality, R&D and Innovation

Maintain market share of 14-15% through selective organic and inorganic growth

Undertake brownfield expansions at low specific investment cost per ton

Consider inorganic opportunities that are value accretive

Increase proportion of high margin value-added products

Diversify customer base, both within India and abroad

Continue to focus on rural markets in India

Continue to evaluate raw material assets in India and abroad to secure key raw material supplies and to reduce cost of production by targeting strategic tie-ups and investments

Focus on cost reduction and energy efficiency

Continuously seeks to improve financial profile

Manage capacity expansion and debt profile to capture market opportunities without excessive risk

Committed to sustainable and eco-friendly technologies to drive growth

Focus on Quality, R&D and Innovation to drive breakthrough cost efficiency

9 Following changes are yet to approved by JSW Steel ‘Board of Directors’: 1) KSIIDC has nominated Mr. Pankaj Kumar Pandey in place of Mr. Naveen Raj Singh, 2) JFE Steel Corporation has nominated Mr. Hiromu Oka in place of Mr. Kyoichi Kameyama

Strong and balanced Board comprising experts of eminence & integrity

Savitri Devi Jindal Naveen Raj Singh1 Nominee Director of KSIIDC

Executive Directors Independent Directors Nominee Directors Chairperson—Emeritus

Sajjan Jindal Chairman & Managing Director

Seshagiri Rao M.V.S Joint Managing Director & Group CFO

Dr. Vinod Nowal Dy. Managing Director

Jayant Acharya Director (Commercial & Marketing)

Dr. Vijay Kelkar Ex-Finance Secretary, Ex-Secretary of MoP&G, Ex-Chairman Finance Commission

Promoter Director

Board fundamentally committed to sustainable business

Kyoichi Kameyama2 Nominee Director of JFE Steel Corporation

Haigreve Khaitan Senior Partner at M/s. Khaitan & Co, India's one of the oldest and full service law firm

Malay Mukherjee 40yrs of rich experience in mining and steel industry

Seturaman Mahalingam CA, Ex-CFO of TCS, Ex member of the Tax Administration Reform Commission

Kannan Vijayaraghavan, FCA and Certified Management Consultant

Dr. Punita Kumar Sinha Former CIO at The Asia Tigers Fund

10

FY16 performance on sustainability matrixes

71% Waste heat utilized 98.5% Waste gases

utilization

943,808 MT Scrap recycled

9% Decrease in

LTIFR over FY 15

3.51 Mn GJ

Energy saved

30% Recycled & reused water

0% Liquid discharged from our Plants

1897 MT Waste recycled

Award in 2016:

JSW Steel received ‘Golden Peacock Innovative Product’ Award

Awards in 2015:

JSW Steel awarded Porter’s Prize for ‘Leveraging Unique Activities

JSW Group received Porter’s Prize for ‘Creating Shared Values’

11

Agenda



Value Proposition

12

A platform of strength and agility

1 Strong fundamentals to boost India steel demand

2 Multi-location manufacturing facilities in India

3 Strategic overseas presence

4 Diversified product profile

5 Domestic market leader with strong export presence

6 Strong sales and marketing platform

7 Focus on operational efficiency

8 Strategic expansion aided by strong project execution

9 Proven ability to acquire and turnaround assets

10 Robust financial profile

13

(200)

0

200

400

600

800

1,000

1,200

1,400

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000

(1) Reserve Bank of India, (2) World Steel Association, World Bank, IMF, (3) World Steel Association and IMF, (4) 12th Five-Year Plan (India), (5) IHS Automotive, (6) Bubble size represents total steel demand of respective country

Strong fundamentals to boost India steel demand 1

5.6% 6.6% 7.2% 7.6% 7.6% 7.8%

FY13 FY14 FY15 FY16 FY17E FY18E

Decisive mandate in India general elections

Strong investor confidence and raised expectations of fast-paced decision-making and economic reforms

China

India Brazil Mexico Russia

Italy

Japan

South Korea

France

Canada

Germany

USA

Upturn in overall GDP growth(1)

• (%)

Infrastructure sector is a key focus area for the new government Infrastructure investment expected to reach ~$1 trillion during

2012-2017(4)

New government is focused to give impetus to infrastructure sector

Automobile sector expected to turn around India projected to become 3rd largest automotive market in the

world by 2016(5)

Faster economic growth and government's policies is likely to drive volumes and revive the automobile sector

India steel consumption to rise at a faster rate

o India’s steel consumption was 61MT in 2015 and is expected to rise to ~64MT in 2016 and ~67MT in 2017(3)

Potential for substantial growth in steel consumption(2)(6)

o World Per Capita Consumption is ~207 Kgs. o India Per Capita Consumption is ~61 Kgs.

Pe

r ca

pit

a St

ee

l Co

nsu

mp

tio

n i

n 2

01

5 (K

g.)

GDP per capita in 2015 ($)

With the growth in economy, JSW Steel is well positioned to be part of the India growth story

14 *JSW Steel Coated Products Limited

Multi-location manufacturing facilities in India

2

Dolvi: 5 MTPA

3.5 MTPA Blast Furnace 1.6 MTPA gas based DRI 55 MW Power Plant

Salem: 1 MTPA

1 MTPA Blast Furnaces 0.5 MTPA Blooming Mill 60 MW Power Plant

Kalmeshwar (JSCPL*)

0.58 MTPA GP/GC 0.19 MTPA Colour Coating Line

Vasind & Tarapur (JSCPL*)

1.18 MTPA GP/GC 0.5 MTPA Colour Coating Line 30 MW Power Plant

Vijayanagar: 12 MTPA

1.7 MTPA Corex 10.4 MTPA Blast Furnaces 855 MW Power Plant

Leveraging locational advantage to increase market share strategically in the Southern and Western regions of India

Salav: 0.9 MTPA DRI

15

Strategic overseas presence

JSW Steel ownership: 100% Early stage development in progress

Mozambique coal mines

JSW Steel ownership: 70% Acquisition cost: $252mn Started operations in FY11 Maritime concession to develop cape size port in

North Caldera

Chile iron ore mines

JSW Steel ownership: 90% Acquisition cost: $810mn Capacity: 1.2 Net MTPA Plates and 0.55 Net

MTPA Pipes Acquired in 2007 Opportunity for diversification in terms of

products, markets and geographies

US plate and pipe mill

JSW Steel ownership: 100% Acquisition cost: $70mn

US coal mines

3

Strategic overseas presence for backward integration and value-added facilities

16

Diversified Product Profile

Wide Offering of Flat and Long Products

Developing New Products, Capturing

Niche Markets

Continuously Increasing Value Added Products

GC

TMT

Slabs

Color Coated

HRC

Billets

HR Plates

Blooms

CRC

Wire Rods

Automotive Grade Steel

Enhanced focus on cold rolled, galvanised and galvanneal products for body panels of automobiles

Manufactured at a new CRM2 complex

Color Coated Products

Largest color coated facility to address construction, warehousing and roofing requirements

State-of-the-art color coating line for appliance grade products used in consumer durables

Electrical Steel Commissioned Cold Rolled Non-grain Oriented (CRNO) steel plant to address domestic

demand by substituting imports of high grade electrical steel

Diversified portfolio to address growing demand for value-added steel

Commissioned new facilities to further enrich product mix

Leveraging JFE Steel’s well-established manufacturing technology for high value-added products for auto-grade steel

4

Continuously enriching product mix

17

77% 85% 84% 76% 88%

23% 15% 16% 24% 12%

FY08 FY10 FY12 FY15 FY16

(1) Joint Plant Committee

Domestic market leader with strong export presence

11.4% 13.4% 6.9% 3.3% India Finished Steel Consumption Growth(1)

JSW Export Turnover as % of Total

JSW Domestic Turnover as % of Total

5

Penetrating further to capture growing domestic demand with unique marketing strategy – unique nationwide retail network (JSW Connect, JSW Shoppe, JSW Explore as well as non-exclusive retailers) of more than 6,583 outlets with footprints across 495 districts

Leadership position in India (domestic sales surged by 20%YoY in FY16 vs. apparent steel demand growth of 4.5% in India) and largest exporter of steel products out of India

Exports to high demand regions such as Asia, Middle East, Europe and the US – presence in over 100 countries

Ability to re-align sales effort and shift between domestic and export market as per market conditions – strategically reduced share of exports to 12% of total sales as global steel consumption declined 3%YoY in CY15

Flexibility to shift between domestic and international markets based on market conditions

4.5%

18

Multi-sectoral volume growth

Optimizing market mix and product mix to derive maximum benefit from sector growth

Leveraging export presence

New product approvals for Original Equipment Manufacturers (OEMs) and automotive customers

Increase in value added products leading to incremental growth in focus sectors and also facilitating import substitution

Focused on Retail Sales – increased reach and penetration

Strong sales and marketing platform

Segmented approach to address different retail segments

Metro / Urban

Urban / Semi-urban

Semi-urban /

Rural

‘JSW explore’ Branded, multiple product service

center for steel solutions

Just-in-time solution with in-house profiling lines and Value Added Services

Franchisee Model

‘JSW Shoppe’

Steel distribution

Enhanced customer experience

‘JSW Shoppe Connect’ Smaller retail format linked to JSW

explore/Shoppe

Last mile link to talukas/rural areas

Sales to end consumers and MSMEs

Increased customer focus and market penetration

6

19 (1) Total production (12.56MT) divided by total no. of employees on Company payroll (11,904) in FY16

Focus on operational efficiency

Coke Making: Recovery and Non-recovery Coke Ovens

Agglomeration: Pelletisation and Beneficiation Plants

Iron Making: Blast Furnace, Corex, Sponge Iron (DRI)

Steel Making: Basic Oxygen Furnace (BOF), Electric Arc Furnace (EAF), Conarc

Casting: Continuous Casting, Thin Slab Casting, Billet Casting

Improving labor productivity: Current production of ~1,055 tons/ employee(1)

In-house training programs internal faculty

Continuously investing, building and enhancing competencies

Integrated manufacturing facilities: From pelletisation/beneficiation to downstream value-add capabilities

Dedicated port and railway siding for logistics support

100% assured power supply through captive power plants and arrangements with JSW Energy and the power grid

Diverse blend of technology High labour productivity Integrated operations

Reduced raw material costs

Focus on process improvements

Waste gas utilization for power generation

Efficient operations resulting in low conversion cost

Resulting in operational efficiency

7

High level of integration and technological expertise leading to reduced production cost and time

20 (1) Vijayanagar works expansions

Strategic expansion aided by strong project execution 8

Focus on low cost and returns accretive brownfield projects to capitalise on expected demand recovery

Strong project execution capabilities ….

Experienced in-house project management team

Supported by cross-functional team (commercial, finance and legal department)

Established long-term relationship with key domestic and international suppliers

Savings in procurement cost by negotiating firm prices for follow-on orders

… at low specific investment cost(1)

Reduced specific investment cost/ton of capacity expansion shows cost efficiency

Major new & on-going Projects

Vijayanagar Works:

Pipe conveyor system for Iron ore and new water reservoir

Dolvi Works:

1.5mtpa Coke Oven at DCPL (Dolvi Works)

Salem Works:

Capacity expansion from 1 MTPA to 1.2 MTPA by setting up certain new facilities and debottlenecking/ modification of existing facilities

Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven and

Turbo Generator

Tarapur Works:

Setting up 0.2MTPA Tin plate mill

1.6 MTPA • FY 2003 • USD 923/mt

2.5 MTPA • FY 2006 • USD 682/mt

3.8 MTPA • FY 2007 • USD 550/mt

7.8 MTPA • FY 2009 • USD 559/mt

11 MTPA • FY 2012 • USD 545/mt

21 (1) Implemented in a wholly owned subsidiary Amba River Coke Limited.

Proven ability to acquire and turnaround assets

December 2010 Completed Initiatives—FY2011–2015 FY2016-2017

Inability to service existing debt

Inadequate cashflows

Corporate debt restructuring (CDR) case

Exit from CDR

Generating positive profit after tax

Plant under maintenance Loss making at EBITDA level High interest cost Financially distressed

Infusion of equity Alignment of marketing strategies resulting in freight

synergies and VAT benefits Reduction of high cost working capital funding Refinancing of existing debt Electricity sourcing from JSW Energy at competitive

prices Commissioning of 4MTPA pellet plant(1), 1MTPA coke

oven(1), waste gas based 55MW power plant, railway siding, and lime calcination plant

Capacity expanded to 5MTPA, ramp-up/stabilization is underway

Further operational improvements underway

Operational improvements underway

Case Study: Turnaround strategy at JSW Ispat’s Dolvi plant

JSW Steel has a proven track record of acquiring troubled assets and turning them around in record time by closely integrating them with its existing operations thus creating synergies and optimizing cost

9

Able to leverage an acquisition to maximum value accretion through application of knowledge and experience

22

Robust financial profile 10

Strong track record of volume growth

Achieved significant sales growth despite weak economic and sluggish domestic demand in past 2 years

Superior profitability supported by efficient operations

Resilient operations with improved EBITDA margin marked by several productivity and cost improvement measures in FY14 and FY15

FY16 EBITDA was under pressure amidst weak steel pricing due to steel supply glut and shutdowns but it should improve in FY17

Well-capitalized balance sheet

Adequate liquidity levels owing to prearranged funding in place for capacity expansions and a committed working capital facility

Financial flexibility to raise capital

Diverse sources of funding

Strong relationships with over 50 banks/financial institutions with access to low cost credit

Healthy mix of local and foreign currency debt

23

Historical EBITDA per ton – JSW Steel Standalone

7,07

7

9,27

6

5,89

2

3,44

3

5,40

0

5,39

8

5,46

9 6,98

8 8,53

4

8,54

5

8,05

2

7,47

8

7,13

7

6,85

9

6,98

5

6,05

4 7,02

8 8,40

2

7,15

1

6,56

9

6,88

7 8,34

0 9,54

6

6,27

9

6,26

8

8,68

6

10,7

93

2QFY

17

1QFY

17

4QFY

16

3QFY

16

2QFY

16

1QFY

16

4QFY

15

3QFY

15

2QFY

15

1QFY

15

4QFY

14

3QFY

14

2QFY

14

1QFY

14

4QFY

13

3QFY

13

2QFY

13

1QFY

13

4QFY

12

3QFY

12

2QFY

12

1QFY

12

4QFY

11

3QFY

11

2QFY

11

1QFY

11

4QFY

10

EBIT

DA

(R

s p

er

ton

)

24

Agenda



Value Proposition

25

Key highlights – 2QFY17

Standalone performance

Highest ever quarterly Crude Steel production: 3.98mn tonnes

Highest ever quarterly Saleable Steel sales: 3.84mn tonnes

Total Income from Operation: `13,357 crore

Operating EBITDA : `2,718 crore

Net Debt to Equity: 1.75x and Net Debt to EBITDA: 4.41x

Consolidated performance

Total Income from Operation: `14,421 crore

Operating EBITDA : `2,959 crore

Net Debt to Equity: 2.15x and Net Debt to EBITDA: 4.82x

Key update

The Board has approved to sub-divide (split) the equity shares of the Company having a face value of `10/- (Ten only) each into ten equity shares of face value of `1/- (One Only) each

Declared as preferred bidder for 5 Category 'C' Iron Ore Mines in Karnataka with estimated resources of about 111 million tonnes

Acquired 74% stake in JSW Praxair Oxygen Private Limited for consideration of `240 crores

Awarded ‘Steelie Award 2016’ (in the innovation category) by the World Steel Association “for the development of advanced high strength automotive steels with speed and innovation”

26

3.25

3.98 3.87

2QFY16 2QFY17 1QFY17

Crude Steel Production

Quarterly volumes – standalone

YoY

22%


Flat 2.57 2.86 2.74

Long 0.64 0.79 0.85

3.19

3.84

3.34


Saleable Steel Sales

YoY

20%


Flat 2.50 2.80 2.48

Long 0.65 0.81 0.74

Semis 0.03 0.23 0.12

QoQ

3% QoQ

15%

All figures are in million tonnes

27

6.65 7.85

1HFY16 1HFY17

Crude Steel Production

Half yearly volumes – standalone

YoY

18%

1HFY16 1HFY17

Flat 4.91 5.28

Long 1.28 1.55

Semis 0.11 0.35

All figures are in million tonnes

1HFY16 1HFY17

Flat 5.07 5.60

Semis 1.33 1.64

6.29 7.17

1HFY16 1HFY17

Saleable Steel Sales

YoY

14%

28 All figures are in million tonnes, * Domestic sales, ^ Total sales (JSW Steel Standalone + JSW Steel Coated Products after netting-off inter-company sales), Value added & special products include HRPO, CRFH, CRCA, ES, Galvanised, Colour Coated, and special bars and rounds

Quarterly sales highlights – consolidated

Value added & special products exports grew by 67%YoY

Overall value added & special products sales grew by 20%YoY; Branded steel product’s sales grew by 11%YoY

TMT sales grew 40%, CRCA sales grew 26%YoY and Coated sales grew 22%YoY

53% 52% 56%

35% 36% 32%

13% 12% 13% 2.82* 2.83* 2.68*

10% 26% 19% 3.14^ 3.82^ 3.30^


OE Retail Auto Exports

2.07 2.54 2.15

1.07 1.28 1.15


Other products Value added & special Products

Focused efforts towards value added & special products sales

29

Quarterly retail sales highlights – consolidated

Branded steel product’s sales increased 11%YoY from 418 thousand tonnes to 466 thousand tonnes

TMT sales grew 44%YoY – Individual Residential and Commercial Construction were major contributors

Galvalume sales grew 27%YoY – Individual Residential and Industrial Construction were major contributors, and Colour Coated sales grew 20%YoY – Individual Residential segment was major contributor

57% 55% 48%

43% 45%

52%


Others Branded Sales

Retail sales (‘000 tonnes) 1,027 976

846

Added 240 new Retailers to the network Engaged with 2,800+ influencer/ retailers through

292 influencer meets 280 engineers visited Vijayanagar works through 7

plant visits

Network expansion and Influencer programme

30 Indicates new grade approval in 2QFY17 Above mentioned approved grades are the highest among the specific product/grade-group; the lower grades upto the highest grades are also approved.

Automotive, Appliance and General Eng. grade approvals Applications Components

Hood 270F 340P 270F 340P JSC340HN

Roof 270F 590R

Doors 270F JSC270DU 270F JAC270DU SGARC40

Body side outer 270F 270F JAC340P

BIW (Inner) 980Y 590R 440W

Floor 270F HX220YD

Structural 980Y 590Y 590R BSK46 SAPH 370

Reinf. Pillar 980Y HX180YD SGARC440

Wheels SPFH440 SPFH590 SAPH 590 HR 750

Engine SCM435 S36CV 86B45 SAE1070 SAE4140 SAE1018 EN1APB 16MnCr5LSi

Transmission 16MnCr5 SAE4124 SAE8822 SAE5160 SAE4145

Axels 150M36

Tractor 815M17

Suspension

Bearings

Front Panel EDD IF

Side Panel D DD

Cylinder Cell

General Eng. Structural SS540 MSL I Gr6

CR Coated HRPO

HR Alloy Steel Longs

IS15194 HS345

Grades Approved

Automotive

100CrMnSi6-4

Appliance

20MnCr5Ni

51CrMoVn

31

Particulars 2QFY17 2QFY16

` Crores USD mn ` Crores USD mn

Total Income from Operations 13,357 2,004 10,893 1,634

Operating EBITDA 2,718 408 1,723 258

Other Income 53 8 106 47

Finance Cost 916 137 804 121

Depreciation 788 118 713 107

Exceptional Items - - 116 17

Profit Before Tax 1,066 160 196 29

Tax 395 59 51 8

Profit after Tax 672 101 145 22

Diluted EPS (`)* 27.78 5.98

USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016)

* Not Annualized

2Q Financials – standalone

32

Particulars 1HFY17 1HFY16





Finance Cost 1,779 267 1,594 239

Depreciation 1,532 230 1,410 212



Tax 848 127 75 11

Profit after Tax 1,754 263 258 39

Diluted EPS (`)* 72.56 10.66


* Not Annualized

1H Financials – standalone

33

1,723

2,718

377 59

514

(21)

65

EBITDA 2QFY16as per Ind-AS

Volume NSR Cost Others Ind-AS Impact in2QFY17 vs. 2QFY16

EBITDA2QFY17

$258

$57 $9

$77

($3)

$10 $408


Operating EBITDA movement – standalone

` crore/ USD mn

34

Volumes 2QFY17 2QFY16 1HFY17 1HFY16

Production 0.45 0.36 0.86 0.75

Sales 0.44 0.37 0.84 0.77

` crore

Operational performance – JSW Steel Coated Products

Million tonnes

Key P&L data 2QFY17 2QFY16 1HFY17 1HFY16


Operating EBITDA 167 102 326 213


35

Sales (net tonnes) 2QFY17 2QFY16 1HFY17 1HFY16

Plate Mill 30,925 41,947 58,468 90,023

Pipe Mill 12,564 17,957 18,182 34,754

Production (net tonnes) 2QFY17 2QFY16 1HFY17 1HFY16

Plate Mill 48,787 58,312 86,646 1,16,430

Utilization (%) 20% 25% 18% 24%

Pipe Mill 12,249 16,043 16,847 29,584

Utilization (%) 9% 12% 6% 11%

USD mn

Net tonnes = 0.907 metric tonnes

Operational performance – US Plate & Pipe Mill

Key P&L data 2QFY17 2QFY16 1HFY17 1HFY16

Revenue from Operations 37.31 53.41 62.57 105.88

EBITDA + Other Income 0.22 (3.09) (5.23) (12.49)

36

Particulars 2QFY17 2QFY16


Total Income from Operations 14,421 2,163 11,993

1,799



Finance Cost 965 145 938 141

Depreciation 892 134 832 125



Tax 473 71 47 7

Share of Associates, JV and non-controlling Interest 68 10 33 5


Diluted EPS (`)* 30.05 2.33


* Not Annualized

2Q Financials – consolidated

37

Particulars 1HFY17 1HFY16


Total Income from Operations 27,307

4,096 24,640

3,696



Finance Cost 1,900 285 1,854 278

Depreciation 1,723 258 1,664 250



Tax 924 139 50 8

Share of Associates, JV and non-controlling Interest 92 14 63 9

Profit after Tax 1,835 275 77 12

Diluted EPS (`)* 75.93 3.21


* Not Annualized

1H Financials – consolidated

38 USD/ ` = 66.6596 (RBI reference rate as on Sep 30, 2016)

*Net Debt excludes Acceptances

Net debt movement – consolidated

` crore/ USD mn

Particulars 30.09.2016 30.06.2016

Cash & cash equivalent (` crore) 1,963 1,032

Net Debt/Equity (x) 2.15 2.27

Net Debt/EBITDA (x) 4.82 5.69

45,355 43,937

939 170

1,359 239 929

Net Debt*

as on Jun'16

New Loan Taken New Finance

Lease Obligation

Repayments Fx Impact Movement in

FD/MF

Net Debt*

as on Sep'16

$6,804 $141 $26

$204 $36 $139

$6,591

39

Agenda



Value Proposition

40 Source: Bloomberg, IMF and JSW Steel

Global economy

Global economic growth outlook remains range-bound

Global growth expectations marked down primarily due to weaker US growth

Recent data and sustained accommodative policy stance indicate US growth recovery continues to moderate

Euro area growth continues to be supported by expansionary monetary policy and subdued commodity prices; uncertainty around the impact of ‘Brexit’ remains an area of concern

Japan growth was weaker in 2QCY16, continues to be weighed down by weaker external demand and private investment

China growth rate remains within the official target range of 6.5%-7.0%, but rebalancing and associated spill-overs continue to be pertinent

3.2

% 2.1

%

2.6

% 2.0

%

0.5

%

4.0

%

7.6

%

6.9

%

3.2

% 1.9

%

2.4

% 1.5

%

0.5

%

4.1

%

7.5

%

6.5

%

3.1

% 1.6

%

1.6

%

1.7

%

0.5

%

4.2

%

7.6

%

6.6

%

World AMEs US EuroArea

Japan EMEs India China

2015A2016P (Jan'16)2016P (Oct'16)

GDP growth - 2015 actual vs. projections for 2016 (%YoY)

-6-30369

12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

US EurozoneJapan China

Index of Industrial Production (% YoY)

41 Source: SBB, ISSB, MySteel, Bloomberg and JSW Steel

*9M annualized exports

Global steel scenario

Steel prices to reflect movement in raw material prices

Exports from China, Japan, Korea and Russia continue to flood global steel markets

Japanese/Korean exports continue to be at a sharp discount to their domestic market prices

Coking coal prices surge rapidly due to physical market tightness in recent months, compressing steel spreads. Not likely to sustain at such high levels over the medium term

Steel spreads squeezed with high coal prices. However, steel prices in Asia and Europe have started moving up in recent weeks

0

60

120

180

240

Jan-

13

Jul-

13

Jan-

14

Jul-

14

Jan-

15

Jul-

15

Jan-

16

Jul-

16

China JapanKorea Russia

~157mn tonnes

~194mn tonnes ~214mn tonnes

Annualized steel exports (mn tonnes)

~216mntonnes*

-

50

100

150

200

250

200

325

450

575

700

825

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jul-

14

Jan

-15

Jul-

15

Jan

-16

Jul-

16

Hard coking coal FOB - RHS North America ExWKorea - Domestic Japan - DomesticChina - export FOB Japan & Korea - export FOB

$/to

nne

$/t

on

ne

42

690 648 576

693 618

733

1,058

Sep-16Aug-16Jul-16Jun-16May-16Apr-16FY16^

Monthly steel imports (in '000 tons)

Source: JPC and JSW Steel, All figures are in million tonnes, ^Average monthly imports during FY16, * Apparent finished steel consumption net of double counting effect

Indian economy and steel industry

Progress on effective trade remedial measures is imperative for the health of the industry - steel imports have again increased in Aug-Sep’16 after declining in Jul’16

Crude steel production increased by 7.5%YoY whereas apparent finished steel consumption grew by 3.6%YoY in 1HFY17

Government spending data, thrust on renewable energy sector, better credit deployment in the roads sector, higher than budgeted Railway Capex, robust port traffic growth point towards an improving demand environment

Normal monsoon and Seventh Pay Commission awards are likely to drive consumer discretionary spending in the on-going festive season

Steel demand growth outlook is gradually improving

Imports have come down by only 35% against the expectations of 50% decline

44.6239.56

47.9940.98

Crude Steel Production Apparent Finished SteelConsumption*

1HFY16 1HFY17

7.5%3.6%

43

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 risk and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition within Steel industry including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, our ability to commission mines within contemplated time and costs, our ability to raise the finance within time and cost client concentration, restrictions on immigration, our ability to manage our internal operations, 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 made strategic investments, withdrawal of fiscal/governmental incentives, impact of regulatory measures, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward looking statements that may be made from time to time by or on behalf of the company.

Forward looking and cautionary statement

44

Thank you

jsw steel limited...7 jsw – jfe strategic partnership one of the largest fdi in the indian metals...

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