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India :Steel Sector Report_August 2013
 

India :Steel Sector Report_August 2013

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India has become the world’s fourth-largest producer of crude steel. The country is slated to become the second-largest steel producer by 2015 as large public and private sector players strengthen ...

India has become the world’s fourth-largest producer of crude steel. The country is slated to become the second-largest steel producer by 2015 as large public and private sector players strengthen steel production capacity in view of the rising demand.

The total market value of the steel sector in India stood at US$ 57.8 billion in 2011 and is expected to touch US$ 95.3 billion by 2016. Total crude and finished steel production grew at a compound annual growth rate (CAGR) of 6.6 per cent and 4.2 per cent over FY08-11 to reach 69.6 million tonnes (MT) and 66 MT respectively.

Steel consumption is expected to grow at an average rate of 6.8 per cent to reach 104 MT by 2017 driven by rising infrastructure development and growing demand for automotives. The infrastructure sector is India’s largest steel consumer, accounting for 63 per cent of total consumption in FY11. Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market. The Government of India (GOI) has allowed 100 per cent foreign direct investment (FDI) in the sector through automatic route in order to attract foreign investments.

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    India :Steel Sector Report_August 2013 India :Steel Sector Report_August 2013 Presentation Transcript

    •       
    • Fourth-largest producer of crude steel • Steel production in India has increased at a CAGR of 7.7 per cent over 2005–12. The country is slated to become the second-largest steel producer by 2015 as large public and private sector players strengthen steel production capacity in view of rising demand Strong growth opportunities • Huge scope for growth is offered by India’s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors Technological advancements • Increased government and corporate sector focus on using innovative production techniques for enhancing operational as well as financial performance is a positive Rising domestic and international investments • Domestic players’ investments in expanding and upgrading manufacturing facilities are expected to reduce reliance on imports. In addition, the entry of international players* would provide benefits in terms of capital resources, technical know-how and more competitive industry dynamics Notes: * - Arcelor Mittal and POSCO
    • • The engineering sector is delicensed; 100 per cent FDI is allowed in the sector • Due to policy support, there was cumulative FDI of USD14.0 billion into the sector over April 2000 – February 2012, making up 8.6 per cent of total FDI into the country in that period Growing demand Notes: FDI - Foreign Direct Investment, MT - Million Tonnes MoUs - Memorandum of Understanding, 2016E - Estimated figure for the year 2016; These estimates are from Data monitor Robust demand • Demand would be supported by growth in the domestic market • Infrastructure, oil & gas and automotives would drive the growth of the industry Increasing investments • Intended steel capacity build- up in India is set to result in investments in the range of USD104.2 billion to USD208.3 billion by 2020 • 301 MoUs have been signed with various states for planned capacity of about 488.6 MT Policy support • 100 per cent FDI through the automatic route is allowed • Large infrastructure projects in the Public-Private Partnership (PPP) mode are being formed • National Steel Policy (NSP) implemented to encourage the industry to reach global benchmarks Competitive advantage • India is the world’s fourth-largest producer of crude steel (up from eighth in 2003); the country is expected to become the second- largest producer by 2015 • Easy availability of low-cost manpower and presence of abundant reserves make India competitive in the global setup 2011 Market value: USD57.8 billion 2016E Market value: USD95.3 billion Advantage India
    • Notes: TISCO - Tata Iron and Steel Company; IISC - Indian Iron & Steel Company; SAIL - Steel Authority of India Ltd • Production of steel started in India (TISCO was setup in 1907) • IISC was set up in 1918 to compete with TISCO • Mysore Iron and Steel Company was set up in 1923 • According to the new Industrial Policy Statement (1948), new ventures were only undertaken by the central government • Hindustan Steel Ltd and Bokaro Steel Ltd were setup in 1954 and 1964, respectively • In the early 1990s, the public sector dominated steel production • Private players were in downstream production mainly producing finished steel using crude steel products • SAIL was created in 1973 as a holding company to oversee most of India's iron and steel production • In 1989, SAIL acquired Vivesvata Iron and Steel Ltd • In 1993, the government set plans in motion to partially privatise SAIL 1907–1918 1923–1948 1954–1964 1973–1992 1993–2012 • Foreign players began entering the Indian steel market • No license requirement for capacity creation • Imposition of export duty on iron ore, to focus more on catering growing domestic demand • Decontrol of domestic steel prices • Launch of Scheme for promotion of Research and Development in Iron & Steel sector
    • Steel End use Structural steel Construction steel Rail steel Form Liquid steel Crude steel Ingots Semis Finished steel Flat Non-flat Composition Non-alloy steel Low carbon steel Medium carbon steel High carbon steel Alloy Stainless Silicon electrical High speed Source: Report on Indian steel industry by Competition Commission of India, Aranca Research
    • Total crude steel production (million tonnes) Total crude steel production rose at a CAGR of 6.6 per cent over FY08–11 to 69.6 MT; production in the first nine months of FY12 was a little more than three-fourth of FY11 levels Finished steel production stood at 66.0 MT in FY11, recording a CAGR of 4.2 per cent during FY08–11; analysts expect production figures to improve rapidly over the next five years with the Ministry of Steel forecasting production levels at 115.3 MT by FY17 Total finished steel production (million tonnes) 17.1 16.4 16.7 17.0 12.3 36.8 42.1 49.1 52.6 41.1 FY08 FY09 FY10 FY11* FY12* (April - Dec) Public sector Private sector 13.5 12.7 13.0 13.1 8.6 42.6 44.5 47.6 52.9 43.4 FY08 FY09 FY10 FY11* FY12* (April - Dec) Public sector Private sector Source: Ministry of Steel, Aranca Research; Notes: FY - Indian Financial Year (April – March); MT - Million Tonnes, * - Provisional; CAGR - Compound Annual Growth Rate
    • India crude steel market share by production - - FY12* (Apr-Dec) SAIL is the leading player in India’s steel sector; in the first nine months of FY12, the company accounted for 18.7 per cent of the country’s crude steel production and had a 13.5 per cent share in finished steel production Tata Steel, another household name in the country, leads private sector activity in the steel sector; during April– December 2011, the firm accounted for 9.9 per cent of crude steel production and 7.8 per cent of finished steel production India finished steel market share by production - FY12* (Apr-Dec) Source: Ministry of Steel, Aranca Research; Notes: RINL - Rashtriya Ispat Nigam Limited, * - Provisional 9.9% 18.7% 4.3% 67.1% Tata Steel SAIL RINL Other 7.8% 13.5% 4.0% 74.7% Tata Steel SAIL RINL Other
    • Market value of the Indian steel sector (USD billion) In 2011, the Indian steel sector’s total market value was USD57.8 billion The sector has benefitted from rises in price and production, especially since the beginning of the millennium Over 2007–11, the sector’s market value is estimated to have posted a strong CAGR of 17.7 per cent 30.1 43.0 36.5 46.8 57.8 2007 2008 2009 2010 2011 CAGR: 17.7% Source: Datamonitor, Aranca Research Note: E - Estimates
    • Consumption of steel (in million tonnes)Total consumption of steel exceeded production and grew to 70.9 MT in FY12 as against 66.4 MT in FY11; over FY07–12, consumption has expanded at a CAGR of 8.7 per cent Driven by rising infrastructure development and growing demand for automotives, steel consumption is expected to grow at an average rate of 6.8 per cent, reaching 104 MT by 2017 Source: Ministry of Steel, Indian Steel Markets Conference, Datamonitor, BMI, Aranca Research Notes: FY12* - Data for FY12 is provisional, MT - Million Tonnes 46.8 52.1 51.9 59.3 66.4 70.9 FY07 FY08 FY09 FY10 FY11 FY12* CAGR: 8.7%
    • Steel demand and production (in million tonnes) With steel’s demand growth outpacing growth in domestic production over the last few years, import dependency has increased Imports have increased at a CAGR of 6.8 per cent over FY07–12 In FY12, total imports stood at about 6.8 MT Steel exports and imports (in million tonnes) Source: Ministry of Steel, JSPL presentation, Aranca Research Notes: FY - Indian Financial Year (April - March), * - Data for FY12 is provisional 50 55 55 60 67 71 50 53 55 57 64 69 2007 2008 2009 2010 2011 2012 Demand Production 4.9 7.0 5.8 7.4 6.8 6.8 5.2 5.1 4.4 3.3 3.5 4.0 FY07 FY08 FY09 FY10 FY11 FY12* Imports Exports
    • Source: JSPL May 2013 presentation, Aranca Research Sector-wise steel consumption FY12Infrastructure is India’s largest steel consumer, accounting for 63 per cent of total consumption in FY11 This is not surprising given the heavy use of steel in this sector and soaring construction and infrastructure activity in the country over the past decade Engineering and fabrication is the next largest consumer, with 22 per cent of total consumption 63% 22% 10% 3% 2% 0 Infrastructure Engineering and fabrication Autos Packaging Transportation
    • Company Products Tata Steel Ltd Finished steel (non-alloy steel) SAIL Finished steel (non-alloy steel) JSW Steel Ltd Hot-rolled coils, strips and sheets Jindal Steel & Power Ltd Iron and steel Ispat Industries Ltd Hot-rolled coils, strips and sheets Welspun-Gujarat Stahl Rohren Ltd Tubes and pipes Bhushan Steel Ltd Cold-rolled coils, strips and sheets Source: Aranca Research
    • Source: Ministry of Railways, Aranca Research Notes: MOUs - Memorandum of Understanding, MT - Million Tonnes Growing investments • SAIL has modernised and expanded its integrated steel plants in Bhilai, Bokaro, Rourkela, Durgapur, Burnpur and Salem • The company is in the process of expanding its crude steel production capacity to 21.4 MTPA by 2013 • Completed mega expansion of Rashtriya Ispat Nigam Limited (RINL) to more than double capacity of plant (from 2.9 MT to 6.3 MT) from 2013-14 Strategic alliances • International Coal Ventures Pvt Ltd, comprising SAIL, RINL, CIL, NTPC and NMDC, has been set up for acquisition of coal mines overseas • The consortium of SAIL and National Fertiliser Limited (NFL) has been nominated for revival of Sindri Unit of the Fertiliser Corporation of India Limited • RINL, Vishakhapatnam Steel Plant and the Power Grid Corporation of India Ltd (POWERGRID) signed an MoU to set up a joint venture company to manufacture transmission line towers and tower parts including R&D of new high-end products Entry of international companies • Attracted by the growth potential of the Indian steel industry, several global steel players have been planning to enter the market • National Mineral Development Corporation (NMDC) has signed an MoU with Russia’s third-largest steelmaker, Severstal, for a greenfield steel plant in Karnataka • Posco Steel to invest USD12 billion in setting up a 12 MT project in India
    • Increased emphasis on technological innovations • Indian steel companies have now started benchmarking their facilities and processes against global standards, to enhance productivity • These steps are expected to help Indian companies improve raw material and energy consumption as well as improve compliance with environmental and pollution yardsticks • Companies are attempting coal gasification and gas-based direct-reduced iron (DRI) production. Other alternative technologies such as Hlsmelt, Finex and ITmk3 being adopted to produce hot metal Source: Aranca Research
    • Steel integrated plants under SAIL (Bhilai, Rourkela, Bokaro, Durgapur and Burnpur) Tata Steel’s largest steel plant, based in Jamshedpur RINL steel plant in Vishakhapatnam Alloy and special steel plants under SAIL (Bhadrawati and Salem) Source: Company websites, Aranca Research
    • Policy support 100 per cent FDI in the steel sector Encouragement of sector-based R&D activities by the government Reduced custom duty and other favourable measures Growing demand in the construction industry Increasing investments Rising investments from domestic and foreign players Increasing number of MoUs signed to boost investment in steel Foreign investment of nearly USD40 billion committed in the steel sector Inviting Resulting in Growing demand in the automotives sector Rising demand for consumer durables and capital goods Growing demand Note: FDI - Foreign Direct Investment
    • Projected values of investment in infrastructure (USD billion) Investment in infrastructure by the Planning Commission is expected to expand at a CAGR of 14.5 per cent over FY12– 17 The Planning Commission expects total infrastructure investment to be USD1 trillion in the 12th Five-Year Plan (2012–17), from USD428 billion in the 11th Plan This increase in infrastructure investment is set to raise steel demand by roughly 40 MTPA during FY13–17 Source: Planning Commission, Aranca Research Notes: MTPA - Million Tonnes Per Annum 97.3 114.1 131.2 149.1 169.0 191.4 FY12 FY13 FY14 FY15 FY16 FY17 CAGR: 14.5%
    • Consumer durables market size (USD billion) Over FY03-FY11, consumer durables has grown at a CAGR of 12.2 per cent as growth in disposable income resulted rise in their demand Capital goods and consumer durables are expected to grow at a 7.5 per cent to 8.8 per cent over 2012-2021 Automotives production expanded at a CAGR of 22.2 per cent over FY09–12 Commercial vehicles are the fastest growing segment with a CAGR of 29.8 per cent over the same period Over FY12-FY21, the automotive sector is projected to grow at a CAGR of 11.5 per cent to 12.5 per cent Total production of automobiles in India (million units) Source: SIAM, JSPL May 2013 presentation, Corporate Catalyst India, Aranca Research Notes: E - Estimate; FY - Indian Financial Year (April - March) 2.9 3.2 3.5 3.8 4.2 4.7 5.2 6.3 7.3 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 1.8 2.4 3.0 3.1 5.1 9.7 0.4 0.6 0.8 0.9 1.4 2.4 8.9 11.1 14.2 16.3 21.0 30.2 FY09 FY10 FY11 FY12 FY16E FY21E Passenger vehicles Commercial vehicles Three wheelers & two wheelers CAGR: 12.2%
    • National Steel Policy 2012 • In view of the sector’s changed dynamics, globally as well as domestically, the Ministry of Steel has initiated the process of drafting a new National Steel Policy to replace the existing National Steel Policy of 2005 • The government has set up a committee headed by the Steel Secretary to monitor the formulation of the new National Steel Policy • Four task forces have been constituted to study, analyses, consult and formulate draft policy documents on different aspects of the policy • The current policy draft proposes allotment of captive iron ore mines to producers through open bidding and putting some mines in the general category R&D and innovation • A new scheme, ‘The scheme for the promotion of R&D in the iron and steel sector’, has been approved with budgetary provision of USD24.6 million to initiate and implement the provisions of the scheme as per the 11th Five-Year Plan • USD10.7 million had been spent under the scheme up to December 2012 • The development of technology for cold-rolled grain oriented (CRGO) steel sheets and other value-added products is also included under the policy purview and is allocated USD6.7 million Source: Ministry of Steel, Aranca Research
    • Foreign Direct Investment • 100 per cent FDI through the automatic route is allowed in the Indian steel sector Rise in export duty on iron ore • The government hiked the export duty on iron ore to 30 per cent ad valorem on all varieties of iron ore* (except pellets) Source: Ministry of Steel, Aranca Research Notes: * - w.e.f. 30th December 2011
    • • Export duty on iron ore has been increased to 30 per cent ad valorem on all varieties of iron ore (except pellets), to preserve iron ore resources for domestic use • As per the government’s decision, the Government of India’s 51 per cent shareholding in Eastern Investments Company Limited (EIL), under Bird Group of Companies, was transferred to RINL • New Research and Development policy for the steel sector have been finalised/adopted for implementation • New techno-economic benchmarks have been evolved on international patterns to improve performance of steel PSUs; implementation is being monitored closely • Under the Ministry, the Joint Plant Committee (JPC) studied 300 districts, 1,500 villages, 4,500 manufactures and 8,000 retailers spread over India’s 28 states and 7 union territories to assess steel demand in the rural areas and examine the potential to increase steel consumption levels • The Ministry of Steel set up the Steel Innovation Council to promote innovative ideas in the steel sector • The New National Steel Policy for the forthcoming years is under finalisation • In April 2013, the Ministry of Steel signed a Letter of Intent (LoI) with the Tanzanian Government to strengthen cooperation in steel and mining activities Source: Ministry of Steel, Aranca Research Notes: W.E.F - With Effect From 30th December, 2011
    • Developer Location Product Viraj Profiles Ltd Thane, Maharashtra Stainless steel engineering products Jindal Steel Ltd Kalinganagar Stainless steel SAIL Salem SEZ Pvt Ltd Salem, Tamil Nadu Steel Orissa Industrial Infrastructure Development Corporation Jajpur, Orissa Metallurgical-based engineering and ancillary/downstream industry Source: Formal approvals granted in the Board of Approvals after the SEZ rules coming into force,” Special Economic Zones in India website, www.sezindia.nic.in
    • M&A scenario – details Period: 1 January 2012 to 21 June 2013 Deal type Number of deals Largest deal (USD million) Inbound 2 - Outbound 1 - Domestic 3 232.6 Cumulative FDI inflows Period: April 2000 to March 2013 Sector Metallurgical industries USD7.5 billion Per cent of total FDI inflow 3.9 Source: Thomson ONE Banker, “Fact Sheet On Foreign Direct Investment (FDI)”, Department of Industrial Policy and Promotion
    • For updated information, please visit www.ibef.org State MoUs signed (2011) Capacity addition (MTPA) Orissa 63 81.2 Jharkhand 49 105.1 Chhattisgarh 76 60.0 West Bengal 16 39.4 Karnataka 57 173.0 Andhra Pradesh 18 11.8 Other states 22 18.2* Total 301 488.6 Capacity addition plans 2012 Company Plans SAIL SAIL plans to invest USD27.3 billion in increasing capacity from 21.4 MTPA to 45 MTPA. In its recent expansion plan, the company modernised and expanded its integrated steel plants at Bhilai, Bokaro, Rourkela, Durgapur, Burnpur and a special plant at Salem NMDC NMDC is setting up a greenfield integrated steel plant of 3 MTPA capacity in Nagarnar, Chhattisgarh at an estimated cost of about USD3.2 billion Source: Ministry of Steel, Annual Report 2011-12; Note: MTPA - Million Tonnes Per Annum, * - Estimated figures
    • Jindal Steel and Power Limited Incorporated in 1979, Jindal Steel and Power Limited (JSPL) is an integrated steel producer and the largest coal-based sponge iron manufacturer in the world. The company has an installed steel production capacity of 3 MTPA. JSPL is engaged in manufacturing long products and is specialised in producing long rails for railways and large sized H-beams as well as columns for the infrastructure and construction sector JSPL also has significant presence across the mining, power generation and infrastructure sectors • Achievements: • 2011 – Ranked third in the Metals category of Business World’s Most Respected Companies Survey, 2011 • 2010 – Rated the World’s Second-Largest Value Creator by the Boston Consulting Group (BCG) and the World’s Largest Value Creator in the Mining and Materials category Projected crude steel capacity in the 12th Plan (million tonnes) Source: Company website (www.jindalsteelpower.com), Planning Commission, Aranca Research 3.0 3.0 4.5 7.0 8.0 10.0 11.5 FY11 FY12 FY13 FY14 FY15 FY16 FY17 CAGR: 25.1%
    • Financial growth (USD million)Sale of steel (million tonnes) 0.3 0.2 0.7 1.0 1.2 1.6 1.9 0.5 0.8 1.4 1.6 2.0 2.3 2.82.8 3.8 FY06 FY07 FY8 FY9 FY10 FY11 FY12 Finished steel products Semi steel products Pellets 671 816 1,488 1,803 1,596 2,287 3,315 3,007 103 197 431 438 395 634 818 721 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gross revenue PBIDT Source: Company website (www.jindalsteelpower.com) Notes: Company clubs iron and steel segment ‘s performance; PBIDT (Profit Before Interest, Depreciation and Tax)
    • 1991 1993 1995 1997 1999 2002 2006 2010 2012 Long track rails Hot-rolled parallel flange beams Column sections Plate and coils Wire rods Organic growth through capacity additions Foray into the oil & gas and cement sectors as a part of diversification 1991 Commenced operations FY08 ISO 9001:2008 accreditation FY 13–14 Steel capacity to rise from 3.5MTPA to 7.0MTPA The iron and steel segment continues to be a major contributor (~75%) Expansion in international markets TMT Re-bars Strong diversified customer base of 2,758 customers
    • Bhushan Steel Limited Established in 1983, Bhushan Steel Limited (BSL) is the third-largest secondary steel producer in India. The company has an existing steel production capacity of 2.5 MTPA. It primarily manufactures flat steel products for the automobile industry Products – Cold-rolled closed annealed coils, galvanised coils and sheets, high tensile steel strapping, colour coated coils, galume sheets and coils, hardened and tempered steel strips, billets, sponge iron, precision tubes and wire rods • Milestones: • 2004 – Commissioned secondary steel production at Khapoli, Maharashtra • 2006 – Commissioned primary steel production at Meramandali, Odisha • 2006 – Commissioned secondary steel production at Sahibabad, Uttar Pradesh Projected crude steel capacity in the 12th Plan (million tonnes) 2.2 2.5 4.5 5.0 5.0 5.0 5.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Source: Company website (www.bhushansteel.com), Planning Commission, Aranca Research
    • Financial growth (USD million)Production of steel (million tonnes) Source: Company website (www.bhushansteel.com), Aranca Research Notes: NPAT - Net Profit After Tax 1.0 1.2 1.1 1.6 1.8 2.1 FY07 FY08 FY09 FY10 FY11 FY12 693 928 1,161 1,178 1,266 1,662 2,251 1,541 35 69 105 92 178 221 213 116 FY06 FY07 FY08 FY09 FY10 FY11 FY12 9MFY13 Gross revenue NPAT
    • 1989 1991 1993 1995 1997 1999 2002 2006 2010 2012 Cold-rolled Wheel, tyre and axle plant (railways) Alloy steel Iron making and castings Organic growth in steel and flat products Capacity expansion (0.9 MT to 2.5 MT) 1989 Secondary steel production in UP Partnership with Japanese steel producer, Sumitomo FY06 Primary steel production in Odisha FY12 USD2.5 billion turnover Galvanised Color coated tiles and pipes Alloy billets Sponge iron Other developed products Technological upgradation and further capacity addition Strong diversified customer base of 3,300 customers
    • Tata Steel Limited Established in 1907 by the visionary founder – JN Tata, Tata Steel is among the top ten global steel companies with an annual crude steel capacity of over 28 MTPA The company caters to sectors such as automotive, construction, consumer goods, engineering, packaging, energy & power, ship building, rail and defense & security • Milestones: • 2009 – Tata Ryerson and HMPCL merge with Tata Steel • 2007 – Tata Steel and Corus were integrated at USD12 billion, making Tata Steel one of the top ten global steel producers Projected crude steel capacity in the 12th Plan (million tonnes) Source: Company website (www.tatasteel.com), Planning Commission, Aranca Research 6.8 7.6 9.2 11.0 15.1 17.5 20.0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 CAGR: 19.7%
    • Financial growth (USD million)Production and sales of steel division (million tonnes) Source: Company website (www.tatasteel.com), Aranca Research Notes: NPAT - Net Profit After Tax 4.6 4.9 4.9 5.4 6.4 6.7 7.0 7.9 4.4 4.8 4.8 5.2 6.2 6.4 6.6 7.5 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Production Sales 0.8 0.9 1.2 1.1 1.1 1.5 1.4 3.9 4.5 5.6 5.9 5.8 7.2 7.1 FY06 FY07 FY08 FY09 FY10 FY11 FY12 NPAT Gross revenue
    • Source: Company website (www.tatasteel.com), Aranca Research, * - Revenues from Indian operations Note: M&A - Mergers and Acquisitions 1912 1995 1996 1997 1998 1999 2000 2002 2004 2006 2008 2010 2011 2012 2013 Blast furnace Organic growth in steel Capacity expansion (3 MT) M&A (Tata-Corus) Technological upgradation 1912 Production capacity (1.6 lakh tonnes) Diversification (coal injection unit) FY06 USD3,625 million turnover FY13 USD7.0 billion turnover* Pig iron and steel ingots Wheel, tyre and axle plant (railways) Alloy steel Iron making and castings Developed products Announced plans to merge Tata Metaliks Ltd and Tata Metaliks Kuboto Pipes Ltd with itself in April 2013
    • JSW Steel Established in 1994, JSW Steel Ltd manufactures iron and steel products in India and abroad Products – Hot-rolled coils, plates and sheets; cold-rolled coils and sheets; galvanised sheets and coils; pre-painted galvanised coils, sheets and galvanised sheets • Achievements: • 2011 – National Sustainability Award by the Indian Institute of Metals • 2009 – Gold Award in the Metal and Mining sector • 2008 – National Energy Management Award instituted by CII Projected crude steel capacity in the 12th Plan (million tonnes) Source: Company website (www.jsw.in), Planning Commission, Aranca Research 11.1 13.23 14.3 14.3 14.3 17.6 18.4 FY11 FY12 FY13 FY14 FY15 FY16 FY17 CAGR: 8.8%
    • Financial growth (USD million)Product group-wise sales (million tonnes) Source: Company website (www.jsw.in) 0.3 4.7 1.1 0.4 5.9 1.5 0.3 6.9 1.71 Semis Rolled Flats Rolled Longs FY11 FY12 FY13 1,417 1,937 2,631 3,162 4,053 5,228 7,221 7,137 178 269 360 96 421 419 339 332 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Gross revenue NPAT
    • Notes: JV - Joint Venture, TMT - Thermo Mechanically Treated, MML - Mysore Minerals Limited, MTPA - Million Tonnes Per Annum 1994 1995 1996 1997 1998 1999 2000 2002 2004 2006 2008 2010 2011 2012 2013 FY 14 Saleable steel sales to reach 9.75 million tonnes Special steel bars Galvanised product TMT Re-bars Wire rods Cold-rolled Hot-rolled Organic growth and integration JV formed to explore, develop & mine iron ore with MML 1994 ISO accreditations Capacity addition 7.8 MT 1994 Production capacity (1.25 MTPA) FY06 USD1,417 million turnover FY 13 USD7.1 billion turnover
    • Note: Capex – Capital Expenditure Automotive • The automotives industry is forecasted to grow in size by USD122–159 billion by 2016 • With increasing capacity addition in the automotive industry, demand for steel from the sector is expected to be robust Capital goods • The capital goods sector accounts for 11 per cent of steel consumption, and has the potential to increase in tonnage and market share • Corporate India’s capex is expected to grow and generate greater demand for steel Infrastructure • The government aims to increase infrastructure spending from 8.4 per cent of GDP in FY11 to 10.7 per cent by FY17 • Due to such a huge investment in infrastructure the demand for long steel products would increase in the years ahead Airports • More and more modern and private airports are expected to be set up • Development of Tier- II city airports would sustain consumption growth • Estimated steel consumption in airport building is likely to grow more than 20 per cent over next few years
    • Source: Planning Commission, Aranca Research Railways • The dedicated rail freight corridor (DRFC) network expansion would be enhanced in future • Gauge conversion, setting up of new lines and electrification would drive steel demand Oil and gas • The liquid fuel transportation pipeline network is likely to grow from the present 16,800 km to 22,000 km in 2014 • This would lead to an increase in demand of steel tubes and pipes, providing a lucrative opportunity to the steel industry Power • The government aims to add 71,000– 1,07,500 MW (Mega Watt) of capacity during the 12th Five- Year Plan • Both generation and transmission capacities would be enhanced, thereby raising steel demand from the sector Rural India • Rural India, accounting for 70 per cent of Indian population has low per capita steel consumption which provides huge scope for growth • Policies like Bharat Nirman and Rajiv Gandhi Awaaz Yojna are driving growing demand for construction steel in rural India
    • Indian Stainless Steel Development Association L-22/4, DLF Phase-II Gurgaon, Haryana –122 002 Phone: 91-124-4375501 Fax: 91-124-4375509 E-mail: nissda@gmail.com
    • CAGR: Compound Annual Growth Rate FDI: Foreign Direct Investment FY: Indian Financial Year (April to March) So FY10 implies April 2009 to March 2010 JV: Joint Venture MoU: Memorandum of Understanding MT: Million Tonnes MTPA: Million Tonnes Per Annum NPAT: Net Profit After Tax SEZ: Special Economic Zone TMT: Thermo Mechanically Treated
    • USD: US Dollar Wherever applicable, numbers have been rounded off to the nearest whole number
    • Year INR equivalent of one US$ 2004-05 44.95 2005-06 44.28 2006-07 45.28 2007-08 40.24 2008-09 45.91 2009-10 47.41 2010-11 45.57 2011-12 47.94 2012-13 54.31 Exchange Rates (Fiscal Year) Year INR equivalent of one US$ 2005 45.55 2006 44.34 2007 39.45 2008 49.21 2009 46.76 2010 45.32 2011 45.64 2012 54.69 2013 54.45 Exchange Rates (Calendar Year) Average for the year
    • India Brand Equity Foundation (“IBEF”) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.