Analyst Presentation - Jindal Steel and Power · 420 440 460 480 500 520 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 Jul-14 Aug-14 Sep-14 Oct-14 Last week Latest Price

Q2 FY’15

Analyst Presentation

4th November, 2014

DISCLAIMER

This presentation may contain certain forward looking statements concerning JSPL’s future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements.

The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and the target countries for exports, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, our ability to manage our international operations, government policies and actions with respect to investments, fiscal deficits, regulations, etc., interest and other fiscal costs generally prevailing in the economy. Past performance may not be indicative of future performance.

The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the company.

2

Jindal Steel & Power Limited

HIGHLIGHTS

INDIAN

ECONOMY AT A

GLANCE

Q2

FY’15

INDUSTYRY

DEVELOPMENTS

OPERATIONS FINANCIAL

PERFORMANCE

PROJECTS

UPDATE

PRESENTATION OUTLINE

3


Key Financial Highlights: Q2 FY14-15

4


Consolidated EBITDA improves from 30% to 32%

Consolidated Cash Profit jumps by 44%

3 fold growth in retail sales over H1 FY14

Over 25% growth in Retail Dealer network from March 2014

Key Operational Highlights: Q2 FY14-15

5


Focus on Inventory reduction continues

BF - 1 Production Stabilized

New slab caster commissioned at Raigarh

DRI achieved quality of avg. 94% metallization at Angul

Hot DRI Charging from DRI plant to EAF was successfully started at Angul

Process Boiler # 3 commissioned at Angul and taken into service on 12th Sept’14

Commercial Production from Central Dundas at South Africa started on 14th Sept’14

Floatation Plant commissioned at Mozambique in the month Aug’ 2014

Started transportation of Return load trains from Beira to Moatize

HIGHLIGHTS

INDIAN

ECONOMY AT A

GLANCE

INDUSTYRY

DEVELOPMENTS


PERFORMANCE

PROJECTS

UPDATE


6


Indian Economy –A Mixed Half Year So Far A Buoyant Q1 followed by a Struggling Q2

7


World Bank pegs India’s Growth at 5.60% in 2014-15

Avg. IIP Growth in Q1 : 3.80% Vs Avg IIP Growth in Q2 : 0.45%

CPI dropped to 6.46% in Sep’14, while WPI dropped to a five year low of 2.38%

HSBC’s Manufacturing PMI stayed over 50 since Apr’14, indicating business expansion

Indian Rupee remained stable in the band of Rs. 60-62/USD during the quarter

CAD to GDP ratio for the fiscal was projected at 1.90%

Indian Economy –A Mixed Half Year So Far A Buoyant Q1 followed by a Struggling Q2

8


Economic Growth: RBI expects Indian economy to grow by 5.5% this fiscal

Manufacturing Sector exhibited growth in Q1 but slowed down in Q2: 3.8% / -1.2%

Mining Sector exhibited growth in Q1 but tapered in Q2: 2.9% / 1.9%

Electricity Sector exhibited growth in both Q1 & Q2: 11.43% / 12.3%

Capital Goods Sector was buoyant in Q1 but slipped in Q2: 13.6% / -7.6%

Green Shoots

9


Inflation: CPI has fallen by 24% & WPI has fallen by 54% since the start of FY15

Exchange Rate: Remained stable in the range of 60.5 - 61.5 on an avg in last 3 months

FDI: Indian govt has recently cleared 25 FDI proposals worth Rs 1,546.12 crores

Standard & Poor has revised India’s ratings in September from negative to stable

Crude oil prices continue to plummet, touched 2-years low – A big plus for India

New Policy Initiatives Announced by Government of India

10


Make in India campaign launched: 25 Sectors identified for growth eg, Automobile, Oil & Gas, Power etc

Ordinance for Coal allocation

Relaxed norms for foreign direct investment in key sectors like Defence, Railways and Insurance

Identified focus sectors to boost manufacturing in India


11


HIGHLIGHTS

INDIAN

ECONOMY AT A

GLANCE

Q2

FY ‘15

INDUSTYRY

DEVELOPMENTS


PERFORMANCE

PROJECTS

UPDATE

Jan – August ‘14 Global Steel performance

12


2.4%

2.7%

3.4% 0.9%

7.6 7.2%

2.3%

1.1%

• World Crude Steel Production up by 2.4% in Jan – Aug’ 14 (y-o-y), led by higher Asian output.

• While CIS reported decrease in steel production due to raw material supply disruption amid geopolitics crisis in Ukraine

• Middle East & Africa continue to record higher production

1070

723

110 79 73

31 17 10

1096

742

113 81 72

30 18 11

World Asia EU North America CIS South America Middle East Africa

2013 2014 Fig in Mt


77

55

81

56

CY '12 Vs '13 8 Month CY '13 Vs '14

India

1.8%

5.1% India: - India recorded impressive

Crude production growth of 5.1% in CY 13 (y-o-y).

- However for Jan-Aug ‘14 steel

production rate was only 1.8% (y-o-y) due to raw material unavailability and mining clampdown

Production trend of Indian Steel Industry


World Steel Capacity Utilization further decreased

1.2 % decrease in August ‘14

(m-o-m)


Steel Demand : Short Range Outlook for 2014 and 2015 (Mt)

India: India’s outlook is improving following new government Steel demand grew only be of 1.8% in 2013 Steel demand expected to grow by 3.4% (In 2014) and 6% (in 2015) Fiscal consolidation remain key downside risks to the outlook

China: Apparent steel use in China is expected to slow to just 1.0% growth in 2014

and will grow only by 0.8% in 2015 However, possible use of targeted stimuli and easing of restrictions on the

real estate market in response to slower GDP growth could increase the forecast

MENA: In the MENA region, steel demand expected to grow by 3.3% (2014) and

revive to 6.6% (2015)


April- Sept'14 Sept '14

(Qty in million MT) Qty % Change

(y-o-y) Qty % Change (m-o-m)

Production: Crude Steel 41.8 2.4 7.1 0.9

Finished Steel (Non Alloy+Alloy)

Import 3.9 26.9 0.8 3.3

Export 2.7 0.4 0.3 (33)

Real Consumption 37.2 0.5 6.0 (9.2)

How the Indian Steel Industry fared

Crude Production: During April-Sept’ 14, crude steel production grow by 2.4% (y-o-y) The ISP Producers (SAIL, RINL, TSL, Essar, JSWL & JSPL) together produced 22.5 Mt (April –

Sept ‘14) , a growth of 2.7% (y-o-y) The rest i.e. Mini & Other Producers produced 19.3 Mt (April – Sept’ 14) - a growth of 2% (y-

o-y)

Real Consumption of Steel: India’s consumption of finished steel grow by 0.5% in April-Sept ’14 (y-o-y) Compared to August 2014, domestic real consumption of steel in Sept ‘14 decreased by 9.2%.


2679

356

3309

547

Flat Non-Flat

Share of Flat/Non Flat Imports (‘000 MT)

Apr-Sep '13 Apr-Sep '14 (Prov.)

23%

53%

3036

3856

Apr-Sep '13 Apr-Sep '14 (Prov.)

Imports of Total Finished Steel ('000 MT)

26.9%

India: Steel Imports grow significantly

- Imports of total finished steel jumped by 27% in April – Sept ‘14 (y-o-y) due to • Impact of Relative Prices • Impact of Policy Measures ( like concessional import duty to items from South Korea and

Japan under CEPA)

- Import of Non-Flat steel jumped 53% in April – Sept’ 14 (y-o-y)


Price trend – Raw Material (International)

• International Iron ore price fails to get a support from the demand side and have stayed low, in the range of US 79-81/tonne (cfr China) in the last 2 months

• Coking coal mkt attains downward stability, Prices are found to hover in the range between USD 107 to 112/tonne (fob Australia)

60.0

70.0

80.0

90.0

100.0

110.0

120.0

130.0

140.0

US$

/MT

International Market

Fine 62, CFR, China HCC, FOB, AU


Price trend – Raw Material (Domestic)

• Iron supply remains under tremendous pressure.. - Higher grade Lumps & Fines are almost unavailable in the mkt - Big players like JSW & Tata Steel are taking recourse to imports to keep their shops running - Recent OMC auction has seen significant increase in lumps & fines prices due to scarcity - Odisha miners also lifted their fines prices by Rs 400/t - Pellet prices in Odisha region remained mostly stable in the last 3 months

2600

2800

3000

3200

3400

3600

3800

5500

6000

6500

7000

7500

8000

8500

9000

9500

10000

Fin

es

pri

ces

in R

s/to

nn

e

Pe

llets

& L

um

p P

rice

s in

Rs/

ton

ne

Domestic Market

Pellet 63.5, Barbil Lump 63, Barbil Fines 63, Barbil


400

420

440

460

480

500

520

10000

15000

20000

25000

30000

35000

40000

45000

50000

55000

Jul-14 Aug-14 Sep-14 Oct-14 Last week Latest

Price Movements: TMT & WIre rod Domestic (Delhi-Rs/MT) Vs International ($/MT)

TMTRebar-Delhi

Wire Rod-Delhi

TMTRebar- FOBChina

Wire Rod -FOB China

Price trend – Long products

July ‘14 – Oct ‘14: Price movement: Domestic Prices: - ~6-9 % decrease in TMT - ~5-8 % decrease in wire rod

International Prices: - ~ 6% decrease in TMT (FOB China) - ~ 8 % decrease in Wire rod (FOB

China) Conclusion:

Long product: • Falling international prices has created

pressure on domestic prices. • Imbalance in relative pricing has created

spurt in imports of Long finished steel

$/MT

International

Domestic

Rs/MT


450

460

470

480

490

500

510

520

530

540

30000

32000

34000

36000

38000

40000

42000

Jul-14 Aug-14 Sep-14 Oct-14 Last week Latest

HRC & Plate Price Movement: Domestic (Delhi -Rs/MT) & Internatioanal (FOB China- $/MT)

HR Coil-Delhi

HR Plate-Delhi

HR Coil-FOBChinaHR Plate-FOBChina

Price trend – Flat product

July‘14 – Oct ‘14: Price movement: Domestic Prices: - ~ 3 % decrease in HRC - ~ 4 % decrease in Plate

International Prices: - 6-7 % decrease in HRC & Plate (FOB-

China)

Conclusion:

Flat product: Falling international prices has created pressure on domestic Flat prices, Outlook: Domestic prices to recover, since Chinese domestic prices has started firming up, post Oct’ 14

$/MT

Domestic

International

Rs /MT


Power – Recent Developments

CEA has recommended retiring of 4,000 MW capacity in the National Electricity Plan of the 12th Plan (2012-17).

GoI is planning to create public sector energy giants with a massive restructuring exercise that will amalgamate all state-run hydropower firms and transfer their thermal projects to NTPC to create strong companies that can take on the rapidly growing private conglomerates

765 kV Ranchi-Dharamjaygarh-Sipat Inter-regional transmission line was dedicated to nation on 21st Aug ‘14.


Fuel (Coal) – Recent developments

CIL signed 162 FSAs of 74000 MW out of total target of 78000 MW. 10 FSAs yet to be signed

Union Cabinet has approved a plan for E-auctioning the cancelled blocks to end-user private players from Power, Steel and Cement sector

SC has disallowed commercial mining and the use of surplus coal for all purposes other than captive use by UMPPs

NTPC & GSECL had signed a MoU for swapping of Coal


Power Scenario – Installed Capacity (30th Sep 2014)

176,779

4,780

40,799 31,692

254,050

-

50,000

100,000

150,000

200,000

250,000

300,000

3,804

21,136

4,014

107 2,632

Small Hydro Wind BM/Cogen Waste to Energy Solar

(in MW)

Source: CEA

(in GW)

60.2% 8.9%

0.5%

1.9%

16.1%

12.5%

Coal Gas Diesel Nuclear Hydro RES

148 159

174

200

223

243

0

50

100

150

200

250

300

FY09 FY10 FY11 FY12 FY13 FY14

All India – Installed Capacity

Renewable Sources All India –

Installed Capacity (in MW)


Private Sector contribution in Generation

11 12 13 14 15 18 20 27 31 34 36

89 88 87 86 85 82 80 73 69 66 64

0%

20%

40%

60%

80%

100%133 125 113 160 149 174 200 144 224

Private Government

Source: CEA; Planning commission; Infraline; Analyst report; Company Web sites

Increasing share of private sector

GW

243 254


Growth in Thermal Capacity vs PLF%

Source: CEA

94 102

112

132

152

168 177

77.20% 77.50%

75.07%

73.32%

69.95% 65.55% 65.35%

50.00%

55.00%

60.00%

65.00%

70.00%

75.00%

80.00%

0

20

40

60

80

100

120

140

160

180

200

FY09 FY10 FY11 FY12 FY13 FY14 Q2FY15

Inst.Cap (in GW) PLF (in %age)


Per Capita Consumption of Electricity

Source: CEA

World Average – 2782 Kwh

631 672

717 734 779

819 879

917 951

0

100

200

300

400

500

600

700

800

900

1000

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Annual Per Capita Consumption (Kwh)


Power Deficit States

5.0% 6.7% 6.8% 7.0%

8.3% 9.9% 10.5%

13.1% 14.0%

20.0%

23.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2.5% 5.5% 5.6%

7.1% 8.1% 8.4% 9.6% 9.9%

14.4% 16.4%

20.0%

Source: CEA

Peak Deficit

All India Avg. 4.7%

(Apr’14 to Sep’14)

All India Avg. 4.0%

(Apr’14 to Sep’14)

Base Deficit

HIGHLIGHTS

INDIAN

ECONOMY AT A

GLANCE

Q2

FY ‘15

INDUSTYRY

DEVELOPMENTS


PERFORMANCE

PROJECTS

UPDATE


29


30

JSPL - Raigarh


12,100 Cr. 3.6 MTPA Liquid Steel 2.35MTPA Finished Steel 851 MW 5200 Investment Capacity Steel Power Workforce

31

Process Flow Diagram - Raigarh


32

JSPL - Angul


18500 Cr. + 1.5 MTPA Steel 810 MW 2723 Investment Capacity Power Workforce

33

Process Flow Diagram - Angul


Product usage

Ship Building Line Pipes High End Structural

Boilers Wind Mills Engineering Pressure Vessels

Coal Gasification Gas Based DRI EAF

Plates Plate Mill Slab Caster

Link Link Link

Link Link Link

//localhost/Users/apple/Desktop/corporate presentation july 2014/Link/Aerial (1).JPG

//localhost/Users/apple/Desktop/corporate presentation july 2014/Link/DRI - 1.JPG

//localhost/Users/apple/Desktop/corporate presentation july 2014/Link/EAF.jpg

//localhost/Users/apple/Desktop/corporate presentation july 2014/Link/Plates.jpg

//localhost/Users/apple/Desktop/corporate presentation july 2014/Link/Plate Mill.jpg

//localhost/Users/apple/Desktop/corporate presentation july 2014/Link/Slab Caster.jpg

34

JSPL - Patratu


1,764 Cr. 1.6 MTPA Finished Steel 1373 Investment Capacity Workforce

35

Process Flow Diagram – Patratu


Bar Mill Processing Panther TMT Rebar

WRM Processing Wire Rod

Rebar Service Centre Processing Taking Shape Cut & Bend

36

JSPL - Barbil


2,388Cr. 9 MTPA Pellet 660 Investment Capacity Workforce

37

Process Flow Diagram – Pellet Plant


38

Performance Highlights - Steel


6.3 6.8

7.9

9.7

7.2 8.0 8.1 8.2

7.5 7.3

-

2.0

4.0

6.0

8.0

10.0

12.0

Q1 Q2 Q3 Q4

Total Sales (in Lakh MT)

FY13 FY14 Fy 15

7.4 lakh MT Crude steel production

for Q2 FY 15 (flat growth)

7.3 lakh MT sold in Q2 FY 15 (9%

decrease over Q2 last year)

7.7

6.9

7.7 7.9

7.1

7.4

8.2

7.3 7.4 7.4

6.0

6.5

7.0

7.5

8.0

8.5

Q1 Q2 Q3 Q4

Production of Crude Steel (in Lakh MT)

FY 13 FY 14 FY 15


Retail Distribution Network

Growth in Distributor Network (from 5 – 41)

Growth in Dealer Network (from 267 to 1550)

0

20

40

0200400600800

100012001400

267

1550

5

41


Retail – Growth

682 3,534

7,359

17,845 17,092 19,832

35,315

51,899

65,773

51,661

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Q1 FY 13 Q2 FY 13 Q3 FY 13 Q4 FY 13 Q1 FY 14 Q2 FY 14 Q3 FY 14 Q4 FY 14 Q1 FY 15 Q2 FY 15

117,434 MT Channel sales in H1 FY 15 3 fold growth in Retail Sales volume over

H1 FY14


JPL Performance highlight (4x250 MW)

85.0

81.0

99.5

100.1

95.1

95.9 84.5

97.7

94.5

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15

PLF (in %age)

1878 1790

2149 2184 2099 2116

1826

2134 2087

0

500

1000

1500

2000

2500

Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15

Generation (in MUs)

OVERSEAS OPERATIONS – Q2 UPDATE

42


Production HBI (MT) :356,886 Production Steel (MT): 185,369 Sales HBI (MT): 392,515 Sales Steel (MT) : 192,505 Sales (Million USD): 171.52 EBITDA (million USD): 37.99

OMAN

Production (MT) : 228,658 Sales (MT) : 245,886 Sales (Million USD): 17.59 EBITDA (million USD): 2.06

SOUTH AFRICA

Production (MT): 109,377 Sales (MT): 115,986 Sales (Million USD): 9.18 EBITDA (million USD): (2.17)

MOZAMBIQUE

Production (MT): 54,614 Sales (MT): 85,566 Sales (Million USD): 2.84 EBITDA (million USD): (24.57)

Wollongong Coal Ltd


43


HIGHLIGHTS

INDIAN

ECONOMY AT A

GLANCE

Q2

FY ‘15

INDUSTYRY

DEVELOPMENTS


PERFORMANCE

PROJECTS

UPDATE

44

Financial Results & Ratios – Standalone Q2 FY15


Particulars (Rupees in Crores) For the Quarter ending %

30.09.2014 30.06.2014 30.09.2013 Y ON Y Q ON Q

Turnover-Total 3,197 3,324 3,524 -9.3% -3.8%

EBITDA 1,103 1,192 983 12.1% -7.5%

Depreciation 444 415 304 46.2% 6.9%

Finance costs 447 428 334 34.0% 4.4%

PBT 237 370 352 -32.7% -36.0%

Profit after Tax 287 306 257 11.9% -6.2%

Cash Profit 945 786 582 62.4% 20.2%

CAPEX 1,081 814 1,571

Net Debt 24,481 23,650 21,806

Ratio (%) 2014-15 2014-15 2013-14 2013-14

Q2 Q1 Q2 Annual

Raw Material to turnover 33.6. 32.2 28.9 33.3

EBITDA to turnover 34.5 35.9 27.9 27.6

Profit before tax to turnover 7.4 11.1 10.0 11.0

Profit after tax to turnover 9.0 9.2 7.3 8.9

Debt Equity Ratio 1.8 1.8 1.7 1.8

Current Ratio 0.7 0.7 0.9 0.9

Interest Service Coverage Ratio 2.7 2.8 3.8 3.1

Debt Service Coverage Ratio 1.4 1.7 2.0 1.8

45

Financial Results & Ratios– Consolidated Q2 FY15


Particulars (Rupees in Crores) For the Quarter ending %

30.09.2014 30.06.2014 30.09.2013 Y ON Y Q ON Q

Turnover-Total 5,143 4,687 4,852 6.0% 9.7%

EBITDA 1,640 1,629 1,457 12.6% 0.7%

Depreciation 650 667 434 49.9% -2.5%

Finance costs 599 535 380 57.3% 11.8%

PBT 431 517 627 -31.3% -16.6%

Profit after Tax 400 402 455 -12.1% -0.4%

Cash Profit 1,308 1,149 907 44.2% 13.8%

CAPEX 1,182 1,815 3,571

Net Debt 37,682 36,801 29,943

Ratio 2014-15 2014-15 2013-14 2013-14

Q2 Q1 Q2 Annual

Raw Material to Turnover (%) 26.7 31.5 27.4 30.1

EBITDA to turnover (%) 31.9 34.8 30.0 28.9

Profit before tax to turnover (%) 8.4 11.0 12.9 12.6

Profit after tax to turnover (%) 7.8 8.6 9.4 9.5

Debt Equity Ratio 1.8 1.7 1.4 1.7

Current Ratio 0.7 0.8 0.8 0.8

Interest Service Coverage Ratio 3.2 3.2 4.3 3.9

Debt Service Coverage Ratio 1.7 2.0 3.0 2.4


46


HIGHLIGHTS INDIAN

ECONOMY AT A

GLANCE

Q2

FY ‘14

INDUSTYRY

DEVELOPMENTS

OPERATIONAL

PERFORMANCE

FINANCIAL

PERFORMANCE

PROJECTS

UPDATE

47

Wollongong Coal


48

Jindal Shadeed, Oman – Rolling Mill under Construction


49

Jindal Shadeed, Oman – Rolling Mill under Construction


50


For any information please contact: - Mr. D.Balasubramanyam – Head of Investor Relations Tel: - 011-26739166 Mobile: - 8130755166 Email: - [email protected] Mr. Nishant Baranwal – Investor Relations Tel : - 011-26739178 Mobile:-8800690255 Email: - [email protected] Ms. Pallavi Kumari – Investor Relations Tel : - 011-26739165 Mobile:-8800094171 Email: - [email protected]

THANK YOU

Documents

Analyst Presentation - Jindal Steel and Power · 420 440 460 480 500 520 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 Jul-14 Aug-14 Sep-14 Oct-14 Last week Latest Price