Iron & Steel Sector

Contents

Sector Overview

Market Size

Iron & Steel Making Process

Growth Drivers

Policy Support

Past Deals

Contacts – Existing & Future

Sector Overview

Market Size

Market Size

Iron Making ProcessIron Ore

(extracted to get)

Iron (Base Metal)

Hot Metal (Liquid Iron)

It is the hot, liquid, metallic iron product obtained upon reduction of

iron ore

Primary input for production of steel in the Integrated Steel Plant

Pig Iron

product in solid (lumpy) form obtained upon solidification of Hot

Metal in Pig Casting Machine

Foundry Grade Pig Iron

Pig iron used in the Foundries for production of Cast Iron (CI)

Castings . This is the major use of pig iron.

Basic/Steel Making Grade Pig Iron

Pig iron (including hot metal) used for production of Steel.

SI/ DRI/HBI

DRI / SI: Solid metallic iron product obtained upon Direct Reduction of high grade iron ore in solid state

itself without being converted into liquid form like that in Blast Furnace.

HBI: At times the DRI/SI coming out from the furnace is converted into a bigger compact mass

i.e. Briquettes for ease in transportation/charging in steel making furnace, which are known as Hot

Briquetted Iron (HBI)

SI – Sponge IronDRI – Direct Reduced IronHBI – Hot Briquetted Iron

Steel Making Process

► http://www.tatasteelindia.com/products-and-processes/processes/steel-making-process.asp

Structure of the Steel Sector

Terms used

► Integrated Producers / Primary Steel Producers – those that convert Iron Ore to Steel

► Secondary Producers - These are the mini steel plants (MSPs), which make steel by melting scrap or sponge iron or a mixture of the two

► Ferro Alloys – refers to various alloys of iron with a high proportion of one or more other elements, manganese or silicon for example. It is used in the production of steels and alloys as a raw material

Growth Drivers – Steel Industry

Policy Support aiding growth in the steel sector

M&A Scenario

Key Deals in 2011

Date Target/Issuer

Total Transaction Value ($USDmm, Historical rate) Buyers/Investors Sellers

11/12/2011 ACE Steelfab Pvt. Ltd. 9.21

Action Construction Equipment Ltd (BSE:532762) -

11/11/2011 Mahindra Ugine Steel Company Limited, Steel Business

26.75

Navyug Special Steel Private Limited Mahindra Ugine Steel Company Limited (BSE:504823)

10/05/2011 National Laminations Group 8.0

OJSC Novolipetsk Steel (LSE:NLMK) -

09/28/2011 Usha Ispat Limited 36.85

Fomento (Karnataka) Mining Company Private Limited

Tata Metaliks Ltd. (BSE:513434)

06/29/2011 Welspun Maxsteel Limited 210.58

Apollo Global Management, LLC (NYSE:APO); Welspun Corp Limited (BSE:532144)

Welspun Steel Ltd.

04/27/2011 Two Mines in Goa and Karnataka

200.0

Halcyon Finance and Capital Advisors Private Limited

-

03/24/2011 Uttam Galva Ferrous - ArcelorMittal India Limited Obulapuram Mining Company Private Limited

Date Target/IssuerTotal Transaction Value

($USDmm, Historical rate) Buyers/Investors07/18/2011 Maharashtra Elektrosmelt Limited 337.46 Steel Authority of India Limited (BSE:500113)

08/12/2011 Ankit Metal & Power Ltd. (BSE:532870) 50.97 Concast Ispat Limited; Mayank Securities Private Limited; VNG Mercantiles Private Limited; Cube Fintex Private Limited; Invesco Finance Pvt Ltd.; Nucore Exports Private Limited; Arthodock Vinimay Pvt.Ltd; Shreyansh Leafin Pvt. Ltd.

12/20/2011 Rohit Ferro-Tech Limited (BSE:532731) 28.36 Vasupujya Enterprises Pvt. Ltd.; Poddar Mech-Tech Services Pvt. Ltd.; VNG Mercantiles Private Limited; Shreyansh Leafin Pvt. Ltd.

06/10/2011 Topack Fittings Ltd. 15.0 Wayzata Investment Partners LLC

02/14/2011 Innoventive Industries Limited (BSE:533402)

10.11 Standard Chartered Private Equity Limited

09/26/2011 Gallantt Ispat Limited (BSE:533265) 7.79 Gallantt Udyog Limited

Companies

No.Company

NameTotal Revenue LTM (INR mm) Product Description Proposition

1 Rohit Ferro-Tech Limited

11,667

Carbon Ferro Chrome, Ferro Manganese, Ferro Silicon, Manganese Alloys, Silico Manganese

Prospective buyer for UFACL

2 Tata Steel Limited

1,290,851

Bearings, Galvano, Agrico Products, Alloy Steel Ball Bearing Rings, Annular Forgings and Flanges

Met with M&A Team:Currently not looking at acquisitions in steel;Merger is Ok, no cash acquisition.Can look at Coking coal mines( 50mn + reserves) with linkage to infrastructure, Iron Ore mine – preferably producing stage (drilling stage – low priority)

3 Mahindra Ugine Steel Company Limited

14,560

Bearing Races, Panels, Bearing Steels, Case Carburising Steel, Castings

Met them -

4 Sarda Energy & Minerals Limited

8,880

Blocks & Tiles,Coal, Coal Washery Services, Electricity, Ferro Alloys

Secured mandate – looking at a Coal Mine

5 Facor Alloys Ltd. 3,963 Ferro Chrome, Ferro Alloys Any Co in Ferro alloys, any sick Ferro alloy co looking at turnaround, any steel co. Size: 15-25cr.

No. Company NameTotal Revenue LTM (INR mm) Product Description Proposition

No.Company

NameTotal Revenue LTM (INR mm) Product Description Proposition

6 Shri Bajrang Power And Ispat Limited

2,947 - RS has contact with Anand Goel

7 Innoventive Industries Limited

7,662 Precision Steel Tube, Auto Components, CRCA Coils, Membrane Panel Strips

Portfolio company of Light House. Looking for opportunities in steel Tubes

8 VISA Steel Ltd. 13,242 Coke. Bar and Wire Rods, Chrome Concentrates, Chrome Ore Powder, Coal

9 Ankit Metal & Power Ltd.

7,058

TMT Bars, Electricity, Ferro Alloys: Ferro Manganese, Ferro Silicon:

Group Co of Rohit Ferro

10 Lloyds Metals & Energy Ltd

6,900

Cold Rolled Steel Coils and Sheets, Electricity, ERW Precision Tubes: Sponge Iron Products, Steel Pipes:

Pradip Sir’s Contact

11 Vandana Group

2679 C.A. O.P. Singhania (Dhiren Sir’s Contact knows them)

12 Hira Ferro Alloys

1,586 Briquet, Electricity, Ferro Alloys, Ferro Manganese, Fly Ash Bricks

C.A. O.P. Singhania (Dhiren Sir’s Contact knows them)

13 Maithan Alloys 6,075 Ferro Alloys, Electricity Shreyas Kampani’s contact

14 Abhijeet Group Power, mining, roads construction, steel, and ferroalloys businesses

To Pitch

No.Company

NameTotal Revenue LTM (INR mm) Product Description Proposition

15 Century Ply 17,021 Manufacture, sale, and export of plywood, laminates, cement, Ferro alloys, and paper products in India and internationally

Shreyas Kampani”s contact

16 JSW Ispat Ltd 82,267 Cold Rolled Steel Coils, Colour Coated Sheets, Galvanised Sheets, Hot Metal, Polysteel

Met Mr. Balan from Ispat Industries in past. Reinitiate a dialogue to check if they looking at any acquisitions now.

17Bhushan Steel Ltd

70,035Steel Coils, Steel Sheets, Steel Strips, Tubular Sections, Zinc and Aluminum Coated Sheet

To pitch

18Uttam Galva Steels Ltd

50,348

Cold Rolled Annealed Sheets and Coils, Galvanised Plain and Corrugated Sheets, Long Steel Products, Cold Rolled Unannealed Sheets and Coils, Color Coated Sheets and Coils

To Pitch

19Adhunik Metaliks, Ltd

18,006Auto Steel, Billets, Carbon Steel, Cold Heading Steel, Ferro Manganese

To Pitch

20Impex Ferro Tech Ltd

6,528Ferro Chrome, Ferro Manganese, Silico Manganese, Trading of Iron and Steel Products

To Pitch

Techno-Economic Parameters

► BF Productivity – measured in terms of tonnes of hot metal produced, per cubic meter of blast furnace volume, per day (T/cubic met/day)

► Coke Rate : This is measured in Kgs. of BF Coke consumed per tonne of Hot Metal produced in the Blast Furnace(Kg/THM). By convention, this excludes coke (nut/pearl coke) mixed with sinter etc.

► Energy Consumption : This is measured in Giga Calorie (i.e. 1000 million calorie) per tonne of Crude Steel produced(Gcal/TCS).

► Power Consumption : This is measured in terms of Number of units of electrical power consumed in KWH per tonne of crude steel produced (KWH/TCS).

► Refractory Consumption : This is measured in terms of total refractory consumed per tonne of crude steel(Kg/TC).

Parameters World Norm

SAIL (BSP/DSP/RSP/BSL)

IISCO VSP TISCO

BF Productivity (T/M3/Day) 2 - 3 1.51 (1.72/1.36/1.11/1.60)

0.75 1.95 1.82

Coke Rate (Kg/THM) 350400 538 (498/573/611/536) 798 474 528

Energy 4 – 5 7.5 9.19 6.32 5.28

Consumption (Gcal/TCS) (6.84/7.36/8.88/7.77)

Power Consumption (Kwh/T Sal Steel)

400500 498 (460/430/602/505) 500 540 430

Refractory Consumption (Kg/Tcs) 15 18.2 (20/16/23.8.14.9) NA 18.5 13.6

Thank You

► References► Ministry of Steel► IBEF► Aranca Research► World Steel► Capital IQ