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JSW Steel Limited[[US$● million] Senior Notes Offering]March 2017
2
DisclaimerThis presentation and accompanying slides (the “Presentation”) is strictly confidential and is not for release, distribution or publication, whether directly or indirectly, in whole or part, into or in the United States, Australia, Canada, Japan, India or any other jurisdiction in which such release, distribution or publication would be unlawful. This Presentation has been prepared by JSW Steel Limited (the “Company”), and has not been independently verified. No representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information contained in this Presentation. None of the Company, the Joint Lead Managers nor any of their affiliates, advisers or representatives accepts any liability whatsoever for any actual or consequential loss or damages howsoever arising from the provision or use of any information contained in this Presentation. The statements contained in this document speak only as at the date as of which they are made, and the Company and the Joint Lead Managers expressly disclaim any obligation or undertaking to supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events, conditions or circumstances on which any such statements are based. None of the Company, its management, the Joint Lead Managers and their respective advisers undertakes any obligation to provide the recipient with access to any additional information or to update this presentation or to correct any inaccuracies in any such information which may become apparent.
This Presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company and/or its management, directors and officers with respect to the consolidated results of operations, financial condition, cash flows and prospects of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” “intends,” or any other words with similar meaning or intent. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions including but not limited to price fluctuations, actual demand, exchange rate fluctuations, competition, environmental risks, change in legal, financial and regulatory frameworks, political risks and factors beyond the Company’s control. The This Presentation is being presented by the Company solely for your information and for your use and may not be copied, disclosed, reproduced or redistributed to any other person in any manner without the Company’s prior consent in each instance.
This presentation is for information purpose only and does not constitute or form part of an offer, solicitation or invitation of any offer to buy or subscribe for any securities of the Company, in any jurisdiction, nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract, commitment or investment decision whatsoever. No securities of the Company may be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been and will not be registered under the Securities Act, or with any security regulatory authority of any state of the United States. Any decision to purchase or subscribe for any securities of the Company should be made solely on the basis of information contained in an offering memorandum issued by the Company in respect of the offering of such securities after seeking appropriate professional advice, and no reliance should be placed on any information other than that contained in such offering memorandum. Certain numbers in this presentation have been rounded off for ease of representation. Investors should be aware that certain financial data included in the presentation are “Non-GAAP financial measures”. The disclosure of such Non-GAAP financial measures in the manner included in the following material would not be permissible in a registration statement under the Securities Act and investors are cautioned not to place undue reliance on any Non-GAAP financial measures and ratios included in the following presentation.
The Notes are not being offered or sold to any person in India and this presentation should not be transmitted to any person in India. No public offering or private placement of the Notes is being made by the Company in India. This presentation is being made to you on the basis that you have confirmed to the company and joint lead managers, that you are not a resident of the United States or India. By participating in this Presentation or by accepting any copy of the slides presented, you agree to be bound by the foregoing limitations. In addition, by electing to view this presentation, you represent and agree that (i) you consent to delivery of the attached preliminary offering memorandum and any amendments or supplements thereto by electronic transmission, (ii) you will not print, copy, videotape, record, hyperlink or otherwise attempt to reproduce or re-transmit (in any form, including hard copy or electronic distribution format) the contents of the internet roadshow presentation, (iii) the confidential password assigned to your organization has not been, and will not be, disclosed to any person or entity other than an employee or director of that organization or a person authorized to receive it, (v) you are accustomed to receiving the type of information contained in this presentation and (vi) you are not resident in the United States and, to the extent you purchase the securities described in the attached preliminary offering memorandum, you will be doing so pursuant to Regulation S under the Securities Act
3
Agenda
Overview
Credit Highlights
Financial Highlights
Business Environment
Appendix
1
2
3
4
5
4
Agenda
1. Overview
5* Listed company with market capitalization of $6.5 billion as of 27-Mar-17 (translated at 1USD =67 INR)
^ Listed company with market capitalization of $1.5 billion as of 27-Mar-17 (translated at 1USD =67 INR)
JSW Group – overview
Among India’s leading integrated steel producers (Steel making capacity: 18 MTPA)
JSW Steel*
Engaged in development and operations of ports (Operational capacity: 45 MTPA)
JSW Infrastructure
Manufacturer of PSC, OPC and GGBS (Operational plants capacity: 6.4 MTPA)
JSW Cement
Engaged across the value chain of power business (Operational plants capacity: 4,531 MW)
JSW Energy^
Presence across the core sectors
6
JSW Steel – Among India’s leading steel manufacturer
One of the leading steel
players in India
Integrated manufacturing
process
Diversified product portfolio
Strong distribution network and
export presence
Globalpresence
Technological competence
Combination of state-of-the-art steel makingtechnologies: 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 manufacturingfacilities – from raw materialprocessing plants to value-addedproduct capacities
Installed capacity 18 MTPA, atstrategic locations in South andWest India
Pan India marketing anddistribution network, exportpresence in ~100 countries across5 continents
Extensive portfolio of products – HR,CR, galvanneal, galvanized/galvalume,pre-painted, tinplates, electrical steel(CRNO), TMT bars, wire rods, specialsteel bars, rounds and blooms
7
Consistently ranked in top 10 global steel-makers
8.02
Posco
7.77
Nippon Sumitomo
7.74
Nucor
7.57
SDI
7.42
NLMK
7.22
JSW Steel
7.36
Voestalpine
7.34
Gerdau
7.24
JFE
7.41
Severstal
Source: World Steel Dynamics (WSD) as on June 2016 based on weighted average score
(1) Ranking among top 37 “World Class” Steelmakers as per weighted average score, (2) Sorted by highest to lowest weighted average score, 1 being least favorable and 10 being most favorable
Ranked ahead of all other Indian players Achieved the best rating on number of key parameters
Parameter Score (2)
Conversion Costs; Yields 10
Expanding Capacity 10
Location in High-growth Markets 10
Labor Cost 107.22 6.99 6.65 6.57
5.63
JSW Tata Steel JSPL SAIL Essar
10 14 24 25 36
Ranking (1)
Weighted average score
8
Translated at USD/ INR = 66.3329 (RBI reference rate as on Mar 31, 2016)
(1) Includes Other Income
Transformational journey to market leadership
Unrelenting progress through the economic cycles
1.6
7.8
18.0
FY 2002 FY 2010 FY 2016
Capacity (MTPA)
262
2,939
6,313
FY 2002 FY 2010 FY 2016
Revenue (USD mn)
42
627
941
FY 2002 FY 2010 FY 2016
EBITDA (USD mn) (1)
80
3,485
4,676
FY 2002 FY 2010 FY 2016
Market Cap (USD mn)
59x increase in market-value
Adopting industry leading technologies
Technology Corex Corex, BFCorex, BF,
DRI
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, value added,
AHSS for automotive,
electrical steel
FY 2002 FY 2010 FY 2016
9(1) Southern Iron and Steel Company, (2) Amba River Coke Limited, (3) Praxair India Private Limited, (4) JSW Praxair Oxygen Private Limited
Combination of Organic and Inorganic growth
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 Dolvi Coke Projects Ltd.
Continuously evaluating opportunities to deliver value enhancing growth
2016
18 MTPA (Vijayanagar and Dolvi capacity increased to 12 and 5 MTPA respectively)
Won Moitra coal mine in Jharkhand
2002
1.6 MTPA
2005
2.5 MTPA
Color Coating Line
Acquired EURO IKON
2007
4.8 MTPA
CRM of 1.0 MTPA
Acquired Plate and Pipe Mill in US
Coal mining concessions in Mozambique
2008
Acquired Iron Ore mines in Chile
2009
7.8 MTPA2006
3.8 MTPA2010
JSW-JFE Strategic Partnership
3.5 MTPA of HSM II
Coal mining concessions in US
2011
Acquired 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
2015
New CRM2—Phase 2
0.2MTPA Electrical Steel Mill
2017
Bought-out Praxair’s(3) 74% stake in the industrial gases joint venture(4)
Won 5 iron ore mines in Karnataka (111 Mn tonnes estimated resources)
10(1) Translated at USD/ INR = 44.65 (RBI reference rate as on Mar 31, 2011)
JSW – JFE strategic partnership
One of the largest FDI in the Indian Metals and Mining space – Equity infusion by JFE of Rs. 5,410 Crores (~US$1.2 bn) (1) 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
Technical know-how for electrical steel manufacturing
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 Technology agreementsGeneral technical assistance
agreements
11
Balanced corporate strategy
Selective
Growth
Diversification of Product Profile and
Customer Base
Backward & Forward Integration, and Focus on Resource
Optimization
Prudent balance sheet management
Sustainability with focus on Quality, R&D and Innovation
Maintain market share 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 reduce cost of production by targeting strategic tie-ups and investments
Focus on cost reduction and energy efficiency
Continuously seek 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 cost efficiency and new product development
12
Strong and balanced Board comprising experts of eminence & integrity
Savitri Devi JindalNaveen Raj SinghNominee Director of KSIIDC
Executive Directors Independent Directors Nominee DirectorsChairperson—Emeritus
Sajjan JindalChairman & Managing Director
Seshagiri Rao M.V.SJoint Managing Director & Group CFO
Dr. Vinod Nowal Dy. Managing Director
Jayant AcharyaDirector (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
Haigreve KhaitanSenior 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 MahalingamCA, 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
Hiromu OkaNominee Director of JFE Steel Corporation
13
Agenda
2. Credit Highlights
14
A platform of strength and agility
Strong fundamentals to boost India steel demand1
Multi-location manufacturing facilities 2
Diversified product profile 3
Domestic market leader with strong export presence4
Strong sales and marketing platform5
Focus on operational efficiency 6
Strategic expansion aided by strong project execution7
Proven ability to acquire and turnaround assets8
Robust financial profile9
15
(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, IMF (World Economic Outlook – 2016), (3) World Steel Association (Short range outlook – Oct 2016), (4) Bubble size represents total steel demand of respective country
Strong fundamentals to boost India steel demand1
5.6% 6.6% 7.2% 7.6% 6.9% 7.4%
FY13 FY14 FY15 FY16 FY17E FY18E
India GDP growth %(1)
Strong economic growth with improving fundamentals India’s GDP growth continues to register stellar performance in a
world seeing sluggish growth
Though impacted temporarily by demonetization, economyexpected to jump back with declining fiscal deficit, benign inflation,lower oil prices and easing interest rate trajectory
China
IndiaBrazilMexicoRussia
Italy
Japan
South Korea
France
Canada
Germany
USA
Government reforms to boost industry growth Various measures in different sectors, easing FDI norms and initiatives
such as ‘Make in India’ aim at driving growth & development
The finance minister in his recent budget speech, stressed oncontinuing with economic reforms along with increase in publicinvestment in infrastructure and development projects
~$60 Bn was allocated for infrastructure development in 2017-18
India steel consumption to rise at a faster rate
o India’s steel consumption was ~84MT in 2016 and is forecast to increase to ~89MT in 2017(3)
Potential for substantial growth in steel consumption(2)(4)
o World Per Capita Consumption was ~206 Kgs in 2016.o India Per Capita Consumption was ~64 Kgs in 2016.
Pe
r ca
pit
a St
ee
l Co
nsu
mp
tio
n i
n 2
01
6 (K
g.)
GDP per capita in 2016 ($)
With the growth in economy, JSW Steel is well positioned to be part of the India growth story
16*JSW Steel Coated Products Limited
^ JSW Steel (Salav) Limited
Multi-location manufacturing facilities2
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 854 MW Power Plant
Salav: 0.9 MTPA DRI (^)
JSW Steel ownership: 100%US coal mines
JSW Steel ownership: 90%
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: 70%
Started operations in FY11
Under care and maintenance
Chile iron ore mines
JSW Steel ownership: 100%
Early stage development in progress
Mozambique coal mines
Strategic overseas presenceGeographically diversified with manufacturing facilities in South and West India
Leveraging locational advantage to increase market share strategically
17
Diversified Product Profile
Wide Offering of Flat and Long Products
Developing New Products, Capturing
Niche Markets
Continuously Increasing Value Added Products
GC/GL/GI
Bars / Rods
SlabsColorCoated
HRC
Billets
HR Plates
RCS / Blooms
CRC
Wire Rods
AHSS for Automotive
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 advanced high strength steel (AHSS) for
automotive
3
Continuously enriching product mix
18
77% 85% 84% 76%88% 79%
23% 15% 16% 24%12% 21%
FY08 FY10 FY12 FY15 FY16 9MFY17
(1) Joint Plant Committee, (2) As at March 31, 2016
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
4
Penetrating further to capture growing domestic demand withunique marketing strategy –nationwide retail network (JSWConnect, JSW Shoppe, JSW Explore as well as non-exclusiveretailers) of more than 6,500(2) outlets pan India
Among fastest growing players in India (domestic sales surgedby 20% YoY in FY16 vs. apparent steel demand growth of 4.5%in India)
One of the largest exporter of steel products from India withexport presence in over 100 countries
Ability to re-align sales effort and shift between domestic andexport market as per market conditions – strategicallyreduced share of exports to 12% of total sales in FY16, asglobal steel consumption declined 3% YoY in CY15. Exportshave again recovered in FY17
Flexibility to shift between domestic and international markets based on market conditions
4.5% 3.4%
19
Multi-sectoral volume growth
Optimizing market mix and product mix to derivemaximum benefit from sector growth
Leveraging export presence
New product approvals for Original EquipmentManufacturers (OEMs) and automotive customers
Increase in value added products leading toincremental growth in focus sectors and alsofacilitating import substitution
Establishing presence in key sectors such as solar,appliances, and automotive
Focused on Retail Sales – increased reach andpenetration
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-houseprofiling 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
5
20(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: Sintering, 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: Currentproduction of ~1,055 tons/ employee(1)
In-house training programs internal faculty
Continuously investing, building and enhancing competencies
Integrated manufacturing facilities: Frompelletisation/beneficiation to downstreamvalue-add capabilities
Dedicated port and railway siding forlogistics support
Assured power supply through captivepower plants, arrangements with JSWEnergy and the power grid
Diverse blend of technology High labour productivity Integrated operations
Procurement optimization leading to rationalized raw material costs
Focus on process improvements
Waste gas utilization for power generation
Solid waste management and zero effluent discharge
Efficient operations resulting in low conversion cost
Best in class profitability
6
High level of integration and technological expertise leading to reduced production cost and time
21(1) Translated at USD/INR = 67.9547 RBI Reference as on December 31, 2016
Strategic expansion aided by strong project execution7
Focus on low cost and returns accretive brownfield projects to capitalise on expected demand growth
Strong project execution capabilities …
Experienced in-house project management team
Supported by cross-functional team (commercial, finance and legaldepartment)
Established long-term relationship with key domestic and internationalsuppliers
Savings in procurement cost by negotiating firm prices for follow-on orders
… at low specific investment cost(1)
Low specific investment cost of $534/ton of capacity expansion shows costand project management 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 Dolvi Coke Projects Ltd.
Salem Works:
Capacity expansion from 1 MTPA to 1.2 MTPA by setting upcertain new facilities and debottlenecking/modification of existingfacilities
Setting-up of Reheating Furnace in Bar Rod Mill, Coke Oven and
Turbo Generator
Tarapur Works:
Setting up 0.2MTPA Tin plate mill
22(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
1.5mtpa Coke Oven at Dolvi Coke Projects Ltd. is being set-up
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
8
Able to leverage an acquisition to maximum value accretion through application of knowledge and experience
23(1) EBITDA of 9months FY17 annualized for 9MFY17 ratio, (2) Net debt excludes Acceptances, (3) As of 31st December 2016
Robust financial profileSuperior profitability supported by efficient operationsStrong track record of volume growth
Well managed leverage profile(1), (2)
Achieved significant sales growth despite weak economic and sluggish domestic demand Resilient operations with improved EBITDA margin marked by several productivity and costimprovement measures
While FY16 EBITDA was impacted by weak steel pricing due to steel supply glut andplanned shutdowns; there has been large margin expansion in FY17
Leverage has significantly improved this fiscal with steep growth in profitability
Adequate liquidity levels owing to prearranged funding in place for capacity expansionsand a committed working capital facility
11.9 12.0 12.1
8.8 10.8
FY14 FY15 FY16 9MFY16 9MFY17
Standalone sales volume (MT)
17.9% 17.7%14.5% 14.5%
23.4%
FY14 FY15 FY16 9MFY16 9MFY17
EBITDA margins
3.7x 3.8x
6.4x
3.7x
FY14 FY15 FY16 9MFY17
Net Debt/ EBITDA
9
Diverse sources of funding(3)
Financial flexibility to raise capital
Strong relationships with over 50 banks/financial institutions with access to low cost credit
Healthy mix with 37% of debt being foreign currency
INR debt63%
Foreign currency debt37%
Bonds & debentures
25%
Loans and others75%
24
Agenda
3. Financial highlights
25
1,368 1,403
906 668
1,357
FY14 FY15 FY16 9MFY16 9MFY17
7,645 7,906
6,251
4,618
5,813
FY14 FY15 FY16 9MFY16 9MFY17
Solid earnings momentum and cashflowsOperating revenue(1) EBITDA(1)
17.9%
($ in millions) ($ in millions, EBITD A margin (%))
17.7% 14.5% 14.5% 23.4%
EBITDA/ Tonne(2), (3) EBITDA less Capex(1)
508 400
133
775
FY14 FY15 FY16 9MFY17
6.6%
Rs/ Tonne ($ in millions, as a % of revenue from operations)
5.1% 2.1% 13.3%
Translated at 1 USD = 67 INR(1) Consolidated financials, (2) Standalone entity, (3) FY15 as per Indian GAAP, FY16 and FY17 as per Ind-AS
6,988 5,469 5,398 5,400
4,059
5,892
9,276
7,077
7,717
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
26
Translated at 1 USD = 67 INR
(1) EBITDA of 9months FY17 annualized for 9MFY17 ratio, (2) Net debt excludes acceptances, (3) As of 31st Dec,2016: Excludes unamortized fees and actual redeemable value of preference shares
Leverage and Debt Maturity profile
3.7x 3.8x
6.4x
3.7x
FY14 FY15 FY16 9MFY17
Net debt / EBITDA(1), (2) Maturity profile of long term borrowings(3)
1,127
667
2,819
1,278
<1 year 1 – 2 years 2 – 5 years >5 years
5,188
(x) ($ in millions)
5,670 5,890 6,804
Prudent financial guidelines
Strong YoY profitability improvement-> reduction in net debt / EBITDA
109 286 110 197
Diversify funding sourcesMaintain adequate liquidity levels
Improve debt maturity profile
Total Debt(1) (US$ mn) Total Cash(1) (US$ mn)Net debt / EBITDA
Current refinancing to improve maturity and diversify funding sources
27
Agenda
4. Business Environment
28Source: 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
Imports in February 2017 (0.491 mt) were down by 46%over February 2016 and by 19% over January 2017
Given such trends in export-import, India emerged as anet exporter of total finished steel during February 2017as well as April-February 2016-17
Crude steel production increased by 8.8% YoY whereasapparent finished steel consumption grew by 3.4% YoY in9MFY17
Expect digital push and re-monetization to restorenormalcy in demand
Government’s thrust to stimulate infrastructureinvestment and consumption growth via higher publicspending will be key ahead
66.5259.54
72.3561.54
Crude Steel Production Apparent Finished Steel
Consumption*9MFY16 9MFY17
8.8%3.4%
1,058
733 618
693 576 648 690
587 634
841
602 491
FY1
6^
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
De
c-1
6
Jan
-17
Feb
-17
Monthly steel imports (in '000 tons)
29
47
50
53
56
59
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
De
c-1
5
Jun
-16
De
c-1
6
US EurozoneJapan China
PMI Manufacturing
Source: Bloomberg, IMF and JSW Steel
Global economy
Global economy is projected to grow by 3.4% in CY17
Recent data indicate US growth recovery is robustenough for Fed to carry out two more hikes this year,following the recent widely anticipated hike
Euro area growth remains resilient in the face of Brexitshock; political risk in the coming year to be watched outfor
Japan growth improved in 3QCY16, manufacturing PMIremained above 50 for 4th consecutive month
China growth rate in 4QCY16 at 6.8% YoY was a bitstronger than expected, supported by continued policystimulus
However, overall Global growth expectations remainunchanged amidst uncertainty around the US policiesand their implications for the global economy
3.1% 1.
6% 1.6%
1.7
%
0.9% 4.1
%
6.6%
6.7%
3.4%
1.9% 2.3
%
1.6%
0.8% 4.
5%
7.2%
6.5%
World AMEs US Euro
Area
Japan EMEs India China
2016
2017
GDP growth - IMF projections for 2016 and 2017 (%YoY)
30Source: SBB, ISSB, MySteel, Bloomberg and JSW Steel
Global steel scenario
Continued trade restrictions to influence global steel trade
Exports from China, Japan, Korea and Russiaremained at elevated levels in CY16. In recentmonths capacity closure in China leading to somenormalisation
Japanese and Korean exports continue to be at adiscount to their domestic market prices
Coking coal contract prices have settled aftersharp volatility in 2HCY16 and Iron ore priceremains at elevated level. This raw material pushwill support steel prices -
60
120
180
240
300
- 125 250 375 500 625 750
Jan
-12
Jul-
12
Jan
-13
Jul-
13
Jan
-14
Jul-
14
Jan
-15
Jul-
15
Jan
-16
Jul-
16
Jan
-17
Hard coking coal FOB - RHS Korea - DomesticJapan - Domestic China - export FOBJapan & Korea - export FOB Iron ore China CFR -RHS
$/to
nne
$/to
nne
157194
214 210
0
60
120
180
240
CY13 CY14 CY15 CY16China Japan Korea Russia
Steel exports (mn tonnes)
31
Conclusion
Macro environment is improving
Various measures undertaken by Government of India to provide a competitive environment forthe industry
Increased Government focus on stimulating the investment cycle bodes well for steel demandgrowth
Revival in global steel prices based on factors like recovery in apparent steel consumption inChina, increase in steel capacity closure targets by China and raw material cost push
Against earlier scenario of high imports, India now emerging as a net steel exporter
JSW Steel well placed to capitalize
Successful expansion undertaken at Vijayanagar Works
Diverse product portfolio with increasing share of value added products
Pioneer in introducing leading technologies and cost efficiency measures in India leading tohigher quality and lower cost
Continues towards securing raw material supplies with recent wins in auctions of coal and ironore mines
Robust financial profile
Efficient scale of operations with one of the lowest conversion costs in the industry
Strong metrics compared to peers
Prudent financial guidelines leading to improved leverage and liquidity levels
32
Agenda
5. Appendix
33
Particulars (US$ Mn) FY14 FY15 FY16 9MFY16 9MFY17
Operating Revenue(1) 7,645 7,906 6,251 4,618 5,813
Operating EBITDA 1,368 1,403 906 668 1,357
% margin 17.9% 17.7% 14.5% 14.5% 23.4%
Profit before tax 195 379 (354) (414) 557
Profit after tax 67 268 (111) (94) 383
Shareholder’s equity(2) 3,299 3,455 3,231 3,129
Net Debt(3) 5,079 5,384 5,780 6,607
Net Debt/ EBITDA 3.7x 3.8x 6.4x 3.7x(4)
Net Debt/ Equity 1.5x 1.6x 1.8x 2.1x
Consolidated financials
FY14, FY15 and FY16 financials as per Indian GAAP; 9MFY16 and 9MFY17 financials as per Ind-AS
Translated at 1 USD = 67 INR
(1) Operating Revenue is net of excise and includes “other operating income”, (2) Includes minority interest, (3) Net debt excludes acceptances, (4) EBITDA of 9months FY17 annualized for 9MFY17 ratio
34
Particulars (US$ Mn) FY14 FY15 FY16 9MFY16 9MFY17
Crude steel production (MT) 12.17 12.63 12.56 9.36 11.7
Saleable Steel sales (MT) 11.86 12.03 12.13 8.84 10.82
Operating Revenue(1) 6,761 6,879 5,479 4,054 5,449
Operating EBITDA 1,311 1,324 854 662 1,287
% margin 19.4% 19.2% 15.6% 16.3% 23.6%
EBITDA/ Ton (Rs/MT) 7,408 7,372 4,719 5,014 7,973
Standalone financials
FY14, FY15 and FY16 financials as per Indian GAAP; 9MFY16 and 9MFY17 financials as per Ind-AS
Translated at 1 USD = 67 INR
(1) Operating Revenue is net of excise and includes “other operating income”
35
FY16 performance on sustainability metrics
71% Waste heat utilized98.5%Waste gases
utilization
943,808 MTScrap recycled
9%Decrease in LTIFR over FY 15
3.51 MnGJ
Energy saved
30%Recycled & reused water
0% Liquid discharged from our Plants
1897 MT Waste recycled
Awards in 2016:
‘Golden Peacock Innovative Product’ Award
‘Steelie Award 2016’ in the innovation category for “the development of advanced high strength automotive steels with speed and innovation” by the World Steel Association
The National Award for Supply Chain and Logistics Excellence under steel industry Category by CII
Accreditation with level 5 for Total Cost Management (TCM) Maturity Model Assessment by TCM division of CII
2nd Prize in the National Energy Conservation Awards 2016 to Vijayanagar Works in “Integrated Steel Sector” and Kalmeshwar
Works in “Steel Re-Rolling Mills Sector” by ‘Bureau of Energy Efficiency’ of India
Awards in 2015:
Porter’s Prize for ‘Leveraging Unique Activities’
JSW Group received Porter’s Prize for ‘Creating Shared Values’
36
Thank you
