analyst meet presentation 13th aug 10

8/8/2019 Analyst Meet Presentation 13th Aug 10

1/40

Consolidated Financial ResultsQuarter Ended 30th June 2010

Analyst Meet Mumbai

1

A global player A product pioneer

A Corporate Citizen

,


2/40

Agenda

Introduction and Consolidated Highlights

Global Business Environment

Performance of European Operations

Performance of Indian and South East Asian O erations

Group Financial Performance

Financing Portfolio and Capital Raising

Business Outlook

2


3/40

Agenda







Business Outlook

3


4/40

Tata Steel Group Safety Performance

Lost time injury frequency rate was 0.65,

a 22% improvement over average FY10

On track to achieve our vision target of 0.4

In the June10 quarter, 1 tragic fatality

Lost Time Injury Frequency (LTIF)

3.06

2.35

2.1

2

2.5

3

3.5

4

occurred at Scunthorpe in UK

H&S teams are being established across

the group to further accelerate learning and

improve risk control systems

1.31

0.95

0.65

0

0.5

1

1.5

YE Mar'06 YE Mar'07 YE Mar'08 YE Mar'09 YE Mar'10 QE Jun'10


5/40

Group Financial Highlights Quarter Ended

30th June10Deliveries Turnover US$ MnMn T

5.356.05

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Jun'09 Jun'10

5,016

5,856

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jun'09 Jun'10

5

EBITDA PAT *

Conversion Rate USDINR 46.44 ; * PAT after Minority Interest and Share of Associates

US$ Mn US$ Mn

44

975

-

200

400

600

800

1,000

1,200

Jun'09 Jun'10 -476

393

-600

-500

-400

-300

-200

-100

-

100

200

300

400

500

Jun'09 Jun'10


6/40

Agenda







Business Outlook

6


7/40

70

80

90

100

110

120

130

60

65

70

75

80

85

90

95

100

Global steel market has returned to pre-

crisis levels due to ChinaGlobal Crude Steel Consumption & Capacity UtilisationMt Per cent

Capacity Utilisation (RHS)

2007-08 2008-09 2009-10

Macro economy

Global recovery has continued, butsigns of slowdown in China

Recovery in Europe has continuedbut has been slow

Indias growth remains robust

Global steel market

2010-11

Crude Steel Consumption (LHS)

40

60

80

100

120

140

160

Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10

EU27 CIS

USA China

India

60

Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10

55

Source: World Steel Association

Crude steel production (Index, April 2007 = 100)

45% YoY in the June10quarter, with continued strength inChina and India and end ofdestocking in mature markets

Steel using sectors likely to slow incoming quarter as inventoryadjustment boost and fiscal stimuluswanes

Increased uncertainty around near-term outlook in China and furtherslowdown is expected with policy

tightening having an impact 7


8/40

200

400

600

800

1,000

1,200

1,400 India (Mumbai)

Chinese domestic (incl VAT)

USA domestic (FOB Gulf)

Russia export (FOB Black Sea)

Germany domestic

HRC price, US$/tonne

Global steel prices have declined in recent

months Price developments

Steel spot prices have eased in

recent months

Reflects signs of a slowdown in

Jan-07 Jan-08 Jan-09 Jan-10

Source: CRU

Rebar (US$/tonne)

200

400

600

800

1,000

1,200

1,400

1,600

Jan-07 Jan-08 Jan-09 Jan-10

East As ia import (CFR)

Chinese domestic (incl VAT)

USA domestic (FOB Midw est)

CIS export (FOB Black Sea)

Germany domestic

na, seasona wea ness an

market uncertainty

Indian steel prices recently have

shown an uptick

8


9/40

0

50

100

150

200

250

- - - - - - - -

Indian spot CIF China

Australia contract CIF China

Australia contract FOB

Iron ore fines price (US cents/tonne)^

Raw material contract prices higher in

September quarter but spot prices lower Raw material developments

Quarterly iron ore contracts rose in

June quarter and further in

September quarter

Iron ore spot prices have stabilised

in recent weeks, following large

$140/tonne*

- - - - - - - -

0

50

100

150

200

250

300

350

400

450

Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10

Spot FOB Australia

Contract FOB Australia

Source: CRU, Tata Steel Group

Premium hard coking coal price (FOB Australia) (US$/tonne)

*Spot price early August. ^Not adjusted for quality or other premiuma s rom pr pea u rema n

below September quarter contract

prices

Quarterly coking coal contract price

also higher in September quarter

Coking coal spot price at levels

slightly below contract price

9


10/40

Agenda







Business Outlook

10


11/40

European economic environment remains

uncertain

-8

-6

-4

-2

0

2

4

6

UK Spain

Germany Eurozone

European GDP (quarterly, Y/Y % change)Mt

Economic Update

Recovery is continuing but has been

tentative so far

Southern Europe lagging Northern

Europe

Recovery so far has benefited from

Source: Thomson Datastream, Oxford Economics

Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10

0

20

40

60

80

100

120

140

160

0 2 4 6 8 10 12

2010 2015

European Public Debt and Fiscal Deficits (% of GDP)temporary boost from inventoryadjustment and previous fiscal stimulus

Significant headwinds remain

Sovereign debt and fiscal crisis not fully

resolved and large spending cuts

pending/ underway

Unemployment is high

Bank lending remains weak

Public Debt (%)

Fiscal deficit (%)

UKUK

Germany

Greece

Greece

SpainGermany

Spain Deficit Reduction Plans

11


12/40

European steel consuming sectors are

recovering but from a low base

20

30

40

50

60

70

Engineering

Automotive

Purchasing Managers Index EU sectorsAbove 50 = Expansion

Below 50 = Contraction

End-use sectors recovering, butfrom a low base

UK auto production is forecast to grow

by 24% in 2010

EU industrial engineering continues to

recover

20

30

40

50

60

70

00 01 02 03 04 05 06 07 08 09 10

UK

EU

Purchasing Managers Index UK & EU construction

Source: Markit

Construction remains generally weak

Macro risks

Slowdown in China will impact

European engineering exports

Construction at further risk from

Government spending cuts

Above 50 = Expansion

Below 50 = Contraction

12


13/40

European steel market stronger in the June

quarter, but has softened in September quarter

1.4

1.6

1.8

2.0

2.2

2.4

2.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

European Steel Service Centre Physical Strip Product StocksMt Months supply

Monthssupply

Stock levels

Market update

European steel consumption was up

33% YoY in June quarter

Key steel consuming sectors, except

construction, are recovering

Source: EASSC, Eurofer

Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

0

1

2

3

4

Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10

0

5

10

15

20

25

Imports into EU27Share (%)Imports (mt)

Importshare

Imports

oc s rema n ow n a so u e erms

European steel prices have declined in

recent months

Imports

Imports into EU remain relatively low

and import share has fallen

EU27 remains a net exporter, which

helping to support capacity utilisation

13


14/40

Turnaround Story Tata Steel Europe

Production Deliveries Mn TMn T

2.84

3.74

0.00

0.50

1.00

1.502.00

2.50

3.00

3.50

4.00

Jun'09 Jun'10

3.11

3.71

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Jun'09 Jun'10

32%32%19%19%

14

Turnover EBITDA

Conversion Rate USDINR 46.44

US$ Mn US$ Mn

3,279

3,814

-

500

1,000

1,5002,000

2,500

3,000

3,500

4,000

4,500

Jun'09 Jun'10 -399

293

-500

-400

-300

-200

-100

-

100

200

300

400

Jun'09 Jun'10

US$

535

Mn

US$

535

Mn

US$

692

Mn

US$

692

Mn


15/40

Operating Performance Trend Tata Steel

Europe

5.2 4.9

3.4

2.7

2.8

4.0 4.2 3.7 3.7

6.4 5.6

4.3

3.63.1

3.8 3.7 3.8 3.7

7,096

7,049

5,623

3,825

3,279 3,611 3,608 3,680 3,814

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jun'08 Sep'08 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Mar'10 Jun'10

Production, Deliveries & Turnover

15

Production (Mn T) Deliveries (Mn T) Turnover (US$ Mn)

802

1044

380

-308-399 -388

142

354 293433

758

88

-1,318

-715-831

-152

38 70

-1500

-1000

-500

0

500

1000

1500

Jun'08 Sep'08 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Mar'10 Jun'10

EBITDA (US$ Mn) PBT(US$ Mn)Conversion Rate USDINR 46.44

EBITDA & PBT


16/40

Quarterly Trend in Tata Steel Europe

Raw Materials Costs Per TonneAverage Selling Prices US$ / T US$ / T

12%12%9%9%

319356

0

50

100

150

200

250

300

350

400

' '

9241,008

-

200

400

600

800

1,000

1,200

' '

16

Deliveries Mn TUS$ Mn

Conversion Rate: GBPUSD 1.4569 & USDINR 46.44

EBITDA

Drop In EBITDA due to:

a) IJmuiden Fireb) Adverse Currency

movement due to depreciation in theJun10 quarter

354

293

0

50

100

150

200

250

300

350

400

Mar'10 Jun'10

17%17%

3.8 3.7

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Mar'10 Jun'10

2%2%

ar un


17/40

Operating Performance Tata Steel Europe

Long ProductsStrip Products Distribution &Building

1.2

1.81.6

0.2

0.4

0.6

0.8

1

1.21.4

1.6

1.8

2

Deliveries (MnT)

0.91.0

1.1

0.2

0.4

0.6

0.8

1

1.2

Deliveries (MnT)

0.8 0.81.0

0.10.2

0.2

0.4

0.6

0.8

1.0

1.2 Deliveries Exc TCP(MnT) TCP Sales

0.91.0

1.0

17

Steel Capacity Utilization

Capacity Utilization is restated for the previous quarters excluding production at TCP

0

Jun'09 Mar'10 Jun'10

0


53%

80%90%

0%

10%

20%

30%

40%

50%60%

70%

80%

90%

100%


0.0



18/40

Positioning for the future: One Company-

Tata Steel Europe Customer First

Group Marketing function established

Marketing sales and distribution teamsaligned directly with key market sectors

Supply Chain Project

Customers & markets

Sales &marketing sector teams

18

an- uropean n egra e supp y c a n

optimisation

Operations Efficiency

Steel production organised around three

hubs with manufacturing optimisedthroughout Europe

Pilot launched in Long EU operations hub

Strip MLE Strip UK Long EU

Supply Chain

Operations hubs Implementation in a phased and structured manner


19/40

Outlook for Tata Steel Europe

Long-term recovery in most steel using sectors is continuing, particularly engineering

and automotive. Outlook for construction remains weak in the near term

However, some softness currently being experienced in European apparent demand

and steel prices due to summer period and market uncertainty. Meanwhile, European

19

sovereign debt / banking sector concerns and Governments aggressive fiscal cuts

present an additional risk to the outlook

Raw material contract prices have risen for both iron ore and coking coal for the

September quarter. Spot prices are currently below contract prices, however the

outlook remains uncertain 19


20/40

Agenda







Business Outlook

20


21/40

Indian Steel Consumption Vs Production

Indian Market update

Indian steel using sectors remain strong

World Steel forecasts Indian apparent

finished steel consumption to rise by13.9% to 63 mmt in FY10

Domestic market remains tight as supply

response remains constrained

Indian & South East Asian Steel Market

0

2

4

6

8

10

12

14

16

Production Consumption

Million tonnes per quarter

Up 7.2 per cent Y/YDown 5.2 per cent Q/Q

Up 16.6 per cent Y/YUp 4 per cent Q/Q

Mar 10 Jun 10 Jun 09 Jun 09Jun 10Mar 10

21Source: Tata Steel Group

India continues to be net importer of steel

South East Asian Market update

Recovery in activity continues in South

East Asia

Chinese steel market is showing clear

signs of slowdown

21

Indian Steel Imports Vs. Exports

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Imports Exports

Million tonnes per quarter

Up 80 per cent Y/YUp 44 per cent Q/Q

Down 21 per cent Y/YDown 48 per cent Q/Q

Mar 10 Mar 10Jun 10 Jun 10Jun 09 Jun 09


22/40

Operating Performance Tata Steel India

Production DeliveriesMn T

Mn T

1.54 1.69 1.59

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80


1.421.70

1.40

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80


22

US$ Mn /US$Turnover EBITDA & EBITDA/T*

Conversion Rate USDINR 46.44 ; *EBITDA / T excludes Profit on Sale of Investments

US$ Mn

1,209

1,5801,411

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800


385

775

638

269

390453

-

100

200

300400

500

600

700

800

900



23/40

Steel Division Tata Steel India

Flat Products Long Products

848

946

785

637

733 803

600

700

800

900

1000

570

753

614601622 671

500

600

700

800

23

0

100

200

300

400

500


Sales Tonnage ('000 T) Net Realisation (US$/T)

0

100

200

300

400


Sales Tonnage ('000 T) Net Realisation (US$/T)



24/40

Ferro Alloys & Minerals Division Tata Steel

India Capacity Utilization rates of Stainless Steel mills &

Fe Cr production has increased YoY and QoQ.

However, due to seasonal production cuts and

restricted demand in China , drop in demand is

847

1,091 1,0941,152

1,437

16

25

30

44

20

25

30

35

40

45

50

600

800

1000

1200

1400

1600

24

witnessed in recent times. Demand is expected to

revive from Sep10 onwards

Ferro Chrome prices are likely to remain firm , with

an expected increase in prices towards end

Sep10


309 347

406

302

4

-

5

10

15

0

200

400

Jun'09 Sep'09 Dec'09 Mar'10 Jun'10

Ferro Alloys Deliveries ('000t)

Ferro Alloys FAMD Ferro Chrome NR (US$/t)

Ferro Alloys FAMD Operating Profit (US$ Mn)

Ferro Chrome NR in Jun10 is 109 c/lb


25/40

Key Events & Awards

CSR Excellence Award 2010 by ASSOCHAM (Associated Chambers of Commerce &

Industry of India)

FE- EVI Green Business Leadership Award in the iron & Steel category for the year

2009-10

Five HR awards by Asias Best Employer Brand Awards 2010 for Talent

25

Management, Best HR Strategy in line with Business, Excellence in Training, CEO with HR

Orientation and HR Leadership Award

Rashtriya Khel Protsahan Puruskar-2010 award for outstanding contribution in the field of

sports in the category of Financial Support for Sports Excellence

Received prospecting license for iron ore in Ankua region in Jharkhand for our

expansion programmes


26/40

Operating Highlights South East AsiaDeliveries EBITDANat Steel

Mn T

US$ Mn

0.54 0.570.61

-

0.10

0.20

0.30

0.40

0.50

0.60

0.70

' ' '

9 10

20

-

5

10

15

20

25

' ' '

26Conversion Rate USDINR 46.44

Tata Steel Thailand

Deliveries EBITDAMn T US$ Mn

0.26

0.340.30

-

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40


1

3

12

-123456789

10111213



27/40

Outlook Tata Steel India & S.E. Asia

Tata Steel India

Companys ambitious 3 Mtpa Brownfield expansion at Jamshedpur is on schedule

Domestic steel demand shows strong momentum driven by strong recovery in steel intensive

sectors such as auto, construction and infrastructure.

Indian steel market remains tight in 2010

Declining Chinese exports in 2H 2010, raises higher possibility of regional price rise on tighter

27

demand and supply balance

Natsteel

Construction activity in Singapore is expected to continue steady recovery, with activity forecast

up 4.7% in 2010 and 8.0% in 2011

Thailand

Thailand shows recovery despite the lingering political crisis. The export led pattern of growth and

continuing rise in private sector investment should result in expansion of output by supporting

industries such as auto parts makers and component suppliers


28/40


29/40

Group Financial Performance Q1 FY11

Tata Steel TSEurope

NSH* TSTH Tata SteelGroup(**)

Deliveries (Mnt ) 1.399 3.710 0.609 0.297 6.049

Turnover 1,411 3,814 375 188 5,856

EBITDA 638 293 20 12 975

Figures in US $ Mn unless specified

29

(*) NSH shows Steel Operations (**) Includes other JVs, Subsidiaries & share of profit of Associates of the Tata Steel Group (***) Conversion

Rate USDINR 46.44

EBITDA margin (%) 45.2 7.7 5.3 6.4 16.6

EBITDA / tonne (US$) 456 79 33 40 161

PBT 508 70 8 2 601

PAT 340 33 11 1 393


30/40

Group EBITDA Trend

44 87 732 1,148 975

US $ Mn

800

1,000

1,200

30

Reported EBITDA

Conversion Rate : USDINR - 46.44

4 887 125

440 79

646

,971

-

200

400


Profit on Sale Of Investments(US$ Mn) Operational EBITDA (US$ Mn)


31/40

EBITDA Trend Tata Steel India

500

600

700

800

900385 430 521 775 638

US $ Mn

31

4 18113 4

381 430503

662 634

-

100

200

300

400


Profit on Sale Of Investments(US$ Mn) Operational EBITDA (US$ Mn)

Reported EBITDA

Conversion Rate : USDINR - 46.44


32/40

EBITDA Analysis Tata Steel Europe

Q4 FY10 Q1 FY11

Reported EBITDA 354 293

Add/(Less): Translation impact Q-o-Q on account ofdepreciation of``` - 42

Add: Impact on account of fire at IJmuiden in Jun10quarter (Increased Maintenance)

- 15

Figures in US $ Mn unless specified

32

Add/(Less): Loss/(Gain) Foreign Exchange RevaluationImpact on Loans

(6) 40

Underlying Operational EBITDA 348 390

Deliveries (Mn T) 3.8 3.7

Underlying Operational EBITDA /T ($) 92 105


33/40

Group Debt PositionUS $ Mn

11,434

Gross Debt Net Debt

9,55111,804 9,843

774 935

10,000

12,000

14,000

522 644

8,000

10,000

12,000

(*) Others include JVs, Subsidiaries & share of profit of Associates of the Tata Steel GroupConversion Rate : USDINR - 46.44

33

5,435 5,743

, ,

-

2,000

4,000

6,000

,

Mar'10 Jun'10

Tata Steel India Tata Steel Europe Others

4,368 4,722

, ,

-

2,000

4,000

6,000

Mar'10 Jun'10

Tata Steel India Tata Steel Europe Others

Increase in GrossDebt primarily onaccount of workingcapital financing


34/40

Gross Debt Movement & Net Debt Position

34Cash & Cash Equivalents include current investments


35/40

Pensions- Tata Steel EuropeSurplus Pension Funds BSPS & SPH

US$ Mn

636681

646

388

268

200

300

400

500

600

700

800

35

Asset Mix in BSPS

Aggregate size of BSPS as on Jun10

quarter : 11 Bn 28% 29% 30% 28% 27%

4% 4% 4% 5% 6%

66% 64% 64% 64% 65%

2% 3% 2% 3% 2%

0%

20%

40%

60%

80%

100%

120%


Equities Real estate Bonds Cash

0

100



36/40

Agenda







Business Outlook

36


37/40

Financing Portfolio & Capital Raising

Equity RaisingEquity Raising Raised `1,069.20 Crs (US$ 230 Mn) through preferential allotment issue of

shares and warrants to Tata Sons in July10

Debt

Pre/Repayment

Debt

Pre/Repayment

Tata Steel Europe prepaid 112.5 Mn in May10

Repaid

`1,020 Crs (US$ 220 Mn) in Q1 FY11

Fund RaisingFund Raising

Contracted US$ 350 Mn loan for working capital purposes

Finalized commitment to raise ` 3,000 Crs ( US$ 646 Mn), 20 year Non

Convertible Debentures to fund the rowth ro ects

37

Steps taken to refinance part of Tata Steels Group debt

Portfolio

Review

Portfolio

Review

NatSteel Holdings Pte. Ltd. has sold its entire 27.03% stake in Southern Steel

Berhad, Malaysia to Signaland Sdn Bhd at a total consideration of ~US$ 72 Mn

Other

Developments

Other

Developments

RML is raising capital of A$ 337 Mn through private placement of ~A$ 102 Mnand non- renounceable rights issue of A$ 235 Mn

Tata Steel maintains its holding at the pre-rights level of 21.15% by subscribing to

its share in private placement and the rights issue at an investment of around A$

72 Mn

RML is taking steps which will find long term solutions to logistics


38/40

Agenda







Business Outlook

38


39/40

Business Outlook

Steel market fundamentals to remain cautious in 2H depending on Chinese

consumption. Modest recovery in steel pricing in end 2010 into 2011 as Chinese

demand is expected to improve due to reversal in policies and new investments made

US still in recovery mode and signs of regional weakness remained in Europe

39

A sustained period of high, volatile raw material prices is likely

Indian steel demand remains robust backed by strong GDP growth forecast of +8%.

Auto demand is expected to be 18-20% higher in FY11

Singapore & Thailands economy remain on track


40/40

Thank You

40

analyst meet presentation 13th aug 10

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