investor presentation 13 jan 2011

8/3/2019 Investor Presentation 13 Jan 2011

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Investor PresentationJanuary 2011


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Agenda

Tata Group Overview

Introduction to Tata Steel

Global Steel Sector Update

Investment Highlights

Recent Developments

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Agenda

Tata Group Overview




Recent Developments

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The Tata Group - Leadership with Trust

ENGINEERING MATERIALS ENERGY CHEMICALS CONSUMER PRODUCTS SERVICESCOMMUNICATION

AND INFO SYSTEMS

One of the worlds largest steel companies globally with

27.2 mtpa of steel production capacity

Principally engaged in providing information technology (IT)

and IT enabled services

Engaged in generation, transmission and distribution of

electrical energy and manufacture of electronic equipment Engaged in the business of operation of a group of hotels

Substantial resence in India and also owns Ja uar and Land O erates an inte rated bevera e business with a ortfolio

Leading Conglomerate with an Established Global Presence

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Rover premium passenger vehicles brands

Largest automobile manufacturer by revenue in India

of strong brands

Second largest producer of soda ash in the world with

manufacturing facilities in India, UK, Kenya and USA

Indias leading crop nutrients player

Leading global provider of telecommunications solutions

serving the voice, data and next generation service needs

of carriers, enterprises and consumers across the world

PROMOTER COMPANIES ACTIVITY

Engaged in the business of promotion ofventures in several sectors

Tata Sons Shareholding in Major Operating Companies

Owner of the Tata brand name and the Tatatrademarks used by most of the Tatacompanies

Tata Industries

GROUP STRUCTURE

ACTIVITY

Incorporated on November 8, 1917

66% owned by public philanthropic trustsendowed by members of the Tata family

Two largest shareholder trusts are DorabjiTata Trust and the Sir Ratan Tata Trust

Engaged in the business of promotion ofventures in several sectors


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Agenda

Tata Group Overview




Recent Developments

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Tata Steel Group: A Global Steel Player One of the flagship companies of the Tata Group and worlds

7th largest steel company in terms of crude steel production

volume(1)

One of the most geographically diversified steel producers with

crude steel capacity of approximately 27.2 mn tonnes

Commercial presence in over 50 countries and operations in 26

countries

Presence across entire value chain of steel manufacturing

Employee strength of approximately 81,000

Net Sales (H1FY11): Rs. 558,399 mn (US$12.4 bn)

Total Assets (as of September 30, 2010): Rs. 1,213,678 mn

(US$26.9 bn)

PAT* (H1FY11): Rs. 37,978 mn (US$ 844 mn)

Profit after taxes, minority interests and share of profit of associates(1) In 2009, according to WSA

Leading Steel Producer With ~27 mt of Annual Capacity Across Global Steel Facilities

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Netherlands ThailandSingapore and AsiaPacific

USUK EU (ex UK &Netherlands)

Three production facilities

Capacity: 10.7 mtpa

Distribution centres

One production facility

Capacity: 7.7 mtpa



Capacity: 0.75mtpa

2 mtpa finishing capacityin 5 countries


Three production facilities

Capacity: 1.2 mtpa(finishing capacity1.7mtpa)


Distribution centres Distributioncentres

GlobalFacilitiesand

DiverseProductMix

Conversion Rate USDINR 45

India


Capacity: 6.8 mtpa



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Agenda

Tata Group Overview




Recent Developments

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Industry Update

Easing monetary conditions globally are driving commodity prices higher

The global steel market is recovering, however most developed markets face a long recovery.

Emerging markets, particularly India and China are expected to continue to have robust growth

China is a major influence on the global steel market, and this influence will grow further in the

medium term. It is also a key driver of raw material prices

Quarterly contracted prices of raw materials have added to earnings volatility of non integrated

steel manufacturers

This volatility has led to steel manufacturers seeking captive mining resources to safeguard

business interests

Lower cost of production and vast domestic market makes India an attractive location for steel

manufacturers

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Global Steel Consumption Outlook

25%

8%

19%

27%

31%28%

7%

14% 13%

6%

11%9% 9%

4%

14%

5%

0%

10%

20%

30%

40%

2009 2010 2011

Worldsteel Apparent Consumption Forecast 2010E & 2011E(% Change y-o-y)

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-36%

-28%

-36%

-24%

-7%

-40%

-30%

-20%

-10%

en ra ou

America

na n a o a

Source: WSA Short Range Outlook for Apparent Steel Use October 2010 Tables

Continued real demand growth in emerging markets expected to contribute to demand going into 2011. The BRICcountries are expected to contribute 37.4% and 50.5% respectively of the incremental demand in 2010 and 2011.


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Agenda

Tata Group Overview




Recent Developments

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Control Over Logistics

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Strong Position in the IndianMarket

Enhanced Competitivenessthrough

Continuous Improvement

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Raw Material Security

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Diversified Product Offering

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Presence In Developed

And Developing Markets

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Strong Position in the Indian Market

Expansion Projects Currently Ongoing:

Capacity expansion is a key strategy for Tata Steel in India, where it derives much of its competitive advantage as a low-cost producer from its access to raw materials and a skilled workforce at a relatively low cost of labour

Work is currently under way to increase steelmaking capacity at Jamshedpur to 9.7mtpa by 2012

Looking further into the future, the Company plans to continue to increase its capacity significantly through greenfield

developments

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Jamshedpur Brownfield Expansions Greenfield Expansions

15.7

1.8 mtpa completed

Orissa Ph-1

2.9 mtpa

Orissa Ph-2

Expansion Projects in Pipeline:

Chattisgarh (5 mtpa) and Karnataka (3 mtpa)

2007 - 08 2008 - 09 2011 - 12 >2014

13Conversion Rate USDINR 44.935

9.7

12.7


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Expansion Projects To Enhance Capacity

Jamshedpur: Brownfield Expansion Project

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Orissa : Greenfield Expansion Project

6 mtpa of flat products integrated steel plantin two phases of 3 mtpa each

2.9 mtpa expansion

Expected to be completed by the end of FY 2012

'I' blast furnace progress Structural erection of JK bay inprogress at LD 3-tscr site

Grinding stack at pellet plant View of Soil test at Sinter plant Area

View of Soil test at Sinter plant Area View of inward material section

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Enhance Competitiveness Through Continuous Improvement

The Company undertook a series of measures to counter recessionary pressures in FY09 and FY10 to reduce cost

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Key Initiatives

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One Company OperatingModel

Product Development AndMarketing Cost Saving Initiatives Strong Retail Management

Implemented, and plans to

continue to implement, strategic

cost-saving measures to

improve the long-term

competitiveness of its business

Fit for the Future initiatives for

its European operations

Works closely with retail and

wholesale customers to ensure

value by scheduling deliveries

on a just-in-time basis

Been able to reduce customers

inventory stock and increase

their margins

Through research and

development initiatives working

to capture market share in a

number of potential high growth

areas

Customer First strategy

In the process of transforming its

operations to directly align its

marketing, sales and distribution

teams with major industries and

sectors

Transforming its supply chain in

Europe


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Raw Material Security

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Investments in Minerals Assets Improving Raw Material SecurityMozambique

Motambo substation , EDM power line

Riversdale Benga Project :Core Yard & Construction Camp

Beira Port

New Millennium Corporation

Field site Exploration

Community and people

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NML (Holdco)

Canada

TS Equity Stake: 27%NML JV (iron ore)

TS Equity Stake: 80%

Status: Initiated project development

Offtake rights: 100%

TSL has an exclusive right to

negotiate and settle a proposed

transaction in respect of NMLs

LabMag Project

RML (Holdco)

Australia

TS Equity Stake: ~24%RivMoz

Partner: RML

TS Equity Stake: 35%

Status: Project development

commenced

Coking coal

Offtake rights: 40% of the coking

coal

CDJV

Australia

Partners: Vale, JFE, NSC,Posco

TS Equity Stake: 5%

Offtake rights: 5 to 20%

Coking coal

Iron Ore

Coal

TSCI

Ivory Coast

Partner: Sodemi TS Equity Stake: 85%

Status: Pre-feasibility

Increasing Higher Raw Material Security

India: Captive mines

Significant amounts of raw

material requirements for FY10sourced from leased captive

mines

Iron Ore: 100%

Coal: 49%

Significant amount offerro alloy

requirements

Current resources


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Diversified Product Offering: Branding and Positioning4

Brand Management IndiaTata Steel Europe: Diversified Product Offerings

Rail

Packa in

Aerospace

Automotive

Add value to its steel operations by increasing the sale of branded

products, particularly from its Indian facilities

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Shipbilding Consumer Products

Energy and Power Operations Engineering


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Diversified Product Offering: Downstream Operations

Tata Steel Processing &DistributionLtd (TSPDL)

100% subsidiary of Tata Steel since July 2009

Five processing units located across India with a processing capacity of ~2 million tonnes per annum

Also engaged in the business of high-end plate fabrication for major equipment manufacturers including Caterpillar and JBP Group

Tata Bluescope Tata Bluescope Steel Limited (TBSL) a 50:50 JV with Bluescope Steel Limited

Engaged in the business of manufacturing building products & solutions from metal & color coated steel.

Existing operations include three facilities with a total installed capacity of 136,000 TPA in Pune, Bhiwandi and Chennai, to manufacture

products for the Indian construction industry

Presently implementing a Greenfield project for setting up of a metal coating (capacity of 250,000 tpa) and color coating (150,000 tpa)

facilities at Jamshedpur, to be operational by April 2011

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Tinplate Company

TCIL is commissioning Cold Roll Mill in 2011

The project involves capacity expansion to 390,000 tpa

Tata Steel holds ~45% equity

Wires Division

Steelworks facility in Tarapur, Maharashtra

Wire drawing plants at Indore and Bengaluru

Caters to the Indian construction and automotive segments for products such as springs, pre-stressed concrete and conductors


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Control Over Logistics

Tata NYK Shipping

Ship anchored at the portDhamra Port

Dhamra Port Company Ltd (DPCL) a 50:50 JV with L&T

Deep sea port at Dhamra, Orissa

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A 50:50 JV between Tata Steel and Nippon Yusen Kabushiki Kaisha (NYK Line),

Japan, currently operating 12 chartered and 2 owned vessels

Focused on shipping dry bulk and break bulk cargo

Trial operations commenced in September 2010

Expected to be capable of handling 13 mtpa of coking coal and 6 mtpa of iron ore

TM Intl Logistics

Partnership between Tata Steel, NYK and Martrade

Engaged in the business of port operations, cargo handling and other related

services

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Agenda

Tata Group Overview




Recent Developments

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$1,781

$1,232

$1,989$2,030

40.6%40.7%37.6%

35.8%

FY2008 FY2009 FY2010 H1 FY2011

$1,042

$810

$1,122$1,156

26.7%23.8%21.4%

20.2%

FY2008 FY2009 FY2010 H1 FY2011

Key Financials India Standalone (US$)

Net Sales (US$ mn) EBITDA (US$ mn) and EBITDA Margin (%) (1) PAT (US$ mn) and PAT Margin (%)(5)

$4,376

$5,404 $5,560

$3,035

FY2008 FY2009 FY2010 H1 FY2011

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Net Debt (US$ mn) (2)

$3,901

$5,369$5,635

$4,890

FY2008 FY2009 FY2010 H1 FY2011

Net Debt

Capex (US$ mn) (4)

$546

$473

$619

$467

FY2008 FY2009 FY 2010 H1 FY2011

Capex

Revenue

Net Debt / EBITDA (3)

2.2x 2.2x

2.8x

2.5x

FY2008 FY2009 FY2010 H1 FY2011

Net Debt / EBITDAConversion Rate USDINR 45(1) EBITDA = Net Sales - Total expenditure + Depreciation + Net Finance Charges

(2) Net Debt = Secured Loan + Non Secured Loans Cash and bank balances(3) Net Debt / EBITDA for H1FY2011 is using a annualized figure of EBITDA(4) Capex = Purchase of fixed assets(5) PAT = Net Profit after Tax post Prior Period Adjustments (Adjusted for Tax)


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$3,952

$1,801

$1,787

$4,028

14.5%

13.5%12.3%

7.9%

FY2008 FY2009 FY2010 H1 FY2011

Key Financials Consolidated (US$)

Net Income from Operations (US$ mn) EBITDA (US$ mn) and EBITDA Margin (%) (1) PAT (US$ mn) and PAT Margin (%)(5)

$29,230$32,740

$22,754

$12,409

FY2008 FY2009 FY2010 H1 FY2011

$1,663

$844

($448)

$779

6.8%

5.7%

2.4%

-2.0%

PAT % Margin

EBITDA % Margin

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Net Debt (US$ mn) (2)

Revenue

$10,976$10,842

$11,945

$10,286

FY2008 FY2009 FY2010 H1 FY2011

Net Debt

Capex (US$ mn) (4)

$1,871

$1,106

$1,874

$1,589

FY2008 FY2009 FY2010 H1 FY2011

CapexConversion Rate USDINR 45(1) EBITDA = Net Income from Operations - Total expenditure + Depreciation + Net Finance Charges

(2) Net Debt = Secured Loan + Non Secured Loans Cash and bank balances(3) Net Debt / EBITDA for H1FY2011 is using a annualized figure of EBITDA(4) Capex = Purchase of fixed assets(5) PAT = Profit / (Loss) as Restated after Minority Interest and Share of Profits of Associates


2.8x3.0x3.0x

5.8x

FY2008 FY2009 FY2010 H1 FY2011

Net Debt / EBITDA


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Rs 196,910

Rs 243,158 Rs 250,220

Rs 136,582

FY2008 FY2009 FY2010 H1 FY2011

Rs 80,138

Rs 55,455

Rs 89,521Rs 91,334

40.6%40.7%37.6%

35.8%

FY2008 FY2009 FY2010 H1 FY2011

Rs 36,445

Rs 46,870Rs 50,468

Rs 52,01726.7%23.8%

21.4% 20.2%

FY2008 FY2009 FY2010 H1 FY2011

Key Financials India Standalone (Rupees)

Net Sales (Rs mn) EBITDA (Rs mn) and EBITDA Margin (%) (1) PAT (Rs mn) and PAT Margin (%)(5)

Revenue

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Net Debt (Rs mn) (2)

Rs 175,567

Rs 241,615Rs 253,556

Rs 220,051

FY2008 FY2009 FY2010 H1 FY2011

Net Debt

Capex (Rs mn) (4)

Rs 24,590

Rs 21,265

Rs 27,863

Rs 21,020

FY2008 FY2009 FY2010 H1 FY2011

Capex


2.2x 2.2x

2.8x

2.5x

FY2008 FY2009 FY2010 H1 FY2011

Net Debt / EBITDA(1) EBITDA = Net Sales - Total expenditure + Depreciation + Net Finance Charges

(2) Net Debt = Secured Loan + Non Secured Loans Cash and bank balances(3) Net Debt / EBITDA for H1FY2011 is using a annualized figure of EBITDA(4) Capex = Purchase of fixed assets(5) PAT = Net Profit after Tax post Prior Period Adjustments (Adjusted for Tax)


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Rs 177,824

Rs 81,049

Rs 80,427

Rs 181,277

14.5%

13.5%12.3%

7.9%

FY2008 FY2009 FY2010 H1 FY2011

Key Financials Consolidated (Rupees)

Net Income from Operations (Rs mn) EBITDA (Rs mn) and EBITDA Margin (%) (1) PAT (Rs mn) and PAT Margin (%)(5)

Rs 1,315,336

Rs 1,023,931

Rs 558,399

Rs 1,473,293

FY2008 FY2009 FY2010 H1 FY2011

Rs 74,845

Rs 37,978

(Rs 20,147)

Rs 35,042

6.8%

5.7%

2.4%

-2.0%

PAT % Margin

EBITDA % Margin

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Net Debt (Rs mn) (2)

Revenue

Rs 493,929Rs 487,906

Rs 537,521

Rs 462,852

FY2008 FY2009 FY2010 H1 FY2011

Net Debt

Capex (Rs mn) (4)

Rs 84,197

Rs 49,751

Rs 84,337

Rs 71,495

FY2008 FY2009 FY2010 H1 FY2011

Capex

(1) EBITDA = Net Income from Operations - Total expenditure + Depreciation + Net Finance Charges

(2) Net Debt = Secured Loan + Non Secured Loans Cash and bank balances(3) Net Debt / EBITDA for H1FY2011 is using a annualized figure of EBITDA(4) Capex = Purchase of fixed assets(5) PAT = Profit / (Loss) as Restated after Minority Interest and Share of Profits of Associates


2.8x3.0x3.0x

5.8x

FY2008 FY2009 FY2010 H1 FY2011

Net Debt / EBITDA


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Agenda

Tata Group Overview




Recent Developments

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Recent Developments

Q3 FY2011 QuarterlyPerformance

Tata Steel and Nippon Steel Corporation have signed a JV agreement (51:49) to set up Indias first CAPL for production of 600,000 tpa of

Indian Operations

Third-quarter deliveries at 1.637 million tonnes were nearly 3% higher compared to the corresponding period of last year and about 1%

lower than the second (September) quarter of FY11

The pricing environment in India in the third quarter was mixed, with prices for flat products being marginally lower compared to the

second quarter, while prices for some long products increased

European Operations

Production and deliveries in the third quarter of FY11 were in line with the first half of FY11

Higher raw material prices and reduced apparent demand due to seasonal slowdown, amongst other factors, adversely affected

margins

Group-wide performance

Volume of steel products sold declined marginally, and net sales expected to be flat compared to the second quarter

Operating results expected to decline somewhat in comparison to the second quarter due to increased raw material prices

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Continuous Annealing

and Processing Line(CAPL)

Update on Teesside CastProducts

Fire at Ijmuiden,Netherlands

automotive cold rolled steel at Jamshedpur

The JV will address the localization needs of Indian Automotive customers for high grade cold rolled steel sheet

Expected to come on stream in 2013

Received a partial final award in TSUKs favour in an ongoing arbitration proceeding between TSUK and certain off-takers of its Teesside

Cast Products Plant on January 05, 2011

The arbitral tribunal amongst other things found that the off-takers did not validly terminate their off-take agreements

The arbitration proceedings are being held under the auspices of the ICC International Court of Arbitration

The arbitration proceedings will now move to the next phase of determining the amount of damages

Fire occurred in one of Tata Steels pickling lines at Ijmuiden plant in the Netherlands

Although Tata Steel expects customer deliveries to be met by diverting scheduled production to alternative facilities, it has declared force

majeure on deliveries of certain strip products from the Ijmuiden site


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Offering Summary

Further Public Issue of 57,000,000 Equity Shares comprising of:

A Net Issue to the public of 55,500,000 Equity Shares

An Employee Reservation Portion of 1,500,000 Equity Shares for purchase by Eligible Employees

IssueIssue

Tata Steel Limited (Tata Steel or the Company)IssuerIssuer

100% Book Building Process under Schedule XI of the SEBI Regulations

Price band: Rs. 594 to Rs. 610 / equity share of face value Rs. 10 each The floor price is 59.4 times the face value and the cap price is 61 times the face value

Bids can be made for minimum of 10 equity shares and in multiples of 10 equity shares thereafter

Price BandPrice Band

BookBookRunning LeadRunning Lead

ManagersManagers

The Issue shall constitute approximately 5.94% of the post-Offer paid up equity share capital of the CompanyIssue %Issue %

Price Band to be announced at least 1 working day prior to the Offer Opening Date, all categories of investors to bid

within the Price Band

Allotment to be made to Non-Institutional Bidders and QIBs proportionately at the Offer Price

Retail Individual Bidders and Eligible Employees have the option of applying at the Cut-Off Price

IssueIssue

ProcedureProcedure

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Offering Summary (Contd)

QIB Portion :

Not more than 50% of the Net Issue or 27,750,000 Equity Shares will be allocated on a proportionate basis to Qualified

Institutional Buyers (QIB Portion) provided that the Company may allocate up to 15% of the QIB Portion to Anchor

Investors on a discretionary basis (Anchor Investor Portion), out of which at least 5% would be available for allocation

to domestic Mutual Funds only

FII participation allowed in the Net Offer

Non-Institutional Portion : Not less than 15% of the Net Issue or 8,325,000 Equity Shares

Retail Portion : Not less than 35% of the Net Issue or 19,425,000 Equity Shares

Issue StructureIssue Structure

January 19, 2011 to January 21, 2011

Anchor book opens and closes on January 18Issue PeriodIssue Period

Part finance the capital expenditure for expansion of the Companys existing works at Jamshedpur; (Rs. 18,750 mn)

Payment of redemption amounts on maturity of certain redeemable non-convertible debentures issued by the

Company on a private placement basis (Rs. 10,900 mn); and

General corporate purposes

Object of theObject of the

IssueIssue

Employee Reservation Portion: 1,500,000 Equity Shares (2.6% of the Issue)

There is no requirement for minimum Promoters contribution under Regulation 34 (b) of the SEBI Regulations

Further, except for the 15,000,000 Equity Shares held by the Promoter which are locked-in till July 22, 2013 and

258,422,225 Equity Shares held by Promoter which are locked in till January 27, 2011 pursuant to Regulation 78 of

the SEBI Regulations, the Equity Shares held by the Promoter shall not be subject to any lock-in

LockLock--inin

RequirementsRequirements

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investor presentation 13 jan 2011

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