Press Conference: Kolkata

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Press Conference Kolkata
Tata Steel

• April 6, 2004

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Presentation Outline

• The Steel Industry in FY 04
• Our Performance in FY 04
• Steel Industry Outlook
• Plans for FY 05
• Long Term Plans

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The Global Steel Industry

• World crude steel production reached 962 MMT in
  2003
• Finished steel consumption estimated at 885 MMT
  in 2003
• China produced 219 MMT of crude steel in 2003,
  and consumed 236 MMT of finished steel in 2003
• CIS, ME, SE Asia, S America saw gt 5 growth in
  steel demand
• Steel demand stable in US, W Europe, Japan over
  2002
• Iron ore, coal, coke, scrap supplies and ocean
  freight were constrained
• Increase in steel prices
• US 201 sanctions were lifted. Trade barriers
  reduced elsewhere
• Consolidation and privatisation continued

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The Domestic Steel Industry

• Finished steel production estimated at 31 MMT in
  FY 04
• Finished steel consumption estimated at 28 MMT in
  FY 04
• Demand growth from Auto and Construction sector
• No fresh capacity addition most plants operated
  at higher capacity utilisation
• Scrap shortage spurred DRI / Sponge growth
• Coke and coking coal in short supply
• Increase in steel prices followed the global
  trend
• Reduction in import excise duties and freezing
  of DEPB rates by GOI

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Presentation Outline

• The Steel Industry in FY 04
• Our Performance in FY 04
• Steel Industry Outlook
• Plans for FY 05
• Long Term Plans

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Increased Production
MTPA
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Steel Production Sales Exports
000 Tons
000 Tons
Flats
Flats
Fe Al Minerals
Fe Al Minerals
Longs
Longs
Steel, Tubes Wires
Steel, Tubes Wires
FY 03
FY 04
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Richer Product Mix
3.9 MMT FY 04
3.8 MMT FY 03
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Rising Operational Efficiency
Raw Material Consumption
Labour Productivity
Specific Energy Consumption
Specific Refractory Consumption
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Increased Market Share in Focus Segments
HR (Auto Segment)
CR (Appliances)
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Increased Market Share in Focus Segments
CRCA (Auto Direct)
CRCA (Auto Ancilliaries)
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Increased Market Share in Focus Segments
Galvanised (Construction)
High Carbon Wire Rods
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Enhanced Focus on Branding
Branded Product Sales
000 Tons
As a of Domestic Sales
As a of Total Sales


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Raw Material Production (In Million Tonnes)
Coal - West Bokaro
Coal - Jharia

Iron Ore
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Tubes

• Highlights
• Best ever total sales at 2,09,000 tonnes
• 50 years milestone of tube making in India
• All mills record best ever figures
• Lowest ever works variable cost
• Highest ever labour productivity
• Lowest ever energy consumption

Production Sales
000 Tons

Market Share
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Ferro Alloys and Minerals

• Highest ever Chrome Ore Production - 12.52 L Mt
• Highest ever Chrome Concentrate Production 3.87
  L Mt
• Highest ever Manganese Ore Production 3.04 L Mt
• Highest ever Ferro Alloys sales at 1.33 L Mt
• Highest ever Chrome Exports 5.64 L Mt
• Reduction in Gross Working Capital in Days of
  Sales
• OHSAS certification awarded to Sukinda Chromite
  Mines

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Other Profit Centres (Bearings, TGS, RA)

• Bearings
• Best ever production 22.00 million numbers
• Best ever sales 22.63 million numbers
• Achieved TS 16949 QMS Certification
• Appreciation - M/s Toyota Kirloskar Motors Ltd
  for attaining Zero PPM Defects

• Growth Shop
• Improved Turnover and Profit
• Adequate carry over orders
• Reduction in fabrication cost

• Rings Agrico
• Growth in market share of railway bearing and
  standard bearing rings
• 100 Agrico production through EPAs
• Agrico revamped distribution network
• New products introduced

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Gross Working Capital (in number of days)
(Estimated)
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Other Highlights

• Jamshedpur Utility and Service Company (JUSCO)
  Ltd.
• 75 years of Industrial Harmony
• Takeover and integration of ISWP
• 1st overseas acquisition - Mascons Sri Lanka
• R D Tata Technical Education Centre
• Crisil upgraded credit rating from AA to AAA
• Securing low cost raw materials JV for
  limestone in Thailand

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Major Initiatives
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Customer Value Management
Long Product
Flat Product
Total
Retail
Others
OE
CVM Coverage
Total
Retail
Others
OE
CVM Coverage
Automotive
Appliances
Auto Ancillaries
Construction
Electrode
Boiler
Whirlpool GB
Ashok Leyland Hyundai T_Motors-CVBU MM Honda
Scooters Bajaj Auto
Wheels India Brakes India Hongo Honda Siel
L T Gammon HCC
ESAB
Thermax
Coverage upto FY04
FY05 Plan
12 new accounts across Flat, Long, Tubes profit
centres

• Key Highlights
• Enhancement in customer relationship
• Customer Service Teams launched for 28 OE
  accounts in Flats, Longs and Tubes
• Over 200 value creating ideas generated thru
  joint working with customers

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Retail Value Management
TATA TISCON RVM SPREAD
TATA SHAKTEE GC RVM SPREAD
Coverage Volume 70 of ABP Distributor - 16 /
25
Coverage Volume 77 of ABP Distributor - 16
/ 21

• 100 coverage by Sept 2004 in GC and TISCON
• RVM extended to Steelium Tubes to complete
  by March 2005

• A

Completed
Completed
On Going
Ongoing

• Key Highlights
• Optimal structuring of retail network ensuring
  higher capacity through enhanced reach
• Transparency created in the retail chain
  Distributor stocks, sales ROCE being tracked
• Systematic measurement of intangibles
  (Distributor capability, Retail CAM capability)
• Over 400 ideas generated towards strengthening
  the channel, to create brand ownership and
  effective marketing spend rigorous involvement
  of channel partners

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Awards

• TBEM Sustained Excellence Award for Steel SBU
• Awarded Asian Most Admired Knowledge Enterprises
  (MAKE) 2003
• 6th Best Employer in India 2003 - M/s Hewitt
  BT
• The Global Business Coalition (GBC) Award 2003 on
  HIV / AIDS
• Best IT User in Mfg. Sector by Nasscom and
  Economic Times.com
• Ranked 2nd in Asia-Pacifics Top Ten Companies
  for Leadership Development, a study by M/s Hewitt
  Associates
• The Energy Resources Institute (TERI) award for
  Corporate Social Responsibility

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Presentation Outline

• The Steel Industry in FY 04
• Our Performance in FY 04
• Steel Industry Outlook
• Plans for FY 05
• Long Term Plans

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Global Steel Industry

• Outlook Positive
• Global Crude Steel Production expected to reach 1
  billion tonnes in 2004
• Global Steel product demand is expected to reach
  950 million tonnes (growing at 6) in 2004
• Demand for Flat Products in China will continue
  to be met by imports for sometime
• Steel industry consolidation has accelerated

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Global Steel Industry

• Key Concerns
• Steel sector is still fragmented
• Highly volatile metallics, Iron Ore and coke
  prices
• Metallics in short supply
• Tight supply of coke
• Higher freight costs
• Higher Energy Prices
• Weaker Dollar leading to higher costs in USD
  terms
• Uncertainty of demand growth in China

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Domestic Steel Industry

• Outlook Poised to Grow
• Rapid GDP growth
• Increasing infrastructure spending
• Increasing per capita income and consumer
  spending
• Low interest rate and inflation rate
• Increasing foreign investments
• Increasing steel demand

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Domestic Steel Industry

• Key Concerns
• High Infrastructure costs
• Reducing tariff levels without the supporting
  infrastructure
• Higher energy prices
• Appreciating Rupee against US

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Presentation Outline

• The Steel Industry in FY 04
• Our Performance in FY 04
• Steel Industry Outlook
• Plans for FY 05
• Long Term Plans

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Challenges in the Next Year

• Increase in cost of Input materials
• Coal
• Limestone
• Freight
• Sponge Iron
• Pig Iron
• Ferro Alloys
• Shutdowns on account of implementing expansion
  plans
• Managing customers with fluctuating steel supply
• Price Volatility

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Plans to overcome Increasing Input Costs

• Increased Production at Mines Collieries
• Increased Ferro Alloys Production
• Thailand Limestone
• Conversion Contracts of Coal and Iron Ore to
  Coke, Sponge and Pig Iron
• To trade own raw materials for billets / slabs /
  pig iron / sponge iron with other Steel Plants

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Plans to Sustain Production Levels

• Increase Production from A to F Blast Furnaces
• Productive use of raw material
• Increase oxygen in blast furnaces
• Additionally, procure semi finished material from
  other steel makers
• Making use of Contract Manufacturing
• HR Procurement

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Market Initiatives

• Product Mix Improvement with the new ECL line
• Development of auto exposed application (skin
  panel)
• Develop Hi-strength steel for Automatic
  Applications
• Develop market for Coated Steel
• Launch of higher coating and wider GC

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Branding

• Retail Identity Programme for Tiscon
• TV Commercial and collateral support for Tata
  Tubes
• Launching Wiron brand in the GI Wires segment

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Production Plan
MTPA
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Sales Plan
4.1 MMT FY 05 Plan
3.9 MMT FY 04
3.8 MMT FY 03
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Presentation Outline

• The Steel Industry in FY 04
• Our Performance in FY 04
• Steel Industry Outlook
• Plans for FY 05
• Long Term Plans

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Plan 2004 to 2010

• Maximise the potential at Jamshedpur
• Move up the value chain strong brands
• Establish alternative locations in India
• Establish global presence
• Connect domestic and global operations
• Grow the minerals business into a global entity

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• Statements in this presentation describing the
  Companys objectives, projections, estimates,
  expectations may be forward looking statements
  within the meaning of applicable securities laws
  and regulations. Actual results could differ
  materially from those expressed or implied.
  Important factors that could make a difference to
  the Companys operations include, among others,
  economic conditions affecting demand / supply and
  price conditions in the domestic and overseas
  markets in which the Company operates, changes in
  Government regulations, tax laws and other
  statutes and incidental factors

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Thank You