Top Notch Manufacturing : Accelerating Growth

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Top Notch Manufacturing Accelerating Growth
Economic Times Intelligence Group Knowledge
Forum 8th November, 2006 - Mumbai
Seshagiri Rao Director finance JSW STEEL
LIMITED - INDIA
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I N D E X
SECTION
SL. NO.
1.
INDIAN ECONOMY
2.
INDIAN MANUFACTURING
3.
STRATEGIES ADOPTED JSW STEEL LTD.
4.
MANUFACTURING CHALLENGES AHEAD
3
I N D I A N E C O N O M Y
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HIGHLIGHTS INDIAN ECONOMY

• Liberalization has finally started showing
  beneficial effect on Indian economy
• Indian economy, which depended heavily on
  agriculture in the post independence era (59 in
  1950-51), has been dominated by Services in the
  post liberalization period (54 in 2005-06).
• Country is gradually and positively moving
  towards industrialization, as indicated by the
  industrys contribution to the GDP reaching a
  figure of 26 in 2005-06
• Avg. GDP growth _at_ 8 in last three years
• Merchandised exports have doubled from 52.7 B in
  02-03 to 102.7 B in 05-06

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INDIAN ECONOMY vs WORLD - RELATIVITY
W O R L D
U S A
C.Y. 2005 3.2
C.Y. 2005 3.2
Source bea.gov.
Source IMF
I N D I A
C H I N A
C.Y. 2005 9.9
F.Y. 2005-06 8.4
Source NBS
Source CSO
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INDIAN ECONOMY TRANSFORMATION
AGRICULTURE.
INDUSTRY
SERVICES
Source CSO / RBI
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INDIAN ECONOMY SECTORAL GROWTH
XI-PLAN
IX-PLAN
X-PLAN
Source Planning Commission
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INDIAN MANUFACTURING SECTOR
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INDIAN ECONOMY DRIVERS
Source Planning Commission
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CONTRIBUTION OF MANUFACTURING IN GDP

• Average contribution of Industry in GDP
  (2001-06) 26
• Average contribution of Manufacturing in
  Industry (2001-06) 58

Source CSO
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MANUFACTURING SECTOR - INFLATION VS GROWTH

• Overall Inflation in Indian Economy increased
  from 3.6 to 4.7
• Inflation in Manufacturing Sector has decreased
  from 1.8 to 1.5
• Growth in Manufacturing Sector has increased from
  2.9 to 9.1

Source CSO
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INDIAN MANUFACTURING DEMAND DRIVERS
YOUNG DEMOGRAPHY
INFRASTRUCTURAL DEVELOPMENT
CONSTRUCTION RESIDENTIAL, COMMERCIAL INDUSTRIAL
GROWING ECONOMY
CAPITAL GOODS
AUTOMOBILE / AUTO-COMPONENT
URBANIZATION
CONSUMER DURABLES OTHERS
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STRATEGIES ADOPTED JSW STEEL LTD.
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Strategies Adopted

• Scale up capacities
• Technology optimisation
• Cost competitiveness
• Market expansion

Sustainable business model aimed to maximise
value to stakeholders
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Scale up capacities

• Greenfield / Brownfield expansions
• Merger / Acquisitions / Consolidations

Figures in mtpa
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Technology optimisation

• Corex process Non recovery coke oven
• Cost effective energy efficient route
• Environment friendly

• Technology selection

• Mix of Blast Furnace Corex route
• Optimal utilisation of energy resource
• No usage of petro fuels

• Blending of technology

• Continuous focus to innovate and improve the
  process

• Strong RD set up

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Cost competitiveness

• Set-up facilities at low specific investment per
  ton

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Cost competitiveness

• Improve factor efficiency
• Labour
• Labour productivity of 978 ton/man year (2006)
  comparable with international standards
• Capital
• Avg. ROCE improved from 18.31 (2004) to 23.01
  (2006)
• Market capitalisation at Rs. 4,749 crs (2006), up
  from Rs. 1,059 crs (2004)
• Enterprise value at Rs. 8,906 crs (2006), up from
  Rs. 5,599 crs (2004)

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Cost competitiveness

• Robust business model
• Integrate / Disintegrate to add value
• Integrated process
• Disintegrate approach
• Acquisition of value added facilities in
  developed markets

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Cost competitiveness

• Maintain healthy capital structure

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Market expansion

• Creating brand image
• Jindal Vishwas in domestic markets
• Galvplus in international markets
• Presence in all markets
• Exports to over 70 countries across 5 continents
• Value for money to customers

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I N D I A N M ANUFACTURING C H A L L E N G
E S A H E A D
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INDIAN MANUFACTURING CHALLENGES AHEAD

• Economy Growth Sustenance
• Infrastructure Faster implementation
• Raw Material Availability of Captive Source
• Human Resource Talent Retention
• Technology Investment in RD/Innovation
• Capital Raising finance at low cost

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T H A N K Y O U