sector update |27 august 2015 metals - motilal oswal · 2015-08-27 · metals | sector update ....

13 April 2015 1

Sanjay Jain ([email protected]); +91 22 3982 5412 Dhruv Muchhal ([email protected]); +91 22 3027 8033

Investors are advised to refer through disclosures made at the end of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Cyclical stress or permanent debt trap? 25 out of 38 under debt trap; JSW and a handful of others can survive

We projected the next 5 years financials of 38 steel companies representing over 70% of India’s installed capacity with total debt of INR3.8trillion. These 38 companies account for 80% of bank credit to the sector.

The debt to EBITDA ratio has zoomed to 13x in FY16E - taking it closer to the previous steel cycle bottom in FY02.

Even after modeling optimism in margins and freezing of growth capex, we notice that the Debt/EBITDA ratio barely falls below 8x by as far as FY20E. Therefore, we believe that nearly half of INR3.8 trillion debt is unsustainable.

Ten companies with total debt of INR1.5 trillion (of this INR1.1 trillion is bank credit) have fallen in permanent debt trap.

We believe worst is still not behind for steel prices because cost of production of inputs is still trending down. Protection from imports is necessary.

The exposure of PSU banks under our coverage is ~6% (v/s 4.6% for banking system) of their overall exposure. Almost 1/5th of the steel exposure of large PSU Banks has already been restructured.

JSW Steel and a handful of others (Prakash industries, Sunflag, Kalyani, Godawari power and Sarda Energy) can weather the storm.

Indian steel sector’s financial stress is a well known fact; so we skirt the historical analysis and ask ourselves how much of this has fallen under a permanent debt trap even after building in reasonable optimism. The picture is quite scary—nearly 25 (out of the 38 companies, representing over 70% of India’s installed capacity, under our analysis) have fallen under the debt trap as their debt individually will increase despite major cost cutting and freezing of growth capex. Having said that, there will be some winners like JSW Steel—who will enjoy reasonable margins because of size, operating efficiencies, market leadership and ability to lower input costs. Excluding debt through bonds/debentures and foreign currency loans, our sample size covers ~80% of Indian banking system credit (of INR 2.8t) outstanding to the iron and steel industry. Debt/EBITDA zooms to 13x—a historical high The aggregate debt of our sample has increased 110% to INR3.85b over FY10-15, while EBITDA has increased only 15%. The leverage position in FY15 itself has turned quite scary—Debt/EBITDA for our sample was precariously high at 8.0x, almost 2-3x of the normal. With margins expected to compress further in FY16 amid sharp drop in steel prices, we see the ratio increasing to 13x—taking it closer to the previous steel cycle bottom in FY02. However, unlike the last cycle during 1998-2002 (when surge in Chinese commodity demand and prices cleaned balance sheet in the next couple of years), we don’t foresee any such recovery this time. No country/economy is large enough to absorb the rapidly growing surpluses produced in China. Although tariff and non-tariff barriers can reduce import pressure, it is never enough to support steel prices into India.

Sector Update |27 August 2015

Metals

Please see our sector report

“Downhill Run”

dated August 2012

http://www.motilaloswal.com/Institutional-Equities�

http://institution.motilaloswal.com/emailer/Research/METALS-20120829-MOSL-SU-PG043.pdf�

27 August 2015 2

Metals | Sector Update

Sector’s debt at unsustainably high levels Even after modeling recovery in margins over FY17-20 on the back of expected extensive cost cutting, freezing growth capex and certain price protection, we see leverage ratio (Debt/EBITDA) falling to only 7.8x by FY20. We see the aggregate EBITDA increasing 23% and debt by another 21% over FY15-20. The enormity of the situation can be gauged by the fact that the sector as a whole will fail to service even the interest cost for the next five years, leave alone debt repayment. Even if the industry were to scale down capex to bare essential sustenance (assumed @1.5% of assets), the free cash flows (90% of EBITDA – sustenance capex) will be just 20% of finance cost in FY16 and would perhaps recover to 90% by FY20 in an optimistic scenario. The sector has fallen into debt trap and unless a part of debt is written off, the industry cannot survive. Our calculations suggest the aggregate debt of INR2t is unsustainable. Ten mills under massive debt trap We have shortlisted 10 companies (let’s call it SDR candidates/club) having debt of more than INR23b each; these companies account for ~39% (or INR 1.1t) of banking credit exposure to the iron and steel sector. There are a few companies that are on the border line. These companies will have debt/EBITDA of greater than 10x over the next five years. Hence, debt and/or interest servicing is impossible; they cannot survive without debt write-down. Other mills too under stress—import duty protection needed Other mills also have high unsustainable financial leverage, but may survive under financial restructuring scheme. We believe protectionist measures are required to improve the industry’s health and make it competitive vis-a-vis other countries— Chinese producers are operating at unreasonably low returns. Japan and Korea are benefiting from currency depreciation. FTA (free trade agreements) with Japan and Korea are hurting the domestic steel industry. We estimate a duty protection to the tune of ~INR3,000-3,500/t is required to support the domestic steel industry. India is perhaps the only country where demand is still growing, but the domestic industry is losing it out to imports. Worst is not behind for steel prices Steel prices have continuously fallen over the last 3-4 years, driven largely by weakening iron ore and coking coal prices on peaking of consumption in China and growth in supply of raw materials—we discussed this in our report “Downhill Run” in 2012 (report link). The spreads between the cost of raw material basket for blast furnace feed and prices of finished products (e.g., HRC) have remained broadly stable because of perpetual overcapacity in China and stable to appreciating Yuan. We believe that there is more downside to iron ore and coking coal prices because the cost of mining continues to trend down on lower energy prices and depreciating currencies of mineral exporting countries; this will put further pressure on steel prices.


27 August 2015 3


Iron & Steel has second highest exposure to the banking system According to our banking analyst the credit growth to sector has slowed down and the iron and steel (I&S) exposure has come down by 20bps to 4.6% in FY15 of the overall bank credit. After power sector, this is second highest single sector exposure. PSU banks, under our coverage, continue to increase their exposure to I&S. Their fund based exposure has grown at 27% CAGR over FY09-15 –now accounts for ~6% of their overall exposure. Almost 1/5th of the steel exposure of large PSU Banks has already been restructured; a significant amount is expected to get restructured under SDR or 5/25 scheme. Over the longer term, moratorium through flexible loan restructuring (5/25 scheme) would enable steel players to gradually improve debt servicing matrices. However as debt restructuring/government reforms would take some time for implementation, our banking analyst believes some P&L hit in the near term is inevitable. Only JSW Steel and a few others can swim through the troubled waters JSW Steel (JSTL) is one of the few better-placed companies amongst the larger ones. The company’s strong operating efficiency and low-cost capacity addition will drive strong volume and cash flow growth. JSTL’s non-integrated business model is fairly insulated from volatility in commodity prices. However, Tata Steel remains vulnerable to iron ore prices. Amongst the smaller names, we believe Prakash industries, Sunflag, Kalyani, Godawari Power and Sarda Energy are the only names that can weather the storm.

Exhibit 1: Sector relative valuation summary

Rating Price MCAP

(USD M) EPS P/E (x) EV/EBITDA (x) P/B(x)

(INR) FY15 FY16E FY17E FY16E FY17E FY16E FY17E FY15 FY16E

Steel Tata Steel Neutral 216 3,161 2.9 8.9 37.0 24.2 5.8 8.3 5.6 1.2 1.2

JSW Steel Netural 889 3,243 74.5 -16.6 40.6 NM 21.9 9.6 7.1 1.0 1.0 SAIL Sell 49 3,063 5.1 -2.6 2.0 NM 24.1 21.9 9.2 0.5 0.5

Non-Ferrous Hindalco Buy 81 2,517 13.5 2.1 11.9 39.3 6.8 8.5 6.7 0.8 0.8 Nalco Buy 30 1,158 4.6 2.8 3.4 10.6 8.8 1.7 0.7 0.6 0.6 Vedanta Neutral 86 3,830 20.3 14.2 12.4 6.0 6.9 6.0 5.3 0.5 0.6

Mining Coal India Buy 358 34,167 21.7 23.5 27.7 15.3 12.9 7.8 6.6 5.6 5.4 Hindustan Zinc Buy 127 8,116 19.2 16.1 16.6 7.9 7.7 2.9 2.1 1.2 1.1 NMDC Sell 92 5,535 16.6 9.6 10.4 9.7 8.9 4.8 4.5 1.1 1.1

Price as on 26.08.2015 Source: Company, MOSL

27 August 2015 4


Steel sector under a debt trap Only half of INR3.84 trillion sector debt is sustainable

We believe the stress issue in the steel sector is unlikely to resolve. Industry can at best

service only half of the INR3.84b debt because industry can’t sustain a debt/EBITDA ratio

of more than 4x. Gross Debt/EBITDA ratio will increase to ~13x in FY16, close to the

historical high seen in FY02. The commodity boom, driven by China’s demand, pulled the

sector out of distress over FY03-08 (with gross debt/EBITDA falling to 2.4x by FY08).

However, we do not see any such recovery this time around. We estimate leverage will

remain high at ~8x even by FY20, while cash generation will be insufficient to even cover

interest payments (0.9x of interest in FY20).

Leverage in the Indian steel sector has increased significantly over the past few years—gross debt/EBITDA in FY15 was at a dangerously high 8.0x as against ~2.5x during FY04-08, and we estimate that the situation to only worsen in FY16/17 if the market dynamics do not change meaningfully. We have taken a sample of 38 companies for our analysis; these companies together represent more than 70% of India’s steel capacities and aggregate debt of ~INR3.8t at the end of FY15. Excluding loans through bonds/debentures and ECBs, the domestic debt of these companies (at INR2.2t) represents ~80% of Indian banking system debt outstanding to the iron and steel sector (INR 2.8t as of March 2015). Exhibit 2: Banking credit to steel sector covered by our sample set

Source: MOSL, Company, Capitaline

For the companies outside our coverage, we see ~10% decline in revenue in FY16 and realization stabilizing at FY16E levels thereafter (this means we are assuming price recovery in 2HFY16E, either aided by safeguard duties or general improvement in market condition). Based on historical industry trend, we have assumed operating cash flows at 90% of estimated EBITDA. We assume that companies will freeze growth capex; sustenance capex is assumed at 1.5% of fixed assets (gross block and CWIP). Debt for the next five years is estimated after taking into account free cash flows (operating cash flows – sustenance capex) adjusted for interest payments.

Banking credit covered in our

sample, INR 2.29t

Bank credit not covered by us,

INR 0.56t

27 August 2015 5


We estimate, for our sample size, sales will increase to INR4.3t in FY20 from INR3.8t in FY15 and EBITDA to INR595b in FY20 from INR482b in FY15; in the meantime, EBITDA will decline to INR316b in FY16.

Exhibit 3: Steel sector revenue (INR b)


Exhibit 4: Steel sector EBITDA (INR b)


Based on estimated margins for companies individually, the overall margin for our sample over the forecast period (FY16-20) is ~13%— similar to 13% over the past three years and largely in-line with margin seen during the last major downcycle (FY01-03) in the Indian steel sector. Exhibit 5: EBITDA margin trend (%)


Exhibit 6: interest payments (as per cash flow statement) as percentage of sales


660

965

997

1,27

6

2,58

8

2,95

0

2,51

1

2,92

6

3,45

9

3,45

3

3,75

9

3,79

0

3,52

0

3,87

3

4,04

1

4,19

4

4,32

3

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

165

305

235

328

513

456

418

482

465

419

538

482

316

494

544

576

595

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

17

9

18

25

32

2426

2015 17 16

13 1214 13

913 13 14 14

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

E

FY17

E

FY18

E

FY19

E

FY20

E

15%13% 13%

3.5

8.27.2

4.33.2 3.4 3.9 3.7 3.9

4.8 5.4 5.8 6.27.1

8.29.6 9.6 9.4 9.7 9.7

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

E

FY17

E

FY18

E

FY19

E

FY20

E

Margins at cyclical low levels in FY16E…we are

factoring reasonable recovery

Interest payments are at historical high

27 August 2015 6


Debt situation in the steel sector is likely to worsen going ahead. Debt/EBITDA will increase to 13x in FY16 from 8x in FY15 on (a) sharp fall in operating profit due to steel price correction of ~10% YoY, (b) continuing capex by some of the major steel companies—Tata Steel, JSW Steel and SAIL. Thereafter, we expect the leverage ratio to fall to 8.9x in FY17E on the back of operating profit improvement on extensive cost cutting. Though we expect gross debt/EBITDA to fall to 7.8x by FY20, it will still be dangerously high. Exhibit 7: Gross debt/EBITDA (x)


The enormity of the situation can be gauged from the fact that the companies will struggle even to meet their interest payments. EBITDA/interest, which on normalized basis should be higher than 1.5x (as was in FY15), is likely to fall to 0.9x in FY16. We expect it to improve thereafter, but only to 1.4x by FY20. Absolute gross debt for the system as a whole will continue to rise despite no major growth capex forecast, from INR3.8t in FY15 to INR4.7t in FY20—implying the companies will need to borrow even to meet their interest /sustenance capex obligations. Exhibit 8: EBITDA/cash interest (x)


7.0

13.9

5.2

2.51.3 2.1 2.4 2.4

3.5 4.3 4.6 5.57.1 6.7

8.0

13.2

8.9 8.3 8.0 7.8

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

E

FY16

E

FY17

E

FY18

E

FY19

E

FY20

E

China commodity boom

5.0

1.12.5

5.8

9.8

7.0 6.65.4

4.0 3.5 3.02.3 2.0 2.0 1.5 0.9 1.3 1.4 1.4 1.4

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

E

FY16

E

FY17

E

FY18

E

FY19

E

FY20

E

27 August 2015 7


Exhibit 9: FCF/cash interest (x)

FCF=operating cash flows – sustenance capex Source: MOSL, Company, Capitaline

Only half of INR3.84 trillion sector debt is sustainable A debt/EBITDA ratio of 2.5-3x is advisable for a cyclical industry like iron and steel, and a ratio above 4x is unsustainable. Therefore, we believe nearly half of INR3.8t debt will have to be written off. Drilling down to the level of individual companies, we note 27 companies in our sample have gross debt/EBITDA more than the normative level of 4-5x (see Exhibit 7). The high-leveraged club includes the larger names like Tata Steel, JSW Steel and SAIL. The situation is unlikely to improve even till FY20, with 26 companies still in the high-leveraged category. However, we expect the larger names, Tata Steel and JSW Steel, to come out of the high-leveraged club by FY20 and replaced by a few others. Among the companies in our sample, 15 did not generate enough operating profits in 2015 to even pay their interest cost; the number is estimated to increase to 19 by FY20. The leverage position in the Indian steel industry is dangerous. If the steel prices were to correct further (very likely), the debt situation of the sector will only worsen.

0.2

0.6

0.9 0.9 0.9

FY16E FY17E FY18E FY19E FY20E

Operating cash flow post capex / cash interest (x)

27 August 2015 8


Ten mills under massive debt trap Account for INR1.1t debt or 39% of bank credit to the sector

While the situation is bad across the board, there are a few companies that stand out and where debt write-down is highly likely. Among our sample companies, 18 have debt (or gross assets) of more than INR23b each and represent ~94% of the overall sample size debt; we focus only on these companies.

Exhibit 10: Debt/EBITDA ratio and debt S.N. Name FY15E FY16E FY17E FY18E FY19E FY20E

Debt D/EBITDA D/ EBITDA D/ EBITDA D/ EBITDA D/ EBITDA D/ EBITDA Debt

(INR b) (x) (x) (x) (x) (x) (x) (INR b) 1 Electrosteel 93 721.9 -29.5 117.8 97.7 72.7 57.5 153 2 Monnet Ispat 71 63.1 2595.9 63.7 51.9 45.8 42.4 140 3 Jai Balaji Inds. 27 54.8 -17.4 36.7 38.7 40.9 21.2 43 4 Visa Steel 32 -5.9 -6.9 73.5 38.8 41.0 43.3 57 5 Essar Steel 376 12.2 27.8 26.3 25.3 24.8 24.5 611 6 Bhushan Steel 419 19.3 30.0 27.5 23.2 21.9 23.2 574 7 Bhushan Power 294 9.0 24.0 17.5 18.2 19.1 19.9 427 8 Jayaswal Neco 40 11.2 27.3 16.2 16.8 17.3 17.9 56 9 Jindal Stain. 119 10.5 11.8 11.9 11.3 10.7 10.7 142

10 Mukand 24 6.6 19.0 12.3 11.2 10.3 10.5 33 11 Adhunik Metal 30 5.3 8.7 8.6 8.6 8.6 8.5 34 12 Jindal Steel 424 7.7 11.2 9.2 7.9 7.6 7.2 441 13 SAIL 300 5.8 32.9 9.4 6.8 6.2 6.5 430 14 Usha Martin 40 6.1 10.0 6.6 6.6 6.5 6.4 43 15 JSW 496 5.3 7.1 5.3 5.1 4.5 3.8 396 16 Tata Steel 807 6.3 7.2 4.9 4.6 4.3 4.0 794 17 Rashtriya Ispat 51 4.4 8.9 6.1 3.6 1.9 1.0 24 18 Uttam Galva 37 6.8 5.7 4.2 3.9 3.4 3.0 27

Others 168 6.9 22.8 10.0 10.2 10.6 11.0 226

Total 3,848 8.0 13.2 8.9 8.3 8.0 7.8 4,652

Source: MOSL, Capitaline

Of the segregated 18 companies, we note that 10 are under a massive debt trap: (1) Electrosteel Steel, (2) Monnet Ispat, (3) Jai Balaji, (4) Visa Steel, (5) Essar Steel, (6) Bhushan Steel, (7) Bhushan Power and Steel, (8) Jayaswal Neco, (9) Jindal Stainless, and (10) Mukand. We name this club as SDR (strategic Debt Restructuring candidates). Adhunik Metallics is a borderline case. These companies have gross debt/EBITDA of more than 10x and nil cash generation to meet interest payments. Even if we were to believe that their operating profit will be double that of our estimates, they will be unable to meet even their interest cost. The SDR club has total debt of INR1.5t, with banking system credit accounting for INR1.12 trillion (39% of Indian banking system’s credit to the iron and steel sector).

27 August 2015 9


Exhibit 11: EBITDA–to-cash interest (x) S.N. Name FY15E FY16E FY17E FY18E FY19E FY20E

1 Electrosteel 0.0 -0.4 0.1 0.1 0.2 0.2 2 Monnet Ispat 0.2 0.0 0.1 0.2 0.2 0.2 3 Jai Balaji Inds. 0.2 -0.7 0.3 0.3 0.3 0.5 4 Visa Steel -1.9 -1.9 0.1 0.3 0.3 0.3 5 Essar Steel 0.7 0.3 0.3 0.4 0.4 0.4 6 Bhushan Steel 0.6 0.4 0.4 0.5 0.5 0.5 7 Bhushan Power 1.0 0.4 0.6 0.5 0.5 0.5 8 Jayaswal Neco 0.8 0.4 0.6 0.6 0.6 0.6 9 Jindal Stain. 1.0 0.9 0.9 0.9 1.0 1.0

10 Mukand 1.1 0.4 0.7 0.7 0.8 0.8 11 Adhunik Metal 1.6 1.0 1.0 1.0 1.0 1.0 12 Usha Martin 1.4 0.9 1.3 1.3 1.3 1.4 13 Jindal Steel 2.1 1.1 1.4 1.5 1.6 1.7 14 SAIL 3.4 0.5 1.8 2.4 2.0 1.9 15 Uttam Galva 1.2 1.4 1.8 1.9 2.1 2.4 16 Tata Steel 2.4 2.4 3.2 3.1 3.3 3.5 17 Rashtriya Ispat 2.9 1.5 2.1 3.3 5.2 7.9 18 JSW 3.7 1.9 2.4 3.8 3.9 4.5

Other smaller co. 1.4 0.4 0.9 0.9 0.8 0.8

Total 1.5 0.9 1.3 1.4 1.4 1.4

Source: MOSL, Capitaline

Exhibit 12: SDR club

S.N. Companies under Debt Steel Debt

major stress Gross Bank Capacity per ton

(INR b) (INR b) (mt) (USD) 1 Electrosteel 93 93 2.5 575 2 Monnet Ispat 71 44 1.5 733 3 Jai Balaji Inds. 27 27 0.8 515 4 Visa Steel 32 32 0.5 972 5 Essar Steel 376 239 10.0 578 6 Bhushan Steel 419 301 5.0 1,290 7 Bhushan Power 294 225 2.3 1,963 8 Jayaswal Neco 40 40 1.0 619 9 Jindal Stain. 119 96 1.0 1,838

10 Mukand 24 24 0.6 612 Total 1,495 1,121 25.2 913

Source: MOSL

The issue with most of these companies is not only low earning capacity of assets in the current depressed steel price environment, but also over-invested asset base. Except Essar Steel, which is suffering due to low capacity utilization (its gas-based steel plant remains closed), all companies have spent more than what is required to earn a reasonable return based on the configuration of their assets. Even if the steel prices were to recover, we believe these assets will not be able to generate sufficient cash flows to meet their obligations.

27 August 2015 10


Other mills also under high stress Need protection against cheap imports

Our analysis suggests that even if we were to exclude the SDR club cases, the combined

cash flow generation for the remaining steel companies will be just enough to meet their

interest cost (and the reason we do not include them in SDR). The issue with the sector is

not only about high leverage, but also about decline in earning capacity of the assets. We

believe if the government wants to follow its policy of encouraging domestic

manufacturing, it will have to provide some safeguard from rising imports. Chinese mills,

operating at sub-2% RoE, are unsustainable and unhealthy for the long term health of the

industry. We estimate a duty of ~INR3,000-3,300/t should provide enough support to the

domestic steel industry.

At current depressed import parity HRC steel prices and domestic iron ore and coking coal prices, a steel company can generate an EBITDA/t of ~INR2,500-2,600 or USD40-45. As against the capital cost of ~USD800-1,000/t for a new plant, asset returns at these margin levels are pathetically low at ~4% and interest cost is ~12-14%; this, companies are struggling to meet even their interest obligation. Exhibit 13: Economics for an Indian steel mill at current import HRC steel prices BOF route to steel making

Iron ore INR/t 3,480 factor x 1.70

a. Iron ore cost in steel INR/t 5,916 Coking coal INR/t 7,012 factor x 0.9

b. Coking coal in steel INR/t 6,311 Scrap INR/t 19,000 factor % 10%

c. Scrap in steel INR/t 1,900 d. Prime material cost INR/t 14,126 e. recovery factor for steel % 95% f. Eff. Prime material cost INR/t 14,870 g. Other RM costs INR/t 1,000 h. Conversion to billet INR/t 4,000 i. Billet CoP INR/t 19,870 j. HRC conversion and sales exp. INR/t 2,500 k. Cost of sales INR/t 22,370 l. Import parity HRC INR/t 25,000 EBITDA on HRC INR/t 2,630 EBITDA on HRC USD/t 42

Source: MOSL, Company

This coincides with our finding that even the non-SDR companies are at risk. If we were to exclude the SDR club companies from our set of 38 companies, the remaining companies are expected to generate cash flows just enough to meet the interest cost. Operating cash flow post sustenance capex is ~1x of interest cost over FY16-20 for these remaining companies. The problem is not only about aggressive expansion driving higher leverage for the sector, but also about a drop in earning capacity of these plants due to unreasonably low import steel prices.

27 August 2015 11


Exhibit 14: Cash flow post capex/cash interest for the non-SDR club companies FY16E FY17E FY18E FY19E FY20E Median FY16-20E Usha Martin 0.5 0.9 0.9 0.9 1.0 0.9 Jindal Steel 0.7 0.9 1.1 1.1 1.2 1.1 SAIL -0.2 1.1 1.6 1.3 1.3 1.3 Uttam Galva 1.0 1.4 1.5 1.6 1.8 1.5 Tata Steel 0.1 1.0 1.4 1.5 1.7 1.4 Rashtriya Ispat 0.4 1.0 2.0 3.7 5.8 2.0 JSW 0.3 1.1 2.9 3.0 3.5 2.9 Other smaller co. 0.1 0.6 0.5 0.5 0.1 0.5 Total 0.3 1.0 1.5 1.5 0.8 1.0


The fall in steel prices to such unreasonably low levels is driven primarily by aggressive exports by China (on the back of its ability to sustain even at low return levels, partly due to government backing) and higher depreciation (than INR) in the currencies of Japan and Korea (who also have FTA with India).

Chinese steel companies have been operating at RoEs of less than 2% over the past three years and the ROEs are expected to decline further amid compression in spreads lately; this explains that the low steel prices into India, rather than being of function of operating efficiency, are driven more by unreasonably low return expectations (and some government support in the export countries). The Indian government, by allowing uninterrupted imports, is only permitting these countries to live through their inefficiencies in capacity expansion/utilization by passing it on to India. While we are believers in capitalism, Indian steel mills are at a disadvantage in this trade.

Exhibit 15: Chinese steel companies’ RoE (%)

Source: Bloomberg (BRPBCHSE Index)

Exhibit 16: Korea and Japan’s currency depreciation has aided their exports (indexed)

Source: Bloomberg

-10

0

10

20

30

Mar

-03

Sep-

03

Mar

-04

Sep-

04

Mar

-05

Sep-

05

Mar

-06

Sep-

06

Mar

-07

Sep-

07

Mar

-08

Sep-

08

Mar

-09

Sep-

09

Mar

-10

Sep-

10

Mar

-11

Sep-

11

Mar

-12

Sep-

12

Mar

-13

Sep-

13

Mar

-14

Sep-

14

Mar

-15

China steel companies RoE (%)

90

100

110

120

Jan-

14

Feb-

14

Mar

-14

Apr-

14

May

-14

Jun-

14

Jul-1

4

Aug-

14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug-

15

South Korea (Won) Japan (Yen) INR

27 August 2015 12


The case for government support gets stronger if we were to consider how India’s steel demand is to shape up. Our analysis of domestic steel demand growth suggests India’s steel consumption will increase to ~120mt by FY21 (at 8.5% annual growth rate, similar to the previous cycle). If we were to assume that imports will remain unchanged at 10mt and exports at 5.5mt over the period to FY21 (similar to FY15), domestic steel production will have to increase to ~118mt by FY21 from ~INR74mt in FY15; based on the announced capacity expansion plans, we note India’s steel capacity will be ~118mt by the said period (a utilization rate of 100%). For an emerging country like India, with significant investment in infrastructure yet to be made, reliance on such unreasonable/unsustainable supplies of steel can be risky. The government should take measures to create a level playing field for the industry and encourage domestic capacity addition. Lack of action at the government level can impact the long-term economical capacity addition at the cost of the earlier-mentioned unsustainable sources.

Exhibit 17: Indian steel supply Producers FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E FY20E FY21E SAIL 11.3 11.9 12.3 11.3 12.1 11.7 11.4 11.1 12.1 11.7 14.3 16.3 16.3 17.3 18.3 19.3

Tata Steel 4.4 4.8 4.8 5.2 6.2 6.4 6.6 7.5 8.5 8.7 9.3 11.2 12.7 12.7 12.7 12.7 RINL 3.2 3.1 2.9 2.5 2.7 2.9 3.1 3.1 3.0 3.0 5.0 6.0 6.0 6.0 6.0 6.0 JSW Steel 4.3 5.4 6.1 5.5 8.4 8.8 10.3 11.6 11.9 12.0 12.7 13.7 15.7 17.7 17.7 17.7 Essar Steel 2.7 3.0 3.4 3.2 3.4 3.9 4.3 4.2 3.3 3.3 3.5 3.6 4.0 4.5 5.0 5.0 JSPL 0.5 0.8 1.4 1.4 2.0 2.2 2.8 2.9 2.9 2.9 3.9 4.4 4.6 4.6 4.6 4.6 Bhushan Steel

0.2 0.3 0.3 0.4 1.2 1.8 2.3 2.3 2.3 3.0 4.0 4.5 5.0 5.0 5.0

Others 12.6 23.4 24.9 27.8 25.4 31.4 35.4 27.4 30.2 30.1 25.6 25.0 28.0 32.2 39.5 48.2 Domestic steel production 46.6 52.5 56.1 57.2 60.6 68.6 75.7 69.9 74.2 74.1 77.2 84.2 91.7 99.9 108.7 118.4

YoY (%)

12.8 6.8 1.9 6.1 13.2 10.3 -7.7 6.2 -0.1 4.2 9.0 9.0 8.9 8.9 8.9 YoY (m tons) 6.0 3.5 1.1 3.5 8.0 7.1 -5.8 4.3 -0.1 3.1 6.9 7.5 8.2 8.9 9.6

Steel Cap. (mtpa) 51 57 60 66 75 78 84 90 91 105 111 115 118 118 118 118 CU (%) 91 92 94 86 81 88 90 78 82 71 70 73 78 85 92 100


We believe the government should step in to support the industry through some form of protection—a safeguard duty. On a normalized basis, at a capital cost of ~USD900/t for a new steel plant and a return on equity of 15% and life of 25 years with 3% annual inflation-led increase, a steel plant should generate an EBITDA of INR7,000/t. At current import parity prices, Indian steel mills are generating ~INR2,500/t EBITDA. Assuming the government will be happy with the companies generating ~10% equity return on a project basis, this will require a EBITDA/t of INR6,000. We believe a safeguard duty to protect this differential, of INR3,000-3,300/t, is necessary for sustainability (and eventual revival) of this sector.

27 August 2015 13


Exhibit 18: Protection required through government measures Base Govt. Case Case a. Cost of a steel plant INR/t 56,235 56,235 b. Equity cost (%) 15% 10% c. Debt cost (%) 12% 12% d. Debt:Equity (%) 70% 70% e. Tax rate (%) 28% 28% f. Inflation (%) 3% 3% g. Life of asset yrs 25 25 h. Normalized EBITDA INR/t 7,000 6,000 i. Current EBITDA INR/t 2,630 2,630 h. Protection required INR/t 4,370 3,370

Source: MOSL

Exhibit 19: India steel demand is growing, but…


Exhibit 20: But flood of imports is crowding out domestic mills…


Exhibit 21: India steel imports from major countries - mt


2.2

3.5

-2.0

0.0

2.0

4.0

6.0

Apr

-13

Jun-

13

Aug

-13

Oct

-13

Dec

-13

Feb-

14

Apr

-14

Jun-

14

Aug

-14

Oct

-14

Dec

-14

Feb-

15

Apr

-15

Jun-

15

Trailing 12m Growth (%)

-284

590 575

-300

-100

100

300

500

700

Apr

-12

Jun-

12

Aug

-12

Oct

-12

Dec

-12

Feb-

13

Apr

-13

Jun-

13

Aug

-13

Oct

-13

Dec

-13

Feb-

14

Apr

-14

Jun-

14

Aug

-14

Oct

-14

Dec

-14

Feb-

15

Apr

-15

Jun-

15

Net steel imports (kt)

1.11.4 1.3

0.1 0.3

1.5

3.6

1.61.9

0.2 0.3

2.3

China Japan Korea Russia Ukraine Others

FY14 FY15

Imports by countries - mt

India steel demand has shown some signs on

recovery in the past few months. Demand grew ~7%

in 1QFY16.

But rising imports is crowding out domestic

suppliers.

Besides China, imports have also surged from Japan and

Korea (in FY15).

27 August 2015 14


Worst not behind for steel prices Cost of mining still sliding

Steel prices have continuously fallen over the last 3-4 years, driven largely by weakening iron ore and coking coal prices on peaking of consumption in China and growth in supply. We had discussed this in our report “Downhill Run” in 2012. (report link). The spreads between the cost of raw material basket for blast furnace feed and prices of finished products (e.g., HRC) have remained broadly stable because of perpetual overcapacity in China and stable to appreciating Yuan. We believe that there is more downside to iron ore and coking coal prices because the cost of mining continues to trend down on lower prices of energy and depreciating currencies of mineral exporting countries; this will put further pressure on steel prices. Exhibit 22: China steel prices – USD/t

Source: MOSL, Bloomberg

Exhibit 23: India HRC steel prices – INR/t

Source: MOSL

300

450

600

750

900

Aug-

09

Jan-

10

Jun-

10

Nov

-10

Mar

-11

Aug-

11

Jan-

12

Jun-

12

Oct

-12

Mar

-13

Aug-

13

Jan-

14

Jun-

14

Oct

-14

Mar

-15

Aug-

15

HRC Rebar

22,500

25,500

28,500

31,500

34,500

37,500

Aug

-14

Sep-

14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jun-

15

Jul-

15

Aug

-15

HRC Mumbai (INR/t)

India import parity HRC steel prices are down by

~30% over the last one year.


27 August 2015 15


Exhibit 24: India long product (TMT Mumbai) prices – INR/t

Source: MOSL, Steelmint

Exhibit 25: India domestic iron ore lump prices – INR/t

Source: MOSL, Steelmint, Company

Exhibit 26: NMDC EBITDA/t – INR/t


Exhibit 27: Chinese and European steel spreads

Source: MOSL, Bloomberg

26,000

28,500

31,000

33,500

36,000

38,500

Aug

-14

Sep-

14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-

15

Aug

-15

TMT Mumbai (INR/t)

2,800

3,800

4,800

5,800

6,800

7,800

Aug

-13

Oct

-13

Dec

-13

Feb-

14

Apr

-14

Jun-

14

Aug

-14

Oct

-14

Dec

-14

Feb-

15

Apr

-15

Jun-

15

Aug

-15

NMDC 6-40mm (CG) Lumps 5-18 (Odisha)

2,20

5

1,83

8

3,28

4

3,27

0

2,96

3

2,54

8

2,54

9

1,22

3

1,17

4

2,857 2,590

4,320 4,125 4,074 3,954 4,049

2,213 2,079

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

E

FY17

E

EBITDA per ton Realisation

140

185

230

275

320

May

-11

Aug

-11

Nov

-11

Feb-

12

May

-12

Aug

-12

Nov

-12

Feb-

13

May

-13

Aug

-13

Nov

-13

Feb-

14

May

-14

Aug

-14

Nov

-14

Feb-

15

May

-15

Aug

-15

HRC Rebar

Long product prices have also weakened on rising

imports and weak domestic demand.

After sustaining on back of domestic shortage,

domestic iron ore prices have started to correct on

(a) restarting of closed mines, (b) unviable exports

and (c) tepid domestic demand.

NMDC EBITDA margins are still high

Global steel product spreads are near

recent lows.

27 August 2015 16


Exhibit 28: INR has appreciated against all other major currencies (indexed to 100)

Source: Bloomberg

Exhibit 29: Quarterly trend of COP of Iron-ore producers

Source: Company, MOSL

65

80

95

110

1-Ja

n-14

1-Fe

b-14

1-M

ar-1

4

1-A

pr-1

4

1-M

ay-1

4

1-Ju

n-14

1-Ju

l-14

1-A

ug-1

4

1-Se

p-14

1-O

ct-1

4

1-N

ov-1

4

1-D

ec-1

4

1-Ja

n-15

1-Fe

b-15

1-M

ar-1

5

1-A

pr-1

5

1-M

ay-1

5

1-Ju

n-15

1-Ju

l-15

1-A

ug-1

5

AUD BRL Yuan INR

32.1

24.728.5

20.4 18.723.2

25.9

19.822.2

17.0 16.2 17.0

Fortescue BHP Rio Vale

Sep' 14 Dec' 14 Mar' 15 Jun' 15

27 August 2015 17


Indian banking After Power sector, Iron & Steel has the highest exposure

Exhibit 30: PSU banks, under our coverage, continue to increase their exposure to Iron and Steel sector –now accounts for ~6% of overall exposure; grew at 27% CAGR (Fund Based Exposure; FY09-15)

Fund Based Exposure (Growth YoY, %) Fund Based Exposure (% of Total FB exposure)

FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 FY15

SBIN 110 9 43 32 4 21 5.0 4.7 6.1 6.6 6.2 7.0

PNB 38 62 13 6 13 10 5.2 6.5 6.0 6.1 6.0 5.7

BOB 19 27 25 10 16 75 4.8 4.7 4.9 4.9 4.7 6.1

BOI 45 22 12 20 5 -7 4.9 4.7 4.5 4.6 3.8 3.2

CBK 125 64 -17 26 2 8 4.1 5.4 4.1 4.9 4.0 3.9

UNBK 2 34 22 5 23 -10 2.9 4.1 4.2 3.8 4.2 3.4

ICICIBC -10 22 26 22 16 4 3.4 3.7 4.1 3.6 3.9 3.7

AXSB 5 78 -17 15 21 25 2.4 3.1 2.3 2.2 2.1 2.3

Total 52 26 24 23 8 17 4.4 4.6 5.0 5.2 4.9 5.1

Top 6 PSBs 72 24 26 24 7 19 4.7 5.0 5.5 5.8 5.4 5.8

Note: FY15 data for BOB is based on consolidated exposure Source: MOSL, Company

Exhibit 31: In the last three years, credit growth in Iron and Steel sector continues to trend lower; however, as % of overall bank credit accounts for ~4.5% - similar to FY12

Source: MOSL, RBI

Exhibit 32: Almost 1/5th of the steel exposure of large PSU Banks has already been restructured; a significant amount is expected to get restructured under SDR or 5/25 scheme


4.1 4.4 4.5 4.8 4.8 4.6

29 28

20 21

13

6

FY10 FY11 FY12 FY13 FY14 FY15

% of Overall Loans Growth YoY (%)

9 100 13 57 31

5

13

22 23 24

BOI SBIN UNBK PNB CBK

I&S restructured loans (INRb) % of I&S loans

After Power sector, Iron & Steel has the highest

exposure to the banking system

Our discussions with bank managements suggests that

~30% of industry steel exposure has either been

restructured or has slipped into NPA

27 August 2015 18


Annexures

Exhibit 33: Gross debt of steel companies (INR billion) Gross Debt FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E FY20E

Tata Steel 47 50 43 35 33 34 249 536 599 531 606 599 685 816 807 869 889 864 833 794

Essar Steel 45 49 57 53 48 72 72 63 75 184 268 319 352 376 376 416 460 507 557 611

Bhushan Steel 6 6 8 9 13 20 32 57 81 114 166 215 285 352 419 450 481 511 541 574

Jindal Steel 4 7 9 10 15 33 54 70 81 86 140 171 246 364 424 441 458 454 449 441

SAIL 142 141 134 91 62 46 46 39 87 176 205 174 225 261 300 360 430 430 430 430

Bhushan Power 4 4 4 5 12 27 40 61 80 105 134 179 248 294 294 320 343 369 397 427

JSW 50 56 59 48 41 44 45 145 223 215 236 294 294 437 496 503 507 507 454 396

Electrosteel 0 0 0 0 0 0 0 1 17 25 41 61 72 84 93 107 117 129 140 153

Monnet Ispat 1 1 1 3 5 9 10 11 13 15 26 41 59 68 71 83 96 109 124 140

Jindal Stain. 0 0 8 8 14 23 29 46 60 80 92 107 116 119 119 124 129 133 138 142

Ramsarup Inds. 0 1 1 1 2 2 2 9 17 18 19 20 20 20 20 25 31 38 47 58

Visa Steel 0 0 0 0 1 2 5 7 9 11 14 16 24 28 32 40 45 48 53 57

Jayaswal Neco 0 5 5 6 6 7 6 6 10 11 12 17 24 37 40 44 46 49 53 56

Usha Martin 8 12 11 11 10 9 10 11 17 10 18 25 32 37 40 42 42 43 43 43

Jai Balaji Inds. 0 0 0 0 1 1 7 14 18 16 19 22 24 27 27 31 34 37 40 43

Adhunik Metal 0 0 0 0 1 2 5 10 15 19 30 41 49 30 30 30 31 32 33 34

Mukand 10 13 14 13 12 12 11 14 15 18 18 20 22 24 24 26 28 29 31 33

Uttam Value 21 22 23 22 18 14 14 13 12 8 8 5 4 15 15 20 22 24 27 30

Uttam Galva 4 4 4 4 5 10 12 10 14 22 23 28 30 36 37 37 35 33 31 27

Ankit Metal 0 0 0 0 0 1 1 1 2 2 3 6 8 8 13 16 18 20 22 25

Rashtriya Ispat 23 20 12 0 5 5 9 4 10 12 11 26 51 51 51 53 53 49 39 24

MSP 0 0 0 0 1 1 1 2 3 5 7 10 11 11 13 14 15 16 17 19

Sujana Metals 1 2 1 2 1 1 2 5 9 0 11 9 14 16 16 17 17 17 17 17

Godawari Power 0 0 0 0 1 2 3 3 4 5 8 10 17 21 20 19 19 18 17 16

OCL I&S 0 0 0 0 0 0 0 1 1 1 3 16 16 18 13 13 13 14 14 14

Sarda Energy 1 1 0 0 1 1 2 3 7 6 8 11 14 17 15 15 14 13 12 11

SKS 0 0 0 0 1 2 4 4 6 7 7 7 7 9 9 9 10 10 10 11

Shah Alloys 1 2 1 2 2 4 4 6 7 8 9 9 9 9 8 9 10 11 13 14

Shyam Metalics 0 0 0 0 0 0 0 0 0 0 4 5 5 0 5 5 5 5 5 4

Bihar Sponge 3 3 4 4 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2

Prakash Inds. 11 12 10 11 7 6 5 4 3 2 7 10 9 10 8 7 6 5 3 2

Nova Ispat 4 0 0 7 0 9 10 0 0 0 0 1 1 1 1 1 1 1 1 2

Sunflag Iron 2 2 2 1 2 2 2 3 3 3 4 6 5 5 4 4 3 3 2 1

Kamdhenu 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1

Aanchal Ispat 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1

Kalyani Steels 1 1 1 2 1 1 1 2 2 2 3 2 2 2 2 1 0 0 0 0

JSW ISPAT 56 67 65 69 58 83 83 72 74 72 69 68 0 0 0 0 0 0 0 0

Gallantt Ispat 0 0 0 0 0 0 0 0 0 1 1 2 2 2 1 1 1 0 0 0

Aarti Steels 1 0 0 1 2 3 3 3 3 4 5 4 5 4 4 4 3 2 1 0

Total 444 478 480 420 382 490 780 1,239 1,578 1,797 2,237 2,557 2,990 3,608 3,848 4,161 4,416 4,535 4,596 4,652

Source: MOSL, Capitaline, Company

27 August 2015 19


Exhibit 34: Gross Debt / EBITDA ratio (x) FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E FY20E

Tata Steel 3 5 2 1 1 1 3 3 3 7 4 5 6 5 6 7 5 5 4 4

Essar Steel 8 -14 11 5 3 4 3 3 4 10 16 21 -21 9 12 28 26 25 25 24

Bhushan Steel 4 3 4 3 3 5 5 6 8 7 8 7 9 13 19 30 27 23 22 23

Jindal Steel 2 3 3 2 2 3 4 3 2 1 2 2 4 6 8 11 9 8 8 7

SAIL 7 16 6 2 1 1 0 0 1 2 3 3 4 6 6 33 9 7 6 6

Bhushan Power 4 3 2 3 5 8 9 8 7 9 9 9 9 9 9 24 17 18 19 20

JSW 22 26 13 3 2 3 2 5 7 5 5 5 5 5 5 7 5 5 4 4

Electrosteel

NM -135 -83 -182 722 -29 118 98 73 57

Monnet Ispat 4 3 2 4 3 5 5 4 3 3 5 8 11 15 63 NM 64 52 46 42

Jindal Stain.

2 2 3 5 3 5 -29 6 7 14 21 19 10 12 12 11 11 11

Ramsarup Inds. 0 5 5 5 4 2 2 5 165 9 -17 -83 -120 NM -337 -621 NM NM NM NM

Visa Steel 3 11 2 4 5 5 7 6 -80 5 6 37 18 32 -6 -7 74 39 41 43

Jayaswal Neco

16 10 18 6 12 5 3 5 4 3 5 7 9 11 27 16 17 17 18

Usha Martin 4 6 5 5 4 3 3 3 3 2 3 5 5 5 6 10 7 7 6 6

Jai Balaji Inds.

2 2 2 3 2 4 5 9 6 5 29 -43 55 55 -17 37 39 41 21

Adhunik Metal

3 6 3 4 5 6 4 5 7 7 5 5 9 9 9 9 9

Mukand 6 11 18 6 4 4 3 4 24 5 5 14 40 12 7 19 12 11 10 10

Uttam Value -89 -49 -447 17 7 16 14 11 82 8 7 3 1 5 5 -9 9 10 11 11

Uttam Galva 8 9 4 4 2 5 3 3 4 5 5 5 5 6 7 6 4 4 3 3

Ankit Metal

7 4 2 4 4 5 7 5 12 -79 -15 54 59 64 70

Rashtriya Ispat 5 3 1 0 0 0 0 0 0 1 1 2 5 4 4 9 6 4 2 1

MSP 2 1 1 1 10 9 2 3 4 6 6 8 6 6 270 138 29 30 32 33

Sujana Metals 4 11 7 5 3 1 2 3 5

3 3 5 9 6 15 9 9 9 8

Godawari Power

4 3 2 2 4 3 2 3 4 3 3 5 6 5 6 6 5 5 4

OCL I&S

0 0 3 3 4 13 38 85 36 17 270 45 44 44 43

Sarda Energy 6 11 2 1 2 4 2 2 4 3 4 5 4 5 4 8 6 5 5 4

SKS

2 1 4 7 4 2 3 4 4 5 -91 111 111 -13 130 130 130 129

Shah Alloys 4 4 2 3 2 4 4 -7 -16 37 -15 -8 -19 -14 -22 -18 Shyam Metalics

0 0 4 4 4

4 7 7 7 6 6

Bihar Sponge 6 70 102 23 0 5 21 3 36 20 -7 -10 -8 -12 -44 -110 NM NM NM NM

Prakash Inds. 44 25 4 4 1 4 2 1 1 1 2 3 3 3 2 4 2 2 1 1

Nova Ispat -52

303

-141 533 0 0 0 0 -7 14 4 -163 -110 246 274 304 335

Sunflag Iron 3 3 3 3 1 2 2 3 3 2 3 5 4 3 2 3 2 2 1 1

Kamdhenu 4 2 3 2 2 1 1 1 6 5 5 4 3 3 3 63 6 6 6 5

Aanchal Ispat

5 7 5 6 5 5 -4 21 22 24 25

Kalyani Steels 5 4 4 3 1 1 0 2 4 2 2 3 2 1 1 1 0 0 0 0

JSW ISPAT 23 -146 11 11 3 22 5 4 9 4 -12 10 Gallantt Ispat

0 0 10 14 7 4 3 3 2 3 1 1 0 0

Aarti Steels 3 2 2 2 3 5 4 3 3 3 3 3 5 3 3 4 3 2 1 0

Adhunik Metal

3 6 3 4 5 6 4 5 7 7 5 5 9 9 9 9 9

Total 7.0 13.9 5.2 2.5 1.3 2.1 2.4 2.4 3.5 4.3 4.6 5.5 7.1 6.7 8.0 13.2 8.9 8.3 8.0 7.8


27 August 2015 20


Exhibit 35: EBITDA (INR billion) FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E FY20E

Tata Steel 15.1 10.0 23.5 35.5 62.0 63.4 74.5 179.9 181.3 80.4 160.0 124.2 123.2 164.1 127.8 120.5 181.3 186.7 192.3 198.1

Essar Steel 5.7 -3.6 5.1 10.2 17.5 17.4 20.7 24.3 19.2 17.9 17.2 15.0 -16.5 42.9 30.9 15.0 17.5 20.0 22.5 25.0

Bhushan Steel 1.8 1.8 2.0 2.7 4.1 4.1 6.7 8.9 10.5 15.7 21.0 30.2 33.3 27.2 21.7 15.0 17.5 22.0 24.8 24.8

Jindal Steel 1.9 2.2 3.2 5.4 9.2 10.6 14.6 23.1 53.3 60.5 65.6 71.1 64.4 61.5 54.8 39.3 49.6 57.5 59.3 61.1

SAIL 21.7 8.6 22.0 49.2 101.1 64.6 95.7 125.9 86.8 94.6 79.4 64.0 51.2 45.0 51.8 10.9 45.8 63.6 69.2 66.7

Bhushan Power 0.9 1.2 1.6 1.9 2.5 3.4 4.6 7.3 11.0 11.2 14.2 20.6 27.1 32.5 32.5 13.3 19.6 20.2 20.8 21.4

JSW 2.2 2.2 4.4 14.1 22.6 17.1 27.2 32.2 29.8 40.7 48.7 61.0 65.0 91.7 94.0 71.2 96.1 98.9 101.9 105.0

Electrosteel 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.5 -0.9 -0.5 0.1 -3.6 1.0 1.3 1.9 2.7

Monnet Ispat 0.2 0.2 0.4 0.7 1.9 1.7 2.3 3.0 4.1 5.0 4.8 5.4 5.5 4.7 1.1 0.0 1.5 2.1 2.7 3.3

Jindal Stain. 0.0 0.0 3.4 4.2 5.4 4.8 9.5 9.1 -2.0 14.4 13.0 7.7 5.6 6.4 11.4 10.6 10.9 11.8 12.8 13.2

Ramsarup Inds. 0.0 0.1 0.2 0.2 0.4 0.7 1.0 1.7 0.1 2.1 -1.1 -0.2 -0.2 0.0 -0.1 0.0 0.0 0.0 0.0 0.0

Visa Steel 0.0 0.0 0.0 0.0 0.2 0.4 0.7 1.2 -0.1 2.3 2.4 0.4 1.3 0.9 -5.3 -5.9 0.6 1.2 1.3 1.3

Jayaswal Neco 0.0 0.3 0.5 0.3 0.9 0.6 1.3 1.9 2.1 3.2 3.8 3.5 3.3 4.0 3.6 1.6 2.9 2.9 3.0 3.1

Usha Martin 2.2 1.8 2.1 2.2 2.6 3.2 3.7 4.5 5.4 5.1 6.0 5.0 7.1 8.0 6.5 4.2 6.4 6.5 6.7 6.8

Jai Balaji Inds. 0.0 0.0 0.1 0.2 0.2 0.5 1.5 2.9 2.0 2.7 3.7 0.8 -0.6 0.5 0.5 -1.8 0.9 1.0 1.0 2.0

Adhunik Metal 0.0 0.0 0.0 0.1 0.2 0.7 1.3 1.8 2.4 4.4 6.0 5.9 7.6 5.6 5.6 3.5 3.6 3.7 3.8 4.0

Mukand 1.7 1.2 0.8 2.2 3.0 3.4 3.3 3.1 0.6 3.5 3.4 1.4 0.6 2.0 3.6 1.4 2.3 2.6 3.0 3.1

Uttam Value -0.2 -0.5 -0.1 1.3 2.6 0.9 1.0 1.1 0.1 1.0 1.1 1.4 3.3 3.1 2.9 -2.3 2.4 2.4 2.5 2.6

Uttam Galva 0.4 0.4 0.9 1.1 2.1 2.1 3.5 3.9 3.8 4.6 4.5 5.3 6.4 6.0 5.5 6.5 8.4 8.6 8.9 9.2

Ankit Metal 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.5 0.4 0.4 0.6 0.9 1.8 0.7 -0.2 -1.1 0.3 0.3 0.3 0.4

Rashtriya Ispat 5.0 6.6 11.5 20.6 32.5 23.4 26.2 35.0 23.6 16.1 14.1 16.5 10.7 11.6 11.6 6.0 8.8 13.5 20.0 24.0

MSP 0.0 0.0 0.0 0.0 0.1 0.1 0.5 0.8 0.8 0.7 1.1 1.2 1.7 2.0 0.0 0.1 0.5 0.5 0.5 0.6

Sujana Metals 0.3 0.2 0.2 0.4 0.5 0.8 0.7 1.7 1.8 0.0 3.3 3.0 2.6 1.9 2.6 1.1 1.9 1.9 2.0 2.0

Godawari Power 0.0 0.0 0.1 0.2 0.4 0.4 0.9 1.7 1.3 1.3 2.5 3.1 3.5 3.6 3.6 3.1 3.4 3.5 3.6 3.7

OCL I&S 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.2 0.2 0.3 0.4 0.2 0.5 0.8 0.0 0.3 0.3 0.3 0.3

Sarda Energy 0.1 0.1 0.2 0.3 0.4 0.3 0.9 1.8 1.9 2.0 1.9 2.2 3.4 3.7 3.8 1.9 2.5 2.5 2.6 2.6

SKS 0.0 0.0 0.0 0.0 0.2 0.3 1.0 1.7 1.6 1.7 1.7 1.5 -0.1 0.1 0.1 -0.7 0.1 0.1 0.1 0.1

Shah Alloys 0.3 0.4 0.6 0.7 0.9 1.0 1.1 -0.9 -0.4 0.2 -0.6 -1.2 -0.5 -0.6 -0.4 -0.5 0.0 0.0 0.0 0.0

Shyam Metalics 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.4 1.4 0.0 1.4 0.7 0.7 0.7 0.7 0.8

Bihar Sponge 0.5 0.0 0.0 0.2 3.0 0.2 0.1 0.3 0.0 0.0 -0.1 -0.1 -0.1 -0.1 0.0 0.0 0.0 0.0 0.0 0.0

Prakash Inds. 0.2 0.5 2.8 3.0 6.2 1.5 2.2 2.9 3.1 3.6 3.5 3.7 3.3 3.8 4.1 1.8 2.4 2.4 2.5 2.5

Nova Ispat -0.1 0.0 0.0 0.0 0.0 -0.1 0.0 9.0 0.2 0.0 0.0 -0.1 0.1 0.2 0.0 0.0 0.0 0.0 0.0 0.0

Sunflag Iron 0.7 0.6 0.6 0.6 1.2 1.1 1.0 1.1 1.2 2.0 1.7 1.3 1.3 1.5 1.7 1.3 1.5 1.5 1.5 1.6

Kamdhenu 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.2 0.1 0.1 0.1 0.2 0.2 0.3 0.3 0.0 0.2 0.2 0.2 0.2

Aanchal Ispat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 -0.1 0.0 0.0 0.0 0.0

Kalyani Steels 0.2 0.2 0.3 0.6 1.1 1.7 1.8 1.4 0.6 1.1 1.2 0.7 0.8 1.4 1.7 1.5 1.5 1.5 1.6 1.6

JSW ISPAT 2.4 -0.5 6.1 6.4 19.8 3.8 17.3 18.6 8.5 18.1 -6.0 6.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gallantt Ispat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.4 0.5 0.5 0.5 0.3 0.4 0.4 0.5 0.5

Aarti Steels 0.2 0.2 0.2 0.3 0.7 0.6 0.8 1.2 1.1 1.4 1.6 1.4 1.0 1.3 1.3 1.0 1.1 1.1 1.1 1.2

Total 63.3 34.4 92.7 165.1 305.4 234.8 327.9 513.3 456.3 418.1 481.6 465.0 418.6 537.8 482.1 315.7 493.6 544.0 576.0 595.2


27 August 2015 21


Exhibit 36: Cash interest (INR billion) FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E FY20E

Tata Steel 4.1 3.9 3.5 1.3 2.2 2.6 6.1 42.7 35.5 32.7 46.0 35.3 32.0 36.8 54.3 49.5 56.5 59.8 58.1 56.0

Essar Steel 0.0 0.0 0.0 4.6 4.8 7.9 8.9 8.4 7.9 15.9 22.3 32.1 40.0 46.1 46.1 46.1 51.1 56.4 62.2 68.4

Bhushan Steel 0.0 0.8 0.9 0.9 1.1 1.7 2.7 5.0 9.8 10.2 16.1 26.3 26.9 31.4 37.4 37.4 40.1 42.9 45.6 48.3

Jindal Steel 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 5.3 5.4 6.1 9.2 15.7 20.0 26.1 36.1 36.6 37.5 37.2 36.8

SAIL 0.0 17.7 14.8 11.1 9.5 6.4 5.2 3.4 2.8 1.7 5.6 7.2 8.5 10.2 15.4 21.0 24.9 26.5 35.3 35.3

Bhushan Power 0.0 0.5 0.6 0.0 0.0 0.0 3.2 5.5 8.9 9.1 11.5 19.1 23.2 32.4 32.4 32.4 35.3 37.9 40.7 43.8

JSW 4.2 3.7 10.7 4.4 4.3 3.1 3.3 4.4 9.7 11.3 10.0 11.4 15.2 24.1 25.6 37.3 39.9 26.2 26.2 23.5

Electrosteel 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9 2.2 3.3 6.0 6.5 7.7 8.6 8.6 9.8 10.8 11.8 12.9

Monnet Ispat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.7 0.6 0.3 0.9 1.3 2.5 6.7 10.0 11.7 13.4 15.2 17.3

Jindal Stain. 0.0 0.0 1.0 0.8 0.7 0.9 2.3 3.5 5.3 4.8 3.3 7.6 4.5 11.9 11.9 11.9 12.4 12.9 13.3 13.7

Ramsarup Inds. 0.0 0.0 0.0 0.0 0.1 0.2 0.2 0.5 0.9 1.0 1.3 3.3 3.8 4.6 4.6 4.6 5.7 7.0 8.7 10.7

Visa Steel 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.4 1.1 0.9 0.9 1.6 1.9 1.6 2.8 3.2 4.0 4.5 4.8 5.3

Jayaswal Neco 0.0 0.0 0.0 0.0 0.3 0.5 0.6 0.6 1.7 1.4 2.0 2.8 3.1 3.9 4.2 4.2 4.6 4.9 5.2 5.5

Usha Martin 1.0 1.3 1.2 1.1 0.9 1.0 0.9 1.0 1.4 1.4 1.9 2.6 3.4 4.3 4.6 4.6 4.9 4.9 5.0 5.0

Jai Balaji Inds. 0.0 0.0 0.0 0.0 0.0 0.1 0.4 1.2 1.7 1.7 1.9 3.0 0.5 0.6 2.7 2.7 3.1 3.4 3.7 4.0

Adhunik Metal 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.6 1.2 1.6 2.1 4.2 4.3 3.4 3.4 3.4 3.5 3.6 3.7 3.8

Mukand 0.0 0.5 0.0 0.1 0.0 0.0 1.1 1.5 1.5 0.0 1.7 2.1 2.1 3.1 3.2 3.2 3.4 3.7 3.9 4.1

Uttam Value 1.9 0.6 0.8 0.3 0.2 0.4 0.3 0.3 0.6 0.6 1.0 1.1 1.8 2.5 2.6 2.6 3.4 3.8 4.2 4.6

Uttam Galva 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 1.8 1.9 1.8 4.2 4.8 4.5 4.7 4.7 4.7 4.5 4.2 3.9

Ankit Metal 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.2 0.2 0.3 0.7 1.1 1.7 1.7 2.0 2.3 2.5 2.9

Rashtriya Ispat 0.0 0.0 0.0 0.0 0.1 0.3 0.4 0.5 0.9 0.7 1.5 2.0 3.3 4.0 4.0 4.0 4.1 4.1 3.8 3.0

MSP 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.3 0.4 0.2 0.6 0.8 1.0 1.2 1.2 1.3 1.4 1.5 1.7

Sujana Metals 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.6 1.0 0.0 1.9 2.0 1.8 1.7 1.6 1.6 1.7 1.7 1.7 1.7

Godawari Power 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.3 0.4 0.3 0.7 1.2 1.2 1.1 2.1 2.0 1.9 1.9 1.8 1.7

OCL I&S 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.2 0.4 0.3 0.3 0.3 0.3 0.3 0.3

Sarda Energy 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.2 0.2 0.3 0.6 0.6 1.1 1.0 1.0 1.0 0.9 0.8 0.8

SKS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.6 0.8 1.0 1.0 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Shah Alloys 0.0 0.0 0.0 0.1 0.1 0.2 0.3 0.5 0.6 0.8 0.9 0.9 0.9 0.9 0.8 0.8 1.0 1.1 1.2 1.4

Shyam Metalics 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.4 0.5 0.0 0.0 0.5 0.5 0.5 0.5 0.5

Bihar Sponge 0.0 0.0 0.0 0.1 0.3 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.2 0.2 0.2

Prakash Inds. 1.2 1.2 0.9 0.8 0.2 0.2 0.3 0.4 0.6 0.3 0.1 0.1 0.6 0.6 0.5 0.5 0.4 0.4 0.3 0.2

Nova Ispat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Sunflag Iron 0.3 0.2 0.2 0.2 0.1 0.1 0.0 0.1 0.1 0.2 0.4 0.5 0.8 0.7 0.6 0.6 0.6 0.5 0.4 0.3

Kamdhenu 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Aanchal Ispat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1

Kalyani Steels 0.0 0.1 0.1 0.2 0.2 0.1 0.2 0.2 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.0 0.0 0.0

JSW ISPAT 0.0 2.0 2.0 2.2 5.8 7.8 12.2 9.1 10.0 10.9 11.2 10.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gallantt Ispat 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.0 0.0

Aarti Steels 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total 12.8 32.6 36.7 28.2 31.1 33.8 49.7 95.2 114.0 119.4 158.1 200.8 212.6 265.1 311.8 338.4 371.4 380.4 404.8 417.9


27 August 2015 22


Exhibit 37: Operating cash flow pre-tax (INR billion) FY16E FY17E FY18E FY19E FY20E

Tata Steel 4.6 57.5 84.9 89.8 94.9

Essar Steel 5.3 7.5 9.7 11.9 14.1

Bhushan Steel 6.8 9.0 13.0 15.4 15.4

Jindal Steel 24.9 34.1 41.0 42.6 44.1

SAIL -3.9 26.8 42.6 47.5 45.3

Bhushan Power 6.2 11.8 12.3 12.8 13.4

JSW 12.8 44.8 76.8 79.4 82.1

Electrosteel -4.8 -0.7 -0.4 0.1 0.7

Monnet Ispat -1.8 -0.5 0.0 0.5 1.1

Jindal Stain. 7.3 7.5 8.4 9.3 9.6

Ramsarup Inds. -0.3 -0.3 -0.3 -0.3 -0.3

Visa Steel -5.7 0.0 0.6 0.6 0.6

Jayaswal Neco 0.8 1.9 1.9 2.0 2.1

Usha Martin 2.5 4.5 4.6 4.7 4.8

Jai Balaji Inds. -2.0 0.4 0.4 0.5 1.4

Adhunik Metal 2.6 2.7 2.8 2.9 3.0

Mukand 1.0 1.7 2.1 2.4 2.5

Uttam Value -2.6 1.5 1.6 1.6 1.7

Uttam Galva 4.9 6.5 6.7 7.0 7.2

Ankit Metal -1.1 0.1 0.1 0.2 0.2

Rashtriya Ispat 1.6 4.1 8.3 14.0 17.5

MSP -0.1 0.3 0.3 0.3 0.3

Sujana Metals 0.8 1.5 1.6 1.6 1.7

Godawari Power 2.3 2.6 2.7 2.7 2.8

OCL I&S -0.2 0.0 0.0 0.0 0.0

Sarda Energy 1.4 1.8 1.9 1.9 2.0

SKS -0.8 -0.1 -0.1 -0.1 -0.1

Shah Alloys -0.5 -0.1 -0.1 -0.1 -0.1

Shyam Metalics 0.6 0.6 0.6 0.6 0.7

Bihar Sponge -0.1 0.0 0.0 0.0 0.0

Prakash Inds. 1.1 1.6 1.6 1.6 1.7

Nova Ispat -0.1 -0.1 -0.1 -0.1 -0.1

Sunflag Iron 0.9 1.1 1.1 1.2 1.2

Kamdhenu 0.0 0.2 0.2 0.2 0.2

Aanchal Ispat -0.1 0.0 0.0 0.0 0.0

Kalyani Steels 1.2 1.2 1.2 1.3 1.3

JSW ISPAT 0.0 0.0 0.0 0.0 0.0

Gallantt Ispat 0.2 0.3 0.3 0.4 0.4

Aarti Steels 0.7 0.8 0.8 0.9 0.9

Total 66.3 232.7 329.1 357.3 374.3


27 August 2015 23


Exhibit 38: Gross Debt / Gross Block (INR billion) FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

Tata Steel 43 42 35 27 23 20 123 47 52 47 53 46 46 47

Essar Steel 69 73 86 78 69 69 53 43 49 113 117 92 83 146

Bhushan Steel 70 68 87 70 79 113 120 195 246 309 115 118 133 135

Jindal Steel 71 86 88 61 59 101 108 88 69 65 72 76 92 77

SAIL 53 49 45 31 20 15 15 12 26 47 51 39 50 46

Bhushan Power 80 88 61 59 73 88 206 163 120 143 142 122 150 110

JSW 283 129 94 77 55 52 42 77 96 78 70 69 64 71

Electrosteel

280 1,353 1,215 610 399 461 215

Monnet Ispat 67 59 70 67 104 145 123 89 88 94 150 188 256 122

Jindal Stain.

70 55 80 99 82 103 112 138 142 86 87 88

Ramsarup Inds.

143 166 167 178 150 158 223 405 252 273 280 287 287

Visa Steel 96 124 79 243 84 117 187 164 106 123 150 163 167 184

Jayaswal Neco

117 116 123 110 98 86 81 73 73 78 98 124 157

Usha Martin 92 77 73 73 61 47 49 54 69 27 40 53 58 49

Jai Balaji Inds.

45 56 62 96 92 110 147 130 110 96 101 92 101

Adhunik Metal

93 174 102 119 149 133 107 127 163 86 106

Mukand 152 116 128 121 115 118 107 124 128 129 123 131 144 138

Uttam Value 102 105 110 104 86 65 63 57 52 35 27 18 14 40

Uttam Galva 66 65 61 63 74 106 103 59 62 90 89 74 72 68

Ankit Metal

28 1,775 106 191 82 80 91 160 115 102 83

Rashtriya Ispat 27 23 14 0 6 6 10 5 11 13 12 25 41 37

MSP 26 21 21 208 239 107 88 137 109 158 122 168 103 91

Sujana Metals 87 116 105 107 70 38 57 122 201

183 137 191 207

Godawari Power 807 62 60 66 113 97 92 62 71 68 65 73 120 75

OCL I&S

64 63 51 243 367 372 123

Sarda Energy 106 92 63 42 63 82 71 98 138 93 79 102 79 94

SKS

118 265 128 175 118 79 93 88 84 81 80 83

Shah Alloys 130 93 83 99 96 102 111 130 129 146 170 159 159 155

Shyam Metalics

0 0 98 94 66 Bihar Sponge 144 160 169 186 46 41 48 41 26 30 31 26 37 47

Prakash Inds. 119 127 108 109 64 55 44 31 19 14 40 41 36 35

Nova Ispat 193

337

439 444 6 0 0 0 29 29 29

Sunflag Iron 43 36 33 28 31 32 31 41 39 38 49 60 40 37

Kamdhenu 64 28 47 48 69 48 70 96 113 112 124 117 114 121

Aanchal Ispat

166 263 319 414 481

Kalyani Steels 90 85 95 64 51 33 28 57 59 49 59 52 28 32

JSW ISPAT 170 189 187 89 76 74 70 60 59 57 55 52 Gallantt Ispat

0 0 69 65 74 58 56 48

Aarti Steels 67 49 50 60 91 90 88 77 60 64 73 82 57 52

Total 67 65 61 48 41 45 63 52 61 66 71 67 72 73


27 August 2015 24


Exhibit 39: Gross Debt / (Gross Block + CWIP) - INR billion FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

Tata Steel 42 41 34 26 21 19 105 44 48 44 48 40 42 41

Essar Steel 67 72 85 76 64 54 49 41 47 60 68 69 72 71

Bhushan Steel 65 60 60 61 64 66 71 76 75 77 83 78 83 82

Jindal Steel 52 62 59 52 52 64 63 65 54 41 49 47 53 56

SAIL 51 48 45 30 20 15 14 11 21 33 33 24 28 29

Bhushan Power 71 70 59 59 73 88 79 87 83 85 83 78 81 79

JSW 86 92 93 76 52 43 36 59 68 62 59 65 57 62

Electrosteel

50 81 63 69 74 74 79

Monnet Ispat 58 55 50 61 95 111 84 70 70 53 81 70 62 55

Jindal Stain.

0 65 53 67 73 63 77 80 82 81 82 86 87

Ramsarup Inds.

143 166 166 175 146 151 108 111 107 102 105 107 107

Visa Steel 79 124 78 131 69 72 78 68 64 67 60 56 73 79

Jayaswal Neco

85 85 99 88 97 84 78 66 71 69 72 80 84

Usha Martin 67 76 70 68 60 45 44 43 46 23 37 46 47 47

Jai Balaji Inds.

40 56 57 76 88 102 112 106 77 78 79 88 97

Adhunik Metal

1 67 60 82 78 87 90 75 78 78 81 93

Mukand 109 115 128 120 115 115 101 102 102 118 121 123 131 134

Uttam Value 101 104 109 102 85 65 62 56 50 32 27 18 14 38

Uttam Galva 65 63 60 60 58 93 74 51 53 72 65 68 63 60

Ankit Metal

5 51 95 97 68 78 83 92 79 85 83

Rashtriya Ispat 27 23 14 0 6 6 10 4 7 7 6 12 23 21

MSP 26 20 7 4 95 74 78 88 77 86 80 88 87 79

Sujana Metals 80 113 103 105 69 33 57 120 162

181 126 178 202

Godawari Power 7 40 52 62 63 76 69 60 51 55 60 60 65 72

OCL I&S

62 59 45 88 221 137 103

Sarda Energy 105 89 62 33 59 64 54 55 83 57 63 66 69 78

SKS

118 82 43 84 79 70 78 80 74 69 66 79

Shah Alloys 94 88 82 92 74 94 74 112 125 142 165 154 154 150

Shyam Metalics

0 0 82 76 57 Bihar Sponge 141 152 169 186 45 39 48 41 26 30 31 26 36 46

Prakash Inds. 119 127 108 108 63 55 42 27 16 12 26 30 27 26

Nova Ispat 192

335

432 442 6 0 0 0 29 27 22

Sunflag Iron 42 36 32 27 28 27 31 37 35 36 40 48 38 36

Kamdhenu 64 28 47 48 68 48 68 70 113 111 122 114 112 121

Aanchal Ispat

166 263 319 414 481

Kalyani Steels 73 69 78 55 49 32 24 53 57 48 57 46 27 32

JSW ISPAT 79 84 79 78 65 68 68 57 56 55 55 52 Gallantt Ispat

0 0 13 48 55 55 56 48

Aarti Steels 67 49 50 60 71 82 82 73 52 59 66 81 57 52

Total 58 58 56 47 38 40 54 45 50 49 53 50 53 54


27 August 2015 25


N O T E S

27 August 2015 26


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For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.

This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited: Kadambari Balachandran Email : [email protected] Contact : (+65) 68189233 / 65249115 Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

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sector update |27 august 2015 metals - motilal oswal · 2015-08-27 · metals | sector update ....

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