A Blueprint

1

• A Blueprint
• of
• Indian Steel Industry

2
Wootz Steel (400-420 A.D.)

• Wootz was the first High Quality Steel
  made anywhere in the world. According to
  travelers to the East, the Damascus Swords
  were made by forging small cakes of Steel
  that were manufactured in South India. This
  Steel was called Wootz. It was a 1000
  years before Steel as good was made
  anywhere in the West.

3

• Indian Steel Industry
• - An Overview

4
India A Few Statistics

• Worlds Biggest Democracy
• Population 1.045 Billion
• Area -3.16 Million Sq Kms (7th Largest)
• GDP - 512 Billion
• Became independent on Aug 15, 1947

5
Recent Past of Steel- Controlled Regime- Till
1991

• 3 Integrated Producers with full control by
  Government
• Secondary Steel producers only in long products.
• Controlled Imports with restrictions on end use,
  duty of upto 150
• Continuous situation of shortage for the last 35
  years
• In 1992, SAIL only manufacturer of HR Coils.
• Total Steel Capacity 14 Million MT

6
Recent Past Decontrol Growth 1994-99

• In 1991-94, Indian Economy was Liberalized, all
  Manufacturing (Incl Steel) was de-licensed
• 4 New Steel Plants -1993-1998
• Total Capacity increased 6 Million Tons
• Customs Duties reduced from 150 to
  15(Currently5)
• Imports were freely allowed
• Downstream Activities increased
• Galvanized Coils Cold Rolling-Approx 10 Plants
• Pipes-Apprx 15 Plants
• Metallics Only 4 DRI Plants
• Total Steel Capacity 25 Million MT

7
Recent Past - Stagnation 1999-2002

• The World Market Collapsed
• Demand for all commodities, including Steel
  Collapsed
• The Far East Russian Currencies Collapsed
• These led to Over Capacities in Steel, in World
  Market
• Customs Duties being Low, India was not Insulated
• New Capacities continued to be added, based on
  Old Projected Growth
• India Starts Exporting Steel
• Prices reached all time LOW
• Total Steel Capacity 27 Million MT

8
Today A New Confidence2002 onwards

• The New Boom triggered by the US announcement
  of Sec 201, placed India in a strong position in
  the USA Market
• Quality a Gainer, since the Quantities were
  guaranteed
• Cautious approach to Growth, after the depression
  of last 5 years
• India emerges as a World Force in Value added
  Steels, for example Thin Gauge GP. Large Dia API
  Pipes
• Total Steel Capacity 36 Million MT

9
Indian Steel Growth-Slowly, Steadily
Confidence
Stagnation
Decontrol
Controlled Regime
2005
1991
1951
10
Upstream Metallics - Indias Potential

• Iron ore Reserves of 13.46 Billion MT (131 Years)
• Current Mining of 102 Million MT
• Exports of Iron ore 48 Million MT
• Pelletisation-Currently 3 Plants, 3 more plants
  being implemented
• DRI India 1 in the world- Nearly 11 Million MT
  in 2005, Capacity of 2 Million being added
• 5 Mini Blast Furnaces upto 550 M3 are also being
  setup

11
Downstream Capacities-Value, Not Volume

• Pre Painted Galvanized Coils
• 1.60 Mill MT New Cap in Galvanized has been
  Planned , increase of 35
• 0.24 Million MT Capacity in Prepainted has been
  Planned , increase of 300
• This includes Required Cold Rolled Capacities
  also
• Total Galvanized Capacity will become 6.39
  Million MT by 2006
• Pipes
• DSAW, Spiral welded API Pipes Capacity Addition
  is already taken place - Capacity is now 2.12
  Million MT, from 324,000MT in 2000
• ERW Pipe growth is steady, at 10-12 Per Annum,
  currently it is 1.49 Million MT
• DI CI Pipes Capacities being added

12
Composition of Steel Production -A Value
Proposition
Quantity age
Long Prods. 13.928 42
HR 7.254 22
Plates 1.832 5
CR 2.251 7
GP 4.790 14
Pipes 3.616 11
Total 33.670 100
HR
13
Pipe Production

• For ERW Pipes from ½ 16
• Capacity 3.16 Million Tons Per Annum
• Capacity utilization 70-75
• Percentage of Black to Galvanized 60 40
• Export Quantity 0.45 Million Tons per annum.
• For DSAW/SW Pipes 18 36
• Capacity 2.12 Million Tons Per Annum
• Capacity utilization 75 80
• Export Quantity 0.5 Million Tons per annum

14

• Indian Steel Industry
• - A Future Giant?

15
India - A Future Giant?

• Objectives of the National Steel Policy
• To increase steel making capacity
• From 35 million tons in 2004
• to 60 million tones in 2012
• to 100 million tons in 2020

16
India - A Future Giant?

• Strengths
• Iron Ore reserves of
• Trained Manpower
• Stable Vibrant Democracy
• Market A strong Middle Class
• Overall economical Growth is sustainable
• Global Location for Exports
• Indians already making 120 Million MT

• Weaknesses
• Capital Availability
• Lack of Proper Infrastructure
• Resources Like Coke, Coal
• Plant Machinery Availability
• Government Policies Vacillation
• Inconsistent Growth Rates
• Manpower Shortage since Indians already make 120
  million MT

17
Immediate New Capacities Planned

• Greenfield and Brownfield Capacity addition plan
  announced
• 6 Plants of 2 Million Tons Up (Flat Long
  Products)
• 87 Plants of 100,000 to 200,000 (all Long)
• All existing plants enhancing their Capacities,
  by 10-15
• Global majors like POSCO Mittal Group have
  shown in putting up Integrated steel mills in
  India.
• It is estimated that if all the plans fructify,
  Indian Steel capacity will be 60 million MT by
  2012, which needs an investment of over USD 17
  Billion
• To reach 100 million MT by 2020, total required
  investment will be USD 37 Billion

18
Demand Indicators

• Automobiles
• HCVs/LCVs- Growth 25 last 2 years , per Annum
• Passenger Cars 2 Wheelers-Growth 21 last 2
  years , per Annum
• Exports of 800,000 Passenger vehicles projected
  by 2008
• Housing
• Growth of 19 in organized sector
• Growth in Rural sector Unorganized sector is
  not measured.
• GDP Growth is currently 6.2, from high of 8.5
  last year
• Manufacturing Sector Growth is 9.0 current year
• Capital Goods Industry Growth is 14.4

19
Apparent Steel Consumption in India during 2003 -
2004
Production Import Total Availability Export App Cons/capita
36.10 1.82 37.92 5.15 32.77
The total domestic Consumption is 32.7 million tons Export at 5.15 Million Tons is 14.3 of Production
20
Can India Sustain 100 Million MT Consumption?
Projected Growth Rates in Per Capita Steel Consumption
Year Population (Millions) Growth over Previous decade (actual) and forecasted growth rates (beyond 2001) Apparent Steel Consumption (Million MT) Estimated Per Capita Steel consumption (KG)
1981 683 24.7 17.658 25.85
1991 846 23.9 23.658 27.41
2001 1027 21.4 29.191 28.42
2011 1222 19 62.600 63.04
2021 1429 17 103.000 138.03
21
GLOBAL EXPERIENCE-Benchmarking
Country Current Per Capita Consumption (KG)
South Korea 917
Japan 562
Germany 407
USA 309
Malaysia 307
China 163
World Average 144
India 29
22
CHALLENGES AN OVERVIEW

• A sustained growth of GDP at 6 and steel
  consumption at 7 for the next 16 years
• Financing Greenfield Projects for the Long Term-
  An Investment of 37 Billion
• Reaching Per Capita Growth of 138 Kgs, against
  Historical Consumption of 30 Kgs, Lesser
• Exporting 5 Million Tons till 2012 if consumption
  grow at 6 per annum and 8 Million Tons by 2020.

23
GLOBAL EXPERIENCE-Benchmarking

• Developed countries like USA, Russia, Japan went
  through a manufacturing led growth, with thrust
  on value added steel production.
• Chinese experience was building capacities slowly
  to match higher domestic demand.
• Being highly Populated, a healthy Mix of Both
  strategies will be followed by India

24

• Introduction to Lloyds
• -A Quick Sales Spiel

25
Lloyds Group in Steel

• One of the top 100 Companies in India
• One of the top 10 steel producers in India
• 5 Manufacturing Units
• Totally Integrated Operations-
• From DRI to Value Added Steels
• API HR Coils, Commodity HR Coils
• Galvanized Coils
• Galvanized Pipes, API Pipes
• Exported 120,000 MT of Galvanized Coils Pipes
  to the USA between Mar 2002 Dec 2004
• Total Employees Currently 2761
• Total Sales Mar 2005 Apprx 383 Million

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Lloyds Group in Steel

• 5 DRI Kilns-Capacity 225,000 MTPA
• Currently 150,000
• Scrap Trading Company-300,000MTPA
• 2 EAFs, 60MT Capacity
• 2 Slab Casters
• 2 will be commissioned by Dec 2005
• One 4 Hi-Steckle Mill, Allied Facilities
• 2 Cold Rolling Mills, Allied Facilities
• 2 Galvanizing Lines
• 2 will be commissioned by April 2005
• 3 ERW Pipe Mills
• From ½ to 14
• 2 Galvanizing Lines

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Lloyds Group in Steel-Value Added Product Range

• Hot Rolled Coils Plates
• Coils from 2mm (0.08) to 16mm (0.63)
• Plates Upto 60mm (2.36)
• Structural Grades, Pipe Grades, Cold Rolling
  Grades
• Special Steels like API (Upto X-70), HSLA, High
  Tensile, Hi Manganese , Boiler Quality
• Galvanized Coils
• 0.23mm (0.009) to 1.50mm(0.059)
• ERW Pipes
• ½ to 14
• Galvanized, Black (Gr A, GrB, API)

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Lloyds Group in Steel
29

• Thank You