Results Presentation

Third quarter and nine-months ended 31st December 2015

4th February 2016

Aerospace

Lifting & Excavation

Construction

Automotive

Packaging

Consumer products

Rail

General Industry - Strips

Energy & Power

Shipbuilding

General Industry - Longs

Disclaimer

Statements in this presentation describing the Companys performance may be forward looking
statements within the meaning of applicable securities laws and regulations. Actual results may
differ materially from those directly or indirectly expressed, inferred 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 or due to the environment, Government regulations,
laws, statutes, judicial pronouncements and/or other incidental factors.

Tata Steel Group Commitment towards excellence in Health & Safety

Key focus areas

0.95

0.78

Competence development programmes in

H&S leadership

0.68
0.60
0.56

Prioritised strategic activity in contractor

management, construction and onsite traffic

0.44
0.38

KPO start-up being undertaken under

systemic risk controls
Health unique capability and provision with
new challenges and opportunities in all
regions
FY10

FY11

FY12

FY13

FY14

FY15

9M FY16

Reduction in LTI continues year on year

3

Tata Steels continued focus on engaging with communities and

improving quality of life

INDIA

Primary health care

services delivery to
~430,000 people
through static and
mobile clinics

EUROPE

Capacity building
of ~2,500 self-help
group members

European
operations support
communities in
three areas:
education, health
and wellbeing and
environment

Thousand school
project aimed at
improving
standards of
education in
government
schools covering
114 schools

~8,000 farmers
adopt the system
of Rice
intensification
method of paddy
cultivation

~49,000 students
of government
schools in
Jharkhand covered
under the mid-day
meal programme

Samvaad a
pan-India tribal
conclave
organised at
Jamshedpur
showcasing a
holistic picture of
tribal culture and
heritage

Children from Tata

Steels IJmuiden
communities
joined a special
rail safety
programme

Employees donated
goods and
equipment to help
communities
affected by flooding
in North West UK

9M FY16 Spend

` Crs

Education

16

Gopalpur Hospital

21

Health

21

Livelihood

17

Infrastructure

12

Others (Sports,
Environment, etc.)

57

Total

144

Employees in South
Wales and North East
UK supported
vulnerable groups at
Christmas time,
including by donating
about a tonne of food
products and gifts

Agenda

SN

Particulars

Financial performance

India & SE Asia performance

Europe performance

Appendix

Global steel industry continues to grapple with excess supply and

weak demand
GDP growth estimates
(0.1)
(0.1)
(0.2 )

% Revision in estimates
Revised GDP Estimates(%)

6.9
6.7
6.5

(2.0)
(1.6)
(1.0)

(0.4)

2.5
2
2.4

0.1

1.5
1.7
1.7

2.4
2.9
3.1
World

(0.2)
(0.2)
0

2.4
2.4
2.2

(0.1)
0

(0.3)
(0.2 )

7.3
7.8
7.9

(0.1)
(0.4 )
(0.4 )

Global excess capacity (MnT) & capacity utilisation (%)

Euro Area

UK

2015(E)

India

Thailand

2016

China

2017

Global crude steel production (% change yoy)

8.8

CY15
change

7.8

6.5

Average currency movements per US$ (% change qoq)

(5%)

5.7

5.4

(59%)

1.1

(1.4)
(1.5)
(2.6)
(3.2)

(1.2)

0.4

(1.2)

(0.5)
(0.4)

(2.1)

(2.9)
(2.6)

(0.4)
(2.0) (1.4)
(2.5)

EU

Q1 CY15

(8%)

1.2

(20%)

1.21.0

(1.2)

(2.1)

(4.4)

(14%)

(2%)

0.5

0.5

(1.7) (1.7)

(0.7)
(1.8)
(4.0)

(4.4)

0.6

(1.5) (1.6)
(1.4)

(6.8)

(6.2)

World

(8%)

16.4

(15.6)
(18.6)

UK

Q2 CY15

Q3 CY15

(20.5)

India

Q4CY15

China
INR

Ruble

Q1 CY15
Source: World Steel Association, CRU,World Bank, Bloomberg, OECD

(10.9)

(30.8)

KRW

GBP

Q2 CY15

EURO

Q3 CY15

JPY

CNY

Q4 CY15
6

Concerns over China and depressed raw material prices have

dampened HRC prices
China Investment production and
sales (%)

China HRC export and cost price

(US$/t)

China steel exports (MnT)

112.6

18%
26%
41%

2014

112

106
86

74

63

78

Q1CY15

550

450

570
527
505
468

58

54

47

Q2CY15

62% Fe China CFR Spot

Q3CY15

Q4CY15

Coal Spot FOB Australia

Source: Bloomberg, NBS, CRU, Platts, Morgan Stanley

29.3

30.8

525
473
467
455

400

Q4 CY15:
YoY 36%
QoQ 14%
Q4CY14

600

500

90

Q1 CY15 Q2 CY15 Q3 CY15 Q4 CY15

HRC quarterly average spot prices (US$/t)

Average quarterly raw material prices (US$/t)

Q4CY15
YoY 30%
QoQ 9%

2015

3%

26.7

25.8

93.8

20%

350

453
440

430
440
416

390

404
376
357

357

300

301

250

263

200
Q4 CY15
Q1 CY15
Q2 CY15
Q3 CY15
Germany HRC domestic spot
UK HRC domestic Spot
China HRC export FOB spot

Mumbai HRC Basic

Q4 CY15

Key highlights Quarter ended 31st December 2015

Robust deliveries in India despite weak domestic steel market

Restructuring of the UK operations underway in the backdrop of severe macro

headwinds and policy costs
Downstream operations curtailed across multiple locations
LOI signed with Greybull Capital for sale of Long products

Successfully refinanced offshore debt of US$ 1.5 billion further lengthening

the maturity and reducing costs

Phased commissioning of facilities ongoing at KPO

Financial performance Quarter ended 31st December15

Q3 FY16
Figures in ` Crore unless specified

India

Europe

SE Asia

Others
& Elimn

Group

Q2 FY16

Q3 FY15

Group

Group

2.35

3.35

0.65

0.02

6.37

6.29

6.29

Turnover

9,064

16,344

1,785

846

28,039

29,305

33,633

Raw Mat consumed

2,341

5,049

59

176

7,625

8,784

10,553

Reported EBITDA

1,525

(675)

52

(61)

841

4,694

3,090

Underlying EBITDA*

1,523

(675)

52

(61)

838

1,985

2,790

Underlying EBITDA/t (`)

6,481

(2,017)

796

1,317

3,156

4,432

EBIT

1,034

(1,114)

(9)

(173)

(292)

3,323

1,639

Deliveries (Mn T)

Q3 FY16

Q2 FY16

Q3 FY15

(712)

(564)

Profit Before Tax

(1,937)

1,785

578

Profit After Tax, Minority Interest and

Associates Income

(2,127)

1,529

157

Exceptional gains/ (charges)

* Excludes one-off items and profit on sale of quoted investments

Financial performance Nine months ended 31st December15

9M FY16
Figures in ` Crore unless specified

India

Europe

SE Asia

9MFY15
Others &
Elimn

Group

Group

6.82

10.06

2.03

0.07

18.98

19.25

27,689

51,147

6,048

2,760

87,644

1,05,838

Raw Mat consumed

7,541

16,753

224

612

25,131

31,959

Reported EBITDA

8,707

(339)

155

507

9,031

11,165

Underlying EBITDA*

5,200

(241)

155

507

5,622

11,112

Underlying EBITDA/t (`)

7,619

(239)

764

2,962

5,773

EBIT

7,267

(2,127)

(29)

160

5,181

6,734

Deliveries (Mn T)
Turnover

9M FY16
Exceptional gains/ (charges)
Profit Before Tax
Profit After Tax, Minority Interest and
Associates Income
* Excludes one-off items and profit on sale of quoted investments

9M FY15

(1,117)

883

1,099

4,449

164

1,749
10

Group EBITDA bridge Q3 FY2016 vs. Q2 FY2016

` Crores
4,596

683
98
(294)

3,197

(218)
(1,388)

(280)

163

906

Central &
Others

Q3 FY'16
Underlying
EBITDA

404
391

(357)

305

(2,806)
Q2 FY'16
Reported
EBITDA

Revenue -Price Cost -Change

Effect
Effect

Production
Volume

Regulatory
Impact

Actuarial
Changes

Others

Adjusted
EBITDA

Profit on sale
of quoted
investments

Non-Controllable (` 1,399 crs)

Underlying
EBITDA

Revenue Vol/Mix

Cost -Volume & Manufacturing

Mix Effect
Exp

Controllable (` 515 crs)

Note: Group EBITDA consists of EBITDA across four operating entities TSI, TSE, NSH & TSTH
11

Debt and pension movement

` Crores

85,168
160

80,903

80,701

(4,424)
2,984

(3,186)

75,118

73,614

10,050

225

7,289

Gross Debt
Mar 15

Loans Movt

Forex impact

Gross Debt
Sep 15

Cash & Cash

Eq

Net Debt Sep

15

Loans Movt

Forex impact

Gross Debt
Dec 15

Cash & Cash

Eq

74,893

Net Debt Dec

15

Derivatives

Underlying Net
Debt Dec 15

Capex incurred of `2,987 crores in Q3 FY16 and `8,839 crores in 9M FY16

Working capital release of `1,610 crores in Q3 FY16

Strong liquidity of ~`18,600 crores plus undrawn KPO project finance

The Net funded status# across all European pension schemes is now surplus of 0.97 billion
compared to surplus of 1.05 billion as on Q2 FY16
# As per IAS 19 (2008) Valuation
12

Committed to long term goals in this challenging business environment

Aligning the footprint in Europe to prevailing market conditions

Ongoing restructuring of the group portfolio to create sustainable long term

value

Kalinganagar project to broaden product basket and customer universe

Focus on cost savings and improvement initiatives

13

Agenda

SN

Particulars

Financial performance

India & SE Asia performance

Europe performance

Appendix

Indian operations weighed down by sluggish uptick in demand and

elevated steel imports
India Steel consuming sectors growth (%)

PMIs (manufacturing) - India and SEA countries

65

28%

YoY % Growth

60
Expansion

55
50
45

15%

14%

14%
5%

8%

4%

1%
-4%
2%

3%
-4%

FY11

2014

Singapore

India steel demand and net steel

imports (in MnT)

335

80

1.3

20

9M FY15
JAPAN

9M FY16
KOREA

OTHERS COUNTRIES

2.1

19

0
FY15

Demand(LHS)

Q3
FY15

Q2
FY16

286

270 267 259

204
178 173 173

95

122 113

67

90

110

95

93

86

70

69

84

82

92

94

86

20

FY14

219

2
1

19

235

Q3
FY16

Net Imports(RHS)

Dec-15

74

CHINA

2.0

77

304 303
264 268
248 252 258

60
40

358 347 351 350

338

307 305 295

Oct-15

2676

385

373

Nov-15

2580

440 430 429

418

Sep-15

1682

3.8

Jul-15

1401
1054

100

Aug-15

2264

Construction

Jun-15

1957

Apr-Nov
FY16*

Market spread in SE Asia

Apr-15

6,992

Capital goods

May-15

2418

Consumer goods

Feb-15

29%

-16%
Apr-Nov
FY15*

* Construction till H1 FY16 & H1 FY15

Countrywise India steel imports (in kt)

9,039

-13%
FY15

2015
Automobiles

India

-12%

Mar-15

2013

5%
1%

6%

FY14

Jan-15

2012

Dec-14

2011

Nov-14

2010

FY13

Oct-14

2009

1%

-4%

-6%

Sep-14

2008

FY12

12%

5%

5%

3%

Contraction

40

13%

12%

9%

International scrap rebar gap US$/mt

East Asia Scrap Price US$/mt
East Asia rebar price US$/mt

Source: JPC, SIAM, MOSPI,Bloomberg

15

Higher deliveries with stable mix of value added products across key
business segments
Steel sales (in kt)
6,824

6,342
2%

2,258

5%

834

57

15%

10%
1%

2,374

2,582
833

61

49

1,035

1,011

2,239

FAMD sales (in kt)

2,128

2,331

342
742
774
270

366
779
907
279

Transfers

26

2,350
333
827
919
271

9M FY15
9M FY16
Q3 FY15
Q2 FY16
Q3 FY16
Automotive and Special Products
Branded Products, Retail & Solutions
Industrial Products, Projects & Exports

35

33

12

11

11

Q3 FY 15
Ferro Chrome

Q2 FY 16
Ferro Manganese

Dolomite

Q3 FY 16
Chrome Concentrate

Robust growth in Branded segment, especially Astrum, Steelium and Galvano

Within the IPPE segment, share of value added products increased significantly led by
strong deliveries in LPG segment
Commercialised 8 products in 9M FY16, to further enrich our product portfolio

16

India EBITDA bridge Q3 FY2016 vs. Q2 FY2016

` Crores
4,771

414
33

-2,806

2
-218

-527

1,525
-144

Q2 FY16

Revenue

Other operational
cost

Vol/Mix

Bought out
Metaliks

Regulatory
Impact

Sale of Quoted
other Inv.

Others

Q3 FY16

Lower realisation impacted the selling results

Favorable cost movement led by operational efficiencies
Lower consumption of Bought out Metaliks in the current quarter
17

Kalinganagar plant

Blast Furnace

Sinter Plant

Coke Oven Battery

Twin Wagon Tippler

` 23,000 crores invested in the project as of December 31, 2015

18

Kalinganagar plant

...contd

Hot Strip Mill

Steel Melting Shop

19

SE Asia Business update

NatSteel Holdings
Deliveries declined due to subdued demand in Singapore and
mothballing of China operations
Stable profitability on the back of renewed focus on cost
management
Continue to focus on export to selected niche markets and higher
sales volumes of downstream operations and solutions business

Tata Steel Thailand

Deliveries increased over comparable quarters despite weak
domestic demand environment
Achieved best ever quarterly sales volume for Value Added Products
Profitability affected due to drop in realisation without commensurate
reduction in metallic prices

20

Business Outlook

Steel demand in key underlying sectors like construction, automobiles and

infrastructure set to improve in the traditionally strong Q4

Supply-side pressure to continue due to elevated imports and capacity ramp

up by domestic steel players

Regulatory initiatives should facilitate the supply-demand balance in medium

term

South East Asian markets will continue to be under pressure due to Chinese
imports
21

Agenda

SN

Particulars

Financial performance

India & SE Asia performance

Europe performance

Appendix

European steel mills not benefiting from domestic economic growth

GDP-Eurozone and UK(YoY%)

Exchange Rates

4%

Euro per GBP

US$ per GBP

2%
2008
0%

2009

2010

2011

2012

2013

2014

2015

2016

Eurozone
-2%

UK

-4%
2008

-6%

EU Sector output1 (YoY%change,3mma2)

2009

2010

2011

2012

2013

2014

2015

2016

EU market supply (Mt, import share %)

15%
20

Automotive
10%

20%
Import (LHS)

Machinery

18

Construction

EU deliveries (LHS)

16

15%

Import share (RHS)

5%
14
0%
2012
-5%

-10%

12

2013

2014

2015

2016

10%

10
8

5%

0%
2010

2011

2012

2013

2014

2015

Low-priced imports harmed European steel producers margins as importers took up 80% of EU
steel demand growth
1. Realised output: gross value added by the sector to the economy, 2. 3mma: 3 month moving average
Source: ONS, Eurostat, WMReuters, Eurofer

23

Production maintained at lower levels to focus on higher-value markets

Liquid steel production (In MnT)

Deliveries (In MnT)

3.74
3.58

3.56
3.31

Q3 FY15

Q2 FY16

Q3 FY16

Q3 FY15

3.27

Q2 FY16

3.35

Q3 FY16

Maintained lower steel production to enable focus on higher value markets

Deliveries at similar levels to the prior year
Turnover down due to lower steel prices in Europe caused by an increase in low-

priced imports

24

EBITDA bridge Q3 FY2016 vs. Q2 FY2016

million
0
(20)
(40)
(60)

3 months to
Dec 2015

3 months to
Sep 2015
(25)m

Selling
Result

(99)m
Cost
Changes

Production
Volume

Central
& Other
Manufacturing

(80)
(100)

(68)m

5m
46m

(45)m

50m

(120)
(140)

Selling Result impacted by continued downward pressure on prices due to flood of unfairly-traded
products from China
Strategic decision to reduce Production Volume to focus on higher-value markets
Manufacturing improved due to initial results of recent restructuring and cost-saving initiatives
Central & Other costs were broadly in line with prior quarter
25

A sustainable business in Europe: market and business improvements

Actions to improve competitiveness

Restructuring including mothballing of some UK assets, exiting of plates
market and loss of 3,000 jobs
Ongoing cost-improvement programme at Strip Products UK business
Progress on compensation for high UK regulatory costs, but EU-wide
action needs to accelerate and strengthen to enable fair competition
Talks ongoing regarding potential sale of Long Products Europe

Customer-focused approach
Further progress on differentiation strategy with 30 new product
launches again this year, including high-strength packaging and
automotive steels
Supports differentiated sales growth, such as 18% y/y increase in key
automotive market
Quality, differentiation and delivery recognised by customers
Volvo awarded Tata Steel its quality award - the first time the Swedish
carmaker has presented it to a steel supplier
26

Business Outlook

The eurozone and UK economies continue to grow, however manufacturing in

UK industrial activity continues to lag the service sectors

Steel demand in the EU is expected to grow by +1.1% in 2016 in line with

steel-using sector activity. A significant part of the increase is expected to
continue to be supplied by imports

Low-priced imports expected to continue to put intense pressure on European

steel industrys margins

27

Agenda

SN

Particulars

Financial performance

India & SE Asia performance

Europe performance

Appendix

Standalone Results QoQ Variations

All figures in ` Crore

Particulars
Net sales

Q3 FY16 Q2 FY16

Key Reasons
Higher steel and FAMD volumes partly offset by lower steel and FAMD
realisations

8,991

9,446

Other operating income

73

85

Changes in inventories

(173)

(132)

Purchases of finished,
semis & other products

333

198

Raw materials consumed

2,341

2,871

Lower consumption of purchased iron ore, pellets and imported coal

Employee benefits
expenses

1,139

1,085

No change in discounting rate during the quarter

Purchase of power

674

668

At par with previous quarter

Freight and handling

778

707

Higher dispatches coupled with increase in rates and destination mix

Depreciation and
amortisation

491

481

At par with previous quarter

Last quarter included higher operating income

Higher consumption of inventories
Higher purchases of HR Coils and wire rods partly offset by lower rebar
purchases from NatSteel

2,474

2,272

Last quarter includes reversal of excess DMF provision and one-time

provision of water conservation fund in Odisha. In addition, current quarter,
higher due to increase in conversion costs, royalty, rates and taxes.

Other income

83

2,933

Last quarter includes profit on sale of quoted investments

Finance costs

350

331

40

(1,322)

247

138

Other expenses

Exceptional Item
Tax

At par with previous quarter

Provision for employee separation scheme and write-down of investments
in Tayo Rolls
Last quarter included MAT credit due to sale of quoted investments
29

Consolidated Results QoQ Variations

All figures in ` Crore

Particulars

Q3 FY16

Q2 FY16

27,819

29,069

Other operating income

220

236

At par with previous quarter

Changes in inventories

957

114

Largely attributable to reduction at TSE

Purchases of finished,
semis & other products

2,432

2,392

Higher purchases at Tata Steel India partly offset by lower purchase at

South East Asia

Raw materials consumed

7,625

8,784

Lower costs of consumption across geographies

Employee benefits
expenses

4,965

4,990

At par with previous quarter

Purchase of power

1,317

1,379

Decreased primarily in Europe

Freight and handling

1,988

2,045

Lower freight rates in Europe partly off set by higher freight rates in India
and destination mix

Depreciation and
amortisation

1,133

1,371

Decreased primarily at Europe due to impairment in last quarter

Other expenses

7,979

7,770

Other income

96

2,938

Finance costs

964

1,049

Decreased mainly in Europe

(712)

(564)

Relates to Tata Steel India & Europe

243

240

Net sales

Exceptional Item
Tax

Key Reasons
Lower steel realisations across geographies partly offset by higher
deliveries at India and Europe

Increased mainly in India and translation loss in Tata Steel Global

Holdings partly offset by reduction in Europe
Previous quarter includes profit on sale of quoted investments & higher
dividend income

At par with previous quarter

30

Contact Information

For Investor
Enquiries:

For Media
Enquiries:

Devang Shah
Tel: +91 22 6665 0530
Email: devang.shah@tatasteel.com

Kulvin Suri
Tel: +91 657 664 5512 /
+91 92310 52397
Email: kulvinsuri@tatasteel.com

Ramvikas Nag
Tel: +91 22 6665 0557
Email: ramvikas.nag@tatasteel.com

Enda Joyce
Tel: +44 203 817 6693
+44 7980 916 827
Email:ejoyce@hanovercomms.com