Executive Summary of an Integrated Steel Manufacturing Company

Company Overview Company Subsidiary Total

 Based in Central India which is hub for the
manufacture of long steel products. Sponge Iron 210,000 MT ‐ 210,000 MT
 Part of prominent business group
Steel Billets 129,600 MT 105,600 MT 235,200 MT
 Strong track record of consistent growth over 19 years
 Has a well established brand with one of the largest TMT Bars ‐ 195,000 MT 195,000 MT
dealer network in India.
 Also has a 100% subsidiary which facilitates forward Power 26 MW 16 MW 42 MW
 integration for the company.
Ferro Alloys 8 MVA - 8 MVA

Raw Material Linkage

Industry Snapshot
 Global steel prices bottoming out substantiated by  The Company has linkages for iron ore and coal from
increased iron ore and coke prices state owned companies.
 Global capacity utilization around 65% ‐ 70%; China
& India 95% and 90% respectively  The Subsidiary procures bulk of the Sponge Iron & Billet
 Iron Ore & Coke prices have also bottomed out as requirement from the Company, Coal from state owned
result of increasing production companies.
 Investments in Infrastructure to be 3X from $ 50
bn
 p.a. to $ 150 bn p.a. ‐ Imperative for 9% GDP
growth rate. Financials Figures in USD Mn ; Financial year Apr‐Mar
 Consumption to increase substantially as Particulars FY2010
Infrastructure spend picks up P&L Balance Sheet
 Low Per Capita Steel Consumption - Ample scope for Net Revenues 138 Net Worth 53
Steel Consumption, the China Way.
EBITDA 20 Borrowings 20
EBITDA (%) 14% Net Block 55
PAT 8 Net Current Assets 43
PAT (%) 5%
Executive Summary of an Integrated Steel Manufacturing Company
Business Plan
Projections
 Set up a new steel making facility with capacity of 210,000
FY ending 31st Mar (USD
MTPA. 2011 2012 2013
Mn)
 16 MW based on waste heat recovery boilers (WHRB) &
P&L Proj Proj Proj
25 MW based on Coal rejects.
 Coal Washery of 600,000 tons p.a.
Net Revenues 158 215 236
 Iron Ore Mines & Coal Block. EBITDA 35 62 78
Products (post expansion) EBITDA (%) 22 29 33
Existing Expansion Post Expansion PAT 20 27 38
Sponge Iron 210,000 MT 210,000 MT 420,000 MT PAT (%) 13 13 16
Steel Billets 235,200 MT 174,600 MT 409,800 MT Balance Sheet
TMT Bars 195,000 MT - - Net Worth 91 118 156
Power 42 MW 41 MW 83 MW Borrowings 48 64 54
Ferro Alloys 8 MVA - 8 MVA Net Block 53 126 113
Coal - 600,000 MT 600,000 MT Net Current Assets 53 97 149
Washery
Iron Ore Investment Rationale
- 10 Mn MT 10 Mn MT
Mines  One of the few mid size integrated steel producers in India , having
Coal Block - 48 Mn MT 48 Mn MT linkages to key mineral resources Iron Ore and Coal.
Funding Pattern  Expanding its steel manufacturing & power facilities to capitalise on
Capex backward linkages and demand growth.
Equity (from Investors) 23  The availability of iron ore and coal guarantees availability of quality
Internal Accruals 10 product at minimal cost.
 Large distributor network along with established brand name.
TermDebt ‐Banks / FIs* 58
Total Capex 92
Proposal
* Term Loans are already approved; Bank Rating - BOB 3  An opportunity to invest in an integrated steel plant, seek equity
infusion of USD. 23 mn