STEEL AUTHORITY OF INDIA LIMITED

Performance Highlights – 2006 - 07

 Contents

Performance Highlights 2006-07

Steel Industry Outlook

SAIL’s Expansion Plans

CSR & Environment Management

Performance Highlights 2006-07
 Financial Highlights – FY 07
Record Turnover of Rs.39189 crore up 21%

Highest ever PBT – Rs.9423 crore up 65%

PAT of Rs.6202 crore – up 55%

EBDIT/SALES – 32%

PAT / Net worth – 36%

Debt / Equity Ratio : 0.24:1 (virtually debt-free, as short

term deposits exceed borrowings)

EPS – Rs.15 up by Rs.5.30

Dividend 31% - Interim 16% and proposed final dividend 15%

 Quarter-wise Profit
FY 2006-07

3000
2925

PBT
2500

2164
2234 PAT
2100
2000 1902
(Rupees in crore)

1443 1471
1500 1386

1000

500

0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
 Financial Highlights – FY 07 : Q4
January – March 2007

Record Quarterly Turnover of Rs.11534 crore up 14 % over CPLY

EBDIT of Rs.3262 crore up 96% over CPLY

PBT of Rs.2925 crore – up 133% over CPLY

PAT of Rs.1902 crore up by 72% over CPLY

 Performance Highlights – FY 07

Highest ever saleable steel production of 12.6 million tonnes (MT)

- growth of over 4%

Avg. Capacity utilisation (saleable steel)– about 114%

Production growth in high value/special quality steels – 16%

Production through Concast – up by 5%

Lowest Energy consumption of 7.16 Gcal/TCS

Coke Rate lower by 2 kg per tonne of hot metal

BF productivity up from 1.46 to 1.50 tonnes/cub. m/day

 Production Performance

Saleable Steel (Million Tonnes)

Record
Production
14.0
13.0 12.6
12.1
12.0
11.0 11.0 Finished Steel
11.0 10.4

10.0 % of
Sal. 80 81 84 81 82
9.0 Steel FY03 FY04 FY05 FY06 FY07

8.0
7.0
FY 03 FY 04 FY 05 FY06 FY07
Highest saleable steel and finished steel production in 2006-07.
 Product Mix Of Saleable Steel Production FY 2007

PLATES
SEMIS 20.2%
18.8%

PIPES
0.7%

ROUNDS / BARS
10.2%
HR COILS / SHEETS
24.1%

COATED PRODUCTS
2.5%

CR COILS / SHEETS
8.7%

STRUCTURALS RAILWAY MATERIALS

6.2% 8%
 Techno-Economic Improvements

Energy Consumption (Gcal/tcs) Concast Production (Million Tonnes)

8.00 9.00
8.32
7.93
7.50 7.46 8.00 7.63
7.34
7.50 7.29 7.24
7.16 7.00 6.60

6.00
7.00
5.00

6.50 4.00
FY 03 FY 04 FY 05 FY 06 FY07
FY 03 FY 04 FY 05 FY06 FY07
 Techno-Economic Improvements

Coke Rate (kg/thm) Sp. Power Cons. (Kwh/tss)

560 530
516
520
550
506
510
542 543
541 492
500
538
540 536
490
478
480
530
470 460
460
520
FY 03 FY 04 FY 05 FY 06 FY 07
450
FY 03 FY 04 FY 05 FY 06 FY 07
 Manpower Vs Production
180,000 14.00
174,736 13.47 13.50

170,000
13.00
159,940
160,000 156,719

Production (million tonnes)

147,601 12.00
12.08 12.10
Manpower (Nos.)

150,000

11.30
140,000 11.00
137,496
10.68 131,910 138211
130,000 10.54 132973
10.00
10.07 9.99 126,857
120,000

9.00
110,000

100,000 8.00
FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07

Manpower Crude Steel Production

 Sales Turnover

45000
39189
40000
------Rs Crore------

31805 32280
35000

30000
24178
25000
19207
20000

15000
FY 03 FY 04 FY 05 FY 06 FY 07
-------Year------
 Sales Volume

Domestic Sales (Million Tonne) Exports (Million Tonne)

11.4
11.5 1.17
1.20
10.7
10.3 0.86
10.5

9.5
0.70 0.58 0.51
9.5 9.2 0.46

8.5 0.20
FY 03 FY 04 FY 05 FY 06 FY 07 FY 03 FY 04 FY 05 FY06 FY 07
FY 05 and FY 06 Includes ISP
 New Product Development

New Products Application

HCR-EQR TMT Earthquake Resistant Construction

Rockbolt TMT Tunnel Construction
EN Series HR Coil LPG Cylinder
MC12 HR Coil Chains
Cu-Cr Rail Coastal Railways
Vanadium Micro-Alloyed High Speed Rail
Rail
Spring Steel Billets (SUP Spring Steel
11A)
S Profile Loco Wheels Diesel Loco Wheels
 Profitability

7000
6000 6817
6202
5000
4013
4000
3000
2000 2512

1000
0
FY 03 FY 04 FY 05 FY 06 FY 07

Net Profit after tax/Loss [Rs./Crs.]

 Profitability Ratio

70
62.9
60
50 47.2
40 38.6
29.3 35.6
%

32.3
30 26.5
20 11.3
21.6
6.5
10 12.9
5.7
0
FY 02 FY 03 FY 04 FY 05 FY 06 FY 07

EBDIT /Cap. Employed EBDIT/Sales

 Reduction in Borrowings
15000 17 0 0
Borrowings
15 0 0
13000 Interest Cost

Interest Cost (Rs. In Crore)

Borrowings (Rs. In Crore)

13 0 0
11000
110 0
9000
900
7000
700

5000
500

3000 300

1000 10 0
FY 03 FY 04 FY 05 FY 06 FY 07

Year FY 03 FY 04 FY 05 FY 06 FY 07

D/E Ratio 6.50 1.87 0.58 0.35 0.24

SAIL’s market borrowings stood at Rs.4181 crore, a reduction of Rs.117 crore from the
previous year. Interest outgo was also lower by Rs.136 crore during FY 07.
 Performance of SAIL Share price vis-à-vis BSE Sensex

130.00 16000

14090.92 114.1
13696.31
108.95 14000
110.00 12961.9
13072.1
12454.42 13786.91 108.15
11851.93 12938.09
11699.05 12000
11,279.96
90.00
10398.61

Sensex (Points)
10609.25
89.2
10743.88 87.65
Share Price (Rs)

83.30 86.3 10000

82.30 79.70
81.2 77.95
70.00
70.25 72.2
8000

50.00
6000

30.00
4000

10.00 2000
6 6 6 06 06
-0
6 06 -0
6
-0
6
l -0 -0 -0 -0
6
-0
7
-0
7 07 SAIL
ar pr- y n u ug e p c t ov- e c- n b a r-
M A M
a Ju J A S O N D Ja Fe M
Month SENSEX

Closing Share Price & Sensex as on the last day of the month
 Market Capitalization
Market Cap crossed level of
Rs.50,000 crore on 11-4-2007
58000
53000
47128
48000
------Rs Crore------

43000
34406
38000
33000
26000
28000
23000
18000 13341
13000
8000
3635
3000
FY 03 FY 04 FY 05 FY 06 FY 07
-------Year------
 Dividend Policy

Year Interim % Final Total Dividend

% % (Rs. in Crs)

2006-07 16.0 15.0* 31* 1280*

2005-06 12.5 7.5 20 826
2004-05 15.0 18.0 33 1363

* Final Dividend For FY 2006-07 recommended by SAIL Board

Dividend Policy of SAIL governed by GoI Guidelines of September

2004

All profit making Public Sector Enterprises (other than Oil

Petroleum and other infrastructure sectors) shall declare a
minimum dividend on equity of 20% or a minimum dividend payout
of 20% of post tax profit, whichever is higher.
 Projects

Project Commissioned Project under implementation

Normalizing furnace at Plate COB at RSP, BSL & BSP

Mill – RSP
Up gradation of BF-7 at BSP Slab caster & RH degasser at SMS-2 at BSP

AOD & EAF at ASP Hot metal desulphurization at BSP

Cast house slag granulation CDI in BF at DSP, RSP & BSL

plant no. 7 at BF-4 – BSL
Replacement of Turbo Mae-West Block modification at BSL
generator/B strand at WRM –
BSP
Bloom caster at DSP BF 2 upgradation at ISP
Steel Industry Outlook
 Global Steel Scenario

1240 Million Tonne Crude Steel Production in 2006, a growth of 8.8% over
2005. China accounted for most of the incremental production.

Further growth in production/consumption is expected to come from BRIC

countries (Brazil, Russia, India and China).

Cost/Availability of raw materials (mainly iron ore & coal) – a major challenge.

Region wise crude steel production as per IISI (in Million Tonne) is as under:

Region 2006 Production Growth Over 2005 Growth (%)

China 418.8 65.4 18.5%
India 44.0 3.1 7.6%
Japan 116.2 3.7 3.3%

South America 45.3 0.0 0.0%

North America 131.5 3.9 3.0%
EU 198.4 11.1 5.9%
World 1239.5 99.9 8.8%
 Global Steel Scenario
World Crude Steel Production

1700
1482
1500
1240 1332
Million Tonne

1300
1100
907 Rest of the World
900 856 China
821
700
500
300 476 575
419
100
2006 2010 2015
Source : IISI / WSD
 Overview of Indian Steel Industry

7th largest steel producing nation in the world with crude steel production
of 44 million tonne in 2006

Apparent consumption of finished steel in FY 07 - approx. 44 million tonne,

growth of 11% over FY 06.

Per capita steel consumption: approx. 38 kg

Finished steel exports in 2006-07: approx. 4.75 million tonne

Imports at 4.1 million tonne in FY 07 catching up fast with exports due to

buoyant domestic demand
 Overview of Indian Steel Industry

Crude Steel Production 2006-07

Company 06-07
(Million tonne)
OTHERS SAIL
32% 30% SAIL 13.5

TISCO 5.2

RINL 3.5

ESSAR, ISPAT 8.4

& JSWL
TISCO Others 14.5
ESSAR,ISPAT & RINL 11%
JSWL 8%
19% TOTAL 45.1

Source: JPC / Internal

 Indian Steel Industry

Steadily increasing consumption of steel in the country

Finished Steel Production, Consumption, Export & Import

55
49 5
5 5
5 4
45 44 4
4
40

M illio n T o n n e
39 4
Million Tonne

40 4
37
34 34
31
29 3

25 2
2
2 2

10 1
FY 03 FY 04 FY 05 FY06 FY07 FY 03 FY 04 FY 05 FY06 FY07

Production Exports
Source: JPC
Consumption Imports
 Indian Steel Industry – Today and Tomorrow

2006-07 2019-20 (P)

45.1 (Mn T) 180~200 (Mn T)

MAJOR PRODUCERS MAJOR PRODUCERS

CAGR @ 11 % ~ 12 %
SAIL SAIL

TATA STEEL TATA STEEL (+)

RINL RINL
MITTAL STEEL
ESSAR STEEL ESSAR STEEL
POSCO
JSW STEEL JSW STEEL

ISPAT IND. ISPAT IND.

Source: JPC/PRIMARY
 Indian Steel Industry – Today and Tomorrow

190 180
170
150
130
110
82
90
70
44
50
30
10
FY 2007 FY 2012 FY 2020
Demand Projection of Finished Steel – India
Growth Trajectory of 11 % CAGR

Source: JPC/CRISIL/IISI
SAIL’s Expansion Plans
 SAIL’s Expansion Plan

Million Tonne
Particulars
2006-07 2010
(Actual) (Plan)

Hot metal 14.6 25

Crude Steel 13.5 24

Saleable Steel 12.6 23

Production through BOF (% OF CS) 78 100

Continuous Casting Production (% OF CS) 62 100

 Investment Under Expansion Plan - 2010

Status of existing
Capital Schemes (Rs.38,400 cr.) 16500
under expansion plan

17500

Tenders to be issued 3000

Tenders issued
Under execution 1400
Completed

0 5000 10000 15000 20000

Rs. In Crs.
 RAW MATERIALS

IRON ORE LINKAGES Mtpa

Year Hot Metal Production Iron Ore Requirement Linkages of Iron Ore

2006-07 14.6 25 Existing Mines

Existing Mines +
2010 25 43 Raoghat, Chiria &
Taldih + Thakurani

Existing Mines +
2020 ~ 60 100 Raoghat, Chiria &
Taldih + Thakurani
 Technological Shift post Expansion Plan

Technology Current Status After Expansion

BOF Steel making 78% 100%

CC Route 62% 100%

Pelletisation Plant No Yes

Coke Dry Quenching No Yes

Top Pressure Recovery
No Yes
Turbine

Auxiliary Fuel Injection in BF Partial coverage Full coverage

Desulphurization of Hot Metal Partly 100%

 Mergers & Acquisition & New JVs

GoI ‘in principle’ approval accorded for merger of NINL, MEL &
BRL with SAIL.

Agreement concluded for setting up of cement plant in Joint

Venture with M/s JP Associates for utilising BF slag of Bhilai
Steel Plant

Process under way for setting up a slag based cement Plant

using BF slag at BSL in the frame work of a JV

JV Companies supplying captive power to SAIL to augment their

capacities by setting up 500 MW plant additions each at BSP &
BSL
CSR & Environment Management
 Corporate Social Responsibility

SAIL unparalleled in community welfare promotion

ƒ Education : Opened 200 schools to provide education to 1,22,000

children. In addition supports other public schools

ƒ Health : Over 2 million people served by SAIL hospitals 19 in number

(including 4 superspeciality), 39 primary health centres, 18
reproductive and child health centres

ƒ Other Initiatives : Access to potable drinking water to 100,000 persons

every year. Construction of 40 kms of pucca roads every year. Support
for extending benefits to physically challenged. Nurturing young talent
through specialized academies promoting sports.
 Corporate Social Responsibility

Major schemes in 2006-07:

Community care :
ƒ Benefits to the SC/ST children through scholarships
ƒ Adoption of tribal children at Bhilai and at Bokaro for free education,
boarding & lodging facilities, etc.

Preserving National heritage :

ƒ SAIL has adopted five monuments in Lodi Gardens, New Delhi for
preserving and maintaining in association with Archeological Survey of
India.

AIDS Awareness Program :

ƒ As a inter-sectoral collaborator with NACO, Ministry of Health for HIV
AIDS programme, SAIL has covered around 6 lacs persons in the AIDS
awareness programmes since 1999-2000.
 Corporate Social Responsibility

New projects identified:

Model Steel villages–

17 villages have been adopted across 7 states.
Blue print being made including measures to be taken w.r.t. Medical &
Health Services, Education, employment generation, use of steel for
storage/construction/bullock carts, etc.

Literacy :
SAIL’s continuous efforts to improve literacy level has resulted in
literacy rate in steel townships reaching the range of 749-796 per
1000 against the national average of 520 (comparative analysis 2001).
 Corporate Social Responsibility

New projects identified:

Mid-day meal : Scheme to provide Mid-day meal to around 50,000 school

children in and around Bhilai Steel Plant, in association with a NGO
(Akshaya Patra Foundation) has been worked out.

Health care : Through CARE, 4 mobile vans to be deployed in Chiria area,

covering 156 villages with more than 1 lakh population.

Education : A special 3-year project being planned in association with a

reputed NGO (Oxfam trust) for the mines, covering :
 Environment Management

Air emission reduced to 2.2 kg/tcs, reduction of 15% w.r.t. 2005-06

(1995-96 : 10 Kg/tcs).

Solid waste utilization increased to 75 %, an improvement of 4%.

Water consumption reduced to 5.31 M3/tcs, an improvement of 5%.

3 lakh trees planted, cumulative plantation - over 13.5 million trees.

Restored over 150 acres of degraded mining area at Purnapani under

the Delhi University –SAIL agreement.

¾ Pisciculture has been taken up in the abandoned mining areas at Purnapani

and 50,000 fishlings released in quarry water .
 Accolades

41 employees awarded with Vishwakarma Rashtriya Puraskar - year 2005

ƒ one third of total awards conferred amongst employees of all PSUs as well
as private sector in the country.

10 employees were awarded Sharam Awards for the year 2004.

SCOPE Meritorious Award for Environmental Excellence and Sustainable

Development for the year 2004-05.

First ever ‘Sustainability Awards’ -2006 instituted by CII to recognize excellence

in social, economic and environmental performance, bagged by Bhilai Steel
Plant (BSP) of SAIL.

Bhilai also won Golden Peacock : “Eco Innovation Award-2006”.

“National sustainability Award year 2006” – 1st prize to Salem Steel Plant by
Indian Institute of Metals amongst secondary steel /alloy steel plants category.

Hon’ble Vice President of India presented National Safety Awards for the year
2002 and 2003 to Raw Materials Division on 14th February’ 07.

Rajiv Gandhi National Quality Award, 2006 - ‘Best of all’ category to BSP.
 Abbreviations used

ASP Alloy Steel Plant

BF Blast Furnace
BOF Basic Oxygen Furnace
BSL Bokaro Steel Limited
BSOs Branch Sales Offices
BSP Bhilai Steel Plant
CCO Customer Contact Office
CDI Coal Dust Injection
CS Crude Steel
DSP Durgapur Steel Plant
EBDIT Earnings Before Depreciation Interest & Taxes
G.Cal/tcs Giga Calories per tonne of Crude Steel
GoI Government of India
IISI International Iron & Steel Institute
ISP IISCO Steel Plant
 Abbreviations used

JPC Joint Plant Committee

Kg/thm Kilo Gram Per Tonne of Hot Metal
MEL Maharashtra Elektrosmelt Limited
MT Million Tonne
Mtpa Million Tonne Per Annum
PAT Profit After Tax
PBT Profit Before Tax
RDCIS Research & Development Centre for Iron & Steel
RINL Rashtriya Ispat Nigam Limited
RSP Rourkela Steel Plant
SSP Salem Steel Plant
VISL Visvesvaraya Iron & Steel Limited
 Disclaimer

Statements / Data which do not relate to SAIL and are used / made in this
presentation are from sources which are considered reliable and Company cannot
be held for its authenticity.

Further, statement describing the Company’s projections, estimates, expectations

are “forward looking statements” within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those expressed
depending on the circumstances / situations.

Major factors that could affect the Company’s operations include, among others,
economic conditions affecting demand / supply and prices in the domestic and
global markets in which the Company operates, changes in Government
regulations, tax laws and other statutes etc.