2019-2020 World Economy Growth Contribution (Intl US$)

THE LIQUIDITY TIGHTNESS PROMPTED THE RBI TO CUT THE REPO RATE BY 25 BPS TO 6%, THE SECOND CUT IN THREE MONTHS, MAKING INDIA THE ONLY ECONOMY IN ASIA TO HAVE HAD IMPLEMENTED TWO CONSECUTIVE POLICY RATE CUTS. THE COMBINED 50 BPS CUT ALSO REFLECTED THE RBI’S INTENT OF INFUSING LIQUIDITY TO KICKSTART THE ECONOMY WHICH IS EXPERIENCING A SOFT PATCH.

India’s forex reserves remained buoyant, at US$411 billion during the last week of March 2019. Merchandise exports grew by 8.75% y-o-y to US$331.06 billion and services exports rising 17% y-o-y to US$204.7 billion (Source: Ministry of Commerce and DGFT).

1.2.1 OUTLOOK

According to the IMF, India is expected to grow at 7.3% in CY 2019 and 7.5% in CY 2020, driven by a continued recovery in investment (9.4% growth) and robust consumption. Going forward, the Indian economy is expected to contribute 13.7% to total world economic growth, which is higher than that of several developed countries, including the US (Source: Bloomberg).

With the general election overhang now behind us and a stable government elected at the centre, any uncertainty around policy continuity or visibility has subsided. Continued economic reforms, along with efforts to reduce public debt, is a prerequisite for the country’s growth. Given the strong mandate, the government is likely to push through key structural reforms towards its ambition of making India a US$5 trillion economy by 2024.

World crude steel production - summary

Top 10 steel-producing countries

While China leads production volumes with more than 51% share, India displaced Japan as the world’s second largest steel producer at the start of CY 2019. According to Worldsteel, India’s crude steel production in CY 2018 was at 106.5 MnT, up 4.9% from 101.5 MnT in CY 2017. Japan produced 104.3 MnT in CY 2018, down 0.3% from CY 2017 levels.

2.1.1 OUTLOOK

Worldsteel expects global demand for finished steel to grow by 1.3% in CY 2019 to touch 1,735 MnT and by 1.0% in CY 2020 to 1,751.6 MnT.

China, which accounts for the largest share of global steel demand, is being supported by a mild fiscal stimulus. This stimulus should act as a counterbalance to the ongoing China-US trade tensions. China’s domestic steel demand growth is thus projected to remain flattish, at 1% to reach 843 MnT in CY 2019. After the implementation of trade restrictions, US steel demand is expected to grow 1.3%. Demand across Europe will likely remain subdued at 170 MnT in CY 2019, or exhibit marginal growth.

Emerging economies exhibit a positive, mixed outlook. Asia is expected to showcase a stellar performance, MENA and CIS could witness subdued growth and Latin America is likely to recover. India, with its increased focus on infrastructure development, should continue to witness an upward trend in domestic demand. Industry-wide consolidations and opening up of raw material sources continue to drive efficiencies, incentivising steel production.

To summarise, CY 2019 and CY 2020 will likely witness global steel demand continuing on its growth path, with growth trends moderating in tandem with a slowing economy. Any escalation of the ongoing trade tensions, increase in inflationary pressure and tightening of US and EU monetary policies could elevate market volatility and pose downside risks to the forecast. The overall outlook, however, remains optimistic.

2.2 Indian steel sector

DEMAND DRIVEN BY INFRASTRUCTURE; PRODUCTION AND CAPACITIES RISE

India’s crude steel production grew 3.3% to 106.56 MnT in FY 2018-19, making it the world’s second largest steel producer, behind China. Steel exports fell 26.4% to 8.54 MnT as global demand weakened due to geopolitical uncertainties and additional tariffs on imports by the US. Finished and semifinished steel imports rose by 4.6% to reach 8.79 MnT. The domestic market saw rising imports from China, Japan and Korea.

During FY 2018-19, domestic steel consumption increased 7.5% to 97.54 MnT, primarily driven by government expenditures on infrastructure (the central and state governments’ infra spending pegged at `7-8 lakh crore). The infrastructure, construction and real estate sectors accounted for 60-65% of domestic steel consumption.

2.2.1 RAW MATERIALS

2.2.1.1 Iron ore

The central government auctioned 19 iron ore mines, which will benefit the Indian steel industry by lowering its dependence on iron ore imports.

In FY 2018-19, iron ore imports surged 157% y-o-y in the ninemonth period to 11.5 MnT. However, from August 2018, due to the strengthening of the US$, the spreads between landed costs and domestic iron ore prices narrowed. Consequently, the volume of iron ore imports also softened.

In India, iron ore prices mirror the global trend, which peaked at US$88/tonne in January and February 2019, its highest since August 2014, due to concerns about supply disruptions. However, the strengthening of the US$ narrowed the spread between landed costs and domestic iron ore prices, contributing to a fall in imports. Domestic iron ore production is expected to rise by 2-5%, which should be sufficient to meet domestic demand. However, this needs to be supported with measures that prioritise domestic consumption over exports.

2.2.1.2 Coal

The steel industry has two categories of coal requirement – coking coal and thermal coal (for captive power plants). Thermal coal requirements are met through domestic production, but coking coal needs to be imported, as the coal available domestically has a higher ash content and a lower calorific value.

In CY 2018, India imported 52.26 MnT of coking coal, up 14% from 45.93 MnT in CY 2017, primarily driven by the restriction on usage of petroleum coke, an alternative to coal, in some parts of the country.

2.2.2 OUTLOOK

Worldsteel forecasts overall steel demand in India to grow above 7% in CY 2019 and CY 2020. Demand is likely to grow to 100-105 MnT, with per capita consumption improving to 75-76 kg, driven by heavy infrastructure spending and faster economic growth. Worldsteel also forecasts that at the current rate, India would overtake the US in terms of demand.

However, India’s steelmakers face persistent threats of cheaper imports and lower domestic prices. The ongoing trade disputes and the global economic slowdown are routing Asian steel inventory to India, negatively impacting the country’s steelmakers. Since, certain trade remedial actions have become irrelevant, imposition of safeguard duty is the need of the hour to stop such imports and corresponding injury to the domestic industry.

The government is likely to take tariff and non-tariff measures to address the issue. It has already asked automakers to cut imports. The list of locally made steel for use in government infrastructure projects is being augmented, along with more stringent quality control norms for all steel products. The government could auction more iron ore mines to increase raw material supply security.

Going forward, India’s steel producers are likely to rely more on robust domestic demand to maintain healthy margins. Margins could also be improved through production of high-end value added steel. The ongoing industry consolidation is expected to drive efficiency.

3.1 Strategic focus areas

In line with the Company’s philosophy of ‘Better Everyday’, the Company has identified strategic focus areas which will help its continuous improvement journey. These include:

1. Increase EBITDA/tonne profitability
   • Commissiong of the Coke oven battery at Dolvi through Dolvi Coke Projects Limited to eliminate procurement of coke
   • Increase Pulverised Coal Injection (PCI) to reduce coke intake
   • Use captive iron ore replacing the high cost imported iron ore
   • Diversification of coal procurement basket and optimising coal cost by dynamic coal blend change
   • Reduce logistics costs by port optimisation and usage of cape vessels to reduce freight costs
2. Build capacities in light of rising steel demand
   • A large-scale capex plan initiated
   • Both upstream and downstream capacities being augmented
3. Continuously improve the share of VASP in the portfolio
   • Focusing on high-tensile, lightweight steel development
   • Value engineering to design state-of-the-art steel for automobiles
4. Aggressively pursue backward integration with iron ore mine acquisitions
   • Six mines won in the recent auctions and three are operationalised
   • More auctions are expected and JSW Steel will proactively participate to derive cost and logistical benefits
5. Introduce Industry 4.0 technologies in plant operations
   • Appointed a Chief Digital Officer
   • Robotics, IoT and sensor-based systems installed

3.2 Product performance

JSW Steel’s best-in-class technology and sustained R&D initiatives help deliver customised and innovative offerings. The Company remained strategically focussed on enriching its product mix by increasing the volume and share of high-margin VASP in its portfolio.

Product mix change year-on-year

3.2.1.4 Galvanised

JSW Steel is the largest manufacturer and exporter of galvanised steel in India, and the first supplier of products with higher coating (550 gsm) to the solar sector in the country.

Galvanised products comprised 10% of the product portfolio in FY 2018-19. The product is differentiated with features like high strength, resistance to corrosion, eco-friendly, durable and lightweight.

Key sectors

Galvanised products in India are largely consumed by the construction and infrastructure sectors, and consumer durables, appliances, panel and duct manufacturers. In FY 2018-19, sales to the solar sector was nearly 64 KT.

Product development

4.1.2 HIGHLIGHTS OF FY 2018-19

1. Location advantage

• Achieved highest-ever hot metal production, with Blast Furnace (BF)-4 producing 3.54 MTPA, the highest by any furnace in India.
• Attained the highest-ever flat steel production; Mill-3 produced 5.05 MTPA.
• Optimised operating cost through key initiatives like:
  • Increase in Pulverised Coal Injection (PCI) in furnaces, thus replacing the need for high priced coke.
  • Optimised coke oven blend with the introduction of coke fine.
• Process improvements which reduced coke fine generation.
• Continued focus on environmental initiatives led to lower-than-target energy consumption.
• Strict adherence to safety standards and improved employee awareness reduced the lost time injury frequency rate (LTIFR) to 0.28.
• JSW Steel signed a long term tariff contract (LTTC) with the South Western Railways (for Vijayanagar, Dolvi and Salem Works).

4.1.3 KEY PROJECTS

Vijayanagar Works witnessed the development of the following key projects during FY 2018-19:

Commissioned

• Operationalised three iron ore mines acquired as part of the iron ore auction process, this is in line with the backward integration strategy to source iron ore locally.
• In order to transport iron ore from the mine to the plant, JSW Steel installed a 24 km-long pipe conveyor belt. This has helped the Company ensure that there is no spillage of raw material while eliminating the need for diesel trucks for transportation, which has further lowered the Company’s environmental footprint and minimised road accidents.
• A new Water Reservoir of 1.3 TMC storage capacity ensures adequate supply of water for uninterrupted operations of the plant, mitigating an operational risk as Vijayanagar is a water-scarce region.
• A Tailing Beneficiation plant which helps reduce tailing losses and improves iron content in the feed to Pellet and Sinter plants.
• Additional Coal Injection system and relining of Stove #4 part of BF-3 has helped reduce fuel consumption substantially.

Under implementation

• Downhill conveyors from newly acquired mines up to the ore yard and remaining segments of the pipe conveyor system to ensure improved connectivity and seamless transport of raw material.
• Coke drying unit at BF-1 to reduce coke moisture utilising waste heat from Sinter Plant-1 off gases.
• A new Cut to Length (CTL) line to meet demand of sized steel products.
• Addition of a new 160T Zero Power Furnace and 1 x 1.4 MTPA Billet Caster along with associated facilities at SMS-3 to enhance steelmaking capacity to 13 MTPA.

4.1.4 CAPACITY EXPANSION ROADMAP

1. Capacity augmentation to 13 MTPA

Objective: Upgrade BF-3 capacity to 4.5 MTPA hot metal, enhance SMS capacity, augment existing HSM and Wire Rod Mills to support enhanced BF-3 capacity

Expected commissioning: March 2020

2. CRM-1 complex capacity expansion

Objective: CRM-1 complex capacity will be increased from 0.85 MTPA to 1.80 MTPA along with two Continuous Galvanising Line of 0.45 MTPA each, a new 1.2 MTPA Continuous Pickling Line for HRPO products

Expected commissioning: March 2020

3. Cost reduction projects and manufacturing integration

Objective: Integrate manufacturing processes at Pellet plant (8 MTPA) and Coke oven battery (1.5 MTPA)

Expected commissioning: March 2020

4.1.5 R&D INITIATIVES IN FY 2018-19

The Company enhanced existing processes and developed new ones to reduce overall costs, maximise quality, optimise energy and utilise wastes.

• Implemented predictive model in COREX furnaces to maximise metallisation and improve productivity
• Developed heat balance model in Blast Furnace 3 and 4 to optimise fuel consumption and improve process efficiency.
• Developed chemical reagent to improve bentonite binder properties to reduce binder consumption.
• Optimised pre-heating temperature of pellet plant to reduce cracks, improve pellet strength and increase pellet productivity.

4.1.6 LOOKING FORWARD

Vijayanagar Works has set out a robust future road map to achieve an even higher operational efficiency in FY 2019-20. Given below are select focus areas where work is ongoing.

• Higher emphasis on Green initiatives during technology upgrades.
• Implementing technologies that utilise the least amount of water.
• More collaborative efforts with academic institutes to address pressing needs such as devising methods to capture CO2 and convert to useful fuels and to convert non-coking coal to coking coal.
• Generate applications to create wealth from wastes.
• The Company has also planned logistics projects, which include:
  1. A Logistics Control Room to act as the central controlling node for all logistics – inbound, in-plant and outbound.
  2. RFID for yard management will enable 100% visibility of finished goods inventory movement
  3. Electrification of railway yards for faster operations.
  4. Road Trans Hub that can handle up to 5 MTPA road dispatches at plant boundary to nearly eliminate in-plant truck movements and ensure a quicker turnaround.
  5. European design for steel loading – first ever in India to reduce damage rate and improve dispatch efficiency.

4.1.7 PRIORITIES FOR FY 2019-20

• Operationalisation of the remaining mines acquired as part of the iron ore auction process to secure 20% of the iron ore requirements.
• Commissioning of the downhill conveyors from newly acquired mines up to the ore yard and remaining segments of the pipe conveyor system to ensure improved connectivity and seamless transport of raw material.
• Sustained usage of PCI to reduce coke usage.
• Successful completion of capacity expansion to 13 MTPA.
• Participation of iron ore and coal mines auction to ensure sustained raw material availability for manufacturing.

4.2 Dolvi Works

The 5 MTPA integrated steel plant at Dolvi is advantageously located on the West coast of Maharashtra. The plant is connected to a jetty that can handle cargo of up to 15 MTPA. JSW Dolvi Works is India’s first steel plant to adopt a combination of Conarc Technology for both steel-making and compact strip production (CSP), aiding production of HR coils.

The facility is undergoing a large-scale ramp-up to double its steel production capacity. Dolvi is the only primary producer of long products in Western India. A substantial quantity of HR coils produced in Dolvi is sent to JSW’s downstream facilities for value addition.

4.2.1 HIGHLIGHTS OF FY 2018-19

• Eight new grades were developed/customised at Dolvi.
• Cost-effective API (X65 and X70) grade steel through CSP route with impact and DWTT at subzero temperature (up to -40 Degree C) for line pipe application (both sweet and sour).
• Billets for E450 grade TLT angle and E350 grade TLT angle with impact properties at -40 Degree C.
• Replaced damaged ducts in Sinter Plant-1, leading to improved collection of dust emissions during material handling.
• Raw Material Yard concreting was done to control material loss and to avoid moisture pick up.

4.2.2 KEY PROJECTS

Commissioned

• Digitalisation initiatives to reduce set up time for processes and thus improve productivity of SMS.
• Installation of cameras to capture the timing of processes in SMS. The cameras help in capturing delays and in identifying reasons for the delays.

Under implementation

• 175 MW WHRB and 60 MW captive power plant (CPP) to harness flue gases and steam from Coke Dry Quencher (CDQ).
• Coke Projects Phase 2: Second line of 1.5 MTPA coke oven battery along with CDQ.

4.2.3 R&D INITIATIVES IN FY 2018-19

• Optimisation of green pellet arrangement and process parameters in lab scale muffle furnace to simulate plant scale process.
  Outcome: Development of critical R&D infrastructure which will be useful for future research projects.
• Maximisation of FMG percentage in sinter feed mix. Outcome: Resulted in better knowledge regarding usage of low grade high goethetic iron in sinter.
• Mathematical model developed for predicting temperature history and phase transformation occurring in TMT rebar during QST process. Outcome: Optimising process parameters of BRM and developing new grade of TMT rebars.

4.2.4 CAPACITY EXPANSION

• By March 2020, JSW Steel Dolvi Works is expected to commission operations at double its current capacity. The expansion project is notable for being undertaken at a rapid pace within a limited available land area.
• The capacity expansion would install a 4.5 MTPA Blast Furnace with a 5 MTPA Steel Melt Shop and a 5 MTPA Hot Strip Mill. The plant would also have a 5.75 MTPA sinter plant, a 4 MTPA pellet plant and 4 kilns of 600 TPD LCPs.

4.2.5 LOOKING FORWARD

• Successful completion of capacity expansion to 10 MTPA.
• Continued focus on conservational initiatives and incorporation of new technologies that can reduce environmental footprint. Emissions will be made compliant not just with the local regulations, but also with European standards.
• Focus on safety to reduce untoward incidents and cap LTIFR to 0.3.

4.2.6 PRIORITIES FOR FY 2019-20

• Successful completion of capacity expansion to 10 MTPA.
• Sustained usage of PCI in blast furnace to reduce coke usage.

4.3 Salem Works

JSW Salem Works is located at the strategic crossroads of Chennai and Bangalore. Well connected to railways, ports and highways, this facility manufactures virgin special steel products and supplies primarily to the automobile sector. Producing more than 850 special grades of steel, Salem Works is the largest homegrown special steel plant with a 1 MTPA capacity.

Crucial technology processes and energy utilisation systems sets the Salem facility apart. It is one of few plants to use Energy Optimising Furnace (EOF) to produce steel, use waste heat to generate more than 70% of captive power, utilise 100% of its wastes and use phased array technology to detect internal defects. For Salem, FY 2018-19 was a year of major environmental initiatives to drive operational excellence.

4.3.1 HIGHLIGHTS OF FY 2018-19

A total of 13 new grades were developed at Salem Works for various applications including automotive, gear, textile carding, rock drill and agricultural utility. Three of them are industry firsts, developed by the in-house R&D team.

In terms of intellectual property, the plant accomplished the following:

• Process development for making paver blocks from steelmaking slags.
• Control of macro inclusions in micro alloyed steel through process modifications.
• Low temperature deformation of carbon steel, micro alloyed steels and high carbon steels slags.

4.3.2 KEY PROJECTS

Commissioned

• Implemented de-dusting systems at various areas to keep emissions in check.
• Developed tyre washing unit to control dust generated through truck movement.
• Installed third billet grinding machine to improve surface finish of billets for cold head quality and free cutting steels.
• Commissioned BF-1 Stove to maintain higher hot blast temperature, thereby reducing fuel costs.
• Augmented Sinter Plant-2 capacity to increase agglomerated burden in blast furnace.

4.3.3 LOOKING FORWARD

Salem Works will focus on the following areas:

• Install a conveyor system to handle raw materials from wagon tippler.
• Build MPI Inspection facilities with grinding station at Line 04.
• Implement liquid oxygen backup system for emergency supply of oxygen to SMS.
• Create oxygen facility for increasing oxygen enrichment in blast furnace.

6.3 Vijayanagar Works

Initiatives taken for energy conservation, emissions reduction and results achieved:

6.3.1 ENERGY MANAGEMENT HIGHLIGHTS

• Top recovery turbine power generation is 18.3 MW which fulfils 13.3% of total power consumption requirement of blast furnace
• Substantially increased the BF PCI by reducing solid fuel rate
• Increased LD gas recovery to 98.7 Nm³/TIs
• Commissioned 150 TPH Boiler for power augmentation
• 45.13 TPH of steam generation through sinter cooler waste heat recovery boiler
• Zero coal-fired boilers, 100% by-product gas firing for process steam generation
• Reduction in oxygen venting by 36%

Progress of energy consumption reduction at Vijayanagar Works:

6.4 Dolvi Works

6.4.1 ENERGY MANAGEMENT HIGHLIGHTS

• Dolvi Works initiated the usage of Coke Oven Gas in place of Natural Gas (NG) in FY 2018-19 at production of Direct Reduced Iron (DRI), Tunnel Furnace, Bar Mill and SMS ladle preheater.
• Fuel conversion of HSM Boiler and BF Cast house from NG to COG leading to NG saving of 672 KSm³.
• Revamping of CPP turbine, identification and arresting of leakages resulting in reduction of gaseous heat rate from 2641 Kcal/nm3 in FY 2017-18 to 2400 Kcal/kwh.
• Interconnection of HP and LP steam network through Pressure Reducing and Desuperheating (PRDS) system to provide steam from Sinter-2 waste heat recovery boiler to Coke oven resulting in steam production @20 TPH.
• Implementation of online air fuel ratio logic at CPP; reduction in CPP gaseous heat rate by 10.6%.
• Fuel conversion of LCP 1, 2 and 3 from solid fuel (coal) to by-product gas (BFG+COG) resulting in reduction of heat rate lower CO₂ emissions.

6.5 Salem Works

Specific energy consumption

6.5.1 ENERGY MANAGEMENT HIGHLIGHTS

• Lowest-ever specific power consumption per tonne of crude steel and at Sinter plant.
• Highest-ever power generation from waste gases of 36.61 Mw (previous best – 36.51 Mw, FY 2016-17).

6.5.2 ENERGY SAVINGS INITIATIVES AT SALEM WORKS

• Reduction in fuel rate in BF-1 by increasing Hot Blast Temperature after installation of High Temperature Hot Blast Stoves.
• Optimisation of Air Fuel ratio in BF Hot Blast stoves through digitalisation initiative to reduce BF gas consumption.
• Energy savings by installation of Motor with drive in Hydraulic system in EOF2 .
• Installation of variable-voltage/variable-frequency (VVVF) drive in BLM Furnace blowers, Descalar and Internal circulating water pump house motors resulted in energy saving.
• Energy savings at Sinter Plant-2 through Waste gas ID fan impeller replacement with increased bed height operations.
• Solid fuel saving at Sinter Plant-2 through installation of three row burner with increased bed height operations.
• Installation of VFD in BF-2 cooling tower fans (8 No’s).

8.3 IIM Ahmedabad Strategic Leadership Programme

As the name suggests, JSW IIM Ahmedabad Executive Education programme is intended to develop analytic, strategic and leadership skills. The programme’s objective is to upskill employees and make them quick thinkers, better decision makers and efficient managers. In FY 2018-19, as a part of the second batch of the programme, 28 participants embarked on this journey of personal and professional progress.

8.4 JSW diversity and inclusion – Springboard

As one of the leading steel companies in India, JSW Steel has been working towards creating an empowering and rewarding working environment for women. The Company puts gender equality on top of its agenda and makes diversity one of its key business and people strategy components.

The Diversity and Inclusion Policy for JSW Steel was unveiled in FY 2018-19. This policy aims to ensure that all those participating in its workplace are treated with respect, dignity and fairness, thus creating an environment which promotes positive working relationships.

8.4.1 IIM BANGALORE WOMEN LEADERSHIP JOURNEY – BATCH OF 2018

With a focus on creating next generation women leaders, JSW Steel launched the IIM Bangalore Women Leadership programme. A batch of 67 high performing women employees were selected to propel their careers around the organisation’s business needs. They were trained in self awareness, career management, personal branding and in strategic subjects such as macroeconomics, industry analysis and design thinking. These women will be JSW Steel’s drivers of change.

8.4.2 GENDER SENSITISATION WORKSHOPS

In order to reduce workplace deviance behaviours and generate respect for individuals irrespective of gender, JSW Steel conducted gender sensitisation workshops for the leadership team and all the line managers. These workshops helped close gender gaps and further workplace equality.

8.5 Pre-Retirement Workshops

To help employees and their spouses understand important aspects of retirement, prepare them for challenges ahead of time and ensure that they make the most out of their post retirement time, JSW Steel conducted pre-retirement workshops. Conducted by the Senior Leadership Team at the Vijayanagar and Kalmeshwar facilities, the workshop covers four important aspects, as listed below.

• Psychological Preparedness
• Social Preparedness
• Financial Preparedness
• Health Preparedness

8.6 Sammaan- Safe spaces make great workplaces

In FY 2018-19, the Company revised the Prevention of Sexual Harassment (POSH) policy under an initiative called ‘Samman’. This was done with the objective of emphasising safe and harmonious work culture within the Company. The revised policy was an effort to create awareness on the subject, often considered a taboo and develop ‘speak up’ culture to receive help from the organisation. Going a step further, JSW Steel specially curated e-learning modules to maximise awareness and highlight various nuances of sexual harassment. Using the forum theatre technique, the facilitators enacted scenarios and provided techniques to handle such situations effectively and raise concerns, as and when necessary.

8.7 JSW Campus Connect initiatives

JSW Group has been playing a key role in shaping the careers of young professionals across India. Its various internship programmes with their structured approach, strong mentorship and meticulous evaluation process act as a career launchpad for aspiring talents.

8.8 E-learning initiatives in FY 2018-19

To adapt to the dynamic business environment, JSW Steel has curated a wide spectrum of courses ranging from behavioural, interpersonal and functional skills. These are hosted on the ‘Learning Academy’ platform. Employees can always avail the system and propel their learning curve. The response of this initiative can be judged by its rise in utilisation metrics and registrations, which rose from 69% to 85% during FY 2018-19. The Company held a spot at the Skillsoft Global Innovation Awards for creating an impact in the manufacturing sector.

#GirlswannaLearn: Skillsoft online learning courses spread over a month for women employees to enhance business performance

Desktop courses: Additional courses to supplement employees learning on MS Excel and MS PowerPoint skills

HMM Spark: Harvard Managementor Spark (HMM Spark) is a mobile application intended to provide personalised, best-in-class leadership and management content to employees on-the-go

Skills 2020: An initiative where Skillsoft courses were categorised based on the most important skills employees should possess by 2020 according to the World Economic Forum

8.8.1 WAY FORWARD FOR FY 2019-20

Steel University courses: In partnership with the World Steel Association, JSW Steel will make Steel University courses available on the ‘Learning Academy’ online platform. The courses will be powered by exciting simulations and 3D models, gamification and interactive learning helping employees learn courses on steel manufacturing, applications and basics of metallurgy. The Company has plans to partner with DuPont to develop e-learns on safety measures.

Kwench library services: Another service catapulting learning among employees. The utilisation for this service went up to 70% in FY 2018-19.

8.9 Employee Engagement at JSW Steel

JSW Steel gives due priority to employee satisfaction metrics. It had conducted an employee engagement survey administered by the Great Places To Work (GPTW) Institute in 2016. The insights derived from the survey gave birth to a host of activities. Some of the key actionable areas included:

• Emotionally and mentally safe place to work.
• Improve perception on respect and fairness by building people manager capability.
• Build culture of appreciation through non-monetary recognition.

Candid Conversations

A platform encouraging employee-leadership interaction. In an informal set up, a group of high performing individuals are nominated every month to meet and learn from leaders at JSW Steel.

JSW Voice Pulse Survey

Launched at JSW Steel to empower employees speak up on key business areas. Such response coming right from the employees at ground level helped churn out essential initiatives for FY 2019-20.

‘Samvedna’

A series of mental and emotional wellbeing and awareness workshops to help employees understand the importance of mental health and develop fundamental coping mechanisms

JSW We Care

First ever Employee Assistance Programme (EAP) was launched in December 2018 in partnership with 1to1help, a leading Employee Assistance Programme service provider. The initiative is aimed at providing psychological and emotional counselling support to the employees along with online self-help tools, e-workshops and assessments.

‘How’s the Josh’ Awareness sessions and contests

Awareness sessions and contests for local HR SPOCS conducted to spread awareness among the employees at various locations. This has helped to engage the stakeholders and employees and in turn led to a boost in adoption of the EAP among the employees.

In the past two years, the Company has launched over 100 projects in digital across manufacturing, supply chain, sales and procurement. Its accruals for FY 2018-19 from digital projects was approximately `180 crore. It has also helped improve governance, boost sales, enhance customer delight and reduce discrepancies in forecasting.

Using analytics, robotics and hybrid cloud, JSW Steel is aligning business processes to dynamic sectoral and economic realities. The Company leverages the SAP platform enabling smooth data collation, decision making, and data security. The year in review witnessed several such levers to innovate, enhance and strengthen business operations, using information technology (IT) and digital platforms.

The Company has envisaged generating additional cost saving of more than `300 crore in FY 2019-20 from digital-led projects in potential areas of operations. It aims to pursue further digital technology initiatives to create differentiation and innovation, providing an edge to the organisation’s efficiency.

10.1 Key risks and response strategies

Risk type	Movement	Impact	Response strategies
Strategic
Competitive dynamics & industry cyclicality		The following can affect sales & margin: Adverse global and domestic demand-supply dynamics Cyclical nature of steel industry Unfair trade practices resulting into surge in imports Trade barriers imposed by other countries like US, Europe.	Company de-risks by - Widening and deepening customer reach in domestic & international markets. This gives flexibility in switching over from domestic to export market & vice versa. Better market intelligence with inputs from marketing team. Broadening product range like CRM, auto grade etc. Increased Value added products like galvanised, galvalume. Strong retail footprint leveraging the network of distributors and dealers and branded products to focus on retail sales.
Marketing		Increasing competition post the recent consolidation in steel industry driven by IBC process	In India Steel output is expected to increase marginally as against the steel demand growth @ 7-8%. Expanding market share and customer retention by focusing on: Developing strong customer relationship and gaining brand equity. New product development and value added special steel segments. Exports to various countries across various geographies. High potential areas where presence via Shoppe Connect can be increased to widen the customer base. Leveraging channel financing for providing additional liquidity. High level of focus on cost has made JSW Steel one of the lowest conversion cost producers in the world. The Company’s timely response on cost control helps to remain competitive across cycles.
Raw material availability and cost – Iron ore		High cost of iron ore impacting the EBITDA. Availability and cost of required grade of Iron ore are impacted by: Global movement and parity of landed cost considering price, freight, tariff and exchange rates. Domestic demand-supply gap, constraints and vendor actions Government policies on mining, allocation and tariff - NMDC stopped mining at Donimalai (which contributes to 10% of the requirements) due to substantial increase in lease rent by GOI.	Successfully participated in auction of iron ore mines and bagged leasing rights for 6 mines (approx 5 MTPA capacity in Karnataka state). Focusing on the captive mines for the requirements through participation of iron ore auctions in Karnataka and Odisha. Exploring iron ore from international sources. The imported iron ore on value-in-use basis has certain productivity gains and to a large extent offsets the difference in price. Government policies and their impact on ore availability are being tracked regularly.
Raw material availability & cost – Coking coal		Risk of production stoppage due to non- availability of coking coal for the capacity expansion at Dolvi and other locations since JSW Steel is solely dependent on import. availability will be a risk considering increasing demand from China no additional capacities are being added globally constraining the supply side and demand from India continues to increase.	Buying on Annual Rate Contract where price is linked to TSI and PLATTS index. The Company plans to ensure availability of coking coal and minimise the impact of rising price by diversifying the sources across various geographies.
Exchange rate fluctuation		Foreign currency - rupee depreciation against US$ from `65 to `74 during the year. Such volatility may increase the cost of the imported raw material and increase the dollar denominated borrowings.	The Company has an advantage of natural economic hedge as domestic prices of steel are linked with international steel prices. The Company has a robust hedging policy approved by Board. For Exports – continue to hedge entire exports through forwards. For Imports – to the extent of exports to be covered through forwards. For Net Gap– the flexibility retained to do options up to 100% of net gap in case rupee appreciates or remains range bound.
Interest rate		Risk of high borrowing cost impacting the profitability. Globally there is increasing trend of the interest rate - Fed raised the key rate in the range of 2% to 2.25%. LIBOR increased 50 bps since March 2018. During the year RBI has cut repo rate by 50bps there by signaling accommodative stance.	The Company has divided its Foreign Currency Loan (FCL) in fixed and floating interest rate in an appropriate ratio. In order to mitigate the risk of increasing interest rate, the Company has hedged its floating rate FCL through Interest Rate Swap (IRS).
Mergers & Acquisitions		Risk of acquisition at value greater than fair value. This will have an impact on the Return On Capital Employed (ROCE). It will also have adverse impact on debt and interest serving. Challenges in turnaround and scale up. Delay may drag the profitability. Old litigation may dent the JSW brand and reputation.	De-risking strategies - Conduct site visit of target. M&A team has access to data room of the target. Carry out due diligence that mainly includes Finance, Tax and Legal aspects. This helps to identify risks and plan strategies for mitigations. Finance model designed taking input from Strategy, Business Development and then the M&A team decide the capital structure. Overall leverage ratios to be within targeted threshold levels of 3.75 x Net debt / EBITDA and 1.75 x Net debt / Equity. Leverage cost leadership strength in merged entity. As per NCLT process, the entire contingent liability of target is extinguished.
Operational
Infrastructure and logistics		Company is in process of brownfield expansion at its Dolvi plant. Various factors can affect movement of enhanced quantity of inbound raw material and outbound goods like - Port congestion, unloading / loading infrastructure, rail connectivity and channel blockage. Storage and material handling (RMHS) system to protect material from exposure to weather thereby its metallurgical property.	Various measures are being taken such as – Pipe conveyor system at Vijayanagar facility to transport iron ore from mines to the plant. Additional gates for smooth movement of vehicular traffic, dedicated gate for project equipment movement. Extending the internal rail track and rail yard. Higher capacity barges (RSV – River Sea vessels) being procured for transportation of inbound raw material and outbound finished goods. This will also reduce pressure on road movement. Improving infrastructure facilities at Dharamtar jetty like – increasing jetty length, dredging for deeper draft, additional barge unloaders. Additional storage yards for iron ore fines and coal are constructed to handle the enhanced volumes.
Availability of power for production		Company’s proposed expansion at Dolvi would increase the power requirement. Inadequate power supply and network bandwidth may lead to operational interruptions and affect production.	The power required would be met partly through self-generation from Coke oven / Blast Furnace gases and balance from JSW Energy, Ratnagiri and MSEDCL through open access. In order to have network bandwidth, 200 KV additional transmission line of 20 kms is planned from Nagothane to Plant. Commissioning of the 160 MW Captive Power Plant at Dolvi to secure power requiments for the expanded operations.
Environment		Steel making process involves emission of CO2, dust and other hazardous gases / waste (slag). These emissions pose risk to environment and sustainable growth. India is also a part of Paris agreement (COP 21) which aims at reducing carbon emissions.	The Company ensures compliance with norms through selecting right equipment, technology, processes, inputs and tracks emissions. Additional capex allocation for advanced technologies like Electrostatic Precipitators (ESPs) in sinter to further reduce the dust emissions. The Company regularly tracks changes in technology and future norms to plan in advance. In discussion with vendor for processing of additional LD slag that would be generated after proposed expansions at Vijayanagar and Dolvi. The Company gives thrust on sustainable products that are safe for consumers. It has developed products that are environment friendly and safe for usage like highstrength low carbon steel, low thickness steel used in auto sector that makes the vehicle lighter, which in turn helps in reducing the carbon footprint as well as safety of travellers.
Health and safety		Any safety lapses would result in damage to property, assets and human capital. The steel sector is subject to extensive health and safety laws, regulations and standards	Compliance with local and international regualtions and standards, protecting the employees and communities from harm and operations from business interuptions are the primary focus. International consultant DuPont has been engaged for rolling out their international safety standards. Periodic safety training, mandatory usage of safety gadgets such as safety shoes, helmets, hand gloves, masks on shop floor / plants. Monthly apex safety meetings are held for review of safety aspect, fatal accidents / near miss accidents, if any. Fire protection systems such as fire extinguishers and fire tenders are in place; Medical facilities, medi-claim policy cover for employees and their families; group insurance policy for employees. Strong Security arrangements like security check-post, entry pass / identity cards, access control system, CCTVs at critical locations.
Human resource		Human workforce with required skillset and experience is critical for maintaining current level of operations and upcoming expansions at plants.	Senior leadership support helps in setting the tone at the top. For building strong relationships, a platform called Candid Conversation launched that enables greater interaction between employees and senior leaders. Strong HR policies and processes in place for hiring & retaining of talent. Robust performance management system to reward performers which helps attract and retain the talent. Training across all departments through structured initiatives such as Project Laksya for workmen level employees for developing self-motivation, time management, communication and other skills. Identified and created a separate pool of employees across bands and grooming them for next level roles through specially designed Future-Fit Leadership Development programmes from IIM Ahmedabad, ISB Hyderabad and Cornell University, USA. Gender diversity initiative SPRINGBOARD launched for high performing female employees to encourage leadership development at IIM Bangalore.
Cyber security		Cyber security risk could result in substantial reputation and financial loss arising from: Theft of corporate information Theft of financial information (e.g. Financial results, bank details etc.) Ransomware – cyber extortion. Disruption to business (e.g. inability to carry out SAP transactions, online payments) Loss of business or contract.	The Company de-risks by: Periodically assessing the current state and prioritise the foundational components of cyber security. Conducting periodic audits of security systems and procedures. Developing a new capability, technologies and processes to combat cyber-threats. Incorporating cybersecurity and privacy into everyday business decisions and processes. (like Information Security Awareness Program) Assessing readiness to adapt advanced technologies in IS domain. Monitor threats and respond, investigate and remediate cybersecurity related incidents and data breaches.

Forward looking statements

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, JSW Steel’s ability to manage growth, intense competition within Steel Industry including those factors which may affect the Company’s cost advantage, wage increases in India, its ability to attract and retain highly skilled professionals, time and cost overruns on fixedprice, fixed-time frame contracts, client concentration, restrictions on immigration, its ability to manage internal operations, reduced demand for steel, ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which – has made strategic investments, withdrawal of fiscal governmental incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorised use of the Company’s intellectual property and general economic conditions affecting our industry. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company.