Presentation made by Mr Sridhar Krishnamoorthy, Managing Director-India, Gerdau Brazil (Steel Company) at the India LAC Investment Conclave. The conclave is being organised by FICCI in New Delhi. More details at indialacconclave.com

1. Sharing our experience of
Making in India
JUNE 2014
Sridhar Krishnamoorthy, Managing Director, Gerdau India
16 Oct 2014

2. 2
Agenda
 Gerdau
 Who are we?
 Our investments in India
 Gerdau Steel India Limited, Andhra Pradesh
 Challenges faced & how we resolved it
 Example 1 - Electricity
 Example 2 – IT & Telecommunications
 Key Takeaways

3. 3
Agenda
 Gerdau
 Who are we?
 Our investments in India
 Gerdau Steel India Limited, Andhra Pradesh
 Challenges faced & how we resolved it
 Example 1 - Electricity
 Example 2 – IT & Telecommunications
 Key Takeaways

4. Global Presence
Headquartered in Brazil, one of the largest steel producers in the world
Gerdau around the world
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Head Office

5. 5
Gerdau in Numbers
 113 years of history; started in 1901; HQ in Porto Alegre, Brazil
 Operations in Americas, Europe & Asia (in 14 countries)
 45,000 employees / ~120,000 customers / ~140,000 shareholders
 Installed capacity ~ 25 M tons of steel / year; Globally 15th largest steel producer
 Listed on São Paulo, New York, and Madrid Stock Exchanges
 Turnover USD 20 Billion, Produced 20 Million tons of Steel 2013
 Iron ore operations in Brazil - By 2022 to produce 24 M tons
 Major worldwide supplier of special long steel to transportation and energy sectors
First footprint in Asia is in India
 Investing in Andhra Pradesh, India, since 2007 – first footprint in Asia
 Started operating from 2013

6. Products and End Use Segments
• Billets, Blooms & Slabs
• Merchant bars
• SBQ
• Rebars
• Fabricated steel
• Heavy structural shapes
• Wire-rod
• Wires
• Nails
• Housing
• Infrastructure
• Agricultural sector
• Automotive industry
• Oil and gas sector
• Shipbuilding
• Wind power generation
• Mining
• Other industrial sectors

7. Aplicação do produto
Special Steel Products Applications
Infrastructure and Buildings
Special steel – Automotive products
Special steel – Energy products

8. Gerdau Steel India Limited (GSIL)
Jambalapadu Village, Tadipatri, Ananthpur District, Andhra Pradesh
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9. Gerdau Steel India Ltd.
General Info
Company Name: Gerdau Steel India Ltd.
Company Type: Public Ltd.
Steel Plant Tadipatri, Andhra Pradesh
Corporate Office Bangalore
Product Portfolio: Special Steel Bars
Steel Mill
Tadipatri, Ananthapur District, AP
• Crude Steel Capacity:
• Rolled Steel Capacity:
300,000 t
300,000 t
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One of the most
under developed
regions in AP
Investments till date:
INR 2700 Crores
Jobs created: 3000
Multiplier effect in
the local economy
Andhra Pradesh

10. 10
CSR Activities
We are spending INR 1.5-2 Crores during 2012-13 and 2013-14

11. Ananthapur District
Reasonable GDP but not the highest in AP; less of a
manufacturing hub and more agriculture / live stock
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Source: Government of AP
in INR Crores
Ananthapur
District
State of
Andhra Pradesh
Share in
State %
Agriculture 7,329 114,492 6%
Industry 12,192 96,563 13%
Services 14,966 208,366 7%
TOTAL 34,487 419,421
Source: AP Government Papers

12. 12
Agenda
 Gerdau
 Who are we?
 Our investments in India
 Gerdau Steel India Limited, Andhra Pradesh
 Challenges faced & how we resolved it
 Example 1 - Electricity
 Example 2 – IT & Telecommunications
 Key Takeaways

13. 13
Infrastructure Needs
Water
Gerdau
Tadipatri
Mill
Ports
Road
Network
Rail
Network
Skilled
Workforce
Electricity
Social
Amenities
IT &
Telecom
2500 m3
per day
35 MW
ERP,
multi-location
operation
For import of
raw materials
Raw materials
and shipment of
finished goods
~ 3000
employees
Employee
attraction
and
retention
Will focus on 2 examples
1
2

14. Impact of deteriorating power situation on our operations
 Power Deficit in the state - lower capacity utilization, high transmission losses,
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lack of coal in thermal power stations, priority for crops
 Power Holidays – announced without much notice (sometimes over a SMS)
created huge challenges…cannot shut down a furnace operating at 1600 deg C
 Too many organizations to interact with – Electricity Regulatory Commission,
Transco, Generation companies and getting NOCs etc every month
 Lost value in our operations: We had to optimize and even shut down those
parts of the plant that could be shut, to reduce power consumption
 Political Factors: Pro- & Anti- Telengana movements and various bandhs
interrupted our operations numerous occasions throughout from 2010-elections
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15. Our Approach to Resolve Electricity Infrastructure Issues 1
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Strategy to meet Energy Demand
Open Access
Thru’ IEX
Open Access
Bilateral Contract
Open Access for
Incremental 5 MVA
New Dedicated
132 KV Feeder
Enhance CMD
from 17 MVA to 35 MVA
Optimize Consumption
using Demand Controls
Captive Power Plant
6 MW
Captive Power Plant
15 MW
Purchased power through open access during
power holidays
Commercially not workable
• Built 132 KV line (7.5 km) costing $1.765 M
• Access negotiations thru 22 private lands
• Took 21 months; 60 jobs
Option not exercised yet and will be possible
after the dedicated feeder is ready
• Uses by-product Blast Furnace gas
• Capex $ 8 M; Took 36 months; 80 jobs
• Currently under construction
• Uses waste heat recovery
• Capex $ 14 M; 5 years; 125 jobs

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Existing 132kV
Future 132kV
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Gerdau Steel India Limited
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Construction of the 132 KV Line
Key Data
Distance: 7.5 kms
No of Towers: 28
Start date Dec 2012
Finish date Oct 2014
1
Capex : USD 1.8 MM
No of jobs: 60
 Got excellent cooperation from AP Transco but faced challenges during access negotiations with
various private landowners, getting suitable experienced contractors to work in such remote areas,
managing the construction with little power equipment like cranes, meeting a tight timeline and budget

17. IT and Telecommunication Challenges 2
i. Frequent Damage / Disruption to OFC cause Tadipatri plant to isolate from rest
of Gerdau (PRI / WAN Disconnection)
ii. High Attrition due to poor social life and amenities in /around Tadipatri
iii. Power Outages and High range Power fluctuation causes risk to Data center
and Critical and Sensitive Equipments
iv. Shipment delays affecting projects schedule since almost all courier companies
do not deliver in Tadipatri
v. Communication – having 1 communication channel for Gerdau India– VoIP
vii. Most vendor do not find it attractive to take up Annual Maintenance contract
and services at Tadipatri due to long distance from Bangalore or Hyd.
viii. Big challenge to find vendors to do small work - high freight & high travel cost

18. Infrastructure Challenges
IT & Telecommunications
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Long distance
WIRELESS point to
Point
Helps avoid Civil
Work and reduces the
lead time for
implementation
Load Balancing and
Failover for WAN and
Internet for high
availability
Visitor, Contractor
and Attendance
management and
Face Recognition
system
Automation IT
Infrastructure
readiness to
support QMOS
Phase 1 SMS
Pan India Wide Area
Network - better
communication and
collaboration and access
to SAP
Outsourcing of critical
to overcome Local
talent scarcity and
Attrition
E Approval for
fast approval cycle
and paperless
office
Desktop Virtualization
Project ; Better
Governance
Better Data security
Lower TCO
2

19. 19
Our Infrastructure Spend
$ 22 M
$ 29 M
$ 0.5 M
None
$ 2 M
$ 10.5 M
$ 1 M
Total Investment INR 2700 Crores
On infrastructure INR 360 Crores
$ 65 Million
~ 15% of our total investment

20. 20
Agenda
 Gerdau
 Who are we?
 Our investments in India
 Gerdau Steel India Limited, Andhra Pradesh
 Challenges faced & how we resolved it
 Example 1 - Electricity
 Example 2 – IT & Telecommunications
 Key Takeaways

21. Key Takeaways - Our experience so far
Challenges exist but so do opportunities
 The automotive and transportation market in general is poised for strong growth –
Make in India initiatives, high speed rail, growing auto sector, smart cities
 Also seeing potential for construction sector to grow as the economy picks up
 The new state of Andhra Pradesh is also expected to invest in development of
new cities and develop infrastructure in ports, airports, rail networks, &
transportation
 Infrastructure companies can piggyback manufacturers & provide outsourced
solutions; build & manage
 Water infrastructure for manufacturers
 Social amenities such as townships, canteens
 And offer energy solutions to serve the needs of manufacturers
 Opportunities in engineering and consulting
 Opportunity to tap into Indian R&D skills

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