4th India Steel Summit Achievement & Unfinished Agenda

1. 4th India Steel SummitAchievement & Unfinished Agenda New Paradigm for Green and Sustainability August 2010 Vishal Mehta vishalmehta@in.ibm.com

2. The four key pressures on organisations Global Pressures • Increasing regulatory requirements, many enforced globally • Carbon credits & trading Global Pressures • Rising energy, raw materials and waste management costs • Scarcity of resources • Risk from adverse weather CostsRising costs of energy, transport, waste disposal and raw materials; risks for physical assets due to climate change / global warming Laws, Regulation,Standards To reduce emissions of greenhouse gases such as the EU Emissions Trading Scheme, Climate Change Levy or Building Regulations Regional / Local Pressures • EU lead the agenda for CO2 reduction • EU Regulation for energy using products implementing measures under study Regional / Local Pressures • Exchange rate $ vs. EUR and ‘export’ • Higher ‘eco’ tax • Source of local supply and security of source Organisation StakeholderPressures From investors, market and financial analysts, employees, consumers or NGO’s about the environmental and economic consequences of climate change NewBusinessDevelopments in markets, knowledge and new technologies, which enable business to cut their carbon emissions while increasing productivity and finding potential new revenue opportunities Global Pressures • Customers environmentally aware • Greater demand for more environmentally preferable products and services Global Pressures • Customers increasing demand for environmentally preferable products and services • Operational efficiencies Regional / Local Pressures • Availability for resources • Local competitors Regional / Local Pressures • Corporate policy extending beyond the bounds of law, high efficiency is a basic requirement • Premiums start at higher costs • Local talent management

3. The CSR Value Curve: a shift from cost to returns Growth Platform Leading Efficiency Values-based Self Regulation Optimizing Access to new markets, new partnerships or product/service innovations that generate revenue Strategic Philanthropy Measurable cost savings through efficient or win-win scenarios Incorporates the company's value system and/or code of conduct to guide business behavior Practicing Legal and Compliance Alignment of charitable activities with social issues that support business objectives Experimenting Adherence to law in the countries of production, operation and distribution Aware TIME

4. Pressures & Imperatives Are Shifting New sustainability view: I need to do what is smart Traditionalist view: I need to do what is right Brand & Growth Talent Regulation Energy Conservation & clean energy Air Reducing pollution/CO2 Water Clean water Land & Resources Protection Operational effectiveness Risk Cost reduction Traditional imperatives for green focused on a moral imperative to preserve safety & life The new pressures are about being responsive to stakeholders and building a better, sustainable business Today’s green business leader doesn’t abandon principle nor business acumen, but embraces both in the new sustainability view.

5. Why Sustainability takes Center Stage • Stake holders are now very involved • Delay or inability to start green field projects ( Perception of polluting industry) • Very active Civil Society • Global pressure on adopting cleaner, greener product ( non trade barriers) • Recent examples of investor activism in the west against companies with suspect track record • Non renewable resources getting scares • There is likely to be a price to pollute in India in near future • Cant rely on regulations alone – need to move beyond in a globalized world • The nature of steel industry makes it a very visible entity

6. Wri 2008 Steel Sector is Important Regulations already in Force in Europe -- cascading effect over medium term for the Indian Steel Sector

7. Scope for improvement balanced with high growth of sector

8. Business Transformational Outsourcing Strategic Roadmap Development Process Change Technology Enablement Degree of Transformation Adopt Sustainability – Water, Carbon, Safety as part of core business KPIs • Product/project portfolio • Process/IT collab • Computer aided engineering • Model driven syst eng’ng • Product dev mgmt • Environmental Product Lifecycle Mgmt • Real estate and facilities asset lifecycle mgmt (ALM) • Plan & Production ALM • Mobile ALM • Infrastructure ALM • IT and network ALM • Service lifecycle mgmt • Sustainable ALM • Demand and distribution planning • Inventory optimization • Supply planning & optimization • SC collaboration, incl S&OP • SCP/BTO • Sustainable SCM Strategy Product lifecycle management SC Ent Apps • Package selection • BizProcess improvement • Training srv’s • Version upgrades • Systems harmonization Enterprise Asset Management Supply chain planning SC enterprise applications • Logistics strategy • DC ops • Reverse logistics • RFID • WMS/TMS • Global sourcing • Sustainable Logistics Operations Supply chain strategy Procurement Program Management Change Management Logistics • Supplier relationship mgmt • Strategic sourcing • Spend analysis • E-procurement • Contract compliance • Procurement transformation, inc BTO • Sustainable Procurement Supply chain strategy • SC assessment & benchmarking • Transformation strat development • Business model & governance devel • SC ops improvement & optimization • Technology/systems assessment • M&A support • Sustainable SCM Strategy, Carbon Tradeoff Model, Sustainable Logistics Operations Supply chain operations • SC Ops analytics & transformation • Quality mgmt • Spare parts optimization • MES and plant floor integration • Energy mgmt • Retail solutions • Sustainable Integrated Operations

9. Define KPI’s - Build carbon, water or solid waste key process indicator (KPI) set (regulatory & stakeholder driven) Metering - Deploy mobile metering capability, establish energy use baseline & identify opportunities for improvement Deploy Carbon Console – Deploy web based management system Optimize Process – Use applied Lean Sigma techniques to analyze, improve and optimize identified high energy (or other) use areas Ongoing Control – Deploy follow-on controls across defined kpi’s, deploy additional metering & management capability Early Adoption of Sustainability Management as core Business Function 1. Defining KPI’s 2. Metering & Baselining 3. Deploying Carbon Console 4. Optimizing Process 5. Ongoing Control Involves using the existing systems and Processes to include Sustainability parameters

10. Adoption of concepts like Green Sigma for Continuous improvements • Gas savings of ~20%-25% within one European site – equates to saving close to 1,000 tonnes of CO2 per annum • Electricity savings within US-based Green SigmaTM project is projected to achieve savings of 10-15% minimally

11. What next • Leadership in Energy Efficiency, CO2 emissions and climate change • Development of new generation products ( Invest in R&D and IP creation) • Adoption of Technology & innovation ( Low carbon steel, CCS pilot studies) • Financial robustness and cost competitiveness • Stakeholder engagement and community initiatives in a transparent way • Move beyond regulations and report HSE parameters • Value creation for stakeholders with Shareholders • Sustainability as a KPI in entire Value Chain and not just a silo function

12. Thank you