4th India Steel Summit – Achievement and Unfinished Agenda

1. 4th India Steel Summit – Achievement and Unfinished Agenda Capitalising on Complexity Presentation by IBM IBM Confidential

2. Agenda • Steel Industry – Context in India • The New Economic Environment • The Agenda for CEOs • Agenda for Steel • Smarter Planet IBM Confidential

3. Steel Industry – Context in India The Indian National Steel Policy 2005 projects a production Level of 100 Million Tonnes by 2020 on the basis of GDP Growth of 7.5 % per annum Indian Production CAGR 7.3% Global Consumption growth at 3% per annum The Ministry of Steel expects that India will be the second largest manufacturer of steel by 2015-16 Provided all fresh capacity creation requirements are met CAGR of crude steel production in the period between 2004-05 to 2008-09 was 8.6% Industry Capacity utilisation of 84% was achieved in 2009-10 (provisional) Productivity and Sustainability are primary concerns during this hyper-growth MOUs have been signed for a cumulative production volume of 276 million tonnes Source : Ministry of Steel Annual Report 2009-10 IBM Analysis IBM Confidential

4. Steel Industry – Context in India Opportunities Challenges • Growing Domestic Market, Global Imbalances in Supply and Demand • Availability of Iron Ore and Coal • Availability of low cost resources, manpower • Advances in Technology • Skills • Infrastructure – land, water, electricity, connectivity • Climate Change, Environmental Concerns, Sustainability • Risk and Compliance Pressures Source : National Steel Policy, IBM CEO Study 2010 IBM Confidential

5. 2010 Capitalizing on Complexity The New Economic Environment • “The New Economic Environment” • Complexity – the primary feature of this environment, characterised by: • Massive global shifts increase uncertainty • Continued rise of technology as key external factor • Challenges are compounded by regional differences • IBM has concluded the 2010 Global CEO Study trying to understand how CEOs across the world are reacting to this environment • 1541 CEO Interviews were conducted • 61 CEO Interviews in India / South Asia IBM Confidential

6. Massive global shifts in the New Economic Environment Full Sample Mature markets retain economic power Consumer demand, economic power and innovation skewed towards mature markets Rapidly developing markets gain economic power Consumer demand, economic power and innovation shifting to rapidly developing markets 14% 10% 76% India / South Asia 10% 15% 75% Full Sample Small government, light regulation Move or return to unrestrained market with limited state ownership or regulatory reform Big government, heavier regulation Greater government involvement, more regulation and government as a stakeholder in strategic businesses 16% 14% 70% India / South Asia 34% 30% 36% Full Sample Slow down or reversal of globalization Increased protectionism, dominance of local interests and local requirements Continued globalization Global capital flows, trade, access to markets, skills and knowledge 17% 16% 67% India / South Asia E&U 10% 3 87% Not at all/to a limited extent To some extent To a large/very large extent Source: IBM CEO Study 2010 Q8 Which of these future scenarios for the next five years do you consider more realistic? Globalization n=1515; Markets n=1502; Government n=1519; ISA n=61

7. Continued rise of technology as key external factor Three most important ‘external’ forces over the next three years Source: IBM CEO Study 2010 Q1 What are the 3 most important ‘external’ forces that will impact your organization over the next 3 years? n=1538

8. The New Economic Environment is experienced as being distinctly different The New Economic Environment Full Sample India / South Asia More volatileDeeper/faster cycles, more risk 13% 18% 69% 12% 34% 54% More uncertainLess predictable 14% 21% 65% 17% 32% 51% More complexMulti-faceted, interconnected 51% 18% 22% 60% 17% 32% Structurally differentSustained change 26% 21% 53% 33% 30% 37% “Last year’s experience was a wake-up call, like looking into the dark with no light at the end of the tunnel.” CEO, Industrial Products, The Netherlands Not at all/to a limited extent To some extent To a large/very large extent Source: IBM CEO Study 2010 Q7 To what extent is the new economic environment different? Volatile n=1514; Uncertain n=1521; Complex n=1522 ; Structurally different n=1523; ISA n=61

9. Five factors add to the sense of uncertainty and volatility Factors impacting your organization to a large extent over the next 5 years Industry transformation 62% 48% Information explosion 61% 48% Sustainability 59% 53% Shorter time cycles 58% 60% Talent shortages 58% 62% 50% Shifts between mature and rapidly developing markets 43% 38% Shift between public and private boundaries 26% 36% Shift between global and local markets 33% 29% Scarcity of natural resources Full Sample India / South Asia 39% Source: Q9 To what extent will the following factors impact your organization over the next 5 years? Industry transformation n=1515; Information Explosion n=1514; Sustainability n=1507; Shorter time cycles: n=1501; Talent Shortages n=1523; Shifts between mature and rapidly developing markets n=1499; Shift between public/private boundaries n=1513; Shift between global/local markets n=1498; Scarcity of resources n=1490; ISA n=61

10. Complexity – the Indian CEO’s viewpoint Currently experiencing high/very high level of complexity 35% 52% Expect high/very high level of complexity over the next 5 years more 70% 7% 70% Expect high/very high level of complexity over 5 years Complexity gap* Feel prepared for expected complexity 63% What should be on the agenda of CEOs in the New Economic Environment? IBM Confidential

11. The Agenda: Stand Out Performance in a Complex World • Creativity is #1 leadership quality • Drive change in the organization to stay ahead of market and use of wide range of communication styles and tools • Break with status quo of industry, enterprise and revenue models • “Getting closer to customers” is the single most important theme • Better understand customer needs through collaboration and info sharing • Exploit the information explosion to deliver unprecedented customer service • Simplify operations and products to better manage complexity • Use iterative strategies, make quick decisions and execute with speed • Integrate globally, increase cost variability and exploit partnering to increase agility

12. The Agenda : Driving Creative Leadership Creativity 63% Integrity Dimension to focus on 56% Focus on Sustainability 39% • How will you develop the critical capabilities to enhance creativity among your leadership? • In what ways can you explore, reward and integrate diverse and unconventional points of view? • What is your approach to evaluating every element of your business model to get the most from currently untapped opportunities? • How will you leverage new communication styles, technologies and tools, both to lead a new generation of talent and to encourage breakthrough thinking? Questions to consider Source: Q19 Which of the following leadership qualities do you think are most important in the next five years? n=1538; ISA n=61

13. Agenda : Getting closer to the customer 87% Getting closer to customer Dimension to focus on 84% People skills 77% Insight & intelligence • How will you engage customers in new ways that increase interest and loyalty to generate new demand and revenue sources? • How can you involve customers more effectively and directly in product and service development? • Can you hear the voice of your customers through the vast amount of data? Can you understand and act upon the information? Questions to consider Source: Q13 Which of the following dimensions will you focus on more to realize your strategy in the new economic environment over the next 5 years? n=1523, n=303; ISA n=60

14. Agenda : Building Operating Dexterity 13% 5% 129% more more more 61% 54% 45% 43% 16% 7% ISA Standouts ISA Standouts Standouts ISA Simplify Operating Strategy Improve Execution Speed Focus on Global Integration • In what ways can you simplify processes, without ignoring underlying complexity, and develop the agility required to execute rapidly? • How can your organization benefit from taking on more complexity on behalf of your clients or customers? • How will you integrate and analyze timely information to gain insight, make quick decisions and enable dynamic course correction? • Have you implemented asset and cost flexibility and defined partnering strategies to compete in your chosen markets? Questions to consider

15. The Agenda for Steel : Stand Out Performance in a Complex World • Break with status quo of industry, enterprise and revenue models • Drive Growth by leveraging strengths and skills • Simplify operations to better manage complexity • Make quick decisions and execute with speed • Integrate globally, increase cost variability and exploit partnering to increase agility • Better understand customer needs through collaboration and info sharing • Exploit the information explosion to deliver unprecedented customer service

16. Stand Out Performance enabled by a new business infrastructure that is Instrumented, Interconnected, and Intelligent Instrumented Interconnected Intelligent Connecting multiple operational nodes for real-time collaboration across the globe speeds decision-making and increases productivity. Remote plant monitoring systems can improve asset utilization and reduce risk by allowing people to monitor and control operations, such as mines, furnaces and yards, from a safe location. New intelligence transforms the way Steel companies operate: increased yield recovery, lower costs, improved safety, and higher production rates. Manage -- in real time / near real-time -- the flow of materials across the manufacturing process and supply chain from a central Production / Supply Chain Command Centre. Increased use of technology to improve capacity utilisation, throughput and sustainability Equipment monitoring systems can capture and analyze equipment operating conditions at run time

17. IBM’s Smarter Planet Solutions links the physical to the digital creating intelligent systems INTELLIGENT Respond to changes quickly and accurately, and get better results by predicting and optimizing for future events. INTERCONNECTED People, systems and objects can communicate and interact with each other in entirely new ways. INSTRUMENTED Ability to measure, sense and monitor the condition of almost everything. Smart Manufacturing for Metals Comprehensive set of capabilities to enable smarter decisions faster Optimization Visibility Collaboration Analytics Physical Meets Digital Linking physical world assets, resources and infrastructure with the digital world of event processing, business analytics and optimization. Smart Integrated Operations EnablementOne open channel to all data required to operate assets in real time Event Management Semantic Model Standard-Based Standardized Metrics Ladle Iron Ore Plant 2 Truck Customer Caster HSM LRF Conveyer Service Center - CTL Torpedo IBM Confidential Coal Truck RF Plant 1 BF EAF Train CRM Line

18. Let’s Build a Smarter Planet Sivaramakrishnan Narayanan Executive Director – Industrial Sector, IBM Global Business Services - India / South Asia sivaram.krishnan@in.ibm.com IBM Confidential