Jindal Saw Ltd Management Discussions.

Industry Structure and Developments ECOMONIC SCENARIO

World Economic Scenario

"The world has changed dramatically since Jan 2020"

The COVID-19 pandemic has been an unprecedented global phenomena for which the world was not prepared for and is inflicting high and rising human costs worldwide. The fall out of the pandemic which has extended months is also severely impacting the economies across the world. As per the world economic outlook issued by IMF, because of the pandemic, the global economy is projected to contract sharply by 3 percent in calendar 2020, much worse than during the 2008–09 financial crisis. In January 2020, before the extent of the current outbreak both inside and outside China was known, the IMF had forecast that the global economy would grow 3.3% in 2020 as U.S.- China trade tensions were easing, with 3.4% growth seen for 2021. As per United Nations (13th May 2020),the projected cumulative output losses during 2020 and 2021 nearly $8.5 trillion will wipe out nearly all output gains of the previous four years. The pandemic has unleashed a health and economic crisis unprecedented in scope and magnitude. Lockdowns and the closing of national borders enforced by governments have paralyzed economic activities across the board, laying off millions of workers worldwide. Governments across the world are rolling out fiscal stimulus measures which are equivalent overall to roughly 10% of the world GDP to fight the pandemic and minimize the impact of a catastrophic economic downturn.

In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound. In that case, the global economy is projected to grow by 5.8% in 2021 as economic activity normalizes, helped by policy support. The risks for even more severe outcomes, however, are substantial. Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. Indian Economic Scenario COVID-19 the global pandemic has also had its toll on India both in terms of health infrastructure as well as its economy. Until February, India was relatively less affected by COVID-19 than other countries. After the World Health Organization declared it as a pandemic, the Indian government was among the first to impose a country wide lock down including restrictions relating to air travel, rail travel and limiting all movement only to essential services. The country announced a nationwide lockdown on March 24,2020 that ended on May 3, 2020 after few extensions. However, production activities were permitted to operate in non- containment zone from April 20, 2020 subject to required approvals from concerned authorities. In response to the economic impact of the lockdown, the government announced stimulus programs by way of cash transfers, employment support, credit support, and food support etc. The Reserve Bank of India (RBI) has also stepped in to announce moratorium on the repayment obligations of the loans and also provide adequate liquidity in the banking systems to counter a sudden interruption in economic activity, which would negatively affect firms revenues and cash flows.

Despite the ongoing challenges, Government of India lays emphasis to tap unique opportunity to revitalize economic growth through the "3Rs" which is Recycle , Rebuilding and Reinvest.

Figure: 1 - Revitalizing Economic Growth through – "3R"

Recycle

(Funding government spending needs through the privatization of state-owned enterprise assets )

Rebuilding

(Aggregating savings by providing tax cuts to the private sector and households)

Reinvest

(Providing incentives for manufacturing firms to reinvest such savings to substitute imports and increase the countrys global market share of exports.)

Towards the end of the economic lock down period the Govt. of India announced a robust and comprehensive economic stimulus amounting to Rs. 20 Lakh Crores covering the entire gamut of infrastructure sector, MSMEs, agriculture and other related sectors to keep the countrys economy afloat. It is expected that the 3Rs and also the reforms by Government under "Atmanirbhar Bharat" ("Self-Reliant India") initiatives should help address Indias cyclical growth challenges through higher government spending, increased savings for the private sector and households, and create more job opportunities by encouraging new investment.

India may be in a relatively good position to accomplish this due to the countrys ample foreign exchange reserves and the low level of short-term foreign debt, which lends to a robust capital account. In addition, the countrys inflation outlook remains benign, and while the fiscal situation could deteriorate, the recent sharp fall in crude prices could turn the current account deficit to a surplus.

OIL & GAS INDUSTRYGlobal Scenario

The oil & gas industry is experiencing its third price collapse in 12 years. After the first two shocks, the industry rebounded, and business as usual continued however this time looks to be different. The current context combines a supply shock with an unprecedented demand drop and a global humanitarian crisis. Additionally, the sectors financial and structural health is worse than in previous crises. The advent of shale, excessive supply, and generous financial markets that overlooked the limited capital discipline have all contributed to poor returns. Today, with prices touching 30-year lows, and accelerating societal pressure, it gives a sense that change is inevitable. The COVID-19 crisis accelerates what was already shaping up to be one of the industrys most transformative moments. Heightened risk of economic slowdown, linked to ongoing trade tensions and reduced confidence, will potentially impact all energy, resources, and industrials sectors in 2020. The energy sector is also severely affected by COVID-19 crisis, which has slowed transport, trade, and economic activity across the globe. The latest analysis of daily data through mid-April, published in IEA Global Energy Review 2020, shows that countries in full lockdown are experiencing an average 25% decline in energy demand per week and countries in partial lockdown an average 18% decline.

The Oil & Gas Industry across the world also gets impacted by the geopolitical considerations and recently it witnessed negative prices due to geopolitical considerations but now seems to be stabilizing to more reasonable levels.Power demand fell as businesses closed and people stopped travelling or commuting. This created a storm that obliterated fossil fuel demand in April. Global oil demand fell by as much as 30 million BPD, followed by gas and coal demand. Even demand for liquefied natural gas (LNG), which has seen strong growth in recent years, plummeted, and cargos destined for Asia had to be rerouted to Europe, adding to a supply glut there.

Global oil demand is expected to be a record 9.3 mb/d lower in 2020 than in 2019. The impact of containment measures in 187 countries and territories has almost brought global mobility to a halt. For Q2 2020, demand is expected to be 23.1 mb/d below 2019 levels. The recovery in the second half of 2020 is projected to be gradual, as economies come out of containment and activity levels rise. Nonetheless, demand is not expected to reach pre-crisis levels before the end of the year, with December demand projected to be down 2.7 mb/d from December 2019 levels, erasing almost a decade of growth.

As per API Industry outlook for second Quarter 2020, historical global real GDP growth averaged 3% (1970-2019) but can be volatile and cyclical. Third party consensus expects growth of 4.4% in 2021, a rebound following a contraction of 4% in 2020. After the immediate demand shock, EIA expects global oil market to rebalance by Q3 2020

India Scenario

With a population of 1.4 billion and one of the worlds fastest-growing major economies, India will be vital for the future of the global energy markets. Energy demand in India is growing rapidly with major implications for the global energy market. Indian economy has immense fundamental strength and a definitive growth pattern and therefore has certain inelasticity in demand of Oil & Gas as it remains a net importer of these products which to a great extent maintains the economic activity around Oil & Gas sector in India irrespective of the global prices. As of May 01, 2020, Indias oil refining capacity stood at 249.9 million metric tonnes (MMT), making it the second largest refiner in Asia. Private companies own about 35.36 per cent of the total refining capacity in FY20. Annual oil consumption stood at 4.69 million barrels per day (mbpd), whereas, for gas, it stood at 54.20 billion cubic meters (bcm). By 2035, Indias energy demand is expected to double to 1,516 Mtoe from 753.7 Mtoe in 2017.

Figure 2: Shows Refining Capacity between Private Companies and Government

Natural Gas consumption is forecast to reach 143.08 million tonnes (MT) by 2040. Indias LNG import stood at 33.68 bcm during FY20. Several initiatives have been taken by the Government of India, including the launch of:

Figure 4

Open Acreage Licensing Policy (OALP) and Coal Bed Methane (CBM) policy

100% Foreign Direct Investment (FDI) in companies and 49% in refining under the automatic route

FDI inflow in Indias petroleum and natural gas sector stood at US$ 7.07 billion during April 2000–December 2019

Investment of US$ 2.86 billion in upstream oil and gas production to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022

Rising demand for oil in India is expected to drive investment in refining capacity expansions and upstream production.

The market for oil and gas upstream in India is expected to grow at a CAGR of over 2.64% during the forecast period of 2020- 2025. Factors such as increasing natural gas pipeline capacity, increasing refining capacity, and increasing demand for petroleum products are expected to increase the growth for the Indian oil and gas market during 2020-2025. However, a huge dependence over imports of crude oil and natural gas for satisfying domestic demand and high volatility of crude oil prices is expected to restraint the growth of the Indian oil and gas market. However, the outbreak of Covid-19 and the measures put in place to prevent its spread are having large and disruptive impact on both the upstream and downstream sectors. The demand for both refined fuels and natural gas is set to contract in 2020, largely due to extensive travel restrictions and a sharp slowdown in economic activity in Q2. In response, Indian refiners are enacting steep run cuts, in an attempt to tackle the domestic oversupply and protect refining margins. The drop in demand is also undercutting performance of the upstream O&G sector, as low prices trigger steep cuts to spending and force majeures issued by buyers necessitate production shutdowns. That said, there are signs that the nadir for demand has been passed and as restrictions are unwound and the economy is allowed to normalize over H2, both the upstream and downstream sectors will begin to recover.

Water Industry Global Scenario

"Water is everybodys business"

"There is a water crisis today. But the crisis is not about having too little water to satisfy our needs. It is a crisis of managing water so badly that billions of people - and the environment - suffer badly." (World Water Vision Report) With the current state- of- affairs, correcting measures still can be taken to avoid the crisis to be worsening. There is an increasing awareness that our freshwater resources are limited and need to be protected both in terms of quantity and quality. This water challenge affects not only the water community, but also decision-makers and every human being. Whatever the use of freshwater (agriculture, industry, domestic use), huge saving of water and improving of water management is possible. Almost everywhere, water is wasted, and as long as people are not facing water scarcity, they believe access to water is an obvious and natural thing. With urbanization and changes in lifestyle, water consumption is bound to increase.

As demand for water increases across the globe, the availability of fresh water in many regions is likely to decrease because of climate change. The United Nations World Water Development Report (WWDR4) predicts that these pressures will exacerbate economic disparities between certain countries, as well as between sectors or regions within countries. The demand for water originates from four main sources, namely, agriculture, production of energy, industrial uses and human consumption. Production of crops and livestock is water-intensive, and agriculture alone accounts for 70% of all water withdrawn by the combined agriculture, municipal and industrial (including energy) sectors.

Figure 5: Shows Water Withdrawn by various sectors

The booming demand for livestock products is increasing the demand for water. The global demand for food is expected to increase by 70% by 2050. All sources of energy and electricity require water in their production processes: the extraction of raw materials, cooling in thermal processes, in cleaning processes, cultivation of crops for biofuels, and powering turbines to generate hydroelectricity. Global energy consumption is expected to increase by about 50% between now and 2035 due to population growth and increasing economic activity, with non-OECD countries accounting for 84% of this increase. Water is an integral part of many industrial processes and increasing demand for water for industrial uses will result from increasing economic activity. As regards human consumption, the main source of demand comes from urban communities requiring water for drinking, sanitation and drainage. The urban population of the world is forecast to grow to 6.3 billion people in 2050 from 3.4 billion in 2009, representing both population growth and net migration from countryside to city. There is already a backlog of unserved urban populations, and the number of people in cities who lack access to improved water supply and sanitation is estimated to have grown some 20% since the Millennium Development Goals were established.

The financial, food, fuel and climate crises are, even individually, serious problems, but in combination their effects could be catastrophic for global sustainability. Water underpins all aspects of development: it is the only medium that links sectors and through which major global crises can be jointly addressed. It is a key element in green growth and in achieving greener economies. It is very unlikely that our increasing demand for water will be able to be met solely through supply-oriented solutions. Rather, the key solutions to the global water crisis reside in our ability to better manage demand while seeking to balance and maximize the various benefits of water.

Indian Scenario

India is among the few large countries which have a very large land parcel and population to cater to but it also has very large water resources including criss-crossing of perennial rivers across the country and lots of rainfall during the monsoon season. India has an issue with the geographical distribution of water resources and timing in terms of a 3-4 months monsoon period during the year. This gives rise to an opportunity of a robust water management system within the country to ensure adequate availability of water in all sectors all across the year.

Despite significant efforts to improve access to water supply and sanitation, nearly 163 million people in India lack access to clean and safe water. Across the country it is estimated that annually 600 million people experience water shortages and nearly 200,000 die due to inadequate or unsafe access to water supplies. The cost to the Indian economy is substantial, with approximately 73 million working days lost due to water borne diseases each year, resulting in an economic burden of an estimated USD 600 million annually. With climate change-induced variations in temperature and precipitation, large parts of India now seasonally experience extreme droughts and floods, creating misery for millions and challenges for governments in managing and balancing demand and competition between different sectors

In 2019, as large parts of India faced a major drought, Prime Minister Narendra Modi announced the creation of a new integrated water ministry – Jal Shakti – merging the former ministries of Water Resources, River Development and Ganga Rejuvenation, and Drinking Water and Sanitation. The government also announced a series of national initiatives to raise public awareness about water conservation, including: Figure 6:

Jal Shakti Abhiyan

(To promote water conservation in 256 of Indias most water stressed districts)

Jal Jeevan Mission

(To provide piped water connections to 146 million rural households by 2024)

Atal Bhujal (Groundwater) Yojana (To improve groundwater management through community participation in seven Indian states)

Jeevan Mission (JJM)

(Aims to provide piped drinking water to all rural households by 2024, saw an increase of just 15 per cent in the budget allocation for financial year 2020-21)

Allocation for the scheme in the current financial year is Rs 11,500 crore, compared to Rs 10,000 crore last year. However, this increase is marginal compared to 2019-20, when funds for the mission were almost doubled over the year 2018-19. In such scheme gram panchayats have been involved to ensure the implementation of the piped water supply to every household. Even post Covid-19, the Ministry of Jal Shakti is putting all the efforts to source additional funds for the effective implementation of Jal Jeevan Mission. Government of Haryana and Uttar Pradesh have already launched the first phase of the mission for the piped water supply schemes. Rajasthan has already prepared a plan to roll out the first phase of the Jal Jeevan Mission with an investment

Rs. 25,000 crores.

These measures are an effort to reform Indias water management institutions and practices that for decades have been characterised by an overwhelming focus on supply side infrastructure-intensive approaches; inefficient and wasteful water practices; siloed and fragmented institutional structures and mandates; limited implementation capacity; poor data management practices and intersectoral conflicts that have resulted in governance and accountability failures.

It is positive that the government continues to give high priority to water and is taking steps to move towards a more integrated and holistic approach to water management. The central budget for 2020-21 describes access to water as one of the key aspects of an "aspirational India" along with access to better health, education and jobs. On February 1, 2020, union Finance Minister Nirmala Sitharaman released the annual budget of India for the financial year 2020-21. The budget speech made important announcements for agriculture, irrigation and rural development which have implications across land, water and energy sectors.

STEEL AND PIPE INDUSTRY Global Scenario

An unusual period in history, the coronavirus pandemic has unleashed a series of unprecedented events affecting every industry. The Steel market will be reset to a new normal which going forwards in a post COVID-19 era will be continuously redefined and redesigned. Amid the COVID-19 crisis, the global market for Steel estimated at 1.5 Billion Metric Tons in the year 2020, is projected to reach a revised size of 1.6 Billion Metric Tons by 2027, growing at a CAGR of 0.7% over 2020-2027.

Figure 7: Estimated Global Market for Steel in billion metric tons

Construction is projected to grow at a -0.3% CAGR to reach 684 Million Metric Tons by the end of the 2027. After an early analysis of the business implications of the pandemic and its induced economic crisis, growth in the Transportation segment is readjusted to a revised 1.8% CAGR for the next 7-year period. This segment currently accounts for a 16.1% share of the global Steel market. The Steel market in the U. S. is estimated at 413.4 Million Metric Tons in the year 2020. The country currently accounts for a 27.18% share in the global market. China, the world second largest economy, is forecast to reach an estimated market size of 286.6 Million Metric Tons in the year 2027 trailing a CAGR of 1.5% through 2027. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at -0.2% and 0.4% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately -0.1% CAGR while Rest of European market will reach 286.6 Million Metric Tons by the year 2027.

Figure 8: Estimated Steel Market in Million Metric Tons (Leading countries)

The global market for welded pipes has been witnessing moderate growth in the past couple of years. The demand for welded pipes is expected to be driven by the growing construction industry and the increase in demand from end-use industries. Due to the rapid industrialization and urbanization across the world, there has been a rise in the demand for welded pipes, which are widely used in manufacturing plants, machinery, and mechanical instruments. Spiral welded pipes are used primarily for the transmission of oil, gas, and water at various pressures and densities over long distances. Welded pipes are used for the in various industries, including infrastructure & construction, water treatment, pharmaceuticals, chemicals, dairy, pulp and paper, breweries, sugar & food processing, and power & energy. Moreover, various reforms and regulations have been introduced by governments in several countries for the purpose of raising their infrastructure and real-estate industries, which lead to the growth of the construction industry and, consequently, the global welded pipes market. However, the growth of the market might be hindered by fluctuating raw material prices. The growing oil & gas industry creates lucrative opportunities for the global welded pipes industry. The growth of the construction and automotive industry is anticipated to drive the welded pipes market in Asia-Pacific. Moreover, the water treatment, pharmaceuticals, chemicals, breweries, dairy, pulp and paper, sugar, and food processing industries are also growing in this region, mainly in the countries such as China, India, and Japan. This is expected to contribute significantly to the growth of market. Additionally, Asia-Pacific is one of the key regions for the automotive industry and held a significant share of global vehicle sales, which is expected to raise the demand for welded steel pipes in Asia-Pacific in next couple of years.

However due to COVID-19 crisis, the global market for Large Diameter Steel Pipes estimated at US$14.1 Billion in the year 2020, is now projected to reach a revised size of US$15.4 Billion by 2027, growing at a CAGR of 1.2% over 2020-2027. LSAW pipes market is projected to grow at a 1.2% CAGR to reach US$8.6 Billion by the end of 2027. After an early analysis of the business implications of the pandemic and its induced economic crisis, growth in the LSAW Pipes segment is readjusted to a revised 1.5% CAGR for the next 7-year period. This segment currently accounts for a 26.9% share of the global Large Diameter Steel Pipes market. (As per Research & Markets). Amid the growing push for decoupling and economic distancing, the changing relationship between China and the rest of the world will influence competition and opportunities in the Pipes and Pipe/Hose Fittings market. Indian ScenarioIndia was the worlds second-largest steel producer with production standing at 111.2 million tonnes (MT) in 2019. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to Indias manufacturing output. The Indian steel industry is modern with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels.

Indias finished steel consumption grew at a CAGR of 5.2 per cent during FY16-FY20 to reach 100 MT. Indias crude steel and finished steel production increased to 108.5 MT and 101.03 MT in FY20, respectively. Export and import of finished steel stood at 8.24 MT and 6.69 MT, respectively, in FY20. Steel industry and its associated mining and metallurgy sectors have seen major investments and developments in the recent past. According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), the Indian metallurgical industries attracted Foreign Direct Investment (FDI) to the tune of US$ 13.40 billion in the period April 2000–March 2020.

As per World Steel Association (Worldsteel- in its latest Short Range Outlook (SRO))- Indias steel demand is likely to face a sharp decline of 18 per cent in 2020, while global steel demand is expected to contract 6.4 per cent to 1,654 million tonnes (MT) due to the COVID-19 crisis. Indian government implemented the most stringent nationwide lockdown measures in the world, bringing industrial operations to a standstill. Construction activity was halted entirely at the end of March, and recovery is expected to remain subdued due to the slow migration of labourers. Further, supply chain disruptions coupled with slower demand recovery will hit the steel-using industries like the automotive and machinery sectors. Supported by the government stimulus, recovery in construction is likely to be led by infrastructure investment such as railways. The demand in India is expected to rebound by 15 per cent in 2021.

The Indian Govt. has taken an ambitious target of enhancing the production of iron and steel from the present level to over 300 MTPA over the years.

DUCTILE IRON PIPES INDUSTRY Global Scenario

Governments across the globe are taking measures to meet the growing demand for water. Rapid urbanization in emerging economies has significantly fuelled the demand for infrastructure services such as roads, transportation, electric and power supply, water supply, and sanitation. Further, due to a rise in migration rate of the population towards urban centres, the demand for ductile iron pipes for waste-water treatment has also increased. Unsafe sanitation is one of the major concerns for governments across the globe and it is becoming more serious as the global population is increasing. Almost 4.5 billion people, i.e. more than half of the global population, still practice open defecation or use unsafe sanitary facilities and services. Governments across the world are undertaking measure for water sanitation. On the back of easy installation with added advantage of recyclability, ductile iron pipes market is poised to grow at a CAGR of 5.7% over next decade (2020-2030).

Drinking water distribution is the major application of ductile iron pipes market. Portable water losses occur due to supply system failures. Ductile iron pipes are reliable, durable, and cost-effective pipes that help in transporting portable water and industrial and household Wastewater. These pipes are preferred over other materials as they have a lower failure rate. Usage of portable water distribution segment is expected to create significant opportunity of US$ 2.6 Bn over the next 10 years (2020-2030).

East Asia alongside South Asia and Oceania represent about half of the ductile iron pipes market as far as volume is concerned. Presence of majority of key players, high agricultural output, government initiatives towards water & waste-water management are some of the prominent factors providing a boost to the Asian ductile Iron pipes market. Furthermore, ever increasing population estimates in Asian countries, increasing grey iron & cast iron production, rapid urbanization & industrialization coupled with focus towards changing the aging water infrastructure are the factors waving towards higher adoption of ductile iron pipes in the region till 2030.

The Global Ductile Iron Pipe Market is Fragmented with the presence of numerous manufacturers across the globe. Chinese Players account for around 65% share in the overall ductile iron pipe market.

Figure 9: China dominates Ductile Iron pipe manufacturing

In order to meet this exceeding demand key players are focusing on capacity expansion and increasing their product portfolio to gain a competitive advantage. For example, DI pipe producers launched a new range of restrained-joint ductile iron pipes which provides higher deflection than restrained-joint pipes launched previously. However, Covid-19 is impacting demand for DI pipes also, as result of halted water sewage construction and ceased production activity. Key market regions for DI pipes such as East Asia, North America and South Asia are under nation-wide lockdown to prevent spread of this virus. With a number of government projects for water treatment and water supply management being put on hold, demand for DI pipes is also getting impacted to some extent, across the globe. As an aftereffect of this outbreaks, DI pipes market is expected to lose market share in global pipes market, at least on temporary basis.

Indian Scenario

India is suffering from the worst water crisis in its history and millions of lives and livelihoods are under threat. Currently, 600 million Indians face high to extreme water stress and about two lakh people die every year due to inadequate access to safe water. The water scarcity in India is only going to get worse. By 2030, Indias water demand is projected to be twice the available supply, implying severe water scarcity for hundreds of millions of people and an eventual ~6% loss in the GDP of India."

Large part of India has started feeling water stress. Exponential growth in water demand is taking place due to rise in population, fast-paced urbanisation and evolving lifestyle. More than 17% of the worlds population resides in India, but the country has only 4% of the worlds renewable water resources. In fact 2/3rd of the global population lives with severe water scarcity for a month every year and most of this population resides in India and China. The annual per capita availability of water is spiralling downwards continuously from 5,177 cubic meters in 1951 to 1,720 cubic meters in 2019. Post elections in May 2019, the government of India have clearly indicated their priorities on building the water infrastructure in India. The erstwhile ministries of water resources and drinking water and sanitation have been merged in the ministry of Jal Shakti in May19 itself. As a result, all the water related departments – surface water, ground water, river rejuvenation, irrigation etc. and departments looking at the use of water have come under a single ministry, which could significantly ease the implementation of large programmes by easing the process and timelines of sharing data / resources within the government.

The economic benefits of access to clean drinking water and basic sanitisation would amount to more than USD 43 billion a year or and economic gain each year of around 5.2% of GDP of India with a benefit cost ratio of 3.2 and a payback period of 7 years. In less than a decade, there could be transformative boost to the Indian economy just by helping its citizens access to clean drinking water and sanitation. The overall demand for Ductile Iron Pipes in India remains robust and would play a crucial part in realising the Jal Jeevan Mission initiative of Govt. of India.

STAINLESS AND SEAMLESS PIPES AND TUBES SCENARIO

The global Seamless Pipe market is forecasted to grow at a rate of 5.0% in terms of value, from USD 204.10 Billion in 2019 to reach USD 302.69 billion by 2027. The growing demand for seamless pipes is relied upon to develop at a massive pace under rising selection owing to its high strength and flexibility. The superior performance benefits related to the product, including the ability to withstand high temperature, high-pressure, high mechanical stress coupled with high corrosive resistance properties are probably going to be the essential components driving industry development.

As a result, the seamless pipes display better weight appraisals than welded channels of a related content inferable from the non-appearance of welded crease showing uniform quality around the whole periphery of the funnel. Thus, the seamless pipes are dynamically supplanting the ridge welded pipes items across different ventures, for example, Deep Well applications, Sub Sea Applications, Automotive, Bearings etc.

The demand for seamless pipes is required to develop due to an upgraded consumption, obstruction, and the capacity to suffer in incredibly cold or hot situations related to the item. The product is progressively used as a rule on seaward oil stages and offshore oil pipelines. In any case, the developing product used for conveying the material for example, water, modern gases, wastewater, and synthetic concoctions are relied upon to support the item request over the up and coming decade. The significant expense related to seamless pipes is relied upon to drive market development over the forecasted period. High initial investments, low consumer awareness, and fluctuating oil prices, which results in price variations of polymers, is expected to attract the attention of new players in the industry, thus increasing the threat of new entrants in the market expected to hamper profit margins of the industry players. The Asia Pacific is relied upon to be the most significant consumer for the product, with a more substantial part of interest determined by China and India. India is probably going to be the key market for seamless pipes because of developing interest in the advancement of the petroleum gas pipeline arrangement. Moreover, the region is making critical interest in enlarging its oil refining limits. North America held an outstanding share in the global seamless pipe market. Technological advances in hydraulic fracking technology have prompted the U.S. and Canada to emerge as one of the worlds largest oil exporters. These countries make significant investments in oil pipeline infrastructure development, thereby boosting demand for seamless pipes. Various LNG & Oil & Gas Projects across MEA (Middle East & African) continent too are acting as catalyst to this growing segment.

Reports and Data forecast promising developments for increased adoption of Seamless Pipe. According to industry experts, the Seamless Pipe market will be experiencing growth in the coming years with an increase in the production of the oil & gas sector in the developing economies for the development and growth of various industries. Moreover, new producers expected to enter the market, which is likely to provide platform-centric equipment and supplies for Seamless Pipe. New companies joining the industry will concentrate on innovating and delivering through advanced technologies, thereby reducing complexity and lowering the overall total cost of operation. Experts also believe that increase in the adoption of Seamless Pipes in emerging nations would be a key development area for the growth of various industries. There might be a temporary aberration to the growth of Seamless Industry owing to the unprecedented COVID-19 situation, but its prospects are evergreen and has all the right ingredients to bounce back as soon as the situation returns back to normalcy.

COMPANY OVERVIEW About us

Jindal SAW Ltd. ("Jindal SAW" or "the Company" or "we") over the years has consolidated its leadership position and has emerged as a dominant player in the supply of welded and seamless pipes and tubes across the world.

JSAW has the unique distinction of having among the widest product range of pipes and tubes made out of iron and steel, across the globe. The product range includes helically welded large diameter pipes, longitudinally welded pipes of iron and steel, ductile iron pipes, seamless pipes and tubes made of carbon, alloy and stainless steel. JSAW also has all varieties of anti-corrosion and protective coating facilities along with the necessary ancillaries like fittings, bends, flanges etc. to make it a total pipe solution provider in the world. Recently the Company has also made a foray in the manufacturing of HDPE pipes to complete its product range to cater the needs of the water sector.

The Company has a philosophy of focusing on value added products and catering to high quality expectations of major clients in India and across the globe. All its manufacturing capabilities are accredited by higher level of quality systems. The Company is also building on IT platform to support its activities across the globe. The Company has its manufacturing facilities strategically located across the country to stay closer to the customers and through its subsidiaries and associates has manufacturing facilities in US and UAE. The Company is a proud owner of low grade iron ore mines in Rajasthan, the only ones in Northern India, and has perfected the capabilities of high grade iron pellets through the beneficiation and palletisation process.

Through its diversified product range the Company is able to cater to the entire range of pipe requirements in the oil & gas sector, water sector, industrial use and specialized sectors like nuclear power etc. Over the last few years, the Company has identified pipes and tubes as its core activity and is committed to remain focused on its core sector, Therefore, through a series of corporate reorganization the Company has demerged / de-subsidiarized / exited its non-core businesses.

The Strategic Business units of the Company are as follows:

1. Large Diameter Submerged Arc Welded Line pipes (SAW Pipes)

The company has multiple manufacturing facilities spread across the country which helps it to stay close to the customers and is one of the USPs of this SBU. The facilities which include the manufacturing of pipes as well as the related ancillary and coating facilities are located at: a. Kosi Kalan in Uttar Pradesh b. Nanakapaya,Samaghogha and Paragpar in Gujarat c. Bellary in Karnataka Recently we have expanded the reach by adding a state of art modern facility at Khundel, Indore (Madhya Pradesh) and also have focused on improving the productivity through initiatives of automation.

2. Ductile Iron Pipes (DI Pipes)

The Company has its manufacturing facilities of Ductile Iron pipes at Samaghogha (Gujarat) and for fittings & accessories at Temburni, (Maharashtra) through its associate, Jindal Fittings Ltd. The operations of the pipes and fittings have been integrated through operation, management and maintenance (OMM) structure of fitting plant whereby the Company offers the entire range of products to the clients.

Recently the Company has upgraded its facilities to manufacture pipes up to diameter of 1200 MM (DN 1200) and double chamber pipes which is the Companys USP.

3. Seamless and Welded Pipes & Tubes of Carbon, Alloy and Stainless Steel:

The company has its manufacturing facilities of Seamless and Welded Pipes & Tubes of Carbon, Alloy and Stainless Steel at :

1) Sinnar and Nagothane in Maharastra

2) Samaghogha In Gujarat

3) Kosi Kalan in Uttar Pradesh (Operated under OMM arrangement with subsidiary)

Currently the Company is manufacturing and offering in the market seamless pipes upto 16" dia through various processes like piercing, pilgering, drawing and extrusion and also can manufacture Stainless welded pipes upto 84" dia. During the year the Company has integrated the business structure for Carbon / Alloy and Stainless businesses for welded and seamless tubes into one after the OMM arrangement with its subsidiary to cater the customers need of different kind of pipes .

Due to the emphasis on "Make In India" policy, we expect the domestic suppliers to gain by substituting the importing products to cater to the ever increasing demand in the various sectors.

We have taken huge strides in moving ahead the value chain by venturing into 13Chrome segment by having the first order from ONGC. This will catapult JSAW to among the few selected global supplier apart from being the only Indian manufacturer in this segment. In continuation to our value chain drive, our Strategic Alliance with Hunting (Cutting Edge Technology Partner) for Premium Connection would prove to be a game changer not only for Indian Oil & Gas Sector but would redefine the competitiveness of existing Global Players in International market. Seamless OCTG with Premium Connection & 13 Chrome OCTG with Premium Connection are going to see a double digit growth from Indian Oil & Gas Sector year on year basis and JSAW Preparedness & readiness on the same not only reflects its far sighted vision but also signifies its strong commitment to stay at numero uno position in the Industry for a very long time. JSAW foray into 13Chrome and Premium Connection is aimed not only to provide value to its shareholders & live upto its Motto of ‘Total Pipe Solution Provider but also to make our Country ‘Aatmanirbhar & ‘Sashakt by reducing Import dependency, scaling down on ground Inventories and saving valuable Foreign Exchange apart from continuously upgrading & augmenting its facilities.

JSAW foray into value chain segment of Stainless Steel is another feather in its cap as successful trials of Duplex, Super Duplex, Nickel Alloy Grades had added another dimensions to the Industries & Customers it can serve.

- Approval of all transactions is ensured through a pre-approved Delegation of Authority (DOA) matrix Schedule which is inbuilt into the SAP system. DOA is reviewed periodically by the Management and compliance of DOA is regularly checked and monitored by the Auditors.

- Your Company believes in zero tolerance towards statutory non-compliance. The Company has a strong online legal compliance management system and it is regularly monitored for compliance. Changes made in the regulatory environment are updated periodically in the system.

- The Company has a comprehensive risk management framework.

- The Company has a strong and independent Internal Audit (IA) department. The scope and authority of the IA function is defined in the Internal Audit Charter approved by the Audit Committee. Every year, the IA department conducts Internal Audit as per Annual Internal Audit plan which is prepared based on risk assessment. The risk-based annual internal audit plan is duly approved by the Audit Committee.

- Our Internal Audit department comprises of In-house Internal Auditors and Outsourced internal auditors. In-house auditors comprises of professionally qualified accountants, engineers and SAP experienced executives. Deloitte Haskins & Sells LLP, a leading global audit firm carries out internal audit of locations and identifies areas where risk management needs to be strengthened. Wherever there are significant audit observations, the corrective action plans are presented to the Audit Committee. The responsibility of the Audit Committee covers periodic reviews of the adequacy and effectiveness of the systems and processes pertaining to internal audit and the implementation of the recommendations.

- We follow the highest standards of ethics. There is a functional Whistle Blower policy whereby anyone can report any act which is not in line with the policy, our code of conduct and overall ethics. There is a designated authority in place to monitor reported cases and to oversee redressal.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS

The global concern over COVID-19 outbreak is growing and so are our initiatives at an Organizational level to combat this black swan event. We at Jindal SAW, assessed this situation when it was in the budding stage at its origin country by releasing travel advisory to all our employees to restrict their travel. The impact of this pandemic on the physical and mental well-being is not lesser known and we have tried to address this issue for our employees at every level. We have followed our motto religiously during these times "Good Performance while staying healthy" and have built a secured and fearless atmosphere within the organization while working seamlessly. During the lockdown period, the Leadership team kept a close track on every team member to ensure that they are well motivated and have high spirits while working from home. Continuous Employee Engagement Programs have been in place to keep employees engaged and connected with their colleagues. Some of the major initiatives are as under:

• Introduction of several online courses to enhance functional expertise;

• E-Training modules on both behavioral and functional topics;

• Motivational videos to boost their morale;

• Unleashing of employee hidden talent through online platforms;

• Informal online meetings amongst teams

Once, permissions were sought to open the premises, a detailed action plan was designed while keeping employee safety and security on priority. The transition of virtual office to physical office by employees triggered few people issues which were dealt effectively with complete pragmatism and patience on humanitarian grounds. The company-wide measures are being implemented and followed consistently like, mandatory display of Aarogya setu App status, Thermal screening, compulsory sanitization before entering the premises, social distancing norms , compulsory mask policy , employees working on rotation basis to maintain low employee strength , preference to virtual communication, placing of hand sanitizers and foot operated wash basins at multiple points within premises, regular sanitization of workstations, shop floors and frequent touch points, to name a few. All these initiatives emphasize the importance of Human Capital perceived and understood by the Management. The Company recognizes that its people are the primary source of its competitiveness and firmly believe that its Human Resource is one of the biggest strengths and major driving force behind its success & growth. Our workforce comprises of people from all parts of the country and is cosmopolitan in nature that helps us in creating a talent pool within the organization. We strive continuously to foster a climate of openness, mutual trust and team work. We understand the criticality and importance of identifying and rewarding the performance, hard work and expertise of employees by endowing them with extrinsic rewards, promotions and role enhancements. The process followed for assessing employee performance is called "Target Based Performance Management System (TBPMS)" wherein the performance is measured with the defined KRAs and action is being taken accordingly. To give an extra financial and psychological comfort to the employees, all employees are covered under three types of different Insurance Policies, one of them providing coverage to the close family as well. Our Policies / Procedures are reviewed on continuous basis to keep our HR systems abreast with the Industrial standards. We are constantly working towards improving the quality of life of employees and their families residing within our Companys Townships by extending best possible medical facilities like Health Check-ups for employees and family (on subsidized basis), regular Health Camps, Awareness Talks, Immunization camps at Units, medical services through fully equipped OHCs at Units, providing educational facilities to the children, creating a cordial sociological atmosphere by facilitating celebration of festivals and events together with complete enthusiasm and holding regular Sports activities for employees and their families.

As a responsible employer, we are committed to respect and promote Womens safety within our Organization and strict guidelines for the prevention of Sexual harassment of women are in place. This promotes confidence and security amongst the female workforce and creates an amiable environment.

The Organization has an altruistic approach and assumes giving back to the society as its responsibility. The company has invested in many such initiatives such as providing accessible environment to all, supporting old age homes, extending of basic facilities at orphanages, financial support to educational institutions nearby our Units, providing clean drinking water to nearby villages, arranging religious events for nearby villagers etc. that benefits the society as a whole. We have been consistent in this approach during COVID-19 as well and have contributed to our neighborhood areas and villages by distribution of masks, carrying out sanitization drives, conducting awareness sessions, distribution of food items and monetary contribution at Central & State levels.

The culture of Jindal SAW Ltd. is built on resilience and its core values which can be clearly identified by its lower attrition rate and higher level of satisfaction amongst the employees.

To,

The Members, Jindal SAW Limited,

A-1, UPSIDC Industrial Area, Nandgaon Road, Kosi Kalan, Distt. Mathura – 281403 (U.P.)

We have examined the compliance of the conditions of the Corporate Governance by Jindal SAW Limited ("the Company") for the Financial Year ended 31st March, 2020, as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and para C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [hereinafter referred to as "Listing Regulations"].

The compliance of the conditions of the Corporate Governance is the responsibility of the Management of the Company. Our examination was limited to review of the procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions of Corporate Governance as stipulated in the said Regulations. It is neither audit nor an expression of the opinion on the Financial Statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned "Listing Regulations" as applicable during the year ended 31st March, 2020.

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For S.K.Gupta & Co.

Company Secretaries

(S.K. GUPTA)

Managing Partner F.C.S 2589 C.P. 1920 UDIN: F002589B000386555

Place: Kanpur Date: 26th June, 2020