Experience of Investment from CSCI By C K

Experience of Investment from CSCI By C K Chang 8 September 2014 China Steel Corporation India Private Limited New Delhi, India

Thank you Shri Narendra Modi Prime Minister and Former Gujarat Chief Minister Dr. Didar Singh Secretary General of Federation of Indian Chambers of Commerce Mr. Sidharth Birla President of Federation of Indian Chambers of Commerce Mr. Pradeep Rawat Joint Secretary, Minister of External Affairs Mr. Amitabh Kant, Secretary, Ministry of Commerce and Industry China Steel Corporation India Private Limited

Thank you Mr. Saurabh Patel Minister of Finance Energy & Petrochemical, Labour and Employment, Government of Gujarat Dr. Nanda Additional Chief Secretary of Home Department, Government of Gujarat Mr. Pandian Mr. Vakil GIDC Chairman , Additional Chief Secretary of Industry & Mines Department , and Former Principal Secretary, Mr. Sahu Mr. Swain GIDC Managing Director Mr. Vakil GIDC Executive Director China Steel Corporation India Private Limited

CSCI Brief Introduction 1. CSC considered the India GDP growth over 6. 3%. 2. CSC has provided energy-saving Electrical Steel into Indian market, from 42, 000 to 80, 000 ton, since 3 years ago. Last year is 92, 000 ton. 3. The India tax remission and exemption schemes. 4. CSCI try hard to do more short time customer services to reach the win-win situation. 5. CSCI Stage I annual ES capacity is 200, 000 ton, focuses on motor, transformer and pump Industries, with investment up to USD 237 M. 6. In the future, CSCI anticipates to provide automobile, home appliance more high grade materials. 4

CSCI Factory Location Ahmedabad has Gujarat’s only international airport. Ahmedabad Vadodara CSCI corporate office is in Vadodara, where is 110 km and 120 km from Ahmedabad and Dahej respectively. Dahej Port CSCI Factory 5

CSCI Brief Introduction Total Investment of Stage I 237. 00 Long-Term Loan(46. 5%) 110. 00 Equity Capital(53. 5%) 127. 00 Unit: million USD Furthermore, for Operating Capital sufficiency CSCI has applied short-term loan from local banks. Until 05. 09. 2014 extra USD 30 M is ready to be invested. 6

CSCI Brief Introduction Office Buildings Stage 1 (Anneal and Coating Line) Utility Areas Reserve for Coil Centre Future Expansion Focus on Cold-rolled and Galvanized product of 1 million tonnes per annum whose application are on automobile, home appliance and construction. 7

4. CSCI Brief Introduction

4. CSCI Brief Introduction Process (ACL) Uncoiling Welding Surface Cleaning Coating Drying & Curing Side Trimming Annealing Recoiling (Optional) 1. Through ACL to gain the energy efficiency and precise shape for customer further processing. 2. Focusing on chrome-free E. S. market, to improve its anti-rust performance which is energy-saving product.

※ Specification & Application for ES Classification Specification Normal Grade (CSC & CSCI) 50 CS 1300 50 CS 1000 Semi-Processed 50 HE 1 ARO 50 NE 1 ANC (CSC) Main Application General Motor & Small Transformer Compressor Motor Medium Grade (CSC & CSCI) 50 CS 600~800 High Grade (CSC & CSCI) 50 CS 470 C Top Grade (CSC) 50 CS 290~230 35 CS 300~210 Compressor Motor for Variable. Frequency, High Efficiency Motor; Accurate Motor, Huge Industry Motor & Generator Thin Gauge (CSC) 25/20/15 CSXXXXHF Driving Motor for Electric Vehicle, , High Frequency Motor, 50 CS 600 H 50 CS 470~350 Compressor Motor, Small/Medium Industry Motor, Small Generator, Medium Transformer Compressor Motor for Variable. Frequency, High Efficiency Motor; Medium/Huge Industry Motor, Generator, & Transformer 10

4. CSCI Brief Introduction CSCI Organization Chart Chairman Managing Director Planning Office M Management Division M 1 Human Resources & General Affairs Department Special Assistant Secretary C M 2 Finance & Information Department W Commercial Division C 2 Sales & Transportation Department W 1 Production & Equipment Department V 0 Production Division W 2 Utilities Department Construction & Engineering Committee W 3 Production Support Department 11

1. CSCI Brief Introduction Employee Training Program: 1. Internal Training (On Job Training & Off Job Training ) 2. External Training (Out side Training Institute) 3. Overseas Training (CSC Taiwan) Employee Benefits / Welfare: 1. Meal Allowance (Canteen Under Construction) 2. Employee Medical Insurance (Family included) 3. Free Transpiration from Bharuch to Factory Site 4. Uniform, Safety Equipment (Staff and Worker) 5. Employee Colony (dormitory for 250 employees, 1, 2 BHK for Staffs) 12

CSCI Chronicle 1. 20. 10. 2011: CSCI Incorporated in Ahmedabad 2. 07. 2012: CSCI Project started 3. 02. 08. 2013: Machinery installation started 4. 06. 2014: ACL individual test run 5. 25. 08. 2014: Cold Run 6. 30. 09. 2014: Hot Run (estimated) 13

Experience of investment from CSCI 1. 2. 3. 4. 5. 6. 7. Gujarat and its Geographical Location Taxes Structure Duty Exemption and Remission Schemes Bilateral Preferential Investment Policies Prominent Characteristics Basic Necessities for Expatriates Advices for Potential Investors 14

1. Gujarat and its Geographical Location New Delhi Mumbai 15

1. Gujarat and its Geographical Location l Most industrialized state in India. l Surplus of power supply. l Easy-access to major markets(within DMIC). l Has a coastline of 1600 km with 42 ports connecting Has 55 SEZs and more than 200 industrial zones. l Business friendly government. 16

2. Taxes Structure Central Tax a. Customs Duty 1) Basic - 5% 2) CVD - 12% 3) SP. CVD - 4% b. Excise duty - 12. 36% c. Service tax - 12. 36% 16

2. Taxes Structure Customs Duty Items (A) CIF (B) (F) Landing Cost (1% on CIF) Assessable Value (A+B) Basic Duty 5% on (C) CVD 12% on (C+D) Education Cess 3% on (D+E) (G) Sub total (H) Special CVD 4% on (G) (I) Total price inclusive all taxes (J) Creditable taxes (E) + (H) (K) Price after non-creditable taxes 106. 58 (C) (D) (E) 100. 00 101. 00 5. 05 Non-creditable 12. 78 creditable 0. 53 Non-creditable 119. 36 4. 77 creditable 124. 13 18

2. Taxes Structure Sales Taxes 1. ) VAT: Value Added Tax 5. 00% 2. ) CST: Central Sales Tax 2. 00% 18

2. Taxes Structure Inner and inter state sales taxes Items Inner State Transaction Inter State Transaction (A) Ex-work Price 100. 00 (B) ED : 12. 36% 12. 36 creditable (C) VAT : 5% 5. 62 N/A creditable (D) CST : 2% N/A 2. 25 Non-creditable (E) Price inclusive taxes (F) (G) 117. 98 114. 61 Creditable taxes 12. 36+5. 62 12. 36 Price after noncreditable taxes 100 102. 25 GST(Good & Service Tax) can be imposed as soon as 2014 -15, in order to replace CST/VAT. 20

3. Duty Exemption and Remission Schemes Advance License : 1. Benefit : Raw materials can be imported at 0% import duty. 2. Obligation : Imported materials need to be exported with 15% added value. EPCG (Export Promotion Capital Goods) : 1. Benefit : Capital goods & spare parts can be imported at 0% import duty. 2. Obligation : Export 6 times of duty saved on capital goods imported, and to be fulfilled in 6 years. 21

4. Bilateral Preferential Investment Policies Essential preferential policies negotiate with governments in advance. such as : • Single window for coordination with central and state government • Easing import duty on Working in Process materials • Win-Win Studying the Bulk Berth in Dahej port 22

5. Prominent Characteristics DESCRIPITION TAIWAN Manpower Knowledge Attrition Rate Industry Standard Materials Availability Schedule Control INDIA REMARKS - Skilled manpower available - Low-Cost Labour - Competency Expertized - Eager to learn - Average level - Beneficiary policy Major Countries’ Standards - Indian Standard - drawing must be converted fully - Plenty of suppliers Patience to find - To find suppliers for comparison Tight Control - Depend Nature - Intertwine with third parties’ contract 23

6. Basic Necessities for Expatriates • • Gujarat is a dry state High percentage of vegetarian Drinking bottle water Summer(before monsoon) is dry and hot. Road system in Gujarat is relatively better Gujarat is a relatively safer state Cinemas, malls are available in big cities 24

7. Advices for Potential Investors • Study preferential policies before investment • Taxes Issue from beginning try to find a good Charter Account and a Lawyer • Negotiate with associated Government officials • Future attraction on Taiwanese industrial zone • Extra costs should be predicted practically 25

The end Thank you for attention 26