Tata Steel Ltd Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : One question as a follow-up on the U.K. transition cost. Currently, we are running our -- with the shutdown of the blast furnace in the Netherlands, we are currently running in a slab to rolling mode. What would be the gross spread that we are currently earning there. As of now, it's not sufficient to cover the high associated sort of the fixed cost there. That's the reason we are running into the losses. But how that gross spread compared with the U.K. when we operate only in the slab mode?

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : Just one clarification. EUR 240 spread, when we are talking about, it's an operation on the integrated spread. But if we are not sort of having a blast furnace and operating only on slab, then what would be the conversion spread that we earn from slab while we in the Netherlands currently? Would we have any idea around that number?

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : Understood, sir. And just one more clarification. I think you mentioned in the opening remarks about the coking coal reduction that the coking coal cost increase that we can see in quarter 3, I missed that number. Would you be able to sort of indicate that number again?

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : Great. So against the $50, $60 increase -- that $100 increase that we are seeing in the coking coal reduction in India, we are only anticipating $10 to $11. So we are benefiting from a sort of availability of the higher inventory in the coking coal in India operations?

Question: Kirtan Mehta - BOB Capital Markets Limited, Research Division - Analyst : Understood, sir. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2023 / 8:30AM, TISC.NS - Q2 2024 Tata Steel Ltd Earnings Call

Question: Ashish G. Jain - Macquarie Research - Analyst : So sir, my first question is, in U.K., one, this provision that we have taken off for roughly INR 2,425 crores, that includes some provision towards the onetime cost that you might incur in U.K. related to employees? Is that the right way to understand?

Question: Ashish G. Jain - Macquarie Research - Analyst : Right. Right. So sir, my focus is that INR 2,435 crores number, that is our current assessment or best case judgment of what the onetime employee-related cost could be? Is that the right way to think?

Question: Ashish G. Jain - Macquarie Research - Analyst : Basket. Got it. Got it. Sir, secondly, in terms of -- so we spoke about where our costs might go down in the U.K. in terms of lower maintenance and all, which is well understood. But let's assume this employee negotiation gets over in 1Q next calendar year. Shall we also assume that whatever is the redundancy, the cost related to that also goes out from 2Q itself and hence, our fixed costs will decline sharply in U.K. Is that the way to think?

Question: Ashish G. Jain - Macquarie Research - Analyst : So Koushik, sorry, to harp on this, but just to clarify this, so I understand that the -- maybe bulk of the onetime outgo happens in first half next year? Or whatever be the time frame. But whenever that happens from that -- sorry, since then, shall we assume the fixed cost will decline? The reason I'm asking is because if I let's say, take a 24-month, 36-month kind of a time frame, where we will be importing steel and servicing the U.K. market, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2023 / 8:30AM, TISC.NS - Q2 2024 Tata Steel Ltd Earnings Call should we assume that -- because if the fixed cost doesn't come down, let's say, from day 1 or day 2, would it be a continuous drag to the cash flows in the U.K. is where I'm coming from? Just to get better clarity on that.

Question: Ashish G. Jain - Macquarie Research - Analyst : Right. Right. And just my second question, it's a very small question. Just if I extend the current spreads in Netherlands to Q4, then we will be fully operational and our maintenance and all will be behind us, relining done, everything. On current spread basis, we would be making losses in Q4 also, I guess, right?

Question: Ashish G. Jain - Macquarie Research - Analyst : In Netherlands, is that? Okay. Okay. Okay. Great. Sir, I'll come back in the queue for more questions.

Question: Ashish G. Jain - Macquarie Research - Analyst : Sir, my question is on India growth plans. I think you clarified that the Kalinganagar 5 million ton will come in the next 6 months or so?

Question: Ashish G. Jain - Macquarie Research - Analyst : Right. So sir, what are we planning in terms of our next phase of growth because we have a well laid out plan in terms of where we want to be in financial year '30 in terms of domestic capacity. So what are the thought process in terms of when do we take up the next phase of expansion,

Question: Ashish G. Jain - Macquarie Research - Analyst : Naren, sorry. Sir, I understand the road map and all because we've been talking about it. My point was more like why are we kind of delaying taking up the expansion? Are we kind of going slow because of our balance sheet focus? Because if I compare with what our peers are doing in terms of expansion, at least at this moment, seem to be a bit more aggressive or ahead of time. And especially given the India growth story and the volume expectation and all, do we think that we are running the risk of kind of losing market share from -- at least from a capacity point of view?

Question: Ashish G. Jain - Macquarie Research - Analyst : And if you can comment on it, are we likely to kind of prioritize NINL first just to optimize the cost there because the current scale is quite small or we are open to everything at this moment?

Question: Ashish G. Jain - Macquarie Research - Analyst : Okay. Great.