Tata Steel Ltd Q3 2019 Earnings Call Transcript

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

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : So my question is with regards to demand in both India and Europe. So clearly, there's a slowdown in the automotive sector in Europe. And both Tata and thyssenkrupp are a big supplier to the automotive sector. Also, with regards to Brexit, we might be selling 70% in U.K. currently, but that demand destruction could also happen because of the Brexit. So considering the slowdown both in India and Europe, what are your views? How you think about the demand going ahead or is it transitory or do you think that the slowdown could sustain for a long time?

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : And, sir, your views on India's automotive demand. What's your thoughts on that?

Question: Anshuman Atri - PremjiInvest - Analyst : My question is regarding imports. So we have seen some jump in imports in January. What are the measures which have been proposed to government and will there be any pushback from the end-users like auto customers?

Question: Anshuman Atri - PremjiInvest - Analyst :

Question: Anshuman Atri - PremjiInvest - Analyst : Secondly, on sales volumes. The last quarter, we saw significant drop in sales and but this quarter will be a tall task in terms of making up for it. A few of our peers have guidance. So what is the strategy of Tata Steel which is allowing it to meet the full year despite a weak Q3? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 08, 2019 / 11:00AM, TISC.NS - Q3 2019 Tata Steel Ltd Earnings Call

Question: Anshuman Atri - PremjiInvest - Analyst : Lastly, on the news article stating thyssenkrupp is expecting the deal closure in next 3 months, is it possible, is it likely that within the next 2, 3 months, they can see European JV...

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : The question is on the net debt part. So if you see the last 3 quarters, this quarter, we have a net debt of around INR 1,01,000 crores. And if I just strip out the FX effect, which was positive for this quarter. Actually, for the last 3 quarters, our net debt has actually not reduced. So I was just trying to reconcile the EBITDA that we are generating. The CapEx spend and the interest. So if you could just help me reconcile the reasons why the net debt is not going down? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 08, 2019 / 11:00AM, TISC.NS - Q3 2019 Tata Steel Ltd Earnings Call

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Sir, but the Bhushan Steel came in 2 quarters back, and we had net debt at that time of around or close to INR 1,00,000 crores, or INR 1,01,000 crores. So basically, for the next 2 quarters also, we have not been able to reduce the net debt. That's why I'm trying to reconcile the next 2 quarters once we are done with the Bhushan Steel.

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Bhavin from Enam Holdings. If I see your Slide 8 where you're giving consolidated and the pro forma numbers, which are excluding Europe and Southeast Asia, if I see the adjusted EBITDA numbers, your pro forma numbers are just INR 100 crores below the reported consolidated numbers. But your European EBITDA on that is higher at INR 902,000 crores. So what I am missing in these numbers?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Yes, gap between the consolidated and the pro forma numbers. So your quarter 3 EBITDA it is INR 7,225 crores and pro forma is INR 7,106 crores. So that is hardly a difference of -- 7-1-0 -- so that's just 109 -- INR 119 crores below the consolidated numbers. So I'm assuming you're excluding the entire European and Southeast Asia in this numbers, right?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Sorry, Sir?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : That I understand sir, exceptional item, but does that pro forma number means that you are excluding the European EBITDA numbers at the EBITDA level?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Yes, so that's the reason. Actually, my question was apart from the adjustment, your European EBITDA run rate is INR 902,000 crores a quarter, whereas if I compare the numbers now, they are hardly going down by INR 100-odd crores in the pro forma. So there is a big INR 900 crore variable here?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Just to complete this. So post whenever the JV gets implemented these will be the actual numbers. This is a big positive surprise so because we were expecting 1,000 crores on a quarterly basis, is it just purely accounting that we are missing out? Or is anything else? Because is it just the accounting mismatch or -- suppose the Europe and Southeast Asia was in there you wouldn't have accounted in this quarter. You're saying that your EBITDA is close to 7,100 crores excluding Europe and excluding Southeast Asia?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : There would be some decline in EBITDA from here. I'll get further details from Sandeep, yes.