Tata Steel Ltd Q3 2020 Earnings Call Transcript

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

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : I wanted to understand on the balance sheet deleveraging target that what we have laid at the start of the year, where we are and specifically on Southeast Asia sales, which is expected by March, where we are?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, looking into the deleveraging targets into next fiscal, how should one look at the potential tax gains on back of Bhushan merger? I'm not sure of the timing over here. And secondly, how should one look at the rights issue. I think the second tranche is still pending. If you could some -- provide some color over there? 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 07, 2020 / 1:00PM, TISC.NS - Q3 2020 Tata Steel Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, possible for you to classify the cash flow impact, the benefit which will be there on back of the accumulated losses or the Bhushan merger? I'm just trying to understand the cash flow. If at all this event had to materialize, what will be the cash flow benefit that will come to us?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Sir, first question is, your strategy over the next 2 to 3 years. I mean, Kalinganagar Phase 2 looks to be coming only end of FY '23 or even FY '24 now. So next 3 years, assuming market still continues to grow at 5%, 6%, clearly we'll be losing market share as we won't have steel volumes to sell. So one is, if you can share your strategy to offset this?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understand. So by the end of this year, how much CapEx we would have spent on KPO 2.

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : So CWIP of KPO 2 will be...

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understand. Okay. Sir, second question, with respect to Europe, now assuming for next 1, 2 years, the spreads remain around EUR 200, EUR 225, what sort of cash burn should we model in FY '21, '22?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understand. So if I understand correctly, FY '22 should be -- I mean, we should benefit from all these and FY '21 could most likely be a transitional year unless and until the spreads expand dramatically?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understand. Sir, last question is with respect to the ongoing auctions. I mean, in terms of reserves, major -- largely the operating mines are -- the auctions have kind of completed, and we've not had any success yet. So if you could just share, I mean, what is our thought process? And do we think that the current clearing price is quite irrational?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understand. Just to confirm, Bhushan -- for Bhushan, we do not require any external purchase from next year onwards?

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Sir, 2 questions from my side. The number one is, on working capital release, so clearly, we have been able to deleverage this quarter due to the working capital release. I wanted to understand the scope of -- quantum of release in the next quarter. So that would be my question number one. My question number two is, with regards to auto renegotiations in Europe and India. So in India, we are understanding that the renegotiated price are at INR 6,000 lower than the prices prevailing previously. Is that correct? That is number one. And in Europe, what is the quantum of reduction in renegotiated prices for auto? And I assume we are selling 30% of our output in Europe to auto sector.

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Understood. And sir, just on auto renegotiate, the contracts are for 1 year or 6 months?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Before I ask the question, it's really commendable to see INR 2,300 crores of deleveraging in what has been a tough quarter and it's equally refreshing to see management stance of taking a step back on expansion and focusing on deleveraging. So if you can just lay out the volume road map over the next 2 years as well as -- as far as the Standalone entity is concerned or as the India entity is concerned. And also, the CapEx road map that you would ideally like to have in the Indian entity over the next 2 years?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Great, great. And the other question I had is on Europe. Have you written down any inventories? Is there any other provision of cost which is sitting there because certainly we could sort of see a very sharp reduction in the inventories which were reported in the P&L also.