Tata Steel Ltd Q3 2021 Earnings Call Transcript

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

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : So overall congrats on the deleveraging process and operational efficiency or across. Sir, my question is on Europe going into quarter 4 and ahead. And I believe the adjustments related to Netherlands entity with support is also...

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : It is clear now?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Yes. Yes. So the Europe operations would have a normalized EBITDA from quarter 4? I'm asking this because the spreads of Europe are at all-time high of $450, $500 and historically, you have guided as the conversion cost there roughly around $200 to $230. So are we looking at record numbers in quarter 4 in the Europe? And are there any adjustments still pending for the European entity in Q4?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Suings. And have the adjustments of this rate support, which was faired during the pandemic and all that happen? Or we still have something of a reversal, which is yet to happen both at U.K. and Netherlands?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : Sure. And the last question, Koushik, you guided for net debt numbers of INR 80,000 crores. Though the gross debt reduction is higher, and we will be receiving over INR 3,000 crores in rights also. So are you expecting some working capital reversal in quarter 4? Because I believe export advances what you have taken over INR 6,000 crores would be for a longer period of time. So which other working capital heads are you expecting there would be a reversal and hence, the net debt reduction, which will be much lower than the gross debt number?

Question: Bhavin Chheda - Enam Holdings Pvt. Ltd - Analyst : So just a clarification. So we are expecting a net debt number reduction of similar levels? That's what my question was. Though...

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : I have 3 questions. First of all, what is the outstanding export advances as of now? Second is, if you can highlight the trading loss that you have registered on carbon credits this year in Europe, as of 9 months? Number three, the question is on Tata Steel Long Products. So we are seeing a company getting created to almost INR 4,000 crores kind of net worth. So what are the -- and probably hardly any borrowings to be left over the next couple of years. So what can be the expansion plans, what can be the leveraging plan within this balance sheet to sort of expand the current 1.5 million capacity. If you can sort of throw some guidance around that?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Yes. In terms of how to utilize this balance sheet, which has almost INR 4,000 crores of net worth? And what are the kind of expansion plans that one can look at currently, which is standing at 1.5 million tonnes. It was earlier -- you have mentioned that by merging all these 3 companies together, the idea is to create a much bigger company and have a better balance sheet to create that kind of scale to expand further. So any sort of thoughts, guidance outlook that you have had formed up?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : And see, currently, it's 1.5 million tonne producers. So -- and almost 75% of the shares still lies with the secondary producers. So can we sort of think of it becoming a 5 million, 6 million-tonne player eventually over the course of next 3, 4 years or 5 years maybe? Is that the sort of thought process that we are going towards with this company? Or?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Okay. Great. It may not be as capital intensive?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Great. Yes. And then those 2 questions in the outstanding export advances as of 9 months '21 and the trading loss on carbon credit in Europe for 9 months?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : I'd like to congratulate the team for A minus rating on CDP and putting on sustainability targets for both India as well as Europe, thanks for that. I have 4 questions. First is on export advances. Sir, you indicated a number of INR 6,000 crores. I just wanted to understand what is the full blown-out number that we can look at over here? If I remember it right, the instrument what we had were was for $1.2 billion. Is that number correct?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : It is $1 billion. Okay. That helps. That is one. My second question is on iron ore security for India operations. What is the percentage of iron ore, which is captive right now? And any specific view that we have on lease expiries by 2025 or 2030 and if it is by 2025, then what is the mitigation strategy? Or how are you looking at the scenario? That's the second question, please? 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 10, 2021 / 9:00AM, TISC.NS - Q3 2021 Tata Steel Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : That's helpful. My third question was about sustainability and Europe. In the presentation, you have indicated EUR 300 million towards Tata Steel Netherlands. Now if I look at the carbon intensity numbers for U.K. It is significantly higher than Netherlands. So just wanted to understand, what is our CapEx commitment for both the regions? We understand U.K. is not probably as good as Netherlands, but when we look at incremental CapEx, current carbon prices, and forgive me for my ignorance, but I think on the EU ETS space for at some point in time, they are looking at benchmarking on assets. And that is something which can actually create a lot of trouble for the U.K. operations. Now if that's the context in which we are looking at capital allocation and the risk on carbon, how is the management approaching this scenario, please?