Tata Steel Ltd Q3 2025 Earnings Call Transcript

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

Question: Satyadeep Jain - Ambit Capital Pvt. Ltd. - Analyst : So Naren, first question on Europe, one of the largest players in the region has talked about delaying decarbonization investments. There's a lot of list of reasons, there onslaught of Chinese imports, CBAM, not making sense in its current form, which is what Mario Draghi had also mentioned in this document. So in that context, given where margins are, given where imports are in the current form of CBAM, and given the strategies adopted by some of the other players where they're waiting for allocation for decarbonation investments, what -- how are you evaluating your allocation to capital in both UK and Netherlands? Are you going to go ahead with all this CapEx till you get more clarity on any support from the government? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 9:30AM, TISC.NS - Q3 2025 Tata Steel Ltd Earnings Call

Question: Satyadeep Jain - Ambit Capital Pvt. Ltd. - Analyst : I wanted to follow-up on that final investment decision. It's only five, six months from now. Let's say, if the demand in pricing doesn't change, would you -- would that decision be contingent on how the demand is around that time in demand and pricing? Would you wait for --

Question: Satyadeep Jain - Ambit Capital Pvt. Ltd. - Analyst : Just last question. What is the expectation for breakeven in UK by when do you expect to reach breakeven? And also what's the clean industry deal is going to be announced sometime soon in February, what is your expectation? Is it more or less in line with what you've seen in UK in terms of concessions?

Question: Sumangal Nevatia - Kotak Securities - Analyst : My first question is with respect to the notes of account, note number 6. There are a lot of details with respect to some environment-related noncompliance notices we've received for our Netherlands facility and also some penalties. Is it possible to share exactly what is this -- what is the nature of penalties? And when do we expect to kind of get back on the right side?

Question: Sumangal Nevatia - Kotak Securities - Analyst : Got it. Koushik, in case we don't reach to these levels, I mean, what sort of financial impact are we looking at for the next three, four years on an annual basis?

Question: Sumangal Nevatia - Kotak Securities - Analyst : Understood. My second question is on overall prices and cost movement guidance, which we usually give. So if maybe Naren can help us with that, with India, Netherlands, UK, all three on the realization NSR and then on cost.

Question: Sumangal Nevatia - Kotak Securities - Analyst : Understood. Just one follow-up on Netherlands. I mean, over the next, say, one year, is there any specific cost reduction self-help measures should we expect to reflect in results? Or from here on, the profitability margins, et cetera, will be largely a matter of market factors?

Question: Amit Murarka - Axis Capital Limited - Analyst : So the first question I had was on India. So on the last call, you had guided for a 2,000 drop. And actually, after that, prices slid even further. I was just wondering like in the reported numbers, at least the fall was looking much lower. So like was the NSR decline lower than what you would thought? Or what was the reason for the better realization guided?

Question: Amit Murarka - Axis Capital Limited - Analyst : All right, understood. And also on the TS UK, I thought you just mentioned the GBP60 drop that you're expecting on the NSRs for Q4. So are you guiding for breakeven in TS UK, including this decline? Or how is it --

Question: Amit Murarka - Axis Capital Limited - Analyst : Sure. And I had a slightly longer-term question as well. Like iron ore leases come up for expiring in 2030. So when you're evaluating growing the India capacity 35 million tonne to 40 million tonne, how are you kind of looking at the IRRs for these projects? Like do you improve the iron ore cash flows in your assessment? How do you kind of look at it?

Question: Vikash Singh - Phillip Capital - Analyst : Sir, just wanted to understand our capital allocation policy. We are already spending in UK we have big plants in India and at some time in between middle and would come into play also. Given our current high debt levels, so what would be our priorities? And can we delay the Netherlands CapEx considering we have some carbon credit left? And how does this affect the Netherlands cost of production?

Question: Vikash Singh - Phillip Capital - Analyst : Understood, sir. And sir, are carbon credit (technical difficulty)

Question: Vikash Singh - Phillip Capital - Analyst : Understood, sir. And sir, is the full benefit of pellet and CRM has been realized in the EBITDA (technical difficulty) spending, which would come into 4Q onwards? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 9:30AM, TISC.NS - Q3 2025 Tata Steel Ltd Earnings Call

Question: Ritesh Shah - Investec Bank - Analyst : Couple of questions. First, sir, what we put out from the last digit application surprisingly did mention Tata Steel. So I don't know what underlying reason. So wanted your take on that because the application went from India Steel Alliance, and we are a part of it (technical difficulty) press release or something else to read from it? And secondly, what are the expectations on tariff and non-tariff measures? We do hear about tweaks on import duty safeguards. How should we look into these events?

Question: Ritesh Shah - Investec Bank - Analyst : Sure. that's helpful. Two questions for Koushik. Sir, how much is the quantum of capitalized cost as a percentage of EBITDA for Q3 and nine months, if you can help us with that number? The reason to ask this question is, if you look at our last year's balance sheet, capitalized cost was nearly 20% of EBITDA. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 28, 2025 / 9:30AM, TISC.NS - Q3 2025 Tata Steel Ltd Earnings Call It was quite a significant number. If you can help with the Q3 and nine-month number, or probably I can take it later, whatever works.

Question: Ritesh Shah - Investec Bank - Analyst : Sure. And the second one was how should we look at the debt and cash flow profile into Q4 and next fiscal specifically factoring working capital release potentially into Q4? And are we still looking at one consolidated balance sheet? Or basically, are we okay to give out numbers on the debt on books currently at UK and Netherlands, which I think the last time what you had given was around [500 million, 600 million] at both the regions.

Question: Ritesh Shah - Investec Bank - Analyst : Sir, possible to quantify the net debt number for Netherlands and UK on December-end basis?

Question: Ritesh Shah - Investec Bank - Analyst : Sure. That's helpful. Can I squeeze in one?

Question: Ritesh Shah - Investec Bank - Analyst : Yeah. Sir, specifically for Netherlands, in the last call, you had indicated that we've already started for the preparatory CapEx. And I think over the last four to five quarters, we have been engaging with the government, but nothing firm as yet. So how are we looking at it specifically as a hypothetical, there is a CapEx of $3 billion to $4 billion and we have to take potentially one furnace down, which will be 3.5 million tonnes. Then how are we looking at the managing the cash flows for Netherlands? And is there a sort of assurance that you can give to investors that there won't be a fungibility of cash from India to, say, Singapore to Netherlands?

Question: Indrajit Agarwal - CLSA - Analyst : Most of my questions are answered. I just want to understand, you quantify what would be the conversion cost differential between the Kalinganagar Phase 2 versus what we have currently over there? What kind of cost savings we can looking forward when Phase 2 is fully ramped up?