Tata Steel Ltd Q4 2018 Earnings Call Transcript

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

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : Sir, just a couple of questions. Sir, first question on the net debt. The INR 69,000 crores of net debt, which has been reported, I believe that already includes the rights issue money that you would have received in the quarter, right?

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : So sir, if you can just help me reconcile, you've got close to INR 9,000 crores of cash coming in from the rights issue and net debt was close to INR 75,100 crores at the end of December. So if I were to adjust for this rights issue amount, our net debt has actually increased? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2018 / 2:45PM, TISC.NS - Q4 2018 Tata Steel Ltd Earnings Call

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : Okay. Also secondly, the question on European business. So if I want to look at the third quarter and adjust for that maintenance shutdown impact, our EBITDA per ton was close to $70. From Q3 to Q4, there has been an improvement for a good amount of our competitors in terms of profitability, whereas if I were to look at our financials, we're flat quarter-on-quarter adjusting to that shutdown impact in Q3. What are the factors, which have led to a flat movement in profitability compared to a jump for the competition?

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : I'm sorry, sir. There was a blank. I couldn't hear you properly.

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : Okay. So it was a one-off incident, which had happened in February, you mentioned?

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : And roughly, if you can quantify, sir, what could be the impact on account of that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2018 / 2:45PM, TISC.NS - Q4 2018 Tata Steel Ltd Earnings Call

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : Okay. Sir, a question on the India realizations. Sir, what would be our Q4 exit compared to Q4 average? And how would that compare with the current realizations?

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : Yes,.

Question: Dhawal Doshi - PhillipCapital (India) Pvt. Ltd., Research Division - Analyst : And how about on the current realizations with Q4 exit?

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Sir, my question is largely related to the Bhushan acquisition. So just wanted to understand what are your plans for the captive iron ore usage in Bhushan? And another question is on if you can quantify the synergies that we can -- that can arise from this acquisition. And also, what is the EBITDA per ton now and what are our expectations when it reaches to 100%?

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Sir but on captive iron ore, any plans on that?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, my first question is from Europe. The sale of noncore assets, what do we have (inaudible)? Now there's one on the Tata Steel U.K., right? So I was with the understanding that coal JV does nothing which is developed in Europe. Can you please correct me over here?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : I think on the holding structure, it's my understanding [Ensemble], Cogent, [Dalja], [First Steel] all fall under Tata Steel U.K. and then comes into Tata Steel Europe. So my question is as part of the JV structure, Tata Steel U.K., it was like 67% and 33%. So wouldn't this be under the JV structure itself?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. So the assets which are currently under the JV, which you are disposing of after having consulted with thyssen and BSPS?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. So sir, are there any further more assets, something like this that you can consider noncore outside of JV?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. That helps. Sir, secondly, on the balance sheet, hypothetically if Bhushan Power had to [plan], will we consider our decision on KPO to specifically 2.2 million tons CR mill. So I appreciate the commentary which you gave on how you look at the balance sheet going forward, but is it something that you would consider delaying KPO to a certain part of the expansion that we have highlighted? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2018 / 2:45PM, TISC.NS - Q4 2018 Tata Steel Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, specifically on the Bhushan Steel part, you indicated that they have 2 million tons CR mill. My understanding was it was 1.2 million tons. So if you can help us with the configuration of the asset, it will be quite useful.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : And my second question over here is, sir, do we have land in place to expand from 5.6 million to 8 million tons?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : That helps. Sir, coming to Bhushan, this INR 35,200 crores, it includes the INR 9,000 crores that, to my understanding, it's the financial creditors who have the optionality to convert it to equities. Sir, if you could please provide some color over here, it will be quite useful.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. And sir, secondly, you said on this INR 18,700 crores, it could get converted to equity at some stage. How should we read into this? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 16, 2018 / 2:45PM, TISC.NS - Q4 2018 Tata Steel Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. And for the time lines over here?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. And it will be at what price? How will it happen?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : (inaudible)

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay, okay. That helps a lot. Sir, last question, if I may. Sir, you indicated the valuation for the asset at INR 42,000 crores, INR 45,000 crores, including 4 years until we -- INR 13,000 crores, INR 14,000 crores. Can you run us through the expansion over here?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : That helps. Lastly, you said about iron ore synergies, right, and they are holding applicable like -- is it like currently we can't use iron ore from Tata Steel to Bhushan Steel if it's a different entity? Are we looking at something where this could actually become possible and that will be considered synergy elements?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Perfect. Sir, Last question...