Tata Steel Ltd Q4 2020 Earnings Call Transcript

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

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Sir, my first question is we are seeing the seaborne iron ore prices rising, and like obviously, it will have a lag effect for the operations in Europe. So just want to understand when will these high seaborne iron ore prices hit us.

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Understood. Sir, so -- and then my second question is actually on CapEx. So you have commented that you are planning to curtail CapEx by close to 50%. And if I look at your cash flow number in FY '20, we had a CapEx of around INR 10,400 crores.

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : So are we looking at the CapEx of INR 5,000 crore next year? And what will be the breakup between Europe CapEx and India CapEx?

Question: Rajesh V. Lachhani - HSBC, Research Division - Analyst : Understood. Understood. Sir, so just a follow-up on this CapEx. Like what is the reason why we have such a high amount of CapEx in Europe? So if I look at FY '18 numbers, FY '19 and, I think, FY '20 also, we have around INR 3,500 crores of CapEx in Europe, where we have a capacity which is quite low compared to the India capacity. So I just want to understand. And are you doing some growth CapEx -- significant growth CapEx there as well?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : So I have a few questions. First, if you can help me with the trend of exports over the past 2, 3 months in terms of volumes, product mix and destination.

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Okay. My second question is on your mining entity, Tata Steel Mining Limited. Now do you see a start of something here? They already see chrome mines, and I'm sure with the existing coal mines also, the new coal mines also coming up for auction, stage is set to participate in the coal mine auction as well. So how big of an entity can this be over the next 2 to 3 years in terms of your thought process? Or how -- what kind of revenues are you targeting for this entity? Can it sort of derisk the business a bit because we clearly see it as less volatile, higher return part of the segment? Or do you think that normally, what we are seeing is competition sort of doesn't allow this kind of top line acquisitions to happen? So what's your thought on this?

Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst : Okay. Okay. And any restructuring or any reduction in the manpower which is deployed within the mining ecosystem today? Can we expect that? I mean, for example, the 34,000 or 33,000 employees that we see in India, is there a scope of pruning it down further for this restructuring? Or that's not sort of what you're looking at?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, I had a couple of questions. First was on European operations. In the notes to accounts, auditors have opined on the going concern for Tata Steel Europe. And there's a number also which has been given at INR 20,000 crores. Sir, how should one interpret this? That's the first question.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. Sir, just a clarification over here. Does the Indian entity provide any guarantees for the debt which is being raised at the Singapore entities to fund the European operations?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : It is -- sorry, I missed it.

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Okay. Sir, my second question is, how should one look at the pension situation right now? I understand that 10 bps decrease in discount implies around 1.4% increase in liabilities. And March-end of last year, it was something which was in a positive zone. Given the change in macro, sir, how are we positioned over here right now?

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : That's comforting. And sir, last one, if I may squeeze in. Sir, how do you usually advance fee and supply agreement? I think there was a Bloomberg notification which stated you have raised around $1.2 billion. I just wanted to understand the context of this particular trade finance arrangement. And what does it imply on the debt that we give out on the balance sheet? And if at all, it has an impact on the covenants. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 30, 2020 / 9:00AM, TISC.NS - Q4 2020 Tata Steel Ltd Earnings Call

Question: Ritesh Shah - Investec Bank plc, Research Division - Analyst : Sir, the impact on covenants, if at all. It has advanced fee and supply agreement?