Tata Steel Ltd 144A

Ladies and gentlemen, good day and welcome to the Tata Steel analyst call. Please note that this meeting is being recorded. The attendees audio and video has been disabled from the back end and will be enabled subsequently. I would now like to hand the conference over to Ms. Samita Shah. Thank you and over to you ma'am.

Thanks, Kanshuk. Good afternoon, good morning, and good evening to all our viewers who have dialed into this call. On behalf of Tata Steel, I'm delighted to welcome you to this call where we will discuss our results for the quarter one of FY26. The call is being led by Mr. T.D. Narendran, CEO and MD, and Mr. Kaushik Chatterjee, ED and CFO of Tata Steel. As is the norm, we will make some opening comments before we open the floor for questions. Before I hand it over to them, I just wanted to remind all our participants that the entire discussions will be governed by the disclaimer, which is on page two of the presentation, which discusses our results. Thank you and over to you, Narendra.

Hi, good afternoon, everyone. As Samita mentioned, I'll make a few comments and then pass on to Kaushik. At an overall level, the US policy, the geopolitical tensions and the macroeconomic situation in China are certainly shaping steel trade flows leading to volatility in regional prices. And steel prices increased in April in India, aided by the expectations around safeguard measures. But with China's steel exports averaging at over 9 to 10 million tons per month, the pricing trend softened a bit by June and in July as well. More recently in China, we've seen the prices go up in the last few days, but the impact of that is yet to be seen. So while the raw material prices continue to moderate, steel spot spreads peaked mostly in April and since then have faced some pressure. Amidst this, Tata Steel has delivered a strong improvement in Q1 performance on a quarter-on-quarter basis as well as on a year-on-year basis. I'd like to now make some comments on the performance in each geography. In India, crude steel production was at 5.24 million tonnes while delivery stood at 4.75 million tonnes and this is lower than the previous quarter due to the seasonality as well as maintenance shutdowns. And while the ramp up at Kalinga Nagar is as per plan, one of the large furnaces at Jamshedpur has been down for relining for the last few months and should come back on track over the next few days. We did have an issue with one of our furnaces in Yelachilispath which had undergone a maintenance shutdown and we didn't have much production from there in April. As a result, the crude steel production was down 4% quarter on quarter. Further in fourth quarter, seasonally strong deliveries led to an inventory drawdown, which has been replenished in Q1 to normal operating levels. This coupled with the drop in production led to a decline in overall deliveries. Nilachal is back at normal operating levels and the relining in Jamshipur, as I mentioned, is at its last stages and the blasphemous G, which is being relined, should come back in the next few days. We could offset the impact of volumes by an increase in net steel realizations to the tune of about 2,600 rupees per ton on a quarter-on-quarter basis in India. This is despite an early onset of the monsoons. And the higher net realizations were partly on the back of increase in broader market prices in April and partly led by our ability to maximize volumes in certain chosen segments. We also drove a number of initiatives which helped us achieve the planned cost takeouts. This has helped us deliver an EBITDA margin of around 24%, which is close to the 10-year average. At a business vertical level, the deliveries to the automotive segment was aided by 4% year-on-year growth in high-end products. And we remain focused on new product development. And within six months of the continuous and leading line, being commissioned in Kalinga Nagar we have successfully established grade approvals for high strength and ultra high strength steels including for skin panel applications. We expect to make further progress with the commissioning of the state of the art continuous galvanizing line at Kalinga Nagar. The first coil from the new CGL line continuous galvanizing line was produced in June and we are in the process of again getting the approvals for the CGL products as well. Our retail business is shaping up well and Tata Tiscon is growing systematically aided by deep consumer connect and reach. And based on consumer insights, we launched Tata Tiscon SDCR, which is super ductile corrosion resistant steel to meet the demand for corrosion resistant steel in the coastal areas of Andhra Pradesh, Tamil Nadu and Kerala. In terms of reach, our dealer and distributor network is now over 25,000 and is ably complemented by e-commerce platforms, Asiana and Digicar. Together, they witnessed a gross merchandise value of about 1350 crores in Q1, which is up 39% year on year and works out to around 5400 crores on an advertised basis. The industrial products and projects deliveries were aided by value accretive segments such as engineering and ready-to-use solutions. And the engineering segment grew 5% year-on-year on improved volumes to oil and gas and railways. And the further enhanced product mix has led to solar witnessing the steel that we supply for the solar panel supports increasing by four times the volume compared to Q1 2025. We continue to strengthen our downstream portfolio and our color-coated volumes have been steadily ramping up through a joint venture with Blue Scope Steel, the Tata Blue Scope JV that we have. This JV now sells around 300,000 tons of color-coated steel, a large part of which is through the high-margin Durashine retail brand. And during the quarter, we had also commissioned 100,000 tons per annum tubes mill, which utilizes an innovative direct-forming technology that offers productivity and quality benefits over conventional mills. Moving on to UK, our deliveries stood at around 0.6 million tonnes and were marginally lower quarter-on-quarter basis. UK steel prices are still 6% below the levels of a year ago due to the subdued demand and import pressures, despite safeguard quotas being in place. And quotas for some products are more than the prevalent domestic demand in the UK. As such, a sustained focus on controllable costs continues to yield results and has aided our Q1 performance. This quarter also marked a significant milestone in UK's transformation journey with a groundbreaking ceremony on the 14th of July at Port Talbot, marking the official start of construction for the scrap-based electric arc furnace. In Netherlands, liquid steel production stood at 1.7 million tonnes and deliveries were at 1.5 million tonnes. Our performance was aided by favourable sales mix as well as moderation in controllable costs. We are committed to 35-40% reduction in carbon emissions and are engaged with the government team on support for the integrated decarbonization and environment measures project. Thank you and with this I hand over to Kaushik for his comments.

Thank you Naren, good afternoon, good evening to all those who have joined in. I will begin with the consolidated performance provided in slide 22 of the presentation. As you would be well aware, the market conditions and trade tensions across geographies remain pretty complex. However, the steel spot spreads over raw materials have improved primarily aided by moderation in cooking coal prices and I&O prices during the last quarter. This, along with our progress on internally focused cost takeout initiatives, which we have discussed in our make call, have led to an improved consolidated performance on Q&Q as well as on a Y&Y basis. Let me give the headlines on the financial performance. The consolidated revenues for the quarter stood at Rs. 53,178 crores and the EBITDA was about Rs. 7,480 crores. Q1 EBITDA increased by 11% on quarter-on-quarter basis, translating to a margin improvement of about 200 basis points and per ton EBITDA improvement of around Rs. 2,400. I would like to point out that our consolidated EBITDA is now broadly similar to the India EBITDA and our intent is to continue the transformation process in UK and Netherlands such that this trend continues and is sustained even though we are faced with volatile market conditions due to trade and tariff related issues. Now let me talk about the global cost transformation program of Data Steel that I had spoken in our earlier call. Firstly, this is a cross-geography, cross-functional efficiency initiative that goes deep on the structural review and looks to push the bar on further efficiencies. During the quarter, we have delivered a traceable improvement of about 2,900 crores during the quarter across the three main geographies. With India at about 1100 crores, Netherlands at about 1400 crores and UK delivering about 400 crores of cost transformation. Across supply chain, spares, repairs and maintenance, raw material efficiency, energy management, logistics and freight, broader productivity areas and fixed cost. The efforts continue to realize the full gains in the future quarters. As mentioned on slide 12, this translates to about 98% compliance to our own first quarter plan. And therefore, we are in a good position to continue this program. In India, we achieved about 100% compliance to the plan and the initiatives or focus areas that yielded results were leaner coal mix, optimization of stores, repairs and maintenance, reduced scrap consumption and operating KPIs relating to freight, and handling and has also with power and fuel. In UK, we have bettered and plan on account of further reduction in maintenance cost, higher in leasing and other operating charges. In addition, we are also focused on optimizing the cost of purchase substrate of the feedstock that goes in for conversion. In Netherlands, we were marginally below plan, basis the pace of consultation with the Central Works Council. Excluding the employee-related costs, we were up to about 100% compliant with the plan, and this was driven by better product mix or downstream sales, optimization of supply chain and procurement costs, along with other controllable costs. Let me now provide a deeper understanding of India, UK, and Netherlands performance individually. The Tata Steel standalone revenues for the quarter ended June was about 31,014 crores and EBITDA was 7,263 crores, which started to a margin improvement of about 275 basis points or 2,600 rupees per ton on a Q1Q basis. As Naren mentioned, our volumes were sequentially lower in the first quarter due to maintenance shutdowns. As a result, the total revenue from operations declined by about 3,400 crores in the first quarter despite higher realizations to the tune of about 2,600 rupees per ton. However, this was more than offset by the improvement in the controllable cost leading to an increase in the first quarter EBITDA by about 158 crores or 2% versus quarter 4 of last year on a reported basis. Within cost, the material cost declined by about 2,900 crores, primarily driven by decline in coking coal consumption costs by about $12, as well as leaner coal mix and inventory management. To elaborate on inventory, there was marginal inventory buildup in the first quarter vis-a-vis the drawdown in the fourth quarter, which is a seasonally stronger quarter. Conversion costs decreased by about 700 crores primarily aided by decline in stores, repairs and maintenance and power and fuel related expenses as a result of the cost transformation program despite having an adverse operating leverage on account of lower volumes. I would like to mention a few comments about a subsidiary in the Nilachal Ispat Nigam Limited or NINL The EBITDA for NINL was about 220 crores for the quarter and this translates to a margin improvement from 23% in quarter 4 to about 24% in first quarter. On 24th of July 2025, we have successfully completed the residual acquisition to make NINL now 100% subsidiary. Looking ahead, the blast furnace operations have resumed in NINL as you heard from Naren and we expect that the production to pick up in the subsequent quarters. In the standalone P&L, depreciation for the quarter was 1627 crores, which was up by about 7% year-on-year. We have capitalized about 5500 crores during the quarter, primarily in account of Kalinga Nagar expansion, and the remaining will be capitalized during the course of the financial year. Coming to the European operations, I would like to elaborate about the total market dynamics before moving on to the performance. The UK and the EU have been impacted by steel imports, which has impacted the demand conditions as well as the supply demand balance. The capacity utilization of the European steel industry currently is about 60-65%. As such, both the UK and the EU have undertaken measures to safeguard the local industry with varying impact across the two regions. In Germany, the HRC prices are up 4% compared to a year ago, while in the UK, the HRC prices are still 6% below the year's average last year. UK steel safeguard quotas by product have been liberalized every year and are now a larger proportion than even in 2018 when it was started, even as the UK demand has contracted. This meant that quotas for selected products are higher than the demand. The EU has already reworked the country quotas and the UK government is currently working to intervene in respect of the quotas. These initiatives are expected to stabilize the price regime in the future with a lag effect. We are also keenly following the details of the trade deals that are being finalized between the EU and the US as also between the US and the UK. Given this dynamics, Tata Steel UK has focused on fixed cost and strategic initiatives to aid performance. In the first quarter, Tata Steel UK has managed to halve its EBITDA loss despite the challenging market conditions and the uncertainty on tariffs. UK revenues for the quarter stood at about £536 million and declined by 3% or £15 million on quarter-on-quarter basis due to marginal drop in volumes. At the same time, total costs have declined about 9% or 55 million, leading to an improvement in the EBITDA performance by about 40 million or 58 pounds per ton. Within cost, fixed costs have improved by about 17 million and first quarter fixed cost base on an annualized basis reflects a reduction of more than 200 million in FY26 versus financial year 25. Apart from fixed costs, The decline in substrate cost, power and fuel, bulk gases related expenses have also helped the performance. Moving on to Netherlands, revenues for the quarter were about 1.5 billion and were down 6% or 105 million on quarter-on-quarter basis. Realizations improved on better sales mix with a drop in volume led to the revenue movement. At the same time, the total costs have declined by about 10% or 155 million euros, leading to an improvement in the EBITDA of about 50 million or 35 euros per ton. Material costs declined by about 184 million euros, but were partly offset by the marginal increase of about 30 million in conversion costs. Improvement in material costs were largely driven by inventory movement and decline in cooking coal consumption costs, despite the incidence of U.S. customs duty on select volumes. The U.S. business of Tardis in Netherlands is very profitable, and the material is shipped from Netherlands to the U.S. for further processing before selling to the customers in the U.S. These shipments incurred about 25% duty till early June and 50% thereafter. Tata Steel Netherlands has negotiated with customers and some of them have agreed to bear some of the additional cost on tariff. Net adverse impact on EBITDA in the quarter was around 14 million. We are hoping to get more clarity of the EU-US trade deal on the final tariff principles on export of steel to the US. Conversion costs rose by about 30 million quarter on quarter, primarily on account of two factors. One was a non-cash actual adjustments and employee benefit provisions reversals that we had in quarter four to the tune of about 27 million. And the other was increase in emission rights costs to the tune of about 6 million, primarily on account of improved production and marginal increase in the EU ETS prices. Excluding these, our conversion costs are actually moderated on quarter on quarter basis. Moving to the cash flows, we spend about 3829 crores on capital expenditure during the quarter, majority of this was in India. There was a working capital buildup primarily due to replenishment of stocks in India and Netherlands after a strong fourth quarter. As the production improves in India, we expect that the optimizations on working capital in the next quarters. Net debt was at about 84,835 crores and a group liquidity remains strong at about 43,578 crores, which includes about 14,118 crores of cash and cash equivalent. While net debt has witnessed a marginal increase versus end March, we are committed to deleveraging and with a slightly stable trade environment, increased volumes on account of completion of Kalingan Agar project and the benefits of cost transformation in the second half of the current financial year, we will endeavor to continue the deleveraging process. Our capital expenditure and projects. The board of the company has yesterday approved the expansion of the tin plate business to almost double the capacity of the existing facilities in Jamshedpur and also invest to ensure sustainability of our captive cooking coal mining capacity. In the UK, the EAF project is progressing well and in Netherlands we continue to be engaged with the government about the support of decarbonisation and the environmental measures impact. Lastly, moving to our disclosures, we are committed to transparent and responsible business practices and also actively engage and embrace the global frameworks. We have recently adopted the TNFD's LEAP approach and published our inaugural TNFD report, which is on nature-related financial disclosures, which is up on our website. It marks an important milestone in our journey towards becoming more conscious of the risk of nature loss and also demonstrates our commitment to continue to be a responsible organization. With this, I'll end my presentation and open the floor for questions. Thank you.

Thank you, sir. We will now begin with the question and answer session. We will be taking questions on audio and chat. To join the audio questions queue, please mention your full name and email ID in the chat box. Kindly stick to a maximum of two questions per participant and rejoin the queue should you have a follow-up question. We will unmute your mic so that you can ask your question. To ask questions on chat, please type in your question along with your full name and email ID in the chat box. We will wait for a moment as the queue assembles. The first question is from Sumangal Nevatiya of Kotak Securities. Sumangal, please go ahead.

Thanks for the chance. I'll start with the bookkeeping one. Sir, you can share what is the price and cost outlook in the coming quarter versus what we've seen in 1Q, both India, UK and Netherlands.

Sorry.

Sumangal, as far as the price is concerned, the guidance we are giving for India is the net realizations will be about 2000 rupees less in Q2 compared to Q1. As far as UK and Netherlands are concerned, it will be flat or slightly higher. As far as cost is concerned, the coking coal costs are expected to be about $10 per tonne lower in each of these geographies from a consumption point of view. And in Netherlands, the iron ore cost is also expected to be about $7-$8 per tonne lower from a consumption point of view for Q2 compared to Q1.

Understood, sir. Got it. So next question is on the cost transformation. Yes, congratulations on delivering on 1Q. So I just wanted to understand one, how is the breakup between India, UK, Netherlands in 1Q? And when we're saying breakeven in UK, if you can share what's the latest thoughts by when is it still 2Q? And this cost transformation, is it in addition to breakeven in terms of we going into positive in UK as well? Or this is basically including the cost transformation, we will be approaching breakeven?

So, Swamangal, I gave the breakup in the cost transformation between agents in my narrative, but I can repeat it again. It's about 1100 crores in India, Netherlands at about 1400 crores and the UK at about 400 crores. See, when we chase breakeven, I presume you're talking about UK. Fundamentally, you cannot have breakeven and then something else. Something else then leads to the breakeven. So, this cost transformation is also a very important part to achieve the breakeven. See, the goal of getting that breakeven is very important for us as a company and we continue to chase that. The market has been very volatile and you understand that, including the uncertainties on tariffs because the tariffs affect not just us directly but also indirectly our customers. And therefore, in UK, there has been a 15% reduction in the automotive sales, for example, or automotive demand in the last quarter. So, we are seeing multiple elements to that, but there is an effort to ensure that we get to the break even by the end of this year for sure.

Understood. Got it. And just one last question on expansion. We have not yet announced or taken board approval for NNL expansion. So just want to understand what is holding us back given we are already ramping up Kalinganagar and maybe in 18-24 months we will be running at a rated capacity. So when do we expect some announcement on expansion?

So one of the things which is important for us to do what we do now is we do the front end work lot more than what we used to do earlier. Earlier we used to announce and then do the environment clearance, then the basic engineering and all the approvals etc. So currently we are in the engineering part is very advanced as well as the environment clearance process. There is a public hearing that has already happened. So the process for the EC is getting completed. It will take a couple of months more. So once we are done with all this, when we go for FID or the final investment decision, That time we are execution ready. That is our approach which was not the case earlier and which we used to suffer from time delays as well as cost delays. So, we have changed the process and that is what is happening in the NIL process. Narin, you want to add something? Okay.

No, I think you articulated it. So basically, once we get the FID, we are ready to move the order placement and the construction. I think that's what we're looking for. Whereas earlier, once you got the board approval, you waited for another year, year and a half to get the work started till you got all the approval. So that's a shift in our approach. So Nilachala is at a very advanced stage. I think we are ready to go to the board maybe by October, November, as soon as we get the environment clear. What you will see over the next 12 months is, of course, the Ludhiana plant coming into action. That will add another 0.75 million. You know, and the Combi Mill and Jamshipur, which is half a million tons, which converts some of the extra billets we have in the Gamaria plant into steel. So, you will see a lot more value addition and, you know, some volume growth in long products before the Nilaat Singh month comes in.

Thank you, sir. The next question is from Prateek Singh of DAM Capital. Prateek, please go ahead.

Opportunity, am I audible?

Yes, please.

Yeah, thanks. So, the first question is largely on prices. So, Indian steel prices seem to be at a 10% kind of a discount post to China prices post safeguarding. And we have not yet seen any improvement in trade prices. So, does this mean that the seasonal impact this time is quite bad? And as a corollary, how are we seeing the government spending, especially state governments where some states are facing fiscal pressure? So, when can we see some price hikes happening or would it only happen once monsoon is behind us? That's the question.

Yeah. So I think what's happening is a lot of capacities which are down because of maintenance shutdowns, because pretty much most of the major steel companies are doing shutdowns and maintenance work in Q1. So that has come back by end of June and that coincided. to some extent with the onset of early onset of monsoons. So that's why there was some sort of price pressure. Internationally, if you look at it, not so much internationally as China, domestic prices have gone up about $35, $40 in the last few days to do with the announcements that they made on the 1st of July. So we are seeing internationally a bit more stability on the pricing. Domestic demand is traditionally weak in this quarter, as you said. But we expect it to pick up once the monsoon ends for two reasons. One is it looks like a good monsoon year. And secondly, once monsoon ends, the construction activity will start. And thirdly, the festival season is on to us. So we are more optimistic about the prices going forward. This will be a slightly difficult quarter because of what I just described. The other thing you should keep in mind is because international prices are low, the exports out of India is much less. So earlier from India, we used to export anything from 7 to 10 million tons of steel. That's not happening because international prices are not great. So pretty much all Indian producers are selling most of what they produce in the domestic market. And that's why we say there is enough supply in the domestic market. We'll lead to some price pressures as we felt last month. But I think we see things improving from next quarter.

Thanks, Naren. And the second one is for Kaushik. Kaushik, you mentioned in UK we are optimizing on the cost of substrate. If you can elaborate a bit more on that, given it's a commodity, what measures are we thinking about? Is it going to be better sourcing, better pricing? What are the measures that you have in mind? Thanks.

Yeah, thanks Prateek. So I think the model in UK obviously has changed since last September because we are essentially buying substrate which is slabs and HR and then converting it to downstream products. Some part of it or a large part of it goes from India and some of it from Netherlands but there are also external purchases that we do from our peers across the globe. so given where the price points are we are also wanting to ensure that our model on pricing spreads and and the stock levels are correct so that we do not have a mismatch in terms of the price at which the substrate comes in and the price at which we convert and sell it to the customers so that optimizing model or optimization model took some time is still maturing and that is something that we need to get right which also needs that how we plan for the supply chain in terms of procurement of substrate the grades at which we buy versus the grades that we sell ensuring that the product mix that is done during the planning And the turn during the actual sales is similar so that we don't downgrade the product at any point in time just to ensure that we have to get the volumes of the cash out. So those are the kind of initiatives which we are currently doing. And it is backed by investments in the IT platform so that we have real-time data for the decision makers at the time of procurement and sales.

Thanks. Thanks. That was very useful and on the list. Thanks.

Thank you. The next question is from Satyadeep of Ambit Capital. Satyadeep, please go ahead.

Hi, am I audible? Yes, please. Hi, two questions. First on the profitability of mini mills in general in UK and Ludhiana. So, if we look at Ludhiana, UK during the transition period and once the EAF comes out, This would be a state of the art EF plant I would believe at par with any mini mill in Europe. So during this transition when you are obviously importing substrate and running it through and after also, the only constraint is it the safeguard quota in UK which is pulling the overall profitability down and maybe not realizing the breakeven every time. in the near term is that the only constraint and if that is not solved that could be a maybe a structural constraint just trying to understand and you can Ludhiana is again a PAF but we don't really have a lot of cases of EA profitability so if you can maybe guide to how do we look at profitability of Ludhiana once it comes in so that's the first question of profitability of Minimum City.

So, Satyajit, as far as UK is concerned, there are two, three issues. You know, what we are facing currently is the tariffs that have been announced by President Trump on the UK, not only for us, but for our customers, right? And so, as that settles, there's been some disruption and as Kaushik mentioned, some reduction in production forecasts of automotive manufacturers in UK, etc., right? The second part of that is, even today, there is a discussion between UK and US on the melt and pour issue. Because today, the US is insisting on melt and pour in UK, whereas our point is till 2027, we are going to be bringing the slabs from Netherlands or India. So that's again part of the US-UK discussion. The third part is the quotas in the UK were set at a point in time when the demand was much more since the demand has shrunk but the quotas have not and as a consequence imports into the UK which are allowed sometimes exceeds the requirement. So UK has seen a divergence of prices as compared to Germany and other such places as Kaushik mentioned. So these are issues which we've taken up with the government. Government is addressing it. I think on the quotas they've already announced some changes. Some of it will take effect over the next few months because it's not just us. As you know, the UK government is now running what was British Steel. So they are themselves feeling the pinch. So we do expect that some of these policy issues will get sorted out. Going forward, when the EAF is there, we are going to use locally available scrap, which is one of the reasons why we set up the EAF there. UK is a big exporter of scrap. So that's a big part of the cost. And we believe we will be much more competitive buying local scrap than importing scrap or the earlier model of bringing iron ore and coal there. and running it in the UK. And we had guided earlier that we expect the cost to be at least 150 pounds down per ton once we shift to the EF. The second part is energy costs in the UK. Here again, the UK government has recently announced some more concessions and that's going to help us as well. That was one of our asks. So by the time the EF comes, we will have the benefit of energy costs which are lower than it is today. So these are the reasons why we believe that the UK business in the during the transition as well as once the EF is up should be EBITDA positive and obviously as a footprint we have a much smaller footprint so the maintenance requirements of a new state-of-the-art EF as you mentioned will be much less than the maintenance costs that we were incurring in a old sinter plant old co-coverns and old blast furnace right so already the maintenance costs take out is visible in the numbers that we have So that's why we believe UK will be in a much better position than we were prior to it. And it is, you know, getting addressed. Some of these issues are getting addressed. And the last point I want to make is you'll have the carbon border adjustment mechanism as well, right? So already the carbon footprint of Port Talbot is down from 6 million to 1 million. So in the earlier context, you would have been paying carbon costs for that free allowances, which would go away once the seed band is rolled out. So there again, we will have some support for the domestic market. So this is as far as the UK is concerned. As far as Ludhiana is concerned, yes, we know that the cost of producing steel through the EAF will be higher than the cost of producing steel through the blast furnace route. But the model here is slightly different. Firstly, we are targeting the retail market where our realizations are much higher. We are also looking at setting up these furnaces in places where there is scrap and hence the scrap processing facility in Rotak and the steel plant in Ludhiana. Thirdly, we are also looking to sell all the steel that we produce within 300 kilometres of where we produce it. So you will also save two to three thousand rupees a tonne on transportation which we incur today in shipping the steel from Jamshedpur or Nilachal to some of these markets. So we believe that these mitigation actions will bring down the cost disadvantage of EIF versus the regular routes of production. And of course, it will have a CO2 of less than 0.3. And with the government's new policy on giving advantage to what the government calls green steel, we will have an advantage in Ludhiana even over the rebars that we make in Jamshedpur or Nilachal. So these are the multiple reasons why we believe this model can work for us. We also have a state of the art mill that we are setting up, long products mill that we are setting up there and which is very energy efficient as well and from a manpower productivity also very good. So if this model works, we want to replicate this in other geographies as well. And, you know, the other advantage is you can set it up in two, three years. You can set it up by spending about 2,000 to 3,000 crores. You need only about 100 acres of land. So you're not limited by acquiring a lot of land and doing R&R and things like that. So it's an opportunity for us to focus on iron ore-based production in East, where we have three big sites, Jamshedpur, Kalinganagar and Nilachal, I call as one site, and Miramangli. And in other parts of the country, leverage scrap, leverage you know the other advantages of being close to the market to you to do scrap based production it could be we are starting with rebars it could also be special steels that we could produce.

Just a follow-up Naren on this the quota so generally I this decision on the transition in UK the company took some time back and the safeguard quotas were already in place at that time that time also the argument could have been the quotas exceed demand But now going through government, now when you have already started the entire process, would it not have been prudent to do it before going into the entire transition and would you slow down since you are already committing capital before there is a review of safeguard?

The issue at that time was we didn't have the actions that the US is taking now, right? So the issue is because of the trade actions being taken by the US and the increased exports from China, you have a lot more trade flows looking for markets, right? So hence, I mean, EU has changed its quotas once this has happened. So we're telling the UK government just do what the EU has done, right? So they are sensitive to that. They are open to that. So the situation has changed. And hence the ask of them to look at the quotas. So that's where it is. So nothing changes from our point of view, you know, because in the long term, we don't expect this to be a big issue. Raushik, you want to add to that?

Yeah, so I think the quota discussion was there and it has been on the table for the UK government. The previous government, when we signed the term sheet and then the new government, the trade-related authorities, the UK TRA was fully involved in that. In fact, they allowed us bespoke import of slabs and for charcoal. Because HRC was earlier, there was import duty on the HRC which they kind of created for the transition. So, it has been on the table, it is that as Narin mentioned the trade dynamics did change significantly post the January of 2025 and it needs to be addressed more in a customized manner which is what the UK government is currently doing. It takes a process, it is not that we were not, we were blindsided by this, it was there, it just took the government a longer period of time to intervene in the manner in which it needs to be done because just now the way in which the imports have been flooding all over was significantly different than what it existed one year back.

Fair enough. The second question on the expansion, you mentioned environmental impact study maybe hopefully in the next couple of months. Given there is a different process now you're starting construction after approvals, how should we, let's say the company does get approval by October, what is the timeline we should be looking at for actually commissioning of Should we look at 5 million tons in the first phase, 24 months or 24 to 30 months from the date of construction? Is that the timeline we should look at? And how should we look at the letter of intent in Netherlands? Any maybe update on discussions and timeline we can look at that?

So as far as the timelines is concerned, I think just wait for the FID because it will, I wouldn't want to preempt the board during the discussion, but it will be, the site is in our control. It is not land acquisition, etc. But 24 months, I don't know if any steel plant gets elected on an integrated basis. We will come and give you the specific details. I think it will be longer than 24 months. It will not be 24 months. But it is our endeavour. One of the reasons why we have changed our process is to ensure that we do our, one is cash to cash cycle is compressed as much as it can be done. Secondly, there is a lot of replicability between our Kalinganagar expansion as into the NINL as much as we can replicate and do it together quickly. Third is to ensure that, you know, we are able to execute the projects in a parallel basis rather than sequential. So there are a lot of project management efficiencies being added to. When we do the FID, I think we will come and give you a more specific answer that will stand. As far as Netherlands is concerned, as you may be aware, the government has fallen. And they are currently in the pre-election phase. However, our project has been endorsed by the current parliament. And therefore, they classify major decisions into two parts. One is what they call as controversial decisions. which essentially means that needs government in power with the mandate to agree. And the other ones in the normal course of business. We are not in that controversial zone because it has been parliament blessed. So we are in the normal course of the business. That's why we are continuing to engage with the government in the Hague, as well as with the local provinces internationally. in Netherlands where we are located. There are multiple issues that will happen. The letter of intent is also focused to be placed before the current parliament before it goes for recess for election. So we will see as to how we can do it. There is also an EC angle to it because the EC has to bless it in some ways before that letter of intent goes. And thereafter, the negotiations for the binding agreement will happen with the new government and the new parliament. So that's how the sequence is done. We spend a lot of effort in getting what we think is an important transition project for Netherlands and for Tata Steel. And we are also looking at also the capital cost engineering, all of that, which is in our control, which is also what is being focused on.

Thank you, sir. Before we take the next question, I would like to remind the participants to please limit your questions to two per participant. Should you have a follow-up question, request it to rejoin the queue or post it in the chat box. The next question is from Amit Murarka of Access Capital. Amit, please go ahead.

Hi, good afternoon. Thank you. So I wanted to know a bit about the rollout of CBAM. We are now only five months away. Like I was reading some reports that the government has exempted up to 50 million annual imports by any customer, which exempts I think 90% of the customers from the obligations of CBAM. That's what I was reading. So could you just throw some light about how do you think the rollout is shaping up to be and are we on track for a timely rollout of January 26th?

I think there is CBAM is first January rollout which is currently in the reporting stage. There is no one government because it is decided by EC and all the other EU 27 countries actually sign up to the CBAM. I presume you are talking about Europe and not about another geography or UK because EC is very clear it will be done. There is a consultation process that is they are initiating in order to make the CBAM more watertight. That is something that has been one of the asked from the players in Europe because we don't want to see CBAM where there is a workaround around the CBAM regulations on imports into Europe. So that, however, is not on the table as yet. I think EC is currently working on it and in the next couple of months will be opening up for consultation, but the current CBAM anyways is scheduled to get online for January implementation.

In fact, if I were to add to that, you know, across European countries and in UK, the government is putting in money into this transition, right? on the assumption that there is a CBAM and all that. So it is in the government's interest also to be consistent on the policy based on which these investments are being made. So I do not think there is going to be a deviation. If at all then The government will allow you to continue with the free allowances, etc. But we don't see anything specific on that.

I think what is there is a 50,000 tons, not 50 million tons of G-minimus import into EU. Because that's like first 50,000 for any importer. will get an exam more to from a, it is like the trial ball in a cricket match, so that is not.

Yeah, I did not mean millions, sorry yeah. Yeah. So, but that exams I believe 90 percent of importers is what like some of the articles are suggesting.

Well, for that first 50,000, it will be important, but it's also backed up by the quotas. So you have a quota and then the CBAM and then this. So if you gloss up the numbers, it will not be significant. And that is exactly what the current review of the CBAM is being done because the players are basically saying that, It needs to be much more watertight than to have these kind of leakages. So, that will at some point in time, may not on 1st January, but soon after will get leaked. And as Narayan Rightney mentioned that with governments participating all across Europe with public money, they will want to ensure that the CBAM effectiveness is very high.

Just a bookkeeping question, like in Q1, like how much cost did you book for the Jamshedpur relining cost, the relining expense?

I think it was about 600 crores or thereabouts, somewhere half around it because bulk of it is between the Q1 and the previous year Q4. So, that will be capitalized in this quarter once the furnace gets up and running.

It is not expensive, nothing is expensive in the P&L and it is all capitalized.

No, that is how we do.

Okay, so that is all. Thank you.

Thank you. The next question is from Ashish Jain of Macquarie. Ashish, please go ahead. Hi. My first question is on this cost savings that you've spoken about and thanks for quantifying that. But if I just look at the EBITDA movement quarter on quarter, you know, it's kind of up marginally and this is in spite of pricing being higher and we are also talking of 11 billion rupees of savings. How do we triangulate this and where do we see these cost savings, you know, really getting reflected? Can you elaborate a bit more on this? Because, you know, the other way to think is without that cost savings, our EBITDA would have been actually down. Is it as simple as that to view it or, you know, there is some other way that one can view this?

So without the cost savings EBITDA would have been down because we are low on the volume. So that is for sure. One of the reasons is cost savings. The second one is in relation to the prices. I think the best visibility of cross-saving would be on a year-on-year basis when we get into the Q4 of this year or end the Q4 of this year. Because what I gave the numbers was in relation to the average of last year. If you look at quarter-on-quarter Q4, because we started this initiative effectively somewhere in the middle of early second quarter of last year. And it has been tracing down. But if you look at, when you look at, when we close financial year 26 and then compare it with the financial year 25, it will be more prominent. We do a traceability exercise and I think about 85% of the cost benefits are traceable to the general ledger. And that's very important for us to ensure that you can see it on the face of it. But fundamentally, and it will also be reflecting if you see on the cost of goods sold, so the dispatch cost. Also, you will figure that out that there is a lower number. But effectively, from an average to average for FI yearly basis, you will find that more traceable.

But Kaushik, just to understand this a bit better, let us say cooking coal is down by $50.00. hypothetically, that will not be counting in this number, right?

No, no. Okay. No price effects are taken into account. The raw material efficiency elements are taken into account. Leaner blends are taken into account, but not the price. So, the contracting on fixed volume, fixed contracts versus spot buying, all those are into account, but not the base prices. Neither on steel nor on raw materials.

Right, right, right. Secondly, you know, just I know this question was asked earlier, but just let's say, you know, an INL, whenever we announce, can you at least given the preparedness we're talking about at the time of announcing the CAPEX, shall we think that the execution timeline could come down to like between two and a half years or that's too aggressive in terms of the execution period?

so normally if you've seen a typical integrated plant like kaushik said you would say three to five years so that would include at least a year year and a half of all the approvals etc so that's the one you will save so that will be the for an integrated steel part if you look at the ludhiana plant we're building it within two years because that's a simpler plant in an integrated plant it's not just a steel plant you have to plan all the logistics the raw material movement And in Nilachal, we are talking of moving it from 1 million to 4.5 million. So, there's a lot of work and that too, like we do it in Jhamsipur, it is being constructed in an operating plant. So, there are some complexities related to that. So, that's why, you know, we would typically look at a time in that range, around three years, three, three and a half years is what we think is realistic. But if we had started from scratch, it would have been four to five years for sure.

Okay, okay. Thanks, Anand. Thanks a lot. Thanks. Thank you, sir. The next question is from Pallav Agarwal of Antigua. Pallav, please go ahead. Pallav, we are unable to hear you. We request you to please send in your question via chat or rejoin the queue. We will now move to our next question. The next question is from Vaibhav Jyotse of J.P. Morgan. Vaibhav, please go ahead. But we are unable to hear you. We request you to please send in your question via chat or rejoin with you. Can you hear me now? Yeah.

Thanks for the opportunity. Just one question on the FX side. So, you know, given the debt to equity refinancing, is FX volatility expected to reduce? Because this quarter had a lot of adverse movements in both pound and euro, but it looks like we didn't have any of that. Thank you.

Yeah, so with more and more on-shoring, we will, for FX debt into rupee debt, that will certainly is showing up as a benefit and the volatility will certainly be lower in the future. The trade-related FX are different.

Referring to the inter-company FX variations.

That we have converted into equity, so therefore that does not come into it.

Okay, thank you.

Next question is from Amit Bikshit of Goldman Sachs. Amit, please go ahead. Am I audible? Yes, please.

Yes, sir. So, I had thanks for the opportunity. Couple of questions from my side. The first one is on the sales volume. So, if I look at FY26, the start has been relatively subdued, of course, due to the maintenance shutdowns and all. So, what kind of volume do we expect to do in FY26? And what would be the contribution of KPO2 in this volume?

Yeah. So, I think what we... Guided at the beginning of the year was about one and a half, 1.5, 1.6 million tons more this year compared to last year. This is despite the fact that you have one of the biggest blast furnaces in Jhansupur down for e-lining and so we are losing volumes there. If you look at Kalinga Nagar, I think the forecast is around 6.7, 6.8 million tons of crude steel production this year, which is, I think, at least 2 million, more than 2 million more than last year. So that's broadly the numbers. And Kalinga Nagar is, like I said, I mean, like we said, is ramping up. So the third vessel is up in May. The third caster is up next month. So at least from a steelmaking point of view, we will have all the facilities up. During this quarter, the coal rolling mill is up and continuous annealing line and one of the galvanizing lines are also up. So you will see not only the volumes grow up in Kalinganagar, the mix also improving over the next few months.

Great. The second one is essentially on Tata Steel UK. So we had some of the benefits. We expected some of the benefits to come from the employee cost restructuring. So does this number that you mentioned include that or we will see some more benefit of the employee cost restructuring going ahead? Also related one is that do we expect provided things remain where they are, PSUK to become a beta level positive from next quarter, let us say.

So first on the employee cost restructuring, we had about 400 people leaving the company in Q1. So we are releasing the provisions that we had made based on the people leaving. There is going to be the full year impact of the employee leave will be most be seen from H2 because that's when we started last year. So you will see some of the full year impacts in the full year of FY26. And I think there is a The program that we had looked at was 1,800 people leaving the company is almost done. And there are some natural repetitions which also happen anywhere. So I think the employee part is largely done. There are some tail end of it that will continue to happen in quarter two. As far as the breakeven, I think, see, if I take the market conditions average of last year, we would have certainly looked at maybe a second quarter or third quarter changes. But the market's been really tough, especially as what we discussed earlier in the call, what Naren mentioned and I talked about. But we still want to ensure that the FY26 exit and Q4 is on a break even. That's actually the There we see ways to do it in terms of areas to look at it. Cost takeout is fundamentally the most important. We're talking about, as I mentioned, my make all 200 million from UK. But more importantly, we're looking at how do we manage the spreads now that we are on a conversion model on substrates and therefore to get the some more work to be done on the supply chain side, which will get us there. But I think that's a clear pathway to get there. Understood.

Thank you so much and all the best.

Thanks. From Ritesh Shah of Investech. Ritesh, please go ahead.

Yeah, hi. So, thanks for the opportunity. Couple of questions. One is, how should one look at the cushion taxation part?

I think there's a... Speak up. Your voice is not very clear.

My first question is for Kaushik. How should we look at the ongoing Bhushan taxation thing? I think the debt which was waived off, it will have some implication on taxes. Is it something that one should worry about? If you could quantify some numbers, would we pay?

So, Ritesh, my counter question is if you are banks waive off the debt, is it an income in our hands? That's fundamentally the question. That if as an arrangement, if the banks have agreed to waive off the debt voluntarily as part of the transaction, then that be said that I will apply 25% tax on that because that's your income.

logically I am with you but law is law so so law is also the same law is also the same that's the point

So since it is sub judice I don't want to talk more about it but I guess that's why I said commonsensically is it the framing is the most fundamental bit and sometimes these kind of things happen you have to find it out legally and logically in the code of law but essentially what I have told is fundamentally the question to answer.

But would it be possible for you to quantify if at all or is that a pass?

No, I don't think we should get into that zone because on the fundamentals of the argument that if there is a waiver, it cannot be deemed to be an income in somebody's hand. Then the whole IBC will fall off. Because the IBC is a process whereby the creditors take... In the interest of the industrial organization or any entity for its continuation on the other side of the line, it has to be sustainable. That's why the past dues to the extent not based on the fundamentals is a waiver that is done by the whole universe of creditors. But that cannot be held to be an income or a benefit. It can be a taxable benefit in the eyes of a buyer. That's all. I'll leave it at that.

Perfect. Second is, we noticed in the annual report, contingent liability with respect to Oriset, which was around 16,500 odd crores, it has been taken off. How should one read into this?

So, see fundamentally there is a basis when it was first demanded and we were also providing or rather not providing disclosing it as a in a manner in which it was transparent. However, it is important to understand that the principles of that ORISET has been interpreted differently by in the courts, it is still in the courts. We will see what is more applicable also in the context of the fact that beyond 2015 when MMTDR Act came in with a new format, these issues on regulatory dues from the mining activity has also been articulated pretty clearly. We have complied with that and we will continue to comply with that because it is part of our mining operations. So in the prudence of not being speculative till the courts and the governments disarray, we thought it was important to mention about it but not continue on a mechanical basis a number which is becoming more theoretical.

Next question is from Tarang Agarwal of Old Bridge Capital. Tarang, please go ahead.

Hi, good afternoon. Am I audible? Yes, please. Yes, just a couple of questions. Sir, your target to contain debt by 6 to 8,000 crores for FY26, that remains, correct? Yes.

Indeed, yes. I mean, see, it is, if I were to reword your, rephrase what you asked, our enterprise strategy to contain debt by about 6,000-8,000 crores is not getting deprioritized ever. But markets being where it is, and honestly, last couple of years, we could have achieved that. But on the other side, we would have not got the ability to invest in Kalihan Agar. So sometimes we look at what comes ahead to get us more cash. For example, there were a lot of questions today on NINL. When NINL comes in, in the initial years, the spends are lower, but there will be a year or two when it will be a peak year where the construction has to be completed. At that point of time, if markets are good, the deleveraging will also continue. If markets are softened and moderated, Our interest and priority is to complete the project first because we can always do that deleveraging the year after when the commissioning is done. So that's how we look at it, honestly. But from a structural point of view, the fact that we will keep our balance sheet de-risked through deleveraging does not change by the season.

Sir, just a couple of questions on the European business. I mean, Q4, you had commented that the gross threats in the Europe market have been at a multi-quarter low. Has that trend sort of continued? I mean, my sense is it has. So I just wanted your comment there. How is that played out in Q1? Because what we see, these are fairly illiquid prices. So they're generally not representative of what's really happening on the ground. So, that's one. I mean, when I say the prices, the prices that we see from publicly available sources. So, they may not be representative of the prices at which the contracting activity is happening in the market. And the second question, sir, you know, Europe's been fairly sluggish now for almost two years, right? This entire operating environment specifically for the steel industry. That coupled with the fact that there is significant transition expenditure that the industry has to undertake. Has there been a change in the structure of the industry in terms of participants in the industry or the financial health of the industry? Sure.

So, Kaushik, I will start and you can add to it. You know, the spreads have improved during the last quarter, partly because prices have improved a bit, as well as the costs have come down, not only in terms of conversion costs, that is more relevant to us, but more in terms of input costs when you look at the spreads. So, iron ore and coal came down and steel prices stabilised a bit and that is why the spreads improved last quarter. This quarter also we expect the spreads to be around that level. Maybe dip a bit but largely okay. There is not much of a concern. It is moving closer to the 225 to 250 euros which is a long term average whereas when Kaushik commented last time it was we had gone down to even 150, 160 levels. So it was very low. The second part is yes when we look at spreads you always look at base HR and compare with iron ore and coal etc., Whereas when you look at the realized value, you will look at the product mix. So we have a significant downstream presence in Europe. So we leverage that. We leverage the fact that we are a big supplier to the auto industry, to the packaging industry, so on and so forth. So the team always looks at how despite a given HR price, how can I manage a better mix? And that's how you, you know, improve on that. The third part of what you said is, obviously, Europe is one geography where the steel consumption today is still lower than what it was in 2008. And hence, all the challenges that we've had in the last 15 years, because in 2008, it was maybe about 160 million tons, it's stuck at 130. It's around that 130 million ton level, which has been quite stable, not growing, but not shrinking either. What we see in Europe is over the last one year, certainly a lot more interest in preserving the steel industry in Europe because of the issues that Europe has faced with Russia, which used to be a supplier of substrate. Before that, the more recent focus in Europe to build a defense industry in Europe. and also the focus to try and become self-sufficient in some sense of the term and not depend on other geographies for critical inputs. And steel being a base industry feeding into all critical industries. Across European countries, we are seeing a lot more interest in preserving the steel industry in Europe and hence the support that they're willing to give, etc., etc., and the safeguards and all that. So we are seeing that there's more support for the industry. in Europe. What we are also seeing is that while the auto industry demand may shrink a bit because of tariffs, because of other things, we are seeing the steel consumption in defence to go up a bit over the next 8-10 years. On the supply side, as you said, there is a restructuring going on. Not everyone will survive this transition because if the CBAM happens as we expected to, I don't think anybody will reline a blast furnace henceforth in Europe. We probably did the last relining a couple of years back. If that is so, when blast furnaces come to end of life, they will close. And only the financially healthier companies can invest to build new capacity. So you do see a Weisstein Pine, you see a Salzgitter, Thyssen, and of course, Tata Steel, SSAB. ArcelorMittal is re-looking at its investment plan, but focusing just on EFs and not going beyond that. But, so there will be a restructuring of the supply side for sure. Not everyone who is producing steel today will be there 10 years from now. So, we do expect this restructuring of the steel industry to help the demand supply equation, you know, more than the fact that demand is going to take off suddenly. So, demand may be stable. What is, there may be some shrinkage in auto which will be made up by defense, etc., But the supply side will certainly get restructured a bit. And that is something we expect. Kaushik, you want to add to that?

No, that's perfectly fine. I think just to add one data point, currently the utilization levels have gone down to about 60-65%. We see some mud-balling also because of the response to price. Hopefully with CBAM coming in and quotas being implemented actively and with some stabilization on tariffs with the US, we expect the stabilization as far as pricing is concerned. And I think the point that Naren mentioned on the structure of the industry will change because it's also dependent on which governments will prioritize its own NDC outcomes to fund how much and through which energy source in the next two decades. So, I think that will also determine who will get that viability gap funding to make that investment.

Okay. Thank you, sir. Thanks.

Thanks. Thank you, sir. I would now like to hand over the conference to Ms. Samita Shah for the chat questions. Over to you, ma'am.

Thanks, Kinshuk. We'll start with Europe and then we move to India. So many of the European questions on Europe have been addressed. I think the only incremental question I can see is what is our, you know, do we have any visibility on which of the green steel projects are actually progressing and in terms of timelines, commissioning, etc.? ?

I think what we're seeing is maybe the investments by Salzgitter, Walsh, Talpine going more or less as per schedule. Thyssen is progressing, but I'm not so sure if it's on schedule. The Scandinavian projects are all delayed that you must have read about. I think whether there's two green steel, SSAB, et cetera. SSAB has already announced, I think, a one-year delay, one, one-and-a-half-year delay. So that's what we see. And parallelly, ArcelorMittal has called off some investments and in some investments that they will build an EF and not the DRI. So, there is, you know, obviously a bit of a mix back there. I think the ones which have progressed most are, I think, West Alpine and South Skitter.

Thank you. We'll move on to India. I think there are some questions in terms of Kalinga Nagar forecast for 26 and 27. I think you've already answered 26. And as all people know, we typically give guidance once a year, which we do in the May. And we'll do that in six months for FY27. But if you just want to talk about broader volume growth, then I know the next topic is.

So I think Kalinganagar will ramp up the exit rate at the end of the year will be you know at the max rate so that's not the issue at least as far as steel making is concerned and that allows us to send slabs to the UK as we are doing today right because the hot strip mill will produce about 6.2 million tons and so you will have some slabs extra and one of the other projects which you look at once the UK year starts or around that time is how do we add more value to the slabs with the plate mill or something like that so that's one track. The coal rolling mill will certainly ramp up and so you will have a, it's one of the most advanced coal rolling mills in the country and galvanizing lines. So you'll have a very good product coming out of that and already auto companies have approved that. the products out of the continuous annealing line and we are working with them on the galvanizing lines. So I think the volume side is up. I think the part which you need to factor in like in this year, next few years we have a few blast furnace re-linings coming up in Jamshedpur. So you have the G furnace happening this year, you have the H furnace which will happen sometime you know, in the next financial year. So, we will be still working out what would be the right schedule. So, there will be some offset from the volume side because of the relining in Jamshedpur. But like I said, you will have some 0.8 million tons of steel coming on stream next year from Lugyana, 0.5 million of value added product coming out of Jamshedpur from the combi mill. So, these are some of the additional volumes that we expect to get.

Thank you. There's a question on Sukinda in terms of the surrender and what is the view going forward for APMD?

Yeah. So I think the surrender of Sukinda mines we had planned, we had already submitted it last year. We were waiting for the government approvals. So that process is going on. It's at a very advanced stage. So, we are re-calibrating the Feraloy's business because we are looking at it you know more as how do we optimize the capacities that we have given the mines that we will retain and how do we bring this business which is to be a very profitable business back to profitability and not to be subjected to the various demands that we get from the government on various regulations. So, that we are simplifying the business. and making it, recalibrating it so that it's profitable. There will be some more kind of developments related to this business which we will announce at the right time.

Thank you. There are some questions on our plans to or our INR strategy post 2030 and how we will sort of, you know, manage without the captive mines.

Yeah. So, you know, captive mines make sense if it's from a cost efficiency point of view, it adds value, it's value accretive, right? Otherwise, you know, and honestly, some of the premiums that are being bid, it really doesn't make sense to have iron ore available at that cost just so that you can say you have a captive mine. So, we believe that it's worth having a captive mine if it's a value accretive to the business. In the past we used to be 70% captive for coal, today we are 20% captive for coal. So we have gone through this journey for another critical input and we believe we can go through this journey and we will optimize around the cost whether it is signing up with merchant players in India or looking at imports because at very high premiums it actually makes sense to import the iron ore. You get better quality iron ore sometimes, lower alumina iron ore which is going to be very important for the future. So we are looking at it from that point of view. We'll continue to bid for the mines that are coming up. We've already got, as we mentioned in the past, more than 500 or 600 million tons of mines post-2030 available with us based on what we already have. So it's not that we don't have anything. But at the same time, we will keep adding to that bank based on the financial viability of the new mines that we would bid for.

Thank you. Some questions on Nelanchil. So essentially in terms of capacity utilization and whether we see the profitability of Nelanchil moving in line with India profitability over a period of time. And also I think some question about whether Nelanchil is just selling pig iron. So maybe you could just clarify.

No, basically Nelanchil as you saw last year delivered more than a thousand crores of EBITDA. This year also we expected to deliver more than a thousand crores of EBITDA. What Nilachal doesn't have is a rolling mill. So what we do is we take the billets from Nilachal. The blast furnaces are running full out. So we make the billets and we convert it into finished products, start a discount at our accredited conversion agents who produce for us and the product is sold in the market. So to some extent the value will accrue to Nilachal more once we expand and build a rolling mill there. uh but as of now pig iron is more like on a not on a planned basis but if there is some extra material which comes out of some imbalance temporarily of course we typically try to use it in some of our other plants rather than sell it in the market so that's where it is but nilachal is running full out we lost production in april but we would make up In fact, the limit on Nilagel is pretty much our current EC, which limits the production to where it is today. We could have produced maybe a little bit more if we had a higher EC. But with the approval that we have sought, we have sought a 9.5 million ton approval on the EC so that we do not have to keep going back. And once we have the 9.5 million approval, then we can expand to the pace at which we have the appetite for.

Thank you. There's a specific question on Kalinga Nagar air separation unit. Maybe we have some common shareholders with Linde India as well. But there's a question and a couple of questions actually in terms of when the second air separation unit will get operational at Kalinga Nagar.

So, yeah, so this will get, I think there is a process in which both from a finishing point of view as completion of the project and the contracting, etc. So sometime this year, the second quarter, third quarter of this year, we should be in that zone. And the agreements are in place between Tata Steel and Linde. I think from commercial interest, this is all that I can talk about.

Thank you. I think the last question, which is on the cost savings, you know, it says that out of the 11.3 thousand crores of cost savings which you've announced is half of that in FY25. I think you mentioned earlier, Kaushik, that we had started doing this from the previous year and maybe that's caused a little bit of confusion.

So FI25 we started but it is beyond that FI 11,500 crores. We said in May that 11,500 crores is over the next 12 to 18 months and whatever has happened in FI25 is banked already. The baseline is from FI25. I just wanted to ensure that we understand that this process started not after the new financial year started. We had started it last year, but got more structured and built into our annual plans and being followed up vigorously on that basis.

Thank you. With that, I think we've answered all the chat questions. Thank you, everyone, for your participation. And I hope you got greater visibility in terms of our results. Look forward to connect with you again next quarter. Thank you.

Thank you. Thank you, everyone. Thanks.