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.