Tata Steel Ltd 144A

Ladies and gentlemen, good day and welcome to the Tata Steel earnings call. Please note that this meeting is being recorded. All the attendees' audio and video has been disabled from the backend 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.

Thank you, Shoham. Good afternoon, everyone, and welcome to this call to discuss our results for the first quarter of FY27. We declared our results yesterday, and I hope you've had a chance to go through the numbers. There's also a presentation which explains more details. To explain, to walk you through the results and answer any questions you may have, we have with us our CEO and Managing Director, Mr. T.V. Narendran. and our ED and CFO, Koushik Chatterjee. They will have shared some opening comments and then we will go into Q&A. Before I hand it over to them, I just want to remind you all that the discussions today will be governed by the Safe Harbor Clause, which is on page two of the presentation. Thank you and over to you, Narendra.

Thank you. Thanks, Amita. And good morning, good afternoon, everyone. So let me share some of my thoughts with you and then hand over to Koushik. So Tata Steel has delivered a resilient performance in Q1 despite the challenging operating environment. The developments in West Asia continue to disrupt the supply chain and the Chinese steel exports of about 9 to 10 million tons a month also has had an impact on international prices. Of course, this has also led to many countries taking actions to protect themselves, which also has a consequence impact on the steel supply chains and on Tata Steel. Performance in some sense, Thank you very much. I would now like to make some comments on our performance in each geography. In India, crude steel production was about 5.76 million tons. This was lower than the previous quarter because we had some shutdown scheduled and a little bit of some operational issues, which are behind us now. In Q4, the strong deliveries also led to an inventory drawdown. And so some of the production went into building up the inventory to optimal levels across a supply chain. And hence, you saw the deliveries were about 5.17 million tons in India in Q1. We were able to offset the impact of lower volumes because of an increase in the realizations to the tune of about 6,000 rupees, 5,990 to be more precise over Q4. And the higher net realizations were partly on the back of improved market prices and partly because of our ability to maximize volume in the chosen segments. So this has helped us deliver an EBITDA margin of 27%, which is higher than the 10-year average. Some of the segmental highlights are what I would like to describe now. The automotive and speciality business delivered best-ever Q1 volumes. It had a 21% year-on-year growth in high-end sales. We also developed cold-rolled ultra-high-tensile steels, DP980, for those of you who understand the technicality of it, for commercial vehicles, and galvanized steel and secondary coatings for passenger vehicles, and tighter trolling speciality steel bars for transmission gears. So these developments further strengthen our position as a preferred partner in the automotive sector. As you know, we have a market share of about 50% in the auto sector. Our well-established brands Tata Tiscone grew volumes 33% year-on-year supported by our extensive distribution network which today covers 97% of India's districts and the Steleum volumes also helped by the Cold Rolling Mill and Kalinga Nagar grew by 34% year-on-year and our digital platforms Asiana and Digica continue to scale with a combined GMV of around 22,200 crores for the quarter which is 61% up year-on-year. We continue to strengthen our presence in the construction solutions business through differentiated offerings that improve the project efficiency. In fact, it's also addressing a trend today that we see that construction workers or workers are not easily available to work at construction sites and hence our move towards construction solutions that we deliver is really helping many of our customers. During the quarter we also commissioned India's first superflex well mesh line at Kathak in Odisha and this is the first of its kind facility that can produce engineer well mesh up to 3.3 meters in width, significantly higher than the industry standard of 2.4. So all these initiatives are basically aligned with what we want to do, go more downstream, go towards more and more Thank you very much. Our efforts to diversify into new end-use segments are also yielding encouraging results, including shipbuilding, where we've got a number of approvals now. Shipbuilding like automotive is an approval-based business, and this has broadened addressable market opportunities for us. And the other area we're looking at is, of course, data centers. We are also strengthening our position in the oil and gas sector through international certifications that enable participation in competitive and ice specification projects. So basically more and more high value approval based businesses as well as emerging consumption sectors like data centers. Our downstream portfolio continues to build momentum with the tubes business and tin plate business delivering the strongest agro-first quarter performance. Our wires business also expanded its market reach through innovative solutions such as a 3D welded mesh for railway applications and Gajamitra high tensile knotted fencing system featuring specially designed tubular structural posts. These are being used in the South by forest departments, particularly where there are elephant corridors. And Colours, the Tata Colours business, which used to be Tata BlueScope earlier, continues to benefit from the infrastructure-led demand supplying roofing and cladding solutions for projects under the Amrit Bharat Station scheme. As you must have heard, the board yesterday has approved the 4.8 million ton expansion at Nilachal Ispat which is central to our strategy of deepening presence in high margin and branded long products and this is the first phase of growth at Nilachal and it will expand the total capacity in Nilachal to about 6.2 million tons. As far as UK is concerned, our delivery stood at 0.5 million tons. We welcome the recent revisions to safeguard measures, including a 51% reduction in tariff-free quotas and higher duties. But there are some categories like galvanized steel, tubular sections, some of the packaging steels, etc., where the current quota allocations are not fully aligned with what we think is fair, because in many cases, the quotas are a significant 70-80% of It used to be higher than the demand now it's brought down but still at a very high level. So we are working with the relevant authorities to provide industry inputs and support a calibrated approach that balances market requirements with the policy intent. In Netherlands the liquid steel production was 1.55 million tons while deliveries were 1.4 million tons. The temporary shutdown of a direct sheet plant has weighed on the operational performance because the direct sheet plant or DSP as we refer to it We have just got the approval to run it for four weeks starting 5th of August and hopefully the data that we generate through that production will help us get the permission to run it beyond that. So I think Q1 was impacted by the shutdown but we hope that in Q2 we are able to address this issue. Finally, as far as West Asia, the developments in West Asia continue to impact energy, freight and some of the raw materials, some of the consumables that we use. We are closely monitoring the situation and taking appropriate action to mitigate the effect of our operations. With this, I hand over to Koushik for his comments. Thanks.