UK 4QFY26-exit-breakeven unwound across four quarters as cost program lands 95% at Rs 10,868 cr.

On European steel industry in the context of the October 7th protectionist measures and CBAM implementation - some European steel players have talked about higher inquiries from EU customers and a restocking cycle happening next year. How do you see utilisation and prices moving into the next year? And UK is probably not going to be directly benefited from the protectionist policy - some thoughts on that?

Sure, Thanks. Yes, the announcements in Europe have helped the sentiment as far as we are concerned because what Europe is doing is to make sure that the quotas for steel imports are brought down by 50% and have an import duty of 50% on any volumes exceeding the quotas. So, this is a positive move for the European steel industry and in a sense, Europe is actually working hard to have a stronger, resilient steel industry in Europe to take care of Europe's strategic needs, particularly defence and other areas. So, this is part of the plan. So, it's good from Tata Steel Netherlands point of view. We have already started seeing it having a positive impact on the price discussions with customers for the annual contracts for next year. And certainly, as you said, imports have stopped coming, in anticipation of this and the restocking etc., will lead to some positive impact for us in Netherlands, particularly from 4Q. Maybe 3Q is already a bit too late and we are still dealing with the hangover of the last two quarters. But 4Q onwards, we certainly see an improvement in Netherlands. And this also has a long-term impact because these actions are also going to come with melt and pour conditions. So, if you want to participate in the European market, you have to make in Europe rather than make somewhere else and ship slabs to Europe to participate in the potential CBAM-protected market in Europe. So, there are multiple reasons why this is a positive move for Tata Steel Netherlands. As far as UK is concerned, like you said, UK is left out of this. In fact, our discussions with the UK Government is that the UK Government also needs to take some actions. Otherwise, UK will bear the brunt of material which can't find markets in the US and Europe. We've not made headway yet. The government is saying they are looking at it, but that's one of the reasons, as Koushik said, we've struggled with our performance in UK.

On the Neelachal capacity expansion - any timelines with respect to the Board approval? Earlier we were planning to get it by October 2025, any reason for the delay and updated timelines?

The reason is largely related to environment clearances and all the clearances that we need to have, because as per our current way of work, we go to the Board after we've got all the approvals in place. But behind the scenes, the work is going on, engineering, planning and detailing, all that is going on. So, that happens. But the FID will be taken once we have the environment approvals, which we expect in the next few months. There are some forest clearance issues, environment clearance issues, which we are going through. We are pretty advanced in the environment clearance process. We are progressing on it and will take it to the Board once we are in a position. The engineering work is also pretty advanced in many areas. And therefore, we are getting the investment case ready for the Board's review sometime soon.

Could you share guidance on cost and prices for India, Netherlands and UK separately for the coming quarter? And what is the latest on safeguard duty - the provisional duty has expired and we're yet to see the government notification?

So, if you really look at it from a realisation point of view, our 3Q guidance for India will be about Rs 1,500 per ton lower than 2Q. 2Q was about Rs 1,500 per ton lower than 1Q. So, we had guided Rs 2,000 per ton, but we ended up at around Rs 1,500 - Rs 1,600 per ton. In terms of coking coal prices, we are saying India consumption cost will be about $6 per ton higher in 3Q than it was in 2Q, because it's starting to turn the other way. Coking coal has firmed up a little bit in the last few weeks. As far as the Netherlands is concerned, 3Q guidance just now is about €30 per ton lower in 3Q compared to 2Q but we expect 4Q to be much better because of what I said earlier. Coking coal consumption costs in Netherlands will be down about €5 - €10 per ton, largely because they have more stocks in the system and so, they will be consuming what they bought earlier. As far as UK is concerned, prices are generally seen as a bit flattish, no real drop. But our concerns are the levels at which prices are today rather than the trend of the prices. And that's what we are working with the government on. In terms of safeguard duty, yes, what you're saying is right. The notification I think has expired in November and we are waiting for advice from the government on safeguard. We are working with them and let's see where it takes us, because the larger point is that the steel industry in India is impacted by steel prices internationally and some of the imports which are coming in.

Given the spot spreads in UK, we are expecting the losses to widen. Is that the right understanding? And Netherlands given pressure on prices at least for 3Q, looking at some softer margins?

In UK, maybe things shouldn't get worse, let me put it that way. We're trying to see how to improve - 2Q was worse than 1Q, but it's not necessary 3Q should be worse than 2Q. We're still working some of that and we're looking to see what help we can get in the Netherlands, maybe some margin compression, but we're again looking to see what we can do there to manage that because, like I said, the coking coal prices are lower. They are also getting some benefit on electricity and some of the other costs in 3Q compared to 2Q. So, they will get some benefit there. In India, well, there is some margin compression, but India will have half a million tons more volume in 3Q than in 2Q. So, we will have a volume upside in 3Q because of the Kalinganagar ramp up.

In India, is it safe to assume 3 to 3.5 years once we take Board approval for Neelachal expansion timeline? What is the peak level of volumes we can achieve in existing capacity? With Netherlands, next year is the timeline to freeze discussions with the government - so FY28 is when capex actually starts?

Yeah, so I'll start and then Koushik can kind of continue. As far as the volumes are concerned, yes, Kalinganagar is currently running - I mean if I look at it last month, it's running at 7 million tons per annum rate, and it can go up to 8 million tons. So, that's on Kalinganagar. Neelachal is pretty much; you can get another 200,000 - 300,000 tons more once you have all the environment clearances because the existing volumes can go up a bit more. Today, we are limited by the EC levels. We have the Ludhiana plant coming up next year, so that's another 0.8 million tons. We are looking at debottlenecking some volumes in the Gamharia plant, which is the Usha Martin plant, to support our combi mill. And we are also looking at some debottlenecking in Meramandali. So, we will get some additional volumes from all these places in addition to the 0.8 million, which we will get out of Ludhiana. The timeline that you said, yes, post-board approval, 3 to 4 years, certainly we want to complete the Neelachal project before that and try and see if we can do it faster. As far as Netherlands is concerned, we'll finalise the tailor-made agreement sometime next year and the FID will be next year. Then there is a permitting process and post the permitting process, the major spends will start on the site etc. So, I don't see major cash outflow in Netherlands in the next couple of years even after the FID.

On UK - CBAM in UK actually kicks in 2027, one year after EU CBAM. In the context of current imports, what is the process timeline? And the cost savings on network tariffs and power costs from the Rishi Sunak Government - has it already kicked in?

So Satyadeep, two things. One is when you talked about the European part, the European Steel Action Plan that Naren talked about in terms of reduction of quota, tariffs beyond quota etc., and melt and pour is going to kick in from June 2026 because they are currently in the consultation process. Once the consultation is done, various stakeholders give their point of view on if they have to change or modify etc., and then it starts from June. So, that will kick in from June. As far as UK is concerned, at this point of time, the consultation process on CBAM hasn't started. It is in a formulated position, but it has not yet started. They are scheduled to go live one year after the EU CBAM, which is 2027, as you mentioned, but we have not seen that happening. And that is one of the conversations that we are having with the UK Government. We are having conversation with the TRA, the Trade Regulatory Authority, on the quotas. The UK is behind the curve as far as EU is concerned as far as these initiatives are taken. So, if it is 2027, then when in 2027 is not yet determined. So, we are actually trying to get an understanding as to when the consultation process will start, how much time it takes. It normally takes six to eight months, maybe a year. So, we want to kick that off faster and to ensure that it is in time when our EAF comes.

Given it needs to go through a formal study, is there a realistic chance of quota reduction in UK in 2026, or are we looking at 2027 or 2028? On Netherlands Joint Letter of Intent - support of up to €2 billion for phase one but explicitly no tailormade support for phase two. Does this mean government is making clear they will not support expansion beyond phase one?

No, so 2027 - 2028 is simply very late, by which time the UK Government would have also lost a significant amount of money because of what they are managing in the steel industry in Scunthorpe. I think they are working on it and that is the assurance that we have got. The answer is yes on Netherlands. This tailor-made agreement is specifically towards phase one and our commitment is to do the phase one. The phase two is left to the Company to decide as to when and as far as timing, the technology to be used, the project cost to be done etc., is one reason why they also want Tata Steel Netherlands to be significantly profitable to ensure that they can afford to do the phase two whenever it is due. So, that is how the understanding is. There is no commitment on funding and neither a commitment on when we have to do the phase two. So, all the discussion is on phase one.

On slide 10, you have given guidance to 40 million tons per annum but not the timelines. The flat products are increasing and longs is coming after that - which is the last portion of flat product expansion expected, and what are timelines?

Yeah, so let me put it this way. The sequence is not to do with the time. So, as Koushik said, what we are most ready for is the Neelachal expansion. And the Neelachal expansion is a long products expansion. So, in Neelachal from 1 million tons it will go to about 6 million tons. And from 6 million tons it can go to about 10 million tons. That's the second phase of the Neelachal expansion. Kalinganagar, as we complete 8, we can go to 13 million tons - that's the next phase. And from 13 million tons we can go to 16 million tons. In Meramandali, we are first looking at taking it from the current level of around 5 million tons to about 6.5 million tons and then after that we can go to about 10 million tons. So, in all these areas, the work is going on. In Meramandali, we need to acquire some land. In Neelachal, we are waiting for the ECs etc. and in Kalinganagar also a lot of work is going on in the background. So, all these are at different stages of readiness. And as we mentioned earlier, we will now go to the Board only after we've got all the requisite approvals. And that's why we've kept the timelines a bit open. The second thing I want to say is, we are also pacing our growth depending on the demand growth in India, the profitability and how to pace it, etc. And we are also looking at adding more and more downstream businesses. So, it'll be a mix of both.

On Netherlands - the free carbon credits are gradually going down. How should we look at cost structure in terms of carbon credits reducing as we start to turn green at a later part?

So, I think the free allowances will come down; started to come down slowly, and we have mitigants. For example, we are using more scrap charge; currently, we are at about 18% - 19%. Our target is to max out on scrap to ensure that we get to it. I would also like to mention that in Netherlands, our CO2 emission as of last quarter, which I just got the number of a couple of days back, is at around 1.6. So, that's kind of one of the lowest. We'd gone down to 1.59 this quarter and last quarter we were 1.6. And we're taking a lot of effort in reducing the CO2 also including usage of scrap as a percentage. And last quarter, we were not able to max out more because of some volume issues. We will go beyond 20%. And once we get to more and more scrap, we will be able to reduce CO2. So, as the natural reduction happens on free allowances, we want to also undertake internal decarbonisation efforts because there is a clear cost advantage to this. So along with our cost transformation program on other cost areas, I think we will continue to work towards reducing the conversion cost in Netherlands, including CO2, energy, natural gas and other costs.

What is the revenue mix exposure from UK to Europe? And how are we looking to de-risk if there are delays on the UK Government taking a stance?

So, that's about 25% volume on the current basis. I was waiting for who will ask that question, but that's the third lever of the negotiations with the government, because in 2021 the EU and the UK had signed an agreement of no quotas and no tariffs between most of the grades except for some galvanized grades where there are specific quotas. But this new regulation that comes in as a steel plan, will require the UK Government to revise that understanding with the EU. So, that's the third leg of the engagement that we have requested the government to do quickly, which they are cognizant of because that's important.

On the cost takeout - you have already talked about Rs. 5,450 crores in the first half. How much has come from Kalinganagar plant efficiencies and how much more can be expected as we ramp up gradually to full capacities with the value-added segments?

So actually, this is unrelated to capacity utilisation because this is on the baseline. There is some element at capacity utilisation, but largely, it is run in an integrated manner. For example, we run it as one program on, say, stores, spares and maintenance. So, it is not just one side, but it is across the combination. And this combination is actually the power of this program because when our colleagues run it on, say, stores management across four sites, it's much more efficient than managing it across four individual sites, right from procurement to usage, to usage pattern to storage and even inventory etc. So, it's very difficult to give it site-wise, but it is more specific by theme-wise. For example, stores using leaner coal mix or energy efficiently. So, those are the kind of themes we run across sites and that's why organisationally we are consolidated to do that.

You earlier guided about Rs. 2,000 - 2,500 kind of lower costs in Kalinganagar. How much of that is achieved and how much is likely to be achieved over the next few quarters?

So, I think we said Rs. 2,500. I don't think we said site-wise, but we said Kalinganagar - I think we said at one time, as we fully ramp up Kalinganagar there will be a benefit because obviously it's a much more productive site. It's a volume effect. So, that's a per-ton volume effect, which will happen by the end, by the time we exit this year, we should be able to get there and that's our target on the volumes anyways. We had some slowness in the first quarter, but second quarter onwards we have been able to increase our capacity utilisation, and we'll continue to do so in 3Q and 4Q.

On the ferrochrome unit sell-off - we bought this unit just three years ago and earlier proposed a 50% expansion along with CPP and also have the chrome ore mines. Suddenly, you decided to sell this business. What is the problem here?

It is linked to our Sukinda resources. And if you really look at it strategically, if we were to continue Sukinda, one was this whole confusion that happened on the MDPA etc., because Sukinda needed underground mining to sustain itself but the resources, the way we were doing it, was coming to an end. So, if you look at the investments required for underground mining, the ferrochrome market in general globally and the way in which the duty tariff structures etc. works, our call was to exit the mining lease of Sukinda because of the high underground capex. And once we took that decision, it was necessary to rebalance the sources of mining. We have two other mines, more specifically one more mine which is more useful. We do not want to be just a converter without a mine and that is the basis on which we then took a decision to get out of it. And the buyer is consolidating in that space, so it helps him also. Basically, we wanted to limit our production to what we largely need for in-house consumption rather than be in the market because we were surrendering the Sukinda mine and the changes in the MDPA etc. was not making this business as attractive as it was before.

Given all the uncertainty and volatility in UK and Europe, how confident are we of the level of profitability once the EAF comes in? What kind of EBITDA do we see as doable, given the current environment, current pricing and current raw material costs?

So, if I were to start and then maybe Koushik can add, you know when we did the EAF, the larger point was, we said the cost position of UK will improve by about £150 per ton, okay, because we were taking out a lot of fixed costs, we were using locally available scrap instead of imported iron ore, coal etc. So, which meant that in longer term, with the steel pricing that we've seen in the past, the UK business should be EBITDA positive and should be able to stand on its own because an EAF run operation has much less requirement of support on maintenance and many other things because you don't have the sinter plant, the coke ovens and blast furnace and many other such facilities. So, that hypothesis stands. What we are seeing now is a very abnormal situation, which is coming out of what's happened in the US, what's happened in Europe now, what's happening in China. So, we don't expect these things to stay on forever. On internal cost side, we are on track to what we said we would achieve. But the external aspects, we expect actions to be taken like Europe has already taken to protect the European industry. And as Koushik mentioned, the UK Government is also bleeding because of their investments in the other steel plants in UK. So, we are expecting some resolution to this in the next few months.

What kind of capacity does UK in particular need? Was there ever a discussion that maybe not put as big a capacity as planned and maybe scale down a bit, given how the environment is?

Yeah, we are comfortable with the current capacity level. I think the issue which has happened in UK is the quotas have not been changed even though the demand has shrunk over the last few years, unlike EU where the quotas have been changed and have been tightened further. So, our submission to the UK Government is, they need to keep realigning quotas, import quotas, to what is the domestic consumption. And I think that's what we expect them to be doing. But otherwise, 3 million tons with maybe 10-15% exports is fine. There's nothing wrong with the capacity in the context of the demand. It's the issue of the imports that has come in. And the UK Government, they were all focusing on infrastructure and that infrastructure, when it actually starts rolling, will require a lot of steel. So, I think there is a policy issue that the government needs to address, which is what is being worked on in terms of growth for the economy itself.

On the Ludhiana EAF, what kind of profitability can we look at compared to the standalone Indian operations?

Yeah, so there are a couple of things happening with Ludhiana. Of course, like you said, the profitability will be lower. Typically, an EAF kind of operation in the Indian context, I would say, is more of Rs 5,000 to 7,000 EBITDA per ton kind of thing. But you should look at it in this context also that you're getting almost a million ton for Rs 3,000 crores or less. So, when you look at it from a different angle, that's the equation that we look at. What we're doing in Ludhiana to supplement the margins that would normally be available, is to see how can we reduce costs because of the fact that you're getting scrap from a 200-300 kms radius and you're selling steel in a 200-300 kms radius, right. So, a lot of the logistics costs that we incur when we make steel in Eastern India and ship it to Ludhiana or elsewhere is what we're trying to save. So, there are a number of initiatives on the route to market, the logistics cost, the supply chain costs etc., so that we maximize the revenue potential in that geography. And of course, pretty much all that is produced there is going to the retail market where our realisations are higher than it is in the project market.

On the pipe expansion - we were looking to expand from 1 million ton to 4 million tons per annum, but that hasn't come across in the recent presentation. Where are we on that initiative?

Sure. So basically, most of that growth would have come through assets that we would lease. Even today, whether it's in long products or in pipes etc., a lot of our capacity goes to assets that we lease, which means 100% of that capacity is committed to us. So today, I think the pipes business is heading towards 1.5 million tons, which includes the pipe business that we acquired through Bhushan plus all the leased-out capacities. I think I'm not remembering the exact numbers, but maybe 40% to 50% would be our own and the rest would be leased out. So, most of the growth will come through that. We recently invested in a precision tube mill, which has added 100,000 tons of high-quality pipes in Jamshedpur. So, wherever it's high quality, specialized like we have the large-diameter pipes, API pipes, are all available from the Khopoli plant. Wherever it's high end, we will make the investments. Wherever it's regular stuff, where the value is more in our branding and distribution, we will lease out capacity. So, that work is going on. And as our hot rolled coil capacity grows, we will continue to expand the pipe capacity and the ambition is to get to 4 million tons.

On iron ore - how are you thinking about securing iron ore for Indian assets? Are you looking to get into tie-ups with OMC as well or will it be broadly merchant purchases?

Yeah, so I think we, as we said last time, obviously we already have some iron ore. We have maybe about 500-600 million tons of iron ore with us today, which is available beyond 2030 based on our existing mines which we bought through our acquisitions or through auctions. Second point I want to make is, when we bid for the mines it needs to make sense. There is no point bidding a price at which the cost of iron ore is so high that you'd rather buy it from the market. Third is what you're saying is right. It can't be all spot purchases. So, we are already engaging with OMC, NMDC etc., to look at what could be the arrangements that we could have. OMC is of particular importance to us because a lot of our sites and production and growth is happening in Odisha. Fourthly, we are also looking at various other options depending on what is the cost of iron ore in India. We already have a mine in Canada, for instance, which is very high-quality iron ore, very low alumina iron ore. It's 63% plus Fe while alumina of less than 0.5. So today, we sell from there into Europe etc. We are getting a shipment into India to test out that material. But it's not necessary that we need to have 100% captive. I think we will do that if it makes economic sense.

On domestic demand environment - after many months we're seeing prices much cheaper than landed cost of imports despite safeguard duty. Volumes from JPC seem on a higher side but prices not getting that reflection. Are we seeing excess supply scenario or lower demand affecting prices? And when you have guided Rs 1,500 per ton price decline in 3Q, are we factoring in December no price increase?

Yeah, so see, it's not that demand is not there, demand is quite strong and India is the only major country which is showing double-digit growth in steel consumption. And I think, given the focus on infrastructure building in India, I do expect the demand growth to be more than the GDP growth rate, which is what happens in most developing countries including in China when they were growing. So, if the economy is going to grow at 6.5-7%, steel consumption growing at 10% is to me par for the course. So, demand is not the issue. Obviously, supply side, as you know, when we add capacity we add in big chunks, right. So, we've added 5 million tons, JSW has added something, JSPL has added something. So, you will go through years when a lot of new capacity is coming on stream at the same time. But I do believe in the medium to long-term, it is not going to be easy to build lots of capacity very quickly in India, given the regulatory environment, the approvals that we need to take, the time which takes in India to build a steel plant, etc. So, I expect there to be a better balance going forward and which should get reflected in the prices. The more specific question you had, yeah, this is factoring in November and December. We've not factored in major price increase in December. We are saying that we operate close to November levels. If there's an increase, there's a potential upside to what I just guided. So for now, we've been a bit conservative on this.

On the BlueScope acquisition - enterprise value of something like Rs 22 billion for a company having net profit of Rs 62 crores and Rs 30 crores in last two years. The amount being paid seems much higher on profitability basis - how do you explain that?

Yeah. So, first of all, I think this JV has been making about 19% ROE since inception. Second is, it is a combination of two parts. One part is that we have, this JV company had its own color coating, metal coating facilities. And then, post Bhushan, as per the JV agreement, we had to ensure that the same facilities that were there in Bhushan, in Khopoli etc., were also used by the JV, the substrate of which was passed on by Tata Steel. And that is the arrangement that we had with the JV and the JV partners, which is ourselves as well as BlueScope. And in some ways, there is a split in the profitability because of the transfer pricing etc. So, you do not see the system profitability of this business. You just see, for that part of the business, only the downstream profitability, excluding the transfer price and the markups and so on. So, I think it is important and we were hindered in this segment because we were the first to come in 2005, to grow this business significantly, which is I think in our domain and the leverages and the synergies and network of Tata Steel and enriching the product mix, also fungibility of the product mix between market segments and so on. And that is the basis on which we actually wanted to consolidate. If you look at it from an underlying EBITDA perspective, it is 7x, which from a value-added downstream perspective is what the numbers will effectively look at. So, that is the basis which when post the acquisition you will see it more on a system basis.

Chat question on Thailand - despite being an EAF operation, it is highly profitable. Can we expect that kind of profitability, either in India or UK?

Yeah. So, there are two or three things when you look at EAF profitability. About 70% of the cost is scrap, so the price at which scrap is available etc., has a big impact and about 15% of the cost is energy. So, these are the two factors which drive EAF profitability, apart from operating performance etc. In Thailand, what you're seeing is an upsurge because, if you recall, there was an earthquake in Thailand, I think it was around April, there was this viral video which went around of a tall building which collapsed. And you know the conclusion at that time was that a lot of this is happening because of the poor quality of steel, which is used, and the quality standards need to be looked at once again. And because if you use poor quality construction steel, you run the risk of this kind of a thing happening, particularly if there's an earthquake. So, as a consequence, a lot of local production which seemingly were not meeting quality standards had to be closed. And Tata Steel Thailand is seen as one of the best quality producers of steel in Thailand, has a good name, we have the Tata Tiscon brand operating in Thailand as well and they got the benefit of that. That's why you see much better performance than we've seen in the last few years. Certainly, we'll be in a much better cost position than we were before in UK. In Ludhiana, the CO2 footprint of the Ludhiana plant is going to be 0.2 - 0.3 tons of CO2 per ton of steel compared to Jamshedpur, which is the best in India at 2.1 - 2.2 tons of CO2 per ton of steel and Netherlands which is one of the best in the world at 1.6 tons of CO2 per ton of steel.

Chat questions on cost transformation - are we on track and what is the number expected for 3QFY26? And given delay in employee-related discussions in Netherlands, are we reducing our target for the year?

So, that looks like an exam question, but I think it is important to mention that our target is the same. I mentioned when we started this that it is an 18-months program. Obviously, the work that can be done is being pursued across the geographies, across teams and across functions. I think we will continue to maintain the secular basis on which we are - we've gone through the first two quarters. The compliance in Netherlands is lower, as I mentioned, because of the employee restructuring going slower than what we had planned. But that is a timing effect and I'm very hopeful and all of us are working with the CWC to ensure that we get to it. But the point is less about QoQ performance, it is more about getting structurally fit. It is about getting the competitiveness in place, so that we become all-weather. I also want to say that the target will also keep changing once we achieve it, there will be more where we want to build a pipeline of it, and we continue this as a journey. Tata Steel India has always done that for about 20 - 25 years. But this time around, we have taken more structural view because we have become multi-site and our capacity has increased significantly.

Chat questions on TSN decarbonisation - given political changes in Netherlands, do we expect the government to follow through this commitment? Is 2030 a sacrosanct deadline?

I think, if I look at the way we have built up our conversation with the government and across the political spectrum, it has been largely bipartisan in terms of, across parties because it was a parliament mandated process to get through to the JLoI. Subsequently, when we were signing the JLoI, it had to go back to the Parliament for placement and noting. So, with the political parties being the same, it is certainly the assumption that we are working in, that the government will continue to work on it because it's of national importance and it is something of a commitment. We do have a journey in terms of final negotiations on the binding tailor-made agreement. But I don't think any of us have a doubt that the government will not stand behind what they have signed, the new government. We have to give the time for the new government to form. The election got just over. Unlike in India, it takes a little bit of time, and we must give that and then we will sit down with them on the tailor-made agreement. In the meanwhile, both sides are anyway working at the background on the conditions that needs to be fulfilled.

Chat question on leverage targets and how we are balancing leverage or what is our approach towards leverage.

I was wondering when that question will come up. I think we are managing our balance sheet pretty well under the circumstances in the context of our operating cash flows, with all geographies being focused on working capital and profitability. This quarter we had a significant amount of cash outflow on our dividend, which is an obligation that we are clearly focused to fulfil as part of servicing investors. It is important to mention that our Net Debt to EBITDA is at about 3, even with the kind of spend that we have. As I've already said that in the past, that between 2.75 and 3 is where we would like to maintain ourselves on a more sustained basis. At times, when there are significant market challenges or volatility in prices, which impacts the working capital, because steel, coal and iron ore prices do change significantly, especially on the seaborne market, that's the time when we do get beyond that matrix. But largely, 2.75 to 3 is what we would like to maintain. In a mid-cycle period like this or a low mid-cycle period like this. In an up-cycle we are on a different platform. So, we would keep the matrix like that. Any opportunity to deleverage, we'll continue to deleverage. But we also look at where best to apply that capital apart from leverage, in short-term payback period projects or acquisitions like the BlueScope that we've done because that actually effectively will help in consolidating the margin and the footprint and helping our product mix to grow.