Refused to commit on mining employee cost percentage.

On Europe - some of the European players have come out with strong commentary on pricing. ArcelorMittal has raised April delivery prices to EUR 700/t, which is EUR 60/t higher than spot. How sticky and sustainable could these be because demand is still weak, but expectations are around higher utilisation levels as imports start to come down?

When you look at what's happening in Europe, while the demand has been quite stable at around 130 million tons for the last few years, imports had gone up to about 30 million tons. The quotas that have been announced are going to halve those imports to about 15 million tons. So that's going to happen by June-July and in addition to that you have the CBAM, which has already started, and the CBAM has an impact on the import prices as well. So, if you're selling into Europe, even in this quarter, you'll have to factor in the impact of CBAM on the prices, and then on top of that, you're going to have a reduction in imports. Over the last 2-3 years, we had seen the European prices move more towards the Asian prices. But because of these actions, we expect that prices in Europe will move away from Asian prices and move towards the US steel prices.

On India - broad timeline for all the capacity expansions: NINL, the 2.5 MTPA at Meramandali and any indication for the Maharashtra greenfield. And how to think about debt as capex will likely accelerate from now on.

In December we said we had the in-principle approval of the board for the NINL expansion. We are weeks away from getting the environment clearance and once we get that, our basic engineering ordering is in progress. So, it will take about 35-40 months when we get into execution. We will get to the FID in the next couple of months. Maharashtra is slightly longer term because it is at the enabling level. As far as the Meramandali expansion is concerned, we have to get the EC clearance. So, the first one is the NINL, the second one is the Meramandali and the third will be the Maharashtra or Kalinganagar expansion. On debt, we've said we would like to be up to about 3x Net debt to EBITDA. Sometimes when you have cyclical issues, we move to 3.2x, and when in better times it comes down, as you see now, we are at 2.6x. We will not bust that range because we have a strong pipeline of capex which are productive.

On Europe - what is the status on UK safeguards and discussions with the government? And given CBAM and the emissions have not been verified for a lot of importers, what is the trend in imports?

As far as UK is concerned, we are deeply engaged at all levels to get the safeguard and quotas out. We are hopeful that it will happen soon. As far as the CBAM is concerned, it's very early days because there was some amount of stocking that happened pre-December. The default rates are high at this point of time; the first year default rates are significantly high. For example, in case of China, it is about 3.1, in case of India, it's about 4.2. There are two very fundamental regulatory triggers in EU which will push up the prices and will have an effect of pushing it towards the US prices. And if you look at the markup in the CBAM, it is a 10% markup in 2026, and a 20% markup in 2027. So, till the verification happens, the markup keeps increasing. Fundamentally, what's going to happen post the steel action plan comes in June or July is that the marginal cost of new supplies will come at a marginally higher cost. We are certainly expecting that the price buoyancy to remain in the EU for a longer period of time.

On India - comments on the budget proposal for National Waterways 5 in Odisha linking Kalinganagar to Paradip. What's your expectation in terms of timeline and impact on cost? And does it make you rethink your decision to look at Maharashtra?

Firstly, Maharashtra is in addition to our plans for the East Coast. It's not in place of any plans. If you look at our own plans for the East Coast, between the Kalinganagar complex and Neelachal which is across the road, we have the opportunity to build about 25 million tons of steel capacity there, which is today at 9 million tons. Then you have the Bhushan plant in Meramandali which can go up to 10 million tons. So, in Odisha, we have the opportunity to go up to 35 million tons as against the current 14 million tons. Maharashtra is in addition to that and gives us optionality on the iron ore and servicing western and southern markets. India is one of those countries where waterways account for a very small percentage of logistics. We are glad that they picked this waterway which is close to our Kalinganagar site because we think it will help us bring down the logistics cost. But we don't have a timeline yet.

Tata Steel is doing everything it can, but it is facing the twin problem of making an investment while having EBITDA losses. Would the company at some point wait for the policy to fructify before stepping up the capex or will the capex continue irrespective of whether there is any immediate support from the government?

Once the EAF is built, our cost structure will be different. When our blast furnaces were running, our cost structures were high. We transitioned to plan for the EAF because the cost structure would be lower. We are at an intermediate phase where we are buying the substrate and then working on the conversion cost. If we were to not progress with the EAF, we are going to delay that transition into a more profitable unit. So, there is no upside in delaying the investment. The quicker we can convert it to that stable state, at least we will be in a better cost position, better working capital position. So we have done that analysis and scenarios, and it makes sense to continue to do the project. In the longer term, we hope that the government for its own requirements is also very mindful of the fact that this bleed needs to stop; not just for us but also for them.

With the safeguard duty placed in India, and the price hike we have seen between December and February, is it fair to say that the December quarter EBITDA per ton was probably the low?

I think December quarter prices, particularly the first part of that quarter was probably the lowest in the last five years for flat products, and pretty low for long products as well. So, in some sense, that was the bottom as far as the prices are concerned. So yes, we expect better numbers this quarter. But we should keep in mind that coking coal prices are also going up; we are conscious of that. But still, prices are certainly coming back to the levels where it should be, because it used to be at a discount to import landed. Now it has caught up with import landed.

On Europe - prices have risen from $650/t to $750/t a few months back. Wanted to understand the nature of our contracts, and with what kind of lag do we see these prices coming up to our P&L.

Contracts are about 35%, largely in packaging which is one area where there are one year contracts and six months contracts. Automotive is the other; automotive has its own cycle. That's the point I mentioned that the benefits of the EU domestic prices will depend on the effectiveness of the CBAM as well as the quotas, both together. The full impact of that will come gradually and not in one jump. The estimation is that there is an opportunity for almost EUR 100/t increase in prices over the full year. But it will happen in at least two stages; one is CBAM now and secondly when the tariffs come in post June 2026.

On Netherlands - how much carbon credits do we have as a percentage of overall requirement right now? Since your emission levels are already closer to 1.6 tCO2/tcs, does that mean whatever carbon credits we have, these are surplus, or we still have to pay or buy some additional carbon credits?

The reference point I'm using is the CBAM. The reference point for CBAM for EU domestic producers is 1.37 tCO2/tcs. So, if it is 1.37 tCO2/tcs and we are producing at 1.66 or 1.68 tCO2/tcs, there is a gap and there is a free allowance that comes in. So, we have to buy the net of that. I think we will still be buying, and we'll continue to buy till we do the transition because the reduction in free allowances is going to happen from this year to 2032 or 2034.

Outlook on the price increase in 4Q for India and Netherlands - price and cost, especially coking coal cost changes.

I think the guidance we are giving is, India prices on QoQ will be about Rs. 2,300/t higher, and on a spot basis hot rolled will be much higher, but when you look at the mix and the contracts that we have, we see an improvement of about Rs. 2,300/t. In UK, it's going to be about £5/t higher. In Netherlands, on a spot basis it is going to be higher on the hot roll coil, but because of the mix issues and packaging contracts getting renegotiated, we are seeing a QoQ reduction of €30-33/t per ton from 3Q to 4Q. But we expect Netherlands to more than offset this reduction in realisations because of cost take out, so we expect an EBITDA expansion in Netherlands, and a slight improvement in EBITDA in UK. India will also see an EBITDA expansion. Overall we expect EBITDA to be better in 4Q compared to 3Q, and volumes to be almost half a million tons better in 4Q compared to 3Q.

With CBAM coming in, will some of the exports that were going to Europe come back to India and pressurise domestic prices?

Tata Steel doesn't sell much to Europe. We send slabs to UK for our plant, but otherwise we are not a big exporter of steel to Europe. Maybe some of our peers are, but I don't think that volume will be so significant as to make an impact in the domestic market in India, because the demand is pretty strong in India. In the last couple of quarters, there was a little bit more ramp up of capacities because our capacity ramped up and a few others, but now there's better balance in the domestic market. So, I don't expect that to have an impact on prices in India.

In India, how much price drop have we seen in 3Q versus 2Q and how much coking coal cost reduction we have witnessed in 3Q?

For India, the price drop was about Rs. 2,100/t, in 3Q compared to 2Q. We had guided Rs. 1,500/t but the market was softer, particularly in October and November. Prices started going up only towards the middle of December. In terms of coking coal, I think the consumption cost was up by $4/t for India, in 3Q compared to 2Q.

On UK conversion cost - even if government gives support and steel prices increase, our slab prices will also increase. What kind of government measures are we trying to look at to make EBITDA positive in UK? And on Netherlands, while you are guiding reduction in prices because most contracts start from January, we have witnessed spot price increases. How are we going to see the reduction in prices in Netherlands in 4Q, and is the cost reduction the driver of EBITDA expansion or price increase?

In Netherlands what's happening is that it's more of a mix issue, rather than a price issue. The price at a hot rolled coil level is going up. We don't do so much on spot basis. But it's going up by about £20-25/t, from 4Q to 3Q. Where we are getting hit a bit is in packaging. Firstly, there's a renegotiation of packaging contracts because of new contracts, and then there is a price drop. The second thing is that a lot of volumes of packaging used to go to the US, but the volumes are being cut to the US. That volume which does not have so much of a market in Europe, is being sold in engineering grades and other grades. So, from a mix point of view, there is a dilution. This £33/t is more of a mixed dilution impact rather than a price drop impact. But the cost takeouts are going to be more than this and hence, we expect the EBITDA to get better.

Follow-up on UK breakeven - at what spread will we breakeven in UK?

Very broadly, if you look at the price drops that have happened over subsequent quarters or years actually in UK, the average price at a point in time used to be well over £900/t. Now, at this point of time, we have multiple downstream products. There is tinplate, there is color coated, there is automotive, tubes, etc. So, what we are looking at essentially is, if the quotas are in place and the tariffs are in place, then the spread will increase and I think that spread increase of say, £75-80/t would be good enough for us to look at increasing the profitability to make it neutral. Ideally, if the right quotas are in place in a similar manner in EU, the price increases should recover to somewhere over £100/t and that will help in the profitability significantly. So, I'm saying that, wherever the spread is today, that spread has to expand by about £100/t to make it a profitable entity.

On spot basis, what are the spot steel prices and coking coal costs vs. the 3Q realisations that we had?

Coking coal, on a consumption basis will be about $15/t higher in 4Q compared to 3Q. On a mixed basis, India prices will be Rs. 2,200/t higher, but if I were to look at the hot rolled coil, I think it will be about Rs. 3,500/t higher. If I look at purchase, it is actually $22/t higher in 4Q compared to 3Q, but the consumption is $15/t. We have materials in transit and things like that, and some of this will flow through into the next quarter.

Mathematically, two to three million tons is the headroom before the next expansion kicks in. Is market share loss over the next few years a point of worry?

The way we approach an expansion plan is now changed. We first get all the environment clearances and everything else before we get the FID done, because we find that gives us more definitive timelines. Second, there is a lot of focus on increasing our downstream capacity and product mix. In Tata Steel, we always look at whether our market share in attractive segments be twice our overall market share. So, if we are a 15-20% market share player, then in the attractive segments, we should be at least 40% or more. So that's what we chase because that gives us a better realisations, better product mix, and less vulnerability to cycles. We are moving towards a million tons or more of tubes. We've just approved some expansion in wires, and we have about 700,000-800,000 tons of wires and that to very high end wires. We will be looking at market share, but we will be looking more at market share in the right, attractive segments. So yes, we have the runway to grow.

On Thyssenkrupp - there's a lot of news flows with respect to Thyssenkrupp and one of the Indian peers evaluating it. How do you see industry structure changing? Any consolidation or anywhere we are looking to participate?

In Europe, we are focused on transformation, and transforming our facilities. In UK, there are a lot of cost take outs, and the transformation will put us in a better cost position. In Netherlands, it's more about driving cost efficiencies. We are focused on these two sides and making sure that they are in the right place on the European cost curve. I do believe that in Europe there will be supply side restructuring simply because anyone whose blast furnace is up for relining will think hard before relining a blast furnace. There will be bigger players who have the ability to invest in the transformation, and there will be some who will not have the ability to invest in the transformation. So, when their blast furnaces come up for relining, you will see some restructuring on the supply side, which helps the overall market dynamics in Europe. Given CBAM, quotas, and the supply side actions that are happening in Europe, we do see Europe looking more attractive in the next few years than it was in the past few years.

On Netherlands - are the price increases going to be a pass through or are there any costs that we should be cognizant of in the environment, more in the CBAM or what we're already paying?

The price increases that are looked at on account of CBAM and tariff are pass throughs. There wouldn't be any impact on additional cost. In fact, this CBAM cost is a compensation of the cost that we pay with the imports that come in. So therefore, it is more of a reimbursement of the cost that we pay. The quotas are effectively related to the imports that are happening. So, that has no additional cost implication for us as such. So, the short answer is no in terms of any relatable costs. There are other cost factors that are there in EU, but those are unrelated.

On the color coated business - what is your target capacity? It's a high value-add business where realisations can be significantly higher. What is the kind of capacity you are targeting and over what period?

The current capacity is around 600,000 tons and the idea is to also change the product mix more favourably in the color coated business. What it does, apart from giving us the ownership of the JV, is that it also frees us up from some of the JV conditions which limited our opportunities to get the most out of all the color coated lines that we got when we acquired Bhushan. So, there is an opportunity for us to make better use of the lines, some of which were underutilised because we were restricted to participate in the construction market other than through the JV. We have an opportunity to also expand in Kalinganagar as a downstream. We also have an opportunity or an optionality in Jamshedpur where we have a 250,000 tons line to convert the metal coating into color coating. So, there are many options, and our aim is to actually double the profitability of the business in the next year or two.

Given the expansion in the data centre space and the government announcing tax holiday, do we have any plans for electrical steel like CRGO?

Data centre in itself offers a lot of opportunities for steel because of the fact that the buildings will use steel, the storage racks and everything else will use steel. There is a focused effort on looking at what we can supply to the data centres and what are the steels that we can develop and provide. Yes, CRGO is part of our plans. We are assessing it and most likely the plant will come up in Jamshedpur, but we are still looking at various aspects of it. So, we are working on it.

On Europe - if we look at the OECD capacities, there are around 213-215 million tons while Europe production has been in the range of 130-140 million tons. Do you have any sense of how much is the effective actual capacity in Europe and over the next five to six years, what would be the effective capacity?

Capacity is sometimes a very misleading kind of number. How much of that 220 million tons is produced steel, is a question to ask. Generally, in Europe, you will see that production is roughly around 130 million tons, and there are exports and imports. Imports have largely been about 30 million tons. A lot of these capacities are very high cost capacities. There are efficient or low cost plants like some of our plants, or some of the Arcelor Mittal plants. And then there are high cost plants and those are the ones which tend to get mothballed. Like I said, if the quotas are reduced, that means more capacity will come on, but those capacities which come on or mothball capacities which come back on are higher cost. People will think hard if any blast furnace is due for relining in Europe. I don't think anyone is going to reline a blast furnace in Europe now. That's why I feel that over the next 5-10 years, there will be a fair amount of restructuring on the supply side in Europe.

Is it fair to assume that over the next couple of years, we can see demand outpacing the production in Europe?

Demand will grow. What's happening in Europe is, given the intention to spend a lot more money by European countries, we do see a pickup in infrastructure spend, particularly led by Germany. We do see an increase in defence expenditure. Even as it is, we do see growth in some sectors, but there is also a bit of degrowth in some other sectors. For instance, if we were exporting a lot of automobiles from Europe to the US, some of that may get impacted. You will have some volumes dropping and some volumes increasing. But overall, I don't see demand growing very significantly and I don't see it shrinking. It will go up maybe 5-10 million tons at best. It's more of the supply side which we are talking about, both from imports being limited and domestic capacities also going through this transition, either to new process routes or closing down blast furnaces.