On the closure of coke and gas plants - what is the cost impact if we replace this with market purchase? And given so much regulatory uncertainty in Netherlands, is there a case to revisit the entire investment plan in the region?
On the cost penalty on buying of coke, given the fact that we are still assessing the timing, there will be an impact because we will not have the gases in particular, and the credits that go into coke making. But we are also looking at options to supply from various sources, which could also include India. We will have some time to plan for it. On the second issue of the case for reinvestment, some of these are prerequisites to be resolved before we undertake any large investments. It's not that the coke and gas plant shut down affects the plant or the volumes as such because there are alternative ways to do that. But to look at the future and the new configuration of assets to invest in, we need to resolve some of these issues before we take on any large commitments.
On the Netherlands regulatory landscape - how are you grandfathering when regulatory landscape can change after you make the investment? And what are the condition precedents in the JLoI?
The Joint Letter of Intent (JLoI) had a few condition precedents on both sides. There are condition precedents that the government has to fulfil and condition precedents that we have to fulfil. Before we get into anything which is binding, a lot of this has to be contractually agreed and we are not there at this point of time. No investor including us will make an investment, unless it is not just grandfathered, but is contractually guaranteed to run its course across a certain minimum period of the life cycle. We are not there as yet as far as the Final Investment Decision (FID) is concerned. The JLoI is live and active, and we are in active conversations, but these are very important things because at the end of the day, even contractually, there will be a certain judgment to be taken on how this works. The regulatory landscape is certainly a very important fulcrum, which needs to be assessed every time we move one step further.
The other cost which you mentioned for India in the first quarter, how much could that be on a per ton basis?
You have to let the quarter finish before, because it is still a very evolving situation. We don't want to give you something and then come out with something else.
In the Rs. 12,000 crore capex in India, can you split it by project?
It's very difficult to give those kind of numbers off hand, but effectively there are certain downstream expansion projects that are going on, be it the tinplate, wires, etc. There is a Hot Rolled Pickling and Galvanising Line (HRPGL) in Tarapur, then there are coke oven projects in Jamshedpur, which is going on. There is the tail end of the payment that has to be done as far as Kalinganagar is concerned, and then there are the sustainable projects, and there is some allocation for NINL. There are also projects on the mining side. Taking all that into account is Rs. 12,000 crores. If you are looking for whether we have allocated money for NINL, the answer is yes.
Any update on the Maharashtra venture?
In Maharashtra, we've moved, and we've been discussing with the government and identified the land. As we get into more finality, we will talk about it, both on the mining side as well as on the land side. Hopefully in the next three months or so, we will give you an update about where we are on the land and more specifics about it.
On Europe - if we need to close our blast furnace and other things also in order to reduce emissions and by that time we don't reach an agreement with the government, is there potential for a joint venture or selling assets, or can we still go ahead with the investment?
As of now, we want to run the plant, as it is. The coke and gas plant is what we have consciously and over a time studied. We have a very detailed work done as to how it will get closed, and that's being shared with the regulators and the environmental agencies, and that is why we have a path to go forward. It is not the next 12 months; it cannot be done very soon. It will require time, and that is the time that we are in discussions with. We have made it very clear because there is a way in which we can do it with segregating the coke oven circuit from the rest of the plant, and also ensuring that it is a make safe closure. If it goes beyond that, then we will have to look at different alternative scenarios, and what scenarios actually work for both the Tata Steel Netherlands business and its business continuity, as well as for Tata Steel as a primary shareholder.
With respect to the delay in the electrical backup and infrastructure for UK, what sort of delays are we seeing and what is the best case estimate for commissioning that plant?
We have just been formally told that there is a delay. We are working with the UK government, the national grid and ESO to see if we can mitigate it, but somewhere between six months to eight months will certainly be there, maybe higher, after we have built the plant. So, the initial estimate was somewhere around 18 months, which has come down to 12 months, and we are actively working to see if we can reduce it further, but there will be some imminent delays.
On the NINL expansion - any update on the exact timelines and capex? And given many players are adding capacity aggressively, is there a concern about losing market share over the next 5-7 years?
On NINL, the initial work on the site preparation has already started. We are getting permissions on different parts and the FEL3 which is our basis for making the final allocation of capital, is also very advanced. So, in the next few months, we should be able to announce that. One of the reasons why there is a lot of work that needs to be done on the site is because this is going to be a 10 million ton site. We are careful from a regulatory point of view to get all the approvals so that we can do it, and equally be tight on the capex. On market share, the key point is market share in what? We are more interested in market share in key attractive segments, and we want to make sure that our market share in these attractive segments is at least twice our overall market share. We have the optionality to grow the upstream even with the existing sites between Kalinganagar, Meramandali and Neelachal plus Jamshedpur at 11 million tons, we already have the optionality to grow to 45-50 million tons in India.
Regarding the coke oven, the auditors have flagged material uncertainty to going concern. If you can just get coke from India, why flag material risk? And in case we shut down these facilities for 5 years before DRI comes, what do you do with the labour there?
We are in discussions with all of the stakeholders, almost on a daily basis. The letter which had come in did not have any definitive pathway, dates or transition specifics. So, when a letter comes in, the auditors are naturally going to say that there is no way in which a specific date is mentioned, or a year is mentioned. And that actually creates the uncertainty, as the company is in receipt of the letter. First of all, the coke ovens cannot be shut down in an unplanned manner. A coke oven is more like a chemical factory than a steel factory. There is also a permit requirement to undertake a shutdown. So, if there is a sequential way of shutting down in a planned, controlled, safe manner, and if a letter lands up which basically does not articulate that path, then it creates an uncertainty because that uncertainty is unmanageable. The coke ovens are 40-50 years old. The standards for some of the design of the coke ovens are not technically feasible also. So, we said we will shut down. We were anyway going to shut down soon after the first phase of the DRI-EAF would have come up. This is now potentially earlier than that and that transit or intermittent gap would have been filled by purchase of coke. There will be cost penalties, but there are CO2 benefits which will also come in. This is more about the physicality, not about the financials, and that is what created the material uncertainty. Regarding the people, if there is any permanent shutdown of any facility, the people will have to be restructured. That is a given, and that's what we have done in the UK also.
On the transition to DRI - even when this entire investment was made by Corus back in the day, the regulatory landscape changed. How do you grandfather when the regulatory landscape can change later? And is there a plan to explore global majors for tie-ups to accelerate expansion in India?
I don't think the India growth is being held back because of anything that we do in Europe. On joint ventures, we have had joint ventures in the past. We still have a joint venture with Nippon steel for a continuous annealing line, and we had a joint venture with Blue Scope for the color coating line. We believe that in our home market, we should ideally be by ourselves because this is our core market. This is where our strength is, this is where we have a strong franchise and hence, we actually want to build capacities by ourselves in India. We think there is power in consolidation and in fact we are buying out our JV partners in India because the synergies that we see in the marketplace, in terms of manufacturing excellence and supply chain, actually makes it very clear that if you have to leverage the power of size, it has to be consolidated rather than fragmented. We are merging NINL, and we bought out Colors. We are buying out many of our JV partners across the value chain because that gives the leverage and the power to be stronger in the market.
What's the pricing been in April and May and what could we expect in the near term in terms of realisations? And what's the coal consumption cost for 4Q and what could we look at in 1QFY27?
As far as realisations are concerned, in India we expect 1Q to be about Rs. 6,000/t higher than 4Q. In UK, we expect it to be about £80/t higher in 1Q compared to 4Q and in Netherlands we expect it to be about €80/t higher in 1Q compared to 4Q. The delta increase we expect in 1Q for India over 4Q is $15/t, and in Netherlands, it is about $10/t. As you know, in UK we don't buy coal. The iron ore increase in Netherlands is expected to be about $5/t in 1Q over 4Q. But I just want to add that some of this suggests that the spreads are going to increase significantly. There will certainly be an improvement in spreads in India, but there are many other costs which are coming in beyond coal and iron ore because of the impact of West Asia, as Koushik mentioned. So, some of that will add to the cost, but overall, we expect margin expansion in India and in UK, and some margin compression in Netherlands because of the issues that we've had with the DSP, as we would have lost almost one and a half months of production.
What's your view on India demand over the next 2-3 years given competitors increasing capex guidance?
The India demand is expected to be strong, as long as there is infrastructure led growth. Until two months back, we were expecting at least 8-10% growth in steel demand going forward. Now, if we are going to recalibrate the GDP and say that the GDP will grow a bit less, then the steel demand may grow a bit less as well. I think the automotive sector is quite strong and continues to be strong. Construction had a bit of a slowdown, and a bit of impact of labour not being there. I do see some pain with the MSMEs as well because there is pressure at that end of the value chain. So far, it's good, it looks positive, but obviously it's not insulated totally from what's happening around the world.
What is the volume guidance for FY2027? Given that we only have the EAF coming on stream, will there be any debottlenecking at Jamshedpur which can add to volumes?
The volume will be at least 2 million tons better in this financial year compared to the previous financial year with most of it coming in India, largely because the Kalinganagar ramp up is pretty much complete. That's the delta volume. In fact, Ludhiana is only half a million tons in this. We've not taken the full Ludhiana volume because it's still being ramped up, but you will have pretty much the full Kalinganagar volume. So, we expect it to be 2 million tons plus for this financial year compared to the previous financial year.
So, the Ludhiana profitability would be lower than the others?
Yes, it will be lower, but the whole model is different. The profitability there from a conversion point of view will be lower, as you're going to save about Rs. 3,000/t of transportation cost. Otherwise, we would have spent Rs. 3,000/t moving the same steel from Jamshedpur to Ludhiana. So, you will save that, and when you look at it from a price minus transportation cost point of view, you'll have a higher price there. The cost may be higher than making steel out of iron ore and coal, but your realisation, if you net it off freight, will also be higher compared to what you would have shipped it from here. Secondly, we are less insulated by the weakening rupee and also the coal prices. The Ludhiana plant is insulated from some of the cost increases that you will face when we're importing coal, paying for freight, buying in dollars, because you're using scrap.
How much potential EBITDA per ton can increasing the proportion of value added products add?
Typically, our downstream businesses, even if you take the steel being transferred to them at market prices, add anything from 5-10% EBITDA. That's the incremental EBITDA you will get from the downstream businesses, even if you transfer steel at market prices. That's why we've always had downstream, and we are planning to grow it. The tubes business, which is now at 1.2 million tons; we want to take it to about 4 million tons. The wires business, where we are the fourth or fifth largest in the world, is about 600,000-700,000 tons, and we want to take it to a million tons. In the packaging business between Europe and India, we are one of the largest in the world again. We want to double the India capacity which we've already announced last year. Then we also have Colors. We feel that we can do much more in color-coated steels. We plan to double the size of the Colors business also in the next 12-24 months. So, I think we want our downstream businesses to at least be about 50-60% of our volume. The whole objective is to sell less HRC in the market and sell more value added products, because when selling HRC, you are always under pressure from international prices.
Are there any plans on monetizing the online platform, which is doing fairly well?
Not monetising it, as in, no plans just yet to spin it off and monetise a value. But this is a very important part of our route to market. We have the retail business Gross Merchandise Value (GMV) growing very fast, and this is being sold with no discounts at the same EBITDA margin that you see in the rest of Tata Steel. This is almost Rs. 5,000 crores now and then you have DigECA, which is for the SME businesses, which is also growing well. We are focused on selling what we produce. It's more about enhancing our reach, particularly in the retail business. Now we have orders coming from Indians living across the world who are doing some construction in India, maybe building homes or buying steel for their parents or relatives who are building homes. We get orders from all over the world now, and we see it as a platform to access customers who we didn't have access to earlier.
On Netherlands and the CGP - what would be the immediate cost impact because of buying coke or gas? If closures happen earlier in the next 12-18 months, is there a possibility that the Netherlands operations become loss making?
With the exception of maybe 2-3 years back, when we did the blast furnace relining, every year in the last 18 years, the Netherlands business has been EBITDA positive and cash flow positive. That's why, as Koushik said earlier, it's debt free even today. So going forward, if the coke ovens close, we expect it to continue to be EBITDA positive, maybe making less EBITDA than we had hoped we would make, but it will always be EBITDA positive. So far, the Netherlands business operated without any support from India. As you've seen in the last few months and going forward, we expect steel prices in Europe to be closer to the steel prices in the US. The pricing to be better in Europe going forward, and we expect our Dutch operations to continue to operate on an EBITDA positive basis, even if the coke ovens are closed. Obviously, there will be some margin compression, but we expect them to take care of themselves. The key question is the investments in the future and whether we have the social license to operate for that.
On UK - given that there is going to be a delay between the plant commissioning and the electricity infrastructure, how will the plant operate without the infrastructure? And on NINL, what is the earliest estimate of the first steel?
On UK, we hope to be EBITDA positive during this year, now that the prices have started improving and that can continue till such time the EAF starts. We can continue to supply the slabs from here and continue to convert it into steel and as the policy changes that we have sought have come, we expect the business itself to be EBITDA positive going forward. There is currently a visible delay of about 12 months on the electricity supply. What we are trying to see is to get at least some connection, even one line as soon as the plant is ready so that we can do some trials. We can test out some of the equipment so that we don't waste that time, while we are waiting for the full electricity connection. We are planning to do a ramp up after the commissioning. We're seeing how to compress that to make sure that we catch up on the project IRR that we had targeted. Till last year we've been sending about 1.2 million tons of slab to UK. We are increasing that from India from Tata Steel Kalinganagar to about 1.8 million tons. On NINL, between July and September, we should be able to get the FID and once we get the FID, the target date is somewhere around 2029-30.
After the 2 million ton increase this year, over the next 2-3 years we will hardly have any volume growth in India. Is that understanding correct? What kind of volume growth can we have from FY2027 to FY2030?
There are two or three things here. Once the EAF comes, you can use those slabs to convert into finished products in India and there are some projects that we are thinking of, in terms of plate mill and various other downstream. That is one possibility. The other thing is that, more than the volume growth, we'll have a lot of value growth because of all the projects that Koushik just mentioned. The HRPGL line is a 0.8 MTPA line, and the tinplate capacity is another 0.3-0.4 MTPA capacity. The steelmaking may be close to where it is till the big volumes come up in NINL. We also plan that in the next year or so, we will announce the next EAF project, maybe somewhere in the west, possibly in Maharashtra. That is something, like you saw in Ludhiana, can be built in two years.
In the construction and infrastructure sector we actually saw degrowth in FY2026. While Tata Tiscon and Steelium achieved record volumes, what's happening in those end use sectors?
As far as Tata Tiscon is concerned, we sell Tata Tiscon to projects, and we sell Tata Tiscon to retail. Retail for us is far more attractive than projects. Over the years, we have increased or pretty much doubled our sales to retail, which used to be at one point in time, 100,000-120,000 tons a month, is today over 200,000 tons a month. So, while overall Tiscon may not have grown, the mix has changed very significantly. And you would see the Tata Tiscon to projects has come down because that's a little bit more of a price to win market. As far as Steelium is concerned, a lot of the Steelium sales will also depend on further value addition options. As the galvanising lines come up, which has just come up in Kalinganagar, we will have less cold rolled to sell. So, if you have cold rolled, we would rather sell it to auto because that gives us better realisations than to sell it to distribution, or we sell it as galvanised, which gives us better realisations than selling cold rolled as it is.
India capacity has been vacillating between 35-40 MTPA by FY2030. We have significant brownfield optionality and decades of experience. Why can't we have parallel expansions across our projects? Balance sheet is in a great state; 2.3x net debt to EBITDA, Rs. 10,000 crores of free cash flow last year.
The optionality today is that we can operate parallelly, whereas like I said earlier, when you had only Jamshedpur, you had to operate sequentially. Now we can operate parallelly in four sides. In the NINL expansion of 5 million tons, the blast furnace will be an exact replica of the 5 million ton blast furnace that we have in Kalinganagar. Parallelly, we are working on the Bhushan 1.5 million ton expansion, which will take it to 6.5 million tons. There is a change in the way we do projects. Earlier we used to just announce a project and then go around getting all the approvals. Now, we announce a project only after we get all the approvals, and we have an FEL3 level of detailing so that our ability to stick to the schedule and the cost is very high. Case in point is the Ludhiana project. We built it in two years because the FEL3 level of detailing was done, and all the approvals were in place. The cost of iron ore in India is going up. So, the value pools will shift. Value pools are not necessarily upstream going forward. Some of those value pools will shift downstream. We feel that we need to focus a lot more on the downstream than we've done. We want to control the entire value chain, which can help us in our competitiveness.
On increasing the stake in TM International Logistics Ltd (TMILL) - what kind of investments are we seeing over there, in either slurry pipelines or rake procurement or coal conveyor?
TMILL, when it started, was actually a port operations and shipping logistics company. But today 80% of its revenue comes from moving stuff on the ground and rail. It's one of the biggest operators in the country. It operates about 55 rakes now. TMILL also manages a lot of warehouses for us to do just in time delivery for our procurement. TMILL is also looking at waterways movement because one of the areas the government is also looking at is the waterways which are close to Kalinganagar, connecting Kalinganagar to Paradip. Logistics is very important and hence we thought that we should simplify as much as possible. We are buying out IQ Martrade, which is a German company which has been with us for more than 20 years. TMILL will go to 74% holding from 51%, with NYK the balance. We will look at the next stage of growth in our logistics and want to make it integral to our growth plans. The slurry company BRPL will look at the slurry pipeline as one of the key areas to grow in the future, not just in the East, but potentially later on in Western India also.
When we guide about Rs. 6,000/t price increase in the first quarter, I hope we are including our auto contracts also, which were not there in the third quarter or fourth quarter, or is this over and above that?
Yes, this includes part of the auto contracts, but most of the benefit from the auto increases will come in 2Q. We will get some of it in 1Q.
Can you give colour on Rs. 6,000/t of pricing increase into 1Q? And something on the flats and longs breakdown.
The prices went up in March, April, and May. Rather May is still being worked out. That's as far as the trade market is concerned. There is some softening in long products, largely driven by the secondary producers, because some of them are struggling a bit with working capital, high cost, and disposing some of the steel that they have. There is some pressure in long products in May that I see. Flat products is still holding out because prices in China have gone up over $20-$25/t in the last 3-4 weeks. In fact, Indian flat product producers also have export options now. Export prices are not too bad. The weaker Rupee is also helping exports. So, export options are growing. In flat products, the pressure is a bit less because international is picking up and China prices have gone up. China's exports have come down to less than 10 million tons after quite a while. The guidance of Rs. 6,000/t is largely driven by what we've seen so far till May. We are expecting maybe 30% of the benefit to come in this quarter and 70% of the benefit to come in next quarter from auto contracts.
On Tata Steel Netherlands and UK - how should we look at normalised spreads for Netherlands and likewise for UK before and after EAF, and the impact of CBAM?
As far as Netherlands is concerned, our base assumption for spreads is, business as usual for the next 12 months at least. Whatever you have seen in the historical spread adjusted for a CBAM uplift that is happening in the market today and for the coal prices that have also moved up, the spreads are no different. There is no adjustment of any combination that we have in our base case scenario for the financial year 2027 or 2028. In UK, typically if you look at it from post EAF, typically good EAFs work in the range of 6 to 8% EBITDA margin. And our assumption is that it is the same, but we have more value added products in the portfolio, so we should be able to get better than that. Our fixed costs anyway are being driven down. So, when the EAF comes in, it should not have any big changes in fixed cost, but other than the combination cost changes because power will become an important factor, scrap will become an important factor.
In terms of the import quota reduction which has happened in UK, how does it affect the sale of slabs from India to UK? And when do we expect UK to breakeven given the increase in prices?
Slabs are excluded from quotas. Regarding the breakeven, prices in UK have caught up with the prices in Europe; in fact, it's slightly higher. And certainly, the EBITDA losses will shrink this quarter compared to last quarter and will shrink again the next quarter. Now whether the shrink is enough to be positive next quarter is something we are still working out because of the Middle East impact on gas prices and energy costs in UK.
Is there a significant spread expansion expected in both Europe as well as UK?
The prices are going up in both places for sure. 1Q prices will be about £80/t higher in UK compared to 4Q and in Netherlands, it will be about €80/t higher. The coal cost in Netherlands are going up about $10/t. Obviously from that point of view, there is an expansion, and we expect margins to improve in UK. Like I just described EBITDA losses to shrink, and come closer and closer to zero during this quarter and next quarter. But in Netherlands, in this quarter, because we will lose about 2 months of DSP production, that's about 200,000 tons of production. There is an impact of that on our performance in this quarter. Overall, the plan this year on an EBITDA basis is higher than the plan for last year and in Netherlands also.
What is the iron ore and coal production in India in FY2026?
Iron ore production would be close to 45 million tons and I think we've sold about 4 million tons. We will continue to produce what we need for our own use and we will continue to maximise the sales. As far as coal is concerned, we have roughly 3 million tons of coal after wash, available for consumption. What we produce in raw coal is maybe closer to 6 million tons.
Any visibility on iron ore sourcing post 2030?
We will continue to participate in auctions, but we will be prudent on what we bid. We will focus on the iron ore leases that are available closer to Eastern India because most of our capacity is coming in East. The second part of the post 2030 strategy is what is evolving in Maharashtra for us. Our plan for Maharashtra is also hinged on iron ore availability. The third part of the plan is, of course, to look at imports. We've already got a shipment from Canada, and we have very high quality ore there. Our plan post 2030 allows us to test the logistics of bringing in iron ore from outside, and to test the impact of good quality iron ore. One of the disadvantages of Indian ore is the quality; apart from the inaudible, the alumina is high and there are many other issues. When we look at imports with low alumina, you can have better value in use. We are looking at imports also as an option and most of our capacity is moving closer to the sea.
Is there any update on the HIsarna project and what is our thought on this going forward?
These two projects, HIsarna and EASyMelt, are very, very important for us, for the future. The advantage of HIsarna is that it can use any raw material. It can use poor quality iron ore, poor quality coal, thermal coal, and you don't need a coke oven or a sinter plant. Our pilot plant in Netherlands is doing quite well. We are also working with Nucor on this project. They are also very keen because they are also keen to build a plant using HIsarna in the US, as they also need some iron feed into their electric arc furnaces. So, when we set up a commercial scale plant in India, which may be close to a million tons, Nucor will work very closely with us, and the engineering is being done for that. We are very excited about this project, and it can be a game changer because that gives you even more optionalities as far as raw materials are concerned.
What is the amount of the FX debt in India?
The FX debt in India is somewhere around Rs. 5,000-6,000 crores. It's $750 million of that ECB and just to clarify to everybody, it's fully hedged. So, we don't have a currency exposure on that.