2021-08-13 13:28:36
*Tata Steel concall: Key points*
1. *Structurally seeing a different kind of global market* where profitability is getting decoupled to China
2. West prices remain robust. Cost of raw materials have moved up.
3. Chinese mills are less likely to reduce prices owing to higher coal cost.
4. Looking to *add 1mt volume in India* in FY22
5. Pellet plant and CRM likely to be commissioned in H1CY22.
6. Domestic prices softened in July but started moving up in August. Domestic prices are more than 20% discount to imports.
7. Europe activities are recovering. Product mix has improved in the quarter. Spreads have improved.
8. *Q2 raw material price impact in Europe:* Coking Coal up USD30/t and Iron ore up USD 10/t
9. Prepaid GBP0.5bn debt in Europe. Interest cost is slightly up due to associated cost of extinguishing the debt.
10. *TSE realisation expected to be up EUR200-250/t QoQ* as contracts are progressively renegotiated. Lot of contracts were renegotiated in July. Hence, impact likely to be seen in ensuing quarters.
11. *India realisation in Q2FY22 likely to be higher by INR3000/t.* Export prices are better and auto contracts at higher prices would be reflected.
12. *20% exports from India in Q2.*
13. Auto and packaging are longer tenure in Europe where TSE is present. About 60-70% of contracts are of six months or above.
14. At TSE, lagging a bit compared to peers on realisation but will cover up in Q2
15 *Indian Auto contract prices are still lower than spot prices*. So not too worried about lower demand from Auto.
16. Standalone FCF at INR27bn.
17. One off cost in TSE: GBP 14mn on account of CO2 emissions purchase.
18. Paid INR11bn of interest cost and INR9.6bn of tax.
19. Of working capital increase, INR40bn in Europe and INR20bn in India. Will be unwound partially in this quarter.
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