Tata Steel Limited ($500470)

Ladies and gentlemen, good day, and welcome to the Tata Steel Analyst Call. Please note that this meeting is being recorded. [Operator Instructions] I would now like to hand the conference over to Ms. Samita Shah. Thank you, and over to you, ma'am.

Thank you, [indiscernible]. Good afternoon, everyone on this Saturday afternoon, and welcome to our call to discuss our results for the fourth quarter and the full year financial year FY '26. We have with us Mr. Narendran, our CEO and Managing Director; and Mr. Chatterjee, our Executive Director and CFO. They will make a few opening comments, and then we will take any questions you may have. As always, the discussion will be covered by the safe harbor clause on the first page of our presentation. I hope you've had a chance to go through the presentation which was uploaded on our website yesterday. So with that, I will request Naren to make a few opening comments. Thank you.

Thanks, Samita, and hello, everyone. A few comments before I hand over to Koushik. Tata Steel delivered a strong performance in FY '26 with improved margins expanding across operating geographies despite subdued pricing and challenges during the year. The performance is a cumulative impact of multiple decisions and disciplined execution over the last few years and positions us well for the next phase of growth and value creation. India for us is a key anchor of our growth strategy with annual crude, steel production and deliveries increasing 8% year-on-year to around 23 million tonnes and the successful ramp-up of the 5 million tonnes per annum expansion at Kalinganagar, alongside the commissioning of the downstream facilities reflects a value-led growth strategy for India. This is supported by a strong marketing network and deep customer engagement, and we maximize deliveries to chosen segments and some segmental highlights are as follows. The automotive and special products business delivered best ever quarterly and annual volumes. Our continuous [indiscernible] and galvanizing line at Kalinganagar, which is a state-of-the-art facility, secured over 25 new grade approvals across ultra high-strength steels and coated products, enabling customers to meet evolving safety and light weighting requirements. FY '26 also marked a shift in our approach to customer relationship from engagement-led initiatives to solution-oriented partnerships anchored in innovation and AI-led enablement. As a result, our branded and retail segment continued to scale and Tata Tiscon, our retail brand achieved the best of annual volumes while Tata Steelium our cold-rolled brand achieved robust growth in the volumes with a 28% year-on-year growth. Innovation continues to differentiate our construction solutions and help cater to complex project requirements. We deployed the InQuik modular bridge system at the Varanasi-Ranchi-Kolkata Expressway in just 24 days and introduced a first of its kind mobile boat [indiscernible] solution and significantly enhancing on-site efficiency. In discerning segments, we strengthened our presence in shipbuilding and oil and gas aided by international certifications that enable us to participate in higher specification and globally competitive orders with stringent quality and reliability requirements. Our downstream businesses, including tubes, wires and colors, achieved the best of our sales, while tinplate achieved record annual sales of the PAXEL [ edible ] oil cans. We remain committed to our India growth agenda with continued investments across capacity, downstream integration and sustainable steel making. During the year, we commissioned our scrap-based, 0.75 million tonne electric arc furnace at Ludhiana and progress continues on the proposed expansion at Neelachal, which will support the next phase of value accretive growth. In U.K., delivery stood at 2.2 million tonnes, reflecting subdued demand dynamics and we welcome the recently announced revisions to safeguard measures, including 60% reduction in tariff-free quotas and higher duties, which are expected to support a more balanced market environment. Continued and calibrated policy support will be critical to enable a sustained recovery in the market. In Netherlands, the liquid steel production was broadly stable at 6.7 million tonnes, while deliveries were 6.1 million tonnes. Policy measures, including tighter safeguards effective from the first of July and the ongoing implementation of CBAM, are reshaping trade flows and enabling preference for local supply. Recently, our operations had been impacted by temporary suspension of the direct steel plant at IJmuiden following emission observations. However, we have now resolved the issue and the plant is expected to restart soon with due regulatory clearance. Separately, we continue to deeply engage with the province and the environmental regulators on emissions compliance at our coke and gas production facilities and the future of these facilities. I must emphasize that the company has undertaken several measures in the last two years to enhance its environment standards in the coke and gas plants. And given the age of these plants, we are now considering closure of these plants in the future. However, any decision on closure of these plants will have to be done in a safe, planned and controlled manner. Finally, the developments in West Asia have increased costs and supply chain risk around energy, freight and some raw materials. In the near term, improved pricing trends across India, Netherlands and U.K. should help absorb these cost pressures. In India upstream are largely operational, though there are some impact on our downstream galvanizing tinplate and color-coated lines because of the shortage of some critical inputs like propane. We are actively trying to mitigate this and most of the lines are now back in full operation. We continue to monitor the evolving situation closely with a close eye on the demand dynamics. With that, I will now hand over to Koushik for his comments. Thank you.

Good afternoon or good evening to all those who have joined in. In recent years, the global markets have been continuously being reshaped by repeated disruptions, including the pandemic, the geopolitical tensions, supply chain dislocations and evolving regulatory framework. Together, these factors have led to a very highly uncertain and volatile operating environment, especially for the long and complex industries like steel. In the quarter ended March 2026 and for the financial year '25-'26, Tata Steel has delivered a resilient and a consistent performance through a series of deliberate value-accretive actions across our portfolio to navigate multiyear trough in steel prices while managing unprecedented levels of uncertainty. I will today talk on 3 areas. Firstly, on the performance management; secondly, on balance sheet; and thirdly, on some recent developments in Netherlands and the U.K. Firstly, on performance, the financial year '25-'26 was challenging on one hand, but represents the continuation of a strategic journey, and in many ways, is a precursor to also what lies ahead. The focus is clearly on the quality of earnings. Our consolidated EBITDA increased by 35% year-on-year from INR 25,802 crores in the full year ended March '25, to INR 34,848 crores in the full year ended March '26. The consolidated EBITDA margin expanded by 320 basis points from 12% to 15%. Our full year performance demonstrates the impact of the cost transformation program, which has achieved about INR 10,868 crores across our savings across geographies. India delivered a cost transformation benefits of INR 3,927 crores. Key cost efficiencies were driven by purchase optimization of spares, reduced refractory consumption, increased use of coastal waterways, which offer a structural cost advantage over other modes of transport, higher power [ milling ] and leaner coal mix. U.K. achieved a cost benefit of about INR 1,958 crores driven by calibrated and focused spending on maintenance costs and maintenance management, stronger space management discipline and in-sourcing of product testing. Netherlands delivered benefits of about INR 4,983 crores via optimization of coal blend leading to decline in procurement cost and deployed value-in-use concept to improve operating efficiencies, such as full rate, scrap consumption, et cetera. In terms of execution, the cost transformation program has achieved about 95% compliance to the stated plan of about INR 11,500 crores. The key variation to the 100% compliance was a delay in Tata Steel Netherlands restructuring, which has since been completed. In financial year 2027, we are aiming to achieve additional cost transformation savings of about INR 7,100 crores versus the FY '26 level. We have also enhanced in the last financial year, our working capital efficiency and released around INR 6,000 crores of cash during the year, especially in India and Netherlands, through very focused management of working capital. Let me now speak on the India business as it continues to be our core growth engine and our anchor in terms of the future strategy of Tata Steel. India now contributes about 74% of Tata Steel's total crude steel production. At a geographical level, India continues with its industry-leading performance with EBITDA margin growing at about 17% year-on-year to INR 34,272 crores. The EBITDA margin was about 24% and similar to the 10-year average, even in a challenging year. Our performance in U.K. and Netherlands have also improved materially on a year-on-year basis. U.K. losses have now narrowed to about EUR 168 million to negative EUR 270 million, while Netherlands EBITDA almost tripled to $267 million, combined the U.K. and Netherlands EBITDA turned positive for the financial year '25-'26. Secondly, our performance also demonstrates the cash flow orientation of the entire company. Operating cash flow before CapEx and dividend increased from INR 17,700 crores in the previous year to INR 29,254 crores in financial year '26 and free cash flows of INR 10,738 crores, which was significantly higher compared to the previous year. Our capacity expansion in India in Phase 2 of Kalinganagar is now complete, and this is being complemented by focused investment in downstream facilities and portfolio simplification, strengthening our product mix and enhancing our margin profile. We continue to focus on growing the India business, some of which we had discussed in our earlier calls. Moving to the fourth quarter performance provided on Slide 28 of the presentation. Our consolidated revenues stood at about INR 63,270 crores and EBITDA was INR 9,953 crores, translating to an EBITDA margin on a consolidated basis to 16%. Higher realizations and improved volumes in India were complemented by savings on account of cost transformation. Tata Steel stand-alone revenues for the quarter at about INR 38,448 crores and EBITDA was INR 9,439 crores. On a per ton basis, the EBITDA witnessed a sequential improvement of INR 2,100 per tonne, primarily driven by the higher volumes and steel realizations. Our wholly owned subsidiary, Neelachal Ispat, recorded INR 402 crores of EBITDA, up 15% quarter-on-quarter and reflecting an EBITDA margin of 27%. We have received the Board approval to merge NINL with Tata Steel subject to necessary approvals and permitting, and we are looking to complete the transaction in financial year 2027. Moving to U.K. steel prices remain below GBP 500 per tonne until the end of February. Since then, with the onset of the West Asia conflict along with the U.K. government announcing, indicating announcements, indicating higher and tighter steel safeguard measures have driven a meaningful uplift in hot rolled coil prices nearing in Jan, March '26 quarter, Tata Steel U.K. EBITDA improved by GBP 15 million to negative GBP 48 million. Most of the recent spot price improvement is expected to flow through the P&L in Q1 and Q2 of FY '27. In the U.K. steel safeguard measures that were originally introduced to support the domestic production are set to expire on 30th of June 2026. We welcome the proposed new trade framework, and we'll continue to engage constructively with the government on areas that require further refinement. Effective first July 2026, the revised safeguard regime proposes a 60% reduction in the import quotas alongside an increase in the tariff from 25% to 50% with the objective of ensuring that 40% to 50% of the steel demand in the U.K. is met from domestic production. For our U.K. operation, this represents a very meaningful step. Over the last two years, we have reduced fixed costs by about [ 50% ] from a base of approximately [ GBP 1 million ] in FY 2024. However, weak demand conditions and the influx of low-cost imports have continued to weigh on performance with EBITDA losses of around GBP 98 per tonne. The revised framework, therefore, has the potential to materially improve the operating conditions and performance with price increases coming through in Q1, we expect quarter-on-quarter improvement in the earnings going forward in the U.K. The work is progressing on the 3 million tonne electric arc furnace in Port Talbot. Major demolition work has been completed and securing access to high power electricity is critical for our planned transition. While we are working with the electricity system operator and the national grid for new electrical infrastructure, the national Grid has formally alerted us that their connectivity project is delayed. This is critical for Tata Steel U.K. for the project commissioning and we are in conversation with National Grid and the U.K. government on resolution of the issues. In Netherlands, the fourth quarter EBITDA at about EUR 58 million translates to about EUR 34 per tonne, higher volumes and improvement in costs were mostly offset by a drop in realization on a quarter-on-quarter basis. As in the past years, a lot of focus in Netherlands has been on cash flow management, and the company continues to perform exceedingly well on the cash flow management and is effectively net debt free in spite of very challenging operating and regulatory conditions. Let me now come to the balance sheet. Our priority is to keep the balance sheet strong and robust. Post-pandemic, we prioritize deleveraging in FY '21 and '22 and reduced debt by about INR 40,000 crores, including prepayment of about [ $3.6 billion ] of offshore obligation. Gross debt currently stands at about INR 92,382 crores and a net debt at about INR 80,100 crores. For the last few years, we have been focusing on onshoring of overseas debt to mitigate the rupee depreciation risks. This has certainly been very beneficial particularly in the last year. If we did not proactively undertaken the onshoring, gross debt would have been significantly higher by about INR 12,500 crores on account of INR depreciation alone. The equity stake in acquisitions that you often see in the disclosures in Tata Steel Holding actually relates to this onshoring initiative. As a result, the overseas debt has come down from about 50% to the total debt in 2021 to 18% of the total debt in '25, '26. By FY '28, it will go down further when our overseas dollar bonds are repaid. The only overseas debt that will remain is the working capital line for our overseas businesses. I would also like to mention that since all of you keep asking me about deleveraging. In the last 12 months, we have actually prepaid around INR 9,100 crores of debt from our internal cash during the year. You don't see the same on the face of the financial statement because the overseas debt is now valued at $94 to $1 versus $88 to $1 a year back, which accounts for about INR 4,200 crores and there is increase in the leased asset, which is about INR 2,500 crores. Hence, you only see a [ INR 2,400 ] crores as the reduction on a net basis. Collectively, these measures reinforce Tata Steel's position as one of the few steel companies globally rated as an investment grade by international rating agencies. Our year-end net debt to EBITDA has reduced to 2.3x down by 1 tonne compared to 3.3x two years back. During FY '26, our total spend on CapEx was about INR 14,000 crores on a consolidated basis. And we intend to increase the allocation of the same in FY '27 to around INR 20,000 crores, of which more than 60% will be spent in India. I would now like to explain a bit on what you would have seen in the press release and filing on the material uncertainty in TSN. Over the last two years, as Naren mentioned, a lot of work has been undertaken in the coke and gas plants, and the company has resolved many issues raised by the environmental agencies. As he mentioned that many of the standard requirements are actually above the industry standards and some of them are technically not doable and not followed anywhere else in the world. After careful assessment, we have agreed, therefore, to close down the CGPs in a planned, controlled and a safe manner in the future. We are currently in discussion with the province and the environmental agencies on the time line that ensures a controlled and a safe closure in sequence in the future. As mentioned in the filing, we have received a letter post the balance sheet debt from the local environmental agencies regarding their intent to revoke permits without any specifics. This causes the material uncertainty element for Tata Steel Netherlands while preparing the basis for the financial statements. Additionally, the local regulatory environment is evolving with authorities proposing standards that go beyond sometimes the EU norms and global practices. Notwithstanding these challenges, we are committed to operating in a safe, compliant an environmentally sustainable manner. And we are deeply engaged with the environmental agency, the provincial leadership and the government for a mutually accepted resolution. With respect to decarbonization of our steelmaking facilities in Netherlands, we continue to remain engaged with relevant authorities of the transition road map. Lastly, on the ongoing crisis in West Asia, as Naren has already mentioned, it has some implication on the cost side on our near-term performance, while our upstream operations, i.e., the crude steel production has remained largely unaffected. The downstream operations initially faced some supply chain constraints, as you mentioned, on propane. We managed to mitigate the impact by a range of initiatives, including alternate fuel, shipping routes and [ preponing ] shutdowns in some cases. Costs remain a focus area. However, we will continue our cost transformation program in financial year '27, where we expect these initiatives to mitigate a certain proportion of the pressures. Before I close, I am happy to share that the Board of Directors has proposed a dividend of INR 4 per share for fully paid shares of face value of 1 each. With that, I'll end my comments and open the floor for questions. Thank you so much.

[Operator Instructions] The first question for today is from Sumangal Nevatia of Kotak Securities.

Firstly, on the topic of the closure of coke and gas plants. I just want to understand if we replace this with the market purchase, what is the cost impact? And then on a broader question, given so much regulatory uncertainty in the region and constant surprises, is there a case to revisit our entire investment plan in the region?

Yes. Koushik?

So to your question on the cost penalty, so to speak, on buying off coke. I think given the fact that we are still assessing as far as the timing is concerned, there will be an impact because we will not have the gases in particular and the credits that go into coke-making. But other than that, we are also looking at options to supply from various sources, which would also include India. We will have some time to plan for it. That's what our base case assumption is. And that's why we are deeply engaged with the government and the regulator. On the second issue of the case for reinvestment, actually, some of these are prerequisites to be resolved before we undertake any large investments. So while the point is very valid, I think that's precisely the conversation that we are having at this point of time with the various stakeholders. And it's not that the coke and gas plant shutdown 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, we need to resolve some of these issues before we take on any large commitments.

Okay. I missed the early part. So we are saying that there's not much cost impact as per us?

No, I'm saying there is a cost impact, but there is also an offsetting impact that is possible, especially because the CO2 will go down. As I said, there are the pluses and minuses. There are negatives, the fact that coke and gas, which is used for as an energy source will not be there. There will be a freight, which will be incurred for bringing in the coke. On the other hand, the CO2 will go down. So there is a net impact. It also depends on at what time this transition happens.

Got it. And with respect to the delay in the electrical backup and infrastructure for U.K., what sort of delays are we seeing? And what is the best case estimate for commissioning of that plant?

So that is again being discussed. And I think we have just been formally being told that there is a delay. We are working with the U.K. government and the National Grid and ESO, which is this electricity supplier to see if we can mitigate but somewhat between, say, 6 months to 8 months, will certainly be there, maybe higher after we have built the plant. So the initial estimate was somewhere around 18 months. It has come down to 12 months, and we are actively working to see if we can reduce it further. But there will be some delays imminent.

Okay. I understand. My second question is with respect to NINL expansion. So we've not yet heard any progress on the exact time lines and CapEx. So any update on that? And generally, if you're seeing a lot of players adding capacity aggressively, it looks like, at least from the math that we might lose market share over the next 5, 7 years. So is this a concern for us? And any shift or change of expansion pace for us that we can expect?

Yes. So Yes, Koushik, do you want to give indication on the NINL time lines, and then I'll address the second part? Yes.

So NINL, Sumangal, 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 announced that. One of the reason is that there is a lot of work that needs to be done on the site because this is going to be a 10 million tonne site. So 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. So we are fairly advanced in that. We'll take a few months and come back and announce and that is then going to ensure that we can execute it quickly. So that's as far as the NINL is concerned.

Sumangal, on the market share question, the key point is market share and what because the way we are looking at it is we are more interested in market share in key segments, attractive segments. And we want to make sure that our market share in the segments that we target or the attractive segments, as we call it, is at least twice our overall market share. That's why our focus a lot more on downstream, a lot more on value-added products, solutions, et cetera. So while we have the optionality to grow the upstream, I think even with the existing sites between Kalinganagar, Meramandali and Neelachal plus Jamshedpur at 11 million tonnes, we already have the optionality to grow to 45 million to 50 million tonnes in India. Once we start the Maharashtra site, which was also announced that potentially adds another 6 million to 10 million tons. So that optionality is available for Tata Steel, which was not there 10 years back when we were operating largely out of Jamshedpur. The question is how fast do we want to build and where, based on the demand, based on the balance sheet and many other things. But what we are very clear is in the market segments that we are strong in, which we think are very important, like automotive, oil and gas, the retail franchise that we have, we will continue to be the dominant player, the #1 player in all these segments.

The next question is from Satyadeep Jain of AMBIT Capital.

Naren and Koushik, I just wanted to understand to the previous question. So you mentioned that [indiscernible] is going to be Coke. You may buy from India or somewhere else. Just trying to understand because the auditors have flagged the material concern to going concern. So it seems like it's not just, okay, if you can just get coke from India [indiscernible] material risk to going concerned. Because we understand some rolling and casting facilities have also been shut down. So can you clarify -- and in case we shut down these facilities for 5 years before, let's say, DRI comes, then what do you do with the labor there?

So Satyadeep, I think the -- first, let me deal with the auditor's question, which I thought I'd explain because in the letter that they have issued, which -- so we were -- we are in discussion with all of the stakeholders and a very deep, almost on a daily basis, engagement by our colleagues in Netherlands. So the letter which had come in did not have any definitive pathway, dates or transition specifics. So which actually from -- if you are an auditor, you -- or if you are even the company, you will actually ensure that these specifics are necessary to get into the next level of planning and creating the investments, et cetera. 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. And that is what has been used saying we are -- the company is in receipt of a letter. First of all, the coke ovens cannot be shut down in any unplanned manner. As I've said in the past to some of you that coke ovens is more like a chemical factory than a steel factory. The coke ovens in U.K. was the last major facility to shut down because it cools down on its own, you have to give time. There's a mix of requirement. There is also a permit requirement to undertake a shutdown. So if all of these is a sequential way of shutting down in a planned controlled safe manner. If a letter lands up, which basically does not articulate that path, then it creates an uncertainty because that uncertainty is an unhandleable uncertainty. And that's why that has been flagged off here. I share your concern, and that is also our concern in some ways because that is precisely what we want to do. The coke ovens are 40, 50 years old. So in the standard, some of them for the design of the coke ovens is not technically feasible also. So we said we will shut down. We were anyway to shut down soon after the first phase of the DRI EAF would have come out. This is now potentially earlier than that. And that gap or the transit gap intermittent gap would have been filled by purchase of coke, which I think is perfectly fine. There will be cost penalties. But as I said, there are CO2 benefits, which will also come in, there will be a net effect out of that. But this is more about the physicality, not about the financials. And that is what created the material uncertainty. We hope that this will get resolved in the coming months as we are engaged with the government and everybody sees the logic of doing it safe because we can't shut down in an unsafe manner because then it will be the regulator who will be responsible not Tata Steel Netherlands. So these are the kind of things that we are working on, and that's the basis on which the auditors have said that TSN is prepared on a going concern but there is material uncertainty given this letter. So the cause of the material uncertainty is only this letter. It's nothing else. And that is something that needs to be understood.

The DSP, the DSP is subject to slightly different. So there were some emissions from the DSP, which exceeded the limit. So we had in the interest of due transparency with the regulator declared it to them. jointly, it was looked at. We've closed the DSP. Some changes have been made. Some trials are being run, and we hope the DSP should be back up with -- if you have all the requisite approvals, later this month. So that's on the DSP side. I think the other question that you said, yes, obviously, a few shutdown facilities that will have an impact on labor in those facilities, et cetera. So that's why this whole transition needs to be planned well, and that has been our submission to the regulators as well because some parts of the site will then be shutting down earlier than what was originally planned. So the transition will happen. Firstly, as Koushik said, once we are clear that we have a social license to operate going forward as well. And then whenever we are ready to the investments.

So Satyadeep, just to add to what Naren said that if there is any permanent shutdown of any facility, the people will have to be restructured so that is given. It's not that -- and that's what we have done in the U.K. also. So that is something that will -- is an inevitable consequence of a shutdown, whether it's planned or unplanned. In case of unplanned, it becomes not more complex to handle.

And secondly, on the transition to DRI. So while you're saying that you will have an agreement with the government, just in the context of when you -- when this entire investment was made by quotas also back in the -- the regulatory landscape change over time, this entire permit the ability to [indiscernible] permit came set a few years ago, much after the initial investment. So how do you grandfather -- are you looking at the regulatory landscape can change later on also after you make the investment. And so while you evaluate all of this, in case there is a plan to not go ahead with this investment. Does it mean you accelerate India investment? And why not explore global majors for tie-ups like some other players are doing? Is that something you've explored to accelerate expansion in India? So that's the other question.

Yes. So let me put it this way. I don't think the India growth is being held back because of anything that we do in Europe, if at all, we've done what we wanted to do in India. That is one comment. The second comment I want to make is, in our view, we felt that it's better for us to go ourselves. We have had joint ventures in the past. We still have a joint venture with Nippon Steel for a continuous annealing line. We had a joint venture with BlueScope for the color-coating line. So we believe that in a home market, we should ideally [indiscernible] 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. So that's our view, at least based on what we've seen so far. Koushik, do you want to add?

Yes. I just wanted to say that actually, 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 the manufacturing excellence, the supply chain, actually makes us very clear that if you have to leverage the power of size, it has to be consolidated rather than fragmented. And therefore, we think that it is important for us to have one large way of moving forward. And as I told you that we are merging now NINL, we bought over colors. We are buying out many of our JV partners across the value chain because that gives the leverage and the power to be more stronger in the market. And I think, as Naren mentioned, I must reemphasize that the India growth is not impacted by what is happening or not happening in the rest of the portfolio.

And what about changing regulatory landscape in Netherlands, let's say, how do you grandfather?

No. So I think that's a good question and an important question. So the joint letter of intent had a few condition precedents on both sides. There are condition precedence where the government has to fulfill and the condition precision that we have to fulfill. Some of the condition precedents also require the regulator to also fulfill because they are also a party in some way [indiscernible] a party in the JLOI. 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 because no investor, including us, will make an investment, unless it is not just grandfathered, it is contractually guaranteed to run its course across a certain minimum period of the life cycle by which the recovery of the investment happens. And in all of this, even the government is an investor. So I think that is even more important. So I think we are not there as yet as far as the FID is concerned. These are the preconditions that we need to resolve before we get there. The JLOI is a joint letter of intent is live and active. We are in active conversation, but these are very important things because end of the day, it will be also even after contractually, there will be a certain judgment to be taken on how this works. So we are not there at this point of time. And the regulatory landscape is certainly a very important fulcrum which needs to be assessed every time we move one step further. So that is also getting registered in our process. to see as to what are the pros and cons, what is tolerable, what is not tolerable, et cetera. So we are not in that zone. We will have to do that work as we discuss with the regulator understand the planned way of doing it because we are also very conscious apart from our own money, we will not take public money to make investment, which are at risk.

The next question is from Alok Deora of Motilal Oswal.

So I just had couple of questions. First is on the NSR. So we saw good improvement in the fourth quarter. So if you could just highlight what's the pricing being in April and May and what we could expect in the near term in terms of the realizations? And second, on the coal cost, what's the coal consumption cost for 4Q and what we could look at in the first quarter?

Yes. So as far as realizations are concerned, in India, we expect Q1 to be about INR 6,000 higher than Q4. In U.K., we expect it to be about GBP 80 higher in Q1 compared to Q4. And in Netherlands, we expect it to be, again, about EUR 80 higher in Q1 compared to Q4. In terms of coal, I'll give you the coal consumption increase. The delta increase we expect in Q1 for India over Q4 is $15 per tonne. And in Netherlands is over $10 a tonne. As you know, in U.K., we don't buy coal and the iron ore increase in Netherlands is expected to be about $5 per tonne Q1 over Q4. But I just want to add here that some of this suggests that the spreads are going to increase significantly. There will be an improvement in spread certainly 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, yes, we expect margin expansion in India and in U.K. and some margin compression in U.K. because -- I mean, in Netherlands because of the issues that we've had with the DSP, and we would have lost almost 2.5 months of production.

Sure. So the other costs, which you mentioned for India in the first quarter, how much that could be in a per tonne basis?

Samita, do you want to?

Yes.

Let the quarter finish before [indiscernible] we don't want to give you something and then come out with something else.

Sure. And also, if you can just highlight some bits on the India demand because we are seeing some of the competitors also adding -- rather increasing their CapEx guidance for this year, next year [indiscernible] numbers are coming out. So what's your view on the India demand over the next 2 to 3 years? If you could just pull through some color on that.

So the India demand is expected to be strong. I think the -- as long as there is infrastructure-led growth, right? So I think that's a big assumption. And hopefully, the current macroeconomic situation will not provoke a rethink on the spend on infrastructure because that's a big part of India's steel demand growth because it's been more investment-led growth rather than consumption-led growth. It's been more infrastructure-led growth than consumption-led growth. And if that continues, then obviously, the demand growth on steel will be greater than the GDP growth rate. So we are -- I mean, until two months back, we were expecting at least 8% to 10% growth in steel demand going forward. Now as a GDP, if you're going to recalibrate the GDP and say the GDP grew a bit less, the steel demand may grow a bit less. I think the automotive sector is quite strong, continues to be strong. We need to see the impact of rising fuel prices, particularly on commercial vehicles. But I think passenger vehicles is strong, 2-wheelers are strong. Construction, a bit of a slowdown, a bit of an impact of labor not being there. I do see some pain with the MSMEs as well because there is pressure at the end of the value chain. Some of them are also struggling with a little bit of working capital issues, et cetera. So I think so far, it's good. It looks positive, but obviously, it's not insulated totally from what's happening around the world.

The next question is from Pallav Agarwal of Antique.

So first question was on the volume guidance for '27. Given that we only have the EAF coming on stream, Will there be any debottlenecking at Jamshedpur which can add to the volumes?

The volume will be at least 2 million tonnes better in this financial year compared to the previous financial year, with most of it coming in India and largely because Kalinganagar ramp-up is pretty much complete. So that's the delta volume. In fact, Ludhiana is only 0.5 million tonnes in this. So we've not taken the full Ludhiana volume because it's still being ramped up, but you will have pretty much a full Kalinganagar volume. So we expect it to be 2 million tonnes plus for next financial year compared to -- or rather this financially compared to the previous financial year.

Sure. So the Ludhiana profitability would be lower than the general blast furnace profitability?

Yes, it will be lower. But the whole model is different. The profitability there from a conversion point of view, will be lower, but you're going to save about INR 3,000 of transportation cost because [indiscernible] that same steel, we would have spent INR 3,000 moving it from Jamshedpur to Ludhiana, right? So you will save that. So when you look at it from a price minus transportation cost point of view, you'll have a higher price there. And so the cost may be higher than making steel out of iron ore and coal, but your realization, if you'll [indiscernible] rate will also be higher compared to what we would have shipped from here. Secondly, we are less insulated by the weakening rupee and also the coal prices, et cetera. So some of the cost increases that we will face when you are importing coal, paying for freight, buying in dollars, the Ludhiana plant is insulated from all that because we're using scrap.

And if I could add, Pallav, if carbon taxes come in, then obviously, that adjustment will also happen because it's -- as you know, it's far more carbon efficient.

Sure. Also just on the value-added proportion going up. So how much of a potential EBITDA [indiscernible] can that add increasing the proportion of steel pipe, so other [indiscernible] products in the mix?

Yes. So typically, our downstream businesses, even if you take the steel being transferred to them at market prices, add anything from 5% to 10% EBITDA okay? So that's the incremental EBITDA you will get from the downstream businesses even if you transfer [indiscernible] market prices. That's why we've always had downstream. We are planning to grow it. The tubes business, which is now 1 million tonnes, 1.2 million tonnes, we want to take it to about 4 million tonnes. The wires business, where we are the fourth or fifth largest in the world, is close to 1 million tonnes. I mean it's about 600,000 700,000 tonnes, we want to take it to 1 million tonnes. The packaging business, actually, 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 were, in some sense, limited by the JV, and that's why we bought out BlueScope share, and we plan to double the size of the colors business also in the next 12 to 24 months. So I think we want our downstream businesses to maybe at least be about 50% to 60% of our volume. The whole objective is to sell less HR in the market and sell more value-added products because selling HR, you are always under pressure on prices, international prices, it's a commodity you're sending to the tube makers, et cetera whereas we feel with less HR in the mix, more cold-rolled, more galvanized, more packaging steel, more value-added products in our mix, we would be better equipped to deal with the cyclicality, which is inherent to the business. Demand is always there, but the question is the profitability that you need to protect.

Sure, sir. Lastly, like, any plans on monetizing our online platform, which I think is doing fairly well? So is that something [indiscernible]?

Not monetizing it as in nothing -- no plans just yet to spin it off and monetizing value. But yes, this is a very important part of our route to market. as you saw, the GMV -- I mean, we have the retail business GMV growing very fast. And this is again being sold with no discounts at the same EBITDA margin that you see in the rest of Tata Steel. And this is almost INR 5,000 crores now. And then you have the -- we have what we call [indiscernible], which is for the SME business, which is also growing well. Just now 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. So we get orders from all over the world now. So we see it as a platform to access customers who we didn't have access to earlier. So we are focused on building it as a very important channel [indiscernible].

The next question is from Pinakin Parekh of HSBC.

So my first question is on the needle and the entire Saga on the CGP. Now when we go back to the U.K. operations, we have seen EBITDA losses of INR 13,000 crores over the last 3 years. Now at this point of time, given the entire uncertainty that we are seeing in Netherlands, First of all, what would be the immediate cost impact because of buying coke or gas from the plant? How will the profitability be impacted? Second, what would the -- if their closures happen earlier in the next 12 to 18 months, is there a possibility that the [indiscernible] operations become loss-making at current steel prices and current cost structure?

So let me address that and then Koushik can add to it. See, as I've said before, with the exception of maybe 1 year, 2 years, which is 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 positive. That's why, as Koushik has said earlier, it's debt-free even today, right? So going forward, if the coke ovens comes close, we expect it to continue to be EBITDA positive, maybe making less EBITDA than we had hopefully would make. But it will always be EBITDA positive. And so far, the Netherlands operation has operated without any support from India. So I think we expect that to continue. I think this whole material uncertainty issue, as Koushik said, was because the letter did not give any time line. And it is like saying that if you don't have a plant closure, then there is a material uncertainty to some assets on that side. I think that is largely the messaging. So the business going forward will continue to be EBITDA positive. The other thing is obviously, 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 U.S. It was traditionally closer to the steel prices in the U.S. But over the last 2, 3 years, the gap has widened. And the gap is closing now because Europe is also putting restrictions on movement of steel [indiscernible] whether through quotas or through CBAM and everything else. So we expect the pricing to be better in Europe going forward. We expect our Dutch operation to continue to operate on an EBITDA positive basis even if the coke ovens are closed. And obviously, there will be some margin compression, but we expect them to take care of them. So the key question is the investments in the future and whether we have the social license to operate for that. And that is a question -- that's a point which Koushik made earlier. Those decisions will be taken once we are comfortable that we have a social license to operate for the future as much as we are seeking one now. Koushik, do you want to add to that?

No, I think broadly the same. I think Pinakin, the issue is always on the safe and orderly closure which I think is also something that the regulators also want very clearly. So we will have to come to that. Once that happens, there are projects which have to be undertaken to segregate physically the CGPs or the coke and gas plant with the rest of the plant. So that will take time. And that is the reason why we are seeing a safe and controlled closure. Once that happens, you have a new operating model where you will import the coke from outside, be it from India or elsewhere and you run it on that basis. But that will not make this site unviable. It can actually continue on the same basis whether it has the affordability to make a large investment to transit or not is a question that we are testing at this point of time. And apart from the affordability is obviously whether the goal post on regulatory standards, will it keep changing. If these two are satisfied, there is a path forward. If not, there is an alternative path forward too. So we are just now in that evaluation stage and exploring as we are engaged very deeply. It is a very serious issue. As far as the new investment is concerned, and therefore, all of this has to be resolved before any commitment for new investment is done by Tata Steel Netherlands itself or whether we will be looking to take the public money that the government has offered us.

Just two more quick questions. The first is on U.K. 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 whether -- will it be EBITDA positive without the electricity infrastructure. The second is in terms of Neelachal. Given that we are still in the process of getting all the approvals, what is the earliest estimate of the first deal?

So on the first one on U.K., two things here. One is we hope to be EBITDA positive during this year now that the prices have started improving. And so that can continue until such time the EAF starts. We can continue to supply the slabs from here and continue to convert into steel. And we are -- now that the prices, the policy changes that we have sought have come, we are expecting the business itself to be EBITDA positive going forward. So that is one part. The second part is, while as Koushik said, 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, one line as soon as the plant is steady so that we can do some trials. We can test out some of the equipment, et cetera, so that we don't waste those wasted time that we are waiting for the full electricity connection. So -- and then what we are planning to do is ramp up that we had scheduled 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, right? So if we do the preparatory work before the full electricity connection is there, then we can hopefully do a quicker ramp up. Yes. On Neelachal, Koushik, you want to comment?

Yes. So just to add to what Naren mentioned on U.K. So we -- currently, we -- until last year, we've been sending about 1.2 million tonnes of slab to U.K. We are increasing that from India, from Tata Steel, [ calling ] another to about 1.8 million if that is our target to increase. And there is a reason why I'm saying this because we often look at the U.K. EBITDA as a stand-alone U.K., actually, the Port Talbot facilities in the U.K. is effectively now the [ fifth third ] strip mill for Tata Steel. And if we actually look at what is the system EBITDA that we talk about, we make about, say, INR 7,000 to INR 8,000 per tonne of EBITDA on the transfer of the slabs to U.K. on a market basis. And with the increase in prices, we are seeing about INR 4,000 crore, INR 4,500 per tonne of EBITDA by U.K. itself on the volumes that we transfer. So on a system basis for the ones for the slabs going to the U.K., we make as Tata Steel consolidated about INR 12,000 per tonne of EBITDA. So that model will continue until the EAF starts. And then as Naren mentioned, that when the power lines get commissioned or activated, we will then do the initial [indiscernible] and then move on to the part of using it. So there is no point where we will not be having the power lines, but we are going to have the year. That is not going to happen on a full-fledged basis. So just thought I'll clarify. On I&L, I think between our July and September, we should be able to start to get the FID. And once we get there, FID, the target date is somewhere around '29, '30.

The next question is from Indrajit Agarwal of CLSA.

I have a couple of questions. First, in -- of the INR 12,000 crore CapEx in India, can you split it by project in which project, how much are we spending broadly?

So I think, Indrajit, I think there is -- it's very difficult to give offend those kind of numbers. But effectively, there are certain downstream expansion projects that are going on, be it the tinplate, wires, et cetera. There is a [indiscernible] in Tarapur. Then there are -- there is a coke ovens project, which is Jamshedpur which is going on. There is a 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. So all of these make up for -- and then -- sorry, then there is also projects in the mining side. So all of that taken into account is INR 12,000 crores. So if we are looking whether we have allocated money for NINL, the answer is yes.

That's helpful. So after the 2 million tonne increase this year, over the next 2, 3 years, we will hardly have any volume growth in India. Is that understanding correct? Or what kind of volume growth can we have in India, let's say, from FY '27 to [ FY 2030 ]?

So there are two, three things here. One is -- of course, 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 more than the volume growth, we'll have a lot of value growth because of all the projects that Koushik just mentioned in terms of [ HRPG ] line, which is a 0.8 million tonne line, the tinplate capacity is another 0.34 million tonnes of capacity. And the tubes and wires, which we will be evaluating during the time. So we will -- you will see a higher percentage of downstream in our mix. The steelmaking may be close to where it is until the big volumes come up in Neelachal. We also plan that in the next year or so, we will announce the next EAF project, maybe somewhere in the West, possibly in [indiscernible]. And that is something also which will -- because that can be built like -- you saw in Ludhiana, we built that in two years. So that can come up quite fast.

The next question is from Tarang Agrawal of Old Bridge Capital.

Sir on the India business, we see end-user consumption in the retail sector sort of slowing down from what you've delivered over the past two years, it used to be about -- my sense is 2.8 million tonnes about a couple of years back, then moved to 3.4 million tonnes and about 3.5 million tonnes this year. And the construction and infrastructure sector, we actually saw degrowth in FY '26. So -- and while in your opening comments, you did allude to Tiscon and Steelium achieving record volumes. So just wanted to get some clarification in terms of what's happening in those end-use sectors.

Yes. So as far as Tiscon is concerned, we sell Tata Tiscon to projects, and we sell Tata Tiscon to retail, okay? Retail for us is far more attractive than projects. So 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 tonnes a month it is today over 200,000 tonnes a month. right? So while the overall discount may not have grown, the mix has changed very significantly. And projects, you would see the Tata Tiscon projects has come down because that's a little bit more price-driven market. As far as Steelium is concerned, a lot of the Steelium sales will also depend on further valuation options. As a galvanizing lines come up, which it 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 realizations than to sell it to distribution or we sell it as galvanized, which gives us better realizations than selling cold-rolled assets. So you will see this going up and down depending on what is the right product mix to say. So that's maybe what you're seeing in the numbers, but we can get back more specifically because I don't remember the exact numbers at a product level.

Sir, just on Aashiyana. So is Aashiyana channel for the retail end use consumption?

Yes. So the customers who buy from -- on Aashiyana are individuals who -- I mean the individual house builder is a target market for us as far as retail is concerned, that's where we sell more than 200,000 tonnes of [indiscernible]. So it is an order generation platform. So people come on the platform, place the order. The fulfillment is done by a physical distribution chain. So anywhere in India, I think within 72 hours or something, you place the order, you will get the steel through our dealer network, which we have over 10,000 dealers now across the country.

And this is exclusively only Tata products. Does it include Tata Pravesh as well or only steel?

No. It includes steel, Pravesh, tubes, wires, everything. All Tata Steel products but I would say 90%, 95% of the sale is Tata Tiscon.

The next question is from Amit Dixit of Goldman Sachs.

Sir, two questions. One is on the capacity expansion plans. Now if you -- if we look at your annual reports over the last 5 years, it has been vacillating between 35 billion to 40 billion tonnes of India capacity by FY '30. Now we have significant brownfield optionality, maybe more than our peers in India. And we have got, I mean, decades of experience so why can't we continue -- I mean, if I can't -- we have parallel expansions across our projects because brownfield expansion, replicating the similar furnace and of course, not ceding the market share to the peers. Why are we not pursuing that balance sheet is in a great state now 2.3x net debt to EBITDA, INR 10,000 crores of free cash flow last year and India consumption expected to double by [ FY '32 ]. So I just wanted to get your thoughts on that. I mean, what are stopping us? Why are we being so circumspect about it?

So yes, you're right. I think the optionality today is we can operate parallelly. There is, like I said earlier, when you are only one Jamshedpur, you are to operate sequentially and now you have -- and you got Kalinganagar we could operate parallelly in two sites. Now we can operate parallelly in 4 sites, right? That optionality is there. So in some sense, for us, the Neelachal expansion of 5 million tonnes, which is to go back to one of the other comments you made, the blast furnace will be an exact replica of the 5 million tonne blast furnace that we have in Kalinganagar and others. So we are implicating assets wherever we can. The steel mill shop will be different because it's a long products plant. And apparently, we are working on the Bhushan 1.5 million tonne expansion, which will take it to [indiscernible]. 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 announced a project only after we get all the approvals, and we have an FEL3 level of detailing so that then our ability to stick to the schedule and the cost is very high because we've gone with a great level of detail. And I think that's been a differential approach than what we did traditionally. So that's why you see the announcements happening only when we have all the approvals in place. and we have an FEL3 level of readiness. And then the -- once we announce it, then we can move much faster. Case in point is the Ludhiana project. I mean, we've built it in two years because the FEL3 level of detailing was done, all the approvals were in place. We announced the Board approval about two years back. We were supposed to get it started in April this year. We started it in March, right? And so we expect going forward, all the projects which Koushik talked about, which has the HR galvanizing line, the tinplate line or the [ combi mill ] that we recently commissioned. It's a different approach compress the execution time and do it on time and schedule with no overruns and do it when all your approvals are in place. So maybe that's why you are seeing us being a bit more circumspect as you said. The other thing is, of course, like I said, we -- strategically, we feel it is not just about steelmaking capacity because let's understand one thing. The cost of iron ore in India is going up, right? So the value pools will shift. The value pools are not necessarily upstream going forward. Some of those value pools will shift downstream, right? Because for us, we've been buffered a bit because we've had our own iron ore. But if you generally look at cost of iron ore in India, it is really going up. Everyone is bidding over 100% to acquire the iron ore, right? Cost of coal will keep going up because India has no choice but to import a lot of coal and with the rupee where it is. right? So input costs for steelmaking is going to go up. So we need to be conscious of that. And that's why we feel that we need to focus a lot more on the downstream than we've done. We probably have a good downstream presence compared to many of our peers, but we want to do even more, right? So that's why we feel that, that is an area which we need to grow much faster than in upstream. And a lot of our focus on investments over the last year, whether it's acquiring JV partners, whether it is building new facilities has been on that. The third thing is we want to strengthen our whole entire value chain. And hence, as Koushik just mentioned, even logistics, we are buying out some of our partners. We want to control the entire value chain, which can help us in our competitiveness and things that. So I think the way we deploy capital, the way we see the value, et cetera, may be different from the way some of our peers see it. But the best thing is we have the optionality. Like I said, even with the current sites, we have the optionality to go to 45 million to 50 million tonnes. So it's -- at some point in time, if we say, hey, there's still a lot of money upstream even though the iron ore prices are high and everything else, you can always go there and do it. The other thing we need to keep in mind in India is the capacity to execute projects because you're going to the same 3 or 4 people or maybe 2 not even 3 to execute on the projects. So that's also something, do they have the capacity to execute that we plan to do and you don't want to get stuck doing multiple projects which can't happen as you planned. So I think there are a number of ways to look at it. And we believe having that optionality open with brownfield, the cost of expansion will be lower, you can pace it better. when you acquire like we did for Bhushan, et cetera, you have a single bullet of INR 35,000 crores going in and your balance sheet obviously gets disturbed. But when you do this, as you pointed out, our cash flows that we generate in India more than takes care of what we need to spend and so we can manage our debt also well. So that's our point of view. I'm not saying that us is necessarily the right point of view, but that is our point of view.

Great, sir. The second question is essentially on and you pointed it out in the answer to the first question, TMILL is increasing stake over there. I would say, very prudent move logistics is something that we are literally struggling in steel industry. So I just wanted to get a little bit more color on that, what kind of investments we are seeing over there in either slurry pipelines or rig procurement or any such thing to do, maybe coal convert any such thing to do with the logistics part?

Sure. So TMILL, when it started was actually started as a port operations and shipping kind of logistics company. But today, 80% of its revenue comes from moving stuff on the ground rail. So it's one of the biggest operators in the country. I think it operates about 55 rigs now. So a lot of our movement is through TMILL. So we see -- TMILL also manages a lot of warehouses for us to do just-in-time delivery for our procurement, et cetera. TMILL is also looking at water waste movement because one of the areas the government is also looking at is the water waste, which is close to Kalinganagar connecting Kalinganagar to Paradip all the way to Angul. So TMILL can play a role there. So logistics, like you said, is a very important part of our cost. I don't know if you know, but we have 5% of the freight revenue of Indian Railways, Tata steel. So it's -- because we move so much iron ore, so much coal and steel, et cetera. So I think logistics is very important and hence, we thought that we should simplify as much as possible. So now we are buying out IQ, which is a German company who has been with us for more than 20 years. We still have NYK with us, though with NYK, we have another company called Tata NYK which does the shipping. So Tata NYK does the shipping and TMILL, which is Tata Steel and NYK going forward, we'll do a lot more on the ground. So in terms of the deal structure or anything, Koushik, maybe you can give more details on the deal.

Yes. No, I think TMILL, as Naren mentioned, is very strategic. And when you talked about the slurry or slurry companies, the JV that we have with Lloyd's, BRPL, and we will expand that slurry pipeline. We're looking at that transport or logistics, very importantly, we will look at doubling capacity there. So I think the entire logistics space between rail logistics, waterways logistics and slurry are the 3 very important ones that will be the frame going forward. And it is in that context, it was best that we consolidate our holding versus keeping it at [ 50 ]. It was already a JV with 51% holding. It will go to 74%, and NYK is the balance. So we will look at the next stage of growth in our logistics and want to make it integral to our growth plans also. So that it has been a profitable venture for all the 3 partners. It's been paying dividend the capital has been returned many times over for all of the 3 partners. So I think it is a question of now making it the larger landscape and 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.

The next question is from Ashish Kejriwal of Nuvama.

Two questions for me. One, when we, sir, guide about INR 6,000 price increase in first quarter, I hope we are including that our auto contracts also, which was not there in third quarter -- fourth quarter or 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 Q2. We will get some of it in Q1.

Okay. Great. And secondly, sir, we were discussing about value addition as a way forward for our Indian business. But at the same time, we haven't discussed much on the Maharashtra venture, which we were discussing last time. So any update on that?

Koushik?

Yes. So on Maharashtra, we are -- we have moved, we have been discussing with the government. We've identified the land. We will be -- as we get into more finality, we will talk about it both on the mining side as well as on the land side. And so hopefully, in the next 3 months or so we will give you an update in the next Q1 meeting about where we are on the land. More specifics about it. I don't want to say it now because we need to get formal approvals in place. And post that, so that is also, as Sarin mentioned, the optionality and to Amit, if you're still listening, it's not the circumspect part. It is actually more definitive part. We know exactly what we want to do. And therefore, we kind of want to handle it in a manner where it is more definitive because the -- like in Maharashtra, for example, we are very clear as to what we want to do, what we are looking at it. The government is on our side in terms of supporting these investments. We have to work together and make it more definitive and then we'll make those investments. So it is a question of how we pace it up. And so in Maharashtra, in particular, I will -- Ashish, I will be able to give you more specific about it in the next call.

Sure. And lastly on, sir, Europe, if I understand correctly, now maybe we have to purchase coke from the market in case if we have to close it, and this can be delayed or this can be closed only within a year time. Now in case if this goes forward to we need to close our blast furnace and other things also in order to reduce emissions. And by that time, if we don't reach agreement with the government, then do you think that either we will close down or again, we can look for some joint venture or buying or selling the assets or still we can go ahead with the investment to reduce the carbon emissions over there. How to look at into it?

Yes. So if you look at it, if you want to paint a scenario or scenarios, then yes, each of them has its own pluses and minuses and options. As of now, we want to run the plant as it is. The coke plant, coke and gas plant is what we have consciously and over time, studied. We have a very detailed work done as to how it will get closed, and that's been shared with the regulators and the environmental agencies. And that is why we have a path to go forward. It is not next 12 months. It is not that it can be done very soon. It will require time. And that is the time that we are in discussion with. We have made it very clear not for anything else because there are -- there is a way in which we can do it by segregating the coke oven circuit to the rest of the plant and also ensuring that it is a make safe closure. So if that happens, then I think there is a path forward, which is the best path forward at this point of time because, as I said, there will be cost penalties, but that -- the way the market is moving, and the way we will optimize it within the overall Tata Steel system, we should be okay. If it goes beyond that, then we will have to look at different alternative scenarios and what scenarios actually were for both for the Tata Steel Netherlands business and its business continuity as well as for Tata Steel as a primary shareholder. So all of these have to be looked at and then comes the investment case as we talked in detail earlier in the call, those are in sequence. So we have a lot of things to settle and set up and set right before we talk about the investment.

The next question is from Ritesh Shah of Investec.

Sir, first is can you give color on INR 6,000 of pricing increase into Q1, if you could break it up April, May, probably the pass-through, which was there from Q4. And so something on the [indiscernible]. I think that's the first easier one.

So rather than give you [ month twice ], all I can say is the prices went up in March, April and May, right, or 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 I understand some of them are struggling a bit with working capital, high cost and disposing some of the steel that they have. So there is some pressure in long products in May that I see. Flat products are still holding out because I don't know if you know, but prices in China have gone up over $20, $25 in the last 3, 4 weeks. So international prices are going up. 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. So I would say flat products of pressure is a bit less because international is picking up. China prices have gone up. China's exports has come down to less than $10 million after quite a while. And if you see the first 4 months of this year, chinese exports are down. So I think flat products overall picture looks a bit better. And for flat products, it's very auto driven also directly and indirectly in auto so far has been strong. So that's a story on flat products. Long Products is a little bit more sensitive to construction. Construction has struggled a bit in the last couple of months simply because of, firstly, the elections and labor going home to work and things like that. And secondly, producers -- so the gap between the prices of secondary producers and primary producers has kept increasing. So I'm not giving you a month-by-month breakup, but the guidance of INR 6,000 crore is largely driven by what we've seen so far until May. We are not expecting any significant upside beyond May, apart from the auto contracts. Auto contracts are still being finalized. And normally, what happens with auto contracts is once they are finalized and you raise the debit notes, so some of the money will come in, in the next quarter. So in this case, we are expecting maybe 30% of the benefit to come in this quarter and 70% of the benefit to come in next quarter.

Wonderful. Sir, my second question is on Tata Steel Netherlands and U.K. Koushik, there are multiple permutations for Netherlands, coke oven, gas plants, CBAM. How should we look at normalized spreads? Basically, if one had to assign a particular scenario with a higher probability, how should one look at spreads for Tata Steel Netherlands? Likewise, for U.K. before and after EAF and again, for both the variables basically, how is it that one should understand the impact of CBAM?

So as far as Netherlands is concerned, our base assumption for spreads is business as usual for the next 12 months at least. That is -- so whatever you have seen in the historical spread adjusted for CBAM uplift that is happening in the market today and for the coal prices that are -- that has also moved up. The spreads are no different. So there is no adjustment of any combination that we have in our base case scenario for financial year 2027. In fact, '27 and '28. We have to look at the conversations that is happening currently with the regulator and the other stakeholders to see where is the landing ground for the timing of this because there is a physical -- as I mentioned many times in this call, there's a physical time line required to make a safe and controlled closure. And that is what we are working on. So as far as Netherlands is concerned, the next 12 months on a base case scenario, we should get what we are looking at. The other issues on gas price increase, the West Asia are separate. But purely from a raw material to steel price spread, it should be on the basis of what has been historically the baseline required adjust for the price increase that is happening. U.K., typically, if you look at it from a poster, typically good EAFs work in the range of 6% to 8% EBITDA margin. And our assumption is that is the same but we have more value-added products in the portfolio, so we should be able to get better than that. Our cost efficiencies, our fixed costs anyway is being driven down. So when the year comes in, it should not have any big changes in fixed cost, other than the combination cost changes because the power will become an important factor, scrap will become an important factor, and it will replace the cost of slabs or HR, which is being bought at this point of time.

Thank you, sir. I would now like to hand over the conference to Ms. Samita Shah for the chat questions. Over to you, ma'am.

So I think just continuing on the questions on the U.K. I think there are a couple of questions around this. One is what is the -- in terms of the import quota reduction, which has happened in the U.K. How does it affect the sale of slabs from India to U.K. And I think you've answered a lot about U.K. in general, but I think some questions on when do we expect U.K. to break even, given the increase in prices in the U.K.

Slabs are excluded from quotas.

Yes. And the breakeven, we are obviously -- given that the prices have gone up significantly since March. These announcements came in March. So the prices that we were seeking. And I think we've said that in the last 2, 3 calls, the prices in U.K. were GBP 100 lower than the prices in Europe. Now the prices in the U.K. have caught up with the prices in Europe. In fact, it's slightly higher. And certainly, as Koushik said, the EBITDA losses will shrink this quarter compared to last quarter and will shrink again in the next quarter. Now whether it shrinks enough to be positive next quarter is something we are still working out because the Middle East impact on gas prices in U.K. and energy costs, et cetera, something that's being worked out. But largely, we are heading in the right direction and because we've got the policy support that we had sought.

Yes. Just in that same vein, I think you answered it earlier, Naren, because I think there are a few questions on this, given the price increases or the guidance which we have given in both Europe as well as U.K. Is there a significant spread expansion expected in both these geographies? I think you answered it, but maybe a few people have missed it, so if you could just...

Yes. So let me put it this way. The prices are going up in both places, for sure. Like I said, Q1 prices will be about GBP 80 higher per tonne in U.K. compared to Q4. And in Netherlands, it will be about EUR 80 per tonne higher, right? And the coal cost in Netherlands are going up by about $10. So obviously, from that point of view, there is an expansion. But we expect margin to improve in U.K., like I just described, EBITDA losses to shrink and come closer and closer to 0 during this quarter and next quarter. But in Netherlands, this quarter, because we will lose about two months of DSP production, that's about 200,000 tonnes of production. There is an impact of that on our performance in this quarter. And hence, while we will be EBITDA positive, we don't -- we will not see a better EBITDA than in the previous quarter because despite the price hikes. But going forward, because the -- there is an import quota in Europe as well. We expect prices will continue to be on the higher side in Europe than we've seen in the past and the spreads will be supportive. So once our operations get back to normal, I think we will start seeing the benefits of that. Overall, the plan this year on an EBITDA basis is higher than the plan for last year in Netherlands also.

I think some questions on the lawsuit in TSN in terms of the earlier lawsuit, if there's any update on the status there, please?

No, there is no material update other than the fact that we have time to file our defense on the lawsuit on the mass claim, and we are working on it. There needs to be experts who will study on the parts raised in the claim, and that's what we are doing. So at the time when we have to submit, we will do the submission and defend it.

We'll move to India now. Some questions on what is the iron ore and full production in India in FY '26?

I think iron ore would be close to 45 million tonnes.

Yes, it's about 44 million tonnes, yes.

Yes. It will be about 45 million tonnes. And I think we sold about 4 million tonnes, if I'm not mistaken. And so we will continue to produce what we need for our own use, and we'll continue to maximize the sales. I think the challenge always in iron ore is more about logistics and evacuating the material and when we have logistics constraints and the priorities on our own in-house consumption. As far as coal is concerned, the in-house production of having the coal that we -- after wash, we have roughly about 3 million tonnes of coal available for consumption. What we produce [indiscernible] is maybe closer to 6 million tonnes.

Yes. Just a little higher but yes. Okay. Any visibility on iron ore sourcing post 2030? And any color around that you could provide?

I think like we said, we will continue to participate in auctions, but we will be prudent on what we bid. We will not bid beyond what we think makes sense. So -- and 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 post 2030 strategy is what is evolving in Maharashtra for us. Our plan for Maharashtra has also hinged on our availability in Maharashtra. So that is the second part of the plan. The third part of the plan is, of course, to look at imports. We've already got a shipment from Canada. We have very high quality over there. So while that may not be the most important part of our plan post 2030, but it allows us to test the logistics of bringing in iron ore from outside the impact that good quality iron ore has because one of the disadvantages of Indian ore is the quality, apart from [ their fee ] it's not necessarily the best. The [ alumina ] is high and there are many other issues. So when we look at import with low [ alumina ], you can have better value in use. So we are looking at imports also as an option. And that's why with most of our capacity moving closer to the sea, because with Kalinganagar and Neelachal, that's 25 million tonnes of capacity, which is closer to the sea than Jamshedpur. The Bhushan plant at 10 million tonnes will also be closer to the sea compared to Jamshedpur. So imports becomes a better option than for a site like Jamshedpur is far more [indiscernible]. So strategically, we are in a better position, better place for imports. So that's where it is. We also have the optionality of our own leases when it comes up for bidding in 2030, we can decide we will decide on what should be a bidding strategy for our own leases. What of it that we want to keep, what is it we may not want to keep. What is the price we are paying for it, et cetera. So that optionality also exists for us. So I think we are objective is to have more options, keep these optionalities open so that we can decide as appropriate.

Then there's a question on Hisarna. Is there any update on the project? And any learnings we have on that and what is our thought on this going forward?

Yes. So I think -- so these two projects Hisarna and [indiscernible] are very, very important for us for the future. The advantage of Hisarna is it can use any raw material. I mean it can use poor quality [ anode ], poor quality coal, it can use thermal coal, et cetera, right? And you don't need coke ovens, you don't need a [indiscernible] plant, so there's a lot of advantage of it. And we've been at it for more than 10 years. And the good news is our pilot plant in Netherlands is doing quite well. We have a team there for the last few years as was mentioned, we are also working with Nucor on this project. They are also very keen because they are also keen to build a plant like using Hisarna in the U.S. because they also need some iron feed into their electric arc furnaces. So when we set up the pilot plant in -- not pilot, the pilot plant is in Netherlands, when we set up a commercial scale plant in India, which may be close to 1 million tonnes, basically, Nucor will work very closely with us. And I think the engineering is being done for that. We are very excited about this project, and it can be a game changer because then that gives you even more optionalities as far as raw materials is concerned.

And the last question, I think, which we'll take for today, it's on the FX debt in India.

What about it?

What is the amount of the FX debt in India. So is that 18% of the consolidated, which is...

INR 17,000 crores.

Yes, that's offshore. But I think the question is how much of it is on India?

A billion is on offshore. So I think the FX debt in India is somewhere around INR 5,000 crores, INR 6,000 crores, right?

Yes. 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. Yes. So I think we have taken most of the questions. And I think I also took a lot of questions on the audio. So thank you, everyone, for your participation today, especially on a Saturday. I hope this helped you better understand the results and look forward to connecting with you next time. Thank you, and bye.

Thank you. Thank you for joining us. Thanks.

Thank you very much.