Ladies and gentlemen, good day and welcome to the Tata Steel Limited Q4 FY 2021 earnings conference call. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Samita Shah. Thank you and over to you, ma'am. Thank you. Good evening, good afternoon, and good morning to all of you. Firstly, I hope you and your loved ones are in good health. Thank you very much for joining us on the call today to discuss the Tata Steel results for the fourth quarter of FY 2021. We will also answer any queries you may have on the performance of Tata Steel BSL and Tata Steel Long Products. The call is being led by T. V. Narendran, CEO and Managing Director at Tata Steel and Koushik Chatterjee, Executive Director and CFO, Tata Steel. The call is also open to our retail shareholders, please feel free to type in your questions and we will try and answer as many questions as we can. As always, the entire discussion will be covered by the safe harbor clause on page two of the results presentation which has been uploaded on our website. Thank you. Over to you, Narendran. Thanks, Samita. Good afternoon, good evening, and good morning to all of you, depending on where you've dialed in from. Again, I echo Samita and I hope all of you are safe and your families as well. As far as the Tata Steel performance is concerned, the first half of the financial year 2021 was a challenging period with the uncertainties and complexities brought on by the COVID-19 pandemic. Since then, the global economy has been recovering, driven by the accommodative policies followed by progressive vaccination. India has also seen a sharp recovery driven by government spending, accommodative policy, and improving liquidity. However, currently India is facing a severe second wave of COVID-19 and in these difficult times, we are working to minimize the impact on our employees, communities, and customers. We have also been working towards supplying more oxygen to collectively fight against the pandemic. We are currently supplying about 1,000 tons a day of liquid oxygen to different parts of the country, almost over eight states. So far we've supplied about 14,000 tons already since the 1st of April. As far as the industry is concerned, the Chinese steel demand remains robust, driven by strong economic fundamentals on the back of policy support, while supply appears to be tighter on pollution control-led production curves. In the rest of the world also, supply improvement is lagging demand recovery. As a result, the steel prices continue to increase across regions and regional steel spot spreads have also seen upward improvement. China has recently announced removal of rebates from steel exports, which is likely to further support regional steel prices. During the Q4 FY 2021, Indian steel demand improved about 0.6% quarter-on-quarter and 19.5% year-on-year, with most of the steel consuming sectors witnessing a broad-based recovery. Domestic steel prices continued to improve amidst robust demand, supply tightness, high raw cost pressures, and higher international steel prices. Current prices are still at a large discount to import parity prices and the onset of the second wave of COVID-19 is of course a key risk for the ongoing demand recovery. Moving on to our performance during the quarter. During the quarter, we achieved best-ever quarterly crude steel production of 4.75 million tonnes in India, though FY 2021 production was lower due to the pandemic-driven disruptions in the Q1. We achieved highest ever annual delivery volumes of 17.31 million tonnes in India and our quarterly deliveries improved 16% on year-on-year basis to 4.67 million tonnes. All our segments have performed extremely well due to our continuous efforts and focus on building strong customer relationships, superior distribution network, brands and new product developments. During the quarter, we achieved highest ever quarterly delivery volumes in Automotive and Special Products segment and our Branded Products and Retail segment also grew positively on both quarter-on-quarter and year-on-year basis. We are also making good progress on our various initiatives to de-risk the business. Aashiyana, which is one of our digital marketing platforms, clocked over INR 726 crores of revenue this year and is helping us reach new markets and be future ready. In fact, we are at INR 80-100 crores a month now in terms of monthly revenues. We continue to work on our strategic priorities to maximize shareholder value. The business has generated very strong cash flows and as committed, we have used it to de-leverage sharply this year. This will continue to be a priority, though we will complement it by investing in future growth and profitability. Firstly, we are expecting to increase the India sales volume in FY 2022 by over 1 million tonnes to around 18.3 million tonnes through debottlenecking and capacity ramp up across our various sites. As mentioned earlier, we have already restarted work on the pellet plant and the cold rolling mill complex, which is progressing well. We are also restarting the other part of the Kalinganagar project, which is the balance of the 5 million tonne expansion and this is expected to be commissioned in FY 2024. While this will increase the CapEx, it will be phased out over the next few years. In Europe, economic activities and overall steel demand has been recovering gradually. We ramped up our steel production with the improving market conditions and our steel sales volume increased by 17% quarter-on-quarter to 2.47 million tonnes in the March quarter. The spot hot rolled coil gross spread improved during the quarter with higher steel prices, which has started translating into the profitability of our steel plants. Our reported EBITDA at Tata Steel Europe sharply improved in the March quarter, while our underlying performance was much stronger. This should improve further in the coming quarters. In this March, we received shareholders' approval to go ahead with the merger of Tata Steel BSL with Tata Steel, and we filed a joint to sanction the merger scheme with effect from April 1st 2019. We continue to move ahead with the reorganization of our Indian subsidiaries into four verticals to drive scale, synergies, and simplification. We have transferred our investments held in JCAPCPL, our joint venture with Nippon Steel, and also Tata BlueScope to Tata Steel Downstream Products Limited, a wholly owned subsidiary of Tata Steel. The merger process of Tata Metaliks and ISWP to Tata Steel Long Products is also progressing well. I will now hand it over to Koushik Chatterjee to comment on our financial performance. Thank you, Naren, and good afternoon, good evening, good morning to all of you. Let me talk about the few comments on the financial side. Despite the unprecedented challenges this year due to the onset of COVID-19 pandemic, Tata Steel has emerged financially much stronger. We have delivered strong financial performance during this quarter with the highest-ever consolidated EBITDA, supported by highest-ever EBITDA from the Indian operations. This quarter, you would have noticed that we have now included Southeast Asia back as a continuing operation. Our consolidated revenue increased during the quarter by 19% Q on Q, and 39% year on year to 49,977 crores. Our consolidated EBITDA grew by about 48% quarter on quarter and 196% year on year to 14,290 crores with strong underlying performance in both India and Europe. Our India operations, which includes standalone Tata Steel BSL and Tata Steel Long Products, generated revenues of INR 30,070 crore, which translated to a 19% quarter-on-quarter and 54% year-on-year growth. We achieved EBITDA of INR 12,295 crore during this quarter, driven by higher prices, better product mix in the domestic market. This translated into an EBITDA per ton of INR 26,309 and an EBITDA margin of 40.9%. The Tata Steel standalone revenues improved 18% quarter-on-quarter and 49% year-on-year to about INR 21,203 crore. EBITDA grew by about 37% quarter-on-quarter and 151% year-on-year to INR 9,200 crore, which translates to an EBITDA margin of 43.4% and an EBITDA per ton of INR 27,828. Standalone operations generated a free cash flow about INR 6,700 crore during the quarter. Our key subsidiaries, Tata Steel BSL and Tata Steel Long Products, have also delivered strong operating performance. Tata Steel BSL generated an EBITDA of INR 2,583 crores, which translates into an EBITDA per ton of 21,648. Tata Steel Long Products generated an EBITDA of INR 506 crores, which translates into an EBITDA per ton of 29,439. Both entities generated free cash flows of more than INR 3,000 crores and INR 400 crores respectively. Our other Indian subsidiaries like Tata Metaliks, Tin Plate, and other downstream subsidiaries also reported strong results with combined EBITDA increasing by 38% quarter-on-quarter to INR 425 crores. Moving to Europe, the reported EBITDA for the quarter was £125 million with improved steel prices and higher deliveries. In the quarter, we had also taken a GBP 47 million charge due to the sale of CO2 emission rights, which were sold earlier in the Q1 of 2021. This is more a one-off charge and will not have any impact in the coming financial year. During the quarter, we took a non-cash impairment charge of INR 723 crore, primarily with respect to our overseas operating entities. This is included in the exceptional item of consolidated accounts. You would have noticed that there is a gain on transfer of investments held in JCAPCPL and Tata BlueScope in the standalone accounts, as it is a subsidiary of Tata Steel, it gets eliminated at the consolidated level. With strong underlying operating performance in India and disciplined capital allocation, we were able to generate free cash flows of about INR 8,800 crore during the quarter. The annual free cash flow generation was about INR 24,000 crore in financial year 2021. Driven by our enterprise strategy on debt management, we deleveraged our balance sheet extensively and aggressively. Prepaid debt. Our gross debt was reduced by INR 27,827 crore, while our net debt was reduced by more than 28% to INR 75,389 crore in FY 2021. Our credit metrics have improved significantly with net debt to equity improving to 2.4x as on of March 31st 2021. My net gearing stood at less than one at about 0.98. This will also reduce our interest costs going forward, and we continue to intend deleveraging the balance sheet as we move on in the next financial year. Our liquidity position was more than INR 20,000 crore at the end of March 2021. We had further deleveraging scheduled in April, which has been done now. We remain very disciplined on CapEx spend during this year. We spent about INR 2,350 crore on consolidated CapEx during the March quarter. Which takes the full year CapEx to about INR 7,000 crore in FY 2021. As Narendran mentioned, we have decided to restart our work on the upstream facilities in Kalinganagar. Our financial year 2022 consolidated CapEx will be broadly around INR 11,000 crores, including INR 7,500 crores in India. As you would have also noticed that the board of directors, on the basis of the performance of the year, has declared a dividend of ₹25 per share for the year 2021. With this, I will end here and open the floor to the questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to the participants, please limit your questions to two per participant. Should you have any follow-up, we would request you to rejoin the queue. The first question is from the line of Anuj Singla from Bank of America. Please go ahead. Mr. Anuj Singla, your line is in talk mode. Kindly go ahead with your question, please. Sorry, I was on mute. Thank you very much for the opportunity, sir. Mr. Chatterjee, the first question for you. The carbon credit expense in Europe, instead of a one-off, seems to be a recurring on a quarter on quarter basis. There have been multiple quarters we have seen that. What kind of provisioning should we be building into the next year? I do understand that there is a declining trajectory of the carbon credit allocation in Europe as well. Based on your analysis, what you would have done for the next year, what kind of impact do you see it for the full year next year? Anuj, what I mentioned as one-off is because we had monetized some of the carbon credits in the Q1, which we had to top up or true up during all the quarters during the year. That is why I said it is one-off. It's not something that we would do in a normal course, and that part will not be the case in the coming year or the years ahead. What is there in your second part of the question, in Europe, the free allowances will keep coming down, and it depends on the production level, actually, and what is the level of production that companies will do. It is on that basis, it's going to be part of the operating cost. It's not going to stick up like this. In the operating cost, you would see somewhere around GBP 20 million-GBP 22 million in a quarter. That is part of already is, for example, in the GBP 125 reported EBITDA. That includes about GBP 20 million on account of the normal operating true up of the carbon cost. Okay. Sir, there was news for that in Europe, we have started putting a carbon surcharge for the customers as well. This was basically towards passing on some of this cost to the end customer. How successful have our efforts been there in that regard? Yeah, sorry, go ahead, Naren. Go ahead, sir. As the carbon differential is emanating in Europe, Tata Steel Europe has put a GBP 12 per ton carbon surcharge on the price, and that is being recovered from the customers at this point in time. Okay, that has already been implemented and customers are paying that. Yeah. Okay. Understood. That's part of the overall price increase that's happening in Europe. Okay. Understood. Second question on capital allocation. You spoke about Kalinganagar, resumed the work there. This is going to be, as Mr. Narendran mentioned, FY 2024 story. We have probably FY 2023 and 2024 in terms of volume growth, it might be subdued. Are you looking for any inorganic growth opportunities as well while the organic growth opportunities take time to materialize? Yeah. Anuj, basically, Kalinganagar, yes, as I said, FY 2024 is when the blast furnace should be coming in. Over the next year or so, we will start getting the cost advantages of the pellet plant as the pellet plant is commissioned. During the next financial year, the cold rolling mill will get commissioned, and that should help us in the margin enhancement and revenue enhancement, even if the volume enhancement is not there. In terms of additional volumes, we've guided that this year we will, in India, have at least 1 million tonnes more than last year, because that's the production that we lost in the beginning of the year. A part of it is coming from there. The second opportunity for us, of course, just now the international prices are better than the domestic prices, but last year we exported more than we normally do. We exported about 3.5 million tonnes, whereas normally we export about one, 1.5 million tonnes. That is additional volume available for us to divert from the international markets to the domestic market if the demand picks up and the prices are good. Inorganic, yes. We are certainly interested in the opportunities that come our way. We've said that we will focus more on long products assets because we have a good opportunity to grow flat products in Angul and in Kalinganagar. We'll be looking for opportunities more in long products than flat products inorganic. Understood. Lastly, Mr. Chatterjee, on the working- The next question is from the line of Pinakin from J.P. Morgan. Please go ahead. Thank you very much. My first question is that if you look at this once in a lifetime steel environment, the cash flows of the company are very strong. While Tata Steel has restarted the Kalinganagar Phase II project, can we get a better sense of how the company is looking at the various growth optionalities over the next two to three years and basically stack it up against the balance sheet? What we would like to understand is that what is the hierarchy of growth projects that the company would pursue or would like to pursue. There is Angul, there is Kalinganagar, there's Jamshedpur, there is long steel products. What are the markers that the company will want to see before it goes ahead with those projects? Is it a certain amount of net debt? It is government approvals? Is it policy clarity? How should we look at the growth pipeline and how the company progresses on it? Thanks, Pinakin. Fundamentally, while you said this is a once in a lifetime, yes, steel price is just now very high, but there are some structural changes also which we should appreciate. I think the next 10 years is going to be different from the last 10 years. Firstly, we are already seeing the impact of China discouraging exports because China is committed to reduce its carbon footprint and one of the easier ways to do it is to reduce the exports of steel, and that's what they started acting on. Secondly, because of geopolitical issues, the cost structure in China continues to be high because they're buying coal from other source other than Australia. Thirdly, as we just discussed, in Europe as well, because of carbon costs, there is less appetite to sell at prices lower than what has been there traditionally. People are looking at building in these carbon costs into the pricing. For multiple reasons, we expect the cost structures and pricing structures to be at a very different level over the next year. Second point is with the significant investment happening in infrastructure across the world, whether it's the U.S. or India, multiple other geographies, we expect the steel intensity to be strong as far as demand is concerned. That is one part of it. Coming specifically to the growth, for us, immediate focus is on completing Kalinganagar because that is work in progress already. The groundwork is started. I mean, not groundwork. A lot of the equipment has already come in. We've already done all the ordering. We've configured the plant. Everything is ready to go, and we are already on the job. That's the quickest way for us to get growth. Like I said, in the next two years or next 24 months, we should complete what is left of that project. That gives us additional 5 million tons. In terms of Angul and Jamshedpur, the opportunities are there, but we will take a call based on what are the other opportunities which are coming our way in terms of inorganic growth, particularly in long products. We stay committed to our goal of de-leveraging by at least $1 billion a year, and all growth will be pursued after we are comfortable that we will be achieving those goals. I think the opportunity to de-leverage is there. We believe we can de-leverage and grow at the same time because the steel cycle is at a better place than it was for most of the last 10 years. Sure. Thank you, sir. My second question is that in base metals and energy, the companies have an option to book in realizations or hedge their volumes. Now, steel is heterogeneous, and that option is not available. Is it possible for the company to, for example, lock in coking coal at INR 110 for a much longer timeframe than it does or also book in steel realizations for a long horizon. Lock in some of the current profitability beyond the normal two-three months that we see. Is that option available on the table? Not so much in terms of using instruments that are available and maybe some of the other metals or energy space. We have different kinds of contracts as well. We have different index contracts, we try to manage the risk through that. In Europe, we do have an option, particularly for iron ore because we get into a lot of long-term contracts on packaging and automotive. There are for iron ore more options available, I guess, than coal, and we exercise some of those options in Europe particularly when we have long-term contracts for packaging steel and automotive. In India to some extent we are hedged because the contract tenures are typically apart from auto which is maybe six months, most of the others are one month to three months, so we can ride the market in a better way, and we have the advantage of course of having our own iron ore and some of our own coal. Understood. Thank you very much. Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead. Hi. Good afternoon. Thank you for the opportunity. I have a couple of questions. First, sir, you mentioned about de-leveraging a little over $1 billion. If you look at the current EBITDA run rate and the CapEx guidance that you have given, we may end up with a much higher cash balance than what we are guiding for. Of the remaining of over and above the $1 billion, what would be the hierarchy and use of cash? Will we be looking to repay back to shareholders by way of even higher dividends, some buyback, or we will be actively scouting for inorganic propositions? I think, Anuj, the point that we have mentioned and Naren in his opening comments mentioned, that we will do at least $1 billion. That has been our long-term plan. Irrespective of the market, that $1 billion will be paid off. I think our long-term net debt to EBITDA target is about 2.5 across cycles. There will be times when that will be much lower because of, as you rightly said, the way in which cash generation is expected to happen over the next 12 months. We will continue to evaluate opportunities to both take out more debt, as well as to look at building up the appetite for growth on an aggressive basis. We will be very clear on our value judgment on those growths. I think from a point of balance sheet, the opportunities for more deleveraging as it comes about, we will certainly take that. As I said, our net debt number that we are looking at always is about 2.5. It will go down because if the cash comes in, then the net debt number will go down more. Our process of deleveraging has not stopped, and therefore deleveraging for the moment will certainly be an important and the first priority before we take something very significant on CapEx. We are focused on ensuring the completion of Kalinganagar Phase II, and that's where most of our capital allocation will go, apart from the raw material projects that are also underway. I think it's important for us to first set the goal of ensuring that our balance sheet is in good shape. Second, to create the appetite in the balance sheet to go for growth. As you know, inorganic growths are normally lumpy. Organic growths are more linear across time. We will be ready whenever there are opportunities in India on inorganic growth. Sure. Thanks. My second question is on the carbon cost, not on the exceptional part, but on a steady state basis. On a quarterly run rate, how has carbon cost increased, say, from last year average? Because we see that carbon costs otherwise have doubled the benchmark prices. Do we have a like-for-like impact or it is much lower far? I think if we did not have to monetize last year because of COVID and liquidity issues and so on, then that cost would be zero. The one which will be there is there are actually allocations under the scheme in both mainland Europe as well as in the U.K., which is just now forming its own scheme after Brexit. That is only a topping up cost, and that's not a very large cost. As I mentioned in Anuj's reply, that last quarter is the topping up that is required. We did it by about $20 million. That's not every quarter. That is because we get the allowance on the basis of the average of last couple of years, three years. When we produce on that basis, and if you are at that level, you don't have to buy anything from the market. That could potentially be zero. If you are monetizing it and then buying it back, then there is a cost to it and you are open to the market movements. That is how one should look at it. It's not that it will be a big cost in the short term. In Netherlands, the government has announced a carbon tax five years from then, and at that point of time, I guess we will be looking at how the spreads pan out, because it's not only a cost issue because EU is also looking at border adjustment tax. There is a inherently neutralizing factor between these two. That's five years from now. That's not going to hit us in the next few years. Just to clarify, if you have that 9 - 9.5 million, it's just a clarification to the earlier question only. If you have a 9 - 9.5 million ton production run rate, there will be no incremental cost. Is that correct understanding? It may be, but it will be small. It is just a topping up number. That is also mostly in Netherlands and not in U.K. Sure. Thanks a lot. Because U.K. we are producing much less. Thanks. Thank you. The next question is from the line of Saumil Mehta from BNP Mutual Fund. Please go ahead. Thanks for the opportunity and congrats on a very great set of numbers. Two questions from my side. One on Europe. First of all, apologies, I joined the call late, you might have answered. What we see is if I look at the Q4, Europe realization is about $64, $65 improvement on a sequential basis. When I see Europe prices from Q3 - Q4, they were much higher, and even from March levels, the prices have gone up by about another $80-$100. While I understand there is a lead impact lag, but at what point in time do we believe that at least a large part of the increase can be factored? Will it happen in Q1 or Q2? Subsequent to that, have the auto contracts for this calendar year 2021 been finalized, and at what levels were CY 2020? To go to your second question, are you asking about auto contracts in Europe or auto contracts in India? In Europe. I believe there are annual contracts in Europe which are typically signed. What is the number ballpark we are looking at for this particular year versus CY 2020? A couple of comments on that, on your first question and then onto your second question. Basically, in Europe, the contract tenures are very different. We have annual contracts, half-yearly contracts, quarterly contracts, and very few spot contracts. The flow through of price increases typically has a lag depending on the time of the contract and the tenure of the contract. Because all the contracts are also not contracted at the same time. There are different contracts at different quarters. The way we see it, obviously Q4 - Q3, there was a jump, Q1 - Q4 there will be a jump, and there will continue to be a jump going forward. There will be a lag which is what you've also seen from the numbers. We expect a lot of the price levels to come in by the next quarter. That is Q1 we will get some of the benefits, in Q2 we will continue to see the rising prices. If the prices continue to rise, then we will continue to see that in Q3 and Q4 as well. A lot of the auto contracts were due in January. Packaging contracts were due around that time as well. Some of them are getting renegotiated. We're getting different prices. It's an ongoing activity. I think the market is conscious, the customers are also conscious that the prices are going up, and wherever possible, we are getting the benefit of that. Basically, we will start seeing improvements in realization continue at least for the next two quarters, if not more. Okay. Any ballpark initial rough estimate of what, I am sure there will be an ask from our side, versus what the customer will quote, and hopefully it will settle somewhere in between. Ballpark, what is the kind of delta we are looking at on the bio-based? Yeah. Basically, if you look at Q1 versus Q4, I think it's better to talk of spreads, because there are also costs going up in some cases, like in iron ore, et cetera. The spreads we expect in Netherlands to improve by at least €70 between this quarter and the previous quarter, and at least £40 in U.K., the spreads improvement. I don't want to give you a Q2 guidance now, but Q1, this is what we see. Sure. My second and last question, while you made about growth plans or what we also read from the press report was RInter is to bid for RINL and NINL. Any initial synergies, what we are looking at, other than long products and maybe NINL being in the same state where we are? Yeah. NINL for us is pretty much a lever. It's just across the road for us in Kalinganagar. It's a long products facility which is not fully completed as an asset. Hello? Hello? Mr. Mehta, I request you to please stay connected. The line for the management is disconnected. Sure. Participants are requested to please stay connected. Ladies and gentlemen, thank you for patiently waiting. The line for the management is reconnected. Over to you, sir. We're waiting for the next question. Yeah. Thank you. I'll now hand the conference over to Ms. Samita Shah for retail questions. Over to you, ma'am. Yeah, thanks. There are questions from quite a few retail investors actually, about the impact on domestic demand due to the second wave of COVID and whether exports is possible and how do we see that playing out? Yeah. Should I answer that, Samita? Yes, please. is that the question? Yeah. As of now, we are seeing some sort of concern in the market. Simply because, one is activity levels are a bit depressed given the severity of the crisis. That is one. Secondly, the stoppage of liquid oxygen for industrial use is impacting some of the fabrication units, et cetera. There is some concern, but not yet very material. We'll wait to see what happens in the next two - three weeks to see if it is a significant impact or it is just something which will blow over from a demand point of view. Having said that, since international markets are very strong and we already have our orders in hand, we don't expect any slowdown in the domestic market to have any material impact on our production or sales because, actually, the international prices are even stronger than the domestic prices at this point in time, and the international market is readjusting to the fact that China is not going to be an aggressive player for some time to come. That's the situation. Yeah, thanks. We'll take the next question, please. Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah. Good evening, everyone, and congratulations on a strong. I have two questions. First, on the India business, if you can share the NSR increase expected in 1Q over 4Q, also the cost movement. Then if you can share some sense again on domestic demand, how that was, before the second wave, reacting to the strong prices. Are there any channels where we are seeing some pushback? Also, do we see any risk of any government policy action against the current prices? Yeah. Sumangal, in terms of Q1 versus Q4, we expect the realizations to be about INR 6,000-INR 7,000 higher. The cost will be about INR 2,000-INR 2,500 higher. That's mainly because all of input costs have gone up. This is broadly the guidance in Q1 versus fourth quarter. In terms of domestic demand, which is being impacted by the high prices. Not really, simply because everyone sees what's happening in the international markets. As I said yesterday, India has probably the cheapest steel price in the world, even today, even after all these increases. You know the steel prices in U.S.A. are $1,500. In Europe, it's heading towards EUR 1,000. Across, and if you look at the prices in China or Southeast Asia, in Southeast Asia it's in the $950-$1,000 range, hot rolled prices. If you look at steel prices across, it's quite high. Domestic customers are conscious of that. If there are domestic customers who are buying steel in India and exporting their products out of India, they're in a very good position just now because they have much better margins than anybody else anywhere in the world. The demand has not been impacted by the high prices. In terms of will the government take any action? Well, that's for the government to decide. Like I said, I think Indian producers, despite very attractive steel prices internationally, have been selling most of the steel that they have in the domestic markets. Like I said, the domestic prices are still the lowest that they are available in the world. That's what I would like to respond. Understand. Next question is on the CapEx. Just want to understand your confidence on this INR 7,000 crore, INR 7,500 crore CapEx this year. First half looks like will be gone in COVID and then in monsoon. You just have six months to spend that. Earlier, our understanding was whenever we start KPO2, it would take 36 months. Based on your opening remarks, you shared 24 months to commission. If you can just elaborate that if we will have a large part of FY 2024 to benefit from the volumes of KPO2? If you look at the KPO plan, basically we had started work before things started going bad. Last year we took a pause. When I say took a pause, there was some activity which continued at a low level where we had minimum CapEx to do, but a lot of preparatory work, a lot of other work went on with this CapEx line. That's why, even if I look at the pellet plant and cold rolling mill, we had focused on that before we took a full pause. A lot of the work has been done. The equipment has been ordered. A lot of the equipment has already come in. In the next 12 - 18 months, like I said, we should be able to get the pellet plant and the cold rolling mill started, which benefits us on cost side and margin side. The blast furnace, everything else has been ordered. If you look at the KPO Phase II, the new thing which is being added was a big blast furnace. That was already ordered, and we had asked the supplier to hold on to it over the last year, and now we've asked them to go ahead and ship it to us as soon as possible. In terms of steel melt shop, it is the same steel melt shop. We are just adding another vessel. You're not having to build a steel melt shop. In terms of the hot strip mill, it's the same hot strip mill. We are just adding some facilities. It's not so difficult for us to ramp up once we get the blast furnace in place. That's what we're going to focus on over the next 24 months. In terms of will we get most of the benefit in FY 2024, I think the commissioning will be more towards the second half of FY 2024. The full benefit in terms of volumes, assuming a certain ramp-up, which will happen, will be in the year after. We will get some of the benefit. We'll get the cost and margin benefit in FY 2024 because the pellet plant and cold rolling mill will be in place, and we will start getting some of the volume benefit in FY 2024, but most of the volume benefit in FY 2025. Just a small clarification for Koushik. The tax expense this year has gone down significantly. Is there any adjustment or any credit of unabsorbed loss of Bhushan already used this year? Yes, that's correct, because Bhushan is at an advanced stage of getting merged. Post the shareholders' approval in March, we have, as Naren in his comments mentioned, that we have also filed for the joint petition. It's now at a very advanced position, which enabled us to take that as a part of our overall tax plan. Got it. That's useful. Thanks and all the best. The next question is from the line of Amit Dixit from Edelweiss. Please go ahead. Yeah. Hi. Thanks for the opportunity, and congratulations for a very good set of numbers. I have a couple of questions. The first one is on your ESG initiatives, particularly in Europe. We find that most of your peers are basically moving towards reducing carbon content in the steel. What specific steps we are taking in Europe, particularly when all the plants are basically blast furnace plants? That is the first question. I will ask the second one later. Sure. Amit, basically, if you look at what's happening in Europe, it's different countries are having different strategies to reduce their carbon footprint. Okay? If you look at Sweden, where SSAB has announced that they'll make green steel. Basically, they are using hydel energy, which is green energy, to make green hydrogen, which they are using in a gas-based DRI plant, where they will use hydrogen and hence reduce iron, which will be green and use that in an electric furnace with scrap and melt it using green energy. Right? That is a process route. They have said that will cost them at least EUR 1 billion, I think, and will be ready by 2025 and will be 1 million tonnes. Right? I think, one is, whatever steps are being taken are still not enough to achieve 150 million tonnes, which is the requirement of the European steel industry. Everyone is taking different steps. ArcelorMittal has announced, again, a number of steps, which includes, again, using hydrogen, et cetera. In France, the approach is more to use nuclear energy and to use nuclear energy as green energy to melt scrap. That's also, in some sense, greener steel than a blast furnace route. In Europe, our footprint, our IJmuiden plant, firstly, is one of the most carbon efficient plants in the world, even as it stands. It's one of the top five in the world in terms of carbon efficiency. The Dutch government is focused more on carbon capture and storage as a technology as a way forward, because Netherlands is on the coast and there is an opportunity to store the carbon in the North Sea oil wells that there are. The conversation with the Dutch government is about how can we work together, and the Dutch government is supportive of industries which use carbon capture and storage technology to reduce their carbon footprint, and they're willing to support that. That is a conversation going on with the Dutch government. Our roadmap for Netherlands to reduce carbon from the current level by 40%-50% involves use of hydrogen generated using the windmills off the coast of Netherlands, use of carbon capture storage technology. We're working with some chemical companies for the carbon capture and use. We also have a HIsarna process route, which is basically more carbon efficient and generates carbon, which is easier to store. Our approach is different. It's more on carbon capture and storage, more on use of hydrogen, and more on use of HIsarna. We have our plans as well. We are working with the government, and we'll announce a more comprehensive roadmap once our conversations with the government are complete. In Europe, the U.K., it's a little bit more of exploring what are the other possibilities of making steel. All our peers are pursuing different options. As Koushik said earlier, we are also waiting to see the Carbon Border Adjustment Mechanism, which EU is expected to put in place. All these new process routes by all of us, including our peers, should not put the European steel industry at a disadvantage compared to others who are not investing in such greener technologies outside of Europe. The governments are supportive of that. They don't want to deindustrialize as they decarbonize. Okay, great. That is helpful. The second question is on our Southeast Asian operations. They have been reclassified as continuing operations. What is the change in stance there? Are we not willing to sell it now, or we have parked it for a while? Pardon. Yeah. I think, Amit, I think the point is we've been looking at it for some time. We have had offers, multiple offers actually. The level of offers that came in at that point of time was also much lower than what we thought would be most appropriate from a long-term perspective, because that business is a self-sufficient business. It makes profit, makes cash flows. It was one of our levers to deleverage at that point of time. At this point of time, we have discontinued that process because we have also been working on the business for some time, and there are opportunities that we have seen. However, if there are opportunities for strategic calls with more appropriate valuations, we will certainly look at it. At this point of time, there's nothing on the table that makes us believe that we will continue as a hold for sale, which is why we reversed it. Thanks a lot for your reply, and all the best. Thank you. The next question is from the line of Miyush Gandhi from Canara Robeco Mutual Fund. Please go ahead. Hi. Thanks for taking my question. I had just two questions. One on the KPO side. Have we quantified how much CapEx will be required for the next 5 million tonne? Yeah. We have the original Yeah, go ahead, sir. Our original capital expenditure, including infrastructure and raw material expansion to match up to that was INR 23,000 crores. In fact, couple of years back when we announced the project, we had mentioned that. How much has already been spent on that, of that INR 23,000 which you-? Yeah. Roughly about INR 7,000 crores-INR 8,000 crores have been spent and is being spent now. We will be spending a significant part of our next year's capital allocation primarily on the cold rolling mill project and the pellet plant, which were part of that INR 23,000 crores, and also on the upstream part that T. V. Narendran explained a little while back. Okay. Thanks. One last question. Do we share as to what is the spreads that we are making in Europe at current prices or at current realizations? Can you also share what is the fixed cost per ton for that business? Current spreads in Europe? Yes. There's a lead and lag, honestly what we see on the P&L is different from what is there in the market. We just thought maybe if you could help us understand at current realizations what are there in the market, what kind of spreads do we make, and also if you could help us understand what is the fixed cost per ton for that business. I can answer the spread then Koushik answers you on the fixed cost. The felt spread is a spread that we experience, which is based on the contracts that we are servicing, both on the sales side as well as the contract we are servicing on the buy side. Just to give you a sense, the felt spread in Q4 was about EUR 215 in Netherlands, and it's expected to be EUR 285 in Q1. As far as U.K. is concerned, it's GBP 213 in Q4 and about GBP 257 in Q1. That's the delta that I gave earlier when somebody asked a question about EUR 70 and GBP 40, roughly from this quarter having as compared to the previous quarter. This will keep changing as the prices which are available in the market goes backwards. Okay. Will it be possible to share what is the actual fixed cost for that business? I am just trying to understand at what levels of realization or spreads or EBITDA per ton that part of the business becomes self-sufficient. I don't have the exact number just now. I'll give it to you outside. Broadly, the business is about EBITDA neutral at around €210 per ton, €210 - €212 per ton. Okay. Thanks a lot. That's it from my side. Thank you. The next question is from the line of Prateek Singh from Credit Suisse. Please go ahead. Yeah. Good evening, sir. My first question is on the EU emission. From what you understand, every year we have been getting around 3 million tons CO2 units over and above what we have needed, and most of the surplus lying in Netherlands. Is it fair to assume that we would still have some spare credits to sell this year without needing to buy them back? That's my first question. The free allowances come on a basis of the last three years, as I mentioned a little while back. Netherlands normally pulls out as much as it can based on the market condition. That is why sometimes, as it is ramping up just now, for example, in the last Q2, they needed more emission certificates to continue that, and therefore they purchased. I don't think we have free allowances, because free allowances to sell are surplus to our requirement. Now with the U.K. and Netherlands being completely separate because of the Brexit, the two will be in a very different position. The U.K. allowance regime is just now getting finalized, and we are waiting to see as to how it will be. In general, the free allowances over the next few years will start coming down. I don't think we will be in a position to have too many of the surplus credits to sell. Great. Thanks a lot, sir. My second question is on iron ore. With the likely optionality to sell 50+ captive ore, are we looking to ramp up our mines beyond KPO2 needs so that we can sell in the market? In that case, what's our approvals limit? We are doing 35 MTP now iron ore, and I think that our approvals are six, seven million tons. Where do we see this production run rate five years from now? Iron ore, yes. We are currently expanding iron ore, but that's more to keep pace with our requirement. The original plan was to expand for Kalinganagar, but in the meanwhile, we also acquired Tata Steel BSL. That was another five million tons, whereas the original expansion plan was aligned only for five million tons of steel, whereas we are now planning iron ore for 10 million tons additional, which is Kalinganagar Phase II and Tata Steel BSL. We are expanding our iron ore capacity, which is currently at 30 production levels, at 30, 32 million. We'll take it to about 50 million over the next few years. That will only help us cater to what we think we need to support our growth organically. Inorganically, we are exploring Opportunities to grow further depending on the recent announcements. We are also seeking some further clarifications. We do have some opportunities already from some of our existing mines, because we also have fines which we can sell, both in terms of the Vijaya mines which we acquired along with Tata Steel Long Products, which is part of the Usha Martin steel business, and our Khondbond mine and some of the other mines. There are opportunities. Even as we speak, we are waiting for some clarifications. In terms of expansion, yes, we will expand as much as we think we need to do. We are allowed to sell 50% of what we can consume. We are only allowed to sell after we have fulfilled our own captive needs. These are the conditions that are put in, but there are some more clarifications that we're seeking. Directionally, yes, that's an opportunity for us available for the future. Sure. Thank you, sir, and all the best. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, I have two questions. One, a couple of years back, you had given certain initiatives to integrate the revenues from steel cyclicity. You had indicated about expansion of downstream products, and you had given a target of more than 30% of volumes from downstream. Second was service and solutions for 20% revenues by 2025, and third was grow beyond steel, new materials as a segment and 10% revenues by 2025. Sir, the first question is: where are we on these three particular variables? Yeah. I think some of them are interlinked, Ritesh. If you look at downstream, a lot of the services and solutions are also linked to downstream. Downstream, we continue to grow in two different models. If you look at our pipes business, we are one of the largest in the country now, and acquiring Tata Steel BSL has almost doubled our capacity and brought us into very high-end segments. We are also the largest in the wires business, which is also a downstream business. We are also one of the largest in terms of rebar fabrication. Not one of the largest, we are the largest. A lot of these efforts are very much on track, we continue to grow downstream. We are also looking at expanding our capacity in tinplate, packaging steel. There are multiple initiatives going on in all our downstream areas. Tata Steel BSL actually had a very strong downstream play, and that was one of the reasons why we acquired that basically, because in addition to pipes, it also has color-coated steel, galvanized steel, et cetera. There are a number of downstream products that we got in with that acquisition with TSBSL. In terms of services and solutions, yes, we are growing. It's a small base, but we are pretty much doubling every year, and we continue to grow in Pravesh doors, nesting solutions. The business is now about INR 300 crore-INR 400 crore and growing quite fast. Our new materials business, which is fiber reinforced polymers, graphene, et cetera, is also doubling every year, starting from a low base. Yes, over the last year in some of these new businesses, we have faced challenges because of COVID and because of the fact that a lot of these businesses are capital light for us. They are knowledge intensive and relationship intensive and capital light. We work through a lot of vendor partners. Some of that activity got impacted because of COVID. We are continuing to pursue those revenue streams, and it's growing quite well. You must also appreciate that our top line has also grown. When we set that goal of 20%, 25% of our revenue should come from all these businesses, we are at a very different top line, and now our top line is very different. It's a moving target. We are still some distance away from that, but the direction and the intent is still very strong. That's quite useful. My second question again goes back to the carbon thing. I think Koushik sir, he made a statement of GBP 20 million per quarter as a normal operating cost. He also said as a function of production levels. This broadly equates, assuming 10 million tons, it's only $10 per ton. That looks like a pretty low number. If I have to compare this versus, say, carbon intensity for U.K., which is 2.22, Netherlands 1.86, and the average value of the 10 most efficient installations is at only 1.3. If one does a broad math, if you don't have any allowances, based on the current spot carbon pricing, it could imply a deficit of nearly $400 million if you don't have any allowances. It would be great if you could provide some clarity on how much is the allowances that we have in stock. In the last call you had indicated GBP 6.45 million for U.K. It would be great to have some color on this number. One clarification to the query that you had, Ritesh. I mentioned that this quarter, Netherlands had a provision of around EUR 20 million-EUR 22 million, but that's not every quarter. Second, I think these free allowances are continuing and will continue in the new regime till about 2025 or even 2030 progressively, and we are still continuing to get it on the same basis. There's no change as of now. When the production numbers, it comes on a certain actual production for the last three years. On that basis, the CRs are allocated. If somebody is to produce at a higher number, then that company or that entity or that site will have to buy that to comply with it. This is the framework within which it works, and that will continue at least for the next few years. Therefore, it is not that it is stopping and there is a INR 400 million gap. That's not happening. Third point is, as you saw that Tata Steel Europe, as part of its price increase, has also put in a carbon surcharge in the price, which is a way in which the spread of that business across in the industry is also expanding. Part of it is taking care of the carbon cost that is increasing. VK, you said something about 1.3? I missed that. What were you saying? That was the average value of 10% of the most efficient installations in 2016, 2017. That's the benchmark what the European Commission is talking about, and they have invited suggestions on that. No, I think definitely that's why I wanted to clarify that. There are two process routes, right? You make steel through an electric arc furnace route, or you make steel through a blast furnace route. The blast furnace route, the most efficient, is around 1.7, 1.8, and our plant in IJmuiden is in that range, okay? The top five in the world. Nobody is at 1.3. This is the best through the blast furnace route. If you go through the electric arc furnace route, then you can produce, depending on the source of energy, between 0.4 - 0.8. Okay? When you take the average of blast furnace and the electric arc furnace, then you can say it's 1.3, but the process routes are different. The electric arc furnace route, typically the cost is at least $100 per ton more than the blast furnace route. Till such time, in some sense, that the carbon cost covers that gap, from a cost point of view, you will always be more preferring the blast furnace route. I wanted that clarity to be there because that 1.3 is not a number which can be used as a reference. This will depend on the process route. Okay. Sir, just a clarification- Sorry to interrupt, sir, for any follow-up, may we request you to rejoin the queue, please. The next question is from the line of Anand Shah from ICICI Prudential Asset Management. Please go ahead. Hi. Thank you very much for taking my question. Am I audible? Yes, sir, you are. Thank you. Just wanted to understand, we do hear about this EUR 1,000, $1,200 HRC price about Europe and $1,500 in U.S. We also understand that there is very little material with the mills to sell. Just wanted to get a sense of, are the steel companies actually able to sell the steel at this price, or then when your contracts get over and you have a material to sell, these prices will then settle down lower? No, I think the way it happens is there are spot prices, and if you want to buy steel today from somebody who has steel available to sell, this is the price that you will have to pay. All mills will have maybe some availability or something available. Most of the European mills would have already been contracted. Right? That's why the prices are quite high, because there's hardly any availability. This flow through, as we said, the flow through will take three to six months normally. If the steel price stays at this level, then over the next two quarters, you will start seeing what we call the felt spreads or the prices which the steel companies get coming closer to this level. This is one part of it. The second reason why in Europe it is very high is because in U.S., the steel prices are so high that anybody who can export steel to the U.S. and who is not having any anti-dumping duty on them would prefer to export to the U.S. There is very little imports, or there's not as much imports coming into Europe as it used to be earlier at lower prices. This is the price which is reflected in the margin. What percentage of steel is invoiced at this price, I don't know. Certainly there would be some quantity which would be invoiced at this price. Yeah, we also understand that now the contracts for September and December quarter are also being sort of signed. Would that sort of realization be available for the September, December contract? I am just getting a sense of whether actual buying is happening at this price by the consumers. Yeah, there are obviously people contracting for later deliveries. I think we are pretty comfortable till September in terms of prices at good prices. That will start flowing through into our performance both in this quarter and next quarter. Like I said, in Europe, most steel companies, particularly the high-end steel companies who make high-end products, have quarterly, half-yearly, and annual contracts. The flow through will come only through the spot orders, which may be 10%, 20%, or 30% of the overall volumes. Sure, thank you. My last question was on the spreads. I think you said the spreads are around €285. If I understand €1,000, if that were to be a spot price, then that can be a realization into the future. The spread on €1,000 will be far higher than €285, right? That's true. Okay, thanks. That's the felt spread what we are getting today. Yes, if the price stays at €1,000, you'll start seeing the felt spread come closer and closer to much higher levels. Of course, it also depends on what is the raw material price at that point in time. Thank you. The next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead. Yeah, sir. Regarding the Europe capacity, if I see the past presentations and all that, if I roughly remember between Netherlands and U.K., the capacity is actually around 12 million tons. If I analyze this quarter's. Run rate also, you can produce over 10 million tons, but we have been more doing around nine. What kind of production ramp-up, if at all, can happen at Tata Steel Europe? We are continuing this one. We guided that India. As we guided in India, we'll be at least 1 million tons additional this year compared to last year. In Europe also, the guidance is we'll be about 1 million tons higher this year compared to last year. That will take us closer to the capacity. At least in Netherlands, we'll be running full out. U.K., we will optimize based on the margins and things like that. Okay. The second question was on the lower tax which was paid as Mr. Chatterjee also clarified it was using the accumulated losses of Bhushan. What's the pending number of accumulated losses of Bhushan, which will be available to offset in FY 2022 also? Materially, not much, or almost none. We will be almost on a full tax basis next year? For one year, yes. Before the commissioning of the pellet plant and CRM comes in, we will not have that cover. Pellet and CRM will kick in in FY 2023 first half? Yes. Okay. Thank you. Yes. Thank you. The next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead. Thank you for taking the question. A couple of questions. First, on Europe, as I understand, I think there would have been shortage of almost 9-10 million tons of carbon credit in the year. I would believe that Tata Steel had to buy this back by March or April 2021. First of all, did the cash flow include buying back those CO2 credits in March, or have you bought them back in April? That's the first question. It was not a shortfall. It was, as I said, it was monetized to provide liquidity in Q1. It has been complied for in the month of April. In the month of April. Okay. Secondly, you mentioned the onfield optionality across different projects. Once you're done with KPO2, what kind of optionality across operations, across BS Angul and Kalinganagar, and even long products can be assumed going forward? Is it fair to say that you would look at greenfield investment only after you exhaust all your brownfield optionality across options? Yes, that's right. I don't think we are looking at investing in any greenfield site, because if you look at it, in Kalinganagar, we have the option to go up to 16 million tons in the land that we have there. In Jamshedpur, we have the optionality to take it from 11 million - about 14 million tons. In Angul, we have the optionality to take it from 5 million tons - 10 million tons. Between these three sites, we have an opportunity to go to about 14 million tons. Right? That means we don't really need to start any new greenfield site for some time. Inorganic growth opportunities, like I said in long products, is something that we would be interested in because both Kalinganagar and Angul will be flat product sites, and we don't want to mix up long products and flat products in the same site. Jamshedpur already has longs and flat in the same site. We have an optionality when we go from 11 - 14 to maybe add long products there if we want. That's why inorganic opportunities in long products would interest us more. Okay. Thank you so much. Thank you. I now hand the conference over to Ms. Samita Shah for retail questions. Over to you, ma'am. Yeah, thanks. There are a lot of questions coming in about the impact of COVID-19 on domestic demand. I think people have dialed in a little late. We've already answered this question, and I request you to go back and listen to the transcript. We will put it up. There are lots of questions also in terms of our strategy over international assets. I think particularly comments that since Southeast Asia is back and included in the numbers, does this mean we have changed our view in terms of international assets or will we still consider exiting from public markets? I think as far as that is concerned, as Koushik explained, at that point in time Let's put it this way. In Europe, we pursue two opportunities because we did believe, and we do believe that consolidation helps the European steel industry. In the current circumstances, given that we have exhausted two options to consolidate in Europe, and given the current market conditions, and given the fact that we are already separating Netherlands and U.K. and believe that we can unlock more value that way, we will continue in this direction. For now, the businesses, even last year, were pretty much cash neutral. That was our primary objective. In the current conditions, we'll no longer depend on India for cash. That is a good space to be in. We will continue to unlock value in Europe and then decide later if we want to pursue any other options. As far as Southeast Asia is concerned, again, as Koushik said, Southeast Asia was never a cash drain on India. It was always cash neutral or cash positive. We did have interest and hence we pursued that. Given that, and we were also at that time looking at what is a quicker way to deleverage, and we wanted to pursue all possibilities to deleverage. Now that a lot of our deleveraging ambitions are getting fulfilled by last year's performance and expected performance this year, we are not in a hurry to divest Southeast Asia. The business can stand on its own. We will continue to run that and decide at a later date whether we need to pursue any other option there. For now, it's not that we are looking at growing in international markets, but existing assets can stand on their own. We will continue to work with them and decide later if we want to do anything which is strategically unlocking more value for us than we are unlocking today by ourselves. Thank you. Back to the queue, and we'll take two or three questions. Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead. Hi, sir. Good evening. Sir, firstly, on Europe, again, like Koushik Chatterjee said that the carbon requirement there will become more stringent. This GBP 12 that we have levied, do we see that as a mechanism to offset that impact, how the customer responds on that? Should we think that the carbon impact could intensify as we go ahead from a cash flow point of view? I think the €12 has been arrived at using the current carbon price and using a formula setting off allowances that we're getting, and the net is what that €12 is which is being charged. It's a surcharge on the customer. The customers obviously have paid for it, and we expect that this will become an industry practice and people will charge for it. Ultimately, the transition to green means whether the government, whether the customer, everyone has to be part of it because it's something which is impacting the whole industry. I think, at least at a retail level, we believe customers, people who are buying cars or people who are buying products made out of steel will probably won't mind paying a bit more for what this carbon surcharge is. Anyway, let us see how it goes. We do believe that the spreads in Europe will also change given this additional cost component coming into the cost. Okay, great. Thank you so much. Thank you. Ladies and gentlemen, due to paucity of time, we'll be taking the last two questions. The next question is from the line of Amit Murarka from Motilal Oswal Asset Management. Please go ahead. Hi. Good evening. My first question was on the asset divestment strategy. Earlier you're looking to divest Southeast Asia and even Netherlands, U.K. As you mentioned that was motivation behind thinking of divestments only to reduce leverage or was it also because you see these as weaker assets and you are looking to kind of move to a more core India strategy? Yeah. I think there were two, three drivers for it. Like I said, in Europe, the driver was a bit more that a consolidated European steel industry is in a better position to deal with Chinese exports and other exports, et cetera. Obviously, there are different views there. The European Commission had a different view, and hence our ThyssenKrupp JV didn't go through. SSAB was a different story. The driver in Europe was more to create a sustainable European business. We believe that if that option, like I said, we've exhausted two options. There are not so many options in Europe. We are better off splitting the business and running it differently, which is what we're doing, and we believe we can unlock more value and have a sharper focus there. Over the last few years, we've been doing a lot of good work on transformation, and some of that is splitting out. We have been, even last year, pretty much cash neutral for the European business. As I said it too, we do believe that these businesses can stand on their own and allow us more time to decide on what is the best long-term strategic option and how we can unlock value either by running it ourselves or along with somebody else. As far as Southeast Asia is concerned, again, it was partly driven by the fact that it's a fragmented geography. We had been there for a long time but did not have the scale that maybe was more important or more relevant. Since we wanted to focus on growth in India, we said that, okay, if there is somebody who is interested in that asset we can divest of it. We are not in any desperation to sell it. We will continue to run it and continue to unlock value and take a call at a later stage if it is an opportunity. Is it fair to say you're no longer looking for a buyer, but if some good offer comes, only then maybe you will evaluate? At this point of time. I think it is important to clarify and supplement what T. V. Narendran mentioned, that at this point of time, we are not aggressively running a process. As we go along, if there are offers which comes in, we will certainly consider them and look at whether it meets our expectations. As I mentioned that the companies have always been profitable and cash-generating companies. We will take a call based on the offers that comes in. These things are often part of it, but the core part of India growth is something that we are always focusing on. Okay. Just another question on the global supply. Given that the spreads are now at a record high, do you see risk of the high cost or idle capacities coming back into the system as these become viable now? High cost capacities, are you talking in Europe or where are you talking? In Europe, U.S., I mean, in these geographies where I guess generally we have seen due to environmental reasons, the costs have been going up, so some of the capacities have been hot idled or something like that. Could they come back now that the spreads are quite high? It depends. Actually what's happening globally in the steel industry is the elephant in the room was always China, right? A lot of the capacity overhang that we talked of in the industry was in China. Right? What is happening is in China, there's a fundamental shift. They don't see any value in exporting steel, importing iron ore and coal, leaving a big carbon footprint in China and exporting steel. That's why they are discouraging exports, which they've been doing, and consolidating the industry, driving greater carbon efficiency, pursuing more electric arc furnaces, et cetera. If China is not such an active player in the global steel market, that's 50, 60 million tons of steel exports going away. The other big exporters are Japan and Korea. Japan again has announced that they're going to shut blast furnace capacities in Japan, again, for the reasons of carbon footprint in Japan. What we are seeing is more and more steel becoming a little bit more of a domestic geographic kind of play. In Europe, you will find a lot of European suppliers and some imports. Europe at its peak had 30% imports. We are seeing now at 10%-15%. U.S., most of the players in the U.S. are expanding and selling in the U.S. U.S. players are not really exporting steel. It's a little bit more regional play rather than a lot of flow across things happening. Honestly, if you look at high cost capacities, it depends. Are they high variable cost capacities or high fixed cost capacities? If they're high fixed cost capacities, then they will come back. If they're high variable cost capacities, I'm not sure they will come back in a hurry. A lot of steel capacities, even if you look at in India, there's a lot of steel capacity which is a high variable cost capacity, which will not come back just because the steel prices are high or spreads are high for some time. Sure. Thank you. Thank you. We take the last question from the line of Sanjay Parekh from Nippon India Asset Management. Please go ahead. Yeah. Thank you, sir, and congratulations on a great set of numbers. Just on the expansion, since we have a potential at Angul, Jamshedpur and Odisha, Clearly we are short as a country, can we explore if preparatory efforts to be done so when you actually want to expand, the time to expand in those areas would be limited. Can we explore that? Because it's fairly comfortable in terms of leverage. What would be your thoughts, sir? Certainly, in all these sites, we always have a master plan. If we have to expand, some of the work is already done or ongoing in terms of the master planning. What is the configuration, what are the facilities we want? What will the layout look like? That work is always ongoing. If we want to, if the steel prices are strong and our balance sheet is good and the cash flows are strong and we can grow without compromising on our deleveraging opportunities, et cetera, we can always expand in any of these places quite fast and parallelly as well. Need not happen sequentially. That's the advantage of having multiple sites. For most, till about 10 years back till Kalinganagar really started, we were constrained by having just one site, and there you can only expand sequentially. Now that we have three sites, we can expand parallelly if required. Thank you very much. Thank you. I now hand the conference over to Ms. Samita Shah for closing comments. Over to you, ma'am. Thank you. Thank you everyone for joining us on this call. We hope you found the clarifications useful. Look forward to connecting with you in the next quarter. Stay safe and take care. Thank you. Thank you. Thank you. Thank you. Ladies and gentlemen, on behalf of Tata Steel Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.