As a reminder, this conference is being recorded Tuesday, November eighth, 2022. I would now like to turn the conference over to Megan Cochard, Director of Investor Relations for Novelis. Please go ahead. Thank you, Chris, and good morning or evening, everyone. Welcome to Novelis's second quarter fiscal year 2023 earnings conference call. Hosting our call today is Steve Fisher, our President and Chief Executive Officer, and Dev Ahuja, our Chief Financial Officer. Following the presentation, the call will be open to analysts and investors for questions. This conference call is being broadcast on the internet at novelis.com in the Investors section. A replay of this call will also be available on our website. Before I turn the call over to Steve, let me remind you that today's earnings release and presentation include forward-looking statements as defined in the Private Securities and Litigation Reform Act of 1995. These statements are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentation also includes certain non-GAAP measurements. Reconciliation of these measurements is provided in the financial statements included with our earnings release, as well as in the appendix of our presentation. Let me turn the call over to Steve. Thanks, Megan, good morning or evening, everyone, and thanks for joining us today. We delivered a solid second quarter despite significant and unforeseeable cost pressures. This was driven by solid global production execution and robust end market demand that drove stronger shipments in the quarter. Double-digit increases in automotive and aerospace shipments versus the prior year were driven by easing supply chain challenges and high pent-up end consumer demand for vehicles and air travel. Meanwhile, shipments in our core beverage can end market, which makes up nearly 60% of our shipment portfolio, were resilient and stable, increasing slightly over the prior year. Our diverse geographic and product portfolio position us well to continue to capture good top-line growth as we navigate a challenging macroeconomic environment. Like many companies across industries, we are facing headwinds from hyperinflation and unprecedented energy prices, stronger US dollar, ongoing supply chain disruption, and lower aluminum prices, which are compressing recycling benefits. We are focused on mitigating these headwinds through what we can control: producing quality products to meet customer demand, capturing pricing opportunities, and negotiating a fair share of cost passes with customers, leveraging our robust hedging and recycling strategy to manage costs, and driving other cost efficiencies across the business. Although the macroeconomic environment is uncertain, we believe long-term demand for sustainable, lightweight, and infinitely recyclable aluminum products remains intact. As such, we remain committed to our transformational capital investment strategy, investing in new capacity and capabilities to grow with our customers, and we will continue to progress these activities in a disciplined, paced manner. Let me provide an update on those strategic projects on slide four. Novelis is a committed business partner to our customers, who are increasingly demanding sustainable aluminum products. To meet this growing demand, Novelis has begun a multi-year transformational organic growth investment period to further strengthen our position as a global leader in low carbon and innovative aluminum solutions. We have identified over $4.5 billion worth of investment opportunities, of which approximately $3.4 billion of specific capital expansion projects are underway. On the left side of this page are two dedicated recycling investments. Aluminum is a sustainable material of choice for customers, and we are taking meaningful actions today to foster a circular economy by recycling higher amounts of customer post-production and post-consumer scrap. We are currently in the process of building a state-of-the-art automotive recycling plant in Guthrie, Kentucky. This is our first recycling center capable of processing automotive end-of-life scrap in addition to customer process scrap material. We broke ground on this project back in May, and we are on track to bring this facility online in 2024. Yesterday, we announced that we broke ground for a new recycling center at our joint venture, UAL, in South Korea. We also have a number of debottlenecking and expansion projects that will unlock rolling capacity across the regions. The hot mill debottlenecking projects at Oswego in the U.S. and at Pindamonhangaba in Brazil are both on track, and I'm excited to share that after a period of delay due to COVID lockdowns and in permitting, we are ready to begin the automotive integration and expansion project at our Tianjin plant in China by the end of this fiscal year. Our largest investment project is our $2.5 billion greenfield rolling and recycling facility in the US. Turning to slide five. We hit an exciting milestone in October with the groundbreaking of the first new US aluminum plant to be built in over 40 years in Bay Minette, Alabama. This plant of the future will be the most efficient aluminum plant in the world. We are bringing all the world-class manufacturing and digital technologies we've developed over decades of experience into building this state-of-the-art facility. The model is safety-centric, leveraging digital technologies, AI, robotics, and sensors to minimize human and machine interaction, drive labor efficiency, and collect real-time intelligence to optimize production. We also believe this new facility will be the most sustainable aluminum rolling and recycling plant in the world, aiming to be carbon neutral for Scope one and two. It will be powered primarily by renewable energy, use recycled water, be a zero-waste facility, and rely on railroad transportation to reduce logistics-related carbon emissions. The new can recycling center at the facility will allow us to increase our global UBC recycling capacity to nearly 100 billion used beverage cans, up from 82 billion today. This investment is supported by favorable macro demand trends for sustainable, low-carbon rolled aluminum products and our decades-long relationships with beverage packaging and automotive customers. We have a proven track record in building and running assets that deliver quality and innovative aluminum products and efficient aluminum recycling. Work is now beginning at the site, and we have secured the supply of critical equipment. As we said before, we have secured pricing, volume, and terms that justify the investment. We are absolutely confident in our ability to meet our mid-teens ROI and be fully contracted by the time we begin production in 2025. I'd like to now turn the call over to Dev for a detailed review of our financial results. Thank you, Steve, and good morning or good evening. Starting on slide 7, net income from continuing operations was down 23% over the prior year to $184 million in Q2. Excluding tax-affected special items, as outlined at the end of today's earnings press release, net income from continuing operations was down 17%, mainly driven by lower adjusted EBITDA. Net sales increased 17% to $4.8 billion, primarily driven by a 2% increase in total flat-rolled product shipments, increased product pricing, favorable product mix, and higher average aluminum prices. The 2% increase in shipments to 984 kilotons was driven by higher shipments across automotive, aerospace, and beverage can markets, partially offset by lower specialties shipments. Automotive and aerospace shipments both grew as semiconductor shortages impacting the automotive industry began to ease. Aerospace OEM production rates improved as air travel continues to its expected post-pandemic recovery. Beverage can shipments also grew in the quarter on strong demand. Would have been even higher if not for some customer destocking late in the quarter. Specialty shipments overall were lower as a result of portfolio shift in Asia, some production disruption in North America, and some softening of demand in Europe, mainly in heat exchangers and building and construction. Adjusted EBITDA decreased 8% to $506 million, resulting in an adjusted EBITDA per ton of $514. Turning to the EBITDA bridge on Slide 8, our teams continue to work hard to control and mitigate what we can in this hyperinflationary market. The 2% increase in shipments led to volume contribution of $18 million. Favorable price and mix of $175 million is driven by our ability to secure better market pricing in a favorable supply-demand environment, mainly in can and specialties, as well as our ability to negotiate PPI and other inflationary cost pass-throughs. We also benefited from favorable product mix, driven by higher automotive and aerospace shipments. The increase in operating costs versus the prior year is largely due to continuing inflationary cost pressures, mainly energy, which has intensified in regions outside of Europe, as well as inflation on other operating costs, such as freight, labor, and other operating supplies. Approximately 40% of the total operating cost increase year-over-year is due to higher energy costs globally. In addition to the significant energy and other inflationary cost increases, we also saw less favorable metal benefits due to higher alloys and hardness costs, lower aluminum prices, and less favorable scrap spreads due to higher freight and lower UBC scrap availability in South America. SG&A and other costs were another $54 million headwind, largely driven by higher factoring costs due to rising interest rates, employment costs, and travel expenses as pandemic-related restrictions have eased and company travel resumes. Lastly, the strong US dollar led to a $22 million currency headwind, mainly unfavorable translation in our European segment. Let's turn to slide 9 and Q2 performance year-over-year by segment. North America shipments increased 3% year-over-year due to higher automotive shipments, as some semiconductor constraints that have impacted the automotive industry have begun to ease, as well as higher can shipments, as supply remains tight and demand resilient. However, adjusted EBITDA was down 16% versus the prior year, despite favorable pricing and product mix, due to inflationary cost pressures, higher factoring costs due to rising interest rates, and higher metal costs. The higher metal costs are due to more expensive metal inputs to overcome domestic capacity constraints in a strong demand environment, as well as local recycling benefits due to lower aluminum prices. Europe shipments were up 3% on improving automotive and aerospace demand compared to the prior year, partially offset by softer specialties shipments in heat exchangers and building and construction. EBITDA was down 6%, driven mainly by unfavorable foreign exchange translation and inflationary cost pressures, primarily the unhedged exposure to unprecedented increase in energy prices. These factors were partially mitigated by favorable pricing, cost passthroughs, and a customer contractual obligation benefit in the quarter. Turning to slide ten. Asia performed very well in the quarter, with shipments growing 6% on strong can demand recovery domestically and higher support to capacity-constrained North America, as well as continued improvement in aerospace demand. Adjusted EBITDA increased 23%, due mainly to favorable product mix due to portfolio shift, a favorable pricing environment, and metal benefits. These factors more than offset higher energy and other inflationary costs. South America shipments were up 10% on increased production capacity and strong demand across the Americas, mainly outside of Brazil. EBITDA was down 18%, despite higher volume and pricing, due to inflationary impacts on energy and other operating costs and higher factoring costs due to rising interest rates. Metal benefits were also less favorable than the prior year due to tight local scrap supply and lower aluminum prices. Let's turn to cash flow on slide 11. Year to date, adjusted free cash flow from continuing operations was an outflow of $90 million compared to cash generation of $158 million in the prior year. The decrease is primarily due to the shift in metal price lag from a prior year benefit to a current year headwind as a result of falling aluminum prices, as well as lower adjusted EBITDA and higher CapEx. Working capital continued to be a headwind through the second quarter due to some inventory buildup and the lagging effect of high aluminum prices still in inventory. We anticipate a release of working capital in the second half of this year as lower aluminum prices and a reduction in inventory provide relief. Our net leverage ratio remains below our target at 2.3x, and we reported a strong liquidity position of $2.8 billion as of September 30th. We will continue our disciplined approach to maintain a strong balance sheet and are adjusting the timing of capital spending as we prudently navigate this current period of macroeconomic uncertainty. We now anticipate fiscal 2023 total CapEx to be between $900 million and $1 billion for the full year, below our previous guidance to be on the low end of a range of $1.3 billion-$1.6 billion. With disciplined CapEx and a release of working capital expected, we anticipate generating a solid positive free cash flow in fiscal 2023. I'd now like to turn the call back over to Steve. Thanks, Dev. Turning to our outlook on slide 13. Generally, near-term demand trends remain quite strong across the end markets in which we participate, and we are not seeing a material reduction in demand. beverage can demand continues to be strong, with tight supply and is historically a more resilient end market during recessionary periods. While we have seen some short-term inventory adjustments as can makers are moderating their near-term demand expectations, post-pandemic highs, the focus remains on the ongoing low to mid-single-digit demand growth, driven by the secular change in demand for infinitely recyclable aluminum packaging and supports our investment in new capacity, including at Bay Minette. In automotive, the mid to long-term outlook remains favorable, supported by light weighting for fuel efficiency, performance, and electric vehicle range, along with high levels of pent-up vehicle demand and low dealer inventory. Semiconductor shortages impacting the automotive industry appear to be easing, although elements of uncertainty remain due to continued supply chain disruptions. The specialties end market is a bit mixed. Demand for EV battery components and container foils remains strong, but overall, the diverse specialties market is typically more aligned with GDP and economic growth, and we are watching for signs of softness. There is still a high level of order backlog in the building and construction industry, but seasonal weakness in the rising interest rate environment is starting to have some impact on demand in these markets. Lastly, demand for premium aerospace plate and sheet from OEMs continues to improve off last year's very low levels, as OEM build rates and passenger traffic levels increase. In summary, Novelis delivered a relatively strong second quarter, mitigating cost pressures by meeting strong demand across our diverse product portfolio and leveraging pricing power to pass through some of these rising costs. Importantly, the fundamentals driving long-term demand in our core end markets remain intact, even in these uncertain times. However, macroeconomic and geopolitical risks remain elevated, and we will need to navigate a challenging couple of quarters ahead as inflationary impacts intensify and metal benefits lessen. While we are working to mitigate these challenges with operating efficiencies and commercial pass-throughs, there is a timing lag associated with pass-throughs, which will result in a near-term squeeze on adjusted EBITDA per ton. Our teams remain focused on what we can control: good operational performance, cost reduction, and free cash flow generation. We will maintain a strong balance sheet, improve liquidity levels, and be disciplined in our approach to capital investment. We are pacing capital spending and prioritizing growth investments that are aimed at meeting strong demand and that help us and our customers achieve ambitious sustainability goals. With that, we're happy to take any of your questions. Thank you. Ladies and gentlemen, if you'd like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. Once again, to register for a question, please press the one followed by the four. Our first question comes from Amit Dixit with ICICI Securities. Please proceed with your question. Hi. Good evening, everyone, and thanks for the opportunity. Just two questions from my side. The first one is on the upcoming facility in the US, the rolling mill capacity, essentially. If you can throw light on how much capacity has been contracted so far, and if you can provide a flavor on the potential spreads that we can achieve on a certain how much percentage is higher than the current spreads that you are getting from auto shipments there from? Some flavor on it would be greatly appreciated. That is my first question. Sure. On the new Greenfield facility, the initial phase one will be 600 KT of finished capacity, aimed at about two-thirds in the beverage packaging end market and about a third into the automotive end market. From a contractual standpoint, as we said in the prepared remarks, we have been able to contract at pricing levels, terms, and duration contracts that we feel very confident in meeting our mid-teens ROI return on this investment. We have not, we have not contracted everything at this point in time. We're roughly about 50%, and we expect to be fully contracted before we ultimately bring the facility up in 2025. As far as what we're seeing from a pricing standpoint, I think we've guided that our previous guidance of 525 per ton sustainable EBITDA per ton does not include further increases in pricing associated with those contracts. There is upside from where we're at today as those contracts come into play in 2025. Okay, great. That's helpful. The second question is essentially on the free cash flow. You hinted that we can be free cash flow positive in FY 2023. However, if I look at the current free cash flow, it is around $96 million negative. You have significant CapEx lined up. And given, you know, how demand is there and how, you know, the EBITDA is progressing, what kind of working capital release do we expect in rest of FY 2023? Yeah, Amit, a good question, and I understand where your concerns are coming from. Now, just to come straight to the point, we are extremely confident about being able to deliver a very healthy cash flow. As an exception, we normally don't do this, but this time, just as an exception, we are telling you that we will be well above $500 million of free cash flow in this year. I will not get to the very specific on working capital release, except to tell you that we will have a very strong release of working capital in the second half, driven by the reduction in, driven by the reduction in the metal prices, number one. Number two, that we had some inventory buildup in the first half, and that inventory buildup will normalize towards the fourth quarter, more precisely. What I'm telling you is that we will spend lower on CapEx, as I said in the prepared remarks. We'll be spending lower than $1.3 billion-$1.6 billion. We now say that we'll be spending about $900 million to $1 billion on CapEx. We will have a very healthy release of working capital, and altogether, we are actually, this time, as an exception, giving you some direction and guidance that we will be well above $500 million free cash flow for the year. Oh, great. That's very heartening. Thank you. All the best. Thank you. Thank you. Our next question comes from the line of Pinakin Parekh, with JP Morgan. Please proceed with your question. Yeah, thank you very much. I have two questions. Towards the end of your prepared remarks, you highlighted of a potential cost to this and a tough operating environment for the next two quarters. At this point of time, do you see EBITDA margins go below the $525 per ton substantially over the next two quarters? Yeah, Pinakin. First, let's make sure we set expectations the right way. We are not changing our expectation to achieve a sustainable 525+ EBITDA per ton. As we highlighted in the prepared remarks, and as you're indicating, there are some significant market headwinds that we need to overcome in the coming quarters that will bring us below the 525. Let's break it off, break it into two components. We are not seeing a problem on the top line in terms of shipments or pricing. The markets we serve are undersupplied, and we still expect approximately 3% shipment growth in fiscal 2023. There is some uncertainty in this in some of the specialty markets, mainly the North American and European BNC, with higher interest rates and just some seasonality, but we anticipate that could be largely mitigated by improving can shipments once some of the short-term destocking ends. What has changed is when we gave guidance of $525 per ton sustainable, is that there is some lower metal benefits now somewhat from further decline in in BMC, mainly the premiums in in recent months. There's also scrap supply tightness from can makers destocking and increased competition particularly in South America, where it is squeezing some of the metal benefits. We also are seeing, because of our short, the short, rolling capacity in North America, higher freight and supply chain costs, to bring metal in, from other, parts of the world to service that market. The second is that we're still seeing, as you know, rising inflation, and while some of this, I think, over the last month or so, is starting to settle, such as ocean freight and European energy, there is still other higher inflation that continues. Energy outside of Europe, in our markets, specifically Asia and Brazil, where those are regulated markets, and nothing we can do from a hedging standpoint, freight, alloys and hardeners, and labor. We have to deal with that, and I'll talk about how we can pass that on. Finally, as Dev mentioned, we are sitting on higher inventory, and that higher inventory is at a higher cost. We put that on the balance sheet because of some of the customer destocking, and that inventory carries that higher inflation and higher ocean freight cost, and that high cost of inventory will start to come out and hit our P&L in the coming quarters. Altogether, the lower metal benefits, this rise in inflation and this higher inventory cost that needs to come out, we expect in the short term, order of magnitude of about $75-$125 per ton of headwinds. EBITDA will come back to $525 per ton as more of the costs pass through to our customers, and that will begin contractually at the beginning of 2023 and continue through the first half. We also will be negotiating fair share pass-throughs for some of this unprecedented energy costs. We do believe there'll be some lessening of some of the inflation over the next couple of quarters, and further, you know, cost actions that we'll take to offset the inflationary conditions. We do see that scrap metal supplies will start to loosen back up, you know, later part of this quarter and into our fourth quarter as well. I know that's a mouthful, so if there's anything you want to dive into a little bit deeper, Dev and I are happy to get into it as well. Sure. This is very helpful. Just basically to break it down in the short term versus $525, which still remains the sustainable EBITDA guidance. In the near term, which is the next 2 quarters, you are seeing headwinds of up to $75-$100 a ton. To that extent, at least for the second half, more realistic EBITDA for then expectations, should be between $400-$450 a ton? Or you think, that there are benefits which would still allow the company, at least for the second half, to remain above $500? Yeah, Pinakin, you heard everything that Steve said. Here's the thing, what you need to be prepared for is that traditionally, the third quarter is a low quarter. Even, you know, in normal times, we have to cope with annual maintenance shutdown, activity level comes down as we approach December, even customers undergo their annual planned shutdowns and all of that. So third quarter is anyway a low quarter, so you should expect that the third quarter will see the dip in the direction, in the direction that Steve mentioned, on the lower side of the extreme. I don't think it is more... I don't think it's prudent to, you know, sort of go into a more detailed, you know, sort of outlook number than that. The range is clear. I think what you need to understand is that the next couple of quarters are a time for a bit of reset to come back, to bounce back. The reset means we feel like we will be able to start passing all the PPI-related cost pass-through, starting from the beginning of the next calendar year, running into the second quarter of the calendar year. We will have pass-throughs happening. We see some of the headwinds settling down, as you heard from Steve, freight in Asia is settling down overall. Energy prices in Europe, you know, right now, the spot prices are settled. We need to bleed out the inventories that we have produced at a higher cost, which will hit us in the coming one to two quarters. We need some reset in the external environment. We will have pass-throughs happening. We will do all the right things in terms of, you know, wherever we can contain costs. Altogether, we feel like, you know, sort of we will be bouncing back to our sustainable guidance in a couple of quarters. I think at this point in time, we cannot be more specific than that. Sure. Thank you. My second question is, you know, when the company announced the CapEx in March, there was a certain demand environment, especially in beverage cans, and we implied a margin, a return ratios implied a certain, you know, profitability in the beverage can market. Over the last two to three months, it seems, some of your customers or one particular customer has downgraded the beverage can demand expectations. There is a lot of uncertainty in terms of what is the underlying demand outlook for beverage cans and how does that impact you? You know, being where you are, what do you see happening in the beverage can market? Has the profitability expectations reduced over the last six months, or they remain where they are? Pinakin, it's a good question. There seems to be a little bit of noise in the, in, in the market associated with what's going on in beverage packaging. I can tell you, first of all, our modeling associated with our investment is spot on still, and continues to be spot on from a growth standpoint. I think what I know has happened in the marketplace, primarily in Americas, is there's been some normalization of post-COVID consumption of beverage cans that has caused a number of can makers to pull back and start to destock. This is a short-term issue in the marketplace that just needs to work itself through over this past quarter and this next quarter. does not change the fundamentals of what's driving the continued growth in beverage packaging, which is driven primarily by sustainability shifts towards aluminum as a package of choice. CRU as a reference point, is still forecasting a 4% growth in beverage canned sheet in calendar year 2022 and over the long term. We know there's some short-term destocking going on, but the trends associated with the growth in this market still stand, and we feel very comfortable about our ability to achieve our returns on our large $2.5 billion organic expansion. Thank you. This is very clear, very detailed and helpful. Thanks, Pinakin. Our next question comes from the line of Ritesh Shah with Investec. Please proceed with your question. Yeah, hi. Thanks for the opportunity. My first question is for Dev, towards the second half of the fiscal. I just wanted to hear your thoughts, place in context, one is U.S. or Europe? If they put a ban on Russian cargo or if at all, they impose tariffs on the Russian material, how does it change the scenario? Second, I think another variable, which is a moving one, is if aluminum banned the result material or put cap on tonnage, how is it that we are looking at the business under the two scenarios? I've done, like, two sub-scenarios under the each of the variables. I think that's the first question. Would love to hear your thoughts. We see virtually no impact of the factors that you mentioned. We are pretty well comfortably supplied on aluminum, on sheet ingots. We have worked over the last many months on securing alternative sources. The short answer to your question is that we do not see any headwinds or any impact from all the importation restrictions slash sanctions, potentially, that could be happening. We are extremely comfortable with our position on supplies and metal. The supplies are secured, that's great. Will the physical market premiums move up, and can it put a risk to the working capital needs? Well, I mean, you know, it will be what it will be. We don't think. I mean, in general, if you see, where the market concerns are, right now, globally, the markets seem to be more concerned about demand, overall, globally. Therefore, you know, there has been more settling down. Now, are you, now, if you are saying that could there be a flare-up? Yes, there could be a flare-up. I think that we will be able to mitigate everything fairly well. On the cash flow side, when I gave you the direction of over $500 million, I mean, we are pretty comfortable that if there are really some headwinds, we will be able to find ways to mitigate them, of the kind that you mentioned. I don't think that we will need to pull back on that guidance despite some possibilities that you have outlined. We are very comfortable. Okay. That's helpful. My second question is on energy hedges. In the prior call, we had indicated that 80% of our energy needs for FY 2023 have been hedged, and for 2024, the number was at 50%. First question over here is, out of that 80%, if one had to look at it, from a calendar value or from a consumption basis, what percentage of this 80% has already been used, utilized? That's one. Secondly, has there been any change in the number of quantum of hedges for FY 2024, which you last indicated was at 50%? Good. I will quickly address both the questions. For the year to go, our hedges are still about 80% for the remaining two quarters of the year, so we are fairly secure on that. Important point to note, that the spot prices right now have settled down very significantly. You know, the winters are mild in Europe and across the world, and gas supplies in Europe are full. I mean, they are, like, 99% full on gas storage. The situation is actually looking pretty settled for the time being, and I'm saying for the time being, but we have over 80% hedges for the year to go. For next year, we are now at a hedge level of 60% for fiscal year 2024. We feel generally good about it. We feel really good about how the spot prices have been fairly settled. I mean, it is more about mitigating all the costs that have already flown into the system, sitting on the inventories. We see some good signs of things settling down for the time being. Could they flare up again? We will wait and watch. Last question was on pension scheme. Based on the last SEC filings, what I could see is pension liability over pension assets, that number is $522 million. If I look at this in conjunction with the allocation on the asset side, equity was nearly 32%, fixed income was at around 49%. Just curious to know how this number of liability over asset has moved. That's the first question. The second question is again, in the SEC filings, the future benefit payments from now till 2032, the number is nearly $1.1 billion. How should one look at these two variables? Thank you. I mean, these are pretty steady numbers. Nothing has really changed. I mean, our pension liabilities slash retirement benefits would be in the range of around $600 million. That number is pretty steady. Our cash outflow is roughly of the order of about $100 some million, which is what you're alluding to. Nothing has changed in the situation, really. The most important thing for you to note is that if there's one benefit of the rising interest environment, it is on pension liability. If the interest environment in general stays, you know, sort of on the higher side, we will see some benefits over time of our pension liabilities, you know, sort of pulling back, settling down in the right direction. All that I want you to know is that really nothing has changed. We are pretty well under control on our pension liabilities. With rising interest rates, that's one benefit we expect to get over time. All right. Just to follow up, sir, you indicated the benefit on the liability side. I couldn't get any sense on the asset side, though you indicated the number moving from 522 to 600. Is the number that we should carry home $600 million? I think so. I think that you can keep the number in that range. You know, as I said, that as interest rates, you know, sort of, stay steadily on the higher side, I mean, it is going to be more a benefit, net, you know. You know, you earn more on your assets, your liabilities, your discounted value of the liabilities, you know, sort of goes down. I think that overall, in short, you should not be too concerned about it. I mean, that part is well under control. Sure. Thank you so much for the detailed answers, Dev Ahuja. Thank you. Thank you. Our next question comes from the line of Satyadeep Jain with Ambit Capital. Please go ahead. Hi, thank you for the opportunity. A couple of questions. One, a follow-up to one of the previous questions on the uncommitted capacity for the rolling mill that you're adding. I think previously, also a few months ago, you'd mentioned that 50% of the capacity is locked in at favorable prices. The expectation is that the remaining 50% is still open because you're expecting even higher prices on that. Our competition is also adding a lot of capacity. The can makers have choices, and they're looking themselves at near term, lower demand. What strategy would you adopt? As you look at next 2 years for contracting the remaining capacity, would you continue to wait, hoping for even better prices than what you've already got? Do you see, more competitive pressure and probably, pressure on the pricing that you've already got? That's the first question. It's a good question. I wouldn't state that we're holding for higher prices. Generally, the prices should trend in that direction. We're just making sure that we could contract 100% of that mill today if we wanted to. We're trying to make sure that as we understand the timeline of bringing that facility up, that we can meet those commitments. As we get more and more comfortable with the 2025 start of production of that facility, we will be committing more and more of that capacity into the marketplace. I would expect that would come over the next 12 months to 18 months, not waiting 2 years by any means. Now, as far as overcapacity in the North America marketplace, now, the North America marketplace is really underserved today. You know, as we've said in the past, we're not surprised that others are following Novelis to add capacity, quite frankly, the market needs that capacity. We had modeled that in as we thought about our investment, and are very comfortable with kind of where what we've seen announced in the marketplace and what will realistically come up in the time frames that we'll still be in a very good position as it relates to ability to sell at attractive margins. I think, you know, you know, Novelis, as we said in our prepared remark, has a proven track record of building and ramping these things up, and we feel good about our strategic relationships with our customers, both packaging and automotive. We think that we've got a real first mover advantage here in order to fill our mill. Basically what you're saying is, even if you get even lower pricing than what you've got right now on the contracts, you still believe that maintaining ROI on the project is still achievable? No. No, I didn't say lower prices. I said that we are not waiting for higher prices. I believe prices will continue to rise. We do not have expectation of the remaining contracts to be at lower prices by any means. Okay. Second question on the guidance. I think the last quarter with looking at $525 EBITDA, and we had challenges on the aluminum spreads and energy prices and inflation. There's a very steep reduction in guidance from that. What caught you by maybe surprise in the last three months? How incrementally was it just inflation was much worse than what was expected a few months ago? As we look at FY 2024, how do we get back to that $525? Is it just higher aluminum prices and spreads? Is it the ability to pass on the inflation with a lag, given the PPI resets happen with a lag? Can you maybe just walk us through that bridge of how do we get back to that, $525 next year? Right. To your first question, you know, we said 525, and then, you know, what caught us by surprise was your first question. Well, what caught us by surprise is what caught generally everybody by surprise. It was just the intensity of the inflation that just continued to rage on. I mean, it spread way beyond European energy into other markets. In North America, freight flared up, and overall, the intensity of it caught us, let's say, by a bit of surprise, and I don't think there's anybody who was not surprised by the intensity. That's the most talked about subject anywhere in the world, right? That is what really happened. Now, let's just go back a bit. You know, I mean, we gave a guidance of 525. You know that we delivered consistently many quarters well in excess of 550. We did not get too excited by that. We still guided to 525 because we knew that those higher aluminum prices may not sustain. We wanted to be prudent about many things, and that is why, despite so many questions that kept coming about our above 550 delivery versus, you know, sort of continuing to guide first 500 and then 525, well, I mean, we kind of did not take it for granted that some of those things will just go on. We continue to say that while the current situation is not ideal, it will play itself out for reasons that, you know, Steve elaborated earlier. You know, it is pass-throughs. It is the short-term squeeze on metal availability in some markets like Brazil, because of the change of consumption pattern post-pandemic. Some of the inflationary headwinds will settle down and some we will manage. You add all of these things together, there is absolutely no reason why we should not be getting to the FY 24. Am I going to time it exactly? No. I'm saying, we are saying the next couple of quarters, we have to kind of, take a bit of the brunt of the current headwinds, but the fundamental market is behaving extremely well, and pricing is behaving extremely well. All in all, it is a situation that will get managed over the next couple of quarters. Okay, thank you so much. Thank you. Our next question comes from the line of Prashant Tota with Emkay Global. Please proceed with your question. Good evening, everyone, thanks for the opportunity. My first question is regarding the pass-through of the current high inflation. The concern that I would like to raise over here or is that if it is normal inflation, yes, waiting for two quarters, three quarters to have a normal kind of negotiations is and ask for a rate increase is fine. This is like unprecedented, like 5,600x, 5,600% increase in the energy costs in Europe. Yes, we are just a part of it, a large part of it. Still, even in these extraordinary circumstances, don't we have the right to ask for price increases outside of the normal negotiations right now, as we speak, or concurrently, if you could throw some light? Yeah. Yeah, here's the thing. Just for clear context, we don't have to. Yes, I mean, you know, there is some negotiation involved, but remember that a lot of our contracts have a standard built-in inflation pass-through contract, clause, and those become operative at certain points of time in the year, you know, starting from, in some cases, calendar year, in some cases, fiscal year, right? You know, things happen in the normal course. Inflation comes first, and the pass-throughs come later, by definition. Now, you're saying that when there's extraordinary kind of, you know, increase, like six times, seven times energy cost, would you not be, you know, sort of really breaking that and having separate discussions? The problem is that by the time you have the discussion, things have changed. Right now, I mean, if you consider where energy prices are, gas price is at $70 spot around, electricity price is at $125. Other way around. Yeah, sorry, I misspoke. $125 and $70. This is significantly, you know, come down compared to the big flare-up that happened during the quarter. When you, when you have these discussions with customers, it becomes a bit tricky because some of it is so transitory. I think that we have to just let things play out. This energy cost will settle down. We cannot time it exactly, we believe it will settle down. A part of it will get passed through as a normal, you know, sort of contracts, pass-through clauses get involved, and some we will manage it very prudently. Again, I say the same thing that I've been saying earlier, that we think that over a couple of quarters, this will settle down, and it's a manageable situation. Just because of a month, two or three months, you know, of flare-ups, you know, you cannot just start, you know, sort of tearing apart all your agreements with customers, you know. I would just add, if we do see, significant, price increases again, you know, we do believe there's a fair share, discussion that needs to happen with our customers to pass some of that on. We've got to do it, manage it in the right way. The good news is exactly what Dev said, is some settling of the spot prices of gas and electricity, especially in Germany, where we've seen, where we have majority of our operations. Right now, over the next couple of quarters, I think we're gonna see about the same impacts that we have been seeing in the first couple quarters. Another example is freight prices. Freight prices in Asia for Asia to North America were shooting through the roof, you know? We had never seen those things, but now they are back, you know. It was a couple of months of flare up, and now they are back, and, you know, we successfully passed on a good majority of that to customers. Well in the range of 40%-50% was passed through. It's not like we don't do it. It cannot be perfect, although. We do all the right things, you know, in terms of how we manage some of these costs, but we cannot take it away entirely. Some impact has to be there. Understood. Understood, sir. I agree that this is a very, very volatile entity to get on top of this. The next question is regarding the metal price lag shift from a $113 million positive YTD FY22 to negative $21 YTD FY23. Dev, if you could talk on this a bit. Is this more to do with the sharp fall in the aluminum prices YTD, or is it more to do with the physical premiums movement? It is more of a premium number? More of a premium. Sorry, yeah. So it is really almost entirely from premiums, because we stay hedged as far as aluminum and LME is concerned, we stay hedged. It is entirely the premiums. We always tell you that, you know, metal price lag, it comes, and it goes, you know, we see big positives and big negatives. In short, it is driven by the pulling back of premiums, and in short, that is what affects us, you know? Indirectly, I mean, you know, like it will help our cash flows as both LME as well as metal prices settle, sorry, premiums settle down, it will help our cash flows in the second half, but that's the nature of metal price lag. You know, that's also the reason. I mean, the premiums we don't control, that's also the reason the adjusted EBITDA is separated out, and we take metal price lag as a separate factor, which we don't control. Understood. Understood, sir, and wish you all the best for FY 2024 and beyond. Thank you. Thank you. Thank you very much. Our next question comes from the line of Raj Gandhi with SBI Mutual Fund. Please proceed with your question. Hi, thanks a lot for the opportunity. Two questions from my side. One, you know, we, as you mentioned earlier, you know, our beverage can contracts in U.S. come up regularly for renewal. You know, we signed a contract for our expansion, 50% of the can capacity. All the renewals are happening on similar conversion margins? Any comment on that, all the subsequent renewals? Yeah. We said we've contracted for greater than 50% of the capacity of 600 KT, is what we've said so far. The guidance we've given is on the sustainable EBITDA per ton of $525, we have upside to that $525 associated with the new contract that we've signed, as they come into play closer to the time that we ramp up our Bay Minette facility. That's kind of the guidance we've given. We'll be continuing to contract the remainder of that, as I said earlier, over the next 12 to 18 months, as we get more comfortable with the exact timing of when that facility will come up. Sure. No, this was not about tying up the balance of the expansion capacity. What I was referring to is that the existing contracts that we have for our extent can business and all in U.S., are they getting repricing on similar terms to older contractors? When they get renewed, are they happening from- Yeah. Are the renewals happening at the similar conversion margin? Yeah. as the expansion was tied up? Yeah, we're not tying contracts, to be clear, specifically to Bay Minette. All contracts in the, in the U.S. market, North American market, are repricing at similar price levels as we move forward. Sure. Thanks. Just one last question. You know, let's say versus versus your margins, you know, relatively, we are seeing much more stability in the margins in terms of Ball and Crown, how they are guiding going ahead on the margins. How should we read in terms of, you know, them being your end user, how should we read through the industry structure and the pricing contracts that we have, vis-a-vis, they have with end customers in terms of? Yeah, I mean, I think, first of all, we're not all beverage cans, it's the majority of our end product is 60%. As we talked about, there's significant growth in other markets that we serve as well. Can is growing for us, and I think that speaks to our, one, our, geographical footprint, across the world and our, customer footprint as well. Obviously, they guided for some destocking. We understand that destocking, and we'll manage that over the, the past quarter and the quarter to come. It is not gonna have a material impact on our sheet business itself. What's driving the near and medium term growth of 4% for beverage packaging stays in place, and it's structurally around demand, driven by sustainability, shifts towards aluminum packaging. Sure. Thanks. Thank you. Our next question comes from the line of Sumangal Nevlani with Kotak Securities. Please proceed with your question. Yeah, good morning, and thanks for the opportunity. First question is on the auto volume. It's been quite stagnant because of all the external issues. I mean, in the medium term, given that we have, about one million ton capacity, I mean, how do we see auto volume ramping up, in the medium term? You saw the significant increase in the quarter itself. We continue to see pent-up vehicle demand after many quarters of supply chain disruptions. You know, semiconductor availability, as we said, appears to be, you know, improving a bit. I think there is still some supply chain disruptions in that industry, so it can still be a little bit bumpy. If you listen to what the OEMs are saying, they're very optimistic as it relates to vehicle builds over the next couple of quarters, driven by, you know, this pent-up demand. Certainly, with continued growth of aluminum in electric vehicles, we feel good about ability to continue to ramp. As you've noted, in that market, we do have 1,000 KT of capacity now that we've commissioned the latest Guthrie and Yeongju. We have the capacity to serve that market, and feel good about the market in the near term. Got it. Sometime in FY 2024, do we expect to reach that 24%-25% of the mix for auto volume? Yeah, no, we probably won't get to 1,000 KT in the FY 2024 by any means. We're not gonna get into 2024 guidance quite yet, just with the volatility in the marketplace. I wouldn't be assuming that we can see that level of growth in 2024. Got it. The second question is from clarification on the margin guidance. Now, we said, if I heard it correctly, $75-$150 headwind, I mean, what is the starting point? Is it from a 1Q level, or is it from a 2Q level? Number one and number two, is it more, I mean, from near term, say, three and fourth quarter, or just the third quarter? You did make a statement that fourth quarter we do expect the contract reset and the inflation being passed through. Is it just a third quarter kind of a caution? Yeah. Maybe I'll start and let Dev finish. We said $75-$125, just to be clear, as the impact of the lower metal benefits, the rise in inflation, the high cost of inventory, that will impact us in the near term. Dev will talk about, again, how that will come back in to the business over the next couple of quarters. As far as what we're coming off of, we're saying that's off of where we're at today, which is roughly the $525 guidance, right? Today, we're at $514, $525. It's kind of against where we stand today at $525. Yeah, Sumangal, you know, unfortunately, in these volatile times, getting a good read about the future is very, very challenging. I gave you the example of energy prices in Europe, on freight prices. We simply don't have a good way of reading too much into the distant future. What I would kind of advise, what we would advise to you, is that take this as certainly something that we see over the next two quarters. After that, just keep reading the news. I mean, we need to see some settling of the external environment, and if we see the settling of the external environment, that will have a direct impact on our ability to start going back to our sustainable guidance. If you see flare-ups in the external situation, energy just looming back, you know, overall, you know, sort of inflationary environment, just keeping on biting us, then, you know, we will just need to figure out the timing to get back to that more sustainable situation. The one thing that will surely happen is that a number of mitigating actions will keep happening in the meanwhile, like the pass-throughs will happen, so that will mitigate the situation to a good degree. We will see some settling down over time. You know, metal situation, today, we are seeing a bit of a squeeze in the South American market. As we mentioned earlier, we do see some settling down of that. Some of the factors are going to settle down. What I would say is that we don't control what we don't control. The external environment, we'll have to keep watching, and that is going to really decide the timing of our full comeback. Got it. That's very helpful. Thank you, and please, and all the best. Thank you. Thank you. Our next question comes from the line of Pinakin Parekh with JP Morgan. Please go ahead. Hi, good afternoon. I was just wondering if you could break down, sort of high level, the production split by region, so how much your percentage of production is based in North America and EMEA, for example, and the impact on costs and moving forward, split by region. If that's something you could provide a bit more color on, that'd be great. Well, directionally, you have that information. If you see our press release and see the volumes by region at the back, that should directionally give you how much we are selling in each region. You will see that there is some inter-region business that we also do. Asia, it has an inter-region sales, and that is directed towards North America, which is a short supplied market. I would say that you can take that as a good guide to how much we produce, because we are directionally self-sufficient across regions, except North America, which is a short supplied market, and we depend on interregional support until the time the new capacities come up. Your other question was difference in cost across regions. I would kind of not go into that. I would just ask you to look at the margins in each region, because every region has its own, has its own, you know, selling price and cost environment. I think that, I would just stay at the margins by each region. One end is South America, the other end is, you know, sort of, well, Europe, largely because of the current geopolitical situation. I would just leave it at that. Great. Thank you very much. Thank you. Our next question comes from the line of Ashish Kejriwal with Nuvama. Please proceed with your question. Hi, thanks for taking my question. My question is on your gas prices. As you mentioned that next year, we have already heard 60% of our gas is energy in Europe. Is it possible to say that, you know, whether that hedge price is higher than the current prices or how to look into that? We're not gonna get into disclosing hedge prices and prices. What we'd give you for guidance here is, since energy prices, gas and electricity have increased in Europe because of the geopolitical situation, we've been experienced $25 million per quarter or euros, dollars are the same, right now, per quarter, since the beginning of this year. We will see that again in the third quarter. At the current energy prices, based on our hedge levels and everything, current spot prices, we would expect another $25 million in the fourth quarter. If prices spike, from where the spot is today, that could be worse, but again, we feel like, based on the dynamics right now, that, you know, the spot could hold for a period of time. Unfortunately, we don't have the ability to hedge and capture that spot price, because there's a huge dislocation still in the forward prices, even a month out, to be able to hedge. The increase in the hedge position in FY 2024 currently is not, you know, something that we see as something that we can execute against at a price that makes that's attractive. That's kind of the guidance that we'd give you right now. Again, two-thirds of our production in Europe is in Germany, that's the market to really watch as well. Thanks. Sir, my second question is, as you mentioned, that there is a $75-$125 per ton headwinds in next two quarters, and at the same time, we are saying that we are negotiating with our customers to pass on few of the costs. Is it safe to assume that next two quarters we will have something like let's say like a top or $450 or below, and then we'll bounce back with the renegotiation and lower end or lower inflation next year? Is that what you meant? I mean, we won't say more than what we have said. Starting off our base guidance number of $525, we are saying that our headwinds are $75-$125. Over that number, we will not be more precise than that, because we don't control many of the things that are happening in the environment right now. I think that you should just work off that. To your point about pass-throughs, yes, we are confirming that the pass-throughs will start happening from January, it takes about two quarters for the impact of those pass-throughs to happen, but they will start happening from the next calendar year. I would say that, you know, we will focus on the controllables. We don't control everything, and hopefully, you know, as we see the next two quarters, we are able to, you know, sort of give you more clarity. It's exactly going to be equal to the clarity that we get from the external environment. Sure. sir, lastly, we still guiding 3% YY volume growth, because in first half we have hardly seen just 0.5% volume growth. Are you comfortable with that volume growth guidance also? Yes, we are comfortable with that. As Steve mentioned, clearly that, and as many of our customers in their earnings announcements have said that they are going through a phase of destocking, and we feel like that destocking phase will come to an end, and therefore. Demand conditions on the auto side are robust. On the can side, fundamentally, the market continues to be robust, so we are very confident about the 3% that we are telling you. Sure. Thank you, sir. Thank you. Our final question comes from Ritesh Kumar with Rank Capital. Please proceed. Thanks for your time. My question again is on the power prices. Assuming for some reason, if this continues for multiple quarters, is there a possibility to include power also as part of the contract going forward? Is that something that the industry would look into? Here's the thing, in a very volatile market, how do you have that discussion? I mean, energy prices have, you know, sort of flared up, you know, like 7, 8, 9 times, and then they come back to levels now which are much way below. You know, the thing is that having those standard PPI clauses in the long run is a much more sustainable way of contracting with customers, because you cannot be starting to contract each element at a time. A couple of months ago, you know, we had alloys and hardeners, we had magnesium prices, which had flared up, and the question that started to get asked is, "Well, can we have a specific contract around magnesium prices?" Magnesium prices settle down. It is energy. You know, we cannot be having contractual discussions with one element at a time. If extraordinary situations persist for a long time, absolutely. I mean, we will have those discussions with our customers. If these conditions persist over a prolonged period of time, we will have to have those discussions. We cannot be picking out elements in a volatile market and start having contractual discussions around elements which are going so much up and down, that by the time you have the discussion, things have undergone a change. Got it. What would be a comfortable prices, power prices would, where you start hedging again? We see that probably it's around $300 plus per megawatt hour in terms of forward. What would be the price where you probably feel it's worth, hedging maybe around 100, 120? What would the number be? Yeah, I mean, that's the level we'd like to see is to hedge in at somewhere in that $100, $130 for gas and power around $70. Unfortunately, it's not something that is able to be captured right now, but we'll continue to monitor. Got it. Outside of power, are there any sticky power? You did mention logistics. Are there any other sticky items, I mean, and if you could just highlight, or in terms of what proportion of the overall inflation would those other items be, if you can, just spell it out. Yeah, you know, unfortunately, inflation is hitting everything, right? Now, freight and energy become very, very visible and prominent part, just because of, you know, sort of the materiality of this cost. Honestly, there is no cost which is not getting impacted, right? I will not say more than that. All that I will tell you is that is why we have the overall inflation pass-through clauses, because they capture a significant portion of all these flared ups, you know, by way of an average, you know, and then they get passed on. You know, honestly, there's no line of cost that is not getting affected in the current environment by inflation. It's just that these costs like freight and energy, just become too visible. Got it. Thank you. Thank you. Mr. Fisher, there are no further questions at this time. I'll now turn the call back to you. Great. Thank you, operator. Thanks to everyone again for attending our call today. We're pleased with the focus and discipline of our teams are displaying in these, you know, really uncertain times. While we are continuing to look ahead to deliver long-term value to our critical partners by providing innovative aluminum solutions to our customers as the world's largest roller and recycler of aluminum. Again, appreciate the time today. Thank you, and look forward to sharing our Q3 results in February.