Q1 21/22

Aug 13, 2021

Ladies and gentlemen, good day and welcome to the Tata Steel Limited Conference Call. As a reminder, all participant lines will be in a listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. Yes. Thank you, Zain. Good morning, good afternoon and After a few opening remarks, we will mute the tele, and we will take your questions. And as of course, if you have any questions about the Tasi's GSL and Tasi Longqera, we I have to remind you that the entire discussion today will be covered in the 2nd quarter, which was on results Thanks, Amita. Good morning, good afternoon and good evening to all of you. Over the last 15 months, global economy has been recovering which has led to improvement in business and customer confidence. Our Indian markets were adversely impacted again during the last quarter due to the second wave of COVID-nineteen. And in these difficult times, we We're working to minimize the impact on our employees, communities and customers. As of 31st July, we have supplied over 68,000 And we continue to support communities across our operating locations by providing medical facilities, meals, counseling, etcetera. So over 90% of my eligible employees across locations have taken a test on dose of vaccination. As far as industry is concerned, the western market Steel prices remain robust and supply is lagging demand recovery, further supported by increasing production costs in the recent structural material crisis. I know it has actually moved up by about $50 in Q1 of course over the last few weeks it's softened again and hard coking coal prices jumped about $80 Moving to China, the Chinese government is focusing a controlled commodity price speculation. Our steel mills are facing margin pressure with higher interest costs And less likely to reduce prices because production of the 24 prices in China are much higher than it is in the rest of the world that goes from more than $100 quarter, the reach of $3.25 in August and China's China is now buying from Australia as you're aware. During the Q1, Indian food demand shrank by about 14.8% While the domestic steel prices have softened has softened a bit during July, demand is recovering again as has prices. The 3rd wave of COVID-nineteen and a potential tapering of liquidity subsidy amidst pricing inflation remains the key As far as the performance this quarter is concerned, during the quarter, Hydro Steel India's Coamshell production declined by 2.6% quarter on quarter to 4,600,000 tonnes in various key consuming sectors. Increased exports to 60% of our total sales to counter the softness in the domestic markets. We continue to focus on our objective to attain and retain market leadership in those segments by focusing on building strong customer relationships, superior distribution network rolling out brands and new product development and we've developed 24 new products in India for customers across segments including automotive and branded products and retail. Few of them are included in our investor presentation. We also focused on value executive growth to drive market share in those segments. We are expecting to add about 1,000,000 tons this year in India in 4th of steel volume through debottlenecking and capacity ramp up across various lines. Our 5,000,000 ton Kalingan, another Phase 2 expansion is focused on product mix enrichment and increase in competitive edge and cost savings. It will enhance the capability to produce high strength steel and advanced high strength steel up to 11 80 MPa, a new product for automotive, construction and other domestic distributors to customers. Our 6,000,000 ton pellet plant, 2,200,000 tonne for holding these projects are expected to be commissioned in the first half of twenty twenty two. We are making good progress on our various initiatives to be with the business. We launched the first in India's first traded FerroScrap product, In Europe, economic activities in steel consuming sectors, especially automotive, continue to recover. Our steel production in Europe remained stable And steel sales volume declined about 6% quarter on quarter, substantially,000,000 tons in June 'twenty one, while the product The spot hot rolled vinyl spread, gross spread further improved during the quarter with high steel prices, which is started translating into the profitability for the students. The European Commission has recently unveiled its HIT-four fifty five package to add DHE emissions and carbon border resistant mechanisms as it's said. Well, this is still at an early stage, our well defined carbon water adjustment mechanism should ensure a level playing field in Europe allowing capacity to 22 to 50 We find the joint scheme petition with the NCIB expansion, the merger scheme with the Tekturn Trust in 2019 and this is under consideration by the interim. I will now hand it over to Kaushik to comment on our financial performance. Thank you, Naren, and good morning, good afternoon to all of you. Hope you and your loved ones are safe and well and all of you are getting vaccinated because it's important for us globally to get vaccinated as soon as possible. Coming to our performance, continuing with our strong performance in the Q4 of last financial year, Slide the 2nd wave of the pandemic in India and disruption caused by the human suffering. Our consolidated financial performance The quarter was exceptionally strong on the back of strong underlying business performance and robust market conditions. Our consolidated revenue increased during the quarter by 7% quarter on quarter and more than doubled on a year on year basis to 56,372 crores. Begin delivered strong financial performance this quarter by achieving a new highest ever quarterly consolidated EBITDA of INR 16,185 crores, which reflects essentially a 3% margin. Facility deducted after tax stood at INR9,768 crores, which is higher than the full year PAT of the previous financial year. Our India operations, which includes the standalone Terra Steel BSL and Terra Steel Long Products generated revenues of about RMB3,244 crores supported by higher steel prices and steel operations. We achieved high SG and A EBITDA of about INR 13,046 crores this quarter. RST and standalone revenues were marginally lower INR 20,798 as a benefit of the strong steel prices were offset by lower deliveries. As explained on the delivery front, Tardis and Sandler also achieved highest ever quarterly EBITDA of 10,274 with a 12% quarter on quarter growth. The operation generated free cash flow of more than INR 4,700 crores in the Q1 of this financial year. Our key subsidiaries, Stratosteel BSL, Stratosteel Non Products Continues to deliver strong operating performance. Tarasil BSL generated an EBITDA of INR 3,118 crores, Viantra Steelong startup generated an EBITDA of INR 554 crores. Gross activities generated Free cash flow of more than INR 2,700 crores INR 4.50 crores, respectively. As part of the overall deleveraging program, Both companies have utilized the free cash flows to reduce debt. The stainless steel BSL and stainless steel on products are close to being net debt free individually. Moving to Europe, our revenues improved to GBP 1,900,000,000 during the quarter, an increase in market prices Starting to translate into the project traffic in Lussekau. Recorded EBITDA, the quarter improved by 19% quarter on quarter With higher steel prices and mix, partially offset by increased input costs as iron ore costs have started to increase. The reported effect is after a one off expense of about $15,000,000 related to sale of civil commission rights sold earlier in the Q1 of last year. With continued elevated steel prices and with strength to make our spreads, we are European spreads widen materially in the Q2, which would mean much higher profitability than past trends even though coal prices have moved up recently. We continue to prioritize on business spend on ongoing projects, especially in the expansion of 7 nanometer and strategically essential investments. On consolidated basis, we spent about INR 2,000 crores of CapEx during this quarter, which includes our accelerated CapEx for Kalingan Oil. As mentioned in my earlier call, our FY 'twenty two consolidated CapEx is expected to be about INR 10,000 to INR 12,000 crores. Despite the increase in working capital due to higher value of inventory and debtors for similar number of moving days, The company generated consolidated free cash flow of over INR3,500 during this quarter. Besides CapEx, Other key outflows in the quarter includes INR1300 sorry INR1100 crores for interest, which is now trending down due to the massive deleveraging that we have done and we would see more reduction going forward. We now have a marginal tax regime and have paid about INR758 crores We will continue to deleverage in the coming quarters and we expect to bring down the debt further by the end of the current financial year. We made debt repayments of INR5894 crores this quarter. Our gross debt has decreased to about INR 82,237 crores, but the yen rate has come down to INR53,973 crores. Our payer metrics have improved significantly with net debt to equity now remaining under 1x and the improvement in net debt to EBITDA of 1.59x, which is now on to the 2x trend line which we have talked about earlier. Our group liquidity position remains strong at INR 3,695 crores including about INR 10,262 crores I'll end my comments here and open the floor for questions. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer Participants are requested to use a handset while asking questions. The first question is from the line of Indrajit from CLSA. Please go ahead. Hi, sir. Thanks for the opportunity. Two questions from my side. First, on the working capital increase of about INR8200 crores. Can you throw some more light on that, that what is the difference there? How much will be inventory and if there is anything in carbon cost related payout for the last quarter which we have done this year? And how do we see this trending in the next 6 quarters of this year. So, Indejit, I think Large part of the inventory has happened due to the not quantity, but more on the value part of it. So we clearly have seen that in India, the inventory increase as far as The quantity concerned has been there, but most part of it is on account of PSE where the inventory value is almost INR2,000 crores, which has increased between in the 2 quarters. So I think that is an important part. So total increase is about INR 6,500 crores, Outfit, 2,000 odd crores is in Europe and 2,000, 2,500 crores is in India. The inventory doesn't have any relation to carbon. I think it's more about the holding base, which is what we Track very clearly because the physical quantity determines the efficiency, whereas the value which is somewhat out of our Control is determined by the price in the market. So I think, largely the Indian inventory, as I mentioned to you, INR 2,600 crores And INR 4,600 crores is in Europe. Just to supplement what Kaushik said, the inventory buildup in India was also partly because of the Local log counts and we expect to unwind that increase in inventory during this quarter. Sorry, sorry, sorry. So I was just saying that the in raw materials, it has actually slowed it down. In Finish goods have been higher and that's the mix between the 2. In tonnage terms, for example, In raw materials, we have been able to reduce more than 1,000,000 tonnes in our inventory and the Value effect has also come down, whereas and I'm talking consolidated. And I think the value of The price of the product is something which has resulted in the value of chasing. Sure. That is helpful. 2nd, on Europe, cost, other expenses in Europe has gone up from about INR 5,500 crores to INR 6,000 crores. So what could have driven this and how do we see this trending? And also on raw material, in last quarter numbers, what kind of iron ore and optical as we have booked in Europe. I'll I'll take the second part. I think as far as Europe is concerned, let me put it differently. From last quarter to this quarter, the coking coal prices at the purchase level will go up by about $30 and at a consumption level maybe about $30 both in Europe and in India. So that will be the quarter on quarter impact of rising coal prices. I know we'll be about So, you wanted to know what the other exchanges in total, right? Now in Europe, in the presentation you have mentioned, it has gone up from 3,500 crore to 6,000. And one last question, if I may. While we have since received interest cost reduction both in Bhushan and standalone, the same is not yet reflecting in the P and L. So when can we see that affecting P and L in response? So actually in standalone, Gushan, LP, all have gone down. In Europe, we have This year, this quarter, we paid about €500,000,000 of debt. Because we have closed, there was a one time cost on account of that. So, it is because of that we had we don't It will happen in the next few quarters because we are taking out significant tests outside of India now being back in Singapore as well as in Europe. And therefore, you will see the consolidated numbers. In fact, on a full year basis, it will be materially lower than the previous year. Thank you so much. I have more questions. I'll join you. Thank you very much. The next question is from the line of Binakan from JP Morgan. Please go ahead. Between the June quarter between the September quarter last year and June quarter of this year. HRC prices are broadly up just about $900 a tonne. And again, this Tata Steel Europe's implantation is up just over $300 a ton. Again, these are not such a strap of comparison, but there seems with the material lag. At this point of time, starting from 4Q, what percentage of the sales portfolio would reflect So, Ganakin, there are 2 key points I want to make. Our series of spot prices which get reported Our spot prices and oftentimes not much volumes are transactional at gross prices because typically a lot of the European contracts are A little bit longer tenure than the spot price. 2nd point is, it's not just a tenure, it also depends on the timing of the contract. For instance, we had a lot of contracts negotiated in November December last year and hence we had contracts from 1st January and we had lot of contracts So you will see the benefits of the higher prices in Europe flowing through from this quarter. If I were to give you a guidance, let's say this quarter, we expect to be at least €200,000,000 to €250,000,000 in Europe of improving prices compared to the previous quarter. So just to understand more Clearly, given the lag, it also means that we will continue to see upward trending ASP, but it will be under your over As the mix changes, so there are 2 impacts, right? 1 is the increase because you contracted at a higher price And 2 is, as you bill out some of the orders contracts in the newer contracts are a bigger part of the mix, you will see the mix impact. That's why we are forecasting a very strong Q2, we think report from that perspective in Europe. We are watching off its raw material prices, From a euro point of view, it's good news when the annual crisis stop. Thank you. Just 2 more questions. And secondly, on working capital, while we will see some release in India, So As far as India is concerned, we expect this quarter, we realized patients to be about INR2,000 higher than last quarter, largely because of Contracts also because export prices are better in this quarter than the last quarter because export prices This is the bottom line with a few months lag and you booked an order to be shipped after 2, 3 months. So from that point of view, you will see the better prices playing out this quarter. We will have more volumes and a bit of which goes downstream. So for these reasons, we see a INR3,000 improvement in prices This quarter really indicated to the previous quarter. What is going to be softer that has been questioned is the 3,000. It's a long sort of crisis this quarter will be lower than last quarter. But overall because we are more flat oriented and because of all that asset and longs also particularly for Parashy Long products there are auto contracts And the higher prices will begin this quarter. So overall, INR 3,000 of guidance for this quarter. As far as working capital is concerned, We expect to sell more volumes in this quarter than we did last quarter and that's because particularly in India we'll be unwinding the finish That was built up and also market conditions are stronger in countries spending more stable top words in India And export markets continue to be strong and we are expecting to export over 30% of what we produce this quarter. So that should help And if raw material prices drop, then your opportunity is opportunity to release more working capital from that point of view. Given the steep increases we are seeing in the 2nd quarter's trend, there would be pressure on working capital, but we Thank you. If you can just also answer the variations that you have asked for expenses, essentially it is in the maintenance cost In Europe, apart from rent and higher rates, which accounted for almost about INR650 crores in the gap that we are seeing The next question is I have a question. One would be a follow-up to Financi's question. The other steel companies have some of the BRLs reported higher Yes. So, Sajid, we have the copper contracts and the packaging contracts are the longer term contracts, Having the account for about 50% to 60% of our mix, right. But like I said, they are not everything starting At the same point in time, they may be starting at different points in time. And so for instance, we had a lot of water contracts due from 1st July, which is not renegotiated at the new price. So it depends on when the new contracts ticket and so those tenders may vary across suppliers. Secondly, some of our peers, If you really look at it, there is also other income in that, non steel income. So I think you should also normalize that to the Price increases, yes, we are lagging a bit, but you will see that in this quarter, we will more than make up for that. Thank you. So the other question would be some of the players that you also Taking the opportunity to sustain their growth on a single day, OdiKant has been running at 100% utilization for a while now. Do you see something like maybe a maintenance period for the Netherlands, for the UK also in this year No major work apart from the regular stuff and we did some shutdowns in April, which was to some extent the reason why the maintenance costs went up as Kaushik mentioned. Also that's also why the production was a bit lower than the previous quarter in because of those shutdowns. But no major The second, please, one more. On carbon, I understood that you think about liability I'll answer the second part and Nick will answer the first part. The surcharge is basically calculated based on the difference between the allowances that we get and the cost of the interim. And that is the true charge that we have added to our price. So far, customers have accepted it. Our peers are also following it in some sense whether we call it a surcharge or not. But the larger point is I think any carbon cost in Europe is applicable to everyone. And so in some sense, cost being added to all producers. To ensure that the producers in Europe are not disadvantaged because of the additional cost, you have the proposed So that there is a level playing field and there is no carbon leakage. So I think there are additional costs in Europe because of Parshik, can you address the CO2, more specific question on CO2 payments? Yes. So the amount that was Expected to be settled has been done in April itself and it was around GBP 227,000,000. Thank you. The next question is from the line of Soumyl Mehta from Corporate Mutual Fund. Please go ahead. Yes. Thanks, Navi. Congrats on a great year performance. I have two questions on Europe. One thing is, is it possible to give a broad data or to Yes. I think, just give me a minute. I think I answered the question differently, but more specifically, I think it's about 60,000 to 70,000 would be the What would be a 6 months and about kind of contracts? Yes. The only point is long term contract prices will not reflect spot price. It's not just for us, for anybody else. Like I said, if the market consumes 150,000,000 tons of steel in a year, Spot will be a very small percentage of it, right. So, there will always be a difference between the spot that you Keep seeing on a daily basis with the attractive prices. So I think what you should look at is the realizations that steel companies And if you see a difference between Tata Steel and Avest, what we're saying is we will bridge that gap Because there is a lag. And in terms of the flexibility of the customer, how flexible they are in terms of any So normally, It's not so much an expectation clause, but if the changes are very significant, then there's always on a Group related cases are distracting between the customer and the super act. It works both ways. When steel prices drop very Deeply also there is a conversation and similarly as we're talking now, when it increases deeply also there is a conversation which happens. So that is what is getting reflected apart from the new contracts that have been negotiated from this quarter, you'll see those prices. Sure. And the final question is when I think about the steel prices, I think last time around was I think there are a couple of things which are different, right. I mean, yes, there is a lot more efficiency today than they were saying here, Right, so that is very clear. Secondly, what is also happening now is nobody is I think capacity are feverishly as they were at this point in time. China was adding 40,000,000, 50,000,000 tons a year at this point in time, right. So I think both these suggest that this will be structurally a different kind of Few quarters, few years maybe. I'm not saying that today's price will be there for the next few years, but all I'm saying is spreads and companies outside China were determined by profitability of steel industry in China, which was very poor even in the best of times. EBITDA margins were 5%, 10%, And since they were expecting at those prices, the EBITDA margins globally in the steel industry also suffered. So that is changing. China is exporting less, mode. And steel companies are making the profits that they should be making to return on the capital that they've invested in. Your next question is from the line of Vinit Malu from Ajay Japular Sun Life Asset Management, please go ahead. Good afternoon. Thank you so much for the opportunity. I just want to understand, so you remark in between some of these questions, the spot prices do not truly representative because Very less volume gets transacted at those levels. Right, but I understand the timing difference in the total segment, etcetera. Eventually, we'll realize those numbers. Is that what it means? So basically, it means that maybe 10%, 15%, 50% of the business will be transacted at this price, right? So 100% of the business will not get transaction to the growth crisis because typically who buys somebody who's a pipe manufacturer Or somebody who is commercial grade, I mean steel buyer who is buying stock. Most Auto companies or packaging companies or anybody who buys steel of a certain So the spot prices are more reflecting shortages, people who have not covered their volumes and are So you are up, you get something close to the spot price, 50,000 tonnes or 50,000 tonnes. And in a market which consumes Maybe 12,000,000 a month, right, so 15,000,000 a month. So that's the difference between spot and transact devices. So that's why Even if you look at other steel companies, you will see that the realizations are obviously lower than the stock. They may be higher than as you are seeing That's it. We are still lower than stock, so that difference will always be there. It is true in India as well, right? I mean if you see Normally these contracted Just to clarify once again, I'm sorry to deliver this kind. I will consider They are negotiating, but obviously the spot prices is a very important part of the negotiation, right. So when you go to that customer, you will say that the spot prices So that will that's an important part of the conversation. Even with India, we've seen something similar this time around, which is our realization has sort of Why do you say profitability is lag? I would say lag versus the delta. If you look at You're talking 2 things, right? 1 is price. Price is a function of the product mix. Who is, how much in flat, So much of downstream is part of that mix, like for instance, the data stream packaging template is a separate company. So So it depends on the mix, depends on whether your flat products or long products depends on many things. So I think you should look at it at an elementary level And we have to answer a more specific question on apples to apples basis. In terms of if I were to look at profitability, I would compare Tata Steel BSL with JSW because Tata Steel BSL is not integrated. I mean, They get raw materials either from the market or from Tata Steel at parcel prices which are determined by market. So that would be a good reference of Next question is from the line of Ashish Jain from Macquarie. Please go ahead. So, Mr. Ashish Jain, your line is unmuted. You may go ahead with your question. This is on the overall volumes or this is on the volume that may have gotten renegotiated for July quarter? Overall volumes. And then secondly, in European business, can you just Pankaj? Yes. So, I mentioned the one off cost was essentially 14,000,000, which was one off. Other than that, there are regular costs, which for example, reflects the increase in the Increments of employees, which was reflected in the Q1, which will essentially flow through in the Q4 because that's the new increment of employee cost. But other than that, the one off cost is more around GBP 14,000,000 in Europe. Next question is from the line of Bhavan Chehra from Enam Holdings. Please go ahead. Yes. Good afternoon, sir. Sir, I missed out on the number of iron ore and Coca Col increase. If any, you guided for Q4. If you give quarter 1 number, it was $10 higher iron ore and $20 on cooking coal. Any quarter 2 guidance there? No, that was a quarter 2 guidance. What we said is quarter 2, we are buying OPEC coal both in Europe and India at about $30 per ton higher than No, no, I'm saying quarter 2 compared to quarter 1. Quarter 1 compared to quarter 4, I'm not remembering the numbers. I'm talking of the quarter which we reported to the quarter which we are in just now. And I know it is about $10 in Europe Basically, in Q2, the cost should be higher than Q1 by about 10 months. Sure. And sir, the profit credit, the amount which was Given which is paid in the month of April, so what is this a direct balance sheet entry, right? It's not passed via It is the part of the cash flows, yes. It is not a P and L item. It's not P and L item. Okay, thank you. The next question is from the line of Abhijit Mitra from ICICI Securities, please go ahead. Yes, thanks for taking my question. Just curious then of the volume outlook for the full year. And can you just understand the impact of mix So I think on volume guidance, we stand by what we gave at the beginning of the year. I think we said we'll lose close to 1,000,000 tons more In India compared to last year and in Europe also it was close to 1,000,000 plus is what we had guided. We stand by that. Secondly, As far as auto is concerned, we are seeing a very strong recovery, but that has no impact on our volume guidance. I don't think mix We'll play out that much because exchange export prices are even higher than domestic prices. And given those fees at which stock prices have gone up, Auto contracts, unless it's matched up much more, particularly in India, are still lower than the stock price. So Even if auto takes less, I think we'll be able to sell to other segments at higher prices. The next question is from the line of Rahul Gupta from Fidelity. So I just wanted to get a bit more in this contract price I don't know if prices have started correcting. There's a factor as well. I mean, So is there a cap, let's say, some negotiations to something like that? So what happens typically in these segments is that you need to be an approved supplier, right. So always The options for our customers are limited to the 3, 4 or 5 or 6 suppliers who are approved for supply, whether it's auto or packaging. So to that extent, it is not a free for all kinds of any it's an import scheme from anywhere kind of conversation, right. So that is why all the steel companies deal with such segments because it's less crowded than in commodity stays there anyone from anywhere in the world. Technically, within that community, obviously, you will look at getting the best out of the contract. And Today, if you look at it in Europe, there is more demand than supply in some sense of the term And there is a pull, there is an issue with the auto industry because of the semiconductor shortage, but otherwise broadly the market is strong, European steel consumption is coming back to pre pandemic levels. Import quotas are pretty much getting used up in the beginning of the quarter, But anyway, impacts only the mid and the bottom end of the segment. And so when you have a conversation with the customer, You will look at certainly like I said spot prices and tell the customer that this is a spot price and this is the option I have as a supplier If the customer is not willing to contract because that's why we can always tell the commodities, if who maybe at a point in time is willing to pay more than So I think these are the conversations that happen and as part of the negotiation, we also keep in mind long term relationships Because in a cyclical business, there will be times when you need the customer more than they need you and it was So you need to remember that it is the other way around. I just wanted to understand, so Is that so is like raw material cost or spreads are part of the discussion or that's Customers will say if I know price has dropped, then I know price has dropped. And I think that's part of any commercial discussion where you will highlight what is in your favor and they will highlight what is in their favor. And then just one more question from my side. Again, it's more What I meant is On an overall basis, this will be the increase. So there will be contracts that you may have negotiated at a higher price. There may be contracts which are continuing from the previous quarter. But the overall impact And that was a question that somebody has asked. This increases the improvement in freight and price, this is on an average of the overall volume. Next question is from the line of Abhishek Poddar from HDFC Mutual Funds. Please go ahead. So regarding the carbon emission allowances, I wanted to understand how would the required review look like in terms of allowances versus our emissions? Yes. So the Fee allowances are based on expected production and the past averages and so on. So all companies have some level of deficit or the other. And we have about 1,000,000 tonnes of Syprisect in the UK and about 2,000,000 tonnes in Netherlands. So that's already included. So that it happens over 4 quarters. So for this quarter, it is already included in the numbers that you see. You will find a similar number in the Q2 and Q3 and going on. The key question remains the price, as Richard gets stated and which you have to provide. So this is broadly the equation as far as carbon allowances Over time, these allowances will keep coming down, this is after 2025. In that time, they'll largely remain the same and the formulation remains the same. In U. K, the post Brexit, The UK emission heating scheme has also been launched. It's not so liquid as yet, but that is the basis if there is a certain correlation with the UATS team. And next to any operating company in Europe and UK would have to There is no other this is the operating part of the carbon emission regime as far as the Europe is concerned. So, So as of now, yes, but it depends on how it moves. We have also increased the surcharge In recent times, the question and the customer world is looking at it and now it's passing through. But if it's given there is a Neutralizing mechanism that we are building in, which will at certain point in time will replace the carbon border adjustment mechanism, which is just uploaded, which is not yet started and will not start very soon. But till that time, hopefully, we should be neutral on that on a net basis. Just one more question on So again, I think the reverse is true. Where we are the customer, it's not that you are buying at spot prices. So you will just like on the other end on the revenue side, you are at a disadvantage because of some of these contracts on the So we obviously will and try to buy at a discount discount And the smartness also lies in finding the right time to buy and the right volumes to buy. So when we guide this, it's not as if Every quarter it has to if I write, the quarter on quarter it will be minimized. So when you say $30 doesn't mean that The rest of the gap will get covered in the subsequent quarters. It's not necessary. So, if I just add to what Narayan mentioned, it's actually the index And we've seen in the past that procurement colleagues have been quite enough to buy at greater than the index, which is what should be fixed in the The reason I asked because 110 plus 50, it's like 150 and 60, whether the spot is 220. So the difference is close to 60.20. So, what kind of efficiency we could have in procurement? So you're saying last The quarter buying price, yes, so when we look at the, What do you call it? The consumption cost, I mean, which we report every quarter, that we'll give you. So even if you see last quarter, when you say 110, right? The I think booking coal price during this quarter was 150 or something. 150, 150, right. So There will always be a gap. Like I said, like I said on the sell side, very little is really contrast to the spot price. Spot price is often an indicator of You know the trend is testament other than the actual price at which all the buying and selling happens. So the spot is a relevant input, Sir, you don't cost it based on that or you don't track your revenue based on the support at both ends? What influences the index and that index is lagged to the spot. And if you are smart, then you can Do many things which will get better than the impact. The other thing, keeping left in mind also, there are many blends in cold. So one of the other things is to Find the right blend, make sure you're able to operate with what we call a lean blend because coal is not just one homogeneous commodity, they are different blends. And so part of the operational excellence comes from being able to manage You know, that's blend from a cost point of view, price point of view, supply point of view and some of those efficiencies come from that. It's not just about Thank you. Ladies and gentlemen, we will take our last question now, which is from the line of Rashi Chopra from Sidharu. Please go ahead. Thank you. So I just wanted to check on realization in India. You had mentioned that this quarter should be about 3,000 higher, but that's pretty much due to the And you'd also indicated that the discounting for clarity is around 20% right now. So when do you think prices start moving up? And is demand really be constrained at this point in time? Or are we talking to them that get better? So I want to make a few comments. One is apart from export mix and auto contracts, On a flat product, on a hot rolled basis, we will see better prices this quarter than last quarter. I'm saying average of this quarter versus average of last quarter. Long products as of now is seeing lower average this quarter compared to last quarter particularly for the reinforcing steel and products. Auto contracts and long products will get better this quarter than last quarter. But I think the sentiment started changing again. It has softened in June July, but if you see all this prices, by product prices have started going up, long products also It's much firmer than we could have expected during the month to month. Now as more sectors of the economy come back on stream over the next few months, we And because if you want to go stream, it is not available at any way close to domestic prices, set of imports is Thank you very much. Ladies and gentlemen, I would now like to hand the conference over to Ms. Shah for closing comments. Over to you, ma'am. Thank you very much.