Days before Tata Steel came out with yet another strong financial performance, the company’s subsidiary was declared as the highest bidder to acquire Neelachal Ispat Nigam Ltd. In an interview with Sambit Saha of The Telegraph, TSL’s executive director & CFO Koushik Chatterjee defended the rationale to pay Rs 12,100 crore for the asset, disclosed the plan to finance it with 50:50 bridge loan and internal accrual, and affirmed that the acquisition would take TSL’s capacity beyond targeted 40mt by 2030. Chatterjee also shares his views on European business performance, rising coking coal prices and acquisition of an iron ore mine with an aggressive bid.
• Tata Steel has already achieved its stated target of debt reduction by $2 billion this fiscal. Do you foresee scope for further deleveraging in this quarter?
Well, important that you ask that question, As you would see from the financial results, as at the end of December our net debt to EBIDTA has come down to 1x and our financial metrics reflect investment grade rating. Having said that, we will continue to pursue further deleveraging in the future as an enterprise strategy even as we also continue to prioritise our growth plans and allocate capital for growth. Hence you would certainly see further deleveraging in the fourth quarter and beyond that.
• The impact of higher coking coal prices was felt by Tata Steel this quarter. Given that the prices are still elevated, what could be the potential impact on the company this quarter?
Yes, the international coking coal prices have risen very steeply in the last 4 months with spot hard coking coal touching $ 440 per tonne recently though our purchase cost is more index based. Coking coal prices have always been very sensitive to supply reactions with many of the large global met coal producers in Australia facing supply constraints. This has certainly had an impact on the costs and will continue to do so in the next quarter. Good thing is the steel prices are also firming up and offset some of this increase.
• Europe continues to deliver strong performances in the last three quarters. What do you expect on the 4th?
Yes, Europe has had a steady performance with very robust spreads. I believe we will continue to see performance momentum in Europe and with the renegotiation of the long term customer contracts, the benefits of the prices will be reflected in the results especially in The Netherlands.