How have your negotiations with the UK government progressed since you refused its earlier proposal in January?
We are in conversation but as of now it is status quo. But there is only a finite amount of time which is available. So, status quo is not an option. Somewhere the penny will drop. Let’s see how the conversations with the government go or else in the next 12 to 24 months, we will take whatever calls we have to take. The proposal the UK government gave is short of what we have sought. Without getting into the numbers, our request was for 50% of the capex (capital expenditure) that is required and some opex (operational expenditure) support because the energy costs in the UK are much higher than in Europe. They have given us a proposal which is less than 25% of the cost; I would say 20% of the cost.How would you review the performance in Q4?
The India business has done well. We struggled last year because of the export duty. That got lifted in November, which opened up the export market. That also coincided with China stepping back from the Covid restrictions. So, the overall sentiment in the steel industry changed and hence you saw in January-March quarter the domestic prices went up as international prices went up, and you could export all the excess inventory in the system. So that’s why the Indian numbers have been good.As far as Europe is concerned, the struggle is there for two reasons. One is you’re struggling with demand compression because of the Ukraine war, the high energy prices and its impact on downstream industry. And for us, particularly, we were preparing for a blast furnace relining in Netherlands, which has been our best performing European asset. So we were building up some stock so the working capital in Europe was also higher than what we traditionally had. So Europe numbers in Q4 are not much better than Q3. We expect Q1 to be slightly better but still in the negative terrain, because blast furnace in Netherlands is down and it will resume in August.I expect Europe to have a challenging Q1, maybe slightly better than Q4 (FY23). And we’ll start getting better from Q2.
You missed your $1-billion debt reduction target in FY23. What is your target for FY24?
As far as debt is concerned, we have reduced it by about ₹3,300 crore in Q4. We said we will reduce debt by $1 billion a year but last year was probably the first time we did not do it. But on average, we have reduced more than $1 billion each year. This year (FY24) we are back to that commitment. We believe that even with the ₹16,000 crore capex that is planned, we can still reduce our debt by a billion dollars.Last year, there were two reasons for missing the target. One is of course that we acquired Neelachal Ispat and Rohit Ferro etc, which cost us about ₹10,000-12,000 crore. And then the working capital. And then export duty, higher gas prices, and margins were compressed. So that’s the reason.
Several assets are coming up in the market. What is on your radar?
I think we don’t need to look at anything because the existing sites can take us to 40-45 million tonnes (a year). When we acquired Neelachal, at that time we were keen to have a site for long products. Now we are well set, we can take Neelachal to 10 million tonnes, Kalinganagar to 15-16 million tonnes, Bhushan to 10 million tonnes. With these three sites in Odisha alone, I can go to 35 million tonnes, and Jamshedpur is 11 million tonnes.In addition, we are building (an electric arc furnace) in Punjab, so if that model works, we can build more such plants in Gujarat or wherever scrap steel is available near industrial areas. So I think we don’t need any assets to fulfil our aspirations.
