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Informist, Monday, Feb. 3, 2025

--Tata Chem: Asian market, especially China, continues to be strong 

--Tata Chem: Will calibrate co's capex going forward to suit mkt conditions 

--Tata Chem: Will focus on salt, bicarbonate, heavy ash chemicals in UK 

--Tata Chem: Decommissioning soda ash production line in UK 

By Akshay V. Johnson and Avishek Rakshit

MUMBAI – Tata Chemicals Ltd. believes the Asian market in general and the Indian and the Chinese market in particular are well positioned to grow. The US markets are flat and Western Europe is slightly de-growing due to reduced demand for flat and container glass, the management said in the post-earnings analyst conference call.

In its India business, the company aims to increase its soda ash production by 320,000 tonnes and silica production by 60,000 tonnes. The company aims to increase its soda ash production by 400,000 tonnes in the US and 350,000 tonnes in Kenya. It plans to increase its bicarbonate production in the UK by 180,000 tonnes. The company's growth ambition has not changed, but it is calibrating the growth ambition to ensure cash flows match the capital needed for investment, the management said. 

In terms of capital expenditure completed, the company has increased its production of soda ash by 230,000 tonnes, bicarbonate production by 140,000 tonnes, and salt production by 330,000 tonnes in India. The company has increased its pharma salt production by 70,000 tonnes in the UK.

Most of the company's capital expenditure is on brownfield projects, so for every rupee contribution it earns, the fixed costs are already covered, and it flows straight into the bottom line. Earlier, the company had said it would not go forward with capital expenditures which do not give an internal rate of return of more than 20%. The company will calibrate its capital expenditure going forward to suit the market conditions, the management said.

During the quarter, the company produced 961,000 tonnes of soda ash in the December quarter, up from 842,000 tonnes in the year-ago period. It produced 73,000 tonnes of sodium bicarbonate, up from 57,000 tonnes a year ago, and 446,000 tonnes of salt, up from 412,000 tonnes a year ago. The December quarter recorded the highest production volume, the company said in a press release.

The company incurred a one-time loss of INR 700 million in the December quarter as one of the stepdown subsidiaries decided to cease its soda-ash production at the Lostock plant in Northwich, the UK, due to the plant's sustained financial under-performance. The management said it will now focus on salt, bicarbonate, and heavy ash chemicals in the UK.

Tata Chemicals plans to focus on value-added products such as pharma salt and premium grade bicarbonate for its UK operations, whereas it looks to extend its product portfolio by introducing new products to plug portfolio gaps at its Rallis operations, according to the company's investor presentation. 

The company's net debt has increased significantly due to lower earnings before interest, taxes, depreciation, and amortisation and higher working capital and capitalisation of leases. The management highlighted the fact that its long-term debt has largely remained intact, and it is mainly the working capital debt which has gone up.

The company reported a consolidated net loss of INR 530 million for the December quarter compared with a net profit of INR 1.58 billion in the year-ago quarter. The company's revenue for the December quarter was INR 35.90 billion, down 4% on year and 10% sequentially. The consolidated net loss was largely due to the one-time loss on account of the shutting up a soda-ash production plant in the UK.  End

Edited by Akul Nishant Akhoury

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