November 02, 2018

Tata Chemicals announces capex approval of Rs2,400 crore for capacity expansion at Mithapur facility

  • Consolidated net profit from continuing operations stood at Rs409 crore, up 17 percent
  • Standalone profit from continuing operations stood at Rs295 crore, up 109 percent

Tata Chemicals group (the ‘company’) today declared its consolidated financial results for the second quarter ended September 30, 2018. The company reported income from operations on consolidated basis at Rs2,961 crore, up 10 percent, and Rs1,014 crore, up 23 percent, on a standalone basis against the same quarter last year.

The company’s results by reporting segment showed income from operations for basic chemistry products at Rs2,033 crore, up by 7 percent; consumer products segment at Rs460 crore, up by 22 percent; and specialty products at Rs669 crore, up by 12 percent.

The company’s board of directors approved a capital expenditure of Rs2,400 crore, which would be deployed towards de-bottlenecking of Mithapur facility to enhance soda ash capacity by about 150,000MT and salt production by 400,000MT and to upgrade turbines for higher efficiency with a reduction in carbon footprint to support the plant's sustainability roadmap.

In line with the company’s strategy to grow their specialty business, Tata Chemicals is considering entry into the lithium-ion battery sector to develop cell chemistries to meet Indian applications. The company recently entered into an MOU with CSIR-CECRI (Central Electrochemical Research Institute), Karaikudi, to explore collaborative technology for scaling up the manufacture of cathode materials for lithium-ion cells.

Performance highlights - Q2 FY18-19

  • Basic chemistry products: Indian operations continue to register healthy volumes and margins due to improved operational efficiencies, despite higher energy prices.
  • Europe performance muted due to lower trading activity and higher fixed costs.
  • North America operations witnessed strong demand. However performance was impacted due to lower operational efficiencies and the installation of new environmental equipment, partially offset by better sales realisation.
  • Magadi performance back on track, with improved sales and higher realisation.

Consumer products

  • Consumer products business registered a growth of 22 percent over Q2FY18.
  • Tata Salt continues to maintain its leadership position, with increased volume and realisation.
  • Pulses and spices portfolios’ revenues grew by ~130 percent, largely driven by higher sales volumes over the previous year.
  • Improvement in market reach and availability remains the focus, especially in modern format stores and online retailing.

Specialty products

  • Higher sales volumes from international business supported Rallis India’s performance.
  • Nutritional solutions business registered higher sales volumes. Margins were impacted due to higher fixed costs.
  • Both facilities, nutraceuticals in Nellore and silica in Cuddalore, are on schedule for commissioning in 2019.

Consolidated net debt at Rs2,180 crore as on September 30, 2018.

Executive comment

R Mukundan, managing director, Tata Chemicals, said, "We are pleased to share a good overall performance across all three businesses. India’s basic chemistry products business continues to register a robust performance, due to operational efficiencies, a robust product mix and better realisations. On the global front, adverse impact on North American operations was partially offset by better sales realisation.

“The chemicals business has been the key pillar of the company and the announced soda ash facility expansion aims to lend further strength and sustainability to the business. With the intended expansion at Mithapur, we would substantially raise our manufacturing capacity of soda ash and edible salt by 20 percent and 40 percent respectively. This expansion will be achieved without any additional carbon generation by focusing on energy from waste heat, solar and wind.

“The consumer products business continues to be led by the growth of iodised salt, pulses and spices, coupled with the entry into new categories. Revenue from the new food platforms launched early this year registered a substantial increase. We continue to focus on improving our market reach and availability for the products.

“We are excited at the opportunities in the specialty business and are exploring a foray into lithium energy storage solutions. The market in India for these applications could be 40-60GWh by 2025, and we are in discussions with multiple technology and equipment providers.

“The nutraceuticals plant in Nellore and the silica facility in Cuddalore are on schedule. These together with the intended capacity expansion at Mithapur would bring into operation our overall investments of approximately Rs2,800 crore.

“The chemicals business, comprising of the basic chemistry and specialty products, and the consumer business continue to be the two pillars of the company. Innovation, digitisation and sustainability continue to be the key pivots in our transformation journey.”