Tata Chemicals in $1 billion club
Business Standard— December 28, 2005

Tata Chemicals today said its acquisition of the UK-based Brunner Mond Group would make it a $ 1billion ( Rs 4,500 crore) company. The acquisition would also establish it as the world's third largest soda ash producer with a combined capacity of 3 million tonne. At present, the world number one and two are Brussels-based Solvay and U.S.-listed FMC Corp, respectively. Tata Chemicals on Friday announced that it agreed to buy 63.5 percent of Brunner Mond from Wayland Investments Ltd and Barclays Bank for Rs 508 crore.

The company would come out with an offer to buy the remaining shares in next month, said Prasad Menon, managing director, Tata Chemicals. The company posted net sales of Rs 3,008 last year. Menon, however, did not comment on the profitability of the firm. While Solvay which has a presence in the US and the UK, has a total capacity of 7.5 million tonne divided between the Trona and Solvay process, the US based FMC has a capacity of 5.4 million tonne in the Trona process.

In terms of geographies, Tata Chemicals already had a presence in Asia and some countries in the Middle East and now the Brunner Mond acquisition also gives it a foothold in a number of European countries like Germany and France apart from expanding the number of countries it is present in Asia and the Middle East and Africa. "This will give us flexibility in catering to markets spread across the globe from manufacturing facilities spread in three continents," said Menon, adding that this would also result in increased and deeper relationships with a large global consumers like Proctor & Gamble and St. Gobain.

"This partnership will also lead to combined sourcing synergies as well as access to large Asian markets for Pharma grade Bicarb in which Brunner Mond is the market leader," said Menon. Prior to the acquisition, Tata Chemicals had a soda ash capacity of 0.9 million tonne making it the largest soda ash player in India with a market share of about 35 per cent. Out of this, it exports 130, 000 tonne to Asia, Middle East and Far East. Brunner Mond with a capacity of 2 million tonne spread over four plants is the second largest producer of soda ash in Europe and the fifth largest globally. This marks Tata Chemicals second move overseas, the first being a 33 per cent stake in IMACID, Morocco.