Tata Chemicals Ltd

The numbers behind the Business Standard news article Tata Chem sells urea business to Norway’s Yara for Rs. 2670 cr - The Hindu BusinessLine were analysed (Refer Excel attachmentTata Chem segmental revenues & operating results.xls (31 KB)

Urea business forms 12% of company consolidated revenues in 2015-16. Urea is the second largest component of the fertiliser business-largest being phosphatic which is also up for sale (per the Business Standard article).

Fertiliser business is the lowest margin business line of TataChem (PBIT at 3% of net revenues) against company aggregate of 10% hence future EPS CAGC must increase with this sale.

Besides, the fertiliser business is subject to regulatory policy changes/uncertainties and price controls as per attached word documentTata Chemicals-Extract from 2015-16 Annual Report.docx (24.0 KB)
I also note from another article that fertiliser subsidies to listed companies like Tatachem and Coromandel have been dropping each year.

By the way, per March 2015 data, Tatachem & Coromandel had the top two revenues and net profit share of the Indian fertiliser industry (22% & 14.5% of revenues and 33% & 16.5% of Net profits respectively).

The TataChem share has hit its 52Week & all time high of 524.70 on August 10, 2016 & gradually slipped down as benefit realisation will be gradual as percieved by market. However, company strategy will ensure value accretion in the long term as I am confident the larger phosphatic portion of fertilisers would also be eventually sold.

I invite comments on TataChems presence in the consumer segment (dals, spices etc.) and whether they can ramp up ROCE & EPS in this business line.

Disclosure: I do not have any current holdings.


Tata chemicals
CMP – 560 Mkt cap 14284 crores

Living Essentials
India’s first national brand of packaged iron fortified iodised salt. Through the Tata Sampann brand, it houses High Protein Unpolished pulses range, low oil-absorb besan made from 100% chana dal and the uniquely developed range of spices for today’s homemakers who are looking at providing wholesome food to their family without compromising on taste.
Tata Swachh water purifiers are an innovative solution for water purification to masses
The Company has developed a range of nutritional products under the brand Sustentials to provide innovative wellness food solutions.
The products manufactured under this brand include FossenceTM (fructo oligosaccharides), GossenceTM (galacto-oligosaccharides) and other polyols and oligosaccharides.

Industry Essentials
Includes products like Soda Ash and Soda Bicarbonate are vital inputs to diverse industries. These include glass, detergents, sodium silicate, textiles, food, feed, mining and chemical processing industries

Farm Essentials
Offers multiple farm inputs that are required to improve crop health and productivity. These include fertilisers, pesticides, specialty nutrients, seeds and agro-services.
The Company is also a key player in the segment of specialty fertilisers and customised fertilisers that provide balanced crop nutrition to the soil.
Tata Kisan Sansar (TKS) and Rallis Kisan Kutumb (RKK) is a network that offers services which enable farmers in creating and generating farm produce by offering information on new and improved agronomic practices and facilitating use of agricultural inputs.
Its subsidiaries Rallis India and Metahelix Life Sciences

Inorganic Chemicals – Soda Ash , Sodium Bicarbonate , Cement , Salt , Overseas Operations in Europe and other countries through different subsidiaries .

The Indian soda ash demand is expected to maintain its growth momentum of around 4-5% in the next few years.
Current Capacity – 4.3 million tonnes. Manufacturing facilities in India, UK, Kenya and USA. More than 6 % global capacity share
Over the next 4 years, a total of 0.9 million tonnes capacity is expected to be added both through debottlenecking of existing operations and entry of new player. However, the projected increase in domestic demand is expected to be more than offset any potential increase in domestic capacity. Pricing pressure is expected to continue in the medium term.
Highest margin based verticals with around 50% contribution in revenues and 70% in profits.
Growth rates of 6-8% p.a. are anticipated for the next 5 years with increasing value-addition and branding in sodium bicarbonate

Salt - The estimated current annual consumption of edible salt in India is 5.9 million tonnes. The demand for edible salt is expected to grow at a rate of around 1.5%. Of the total edible salt consumption, it is estimated that 65% of sales is in packaged form with the remainder in loose form or under local labels.
Tata Salt share in branded segment is 60% , while in overall market is 25%.
A 2% increase in share will result in 10-15% company’s growth.

Fertiliser Segment – Crop nutrients, Urea, Fertilisers
6831 crores revenue from fertilisers segment contributing 40% to sales and only 13% of profits .In it Urea business is low margin business which is decreasing the margin of fertilisers segment. It has been sold at a good price of 2670 crores

Other Agri – Rallis India The Indian crop protection industry, which has been growing at a CAGR of 8%, suffered severe reversals in recent years due to back to back droughts. The domestic industry is estimated to have registered a negative growth in FY 2015-16 compared to the previous year, with most southern states and Maharashtra severely affected. This has led to challenging business scenario with the industry carrying higher levels of inventories compared to the previous year.

Others – Pulses , Spices , Water purifiers , Nutritional solutions with revenue growth of 62% in 2nd year getting a revenue of 460 crores ,
Pulses (Dal and Bhesan) – 400 crores Revenue ,122000 outlets , 72% revenue growth , 99% revenue unbranded
Spices – Industry growing at 26% p.a. , 75% market unbranded ,
Tata Water – Sales of 4 lakh units , 20% CAGR expected

Equity is 27 crores face value is Rs 10
Promoter holding - 30.94% , FII holding - Around 20%
Q1 FY17
Net Income – 3663 crores
EBITDA – 616 crores , EBITDA Margin – 16.9%
Inorganic Chemicals – 15 % margin , 50 % share in revenues
ROE – 10 % ,ROCE -14%

Investment Thesis
As higher sales in Inorganic chemicals segment does not require much capex for incremental sales, it will improve ROE.
Also agricultural related segments include Rallis which is expected to show good performance due to good monsoon which will add to margins further improving ROCE.
Sales of urea plant will help to retire much debt at standalone level and increase bottom-line which will further improve return ratios of company.
Pulses and spices market is highly unorganised and this could help to have higher growth in future .

Some risks include :
Low promoter holding
Inorganic chemicals showing mature growth so may be not much upside
Pulses and others segment is a small segment ,thus showing higher growth on small base which is being over hyped(as it contributes only 3% to total revenues) ,this growth need to tracked closely in future.

Disc - Not invested , was looking to opportunity to learn more about it .a novice investor and recently started putting posts on Vp
Other Vp members an give their insights regarding risks and concerns in this story .



Whats the impact of this policy change on Tata Chemicals ? Comments invited.

The following two proposed changes are landmark in nature and will surely help TCL aspiration to become a leading players in pulses:

  • " elimination of the export ban and stock limits on pulses, and intensified procurement"

  • "It also wants States to be encouraged to delist pulses from their Agricultural Produce Market Committees. " Reason : It would be much easier going forward for company to plan its procurement in line with demand.

  • “Making a case for eliminating export ban on pulses and stock limits, the report suggested that limits on wholesalers should go.” Reason: Currently TCL may not be able to stock as much pulses as it wants. Impacting economies of scale. This new rule if implemented will make pulses free from govt regulation like Rice currently.

  • “The report also called for setting up a public-private-partnership institution to compete with and complement the existing institutions to procure, stock and dispose pulses.”


Some good development in Tata chemicals

  • They have sold Phosphatic fertilizer businesses. good cash flow to balance due to sale of Fertiliser businesses .
  • 22 Rs dividend ( ecpected to by paid by July end).
  • Rallis and also their overseas subsidiaries doing well.

May 2018 Investor presentation:


Disclosure : Invested and planning to add on Dips for long term.

Mutual Fund holding of Tata chemicals has shown a tremendous increase in the month of May


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Completion of acquisition of Allied Silica:

good for Tata Chem

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Hi All Respected member i am confused about the PE of company … different website showing different PE … What is the exact PE of the company

You can use the latest result from BSE site to get all details or you can use screener.


The company has an extraordinary income, hence earning looks skewed.

Some interesting links showing the transformation happening at Tata Chemicals


TATA Chemicals
Highlights of Q1 FY19 results

  • Revenues grew by 10 % on consolidated basis to 242 Cr and 15 % on standalone basis compare to last year same quarter. Mainly contribution come from sale of salt that has increased by 42,000 tons and additional revenue from pulse business.
  • Consolidated PAT from continuing operations and also including the discontinued operations both up by 24% and 16% respectively and standalone PAT up by 70 % to 109 Cr
  • Consolidated cash at the end of the quarter was Rs 4,960 Cr of which Rs 3,996 Cr is related to TCL standalone. On Standalone basis company is net debt free with net cash of INR 2,855 Cr, up from INR 2,347 Cr in March out of which 670 Cr were released for Dividend payments and DT payments.
  • Subsidy outstanding at the end of June is INR 511 Cr, that’s down from INR 859 Cr in March and INR 1 ,105 Cr in June 2017

Key Highlights

  • Completed the transfer of phosphatic fertilizer business, which includes the facility at Haldia and trading business to IRC Agrochemicals, which is part of the Indorama group, which is company exit from fertilizers is complete and the major step in company stated strategy, that is to focus on leadership position in the basic chemicals while continuing and investing to grow our consumer and specialty products, is well underway

  • Post the divestment of fertilizer business, based on the recommendations of audit committee, the board has approved a new segment reporting, which brings far more clarity. And the 3 segments are the basic chemistry products, which include the soda ash, bicarb and other basic chemicals, which has long form the backbone of the company.

  • The second segment is consumer products, which include salt, pulses, spices and branded consumer products, which is the growth business of the company, which already has a substantial revenue and profit momentum behind it and has been sequentially growing over the past few years in a very – on the back of the strong consumer market growth in India. The third segment is specialty products, which includes the agrochemicals business and the seeds business in Rallis and Metahelix. Coupled with the new investments we’re making in nutrition solutions and advanced materials, these are products which have come out of company innovation and R&D center in Pune. This R&D and innovation center in Pune also houses company food science lab, which is where most of the new products, which enter the consumer products portfolio, are being designed and developed. So these segment reflects the current strategy and the structure of the company and also clearly defines the growth drivers for the company, which are mainly in the consumer and specialty products.

  • Full Turkish capacity has now come on stream and the market still is tight on the back of a very strong global demand for soda ash and this trend is likely to continue . .

  • On the back of such a strong demand pattern and the tightness in supply situation, the energy cost increase, which this business had to incur, has been fairly passed on in a manner that company has been able to hold margins in this business at a steady pace. While operating performance in India was on par, the U.S. operation, Company had a plant shutdown in this quarter, which was part of the overall plan to hook up equipment related to improving the environment performance, which was part of a long-term plan, and that has been hooked up and the plant in U.S. is back to full production. Kenya had a minor hiccup in terms of heavy rains, which caused a bit of operational difficulties, but the plant is fully recovered post that operational difficulties in Q2. These led to some minor negatives in terms of the operating performance, but that was more or less made up by excellent performance coming in from India and U.K. Overall, the market remains tight and trend remains to be that if this global situation continues, it is going to trend towards even bigger tightness going forward, and company remain extremely positive on the margin protection in this business. This business is company cash business, so company is focused on this business in generating cash for growth, and the growth businesses are the consumer products. On the consumer business side, Tata Salt continues to deliver volume and value, and company have lot of slew products, but the 3 platforms, which company have spent time maximum on, which is salt, pulses and spices, are beginning to trend in a very positive direction. The mature part of the business, salt has trended positively. In terms of the consumer metrics, the businesses, both pulses and spices, have trended very positively, delivering on a base, which was low, over 100% growth, year-on-year growth, in terms of the volume numbers. Business overall has delivered about 33% growth in terms of revenue, and it would continue to sort of trend in a strong way moving forward. During the quarter, company also launched a new set of products, which is chutneys. And also launched several other new variants in the marketplace, which were available on Amazon and other modern trade stores. Company approach to feeding the business is primarily to launch them in e -commerce platform, moving them on to modern trade before bringing them to general trade and thus that trend has continued, and it allows to sort of pick the winners out of the product when company launch and then move the winners in the general trade over a period of time. And one would continue to see every quarter new product launches and the older products maturing and grabbing market share and moving forward. In terms of specialty products’ front, Rallis and Metahelix showed healthy performance. This segment grew 25% year -on-year. Company plans for nutrition solution and HDS facilities are on schedule.

  • Already announced during the quarter the acquisition of Allied Silica to – at INR 123 Cr, where additional investments are being made to get that plant up to speed to Tata standards before company start supplying to the customers, both in food and in the rubber space

  • Kindly help to understand that intersegment transfer between basic chemistries to salt business and is there a portion of margin related to salt which is in manufacturing part itself included in basic chemical segment? What will be the proportion which has been retained in the manufacturing site ?
    o Yes, The manufacturing margins are in the basic chemistry products, whereas beyond manufacturing the margins are all loaded in the consumer product, which was the right transfer pricing tool company have adopted.
    o The margin structures in consumer products would reflect the margin structures which exist in most consumer products . Company have chosen margins which normal companies can earn and these are independently reviewed by auditors and 2 independent valuers to arrive at what is the appropriate and market acceptable, and this is also done in a way that tax authorities will also have resonance. So it reflects what is expected in a consumer business in a normal range.

  • For how many days the US and Kenya Plant were shutdown ?
    o Company had a lost tonnage of 16000 ton in Kenya Plant and 25000 tons in US plant.
    o In US there was one production line down for an extended maintenance period.
    o Kenya Plant was not stopped ever it was running but at a lower load because of logistic issues of shipping through flooded roads and flooded rail lines, it was more an issue. Company had to slow down its rate of evacuation.

  • Why volumes were down in India Business also ?
    o In Indian business company is slowly moving to the soda ash which is marginally down and also shore up the volumes up in terms of the bicarbonate, which is marginally up. And this will be minor issues of sales and evacuation and dispatch.

  • Of total 5000 Cr of run rate of Consumer business how much contribution will come from organic growth and new product expansion ?
    o 5,000-odd Cr turnover is built largely on 3 platforms in which company have already presence in which is salt , pulses and spices.
    o In Salt there is an YOY investment of approximately 100,000 tons of additional salt being brought to market to feed what company call as opportunity markets These are the markets where company market share is not in line with national average. So there are still opportunities to grow in several parts of India where the distribution is being strengthened. So salt, the strategy is to improve the reach. So in about 4 years time, company should be reaching about 1 million tons of salt to about 1.4 million ton of salt for which the board has already approved close to INR 500 Cr of investment, which is being invested. So this is part of the growth agenda, which should account for at least 50% or more than 50% of the turnover at that point when company said it will be INR 5,000-odd Cr
    o The food, which is the non-salt food categories, 2 categories account for the balance 50%, where company is investing and co-investing in various packing centers and distribution center along with our partners. This may not fully be reflected in balance sheet because there are partners who are willing to invest for company. And this is going to be a slew of products, which are built on various platform. The first platform is the protein platform, and the vegetable protein platform has pulses. It now has organic pulses, which was launched this quarter. It has first powder, which company launched was besan, but then on top of that, company have launched mixes. The first mix which launched was khichdi mix. Then company have launched nutrimixes, which are chilla mix.
    o Very shortly launching other mixes where pulses are added like dhokla, idly, dosa all of these, where some element of pulse exist. They all are going to be part of the protein platform. And these are all products, which are designed in company innovation center. And the common characteristic of them is that they rely heavily on one form of dal or another form of dal as the ingredient. When it comes to spices, there is a second platform, which was part of completion of taste portfolio. In taste portfolio, company first launched the CTC, which is chili, turmeric and coriander in form of straits. Then with various mixes, company currently have a range of about 6 mix . And company is not present all India, because company have stayed very much focused on north, west and east, and stayed away from south in terms of penetrating spices because the spice mixes in South Indi a tend to be very different in terms of range than rest of the country. So first focus is to deliver on these 3 regions before company go to south. Company have actually taken a strategic wait for the southern market, but company will enter at some point. So broad numbers on this INR 5,000 odd Cr is colored out of these 3 ranges, 3 categories and 3 platforms. Any additional platform launch by company will only add to this number.

  • Does the intersegment revenue that’s shown there of INR 695 Cr for the full year, that basically – does that primarily represent the sales of salt from the basic chemistry segment to the consumer product segment ?
    o Yes

  • After jumping in consumer products EBIT that come compare to previous quarter is up from 50 Cr to 82 Cr this quarter so Is that driven primarily by margin improvement in the non-salt product segment?
    o It is primarily driven by fixed cost. They are not increasing substantially. So when that INR 100 Cr of additional revenue was throughput this quarter, lot of it actually translated to bottom line, that’s what reflected there.

  • So is it right to conclude that the non-salt portfolio has turned profitable for the quarter and is this sustainable going forward ?
    o No , non-salt portfolio is delivering margins, and it’s showing a disproportionate number because if you say on a INR 100 Cr additional revenue, you got INR 30 Cr bottom line broadly or maybe INR 26 Cr – INR 30 Cr bottom line and that is because the fixed costs are fixed, the entire gross margin is flowing down
    o Yes , In fact there could be some movement quarters where there could be discretionary movement of INR 5 Cr to INR 6 Cr s or INR 7 Cr, which depends on advertising spends. That’s the only number where company don’t want to guide on because that company leave on teams to deliver because that’s pretty critical. So this will be approx. numbers going forward and they want to launch blitz on Diwali so it may some in Q2 or sometime in Q3.

  • Did the 500 Cr CAPEX for salt in next 4 years will come off within the basic chemistry segment ?
    o Yes. Company CAPEX is trending so out of total 800 Cr CAPEX 500 Cr will be spend on Salt and 300 Cr will be spend on Specialty product segment , part of it rallies may end up with 2.5 Cr and 30 Cr and CAPEX of the balance number would be in Nellore Plant. which is for the Nutraceutical and the other part will be in the Cuddalore plant for the HDS .

  • What was the impact of the fall in the Turkish currency on global soda ash prices and the antidumping duty, which has been taken off in India?
    o There is hardly any impact antidumping duty may not play out as a big an event as company thought and it has not played out. The market is extremely tight and prices are going to move up in rupee terms in any case because those customer s who relied on imports are really going to be paying – because rupee also has weakened so the market has a natural Hedge to the rupee-dollar movement and Turkish currency has no impact because this trade is done in dollar terms.

  • On the soda ash part company has a potential loss of around 25,000 tons in U.S. but even after adjust for that volume de-growth is there so on FY!9 will there be some positive growth in volumes in US and other geographies for soda ash ?
    o The annual numbers would be almost flat. Company don’t see any change in the US number because they are running flat out. Company annual number still remains the same there will be no impact on that . In UK there will be a volume fall but that is mainly the quantity which company have pulled back which was a traded quantity, which means company is manufacturing it. Company was buying from a third party and selling it to the customer and company pulled back from that because it was a 0 margin. So there is point chasing volumes which are at 0 margin so company took a call to move away from that trade.
    o As far as Kenya is concerned the 18,000 ton is a onetime loss. it probably may not get recovered, but for the year, they should deliver better performance than what they did in first quarter.

  • Does the current utilization level will be enough to meet the market demand or company need to have more investments in soda ash to reap the incremental demand?
    o In terms of soda company want to be measured in capital investments which are focused on consumer and specialty product and consumer of course it doesn’t need that much of a capital, but company focus is to grow these segments. On soda ash, company view is to de-bottlenecking in US. In India company have put debottlenecking plant which is subject to government approval. So company don’t want to commit various approvals. Which company need for this kind of unit. There will be investments in UK but there will be more focused on value which mean within the product range where company will move to higher value product like bicarbonate and other products, but they’re not going to be spending to increase the capacity. So there will be lot of value shifting in UK and slight volume growth in US. and some volume growth in India and that what company are thinking off and this spread over about 3 years. Company CAPEX number are close to about $50 million in U.S. and about INR 1,500 Cr in India for a spread of 3-4 years

  • Out of the new product launch in last 1.5 -2 year how many of those products are evolving to modern trade or general trend ?
    o In online stores e-commerce which company can very quickly go where there is whole product range , which is stabilizing in the market so there is pulses, the mixes as well as the range of spices available. And that is same available in the modern trade too.

  • What will be the tax rate on standalone basis ?
    o Standalone basis it is 20.5 %.

  • What is the reason for incremental revenue of 18 Cr in Q1 FY19 and incremental EBITDA of 23 Cr in Q1 FY19 ? What was the sales mix ?
    o Last year, the facility suffered a fire and it was actually 2 instances last year, which is a constraint production and this year it is decent production . It was 1 upset through the quarter as well as we also received some insurance payment of INR 1.5 Cr .
    o This year production is normal and this year run rate is a normal run rate . Last year there was some disturbances in the plant, that’s the issue.

  • Did it can assume that there is higher sales of salt this quarter for margin expansion ?
    o In UK it is majorly B2B sales where company sell to brands. In U.K. salt demand is pretty flat, because there that is very mature market.

  • Did the shutdown of the UK plant was because of thin margin ?
    o No U.K. was also used to supply to last year there was supplying what was product meant for trade, which was about 23,000 tons, which was material bought from other manufacturer and supplied to customer in U.K., which they have stopped. The traded volume have stopped not the manufacturer volume.

  • In salt business quarter-on-quarter sequentially, the revenues and the volume seems to be almost similar, but the profitability in consumer product had improved significantly So is it fair to assume that large part of this is led by improvement in the margins in this are to business are is there anyone off?
    o It’s improvement both in margin in all the 3 categories. Spice, pulses and salt.

  • How company will intend to compete with players like MDH which are already present in Spices at Amazon ?
    o Company have 3 categories which is healthy for you, good for you and fun for you category and right now company focus is on Healthy for you . In Spices company focus is to deliver spices with higher amount of essential oils. Whole issue for company is around retention of these active ingredients. So turmeric for example, has got a higher proportion. So these are scientifically done in company lab. And it is supported by claims and in packing there are 5 packs within 1 big pack of cartoon. And it retains the freshness over a longer period of time. So the teams have worked out what i s a unique selling proposition for each one of category and which is why these products are found resonance and they will continue to gain market share and also drive growth in the market.

  • Is the whole increase in revenue and margin is driven by salt only ?
    o It is related to all 3 categories in which salt has the highest share of revenue.
    o There is some margin improvement in n pulses and spices and also in volume picks so margin also picks.

  • What was company missing from last 5 years that led to profit in this quarter in consumer segment and does consumer business excluding salt could be profitable?
    o Firstly the last 5 years is a missed number. Spices have obviously second year of operation in 3. Last year it was a very small number This year is slightly better number in terms of margin. But in pulses last year company have to reconfigure entire supply chain based on the learning from market where there are controls in terms of movement of prices. So that supply chain has been reconfigured and has worked very well in terms of high levels of fluctuation, delivering steady margin So company had done that bit which is the part of learning process. And some amount of element of deep talking, some amount of slowness in the market, which came through disturbances, which were, let’s a policy lead, those have not been even this year.

  • What are the likely margins for our foreign operations that is U.S., U.K. and Africa?
    o U.S. operation is very profitable and U.K. and the planet, margins are what company have guided was EBITDA of INR 25 Cr and $10 million for Magadi. And about $100 million for U.S. and that will remain steady . Now the impact of energy cost has been fully being factored in now and it’s translated into market price and the margin has been more or less protected.
    o In terms of EBITDA margins , it is broadly between, let’s say, 15% to 19% or 29%, 18% to 19% or 20% in U.S. And EBITDA margins will be closer to 8%, 9% or 10%, in US , UK and Kenya would also tend to be in the same range and U.K. tends to be slightly different in terms of its PBT margin because it’s highly that’s there is a debt in this company.

  • If the 3 segments that is basically consumer, specialty and the number get some up there is a difference of about INR 675-odd million between the So it seems like there was exceptional feel of INR 64.3 Cr in TCNA or is that basically built in basic chemistry division here?
    o No, there is no exception in U.S… In FY18 it was there
    o There was 2 things happen in the U.S. last year. One was, the change in federal tax legislation and also there was a share ramp where company changed the medical benefits. There were books disclosed in the December '16 results.

  • Does the EBIT include the 64.3.Cr of one off exceptional gain ?
    o Yes

  • On the pulses and spices business, How the ramp has been happen on quarter-quarter basis. Because company has highlighted last year first quarter was probably a low base. So the revenue has been moving sequentially here?
    o Yes, sequentially it is a growth of approximately 20%. In pulses and spices it is 250 %.


Hello All,

I am new to ValuePickr and the stock market. Can someone please help me to understand the below points.

If we take the example of TATACHEM then most of the FIIs and DIIs are bullish on this stock (Total holding 46%).

Financial Ratios (as per screener.in)

  1. BOOK VALUE - 445
  2. EPS - 106
  3. DIVIDEND (this year)- 22 per share
  4. ROE - 12.44 (decreasing)
  5. ROE 3 YEARS - 12.76
  6. ROCE - 2.08 (decreasing)
  7. ROCE 3 YEARS - 6.59
  9. PROFIT GROWTH - 118%
  11. EVEBIT - 6.48
  12. EARNING YIELD - 15%

Can someone help me to understand/analyse the reason of the vast FII/DII holding inspite of low ROE and ROCE?

> Is this because of low EVEBIT ratio or high BOOK VALUE, EPS and EARNING YIELD?


Tata Chem and Tata Global merger will create a huge FMCG

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Can anyone help me to understand the above point…

Can someone help me to understand/analyse the reason of the vast FII/DII holding inspite of low ROE and ROCE?

Is this because of low EVEBIT ratio or high BOOK VALUE, EPS and EARNING YIELD?

This some personal opinion
They now they have main agenda “Transform to Grow”
They have completed exited from fertilizer business and use that cash to reduce debt

One can say they are transforming from commodity company to FMCG company

As debt is reduced denominator of ROCE will improve and as they go into high margin business numerator of ROCE may improve in future
Now they will be reporting results in three segments
1 basic chemical (it generates cash and it will be utilised for new growth in other two segments)
2 consumer products
3 specialty products

For me personally consumer and specialty products has good potential if properly executed

Disclosure Invested so views are bias

@ashit Thanks.

I think you are right. Institutions are bullish on this stock because of furure prospects and exepected growth.

TATA Chemicals Ltd

Highlights Of Q2 FY19 and H1 FY19 Results

Segmental Performance

  • Basic Chemical
    • Revenue grew by 7 % in Q2 FY19 compare to Q2 FY18 and it could be even more it because of some one-off in international business it couldn’t .
    • TCNA performance was largely to an extent impacted by hook up which company had to do for an environment equipment, which has come into play because of the tightening air pollution norm and that hook up was to be done this quarter and company approximately loss y 50,000 tons in terms of production volume due to the equipment hook up which was as per the plan. Had it not been for the company would have been able to capitalize on even strong demand and better realizations in the region.
    • All units of company perform to the tune.
    • Magadi performed well with recovery from heavy floods which impacted the previous quarter. This trend will be continue going forward and across the region company expect the international businesses to perform better than this quarter in the second half of the year.
    • Due to trend increase it is tightening the market that allow company to pass on the energy cost increase. The energy cost increase in many accounts will be passed on by Q4 of this year, primarily because that is when most of the contracts unwind and open up. The Turkish capacity has come on stream and bulk of that capacity has been fully absorbed and the market is continuing to be tight despite that full absorption.
    • Company expect margin to move in positive direction by Q4FY19
  • Consumer Business
    • Revenue grew by 22 % in Q2 FY19 compare to Q2 FY18
    • There is higher growth in pulses and spices. Company is focused on market reach and availability.
    • Company will be adding new categories from time to time. As of now company three categories are protein and there is an increasing trend globally in terms of shift towards nonanimal protein, and company is in the right market segment with pulses as far as that element of nutrition is concerned.
  • Speciality Business
    • It is driven by the performance of Agro Chemical and the Seed business.
    • Nutrition solution plant in Nellore which is in investment phase which is on schedule for start by the Q4 of this year in that company is going to instal most of the equipment and doing a soft start by February of this year. By march the test run of plant will begin.
    • Silica plant is being upgraded to meet the environment and other safety norms of Tata Group and company expect the trial runs to begin anytime during third week or fourth week of November.
    • Company will be spending 565 Cr in expansion before the end of FY19.

Key Highlights

  • Company has approved a comprehensive plan towards re-energizing Mithapur. It is not just debottlenecking but it is reimagining and re-energizing of core facility in Mithapur and there is a capital spend of approximately $370 million, which have been cleared, About 250 Cr has been already spent. And the balance 340 $ Mn will be spending toward capacity increase in soda ash by 200,000 tons. In addition to soda ash, the salt production capacity is being enhanced by 400,000 tons. Company is investing in a Specialty Bicarbonate, which is Medicarb plant, which is pharmaceutical grade Bicarb, -it is a high grade product which company has introduced. in the market and it is seeing a very strong traction. New capacity of this high grade product would be of 35,000 MT
  • Company cement capacity is also augmented by 300,000 tons. It is a very comprehensive project to be completed in 3-4 years. The entire expansion will be with zero carbon impact Company is not going to be adding any new coal fired or oil fired boilers for this energy, which is one of the big elements of this comprehensive plan of being completely environmentally-friendly. This entire project is going to be funded largely through internal cash generation
  • In specifics about $90 million is being spent on energy and environment, about $100 million each is being spent on soda ash and salt each and about $25 million on cement, and about $15 million on Bi-carb. So, that broadly is the breakdown of $330 million which is the capital spend and will be phased on the basis of one-third, one-third & one-third spread over three years.
  • In terms of return from this capital investment it is very goo for company because it is zero carbon and it taking the company towards lower carbon intensity and also is making the site more competitive in terms of cost structure. This project would be in mid-20 IRR which will be broadly 25 % IRR.
  • Board approved entry into a new line of business in the chemistry ingredients space, which is going to be in the area of the energy transition, which India is going to see.
  • Company have been working in this space for quite a few years looking at alternate energy. Company have invested in Bio-fuel business from which company have pulled back. Company have signed to MOUs one with CSIR Lab and company is sourcing various technologies , but company plan is to support the automotive industry as it makes its transition to electric vehicle. Broadly, the theme of this investment involves between 2 to 4 GW of cell manufacturing capacity, but company will come with a specific plan moving forward in negotiations and discussions with customers.
  • Company is seeding two part of the cash towards the businesses known to us. We are seeding two broadly new businesses; one is the Nutraceuticals and other one is Specialty Material business in Cuddalore, and thirdly company will will seed the electric battery / lithium-ion battery business moving forward.


  • On consolidated basis
    • Company have cash worth 4.441 Cr compare to Debt of Rs 2,180 Cr.
  • On Standalone basis
    • Company have cash worth 3,665 Cr compare to Debt of 2,500 Cr.


  • Kindly provide clarification on CAPEX , it was 2400 Cr and historically company is spending around Rs.500-550 Cr in inorganic chemicals in the past. So, the maintenance CAPEX would be in addition to that or this would be inclusive of any other maintenance CAPEX which company had planed earlier? What is the nature of the CAPEX in Soda ash ?
    • Soda ash would be increased by 200,000.
    • Company investing in tis own unit which included integrated projects investment in environment , energy efficiency, Bi-carb capacity and other projects. So, the core soda ash itself is about $100 million of investment.
    • About 200 Cr has already spent in term of CAPEX it has already done over the past year, the balance of $340 million is spread approximately as follows: $90 million for energy and environment, $25 million for cement, $15 million investment for pharma grade bicarbonate and $100 million each for soda ash and salt. So, that is about the $330 odd investment which company is planning in terms of the additional CAPEX which would come through. Company is aware that the last capital expansion done of which company have a number is in Pakistan by ICI was done at $90 million, 150,000 ton capacity increase and company own is about 200,000 tons capacity increase. So, it is pretty much benchmarking with a like-to-like investment.
  • In overseas operations despite of capacity expansion in the US plant in Soda ash will be kind of volume decline and profitability decline in the US operations especially despite the overall market being firm and company is seeing strong volume growth. So where exactly is the challenge . When company say that bulk of its sales will get renewed in Q4 in US and India so how much of it will be on contract basis and how much is on spot basis ?
    • In US, they are annual contracts, which is on a calendar basis. As far as the UK is concerned, there are some contracts which are multiyear; it is indexed to inflation. So, it is a different structure there. In India, approximately 50% is open and balance is contracted. And in India, the contracts unwind almost every six months and barring one or two large contracts which are on annual basis. So, in India some bit of movement will happen in Q3 and and certain bit of movement further happening in Q1 of the next year.
    • The volumes are done in the half year, but it is expected to recover after that towards the end of this year. Based on that company is still looking at probably a second best production in the last five years in North America.
  • What will be the cost of environmental in Q2 ?
    • The capital investment itself was related to in the environment related capital expenditure, which was approximately $8 million.
  • When company is looking at the supply/demand more favourable . so what kind of run rate one should be doing this year and when the contracts once renegotiated will start being more beneficial as far as the margins are concerned?
    • There are two issues involved: One is the contract issue that is only recouping the energy cost increase. The real issue is operational one in US, in the sense that company believe that 50,000 tons loss meant that much of a contribution loss which flows into the bottom line has been impacted. As far as the UK and Kenya operations are concerned, Kenya operations has more or less stepped back to normalcy and UK operations is fundamentally been back to normal by Q4 FY19.
  • With respect to the Indian soda ash, company is putting in 200,000 tons capacity and GHCL is putting about 125,000 tons capacity. So does attractiveness of the business probably the spreads could be a bit of challenge as the new capacities come in because supply is now will be there, close to about 350,000 tons?
    • No , it is the global growth even if it is 4 % also needs approximately even at a low rate, at least a million ton of which at least India needs about 0.35 to 0.5 mt additional material every alternate year just to respond to the growth and part of that growth will be taken up this year by the capacity of Rohit detergent which is coming on stream, but company will be still tight in the market. India used to export almost 25% of its output which has been coming down seriously and if India has become a large importer now and that position of India being a large importer is not going to change. So that is the reason company has acquired the US entity as India becomes a larger and larger importer, company is going to bring that material more and more into India. So, part of the plan of Tata Chemicals is to not just expand in India, but also leverage its very competitive position in North America to bring it to the domestic market and that will play out as company move forward.
    • Company strategy is simple bring the world most competitive capacity to deliver to the most competitive, most attractive market. So company is working on that to deliver that. So Indian market attractiveness will not change and globally there is tightness in the market and Indian market is only reflecting the same.
  • Does the Lithium Ion is exclusive of the current CAPEX of 2400 Cr given by company ?
    • Of 2400 Cr CAPEX about 250 Cr has been spent already that CAPEX is only from Mithapur. The lithium battery project has been approved, it will be funded separately and Rs.2,400 Cr CAPEX is going to be funded entirely through company cash generation. Company will come back with plans for the lithium battery as and when company get specific project approval. Right now the Board has cleared in-principle investment in that direction.
  • Does company strategy has change from earlier toward more spending of CAPEX in FMCG ?
    • No it is same. Company have two broad pillars. Chemistry Ingredients business and Consumer Products business.
    • In Chemistry Ingredients business company have both basic chemistry products and the specialty products which would continue to grow so would the consumer products business
    • Consumer business is by their very nature do not need CAPEX, they are mostly run on OPEX Company r investments which are happening in CPB is flowing through the P&L. Those expense are on quarterly basis and they cannot be shown as a separate capital, but that is the nature of accounting.
  • On Soda Ash business, going forward like Q3 and Q4, company will have a better flow with the volumes, etc., compared to first half?
    • That is company anticipation . Company don’t have any hook ups and there is the issues in Kenya behind company so company should have a better performance and Q4 in UK company get a triad benefit wherein the energy business profit kick in only in the Q4 because that is when the UK government offers company the cash coming from the Triad business which is separately one-time which sort of happens in Q4. So, all factors are in play.
  • On capacity expansion project is it correct to interpret that at peak utilization, this project will be generating somewhere about Rs.600 Cr worth of EBIT on Rs.2,400 Cr investment and how long does company expect it to take before the peak utilization?
    • This is going to invest over three years. and capacity increases come on-stream in steps in three years. So, it is almost a straight line except for one bumpy increase in the salt business which comes on stream early. So, company expect the utilization to creep up to 100% as may be in a month or two or three months of putting in because there is enough un-serviced market in India for these products for company to occupy that space. Board will generate cash in range of 600-800 Cr ?
  • How much time it will take to commissioning the lithium ion project ? How does it fit into company business portfolio ? How the lithium strategy will work for company ?
    • Company have two broad business one is Chemistry Ingredients business which is both various ingredients which go into various other entities, various other consumers and company have got a consumer product business. This fits in perfectly well with speciality chemicals business wherein company have been making active ingredients. Company will be having partners from where company will source key elements. So, that is part of the plan. The first step in this project of course is to get confirmed orders from company customers in automotive business so company is in negotiation with them. the project will take off in tune with their plans to launch any vehicle. Company is working very closely with its customer in automotive sector.
  • On the soda ash business this quarter, besides the environmental hook up in the US, the presentation also mentions lower operational efficiency so whether there was some additional factor besides the environmental hookup? Kindly elaborate what lead to higher fixed cost in Europe and Kenya ?
    • In terms of efficiency company has to run one line while the equipment was being hooked up, so when company is at slightly lower capacity. , the inefficiencies creep in which is really what this whole element is highlighting. So, the prime driver for that is the hookup and the related expenses and cost of running at a lower run rate, nothing exceptional beyond that.
    • In Kenya company have to fix that entire series of equipment’s which were damaged and which were impacted in the short run, of course part of it company have put in the insurance claim, so it is a spend just to get company units back on stream because lot of the electrical were flooded out and damaged.
  • Would the Lithium Ion Cell manufacturing will be a big commitment for the company ?
    • It usually comes in steps. Broadly for about 1.5 GW factory, it is about $200 million investment and it can be done in steps of either 1 GW, 1.5 GW or 3 GW. For broad thumb rule it would be $200 million for 1.5 GW, that is the broad expenditure. India’s demand is estimated to be in 10-years’ time about 40 GW and company is looking at 25 % share of that 10 GW.
    • The initial phase will be between 2-4 GW.
  • On the technological end, is it very risky or is it stable state technology currently?
    • It is extremely stable. The cell manufacturing has three broad routes – LPO, LFP, as well as NMC. Company is looking at an option between LFP which is a Lithium Phosphate Ferrous option or NMC, which is the Nickel, Manganese, Cobalt option along with Lithium and within NMC there is NMC-622 or 811. Everything depend on the vehicle specifications and these are extremely stable as far as the Chinese market is concerned, Chinese are the leaders in this, the Koreans are also leaders in this, so Chinese, Korean and Japanese have a large play and company is looking at options of partnering with one of the technologies coming from one of these regions, but company is in active discussion with partners in all three countries.
  • For the end-use applications does company is mainly focus on the road transportations ?
    • Company is focused on four-wheelers and two-wheelers as of now
  • The Rs.2,400 Cr CAPEX, would the margins on incremental sales be any different from current operating margins?
    • Yes, it will be higher because there is no fixed cost involved in, so one would expect the contribution to flow through. since there is no additional energy cost because this is coming straight out of energy savings, even the contribution margin company expect t to be better than what it is today.
  • The 90 million which was pending on energy vertical, would the margins improve on existing capacity also because of that?
    • It is part of the pool. So effectively in company plan basically that 90 allow company to get almost close to nil kind of a variable cost, the energy demand for the increasing capacity
  • What are the different commissioning timelines for the different soda ash, salt ?
    • Salt, the capacity of 400,000 is coming in steps. It would come in steps of 100,000 to 1,50,000 tons so it will be in three steps and soda ash again is going to be broadly in two steps of about 70,000 and 1,30,000 broad tons. so it is going to come in steps and spread over three-and-a-half years, that is a broad range.
  • When can be the 70,000 soda ash ton facility come ?
    • In roughly 1.5-2 years.
  • What is company strategy in terms of discounting in spices portfolio as there is 50 % discount on amaxon and Big Basket kind of platform so did the margin erosion happen at company end ?
    • Company is in investment phase. Company have to induce trial. These are all part of schemes which company run with the E-commerce partners. So, many of these costs are shared with them. For them also it is bringing more customers to the platform. So, people like Amazon want to drive additional sales for their grocery through the pantry section and they have been working with company very closely y in terms of using some of products to to also drive customers through the pantry section, so they not only sell company products, but sell other products. So it is combination of company to Induce trial to get higher higher share and build awareness and build traction, at the same time it is also for the partner. So, there are varying co-investment approaches in this, but it is part of company own investment plans for the business.
  • What is the revenue from pulses and spices in Q2 FY19 ?
    • On pulses company have about 40 Cr of revenue e which is up about a third on the prior quarter
  • Whatever gain shown at EBIT level , there was an inventory loss in Q2 FY18?
    • Not Q2 FY18, in quarter ending June company is up about third in that quarter, so it has continued expansion of the product portfolios in the marketplace
  • In North America the capacity utilization was 87 % in H1 FY19 so will it similar kind of capacity utilization what company have seen in FY18 ?
    • It will tend toward full capacity utilisation.
  • Does company have taken a price increase in soda ash ?
    • Yes, there have been two price increases taken, except for the contracts most of them are affected for all other customers
  • Assuming INR depreciating and margin pressure is still there, so can company expect further price increase in October-November-December ?
    • There is in opportunity for all region toward price increase .
  • What was the reason for margin contracted in Europe business ?
    • It is a mix of sales through company Salt business in Europe in the quarter that really pulled the margin back.
  • Is there any synergy for the existing businesses of Lithium Ion or this is additions that company have to make in the Specialty portfolio?
    • Company have got a very strong understanding of Lithium because company also have very strong understanding of Sodium Ion. Focus is in the inorganic chemistry as in first column of the periodic basis, hydrogen, lithium, sodium, potash, all have some unifying approach and characters. So, this is part of the alkali businesses which company have a good understanding . Company is the suppliers to many of the lithium entities for their lithium purification business where soda ash is used and company have a very strong base in the innovation center in the lab in Pune, where company scientists are constantly working, give it the technical support.
  • With respect to this volume loss for US, is it the permanent loss or company will making up for the same going forward ?
    • No, it is just a tie in of a dry sorbent injection plant to clean up the exhaust gases. Company expect to recover some volume in the second year.
  • What is the net unearned allocated income of around Rs.158 Cr for the quarter in the consol and Rs.268 Cr for the first half?
    • Mutual Fund and Bank Interest Income.
  • In Soda ash how much has been the imports for the current nine months of this calendar year or for the six months of the fiscal, how much soda ash has moved into the country ?
    • Six months about 300,000 tons, so annual number should be anywhere about 550,000 to 600,000 tons broadly
  • Who are the main players who are competing and putting the supply here and which geographies ?
    • So, it is mainly the non-Chinese players, so it is Kenya , America , Turkey and Europe.
  • How much company has imported from US and Kenya from 6 lakh tons that has come in the country ?
    • Kenya it is about 95,000 or 100,000 tons and from US it is about 40,000 tons and US number probably should be increasing towards 100,000 tons annualized. So, from next year on, the number is going to be 100 thousands from Kenya and 100 thousands from US.
  • In domestic business from where margin pressure is coming ?
    • Margin pressure is mainly coming out of the increased coal contracts and that company is trying to claw back by moving the prices up which has already been done more or less .
  • Globally does there is any capacity decrease in any region like China what is the status there – is it that they are still undergoing capacity compression or some of the old capacities which were shut down earlier has started to come up again? From where the incremental supplies will come from and in next 12-18 months what kind of capacity utilization company is looking for ?
    • In current demand supply situation the capacities in China are undergoing rationalizations because of the government stringent environment norms and some of the plants have been asked to relocate from cities. So, it is part of their move. China also is looking move up the value chain rather than remain in some of these products which according to them are also creating environment issues.
    • The second element, certainly China is going to turn broadly into producing for its own need rather than playing in the various markets which they did in the past. So, that effectively reduces the global trade in the hands of two players: one is the North America and Turkish players who would be the large traded players will play in the market because of their very competitive natural soda ash which is produced there, and that competitive advantage will allow margins to continuously expand and fundamentally reach up to a point, beyond which it will be feasible for people to put up fresh Greenfield capacity. As of now, the margins are not adequate to put up fresh Greenfield capacities and fundamentally people would be looking at Brownfield opportunities as and when they arise. Most of the companies are pushing toward brownfield expansion. This commodity is in a situation where new capacities of synthetic plant coming up in Europe are limited. In South America company have no chance of any capacity coming on. The only place synthetic capacities could come in is in India, but that will take another five years for any new capacities announced today to come on stream. In US any fresh capacity announcement made would take at least three-and-a-half to four-years to come on stream. So, in the next three to four years, it is only going to be tightened further and further. So, tha is company reading on market. In terms of Greenfield of a million ton it is three to four years before it comes on stream
  • As many Indian manufacturers bringing up that capacities like GHCL, Rohit Surfactants. So, would not this impact company imports and overall imports of the country?
    • The country is already short and every year the country demand increases by 4% to 5%. So, at this rate this country needs close to about 150,000 tons to 200,000 tons annual basis. So, there is no material other than the additional capacities which are being put in place. The quantity of import into India is only bound to increase.
  • CAPEX relating to emission norms in India. Is it to do with the new emission norms which have been announced by Government of India on sulphur and nitrogen emission? If yes, how much are we spending on these two?
    • No this is more related to movement toward energy saving and at the same time arriving at more environment-friendly and company can do this additional energy which company needed through a new boiler but company need to go in favor of green energy which is making sure that waste heat extraction was maximum, company r turbines going towards more higher efficiency turbine, in addition to looking at various other opportunities of reducing the environment load and that effectively has given company free energy with no additional carbon.
  • Will the new CAPEX will give atleast 20 % ROE or more than that and does China and Korea are also generating such kind of returns or more than that ?
    • Company will stick to earlier guidance of 20 % ROIC. Current capital is meeting with the guidelines. As far as the new investment in battery is concerned, entire vehicle population in India is going to transition at some point to electric vehicle and in electric vehicle one-third of it cost is battery So, it is a huge investment opportunity for any company which is into chemical business, it is something for which company is extremely excited about. It is obviously new technology, there will be changes in technology and this technology is rapidly moving. So, the challenge for company more than the financial returns is going to be keeping pace with the technology and investing in technology constantly. So, it is an exciting part of the business and company don’t see this as a legacy business, this is the business of the future

Management Comments

  • Company now have in Specialty three broad businesses on which company is working on One is the area of the Nutraceuticals, the second is the area of advanced materials, and thirdly now the new area of Energy business.
  • Basic Chemical business are very y highly cash generative and highly profitable business which we will continue to invest as and when opportunity arises. Company will continue to focus on the Consumer business both in food and non-food area.

Tata Chemicals Ltd

Highlights Of Q3 FY19 and Nine month FY19 Results


  • Basic Chemistry Products
    • Revenue from India business was at Rs 746 Cr up by 10 % YOY on account of higher sales realization, partly offset by lower sales volumes by 10 Kts. Margins was at Rs 183 Cr down by 6% mainly due to higher power and fuel cost
    • Revenue from Tata Chemicals North America operations was at Rs 889 Cr up 13% YOY due to higher sales volumes. Margins were impacted due to Lower production, higher plant and other fixed costs.
    • Revenue from Tata Chemicals Europe operations was at Rs 371 Cr compare to Rs 375 Cr previous year . Margins was impacted mainly due to the following reasons:
      • Higher fixed cost in soda ash and Salt business.
      • One off increase in UK Pension liability
    • Revenue from Tata Chemicals Magadi operations was at Rs 144 Cr up by 23% YOY mainly due to higher sales volumes and better sales realization. Margins were better lower fixed costs and improved operational efficiencies.
    • Moving to new contract in the year company expect internationally to see on an average about 5 $ increase for price increase per ton year to date for December 2018.
  • Consumer Business
    • Salt business maintain leadership of more than 25 % market share of overall salt industry. Volume was higher in the quarter
    • Revenue from Pulses and spices portfolio grew by 110 % over previous year
    • Continue to focus on Modern trade for visibility of pulses and besan.
    • New product launched in this quarter were Basmati Rice and Red Poha and receiving well by the customers.
    • Also company has tested the Detergent in the west Bengal Market.
  • Specialty Business
    • Revenue from overall specialty products business stood at Rs 429 Cr up by 8% YOY driven by international business and higher revenue by Metahix…
    • Nutrition business revenue continues to be in investment phase for which is dedicated toward direct manufacturing facility in Nellore and likely to install all of equipment during this year.
    • On Silica business company have upgrade the plant as per described norms to meet the customer specifications. Company also taken test plant and completed both the project in stipulated time frame in early part of the next year.
    • Update on Lithium opportunity during the quarter.
      • Signed MOU with CMAT Pune for developing and upgrading technology on Lithium ION batteries.

Key Highlights

  • Basis Chemical business is performing well driven by steady demand. Completion of expansion will successfully help to maintain leadership position.
  • Consumer business is on growth track and receiving good attraction across product and growing visibility by spending on marketing side and confident of scaling up the business in coming years. Product portfolio continues to remain strong with range of new products.
  • Speciality products are shaping up well by the investment undertaken by all three business and these business are at growth phase and high potential for future and could see significant attraction in coming years.


  • Company is introducing new products in the chemistry and also focus on electro chemical business and company got a lab in Pune ,Bangalore and Chennai.
  • Nutrition solution chemicals and agro chemical remain company focus area
  • Energy cost will come down and margin expansion will happen from next quarter.
  • Planning to launch detergent in West Bengal
  • Launching Pilot plant for back up production of spices by planting trees at own.

Tata Chemicals Q2FY20 Concall Summary

Business Updates

  • Domestic business has performed well
  • The high density silica business should start commercial production by Q4FY20
  • Pulses & spices portfolio grew at over 25% yoy
  • The merger process with Tata Global is on track
  • The company has received approval from Gujarat government for its new manufacturing facility for soda ash in Dholera
  • The full year tax rate is expected to be around 25%



Goldman Sachs

ICICI Securities

Securities & Investment Management

Nirmal Bang

Kapoor & Company

Emkay Global

Stewart & Mackertich


  • The new capacities will take 36 months to come on stream by which demand growth will balance with additional supplies
  • The automotive sector contributes just 15% of the derived demand for soda ash
  • The business of agrochemicals under Rallis is expected to double in the next 5 years
  • The first setup for battery manufacturing will be around 300-500 MW but the company has the capacity to setup around 5GW
  • The salt capacity expansion will come up in 3-4 steps with phased expansion of 100-150’000 tons
  • The energy situation is becoming more benign and a lot of improvements in margins are coming on back of improvement in energy prices
  • There will be a cost impact of a further Rs 10 crores on account of demerger related expenses by the end of the year
  • For the nutraceuticals business the asset turnover is between 1.7-2 times
  • By March 2021 close to half of the new capacity for soda ash and sodium bicarb should be on stream
  • In both pulses & spices the company will take almost 12-18 months to become self sufficient and till then company has to continue to invest
  • The group has been slowly unwinding cross holdings and that will be slowly continuing n the future as well
  • Rallis is a part of core operations of the company and will not be divested
  • The company is focusing on improving return metrices of its own core operations
  • The management has aspirations of reaching Rs 500 crore turnover in material science & nutritional science business post which they will look at doubling this