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ANALYSIS

Tata Chemicals’ income from operations for Q2 of ’18 worth Rs 2,961 cr
Tuesday, 06 November, 2018, 08 : 00 AM [IST]
Our Bureau, New Delhi
Tata Chemicals Group recently declared its consolidated financial results for the second quarter ended September 30, 2018. The company reported income from operations on consolidated basis at Rs 2,961 crore (up 10 per cent), and Rs 1,014 crore (up 23 per cent) 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 Rs 2,033 crore (up by seven per cent); consumer products segment at Rs 460 crore (up by 22 per cent) and specialty products segment at Rs 669 crore (up by 12 per cent).

Consolidated net profit from continuing operations stood at Rs 409 crore (up 17 per cent). Standalone profit from continuing operations stood at Rs 295 crore (up 109 per cent).

The company’s board of directors approved a capital expenditure of Rs 2,400 crore, which would be deployed towards de-bottlenecking of Mithapur facility that could enhance soda ash capacity by about 1,50,000 metric tonne (MT), salt production by 4,00,000 MT and upgrade turbines for higher efficiencies and reduction in the carbon footprint to support the plant's sustainability road map.

In line with its strategy to grow their specialty business, it is considering entry into the lithium-ion battery sector to develop cell chemistries to meet Indian applications.

The company recently entered into a Memorandum of Understanding (MoU) with CSIR-Central Electrochemical Research Institute (CECRI), Karaikudi, to explore collaborative technology for scaling up of manufacturing cathode materials for lithium-ion cells.

Performance highlights - Q2 FY18-19
Basic chemistry products

  • India operations continue to register healthy volumes and margins due to improved operational efficiencies, despite higher energy prices
  • Europe’s performance muted due to lower trading activity and higher fixed costs, offset by the receipt of one time insurance income on account of a fire incident in Q1
  • North America operations witness 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 an overall growth of 22 per cent over previous year
  • Tata Salt continues to maintain its leadership position, with higher sales volume and realisation
  • Pulses and spices portfolio revenues grew by about 130 per cent, largely driven by higher sales volumes over previous year
  • Improvement of market reach and availability continue to remain our focus, including increasing availability through modern format stores and online retailing
Specialty products
  • Revenues of the specialty chemicals business was mainly driven by higher sales
  • Higher sales volumes from international business drives performance of Rallis India
  • 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
The consolidated net debt as on September 30, 2018 was Rs 2,180 crore.

R Mukundan, managing director, Tata Chemicals Ltd, 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 per cent and 40 per cent, respectively. This expansion will be achieved without any additional carbon by focussing on energy efficiency and energy from waste heat, solar and wind,” he added.

“The consumer products business continues to be led by growth of iodised salt, pulses and spices coupled with 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,” Mukundan said.

“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 40-60 GWh by 2025, and we are in discussions with multiple technology and equipment providers,” he added.

“The nutraceuticals plant in Nellore and the silica facility in Cuddalore is on schedule. These together with the intended capacity expansion at Mithapur would bring into operation our overall investments of approximately Rs 2,800 crore,” Mukundan said.

“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,” he added.
 
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