Tata Chemicals – Creating Long Term Value For Stakeholders

Tata Chemical is broadly into three segments which involves Basic Chemistry Products, speciality products and crop-based product. Under Basic Chemistry products it manufactures Soda ash, Bicarb, Salt, Marine chemicals and Cement. Under Speciality products vertical, Tata Chemical manufacture Prebiotics Specialty silica. Rallis India Limited is the listed subsidiary of Tata Chemical, which is into crop-based products e.g. herbicides, insecticides, fungicides etc.

Company has operations in India as well as in overseas market. Tata Chemical produces Soda Ash (Installed Capacity: 9,17,000 MTPA), Bicarb (Installed Capacity: 1,05,500 MTPA), & Salt (Installed Capacity: 1,170,000 MTPA) at Gujarat. It produces speciality products (Prebiotic – 5,000 MTPA, & Specialty silica-10,000 MTPA) at Andhra Pradesh & Tamil Nadu. Rallis India Manufacturing locations are situated in Maharashtra & Gujarat. Besides this, Company has operations in US, UK & Kenya.

Company has strong Research & Development Facility with 225 skilled scientists in R&D domain. It has 3 innovations centres and have more than 150 patents

During the Half Year ending September 2021, Company has posted strong results

(in Crore)
EBITDA & Margin
(in Crore)
PAT & Margin
(in Crore)
Rs 3023 CroreRS 501 Crore (17%)Rs 248 Crore (8%)
↑ 16% vs. Sept20↑ 30% vs Sept20↑ 87% vs Sept20

In a statement made during Investors Call, Company is seeing strong bounce back in demand for its products in China. This includes demand arising from solar glass Industry. Demand in Southeast Asia is back, driven by traditional segments related to flat glass and detergents which have the headroom to grow further with increase in Container glass demand, presently subdued and dependent on opening of tourist economies. In North America, Company is seeing signs of strong demand.

In Europe, demand is getting back to pre-covid levels as the flat glass demand and container glass demand, have bounced back.  In India, most of the the sectors have started operating at its capacity and Company is expecting the demand to further elevate in 2022.

According to a Mint report, Tata Chemicals is in talks with Johnson Matthey for buying its Battery Material business.  Headquartered in London, Johnson Matthey is one of the global leaders in sustainable technologies. In a brief dated November, the Company has announced its decision to exit the business related to Battery Material. Demand for the battery materials business is increasing, including an increase in competition leading to commoditization of the business.  JM is focusing on the growth oriented and futuristic business e.g.  hydrogen technologies, decarbonization etc and as a result has decided to exit the battery material business.  

On the EV front, Tata Motors has received investment of Rs 7500 Crores from TPG Group, in its wholly owned EV subsidiary.  Tata Chemicals will support Tata Motors by manufacturing lithium-ion battery and related cell manufacturing technology. The role of Tata Chemical is crucial in achieving and advancing Tata Group’s overall ambition in EV segment.   

Tata Chemical is leading global chemical player. Company has strong business model and well positioned to capture the growth. Tata Group is known for its strong Corporate Governance.  Company has a strong management under the leadership of Mr R Mukundan, Managing Director and CEO of Tata Chemicals, who has spent over 26 years with Tata Group.

Chemical Industry in India has a structural advantage and has the potential to grow to US$ 300 billion over a period of  5 to 7 years  from its current size of US$ 178 billion. Government wants to make India a manufacturing hub for the World. Chemical Industry is set to benefit under the PLI Scheme. Tata chemicals is one of the strongest players in chemical space and has potential to create long term value for all its stakeholders.

Bureau Galactik Views

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