Tata Chemcials to invest $100 million to expand US soda ash capacity
28 Jan 2011
Tata Chemicals Ltd (TCL), which today reported a 22-per cent fall in third-quarter net profits, plans to invest about $100 million in its US subsidiary to expand soda ash capacity by 400,000 tonnes.
The world's second-largest producer of soda ash, after Suda Alkali Industrial of China, TCL – with manufacturing facilities in India, the UK, the US and Kenya – has a global soda ash capacity of around 5.5 million tonnes per annum. About 60 per cent of this is from natural soda ash deposits at Wyoming in the US and Lake Magadi in Kenya.
TCL shares fell by more than six per cent on Friday after it reported a sharp drop in Q3 net profit, which fell to Rs165 crore (on a consolidated basis), as against Rs212 crore in Q3 of the previous fiscal. Sales were, however, up at Rs2,860 crore (as against Rs2,622 crore in the third-quarter of 2009-10). Net sales for the nine-month period (April-December) were up by 16 per cent at Rs8,402 crore, and profit after tax (after minority interest) was up by six per cent at Rs508 crore.
''We continue to see pressures of increasing input prices,'' said R. Mukundan, managing director, TCL. ''The unfortunate weather events in Australia and Indonesia will put even greater pressure on energy prices. We are working towards price increases to negate this impact. We are witnessing an encouraging demand environment for all our businesses both domestically and overseas.''
The company plans to boost domestic salt production capacity by 200,000 tonnes by the end of next fiscal at a cost of Rs.1,800 crore, he added. ''With the acquisition of British Salt we have secured the long term supply of brine and also a new business-branded consumer and industrial salt in the UK,'' added Mukundan.
Referring to the new, nutrient-based subsidy in the fertiliser sector – the commodity accounts for two-third's of the company's revenues – Mukundan said it was a positive development, though the company was awaiting the new urea policy as well as allocation of gas for doubling its urea capacity.
''Our consumer products business continues to do extremely well with branded salt maintaining a dominant 62 per cent market share and the range of Tata Swach water purifiers enjoying excellent demand,'' he added. ''We are also delighted to extend our i-Shakti. brand to pulses as a natural evolution of our 'Farm to Fork' strategy which leverages our strong association with the farmer and our established retail presence to bring quality, hygienic and affordable pulses to the Indian consumer. The business would have to address structural challenges existing in infrastructure.''
