Release Date: October 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tata Chemicals Ltd (BOM:500770, Financial) reported a 6% sequential increase in revenue, driven by higher volumes, particularly from the US operations.
- The company successfully commissioned its expanded capacities, including soda ash, salt, and bicarb, which are expected to contribute to increased throughput from Q3 onwards.
- The US operations showed robust volume growth, with both domestic and export markets performing well.
- Kenya operations experienced higher volumes and prices, contributing positively to the company's performance.
- The pharmaceutical salt plant was commissioned and is undergoing trials, indicating progress in expanding product offerings.
Negative Points
- Heavy rains in India impacted operations for almost 10 days, leading to lower Indian volumes and affecting overall performance.
- The India business faced a cost impact of approximately INR40 crores due to unstable operations and insurance claims related to weather disruptions.
- UK operations experienced lower volumes and negative spark spreads, impacting profitability.
- There was a moderation in exports to Latin America due to reduced demand in the lithium carbonate markets.
- The company is facing challenges with increased imports into India from Iran, Russia, and Turkey, which may affect domestic market dynamics.
Q & A Highlights
Q: Can you provide more details on the impact of weather disruptions in India and how it affected production and EBITDA?
A: The weather disruptions led to a production shortfall of about 30,000 tons of soda ash and 40,000 tons of salt. This instability resulted in an estimated cost impact of INR40 crores, with INR25 crores due to increased operational costs and INR15 crores related to an insurance claim. Operations have since stabilized.
Q: Could you give insights into the US contract discussions for 2025 and current export pricing?
A: While specific contract details are pending, the domestic markets are balanced. We remain optimistic about long-term trends, particularly in solar glass demand, despite some softness in lithium markets. Export pricing has bottomed out, and we expect stability moving forward.
Q: Was there any cost impact from the commissioning of expanded capacities in India?
A: The impact was minimal as the ramp-up to full utilization is ongoing. The additional capacity includes 2.25 lakh tons of soda ash and 140,000 tons of bicarb. The main cost impact will be on the interest side, with no significant changes in fixed costs.
Q: Are there any signs of capacity rationalization in soda ash in Europe or China?
A: There has been a slight pullback and addition in capacities, balancing out the market. We are monitoring the situation closely, but currently, there is no significant impact on pricing or supply.
Q: How is the China demand for soda ash, and what is the impact of government stimulus?
A: While there has been some moderation in demand, particularly in the lithium market, solar glass demand remains strong. We anticipate a balanced market as new capacities stabilize, potentially reducing import needs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
