TATACHEM - Tata Chemicals

📊 NSE: TATACHEM 🏢 Chemicals 📅 Last Updated: 12/14/2025 14:08

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for FY2024-25 moderated by 3% YoY due to industry-wide dips in soda ash realizations. Standalone revenue for FY2024-25 was INR 4,441 Cr, a marginal increase of 1% from INR 4,384 Cr. The Rallis (Crop Care) segment reported revenue of INR 2,663 Cr, up 1% YoY from INR 2,648 Cr, driven by growth in Crop Care despite cost volatility.

Geographic Revenue Split

The company operates across four continents. In H1FY26, India benefited from higher throughput and operational efficiencies; the US saw margin support from a favorable domestic sales mix; the UK operations stabilized following the closure of loss-making units; and Kenya saw improved performance supported by additional calciner capacity.

Profitability Margins

Standalone Net Profit Margin decreased to 11.80% in FY2024-25 from 20.44% in FY2023-24 due to higher material costs and lower price realizations. Consolidated Operating Margin for FY2024-25 fell to 5.58% from 12.11% YoY. However, H1FY26 PBILDT margins improved to 18.14% compared to 16.96% in H1FY25, driven by softer coal prices and cost rationalization.

EBITDA Margin

Consolidated EBITDA margin for FY2024-25 was 12.9%, down from 18.2% in the previous fiscal. In Q2FY26, EBITDA was INR 537 Cr, a decrease from INR 618 Cr in Q2FY25. The margin improvement of 334 basis points in Q1FY26 was primarily attributed to lower coal prices and ongoing cost rationalization efforts.

Capital Expenditure

The company utilized cash and bank balances for acquiring property, plant, and equipment, leading to a decrease in the standalone current ratio from 1.62 to 1.15. In August 2024, the company issued NCDs worth INR 1,700 Cr to fund subsidiaries for loan repayments and working capital.

Credit Rating & Borrowing

CRISIL and CARE have reaffirmed 'AA+/Stable' ratings for long-term facilities and 'A1+' for short-term programs. The company issued INR 1,700 Cr in NCDs in August 2024 for a 3-year tenor. Interest Service Coverage Ratio (Standalone) decreased to 5.68 in FY25 from 17.86 in FY24 due to new borrowing arrangements.

⚙️ Operational Drivers

Raw Materials

Key raw materials include coal (for power/steam), salt, and limestone. Standalone cost of materials consumed was INR 1,141 Cr in FY2024-25, representing approximately 25.7% of standalone revenue, an increase of 14% YoY due to higher input costs.

Import Sources

Not explicitly disclosed in available documents, though operations are spread across India, US, UK, and Kenya, suggesting localized sourcing for soda ash production (e.g., trona in the US, lake brine in Kenya).

Capacity Expansion

Kenya operations saw improved performance in H1FY26 supported by additional calciner capacity. The UK operations underwent a reconfiguration, including the cessation of certain loss-making units at the Lostock plant to improve overall efficiency.

Raw Material Costs

Standalone material costs rose 14% to INR 1,141 Cr in FY25. The company focuses on cost rationalization and maximizing volumes to mitigate the impact of volatile raw material prices and weaker soda ash pricing.

Manufacturing Efficiency

The company focuses on operational efficiencies and higher throughput, particularly in India. UK operations were restructured to ensure all units are EBITDA positive, removing the drag from inefficient cost structures.

Logistics & Distribution

Standalone freight and forwarding expenses were INR 555 Cr in FY2024-25, up 8% from INR 514 Cr, primarily due to higher sales volumes.

📈 Strategic Growth

Growth Strategy

Growth is targeted through volume maximization, customer delivery focus, and cost optimization. The company is restructuring its UK operations to reach EBITDA positivity and monitoring US export contracts to ensure they remain range-bound and margin-positive.

Products & Services

Soda Ash, Sodium Bicarbonate, Salt (Tata Salt), Cement (by-product), Crop Care products (pesticides/fungicides), and Seeds.

Brand Portfolio

Tata Chemicals, Tata Salt, Rallis India.

Market Expansion

The company maintains a global presence in India, North America, Europe, and Africa. Recent focus has been on stabilizing the UK business and expanding calciner capacity in Kenya.

Market Share & Ranking

The company is a leader in the global soda ash industry, maintaining 'Industry Leader' status in the 2024 Tata Group TBEM assessment.

Strategic Alliances

Joint ventures include Indo Maroc Phosphore S.A. (IMACID) and Tata Industries Ltd. Associates include JOil (S) Pte Ltd.

🌍 External Factors

Industry Trends

The soda ash industry is currently experiencing price volatility and weak realizations. The company is positioning itself by shifting focus to cost-efficient manufacturing and high-capacity utilization to weather the down-cycle.

Competitive Landscape

The company faces global competition in the soda ash and bicarbonate markets, with pricing heavily influenced by Chinese demand and global supply capacity.

Competitive Moat

Moat is built on being a low-cost producer in several geographies (like the US), global scale, and strong financial flexibility from being part of the Tata Group, which holds quoted equity investments of ~INR 7,400 Cr in other group companies.

Macro Economic Sensitivity

Highly sensitive to global soda ash demand-supply dynamics and coal prices. A reduction in coal prices in H1FY26 directly contributed to a 334 bps margin improvement.

Geopolitical Risks

Global market headwinds and trade-related pressures on US exports are noted as ongoing risks to margins.

⚖️ Regulatory & Governance

Industry Regulations

Operations comply with FSSAI, FSSC 22000, FAMI QS, Halal, and Kosher certifications for nutrition and food-grade products.

Environmental Compliance

The company adheres to GRI, BRSR, UNGC, CSA, and CDP standards. Sustainability data for FY2024-25 is assured by KPMG.

Taxation Policy Impact

Standalone current tax liabilities decreased 86% to INR 3 Cr in FY25, while deferred tax liabilities (net) increased 20% to INR 888 Cr due to higher capitalization of property, plant, and equipment.

⚠️ Risk Analysis

Key Uncertainties

Primary risks include soda ash price volatility, sustainability risks (environmental impact), and operational risks like cyber-attacks or equipment failure. Financial risks are managed through a five-level governance structure.

Geographic Concentration Risk

Revenue is diversified across four continents, reducing dependence on any single market, though the UK and US operations have faced specific margin pressures recently.