Tata Chemicals

The global soda ash market faced a severe downturn as prices plummeted by over 25% YoY. This was primarily driven by an 8.9% surge in global capacity, largely originating from China (Inner Mongolia). While demand grew in China (18%) and India (4.5%), the rest of the world saw a 2.3% decline, creating a supply-demand imbalance that management expects to remain range-bound in the immediate term.

Tata Chemicals has fundamentally restructured its UK business by ceasing soda ash production at the Lostock facility, incurring a ₹55 crore exceptional charge^📎. The focus has shifted entirely to high-value products, evidenced by the commissioning of a 70,000-ton pharmaceutical-grade salt capacity in Middlewich. Management expects the UK unit to reach a stable, profitable profile similar to the Kenya operations by Q2 FY26.

The Indian business remains a bright spot, with the successful commissioning of 230 kT of soda ash and 140 kT of bicarbonate capacity at Mithapur. Despite lower realizations, standalone revenue reached ₹1,219 crores in Q4, supported by higher volumes. Management anticipates domestic demand to continue growing at a steady 5-6% rate over the next two years.

The US business is currently bifurcated; while domestic sales remain stable, export margins are under intense pressure. Prices in Southeast Asia have dropped to approximately $200 per ton, which management admits does not yield full cost recovery. To counter this, the company is focusing on cost efficiencies and optimizing the market mix, targeting a steady quarterly volume of 600 kilo tons.

After a peak CAPEX year in FY25 where ₹2,000 crores were spent, Tata Chemicals is significantly scaling back investment. FY26 CAPEX is guided at approximately ₹1,000 crores, with ₹550-600 crores dedicated to sustenance. This shift is intended to improve free cash flow and begin reducing the ₹1,100 crore debt increase incurred during the recent expansion phase.