Tata Chemical – Annual Report analysis

Tata chemical is a part of US$ 113 billion Tata Group. Company enjoys a strong and established position globally in inorganic and crop protection chemicals. Management has a strong vision to be a leading sustainable Chemistry Solutions Company serving customers based on innovative, science-led differentiated products and solutions.

FY 2019-20 Operational and Strategic Highlights-:

1) Completed demerger of Consumer Products Business.

2) Acquired the balance 25% stake in Tata Chemicals (Soda Ash) Partners Holdings from The Andover Group for US$ 195 million to increase ownership to 100%.

3) Capacity expansion and debottlenecking programme in Mithapur and to focus on rapid expansion.

Financial Analysis

Consolidated revenue from operations was flat at Rs 10,357 cr in FY 2019-20. EBITDA increased by 9% to Rs 1,949 cr, while PAT was Rs 1,028 cr. Business continues to generate robust cash flows at Rs 1,780 cr which supported the Capex of Rs 1,199 cr during the year. The total cash and current investment was Rs 3,681 cr as on March 31, 2020. Net Worth per share has improved to Rs 506 per share in FY 2019-20 from Rs 484 per share in FY 2018-19. The Board of Directors has recommended a dividend of Rs 11.00 per share in current year vs. Rs 12.50 per share last year. 

Tata chemicals create value across two integrated business verticals:-

1) Basic Chemistry Business which is established business with strong foundation, client (B2B) relationships and steady growth. Company enjoys a market leading position in multiple markets globally supported by our robust manufacturing capacity, R&D capabilities and manpower and channel relationships.

2) Specialty Products Business (Nutritional Sciences, Agri Sciences, Material Sciences and Energy Sciences) which is a high-growth potential business area.

Management forward looking vision

Management believes they will continue to drive value through innovation, digitalisation and sustainability across our five business units. The Company will continue to invest in our R&D labs in Pune and Bengaluru to bring new products and offerings to our customers. The current pandemic has brought the importance of digital thrust and sustainability focus.

Company’s newest plant in Andhra Pradesh has been designed with digital thread as a central core along with sustainability embedded in its operations. We see this as our future design and operational principle. Going forward, we expect immediate market conditions to be challenging and are well positioned to emerge stronger by leveraging the rethink in supply chain strategies around the world.

Dividend Distribution Policy

The Board of Directors of the Company has adopted the Policy which endeavours for fairness, consistency and sustainability while distributing profits to the shareholders. The Company has had a consistent dividend policy that balances the objective of appropriately rewarding shareholders through dividends and to support the future growth.

CSR initiatives in the wake of Covid-19

Towards the end of the financial year, the Company took various initiatives towards financial, medical and community support in the fight against Covid-19 pandemic. This included financial support towards the relief funds of state governments, providing sodium hydrochloride, hand sanitizers, medical infrastructure, supply of dry ration, driver kit, hygiene kit, distribution of masks, awareness drives, etc.

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Advancing Digitalisation and Innovation for a Better Tomorrow

Company is pioneering cutting-edge technologies and nurturing innovation to retain our competitive edge. Better technology is helping to transform business and processes to improve efficiencies and customer experience. Innovation is accelerating product stewardship and in seeding niche product areas.

by Rahul Kamdar