Rajesh Kamat, Head - Sales and Marketing, Tata Chemicals Limited shares his perptectives on the emerging trends in the chemical industry, his company's overall plans on expansion, R&D, digitalization and sustainability amongst others. 

Industry trends/challenges in Basic Chemistry and Specialty Chemicals in 2024?

India’s economy has been remarkably resilient, weathering the storms of post-pandemic supply disruptions, the war between Russia and Ukraine, and monetary tightening across economies. [1]The International Monetary Fund (IMF) recently raised its growth projection for our GDP for this fiscal to 6.8% reveals the optimism about India’s future. [2]Chemical industry too is showcasing promising trends for 2024, and is projected to hit the $300bn-mark by 2025. The Indian market is fairly balanced, even as the European market continues to face pressure. As for the basic chemicals market, the focus will remain on sustainable and eco-friendly products and services. The area of specialty chemicals, particularly, is experiencing significant growth, notably in sectors such as pharmaceuticals and advanced materials. In the era of digital revolution, companies are lapping up every chance to innovate and expand, creating numerous opportunities for new products and ventures.

As far as challenges are concerned, global economic slowdown could continue to keep the demand for chemicals across industries (especially those dependent on exports) at a low for now. Another important factor to consider is the increasing stringency of environmental regulations. While these regulations are becoming stricter, they are essential. They present an opportunity for us to take the lead in sustainability efforts. In this scenario, industry needs to keep sustainability at the forefront and adopt sustainable practices in production, packaging and distribution – keeping our planet at the heart of our operations. 

Financial performance of Tata Chemicals in FY 2023-24 with respect to revenue and profitability? Plans for FY 2024-25?

There was a net loss of Rs 850 crore in the quarter ended March 31, and revenue from operations fell 21% due to challenges in UK operations and impairment charges. In India, we have adjusted prices for soda ash products several times since April 2023 to remain competitive and responsive to market trends. For FY24-25, demand in India remains stable and we see recovery across various markets globally. We believe that the new capacity additions of Soda Ash would get absorbed. We remain optimistic about the future with newer applications such as solar glass and lithium fueling industry growth.

How has the company performed internationally? Are you focusing on any new geography/product?

We are a global organisation, with a strong presence in Asia, Europe, North America and Africa. Tata Chemicals remains focused on the timely execution of planned expansion projects and efficient cost management across all geographies. We are committed to collaborating with our customers and other stakeholders to advance our sustainability and digitization initiatives. Our efforts will be broadly concentrated on three key areas: Decommoditization, Decarbonization, and Digitalization.

We continue to cater to customers across the globe across all product segments, including solar glass. Going ahead, we are working on increasing the extent of direct relations with our key customers across all our products.

Capex investment made in FY 2023-24 and projects where the company invested? Capex plans for FY 2024-25 and projects where the company is planning to invest? How will these investments help the company in the long run?

[3]We allocated Rs. 8,000 crore for over the next three years capex plan for various projects. We invested in delivering capacity expansion for Soda Ash, Bicarb and Salt. We will increase the soda ash capacity by another 1 million tonne (MT), taking the total global capacity to 5.3 MT. The company’s 380 kilo tonne of salt capacity addition in the UK and Mithapur in India would increase its global capacity to 2.3 MT and that in India to 1.8 MT. The company is also expanding its specialty silica capacities by five times, in a phased manner, to reach 50,000 KT to support the emerging demand of sustainable materials of tyre industry.

On our long-term investments, expanding capacities in core businesses such as soda ash, bicarb and salt will allow us to cater to growing demand and serve our customers across the world. Focusing on specialty products and potentially new ventures will diversify the portfolio and reduce dependence on traditional segments. Investments in green technologies and sustainable solutions will help improve our environmental footprint and potentially attract environmentally conscious customers. Modernisation and capacity expansion can lead to improved operational efficiency and potentially lower production costs.

On the R&D front, the company has initiated work on new sustainable chemistries in bio-based surfactants, conversion of CO2 to value-added materials, applications in Bicarbonate and Soda Ash. What's the update on these fronts?

Innovation would remain a catalyst for the industry, and Tata Chemicals has kept this at the forefront of its operations. We are actively investing in creating environment that encourages innovation. We are committed to developing sustainable world class practices across all our R&D efforts. Our carbon capture plant in UK is now operational, producing high-grade sodium bicarbonate using captured CO2. This not only reduces emissions by 10% but also creates a more circular process. We are working on new sustainable chemistries and bio-based surfactants, and also on bicarbonate for Flu Gas Desulfurisation (FGD) applications. Additionally, our Mithapur Salt Works utilises solar energy, avoiding appx 33.5 MMT of CO2 emissions annually. These initiatives demonstrate our steadfast commitment towards sustainability.

What strategy should India adopt to become a global manufacturing hub for Basic Chemistry and Specialty Chemicals?

India has the potential to be one of the world’s largest chemical manufacturing hubs. Chemical industry is the backbone of the entire manufacturing sector, and therefore, focus needs to be on boosting investments keeping sustainability as a pillar. Driving exports to bridge the trade deficit will be critical to ensure we are able to find markets for the products that we manufacture. [4]As per a recent industry report, the key segment projected to aid India widen its exports could be the specialty chemicals, whose net exports is likely to grow 10X from $2 billion in 2021 to $21 billion by 2040.

However, despite growth projections and reasonably favourable market conditions, India is likely to face tough competition from Saudi Arabia, China, Indonesia, Vietnam, Germany and South Korea. Through the Petroleum Chemicals and Petrochemical Investment Region (PCPIR) policy, India aims to get an investment of $284 billion by 2035, helping create new jobs, in the near term, and boosting exports in agrochem, dyes and pigments, and food additive chemicals, in the long term. 

The chemical industry is witnessing momentum in new areas like Hydrogen, Battery Chemicals, and Green & Sustainable Products. What is Tata Chemicals strategy on these fronts?

The chemical industry has immense potential in developing innovative solutions to enable the shift towards a sustainable and circular economy. [5]Worldwide, there has been a significant push for EVs, and India, too has framed policies encouraging EV adoption and propelling the nation’s green growth. Chemical companies like TCL, thus, have a unique advantage here as soda ash is a key component in making battery chemicals.

[6] Chemical companies across the world have capabilities to tap into the opportunities of the emerging hydrogen economy by utilising green hydrogen as a source of energy. Collaboration will play a role here as organisations can utilise their global assets and knowledge resources to kick-start green economy initiatives, and make the shift to a more sustainable portfolio in a profitable way.

 What are the company plans related to digitalization across all its operational facilities? How are you planning to leverage it?

[7]Tata Chemicals embraced technology early in the day to enhance digital capabilities to update processes leveraging industry 4.0 perspective. By leveraging the digital twin tech and prescriptive analysis system, hosted on Azure, we have notably enhanced the soda ash carbonation process. Digital dashboards have been implemented to showcase key performance indicators (KPIs), providing enhanced visibility and facilitating data-driven decision-making across multiple business domains. We have implemented e-logbooks to digitise data capture, in various projects.

Furthermore, our ongoing digital transformation efforts encompass improvements in data, logistics and security systems, infrastructure modernisation, and expansion of our logistics control tower to ensure real-time visibility across transportation modes. This initiative has paved the way for enhanced reliability and efficiency in financial systems through the adoption of robotics process automation (RPA). Additionally, we have initiated business process reengineering (BPR) for harmonization purposes and commenced the implementation of a cloud-based ERP system.

The company is also strengthening cyber security for IT and Operational Technology (OT) systems, which is a priority, ensuring they are secure and protected against cyber threats. Using historical sensor data, the AI-based system provides recommendations for optimal device design, demonstrating improved performance. We plan to devise and use more such controls at other plants.

The company has bagged a lot of awards on sustainability and it is focused on People, Planet, and Profits. What's the strategy for green energy, energy efficiency, water neutrality, zero solid waste and recycling, and conservation and restoration of biodiversity? Sustainability roadmap in FY 2024-25?

Sustainability and green growth are at the core of our strategic framework, guiding our endeavors to create long-term value for all stakeholders by adhering to green chemistry principles. Our decarbonisation strategy comprises four primary pillars: Low Carbon Fuel Switch, Renewable Power, Energy Efficiency, and Carbon Capture and Utilisation. Renewable energy will play a crucial role in the circular economy by facilitating the adoption of circular business models. [8]

Tata Chemicals has ambitious plans for 2030, including a 30% cut in carbon emissions and water neutrality and zero waste into landfills. Going forward in terms of environmental concerns, we will continue with biodiversity preservation and sustainability, as integral parts of our plans’ roadmap for 2024-2025. We also aim to initiate the commercialisation of RHA Green Technology for highly dispersible silica production. Additionally, our Mithapur manufacturing complex is already operating as freshwater neutral. At the same time, a high-performing green portfolio of products is being developed by our Innovation Centers in Pune and Bengaluru, leveraging green fermentation technology to enhance our nutrition offerings.[9]

Looking towards the future, what are the key strategic priorities and growth plans for Tata Chemicals?

Our key strategic priorities are to focus on growing the core, protecting margin across geographies, generating cash and deleveraging. Our priority for Indian market is to deliver consistent performance through customer engagement and further delivering capacity expansions on soda ash, bicarb and salt.

[10]We are also looking at increasing our investment in marketing, manufacturing and digitization capabilities to build differentiation.

On the international front, for the USA market, we are looking at maximising volumes through customer engagement, increasing our focus on cost management and generating cash and. For UK, we are ensuring operations are in line with market dynamics, by focusing on value added products like pharma salt and premium grade bicarb. In Kenya, we want to sustain volume delivery to customers through customer engagement and continue focus on cost.[11]

Anything you would like to add from your side...?

The Indian chemical industry is poised for significant growth, and Tata Chemicals is well-positioned to capitalize on this momentum. By focusing on volume expansion and strategic pricing, we aim to further contribute to the industry's success. TCL is committed to embedding sustainability and innovation into our core.  We are actively pursuing climate positivity, embracing the circular economy, and fostering biodiversity.  Through these efforts, we believe we can play a leading role in building a greener future for the Indian chemical industry and the planet.

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