Tata Chemicals Ltd expects its fertiliser plant at Babrala in Uttar Pradesh to start commercial production by the middle of next year, a senior official said on Thursday.

"The construction is under progress and we have placed orders for all the equipment. The plant will start commercial production by the end of June 2010," Kapil Mehan, executive director told reporters.

The total capacity of the plant will be 1,30,000 tonnes per annum, and the company has invested around 500 million rupees in the project, he said.

The company expects its total urea production to increase by 11 percent to 2 million tonnes in FY10, compared with 1.8 million tonnes a year ago, Mehan said.

Tata Chemicals expects its margins to improve in the coming quarters as demand for fertilisers is recovering, he said.

"Consumption of fertiliser in the khariff season was lower compared to last year, but we expect it to go up by 4-5 percent in the rabi season," he said.