Tata Chem lines up $100 mn capex for soda ash

Tata Chemicals plans to spend more than USD 100 million to expand soda ash making capacity by 400,000 tonnes, a top official said on Thursday.

The expansion would happen at its US unit General Chemicals, which presently makes 2.5 million tonnes of soda ash and is undergoing a capacity expasnion of 100,000 tonnes per year.

The further expansion would happen over a period of three years, PK Ghose, chief financial officer, told a news conference.

The Mumbai-based chemicals maker has lined up an initial investment of USD 15 million for bio-fuels production in Mozambique, he added.

Earlier in the day, Tata Chemicals reported a forecast-lagging consolidated net profit of Rs 1,650 crore on net sales of Rs 2,859 crore for October-December.

A Reuters' poll of 21 brokerages had forecast a consolidated quarterly net profit of Rs 1,980 crore on net sales of Rs 2,873 crore for Tata Chemicals.

"We have absorbed cost pressures for two quarters and at some point, you will have to start passing them on," Managing Director R Mukundan said.

"Input cost pressures are continuing but re-set prices will come into play...so margins should ease next quarter (Jan-March)," he said.

In October, the company had raised prices of soda ash by Rs 500 (per tonne) in India while it planned to hike prices by USD 20 to USD 30 a tonne in the US and Kenya in March quarter.

The firm's EBITDA (earnings before interest, tax, depreciation and ammortization) margin fell 19% in October-December as European operations were hit by extreme climatic conditions last month and input costs had risen, it said in a statement.

Production was affected for some 35 days due to a planned shutdown at its Imacid plant in Morocco, it added.

The company would boost domestic salt capacity by 200,000 tonnes by March 2012 at an investment of Rs 1,800 crore, Mukundan said.

Shares of Tata Chemicals closed at Rs 351.15 on Thursday, down 6.13% in a weak Mumbai market.