Page 107 - Tata_Chemicals_yearly-reports-2019-20

Integrated report Statutory reportS FInancIal StatementS
Management Discussion and Analysis

potential material risks. the Company has so far not experienced World soda ash markets were oversupplied despite no new
any specific issue in its raw material sourcing. significant capacity addition during the year. Higher operating
rates of new capacity addition in India, turkey and China created
the Company at present continues to fulfil its obligations with the surplus. Weaker economic sentiments and slowing demand
respect to all the existing contracts and agreements. the Company led to higher stocks and softening of international soda ash prices.
does not foresee any material impact on account of non-fulfilment By the end of the year, price attrition was almost uS$35-40/tonne
of obligation by any party in existing contracts or agreements.
as per internal tracking of price data from IHS Markit report. natural
there has been no material change in the Company’s liquidity soda ash supplies from turkey with cost advantage increased
position subsequent to the year ended March 31, 2020; with a penetration in europe (eu), Indian Sub-Continent (ISC) and South-
very positive liquidity position in India with no borrowings and east asia (Sea) replacing the uS and Chinese dominance of past
sufficient credit lines available. the Company has also instituted, years. Ciech’s plant in romania with a capacity of 5.40 lakh tonnes
across all its operations, aggressive and focussed cost control was idled in September 2019 without any impact on supplies,
programmes and a deferment of all but completely necessary even in eu.
capital expenditure to build up and conserve its already healthy
cash position. Further, there is no impact on internal financial In the uS, domestic demand was lower by 2.4% but exports
controls due to Covid-19. were higher by 0.8%. While exports to north-east asia (nea),
africa and the Middle east, South america and Western europe
Business Units were lower, this was offset by an increase in exports to Sea,
Basic Chemistry Products north america and the ISC. demand in latin america, mainly
Industry Structure and Developments driven by uses in lithium carbonate production, saw a drop,
with prices of lithium reducing.
tCl serves customers across four continents through its Basic
Chemistry products (‘BCp’) business (soda ash, salt, sodium the Indian soda ash market remained largely oversupplied
bicarbonate, cement and marine chemicals). the Company’s through the latter part of the year. availability was higher due
global supply chain gives it the unique advantage of maintaining to the operationalisation of domestic capacity additions and an
assured supply and efficient service at competitive prices. increase in imports. India experienced an extended monsoon,
With an annual capacity of around 4.3 million tonnes, the which affected the demand. gdp growth weakened in sequential
Company is currently the world’s 3 largest soda ash producer. quarters, leading to weaker market sentiment and muted demand
rd
More than two-thirds of this capacity is natural soda ash based and growth. oversupplies, with slowing consumption, led to inventory
located at the green river Basin, Wyoming, uS, where the world’s accumulation at supplier and consumer ends. the softening of
largest deposits of trona occur and at lake Magadi in Kenya. In international and domestic prices resulted in lower unit price
addition to having lower manufacturing costs, natural soda realisation. among the end segments, the float glass sector
ash has a lower energy and environmental footprint. Synthetic experienced problems due to cheaper imports and lower demand
soda ash and sodium bicarbonate are manufactured at Mithapur, from both the realty and automotive sectors. the detergent
India and northwich, uK, primarily to cater to their respective segment was marginally impacted due to extended monsoons
domestic markets. this process uses raw salt/brine (saltwater) and and lower consumer demand. Ceramic and Silicate clusters in
limestone as key raw materials. gujarat faced a downturn due to stringent environmental norms
and lower exports on account of trade measures announced
Soda Ash by the Kingdom of Saudi arabia, one of the key export markets.
Finally, in March 2020, the spread of Covid-19 and the consequent
the global Soda ash demand is estimated to have grown by 4% lockdown brought the market to almost a standstill. In FY 2019-20,
in FY 2019-20 to reach approximately 62.5 million tonnes. With
turkish capacity getting fully operationalised and resurgence soda ash volume was almost flat.
in domestic demand in China, approximately 2.5 million tonnes
of additional volumes were consumed during the year. turkey Sodium Bicarbonate
registered a 23% increase in exports compared to FY 2018-19, Sodium bicarbonate (‘Bicarb’) is a versatile product with a wide
translating into 7 million tonnes additional material availability. range of applications, including food additives, animal feed,
Having overcome environmental inspections and hurdles, pharmaceuticals, dyes, textiles and air pollution control. the
production in China started to normalise. Yearly domestic Company believes that given its wide range of current and
demand bounced by 8%, despite the early onslaught of Covid-19 emerging new applications, Bicarb is expected to sustain volume
and associated disruptions. China’s exports at 14.4 lakh tonnes growth rates above the gdp levels, along with offering significant
also returned to growth. value addition potential in the future. the Company is the

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