Page 155 - Tata Chemical Annual Report_2022-2023
P. 155

Integrated Annual Report 2022-23  01-83  84-192              193-365
               Integrated Report      Statutory Reports       Financial Statements
                                      Management Discussion
                                      & Analysis

 key result areas. Generating free cash flow and prepaying       In  Bicarb,  capacity  addition  by  competition  and  the       Using technology for digitalisation of the plants, and       Adherence to more stringent environmental and regulatory
 debt remains a critical area of focus.  Company itself may lead to temporary oversupply.    making processes smoother for customers and internal   norms, and sustainably improving safety performance
 Threat of substitution from sodium sulphate in animal feed,   stakeholders is going to be crucial as the Company heads   are other key issues for the business. A focus on these
     For Rallis, manufacturing capacity and introduction of   which is a cheaper variant, also needs to be considered.   into a digital age. Multiple projects around plant and   initiatives, including investment and resource prioritisation,
 new products will provide a growth platform for both   Bicarb use in the flue gas segment continues to be a   supply chain automation, as well as customer relationship   form a mitigation strategy to systematically address them.
 exports business and domestic sales. Rallis is augmenting   promising opportunity, but there still remains uncertainty   management are  being implemented.
 its product portfolio through co-marketing and in-  in consistent off-take by power plants. The Company had       TCE, UK continues to address the inflationary environment
 house research & development (R&D). Manufacturing   started supplies in FY 2020-21,  and expects the engagement       Rallis has  a robust and  comprehensive  framework  to   and higher energy costs with a focus on reduction of fixed
 capacity is being augmented, marketing activities are   to continue as the regulations are implemented.  address the vagaries of monsoon and its impact on India’s   costs and customer engagement. TCE UK continues to work
 being intensified and distribution networks are being       The Government’s push towards renewables will   agriculture sector through deeper engagement with   on growth opportunities of Ekokarb® in the global market
 strengthened in key  states. Seeds business will address   accelerate consumption of various products in India in   farmers. In addition, the steep increase in input costs   and leverage the new warehouse to enhance customer
 challenges to stabilise  operations in FY 2023-24.  is being addressed through combination of localisation   experience  and quality. The proposed pharma salt project
 a significant manner. Its focus on 'Atmanirbhar  Bharat'   of intermediates, and appropriate engagement and   will give a boost to offering premium grade products
 6.  Risks and Opportunities  opens up opportunities in terms of kick-up of demand   contracting with suppliers. Increased domestic usage of   to customers.
 from infrastructure development, boost to domestic
 India  manufacturing through several initiatives like PLIs, import   agrochemicals and exports out of India are immediate
                opportunities. The long-term trend of shift to biologics
     Higher energy costs due to higher coal and fuel costs is a   restriction measures, and softer finance facilities. This will   remains an area of product development focus.      In Kenya, the focus is largely on quality and capacity
                                                                   utilisation. To maintain a niche in the container glass
 significant risk to the Company’s business performance.   have a positive impact on soda ash, bicarb and cement   and silicate sector, the quality of soda ash needs to be
 Other risks include pricing risk on account of capacity   consumption, either directly or through increase in demand        Overseas  maintained, which remains a challenge. This shall be
 additions in US & China, higher inflation and recessionary   of the end segments.      TCNA, US is well prepared to address the short-term export   mitigated with stringent quality controls. Energy saving
 pressure (both global and domestic) leading to demand       Coming to silica, delay in product approval from major   risks  subsequent to the exit from the American National Soda   through solar power and innovation shall continue to
 slowdown, currency  devaluation,  and  changes  in  the   tyre  and  non-tyre  customers  will  negatively  impact   Ash Corporation (‘ANSAC’) in December 2022. ANSAC exit   help reduce the cost of production, which is critical in
 export sector or imports  from global markets. The Company   the plant utilisation rates. Both R&D and business   allows  the Company to drive direct customer engagement   helping the Kenya operations remain favourable on
 continues to remain focussed on keeping the costs low,   development teams are engaging with critical customers   and to better align the strategic goals of the business with   cost leadership.
 including variable costs like fuel, salt and limestone through   on a constant basis to fast track product approvals   the market.
 raw material securitisation, and continuous improvement   and increase commercial sales.  The Company’s HDS
 programmes to help mitigate the adverse impact of these   (Highly Dispersible Silica) has gained approval among   7.   Financial Performance (continuing operations)
 risks such as diversifying energy sourcing in addition to   large tyre manufacturers like CEAT, with whom TCL is    (A)  Standalone performance for the year ended March 31, 2023
 current sources to improve sourcing flexibility, working   working closely to scale in the high margin business. The      ` in crore
 on changing fuel mix, maximising use of alternate energy   Company is working towards reducing the variable cost   Particulars   FY     FY   Change    %    Remarks
 sources, different contracting strategies and continuing with   of production of silica through local sourcing of low-cost   2022-23 2021-22  Change
 strategies like commodity hedging / advance fixing of prices.  raw materials, and enhancing plant efficiencies through   Revenue from operations  4,930  3,721  1,209  32 Basic Chemistry Products:
 better process control.                                               Higher realisation in soda ash and salt, and increased
     Execution of expansion project, adherence to more stringent       volumes of salt have contributed in higher revenue
 environmental norms, packaging and improving safety       In FOS, lower sales off-take are resulting in low plant   for the Company.
 performance in a sustainable manner are other key areas   utilisation. Margin erosion can happen due to escalating   Specialty Products:
 that the Company continues to focus on during FY 2023-24.  raw  material  costs,  primarily  sugar  and  rice  husk,   Growth is due to increase in sale of nutrition products.
 and softening of selling prices of FOS. However, the    Other income  301  278  23  8 Other income has increased mainly on
     El Niño effect on weather and monsoon, and supply chain   favourable regulatory landscape of certain countries will   account of higher dividend received from
 disruptions due to rake availability etc. are some other   work as a growth lever, to open more territories where   non-current investments.
 risks which need to be considered. Excessive rains are   FOS can be sold. The Company is using data from third   Cost of materials consumed  1,138  814  324  40 Cost of materials is higher due to higher input costs
 resulting in dilution of brine, which is affecting captive   party data aggregators to directly target the existing   of raw materials.
 solar salt availability, leading to rise in cost of production as   users of FOS. This can  help the Company in achieving   Purchases of stock-in-trade  130  160  (30)  (19) Purchases of stock-in-trade decreased mainly
 there is an increased need to purchase salt. The Company   quicker conversions. GRAS (Generally Recognised as   on account of lower opportunities for nutrition
 is enhancing production capacity of salt through joint   Safe), Halal & Kosher certifications  for FOS from a fungus   solutions related business.
 development projects with TCPL, including working with   called Aspergillus Niger can open  additional markets for   Power and fuel  1,188  670  518  77 The increase in power and fuel cost is mainly on
 TCPL on logistics options to maximise movements. Changes   the Company.  account of higher coal prices and other variants.
 in monsoon pattern may also have adverse effect on the   Employee benefit expenses  274  249  25  10 Overall employee costs have gone up mainly due
 agrochemicals demand.      In  addition  to  enhanced  ease  of  doing  business,   to higher actuarial valuation impact as compared to
 customer partnerships around themes of innovation and                 FY 2021-22.
     Carbon emissions taxation will impact the cost of production.   sustainability continue to offer opportunities for stronger   Freight and forwarding expenses  527  460  67  15 Freight and forwarding charges have increased
 The Company is developing a holistic carbon abatement   customer connect. Increasing value-added products and   majorly due to higher sales volumes of soda ash
 strategy at a corporate level, which will help in mitigating   sustainable supply chain practices like bulk material are   and salt.
 this risk.  some steps the Company will continue to focus on.  Finance costs  26  19  7  37 Finance costs increased majorly on account of
                                                                       interest on acceptances.


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