Tata Chemicals Ltd
NSE:TATACHEM
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
939.2
1 315.25
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Tata Chemicals Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Earnings Conference Call of Tata Chemicals Limited. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.
Thank you, Margaret. Good day, everyone, and thank you for joining us on Tata Chemicals Q1 FY '23 Earnings Conference Call. We have with us today Mr. R. Mukundan, the Managing Director and CEO; and Mr. Nandakumar Tirumalai, the Chief Financial Officer.
Before we begin, I would like to mention that some of the statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties.
I now invite Mr. Mukundan to begin proceedings of the call. Over to you, Mukundan.
Thanks, Gavin. Good morning, and welcome, everyone, to our quarterly earnings call. I'm joined by my colleague Mr. Nandakumar Tirumalai, CFO, for today's call. I will start with the discussion on key operational parameters across business and geographies, following which Nandu will walk you through the financial performance for this quarter.
As you would have noted that we started the year with a good all-round performance. Our businesses across geographies have done well and they've actually done a good work in term of competing the inflationary pressure on them coming from input costs. While large part of growth and profitability has been driven by core business of soda ash, bicarb and salt, we do expect that this process will continue going forward in terms of momentum in the core business even in the coming quarters. This is due to the continuing demand supply situation, which we spoke about.
We are keeping a close watch on market demand and continue to engage with customers, making sure that they are served well right through this period. The CapEx plan is progressing well and we do expect commissioning of the capacity -- part of the capacity for FY '24, where capacity in salt and some capacity in soda ash should come on stream. And as you are aware, the Board has also cleared additional expansion of capacity within India, for which needed approvals are in the process of being moved forward.
Now moving on to individual businesses, geography wise. The India soda ash business was strong for the quarter, which resulted in overall revenue growth of 34%. This reflects the market demand for soda ash, which was robust in terms of continued demand from both detergent, glass and other sectors. Overall, I would say, across geographies, this trend has continued, new segments like solar and lithium carbonate are growing well.
The U.S. business has delivered strong volume as well as demand. Export volume has moved in tandem with the same trend, which is playing out everywhere. We have done a bit of shift in our contracting. Most export contracts are on a quarterly basis. And this has set a new trend in terms of contracting approach, and we will continue to leverage this contracting approach, which will be the contracting approach in India, and I think we have moved to the same contracting approach for exports out of the U.S.
U.K. has performed well despite challenging -- amongst the most challenging external environment. And they've also commissioned the carbon capture plant. The fundamental improvement in realization and consumption with the cost increase, especially of the natural gas in the U.K. has enabled the unit to move to a profit position from last corresponding quarter, previous quarter. The Magadi has done a solid performance. Business continues to benefit on account of buoyancy both in Indian and Asian market. And all the contracts are now on a quarterly basis. And this would continue to see good performance going forward as well.
Salt business has been steady. The volumes grew by 2.5% over the same period last year. Additional growth would come once the capacities are commissioned towards the end of this fiscal year. The bicarb business has been doing well, both in India and U.K. So overall, I would say all business has done well. The new businesses while we have seen revenue growth, I think a large part of the growth in silica is going to come on the new capacity or commission for which we have moved for consent established to increase capacity 10x times from -- 5x times from where it is today.
On Rallis, the business has delivered a strong top line growth. The crop care segment had a good growth in both domestic and international business. There was a stress on dependency on China, we expect the margins to improve during the second half of this fiscal. Going on to the CapEx, I think this is going to be on schedule. We have -- we expect most of the commissioning of Phase 1 to be done by the end of this fiscal year and possibly would flow into FY '24. As for the Phase 2 expansion is another 30% expansion and 40% expansion in bicarb and 5 lakhs expansion in silica. We have moved for approvals from regulatory quarters and this will also start in terms of execution very shortly.
To conclude, I'd like to state that core business is expected to perform well on the context of macro environment, where demand supply situation for the core product continues to be fairly good. And we will -- we should be able to combat the inflationary pressures we are facing as we have done in the past or current quarter. Rallis are expected to contribute, as we said, positively in terms of the moving into performance in the quarter -- H2 of this current year when most of its CapEx program should be beginning to fruition.
So overall, I would just simply say that we have had a benefit of the continued demand supply market situation. Our teams have combated the inflation pressure as well. So our focus is going to be continuing to focus on operational excellence and ensuring execution of growth CapEx is done on time and within schedule and deliver so that we can start delivering to our customers.
With these remarks, I'd like to invite Nandu to take us through the financial performance.
Thank you, Mukundan, and good morning, everyone. At the outset of that, I'm pleased to inform that we modified the investor presentation to begin more clarity as we have seen yesterday. The investors place of the website has also been modified to make it more user-friendly and now it got a better interface for the investors. We hope you like it, and we would like to have a feedback for further improvement.
I talk about the headline numbers and then go to the each business. Starting from financials for the quarter [indiscernible] our revenues was at INR 3,995 crores, a growth of 34% over last year Q1. The growth was broad-based with all the businesses and geography is performing well. EBITDA for the quarter was at INR 1,015 crores, 69% more than last year's Q1, driven in part by operating leverage and price revisions undertaken during the quarter to offset the rising input prices. EBITDA margin was 25% higher by 5% compared to last year's Q1.
Moving on to individual businesses, starting with India. Revenues for the quarter was 48% higher than last year. Soda ash volumes are now trending towards pre-COVID levels, reflective of the strong demand from existing and new segments. Our price as well as has been improved, [ part of the ] price hikes at a taken to offset the impact of rising input costs and reflecting the strong soda ash market. Salt volumes as well remained elevated during the quarter.
Moving on to U.S. We got a good quarter with the growth of revenue of 34%. Domestic volumes remained stable. Pricing environment was strong as well as in turn resulting an EBITDA margin of 25% for the quarter as we get 21% for last year's. As mentioned by Mukundan earlier, the pricing arrangements for export, which is even shifting towards quarterly basis rather than annually as was the case earlier, which in turn should drive the growth going forward.
Currently, U.K. business, operating performance remained steady despite the challenging external environment on account of input costs, Q1 also witnessed the full benefit of carbon structure unit, which helped to negate some product cost inflation. Overall, volumes during the quarter remains relatively stable. The price actions taken to offset costs have led to a profit in the quarter of INR 49 crores as compared to INR 18 crores loss in last year's Q1 in U.K.
As far as Kenya is concerned, Q1 witnessed yet another [ great ] performance of our business, with revenue growing 84% and volumes remained flat. EBITDA margins have also improved significantly and are at 49%. As far as Rallis concerned, Q1 saw good revenue growth driven primarily by the crop care business in both domestic and international businesses. Seed business, though continue to remain soft amid challenging from external environment. Growth in crop care business was both volume and value driven. The company is working towards improving the product mix and is expected to deliver a better performance with regards to margins and profitability during the second half of the fiscal. Capital spending in the quarter was as per planned in all geographies. The company has also prepaid a debt of $30 million during the quarter in the U.S. on account of its cash accruals.
With that, I close my comments and hand it over back to the moderator to open up for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Rohit Nagraj from Centrum Broking.
Congrats on a very good set of numbers. Sir, first question is in terms of demand-related challenges. Given that the soda ash prices have been increasing continuously, and we've been saying that there will be price environment likely to stay robust for the next 18 to 24 months. Any segments which are vulnerable due to these continuously rising soda ash prices? And any indications that we are getting from any of the geographies?
Thank you, Rohit. Actually, we are continuing to see robust environment on demand. We are not seeing any major signs of any softening in any part of the geography. And as we mentioned, this broad trend, I'm not going to get into specific segment and issues, but the broad trend is likely to continue until about 35%, 36% because of the nature of the CapEx and the growth and additional volumes coming in. We are keeping a close watch on that.
As far as customers are concerned, we are also keeping close watch on customers. And I think we are not seeing any signs in terms of stresses. There could be a few segments here or there, which may be having stress because of some other reasons, but not essentially because of issues related to soda ash situation.
The most important place where I think the pricing and the stress may be felt first will be actually in U.K. and Europe because that is where the gas price is not just for us, but also for our customers is very high. It's almost at GBP 5 per tonne last week. So we haven't seen any signs even in that geography of any change in terms of volume offtake from our unit.
Now the issue fundamentally is that as far as Tata Chemicals is concerned, our capacity of 4.3 million tons, only 0.3 approximately is in Europe. So we are well protected because the balanced 4 million ton approximately, is actually in geographies which are fairly robust. In terms of our own energy part, India is mostly linked to coal and Indonesian coal where we have an industry-linked pricing. In U.S., it's 75% of our cost, energy cost is in coal, 25% is natural gas, but U.S. natural gas equal and if you take what I mentioned is GBP 5 is about $7 per dekatherm, which obviously is about $0.7 per ton. So it's about almost 1/6 of where the European cost structure is.
And Magadi also has the HFO, but their energy intensity is very low, and they also have a hedging process. So all in all, we have ensured the company is contracting. While I mentioned about contracting on the sales side to customers, we've also done a fairly robust work in terms of contracting on the input cost side so that we can manage this pathway well. So all in all, I would say that we continue to remain very -- staying very close to customers, listening to them and ensuring they're served well and at the same time, staying very close to our state -- our supply chain partners to ensure that all of us can gear up in a very positive way.
Got it. This was a really helpful explanation. Sir, second question is in terms of the global demand supply dynamics. If you could just run us through in terms of where could be the incremental capacity or probably incremental volumes will come from if the global growth rate comes to 2% to 3%, wherein the soda ash usually attracts the global growth rate. Any geographies where the utilization levels can go up and that will throw us some volumes?
So obviously, the two places where capacities have been announced, one is Inner Mongolia in China. And second is, there are probably some capacities that could come on stream would be in U.S. where we have some units which have spare flywheel capacity, which will come on. And all these capacities are slated to come on stream somewhere around 25%, 26%, Mongolia as well as -- so while you would hear us, early days. So some part -- some small part of the capacity can come on stream in U.S., so -- which is fundamentally capacity which have been -- which were not called could be brought on stream. But overall, they are not going to move the needle in terms of the demand-supply dynamics.
The next question is from the line of Sumant Kumar from Motilal Oswal.
So my question is regarding U.S. business. And we have seen a significant improvement Y-o-Y and also Q-o-Q in EBITDA per ton. So can you talk about the demand scenario of the levering country, say, when we are talking about the export of the -- from the U.S. market to other geographies, so are we selling more to the Latin market or nearing countries where EBITDA per ton is higher for the U.S. business? So can you talk about the mode of the changing dynamics of the U.S. business?
As far as the U.S. is concerned, our view is that, as we said on exports, we have moved to quarterly contracts. So you would see the reflective number in the U.S. in terms of improved numbers every quarter, quarter-on-quarter as the current contract unwind into a new set of contracts. That's on the export side, which is about 40%, 45% of the turnover. The domestic volume is fully contracted out. So that you will see a change only by January of next year. So what you're going to see is a blended move, export is going to continue to move up quarter-on-quarter and domestic will remain flat till December, and that's the broad trend.
So we do not have a plan to move domestic sales also on a quarterly basis?
Really speaking about our flexibility because we have fully contracted out to our customer commitments. I think we will manage the best we can at the edges. But I think if you ask me, can you switch big numbers from one end to the other, I think we will not do that because we are very clearly committed to our customer and our contracts, fulfilling our contracts.
Okay. Okay. So how we are going to manage for the price increase in the U.S. market when we have a higher volatility in the raw material prices in the margin front?
I didn't get -- what did you mention?
So I'm talking about when we have an annual contract for the U.S. domestic market, when there is a higher volatility in the raw material prices, is there any price escalation with the customer?
See, I think in most places, we already have what is one of the energy surcharge if there is an increase, which is beyond certain brands. The energy surcharge is [ fixed ] and is part of the contract. So that is a separate piece, and it is operative in U.K. as well as in the U.S. So I would just leave it at that, and that's one way we protect ourselves. As far as U.S. is concerned, and U.K. is concerned, we also hedge and protect our energy on a matter basis. So every quarter, we sort of extend that coverage, which we have. And U.S., especially, as I mentioned to you, 75% of our energy is from coal. And really, that is contracted out more or less on an annual basis.
Okay. And the last thing is talking about the price scenario, if there is a connection in the energy cost and we have seen some softness in the cost, do you think the market is going to take some price cuts in the soda ash in the current scenario?
Let me give [indiscernible]. I think as far as we are concerned, I think the current prices don't reflect even the reduced energy cost.
Current price?
Current prices, which are there in the market, I think the debate -- let's say, if the energy prices remain at this level, the prices will have to move up further broadly.
Okay. So if there will be a correction of 20%, 25% in the energy cost, we are going to decline. My question is we are going to reduce the -- our market is going to reduce soda ash cost, assuming current demand supply scenario or not?
Okay. Now it is clear what you're asking. See, broadly, I would say the pricing in this market is determined by demand supply situation. While there can be some linkage to cost side, but it is fairly dependent on the demand supply situation. So I would say that you cannot take a view that there is a linkage, except for the linkage of energy surcharge, I think there is no other major linkage. And the energy sector works on the contracts, not on openly space.
Okay. So in open space, if there will be a correction there is the higher chance the price is going to hold for the open markets?
I won't make any statement except to say it depends on the demand supply situation. And as of now, we see that to be fairly tight.
[Operator Instructions] The next question is from the line of Abhijit Akella from Kotak Securities.
Sir, just on the Kenya and the U.K. businesses, Kenya has reported almost 50% EBITDA margins this quarter, which is a very, very sharp increase in the last 2 quarters. So is this entirely driven only by higher realizations or have there been some cost efficiencies out there as well? And how sustainable do you think such high margins are for that region? And on the U.K. business, I just wondering if it's possible to share some color on how much in terms of cost savings, the new CCU unit might have contributed, carbon capture unit?
I think firstly, as far as Kenya is concerned, the cost side for Kenya is probably our lowest cost unit in many ways. So when the price -- market prices move up, I think they tend to benefit disproportionately in terms of margin. So I think that benefit has come to them. And since the Asian markets where we serve mostly India and Southeast Asia, I think these markets have moved up in terms of the market realization, I think that benefit has gone to them. So it is entirely dependent only on that. I think the efficiencies if at all are fairly small proportion of the improvement, which we've seen at the EBITDA level. So I would put a greater -- almost 90% of the benefit coming from the market dynamics.
Second, as far as U.K. is concerned, I think it's very difficult to say what carbon capture has really given us benefit. Certainly, we are not buying for bicarbonate production, the CO2 from our -- but the gas supplier, it is now being internally produced. That certainly is a saving. But beyond that, I would not want to sort of give specific numbers at this point of time.
Got it, sir. And also, just wanted to get your thoughts on two aspects, sir. One is, any impact you see of the impending exit from ANSAC in the U.S.A. later this year? Would that be positive for the business on a net basis? Or do you see some disruption out there? And also secondly, the new carbon credit policy that's been floated in India going to come up in the next few years. How do you see that impacting the local market in terms of supply or demand?
Yes. So I think, firstly, as far as ANSAC transition is concerned, it's a very structured transition while we will move out of ANSAC, there's a structure where the volume comes out of the ANSAC pool over a period of 2 years, if I'm not mistaken. So it is not going to be switching overnight from 40% of our output to -- out of ANSAC. It will be in a manner that will be two step changes.
Secondly, we've already done our appointment of distributors and sales channel in key markets like Southeast Asia as well as -- where we already had sales of our own other products and in LatAm, which we have already opened up. So the teams are pretty much in place to deliver to that. We see this as a big positive because one of the things that provides us with a direct connect with customers, which we were lacking in the past. So to that extent, I think we will be able to serve our customers better and also engage with customers better for -- overall better quality as well as robustness of revenues because really, I think being in close connect to the customer improves the quality of revenue. That's all I would say as far as this transition out of ANSAC is concerned.
I see it as a strategic move we wanted to make. And the timing is favoring us because any of these moves we make when the market conditions are tight, it is much easier to shift, so we've been fortunate that the timing came out to be correct. But leave the timing aside, I think this is a right move in terms of customer engagement.
As far as the carbon issue in India is concerned, we are awaiting the mechanism. Already, as you know, there's a carbon tax in terms of -- [ that's ] on coal, which all of us pay. So it's a bit like a carbon tax. There's also a renewable power commitment all of us have already made. There's a transition pathway. Every company has got to have certain percentage by wind and solar. If you don't -- part of your energy is not part of that, you will have to buy in the open market at the renew certificates.
And as and when the carbon trading policy or whatever the government wants to come out, that comes in, we will be in a position to sort of engage with it. Already, our unit in Mithapur has started to look at alternate fuels and look at alternate options. This is part of our sustainability commitment. As you know, Tata Chemicals is signed by the CTI and we do have a commitment to reduce 28% across the globe in terms of our carbon intensity and making sure that we move in that right direction.
The next question is from the line of Dhavan Shah from ICICI Securities.
I have a question on the demand supply front. If I look at the current quarter result, the volume growth, I think Y-o-Y business, it is almost the same, I think, marginally decline, plus quarter-on-quarter also there is some decline. So you -- I think you highlighted that the demand environment is robust. So if you can help us in terms of the demand supply situation like the global capacity is roughly 75 million odd tonnes, so how is the demand supply situation right now? If you can help on this.
Yes. So the demand supply situation is fairly, as I said, tight as of now. The issue which has happened this quarter is there were some plant shutdowns in some of the units as well as there are some logistic challenges in getting the ships on time for export markets in some of the ports. I think that has led to a small marginal number, which is lower than before. But otherwise, I think we are more or less -- we should be tracking as our capacities come onstream, we are literally running our units flat out at 100% utilization.
And global demand supply, I think in numbers, if you can help, I think that can give us some insights about the soda ash prices and environment also.
Sorry, we couldn't hear you clearly. Can you repeat it?
I'm telling that in numbers front, if you can help in terms of the global demand, the demand supply situation of soda ash. So it can give us some insight how can be the prices going forward. In terms of the numbers if you can help, like in the past con call, you mentioned that there is some closure in the Chinese capacity also. So maybe 3 million, 4 million tonnes, some excess demand or something like that, you mentioned in the numbers. So if you can help on that front.
Yes, in terms of broad demand supply, I think we should continue to see -- the demand continuing to be slightly stronger than the supply side because the market has bounced back to the original level of approximately about 60 million tonnes. And we will continue to hold, continue to grow beyond this point, primarily driven by the demand coming off -- coming from the solar glass as well as from lithium carbonate and other new segments, which have started to also take soda ash in substantial quantities and continuing steady demand uptake of other traditional segments, which is chemicals and detergents and flat glass.
So I would simply say that as of now, we continue to see, as I said the major capacity in addition to support the market are going to come on, it's going to take 2 to 3 years' time to come on stream. They are also announcements which have been made, announcements are being made in Inner Mongolia. And certainly, there have been closures or shutdowns around the world, but the most recent one, I would say, has been in Europe where 10 suppliers have shut down. And whether it's temporary or otherwise, we don't know. So we have to await what the situation is. So all I would say that our analysis shows that the demand supply is fairly tight at least going towards the next 18 to 24 months even could be somewhere around 36 months.
Sure, sir. And my last one is on the power and fuel and freight costs. So we have seen some decline during this quarter. I mean, on Q-o-Q basis, if we look at power and fuel was down by roughly 4-odd percent on Q-o-Q basis and freight was roughly increased by just 2% as against the realization growth on Q-o-Q business is very robust. So if you can help on this front also, I mean, we have seen some higher cost on these two things also. So how are we placed? And what led to some savings on these two counters?
So I think broadly, we have a process of contracting and hedging, which has worked for us, and we continue to work on that. And our effort will be to continue to maintain our margin structure, that's what I can highlight. So if it's a continuous process in our commercial team, both on supply side as well as the demand side continue to grow both input as well as output.
[Operator Instructions] The next question is from the line of [ Vignesh Iyer ] from Sequent Investments.
I just wanted to ask, since China is opening up post lockdown as in at least partially, is there any chance that some more supply could come from China into the market? Because in general, usually, it does happen. And there were news that, I guess, 1 million or 2 million tonnes of Chinese capacity in Shanghai region, was facing some logistic challenges. So that supply was not coming into the market. So if you could just give us some idea on it.
Yes, I think we had highlighted the last time also that China has -- Chinese exports have now more or less become very opportunistic, and at some point, they were also net importers. So I think the Chinese -- the issue with the world of soda ash space for the last few years, if we go back 4, 5 years, was a sudden Turkish capacity coming on stream. That has now been fully absorbed. So if you look at it in our big picture, I think the big picture is that every country exports a little bit, every country consumes mostly. And the big exporter has always been U.S. because that's been the lowest cost producer [indiscernible].
So the Chinese supplies into the world market have been more or less coming down or holding at a level which is not disruptive. The big disruption which happened has been the Turkish capacity, which has been fully observed. And this is why we are saying that at this point of time, it is going to be that our -- the markets are going to remain tight until any fresh capacity comes on. The announcements which have been made have been mostly in U.S. and in Inner Mongolia. And that's about what we understand about dynamics. In terms of most of the -- like any country, most of the -- even within China, there has been a pressure to shutdown subscale capacity because they are more carbon intensive. And I think that process will continue.
Okay. Another question is more on the line of pricing. Then I wondering as you say, for example, if there is more increase in pricing say just because of energy, cost increasing or raw material cost increase. Would there be any -- some worries that at a higher price per kg, the demand for the product might drop a bit or assortments because at some point of the time, the buyers would also -- wouldn't be able to pass on the pricing. So is there any worry that after this amount of price per kg, there would be some demand drop due to nonviability of operating business?
In terms of the cost pressure and the price movement and the impact on the customers, the area, which I think we are watching closely is the European market because -- but our company's exposure is very low. We only, as I mentioned, 0.3 out of 4.3, around less than 9% or 10% or around 9% of our volume is [ export from ] U.K., that's not in Europe. So where the customers of soda ash are also facing high energy cost. And the soda ash also is facing high energy cost. I think the pressure point will be [ trade ] there first. So as I mentioned in one of the previous question, the early signs of any demand or any pressure from pricing will actually come from Europe. As of now, we are not seeing any. As and when we see any, we will sort of adjust our process. But the rest of the world, I think, is able to sort of manage the process fairly okay. That is where we are as far as our understanding is concerned.
[Operator Instructions] The next question is from the line of [ Karthikeyan VK ] from [indiscernible].
Just one question. What would your current supplies to the lithium carbonate segment be? And what is the outlook there?
We couldn't catch you very clearly. Can you repeat the question?
So I was asking you the soda ash supplies to lithium carbonate segment, if at all. What would that currently be? And what is the outlook there?
Lithium carbonate?
There's overall spectrum supply, which is there, which continues to be steady and approximately one tonne of lithium carbonate needs two tonnes of soda action. That is really what the demand from that sector is.
The next question is from the line of Trilok from Dymon Asia.
Congratulations on a good set of numbers. Just want to check on two questions. One is, in the U.S., what's the export domestic mix for this quarter? And what should be the mix for the full year? And second is, from a domestic pricing perspective, you haven't sort of seen any volume uptake of kind of incremental demand pressure in the domestic market? Is that understanding correct? And do you think that the demand will remain firm in the market there?
Yes. So I think -- as I mentioned, we haven't seen any pressure on demand. And in fact, we expect that to hold fairly well even going forward. And also, let me highlight one more thing that as many would have observed, the energy cost and inflation pressures are actually reducing even on our customers. So I think that would be continued positive across the market. Your first question sorry, what was that U.S. or ?
Yes. So I was trying to understand the U.S. split of domestic and export in terms either percentage or volume whatever?
I think it would vary slightly from quarter-to-quarter. More or less, I think it will be fluctuating between 45% to 50%. And you can take an average of 48%. I mean, I'm just -- it depends on when a ship leaves, when a ship arrives and all that. But its -- broadly, I think it is 45% to 50% every quarter.
The next question is from the line of Saket Kapoor from Kapoor and Company.
A small understanding, sir. Sir, you did mention that even if there is a correction in the input cost, the current prices of soda ash does not translate the effect of the entire energy cost, so that is the correct understanding that we are not expecting any reduction even on a reduction of input cost. This would be a good understanding of what you were trying to convey?
Yes. So let me -- because I think the question asked, I was not very clear about the question was, so you have phrased the question well. And I also answered that question -- previous question was rephrased again. The answer is that certainly, pricing of soda ash some sort of input, which comes in from cost structure. But a large portion of soda ash pricing comes from the demand supply situation of the product itself. So that drives the pricing. And since the demand-supply situation, which continues to be tight. I was saying the movement in energy is not going to make a big shift in the movement in the pricing side. It is -- I'm not saying it is not likely. I'm saying -- it's not -- this should not in the normal circumstance.
As far as energy is concerned, in markets where we are contracted out, which means we are on a fixed price contract to protect ourselves. We have actually put energy surcharge, which sort of moves in tandem between a collar and cap of energy. So if energy goes above certain points, we increase the price. If it goes below collar, we pass on to benefit the customers. That is only meant for a long-term contract, not for quarterly contracts.
Correct. And sir, now coming to your -- in your presentation, you mentioned about 10,000 production loss at U.S. So that's a permanent loss that has happened or over the period with debottlenecking, you would be able to recoup the same?
Just this quarter. I think we will end the -- as far as we are concerned, we would more or less regain this going forward. Every quarter, certain -- every once in a while, we'll have to take some maintenance shutdown, but this is only for this quarter. Next quarter should see a bounce back to [indiscernible].
So for the full year, we will be making good for this 10,000 gaps?
We should be at least doing the volume we did last year, if not more. We are hopeful we'll do more.
Sir, coming to the last question, we're all connected in one again, our Chairman did mention that we are looking to double our capacity from 4.3% to 7 point something during the AGM. How much of that factored from the U.S.? And what steps are we augmenting to increase the capacity at U.S. since our parities are to first lower the debt, first to repay the debt. And also, sir, this time, I think you have not mentioned the net debt number, if you could give some more color on these two aspects.
Yes. As far as -- see, there are two different issues. One is the current debt on the books, as we had mentioned. We'll continue to pay down that debt, both Kenya and U.S. Kenya should become debt-free in over 12 to 18 months. As far as U.S. is concerned, we will continue to pay down debt at the rate of about $100 million per year, of which I think this quarter, we have paid down $30 million. So every quarter, between $20 million to $30 million will keep paying down on a regular basis. So that's we hit a figure of $100 million. So there's a $300 million debt in U.S. which will be down to zero in broadly 3 years' time, if we can accelerate, we'll accelerate it.
Now as to expansion, we need to take fresh ways of capital in the form of debt, we will do that, but there will be a separate one linked to the expansion. And as we speak, all three sites are working for expansion to achieve that vision, which has been set out between India, Kenya and U.S. We'll come back with specific numbers on each, what each site is going to do, but I can only say that all three sites are working to grow the volume.
[Operator Instructions] The next question is from the line of Abhijit Akella from Kotak Securities.
Just on the U.S. export realizations, last quarter, you had mentioned that they are lagging a little bit behind pricing trends in the rest of the globe. So how has been the progress on that front? And is there still some more distance to -- for them to catch up on?
Yes, I think there is Abhijit, the way the accounting enterprise works because of the way our contracts are structured, you will see a quarter lag as it keeps coming, which is why I said, in U.S., we'll continue to see increases coming even going forward. That's the way the mechanism is. So between last quarter and this quarter, there was an improvement. We expect the improvement to continue.
And also just wanted to confirm the overall capacity addition number that was just mentioned on the call. So it's basically 4.3 million tons at the consol level, going to 7 million tons over a period of time, is it if you could specify some timeline...
That's the vision. We'll come back with a specific number where, what and how. I think that is the work in progress. The teams are working. And I think our ambition is to grow across all three sites and all three sites have potential to at least do substantially better or increase in volume, and the increase in capacity will be skewed more towards India. That's all I would say at this point.
The next question is from the line of [ Yugesh Tiwari ] from Arihant Capital.
I had a question regarding the demand supply. So if I look -- if you look at the cost of production through the natural route versus the synthetic routes, the natural route is like it has lesser cost of production. So just wanted to understand, is there any risk cost of more imports into India because most of the Indian capacities are based on synthetic routes because of lower cost of production.
Yes. So I think broadly, the way I would explain is that the natural route is more cost competitive than synthetic route. That is correct. But the synthetic -- India has -- India is a unique location in the sense that the most competitive place with large volume for export is U.S., but the U.S. is almost the other side of the world. So the cost of shipping and the cost of logistics you need to add, which is why the pricing in India's import [ parity ] pricing. So we do have -- our Indian prices are reflected. What will be the cost of the closest competitor shipping the material into India, including the logistics and freight and all that put together, port charges that will be put together. So India is competitive on its own even though it is synthetic because most of the natural sites are, I would say, have additional layer of logistic costs because they are -- the material comes in from U.S.
And are you seeing any slowdown in the domestic detergent industry with regards to demand for soda ash?
The domestic detergent industry has a bit of seasonality. I think that is not a -- so monsoon, they do see a bit of lower offtake than post monsoon but all units are running flat out. All I can tell you is that there is no material in the market. So the industry is still a bit of I would say slight softness during monsoon and that, again, it increases. It is not that people are not washing their clothes during monsoon but that is the way the trend is. I just want to tell you that's what we've seen from the customers. Other segments are more or less steady. I think detergent will have slight lesser offtake during monsoon and more during rest of the year.
Sir, just last one question. So if we look at the demand contribution, globally, the glass industry is bigger than the detergent, while in India, it is a detergent bigger than glass. So if you can share what would be the addressable opportunity in terms if you can quantify the addressable opportunity of the glass industry towards the demand for soda ash in India?
We will come back to you. I think it's a good question. The glass in India is underpenetrated. And as a building material as India build more homes, India build more office space, I think glass is going to grow. But we have a line of sight. It is going to grow at a rate which may be slightly higher than detergent but also there's an auto sector. So overall, this is an opportunity for all of us.
More importantly, also, I think as packaging ships to glass from plastic packaging for containers. And that also is a growth opportunity going forward in line with sustainability. More importantly, I think India will also see investment in solar glass, which will see a major uptick going forward because of the renewable energy and commitment government of India has made in terms of ship to solar and wind and renewal energy.
The next question is from the line of Nitin [indiscernible], an Individual Investor.
So Tata Chemicals has been highlighting itself as a green chemistry company now. So in the old presentations, we have said that specialty chemicals will be around 50% going ahead. So any status on that? So what are the status currently on that?
So as far as the specialty piece is concerned, our bicarb specialty is [indiscernible], as it has growth plan and growth ambition, which you would have heard. And they will continue to grow at a rate, which at least in crop care, I can say, rate faster than the market growth and that is what we intend to do. And when I say market growth, Indian market growth. In terms of the other two areas which we entered, the fermentation platform in terms of nutraceutical that, as I mentioned already, we have to ensure the capacity utilization of current unit is fully achieved. That is what the focus is by getting more customers and getting more customer approval that's 5,000 tonnes. I think once it is done, we will look at optionality of exports and which direction to take the fermentation platform.
As far as Silica is concerned, we are today running at about 100% utilization in our [ direct ] grade line and almost close to 100% in [indiscernible] line, which is why we have cleared the approval for expansion of that capacity 5x time. Once that comes on stream, I think it will take our specialty segment forward. But also, while we don't say this, bicarbonate is a specialty product so is our trade of edible salt because the [indiscernible] specifically the opportunity for us with no fluctuation, it doesn't move in a commoditized front. So while these are not really resorted separately, when we made that statement, it included these two product also.
Sir, just a follow up question. So as [indiscernible] has said that...
[Technical Difficulty]
[Operator Instructions] We will move to the next question, which is from the line of [indiscernible], an individual investor.
I just have -- I'm not clear because your slide didn't mention the net debt this time. What would be the net debt position as of the end of the quarter?
The net debt number is INR 4,979 crores for end of June. 4-9-7-9.
Okay. And just is it good to assume because you said $20 million, $25 million -- $75 million less plus some Kenya debt. Is there a number that you are looking for by the end of the year, if you do the math around 4,000. Is that a good number?
We don't talk about forward-looking numbers here. So we got to be looking at debt being repaid. And you can assume a number based upon our normal cash projections and the debt [ income ] schedule. But we don't generally give numbers in terms of going forward on what the numbers will be.
Okay. In the India business and U.S. business, are there any customers with which you do like a forward contract like 3 months, 6 months? Maybe if you mentioned it and I missed it, my apologies, but if you can throw some light on that, I would appreciate it.
Customer or with company -- with customer or in terms of the quarterly sales.
No, no annual contract.
Yes, sorry, I think in the U.S., the domestic customer, this is about 50% of our revenue is an annual contract with energy concerns in place.
Okay. This is just in U.S., not in India at all, right?
India is mostly on quarterly, there are a few annual contracts, but there is a recent somewhere around half yearly contract. And there are some resets and market adjustments, which have put in place in terms of -- into those contracts also. But mostly, rest of the world is on quarterly price.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
Thank you. And what I want to just end was to say that we continue to remain focused on our customer, customer base, serving them well. Our strategy continues to be to grow the core and adjacencies, which we will continue to do. So really, it is going to be effort in terms of ensuring operational excellence to navigate this period of high inflation so that we can come out stronger on the other side. At the same time, put the growth CapEx on schedule and deliver on schedule on that. Thank you all, and see you next quarter.
Thank you. On behalf of Tata Chemicals Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.