Tata Chemicals Ltd

NSE:TATACHEM

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Q1 FY '25 Earnings Conference Call of Tata Chemicals Limited. [Operator Instructions]

I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.

[Gavin Desa]

Thank you, Sagar. Good day, everyone, and thank you for joining us on Tata Chemicals' Q1 FY '25 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'd also like to state the duration of this call will not exceed 50, 5-0, minutes.

I now invite Mr. R. Mukundan to begin proceedings of the call. Over to you, Mukund.

[Ramakrishnan Mukundan, executive]

Thank you, Gavin. Good evening. Welcome, everyone, to our quarter 1 FY '25 earnings call. I have alongside with me Mr. Nandakumar Tirumalai, our CFO. I'll start the discussion with a brief overview of our operational highlights, following which Nandu can walk you through financial performance.

Overall, on the industry, I think the demand has been fairly stable across all end users. Demand for detergents, as you usually know within India, it goes through a bit of moderation during monsoon and then picks up again very, very strongly after winter and goes on to remain robust. Demand for flat container glass and solar glass is good. In North America, while the demand is flat, Europe experienced muted demand. And Chinese soda ash demand was fairly strong between Jan and May and -- Chinese soda demand was between Jan and May, and demand for solar glass and lithium carbonate was on a strong footing within China. And in Americas, the demand was more or less flat.

Imports into India, while they did go up between Jan to May, it has moderated post that and mainly on account of higher freight rates due to tensions in Middle East. U.S. operational issues, most of the companies have been able to resolve them. And most of the units in U.S. are operating at normal speed -- normal operating levels.

Chinese soda ash operation, however, was slightly reduced due to some issues in Inner Mongolia. And this also partly be heard was because of some issues related to quality improvement, which was needed in the product. So overall, I think the demand supply situation remains fairly balanced. And we do believe that this situation is likely to continue for a couple of more quarters.

Sequentially, company's overall sales volume grew marginally and India had stable volumes. Prices were lower.

During the quarter, we commissioned 2.3 lakh tons of soda ash at Mithapur. This capacity will come onstream in the coming months. Export market in U.S. saw lower volume. But between the last year of -- the quarter 1 of last year and this year, it is an increase. And sequentially, the export pricing was better. U.K. had stable volumes, however, the prices had softened. Kenya saw marginally higher volume and marginally higher prices sequentially. While this quarter 1 was mixed quarter, domestic business performed well, and there was a pricing pressure on export markets.

So overall, I think this quarter has played out exactly as we had anticipated. The operations have performed to a plan. We continue to focus on ensuring that we serve our customers well. We focus on being cost competitive and continue to deliver on the CapEx plan on schedule.

We would bring on stream several of the CapEx, which we have planned, including the bicarbonate capacity of 70,000 and also the pharmaceutical salt by second half of this year in U.K. So all in all, it's focus on operations -- efficient operations and servicing customers well.

With this, I will hand over to the moderator to open for Q&A.

[Operator]

[Operator Instructions] Our first question is from the line of Saurabh Jain from HSBC.

[Saurabh Jain, analyst]

My first question is regarding to one of the U.S. peers announcing a price increase in a couple of months back. So have Tata Chemicals also taken such kind of a price increase? And if yes, then what is the expectation on the margin profile in the U.S. obviously going forward?

[Ramakrishnan Mukundan, executive]

Yes. Actually, U.S., you would see that the domestic market is mostly annual contracts. So you would find right up to December, right through December the domestic prices will remain same, very high -- move in a very narrow band and almost stable. However, the export prices, we have seen a bit of up movement in the Southeast Asian markets, and we will continue to be in sync with the market.

[Saurabh Jain, analyst]

So do you expect that the benefits will flow to you in the second quarter, which may result in further improvement in the margin profile for the U.S.?

[Ramakrishnan Mukundan, executive]

The sales to Southeast Asia, sequentially, as we booked the orders, I think will come into play in the export markets. The domestic markets, I think it will be better that we speak to you closer to the month of Jan, that the new contracts will be negotiated.

[Saurabh Jain, analyst]

So what I want to understand on the export side, at least, would you see a benefit on the margins in the future quarters?

[Ramakrishnan Mukundan, executive]

Yes. I think as these -- as we service these orders, they are at a slightly higher price.

[Saurabh Jain, analyst]

Okay. So do you believe more than $50 a tonne kind of EBITDA margin is possible...

[Ramakrishnan Mukundan, executive]

No, I think we will move -- the move in the market has been between $10 and $20-odd at best.

[Saurabh Jain, analyst]

Okay. Understood. Again, the same thing for U.K., what happened in the U.K. geography this quarter, there has been a collapse in the margin. I thought it's a fixed margin contract, obviously?

[Ramakrishnan Mukundan, executive]

The U.K., there is a bit of an impact of volume. The second one is that I think the -- there's been a marginal -- there has been a drop in the earnings, which we used to get from energy business, which means we were supplying wired energy to the grid. That has impacted the margin for soda ash because -- so I think U.K., we expect a similar kind of margin to run through the year.

[Saurabh Jain, analyst]

Okay. So what you delivered in the first quarter, this is kind of margin would continue for the rest of the year is what you say?

[Ramakrishnan Mukundan, executive]

Yes.

[Saurabh Jain, analyst]

Okay. And my last question before I join back the queue is that, there has been a lot of rainfall in some of the resort regions where we had the rainfall. Are you seeing any sort of possible production disruptions for your salt and that may basically [indiscernible] from the vendors? Is that something kind of a synergy that is happening?

[Ramakrishnan Mukundan, executive]

Actually, as far as we are concerned, we would continue to at least I can speak up to today. We expect to be on track for delivering numbers as we have planned, and these will be numbers in terms of volume ahead of what we had last year.

[Saurabh Jain, analyst]

Okay. Okay. So no disruption as such is that [ position ]?

[Ramakrishnan Mukundan, executive]

We haven't seen, and you will have to wait till the month of September because monsoon detail is highly elongated. Hopefully, the situation remains as we have seen up to now.

[Operator]

The next question is from the line of Sumant Kumar from Motilal Oswal.

[Sumant Kumar, analyst]

Sir, can you talk about the Kenya sequential margin decline is all because of the prices [indiscernible] that our margin is not -- has declined sequentially?

[Ramakrishnan Mukundan, executive]

The Kenya margin is -- I think in terms of the per tonne margin, it is in sync with what would -- the market pricing is in sync with what we are seeing across the board. But however, there was a slightly higher variable costs, mainly due to the cost which we had in terms of realization, which is clearly the shipping and transportation cost was slightly higher this quarter. We expect them to normalize.

[Sumant Kumar, analyst]

Can you talk about the demand supply scenario currently in soda ash?

[Ramakrishnan Mukundan, executive]

We are fully sold out, and we expect to remain fully sold out.

[Operator]

The next question is from the line of Ankur Periwal from Axis Capital.

[Ankur Periwal, analyst]

First question on the India business on the capacity expansion for sodium bicarbonate. Just trying to get some clarity. We have already expanded 70,000 tonnes, and we are going to expand 70,000 further, is it?

[Ramakrishnan Mukundan, executive]

Yes, 70,000 has already come on stream. I think another 70,000 will come somewhere around October, middle October end.

[Ankur Periwal, analyst]

Sure. And this will aggregate to around 2,90,000 tonnes of capacity?

[Ramakrishnan Mukundan, executive]

That's right.

[Ankur Periwal, analyst]

And how do you look at the volume growth in the bicarb here? Historically, the numbers have been slightly slower, but given that we have ample capacity now, any thoughts there?

[Ramakrishnan Mukundan, executive]

I think your point about full utilization. I think this should happen through the year. So we expect the first stream should get fully absorbed during the year and the balance maybe by quarter 1 of next year. It may be even faster than that, but I think our teams are working to make sure the market is able to absorb the volume, but the bulk of -- India has much less a consumption of bicarb than other markets, and we do expect that this supply will drive some of the demand.

[Ankur Periwal, analyst]

Sure. So sorry, if I got you right, you're saying optimum utilization by the end of this financial year?

[Ramakrishnan Mukundan, executive]

Yes. What I was saying is that the first 0.7 should get fully absorbed during the year. And second 0.7 depending on how the market evolves, our plan was to sort of get it done by quarter 1 of next year, but it could be faster depending on how the market -- how we are able to service the market.

[Ankur Periwal, analyst]

Sure. And last question on the domestic, which is India's EBITDA improvement on a Q-on-Q basis. Any specific drivers there? How should we look at that business -- that margin improvement?

[Ramakrishnan Mukundan, executive]

Probably it's going to be stable. I don't think there's going to be -- see, most of the numbers will be stable. There was a question on Kenya. I think that would also normalize because there were some one-off shipping and one-off variable costs, which sort of impacted us. So we see nothing on horizon, which is going to impact our elements right through December.

[Operator]

The next question is from the line of Vivek Rajamani from Morgan Stanley.

[Vivek Rajamani, analyst]

Two questions. Firstly, on pricing on both the India and the U.S. Would it be fair to say that the improvement that we saw in the implied prices and margins was more due to the supply-driven relief that we were seeing in this quarter because you mentioned demand was broadly flat. That was the first question pricing.

And secondly, on demand, if you could just give some color on demand by geography and some key markets in terms of what you've been seeing after the June quarter?

[Ramakrishnan Mukundan, executive]

So in terms of demand situation, let me just say this that what I'm saying, you must take it with a bit of caution because while I said there's a stable demand. Europe is an area where muted demand is being seen. If you leave that aside, there are some -- the growth we have seen in Chinese demand. We need to be very watchful whether that continues because the general news from -- on all other front is that there could be some bit of softness if things don't go well. But I think the issue is that while this news has been around, the demand has been fairly good. So we are not able to sort of figure out the equation as it's playing out, so we remain watchful.

As far as South America and North America is concerned, especially in the Southern American side, you would know already the lithium prices are at the bottom, and the solar glass production also, the supply is ahead of the demand seen by the module manufacturers.

So what we are seeing is that the demand for soda ash has continued to be fine. But the market conditions, hopefully, for our customers have bottomed out and it should start improving. They've gone through a bit of a difficult period in the last 2 quarters. We are watching if there are early signs of that happening.

At the same time, I think on the Chinese side, we need to be watchful of any signs of softness. So on one side, the market could move in the positive direction. On the other side, you would have a potential. So that's why we said it's balanced right up to quarter 3. But as signals come, we will sort of highlight them to you maybe in the next quarter, if we pick up anything different.

[Vivek Rajamani, analyst]

Sure, sir. That's very helpful. And if I could just clarify on the supply side as well. Do you see a significantly more supply driven release this quarter? Because you did mention that there were issues on Mongolia [indiscernible].

[Ramakrishnan Mukundan, executive]

Correct. I think supply side, as I said, there's been an increase in freight rates, mainly on account of the tension which you're seeing in Middle East and other parts of the world. And that has led to some kind of -- certainly, some material not arriving into the Asian market.

The second piece on the supply side, as I mentioned, within China again, especially for solar glass, which needs low iron. The -- what we have picked up is that in our Mongolian plant, iron content is slightly high so unable to service the solar glass demand.

So there are very product-specific issues on supply side. Barring these 2, rest of the market is -- we are not seeing any major changes in terms of contraction of supply. So there's one quality-related supply contraction. Other one is the supply chain-related contraction.

[Operator]

The next question is from the line of Abhijit Akella from Kotak Securities.

[Abhijit Akella, analyst]

Sir, the [indiscernible] costs seem to have declined quite meaningfully on a quarter-on-quarter basis, leading to some margin expansion. So just wondering what the reasons for those might have been. And in the U.S. as well, we've seen some improvement in realization this quarter along with EBITDA per tonne. So if you could please just shed some light on both these aspects?

[Ramakrishnan Mukundan, executive]

So it's mainly on account of sequentially, if you see the energy and fuel costs and the cost of some of the materials have trended down, and that has driven mostly the reduction. So if you see power and fuel, and that's been one of the drivers. And the other element, I would say, in U.S., again, it's mainly steady production has meant that been able to maintain both efficiency and the cost line within control.

[Abhijit Akella, analyst]

Got it. And the debt numbers seem to have increased quite meaningfully sequentially. Is this just a precursor to the startup of the new capacity in India and therefore this should normalize? Or how should we read the debt trending [indiscernible]?

[Ramakrishnan Mukundan, executive]

The working capital increase of [ $800 -- INR 80-odd crores ], which has happened should normalize through the year. This is -- we are seeing it happen every year that before monsoon, we tend to stock up some of the material because we are now wanting to be safe and running short of these materials. So monsoon sometimes does drag on a bit longer.

And the second piece is that about INR 170-odd crores is an impact of capitalization of warehouse, which we have taken on [indiscernible]. So that's what the accounting norm is. Even though it goes through P&L, we have to also end up capitalizing. That has led to about INR 170-odd crores impact.

[Abhijit Akella, analyst]

That's helpful. Just one last quick thing for me. The China demand you mentioned in your opening remarks was strong from Jan through May. So post May, has it softened? Or do we just not have data at this point in time?

[Ramakrishnan Mukundan, executive]

We think it is holding well, but the only thing we need to be watchful because if you see the news flow, which has come both in terms of their vehicles getting stranded in Europe, if you look at the kind of the news flow, which is coming in terms of many of the countries wanting local production, I think we are watching all this, especially because China is such a big player in solar modules and also such a big player in lithium EV. So -- and it's a big part of the demand growth as we've seen. So anything happening in that -- in the sustainability space, it may be a temporary blip, obviously, but I think we need to -- while we all believe that sustainability is a long-term trend. But at least from the end user, we are seeing some bit of softness coming through, so which is why we are watchful.

[Operator]

The next question is from the line of S. Ramesh from Nirmal Bang Equities.

[S. Ramesh, analyst]

So if you look at the current pricing and margin environment, what is the kind of sense you have in terms of when you can saw year-on-year growth in EBITDA. And in terms of the interest expense because of the increase in your debt, what is the kind of increase in debt, we should expect for the year will be similar to what we have seen in the first quarter? And will you be able to reduce that trend, say, next year by repaying some of the debt?

[Ramakrishnan Mukundan, executive]

On debt, I'll have Nandu to comment. But in terms of the -- see, even if the margin profile remains the same, let me just say this. The capacity, which is getting commissioned as we speak through the year, next year should give us at least INR 400 crores bump up in the EBITDA. So I think if these conditions persist, that is what we think will happen if we look at all the salt bicarbonate and soda ash and the pharmaceutical salt capacity getting commissioned. So that -- keeping everything constant. But if market conditions improve, as we are saying in some places, it has started to improve. But if the trend continues, again, I'm saying if the trend continues, we need to be watchful in this bit of a difficult volatile environment. I think it's only going to be a plus point. We see that till December, we are clear. We need to be watchful. We'll update as we move along because our visibility doesn't extend beyond that today.

[Nandakumar Tirumalai, executive]

Also on the entire working capital debt, Ramesh, that will be unwinding by Q2 or Q3 as we start looking all the stocks. So Q1 is the aberration in terms of the higher working capital [ loan ] that will get unwound as we go by. So that number will come down going forward in India.

[S. Ramesh, analyst]

Okay. So just to clarify the increase in EBITDA, you mentioned INR 400 crores, if you take the 2,30,000 of soda ash, the increase in bicarb and the pharmaceutical salt...

[Ramakrishnan Mukundan, executive]

All told, the next full -- if we take a full year impact of that, that will be the number.

[S. Ramesh, analyst]

And including the entire 1,40,000 expansion in bicarb, right?

[Ramakrishnan Mukundan, executive]

All that, all that [indiscernible].

[S. Ramesh, analyst]

So in terms of how you see the global supply getting rationalized that being one challenge. So do you see any further reduction in the operable capacity or closures? And how do you see the Inner Mongolia capacity utilization ramp up also impacting the segment...

[Ramakrishnan Mukundan, executive]

Ramesh, let me highlight. Inner Mongolia, capacity is fully commissioned, fully on stream. They are having some quality issues with specific segments of the market, they need to address it. Hopefully, they address it. These are technical matters, which the companies do take a bit of time, but they finally address it. So if you ask me anywhere, this is anybody's guess, but it's not lost forever.

Second is as far as capacity rationalization is concerned, that you will see then and the news happens. But we've always maintained that the capacity, which will come under immediate pressure should be if the Turkish natural production starts to push the European capacities. We have not seen them come off, but we all know where the numbers are the weakest. You know our own numbers. So we'll have to wait -- watch that space carefully.

[Operator]

And our next follow-up question again is from the line of Abhijit Akella.

[Abhijit Akella, analyst]

Just a quick one. On the U.K. expansion, could you please just help us with the capacity over the bicarb capacity and the pharma grade salt, what's the capacity number there?

[Ramakrishnan Mukundan, executive]

The bicarb is constant. It's a pharmaceutical salt, which we are commissioned. About 30,000 pharmaceutical?

[Nandakumar Tirumalai, executive]

70,000.

[Ramakrishnan Mukundan, executive]

70,000 is the pharmaceutical.

[Abhijit Akella, analyst]

Okay. So the INR 400 crore incremental EBITDA we are talking about is basically 70,000 tonnes of salt from the U.K., along with the India expansion we've talked about?

[Ramakrishnan Mukundan, executive]

Yes, it is all included, U.K. pharmaceutical salt, India soda ash, salt and bicarb, everything put together gives us an EBITDA bump up of about INR 400-odd crores.

[Abhijit Akella, analyst]

And the 2,30,000 tonnes salt in India, is any part of that currently being sold? Or it's pretty much a 0 base right now?

[Ramakrishnan Mukundan, executive]

It will start to go to the market. As of first quarter, I would say that there is a very small increase quarter-on-quarter -- year-on-year number. Sequentially, in fact, there's a bit of a reduction. As you know, during monsoon, some of these people do tend to bring stocks down of especially these sort of materials, and that's what has happened. But otherwise, we do believe that sequentially every year, the salt will continue to grow at about 2% to 3%, and in some years, it may grow at 3% to 5%.

[Abhijit Akella, analyst]

All right. And just one last thing. The pharma salt, what sort of margin differential does it enjoy over the normal salt that we sell?

[Ramakrishnan Mukundan, executive]

It has a higher margin, but I've given you a total picture.

[Operator]

The next question is from the line of Rohit Nagraj from Centrum Broking.

[Rohit Nagraj, analyst]

The first question is that in the previous call, we had mentioned in a couple of calls that the market is oversupplied and now we are talking about the balanced market. There have been some logistic challenges. There have been some quality issues. But is it that -- I think there are no capacities which have gone outstream or probably any closures because of maintenance. There is inventory in the system and because of the logistic or any other challenges that is not coming to the market and once these are terribly getting taken care of, this inventory, again, will come back into [indiscernible] probably, we will have some bit of -- bit balance again. So just wanted what [indiscernible]?

[Ramakrishnan Mukundan, executive]

See, this current situation we are in is slightly what I would call, impact of the 2 factors you highlighted. And the -- if you look at India, inventory levels actually are lower today than before. And I think this is a combination of, as somebody highlighted, there were some constraints which came on supply side and some uptick, which happened on demand, and that got the system under a bit of a stretch, and there was a drawdown on inventory across. So that's the situation we are in.

[Rohit Nagraj, analyst]

Sure. This is helpful. The second question, again, slightly delving into China. So the current capacity probably from your estimates could be about 5.5 million tonnes, and that is completely operable. And given that the pricing environment in China still remains behind, the current pricing, does it hold the element of, again, some bit of demand-supply imbalance or the higher logistic cost. And once this factor normalizes, probably the pricing across other geographies, again, will start normalizing. And what is your sense in terms of the Chinese capacity, will it stop here? Or is it going to increase from the 5.5 million tonnes to any other incremental number?

[Ramakrishnan Mukundan, executive]

So I had highlighted again, I think if you look at short term, it will go through all these blips we are talking about. Long term, as I mentioned, a natural capacity will start to pressure, closest synthetic capacities. And that will play out even in China. And China has plants which are, I would say, competitive scale and also plants with a subscale. So that play out will happen in that local market, not in 1 year, 2 year, but I think play out over 2 to 3 years. So leaving that aside, the current situation we have faced is very unique, whether it corrects itself in 6 months, 12 months, we don't know.

And then there is a whole lot of geopolitics, which is extremely difficult for us to sort of decipher and read. But we will continue to engage with customers with market participants to best understand. And our understanding is it seems okay till December. But beyond December, we can't say. So we're going to wait for next quarter.

[Operator]

The next question is from the line of S. Ramesh from Nirmal Bang Equities.

[S. Ramesh, analyst]

Yes. So if you look at the Indian automobile sector, there is some concern about a slowdown. Does that concern you in terms of the growth in soda ash on India? And secondly, if you're looking at the solar glass from India, do you see incremental production in solar glass, especially after the import duty imposed on imports, will it be a positive for growth in that segment at least over the next 2 years?

[Ramakrishnan Mukundan, executive]

See, really, if you say the demand, as we had mentioned, that every 10 gigawatt needs 1 million tonnes. So I think the demand for solar glass will continue to grow, especially if government is on track in terms of ensuring solar power plays a key role. And solar power today is probably the one which is going to play, let's say, elemental role in shift to renewable in many ways.

The second piece around the domestic availability and domestic growth, I think they are in a very balanced phase, and that situation is likely to continue. If you look at imports as a share, I think the imports are down, if I'm right, from 31% to 23% now, about 8% drop, and that has been picked up by domestic players broadly.

[S. Ramesh, analyst]

Okay. So just one last one on the U.S. growth in both domestic and export market. So is that trajectory likely to be sustained in the next 9 months? And do you see an improvement in say FY '26 given the underlying demand in the segment there?

[Ramakrishnan Mukundan, executive]

So let me state it differently. Except in U.K., we do believe that we should either be better in volume terms or at least at the same level as last year in all the geographies. In fact, India and U.S. will show -- if we run our operations well, that is within our own limit and what we need to do, market is not a constraint for us to deliver higher volumes.

[Operator]

The next question is from the line of Saket Kapoor from Kapoor & Co.

[Saket Kapoor, analyst]

Sir, you alluded to the fact that the Q1 performance for U.K. is what things are going to be for the current year. So we had PBT losses of [ INR 60 crores ] for the first quarter. So these are -- this would be the trend for -- going ahead also? Or what factors should undermine this losses?

[Ramakrishnan Mukundan, executive]

See, within the number in U.K., there is a one-off, which is -- we had a one-off payment of 10 -- INR 13-odd crores, which was a fine which we had paid and we had actually declared that to SEBI. So if you remove that, the INR 60 crores should read more close to INR 45 crores. I think that run rate will continue. It may be less -- see, the issue in U.K. is that if, let us say, the renewable power generation there reduces, we would probably be closer to a INR 30 crores, INR 30-odd crores figure, if the renewal power does not reduce -- sorry, they have a high level of wind energy and generation, it will be close to about INR 45 crores. That's the kind of range that will fluctuate between in negative terms.

[Saket Kapoor, analyst]

And sir, what factors would change, what steps you will be taking to reduce these losses? Because this will be a big dent on the number if you take the annualized number of INR 200 crores plus INR 250 crores rather. That's a big amount.

[Ramakrishnan Mukundan, executive]

No, it's not INR 200 crores. So let me correct. I think it is, as I said, between INR 30 crores and INR 40-odd crores. So if you say that for the year, it is likely to be the number closer to INR 200-odd crores, If everything continues as is. The team is working on a plan. And let them execute the plan. And it's premature for us to sort of highlight. Obviously, we want the losses to reduce to 0. And that's a plan they are working to. And right now, it is still in, let's say, finalization phase, and they will come back with specifics. It includes a bit of cost rationalization and portfolio readjustment, which will partly come into play in the second half with the pharmaceutical plant getting -- pharmaceutical salt unit getting commissioned with a higher grade of bicarbonate getting sold. So all these are part of the [ trusts ].

[Saket Kapoor, analyst]

Okay. So then that will lower the losses to some extent?

[Ramakrishnan Mukundan, executive]

Yes, that little lower. And obviously, we want to end up in a situation by the time the year ends. We are at least talking about a much, much leaner number than what we're seeing today.

[Saket Kapoor, analyst]

Okay. And sir, when we look at this capacity augmentation for the sodium bicarb 70,000 and then further 70,000 and now totaling to 2,90,000 for us. Sir, what are the main demand drivers. And as I -- I think you mentioned that it is not domestic demand that will be kept into. So just correct me there. How are we going to run at high utilization levels. So where are the demand drivers for sodium bicarbonate?

[Ramakrishnan Mukundan, executive]

So on sodium bicarbonate, there's food, feed and pharma. And the feed market is growing well. For example, for cattle population, addition of sodium bicarb, it increases the milk production. It also has a positive impact on the environment. So I think for cattle, it's clearly the additive which we are promoting. .

In terms of food, certainly, it has a positive impact on several of the -- it basically softens the food in a way that other elements cannot do in a benign manner. And pharmaceutical, again, there is an application, which -- and in addition to that, there is a flue gas treatment market, which all the coal-fired plants, especially of PSUs like NTPC, they are now beginning to use that mainly for desulfurization. And that again is one of the key drivers because the environment nor for -- India will continue to use coal for some bit of time. And we will have coal plants for at least the next 10, 15, and 20 years. And all these plants with tightening norms will need to use the various process to desulphurize it. These are driving the demand. And clearly, we see them to continue to move up. And our business plan does say it will get absorbed.

[Saket Kapoor, analyst]

Right, sir. And last point is about the employee cost [ process ]. Now with realization, lower and the dynamics changing the impact of higher with other employee cost is also significant. So what's the thought process behind or this is the quarterly number that we are going to -- the run rate will continue to 480 level?

[Ramakrishnan Mukundan, executive]

In terms of employee numbers, as you would see in some quarters, it does bump up because that's the quarter in which we pay the variable pay and other elements. But if you take it normally through the year, I think it should be more or less stable. We are extremely focused on employee productivity, using all the tools to grow. And as I said, as new capacities come on stream, there is really -- one of the benefit is the operating leverage we have in all our units because these are all coming in brownfield sites. There are not any new sites getting opened. So that benefit will flow through.

[Operator]

The next question is from the line of Mithil Bhuva from Unlisted India.

[Mithil Bhuva, analyst]

I had a couple of questions. The first one being, we have seen sodium ion batteries emerging as an alternative to lithium ion. So as sodium ion requires soda ash, so what does the management see the impact on the demand for soda ash to customers?

[Ramakrishnan Mukundan, executive]

You want to ask your next question also?

[Mithil Bhuva, analyst]

Yes. So the next question is on the battery recycling, the waste and e-waste recycling as there is a big opportunity going ahead. So the management sees that as a bit opportunity in solving the issue?

[Ramakrishnan Mukundan, executive]

So we have nothing specific to state, except that our teams are looking. And if anything substantially does happen because we had done the battery recycling of the mobile and laptop batteries and that was mainly dependent on the cobalt pricing. But there's a need for technology as far as the vehicle recycling is concerned to have the right approach for LFP where we have to make them into a useful product. And as you know, cobalt is highly valued, whereas the LFP ingredients are out that value. And I think that work is underway, and there's nothing more beyond saying that work is underway.

Sodium ion battery, even our team is working. And I think for stationary application, we do see that as a great alternative today. But for mobile applications, I think mobility applications for cars, China seems to have got a very good energy density. We are able to get about 120, 130, but China seems to have hit a figure of 160, 170. Obviously, at that number, it becomes a viable alternate, but we will have to see how that evolves. But clearly, it is an opportunity for soda ash business, and we'll continue to keep a close watch on it. And also, if we can get our own solutions, we will talk about it. But as of now, it's all in the lab in [ Kenya ].

[Mithil Bhuva, analyst]

On the e-based recycling like the electronics...

[Ramakrishnan Mukundan, executive]

Yes. On the e-waste, as I mentioned, the last chunk of it, again, will come from mobility applications. And there, India is likely to remain an LFP market. And because India is like the LFP market, we need technology is slightly different, which rather -- which uses NMC, NMC the profitability depends on cobalt. In LFP it is not there. So our teams are working on it. There are no concrete plan for me to sort of mention anything to our stakeholders today.

[Operator]

We'll take one last question from the line of [ Santosh Kumar Kesari from Kesari Finance ].

[Unknown Analyst]

So I just had a very big question. In last year, we [Technical Difficulty]

[Operator]

[ Mr. Kesari ], we are not able to hear you clearly. There is a lot of background noise from your background.

[Unknown Analyst]

So my question is that the last year we got some good amount of profit and talking of like really good. Now in this year what happened that [indiscernible].

[Ramakrishnan Mukundan, executive]

We can't hear you clearly.

[Unknown Analyst]

Okay. Sir, I will then write an e-mail to you.

[Operator]

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

[Ramakrishnan Mukundan, executive]

Thank you. As I mentioned, our visibility in terms of markets says that we are in a zone of, let's say, narrow band of movement and our teams are well positioned to ensure that we deliver on servicing our customers well. We focus on competitive operations, and delivering on CapEx for growth of volume. At the same time, as Nandu has already highlighted, every surplus we have, we will deploy towards debt repayment. These remain our priorities. And certainly, as we get greater clarity on the market going forward, we will highlight them to you. This visibility, as I said, is up to December. And we remain very vigilant because these are times one needs to be extremely vigilant with the kind of market conditions we have. Thank you.

[Operator]

Thank you. On behalf of Tata Chemicals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.