Tata Chemicals Suffers Q4 Net Loss of Rs 818 Cr Amidst Declining Revenue and Exceptional Losses

Tata Chemicals incurred a net loss of Rs 818 crore for the quarter ending March 31, 2024, due to a provision for losses in the UK business. Total income declined, and profit after tax from continuing operations saw an 82% drop. For the fiscal year 2023-24, the company reported a declined profit after tax to Rs 449 crore. Demand for soda ash in India remained stable, while the European market faced pressure. The UK business incurred a one-time non-cash charge of Rs 963 crore due to muted demand and margin pressure. Despite adverse price movements, sales volume grew sequentially. The company is focusing on expansion projects and cost management amid ongoing geopolitical and market instabilities.

Tata Chemicals Ltd on Monday reported a net loss of Rs 818 crore in the fourth quarter ended March 31, 2024 on lower income and provision of loss on account of exceptional items of Rs 963 crore in the UK business. It had posted a net profit of Rs 694 crore in the year-ago period.

The consolidated profit after tax (before exceptional items and Non-Controlling Interest) from continuing operations declined to Rs 145 crore in the fourth quarter of the last fiscal, as compared to Rs 694 crore in the corresponding period of the preceding year, according to a regulatory filing.

The company's total income fell to Rs 3,589 crore in the fourth quarter of the last fiscal year from Rs 4,482 crore in the year-ago period.

During the 2023-24 fiscal, the company reported a 82 per cent decline in profit after tax from continuing operation to Rs 449 crore mainly due to provision of loss on account of exceptional items of Rs 861 crore and lower income.

Its net profit stood at Rs 2,452 crore in the preceding year.

Profit after tax (before exceptional items and Non-Controlling Interest), declined to Rs 1,310 crore last fiscal, as compared to Rs 2,452 crore in financial year 2022-23, the company said in a regulatory filing.

Total income also declined to Rs 15,707 crore in 2023-24, from Rs 17,007 crore in the preceding year.

''Overall demand for soda ash in India stayed stable during the (fourth) quarter on account of rising demand from the detergent and chemical sectors. During the year, salt production & sales were at the highest level,'' R Mukundan, Managing Director & CEO, Tata Chemicals Limited, said.

The European soda ash market remained under pressure due to muted demand and margin pressure leading to one-time non-cash charge of Rs 963 crore in UK, he said.

The company's overall sales volume grew sequentially from the previous quarter, despite adverse price movement on account of market factors.

''We continue to focus on customer engagement and sustainable performance, whilst maintaining a prudent balance sheet,'' Mukundan said.

He said the global demand is stable.

However, ''market remains cautious due to ongoing geopolitical instabilities, pressure from Chinese real estate market, high interest rates and situation of oversupply. We expect sustainability trend will drive the demand for newer applications like solar glass and lithium which will fuel growth,'' Mukundan said.

The company is focusing on timely execution of expansion projects and efficient cost management, he added.

During the fourth quarter of last fiscal, the Group has recognized, a non-cash write-down of assets aggregating to Rs 963 crore in UK, which has been disclosed as an exceptional loss.

In the full 2023-24 fiscal, the company has reported an exceptional gain amounting to Rs 102 crore. This represents write-back of provisions made in earlier periods for an indirect tax matter upon settlement of dispute with concerned state government authority.

''During the year ended 31 March, 2024, the Group has recognised a non-cash write down of assets aggregating to Rs 963 crore which has been disclosed as an exceptional loss, in respect of United Kingdom - Soda ash and Bicarb operations (UK Group operations).

''The impairment is primarily due to unfavorable market conditions and reduced demand for soda ash in Europe and the persistently low pricing outlook in the jurisdiction based on which the cash flow projections have been revised downward.

This impairment of Rs 963 crore represents the non-cash write down of the cash generating unit..., relating to the UK Group operations,'' the filing said.

A part of the USD 150 billion Tata Group, Tata Chemicals Ltd, is a leading supplier of choice to glass, detergent, industrial and chemical sectors. The company has a strong position in the crop protection business through its subsidiary company, Rallis India.

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