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TATA CHEMICALS: Key takeaways
Urea plant running at peak capacity of 3,600 ton/day, but on refurbished converter. TCL
plans to hook up the new converter by mid March 2011. Since it takes at least a month
to hook up a new converter, the plant will run sub-optimally in March-April.
Due to a lack of clarity in government policy on gas allocation/pricing/lifting of cap-collar
rate on urea pricing for debottlenecked capacity, TCL is evaluating setting up urea plant
overseas in locations where gas cost is low. However, since this will imply increased cost
(by at least 30% to US$1.3 bn), TCL may explore partnerships for overseas Greenfield
projects
TCL feels the government has been aggressive in the recent subsidy cut for NPK fertilizers
under NBS regime. With increasing global demand for NPKs, the fertilizer output and
input prices are likely to remain high. In order to protect margin, TCL may take a (1) price
increase; however, full price increase at farmer’s end to compensate for cost increase is
not likely or (2) it may curtail DAP production in FY2012E.
100,000 ton capacity expansion at GCIP will come on stream by end-2011E which will
take GCIP capacity to 2.6 mn tones. Further expansion of 400,000 tons per annum is
being considered. This will require significant capex and may happen over next three years.
Future areas of growth are (1) debottlenecking of capacity at GCIP as above, (2) increase
in high-margin branded salt capacity to 800,000 tons from 500,000 tons, some of which
will come on stream by end FY2011E, (3) customized plant, 2 more to be set up after the
first plant at Babrala, (4) small SSP plant at Haldia, (5) evaluating setting up additional
capacity at IMACID.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TATA CHEMICALS: Key takeaways
Urea plant running at peak capacity of 3,600 ton/day, but on refurbished converter. TCL
plans to hook up the new converter by mid March 2011. Since it takes at least a month
to hook up a new converter, the plant will run sub-optimally in March-April.
Due to a lack of clarity in government policy on gas allocation/pricing/lifting of cap-collar
rate on urea pricing for debottlenecked capacity, TCL is evaluating setting up urea plant
overseas in locations where gas cost is low. However, since this will imply increased cost
(by at least 30% to US$1.3 bn), TCL may explore partnerships for overseas Greenfield
projects
TCL feels the government has been aggressive in the recent subsidy cut for NPK fertilizers
under NBS regime. With increasing global demand for NPKs, the fertilizer output and
input prices are likely to remain high. In order to protect margin, TCL may take a (1) price
increase; however, full price increase at farmer’s end to compensate for cost increase is
not likely or (2) it may curtail DAP production in FY2012E.
100,000 ton capacity expansion at GCIP will come on stream by end-2011E which will
take GCIP capacity to 2.6 mn tones. Further expansion of 400,000 tons per annum is
being considered. This will require significant capex and may happen over next three years.
Future areas of growth are (1) debottlenecking of capacity at GCIP as above, (2) increase
in high-margin branded salt capacity to 800,000 tons from 500,000 tons, some of which
will come on stream by end FY2011E, (3) customized plant, 2 more to be set up after the
first plant at Babrala, (4) small SSP plant at Haldia, (5) evaluating setting up additional
capacity at IMACID.
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