Tata Chem: Restructuring paying off - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Tata Chem: Restructuring paying off

Dec 7, 2001

A massive restructuring exercise undertaken by Tata Chemicals (TCL) last year seems to be yielding results for the company. The restructuring included a massive 25% reduction in its workforce, a conscious decision to exit non-core areas, a detailed plan to prune costs and a renewed focus towards marketing and brand building.

The revenue mix of the company is now skewed towards Soda Ash with a contribution of more than 40% coming from this business. After a free fall last year, due to Chinese dumping soda ash prices have shown a firm uptrend. Tata Chemicals is re-organizing every aspect of this business to improve efficiency. The company has set for itself a target to become the lowest cost soda ash producer in the world over the next three years. The company plans to cut costs by at least US $ 20-22/ tonne by various cost cutting measures. This is around 8-9% of the current International soda ash prices.

In the salt business, though the company was a pioneer in branded salts, it is having a tough time maintaining its leadership position due to competition from HLL. Besides a strong marketing push in the domestic market, Tata Chemicals is eyeing export opportunities in the Middle East. The urea business, though not lucrative, remains a cash cow for the company. The company remains one of the most efficient producers of Urea.

TCL plans to exit all non-core areas of businesses viz, cements and detergents. As far as detergents business is concerned there is a MoU with Jyothi Labs, though the sale price has not been decided. The cement business with a clinker capacity of 0.3 m tonnes is also up for sale. Armed with huge operational cash flows and expected cash flow from sale of non-core businesses, TCL plans to get aggressive on the in-organic growth front.

The current year would also see a major change in the capital structure of the company. First, it plans to re-pay / swap high cost debt in its books. Further, the company recently acquired shareholder approval to buyback 15% of its share capital from open market purchases.

Assuming that the buyback of the company goes through in the current year, the stock trades at 4x our expected earnings for FY02. Tata chemicals has paid an average of dividend of Rs 5.5 in last ten years with an average dividend yield in the range of 11-15%.

Equitymaster requests your view! Post a comment on "Tata Chem: Restructuring paying off". Click here!


More Views on News

TATA CHEMICALS 2020-21 Annual Report Analysis (Annual Result Update)

Sep 6, 2021 | Updated on Sep 6, 2021

Here's an analysis of the annual report of TATA CHEMICALS for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TATA CHEMICALS. Also includes updates on the valuation of TATA CHEMICALS.

TATA CHEMICALS Announces Quarterly Results (1QFY22); Net Profit Up 289.5% (Quarterly Result Update)

Aug 9, 2021 | Updated on Aug 9, 2021

For the quarter ended June 2021, TATA CHEMICALS has posted a net profit of Rs 3 bn (up 289.5% YoY). Sales on the other hand came in at Rs 30 bn (up 26.8% YoY). Read on for a complete analysis of TATA CHEMICALS's quarterly results.

Tata Chemicals Shares Tumble Over 8% After Q4 Earnings (Views On News)

May 4, 2021

Key takeaways from Tata Chemicals Q4FY21 results.

Deepak Fertilisers Soars 52% in Six Days. Stock Hits 52-Week High (Views On News)

Jun 15, 2021

In the past one year, the company's share price is up by 336%. Can it go higher?

TATA CHEMICALS 2019-20 Annual Report Analysis (Annual Result Update)

Dec 11, 2020 | Updated on Dec 11, 2020

Here's an analysis of the annual report of TATA CHEMICALS for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of TATA CHEMICALS. Also includes updates on the valuation of TATA CHEMICALS.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Nov 26, 2021 (Close)


  • Track your investment in TATA CHEMICALS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks