Tata Chemicals Limited (500770) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, and welcome to the Q4 FY '25 and FY 2025 Earnings Conference Call of Tata Chemicals Limited. Please note that this conference is being recorded. [Operator Instructions] We have with us today Mr. R. Mukundan, Managing Director and CEO; and Mr. Nandakumar Tirumalai, Chief Financial Officer of Tata Chemicals Limited. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. With this, I now invite Mr. R. Mukundan to begin the proceedings of the call. Thank you, and over to you, sir.

Thanks, Nirav. Good evening, and welcome to everyone for this Q4 FY '25 earnings call, and I'll start the discussion with a brief industry overview, then move on to our highlights across business and geographies. Starting with the demand scenario across geographies, the demand worldwide, there was a surge. There was a growth, mainly led by China by 18% and India by 4.5%. The market conditions, while the rest of the world saw a very muted growth or decrease in demand of about 2.3%, the market conditions remain challenging, even as India continues to grow. While China, U.S. and Western Europe are either seeing flattish or slight decline due to reduced demand, mainly in the flat and container glass in all these markets. So going forward, we do anticipate that pockets other than China, U.S. and Western Europe to show momentum and growth and India will continue to grow. Though demand-supply balance softness, tariff uncertainties will also weigh in on the market. But however, I would say, looking beyond this medium and long-term remains positive, driven largely by sustainability trends where soda ash is one of the key ingredients for the sustainable transition of the world. In terms of supply side, soda ash remains well supplied and mainly the supply position will continue to remain strong, especially because supply has risen in China more recently. Soda ash capacity increased by 8.9%, and this was the main reason for decline in prices by over 25% from previous year. The tariff uncertainty could lead to shifts in production center of soda ash application industry, and this could lead to change in demand centers. However, some of the demand centers will continue to move forward with positive momentum. In terms of the TCL performance, the company reported for Q4 a consolidated basis, a revenue of INR 3,509 crores, EBITDA of INR 327 crores and a PAT before exceptional item of negative INR 12 crores. For Q4 financial year on a stand-alone basis, on a revenue of INR 1,219 crores, there was an EBITDA of INR 230 crores and a PAT from continuing operation of INR 97 crores. For the full year, the consolidated revenue was INR 14,887 crores, an EBITDA of INR 1,953 crores and a PAT before exceptional item of INR 479 crores. Similarly, for FY '25, the stand-alone revenue was INR 4,441 crores, EBITDA of INR 818 crores and PAT from continuing operation of INR 524 crores. India, the performance is higher compared to previous year mainly driven by higher volume, partly offset by lower realization of soda ash and bicarb. The quarterly sales volume of FO has increased significantly to 817 metric tons compared to Q4 of FY '24. During the year FY '25, company commissioned 230 kilotonnes of soda ash, which is fully on stream now and 140,000 kilotonnes of bicarb capacity in Mithapur, which is also fully on stream. U.S. overall, both the volumes and prices were lower than Q4 of '24 in FY '25. U.K. had lower volume, mainly because of the key reason of decommissioning of the casing of the soda ash operations in Lostock. And there's been an exceptional charge -- additional exceptional charge of INR 55 crores which has been taken to comply with certain regulatory and contractual obligations in U.K. And our focus in U.K. will be to move fully to high-grade value-added products. And in this regard, we have commissioned a 70,000 kilotonnes of farmer salt capacity in Middle East, U.K. Kenya saw higher sales volume and higher realization, mainly because they continue to focus on the domestic African market, which gives them better yield in terms of price contribution margins. Rallis results were lower amid continued weakness in export market, and this also is a weak quarter for Rallis, and they were in line with our internal understanding. In conclusion, going forward, I think our focus will continue to be focused on safety, focus on sustainability. While focusing on these 2, we will continue to focus on maximizing volumes across products. Focus on cost and working capital efficiency, and we'll also calibrate CapEx to the market conditions. We remain positive in terms of the medium-term outlook, and we also remain very, very focused on our outcomes in the immediate term to ensure that our free cash flow and operational efficiencies continue to be of the highest order. With this, I close my comments and hand over back to the moderator to open for Q&A. Thank you.

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

My first question is on the Indian business. We have seen improvement in the volumes and also on the margin side on a Q-on-Q basis. I wanted to know your views whether the government imposed minimum import price. Does it play a role in this kind of improved performance for us during the quarter?

No, I think this would have been done even without any support. And I think that MIP was, in fact, not a factor at all.

Okay. So it's going to expire in June? And how would you imagine the situation in India post this MIP expiry? You said you don't -- are not impacted, right, but what about the industry? Are you seeing any impact post this expiry of MIP next month?

I doubt it benefited industry. I doubt it's going to sort of impact the industry.

Okay. Secondly, on the U.S. business, and if you can also comment on the margins for the other businesses as well. The U.S. business, we have seen the margin kind of seeing persistent compression, right? While if I look at the realizations, it's still holding up at about $259, $260. And we used to make good margins at these realizations about 2 to 3 quarters back. Can you please explain what kind of led to such kind of difficulties in getting the profitability in the U.S. business?

I think the big issue in U.S. is not the -- mainly the domestic piece of the U.S. business is doing fine in terms of the -- both revenue and margin profile. It is mainly in the exports where there's been a margin compression. And I think fundamentally, one needs to watch out for the export pricing in the Southeast Asian markets and in the Latin American market. Latin American market, not such a big issue. It's been the Southeast Asian market where the prices are hovering somewhere close to, I would say, $200-odd per tonne. And they are not -- while they have positive contribution margins, but they are not full cost recovery.

So what you're relating to the fact is that the demand situation is much better in the LatAm and the Southeast Asian markets, but the pricing challenges remain.

I don't think there's a demand issue in the markets we operate. I think we are fully sold out and we'll continue to be fully sold out in all our products. I think as far as -- and I think the way we do see the next year going forward, we do see India, Kenya and the U.K. continue to move in the positive direction. U.K. mainly because they've restructured their operation. And I think the cost structures and everything will be reflected by first quarter, and you would start seeing the difference. And by second quarter, it would have fully settled down. So I think that's the profile, I would say, of U.K. because whatever residual issues would be there, they would all be out of the way during -- I think early part of this month itself, more or less it was out of the way. So I think we are not going to see any further cost impact and U.K. would continue to go towards a value-added cost profile, which is what India would continue to move in the same direction and Kenya would be. And U.K. -- U.S. domestic also should be positive. I think the main point being the U.S. exports, which we remain totally focused on how to improve the volume and the market mix and that effort the team is going to work on. It is not that we can't place the volume, but it is about where can we place the volume with opportunities to improve the margin profile.

So what could be a fair assumption to kind of build out the margins for the U.S. business? $40 per tonne of margin, when can we reach that back?

What is the question, just repeat that?

What I'm saying is what kind of improvement do you expect in the U.S. margins in the next few quarters? How much of that can improve?

See, look at quarters, the pricing is still subdued in the market here. So I think we have to look -- and since U.S. exports about 60% and keeps and domestic sales on the export part, the pressure still remains. So we don't expect any major improvement in the margins in the next few quarters in U.S.

[Operator Instructions] Next question is from the line of Ankur Periwal from Axis Capital.

So first question on the U.K. part of the business. You did mention onetime cost or expenses of around INR 55-odd crores for the quarter. But even if I adjust for that, the profitability on the business given the shutdown of lock there looks slightly on the lower end. So your thoughts on how you are looking at FY '26, given that Pharma salt also comes into picture in terms of ramp-up and the loss-making operations are also taken care of?

Yes. I think, as I said, by quarter 2, you would start getting the complete stable profile. And our anticipation is in terms of its overall, it should move towards the way Magadi transformed itself. So I think U.K. is on a transformation path. We are pretty much hopeful that, that will be the direction it would take.

Sure. And Nandu, sir, just as a follow-up, so any numbers or thoughts we can peg ourselves to maybe in FY '21, '22 profitability sort of a number that we can look at on a steady-state basis?

Look at the British salt numbers have improved in the last 3, 4 years' time. And therefore, when you get the annual report, it's by the end of May, you'll get all the numbers for company-wise performance. And then you can look at those and work out. So British salt is an upside, and I think EBITDA has in the last 4 years in away doubled. That would remain at a time. We also get the incremental volume from the Pharma grade salt in salt and Bicarb, the 80KT plant remains in U.K., which is going to deliver profits. Lostock is shut down. So Lostock losses will not be coming going forward. So broadly, we're looking at a kind of U.K. getting into a much better financial position going forward. The issue remains debt in U.K., which has to get serviced over a point in time. So I think broadly, it's a British salt and the 80KT Bicarb, which will do well.

Okay. Great. That's helpful. Second, on the Kenya side of operations, we have seen a recovery in profitability there. Volumes also have seen a Q-on-Q improvement as well as on a Y-on-Y front. Will this be a fair run rate expected to continue? Or there are more benefits that can flow through there?

Yes. In Kenya, I think this would continue. I think there is headroom to improve volume even further. That will be our attempt. But I think the current run rate is a fairly conservative estimate you can make. In addition to that, they've got an approval to expand their capacity from the government. The NEMA approval has come this quarter, and they are pressing ahead with the expansion initially for another 50,000 tonnes but this 50,000 tonnes will be a pure ash product, which means it can go into float glass. And we expect to bring it on stream sometime during the -- towards the end of the year. That will be another added benefit as we move forward in Kenya. And the pure ash product, at least the construct we have is it will come in streams of 50,000 tonnes because it is a very modular plant, which uses green power and solar power.

Next question is from the line of Rohit Nagraj from B&K Securities.

Sir, first question is in terms of the Chinese demand. So we have seen that last year also, it went up by double digits. First 3 months also, in your commentary, you said almost 18%. So any understanding as to which segments are driving this demand? And probably at certain point in time, there could be a backlash in terms of the user segment, there will be higher inventories and subsequently demand slowdown for soda ash. Just your comments on that.

As I mentioned, last year was a year of very strong growth in China. We don't expect similar growth to continue this year. Last year was about 18% surge driven by mainly solar and lithium carbonate markets. We don't expect because usually, we expect about 6% growth. So we are actually factoring in that China will probably remain stable or maybe have a negative 1% or so. So it's going to be somewhere stable in my view. So that's what we are projecting into our plan.

Sure. Sir, second question, in terms of the India domestic market, how are we foreseeing both the availability of soda ash in the domestic market and the exports and concurrent demand side, which and all segments are actually showing a good traction?

India will continue to grow, and we are seeing a very good traction of growth in both glass and all other segments in India. And we are at least factoring anywhere between 5% to 6% growth in India even in the coming year. And the Indian economy and Indian demand is one of the steadiest we will see for the next couple of years.

Next question is from the line of S. Ramesh from Nirmal Bang.

So if you were to look at the U.K. business in perspective, if you were to knock out the soda ash revenues and work on the margins, is a 20s kind of margin possible once everything is stabilized, maybe second half? What is your thought on that?

I think my suggestion is once we stabilize, I said, second quarter is what you should take. First quarter, I think, will be the continued process stabilization. The reason I say that is we will be finishing the reconfiguration of our power plant and other plants because these power plants are sized for a very large capacity of soda ash. They're being reworked and reconfigured. That work should sort of stabilize around second quarter. So just -- I would say I don't want to make any forward-looking statement. I think you need to wait for the second quarter numbers to come through. Part of the result you will see in the first quarter itself. By the time second quarter comes, it should stabilize more.

Okay. So in terms of the U.S. business and the overall interest expense outlook, in terms of the cash flows, when do you see the cash flows improving to levels where you can reduce the debt and bring down interest expense? And obviously, you need to see some traction in terms of the pricing. But at these prices, would you expect the current run rate in the U.S. profitability to continue? Or do you have any other levers where you can actually marginally improve the performance?

Yes. In terms of U.S., our focus is going to be to generate enough EBITDA margin and cash flows to at least start bringing down the debt marginally. So we are extremely focused, and we have actually tightened our belts in terms of when I said recalibrate the CapEx plan. I think the bulk of the recalibration in CapEx is happening in U.S. as we speak. And we'll be able to grow the momentum in U.S. as soon as we see that it has reached reasonable levels of free cash flows, which then can allow us to invest. So we are putting capital where the cash flows are good and where the cash flows need to improve, we will work on improving them. One of the big levers we have is to become even more cost efficient and cost competitive, and that effort is underway during the year. So you'll start seeing some of the results on that even while the market remains challenging for the U.S. exports, you will start seeing the results during the course of the year.

So just one last thought. If you look at the excess capacity play in the market, what is the kind of capacity that needs to be taken out for you to get back to normalized margins?

See, the excess capacity, I would say not excess capacity, excess uncompetitive capacity, I think, which needs to go up for the balance to happen. I think the -- if you look at the world prices, the highest world prices in Western Europe, I think the capacities there are being serviced at unsustainable levels. And ideally, they would be the ones. Also in these sort of markets, we expect the new CapEx for synthetic to sort of slow down and that will also make sure that as growth comes in, demand growth continues, we have a reasonable balance coming through. So broadly, I would say that in the markets we operate now, we are not an operator in the European market. For us, the -- we work with a pretty stable outlook towards capacity and continued growth of the market. The balancing in Europe will only take out some of the material which needs to -- which flows out from Turkey into Europe, that will continue to increase. That's...

Next question is from the line of Vivek Rajamani from Morgan Stanley.

Just a couple of clarifications on the U.S., I know you mentioned that the export realizations in some markets were the main reason for the decline in EBITDA. But I just wanted to check if the surge in gas costs that we saw this quarter, did that also play a role in the margin compression? And the second clarification I had was, if I remember correctly, in the last quarter, you mentioned that 2 shipments got pushed out to this quarter. So just wanted to check if it wasn't for those shipments, would the U.S. volume numbers would have been lower this quarter?

Yes. I think the U.S. volume numbers are lower this quarter, mainly because I think we had congestion at the Port of Portland because of weather condition and the day rate get pushed out. So they will come into the books in the first quarter of the current financial year. And in terms of your question about -- sorry, can you repeat the first question? What did you ask before that?

Yes. Just wanted to check if the increase in gas cost, did that also play a bit of a role in the margin compression?

See, gas is fully hedged. I think our big issue more than the cost side in most of the units variable cost side, it has more been the market pricing and also fixed costs where there are opportunities. So I think we are focused on those 2 elements. U.S., in fact, our gas consumption is only 25% of our energy portfolio there. 75% of our energy portfolio still is coal. And the -- while we will convert to gas fully by 2030, as we speak, 7%, 8% is coal, which is more or less stable. There is no movement in the cost at all. So for us, the impact is not high, and that has not made any difference. Our biggest difference is the -- as Nandu highlighted, we need to maximize volume. Maximizing volume does bring down variable cost because the utilization rates aid efficiencies of operation. And the second piece is about making sure our fixed cost is fit for fitness. There are opportunities there. And also markets we serve, can we get to slightly better servicing of markets where the profile market mix is better.

Sure, sir. So just as an extension to that because you mentioned the logistical problem, then would a 600 kilotons sort of a quarterly run rate be a realistic number to assume going forward, assuming you don't have any other constraints?

For U.S., yes. It should be very much possible. I think we are also in the process of adding warehouse capacity so that the production rates and evacuation rates don't get affected. So we will be doing that to aid the aid a steady production, but 600 on an average, be very comfortable.

Sure, sir. And if I could just squeeze in one last clarification. I think in your opening remarks, did you mention that there was supply growth in China once again? Did I hear that correctly?

Yes. In China, there's been a supply growth. I think that is where the capacities have come in last year. And basically, the inner Mongolia capacity was not running at full rate, full capacity due to maintenance outage, but now it is fully back on stream. So the maintenance...

No, no, so, apart from the inner Mongolia capacity, sir, there is nothing incrementally new, right? It's just the ramp-up of that capacity. Is that correct?

Yes. Basically, we're out of the maintenance outages, which is why I think the exports to China stopped.

[Operator Instructions] Next question is from the line of Arjun Khanna from Kotak Mahindra.

Sir, when I look at our net debt, it's up roughly INR 1,100 crores. And in the presentation, we talk about net debt being higher due to higher working capital debt in India, U.S. and U.K. But when I look at our balance sheet, I do see inventories up only INR 30 crores, trade receivables being flat at INR 1,900 crores and trade payables actually in our favor of around INR 120 crores. So what am I missing here?

Arjun, I think it's more in terms of the -- we also had a CapEx incurred during the quarter. So I think a temporary funding for the year for CapEx. And this year, we had, I think, peak CapEx in India and all over the place. So that is a temporary working capital loan taken to fund the CapEx. But over a period of time, that will be repaid from our equity coming in, in terms of the profits being made. So otherwise, the inventory is more or less intact. It's more like the -- I would say, U.K. had also certain expenses and the variable cost being more. Otherwise, it's more in terms of funding the overall cash needs of the company, which came in the year, the EBITDA was there, but it was offset hugely by the CapEx incurred and the last stage because this CapEx was incurred for the last stage of Mithapur, which had the capitalization happening for soda ash, bicarb and salt. So it's a matter of temporary funding taken through working capital growth.

In terms of CapEx, so we spent roughly INR 2,000-odd crores in FY '25. What is the outlook for FY '26 and beyond, if we have any number for '27?

It will be lower because this year was a peak, Arjun, as I spoke about the U.K. pharma grade salt was capitalized in the current year, the salt and bicarb came. So this is a peak. We'll go back to the historical trends going forward, at least for next year.

So our plan would be about INR 1,000 crores for FY '26?

See, our sustenance CapEx should be clocking anywhere between INR 550 crores or so, INR 550 crores, INR 600 crores so. And beyond that, I think our biggest CapEx is increasing the capacity in silica plant -- sorry, our FOS prebiotics plant at a cost of about INR 18 crores. And there are no other major CapEx is being planned during the year. We'll come back to you.

What about Kenya, sir. Kenya has 50,000?

Yes, that is at a very minor CapEx. It's -- we'll give you the figure in the next meet when we do. It is about -- Kenya is about -- next year is about INR 60-odd crores.

For 50,000 tonnes?

Yes. 50,000 and other capital expenditures there.

Sure. And my final question, second question on freight costs. So if I see freight and forwarding costs year-on-year, while we have increased volumes by roughly 1-odd percent, we see 11% increase in freight and forwarding charges. Is there any onetime impact on this? Or is there anything you'd like to call out on this number? Are the mix change, et cetera, the way we do business?

Yes. One is the increased volume we had in the current year, Arjun. And secondly, we look at the increase also this year, we're getting out of ANSAC in the last year of ANSAC and which means that now we have to directly get the CNF price and pay the freight for it. Till last year, we had ANSAC a much higher share. We were at their port in U.S., and they were incurring the freight. So the model has changed in U.S., and this is the third year and the last year of ANSAC coming out. Next year would be entirely exports without any ANSAC play. So that's a change in model, which means now we get a higher revenue, but we also incur higher freight.

Sure. But would it have a positive impact on margins?

See, that we can't say between ANSAC and export, both would be more or less similar. But in the non-ANSAC, tell you we know who the customers are. At this point in time, I think premature to comment on whether I'll get better margins by doing non-ANSAC sales, but broadly it should help us in the long-term. Now we know exactly who the customers are and we can service them better.

Next question is from the line of Abhijit Akella from Kotak Securities.

Sir, in your opening remarks, I believe I heard a number of 8.9% increase in capacity for soda ash for the full year last year at the global level. Just wanted to confirm that number. And then if you could please also just help us with a demand growth number if you would happen to have that for the -- for last calendar year as well.

So last calendar year, I think both were about similar, I think 8.3% and 8.9%. So I think the demand grew by 8.3% and the supply, which came on stream was 8.9.

Understood. And with regard to the outlook for capacities in the global market, would it be possible to share your perspective on how you're seeing things? There is a large capacity expansion by [ shisham ], I believe it's called in the U.S., 5 million tonnes odd and then some other smaller expansions in various parts of the world. So any sense of how much new capacity could be expected over the next 2 or 3 years?

Our view is that expansion in U.S. for export market is unviable at these prices.

Yes, that's...

I'm saying that at the current export price realization and margins, the expansion of capacity is not viable. And the point is that at the end of the day, you have to finance these. It won't be -- numbers don't add up.

Understood, sir. But as per your market intelligence, are the suppliers in the market behaving rationally according to this? Or are the expansion still going on as per their plans?

I cannot comment on that. I can only comment on what we do. I think if you look at the market picture, it has become even more slightly hazy with all the tariff issues. And on top of that, interest rates are not coming down with the rate at which they need to come down. And I think if it is going to be debottlenecking where you're adding capacity for a very marginal cost, I think it is one scenario. But if it is a scenario of a fresh new capacity, I think it is challenging.

Next question is from the line of [ Dishant Gupta from Judit Financial ].

So my first question would be what exactly would you attribute the lower profitability to? Is it because of drop in realizations or increases in expenses or issues in the U.K., what exactly would be the reason?

So clearly, I think pricing as a role. And secondly, I think this quarter, some of the units could not perform too in terms of volume, especially U.S. And thirdly, I think the issue is also due to certain one-off expenses, which have been booked in this quarter.

Okay. And my another question would be like even the sales volume growth has not been very promising. So how will you maintain the sales volume growth in the future to offset the lower realizations or the volatility in the realization in the future?

I think we will continue to maximize throughput. I think in terms of sales volume, if you look at it, I think the volume loss, which we will have in U.K. in soda ash, more or less we will try to compensate with growth in India and Kenya. And India and Kenya will continue to offer opportunities for expansion.

Okay. And will you be able to give any number like how much sales volume growth would we expect year-on-year on a sustained basis?

See, the capacity has gone up in the current year as the numbers have been given to you. That will come for the next year's full year. This year only part year it came. So you can expect that for the full year next year, both India soda ash, India bicarb and U.K. pharma grade salt. That will be the incremental volume next year.

And that capacity increase would be according to you, it is met by the demand, like the demand growth also would be expected as much, right?

Yes, yes. Yes, yes.

[Operator Instructions] Next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly, can you provide us with the import number in tonnage for the quarter and for the year as a whole? As you mentioned that MIP did not play any role. So post the imposition of MIP, how have things been? And also an update on ADD, sir?

There has been a reduction, but my view is that -- and I'm giving my company view that MIP number is not impacting. It's about 1 million tonne of material came into India. But I think ADD, I think the investigation is on, so it is -- I would not like to comment on matter which is causing judicial process.

Okay. And sir, for the utilization levels, what are the current utilization levels? And what are the capacity addition for both soda ash, bicarb and salt? So if you could just give some color for the next financial year, how are the capacities likely to be set?

See, our numbers we have with you in terms of Tata Chemicals that is there. And beyond that, capacity expansion is almost quite U.S. unviable. We don't look at much expansion coming on board, except in China, which is already at -- in is fully operational. Otherwise, we don't expect at the current prices that companies can put up capacities, which will be viable.

That's correct. But I think the INR 2,000 crore CapEx, which we have spoken this financial year.

I know you're asking about our capacity. Our capacity, as Nandu has already mentioned, 230,000 tonnes of soda ash and 140,000 tonnes of bicarb has fully come on stream. The full -- what you saw in quarter 4 will be now seen through the full year. That is the upside.

Next question is from the line of S. Ramesh from Nirmal Bang.

So if you were to achieve the full utilization of your expansion in Mithapur soda ash and bicarbonate in terms of the depreciation run rate, would it be similar to what we saw in the fourth quarter for the full year about INR 72 crores? Or should we pencil in some increase there? And on this sort of utilization after the depreciation, would you be able to achieve the normal EBIT margin and ROCE of around 20%? Is that possible?

Ramesh, we capitalized sometime in October. So this Q4 would be the right number to track for the full year going forward quarter-wise.

So that entire 230,000, we can expect to be done in FY '26?

Yes. 145 kt bicarbon.

Okay. Sir, just some thoughts on the U.K. tariff rebates for Indian exports under the FDA. Any impact for soda ash, bicarbonate or any other business?

From U.K., we bring in very high-quality pharmaceutical grade products into India. Our exports to U.K. are not there. But I think certainly, we are examining opportunities to export high-grade pharmaceutical products once we start making in India to them. As of now, we don't manufacture. We make the pharma grades only in U.K. but it's an opportunity to manufacture in India.

Next question is from the line of [ Aditya from DB Securities ].

So I had a quick question based on your initial comments. You said the number or the volumes are increasing on the India front now and other regions, right? Would it be enough to compensate for the decline you're seeing in other regions?

Decline of what?

In the sense that your decline in terms of the prices in your presentation says that some sort of a demand is tapering down in U.S., Europe and China as well, right?

Yes. So I think in U.K., we don't sell soda ash anymore. I think it's mainly the soda ash sold, which is bought from the U.S., which we sell to customers with whom we have contracts in U.K. We don't manufacture soda ash. What I meant was -- the capacity which went out in U.K. will get compensated during the course of the year by India and Kenya put together. India has already added 230,000. There's another 50,000 tonnes, which is coming in Kenya. So that should compensate for the loss of volume. So we'll be able to go back to our volume, which existed when U.K. used to operate fully soda ash. In terms of bicarbonate, there is a minor reduction in U.K. of, I think, 40,000 tonnes, which we used to go to the flue gas treatment market. Because in India, we've already added 140,000 tonnes. I think our net increase in bicarbonate will be 100,000 tonnes already. And salt, we have added 70,000 tonnes in U.K. of the high-grade pharma salt and our capacities in India are fully operational. And there's further expansion coming on stream, which we will review during the course of the year and come back to you.

Sir, just a follow-up on that. Would that compensate for any -- with the increase in the production on the India side, right, will it help us sustain the EBITDA above the last year margin because it's now below 10%, right? And there has been a steady decline. I understand that the volumes are going up, but pricing pressure remains, right? If certain markets do well.

Correct. So Aditya, the pricing pressure remains. And I think what we've done is we've reconfigured our U.K. operation. That should be an upside next year. So that should get -- that should fix because our costs were high and we were having negative margins there. That is no longer there. And I mentioned that U.K. will transition to the same situation, which we have in Kenya, which is a profitable unit. And our -- India would continue to -- so you have 3 units, which will be clearly in the positive zone. U.S. exports remain a bit of a challenge, but we'll work our way through that through ensuring cost and operational efficiencies. So you should -- you could wait for the operational details as we move along, quarter 1 and quarter 2. That would give you an indicator of the way we are going to be transitioning into next year. The last 2 quarters are not a reflection of what the company is planning to do next year.

Okay. Sir, would you like to give some guidance on where the EBITDA margin should look like for FY '26?

We don't give guidance, Aditya, but I think that's what I mentioned. As the year unfolds, by quarter 2, you would have a clear direction of where we are.

Okay. Sir, just second last question, sir. With the tariffs coming along, right, do you see that because there is a clear pressure on China, do you see some of those export volumes might be given to us? Or can we basically take advantage of that in case if there is a sustained pressure on exports out of China?

I think in our view, we have not factored any of the major issues around tariff. It may lead to rebalancing of supply-demand centers. And as of now, from the centers we manufacture, we have not seen a major shift in the way we need to rebalance our market portfolio. And we'll keep you -- we'll keep updating you every quarter because this is a fast-moving situation, and we cannot project for the future. As we speak, our view is that our production center and market portfolio, we are not seeing any major shifts in the demand pattern that we see. But if there's a substantial change, we'll update you at the end of the first quarter.

Ladies and gentlemen, we'll take that as the last question. I would now like to hand the conference over to Mr. R. Mukundan for closing comments.

Thank you. Thank you for joining the call today to all the participants. While the market conditions remain challenging, our endeavor is to excel in operations through innovation, digital and customer delight. We continue our journey to embed sustainability guided by Project Aalingana, which the entire Tata Group is focused on. Our focus is to expand the core while being calibrated, and this will also include broadening the portfolio with high-grade and high value-added products. As highlighted in the previous calls, market remain range bound and the pricing scenario would continue as it is at least in the immediate term. We expect over a period of time, the market profiles to change and especially the positive benefits of sustainability as a driver will come into play. In terms of our approach, we would continue to focus on ensuring cost optimization and focusing on becoming more competitive. We will also be looking at ways and means to improve our capital program, including working capital, and we look forward to seeing all of you in quarter 1 of FY '26. Thank you all, and safe days ahead. Thank you.

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

Thank you.