Tata Chemicals Limited (500770) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, and welcome to the Q1 FY '26 Earnings Conference Call of Tata Chemicals Limited. Please note that this conference is being recorded. [Operator Instructions] We have with us today are R. Mukundan, Managing Director and CEO; and 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. I now invite Mukundan to begin proceedings of the call.

Thank you, and good evening, and welcome, everyone, to our quarter 1 FY '26 earnings call. I'll start the discussion with a brief overview of industry, then our operational highlights across business and geographies. The market conditions remain fluid and balanced. Overall, global demand is estimated to be flat in the near term due to uncertainties associated with some of the trading issues. The market condition remains steady in view of the demand being stable in India, China and some parts of other regions, including, I would say, Americas, excluding U.S.A. . Though demand-supply balance continues to be balanced, there are uncertainties in tariffs as it is a consuming industry, which will continue to weigh in on market in the immediate term. And as this uncertainty disappears, we could begin to see some more balanced approach to market growing. All soda ash markets continue to be oversupplied with high inventory levels in most regions. China inventory remains high at [ $1.8 billion ], a slight increase over prior quarter. This is going to continue to keep the market pricing range bound. In India, the soda ash list prices remain unchanged. On an average import prices remained range bound between $230 to $235. Although MIP has been extended, it has not had much impact on prices. In U.S., the export pricing to Asia continued to be under pressure and now has reached a balanced number. Overall, we expect pricing to remain in similar levels at least for next 6 to 9 months. In terms of company's operational performance, company reported quarter 1 FY '26 on a consolidated basis revenue from operations of INR 3,719 crores, EBITDA of INR 649 crores and a PAT of INR 316 crores. For quarter 1, the standalone revenue of INR 1,169 crores, had an EBITDA of INR 270 crores and a PAT from continuing operations of INR 307 crores. In India, the performance is higher compared to previous year, mainly due to higher volumes, operational efficiencies, partly offset by a minor drop in realizations of soda ash and bicarb. Quarterly sales volume of all products increased, including FOS to 869 metric ton as compared to 614 metric ton in quarter 1. U.S. overall, both export sales and prices were marginally lower. The export sales impacted by a spillover of the shipment to next quarter. In U.K., the cessation of Lostock operation led to a lower volume and the other parts of the business, which are continuing had better financial operations. Kenya saw a slight lower volume. Our prices were maintained as that of Q1 FY '25. Rallis saw an overall growth of 22%, a volume growth of 9% and price growth of 13%, driven by growth in Crop Care and Seeds business and EBITDA margin stood at 16% and a PAT growth of 100% in Q1. In conclusion, we remain focused on ensuring that we focus on customer delight and serving our clients well. We continue to focus on ensuring that we deliver on our outcomes in terms of volumes, costs and working capital efficiency. With this, I close my opening comments and hand back to the moderator to open for Q&A.

[Operator Instructions] Our first question comes from the line of Nitesh Dhoot from Anand Rathi Institutional Equities.

So my first question is on -- I mean, you mentioned in your opening remarks that -- and in the presentation that prices continued to weaken during Q1. And the overall global demand is also estimated to be flat in the near term. So if you could give some color on the extent of the price decline that we've seen in Q1 and Q2 so far? And what would that mean for company profitability going forward, reason-wise, if possible, given that India has some benefit of MIP till December, but for the other regions, how would it -- how is it likely to play out?

So firstly, MIP has had no impact. So let me just highlight. So it is -- the changes in the pricing has been fairly range bound. It's been between $3 to $5 at best, in some pockets, it may be $10, but that's the kind of reduction we've seen in most domestic markets. What we have seen is, and if you take a trading quarter basis, this will be very marginal shift in terms of $3 to $4 between last quarter to this quarter. And we believe that prices have more or less bottomed out. It's going to remain in this broad range.

Sure. And sir, sequentially, the India business and even the U.S. business witnessed a decline in volumes. So what exactly drove the improvement in profitability, I mean, for both these markets? I mean, if you could just give some color. And I understand, I mean, prices you mentioned in the opening remarks. Yes, please go ahead, sorry.

Yes. The U.S. sequentially, I said is a spillover so that 40,000, 50,000 tonnes will catch up in the next quarter. It is just a shipment timing issue. It has nothing to do with -- and India too, we see no major issues. We should be clipping around the numbers we've had in the previous few quarters.

Right. So just one last thing. So you had planned a structural EBITDA improvement of about INR 600 crores, INR 650 crores through shutdown of loss-making U.K. assets and volume ramp-up in India, Kenya and the cost efficiency initiatives that you have mentioned about. So do you hold on to your outlook for FY '26, considering I mean, some softening further on the soda ash pricing?

Yes. So let me clarify. I think while prices have softened, also the input variable costs have come down by almost the same number. That is why the numbers are holding. So I did not speak about the cost side. But having said that, I think our number, which is broadly what I had indicated was INR 600 crores, split equally between reduction in the, let's say, unviable operations in U.K., INR 200-odd crores in terms of additional bottom line contribution from new projects getting commissioned and another INR 200 crores in terms of cost improvement, I think still stands -- still holds fine for the full year.

Our next question comes from the line of Vivek Rajamani from Morgan Stanley.

Congratulations on good set of numbers. Just wanted to dig in a little bit deeper on the previous participant's question. If you could just give a bit more color on what's driving the sequential improvement in both India and U.S. given that the volumes are lower, but the profitability seems to be a lot more stronger. Any specific reason for that? And that's the first question.

See as far as U.S. is concerned, the main driver of the shift is -- one is the volume mix. I think there is a greater share of domestic sales versus export sale in this quarter, but that will correct itself as it goes into the future quarter because the shipment which got delayed was mainly because of the issue on export consignment, so there is a net realization and net margins have been higher because there's a higher proportion of domestic. So it's a mix issue in U.S. In addition to that, they have had a lower fixed cost so that has led to the overall improvement in the EBITDA and India is purely a volume-led change. The fixed costs are more or less in line, as there is a marginal increase but that was expected because new capacities are coming on stream.

So just a clarification given your opening remarks where you said that there has not been any significant changes in pricing, some minor -- would it be fair to say that the Q4 EBITDA numbers for both India and U.S. may be the more normalized numbers going forward? Or the 1Q numbers should be more of a normalized benchmark assuming no significant changes in pricing?

So broadly, I think in U.S., as I mentioned, the mix will normalize. So because of the mix, there is probably going to be in quarter 2 because quarter 2 will have higher share of exports and lower share of -- I think you would see that getting into a zone, which is slightly lower than this quarter. In addition to that, there will be some additional costs in terms of fixed cost. So I think U.S. should tend to drop a bit because of the 2 drivers, which are basically export domestic mix and the maintenance and fixed cost. So that's really the driver there. As far as India is concerned, we do believe that it is going to remain range bound, more or less what we are clocking. We may not see any major shift. If at all, there's any big shutdown, which is coming, it is in Kenya, but we have enough stocks to serve the market in the quarter 2.

Great, sir. Very clear. And just the last one from me. Given the recent news flows that the Chinese government is looking to -- is looking at the excess capacity that's there across the petrochemicals and the chemicals landscape. I just wanted to hear your thoughts if you think that could drive any kind of benefit from a soda ash perspective?

So all we are saying is there have been efforts by several governments. Chinese government is trying to do its piece, Indian government has put MIP. But in terms of market behavior and market condition, if we see an early sign, I will report that next quarter.

Our next question comes from the line of Saurabh Jain from HSBC.

My question is on the U.K. business. We saw that the margins have kind of improved sequentially, obviously, because of the product mix that has become favorable for now. But wanted to know your sense whether the current run rate is what something you expect to continue for the rest of the year? Or there is more room for improvement in terms of profitability and EBITDA that you deliver?

U.K., I think there are 2 big drivers of the shift, which will happen. I think the quarter 1, they have had to buy CO2 from market. So the announced CO2 production should start this quarter. Secondly, the pharmaceutical grade salt plant has been commissioned. But right now, they are going through a process of qualification with customers that should begin maybe in the second half of the year. So I think there will be 2 further drivers to move. We do expect to run the year towards exit during -- towards the third and fourth quarter with at least balanced or 0 losses at the PAT level in U.K. So I think the drivers towards that. And the 2 drivers of that are fundamentally the shift towards own CO2, which is obviously lower cost and also sales and approval of pharmaceutical grade salt from the customers in the second half.

Okay. Any numbers that you can share how much of savings are you targeting from this in-house Q2 captive plant.

We can't give specific, but I already sort of highlighted that we do expect that the 31 negative, which you see should disappear.

Okay. And what happened to the Kenya margins in this quarter? It kind of got a big decline sequentially. So any light on that?

I think fundamentally, the sale of -- the proportion, the mix of sale in the local African market had reduced. We are -- that should be back up as we move through the year again. So whenever they export more towards Southeast Asia versus domestically in Africa, I think the margins tend to shift. I think that would be back to normal.

Okay. Understood. Separately, there is a comment in the presentation that the PAT includes a INR 75 crore on account of income tax refund. Where is it reflecting? And is it in the India business?

It's India business there, both in the other income line, interest and the tax line.

Okay. But what is it relating to?

We got income tax refund order in the month of May towards the old case we had that was in our favor. So that came in the month of May, and we got a tax order for refund for both interest and tax. Actually, we had also informed the stock exchange in the month of May. If you look at the notice released by the company, the details are there on the stock exchange.

And one last question. What is the progress on the Kenya capacity expansion? What is the update there?

Yes. I think that's what I said. We have commissioned the 50-kiloton calciner. And it is going through what I call is the trial runs as we speak. So sometime during the second quarter, it should be delivering products towards the market. But we will clarify that specifically with more color in the quarter 2. But it is being commissioned, it's going through trial right now.

[Operator Instructions] Our next question comes from the line of Abhijit Akella from Kotak Securities.

The sharp decline in power and fuel cost this quarter on a quarter-on-quarter basis sequentially, is that primarily led by lower coal costs? Or is it the U.K. closure? If you could please help us understand?

Yes, it is a combination of the 2.

It is also led by lower gas, lower coal and also cessation of the operations.

Okay. So this is a sustainable number going forward, right?

Yes, this is a sustainable number. And also, there could be savings because some of the optimization work is yet underway. So that's where we are, but it should be sustainable.

And just on the U.K. expansion -- I'm sorry, the turnaround. There was this sodium bicarbonate project that we had planned. So is that still on track? And if so, by when could we expect it?

So we are going through right now, this is -- the design work is still continuing. And as we speak, we are continuing to progress that. But our first effort during the current year in terms of the needle is to make sure that we get -- at least we end of the year at a breakeven at the PAT level. That's what we are working towards. But we ensure that all the projects commissioned and all the existing capacity of bicarb is back on stream in a balanced way today because they had to reconfigure the unit because it doesn't -- no longer have a soda ash unit attached to it. They're also going through qualification of the pharmaceutical [indiscernible].

Just one suggestion from my side. I believe previously, you used to offer the geographical split of the U.S. volumes. I'm not sure I see it anymore in the presentation, but it will be helpful if you could start getting that once again.

Thanks for suggestion. Noted.

Our next question comes from the line of Sumant Kumar from Motilal Oswal.

So my question is for India, and we have seen an EBITDA improvement. So is there any kind of revision of the contract for soda ash, which is helping us the margin improvement or benefit of any input cost, our salt business has better margin in this quarter.

So all in all, I think the cost -- variable costs are down per tonne basis because it has been highlighted by several speakers, several analysts, the coal prices have come down. So that is certainly helping us. In addition...

We can't hear you, sir. Can you speak closer to the mic?

Is it clear now?

Yes.

We're getting an echo from your line.

No. Okay.

Yes. So the variable part were certainly lower. We're still getting an echo on from your line.

Sir, you may proceed.

Okay. So as I was mentioning, the variable costs are certainly lower on account of coal and other input costs. Also the higher volumes. And in terms of pricing, as I mentioned, it is range bound in some pockets, it's dropped a little, but it's thereabouts. So the real driver of this number is really higher throughput and making sure that our fixed costs are more or less even-steven and in line with what we had budgeted. So it's basically variable cost and volume.

Okay. And can you talk about the CapEx for this year and capitalization also?

See, last year, we had a peak CapEx cycle on account of the expansion in India that's now over. What's going to be this year is only the operational CapEx for all geographies and roughly around INR 1,000 crores we incur every year on the operational CapEx. Not much growth CapEx left to pay, everything is done last year.

CapEx this quarter -- this year?

Yes.

So what is the maintenance CapEx?

What is the?

How much maintenance CapEx this year?

Around INR 1,000 crores, I can say for the full year across the globe.

Maintenance CapEx?

Yes.

Okay. Okay. And anything about U.S. soda ash expansion and bicarbonate we were discussing earlier.

As of now, I think we are continuing to push ahead with the expansion and growth in Kenya. We will certainly be looking at opportunities for growth in India also. The next phase of growth in Mithapur is being worked out. We'll come back with specific numbers towards the third quarter of this year. While the design work in U.S. is continuing, we will press the pedal on that only when the market conditions seem to be clearer to us. As of now, we put it on a pause, but it will be a pause for -- in a couple of quarters or maybe a year. But the moment market conditions are clear, we would press it. So the work is continuing. The approval from the environment authorities, public hearing approval has been obtained. So it is pretty close to getting all the necessary approvals, but it's internally we are awaiting the right time to press the green signal.

Okay. Last soda ash side, the demand supply scenario and balance. And going forward, do you think in the next 2 to 3 quarters, we can have some balance soda ash demand supply. And any sense on that, any time line when we can see some tightness in the demand/supply in soda ash.

Yes. The current situation we are facing, there's not a demand problem. Demand is actually very fine. The demand is growing as per our projection. There is no issue at all with the market on the demand side. Our issue is more from the excess supply and the continuing operation of unviable units. If you look at the ceasing of operations, only 2 people have announced the announcement. One is us. And also the other third -- second largest player in Europe has also announced ceasing of one of his operations. We've just heard some news of a Chinese unit going into long maintenance shutdown, whether it is ceasing operation or this unit is Shandong [indiscernible], which is considering idling capacity. But we'll have to see as these announcements come. So actually, the big issue in terms of the major moving will be on the basis of either plants idling capacity or taking a pause for a certain period of time until the production catches -- demand catches up, right? Right now, it's not a demand issue. It is fundamentally a supply issue by some units which are unviable.

Our next question comes from the line of S. Ramesh from Nirmal Bang Equities.

So if you look at the China prices, so there is about $160. So to what extent is the market in Asia already discounting the entire excess supply from the Mongolia expansion? Or is there still some more increase in production from Mongolia, which can put further pressure on Asia prices?

So it's really Mongolia expansion has come on stream, which we knew. But I think the real issue is that at least prices, many of the units in China are not viable. So I think that there'll be some movement which needs to happen there. So really, the Mongolian unit is fairly competitive. It's a natural soda ash. It is really the synthetic soda ash, which have to take the call. We'll have to watch the news release.

Is the entire Mongolia capacity in operation now, that 5 million tonnes?

Yes, more or less.

In terms of the P&L now, can you give us some sense in terms of the sustainable run rate for depreciation, interest expense and tax rate particularly with reference to U.K. because there you have taken out 1 asset for the Lostock facility. So if you can put these things in perspective for U.K. as well as the company, it would be useful.

Yes. I think if you take the current quarter number, more or less, it will be somewhere around INR 5 crores, INR 10 crores around that number in terms of depreciation and amortization. And finance costs, depending on how quickly we can start to pay down debt, we will make some effort during the year. It will start to also go down. But the run rate mentioned in the current quarter should be what we would -- what one should expect during the year.

And what about the tax rate?

Tax. The current quarter has those tax refunds, Ramesh. Therefore, we can't generalize that. So it will be depending upon the full year's profit numbers what comes. Current year -- we can't take the Q1 tax as for the full year. It's got a number of one-offs.

Okay. And so if you were to dwell on the U.K. business, the EBITDA margins have improved. So in terms of the run rate, say, over the next 3 quarters this year and then FY '27, would we go back to the British Salt gross margins and EBITDA margins? And when you ramp up the Pharma business, do you think that entire volume can be placed next year?

Yes. I think that is what we expect will happen. So effectively, you will see a quarter-on-quarter improvement in the trend in terms of U.K. By the time you come to the fourth quarter, you would know exactly what will be the sustainable number or thereabouts as far as U.K. is concerned. So every quarter will be better than the previous quarter because as we start to stabilize bicarb unit with the new power configuration and having [ in-house ] CO2 that structure will improve. As the pharma salt starts to get into the market in terms of [ data ] that has higher margin. So it will start to impact or at least show that in the result. So we expect every quarter it should sequentially continue to improve.

One last thought on the India expansion, you have seen about 32,000 increase in soda ash on a Y-o-Y and another about 12,000 in bicarb. So would we see the entire capacity from the expansion being placed in the second half for soda ash and bicarb or will it take some more time?

The only one which is ramping up every quarter, every month is the bicarb because as you know, bicarb, we have to work with our customers in developing application. So the utilization will continue to trend up. If you say that broadly, I would say about 20-odd thousand tonnes of that will -- 5,000 tonnes per month approximately is an amount which we can make up as we move towards the end of the year. In terms of soda ash, there is no issue in terms of placement of the product or market issue.

In spite of the slowdown in auto and the container glass, you don't see a challenge in the Indian markets?

Overall demand, there is -- India will continue to show the higher -- our assessment of the market, at least for the first 2 quarters of the calendar year, Indian market has continued to grow. There's a slight dip in Chinese market by about 1% and then we anticipate for the full calendar year, market other than North America, which is in South America will also show growth. And China is a slight dip, India is the growth and U.S. is flat.

Our next question comes from the line of Rohit Nagraj from B&K Securities.

It might be slightly repetitive question, but I'm just referring to our Q3 presentation where we have given the expansion project pipeline. Soda ash India, 3.2 lakh tonnes, silica 0.6, soda ash U.S. 4, soda ash Kenya 3.5 and bicarb U.K. 1.8. So given the current circumstances, are there any deliberate delays on these projects? And what are the time lines that we are seeing for all the 5 projects and the overall CapEx as of now, which is envisaged for the same?

In terms of, as I mentioned, that the design work and the public hearing approval for the U.S. soda ash has been obtained. And so it needs just one more modification to get a full clearance. So the work is updated, but that is the one which is on pause as we speak. As far as India soda ash is concerned, out of the 320,000 broadly, we are looking at doing it in 2 steps of 150,000 and 170,000 tonnes. We will come back to you by the second and third quarter in terms of the operationalization of that as soon as the details are clear, but it is going to be more like a debottlenecking at a low cost rather than full expansion as we had thought of before because we do believe there are headrooms available in balancing capacities to do it at a much lower cost. In terms of U.K. bicarb, this year, we'll be spending time on making sure our current existing 80,000 tonne unit is fully run in a proper manner before pressing the pedal. There, again, design work is on its way. And in terms of the silica, we are going to do this in 2 phases. The first phase would be half of the number there, which is already undergoing. I think the execution is just about to begin.

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

Just a clarification on our U.S. EBITDA for this quarter. So if I look at Q-on-Q, given that large part of the business is contractual wherein we enter into contract for the full calendar year. I'm just trying to better understand the Q-on-Q variation here. You did explain on the volume bit. Because of the delayed shipment, volumes were lower. But it is purely because of lower export that there is a sharp jump, almost INR 100 crores odd jump on EBITDA. Is that a fair understanding?

I mentioned two factors. One is mix is correct. The second one is the lower fixed cost. The fixed cost may normalize next quarter. And broadly, the range we're looking at is about $2.5 million, $3 million up move on that. That's what we think of the fixed cost will move. Fundamentally, that is the second driver, which is in addition to the mix.

Sure. So on a -- from a steady run rate perspective, what should that number be, let's say, INR 150 crores odd on a steady-state basis give and take on a quarterly run rate?

We can't comment on that yet. I don't know. It's a forward-looking [indiscernible] mentioned fixed costs, fixed costs will go up quarter-on-quarter next quarter because we have some savings include that will come up in Q2. Apart from that, the mix will change in Q2 because of the export being more than the domestic. So we can't comment on the exact numbers what will be the run rate going forward.

Sure, Nandu. No problem. Just the share of exports in U.S. was around 60% last quarter. What was that number in this quarter?

We'll come back on that.

The export consignment, which got delayed to next quarter was about 45,000 tonnes that's the indicator I've already given. I think in terms of -- if you wait for the second quarter result, the H1 will be fully indicative of what the normalized number likely to be.

Sure. It should be good. Second question on the Kenya side, while the volume run rate is slightly lower versus what we had seen in the earlier quarters, the margin hit is there again. So the volume loss is largely because of the weaker domestic demand. Will that be a fair understanding?

No, no, not weaker domestic demand. I think it is mostly led by 2 factors. One is, I think there was -- it was one -- basically one delay in the shipments to Southeast Asia, which is not related to any shipment issue, but is the customer asking us to hold back some of the shipments into Southeast Asia, which will catch up during the year. And the second is the half of it is due to the domestic African supplies, which we are hopeful that we will make up during the current quarter.

The next question is from the line of Naushad Chaudhary from Aditya Birla Mutual Fund.

A few basic clarifications, sir. First on the soda ash prices in different geographies, just want to check are different geography prices more or less largely correlated? Or do they move in different directions?

So your question is, are they all moving in the same direction or a different direction?

Historically, the prices in different geographies are...

I get your question. Historically, the U.S. domestic tends to be more or less steady and it is -- the pricing is linked to the only the U.S. domestic market. Indian pricing, again, is more or less import parity, but there's also the issue of the Indian domestic pricing having a slight premium because of issues related to port and other handling charges and elements. And the true variable number actually is in Southeast Asian market where there's no domestic producer. So really, that's the one which gets impacted in terms of the pricing worldwide. So all regions tend to have a localized number, the one which moves in sync with the Chinese price is the Southeast Asian market.

[indiscernible] prices are fine. I just wanted to understand if everything moves in a similar direction?

It will not, will not because you see the U.S. and -- U.S. is on an annual contract domestic market. So really, it will not see any shift at all, whereas the pricing in Indian market is quarterly. So it will shift every quarter, if at all. And some contracts are half yearly contracts. So they are not going to move for at least 6 months. The U.K. market tends to be fully annual contracts, so they don't shift during the year. And Kenyan market or Kenyan exports are mostly quarterly to Southeast Asia as well as the Kenyan sales to -- U.S. sales to Southeast Asia are also quarterly, whereas U.S. sales to LatAm is mostly annual.

Second, on the -- again, on the soda ash pricing point of view, what do you think -- what can let the prices to drop further? Any possibility going down further from here on? And if it has to happen, what should let this?

So in terms of what we can control clearly is our internal cost structure, which is what we are focused on. And Naushad, in terms of what we have modeled is our realistic expectation when I mentioned there will be INR 600 crore improvement over last year, split INR 200 crores, INR 200 crores, INR 200 crores. That is our realistic expectation of where we expect the market to be. At best, I expect maybe a INR 50 crores or INR 60 crores move from what I mentioned, overall, in terms of numbers, if you put it, not more than that.

Last, on the -- from an export point of view, how long do you think soda ash typically as a product can travel globally in a normalized market condition?

Can you repeat the question.

From an export point of view, the soda ash product, can it be traveled in normalized market conditions beyond which it's not viable.

Beyond which it's not viable. Fundamentally, for synthetic producers, it cannot travel long because the variable cost of synthetic production is high. And it tends to be mostly domestic or near by market. But for natural soda ash players, they have a headroom to travel with a freight cost of anywhere between $30 to $50-odd anywhere in the world because the available cost is low.

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

Mukund, just wanted to clarify the previous comment regarding the INR 600 crore, plus INR 200 crores plus INR 200 corers. So I'm sorry, I couldn't exactly follow what this was. Is this the EBITDA delta that you're talking about for the upcoming year?

This was in relation to what will be the key bundles of improvement between last year and this year in terms of the performance. And I had mentioned that it is because of cessation of operations in U.K., that will contribute about INR 200-odd crores. The increased volumes in India will be 200-odd crores. And our own cost-out efforts, which we are doing, both at variable and fixed would give us INR 200-odd crores. That was broadly the comment I made last time and that is probably playing out as I expected.

Okay. So INR 200 crores x 3, so INR 600 crores is the total improvement on a year-on-year basis?

Correct. Correct. Which we expect during the year. U.K. is more or less in the bag. I think in terms of expansion also more or less in the bag. I think the cost out there is work in progress, which we are doing.

Our next question comes from the line of Mithil from unlistedindia.com

I had a couple of questions. First, on the natural soda ash industry, it is reported that in China also 2.8 metric tons will come into capacity in next year, 2026 as well. Is that on schedule or....? so it's reported 2.8 million metric tons.

Yes. I think there is an effort to continue to keep adding capacity, but I think we're also watching this space. I think this has to be first looked in the context of whether there's a rationalization of synthetic capacity in China. There is already an effort, and I think we need to watch this. So we'll clarify this to you maybe within the next quarter, very clearly where it stands.

Regarding the natural soda ash only. The WE Soda has bought Genesis in the previous quarter, and now they are the leading producers of natural soda ash. Given the dominance in the forward integration to glass also, are they in a position wherein they can keep the soda ash prices lower and still benefit? So the lower soda ash prices are still benefiting them actually.

So Mithil, I don't understand the question. I'm not going to answer if that is the question of a specific company. But generally, I want to tell you that when input material prices go down, for a downstream manufacturer, it is actually negative in terms of competitive advantage because this competition gets the raw material at a lower price. So broadly, let me leave that with you. I think that should give you where I think if you're a downstream product producer, you would want the raw material actually for your competitors to be priced higher.

Sir, the second question was on coal prices. They've risen from May. So we have seen a sharp reduction in coal cost -- fuel cost this quarter. So can it possibly go up in the next quarters?

We're constantly contracting. And our numbers are not tendered very much up. I'll cross check this number. But as of now, we think it is still biased towards down.

Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to R. Mukundan for closing comments. Over to you, sir.

Thank you, everyone, for joining the call today. While the market conditions remain tepid and challenging, our endeavor is to excel in our operations and continue to focus on what we can do internally. And we will ensure that we -- in all our current capacities which have come on stream are fully brought on stream, focus on cost optimization and optimization of working capital. Next quarter, we'll be able to give a better update on market conditions as the picture becomes clearer. Thank you all, and see you in Q2 FY '26.

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