Tata Chemicals Ltd (NSE: TATACHEM) Q3 2025 Earnings Call dated Feb. 03, 2025
Corporate Participants:
R. Mukundan — Managing Director and Chief Executive Officer
Nandakumar S. Tirumalai — Chief Financial Officer
Analysts:
Gavin Desa — Senior Partner and Account Head
Saurabh Jain — Analyst
Abhijit Akella — Analyst
Vivek Rajamani — Analyst
Sumant Kumar — Analyst
Arjun Khanna — Analyst
Ankur Periwal — Analyst
Ramesh Sankaranarayanan — Analyst
Rohit Nagraj — Analyst
Nitesh Dhoot — Analyst
Saket Kapoor — Analyst
Mithil Bhuva — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Tata Chemicals Q3 FY ’25 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.
Gavin Desa — Senior Partner and Account Head
Thank you, Sagar. Good evening, everyone, and thank you for joining us on Tata Chemicals Q3 FY ’25 earnings conference call. We have with us today Mr. R. Mukundan, the Managing Director and CEO; and Mr. Nandakumar Tirumalai, the Chief Financial Officer.
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 Mr. Mukundan to begin proceedings of the call. Over to you, Mukundan.
R. Mukundan — Managing Director and Chief Executive Officer
Thanks, Gavin. Good evening, and welcome to everyone. I am joined by my colleague, Mr. Nandakumar Tirumalai. I will start the discussion with a brief overview of our operational highlights across business and geographies.
The demand scenario across geographies is as follows. Two broadly, the Asian markets continue to show growth is particularly China, which has shown robust growth in volume compared to previous year. The US and Western Europe, rest of the market world in fact, led to US and is showing a slight decline, reduced demand for flat and container glass. In the short-term, the current demand/supply situation in our view is likely to persist. While in the long-term, it will be stabilizing and balancing out, driven by the growth sectors, primarily solar glass and the lithium carbonate and other-related markets, which are growing at a faster pace.
Supply has certainly increased in the — this quarter from major exporting countries, including China, US and Turkey. China’s exports have been muted and moderated depending on the domestic demand. But clearly, US and Turkey have upped the exports from their units. In fact, part of the exports also have gone to China, which has supported the — supported the increased output.
In terms of pricing, China soda ash prices sharply dropped anywhere between 25% to 30%. In India, soda ash prices declined compared to last year’s same quarter by about 15%, primarily driven by lower-priced imports. The domestic prices in Western Europe and US has remained steady. These are, as you know, mainly annual contracts. We expect pricing to remain at a similar level or around the same level, maybe trend a bit lower, at least for the next three to six months. Overall, the revenue was down 4% against Q3, largely due to pricing pressure. The performance is — in India, performance lower to previous year, mainly due to lower realization. It was offset by a little bit of higher-volume. Imposition of MIP is expected to be sentimentally positive as this will safeguard the domestic price volatility. Our plant is on-track to going to full utilization of capacity.
US overall sales volumes were higher, however, prices were lower than Q3 ’24. US exports to Southeast Asian countries, Indonesia, Malaysia and Thailand increased significantly. UK had low-volume. Pricing was slightly better. We also took an exceptional charge of INR70 crores. There are more than 20 in the conference, INR70 crores consisting of estimated expenses related to employee termination benefits. The decommissioning of the plant as we seize the operation of soda ash production at a lostop site. 70,000 merisol plant has been commissioned in UK. We’ve also as I mentioned, see the operation — this is the of loss of plant in is underway. Kenya saw low volumes, however prices remained steady during the quarter. Results were lower due to continued weakness of export demand and intense domestic market.
In conclusion, while overall, our volumes have tended to be better than previous year, especially in India and US and they will continue to remain so for the next quarter two, there is a pricing pressure which is impacting our margin structure even though costs have come down. We also do believe that the current prices are below cash cost in China and wood is actually unsustainable beyond certain point. Our focus is on increasing our sales volume through customer engagement as new capacities have come on-stream in India especially and these are available to sell-in the market. We will focus on cost rationalization and optimization, as well as we will calibrate our capex now going-forward to suit the market conditions.
With this, I hand over — hand it over back to moderator for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Our first question comes from Saurabh Jain from HSBC. Please go-ahead.
Saurabh Jain
Yeah. Thank you so much for the opportunity. I wanted to see the clarification. Did I hear it right that there are exports coming out of China now? And if yes, then can you quantify the amount and the reasons where it is heading to?
R. Mukundan
Sorry, question again?
Saurabh Jain
Yeah. I was saying…
Operator
Saurabh, your line was muffled. If you can use the handset mode in case if you’re using the speaker mode, please?
Saurabh Jain
Sure. Sorry, can you hear me better now?
R. Mukundan
Yeah, much better, much better.
Saurabh Jain
Okay. Thank you, sir. I’m sorry. Wanted to seek a clarification. Did you said that exports of soda ash are now coming out of China? If that is true, then how much is the quantum of the exports and which regions are they kind of flowing to?
R. Mukundan
Yeah. So I think China till last quarter remained a net exporter. There is some small quantities which are coming out of China, not a large quantity compared to the quantities which are getting exported from US and Turkey. And largely these — these products are going into Southeast Asia.
Saurabh Jain
Okay. And do you also see any synthetic capacities in China kind of coming back online? What are your thoughts over there or any closures in plants that you might have seen?
R. Mukundan
So, clearly, I think what is happening in China is exactly what we had said as the inner — inner Mongolia capacity at comes on-stream, that will tend to push the synthetic plants which are on the course to start to move material out because someone — somewhere some something has to give, exactly as you mentioned, either people start lowering their output or they become unviable. Already we have highlighted from all the data sources available, China is today selling at today’s market prices, both the processors who and process they use are below cash cost and we just have to wait-and-watch how long this is sustainable.
We do believe the current prices are unsustainable for — for China, for domestic and export blended together and especially for exports. Even from India, these prices are unsustainable for exports today. So I really think this is a — this is a point we had to wait-and-watch.
Saurabh Jain
Okay, understood. That is helpful. My second question is on the UK plant. I think there was a notification that the production of chemicals in that plant has seized production. So can you clarify, is it only a short-term pause or it is a complete decommissioning? What is the strategy on that plant and which chemicals in particular are impacted because of this? And if you can also quantify the benefit that it is going to flow to the company because of that closure?
R. Mukundan
Yeah. The cessation of that unit, lost of unit, it’s not a complete plant, but what it has seized is to operate the soda ash unit. There are some other parts of the unit, which will be still running. And for example, delivering some of the chemicals to customers there and those will continue, including the traded imported chemicals exoda ash which you are getting from US and good, the UK market. Our intention is to maintain our market-share in UK for heavy ash with material coming in from US and we would continue with production of bicarbonate and production of salt in UK. It is just that soda ash has been seems to be produced there.
Saurabh Jain
Okay. So it’s like a temporary pause because of adverse economics. And if things improve in future, then you will bring that capacity back live again.
R. Mukundan
No, the of plant is — to operate and it is unlikely that it is going to start.
Saurabh Jain
Okay. Okay, sure. Okay.
R. Mukundan
But other parts will continue. What I mentioned is the at Winnington and at — sorry, salt at middle, which will continue.
Saurabh Jain
Understood. I’ll get back into the queue for more questions. Thank you so much.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to two per participant. If you have any follow-up questions, please rejoin the queue.
The next question comes from Abhijit Akella from Kotak Securities. Please go-ahead.
Abhijit Akella
Good evening and thank you so much. Mukundan, you mentioned about calibration of capex in light of market conditions. If you could please help us understand what the revised plan might be now? You had previously articulated plans to expand across most of your major geographies.
R. Mukundan
Yeah. In terms of our capex in terms of the, let’s say, 400,000 ton in US and about 300-odd 1,000 ton in Kenya and 300-odd thousand ton in India. When I said calibrate, we are also looking at option of bringing them up in phases. In — in Kenya, for example, we will be bringing on-stream 50,000 tonne immediately and then we can bring out — bring the capacity out in steps of 50,000 or 100,000 tonne so that we are able to bring not — so that we manage our cash flows better, Abhijit, it is not to do that there is a change in-plan. Even in, we are examining, is there a two-step investment option there, which we will come back with specific.
But clearly this is when I said calibration, the target doesn’t change, but say we — there is an opportunity to bring these up in phases. In India, that opportunity is not there. The 300,000 ton will come as one stream only, whereas in US, it can come in two steps. In Kenya, it can come in about three to four steps.
Abhijit Akella
Got it. Thank you so much. And the other one I just had was with regard to any color you might be able to help us with on the progress of the annual contract negotiations in the US?
R. Mukundan
So contracts in US are more or less done. I think the annual contracting is more or less done barring some minor quantities, which need to be system. Even in India, I think contracting is for the quarter and some for half year is more or less down. So if you needed the color, the domestic prices I mentioned are either same or maybe a dollar or $0.50 or $1 less than last year, but it’s not a big move. So we’ll have to see margin structure depending on the gas price.
Abhijit Akella
Right. And the US also commensurate reductions?
R. Mukundan
Yes, when I spoke about a dollar — $0.50 to a dollar reduction, that is mainly the US market. It’s a blended number, so and in India, the pricing is more or less steady as we speak.
Abhijit Akella
Okay. Thank you so much and wish you all the best.
Operator
Thank you. The next question comes from the line of Vivek Rajamani from Morgan Stanley. Please go-ahead.
Vivek Rajamani
Hello. Can you hear me?
R. Mukundan
Yeah.
Vivek Rajamani
Hello?
R. Mukundan
Yeah, I can hear you. Go ahead. Vivek, go ahead.
Vivek Rajamani
Yeah, thank you, sir. Yeah, sorry. Sir, just a couple of clarifications. On the US, I think you’ve mentioned that there was a production outage, which potentially explains the sequential drop-in volumes. Could you also give us a sense of what the cost impact was which impacted your EBITDA because of the same?
R. Mukundan
Yeah. So see, Vivek, actually we have two large shutdowns in a year and usually this would have happened in-quarter two, we pushed it to quarter three and mainly to ensure that we are able to and we supply to customers even when the pricing was bit higher.
Now as far as the — as far as the quarter two is concerned, let me just say, including quarter-four, our annual number should be ahead of the previous year number. So we are on-track to sort of deliver volumes which are more or there or thereabouts. There’ll be no change in the volume as what we delivered last year. In terms of the maintenance cost, the quarters where there is a — there is a maintenance shutdown like this quarter. Usually it is about INR30 odd crores of cost impact for that of sustenance shutdowns.
Vivek Rajamani
INR30 crores. Got it, sir. And when you say that in terms of volumes, you should be above last year. Just to clarify, is this ongoing activity now over or is there some spillover into Q4?
R. Mukundan
No, no, it’s not over. It’s over. And I think it was mid-quarter we took the shutdown.
Vivek Rajamani
Sure, sir. Thanks. And just a last clarification for the question that was asked by the previous participant. You mentioned the US contract in terms of the ASP, it’s broadly unchanged. But your margins would be determined based on the gas pricing. If you just — if you could just elaborate a bit more on the margin part, that would be super helpful.
R. Mukundan
It should more or less remain flat, Vivek. I wouldn’t want to sort of — our team is still going through the process of hedging. We expect a — if at all, a squeeze of $0.50 to $1, not more than that per ton as far as the domestic sales are concerned.
Vivek Rajamani
Got it, sir. Okay, sir. I’ll rejoin the queue. Thank you so much.
Operator
Thank you. The next question comes from Sumant Kumar from Motilal Oswal. Please go-ahead.
Sumant Kumar
So sir, considering the — your competitor numbers reported today and they have shown a good operating performance, but it’s — for our soda ash, India business looks muted despite volume growth in salt and soda ash. Is that because of some — we are selling more on contractual basis or we have a lower spot sales?
R. Mukundan
No, if you really look at the EBITDA number for the — for the quarter, it is almost similar to previous quarter as far as the — as far as the TCL is concerned. And compared to previous — previous year, it is down by INR108 crores EBITDA, largely driven by the increase in employee benefits by 12% and freight cost by 16%.
Sumant Kumar
So I’m talking about India business.
R. Mukundan
I’m talking only about…
Sumant Kumar
Okay.
R. Mukundan
Yeah. So compared to India business, if you compare to previous year, the same quarter, we had INR206 crores of EBITDA. This year, we got INR209 crores of EBITDA. It’s almost at par compared to previous year. In fact, India business has improved from the EBITDA, which it had previous quarter, INR144 crores was the previous quarter EBITDA. This quarter — this quarter EBITDA is up to INR209 crores. It’s almost 60 odd crores more than INR65 crores more than last year. Last previous quarter, immediate previous quarter.
Sumant Kumar
So when we see the overall scenario or cost scenario for India business in energy cost and any other cost and that is not — that is mostly stable and our volume has also increased in soda, ash and salt, but still we are — we are showing a muted numbers. So is there — you are talking about the employee cost has increased for us?
R. Mukundan
No, no. In fact, when I said EBITDA, EBITDA includes all the employee costs, everything. So in fact from the previous quarter of 144, it has gone to 209 and from previous years the same quarter, it was 206 EBITDA. So that takes care of everything. Rest is all issues related to JV income, other income and all that. And also the interest cost because we also moved into India for the debt from Singapore has moved into India as we speak.
Sumant Kumar
Okay. Thank you.
Operator
Thank you. The next question comes from Arjun Khanna from Kotak Mahindra Asset Management. Please go-ahead.
Arjun Khanna
Thank you for taking my question. Sir, the first question is just to understand the capex going-forward. So when we had announced CapEx, we said that if we don’t see 20% IRR, we won’t go-ahead, given where prices are at this point in time. I’m kind of curious why we going ahead with the capexes given that it seems that a 20% IRR seems difficult at this point in time.
The second part is, if you could give us the timelines. So while we have done the first phase of capex for US, Kenya and India, what are the timelines for the expansion of 400,000 and 300, 300,000 in salt?
R. Mukundan
Yeah. In terms of — you’re absolutely right, in terms of the — which is what we said we’ll calibrate it. What has come on-stream, we will sort of run it to full capacity. What is going ahead is the Kenya 50,000 ton as we speak. And we also fundamentally don’t take a short-term view. We will calibrate it to cash flows, but we don’t take a short-term view. If we do believe that in the medium-term, these are going to trend upwards, which is what our belief is. We will bring it on-stream in a calibrated manner, which is not burnt them together, but bring them out in phases. That is what we are doing.
And these are — in addition to that, our capex mostly is brownfield. So for us, every rupee contribution we earn, the fixed costs are already covered. So it flows straight into the bottom-line. So for us, it is — the returns will still be good and we will keep a watch on the return, as you mentioned that if the returns don’t track what we committed, we will make sure that we either optimize the capex or we phase-out or we wait for better visibility.
Arjun Khanna
Sir, could you help us with the timelines of US, Kenya and India in terms of — is it a three-year period where we expect this capex to be done through? I understand they would be in phases, but what is the timeline for this 1 million ton expansion?
R. Mukundan
Yeah. So we had initially planned exactly what you mentioned three years. So depending on how we phase it, it may go into four years, but we’ll come back to you with specifics because it’s also brownfield. It allows us to bring capex on-stream, earn the cash-flow and then use the cash-flow, which we want to do the further expansion.
Arjun Khanna
Sure. Sir, just on the debt part of it, our net-debt is up almost INR900 odd crores. We had earlier stated that we are looking at paying down debt. Since then debt continues to move-up. So how do we look at this at this point in time in terms of calibration with capex. So what kind of peak debt do we envision at this point in time?
Nandakumar S. Tirumalai
Yeah. Nandu here. So on the debt part, Arjun, if we look at it, it’s gone up compared to March ’24, mainly on the working capital debt part, long-term debt is intact. In fact, we moved from Singapore to India, the debt also. So mostly working capital debt was the timing issue and that should over a point in time come down as we have the inventory because we also have higher inventory in end of December ending as you can that the count. So more of a timing issue of working capital. Long-term debt is — if you see last year, I get repaying in both Kenya and US. So long-term debt is lower than what we had earlier, but now short-term little.
R. Mukundan
Yeah. Also, I just wanted to highlight this point that if you disaggregate the debt, there is debt which is sitting in UK. And UK, as you know, we have already sort of seized the soda ash units. So UK is now going to run only two profitable lines of bicarbon salt. We do expect the UK to pay-down its debt on its own on the base of the cash earnings it’s going to have. India, as I mentioned, we’ll celebrate the earnings in such a way that we are able to also manage parallelly a certain deleveraging of the debt we have moved from Singapore to India because we believe that’s the right approach to do.
And US, again, I think we will keep an eye on the debt very clearly. What you need to take-out where the capex is more or less done, no major capexes are going to come immediately except for the GBP60 million which we had said we fund, but that is going to be very value-adding because it’s only in the bicarbonate and salt business. So UK more or less should be able to manage its debt. We’ll come back to this peak debt in the next quarter.
Arjun Khanna
Sure. The final question is just as a carryforward of this, we have created inventories. We see production much higher than sales. Given that the market remains tepid, just curious why we setting up additional inventories when we are not expecting much growth in the overall volume?
R. Mukundan
Yeah. So firstly, I think as far as US is concerned, the inventory is mainly because it has moved into the next quarter. They missed two shipments, the sailing the boards just about moved into the next month. So it is really a timing issue. It — the inventory buildup in India, we are very sure that we’ll be able to calibrate that to manage it at a reasonable level. Certainly, we had to test our plant. For example, the soda ash plant, the commission capacity was 1 million ton. So we actually ran and proved the plant can deliver per million ton and this quarter it produced, I think 251,000 ton thus proving the capability of the plant. But we are under no longer any pressure. So we’ll calibrate the output and the sales in alignment as far as India and India is concerned.
Arjun Khanna
Sure. Thanks for this and wishing you all the best.
Operator
Thank you. The next question comes from Ankur Periwal from Axis Capital. Please go-ahead.
Ankur Periwal
Yeah, hi, sir. Thanks for the opportunity. A few shorter ones. First on the India operations. Now year-on-year, while we have seen an improvement in EBITDA, which is largely led by the volumetric growth. We are expecting this higher volumes to sustain as well as the pricing-led pressure, which probably the full impact of the price decline is already there in this Q3 or Q4 can see further price decline? Thanks.
R. Mukundan
I don’t see an issue on price decline, but certainly the volumes will be more — sales volume will be more than Q3 and Q4. And sequentially, I think in India, we will be able to place more material in the market because we have the capability to place them. And also the material which will come out of Kenya is likely to be a pure of material in the sense that its purity levels will match applications which we have not yet sold, so that 50,000 tons also should find markets both in India and Southeast Asia out of Kenya. And Indian market will be fully serviced through our production from Metapur, which is now onstream.
Ankur Periwal
Sure. And pricing you said should be largely stable Q-on-Q?
R. Mukundan
It has not moved much in the sense that at least this is — this seems to be a moving horizontally around that a plus or minus minor movements, but we haven’t seen either a move-up or move down.
Ankur Periwal
Sure. A second bit on the Chinese capacity inner Mongolia. Last quarter we had highlighted there were quality issues and hence some issues in terms of the production ramp-up. Given that they are still continuing to be net exporters for the last quarter as well, how is the situation there in terms of ramp-up, is fully ramped-up now or there is still scope to increase it further?
R. Mukundan
No, I think it’s ramped-up to the extent they can. And we are not fully clear about the overcoming of the quality issues. It will be going to applications which can accept that quality. But the real issue is that the synthetic ash plants are selling below cash cost at the current price, $180, which is the current price. I think they need to sort of increase it by at least $30 more in our view. So we need to sort of watch out for how long this sustains.
Operator
Thank you. The next question comes from S. Ramesh from Nirmal Bang Equities. Please go-ahead. Mr. S. Ramesh, your line is unmuted. Please proceed with your question.
Ramesh Sankaranarayanan
Yeah. Thank you very much. So in the Indian Mitapur Soda Ash expansion, can you share the capacity utilization for soda ash and bicarbonate expansion capacities in 3Q? And what is the utilization we’ll expect in 4Q?
R. Mukundan
Yeah. I think our capacity currently is about 250 per quarter and if you look at this gross production and split it into bicarbonate and soda ash and dense and light ash, we should be running close to 235,000 to 240,000 tonnes. So pretty much that should give you the range of utilization about 90% to 25% here.
Ramesh Sankaranarayanan
And what was it in 3Q?
R. Mukundan
We had actually produced fully, we had produced to the extra 251, that was at the capacity it ran. It actually ran at full load, which is why the inventories went up to almost 20,000 30,000 tonnes.
Ramesh Sankaranarayanan
Okay. So that figure includes the bicar production?
R. Mukundan
Yes, we only declared the gross production, right, correct. Production figures is gross, the sales figure is met.
Ramesh Sankaranarayanan
Okay. So in terms of the run-rate on depreciation and finance costs, how do you think that will move compared to 3Q? Will it be similar or will there be any increase in 4Q and then for FY ’26 once current capitalization is done?
Nandakumar S. Tirumalai
It will be similar for the Q4 as of now because the debt is to be remaining same. So we don’t expect any increase in Q4 compared to Q3.
Ramesh Sankaranarayanan
And the same for depreciation?
Nandakumar S. Tirumalai
Also, because again, capitalize the whole thing in end of Q2 or Q3. So this will not change too much for Q4.
Ramesh Sankaranarayanan
Okay. So in terms of the 15% decline in prices, you mentioned in India, has your listed list price been reduced because we haven’t seen that in your website. So or is it more in terms of discounts? How has it worked out? What is the current realization for soda ash from your plant?
R. Mukundan
So we said 15% is on import offerings. It is not really — now then there are dollar prices, right, 15%. Now dollar itself is depreciated. So that should provide some color. So if you back-calculate that in rupees with all the duties put together that would have already taken care of about 7% or 8% of that 15% as far as the imports are concerned in rupee terms. Our rupee number, as I said, is more or less stable and hasn’t moved much. But this fall is on the import prices.
Ramesh Sankaranarayanan
Okay. So in terms of the latest that we hear from Canada kind of blocking imports of alcohol from US, do you think that will have any impact on the US container glass amount for alcoholic beverages because last-time when there was a disruption in beer production, there was a similar disruption in container glass demand. How do you see that impacting your container glass demand in US?
R. Mukundan
So our domestic sales into container glass actually is fairly low. Our sales are mostly into chemical applications where we — and to flat glass. So we haven’t — we don’t see that as a big issue for us. It will see the exact impact, but we are less — less impacted because our exposure is low.
Operator
Thank you. The next question comes from Rohit Nagraj from B&K Securities. Please go-ahead.
Rohit Nagraj
Yeah. Thanks for the opportunity. Sir, first question is on the UK soda ash plant, which is likely to be seizing to exist. So it has got a capacity of 400,000 tonnes. Effectively from this quarter onwards, that entire capacity will not be available and which also means that the 1 million tonnes we are targeting to add about 400,000 tons is just to replenish the soda ash capacity of UK, which is going out? Thank you.
R. Mukundan
Yeah, I think the — that’s one of the issues we are looking in US because the unit which feeds into the UK market is actually US, they will — they will get about and there’s a dense and light split. So we do see that they are now contracted out about 150,000 tonnes annually into the UK market itself from existing customers. So this is a — this is continuing to serve the existing customers, which we have in UK. So obviously, they have a market space available to at least take care of, if not, I would say 400,000 ton which we planned in US, at least half the number, which is why I said initially that we are trying to calibrate the market expansion in such a way that we also derisk ourselves from any variations in the market price.
Rohit Nagraj
Yeah, fair enough. And second question on the specialty products front, so we’ve seen that this segment has barely able to make any money at the EBIT level. So any specific reasons for the same?
R. Mukundan
This quarter is actually a weaker quarter for — for, which is why the amount is usually lower. And if you come to standalone, I think as far as we are concerned, this quarter, in fact, for the last two months, the market — the orders which were fulfilling are closer to about 80%, 85% of the production capacity. So we will come back with specific numbers for both Nutra and silica in the 4th-quarter where we should be producing to the fullest output of these two plants.
Operator
Thank you. Next question comes from Nitesh Dhoot from Dolat Capital. Please go-ahead.
Nitesh Dhoot
Yeah. Hi, sir. Thanks for the opportunity. So my question is on the amendments to the emission trading scheme, ETS, in EU, EU will likely lead to lower Turkish soda ash imports and benefit the local manufacturers. So Turkey players had also mentioned about an impact on the contract negotiations for 2025. So how should one read this in the context of Tata Chem shutting down the plant? And as a follow-up, is this — I mean, an incremental question there. Is it likely to put further pressure on the Indian industry as Turkey imports will likely increase significantly into India?
R. Mukundan
Yeah. So I think as far as Europe is concerned, I think their emission trading scheme and its impact on — to protect the domestic industry for the C-band which they have done. Natural soda ash still would be a lower carbon footprint than synthetic soda ash in many ways.
And it is — for Turkey, the natural market will continue to be Europe. That doesn’t change the basics of the discussion in terms of what makes sense and that’s where I would stop it. And the logistic cost to India and Asia, I think they have to come through, they have to come through Red Sea. So there are other issues in this market. What they will naturally try to push their product is to Western Europe and whatever is, let’s say, some overflow, if it does happen, it will find onto the eastern seaboard of South America.
Operator
Nitesh, does that answer your questions? The next question comes from Saket Kapoor from Kapoor Company. Please go-ahead.
Saket Kapoor
Yeah. Thank you for the opportunity. Sir, firstly, with the introduction of the minimum import price, the threshold level of 20,000 odd level per ton, how does this suffice a lot of this import issue, which you have alluded to in terms of the same flowing from China and other geographies into the country and thereby supporting our margins and also improved levels of utilization levels for the Indian operations?
R. Mukundan
I think it provides a floor. And secondly, as we said it is also sentimental in some ways because the MIP as we speak today is actually lower than the current prices at which we are contracting and we are not seeing our sales price ever touching that number. What is more important is that the anti-dumping investigations have started and I think that process will move-in parallel. So while this has been imposed as a quick measure to ensure it doesn’t go below a threshold price, the real numbers would come out when the ATD investigations are over, which is already underway.
Saket Kapoor
Okay, sir. So you are mentioning that the realizations are currently higher than the MIT mentioned?
R. Mukundan
Yeah, the current realizations for Indian manufacturers domes are higher than MIP in any case. So it has provided a floor, it has provided a psychological barrier. But I think in reality, the imposing of anti-dumping duties is a permanent measure, which will protect him in through the situation, which is — whose process is underway as we speak.
Saket Kapoor
Okay. And when can we hear more about it in the annual?
R. Mukundan
I have no definite timeframe, but this is up to authorities to investigate. Usually takes anywhere between four to six months of investigations.
Operator
Thank you. The next question comes from Mithil Bhuva from Unlisted India.com. Please go-ahead.
Mithil Bhuva
Yeah, sir. On the US front EBITDA margins can we say that the new normal is like 15%, it used to be 20% before even after the coal prices have come down actually. So the new EBITDA margins in soda ash business is around 15%.
Nandakumar S. Tirumalai
Yeah, this being a futuristic number, we can’t comment on that as of now in this call.
Mithil Bhuva
Okay. But has it come down actually, what is the expectation of the management? It used to be 20% before — but now after the new capacities have come, is it going to be 15% only?
Nandakumar S. Tirumalai
So this quarter also is a question of mix. So each quarter — the whole mix might be changed depending upon the customer mix. So one can’t really comment on quarter-on-quarter or that budget could remain. So therefore, I’m saying going-forward, what margin we’re going to keep, really can’t comment on this 1/4 numbers. It could be different because mix changes, it may have a higher EBITDA or lower EBITDA, but because I can’t comment on future numbers based upon this 1/4 numbers.
Mithil Bhuva
Okay, sir. And how is Tata Chemicals plan to decommoditize like the management and had said that they will decommoditize Stata Chemicals, how do you plan to do it? Just any comments on that?
R. Mukundan
No, I said we will also move businesses into more non-cyclical. So in fact, we’ve added disproportionate capacity in bicarbon salt, which we will continue to do and also grow the soda ash to the extent we can enter segments through brownfield expansions.
Mithil Bhuva
Any other area of chemicals that we are planning to?
R. Mukundan
Progressing our both utraceuticals and silica business. Those are the two we are focused on.
Mithil Bhuva
Okay. Thank you.
Operator
Thank you. Thank you. The next question comes from Arjun Khanna from Kotak Mahindra Asset Management. Please go-ahead.
Arjun Khanna
Thank you, sir, for the follow-up. Just on the side, so we did write-off all the plant and equipment. Now we have taken a provision for employee costs. Do we see further expenses maybe for cleanup of the site, et-cetera in the future?
R. Mukundan
Actually that is right. So what I would say, Arjun, is that when we — when we — when we took an impairment on the asset. We — an impairment is a testing which you have to do, whether you run the unit or seize the operation. The seizing the operation decision has happened only now and this is the cost to seize operations. Our best estimate as we speak today is it — we expect it is likely to remain in this range. If it’s slightly lower, it will release some money for P&L. If it’s slightly more, it will go into the P&L, but this is our best estimate in terms of employee benefits for termination of their services. This is what it is going to take us to close the site in a safe manner.
Nandakumar S. Tirumalai
So it includes both the cost in terms of the employee as well as oppose cost the INR70 crores.
Arjun Khanna
Sure. So we do not envisage a major incremental expense post this.
R. Mukundan
No, not a majority, but also there will be some minor movements depending on actual expenses incurred is our best estimate.
Arjun Khanna
Sure. Sir, the second on the specialty, you did delve on it. But if I look at the standalone, we see that margins are close to nil even though we are operating at 85%. So either the pricing is extremely low or we are very inefficient at current scale. Could you help us understand what’s happening here given that on a sequential basis, margins have actually come off even on a year-on-year basis as utilizations are increasing?
R. Mukundan
Yeah. So I think you’re right in the sense that if we don’t increase the scale, at least double the capacity over a period of time because the utilities there have been set-up for almost double the capacity. It is going to move along. We didn’t want to add additional capacity till we proved that the current capacity could be fully used because otherwise you’ll have a much higher idle capacity. I think now that we are inching towards, we will move forward with a — what we call as a balance — balanced equipment which will be added to this unit to increase output for the market.
Arjun Khanna
So has the decision been taken and what are the timelines?
R. Mukundan
It is moving forward and we will come with specific number by that by the next quarter on exactly what is going to be the phasing. It may still be in two steps because we can add entire 5,000 in one-step or we can add it in two steps of 2,000 and 3,000 and we are working — that’s the plan today. The plan is just to add a one — do it in two steps rather than one-step immediately.
Arjun Khanna
Sure. Thank you. And again, wishing you all the best.
R. Mukundan
Thank you.
Operator
Thank you. Ladies and gentlemen, we will take that as our last question for today. I now hand the conference over to the management for closing comments.
R. Mukundan
Yes. Thank you and thank you for joining the call today. And as we spoke from the last call to this call, I think the markets have remained range-bound at a lower pricing scenario, largely driven of the supply-demand imbalance, which is existing today. We do expect that over a period of time, the current pricing, which are unsustainable, some changes will certainly happen. We can’t comment on the timing. So we had already highlighted that this level is likely to continue for three to six months at least.
In terms of the growth in-market, we do believe that India is well-positioned to continue to grow. Asia is well-positioned to grow. The US and Western European markets are flat or are you — Western Europe is slightly degrowing. How we do expect that US would move forward because it continues to grow as an economy at a good rate going-forward.
In terms of our approach, we have been very clear about our — in ensuring that we are able to run sustainable units. With that decision, we have taken the cessation of our UK plant. And as I mentioned that while we work — our growth ambition has not changed, we are only calibrating the growth ambition in-line to make sure our cash flows match with the capital needed for investment. And at the same time, we are able to deleverage in a meaningful way every quarter, every year going-forward.
Thank you all and see you next time.
Operator
Thank you. On behalf of Tata Chemicals Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.