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Tata Chemicals reinforces confidence

March 25, 2009

As per the company soda ash prices are stabilizing and demand in North America is stable despite slowdown as flat glass demand gets replaced by container glass. The company has also not scaled back price hikes it got in CY08 in UK and Netherlands.

Post channel checks and meeting with Tata Chemicals management we believe price correction in the stock is overdone given stabilizing prices in soda ash and strong expected free cash flow led by urea and iii) improving scenario in DAP.

Post de-bottlenecking, urea capacity is up 30% and is already functional. The company is in talks with Reliance Industries for gas supply and is likely to get ~US$6/mmbtu delivered cost. Moreover, we expect DAP and IMACID operations to become profitable in Q1 FY10 given strong correction in rock phosphate prices globally.

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