Tata Chemicals: Transforming into a growth company; re-rating imminent

Tata

Initiating Coverage | Sector: Chemicals

Tata Chemicals

BSE Sensex

33,255

S&P CNX

10,212

CMP: INR692

TP: INR940 (+36% )

Buy

Tata Chemicals (TTCH) is a 78-year-old commodities company, reinventing itself as a

specialty and consumer products company. It has a diversified portfolio of businesses:

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val, INRm

Free float (%)

(a) soda ash and sodium bicarbonate, where it enjoys global leadership, (b) fertilizers,

TTCH IN

254.8

781 / 558

1/3/3

176.1

2.7

565.0

69.2

which it is exiting from, (c) agricultural inputs, through subsidiary, Rallis India, (d)

consumer products such as branded iodized salt, pulses and spices, and (e) a fledging

specialty products business – materials such as highly dispersible silica (HDS) and

nanomaterial, and nutritional products like oligosaccharides and polyols. It also has

sizable financial investments that it can liquidate to fund its growth.

Financial Snapshot (INR b)

Y/E Mar

FY18E FY19E FY20E

Net Sales

105.8 115.5 126.3

EBITDA

22.6 24.7 27.2

PAT

8.6 11.2 12.8

EPS (INR)

33.7 44.0 50.3

Gr. (%)

0.0 30.5 14.3

BV/Sh (INR)

368.7 394.1 423.2

RoE (%)

11.3 11.5 12.3

RoCE (%)

7.8

9.1

9.9

P/E (x)

20.5 15.7 13.8

P/BV (x)

1.9

1.8

1.6

Shareholding pattern (%)

As On

Dec-17 Sep-17

Promoter

30.8

DII

31.5

27.9

FII

11.5

15.1

Others

26.2

26.1

FII Includes depository receipts

Flight of rebirth

Transforming into a growth company; re-rating imminent



Dec-16

30.8

29.7

18.6

21.0

TTCH is using its cash cows – soda ash and sodium bicarbonate – to build growth

businesses such as consumer and specialty products. In the consumer business, it

enjoys leadership in the domestic table salts market and is fortifying its pulses and

spices portfolios. In the specialty products business, it is developing nanomaterial

and nutritional solutions.

Massive cash generation of INR39.7b via divestment of the urea and phosphatic

fertilizers business and sale of investments coupled with steady accruals from the

soda ash business would help TTCH repay debt. Its interest outgo is likely to

decline from INR4.1b in FY17 to INR2.1b in FY20.

As TTCH scales up its growth businesses and deleverages its balance sheet, we

expect its consolidated RoCE to improve considerably, in turn driving a stock re-

rating. We believe it would be fair to assign ~30% premium to its five-year

average EV/EBITDA of 7.5x. Our SOTP-based target price of INR940 (implied

EV/EBITDA of 9.7x FY20E) implies 36% upside. We initiate coverage with Buy.

Using cash cows to invest in growth businesses

TTCH is the global leader in soda ash and sodium bicarbonate. These are

mature, commodity businesses, growing at 3-4% per year and yielding

consistent cash flows. TTCH is using these cash cows to build growth businesses

such as consumer and specialty products. The company should be able to

enhance focus on these businesses following its exit from the regulated fertilizer

business. We expect the contribution of specialty and consumer products to

increase from 27% in FY17 to 33% by FY20, based on the progress in its existing

portfolio, though the company’s internal target is to reach 50% via the launch of

new products. TTCH enjoys leadership in the domestic table salts market and

will continue focusing on growing its other specialty and consumer products,

including nutraceuticals and silica. We expect specialty and consumer products

revenue to grow at a CAGR of ~14%, outpacing the overall growth of 9% over

FY18-20.

Tata Chemicals

Flight of rebirth

Sumant Kumar

91 22 3078 4702

Sumant.Kumar@motilaloswal.com

Please click here for Video Link

2 April 2018

Tata Chemicals

Stock Performance (1-year)

To be net debt-free by FY20; RoCE to improve considerably

Divestment of the fertilizer business and sale of Tata Global Beverages shares should

result in cumulative gross cash inflow of ~INR39.7b in FY18. Internal accruals would

add further to cash flows. TTCH is also focusing on working capital, which has

reduced by INR21b in two years. Strong cash flows will allow part repayment of debt

and also help invest in higher-RoCE businesses like specialty and consumer products.

TTCH is investing in manufacturing facilities for new materials (such as HDS and

nanomaterial) and nutritional solutions (such as oligosaccharides and polyol). At full

potential, these businesses should generate RoCE of 20-25%. We expect the

company to be net debt free by FY20 from net-debt-to-equity of 0.7x in FY17.

Interest outgo should reduce from INR4.1b in FY17 to INR2.1b in FY20, enabling 22%

CAGR in continuing business profitability over FY18-20.

Focus now on consumer…

TTCH has been a pioneer in developing the market for iodized salt in India, and

enjoys a share of 25% in the country’s powdered salt market. It has a distribution

network of 1.7m retail outlets, reaching 143m households across India. Compared to

the other prominent FMCG companies in India that have an average retail reach of

5m-6m outlets, we believe TTCH has ample headroom available for growth.

Leveraging on the network, TTCH has expanded its horizons to include branded

pulses, spices, besan (pulse flour) and water purifiers, where it is yet to realize full

potential.

…and specialty products

TTCH is also entering nutritional solutions. We believe nutraceuticals presents a

huge global opportunity, with an estimated B2B market size of ~USD60b in 2016 and

B2C market size of ~USD182b, which is expected to grow at 9% CAGR till 2021. At

full utilization, we expect the current planned nutraceuticals capacity addition (likely

to be commercialized by 1QFY20) to contribute 4% of consolidated sales and 5% of

consolidated EBITDA. This would increase to 9% of consolidated sales and 10% of

consolidated EBITDA on doubling capacity, and 13% of consolidated sales and 15%

of consolidated EBITDA on tripling capacity, with global B2B market share at just 0.1-

0.3%. Besides, it is foraying into yet another technology-enabled, differentiated

business – highly dispersible silica (HDS). HDS is a substitute for carbon black, which

had a market of INR50b in India in 2016.

Initiating coverage with a Buy rating

TTCH has traded at a one-year forward EV/EBITDA of 7.5x (average) for the last five

years. Our SOTP-based target price is INR940 (implied EV/EBITDA of 9.7x).

Considering the increased focus/business transformation toward higher-RoCE

segments (specialty and consumer products) and the divestment of a regulated

business (fertilizers), we believe it is fair to assign ~30% premium to its five-year

average EV/EBITDA. We expect TTCH to continue its journey to become a larger

specialty and consumer play. As at the end of FY17, net debt stood at INR52b. We

expect the company to become net-debt-free by FY20, with (i) cash generated from

the divestment of the fertilizer business, (ii) sale of investment in Tata Global

Beverages shares, (iii) internal accruals, and (iv) potential sale of investment in

group companies. Average free cash flow yield over FY19-20 is estimated at ~9%.

We initiate coverage with a

Buy

rating and a target price of INR940 –36% upside.

2 April 2018

Tata Chemicals

Company overview



Tata Chemicals (TTCH) started its journey in 1939 from Mithapur, Gujarat. It is

now a global company with businesses in inorganic chemicals & crop nutrition,

crop protection and consumer products.

The company is the world’s second largest soda ash producer with combined

capacity of ~4.2m tons. With manufacturing facilities in India, UK, Kenya and US,

TTCH is the world’s most geographically diversified soda ash firm, with almost

two thirds of capacity comprising natural soda ash.

Geographical Revenue

Europe,

12%

Exhibit 1: TTCH’s segmental and geographical mix (FY17)

Segmental Revenue

Segmental EBITDA

Speciality

consumer

, 27%

Speciality

consumer

, 29%

Africa,

Fertilizer,

16%

Commodi

ty, 56%

Fertilizer,

Commodi

ty, 68%

America,

24%

Asia,

60%

Note: Specialty consumer includes salt, other consumer and agri inputs, Source: Company, MOSL

Exhibit 2: TTCH’s sales mix

FY15

FY17

16%

43%

36%

12%

56%

15%

67%

18%

FY20E

14%

13%

Exhibit 3: TTCH’s EBITDA mix

FY15

10%

18%

57%

15%

68%

13%

67%

15%

FY17

FY20E

19%

16%

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 4: TTCH’s EBITDA margin mix

Fertiliser

25%

22%

15%

17%

13%

19%

Consumer

Agri inputs

Soda Ash & other inorganic chemical

27%

20%

16%

FY15

FY17

FY20E

Source: Company, MOSL

Exhibit 5: TTCH’s business segments

Living Essentials

•TTCH aims to provide nourishment and nutrition to millions of consumers across

India through iodized and iron-fortified salt, high protein unpolished pulses, aromatic

spices, as well as nutritional products and ingredients -- Nx (low-calorie sugar

substitute) and NQ range.

•Tata Swach is an innovative, low-cost, nanotechnology-based, offline water purifier,

providing safe water to the masses through a social enterprise model

Industry Essentials

•TTCH strives to provide sustainable inorganic chemistry solutions to customers across the

globe. The key products, soda ash and sodium bicarbonate are vital ingredients to diverse

industries including glass, detergents, sodium silicate, textiles, food, feed, mining and

chemical processing.

•The company's business strategy is delivering value-added, differentiated products and

solutions while driving cost competitiveness.

Farm Essentials

•TTCH offers multiple farm inputs that are required to improve crop health and productivity.

These include fertilizers, pesticides, specialty nutrients, seeds and agro-services.

•Tata Kisan Sansar and Rallis Kisan Kutumb are networks that offer information on new and

improved agronomic practices and facilitate use of agricultural inputs.

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 6: TTCH’s inorganic business segment

TTCH - Inorganic

Chemicals

Soda Ash

Mithapur,

Gujarat, India

TCNA - North

America

Green River,

Wyoming, USA

TCEHL -

Europe

Northwhich,

Sodium Bi

Carbonate

TCAHL - Africa

Mithapur,

Gujarat, India

TCEHL - Europe

Salt

Mithapur,

Gujarat, India

Magadi, Lake

Magadi, Kenya

Northwhich, UK

Source: Company, MOSL

Exhibit 7: TTCH’s global presence

Source: Company, MOSL

2 April 2018

Tata Chemicals

Transforming to a consumer product focused company

Specialty and consumer products to contribute 33% of revenue by FY20



Under its commodity portfolio, TTCH operates the soda ash and sodium bicarbonate

business, wherein it is a global leader. This business acts as a cash generator (steady in

terms of growth: average of 3-4%).

It also has growth engines in the form of the specialty and consumer products – the

company should be able to enhance focus on this business following its exit from the

regulated fertilizer business.

We expect the contribution of the specialty and consumer business to increase from

25% in FY18 to 33% by FY20 (based on its existing portfolio), while the company's

internal target is to reach 50% via the launch of new products.

Specialty and consumer (S&C) to contribute 33% to total revenue by FY20

The commodity business (73% of revenue) as of FY17 includes soda ash, sodium bi-

carbonate, cement and fertilizers. The S&C business (27% of revenue in FY17)

includes salt, agri inputs, pulses, spices and nutritional solutions. As planned, TTCH

has exited the highly regulated fertilizer business (urea and phosphatic), allowing it

to focus more of the efficient S&C business – the contribution of this business is

expected to increase to 33% by FY20, considering the current product portfolio.

However, the company aims to take the total contribution of the business to 50%

based on its planned product pipeline. EBITDA of the S&C business is expected to

grow at a CAGR of 14.6% over FY18-20 to INR8.8b while EBITDA of the commodity

business is likely to grow at a CAGR of 6.4% to INR17.8b.

Exhibit 8: Contribution of specialty & consumer business to increase to 33% in FY20

Specialty and Consumer Business

Commodity Business

76%

73%

75%

69%

67%

24%

FY16

27%

FY17

25%

FY18E

31%

FY19E

33%

FY20E

Source: Company, MOSL

Exhibit 9: S&C business revenue to grow at ~14.2% CAGR

over FY18-20E

Specialty and Consumer Business Revenue (INR b)

Growth (%)

14.1

14.2

Exhibit 10: Commodity business to decline at CAGR of 5.5%

over FY18-20E

Commodity Business Revenue (INR b)

Growth (%)

7.0

-1.3

36.6

98.4

-11.9

36.6

FY16

FY17

32.2

FY18E

36.8

FY19E

42.0

FY20E

118.3

FY16

FY17

-16.9

97.1

FY18E

-16.6

81.0

FY19E

86.7

FY20E

Source: Company, MOSL

2 April 2018

Tata Chemicals

Directing cash inflow toward efficient businesses

Selling of stake in group companies and exit from regulated fertilizer

business to help generate cash flows



The divestment of the fertilizer business and the sale of investment in Tata Global

Beverages are expected to result in cumulative gross cash inflow of ~INR39.7b in FY18.

Internal accruals should also further aid cash flow.

The company is also focusing on working capital, which has reduced by INR21b over

the past two years. Strong cash flows will allow part repayment of debt and also help

to invest in higher-RoCE businesses like specialty & consumer.

We expect TTCH to be net debt free by FY20 from net-debt-to-equity of 0.7x in FY17.

This will also help reduce interest outgo from INR4.1b in FY17 to INR2.1b in FY20,

boosting profitability.

Part cash flow will also be invested in manufacturing facilities to develop scale in the

specialty business of new materials (such as HDS and nanomaterial) and nutritional

solutions (such as oligosaccharides and polyol). At full potential, these businesses

should generate RoCE of 20-25%.

Reduction in debt via sale of fertilizer business and investments

TTCH sold its urea and customized fertilizer business in Babrala to Yara Fertilizers

India in August 2016 for INR26.8b. The transfer of assets to Yara was completed on

12 January 2018. It also sold its phosphatic fertilizer business in November 2017 for

INR3.75b excluding outstanding subsidy amounts. The transaction is expected to be

completed by March 2018.The move was driven by TTCH’s plan to build the

consumer and inorganic chemical businesses, and to focus on the farm business

through subsidiaries, Rallis and Metahelix. This should help TTCH to focus more on

the commodity and specialty & consumer businesses, and thus, foster growth.

TTCH was also able to reduce its working capital by selling the urea business – note

that the fertilizer business is government-regulated and requires significant

investments. Sale of the urea segment proved beneficial for TTCH as working capital

in this business accounted for 31% of the company’s overall working capital.

TTCH has reduced debt through focus on working capital, ultimately leading to a

reduction in the debt-to-equity ratio to 0.7x in FY17 from 1.1x in FY16.

Exhibit 11: Urea business WC investment constitutes 31% of total investment in WC

Particulars

Inventories

Trade Receivable

Less: Trade Payable

Net

TTCH INR m

15,075.4

29,227.7

13,468.5

30,834.6

For Urea Business

1,266.8

8,344.2

89.1

9,521.9

Urea Business as a %

of Total TTCH

29%

31%

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 12: Cash flow from sale from fertilizer business and investments

Particulars

Urea business

Deal Value (1)

Book Value (2)

Subsidy as a part of deal (3)

Capital appreciation (1-2-3)

Tax @30% on capital appreciation

Profit/Net Cash from sale of Urea (Excluding Subsidy) (A)

Net Cash from sales of Urea (Including Subsidy) (G)

Tata Global Beverage

Sales of TGBL shares (43.18 mn share @ 213.35) (H)

BV of TGBL

Profit from sale (B)

Phosphatic Fertilisers business

Deal Value (D)

Book Value of Business (E)

Loss from sale of phosphatic fertiliser (D-E) (F)

Complex fertiliser subsidy outstanding as on Q3FY18 (I)

Total Cash inflow (Including loss from sale from phosphatic fertilizer and urea subsidy

(G+H+D+F+I)

Profit from Sale of Urea & phosphatic fertiliser and TGBL (A+B+F)

INR m

26,820

10,210

7,400

9,210

2,763

16,657

24,057

9,211

6,500

2,711

3,750

8,863

-5,113

7,840

39,745

14,255

Source: Company, MOSL

Stake sale in Tata Global Beverages generated cash of INR9.2b

The Tata Group has been in constant talks to reduce the complexity in group

holdings, which would help group companies to carry core assets on its balance

sheets, and thus, allocate capital efficiently. Cross-holdings in companies where

shares of different companies are held by each other are being reduced. As a result

of the strategic restructuring, TTCH sold its holdings in Tata Global Beverages to Tata

Sons for a consideration of ~INR9.2b in September 2017. Such restructuring in the

Tata Group will keep significant free cash flows at TTCH’s disposal.

What lies ahead…

Apart from the above, TTCH has other non-core investments amounting to INR16.8b

at its disposal, which could be potentially sold as part of its strategic restructuring.

Exhibit 13:

Non-core investments held by TTCH

Particulars

The Indian Hotels Co. Ltd.

Oriental Hotels Ltd.

Tata Investment Corporation Ltd.

Tata Steel Ltd.

Tata Motors Ltd.

Titan Company Ltd.

Market Value of Non-Core Investments

No.

Shares (In m)

8.9

2.5

0.5

2.5

2.0

13.8

Market Price

136

43.7

763.6

578.5

338.8

943.9

Market Value

(In INR m)

1,211.5

110.4

363.4

1,441.7

666.2

13,050.5

16,843.6

Note: Price as on 27 March 2018, Source: Company, MOSL

2 April 2018

Tata Chemicals

Potential areas to allocate cash generated from divestment process

Exhibit 14: Potential areas to allocate cash from non-core assets

Repayment of debt

Deploy in specialty &

consumer business

Source: Company, MOSL

Repayment of debt to save interest outgo, boost profitability

The funds received from the sale of the fertilizer business and available cash in hand

could be used to repay debt and to invest in consumer business, leading to savings

in interest expense, and ultimately, increasing earnings. Debt repayment would lead

to 48% reduction in interest cost from INR4.1b in FY17 to INR2.1b in FY20. The

management intends to use the cash from sale of fertilizer business and investments

to retire India debt (INR20.5b in FY17). We assume long-term debt repayment of

INR15b in the standalone entity through the sale of fertilizer business and

investment in Tata Global Beverage. We also assume debt repayment of INR2.5b

each in the US and Europe & Africa businesses in FY18.

Exhibit 15: Transformation into a net debt-free company

Net Debt (INR b)

1.1

0.7

0.1

12.7

-2.1

0.0

3.0

5.3

FY16

FY17

FY18E

FY19E

FY20E

FY16

4.1

Net Debt to Equity Ratio

Exhibit 16: Debt reduction to lower interest expense

Interest Expense (INR b)

Interest Coverage Ratio

8.2

5.3

10.0

78.2

51.9

0.0

4.0

4.1

FY17

3.3

FY18E

2.4

FY19E

2.1

FY20E

Source: Company, MOSL

2 April 2018

Tata Chemicals

Unleashing the specialty & consumer business potential

Leveraging on Tata Salt’s distribution strength



TTCH has been a pioneer in developing the market for iodized salt in India, and enjoys

a share of 25% in the country's powdered salt market.

It has a distribution network of 1.7m retail outlets, reaching 143m households across

India. Compared to the other prominent FMCG companies in India that have an

average retail reach of 5-6m outlets, we believe TTCH has ample room for growth.

Leveraging on the network, TTCH has expanded its horizons to include branded pulses,

spices, besan (gram flour) and water purifiers, wherein it is yet to realize full potential.

It is also entering nutritional solutions, backed by years of deep understanding and

scientific research. Besides, it is foraying into yet another technology enabled,

differentiated business – highly dispersible silica.

Tata Salt’s sweet success to continue

Estimated annual consumption of edible salt in India is 6m tonnes. Demand for

edible salt is expected to grow at ~1.5%. The market continues to move toward

higher share of branded salt, with increasing awareness about product quality,

visible purity and iodine content. Specialty salts like rock salt and black salt have

increased presence in modern format stores.

Tata Salt continues to be the leader in the national branded salt segment, and ‘I-

Shakti’ is the third-largest brand in terms of market share. TTCH commands a

market share of 25% in the Indian salt market (29% if ‘I-Shakti’ salt brands are also

taken into consideration). Tata Salt Lite continues to be the leading brand in the low

sodium salt segment, and Tata Salt Crystals leads in the crystal salt segment. As the

brand continues to grow, a number of products designed to cater to specific needs

of the consumer have been added to the portfolio in recent years, such as Tata Salt

Lite, Tata Salt Plus and Sprinklers. In FY17, the company launched rock salt and black

salt in attractive crusher formats, which were well received in the launch markets.

Exhibit 17: Bifurcation of salt market in India

Exhibit 18: TATA Salt’s share in India’s salt market

25.2

24.6

24.2

Unbranded

56%

Branded

44%

21.6

FY14

Source: MOSL

FY15

FY16

FY17

Source: Company, MOSL

Salt is likely to deliver sales CAGR of ~5.5% over FY18-20. TTCH’s market share in

some markets is as high as 35-40%, while in some other markets, it is way below

25%. It has lower market share in the South and East – the regions where the

company intends to strengthen focus. TTCH plans to focus on growing its market

share by increasing its distribution reach and manufacturing capacity. It reaches

2 April 2018

Tata Chemicals

about 1.6m retail outlets compared to prominent FMCG players’ reach of 5-6m

retail outlets, implying significant headroom for growth. TTCH will increase its

capacity from 1mt to 1.5mt in phases over the next five years. TTCH has also added

team members to fulfill its growth targets. Tata Salt’s distribution has always

focused on wholesale channels. This strategy has led to lower focus on on-ground

sales. TTCH is now shifting its focus from wholesale to retail channels.

Existing salt distribution network to foster growth in consumer business

Tata Salt commands 25% share in the Indian salt market. However, if we consider

only the branded segment, it commands 66% share, clearly a leader in the salt

market in India. Tata Salt reaches 143m households across the country annually. It is

the largest distributed brand, with a reach of 1.7m retail outlets across India. This

could be used to foster growth of consumer products (pulses, spices, nutritional and

other products) in TTCH’s pipeline.

Exhibit 19: TTCH’s salt products range

Source: Company, MOSL

Exhibit 20: TATA Salt revenue and growth

19.0

21.8

Revenue(INRb)

Growth(%)

Exhibit 21: TATA Salt volume and realization

Volume (in '000MT)

12,068

11,199

12,776

Realisation (INR per tn)

11,636

11,521

11,753

11,870

5.4

7.7

10,078

5.2

1.0

-3.8

6.1

5.0

11,499

8.8

10.8

11.3

12.2

11.7

12.4

12.5

13.2

13.9

876

936

940

956

1,049 1,073 1,073 1,127 1,172

Source: Company, MOSL

Expanding consumer business horizon through Tata Sampann brand

TTCH, via its Tata Sampann umbrella brand, offers unpolished high protein pulses

range, low-absorb besan (gram flour) made from 100% chana dal, and the uniquely

developed range of spices. The focus is to capitalize on demand for wholesome

food with good taste.

2 April 2018

Tata Chemicals

Exhibit 22: Growing number of products in consumer business

No. of products in CPB portfolio

FY14

FY15

FY16

FY17

Source: Company, MOSL

Pulses – focus on grade-A stores

The pulses market in India is largely unbranded. However, many business houses

have entered the market over the past few years. Due to the government’s policy

changes for regulating stock movement and prices, there was a downward trend in

the pulses commodity cycle in CY16, because of which branded players suffered.

TTCH has taken necessary steps to eliminate such risks, and intends to focus on

grade-A category of stores.

Exhibit 23: Growing reach of pulses (no. of outlets)

122,000

92,000

128,000

45,000

FY14

FY15

FY16

FY17

Source: Company, MOSL

Exhibit 24: TATA Sampann’s wide portfolio of pulses

Source: Company, MOSL

2 April 2018

Tata Chemicals

Besan: TTCH’s differentiated health-focused products ready to tap

opportunity

The besan (gram flour) market is estimated at INR200b, but the product is

associated with guilt, because of its heavy usage in fried snacks. Besan is mostly

used in the making of fried snacks such as pakoras, bhajjis, sev and gathiyas. To

make snacks crispier, they are often deep fried, which leads to higher oil absorption.

This increases the chances of weight gain and other health issues. Therefore,

consumers look for ways to prepare besan snacks with less oil while retaining the

same taste and crispiness. TTCH has launched besan that absorbs less oil and is

healthy.

The besan market is largely unbranded in India, and there is a significant

opportunity to introduce superior branded variants by driving the ‘Low Oil Absorb’

differentiation. The differentiated offering commands up to 10-15% premium over

ordinary unbranded besan. TTCH’s portfolio consists of ‘Tata Sampann Low Oil

Absorb Besan’ and ‘Tata Sampann Fine Besan’. Since the launch in January 2016,

TTCH has achieved volumes of 13,000 tonnes.

Exhibit 25: TATA Sampann – another innovative product in basket

Source: Company, MOSL

Exhibit 26: TATA Sampann’s products on Amazon

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 27: TATA Sampann’s products on Grofers

Source: Grofers, MOSL

2 April 2018

Tata Chemicals

Exhibit 28: TATA Sampann’s products on BigBasket

Source: Company, MOSL

Spices: Adding flavor with health-focused objectives

The total branded spices market in India is around INR150b in size. Chilli, turmeric

and coriander account for 80% of the pure spices market. The market is fragmented

and commoditized, with over 3,000 local brands. Garam masala, meat masala,

chicken masala, and kitchen king masala, among others are the popular blends cross

regions.

TTCH has developed a portfolio of four pures (Chilli, Turmeric, Coriander, Shahi Lal

Mirch) and eight blends (Punjabi Chole Masala, Dal Tadka Masala, Kitchen King

Masala, Garam Masala, Meat Masala, Paneer Masala, Chicken Masala and Pav Bhaji

Masala). These are 100% pure and unadulterated, with guaranteed levels of active

ingredients, ensuring the best quality. It is currently present in 16 states, with the

highest market share being in the state of Punjab (around 5%). Going forward, TTCH

plans to scale up the spices business by leveraging TATA Salt’s distribution network

and expanding direct reach to outlets beyond its current coverage. Foraying into the

global markets is also a priority, as the opportunity landscape is widening. New

variants, product formats and customized offerings are consistently being

developed.

2 April 2018

Tata Chemicals

Exhibit 29: TATA Sampann spices

Source: Company, MOSL

Exhibit 30: Business value chain for Salt, Pulses, Besan, Spices and Nutritional Solutions

Business Value

Chain Of Products

Raw Material

Processing

Salt



Products

Pulses and Besan

Sea Salt/ Brine Access /



Procurement

Vacuum Evaporated /



Third Party refining

Iodised VE Salt, Tata



Salt, Tata Salt Lite, Tata

Salt Plus, Tata Salt

Crystal, Flavoritz, Rock

Salt, Black Salt, I-Shakti

Salt, I-Shakti Cooking

Soda

Multiple SKUs



at CFAs under HACCP /

FSSAI standards

Sourcing from Farms

and Mandis

Milling / Outsourced

operations

Unpolished Dals/ Low

Oil Absorb Besan, Toor

Dal, Moong Dal, Masoor

Dal, Chana Dal, Urad

Dal, Low Oil Absorb

Besan, Fine Besan, Low

Oil Absorb Pakoda Mix

SKUs of multiple sizes

and dal types

Spices



Nutritional Solutions

Sucrose

Other processing

aids

Biotransformation,

Purification,

Fossence,

Gossence,Tata Nx

Lite & Sweet . Tata

Nx Zero Sugar

Sourcing as per requirements



Processing operations with



business partners

Spices, Chilli, Turmeric,

Coriander, Shahi Lal Mirch,



Punjabi Chole Masala, Dal

Tadka Masala, Kitchen King

Masala, Garam Masala, Meat

Masala, Paneer Masala,

Chicken Masala, Pav Bhaji

Masala

5 sachets in a pack format

Road



Packaging

Logistics

Distribution

Same distribution

channel as salt would

act as a catalyst to

foster growth

End Use



Through Rail and Road Road

1. Distributor

To Stockist and

To Retailer

2. Institution

3. Dal on Call



Household

Warehouse

1. Distributor

To Stockist and

To Retailer

2. Institution



Household

1. Distributor

To Stockist and

To Retailer

2. Institution

3. Dal on Call



Household

Warehouse

Industries - Bakery,

Confectionary,

Nutraceuticals

Source: Company



2 April 2018

Tata Chemicals

Expanding horizons of speciality – nutraceuticals to

enable flight

Huge opportunity to change Tata Chemical’s business dynamics



TTCH would focus on both B2B and B2C space in the nutraceuticals industry, aiming at

bulk supply to global as well as domestic companies. Its plant at Nellore, Andhra

Pradesh is likely to commence in 4QFY19 and commercialization is expected in

1QFY20.

We estimate the size of the B2B global nutraceuticals industry at ~USD60b in 2016,

growing to ~USD92b in 2021.

We expect the segment to generate EBITDA margin of 24-25%, with RoCE at 20-25%.

Global nutraceuticals market to grow at CAGR of 7.5% over 2016-21

Nutraceuticals are food or fortified food products that not only supplement the diet

but also assist in treating or preventing disease, providing medical benefits. The

nutraceutical market mainly constitutes functional foods and beverages and dietary

supplements. Dietary supplements are present in the form of tablets, capsules and

liquids. The nutraceutical ingredients include pre-biotic and pro-biotic vitamins,

minerals, fibers, proteins, omega-3 and structured lipids, amino acids, and various

other ingredients.

Nutraceutical ingredients find application right from cereals, grains, nuts,

vegetables, fruits, dairy products, poultry products, sea food and confectionery

items to non-alcoholic beverages like juices, energy drinks, sports drinks, etc. Few

examples of functional foods are yogurts with pro-biotics, drinks with herb blends,

soya beverages rich in proteins, etc. The functional food category is seeing the

highest growth in energy drinks, healthy snacks and breakfast products.

According to Research & Markets, the B2C global nutraceuticals industry is valued at

USD198.7b (in 2016). It is expected to grow at a CAGR of 7.5% over 2016-21 to

USD285b. The functional global beverages market was valued at USD71.5b in 2016

and is expected to grow at a CAGR of 8.1% over 2016-21 to USD105b. The functional

global food market was valued at USD64.6b in 2016 and is expected to grow at a

CAGR of 7.4% over 2016-21 to USD92.3b.

Currently, the US, Europe and Japan account for most (93%) of the total global

nutraceuticals market. The market, however, seems to have attained maturity in all

the three regions. Therefore, the nutraceutical players across the world are now

turning their attention to emerging markets like India and China. India is one of the

most rapidly-growing nutraceuticals markets in the Asia-Pacific region. According to

ASA & Associates, the nutraceuticals industry in India was worth about USD2.2b in

2015 and is estimated to grow at a CAGR of 20% over 2019-20 to USD6.1b.

2 April 2018

Tata Chemicals

Focus on nutraceuticals space to transform Tata Chemicals

TTCH’s nutritional solutions plant at Nellore, Andhra Pradesh is likely to commence

in 4QFY19 and commercialization is expected in 1QFY20. The company intends to

set up a state-of-the-art biotechnology unit with a capacity of 5,000TPA and the

capex for the plant will be INR2.7b. The plant is for manufacturing of fructo-

oligosaccharides (FOS), a natural sweetener used in infant milk powder, cereals &

dairy, and galacto oligosaccharide (GOS), which belong to the group of prebiotics.

TTCH is entering into the B2B space of nutraceuticals, with focus on bulk supply to

overseas companies. It has already built a global supply chain and relationships

across the globe. We estimate the size of the B2B market at ~USD60b (assumed cost

of goods sold of global B2C players) in 2016. Assuming similar growth of 7.5% in the

global B2C nutraceuticals industry, the B2B market is estimated to reach USD92b in

2021.

We did a scenario analysis assuming asset turnover of 1.5x and 2x. According to our

analysis, EBITDA margin of the business would be 24% (at 1.5x asset turnover, and

assuming RoCE of 20% and working capital to sales at 35%) in Scenario-1 (refer

exhibit-33) and 25% (at 2x asset turnover, and assuming RoCE of 25% and working

capital to sales at 40%) in Scenario-2 (refer exhibit-33).

At the current planned capacity, the nutritional solutions segment is expected to

contribute 3-4% to consolidated sales and 4-5% to consolidated EBITDA (refer

exhibit 31 & 32). Assuming doubling of capacity, the segment is expected to

contribute 7-9% to consolidated sales and 8-10% of consolidated EBITDA. Assuming

tripling of capacity, the segment is expected to contribute 10-13% of consolidated

sales and 11-15% of consolidated EBITDA with global B2B market share at just 0.3%.

Exhibit 31: Case-I (Asset turnover 1.5x)

Scenario

Current capacity (5000 TPA capacity) (Announced)

Scenario 1 (10,000 TPA capacity)

Scenario 2 (15,000 TPA capacity)

Revenue

(INR m)

4125

8250

12375

EBITDA

(INR m)

1100.0

2200.0

3300.0

Global Market

0.07%

0.14%

0.21%

Contribution to Contribution to

Consolidated

sales

EBITDA

10%

11%

Source: Company, MOSL

Exhibit 32: Case-2 (Asset turnover 2x)

Scenario

Current capacity (5000 TPA capacity) (Announced)

Scenario 1 (10,000 TPA capacity)

Scenario 2 (15,000 TPA capacity)

Revenue

(INR M)

5,500

11000

16500

EBITDA

(INR M)

1375.0

2750.0

4125.0

Global Market

0.09%

0.18%

0.28%

Contribution to Contribution to

Consolidated

sales

EBITDA

10%

13%

15%

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 33: Tata Chemical’s Nutritional Solutions segment Profit & Loss A/C (Estimated)

INR Mn

Net block

Working Capital (as % of sales)

Working capital

Capital employed

RoCE

Asset Turnover

EBIT

Revenue

Depreciation

EBITDA

EBITDA Margin

Scenario I (Asset turnover 1.5x)

2,750

35%

1,443.8

4,194

20%

1.5

838.75

4,125

138

976

24%

Scenario II (Asset Turnover 2x)

2,750

40%

2,200

4,950

25%

2.0

1,238

5,500

138

1,375

25%

Source: Company, MOSL estimates

Seeding the specialty and nutritional portfolio

TTCH’s innovation center (IC) in Pune supports the diverse needs of its businesses

along with synergistic programs with Tata Group companies. The nutritional

solutions unit, operating as a start-up, will focus on building scale in the specialty

businesses. MoU was signed with the Andhra Pradesh government to invest

INR2.75b for a greenfield biotechnology manufacturing unit for food ingredients and

formulations developed at TTCH’s IC. During the year, the IC developed a highly

dispersible silica formulation that is suitable for tyre applications, and the company

is planning to manufacture precipitated highly dispersible silica (HDS) in Gujarat.

The nutritional solutions business unit offers optimal nutrition through dietary

solutions in the form of highly differentiated, science-based innovative ingredients

and formulations. TTCH’s bio-easy platform brings together knowhow of

biogenomics, food technology, material sciences and biotechnology to ensure that

the right nutrient is delivered in the right way to the consumer. This involves

collaboration and co-creation with customers in a project mode.

FY17 was the second full year of operations of the greenfield proof-of-concept

manufacturing unit at Sriperumbudur near Chennai. During the year, the unit

produced several grades of fructo-oligosaccharides (FOS) and FOS-based

formulations and sold a total of 680 tonnes of FOS across India. Albeit being a new

product, it has garnered wide acceptance as a prebiotic healthy sweetener for

categories such as dairy, bakery and confectionery. Based on market requirements

and formulation capabilities, the business has introduced new variants of healthier

and natural sweeteners that are alternatives to cane sugar for both institutional and

retail segments. Additionally, at the request of key customers and to leverage

synergies with company-manufactured products and formulations, complementary

products were added to the product portfolio. In FY17, the business achieved a

turnover of INR269m, more than 300% increase over the previous year.

2 April 2018

Tata Chemicals

Exhibit 34: Artificial sweeteners

Source: Company, MOSL

During the year, TTCH initiated critical clinical studies and technology ramp-up for

downstream processing and spray drying. The business has also initiated market

seeding with customers in the US to gain insights; this will aid business development

efforts in anticipation of the upcoming commercial-scale 5,000 tonnes

manufacturing unit at Nellore, Andhra Pradesh.

2 April 2018

Tata Chemicals

HDS – a future technology for tyre industry

Tata Chemicals on right track, with filing of eight patents



Highly dispersible silica (HDS) is a substitute for carbon black, which has an INR50b

market in India. It scores over carbon black on various parameters – reduced rolling

resistance, reduced emissions and better aesthetic appeal.

TTCH is set to manufacture HDS, with an initial capacity of 50,000TPA, which will

enable it to grab ~12% share in India’s HDS market at full utilization.

Assuming fixed asset turnover of 1.5x and RoCE of 20%, we expect HDS business to

generate a revenue of ~INR4.5b in first year of operations, with a margin of ~23%.

HDS – impressive prospects

HDS is a product used in tyres, primarily for rubber reinforcements. It is expected to

benefit the tyre industry by lowering rolling resistance for improved vehicle fuel

economy, reducing greenhouse gas emissions, increasing traction for improved

safety/handling and improving wear resistance compared to traditional compounds.

In addition, HDS has an aesthetic appeal, wherein it can be mixed with different

colours – it acts as a catalyst for the preparation of tyres in different colors.

The current compound used in tyres for the same purposes is carbon black. It

constitutes almost 13% of a tyre’s total cost. In the near future, HDS has a good

chance to replace carbon black and become an important input material in new-age

tyre manufacturing. In 2016, the market size of carbon black in India was INR50b.

Exhibit 35: HDS scores over carbon black

HDS

Expensive than Carbon black

Better performance

Increased fuel efficiency

Environment and human friendly

Carbon Black

Cheaper to produce

Lower performance

Lower efficiency

Carcinogenic (Cancer Causing)

Source: Company, MOSL

HDS segment margin likely to be in the range of 22-23%

TTCH is setting up a manufacturing unit in Gujarat for precipitated HDS, mainly used

in the rubber and tyre industries, with a total capacity of 50,000TPA. The total

investment will be INR2.95b. Trial runs are expected to commence in 4QFY19 and

commercialization is likely in 1QFY20. Technology for the HDS has been developed

at the IC (innovation center) in Pune, for which eight patents have already been

filed. We expect the company to grab ~12% share in India’s HDS market at full

capacity utilization. We estimate EBITDA margin of the business at 22-23%,

assuming RoCE of 20-25%.

2 April 2018

Tata Chemicals

Exhibit 36: Tata Chemical’s HDS business Profit & Loss a/c (estimated)

Particulars (INR Mn)

Net block

Working Capital (as % of sales)

Working capital

Capital employed

RoCE

Asset Turnover

EBIT

Revenue

Depreciation

EBITDA

Margin

Scenario I (Asset turnover 1.5x)

2,950

30%

1,327.5

4,278

20%

1.5

855.5

4,425

147.50

1,003

23%

Scenario II (Asset Turnover 2x)

2,950

30%

1,770.0

4,720

25%

2.0

1,180

5,900

147.50

1,328

23%

Source: Company, MOSL estimates

2 April 2018

Tata Chemicals

Soda ash to show steady performance

Cost advantage over its peer, as 70% of capacity is natural soda ash



TTCH’s soda ash realizations have seen robust growth over FY12-17 across

geographies: 6% in India, 11% in Europe, 8% in North America, and 5% in Africa.

However, volume decline led to flattish growth in consolidated soda ash revenue.

Going forward, we expect consolidated soda ash revenue to grow at a CAGR of 5%

over FY17-20, driven by both volume and realization growth.

World’s second largest soda ash manufacturer

With a capacity of ~4.2m MT of soda ash and 0.2m MT of sodium bicarbonate across

its manufacturing facilities in India, UK, Kenya and US, TTCH has a competitive

advantage of being the world’s most geographically diversified soda ash company.

Almost 70% of its soda ash capacity is manufactured via the natural route. The

plants at Mithapur (India), Wyoming (the US), Northwich (the UK) and Magadi

(Kenya) have their own unique operational philosophy.

Exhibit 37: TTCH’s operations in various geographies across the globe

Name of the

company

Type of soda ash

Place of operations

TATA

Chemicals India



Raw Material

Synthetic

India

Limestone, coke,

coal, natural gas,

CO2, Ammonia

Road, Rail and sea

Direct 73%, Channel

Partners 27%

Mithapur:

It is an

integrated inorganic

chemicals complex,

manufacturing soda

ash, edible salt,

sodium bicarbonate,

cement, marine and

caustic chemicals.

TATA Chemicals

North America Inc.



Natural

United States of

America

Coal, Natural gas,

HFO

Road, Rail and sea

Direct 73%, Channel

Partners 27%

Wyoming:

Manufacturing facility

consists of an

underground trona

mine and a surface

refining plant that

processes the ore

into soda ash.

TATA Chemicals

Europe Holdings Limited



Synthetic

United Kingdom

Limestone, coke,

coal, natural gas,

CO2, Ammonia

Road, Rail and sea

Direct 73%, Channel

Partners 27%

Northwich:

It is one

of the continent’s

leading producers of

sodium carbonate,

soda ash, salt, sodium

bicarbonate and

other products.

TATA Chemicals

Magadi



Natural

South Africa

Coal, Natural gas,

HFO

Road, Rail and sea

Direct 73%, Channel

Partners 27%

Magadi:

It is Africa’s

largest soda ash

manufacturer and

one of Kenya’s

leading exporters. At

the facility, soda ash

is obtained by

washing and calcining

trona, a naturally

occurring form of

sodium

sesquicarbonate,

extracted from Lake

Magadi in Kenya.

Source: Company, MOSL



Logistics

Distribution

Unique operation

philosophy









2 April 2018

Tata Chemicals

Exhibit 39: Consolidated soda ash volume and realization

per tonne

Volume (In mn tn)

19.5

18.8

18.1

19.0

Avg realisation per tonne (In 000's)

19.5

Exhibit 38: TTCH soda ash revenue mix by geography

India

22%

23%

22%

23%

North America

47%

46%

43%

Europe

22%

21%

23%

24%

Africa

10%

3.6

10%

FY16

3.7

FY17

3.8

FY18E

3.9

FY19E

4.0

FY20E

Source: Company, MOSL

Note: Europe revenue includes soda ash, sodium bicarbonate, salt and power

Global/Indian soda ash market to remain steady

Emerging economies, especially China, have been the primary growth drivers for

soda ash over the past decade, with increasing glass and detergent usage. However,

the year 2016 saw demand slowing down in China, with an estimated growth rate of

less than 1%. Several other regions, including the developed markets of North

America and Europe, however, showed relatively healthy growth during the year.

Global soda ash demand in 2016 is estimated to have grown ~1.9% to reach 56.6m

tonnes.

Global demand is expected to grow at 2.1% annually through 2026.

Indian market demand growth increased by ~7% in FY16-17, after almost flat

volumes in the previous year. North American volumes are expected to be flat, with

the exception of incremental demand from Mexico’s container glass industry. US

exports are likely to face stiff competition from new production from Turkey and

Russia. The UK market remained reasonably flat for the year, with Tata Chemicals

Europe retaining its market leadership, leveraging production based out of both the

UK and US manufacturing facilities. Demand growth in the key markets of the

company’s African operations remained mixed.

Global soda ash capacity is estimated to have grown marginally by ~0.5m tonnes in

FY17. Regional overcapacity and tightening governmental policies resulted in

continued consolidation in China, leading to capacity remaining almost flat in FY16-

17. However, capacity addition occurred in other regions, including the Indian

subcontinent, the Middle East and Central Europe.

Global capacity is expected to

grow at 2.1% annually through 2026, with Turkey leading capacity addition.

India

continues to be a significant importer of soda ash, with 0.75m tonnes of imports in

FY16-17. While the Indian market is supplemented by soda ash from the US and

Kenya, UK demand is also catered to by substantial imports from the US.

2 April 2018

Tata Chemicals

Exhibit 40: Soda ash uses globally (2017)

Glass

Inorganic Chemicals

Soaps & Detergents

Organic Chemicals

Paper & Pulp

Alumina

Others

Source: Bloomberg, MOSL

Source: MOSL

Dense (used in

glass

manufacturing)

Washing Soda

(used in detergents

and soaps)

Light Soda Ash

(used as ph

regulator in

industrial uses)

Exhibit 41: Types of soda ash

Soda Ash

Exhibit 42: Global soda ash demand to grow at a CAGR of 2.1% over 2016-26 (m tonnes)

57.9

2011A

58.7

2012A

58.9

2013A

60.2

2014A

2015A

61.9

2016E

74.4

2026E

Source: IHS and USGS Soda Ash, MOSL

Exhibit 43: Global soda ash capacity mix (%)

2012

5.3

2017

2021

9.3

6.7

0.5

11.9

6.1

0.4

45.2

6.4

1.1

14.6

5.7

0.4

43.8

22.7

20.0

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 44: Global soda ash consumption mix (%)

2012

2017

2021

Source: Company, MOSL

Exhibit 45: Soda ash production process and its relative cost advantage

Source: Bloomberg, MOSL

2 April 2018

Tata Chemicals

Exhibit 46: Soda ash production process capacity (2016) mix

Other global natural, 2%

Other synthetic, 8%

Hou, 22%

US Natural, 20%

Solvay, 48%

Searless, 10%

Ciner, 19%

Genesis,

28%

Tata, 20% Solvay, 23%

Source: IHS and USGS Soda Ash, MOSL

Exhibit 47: Soda ash price in India (INR per 50kg)

1,500

1,400

1,300

1,200

1,100

Exhibit 48: Soda ash price in China (USD per tonne)

350

300

250

200

150

Source: Bloomberg, MOSL

Exhibit 49: Soda ash price in Europe (USD per tonne)

340.0

310.0

280.0

250.0

220.0

Exhibit 50: Soda ash price in US (USD per tonne)

227.0

219.0

211.0

203.0

195.0

Source: Bloomberg, MOSL

2 April 2018

Tata Chemicals

Exhibit 51: Sodium bi-carbonate price in India (per 50kg)

1,800

1,600

1,400

1,200

1,000

Source: Bloomberg, MOSL

Exhibit 52: Ammonia price in India (USD per tonne)

750

625

500

375

250

125

Exhibit 53: Ammonia price in Middle East (USD per tonne)

750

625

500

375

250

125

Source: Bloomberg, MOSL

Exhibit 54: Indonesian coal price (6322 KCAL)/tonne

120

Exhibit 55: Natural gas price (Henry Hub; USD/MMBTU)

6.0

4.5

3.0

1.5

0.0

Source: Bloomberg, MOSL

Consolidated soda ash business to show steady performance

TTCH’s consolidated soda ash and sodium bicarbonate revenue was almost flat over

FY15-17. Realization grew at a CAGR of 1.8% and sales volume declined at 1.63% per

year. EBITDA grew at a CAGR of ~4%.

We expect consolidated soda ash and sodium bicarbonate revenue to grow at a

CAGR of 5% over FY17-20 to INR81.9b. Sales volume is likely to grow at a CAGR of

2% to 4.1m tonnes and realization at a CAGR of 2% to INR19,610/tonne. EBITDA is

expected to grow at a CAGR of 7% to INR17.2b and EBITDA/ton at a CAGR of 5% to

INR4,111.

2 April 2018

Tata Chemicals

India soda ash business to grow at healthy pace

Soda ash revenue grew at a CAGR of 7% over FY12-17, driven by higher realization.

Realization grew at a CAGR of 6% and sales volume grew at a CAGR of 1%.

We expect revenue to grow at a CAGR of 3% over FY17-20 to INR17.2m. Sales

volume would grow at a CAGR of 1% and realization would grow 2%.

Exhibit 56: India soda ash volume and growth

Volume (in '000 tonnes)

2.6

1.5

0.8

-0.2

-0.9

674

FY12

691

FY13

690

FY14

683

FY15

685

FY16

708

FY17

714

FY18E

724

FY19E

739

FY20E

0.3

0.8

Growth (%)

3.4

2.0

Exhibit 57: India soda ash revenue and growth

18.6

Revenue(INRb)

Growth (%)

15.0

10.7

6.8

1.9

-3.3

11.2

FY12

13.3

FY13

13.6

FY14

15.0

FY15

16.0

FY16

15.5

FY17

15.6

FY18E

16.3

FY19E

17.2

FY20E

0.9

4.5

5.1

Exhibit 58: India soda ash realization per tonne and growth

Realisation (INR/tonne)

14.1

15.6

11.7

2.2

6.5

0.1

-6.4

16,637

FY12

19,233

FY13

19,647

FY14

21,952

FY15

23,390

FY16

21,882

FY17

21,904

FY18E

22,561

FY19E

23,238

FY20E

3.0

Growth (%)

2 April 2018

Tata Chemicals

Exhibit 59: India soda ash scenario

3.4

Soda Ash India (in m tonnes)

2.8

0.75

0.03

Installed Capacity

Production

Imports

Exports

Source: Company, Ministry of Commerce and Industry, various industry sources

Exhibit 60: Soda ash market share mix in India

Import, 23%

Tata Chemicals,

20%

Others, 5%

Nirma, 27%

GHCL, 25%

Source: Company and various industry sources

Tata Chemicals Europe likely to show steady performance

TCEHL (Tata Chemicals Europe Holdings Limited) revenue grew at a CAGR of 2% over

FY12-17, driven by higher realization. Realization grew at a CAGR of 11% and sales

volume declined at 8% per year. For TCEHL, the realization is a blended mix of soda

ash, sodium bi-carbonate, salt and power. EBITDA declined at 4% per annum over

FY12-17.

We expect revenue to grow at a CAGR of 2% over FY17-20 to INR17.3b. While sales

volume would grow at a CAGR of 0.4%, realization would grow at a CAGR of 2%.

EBITDA is expected to grow at a CAGR of 2.9% to INR2.5b. EBITDA/tonne is expected

to improve from GBP45 in FY17 to GBP48 by FY20.

Exhibit 61: TCEHL’s revenue mix (FY15)

Power, 21%

Salt, 19%

Soda Ash &

Sodium

Bicarbonate, 60%

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 62: TCEHL’s revenue and growth

22.5

10.3

15.0

7.6

-6.2

14.5

FY12

16.0

FY13

18.4

FY14

17.3

FY15

-1.9

-4.7

8.6

Revenue(INRb)

Growth

-8.1

14.8

FY18E

16.0

FY19E

17.3

FY20E

17.0

FY16

16.2

FY17

Source: Company, MOSL

Exhibit 63: TCEHL’s total sales volume and growth

Total Sales Volume (in '000 Tonnes)

-4.2

-23.2

-0.7

Growth (%)

-1.0

-7.1

4.0

4.8

-8.7

887

FY12

810

FY13

776

FY14

596

FY15

592

FY16

586

FY17

544

FY18E

566

FY19E

593

FY20E

Note: Europe sales – total sales volume includes soda ash and sodium bicarbonate

Source: Company, MOSL

Exhibit 64: TCEHL’s realization and growth

31.1

20.8

20.1

Realisation (INR/tonne)

22.1

3.5

3.6

Growth (%)

-1.2

-3.7

27,560

FY17

-1.1

16,374

FY12

19,779

FY13

23,751

FY14

28,993

FY15

28,632

FY16

27,263

FY18E

28,220

FY19E

29,236

FY20E

Note: Europe sales – realization includes soda ash, sodium bicarbonate, salt and power

Source: Company, MOSL

Exhibit 65: TCEHL’s soda ash sales volume and growth

Sales Volume ('000 tonnes) soda ash

-3.5

-3.7

Growth (%)

5.0

-7.5

-2.2

-10.0

-26.0

785

FY12

716

FY13

691

FY14

511

FY15

492

FY16

481

FY17

433

FY18E

455

FY19E

482

FY20E

-8.8

6.0

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 66: TCEHL sodium-bi-carbonate sales volume and growth

Sales Volume ('000 tonnes) sodium bi-carbonatre

17.6

2.0

-7.7

102

FY12

FY13

-10.0

FY14

FY15

100

FY16

105

FY17

111

FY18E

111

FY19E

111

FY20E

0.5

5.0

6.0

0.0

Growth (%)

Source: Company, MOSL

Exhibit 67: TCEHL’s EBITDA/tonne

EBITDA/tonne (GBP)

EBITDA/tonne (INR)

2770

1242

-219

FY14

FY15

FY16

FY17

FY18E

FY19E

FY20E

4244

3942

3869

4051

Source: Company, MOSL

Tata Chemicals North America operating performance likely to improve

Tata Chemicals North America (TCNA) revenue grew at a CAGR of 7% over FY12-

FY17, driven by higher realization. Realization grew at a CAGR of 8% and sales

volume declined at 1% per annum. EBITDA grew at a CAGR of 1% over FY12-17.

We estimate 5% CAGR in revenue over FY17-20 to INR37b. Sales volume would grow

at a CAGR of 2% and realization at 2.7%. EBITDA is expected to grow at a CAGR of

9% to INR8b. EBITDA/tonne is expected to grow at a CAGR of 6.3% in INR terms to

INR3,385 and at a CAGR of ~5% in USD terms to USD50.

Exhibit 68: TCNA revenue and growth

26.8

Revenue(INRb)

Growth (%)

13.0

12.5

3.2

5.9

-0.3

30.1

FY16

31.9

FY17

0.1

32.0

FY18E

34.4

FY19E

37.1

FY20E

7.7

7.8

23.1

FY12

26.0

FY13

29.3

FY14

30.2

FY15

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 69: TCNA realization and growth

Realisation (INR/tonne)

-1

9,705

FY12

11,116

FY13

12,261

FY14

12,800

FY15

14,331

FY16

14,250

FY17

-3

13,846

FY18E

14,616

FY19E

15,442

FY20E

Growth (%)

Source: Company, MOSL

Exhibit 70: TCNA sales volume and growth

Volume (in '000 tonnes)

Growth (%)

-1

-11

2376

FY12

2343

FY13

2390

FY14

2363

FY15

2104

FY16

2241

FY17

2308

FY18E

2354

FY19E

2401

FY20E

-1

Source: Company, MOSL

Exhibit 71: Realization of Ciner v/s TCNA (per tonne)

Ciner

202

188

204

203

182

209

219

TCNA

212

215

221

228

177

183

174

184

2012

2013

2014

2015

2016

2017

2018

2019

2020

NOTE: Ciner is the world’s largest natural soda ash producer, with a capacity of ~5.9m tonnes.

Source: Company, MOSL

Exhibit 72: EBITDA/tonne of Ciner v/s TCNA

Ciner

TCNA

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: Company, MOSL

2 April 2018

Tata Chemicals

Tata Chemical Africa operating performance to improve

TCML’s (Tata Chemicals Magadi Limited) revenue declined at 2% per annum over

FY12-17, driven by lower sales volume. Realization grew at a CAGR of 5% and sales

volume declined at 11% per annum. EBITDA declined at 14% per annum over FY12-

17 to INR0.5b.

We expect revenue to grow at a CAGR of 10% over FY17-20 to INR7.8b. Sales

volume would grow at a CAGR of 8% and realization at a CAGR of 2%. EBITDA is

expected to grow at a CAGR of 33% to INR1.2b. EBITDA per tonne is expected to

grow at a CAGR of ~23% over FY17-20 to INR3,453 (USD51).

Exhibit 73: TCML’s revenue and growth

28.0

11.9

-1.3

-3.3

2.4

-15.7

6.4

FY12

6.3

FY13

7.0

FY14

6.8

FY15

7.0

FY16

5.9

FY17

6.9

FY18E

7.4

FY19E

7.8

FY20E

Revenue(INRb)

Growth

17.3

7.7

5.7

Source: Company, MOSL

Exhibit 74: TCML’s realization/tonne and growth

Realisation (INR/tonne)

35.9

16.9

-3.2

-11.1

17,773

FY15

15,792

FY16

-6.7

14,739

FY17

-2.6

4.5

4.6

Growth (%)

26.2

11,556

FY12

13,503

FY13

13,077

FY14

14,350

FY18E

15,000

FY19E

15,694

FY20E

Source: Company, MOSL

Exhibit 75: TCML’s sales volume and growth

Volume (in '000 tonnes)

14.2

0.4

-12.1

-38.0

484.6

FY12

426.0

FY13

486.4

FY14

301.7

FY15

307.0

FY16

272.0

FY17

327.8

FY18E

337.6

FY19E

341.0

FY20E

1.8

-11.4

Growth (%)

20.5

3.0

1.0

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 76: TCML’s EBITDA/MT

EBITDA/tonne (INR)

-5

-10

2552

3713

2146

1838

EBITDA/tonne (USD)

3201

3300

3453

-258

-596

Source: Company, MOSL

World’s fourth-largest sodium bicarbonate producer; sound long-term

fundamentals

Sodium bicarbonate is commonly used as an ingredient in leather tanning, dyes and

textiles, food additives, animal feed, pharmaceuticals, and air pollution control.

TTCH is the world’s third largest producer of sodium bicarbonate, with ~6% capacity

share – it is the market leader in India and the UK. Sodium bicarbonate demand in

India grew ~7% in FY16-17, as against ~4% growth in the previous year. The key

drivers of demand included food, feed and other industrial applications. TTCH

continues to believe in the long-term sound fundamentals of this business, and

maintains a market share in excess of 50%. Going forward, the company plans to

focus on developing and delivering new value-added offerings to its customers. Tata

Chemicals Europe retained its market share in the UK with increasing exports

volumes, which was also helped by the weakening sterling.

Exhibit 77: TTCH India’s sodium bicarbonate revenue

Sodium Bi-carbonate (INR b)

2.4

2.5

FY16

FY17

FY18E

FY19E

FY20E

FY16

20.8

94.0

FY17

97.8

FY18E

102.6

FY19E

110.9

FY20E

Growth (%)

22.2

Exhibit 78: TTCH India’s volume and realization per tonne

Volume (In 000's tonnes)

Avg realisation per tonne (In 000's)

21.4

21.6

21.2

2.0

-1

2.0

2.2

Source: Company, MOSL

2 April 2018

Tata Chemicals

Farm inputs continue to aid growth

New product launches to provide necessary boost

Rallis India – presence across the value chain

TTCH’s subsidiary, Rallis India is one of India’s leading agrochemical companies, with

a comprehensive portfolio of crop protection products, plant growth nutrients,

seeds, crop services and contract manufacturing. Rallis is closely connected to over

1m farmers through the Rallis Kisan Kutumb Program.

Exhibit 79: Consolidated revenue to grow at a CAGR of 11%

over FY17-20E

17.4

Revenue(INRb)

19.8

4.3

-10.6

12.7

FY12

14.6

FY13

17.5

FY14

18.2

FY15

16.3

FY16

17.4

17.9

20.6

23.7

2.1

2.7

2.8

2.3

2.6

2.7

3.1

3.9

6.8

Growth (%)

15.0

3.0

15.0

16.4

15.7

14.6

15.5

14.1

15.2

15.3

Exhibit 80: EBITDA margin expands 60bp over FY13-17

EBITDA(INRb)

EBITDA margin (%)

16.3

14.4

FY17 FY18E FY19E FY20E

Source: Company, MOSL

FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E

Source: Company, MOSL

Metahelix – a focused Hybrid seeds company

Metahelix, a subsidiary of Rallis India, is an agricultural biotechnology company

focusing on developing traits and technologies to improve productivity. Hybrid

seeds and traits are commercialized. Metahelix also exports its seeds to selected

countries. The current portfolio of products includes hybrid and research varieties of

various field crops (such as paddy, maize, pearl millet and Bt cotton) and vegetable

crops (such as tomato, hot pepper, okra, green peas and coriander). With significant

improvements in the market shares, it has narrowed the gap with the second largest

player in hybrid rice, and retained the second position in millet. In maize, it has

significantly improved its position, with growth of 35% in sales volumes over the

previous year. In addition to the strong business performance, Metahelix during the

year further strengthened its brand presence, helping it to realize better prices in

the market. On the seed production front, it strengthened its supply capabilities

with the addition of newer locations. During the year, Metahelix launched 11

products.

2 April 2018

Tata Chemicals

SWOT Analysis



Second largest and

most diversified soda

ash producer in the

world

25% share of Indian

salt market

Leveraging TATA

brand



Saturated soda

market, low scope for

growth

Due to global

operations, company

is exposed to foreign

exchange risk



HDS, FOS and GOS

products are relatively

niche and could prove

to be major success

factors

Chinese supply glut in

soda ash globally, which

can be beneficial for

current players

Ample headroom to

increase distribution

network



Decrease in cost of

production of synthetic

soda ash threatens

benefits from producing

natural soda ash

Sudden increase in soda

ash capacity from

Turkey disrupting

market dynamics

Increasing competition

in salt business



2 April 2018

Tata Chemicals

Bull & Bear case

Bull case



Bear case

In the bull case, we have assumed higher sales growth (driven by an increase in

price/volume) and operating margins.

We had assumed 477bp EBITDA margin improvement over FY17-20 in the base

case. However, on account of a decline in raw material prices in our bull case

assumptions and benefits from economies of scale, we are assuming a 557bp

YoY improvement over FY17-20.

In the bull case, we assume that the company will not pass on the benefit of

lower raw material prices, and thus, enjoy higher margins. We also estimate a

drop in natural gas & coal prices and lower freight costs, benefiting (i) exports

from North America, (ii) UK and India operations, a net importer.

Further, the implied EV/EBITDA multiple is 10.9x FY20E v/s 9.7x in our base case,

considering faster growth in the consumer business.

Carrying the above assumptions, we get a bull case target price of INR1,147

(upside of 66%) based on FY20E EBITDA (v/s base case target price of INR940,

upside of 36%).



In the bear case, we have assumed lower sales growth (driven by decrease in

volume/ price) and operating margins over FY18-20.



We are assuming EBITDA margin contraction of 170bp over FY18-20.



We assume an increase in natural gas and coal prices beyond the current levels.

Additionally, we assume that the company is unable to pass on the price

increase, leading to margin compression.



In our bear case, the implied EV/EBITDA multiple is 8.3x FY20E v/s 9.7x in our

base case, assuming the consumer business fails to pick up.



Carrying the above assumptions, we get a bear case target price of INR683

(downside of 1%) based on FY20E EBITDA (v/s base case target price of INR940,

upside of 36%).

Exhibit 81: Scenario analysis – bull case

Bull Case

Sales (INR m)

Sales growth (%)

EBITDA (INR m)

EBITDA Margin (%)

EBITDA growth (%)

PAT (INR m)

PAT Margin (%)

PAT growth (%)

EPS (INR)

Implied EV/EBITDA (x)

Target price (INR)

Upside/downside (%)

FY18E

1,05,804

-20.4

22,854

21.6

2.8

9,958

9.4

0.3

34.3

FY19E

1,16,775

10.4

25,924

22.2

13.4

12,088

10.4

21.4

47.4

FY20E

1,29,190

10.6

28,809

22.3

11.1

14,030

10.9

16.1

55.1

10.9

1,147

Source: Company, MOSL

Exhibit 82: Scenario analysis – bear case

Bear Case

Sales (INR m)

Sales growth (%)

EBITDA (INR m)

EBITDA Margin (%)

EBITDA growth (%)

PAT (INR m)

PAT Margin (%)

PAT growth (%)

EPS (INR)

Implied EV/EBITDA (x)

Target price (INR)

Upside/downside (%)

FY18E

1,05,804

-20.4

22,748

21.5

2.3

9,881

9.3

-0.5

34.0

FY19E

1,13,806

7.6

22,875

20.1

0.6

9,853

8.7

-0.3

38.7

FY20E

1,22,359

7.5

24,227

19.8

5.9

10,642

8.7

8.0

41.8

8.3

683

(1)

Source: Company, MOSL

2 April 2018

Tata Chemicals

Transition into a net debt-free entity by FY20

Core RoCE to improve from 11% to 18% over FY17-20

We expect TTCH to deliver revenue CAGR of 9.3% over FY18-20, with the specialty

and consumer (S&C) business driving growth. The S&C business is expected to grow

at a CAGR of 14% over FY18-20. We expect EBITDA margin to expand 467bp from

16.7% in FY17 to 21.4% in FY18 and remain at 21.5% over FY19-20. TTCH’s exit from

the fertilizer business and stake sale in other non-core assets should act as key cash

generators for debt repayment. We expect TTCH’s net debt-equity ratio to reduce

from 0.7x in FY17 to almost nil by FY20. Consequently, interest coverage ratio

should improve from 4.1x in FY17 to 10x in FY20. Adjusted PAT from continuing

operations is likely to grow at 22% CAGR over FY18-20 to INR12.8b. We assume tax

rate of 27% in FY18, and 28% in FY19 and FY20 against 24.7% in FY17. We expect

core RoCE (excluding goodwill, investment and cash) to improve by 534bp to 18% by

FY20 from 12.8% in FY18. We believe TTCH’s performance should be gauged on core

RoCE, as the company is in the process of selling non-core assets and investments –

it will be deploying the high cash on its books in high RoCE businesses. Blended RoCE

is likely to improve by 216bp to ~10% by FY20 from 7.8% in FY18.

Exhibit 83: Revenue to grow at CAGR of 9.3% over FY18-20

Revenue (INR b)

Growth (%)

9.2

9.4

13.7

-13.4

-12.7

-20.4

152

FY16

133

FY17

106

FY18E

116

FY19E

126

FY20E

20.9

FY16

22.2

FY17

22.6

FY18E

24.7

FY19E

27.2

FY20E

16.7

Exhibit 84: EBITDA to expand by 467bp over FY17-18

EBITDA (INR b)

EBITDA Margin (%)

21.4

21.5

Source: Company, MOSL

Exhibit 85: Transformation into a net debt-free company

Net Debt (INR b)

1.1

0.7

0.1

0.0

Net Debt to Equity Ratio

Exhibit 86: Debt reduction to lower interest expense

Interest Expense (INR b)

Interest Coverage Ratio

10.0

8.2

4.1

5.3

3.0

78.2

FY16

51.9

FY17

12.7

FY18E

9.2

FY19E

3.0

FY20E

5.3

FY16

4.1

FY17

3.3

FY18E

2.4

FY19E

2.1

FY20E

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 87: Net worth to grow at ~11% CAGR over FY17-20

Net Worth (INR b)

23.5

18.8

15.4

6.9

68.5

FY16

79.1

FY17

93.9

FY18E

100.4

FY19E

7.4

107.8

FY20E

101

FY16

-48.5

FY17

FY18E

FY19E

FY20E

15.9

-7.5

-2.1

-4.3

Growth (%)

Exhibit 88: Improvement in WC cycle

Working Capital Cycle (Days)

Growth (%)

Source: Company, MOSL

Exhibit 89: RoCE and RoE to show an improving trend

ROCE (%)

Core ROCE

ROE

Exhibit 90: Adjusted PAT to grow at 22% CAGR over FY18-20

Adj. PAT Continuing operation (INR b)

9.7

PAT Margin (%)

10.1

6.5

4.6

7.0

8.6

FY17

8.1

8.6

FY18E

11.2

FY19E

12.8

FY20E

FY16

FY17

FY18E

FY19E

FY20E

FY16

Source: Company, MOSL

2 April 2018

Tata Chemicals

Exhibit 91: Key assumptions

Particulars (INR m)

Standalone

Inorganic Chemical-India

Soda Ash India

Volume (in tonnes)

Growth (%)

Realisation (INR per tonne)

Growth (%)

Sodium Bi Carbonate India

Volume (in tonnes)

Growth (%)

Realisation (INR per tonne)

Growth (%)

Others (Inorganic Chemicals+ Cement)

Revenue(INR m)

Growth (%)

EBITDA-Inorganic Chemical-India

EBITDA margin (%)

Consumer (Salt+others)

Revenue(INR m)

Growth (%)

EBITDA(INR m)

EBITDA margin (%)

TCNA

INR/USD

Volume (in tonnes)

Growth (%)

Realisation (USD per tonne)

EBITDA/Tonne(USD)

TCEHL

INR/GBP

Volume (in tonnes) (Soda ash+ Sodium

bicarbonate)

Growth (%)

Realisation (GBP per tonne)

EBITDA/MT(GBP)

TATA Chemicals Africa

Volume (in tonnes)

Growth (%)

Realisation (USD per tonne)

EBITDA/MT(USD)

Rallis India

Revenue(INR m)

Growth (%)

EBITDA

Margin (%)

FY15

FY16

FY17

FY18E

FY19E

FY20E

683266

-1%

21,952.36

12%

88,066.00

21,154.59

11%

2,802

-21%

8,329

26.1%

14974

15%

3,766

25%

2362711

-1%

209

596000

-14%

294

12.6

301686

-38%

369

18218

2827

15.5%

685000

23,389.93

89,000.00

22,220.43

5,962

113%

9,519

26.7%

16190

3,613

22%

2103566

-11%

219

592000

290

28.1

307000

347

16278

-11%

2290

14.1%

708000

21,882.34

-6%

94,338.00

20,713.75

-7%

4,708

-21%

9,723

28.2%

16037

-1%

3,493

22%

2241000

212

586000

315

45.0

272000

-11%

322

17380

2634

15.2%

713664

21,904.23

99,054.90

22,370.85

4,155

-12%

9,804

28.4%

14324

-11%

3,941

28%

2308230

215

544200

-3%

324

46.0

327760

21%

326

17901

2739

15.3%

724368.96

22,561.35

1,01,036.00

23,489.39

4,443

10,322

28.4%

16182

13%

4,530

28%

2354395

221

565845

327

47.0

337592.8

333

20587

15%

3150

15.3%

7,38,856.34

23,238.19

1,03,056.72

24,194.07

4,733

10,799

28.2%

18318

13%

4,908

27%

2401482

228

593117.7

331

48.0

340968.728

339

23675

15%

3859

16.3%

2 April 2018

Tata Chemicals

Valuation and view

Initiating with Buy

Strategic transformation of business to drive value upward

TTCH is engaged in the manufacture of soda ash, consumer products and crop

protection. It has taken strategic initiatives to: 1) rapidly grow the consumer

business, including salt, pulses and spices via an expanded product portfolio,

leveraging the Tata brand, strong distribution network of the salt business and

strategic sourcing, 2) expand the portfolio, with the launch of new specialty and

consumer (S&C) products, and 3) divest the regulated fertilizer business. We expect

the share of S&C business to reach 33% by FY20, based on its existing product

portfolio. Also, the launch of new products could act as a catalyst to drive the

contribution higher. The company’s future investments are also clearly directed

toward higher-RoCE businesses (20-25%), such as investment of ~INR3b each in the

highly dispersible silica and nutraceuticals businesses. These products are developed

in-house, and the company plans to launch more products.

We have valued TTCH based on SOTP (refer exhibit 92) and arrived at a target price

of INR940 (implied EV/EBITDA is 9.7x). The stock has traded at a one-year forward

EV/EBITDA of 7.5x (average) for the last five years. Considering the increased

focus/business transformation toward a higher-RoCE segment (specialty &

consumer) and the divestment of a regulated business (fertilizer), we believe it is fair

to assign ~30% premium to its five-year average EV/EBITDA. Net debt as on FY17

stood at ~INR52b. We believe the company should become net-debt-free by FY20

via (i) cash generated from the divestment of the fertilizer business, (ii) sale of

investment in Tata Global Shares, (iii) internal accruals, and (iv) potential sale of

investment in group companies. Average free cash flow yield over FY19-20 is

estimated at ~9%. We initiate coverage on TTCH with a

Buy

rating.

The stock trades at 16x FY19E EPS of INR44 and 13.8x FY20E EPS of INR50.3, and at

8.4x FY19E EBITDA of INR24.7b and 7.4x FY20E EBITDA of INR27.2b. On a P/E and

EV/EBITDA basis, the company has historically traded at a five-year average of 12.5x

and 7.5x, respectively.

2 April 2018

Tata Chemicals

Exhibit 92: BUY with an upside of 36% (INR m)

Business

Commodity

Inorganic Chemical India (Soda Ash & others)

(Excluding Salt)

Tata Chemicals North America

Sub Total

Speicalty and Consumer

Consumer (Incl Salt)

Rallis India Ltd (Tata Chemicals hold 50% )

Total EV

Less: Debt FY20

Less: Minority Interest

Add: Cash & Liquid investment

Add: Value of quoted Investment

Target Mcap

Outstanding share (m)

Target Price (INR)

CMP (INR)

Upside (%)

Implied EV

Implied EV/EBITDA (X)

Market Capitalisation

16,843

0.8

EV/EBITDA (x)

EBITDA

4,908

45,603

0.8

83,430

18,241

250,246

40,523

26,239

42,586

13,475

239,545

255

940

692

35.8%

263,721

9.7

Source: Company, MOSL

20% discount to Current

Attributable Mcap

MCAP

Methodology

Metrics

FY20

Multiple

(x)

EV/ MCAP

(INR m)

45,118

81,290

22,167

148,575

EV/EBITDA (x)

EBITDA

6,445

8,129

3,694

18,269

Tata Chemicals Europe and Tata Chemicals Africa EV/EBITDA (x)

2 April 2018

Tata Chemicals

Exhibit 93: Peer Group comparison

Company Name

Consumer

Dabur India Ltd

Colgate-Palmolive India Ltd

Hindustan Unilever Ltd

ITC Ltd

Britannia Industries Ltd

Zydus Wellness

Pidilite Industries Ltd

Soda Ash

GHCL Ltd

Ciner Resources LP

FMC Corp

0.4

0.6

10.3

7.7

11.1

13.8

7.3

11.2

12.5

6.5

10.9

11.2

6.1

5.8

10.8

5.0

5.8

10.0

4.6

6.3

9.3

22.1

20.3

19.6

17.1

18.5

16.2

8.8

4.4

44.4

47.7

9.2

0.7

7.4

44.3

44.1

58.8

28.9

60.6

38.1

53.3

37.1

37.4

48.3

25.4

48.6

32.0

45.6

32.0

31.2

40.8

22.6

38.8

28.1

39.7

34.5

25.9

40.5

19.0

40.6

36.8

33.7

28.5

22.6

33.4

16.7

32.5

31.3

29.1

24.5

19.2

28.3

14.7

25.9

27.7

25.0

25.4

49.9

76.5

22.8

33.9

20.2

24.2

26.7

55.5

91.4

23.8

35.8

20.3

24.5

28.6

61.9

107.9

24.8

40.1

20.6

24.7

MCap

(USD b)

P/E(x)

FY18E

FY19E

FY20E

FY18E

EV/EBITDA (x)

FY19E

FY20E

FY18E

RoE(%)

FY19E

FY20E

Exhibit 94: 1yr forward P/E

P/E (x)

Min (x)

23.0

18.0

13.0

8.0

3.0

Avg (x)

+1SD

Max (x)

-1SD

Exhibit 95: 1yr forward EV/EBITDA

EV/EBITDA (x)

Max (x)

+1SD

Avg (x)

Min (x)

-1SD

11.0

9.0

19.0

15.0

11.4

7.9

4.5

9.3

15.7

7.0

5.0

3.0

8.1

7.0

6.0

4.0

7.5

Source: Company, MOSL

2 April 2018

Tata Chemicals

Key risks

New capacity addition from Turkey

New soda ash capacity addition from Turkey would affect the market dynamics.

Turkey’s annual production capacity is expected to increase from 2.9 million tonnes

in 2015 to nearly 5.4 million tonnes by 2018.

Governmental policy risks

There is currently an anti-dumping scheme in place by the Indian government

against imports of soda ash. This is keeping prices stable and is avoiding the

downward pressure on the prices. If this scheme is removed due to other political

factors, there could be an adverse impact on TTCH’s margins.

Operational risks

TTCH is a global organization, and there are a multitude of labor laws,

environmental regulations and other factors for every country that TTCH operates

in. There are operational risks for every country that can have an impact on the

company’s operations.

Foreign exchange risk

TTCH is a global organization that has sales in a number of different countries with a

variety of currencies in play. The company has to hedge and manage risks relating to

currency fluctuations, which could otherwise have a significant impact on the

accounts of the company.

2 April 2018

Tata Chemicals

Management overview

R Mukundan, Managing Director and CEO

Mr Mukundan is an Engineer from IIT Roorkee. He joined the Tata Administrative

Service in 1990, after completion of MBA from FMS, Delhi University. He is also an

alumnus of the Havard Business School. During his 26-year career with the Tata

group, he has held various responsibilities across the Chemical, Automotive and

Hospitality sectors. He serves on executive committees of various industry forums –

the Confederation of Indian Industry, Bombay Chamber of Commerce and Industry,

Employers' Federation of India, All India Management Association, etc.

John Mulhall, Chief Financial Officer

Mr Mulhall joined Tata Chemicals in 2007 as the European Finance Director of its

recently acquired subsidiary, Brunner Mond (UK), followed by positions in Tata

Chemicals North America Inc, (VP and CFO) and Tata Chemicals International Pte in

Singapore (CFO). He relocated to Mumbai in 2015. Prior to Tata Chemicals, Mr

Mulhall worked in Finance for various UK manufacturing companies. He is a

graduate of the University of Strathclyde and a member of the Institute of Chartered

Accountants of Scotland.

Rackanchath Nanda, Chief Human Resources Officer

Mr Nanda started his career with the Murugappa Group in Chennai, where he spent

nearly 15 years in a variety of roles – in Human Resources and also as the Head of

Manufacturing and Commercial functions for the foods business. He has also led the

Human Resource function for Amara Raja Group and the Dubai-based Landmark

Group. Mr Nanda joined the Tata group in 2006 with his first role being at Tata

Communications. He moved to Tata Chemicals in May 2012 and currently oversees

the global functions of Human Resources. Mr Nanda has completed his post-

graduation in human resources and has also done several professional certifications

and executive development programs.

Rajiv Chandan, General Counsel & Company Secretary

Mr Chandan heads the Legal, Company Secretarial and Corporate Governance

functions at Tata Chemicals. His experience is spread across diverse industries,

including the Paper, Automobiles, Logistics, Cement, Chemicals, FMCG and Fertilizer

sectors. Before joining Tata Chemicals, he was Vice President – Legal and Company

Secretary, Lafarge Cement, India. Mr Chandan is a fellow member of the Institute of

Company Secretaries of India, and has a Masters' degree in Commerce and a Law

degree from the University of Mumbai.

2 April 2018

Tata Chemicals

Financials and valuations

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Minority Interest

Reported PAT - Continuing Ops.

Adjusted PAT - Continuing Ops.

Change (%)

Margin (%)

Reported PAT - Discontinuing Ops.

Reported PAT

Adjusted PAT

FY13

150,343

7.0

128,715

85.6

21,628

14.4

5,339

16,289

4,639

4,178

15,828

-6,699

9,129

3,025

33.1

2,100

4,004

8,483

-10.9

5.6

4,004

8,483

FY14

162,274

7.9

144,178

88.8

18,096

11.2

4,712

13,384

5,795

1,424

9,013

-14,202

-5,189

2,888

-55.7

2,243

-10,320

11,786

38.9

7.3

-10,320

11,786

FY15

175,708

8.3

154,065

87.7

21,643

12.3

4,631

17,012

4,609

1,180

13,582

-1,997

11,585

3,511

30.3

2,109

5,965

7,356

-37.6

4.2

5,965

7,356

FY16

152,202

-13.4

131,285

86.3

20,917

13.7

5,261

15,657

5,255

1,253

11,655

2,484

21.3

2,207

6,964

-5.3

4.6

742

7,706

FY17

132,889

-12.7

110,653

83.3

22,237

16.7

5,347

16,889

4,112

1,661

14,439

3,573

24.7

2,282

8,583

23.3

6.5

1,348

9,931

FY18E

105,804

-20.4

83,162

78.6

22,642

21.4

5,258

17,384

3,303

1,058

15,139

14,255

29,395

7,937

27.0

2,465

18,993

8,587

0.0

8.1

1,217

20,210

9,803

FY19E

115,508

9.2

90,789

78.6

24,719

21.4

5,413

19,306

2,358

2,310

19,258

5,392

28.0

2,662

11,203

30.5

9.7

11,203

(INR Million)

FY20E

126,324

9.4

99,164

78.5

27,160

21.5

5,771

21,388

2,136

2,526

21,779

6,098

28.0

2,875

12,805

14.3

10.1

12,805

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Total Loans

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Goodwill on Consolidation

Capital WIP

Current Investments

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY13

2,548

61,587

64,136

5,361

83,840

-56

153,281

106,053

65,282

40,771

66,287

5,916

5,997

81,830

16,018

34,401

18,414

12,997

47,519

15,572

14,753

17,194

34,311

153,281

FY14

2,548

53,107

55,655

6,552

83,931

1,910

148,048

112,504

69,677

42,827

67,243

4,676

4,409

81,705

16,490

32,409

17,530

15,276

52,812

13,992

17,080

21,740

28,893

148,048

FY15

2,548

52,969

55,517

6,735

83,788

2,062

148,102

120,084

76,081

44,003

69,586

1,893

4,429

88,109

26,264

34,267

14,643

12,936

59,918

18,891

16,341

24,686

28,191

148,102

FY16

2,548

65,995

68,543

25,985

90,904

12,348

197,780

120,671

5,490

115,181

17,619

5,015

21,879

83,769

19,319

35,656

12,654

16,140

45,682

16,818

7,923

20,941

38,086

197,780

FY17

2,548

76,534

79,082

26,239

70,719

12,144

188,184

117,703

9,839

107,864

16,984

4,791

2,205

27,907

78,269

13,809

20,884

16,654

26,923

47,630

14,427

11,462

21,741

30,639

188,184

FY18E

2,548

91,398

93,946

26,239

49,394

12,144

181,724

116,672

15,097

101,575

16,984

4,958

2,205

21,407

69,991

10,004

15,943

34,522

9,522

33,192

10,592

5,290

17,310

36,799

181,724

FY19E

2,548

97,883

100,431

26,239

44,928

12,144

183,742

124,639

20,510

104,129

16,984

4,992

2,205

21,407

72,467

10,921

17,089

38,682

5,775

36,236

11,563

5,775

18,898

36,231

183,742

(INR Million)

FY20E

2,548

105,294

107,843

26,239

40,523

12,144

186,749

132,632

26,281

106,351

16,984

4,998

2,205

21,407

76,638

11,944

17,997

40,381

6,316

39,630

12,646

6,316

20,667

37,008

186,749

2 April 2018

Tata Chemicals

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

Core RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Current Ratio

Interest Cover Ratio

Net Debt/Equity

FY13

33.3

54.2

251.7

10.0

75.7

FY14

46.3

64.7

218.4

10.0

-29.0

FY15

28.9

47.0

217.9

12.5

65.7

24.0

14.7

3.2

1.4

11.7

1.8

27.8

13.2

9.1

22.2

9.5

1.5

1.2

137

1.5

3.7

1.2

FY16

27.3

48.0

269.0

10.0

45.0

25.3

14.4

2.6

1.8

13.4

1.4

64.6

11.2

8.9

14.0

8.6

1.3

0.8

119

103

1.8

3.0

1.1

FY17

33.7

54.7

310.3

11.0

40.2

20.5

12.7

2.2

1.9

11.4

1.6

113.3

11.6

9.0

11.3

8.6

1.1

0.7

122

127

1.6

4.1

0.7

FY18E

33.7

54.3

368.7

13.8

21.7

20.5

12.7

1.9

2.0

9.5

2.0

163.0

11.3

7.8

12.8

9.8

0.9

0.6

119

126

2.1

5.3

0.13

FY19E

44.0

65.2

394.1

15.8

42.1

15.7

10.6

1.8

8.4

2.3

63.0

11.5

9.1

16.3

11.6

0.9

0.6

119

126

2.0

8.2

0.04

FY20E

50.3

72.9

423.2

18.1

42.1

13.8

9.5

1.6

7.4

2.6

54.9

12.3

9.9

18.1

12.9

1.0

0.7

119

126

1.9

10.0

-0.02

1.4

-14.3

13.3

9.7

23.9

9.4

1.4

1.0

101

1.7

3.5

1.0

1.4

68.4

19.7

16.0

38.5

17.0

1.4

1.1

1.5

2.3

1.2

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY13

9,130

5,339

4,468

-3,584

-17,107

-1,755

3,965

2,210

-5,842

-3,632

201

3,772

-1,869

8,966

-4,641

-3,033

1,292

1,633

16,780

18,414

FY14

-5,189

4,712

5,133

-2,307

3,795

6,144

17,232

23,376

-5,938

17,438

-59

390

-5,607

-9,894

-5,798

-2,961

-18,653

-883

18,414

17,530

FY15

11,585

4,631

4,241

-3,612

-11,245

5,600

7,136

12,736

-5,649

7,087

-29

928

-4,750

-3,417

-4,430

-3,026

-10,873

-2,887

17,530

14,643

FY16

12,935

5,714

5,946

-3,645

-652

20,298

3,022

23,319

-6,865

16,454

-90

-337

-7,292

-6,098

-6,202

-3,820

-1,897

-18,017

-1,989

14,643

12,654

FY17

16,522

5,522

4,645

-4,516

12,103

34,276

1,033

35,309

-6,429

28,880

-2,064

588

-7,905

-14,117

-4,456

-3,056

-1,776

-23,404

4,000

12,654

16,654

FY18E

15,139

5,258

2,245

-7,937

11,708

26,414

14,255

40,669

863

41,532

6,500

1,058

8,421

-21,324

-3,303

-4,129

-2,465

-31,221

17,869

16,654

34,522

FY19E

19,258

5,413

-5,392

4,728

24,055

-8,000

16,055

2,310

-5,690

-4,466

-2,358

-4,719

-2,662

-14,205

4,159

34,522

38,682

FY20E

21,779

5,771

-390

-6,098

922

21,983

-8,000

13,983

2,526

-5,474

-4,405

-2,136

-5,394

-2,875

-14,810

1,700

38,682

40,381

(INR

2 April 2018

REPORT GALLERY

RECENT INITIATING COVERAGE REPORTS

Explanation of Investment Rating

Investment Rating

BUY

SELL

NEUTRAL

UNDER REVIEW

NOT RATED

Expected return (over 12-month)

>=15%

< - 10%

> - 10 % to 15%

Rating may undergo a change

We have forward looking estimates for the stock but we refrain from assigning recommendation

Tata Chemicals

*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures:

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,

Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of

which are available on

www.motilaloswal.com.

MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited

(BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of

Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

Regulatory Enquiries against Motilal Oswal Securities Limited by SEBI:

SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and

adjudge violation of SEBI Regulations; MOSL requested SEBI to provide all documents, records, investigation report relied upon by SEBI which were referred in Show Cause Notice. The matter is closed and MOSL had to pay Rs. 2

lakhs towards penalty for misplacement of original POA of client.

MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at

the end of the month immediately preceding the date of publication of the Research Report.

MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act

as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial

instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.;

however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there

might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have

received any compensation from the subject company in the past 12 months.

In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:

managed or co-managed public offering of securities from subject company of this research report,

received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,

received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.

Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.

MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in

this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result,

the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or

brokerage service transactions.

Terms & Conditions:

This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part

or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report

is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied,

is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to

buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by

virtue of their receiving this report.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the

specific recommendations and views expressed by research analyst(s) in this report.

Disclosure of Interest Statement

Analyst ownership of the stock

Tata Chemicals

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or

its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have

expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject

MOSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities

and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)

Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only

available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from

registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered

investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption

under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional

Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional

investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule

15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S.,

MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of

this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject

to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.

For Singapore

Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal

Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the

Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced

in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in

this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of

independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document

(including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including

those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy,

completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the

views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval.

MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform

investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this

into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and

the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or

published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such

distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all

jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall

be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

The person accessing this information specifically agrees

to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL

or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm

Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:

na@motilaloswal.com,

Contact No.:022-30801085.

Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100.

Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth

management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real

Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products

2 April 2018