Tata Chemicals to pause Kenya operations for major upgrade

India's Tata Chemicals Ltd is preparing for a "big shutdown" at its Kenyan operations, a move the company assures will not disrupt the supply of its primary product, soda ash, despite a "slightly lower volume" from its East African unit in the first quarter of fiscal year 2026.

The chemical firm confirmed that it holds "enough stocks to serve the local and international market in the second quarter" to mitigate any impact from the planned operational halt.

Tata Chemicals has a long-standing presence in Kenya, where it extracts and processes soda ash from Lake Magadi, a unique natural deposit. 

The company, a part of the vast Mumbai-headquartered Tata Group – one of India's largest conglomerates with diverse global businesses – is a leading global producer of soda ash, which is a crucial ingredient in various industrial applications. 

Soda ash (sodium carbonate) is widely used in the manufacturing of glass (flat glass for windows, container glass for bottles), detergents, chemicals, paper, and in water treatment.

During its July 25 earnings conference call, management specifically addressed the operational pause.  “We have a big shutdown planned in Kenya, but we have enough stocks to serve the market in the second quarter," stated one of the executives, assuring investors of continuous supply. 

The shutdown, while significant, is a temporary measure designed to accommodate the commissioning of a new 50-kiloton calciner. 

A calciner is an industrial furnace used to heat materials to high temperatures to remove impurities or moisture, a crucial step in the production of soda ash. 

This new facility, currently undergoing trial runs, is expected to commence product delivery to the market sometime during the second quarter of 2026.

The expansion is a key part of Tata Chemicals' strategy to boost capacity and enhance efficiency in its Kenyan operations.

The earnings call also provided insights into the Kenyan unit's performance in the first quarter of 2026. It experienced a sequential decline in margins, primarily attributed to a higher proportion of sales being directed towards Southeast Asia rather than the more lucrative local African market.

 "Whenever they export more towards Southeast Asia versus domestically in Africa, I think the margins tend to shift," explained Tata Chemicals Ltd Chief Executive R. Mukundan.

He expressed confidence that this sales mix would normalise, bringing margins "back to normal" as the year progresses. 

The earnings call did not explicitly name Tata Chemicals' biggest customers for soda ash, but indicated sales across various regions, including Africa and Southeast Asia.

Despite the marginal volume dip and the upcoming shutdown, Tata Chemicals remains bullish on its Kenyan capacity. The new calciner's contribution is part of a broader company strategy that includes volume ramp-up in Kenya, aimed at achieving a structural Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) improvement of INR 600-650 crores for the full fiscal year 2026. 

At an exchange rate of 1 INR to Sh1.65, this translates to an expected EBITDA improvement of Sh990 million to Sh1.07 billion. EBITDA is a widely used measure of a company's financial performance, indicating its profitability from core operations before non-operating expenses and non-cash charges. 

For Q1 of this year, Tata Chemicals reported consolidated revenue from operations of Sh6.14 billion and a profit after tax of Sh521.4 million.