On Monday evening, Tata Chemicals confirmed that the company will again restructure its business in the United Kingdom and close the Winnington soda ash and calcium chloride plants, which will lead to a loss of 220 jobs.
There is real regret that TCE will have to bring to an end a long history of soda ash production at the Winnington site, but energy costs have overwhelmed the viability of these plants, TCE managing director Martin Ashcroft said in a company statement on Monday.
Brunner Mond was hived off from the now legendary industry behemoth Imperial Chemical Industries (ICI) in 1991 along with two other companies and floated into different sectors.
While the other two companies spawned from ICI once a corporate titan which brought the entire city of London to halt on the eve of its results continued their legacy in the form of pharma major AstraZeneca and Imperial Metals Industry (IMI), Brunner Mond gave sleepless nights to Tata Chemicals management.
Prasad Menon, the then MD of Tata Chemicals, had said the first step would be to restructure the companys debt, which was around R390 crore at the time of acquisition. The company was brought for R508 crore.
That was, in fact, the first round of restructuring that was done to bring the servicing cost down and make the operations more profitable. At what rate was that done and how much was restructured could not be known as mail sent to Tata Chemicals on Tuesday remained unanswered.
This measure did not suffice much, although the acquisition had made Tata Chemicals the third-biggest soda ash manufacturer in the world with a capacity of 3 million tonne per annum.
Thereafter, in mid-2006, the company launched a programme project fusion an approach to set up cross-functional teams to explore the potential synergies between the companies. While it continued for some time with some positive results, finally in August 2009, Brunner Mond had to down the shutters at its site in Delfzijl, Netherlands, as part of another round of restructuring. This also reduced the number of its employees from 1,529 in 2009 to 1,401 in 2010-11. Today it has close to 250 employees in UK, according to sources.
This led to a jump in operating income of the company within a years time to R200 crore approximately for Brunner Mond from an earlier loss in 2009-10. But this led to an impairment and restructuring cost of R124 crore as well.
Buoyed by the increase in bottomline numbers, Tata Chemicals planned another big leap and gobbled up a majority stake in yet another iconic giant brand British Salt in early 2011 an acquisition done in the books of Brunner Mond.
This, while giving Brunner Mond a much-needed backward integration (salt is a raw material for manufacturing soda ash), also saddled its books with a debt of R1,200 crore.
If all this was not enough, Tata Chemicals announced a R484 crore write-off on impairment charges in May for the fiscal FY13 due to weak European chemicals operations. This write-off came in the middle of several initiatives to cut down costs and pump up bottomline.
Despite the measures, TCE announced its third round of restructuring on Monday, which will finally bring down the curtains on a 145-year soda ash manufacturing legacy brought forth at Winnington by John Brunner and Ludwig Mond, who set up the company around the same time when Jamsetji Tata was laying the foundations of the Tata Group in India in 1870.