TGV SRAAC : caustic soda industry is highly power intensive, whereby power cost constitutes ~50% of the production cost

TGV SRAAC :  caustic soda industry is highly power intensive, whereby power cost constitutes ~50% of the production cost

  • Integrated operations and improving operational performance 
    • The operations of SRAAC are highly integrated, with the by-product of one process being used as a raw material for another product, enabling the company to optimally utilise its production capacity. 
    • This also protects the company from the effects of cyclicality in the demand for certain of its products to some extent, given a diversified product basket. 
    • The operational performance of the company continued to remain healthy marked by high capacity utilisation for its key products during FY24. 
    • However, its revenue and profitability were affected during FY24 by a significant decline in Electro Chemical Unit (ECU) realizations, driven by global demand-supply dynamics.
  • Comfortable capital structure and debt coverage indicators
    • The company’s total debt increased marginally in FY24 to support the chloromethane expansion project leading to some moderation in its overall gearing from 0.22x as on March 31, 2023, to 0.29x as on March 31, 2024. 
    • Its debt coverage indicators marked by total debt / PBILDT however moderated significantly from 0.43x in FY23 to 2.38x in FY24 mainly due to significant decline in its PBILDT in FY24. 
    • However, with improved ECU realisations in H1FY25, its total debt/PBILDT is expected to remain comfortable at below 2x by end FY25. 
    • Its capex plans are moderate and even after partial funding of the same by debt, its capital structure and debt coverage indicators are expected to remain comfortable in the near to medium term. 
  • Better control over power cost 
    • The caustic soda industry is highly power intensive, whereby power cost constitutes ~50% of the production cost. 
    • TGV SRAAC has access to diversified pool to meet its total power requirement. 
    • The average cost of power to the company in FY24 declined to ₹6.69 per kilowatt hour (kWh) against ₹6.93 per kWh in FY23 due to an increase in the contribution from solar power, power sourcing under open access arrangement, and increase in contribution of power from Andhra Pradesh Southern Power Distribution Company Limited (APSPDCL). 
    • Also, it has plan to further expand its solar power capacity, which is likely to augur well for its longterm prospects. 
  • Established relationships with key clients and benefits of diversified end-user industry application
    • The company has a long and established manufacturing track record of almost four decades in manufacturing chemicals. 
    • Over the years, TGV SRAAC has established long-term relationships with over 200 clients. 
    • The products of the company have varied application across a diverse range of industries, including textile, pulp and paper, alumina, soaps and detergents, petroleum, fertilisers, pharmaceuticals, agrochemicals, and water treatment, among others. 
    • Internally, caustic soda is used for castor oil preparation, soap noodles, and chloromethane operations.
    • Moreover, TGV SRAAC also benefits from the synergies brought ~by the presence of group companies in related businesses, wherein, it procures certain raw materials from its group entities and sells some of its finished products to group concerns. 
  • Experienced promoters 
    • TGV SRAAC is the flagship company of the group, promoted by TG Venkatesh, a commerce graduate with a background in both industry and politics. 
    • He founded the TGV group and successfully diversified its operations, expanding from manufacturing industrial chemicals to other sectors such as healthcare products, aquaculture, real estate, pharmaceuticals, and hospitality. 
  • Liquidity: Adequate 
    • The liquidity position of the company is adequate, marked by sufficient cash accruals against its repayment obligations and current ratio of 1.06x as on March 31, 2024. 
    • The operating cycle of the company remained comfortable at 38 days in FY24. 
    • The average utilisation of the fund-based working capital limits and non-fund-based limits remained moderate at 82% and 79%, respectively, for the last 12 months ended September 30, 2024. 
    • The liquidity of the company is also supported by positive cash flows from operations on a sustained basis.


As expected and shared in previous video on chemical sector that companies will be reporting terrible results.

Check this video, incase you missed: https://youtu.be/gQLrWczQGTc 

TGV announced it's results and it was a disaster

FY 2023 PAT: 361 cr

Market cap as on 14th Aug: 1,006 cr ( 93)

Q1 PAT: 20 cr Vs 148 last year

Updates: Approval for setting up of another 20 MW Solar Power Plant near to factory at a total approximate cost of Rs. 74 Cr

The above proposal is in addition to earlier Board approvals for 40 MW Solar Power Plant

-  out of this 22.75 MW Solar Power Plant works completed and started power generation

-  balance 17.25 MW Solar Power Plant works are in progress satisfactorily  


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