Mumbai, May 14: Tata Chemicals is planning to shut down a soda ash manufacturing plant in north-east Netherlands a clear indication that the recession in the West has started to hit the foreign subsidiaries of Indian companies.
It is learnt the Tata group company that acquired UK-headquartered Brunner Mond may shut the latters Dutch facility located in Delfzijl by September. The Brunner Mond management in Delfzijl, Netherlands, has reportedly held talks with workers and unions on the future of this unit.
The Delfzijl plant employs around 120 workers, according to data available on the Brunner Mond website.
Tata Chemicals declined to comment on the development.
Like its peers within the group, Tata Chemicals has made a series of acquisitions over the past few years, a move that catapulted the company into the second-largest soda ash maker in the world.
It bought UK-based Brunner Mond in late 2005 for Rs 798 crore. Brunner Mond was an ailing company that had witnessed frequent changes in management and ownership before the Tata group took over.
Brunner Mond has plants in Northwich in the United Kingdom, Delfzijl in the Netherlands and Magadi in Kenya.
After the Tata group took over, Brunner Mond embarked on a series of cost-cutting measures at the Delfzijl plant and made efforts to beat rising input costs.
Last year, Tata Chemicals had also opened a high-tech sodium bicarbonate plant adjacent to its Brunner Mond facility in Delfzijl. The highly automated plant put up at an investment of Rs 100 crore uses surplus carbon dioxide from the soda ash plant as one of its raw materials.
However, the global meltdown is reportedly making it difficult to run the Brunner Mond soda ash plant as a commercially viable venture.
In 2008, Tata Chemicals also acquired the soda ash business of US-based General Chemical Industrial Products for $1 billion that has manufacturing facilities in Wyoming, making the former the second largest producer of soda ash in the world.
Recently, the Tata group also announced that it was considering mothballing a Tata Steel unit, Teesside Cast Products in north-east England.
Initially, Tata Steel had planned to sell this unit to its key customers. However, the deal appeared to have fallen through.
Subsequent to this development, four of its customers that accounted for a major chunk of the units business backed out of a 10-year slab offtake agreement putting at risk the future of the units employees. The Tata group is not alone.
There have been reports of other steel makers who have made acquisitions in the US facing difficult times as a corollary of the slowdown. This has forced them to run plants at 10 to 15 per cent capacity utilisation.