The Hindu Business Line : Tata Chemicals net at Rs 220.53 cr

TATA Chemicals Ltd (TCL), now with Hind Lever Chemicals Ltd (HLCL) also aboard, on Tuesday reported a profit after tax of Rs 220.53 crore on net sales/income from operations of Rs 2,544.15 crore, for the year ended March 31, 2004.

Being figures for the merged entity, these were not comparable with that of previous fiscal. On a stand-alone basis, TCL's net profit was Rs 213 crore (Rs 196.58 crore for the year ago period) and its gross sales were Rs 1,742 crore (Rs 1,626.96 crore), senior company officials said at a press briefing.

The board has recommended a dividend of Rs 5.50 per equity share translating to a dividend payout ratio of 60.5 per cent. The company has applied for de-bottlenecking operations at its Babrala plant, which will hike its fertiliser capacity from 8,65,000 tonnes to slightly less than 1.2 million tonnes at an investment of Rs 150 crore.

The company's capital expenditure for the financial year 2005 is pegged at over Rs 260 crore. Barring likely debt component in Babrala's share of capex, the rest will be met through internal accruals.

Hind Lever, which brought into the Tata Chemicals fold businesses such as sodium tri poly phosphate (STPP, used in detergents), DAP and complex fertilisers, was hit by the steep price increase in key raw materials, ammonia and phosphoric acid.

While the former's cost was pushed up by higher natural gas prices in the US, the latter's price rise was triggered by higher cost of sulphur partly in sympathy with revised oil prices but also due to the problems in Iraq, a major supplier of sulphur.

Despite the STPP business weathering cost pressures courtesy its own phosphoric acid production, the DAP business was impacted by the rising prices, particularly that of ammonia from $140 to $350/tonne. Hind Lever's bottom line dipped as a result.

According to Mr Prasad Menon, Managing Director, Tata Chemicals, the annual requirement of phosphoric acid and ammonia is in the region of 2,40,000 tonnes and 1,20,000 tonnes, respectively.

The viability of backward integration or alliances to secure cost-effective supply of these inputs is being explored. With the agricultural nutrient ratio gradually changing from its strong nitrogenous fertiliser bias, Tata Chemicals anticipates good prospects in the DAP segment.

Talks are on between industry and Government to revise DAP prices, ambience for the same being conducive at present given imported DAP costing more than its domestic counterpart.

Domestic soda ash sales amounted to 5,72,000 tonnes while exports rose 26 per cent to 1,28,000 tonnes. In line with global trends, the glass industry has emerged as a big consumer. Soda ash export target for the current fiscal is targeted at 1,40,000 tonnes. "This year we will probably hit our capacity. We don't want to sacrifice the domestic market for exports,'' Mr Menon said.

The company is studying options to de-bottleneck its soda ash plant. Details have not been firmed up as yet. For the last quarter of financial year 2004, Tata Chemicals PAT was Rs 29.65 crore on net sales/income from operations of Rs 554.20 crore.

In 2004, the company's cement plant — once a candidate for sale — crossed 100 per cent capacity utilisation for the first time with revenues of around Rs 130 crore. Cement prices have picked up in Gujarat since February/March and it is hoped that margins will improve. "We are not currently pursuing plans to sell the business,'' Mr Menon said.

Over the last four months, Tata Chemicals market share in the national branded salt category has averaged 41 per cent. The company plans to increase the number of Tata Kisan Kendras (TKKs) from the current 316 to more than 500 this fiscal.

On business outlook for the financial year 2005, Mr Menon said that he expected DAP and NPK sales to go up by 10 per cent while soda ash sales should grow at five per cent.