The Hindu Business Line : Tata Chemicals Q4 net profit declines 42 pc

Report card
For 2005-06, the company posted 3.66 per cent growth in profit after tax at Rs 353.03 crore (Rs 340.55 crore) and 16.93 per cent rise in net sales/income from operations at Rs 3,517.48 crore (Rs 3,008.14 crore).
The board has recommended a dividend of Rs 7 per share.
Capacity expansion at Magadi in Kenya — the low-cost soda ash facility came aboard with Brunner Mond's acquisition — is nearing completion.

Mumbai , May 30

In results declared on Tuesday Tata Chemicals Ltd (TCL) showed 42.03 per cent decline in profit after tax for the quarter ended March 31, 2006, at Rs 64.42 crore from the previous corresponding Rs 111.13 crore.

Mr P.K. Ghose, Chief Financial Officer, maintained the quarters were not comparable owing to factors on the tax front and one-time expenses.

TCL had one-time repair expense of Rs 25-30 crore and non-recurring provisions across its domestic manufacturing facilities. Further, tax outgo in the year-ago quarter was low following FY05 reduction in tax rate from 36 per cent to 33 per cent. On top of it was FBT impact in FY06, effective tax rate for the company closing at 29-30 per cent (24 per cent). Q4 net sales/income from operations was up 4.66 per cent at Rs 753.09 crore (Rs 719.56 crore).

For 2005-06, the company posted 3.66 per cent growth in PAT at Rs 353.03 crore (Rs 340.55 crore) on 16.93 per cent rise in net sales/income from operations to Rs 3,517.48 crore (Rs 3,008.14 crore). The board has recommended a dividend of Rs 7 (Rs 6.50) per share.

Including 11 months of operations at the Moroccan joint venture IMACID and three months of Brunner Mond, TCL had consolidated PAT of Rs 428 crore on operational income of Rs 4,029 crore in FY06.

TCL's soda ash, salt and cement businesses have done well, Mr Ghose said. In both domestic and international markets the price of soda ash has averaged $180-190 per tonne. "This is expected to hold," he said. There is continued fuel for soda ash price in the Indian Ocean region from growing auto sales.

Capacity expansion at Magadi in Kenya — the low-cost soda ash facility came aboard with Brunner Mond's acquisition — is nearing completion.

Over the next couple of years, TCL would spend Rs 300-400 crore in capital expenditure, Rs 200-300 crore of that at Mithapur and about Rs 150 crore for the proposed de-bottlenecking at Babrala. This would raise domestic soda ash capacity from 8.75 lakh tonnes to 10 lakh tonnes, cement capacity from 5 lakh tonnes to 7 lakh tonnes and that of salt, from 5 lakh tonnes to 7 lakh tonnes. Funding of capital expenditure can be met internally. "For further growth we may need to look at raising funds," Mr Ghose said. TCL's debt equity ratio currently stands at 0.58:1. He deferred opinion on the company's fertiliser business as the government was still firming up relevant policy. "Let's wait for the final draft," he said. With all three Tata companies involved in submitting their proposals to the Bangladesh government, official feedback on Tata projects in that country should be available in a few weeks. Shares of Tata Chemicals edged down by Rs 1.85 to Rs 235.35 on BSE.

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