The Hindu Business Line : Tata Chem net increases 7%

Performance of subsidiaries was subdued mainly due to prepayment penalty on early retirement of high-cost debt, inability to pass on higher input and freight costs.

Our Bureau

Mumbai, Jan 30 Tata Chemicals, a leading manufacturer of chemicals, fertilisers and food additives, has posted a 7 per cent rise in net profit at Rs 125 crore for the quarter ended December 31, 2007, against Rs 117 crore logged in the same period last year.

Total income in the quarter was down 6 per cent at Rs 1,236 crore against Rs 1,319 crore last year.

Mr Homi Khusrokhan, Managing Director, Tata Chemicals, said, “Our chemicals business continues to perform well on the back of a buoyant demand for soda ash. During the quarter we have prepaid high-cost debt and borrowed at much lower levels. While this may have impacted our consolidated profitability in the review period, it will result in significant savings going forward.”

On a consolidated basis, the Group posted a 42 per cent drop in net profit at Rs 91 crore for the quarter ended December 31, 2007, against Rs 156 crore for the same quarter last year. Total income fell 5 per cent to Rs 1,713 crore (Rs 1,794 crore).

Performance of subsidiaries was subdued mainly due to prepayment penalty on early retirement of high-cost debt, inability to pass on higher input and freight costs incurred due to long-term contracts which get renegotiated every financial year and political tension in Kenya in December impacting operations, logistics and transportation of materials, the company said in a press release.

Soda Ash

International spot soda ash prices have remained firm over $300 per tonne and availability continues to be tight. Since no significant capacity additions are expected over the next 2-3 years supplies will remain tight, the company said.

In India, prices rose by around 8 per cent during the quarter under review. Substantial imports combined with normal production in Gujarat significantly improved availability.

The US, a major player in the international soda ash market, is facing a shrinking domestic market due to the housing and automobile sector recession. Chinese domestic demand, on the other hand, has been rising, leading to decreased exports.

Tata Chemicals continues to be the market leader in the domestic edible salt market with a 46 per cent share.

Fertilisers

Prices for phosphatic fertiliser and key raw materials have been going through a volatile phase. Rock-phosphate, phosphoric acid and sulphur prices increased sharply, leading to DAP (Di-Ammonium Phosphate) prices rising to about $800 per tonne (an increase of over 300 per cent in the last 15 months), the company added.

On Wednesday, the company’s stock on the BSE lost 4.58 per cent at Rs 329.