THE Tata Chemicals' Chief Financial Officer, Mr P.K. Ghose, says that their margins are sustainable as Asian prices are seen firm. He adds that, their soda ash and cement realisations are higher.

Excerpts from CNBC-TV18's exclusive interview with Mr Ghose:

Can you put the Brunner Mond acquisition in perspective and explain how it fits in?

We have acquired 63.5 per cent stake in Brunner Mond and that is at £100 per share. The reason behind this acquisition was scale since post-expansion of Magadi soda, we have become a 3-million-tonne player and that makes us the third largest player in the world.

Second, it gives us access to low-cost natural soda ash as opposed to the synthetic soda ash and, lastly, it gives us access to newer geographies both in terms of facilities and in terms of markets. We will be marketing the products in Europe and Africa.

A quick check on what the soda ash performance was like in this quarter and where realisations stood?

The chemicals business has been doing very well for the entire year including this quarter. Prices, which traditionally used to be in the region of $121-130 have been in the range of $190-200, and we expect that in the short-term and in the medium-term, these prices will continue despite a slight softening in the Chinese prices.

We had higher realisations in soda ash, salt as well as in cement and this was coupled with lower input cost for soda ash. For the first time we saw that after the increase in commodity prices, the cost of coke came down.

In terms of volume growth, in which category do you see the highest growth?

Volumes have grown in all our major products significantly during the year. The sales for April to December have been higher than last year in all segments, and I can't single out a single product. We have had higher sales in soda ash, branded salt, cement, urea and the outlook appears to be fairly good.

Does it seem like a benign environment in terms of raw material prices as well?

In the short to medium-term, prices in Asia continue to look to be in the same region despite a slight softening in the Chinese prices, but otherwise the outlook is fairly good.

Your group company Tata Tea got re-rated after it integrated the Tetley operations and started reporting combined numbers. By when do you hope to do it and could you give us a sense of where blended margins for the two entities would be once you integrate Brunner Mond into your accounts?

We are at the moment in the post-merger integration phase and we are meeting with the Brunner Mond people right now. Since we have a 63.5 per cent stake, we have to consolidate the accounts. Brunner Mond expects to deliver its results in the first week of March for April to December. I can only say that at the moment results are based on good performance of the soda ash industry. The consolidated results will only be available in May or June this year.

(This article was published in the Business Line print edition dated February 4, 2006)
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