Q3 FY2005 financial result communication
January 18, 2005

Robust Q3 FY2005 operating and financial performance

• Net sales improve 38%, PBT increases 54%, PAT up 63%
• Q3 FY05 EPS: 4.49, 9M FY05 EPS: 10.66
• Soda ash plant maintains high capacity utilization levels
• Tata Salt continues to enjoy 40%+ marketshare, STPP sales strong
• Urea sales up 10%; DAP/ NPK* sales up 26%
• Prudent financial management further lowers debt, cost of borrowing

Tata Chemicals Limited, a leading manufacturer of chemicals, fertilisers and food additives and one of the largest manufacturers of synthetic soda ash in the world today announced its unaudited financial results for the quarter ended December 31, 2004.

Commenting on the Company's performance for Q3 FY 2005, Prasad Menon, Managing Director, Tata Chemicals, said,

"I am happy to report strong operating and financial performance resulting from improved sales volumes and efficiency enhancement across our businesses backed by aggressive financial management. While we continue to be leaders in the soda ash and edible salt business categories, the performance of our urea, NPK and DAP businesses too has been very creditable.

The external environment continues to pose challenges; however these results further strengthen my confidence that Tata Chemicals possesses the size, scale and structure to deliver growth and value going forward "

manufactured by the Company

Performance Summary

Q3 FY 2005 (October - December 2004) v/s Q3 FY 2004 (October - December 2003)

• Income from operations (net of excise) up 38% to Rs. 1,039 crore from Rs. 755 crore
• Increased trading activity in complex fertilisers, driven by the 'Tata Kisan Sansars' further improves revenues
• Profit from Operations improves 8% to Rs. 131 crore from Rs. 120 crore, despite continuing high coking coal and ammonia costs
• PBIT of the inorganic chemicals business at Rs 42 crore
• PBIT of the fertiliser business amounted to Rs 66 crore
• Profit before tax stood at Rs 141 crore, up 53% over Rs 92 crore in Q3 FY 2004
• PAT at Rs. 97 crore compared with Rs 59 crore in Q3 FY 2004
• EPS (for the quarter): Rs 4.49

9M FY 2005 (April - December 2004) v/s 9M FY 2004 (April - December 2003)

• Income from operations (net of excise) improved by 16% to Rs. 2,289 crore from Rs. 1,979 crore
• Profit from Operations at Rs. 382 crore compared to Rs. 385 crore
• High prices of coking coal, coke as well as phosphoric acid and ammonia, especially during the first six months of the current financial year resulted in reduced profit from operations
• PBIT of the inorganic chemicals business at Rs 153 crore
• PBIT of the fertilizer business amounted to Rs 159 crore
• Profit before tax at Rs 341 crore, up 20% over Rs 285 crore
• PAT at Rs. 229 crore compared with Rs 197 crore in 9M FY2004
• EPS (for the period): Rs 10.66

Segmental Performance

Inorganic chemicals

Soda ash

• Capacity utilization levels at the Mithapur facility during the quarter under review stood at 93.5%
• Tata Chemicals maintains its leadership position in the domestic market with a 30% marketshare
• Domestic sales for the quarter under review stood at 137,000 MT and for the year-to-date amounted to 388,000 MT, making up the sales shortfall that resulted from the transporters strike in the second quarter FY05
• In line with its objective of enhancing its global presence, the Company exported 46,600 MT, 44% of India's export volumes during the period under review.

Food additives

• Market leadership in the edible salt segment was sustained with a marketshare of 40.5%
• The Tata Salt brand was also recognized as the 'Number 1' food brand in the country, as part of 'The Economic Times Brand Equity rankings'. On an overall basis too, the brand ranked fifth as compared to sixth in the previous year
• During the review period, Tata Salt was also introduced in 100-gram dispenser sets. This innovation has enjoyed a strong consumer response besides also enhancing the image of the brand
• Primary sales of both Samunder Cooking Soda and Samunder Crystal Salt continued to be healthy steady

STPP

• Sales volumes of sodium tri poly phosphate (STPP) were healthy at 14,160 MT, an improvement of 30% over the corresponding period last year

Fertilisers

Nitrogenous

• Sales during the quarter amounted to 279,800 MT, an increase of 10% over the corresponding period last year
• Tata Chemicals remains the most energy efficient player in the industry
• The Safety Management Systems of the Company's Babrala manufacturing facility were awarded the 'Sword of Honour' by the British Safety Council. This is first such award given to any fertilizer company in India
• The Tata Kisan Kendra initiative has been given a new identity with the brand name 'Tata Kisan Sansar' (TKS). The TKS network was also extended to Agra and Chandigarh where it received an enthusiastic response

Phosphatics

• DAP, NPK and complex fertiliser sales volumes during the quarter under review amounted to 235,000 MT translating to 444,000 MT for the year to date
• During the quarter ended December 31, 2004 regular availability of ammonia and phosphoric acid ensured optimal levels of production

Financial Management

• Interest costs in line with the Company's focused debt restructuring programme amounted to Rs 6 crore in Q3 FY2005, a 48% decline compared to the corresponding period last year
• Total debt as on December 31, 2004 stood at Rs. 743 crore. This debt comprises short-term buyers credit amounting to around Rs. 295 crore, the tenor for which is around six months
• The weighted cost of borrowings (short and long term) was 4.41% for the quarter under review

Outlook
Inorganic Chemicals

• The demand outlook for the soda ash business, especially from the glass segment remains strong both domestically and globally. On the back of this demand, as well as spiraling raw material and freight costs, prices of soda ash were firmed up in November 2004 in select markets by approximately 7%
• All the Company's food additives offerings continue to receive good response at both the distributor and the consumer levels. Going forward the Company is exploring opportunities of widening its presence in the category

Fertilizer

• A good rabi season is anticipated to result in continued healthy nitrogenous and complex fertiliser demand though some purchases may have been made in advance
• The revised phosphoric acid price that the Government and industry have negotiated can be expected to provide some relief to the complex fertiliser business. However ammonia prices remain strong