Tata Chemicals: Q1 FY2006 PAT increases by 42% to Rs 65 crore, basic EPS: Rs 3.02
July 21, 2005

Tata Chemicals Limited, a leading manufacturer of chemicals, fertilisers and food additives, has announced its audited financial results for the quarter ended June 30, 2005.

Commenting on the Company's performance for Q1 FY2006, Prasad Menon, Managing Director, Tata Chemicals, said, "I am delighted to announce strong operating and financial performance for the quarter under review.

"In the chemicals segment, improved realisations from all our products facilitated by earlier announced price increases have improved our profitability.

"While supply of phosphoric acid has stabilised as a result of the IMACID partnership, we moderated our phosphatic fertilisers sales due to the delay in the monsoon. However, delays in the announcement of phosphoric acid prices as well as expected tight supplies of rock phosphate in the foreseeable future continue to be causes for concern.

Urea sales volumes were especially strong and this was the first complete quarter when our Babrala facility plant operated without any usage of naphtha.

"I believe with its continued focus on enhancing customer relationships and controlling input costs Tata Chemicals is optimally positioned to take advantage of the healthy demand environment and sustain its growth momentum "

Performance summary
Q1 FY2006 (April - June 2005) v/s Q1 FY2005 (April - June 2004)

	Income from operations (net of excise) at Rs 510 crore compared to Rs 520 crore. This was the first complete financial quarter that the Company did not use naphtha as a fuel in the manufacture of urea. As a result there was no price escalation component in the income from operations.
	Profit from operations improves 9 per cent to Rs 122 crore from Rs 111 crore. Improved realisations from the chemicals segment on the back of price increases announced in previous year.
	PBIT of the chemicals business amounted to Rs 74 crore up by 30 per cent from Rs 57 crore.
	PBIT of the fertiliser business was Rs 27 crore, compared to Rs 32 crore.
	PBT amounted to Rs 96 crore, up by 32 per cent in Q1 FY2006 compared to Rs 72 crore in Q1 FY2005. Improvement in PBT also attributable to increase in tax refunds and reduction in interest costs.
	PAT increased 42 per cent to Rs 65 crore compared with Rs 46 crore in Q1 FY2005.
	Basic EPS (for the quarter): Rs 3.02
	Diluted EPS: Rs 2.71

Segmental performance

Chemicals

Soda ash

	Amongst domestic manufacturers, Tata Chemicals' marketshare stood at 32.4 per cent, remaining the largest player in the Indian soda ash segment. On an overall market basis (including imports), the Company's marketshare was 30 per cent.
	Sale contracts initiated with effect from the ongoing fiscal, incorporated the increased prices (by approximately Rs 500 per tonne effected in November 2004), enabling increased contributions from soda ash sales.
	Production of soda ash during the quarter under review amounted to 160,530 tonnes translating to a capacity utilisation of 73 per cent. Production volumes were lower during the quarter due to a planned plant maintenance shut down, which lasted for around two weeks.
	Sales of dense soda ash to the fast growing glass segment, improved by 10 per cent over the corresponding quarter last year. During the quarter, Tata Chemicals sold 150,000 tonnes of which 32 per cent was dense ash.
	Prices of soda ash, especially in North America and Europe remained firm resulting in reduced imports into the country. Capacity expansions have however resulted in marginal lowering of prices by Chinese manufacturers.

Food additives

	Tata Salt's dominance of the domestic market continued with the brand's marketshare standing at 37 per cent in the first two months of the quarter.
	The quarter ended June 30, 2005 was the first wherein Tata Salt was sold at the increased price levels of Rs 9.25 per kg.
	The Tata Salt advertising series was awarded the Best Advertisement campaign for June 2005, by the Economic Times Brand Equity Ad Monitor Track.
	During the quarter, the Company commenced exports to the Middle East with an initial shipment effected to the UAE

STPP

	Sales volumes of sodium tri poly phosphate (STPP) improved by 11 per cent over the last year
	Lower production volumes though, as a result of the implementation of the plant expansion programme and limited raw material availability, resulted in an increase in imports and a reduction in the Company's overall marketshare.
	Chinese STPP prices have softened over the last two months.

Cement

Cement sales remained healthy during the quarter.

Fertilisers

Nitrogenous (urea)

	Improved rainfall towards the end of June 2005 contributed to higher urea sales. Sales volumes for the quarter ended June 30, 2005 were higher by 23 per cent quarter-on-quarter at 201,000 tonnes.
	Tata Chemicals remains the most energy efficient player in the industry with an energy consumption of 5.2 G Cal/ MT urea.
	The quarter under review was the first in recent times where complete production was without any naphtha usage. This was achieved through the combined use of APM, RLNG and PMT gas.
	The Babrala manufacturing facility was awarded the Golden Peacock Environment Management Award for the year 2005 and the Greentech Safety Gold Award for the year 2004-05 in the chemical sector

Phosphatics (NPK, SSP, di ammonium phosphate)

	DAP, NPK and complex fertiliser sales volumes were at lower levels during the quarter under review due to the delayed monsoon which resulted in lower consumption.
	Phosphoric acid supplies, however, have stabilised as a result of the sourcing agreement with Indo Maroc Phosphore S.A. (IMACID), Morocco, ensuring continued production.
	Nevertheless, delays in the settlement of phosphoric acid prices and expected tight supply of rock phosphate and phosphoric acid in the foreseeable future are a challenge.

Financial management

	Interest costs in line with the Company's focused debt restructuring programme amounted to Rs 1.94 crore in Q1 FY2006, a 73 per cent decline compared to the corresponding quarter last year.
	Total debt as on June 30, 2005 stood at Rs 1,246 crore. The debt includes a balance amount of approximately Rs 500 crore availed via the Company's Foreign Currency Commercial borrowing
	Debt comprises short-term buyers credit amounting to around Rs 459 crore, the tenor for which is around six months