First half of financial year 2003 revenues increase by 17.9 per cent, profit after tax improves 43.2 per cent
October 23, 2002

	Manufacturing and marketing efficiencies enhanced across all businesses.
	Prudent financial management contributes to earnings.

Announcing the results for the first half of the financial year 2003, Prasad Menon, managing director, Tata Chemicals, said, "Our performance illustrates strong operating results driven primarily by volume growth, and manufacturing and marketing efficiencies across all our businesses. These initiatives have resulted in an optimal equation where we have revenue growth, expense containment and earnings expansion. Increased operational strength combined with prudent financial management and a stable sector outlook makes us confident of achieving continued business progress in the coming quarters."

Announcing the results for the first half of the financial year 2003, Prasad Menon, managing director, Tata Chemicals, said, "Our performance illustrates strong operating results driven primarily by volume growth, and manufacturing and marketing efficiencies across all our businesses. These initiatives have resulted in an optimal equation where we have revenue growth, expense containment and earnings expansion. Increased operational strength combined with prudent financial management and a stable sector outlook makes us confident of achieving continued business progress in the coming quarters."

Financial performance review

Highlights — First half of financial year 2003 (April-September 2002) versus first half of financial year 2002 (April-September 2001)

	Total revenues increase by 17.9 per cent to Rs 801 crore from Rs 679 crore.
	Profit from operations advance by 25.6 per cent to Rs 234 crore from Rs 186 crore.
	Profit before tax appreciates by 76.9 per cent to Rs 126 crore from Rs 71 crore.
	Net profit after tax grows by 43.2 per cent to Rs 81 crore from Rs 57 crore, despite substantially higher tax provisions.
	EPS on basic and diluted earnings (not annualised) for first half of financial year 2003 is Rs 4.48.

Highlights — Second quarter of financial year 2003 (July-September 2002) versus second quarter of financial year 2002 (July-September 2001)

	Total revenues rise by 13.1 per cent to Rs 439 crore from Rs 388 crore.
	Profit from operations increase by 19 per cent to Rs 125 crore from Rs 105 crore.
	Profit before tax advances 34.4 per cent to Rs 73 crore from Rs 54 crore.
	Net profit after tax grows by 8.3 per cent to Rs 47 crore from Rs 43 crore.
	EPS on basic and diluted earnings (not annualised) for second quarter of financial year 2003 is Rs 2.60.

The operating and financial performance of first half / second quarter of the financial year 2003 is not evenly comparable with the corresponding period last year due to the major fire at the Mithapur facility during the last year.

Financial management perspective
Prudent financial management results in direct contribution to earnings.

Reduced cost and efficient capital deployment in operating businesses through multiple initiatives that include repayment, refinance and rollover of existing debt.

	Total debt as on September 30, 2002, reduced by 22 per cent to Rs 918 crore from Rs 1,182 crore as on September 30, 2001
	Interest outgo in first half of financial year 2003 reduced to Rs 51 crore from Rs 62 crore in first half of financial year 2002. Interest outgo in second quarter of financial year 2003 decreases from Rs 31 crore to Rs 25 crore.
	Weighted average cost of borrowing in first half of financial year 2003 reduced to approximately 10.5 per cent per annum from approximately 11.7 per cent in first half of financial year 2002.
	Working capital in September 2002 reduced to Rs 282 crore from Rs 362 crore in September 2001, despite increased business activity. Reduction achieved through better inventory and debtor management.

Manthan perspective
Implementation of Project Manthan, an efficiency-led initiative in consultation with Mckinsey & Co, being done in a phased manner. Gradual increase in benefits from this exercise

	Initial phase that focused on fuel and raw material purchase has been partly implemented.
	Second phase, which focuses on operations, processes and marketing initiatives, under implementation.
	The final phase, which focuses on supply-chain management programmes to 'reduce total cost to customer' through effective marketing and production processes, has been initiated.
	Working capital in September 2002 reduced to Rs 282 crore from Rs 362 crore in September 2001, despite increased business activity. Reduction achieved through better inventory and debtor management.

The precepts of Manthan have been imbibed into the system and are distilling greater efficiencies from all aspects of the company

Business and operations review

Soda ash business

	Market outlook is promising with low level of soda ash inventories, despite capacity expansion within the sector.
	Demand growth from all primary user categories remains stable.
	Capacity utilisation enhanced; the company produced 357,675 tonnes of soda ash in first half of financial year 2003.
	Demonstrable results of multiple export initiatives obtained:
		Exports of 51,000 metric tonnes during first half of financial year 2003 in comparison with a historical annual high of 40,000 metric tonnes and 34,000 metric tonnes for the previous year.
		Established leadership position in the Bangladesh and UAE markets; consolidating recent market entries in Thailand and Indonesia.

Salt business

	Salt business has emerged as a key driver of business growth. Revenues from the company's industrial and edible salt business form 12.6 per cent of first half of financial year 2003 turnover.
	Increased competition in branded salt market — national brands gain share at the expense of local brands.
	The company regained its leadership position in the branded salt market in India — this was earlier affected due to operational disturbances in the first half of financial year 2002.
	Tata Salt rated number four in the Brand Equity survey of India's most trusted brands.

Urea business

	Focused distribution efforts and partnership approach with farmers through Tata Kisan Kendras, as also a revival in the monsoon enables the company to strengthen its market position.
	Marketing of urea produce continues to be driven by ECA allocation.
	The company continues to maintain high level of operating efficiency, remaining the lowest per tonne energy consumer within the sector.
	Presented the 'Golden Peacock management award' by the World Environment Foundation, and the 'IMC award' for environment, agriculture and rural development.

Some of the statements in this document that are not historical facts are forward looking statements. These statements are based on the present business environment and regulatory framework. We assume no responsibility for any action taken based on the said information, or to update the same as circumstances change.