Boards of Tata Chemicals and Hind Lever Chemicals approve proposal to merge
January 24, 2003

	The transaction enables the creation of 'natural synergies' and the development of a superior operating model and business profile.
	The transaction will strengthen the company's financial position across all key performance parameters.
	Merger ratio fixed at 2.5:1 (2.5 shares of Tata Chemicals for every one share of Hind Lever Chemicals)

The boards of Tata Chemicals Limited (TCL) and Hindustan Lever Chemicals Limited (HLCL) today approved the proposal to merge the two companies. As per the proposed scheme of merger, HLCL shareholders will be issued new TCL shares in the ratio of 2.5:1 (2.5 shares of TCL for every one share of HLCL held). The transaction is subject to statutory, regulatory and shareholder approvals of both companies and the merger, once approved, will be effective from April 1, 2002.

Commenting on the transaction, Prasad Menon, Tata Chemicals ' managing director, said, "This transaction provides us with an opportunity to make a decisive and progressive move in line with our strategy of growing our leading position. The natural synergies that exist between both companies provide us with a compelling argument to combine our operations for the benefit of all our stakeholders, which include our customers, employees, business associates and shareholders. The proposed merger will result in a renewed, robust organisation with an enhanced product profile and a stronger financial position. It will enable us to consistently achieve business and profit growth more rapidly than would have been previously possible."

Key perspectives

	The existing businesses of TCL and HLCL have 'natural synergies' that can contribute to creating a superior operating model and a business profile capable of sustaining strong growth over the long term.
		TCL's inorganic chemicals business is a natural fit with HLCL's bulk chemicals business. TCL is the largest manufacturer of soda ash, which is a key raw material for the production of detergents whereas HLCL is India's largest manufacturer of sodium tri-polyphosphate (STPP), used as builders in detergents.
		TCL's fertiliser business is highly complementary to HLCL's operations in that sector. TCL is a leading urea manufacturer in India, with branded sales infrastructure — 'Tata Kisan Kendras' and a significant presence in the states of Uttar Pradesh, Haryana, Punjab, Uttaranchal and Bihar. HLCL is a leading manufacturer of fertilisers such as DAP, NPK and SSP, sold under the 'Paras' brand name, which enjoys substantial consumer loyalty in Bihar and West Bengal.
	Post-approval of the merger, the company will be able to offer a wider range of complementary products and support services to the current base of customers and also facilitate access to new markets and customers in both the chemicals and the agri inputs businesses.
	The merger will provide an opportunity to create cost-efficient operating and marketing structures by combining common infrastructure and resources; thereby strengthening the company's competitive position in its operating categories and growth markets.
	The transaction is in line with TCL and HLCL's intention to continuously explore business opportunities that enhance value for all their stakeholders including the shareholders of both companies.
	The transaction will result in a stronger balance sheet and profit and loss account, with combined (unaudited) revenues of approximately Rs 1,254 crore (first half of financial year 2003) and profit after tax of approximately Rs 92 crore (first half of financial year 2003), ended on September 30, 2002.
	The transaction will result in equity dilution of approximately 19 per cent but adds significant size to revenues and earnings.
	Tata Group shareholding will be approximately 25 per cent and the Unilever Group shareholding will be approximately 8 per cent in the post-merger company.

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