• Scheme of amalgamation with Hind Lever Chemicals effective
• Fertiliser realisations continue to be healthy
• Edible salt market share currently at an all time high of 41 per cent
• Soda ash sales robust
• Dividend: Rs 5.50 per share

Tata Chemicals Limited, a leading manufacturer of chemicals, fertilisers and food additives, today announced its audited financial results for the year ended March 31, 2004.

Commenting on the company's performance for FY2004, Prasad Menon, Managing Director, Tata Chemicals, said, "Tata Chemicals' operating and financial performance is a reflection of a continuing endeavour to strengthen topline through volume expansion and enhancement of product offerings while simultaneously improving margins on the back of efficient operations and prudent financial management. It is heartening to note that these results have been achieved in the face of a demanding external environment wherein prices of key commodity inputs such as coal, coke and ammonia, as well as ocean freight rates touched record highs.

The Scheme of Amalgamation with Hind Lever Chemicals, which was approved by the shareholders of both companies and the Honorable High Courts, has also given us a more enhanced and synergistic product profile, a larger customer base and an even more well developed distribution infrastructure."

The merger with Hind Lever Chemicals has resulted in the dilution of Tata Chemicals' equity by approximately 19 per cent. Consequently, Tata Chemicals' paid up equity share capital stands at Rs 215.17 crore.

Performance summary

FY2004
Tata Chemicals' net sales in FY2004 amounted to Rs 2,544 crore, a 66 per cent increase over the net sales of the stand-alone company in the corresponding period last year. Profit from operations has expanded 11 per cent to Rs 460 crore. The company's net profit has also appreciated 12 per cent and stands at Rs 221 crore, translating to an EPS of Rs 10.25.

The company's debt stands at Rs 766 crore as on March 31, 2004 compared with Rs 816 crore as on March 31, 2003. Weighted average cost of borrowings stood at 7.8 per cent in FY2004 compared to 9.7 per cent in FY2003 and 11.2 per cent in FY2002. FY2004 debt comprises Rs 295 crore debt of the erstwhile HLCL, which comprises short-term buyer's credit amounting to Rs 269 crore.

The Board of Directors has also approved payment of a dividend of Rs 5.50 per equity share translating to a dividend payout ratio of 60.5%

Q4 FY2004
On a corresponding quarter basis, the company's net sales have improved 57 per cent to Rs 554 crore while profit from operations amounted to Rs 75 crore and PAT stood at Rs 30 crore.

Segmental performance

Inorganic chemicals

Soda ash
Soda ash sales volumes in FY2004 improved 3 per cent over volumes sold in FY2003 enabling the company to sustain its market leadership position with a marketshare of 33.3 per cent.

As part of its thrust on enhancing its global presence, Tata Chemicals' total soda ash exports in FY2004 amounted to 128,000 MT, a 26 per cent increase over the previous financial year. The company is now the largest exporter of soda ash from the country.

Soda ash manufacturing operations during the just concluded financial year were considerably impacted by the record high prices and limited availability of key inputs like coal and coke. Due to the high import dependence of some of these raw materials, this effect was further accentuated by the appreciation in ocean freight rates.

The company is exploring various options that will enable it to mitigate these threats.

Food additives
'Tata Salt' retained its strong leadership position in the edible salt market. The brand's marketshare presently stands at 41 per cent. In FY2004, the brand contributed a sum of Rs 68 lakh to the Desh Ko Arpan programme.

Sales of 'Samundar Crystal Salt' that was launched in South India in August 2003 continue to enjoy encouraging demand at both the dealer and consumer level.

Continuing with its efforts towards adding value to the food category and creating a more evolved and quality conscious market, sales of 'Samundar Cooking Soda' have been extended beyond south India to Delhi and Gujarat.

STPP
Sales volumes of sodium tri poly phosphate (STPP) were healthy amounting to 18,000 MT.

Fertilisers

Nitrogenous
Urea sales volumes amounted to 858,000 MT for the entire fiscal.
The company's energy consumption continues to be the lowest in the industry making it the most efficient player in the sector.

Integration of the Rallis India's Farm Management Services Business has also strengthened Tata Chemicals' association with the farmer through an expansion in the basket of service offerings.

Phosphatics
FY2004 sales volumes of DAP fertiliser stood at 403,000 MT. Performance in this segment has been considerably impacted by the steep increase in the price of raw materials like ammonia and phosphoric acid.

Brief perspective of HLCL merger

Both the shareholders of Tata Chemicals and the erstwhile Hind Lever Chemicals Limited and the Honorable High Courts of Judicature of Bombay as well as Punjab and Haryana have approved of the merger between the two companies. The Scheme of Amalgamation will as earlier communicated be effective retrospectively from April 1, 2002.

After amalgamation, Tata Chemicals' total paid up equity share capital amounts to Rs 215.17 crore (a dilution of around 19 per cent). In the renewed entity the shareholding of the Tata Group will be approximately 25 per cent and the Unilever Group shareholding will stand at around 8 per cent. As per the scheme of arrangement the merger ratio was fixed at 2.5: 1 (2.5 shares of TCL for every 1 share of HLCL). The record date for the transfer of shares is June 21, 2004.

The company is now able to offer a wider range of complementary products and support services to its enduring customers while also gaining access to new markets and customers in both the chemicals and the agri inputs businesses.

From an Inorganic Chemicals segment perspective, as a result of the inclusion of STPP, a key ingredient used in the manufacture of detergents, the renewed company now has access to major detergent players in the country.

In the fertiliser segment too, Tata Chemicals' portfolio now also comprises DAP. With the agricultural nutrient usage ratio gradually changing from its strong nitrogenous fertiliser bias (N: P: K - 7:2:1, while the global ratio is 4:2:1), the company anticipates considerable prospects in this segment.

The company also believes there is significant opportunity to expand its geographical presence on the back of the Paras brand which enjoys strong equity in Bihar, Bengal and Jharkhand.

Note: In this communication, all FY2004 financial details pertain to the merged entity and those in FY2003 are relevant to Tata Chemicals stand alone and are hence not strictly comparable. 

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