• Fertiliser sales volumes strong post healthy monsoon
• Soda ash sales robust
• Edible salt market share at 39 per cent
• Debt, interest costs continue to decline

Announcing the unaudited results for Q3 FY2004, Prasad Menon, Managing Director, Tata Chemicals, said, "I am pleased to report that Tata Chemicals has sustained its steady operating and financial growth in a dynamic and competitive environment. While continuing to enhance efficiencies and implement an aggressive marketing and financial approach, we have also explored opportunities to strengthen our presence across all our key businesses. I remain confident of our ability to deliver incremental value to all our stakeholders going forward."

Performance summary

Q3 FY2004
Tata Chemicals' net sales amounted to Rs 467 crore, a 7 per cent increase over the net sales in the corresponding period last year. The company's PAT has also reported a 6 per cent increase and stands at Rs 59 crore, translating to an EPS (not annualised) of Rs 3.26.

Tata Chemicals' debt has declined to Rs 492 crore as on December 31, 2003 compared with Rs 913 crore as on December 31, 2002 and Rs 617 crore on September 30, 2003. Weighted average cost of borrowings was 8.5 per cent in Q3 FY 2004 compared to 8.2 per cent in Q2 FY 2004 and 10.1 per cent in Q3 FY 2003.

Segmental performance

Fertiliser
Urea volumes higher by 9 per cent compared to the corresponding quarter last year. Sales volumes amount to 254,000 MT.

In line with the introduction of the efficiency encouraging Group Pricing Policy, the company's energy consumption, which is the lowest in the industry, further declined to 5.23 GCal/ tonne. Tata Chemicals also won the 'CII Sohrabji Godrej Green Business Centre National Award for Excellence in Energy Management - 2003.

Inorganic chemicals

Soda ash
Soda ash sales volumes improved 5 per cent over volumes sold in Q3 FY 2003. Tata Chemicals sustained its market leadership with a marketshare of 34 per cent. Export volumes amounted to 26,000 tonnes in the quarter.

Food additives
'Tata Salt' continues to be the market leader in the 'edible salt' segment with a marketshare of 39 per cent. The brand was ranked No. 1 in the Food Additives Segment, as part of the recently announced 'Brand Equity Survey' for the year 2003.

Sales of 'Samunder Crystal Salt' that was launched in the sequentially preceding quarter have been highly encouraging. 'Samunder Cooking Soda', which was introduced in December 2003, has also enjoyed positive retailer acceptance.

Financial performance perspectives

Q3 FY 2004 (October - December 2003) v/s Q3 FY 2003 (October - December 2002)

Revenue analysis

• Income from operations (net of excise) improved by 7 per cent to Rs 467 crore from Rs 437 crore.
• Revenues from the fertiliser segment increased 17 per cent to Rs 245 crore from Rs 209 crore in the corresponding financial quarter. The revenue contribution from the fertiliser business amounted to 52 per cent.
• Revenues from the inorganic chemicals segment reduced 3 per cent from Rs 228 crore to Rs 222 crore. The decline is primarily attributable to the withdrawal of the sales tax benefit on soda ash sales in the current financial year.

Earnings analysis

• Profit from operations demonstrated a marginal reduction of 1.6 per cent, mainly as a result of the withdrawal of the sales tax benefit on soda ash, a sharp increase in raw material prices and the implementation of the Group Pricing Policy, which is seen to impact earnings in the near term. These developments have also influenced the PBIT performance in these business segments
• PBT advances 13 per cent to Rs 92 crore compared to Rs 81 crore.
• PAT improves 6 per cent to Rs. 59 crore from Rs. 56 crore.
• EPS (not annualised) at Rs. 3.27 compared with Rs. 3.07.

9M FY 2004 (April - December 2003) v/s 9M FY 2003 (April - December 2002)

Revenue analysis

• Income from operations (net of excise) improved by 6 per cent to Rs 1,258 crore from Rs 1,182 crore.
• Revenues from the fertiliser segment appreciated 6 per cent to Rs 596 crore from Rs 539 crore in the corresponding period in the preceding financial year. The revenue contribution from the fertiliser business amounted to 47 per cent.
• Revenues from the inorganic chemicals segment appreciated 3 per cent from Rs 643 crore to Rs 662 crore.

Earnings analysis

• Profit from operations increase 8 per cent to Rs. 365 crore from Rs 338 crore, delivering an EBITDA margin of 29 per cent.
• PBT advances 36 per cent to Rs 281 crore compared to Rs 207 crore.
• PAT improves 38 per cent to Rs 188 crore from Rs 137 crore. EPS not annualised at Rs 10.41 compared to Rs 7.56.

Financial management
The company's two-pronged approach towards achieving optimal financial efficiencies continues to deliver strong results.

Reduce debt

• Total debt stood at Rs 492 crore as on December 31, 2003 compared with Rs 617 crore as on September 30, 2003 and Rs 913 crore on December 31, 2002.
• Debt equity ratio stands at 0.26 as on December 31, 2003. Debt prepayment has been achieved completely through internal cash generation.

Reduce cost of remaining borrowings

• Weighted average cost of borrowings at 8.5 per cent in Q3 FY 2004 compared to 8.2 per cent in Q2 FY 2004 and 10.1 per cent in Q3 FY 2003.
• Net interest outgo for the quarter amounted to Rs 8.5 crore.

Segmental performance perspective

Fertiliser

• The well-entrenched Tata Kisan Kendra network continues to strengthen performance of the fertiliser business, also contributing to healthy traded sales of DAP and complex fertilisers.
• The Babrala fertiliser plant also completed 3.55 million accident free man-hours. The facility was awarded a 5-star rating by the 'British Safety Council'.

Inorganic chemicals

Soda ash

• Tata Chemicals maintained its market leadership with a marketshare of 34 per cent. The company continues its thrust on the fast growing domestic glass segment.
• Robust international and domestic sales contribute to healthy business performance and 87 per cent capacity utilisation.

Food additives

• 'Tata Salt' maintains its leadership in the edible salt category. The brand's marketshare is greater than that of the next three players.
• Encouraging response for both 'Samunder' Crystal Salt and 'Samunder' Cooking Soda.

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.