Tata Chemicals' fiscal Q2 net profit up 116.5% year-over-year to 2.75B Indian rupees as net sales rise 19.7% to 35.71B Indian rupees; results reflect strong performance in U.S., U.K., and Kenya, healthy demand for soda ash business across markets

Alison Gallant

MUMBAI, India , November 11, 2011 (press release) – EPS (diluted and non-annualised) at Rs10.81 per share

Q2 FY2011-12 consolidated financial highlights

Net sales higher by 19.7 per cent at Rs3,571 crore.

Profit from operations up 57.5 per cent at Rs674 crore compared to Rs428 crore.

EBIDTA margins at 18.9 per cent.

In Q2 FY2011-12, the company has not recognised subsidy income of Rs14 crore on opening stock of raw materials for phosphatic and potassic fertilisers, in accordance with the office memorandum issued by the Department of Fertilisers (DoF) dated July 11, 2011. The matter is being contested.

PBT at Rs481crore vis-à-vis Rs250 crore.

PAT (after minority interest) at Rs275 crore against Rs127 crore; up 116.5 per cent — includes impact of:

Rs47 crore towards charge for M-T-M for foreign currency debt.

Rs10 crore in accordance with the above circular issued by DoF in Q2 FY2011-12.

EPS (diluted and non-annualised) at Rs10.81 per share.

Q2 FY2011-12 business highlights and initiatives

Firm demand environment across major products with stable pricing situation.

Improving realisations combined with efficient operations offset the pressure exerted from rising input costs.

Growth across all locations — domestic and international.

Customised fertiliser witnessing healthy volume growth.

Expansion of product portfolio enables 100 per cent growth in sales of other agri inputs.

i-Shakti pulses coverage extended to Karnataka and Gujarat.

Increased strategic stake in EPM Mining Ventures to 30.6 per cent to secure supplies and access low-cost sulphate of potash.

Signed pre-construction services agreement with Technip SA for the Gabon Fertiliser Project on a convertible lump sum turn key (LSTK) methodology to ensure implementation of project within the best time and cost norms of the industry.

Formed Natronx Technologies in joint venture with FMC Corporation and Church & Dwight, to set up a 450,000tpa manufacturing facility to produce Trona sorbents with an overall investment of $60 million (TCL's share one-third).

Commenting on the company's Q2 FY2011-12 performance, R Mukundan, managing director, Tata Chemicals, said:

"We are happy to report an extremely strong operational and financial performance, given the challenging macro environment. All our businesses have performed well. Particularly encouraging is the performance of our overseas operations in the US, the UK and Kenya. While input prices remain firm, we continue to see healthy demand outlook for soda ash business across markets.

All facilities are operating at high capacity-utilisation levels. The rehook of the ammonia convertor at Babrala is expected to be completed by the end of the current financial year. We are witnessing sustainable improvement in our customised fertiliser business. Additionally, the sales of other agri products increased by over 100 per cent on the back of an expansion in our portfolio of offerings. We continue to widen our expansive urban and rural reach as well as our product offerings.

We are also encouraged by the healthy performance of our consumer products business with Tata Salt maintaining its dominant position with a 64 per cent market share. During the quarter we also launched i-Shakti pulses in Gujarat and Karnataka.

Overall, though rising input costs, a depreciating rupee and increasing interest rates continue to exert pressure, our access to low-cost resources combined with efficient operations and distribution will enable us to continue to drive sustainable growth."

Chemicals

Domestic demand for soda ash stable — Sales to be impacted given situation of rising interest rates.

Performance maintained at Mithapur operations.

Rising input (imported coal and limestone) costs continue — though partially mitigated through usage efficiency.

Normalised soda ash production at Tata Chemicals Europe — impact of extreme winter during early January 2011 tapered down.

Production, sales and realisations at British Salt continue to be robust — brine cavities for gas storage further improve earnings performance.

Tata Chemicals Magadi's improved performance driven by higher production and better realisations for both, SAM and PAM despite higher consumption of fuel and energy.

MRTE initiatives to bring down consumption in next few quarters.

Higher production volumes combined with renegotiated contracts improve performance at Tata Chemicals North America.

Consumer products

Tata Chemicals remains the market leader with 64 per cent market share in the national branded segment.

Strong demand for branded salt across the nation — branded salt volumes growth at approximately 10 per cent.

Offtake for i-Shakti range of pulses robust, backed by strong sales promotion activities.

Fertilisers

Shutdown at Babrala plant for 15 days due to urea stripper and catalyst replacement in methanator of ammonia plant — production post shutdown has stabilised and the shortfall is being covered by high production levels.

Customised fertiliser witnessed significant improvement in volumes.

Sales volumes at IMACID registered a healthy growth — increase in realisations to improve margin situation.

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