The company will be going in for a preferential offer to Tata Sons to fund expansion projects
Recommends a dividend of Rs. 9 per share
Tata ‘Swach' to go national by year-end
MUMBAI:A sharp drop in the price of phosphatic fertilizers during the year led Tata Chemicals to report a 4 per cent drop in its standalone net profit for 2009-10 at Rs.434.78 crore (Rs.452.05 crore) on a 35 per cent lower net sales of Rs.5,412.26 crore (Rs.8,362 crore). The company's operating profit also dipped by 13 per cent to Rs.709.3 crore (Rs.817.3 crore) although operating profit margins were up 300 basis points. The board of directors of the company has recommended a dividend of Rs.9 per share.
On a consolidated basis, the net profit for the group was lower at Rs.606 crore (Rs 648 crore on lower net sales of Rs 9448.5 crore (Rs 12,652 crore). The company's operating profit was lower at Rs.1,390.66 crore (Rs.1,579 crore).
However, the company stated that the figures of the corresponding period in the previous year are not comparable on account of Rallis India becoming a subsidiary of the company and the actuarial gains and losses on the funds for employee benefits (pension plans) of the overseas subsidiaries for the period from April 1, 2009.
Tata Chemicals Managing Director R. Mukundan said, “our operating and financial performance for the year has been extremely strong reflected in healthy improvement in our operating margins by over 300 basis points. This has been the result of a focus on enhancing sales volumes and driving down costs.'' Soda ash prices have declined year on year. However, commensurate falls in input prices combined with increasingly efficient operations have helped the company maintain its position.
While in the last year, phosphatic fertilizer production was higher, prices were on an average of $390 a tonne for the year. “However, in the previous year, the prices had gone up to $1,200 a tonne level from $ 400-500 a tonne,'' said Executive Vice-President and Chief Financial Officer P. K. Ghose.
Tata Chemicals announced that it would be going in for a preferential offer to promoter Tata Sons of 11.5 million shares which will take the promoters' holding from 28.15 per cent to 30.4 per cent. “This is being done to fund growth plans including the Babrala expansion. The preferential issue will be completed by July-August,'' said Mr. Ghose, adding that the capital expenditure plan for the year was around Rs.300 crore.
Rs. 3,800-cr expansion
The Babrala expansion will cost Rs.3,800 crore and will take capacity from the current 11.5 lakh tonnes to to 24 lakh tonnes annually by adding a further 12.4 lakh tonne capacity. The project is expected to be completed in three years. According to Mr. Mukundan, “we have made progress in doubling our fertilizer facility at Babrala with the selection of Haldor Topsoe, Denmark and Saipem, Italy, as technology suppliers and EPCM partners for ammonia and urea, respectively. We are hopeful of gas allocation and suitable policy amendments for this project to achieve financial closure.''
“The setting up of our 1.30 lakh tonne customised fertilizer unit too is nearing completion and will be ready by the second quarter of the financial year. We are excited about creating a new business category and believe there is tremendous opportunity for us to build our brand and expand offerings through this business.
Tata ‘Swach', the company's low cost water filter offering, is now available in Maharashtra and Karnataka and will go national by the end of the current financial year. Priced at Rs.999, the company hopes to sell a million units this fiscal.