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  • JULY 28, 2000

Tata Chemicals: Retention price reduction hits bottomline

The reduction in the retention price of urea by Rs 463 per tonne by the government has hit Tata Chemicals' bottomline by Rs 82.9 m. Besides, the margins on soda ash have also been under pressure due to dumping by China. These are the main factors for the loss reported by the company in the first quarter of the current year.

(Rs m)1QFY001QFY01Change
Sales 2,747 3,252 18.4%
Other Income 21 14 -35.2%
Expenditure 1,932 2,503 29.6%
Operating Profit (EBDIT) 816 749 -8.2%
Operating Profit Margin (%)29.7%23.0% 
Interest 474 470  
Depreciation 297 335 12.8%
Profit before Tax66-42-164.0%
Other Adjustments 4 
Tax   
Profit after Tax/(Loss) 66 (38)-157.3%
Net profit margin (%)2.4%-1.3% 
No. of Shares (m) (eoy)180.7180.7 
Diluted no. of shares (m)180.7180.7 
Diluted Earnings per share*1.5-0.8 
*(annualised)   

In the current year the company proposes to merge its subsidiary Sabras Investment and Trading Company with Tata Chemicals. Sabras holds shares in quite a few Indian companies including Tata group companies such as Indian Hotels, Telco, Tata Tea, Tata Industries and Rallis. The first quarter profits of Sabras were Rs 1143.3 m, which have not been accounted for in Tata Chem's books.

The stock currently quotes at Rs 38. While soda ash margins would improve somewhat due to the anti–dumping duty imposed on Chinese imports, the economics in the fertliser business are unlikely to change in the current year.

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