Tata Chemicals' nine-months PAT at Rs508 crore January 27, 2011

9M FY11 consolidated financial highlights
	Net sales at Rs8,402 crore; up by 16 per cent
	Profit from operations at Rs1,047 crore
	PBT at Rs859 crore; up 12 per cent
	PAT after Minority Interest at Rs508 crore; up 6 per cent
	EPS (non-annualised) Rs20.4

Business highlights
	Strong demand environment across all products.
	Extreme climatic conditions in December impact European operations.
	Global soda ash prices firm, GCIP and Magadi capacity utilisations improve.
	Rising costs partially mitigated through price increases across decontrolled products.
	Introduction of NBS a positive for fertiliser industry, reduction of benchmark prices for next fiscal a concern though.
	New fertiliser policy for urea still awaited.
	Insurance claim towards Babrala admitted — Rs39 crore accounted on a conservative basis.
	Production from customised fertiliser plant commences; product launched.
	Planned shutdown at IMACID successfully completed; production impacted for approximately 35 days.
	Tata Swach sales continues strong growth — 9M FY2011 sales at 3.45 lakh units.

Growth initiatives
	Brunner Mond acquires 100-per-cent stake in British Salt for an enterprise value of £93 million to secure supplies of raw material at Brunner Mond UK as well as a new business of branded consumer and industrial salt in UK.
	Rallis India (Rallis) acquires a 53.5-per-cent stake in Metahelix Life Sciences (Metahelix), a research-based seed company filling in a vital gap in our overall agri strategy. Opportunity to leverage Metahelix's strong presence across the seeds value chain through its existing network.
	i-Shakti brand extended to pulses — 'i-Shakti Dals'. introduced in Maharashtra and Tamil Nadu — thrust on offering quality and hygienic pulses at an affordable price through linkages with the farmer.

Commenting on the company's performance for Q3 and 9M FY2011, R Mukundan, managing director, Tata Chemicals, said: “We are witnessing an encouraging demand environment for all our businesses both domestically and overseas.

We continue to see pressures of increasing input prices. The unfortunate weather events in Australia and Indonesia will put even greater pressure on energy prices. We are working towards price increases to negate this impact. The healthy improvement in production levels and demand growth enjoyed by General Chemical Industrial Products (GCIP) is particularly encouraging. The operations at Brunner Mond UK were impacted due to extreme weather conditions in the later part of the quarter. With the acquisition of British Salt we have secured the long term supply of brine, a key raw material for Brunner Mond and also a new business — branded consumer and industrial salt in the UK.

In the fertiliser sector, while the NBS is a positive development, the lower benchmark prices set for DAP and MOP in a hardening price environment is a challenge for the next fiscal. We continue to await the new urea policy as well as allocation of gas for doubling our urea capacity at Babrala. Rallis continues to perform well in a challenging environment. The acquisition of Metahelix by Rallis fills in a vital gap in our overall agri strategy providing us leading-edge technology for developing high-productivity seeds. In the immediate future Metahelix's strong presence across the seeds value chain enables us to offer high-quality trusted hybrid seeds to the farmer.

Our consumer products business continues to do extremely well with branded salt maintaining a dominant 62 per cent market share and the range of Tata Swach water purifiers enjoying excellent demand. We are also delighted to extend our i-Shakti. brand to pulses as a natural evolution of our 'Farm to Fork' strategy which leverages our strong association with the farmer and our established retail presence to bring quality, hygienic and affordable pulses to the Indian consumer. The business would have to address structural challenges existing in infrastructure.

We are confident of the performance of our businesses but are cautious of the increase in costs — energy in particular.”

Financial performance for nine months ended December 31, 2010
9M FY2011 (April — December 2010) v/s 9M FY2010 (April — December 2009)
	Net sales at Rs8,402 crore compared to Rs7,255 crore in 9M FY2010, an increase of 16 per cent.
	Profit from operations at Rs1,047 crore compared to Rs1,101 crore in 9M FY2010..
	PBT stood at Rs859 crore, up 12 per cent from Rs769 crore in the corresponding period last year..
	PAT (after Minority Interest) increased by 6 per cent to Rs508 crore from Rs478 crore.

Soda ash
	Domestic demand for Soda ash grew by 5 per cent; robust sodium bicarbonate demand growth at over 9 per cent.
	However, rising input (coal, coke and limestone) costs continue to exert pressure.
	Unusually extreme climatic conditions result in power and water supply failures causing Brunner Mond UK plant to operate at sub-optimal levels.
	Acquisition of British Salt enables long term securitisation of brine for Brunner Mond.
	Magadi operations improve on the back of stable production.
	GCIP demonstrates strong production growth.
	Healthy demand in the USA — international market conditions favourable in terms of both, volumes and pricing.

Consumer Products
	Salt
		Tata Salt volumes growth strong at over 8 per cent.
		Tata Chemicals remains the market leader with 62-per-cent market share in the national branded segment.
		During the quarter, profitability improved, achieving EBITDA margin of 22 per cent compared to 15 per cent in the same period in the previous year. The improvement in EBITDA margin has been achieved through better portfolio mix and improved quality of operations including efficient control over working capital..
	Pulses
		i-Shakti brand extended to other food essentials — launches range of pulses under the brand name 'i-Shakti Dals'.
		Farm to Fork strategy: Tata Chemicals will leverage its well-entrenched and extensive food retail distribution presence through salt as well as its widespread and entrenched association with the farmer through Rallis Kutumba initiatives and Tata Kisan Sansar outlets to distribute i-Shakti Dals range across the country.
		Thrust on introducing quality and hygienic pulses at an affordable price.
		Endeavouring to partner with various state governments.
	Water Purifier
		Tata Swach contributes positively to performance – 9M FY2011 sales at 3.45 lakh units.
		New introductions “Swach Smart Magic” and “Swach Magic” show promise.

Fertilisers
	Domestic demand for urea, DAP and NPK increases by 4 per cent, 6 per cent and 29 per cent respectively.
	Marginal loss of urea production as a result of floods in October.
	Unavailability of phosphoric acid results in lower production volumes at Haldia.
	NBS a significant positive for the fertiliser industry. However, setting of low benchmark prices for DAP and MOP poses a challenge.

Rallis India
	Strong growth in domestic business driven by value-added offering to farmers in the last four years.
	Rallis revenues higher by 32 per cent at Rs268 crore and PAT growth of 40 per cent at Rs34 crore in Q3 FY2011.
	Rallis has acquired 53.5-per-cent stake in Metahelix Life Sciences through an all-cash deal of Rs99.5 crore funded largely through internal accruals.
	Acquisition in line with TCL's strategy to offer the entire suite of agri-inputs for the benefit of farm community.
	Metahelix possesses a portfolio of seeds successfully commercialised over the last three years.
	Transaction provides a presence across the entire value chain comprising breeding, production and marketing of seeds.
	Pursuant to the terms of the definitive agreements signed, Rallis will enhance its shareholding to 100 per cent in Metahelix over a period of five years.

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.