Tata Chem reports 13% drop in profits on delay in urea policy

Tata Chemicals today reported a 13 per cent drop in consolidated net profit at Rs 153.04 crore for quarter-ended June 2015 on account of delayed implementation of urea policy and payment of fertiliser subsidies by the government.
Its net profit stood at Rs 175.5 crore during the April-June quarter in the last financial year.
"Urea policy getting delayed by two months to June 1...So the first two months we could not get benefit of production and hence the profit number have been muted, especially the standalone because of the delayed policy announcement and the shift in the sales of DAP (Diammonium phosphate) to NPK (Nitrogen, Phosphorous and Potash) in Q2 and Q3," Tata Chemicals managing director R Mukundan told reporters here.

However, Tata Chemicals total income increased to Rs 4,079.37 crore in the first quarter of 2015-16 fiscal from Rs 3,871.37 crore in the same period year-ago.
The firm's operational expenses rose to Rs 3,690 crore from Rs 3,452.90 crore, during the period under review.
Mukundan termed media reports on company's plans to sell stake in its fertiliser business as "speculative".

"That's a speculative media news, which has come and we are very much clearly focussed on making sure that the Babrala (plant in UP) works in full steam," Mukundan told reporters.
"We welcome the government urea policy, but our concern still remains the subsidy delays and while the subsidy numbers have come down...We are always watchful as it tends to climb up during end of the year," he said adding that the company is working hard with the government in this regard.

Tata Chemicals MD also said that Magadi (Kenya) restructuring was complete and the company was currently in the last stage of restructuring its business in the UK.
Going forward, Tata Chemicals executive director and CFO Prashant Kumar Ghose said the company would focus on consumer products and subsequently make it a Rs 4,000-5,000 crore business segment.
"First of all consumer products is going to be a future strategy. We want to take (the turnover) much higher to Rs 4,000-5,000 crore in next 5-7 year period," Ghose said.
During the April-June quarter, company's finance cost increased to Rs 113.58 crore from Rs 103.44 crore in the same quarter in the previous fiscal.

Tata Chemicals, part of over USD 100 billion Tata Group, is world's second largest producer of soda ash with manufacturing facilities in Asia, Europe, Africa and North America. Besides chemicals, the company also manufactures chemicals, fertiliser, salt, pulses, besan and spices.