INDIA’S leading inorganic chemicals and fertilisers manufacturer Tata Chemicals (TCL) came out with better results for the quarter ended June 2008 compared to the same period last year. Profit from operations nearly doubled to Rs 505 crore on a consolidated basis. However, notional forex loss of Rs 129 crore has hit its net profit. The resultant consolidated net profit was 22% lower on y-o-y basis at Rs 107 crore.
The company had borrowed $825 million earlier this year to finance its acquisition of USbased General Chemical Industries (GCIP). With the rupee weakening against dollar during this quarter, the company had to provide for a notional loss on this liability. “These are notional losses and not cash expenditure. Nothing goes out due to this. We had to provide for it just because the accounting standards recommend it. Since the repayment of these borrowings begins only from 2012, we don’t find any need to hedge this position. Besides, we have dollar earnings flow from GCIP to pay off these liabilities. Hence, this is not going to affect our operationally excellent results,” said PK Ghose, finance director, Tata Chemicals.
Both inorganic chemicals and fertilisers performed well during the quarter. Operating margins in the chemicals business remained strong at 24% while fertiliser margins jumped to 20% from just 13% earlier. Homi Khusrokhan, MD, Tata Chemicals, said: “The recent change in the fertiliser policy allowing phosphatic fertilisers to receive subsidy based on import price parity, helped the company in improving margins.”
The company had borrowed $825 million earlier this year to finance its acquisition of USbased General Chemical Industries (GCIP). With the rupee weakening against dollar during this quarter, the company had to provide for a notional loss on this liability. “These are notional losses and not cash expenditure. Nothing goes out due to this. We had to provide for it just because the accounting standards recommend it. Since the repayment of these borrowings begins only from 2012, we don’t find any need to hedge this position. Besides, we have dollar earnings flow from GCIP to pay off these liabilities. Hence, this is not going to affect our operationally excellent results,” said PK Ghose, finance director, Tata Chemicals.
Both inorganic chemicals and fertilisers performed well during the quarter. Operating margins in the chemicals business remained strong at 24% while fertiliser margins jumped to 20% from just 13% earlier. Homi Khusrokhan, MD, Tata Chemicals, said: “The recent change in the fertiliser policy allowing phosphatic fertilisers to receive subsidy based on import price parity, helped the company in improving margins.”
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