Tata Chem sales slip 15% in 5 months

The main problem which put pressure on the company’s margins and bogged down sales was realisation in caustic soda, cheaper imports of soda ash from China and the cyclone that hit the Gujarat coast. Tata Chemicals’ soda ash plant is located at Mithapur in Gujarat.

"Like any other industry which has been affected, the slowdown has impacted Tata Chemicals, especially in the second half. The total income during 1997-98, would have been higher other wise," Tata told shareholders. Operation wise while the volumes have increased, the marginshave been under tremendous pressure.

"Heavy rains in the last few weeks affected dispatches which has impacted the last two months of the five month period. However, the prevailing problems will be sorted out by the end of the year," Tata said.

The management has set itself the goal to overcome these problems by the end of the year, he said. "While the management feels that the company will regain lost ground, the market conditions definitely are tough," he added.

Among the main issues affecting the company is the retention price which has not been finalised by the government. The government has only fixed a provisional price of Rs 7,200 per tonne for the company, Tata said. Tata was hopeful that the matter will be settled early.

About the future, Tata said it was optimistic as far as operations go and expressed confidence that the company will continue to be a leader.

On whether the company was looking at the possibility of selling off its cement division to ACC, Tata said at present there was nosuch plan. He, however, added, "If this, at a certain stage, makes business sense and benefits the company, we will do it."

ACC in involved in the marketing of Tata Chemical’s cement brand. "If you were to ask whether the company is thinking of setting up a marketing outfit for its cements business, it is not so," he added.

"Tata Chemicals plans to maintain the competitive edge as far as Tata Salt is concerned," Tata said in reply to a shareholder’s query as to what will be the impact of the Captain Cook salt brand being sold to Corn Products.

As per the shareholding pattern of Tata Chemicals, Tata companies and trusts hold a 31 per cent share, banks and insurance companies have 35.6 per cent, foreign holding is 2 per cent and the balance is held by the public.