Mumbai: Fertilizers and chemicals maker Tata Chemicals Ltd posted Wednesday a 12% decline in consolidated revenue for the third quarter, hurt by shrinking fertilizer sales as the company switches focus to its consumer business.
Profit after tax, however, rose 31.6% to Rs318.39 crore in the quarter ended 31 December, from a year earlier. Revenue fell to Rs3,494.80 crore with fertilizer sales dropping 31% to Rs913.8 crore year-on-year. Sales from the inorganic chemicals business fell marginally by 0.05%.
Mint had in April reported that Tata Chemicals intended to shift its focus away from fertilisers as it did not want to continue investing in a “regulated and subsidy-ridden business” and wanted to free up working capital.
The company is now focusing on its higher-margin “living essentials” consumer business comprising five brands of table salt, Tata Sampann that sells pulses and spices, and Tata Swach non-electric water purifiers. Tata Sampann was launched in October 2015.
“The company is seeking to move away from soda ash production to cater more to the demand for salt,” managing director R. Mukundan said at a press conference in Mumbai on Wednesday.
Tata Chemicals is the world’s second largest manufacturer of soda ash, which is largely used to manufacture glass.
Tata Chemicals has also announced it is selling its urea business to Yara Fertlisers for Rs 2,670 crore. “We are in the process of completing this deal, we have already received approval from the CCI (Competition Commission of India) for the deal,” Mukundan said.
Tata Chemicals’ consumer business now comprises around 12-15% of the company’s total revenue, Mukundan said. “We are currently focused on our spices and pulses categories and we have always said we will wait for one of these two to turn profitable before moving to another category,” he added.
“We are going steady in the north and west and are looking at the east. South is an extremely different region with (products) like sambar masala and rasam masala among others. So we’re waiting to stabilize in these three regions.”
Tata Chemicals pared its consolidated debt by 33% to Rs 5,833 crore in the last three quarters. The company has been paying off debt with cash generated from operations and anticipates it would have zero standalone net debt in the next six to eight quarters. Current standalone debt fell 55% to Rs 1,318 crore in the last three quarters.