Tata Chemicals was the subject of renewed buying interest on Friday, consolidating on a recent rally in the scrip.

The scrip of the fertiliser, soda ash and salt maker firmed up by 3.9% to Rs 70.05 on BSE in early noon trades . The scrip hit a high of Rs 71.35. Relatively high volumes of 250,000 Tata Chemicals shares were registered on BSE. Daily trading volumes in the stock have varied widely in the recent past, from about 50,000 shares to over 600,000 shares.

The stock has been moving firm of late and currently trades near a 52-week high. From Rs 46.90 on 14 November 2002, TCL has surged 49% to the current Rs 70.05. The rally in the stock has materialised amid intermittent corrections.

The company unveiled its annual results on 29 April 2003 - profit after tax up 55% to Rs 197 crore (Rs 1.97 billion) and income from operations up 14% to Rs 1,628 crore (Rs 16.28 billion). The company said multiple financial initiatives including replacement of high cost debt with low cost debt helped in the company's bright performance.

Net interest cost fell 18% to Rs 90 crore from Rs 110 crore (Rs 1.10 billion) in the previous year. The company said that weighted average cost of borrowings declined to 9.7% in FY 2002-03 from 11.2% in FY 2001-02. The latest results of Tata Chemicals do not include those of Hindustan Lever Chemicals which is in the process of being merged with TCL.

Outstanding debt declined to Rs 820 crore (Rs 8.2 billion) as on 31 March 2003 from Rs 1,060 crore (Rs 10.6 billion) as on 31 March 2002.

The company's three core businesses - inorganic chemicals, salt and urea - all reported strong performances in FY 2002-03.

In the soda ash business, the company managed a Rs 40-crore cost savings across manufacturing and marketing functions. The company's thrust in this business is exports, having reached a target of 101,000 MT in FY 2002-03 (a 197% growth over the figure of the previous year). TCL is a leading player in the soda ash segment with an installed capacity of 8,75,000 tonnes per annum, accounting for 42% of India's soda ash capacity.

In the salt business, TCL is a market leader, with a 38% market share in the branded segment.

As far as the fertilisers business is concerned, the merger of HLCL with TCL is expected to contribute to enhanced operating synergies, an expanded geographical presence and a larger product portfolio. While TCL is a leading manufacturer of urea (a nitrogenous fertiliser), HLCL is a leading manufacturer of phosphatic fertilisers - diammonium phosphate  and SSP.

TCL will be in a position to use HLCL's strong marketing and distribution network to sell its products in the eastern part of India, whereas HLCL can use TCL's strength for selling its products in western UP and northern India. TCL sells fertilisers in UP, Haryana and Punjab.

BSE code: 500770