Tatas to pump Rs 400 cr into chemical arm

MUMBAI: Tata Group will invest nearly Rs 400 crore in Tata Chemicals through purchase of fresh shares to part finance the fertiliser and chemical firm’s expansion plan. Tata Sons, the group’s main investment firm, will subscribe to a preferential issue of 11.5 million equity shares of Tata Chemicals, the latter said in a stock exchange filing.

“The issue will scale up the promoters holding by 2% to 30%,” executive director & CFO PK Ghosh told a press conference. “The proceeds will be used to part finance Tata Chemicals’ about Rs 4,000 crore expansion plan.”
In addition to Tata Sons, the other major shareholders of Tata Chemicals include Tata Investment Corporation and Tata Tea. They hold a 6% each.

Tata Chemicals has put its expansion, which includes increasing branded-salt making capacity by 60% and doubling the urea production in next three years, on a fast track after the recovery in global demand. The Tata company now produces 0.5 million tonne of salt 1.2 million tonne of fertiliser.

The Tata Chemicals board has approved Tata Sons’ proposal to invest money through subscription of fresh shares. The board also approved the financial results for 2009-10 and announced a dividend of Rs 9 a share. The Tata Chemicals stock lost 4% to close at Rs 305 in a flat Mumbai market.

Tata Chemicals has reported a 7% drop in net profit to Rs 605 crore in fiscal ended March 2010 due to fall in prices. Sales, during the year, fell by 25% to Rs 9,568 crore. “In 2009-10 prices dipped substantially from their peaks in 2008-09,” said Kapil Mehan, executive director for fertiliser business.