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Tata Chemicals plans to restructure its European operations to bring down costs and realign its product mix with the market demand.
The company intends to close down its soda ash and calcium chloride factory at Winnington, UK, expand its sodium bicarbonate factory at Winnington and retain its soda ash and sodium bicarbonate factories at Lostock, UK. The Middlewich-based British Salt is unaffected by this proposal. The plants at Winnington and Lostock have synthetic soda ash production capacity of 700,000 tonnes a year.
Tata Chemicals Europe has commenced a 45-day statutory consultation with unions and employees about the proposal.
The company plans to take over the share of its joint venture partner E.ON in the heat and power generation plant at Winnington. E.ON has already paid £17 million for breaking the operational ties prematurely and another £6 million is expected before the contract ends in 2015. Tata Chemicals established its European operations with the acquisition of Brunner, Mond and Company from ICI in 2006.
Tata Chemicals CFO P.K. Ghosh said the company is trying to lower interest on loans availed in Europe by shifting the loans to a consortium of banks at a lower interest rate.
The cost of operations in Europe is expected to come down substantially in two years. In India, the company raised $190 million through external commercial borrowing to refinance loans.
Tata Chemicals has a gross debt of Rs 8,300 crore. Ghosh said the company has managed to ring fence the currency inflation impact of about Rs 1,000 crore a year on the debt by refinancing and restructuring measures.
Profit dip
The company’s net profit dropped 48 per cent to Rs 134 crore (Rs 257 crore) in the September quarter due to the crisis in Europe, floods in Kenya and lower profits in Barbala (UP) and Haldia (West Bengal) plants. Net sales were up 3 per cent to Rs 4,282 crore. The forex loss for the September quarter was at Rs 91 crore. The company has to receive Rs 1,700 crore as fertiliser subsidy from the Government.
suresh.iyengar@thehindu.co.in
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