TNPPL is a leading manufacturer of linear alkyl benzene (LAB) used in the soap and detergents industry. It also makes ECH, used to manufacture epoxy resins and plant pesticides. In FY 2001-02, TNPPL acquired the heavy chemicals division of Spic. TNPPL was the first company in the world to introduce an advanced process control system at its linear alkyl benzene (LAB) plant. It was also the first company to export LAB from India. TNPPL was originally promoted by the Tamil Nadu Industrial Development Corporation (TIDCO) but was later converted into a joint-sector company in association with Southern Petrochemical Industries Corporation (Spic).

The Company has, during the period 1995 to 2003 invested Rs 27.65 crore in SPIC Electric Power Corporation. No provision for the permanent diminution in the value of investment has been considered. The Company has entered into a Memorandum of Understanding with a party, for a detailed technical specification and cost structure of the complete project and to develop a plan of finance for the project to achieve early financial closure. The party is in the process of finalizing the consortium members for equity participation, debt syndication and major project contractors.

Quarter Performance

The net sales rose by 5% y-o-y to Rs 222.86 crore. Significant fall in the operating profit margin (OPM) by 720bps to 2% is attributed to the high raw material and energy cost (on account of surging crude price) not equally matched by the increase in selling price of Linear Alkyl Benzene. The raw material cost as percentage to sales net stock, rose by 360bps to 54%. Power & Fuel cost increased by 330bps to 20%. Other expenditure rose by 90bps to 18%. Staff cost and stores declined by 40bps and 110bps to 2% and 3% respectively. The operating profit slumped by 78% to Rs 4.36 crore.

The other income surge by 43%. Interest expense increased by 52%. With depreciation cost reducing by 13%, the resultant amount before tax was loss of Rs 10.54 crore from PBT of Rs 5.66 crore in corresponding previous period. On adjusting total tax provision of Rs 2.08 crore, the net loss was Rs 12.62 crore in contrast to the net profit of Rs 5.63 crore in the quarter September ’05.

Half-Year Performance

The company witnessed 8% growth in its topline to Rs 433.18 crore. Raw material cost as percentage to sales net stock, was 280bps up to 53%. Stores were 130bps down to 3%. Power & fuel cost was 330bps high at21%. Staff cost was lower by 60bps to 2%. Other expenditure increased by 340bps to 19%. Due to high raw material cost and energy cost, the OPM was 740bps down to 0.8%. The operating profit was 90% y-o-y lower to Rs 3.37 crore.

At the non-operating front, other income surged by 28%. Interest outgo rose by 38%. However, depreciation was down by 13%. The Loss before tax amounted to Rs 24.51 crore against the PBT of Rs 5.87 crore in quarter September ’05. With total tax provision adding to Rs (-2.43) crore, the net loss was Rs 22.08 crore from the net profit of Rs 7.43 crore in corresponding previous period.

Promoters’ shareholding remains unchanged at 34.55% as on September 31^st 2006.

The scrip is trading at around Rs. 17.80 on the BSE