NEW DELHI-SAIL Sinking

TATA CHEMICALS is diversifying into shipping. It is purchasing, outright, one second-hand multipurpose cargo ship of 21,548 DWT from Great Eastern Shipping, and taking on bareboat charter another identical ship for 11 months from the same company with the option to purchase it at the end of the charter period. Both these ships are eight years old and arc versatile cargo vessels, demand for which is relatively more stable than that for larger specialised ships. It has been agreed with GES that, out of the purchase consideration for the first ship as well that for the second (if the purchase option is exercised), amounting to about Rs 8.75 crores, a major part would be met through a deferred payment arrangement spread over 4 to 5 years. Implementation of the project will thus not involve issue of any additional equity capital by the company. It is also proposed to enter into an agreement with GES whereby that company would operate these two ships on behalf of Tata Chemicals for a remuneration for two years. This will give the latter adequate time to build up necessary organisation and expertise in the new line. The directors of Tata Chemicals point out that it is possible that the shipping business of the company may have to sustain some operating losses in the initial year or two, but they feel that the company will be able to absorb these without difficulty and without affecting its ability to maintain its present rate of dividends. Meanwhile, Tata Chemicals has reported poor performance for the first six months of the current year (July to December), with total turnover down at Rs 15.43 crores from Rs 18.72 crores in the same period of 1975-76, and profit before tax Rs 2.26 crores against Rs 3.66 crores. Profit after tax is Rs 1.47 crores (Rs 2.13 crores). The directors attribute this outcome to price reductions, lower sales, and some unexpected outages in the early part of the period. They add, however, that the position has since improved substantially and the half-year results are not representative of the likely results for the full year.