Tata, addressing shareholders at the annual general meeting, added that the division was still making a significant contribution to the company.

Tata statement is likely to spark off speculation as to whether the division could be transferred to group cement major ACC or put on the block for open bidding like Tata Steel had earlier done.

The chemicals major's cement division, located in Ahmedabad, has an installed capacity of 4 lakh tonnes. However, during the last fiscal, it produced 2.94 lakh tonne, up from 1.72 lakh tonne in the previous fiscal.

"Going by the size of the division - in comparison group company ACC has a capacity of 12 million tonne - Tata Chemicals should not be in the cement business at all," a cement analyst with a leading brokerage said.

The Tata group, which is in the process of a majorrestructuring, is also looking at whether common businesses of group companies can be synergised. Chairman Tata said that Tata Chemicals has posted a 4 per cent drop in sales for the first four months of the current fiscal, adding that the decline in sales was on account of lower production.

The company has decided to resort to debottlenecking at one of its plants to generate additional capacity. Aggregegate revenue for the four month period has risen by 16 per cent, Tata said.

The production in the fertiliser division was adversely affected owing to malfunctioning of ammonia plant. The division has also been negatively impacted by the delay in fixing the retention price for urea. As and when the governemt sets it, it will have a positive impact on the company's bottomline, he added.

Soda ash prices continues to be under pressure though the division recorded a 40 per cent increase in volumes, he added.

Cement prices are also under pressure despite a rise in volumes by 16 per cent, Tata said.

Thecompany has introduced a spate of cost reduction programme and is providing greater emphasis on value added products, he added.

The uplift in the economy will put the soda ash and cement divsions in a better pedestal resulting in a better performance of the company in the current fiscal, he added.

1998-99 has been a bad year for the company due to decline in soda ash production and increasing imports, Tata said.

Sales ofthe company's cement division increased from 1.72 lakh tonnes in the previous year to 2.94 lakh tonnes in the last year due to higher production, he added.

The entire fertiliser plant of the company was shut down for the month of April 1999 to repair and modify the damaged equipment. Taking the opportunity of the shutdown, other major equipment of the plant was overhauled and the plant was brought back into operation in the first week of May 1999, company source said.