Net turnover rose by 18 per cent to Rs 325.19 crore from Rs 274.72 crore, while other income declined from Rs 2.10 crore to Rs 1.36 crore during the period.

"By interim re-assessment of the capacity, the government reduced the retention price for urea produced by the company in the last week of May by Rs 463 per tonne with retrospective effect from the start of the financial year. This has resulted in a reduction in revenue and profit of Rs 8.29 crore," Tata Chemicals said in a statement.

As a result, operating and gross margins declined to 24.5 per cent and 10.1 per cent for the quarter, as against 30.4 per cent and 13.1 per cent respectively last year.

Raw-material consumption shot up from Rs 53.27 crore to Rs 72.02 crore during the period. Raw materials as percentage to net sales increased to 22.1 per cent from 19.3 per cent in the corresponding quarter.

"Urea sales were higher by 4.8 per cent for the same period last year and soda ash sales were up by 34 per cent. Margins on soda ash, however, continued to remain under pressure due to low international prices," the company has said.

Power cost rose by 27 per cent to Rs 48.71 crore. Interest charges increased marginally over its corresponding quarter to Rs 47 crore while provision for depreciation rose by 13 per cent to Rs 33.47 crore. Amortisation of compensation paid under voluntary retirement scheme accounted for Rs 3.23 crore for the quarter.