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Q4 to Be the Best Quarter of FY12: Indraprastha Gas

  • In an interview to CNBC-TV18, M Ravindran, managing director of Indraprastha Gas (IGL) says, Q4 will be the best quarter of FY12. "This is going to be a good quarter where sales are touching around 3.6-3.8 mmscmd," he adds.

  • Q: How is the fourth quarter panning out for your company? The company took a price hike of 5.5% on December 31. How is it benefiting margins this quarter?

  • A: Practically, this is the best quarter of this year. This is a period when we have maximum sales. We should be able to recover losses that we had in the earlier part of the quarter. This is going to be a good quarter where sales are touching around 3.6-3.8 mmscmd.

  • Q: In the previous quarter, the profit actually declined 10.5% sequentially because of higher gas costs. Can you just give us a sense of what impact the price hike of 5.5% will have in the Q4 bottom-line?

  • A: The overall bottom-line, for the year, should be touching around 15-18%. That is what we are targeting at. Since the sales on the industrial side is picking up in a very big way and the volumes in the CNG sector is also now picking up because of the 10-15 mini station which have become operational since last quarter, definitely there will be a bottom-line impact of around 8-10% on the upside.

  • Q: What about gas cost this quarter? That was the key thing that actually impacted last quarter's numbers where there was a combination of the rupee depreciation along with higher spot LNG prices. What gas prices are doing for you in this quarter?

  • A: The gas cost sourcing is still on the higher side. Volumes are now touching around 3.6-3.8 vis-�-vis 2.7-2.8 in the last financial year. Since the D6 volume is totally zero, we are sourcing the costly gas from the market.

  • We are in discussion with our promoters and other sources to get some cheap gas. Overall, there will be an impact on this gas sourcing price because the gas prices have not decreased to that extent. Definitely the prices are on the higher side

  • Q: Can you give us some numbers for FY13? How do you think the gas prices will pan out for you?

  • A: The FY13 gas cost will be definitely on the higher side because the demand is suddenly going to pick up. There are more stations that are going to become operational. There are more of industrial consumers that are going to come in.

  • We are in talk with our promoters and other sources for sourcing of gas for a short time period of one-two years. Once it works out then it will be under the range of around USD 10-12.

  • Q: Should we expect that in the near-term you are contemplating some more gas price hikes to bridge the gap? How much do you need in terms of price hike to balance out your costs?

  • A: These price hikes are going to be a constant feature. As and when we source a costly gas, we don't have any option to keep it at our end. We will pass it on to the customer. But then we are trying to see to that back to the customers is bare minimum.

  • We'll try to source the cheaper sources of gas. For that, we are in talks with our promoters and then these price hikes are bound to be around in the range of 10-15% over a year. That is how it has been panning out in the past one-two years. Once the diesel prices go on for a hike then this differential will always be there.

  • Q: For Q4, in particular, any sort of near term price hikes that we can expect?

  • A: Q4, right now, we are just evaluating all the options. Probably once we are done with that, once we have the sources and other prices are available, probably then we will be able to comment on that.

  • Q: What about for Q4 and FY12? You did mention that there could be a substantial increase in Q4, considering it's your best quarter. Can you give us a percentage term increase in your top line and your bottom line for Q4 as well as for FY12?

  • A: For Q4, I think the top-line will see around 10-12% hike and the bottom-line should see around 10-12% growth. Overall, for the year, it should be around 18-20% hike.

  • Q: One of the risks to your company's margins is the possibility of the government's move to regulate marketing margins. That's very much in there. Do you think it will come through? Have you heard anything from the government?

  • A: That's going to take some time. Probably there is more clarity needed on this subject. There needs to be more of dialogues between the government and the ministry on these issues and probably one has to see the provisions of the act and then what was mandated by the act. I don't think it is going to be that soon.

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