Company to sustain volumes in Q3FY10: A Sengupta, Dir (F&C)


A Sengupta, Director-Finance at Petronet LNG said that the Dahej expansion led to jump in revenues. Here is a verbatim transcript of the exclusive interview with A Sengupta on CNBC-TV18. Also watch the accompanying video.

Q: First if you could take us through that big jump in topline or revenues that you have seen -- is it because of that Dahej terminal expansion or if you could take us through what led to that Rs 3,400 crore topline?

A: Our expansion -- Dahej terminal expansion was commissioned in July and after that we had this additional capacity. We were actually operation at 6.5 million tonne to 7 million tonne. Now with the expansion we have moved to 10 million tonne capacity. If you see this quarters volumes, it represents almost 9 million tonnes of volumes. So, that is the major reason why we could increase our volumes.

Q: Can you just explain though why there has been so much pressure on the margins and whether there is clarity now on what kind of return on capital employed you can work with? Is it the tariff commissions rate or your own rate?

A: We don?t have any tariff commission rate -- we don?t come under that. If you see after the commissioning, we have almost Rs 17 crore of additional financing charges and Rs 24 crore of additional depreciation. If you add those backs -- the margins haven?t performed that badly. So, I don?t think it is a margin issue at this point of time. But moving forward, maybe for a short period, when the domestic gas production goes up, that will be a challenging time. We will see how to cope up with that.

Q: By next quarter or the current quarter which is under way right now -- would volumes be 10 million tonnes then -- I am asking because then there would be a quarter-on-quarter (QoQ) improvement again in terms of revenues because this Dahej plan was a phased expansion plan -- when is the next bit of addition to capacity going to kick in?

A: Our intention will be to increase our utilisation. But it will be a bit challenging because the domestic gas volume is also expected to increase during this quarter. Nevertheless, if you see the last two quarters, we have been able to increase the volumes. So, I expect we will be able to increase the volumes. On expansion -- we have planned for a second jetty in Dahej. Once the second jetty is in place -- in say two-and-half-year's time -- our volume will go upto somewhere between 12.5 million tonnes to 13 million tonnes.

Q: By when is this, that is, which financial year?

A: It will take around two to two-and-half years. So, if we take from 2010, then it will be somewhere between 2012-2013.

Q: On your interest cost because that is escalated quite a bit in this quarter -- any any plans to reduce that?

A: As I explained, once our expansion project is commissioned, the interest has been capitalised upto that point. As we move forward, that will become an operating cost. So, it is just a function of additional debt and it is not a function of interest rate going up. So, I think that interest burden will definitely be there with us. We have to increase our volumes to take care of that.

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Source: Date: Oct 27, 2009
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