Key takeaways of the conference call

Consolidated sales for the quarter ended March 2009 dropped by 48% to Rs 62.63 crore and the PAT were down by 61% to Rs 4.57 crore.

Revenue of Liquid logistics was down by 15.7% to Rs 16.38 crore (Rs 19.43 crore in Q4FY08) and the revenue of gas division was down by 54.5% to Rs 46.6 crore (Rs 101.6 crore in Q4FY08). Consolidated operating profit margin of Liquid terminal for the quarter was at 40% compared to 47% in the corresponding previous period. The operating margin of gas division was 12.9% compared to 14.9% in the corresponding previous period.

Fall in revenue of Liquid logistics business was largely on account of volume drop. Due to crash in prices of Chemicals and petrochemicals most of the clients had stopped imports and there by lower occupancy during Dec 2008-Feb 2009 period. From March 2009 onwards the occupancy was back to full (100%) compared to 70% in Jan-Feb 09.

Sharp fall in gas division revenue was on account of fall in gas prices as well as marginal drop in volume. The volume for the fiscal ended March 2009 was down to 51100 tonnes compared to 70000 tonnes in corresponding previous year. LPG – volume handled for full year is 224000 tonnes as against 282000 tonnes in corresponding previous period. Drop in volume is on account of zero imports by IPCL for nearly 6 months.

Auto Gas division saw volume increase of 49%. The traction in volume came on the back of low auto gas prices along with higher number of stations.

In FY09 the Cochin Subsidiary booked a loss of Rs 3 crore partly due to 50% of the capacity is blocked with molasses apart from impact of general slowdown. Since the customs duty is not paid the molasses was not taken delivery. Now with the government insisting on public auction, the company sees prospect of selling of the molasses, whose prices are on rise. During the year the company has repaid a debt of Rs 19.5 crore of debt resulting in higher interest.

The company decided to have more flagship stations (for auto gas) in large cities such as Bangalore Hyderabad etc. Flagship stations will come up in City centre and these stations are to be 2 or 4 times bigger in size compared to Tier 3 stations. It may be company owned stations. Company owned station 3 one of which is in Bangalore. It will have two more in Bangalore. Navi Mumbai/Thane, Hyderabad is also looked at.

The company currently has 62 auto gas stations operational in 8 states. The company targets to have 100 stations operational by end of March 2010, a revised deadline from earlier March 2009. The company is confident of achieving this critical mass in FY10 even though it has failed in its attempt in FY09. So far the company has signed up for about 130 stations and of which around 40-45 stations will be in Maharashtra.

Planned Capex for FY10–a minimum of Rs 25 crore will be spent in de-bottlenecking of LPG terminal, construction of new office building at Bombay Terminal operation site, and Company owned outlets (flagship stations) in Bangalore and Hyderabad. Projects will be funded by internal accruals and debts.

Outlook for the year ahead

Liquid Terminal – Since March 2009 there is rebound and the outlook is bright. The petrochemical and chemical clients began to restock and start importing. And it is back to 100% occupancy since March 2009. The PSU throughput is strong. Demand and margin are quite healthy for auto gas business with global LPG price going down. With average auto gas now around 22.5/ ltr and good spread between petrol and auto gas there is greater value for customer providing traction.