Key takeaways of the conference call

Consolidated net sales for quarter ended June 2011 stood at Rs 830.41 crore, up by whooping 621%. Upside in operating income was largely on account of 751% rise in revenue of Gas terminal division (GTD) to Rs 807.48 crore. But the revenue of Liquid Terminal Division (LTD) was higher by 13% to Rs 22.93 crore.

However a 1090 bps crash in Operating profit margin to 3.3%, moderated the growth at operating profit level to just 67% at Rs 27.38 crore.

On segment front, LTD PBIT was higher by mere 3%. On the other hand, the PBIT of Gas terminal division registered an increase of healthy 193% to Rs 18.21 crore leading to jump in PAT by robust 92% to Rs 16.61 crore.

The sales volume contributed from LTD was around 43% of the total sales volumes against 46% on y-o-y basis due to less capacity utilization when compared to the last year's because of the product mix. The division is at full capacity utilization in Mumbai port.

The GTD sales volume accounted to 200,2000 MT, higher by whooping 198% on y-o-y basis. Hence, the net sales were higher mainly due to high growth in Gas volumes but not by pricing realizations.

The GTD sales were majorly contributed from PSU sector oil companies i.e., higher by 170% on y-o-y basis and rest of the gas sales from auto &oil gas sector and Petrochemicals sector. Government of India's Rajiv Gandhi LPG Vitrak Scheme has increased the penetration of LPG use in the rural areas and accordingly, demand for LPG imports is booming.

In the year ending March 2011, LPG imports in India grew by 77% to four and half MT and the company expects imports to grow to 5 MT this year. Aegis is a key player in the LPG business accounting 15-20% of India's imports.

Company's sourcing business of its overseas subsidiary, Aegis Group International was also one of the reasons for increase in gas volumes on much cheaper shipping rates provided by them. Hence, improved imports and consumption in India and competitive purchasing cost and shipping costs has escalated the sales volumes of GTD.

Under GTD, Petrochemical sector sales volumes were significantly increased by 68% on y-o-y basis. During Q1FY10, the sales volumes were down mainly due to a plant shutdown of a key petrochemicals customer for the gas division during a de-bottlenecking of their plant. Q1FY12 sales are also significantly higher when compared to Q4FY11 on massive increase in demand for gas from many clients.

Under GTD, the auto gas sector sales volumes have not shown a quite significant increase, however higher by 12%on y-o-y basis. This sector is slow but showing a steady growth process in sales.

Puregas cylinder sector sales volumes also rose by modest 12% on y-o-y basis. This sector is also showing a slow and steady growth in distribution & sales. The sales were aided from three states: Maharashtra, Gujarat and Karnataka with an entry into AP and Tamil Nadu expected in the next two years.

The margins in auto gas & pure gas cylinder on wholesale front is at lower level as company is sourcing gas for two of the NOMC of HPCL & BPCL from Middle East from its office in Singapore and in the process the company earns small brokerage fee.

Retail distribution margins stood at around 18.5% against 13.6% on y-o-y basis on cheap shipping costs charged by Aegis group International.

Blending plant in Gujarat for HPCL on contract basis is going to be commissioned in August 2011. The blending plant will blend butane and propane for HPCL. Company anticipates to generate the revenues of about Rs 25 lakhs per month immediately after the commencement of this plant.

Company expects the bunkering business to be started by Deccember'11 and hopes to gain huge revenues from this business.

Company stated that it would bid projects for new terminals of BPCL, HPCL and IOCl in next 6-9 months. Apart from Aegis logistics it was Indian oil tanking and Indian Molasses companies selected for the tender. There are about 15-20 projects to be commenced in next 5-10 years and out of 20 projects it expects to secure good number.

Building terminals – The company is expanding beyond Mumbai for liquid terminal. The company has planned construction of new terminal at Pipavav, Haldia and Kochi at a cost of Rs 413 crore. It is waiting for the final Environmental clearances for construction of new terminal of 130000 KL at Pipavav and also for doubling its gas terminal capacity in Pipavav to 5400 MT and for this the project duration is estimated to be 18 months after approval. Capex planned for this project is Rs 150 crores and this plant is likely to be commissioned in second part of next year.

Capex of Rs 50 crores is planned for construction of liquid terminal of 100000KLat Haldia and Rs 20 crores of capex is planned for construction of 50000KL new liquid terminal in Kochi. Haldia & Kochi plants are likely to be commissioned during FY13 after the approval of Pipavav project.

Kochi terminal – Currently the capacity utilization of Kochi terminal is 15-20%. The company is embarked on connecting the storage terminal to another jetty (Q4jetty), which has deeper draft by laying 3 new pipelines. The pipeline is ready for mechanical commissioning and the company is in the process of getting the permission of the Port trust of Kochi for commissioning which is expected to within 6-12 months.

Company plans to commission 30 new LPG stations including 5 flagship stations (of which 3 in Bangalore, 1 in Hyderabad and 1 in Nashik) during this year. Each flagship station would generate volumes of 1200 MT per year.

Company is hoping that the raised capital through infrastructure fund and also retained cash flows would be sufficient to fulfill their capital expenditure and therefore, it said that it has no plans to raise any capital in near future.

Company is bullish about the gas business in next quarter and also expects the order book position to remain very strong whole this fiscal year particularly in gas business. Massive growth is expected in India in consumption of oil. For the next 10 years, Oil terminals capacity additions is needed massively. Building it in time in correct location depending on the ports capability will be the challenge.