THE DECEMBER 2008 quarter results of Gujarat State Petronet (GSPL) were dampened by a 25% fall in natural gas volumes as consumers replaced high cost spot LNG with cheaper naphtha. Still the company posted a 10% rise in net profit to Rs 28 crore, while net sales increased 6% to Rs 117 crore.
An increase in staff and maintenance costs put pressure on the operating margins during the quarter, which was eroded by 130 basis points to 86.4%. A 39% fall in other income and marginal increase in interest and depreciation charges pushed the pre-tax profits 5% below year ago levels. Thanks to a cut in tax provisions, the company posted 10% improvement in net profit.
The company's shareholders have approved a contribution up to Rs 64 crore for charitable purposes in FY2009 in response to Gujarat government's request to all state owned companies to contribute onethird of their pre-tax profits.
During the current quarter, the company successfully renegotiated most of its contracts under which the connectivity charges will now be borne by its customers. With naphtha prices moving up and Torrent Power's contract commencing, GSPL's gas volumes will improve substantially in the current quarter. Similarly, with the RIL's gas starting to flow from mid-February, GSPL will transport a greater volume of gas to Gujarat-based power and fertiliser plants. These factors will boost the company's topline as well as operating margins in coming quarters. However, in case of its contract with RIL to transport 11 million cubic metres per day (MCMD) of gas to its Jamnagar Refinery, the additional gas volumes are likely to begin only once RIL reaches production level of 60 MCMD at its KG basin gas field.
An increase in staff and maintenance costs put pressure on the operating margins during the quarter, which was eroded by 130 basis points to 86.4%. A 39% fall in other income and marginal increase in interest and depreciation charges pushed the pre-tax profits 5% below year ago levels. Thanks to a cut in tax provisions, the company posted 10% improvement in net profit.
The company's shareholders have approved a contribution up to Rs 64 crore for charitable purposes in FY2009 in response to Gujarat government's request to all state owned companies to contribute onethird of their pre-tax profits.
During the current quarter, the company successfully renegotiated most of its contracts under which the connectivity charges will now be borne by its customers. With naphtha prices moving up and Torrent Power's contract commencing, GSPL's gas volumes will improve substantially in the current quarter. Similarly, with the RIL's gas starting to flow from mid-February, GSPL will transport a greater volume of gas to Gujarat-based power and fertiliser plants. These factors will boost the company's topline as well as operating margins in coming quarters. However, in case of its contract with RIL to transport 11 million cubic metres per day (MCMD) of gas to its Jamnagar Refinery, the additional gas volumes are likely to begin only once RIL reaches production level of 60 MCMD at its KG basin gas field.
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