WHAT was given by the fall in subsidy burden and overall improvement in performance was taken away by heavy spurt in the tax provisions for Gail in the quarter ended March 2008. Profits before tax for India’s largest gas transmission company doubled during the quarter as the subsidy burden declined 23% to Rs 387 crore. However, the tax provision at 34% of pre-tax profits was in sharp contrast to the heavy tax writebacks in the corresponding quarter of the previous year. As a result, the growth at the PAT level was stunted to just 6%.
Gail’s overall Q4 performance was healthier compared to the subdued Q3. The company reported sales as well as profits growth in all of its business segments. Particularly, the LPG and liquid hydrocarbons segment posted a major turnaround, as the turnover doubled despite a 5% fall in the volumes to 0.32 mt and profits soared past Rs 353 crore as against a loss in the Q4 of the last year.
Gail manufactures polymers from natural gas feedstock, hence this segment also benefited from the global rise in the polymer prices. The company expanded its polymer capacity by 25% last quarter, boosting the sales volumes by 10% to 1.1 lakh tonne during the current quarter. The sales from polymers were 17% higher and Q4 profits jumped 21%. The natural gas trading business reported over 40% jump in profits while the natural gas transmission business soared 36%.
Being a PSU, the company was affected by the recent Sixth Pay Commission recommendations. The company has made provisions of Rs 105 crore for the quarter as the staff costs jumped by 170% to Rs 220 crore. Going forward, Gail is likely to benefit from increased volumes of natural gas as the entire production of Panna-Mukta-Tapti consortium was transferred to the company with effect from April 1, 2008. Gail plans to invest Rs 3,413 crore during FY09.
Offshore focus props up Varun Shipping’s net
VARUN Shipping posted a higher growth rate in FY08 than the previous fiscal, thanks to its increasing focus on the offshore services segment. The company posted a growth of 29.4% in its total income while net profit swelled by 61.3% for the year ended March 2008. The company has strategically changed its revenue mix as offshore vessels contributed around 20% of its revenue this year compared with a minuscule 3.6% in FY07.
The offshore services continue to be an attractive area of investment as high oil prices have made exploration feasible in deep sea, leading to surge in demand for offshore vessels. The company has achieved a leadership position for offshore vessels as it has three anchor handling vessels in service, the highest among Asian shipping companies. At the start of 2008, the company had indicated plans to spend $400 million for expansion. It has already acquired one anchor-handling vessel, which leaves it with $300 million for further expansion. The company’s fleet size increased to 21 as of March 31, 2008, from 19 a year earlier. However, the debtequity ratio remained at 2.4:1, which is almost same as on March 31, 2007. This is due to sharp rise in top and bottomline, which has enabled the company to plough back enough profits so that debt to equity ratio does not get stretched. The company is already the leader in LPG shipping as it owns more than 80% of LPG tonnage under Indian flag.
Gail’s overall Q4 performance was healthier compared to the subdued Q3. The company reported sales as well as profits growth in all of its business segments. Particularly, the LPG and liquid hydrocarbons segment posted a major turnaround, as the turnover doubled despite a 5% fall in the volumes to 0.32 mt and profits soared past Rs 353 crore as against a loss in the Q4 of the last year.
Gail manufactures polymers from natural gas feedstock, hence this segment also benefited from the global rise in the polymer prices. The company expanded its polymer capacity by 25% last quarter, boosting the sales volumes by 10% to 1.1 lakh tonne during the current quarter. The sales from polymers were 17% higher and Q4 profits jumped 21%. The natural gas trading business reported over 40% jump in profits while the natural gas transmission business soared 36%.
Being a PSU, the company was affected by the recent Sixth Pay Commission recommendations. The company has made provisions of Rs 105 crore for the quarter as the staff costs jumped by 170% to Rs 220 crore. Going forward, Gail is likely to benefit from increased volumes of natural gas as the entire production of Panna-Mukta-Tapti consortium was transferred to the company with effect from April 1, 2008. Gail plans to invest Rs 3,413 crore during FY09.
Offshore focus props up Varun Shipping’s net
VARUN Shipping posted a higher growth rate in FY08 than the previous fiscal, thanks to its increasing focus on the offshore services segment. The company posted a growth of 29.4% in its total income while net profit swelled by 61.3% for the year ended March 2008. The company has strategically changed its revenue mix as offshore vessels contributed around 20% of its revenue this year compared with a minuscule 3.6% in FY07.
The offshore services continue to be an attractive area of investment as high oil prices have made exploration feasible in deep sea, leading to surge in demand for offshore vessels. The company has achieved a leadership position for offshore vessels as it has three anchor handling vessels in service, the highest among Asian shipping companies. At the start of 2008, the company had indicated plans to spend $400 million for expansion. It has already acquired one anchor-handling vessel, which leaves it with $300 million for further expansion. The company’s fleet size increased to 21 as of March 31, 2008, from 19 a year earlier. However, the debtequity ratio remained at 2.4:1, which is almost same as on March 31, 2007. This is due to sharp rise in top and bottomline, which has enabled the company to plough back enough profits so that debt to equity ratio does not get stretched. The company is already the leader in LPG shipping as it owns more than 80% of LPG tonnage under Indian flag.
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