Q: If indeed the deal is struck and it’s a big ‘if’ between the two camps at USD 3.6/mmbtu, do you think it will be good for the market and good for both companies?
A: This will definitely be good for the market but this will be good more for Reliance Industries because if you see the price for which both the parties are fighting USD 4.2/mmbtu on one side and USD 2.3/mmbtu on the other side.

So what Reliance would be sacrificing is 60 cents per mmbtu and RNRL will be paying USD 1.28/mmbtu extra. Obviously, on arithmetical basis it will be in favour of Reliance Industries.

Secondly, because sentimentally this could have impacted their profitability though they would not have supplied the gas to RNRL over the next three years, maybe three years down the line you may have ample gas production. I don’t say there won’t be consumption of gas in the country but we do not have the distribution network, we may not be having matching distribution network three years down the line. So taking all this into consideration, think this will be more in favour of Reliance Industries and that is how market will also see it.

Q: Working on the premise that some kind of solution is worked out aside from Reliance from the ADAG side which stocks stand to benefit the most? Is it RNRL or is it something like Reliance Infrastructure?
A: I don’t see much hopes coming in for RNRL but Reliance Infrastructure holds a good promise because, maybe at least, the process will start and you will see the steps being initiated by the company in respect to power generation and other infrastructure and as well as for Reliance Power also because they will be taking up the Dadri power projects and activity will start on that front. So, except for these two stocks I don’t think that much benefits will be derived by the ADAG stocks.

Q: Any thoughts on Maytas after the recent order that they have bagged and the way the stock has moved?
A: Again the company is coming back on the track. Earlier, we have seen because of the financial problems, the liquidity crunch and the orders they have been losing, they have started divesting their minority stakes in the joint ventures or special purpose vehicles (SPVs). So the company is coming back on the track and the valuations are attractive. That is the main reason for the stock to move up.

Q: Did you have a look at Dhampur Sugar’s numbers yesterday? What did you make of it and generally how would you approach the sugar space now?
A: I am quite bullish on the sugar sector but I am really disappointed with the Dhampur Sugar results. Its bottomline is Rs 14 crore for the quarter and for the full year it is Rs 56 crore. That means you have identical bottomline coming in all the four quarters and surprisingly the company has not provided for tax liability in their audited statements account.

I am unable to understand that even if they have accumulated loss there should have been some tax liability. So I am not convinced, they have sold out 9 lakh bags of sugar at an average price of Rs 28 and that should have given them a very good profit. They had liquidated stock of about Rs 183 crore, the decrease in the stock is to that extent.

So based on my calculations, I was expecting PAT to be about Rs 36–40 crore. I am bullish on the sector but disappointed with Dhampur’s results.