GSPL sees 50% increase in FY09 volumes

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Manish Sheth , CFO, Gujarat State Petronet said by year-end, he expects 50% increase in volumes.

Volumes will go up as two major contracts come online; the torrent power for Surat plant and Reliance contract.

The company has a comfortable debt-equity position and has capacity to raise more debt, he said.

Sheth sees FY09 sales at around Rs 550-600 crore.

Excerpts from CNBC-TV18's exclusive interview with Manish Sheth:

Q: It has been a tremendous quarter for you this time around, what has been the volume growth that you have seen this quarter and what is the expectation going forward for FY09?

A: Volume growth as compared to last quarter is almost flat, but in the coming quarters, we do expect volumes to go up as two major contracts come online; the torrent power for Surat plant and another is the Reliance contract getting started.

Q: How much increase in volumes do you expect?

A: By the year-end, we expect 50% increase in volumes.

Q: You will be implementing two new pipelines to a total cost of USD 250 million, what would that do for the company?

A: We are connecting the power where gas-based power plant is being set up, that would be around 700 MW, which would supply a demand of 3.5 million units per day of gas and Mundra market is another market where lot of SEZs are there.

Q: What will be your total capex for FY09 and are you adequately funded to implement these projects?

A: If one sees our financials, we have a comfortable debt-equity position and we do have capacity to raise more debt and currently we do have approximately 1:1 debt-equity ratio.

Q: What are your tariff plans and do you see the average tariff to actually trend downwards from here on?

A: Tariff depends on which market takes more gas, so there are times when there are more spot contract in markets, which are at a closer distance, so that pulls the average down vis-à-vis a new market which is at a longer distance, they take more gas and that pulls the average up. So it's a combination of these two factors, which determine where the actual number would end up, so it's hard to take a call on that.

Q: You were talking about raising more debt, how much is the requirement for FY09 - FY10?

A: We already have some debt lined up which we will be using. We have tied up with IFC, which we have not used up and we may be raising some more debt. For FY09 we may be ending with a capex of around Rs 600-700 crore.

Q: What are the target on the topline and bottomline for FY09 in sales and profits?

A: In sales, we may be reaching around Rs 550-600 crore.