Expect margins to be stable at current levels: IGL

Indraprastha Gas is confident of being able to maintain 25% Compound Annual Growth Rate (CAGR) in volumes over FY10- FY13, said Rajesh Vedvyas, managing director of the company  to CNBC-TV18.

The company expect margins to be stable at current levels this year.  Also Read: Buy Indraprastha Gas; target of Rs 409 says IIFL Below is the verbatim transcript of his interview with Anuj Singhal and Latha Venkatesh of CNBC-TV18. Also watch the accompanying video. Q: First up, I would want to know about what is happening on the pipe gas front, because we saw an increase in LPG prices and there was quite a bit of talk that some of the users may shift to pipe gas because that would be cheaper compared to cylinder gas. Over last one month or so have you seen that kind of trend taking place? A: As far as pipe gas is concerned, the acceptability over LPG is because of many factors, main being the convenient factor. So it is any day preferred fuel by any person who has the option to switch over to pipe natural gas (PNG). But there are certain factors such as some people are tenants; there may be some other reasons which come in the way of switching over. If a person has choice between the two, he would prefer PNG. But, the increase in LPG price was very marginal and that has not really spurred further the demand for PNG. PNG demand as such is huge and we only have to be able to address the demand which we try to do depending on the permissions for laying our pipeline fpr which we are dependent on the civic authorities. So our spread of PNG services is primarily limited by the permissions from authorities not for any other reasons. Q: Do you anticipate that PNG gas authorities also may be pushed up? A: PNG gas prices of course will need to be adjusted same way as the CNG prices. All because of one reason that we have already exhausted our full quota of the lower priced APM gas and now the incremental demand is being met from the RLNG. Depending on the weighted average cost of gas it will continue to go up with time because of the higher proportion of the imported RLNG. So there will be adjustment upwards of the pipe natural gas price also, the same way as also CNG price from time to time. Q: What kind of volume growth can we expect in case of IGL over next three-four years? Couple of brokerages are very bullish on the stock and they have been talking about 25% CAGR. Would you say that that is possible? A: In fact that is the assessment given by us to the brokerage houses and analysts. We are very confident of being able to maintain a compound annual growth rate (CAGR) of volume growth of around 25% over the next four- five years period. And we fairly certain of being able to achieve this kind of growth. Q: What do you think you will end the year with in terms of margins? A: I won