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Last Updated : Sep 02, 2016 12:33 PM IST | Source: Moneycontrol.com

New customers, expansion to boost growth: Mahanagar Gas

Speaking to CNBC-TV18, Rajeev Mathur, MD of the company said the volume growth has been 7.5 percent quarter-on-quarters. He guided for a 7-8 percent rise in quarters ahead.


Mahanagar Gas reported good first quarter numbers with profit rising 19.1 percent to Rs 92.7 crore year-on-year (YoY). The revenue, however, dipped 5.5 percent to Rs 534.1 crore as against Rs 565.1 crore in same period year-ago.

Speaking to CNBC-TV18, Rajeev Mathur, MD of the company said the volume growth has been 7.5 percent quarter-on-quarters. He guided for a 7-8 percent rise in quarters ahead.

Mahanagar plans to increase number of customers as well as presence in new areas. More customer acquisitions are expected in both CNG & PNG.

Mathur expects lower gas prices going forward.

Below is the transcript of Rajeev Mathur’s interview to Sonia Shenoy, Anuj Singhal and Latha Venkatesh on CNBC-TV-18.

Sonia: The sales volume has improved, but the absolute sales have declined quite a bit. Was there a price decline that you saw this quarter?

A: It means that the cost of procuring gas since it had gone down, we passed on some of the benefit to the consumers and at the same time, we increased the sales and maintained our margins.

Anuj: So, what are the expectations of volume growth going ahead?

A: We have been able to do about 7.5 percent growth quarter on quarter basis and we expect going forward between 7 and 8 percent is what we should be able to do provided the gas prices remain as they are and the crude prices and the alternate product prices, which are looking up behave in the manner as they are behaving at the moment. So, as long as that is there, we should be able to do 7-8 percent.

Latha: Do you sense more price cuts coming in, in the next few quarters?

A: As things look, there is a lot of gas becoming available across the world and the demand seems to be lower than the supply. And that would get reflected in terms of the pricing. And if the prices remain subdued, we should be able to procure gas at more cost effective prices and which will add to the benefit that the consumer gets in terms of pricing and as you penetrate more and more houses and more and more Compressed natural gas (CNG) vehicles get converted on gas, we should be able to show better growth going forward.

Sonia: The earnings before interest, taxes, depreciation and amortisation (EBITDA) margins have also improved for the company this quarter to 28.5 percent. Do you expect the margins to surpass 30 percent in FY17?

A: I cannot predict that far, but all I can say is that as things are, the way our projects are going, the way customer acquisition is happening and the way we are spreading our customer base and increasing more and more piped natural gas (PNG) connection, we hope to maintain the margins and try to better them as we go along.

Anuj: When can we see the company going back to 10 percent volume growth because you do tend to compare Mahanagar Gas (MGL) with Indraprastha Gas (IGL)?

A: One should make a distinction between what is happening in Mumbai and Delhi. Here whatever is happening is based on individuals preference as well as customer choice and the economics which drives more and more customers that we are acquiring.

As opposed to maybe a court driven mandate and things like that which allow people to use one fuel over the other or convert on to CNG, we feel that this is a more sustainable long-term model where more and more people will, although we may not get a quantum jump within one quarter or two quarters, but on a sustained basis, we should be able to get more and more customers acquired and both in CNG as well as PNG.

Latha: And any more geographies, any more areas where you will start operations soon which may lead to volume upsides, any other cities?

A: We are looking at both models. One is Petroleum and Natural Gas Regulatory Board (PNGRB) is coming out with the newer cities where they have asked people to bid. We are looking at one or two cities very closely and we hope that we will look at getting at least one more area where we would be wanting to operate.

In addition, we are also looking at some other cities where authorisation has been given and not progressed in the past and the promoters or people who are implementing the projects in those cities are looking for expertise or some kind of a partnership. We are also looking at that model for reaching out to newer customers or newer geographies.

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First Published on Sep 2, 2016 11:18 am
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