Petronet LNG reported a 58 percent jump in June quarter net profit on tax reversal even as it imported 32 percent less liquefied natural gas (LNG) under a costly long-term deal with Qatar.
Speaking to CNBC-TV18, Director RK Garg says the company has a one-time tax adjustment in Q2 which is why lesser tax has been provided for.
Furthermore, he says the work on Kochi-Bangalore pipeline has not started yet but the state governments will be supporting the project.
Petronet's net profit stood at Rs 247.50 crore in the April-June quarter as compared to Rs 156.60 crore net profit in the same period a year ago.
Below is the transcript of RK Garg’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Numbers look good because of no tax provision this time, can you just take us through your numbers?
A: It is better if we compare our results, the profit before tax (PBT) because that is the correct comparison with this quarter as well as the last quarter and the corresponding quarter because this quarter as well as the last quarter, we had certain write back of the tax provisions which has affected the net profit in these two quarters.
PBT for this quarter is Rs 247 crore as compared to the earlier quarter, sorry Rs 253 crore and earlier it was Rs 131 crore. So, before tax profit has increased from Rs 131 crore to Rs 253 crore. And corresponding quarter, this profit was Rs 238 crore, before that.
Sonia: Is there any other tax adjustment that is left over in the coming quarter?
A: This is a one-time adjustment and because of 80-IA benefit, that company had filed with the tax department and we could get a favourable judgement, because of that, this tax provisioning has been taken back and that is why the less tax have been provided. So, this is a one-time. It is not going to be there in the next few quarters after that. So, this is a one-time adjustment, I can say that.
Latha: We ask you about the Dahej operations also. That is down nearly 100 percent in terms of utilisation. Can you take us through the developments in Dahej?
A: The Dahej terminal is our main terminal where utilisation has always been good and only in the last quarter, the sudden less off-take under long-term, the utilisation at Dahej had been lower. However, during this quarter that we have operated Dahej close to nameplate capacity and overall utilisation was 98.6 percent. So, in spite of that, the long-term volume was less. We could make up through import of more spot cargoes as well as the re-gas cargoes at Dahej, and operated at that level.
Sonia: Kochi still remains a disappointment as the utilisation is quite low at just about six percent. Can you throw some more light on that?
A: The Kochi utilisation can improve only if it is the pipeline getting completed which is an unfortunate situation that we have a new terminal and country is looking for more gas in the country to arrive. However, the pipelines are not getting built. This is a concern for us and we have been trying to mitigate the Kochi problem through other ways. As you know that we had started providing Kochi as a unload and reload facility. It was using as a storage for Kochi which has been quite successful and we have done one load and reload this quarter and which has given us advantage. In addition Kochi we have started doing Liquefied Natural Gas (LNG) bunkering to the LNG ships; the ships who are using the fuel as LNG. But, these all measures are not going to increase substantially. The utilisation of capacity at Kochi, pipeline is a must and I think already lot of efforts are going on as of now to see that pipeline construction becomes as early as possible.
I agree with you that is a matter of concern. However, this time positive that overall profitability is better as compared to last quarter because the higher utilisation and the reload income at Kochi we had.
Latha: So, what is your expected volume for FY16 versus FY15?
A: We have to see that how things develop. This quarter has been good and I hope that similar performance should continue for the rest of the quarter. But, we have to see and keep on watching the situation.
Sonia: And what are the expected marketing margins on the spot volumes that we can see going ahead?
A: Giving an exact number is not appropriate, but overall profitability is better. So, there have been certain margins on the spot volume we have earned. And we will continue to do that, so very difficult to give the number, what number that you are looking for. But overall profitability is better.
Latha: We cannot let you go without asking you about the completion of the Kochi-Bangalore pipeline.
A: There has been positive news that state government will be supporting that pipeline and GAIL has started again working on that. But timeline could be given only when the real work at the ground really starts and we expect that something to start maybe after this monsoon. So, we have to see when it is likely to start then we will be able to give exact timeline.
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