Wednesday, November 17, 2010

Assam Company may get 100% stake.

Guwahati, Nov. 16: The Assam government has asked the Centre to re-allocate Canoro Resources Ltd’s “cancelled” stake in Amguri oil block to Assam Hydrocarbon & Energy Company Ltd to increase its hold over the state’s hydrocarbon industry.

A source in the industries and commerce department said the government had requested the Union ministry of petroleum and natural gas to give the AHECL the Amguri block when it comes up for sale. Assam had set up the AHECL in 2006 to explore and harvest the huge reserves of oil and natural gas in the state.

“If we manage to acquire Canoro’s 60 per cent stake in the Amguri field, the company’s portfolio will gain significant weight,” the source said.

The CRL owns 60 per cent stake and is the block operator with Assam Company India Ltd holding the balance 40 per cent.

In August, the Union ministry of petroleum and natural gas had issued termination order to Canadian explorer Canoro Resources Ltd for Amguri field, saying it had violated Article 29.2 of production sharing contract (PSC) by not seeking the government’s consent before making a “material change” in the shareholding of the company.

The ministry stated in the letter, “The contravention of the production sharing contract provision has been viewed very seriously and you are called upon to explain as to why the contract, in respect of the contract area identified as Amguri field, should not be terminated.”

Sources said the Canadian company had gone to Delhi High Court which had issued a stay on the termination order, implying that Canoro will continue to hold its 60 per cent stake until a decision is taken on the matter.

Sources in the Assam Company India Ltd said the ministry will look into the status of the Assam Hydrocarbon and Energy Company Ltd before taking the final decision as the AHECL is a new company .


Monday, November 15, 2010

Assam Company Results.

Kolkata-based diversified tea producer, Assam Company (India) Limited has registered 16.9% growth in the company’s net profits for the third quarter ending September 2010.

A leading domestic conglomerate engaged in diverse sectors like Tea plantation, Oil and Gas exploration and production (E&P) and Infrastructure, announced its results for the quarter and nine month ended 30th September, 2010 (Q3CY10) today.

The company’s total operational income for Q3CY10 stood at Rs.70.95 crore compared to Rs.73.52 crore in Q3CY09. Meanwhile, EBDITA grew 38.9% to Rs. 38.11 crore from Rs. 27.43 crore in Q3CY09.

A statement issued by the company this morning said, “The EBIDTA margins jumped to 53.7% in Q3CY10 from 37.3% in Q3CY09, propelled by improved tea realization, growth in Oil and Gas business and efficient forex management. Employee cost increased by 35.7% on account of industry-wide wage revision at tea estates and fresh recruitment of manpower.”

Company’s net profit for Q3CY10 was up 16.9% to Rs.33.33 crore from Rs. 28.51 crore in Q3CY09.

The company made no tax provision for the quarter on account of seasonal nature of its business and the final tax liability will only be determined at the end of CY10, depending on the results.

On equity capital of Rs. 30.98 crore, the earning per share (fully diluted) for the quarter stood at Rs. 1.08 (up 17.4%).

Commenting on the results, Aditya K Jajodia, Managing Director, Assam Company (India) Limited, said “Our results reflect the impact of our continuous thrust in improvement of product quality and product mix. This has also resulted in higher realization and margins. I am happy that our diligent efforts in creating a growth-ready organization are finally translating into numbers.”

During the quarter Canoro Resources Limited, a Canadian E&P Company (the operator under consortium with Assam Company India Limited) has made significant progress in commissioning the Gas reinjection project.

“While the tea division would continue to support our performance with sustained revenues, the Oil and Gas business will propel us into the next orbit by expanding margins, thereby resulting in enhancing stakeholder value,” said Jajodia.

In the coming months, the company would witness substantial increase in production from Amguri field, the only producing field. The company’s revenue from sale of natural Gas is expected to increase substantially pursuant to increase in Gas price by GOI w.e.f. June, 2010, the company statement said.

Oil and Gas accounted for 11.5% of the total revenues of the company (6.2% in Q3CY09), and registered an increase of 80.9% in absolute terms to Rs. 8.14 crore.

Divisional EBIDTA for the quarter stood at Rs. 4.44 crore (up 196.3%), driven by improved production of Oil and Gas where Company’s participating interest is 40% (Oil production up 46.4% to 11577 bbl and Gas production up 44.4% to 5765 mcm) coupled with better realizations (Average sale price of Oil up 10.2% to USD 79.43 bbl and average sale price of Gas up 73.9% to Rs. 5966/mcm) during Q3CY10 as compared to Q3CY09.

Revenues from Tea business division accounted for 88.5% of the total revenues during the quarter under review. In absolute terms, the tea division sales stood at Rs. 62.71 crore, as compared to Rs. 68.53 crore, on account of lower production.

The average realization for the tea improved by 15.1% to Rs. 167.93/kg in Q3CY10 as compared to Rs. 145.87/kg in Q3CY09. However, total sale of tea in terms of quantity decreased by 20.4%, resulting in lower divisional revenues for the quarter. Divisional exports for tea accounted for 13.21% of the divisional revenues during the quarter. Divisional EBIDTA margin was stable at 34.8% in Q3CY10, as compared to 34.9% in Q3CY09.

For the nine months ended September 30, 2010, the company’s total operational income stood at Rs. 134.48 crore as compared to Rs 135.04 crore in the corresponding period previous year and its net profit stood at Rs 24.58 crore, up by 34.68% as compared to the corresponding period previous year. The Company’s EBIDTA registered an increase of 5.3% to Rs. 34.11 crore during nine months ended September 30, 2010
Q: You are in the process of demerging the Borboorah Tea Estate and transferring to Camellia Cha Bar. Can you take us through why you are doing it?

A: The board took a prudent view that we should look at three different sorts of businesses; one is oil as different sector which is today part of our main company, SEZ as a second sector and tea as the third. We are refocusing on tea where we are trying to look at different gardens for a value added projects.

They are all part subsidy of the company but we want to refocus them for a different reason. Hence the company took a decision to do the demerger so that the exact shares valuation comes in and there can be more focus towards these businesses.

Q: What is the eventual plan? Will you have two separate listed companies; one focusing on energy and one on tea?

A: That’s right. There will be about four different companies ultimately. One would be purely oil and gas based, one would be energy, one would be SEZ and one would be tea.

Q: By when will this process be done and all four be listed?

A: We are studying that and are looking into tax matters, government rules, regulations so you would be seeing a series of announcements coming as and when we complete this study.

Q: Can you give us an update on the 1000 megawatt power plant that you have been planning?

A: In the current statement, of a 1,000 megawatt power plant, 1,050 megawatt combined cycle which is coming in Gujarat, we have acquired the land, water permissions, permission from the state government, we also have the principle letter for the gas and we hope to crystallise this permission in next few months.

There are two major permissions which we are waiting for; one is the environment and the other is getting the final permission for the gas. Right now our position is strong and we are ahead of time and hope in other four-six months everything should come through.

Q: For the current quarter sales were flat. What is your outlook for the tea business now that it will be traded or quite soon will be traded in a standalone form? How is the outlook for that looking in terms of prices?

A: The prices have been up by nearly Rs 20 or 15%. The reason why you are not seeing that is because in the last quarter our exports what we booked has not come into the balance sheet because the shipment somehow didn’t take place because of some reason.

All those will come into the current quarter so this current quarter will be exciting for us. We see a favourable jump over the last year and there would be no comparison between the two.


Wednesday, November 10, 2010

Assam Company can head upto Rs 36, says Mitesh Thacker.

Assam Company can head upto Rs 36, says Mitesh Thacker, Technical Analyst,

Thacker told CNBC-TV18, "Assam Company - strong breakout over here and while we are still midway through the week and the stock has recorded its highest ever weekly volumes at about 3 crore a share already for the last 2.5-3 days. I think this stock should do well over the next few weeks, it could head towards Rs 36."

The company's trailing 12-month (TTM) EPS was at Rs 0.70 per share. (Jun, 2010). The stock's price-to-earnings (P/E) ratio was 40.93. The latest book value of the company is Rs 9.97 per share. At current value, the price-to-book value of the company was 2.87. The dividend yield of the company was 0.7%.


Oil Min to defend Canoro PSC termination at Delhi HC this week

The petroleum ministry’s petition to the high court here for a go-ahead on its earlier termination of a production sharing contract involving Canoro Resources of Canada for an Assam oil block will be heard on Friday.

In August-end, the ministry had terminated a contract between Canoro and Assam Company India Ltd (ACIL) for the oil block. This was the first termination of a PSC in the Indian oil and gas industry.
The ministry cited the PSC in saying the decision was due to a change in the shareholding pattern of Canoro. Canoro owned 60 per cent and was the block operator, with ACIL holding the balance 40 per cent.
Canoro challenged the termination at the Delhi high court; it got an interim order of restraint on the petroleum ministry from appointing a new contractor. "We have filed a petition seeking the vacation of this order," said a government official.

The development is analogous to the Cairn-Vedanta case involving the ministry. Cairn Energy initiated a process, around the same time, to sell between 40 and 51 per cent stake in subsidiary Cairn India — operator of the nation’s largest onland oilfield — to London-listed Vedanta for $6.65-8.48 billion. The government is yet to give approval and has said its permission for the deal should have been taken first, something Cairn contests.

The Amguri field in the Assam block produces about 1,000 barrels of oil equivalent per day (boe) and is estimated to have proven and probable reserve of oil condensate and gas of 12.287 million boe. In the case of Cairn India, the stakes are much higher, with average crude oil production from its Barmer block being 120,000 barrels a day. Cairn is also operator of the Ravva oil and gas field and the Cambay Basin (CB/OS-2), which produces 37,043 and 13,527 barrels of oil equivalent per day.

The ministry had on June 1 issued a showcause notice to Canoro for raising C$95 million in April through a mix of debt and equity from Barbados-based Mass Financial Corp, without the "required consent" of the government. Mass initially got 18 per cent equity in Canoro but after the closure of the rights issue, it now holds 52.9 per cent of the oil block and has three out of five directors on the board.


Tuesday, November 9, 2010

Assam Company - Fort Share Broking.

Buy Assam Company, says Aashish Tater, Head of Research, Fort Share Broking.

Tater told CNBC-TV18, "Assam Company is one space which has been doing rounds about from 2007 onwards because of its rich oil and gas available in the Assam region and Nagaland region but what is interesting for us is the inclusion of the top management with Pradip Tusnial. We feel that this particular personal has turnaround the tea estate story for Khaitans and we feel that there could be a good restructuring prospect into this particular stock itself. We feel that this company is having a asset of close to Rs 1,800 crore on NAV basis that too when I discount this on return of equity of close to 26% which is very high because this company is having a small sale that owns 18 tea plantation across India and also own four oil and gas base."

He further added, "What is interesting is the GSPC tie-up for a 750-1000 mw SEZ project that the company has recently got nod for. If I see the peer valuation of SEZ project, we feel this stock is terribly undervalued but what is interesting is how the company is going to fund this particular project because the company is already sitting on a debt of Rs 513 crore and that’s why we feel that this stock can be a good buy because we feel at 22-21 the downside is 8-10% but there could be a potential upside up to 100% from two years perspective."

"If I see the entire oil and gas reserves they have a proven record in the Arakan and Amguri based in Assam which is close to 60 million barrels of oil and close to 290 cubic feet billion cubic feet (Bcf) of gas along with that the company is into the exploratory area right now for the AAON-7, we feel there could be a major restructuring exercise into the stock and the net asset value at a very high return on equity, discounts at Rs 40 from two years perspective. We have pegged the Diwali target given this was our Diwali pick at a very conservative target of Rs 30 by next Diwali which is still an upside of 40-45% from current levels and given the recent inclusion of one of a person who has got restructuring done and as a prove track record for the management, we feel this could be a clear multibagger if someone holds it for two-three years perspective for a decent 25% upside year on year returns on to the stock."

Indosolar: At the CMP of Rs 26, Indosolar trades at a P/E of 6.6x on FY12 EPS estimates of Rs 3.9. On a EV/EBIDTA basis, the stock is available at a multiple of 10.6 & 4.2 on FY11 & FY12 estimates. We recommend a “BUY” rating on the stock with a long term view.

Godrej Properties (GPL): Given the kind of unique asset light business model & visibility of strong cash flow with JDA, GPL commands rich valuations to its peers & trades at a premium to its NAV of Rs 570. At the CMP of Rs 718, we recommend a “BUY” on the stock with medium to long term view.


Sunday, November 7, 2010

XL Telecom - Q3 Results.

Q: Could you just take us through the numbers?

A: The current quarter ending September 30, which is the third quarter for us this fiscal. We ended up with topline of about Rs 61 crore and the net profit after tax is about Rs 12 crore.

Q: Last quarter you had losses because of inventory write downs is that pretty much out of the way?

A: No. This will be the last quarter in which we had to go through. Technically, we have the profit before tax, the loss write down because these were the inventories we carried from 2008. At that time the prices were close to 3 euros and we had to sell about 1.4.

From the October quarter we will be with the new inventories and whatever fresh we have bought in the current market prices in this quarter because of the deferred tax we had provided earlier we had to provide. So we covered those losses.

Q: So at the PBT level you are reporting a loss even this quarter?

A: Yes. Profit Before Tax.

Q: What is the PBT level?

A: It is about Rs 72 crore.

Q: What is your deferred tax write in?

A: It is about Rs 84 crore. So the net profit after taxes has come positive.

Q: What do you expect you will do in the last quarter?

A: We should be doing close to about Rs 100 crore plus. From the current quarter we are targeting Rs 60 crore, about Rs 100 crore this quarter. But effective January we have a very good visibility because the Indian government has cleared the Jawaharlal Nehru Solar Mission where we have order book visibility of close to Rs 200 crore plus. This quarter we should have good growth quarter on quarter on the topline and we continue to do that way.

Q: But you will be in the black even in your bottom-line in the fourth quarter?

A: Fourth quarter operating level yes.

Q: Do you have any fund raising plan at all for the ongoing quarter?

A: We are looking in terms of as we had come and told about few months back about the GDR. We are looking in terms of raising that. It has to be the market conditions and other things should be continued to be in good condition like this then we should look at pricing in this quarter.

Q: This orders that you are speaking about for next quarter are they tied in – the MoUs are signed – is it financially closed, the solar mission orders.

A: They have to get the financial closure that is the reason we have not announced the orders as of yet. But for this quarter we have confirmed orders for exports not for domestic.