Saturday, March 11, 2017

ACIL Interview

Calcutta, March 5: Assam Company India Ltd is set to take full control of the Amguri oilfield in Assam after the Arbitral Tribunal Board gave an award in favour of the company in an ownership dispute with the government of India.

The board declared Assam Company the owner of the 60 per cent stake held at present by public sector ONGC on behalf of the government.

The Calcutta-based company already held 40 per cent in the discovered field in the Assam-Arakan basin.

Aditya Jajodia, managing director of the company, said the field might go back to production by the middle of this year.

“With the use of latest technology, we should be able to produce much higher than what we used to do before,” Jajodia told The Telegraph over telephone.

The Amguri field used to produce 1,600 barrels of oil per day in 2010 when it was in production.

According to the award of the board, the production sharing contract between the government and the company will be extended by five years and run up to 2033.

Moreover, a sum of $3.54 million, or Rs 23.61 crore, has been granted to Assam Company as damages/compensation along with an interest of 6 per cent per annum from March 2011 till the day of payment.

Arbitral proceedings worth Rs 1.25 crore will also be given to Assam Company.

Since 2006, Assam Company along with it’s earlier partner Canaro Resources Ltd had operated the Amguri field, which was a discovered and producing field. The production stopped since December 2010 after the operatorship and participating interest of Canadian oil explorer Canaro Resources was terminated by the government over a breach of contract.

Jajodia said the production sharing contract had stated that a non-defaulting party should have got the stake of the defaulting party but the government decided to auction the interest.

“Despite having rightful claim and fulfilling all the conditions as confirmed by the GoI and its nodal agency, the directorate general of hydrocarbon (DGH), ACIL (Assam Company) was continuously denied its legal and rightful claim to possess 60 per cent participating interest and operate the field to maintain the production of oil and gas,” a company official said.

Assam Company invoked the arbitration proceedings in this regard against the government in January 2012.

Jajodia declined to comment on the possibility of bringing in a fresh partner to further develop Amguri.

“The area has potential. Just look at the aggressive bidding that took place recently for the smaller marginal fields,” Jajodia pointed out.

The Assam Company stock rallied over 10 per cent after the award of the tribunal board. The stock, with a face value of Re 1, closed at Rs 7.86 on the BSE on Friday.


Friday, March 3, 2017

Deep Industries: FY17 revenue growth of 70%.

May 20, 2016, 01.31 PM

See revenue growth of 70% continuing in FY17: Deep Industries The promoters of the company have plans to increase the stake to about 75 percent, says Paras Savla, CMD of Deep Industries.

The newly secured ONGC gas dehydration business drove up the profitability and the topline growth of the company, said Paras Savla, CMD of Deep Industries . FY16 saw a revenue growth of 70 percent and Savla expects the trend to continue for both revenue and profit margins in FY17. With the current orderbook being around Rs 875 crore (80 percent from ONGC alone), the company awaits the results of more bids worth Rs 600 crore. The promoters of the company have plans to increase the stake to about 75 percent, he added. Below is the verbatim transcript of Paras Savla’s interview with CNBC-TV18's Reema Tendulkar.

Q: A very good quarter for you. Your topline has gone up by 142 percent year-on-year (Y-o-Y). Your profits are up by 184 percent. You have seen some improvement in your margins. Could you tell us was there any element of one off in the quarterly numbers and what is the sustainable revenue and profit growth going forward?

A: The main driving factor of the profitability and the topline going was the new gas dehydration business that we secured. That has brought immense growth in the company. With just a single contract last year our company got doubled. We currently have the order books on that account from ONGC. The margins as I said has been relatively quite good. We have been almost at a profit after tax (PAT) of almost around 24.07 percent. Q: What is the current order book? A: The current order book we have is around Rs 875 crore.

Q: Any new contracts that you are likely to win?

A: We have bidded quite a few projects. We are expecting the outcome of those projects to come in next month or so. So, with those expectations it is expected we get more orders on our hand.

Q: Could you give us how many contracts have you bid for, what is the total size of the contracts that you won. Just to get a sense, the future visibility of the company?

A: If you see the last year standalone the orders that we received from ONGC were for two gas dehydration projects and the drilling rigs. So, all these orders combined two drilling rigs and the dehydration units were closely around Rs 650 crore odd. So, we had to get some of these projects - I am unable to guide the numbers going forward but the numbers would also be in similar lines.

Q: The promoters have been hiking stake in the company. My colleague has just highlighted how in the last three years you have seen the promoter holding go up from nearly 60 percent up to over 70 percent as of the March 2016 shareholding. Do the promoters want to increase the stake up to 75 percent, do they have plans to keep the company listed at all, explain what the promoters plan is because they have been consistently increasing their stake?

A: We have been increasing our stake. It is very hard to comment at this point what we would be doing going forward but yes, we do have plans to increase our stake because we are very confident of the business we have. Q: But increase your stake only up to 75 percent? You can't go beyond that? A: We can't go beyond, yes.

Q: So, you will go up to 75 percent?

A: Yes.

Q: Will this revenue run rate that you have enjoyed in FY16 be maintained because you have seen your revenues go up by nearly 70 percent last year?

A: Looking at the order book that we have it is quite possible that the growth would be on similar lines that we expect even this year to go ahead.

Q: What about margins, what would be the sustainable margins?

A: Margins would be in the similar lines because it is services business, we have a straight line revenue and expenses coming in. So, we think the margins and percent of profits would be on similar lines of the topline that we get for the current financial year.

Q: You told us your order book is Rs 875 crore. What percent of that comes in from ONGC?

A: Around 80 percent of that comes from ONGC.

Q: And is ONGC is a long term contract, is there risk of the contract coming to an end. Because you have got clearly a lot of client concentration risk?
A: The biggest contract that we have received last year were the 10 years, three years and five years. So, the contract that we have are long term contract. So, we have very few contracts which are on getting expired in this financial year. But they are very few numbers. The largest content is of gas dehydration business and drilling rigs.

Q: Even the new contracts that you bid for right now, are they from ONGC or they are from other operators?
A: They are from ONGC and other oil and gas companies as well. They are from public sector undertaking (PSU) as well as private oil and gas players.

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