Dalal Street

The Chaturvedi committee has recommended a transparent mechanism for dealing with losses of state-owned oil marketing companies (OMCs) via monthly review of auto fuel prices to bring them to par with export parity prices in phases and funding LPG/Kerosene subsidies through a special oil tax.

The proposals are most positive for ONGC, if ad-hoc subsidies are indeed scrapped in favour of the transparent “special oil tax”. No tax on pure refiners is positive for RIL, while Cairn is not impacted by the proposals.

It has been more than 14 years since India has been forming committees to review Energy Prices and needs but the successive Governments have lacked the will to implement any recommendation. Here is the laughing stock of committees appointed by Various Indian Governments to review Oil & Energy situation in the past 14 years.

Sundararajan Committee for Pricing reforms in 1994 (Chaired by Mr. U. Sundararajan)
Restructuring Committee in 1996 (Chaired by Mr. Vijay Kelkar)
Gas pricing committee in 1997 (Chaired by Mr. T. L Sankar)
Expert Technical Group or Nirmal Singh Committee in 1997 on Petroleum product pricing
Nitish Sengupta Committee on Oil Infrastructure in 1998/99
Synergy for Energy Committee in 2005 (Chaired by V. Krishnamurthy)
Committee on Petroleum product pricing in 2005/06 (Chaired by Mr. Rangarajan)

Ambuja Cements Ltd (ACL) Q208 sales increased 8.2% yoy; however, EBITDA margin slumped 755 bps yoy and adjusted net profit declined 19.8% yoy as the Company could not shield its margins and profits from the rising cost pressures. Power and fuel costs per tonne shot up 34% yoy as domestic and imported coal prices rose 35% yoy and 85% yoy, respectively.

Analysts expect ACL’s EBITDA margin to fall 557 bps yoy in CY08E to 30.8%, compared with 36.3% in CY07. ACL is working at a high capacity utilization rate of 90% and has already increased its blending ratio to a high level of 1.45. Expect revenues to grow at 9.9% in CY08E, compared with 32.2% in CY07. EPS is expected to remain flat or go down to Rs 8.4 from Rs 8.7 in previous year.

The Q1FY2009 net profit of Deepak Fertilisers & Petrochemicals Corporation Ltd (DFPCL) stood at Rs44.9 crore, almost double compared with Rs22.6 crore for the corresponding quarter of the last year.

The net sales increased by 49.1% year on year (yoy) to Rs327.6 crore in Q1FY2009 on the back of a robust growth in both the chemical and the fertiliser segments due to the availability of additional gas during the quarter. DFPCL’s operating profit during the quarter grew by 64.5% yoy to Rs63.6 crore with the operating profit margin (OPM) increasing by 180 basis points to 19.4%.

Chemical segment: The revenues from the chemical segment increased by 52.1% yoy to Rs231.3 crore as compared with Rs152.0 crore in the corresponding quarter of the last year. The robust growth in the revenues during the quarter was achieved on the back of improved capacity utilisation.

Fertiliser segment: The revenues from the fertiliser segment were up by 44.1% yoy to Rs98.9 crore from Rs68.6 crore in Q1FY2008 due to an increase in the manufacturing activity.

Realty segment: The company’s specialty mall for interiors and exteriors, Ishanya Mall, registered revenues of Rs3.1 crore during the quarter.

The company is expected to report an EPS of Rs 13.5 and Rs 17.7 for FY09 and Fy10 respectively.

During Q1FY09 Bilpower, net sales rose 73.02% to Rs.1036 mn over the corresponding period of the previous year. EBITDA margin has declined by 264bps to 9.93% on account of rise in raw material cost, which jumped by 94.56% to Rs.946.12 mn. Raw material as a percentage of sales reached to 91.32% as compared to corresponding period of the last year where it was only 81.21%.

The company has been in expansion mode from last two years. Capital expenditure planned in FY08 is progressing as per the schedules. The company is expected to report an EPS of Rs 29 for FY09. Here is over coverage on Bilpower and Lakshmi Energy Foods.