A K Jajodia, MD-Assam Company

Update us on your plan to acquire oil block in Colombia.
The company has entered into a farmout agreement with Sismopetrol and R3 in Colombia, for exploration and production of the block ANH El Triunfo (‘the Block’) located in Casanare, Colombia. As per the agreement ACIL will acquire a 70 per cent working interest in the Block and Sismopetrol and R3 will retain the balance 30 per cent share. The work at the Block is expected to begin early July this year and production of oil should commence from November, 2011 onwards. Subject to ANH approval, the farmout agree­ment provides for ACIL to be the Operator of the Block, wherein ACIL will pay 100 per cent of the drilling and initial testing costs of the Phase 5 commitment well in the Block. The Block is located in the prolific Llanos basin, less than 20 kilometers from Colombia’s largest discovered field operated by British Petroleum. The geological set up of the area is comparable to that prevailing in Assam shelf, in the Northeast India. The company is expected to drill one well in phase five to 16,500 feet maximum depth, which is expected to cost between US $ 10 to 15 million per well. The company estimates the un-risked resource potential (recoverable) from the Block to be between 10 to 30 MM barrels.

What have been the thrust areas for Assam Company in the recent times?
The company’s three oil and gas blocks are located in Assam and the company also forayed into overseas oil and gas exploration and production through a farmout agreement with Sismopetrol & R3, for block ANH El Triunfo located in Casanare Colombia. At the same time, the company’s SEZ plans are firmly on course, with the ongoing land acquisition. The SEZ being developed by GHPSL is amongst the first dedicated Hydrocarbon and Power SEZ in India. Gujarat Industrial & Develop­ment Corporation (GIDC) has approved 450 hactares (1112 acres) area for SEZ.

What are the further plans for your power plant project at Bharuch, Gujarat?
This SEZ is planned to be spread over 160 hectare of land in Vilayat Industrial Estate developed by GIDC in Bharuch district of Gujarat wherein Formal Approval has been received. Proposed activities to be undertaken under this SEZ include Wind, Wave, Solar, Bio-fuels & Coal, Power, etc. We have received NOC from Government of Gujarat to setup Gas based combined cycle 1200 MW power plant in Bharuch in 2010 and a letter of commitment from Gujarat State Petroleum Corporation (GSPC) for supply of Gas to Power Plant and Hydrocarbon SEZ. We have also received commit­ment from GIDC for uninterrupted supply of MLD water for proposed power plant and SEZs. The Environment Clearance for SEZs expected in March 2011.

Your take on the present Indian tea industry and its future...
The tea industry globally has witnessed declining production level over the last few years due to erratic weather conditions and pest at­tack in Assam, Sri Lanka and Kenya. Global shortage of Tea is likely in 2011-12 with the global deficit touching almost 120 million kg in 2010. In India alone, tea production fell to 20.93 million kg in January 2011 from 27.09 million in January 2010 (Source: Tea Board of India).

However, domestic per capita consumption of tea is expected to grow at 3-3.5 per cent annually, which is further likely to widen the demand and supply gap. As in with any commodity, higher demand coupled with lower supply is expected to firm up tea prices resulting in better pricing for the industry in near future.

What has been the impact of rising prices and inflation on your top line and bottom line?
Both of our business segments – Tea and Oil & Gas have witnessed spike in the prices, simply on account of higher demand and lower supply. The lower supply relates to the inability of each industry to increase supply. Even though with inflation coming down, the prices of tea are expected to be strong. However, with the on-going crisis in key oil-producing nations, the oil prices are expected to remain strong in the middle term. As a result, it will be very difficult for us to earmark the impact of rising prices and inflation on our topline.

What kind of HR practices being adopted for the better profit per employee and check attrition?
Human resources are an integral and important part of any organisa­tion and for the Company its people are the key to its success and growth. Thus, the Company has put in place sound policies for the growth and progress of its employees. These include well defined performance-based incentive plans and an Employee Stock Option Plan (ESOP) for eligible employees. The Company also recognises the importance of providing training and development opportunities to its people to enhance their skills and experience, which in turn enables the Company to achieve its business objectives.

Tell us about the risks and challenges lie ahead for the company.
The company is exposed to normal industry risk factors of com­petition, economic cycle and uncertainties in the international and domestic markets and credit risk. The Company manages these risks by maintaining a conservative financial profile and by following prudent business and risk management practices.

How are you adding value for your investors?
The two main tools to build, enhance and nurture shareholder value is by scaling up businesses and derisking them progressively. Our value driven approach is reflected in the growing strength of our balance sheet. We have deployed the most stringent internal control measures as well as proactively implemented corporate governance practices that ensure that every action of the management is share­holder value accretive.