Petronet LNG's PAT Tumbled By 42% in Q2FY14

Lower capacity utilization along with high depreciation and interest charges on new Kochi terminal has hit hard the bottom line of Petronet LNG. The bottomline tumbled to Rs 182 crore during Q2FY14 as against Rs 315 crore reported during the quarter ending September 30 2012, showing a decline of 42 per cent. At the same time owing to spurt in price of LNG in international markets and constant decline in the value of rupee has artificially jacked up the top line to all time high during the same period to Rs 9493 crore on QoQ basis, giving a growth of 26 per cent. This clearly indicates the negative impact of rupee depreciation on the business of oil companies and Indian economy, which imports majority of its crude requirement.

As far as capacity utilization is concerned company has operated on 97 per cent of its capacity at Dahej Terminal of 10 MMTPA as volume of re-gasified reached to 123 TBTUs. Due to increase in the cost of LNG demand for it has subdued among its main consumers like fertilizer manufacturer and other industrial consumers and it is declining quarter on quarter basis. Company management is of the view that for the situation to change it is really necessary that some softening in the LNG prices in the international markets coupled with further consolidation in rupee should happen.

On the positive side company has commissioned the new 5 MMTPA LNG terminal in the month of September. In the first year capacity utilization of this plant would be low as there is no pipeline infrastructure but as work is going on in Kochi-Koottanad-Bangalore-Mangalore pipeline network, volume will be ramp up soon. Further work on Company's third LNG terminal proposed at Gangavaram in Andhra Pradesh is progressing satisfactorily as Ministry of Environment & Forests, Government of India, is expected to take up the Company's proposal for award of environment clearance for the project soon. The Company will soon shortlist the potential EPC bidders for the LNG Storage Tanks, Re-gasification and Marine portions of the project.

Also keeping in mind the growing demand of natural gas in India, company is working on the expansion of Dahej terminal to 15 MMTPA and Board of Directors has now approved the award of EPC contract for construction of two storage tanks for Dahej expansion. Also process of evaluation of the second EPC bid for re-gasification package is under evaluation and it is also expected to be finalized soon. Recently board has also approved award of a long-term time charter for fourth LNG vessel which will carry LNG from Gorgon, Australia to Kochi. The delivery of the vessel will synchronize with the start of LNG supply from Gorgon. At the same time it has also been informed by the management second LNG Jetty at Dahej is expected to be commissioned by May'2014.