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.


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