Monday, December 20, 2010

Assam Co to demerge biz, focus on four verticals.

Q: A couple of days back it was reported that Canoro has stopped production at the Assam Oil field, in which you hold about 40% stake, is that true and what’s the kind of impact?

A: Yes, it is partly true. There were two well which were producing. One of the wells, which is well number 11, which was producing nearer to about 800-900 POE a day, I believe has been stopped because they are looking at the pressure and redoing the well, this is subject to what Directorate General of Hydrocarbons (DGH), what permissions would be given by the DGH. We still have a small production happening.

The production has only stopped as recent as December 3, 2010. So, there is not virtually going to be a major impact because most of the quarters have gone. We will have to see how we go about in the coming year.

Q: But how do you expect resolution of this?

A: We are looking at this favorably because there is some sort of legal dispute going on between us and Canoro and government has intervened in that. As you are aware that government has cancelled Canoro’s PI interest, which is participating interest, to the extent of 60% where Canoro has gone to the Court and has got some sort of stay. We expect a judgment coming out very soon. So, in all these things, this is a positive news and whatever this is being done would not really impact us this year on our balance sheet and hopefully next year we should do very well.

Q: Can you then just get to the acquisition of Duncan Macneill Power & Utilities, what exactly is this strategic fit and how much exactly did you spend on this acquisition?

A: This is not an acquisition as an acquisition, it was one of my earlier interviews with you all we had said the Assam company has now become a mixed bag. So, we are trying to make different verticals for different businesses and the board has approved that we should use different companies for different projects and this was one of the projects which we had.

We are putting up a 1200 megawatt of combined cycles, which is a gas based power plant, which we have acquired the land in Gujarat in a place called Vilayat and we have got necessary inprinciple permission of the gas from GSPC. We have also got the water permission. We have given to the environment for getting the environment clearances. So, that is how we are going forward with the project. Instead of doing it in Assam company where we have tea, oil and other utilities, so we thought of doing it in a separate company because at sometime we would be there in the market.

Q: So when do you expect this entire power project to crystallise?

A: It is on its way of crystallising. We are waiting for the environment clearance and we are waiting for the final clearance from the gas. Once the two is in position, nothing would stop us while starting the project. I think by month of February-March, we should have all those permission available with us subject to whatever government clearances are required.

Q: You made a point about making focused units, any plans of demerging all these various verticals and having them listed?

A: Yes, we are absolutely on this. We see that by having one individual unit the shareholder gets confused because there may be separate shareholders who may be interested in individual verticals, but may not be interested in the mixed bag.

Q: When will this happen, this restructuring?

A: The restructuring it’s already on its way as we have done through this, others are also on its way. We would be taking it to the board meeting. Those are valuation going on. It would happen between now and the next quarter that the company would have more definite plan of looking into more on focused activities. And that would also give us enhanced profitability on each individual sector.

Q: Can you just tell us about which are the demerged entities and which ones would you be looking to list?

A: The verticals at this moment is tea which we would now make it separate at some time. Oil and gas where we are going to do that. The third is SEZ, which is another subsidiary company of Assam Company, which is being delisted and the fourth is the power. So, we are putting it into four different verticals.


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