Aegis Logistics Q4FY18 Concall Summary

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Financial Highlights

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  • Total revenues for the financial year ending 2018 March were Rs. 4,791 crores versus Rs. 3,939 crores in FY17
  • A rise of 22% for consolidated Aegis group revenues seen
  • Total EBITDA for FY18 was Rs. 306 crores versus Rs. 247 crores in FY17, rise of 24% year-on-year. 
  • Profit after tax for the group was Rs. 214 crores versus Rs. 136 crores in FY17, a rise of 57%
  • Earnings per share reached Rs. 6.38 for the year versus Rs. 3.97 in FY17, a rise of 61%
  • Board has approved a Rs. 75 paisa final dividend
  • Total dividend for the year to Rs. 1.25 per share

Business Updates

  • Very strong growth in imports over the next 10 or 15 years
  • Domestic production is operating at full capacity right now
  • All the refineries have the full capacity of LPG right now
  • Domestic production of LPG always will be less expensive than imports
  • Aegis is at the full domestic production of LPG, 
  • There might be some small debottlenecking of refineries, etc. 
  • Already seeing rising imports from the oil companies
  • Trend is clear for rising imports 
  •  Expect to maintain the throughput volumes in Pipavav and Mumbai terminals and more Autogas stations are in the pipeline

Liquid Terminal division

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  • The revenues for the year reached a record Rs. 168 crores versus Rs. 154 crores in FY17. Saw a rise of 9% year-on-year
  • The EBITDA for the year for the division was Rs. 103 crores versus Rs. 91 crores in FY17. A rise of 13% year-on-year
  • Steady overall performance for this division.
  • The future growth will depend on new capacity, in Kandla, Haldia, and Mangalore 

Gas Terminal division

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  • Revenue for the year was Rs. 4,622 crores versus Rs. 3,776 crores in FY17
  • The EBITDA for the division for the year was Rs. 203 crores versus Rs. 156 crores in FY17. A year-on-year rise of 30% in the EBITDA
  • Expect a major boost to the LPG terminal volumes in FY 2019
  • Due to full year operations of the Haldia terminal
  • Haldia terminal was commissioned in Q3 of FY 2018
  • In FY 2019, full year benefit of the Haldia sales volumes will be seen
  • Sales volumes are currently running far above the budget in Haldia. 
  • The one year budget was mentioned to be around 0.5 million tonnes. That would be the full year annualized budget for sales volumes in Haldia. 

LPG volumes

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  • Most important segment in the LPG volumes is the LPG throughput terminal logistics volumes
  • For the year it was 1,742,467 metric tonnes versus in FY17 reached 1,349,899 metric tonnes
  • A rise of 29% in the volumes of LPG handled at the 3 terminals in Mumbai, Haldia and Pipavav
  • LPG sourcing volumes for the year were 1,176,598 metric tonnes versus in FY17 1,043,067 metric tonnes, a rise of 13%
  • The Packed LPG Commercial Cylinder business was 13,504 metric tonnes for the year versus 12,521 metric tonnes in FY17, a rise of 8%
  • Bulk industrial distribution sales of LPG was 40,232 metric tonnes versus 23,539 metric tonnes in FY17, a rise of 71% 
  • Autogas was 24,150 metric tonnes for the year versus 23,217 metric tonnes in FY17, a rise of 4% 
  • Key driver of rising LPG profit in the division was the LPG terminal logistics volumes 

    Autogas Stations

    • All new stations of Autogas are unified petrol, diesel under the Essar brand and Aegis Autogas - Aegis Auto LPG.
    • New stations constructing are selling petrol, diesel under the Essar brand as well as Aegis Autogas. 
    • Dealers are selling 3 products rather than 1
    • Around 11 of the old 107 stations have already been petrol
    • Diesel has already been added and continuing to see each of the current 107 stations more can be petrol and diesel. The main benefit is that getting more traffic in the station
    • Apart from LPG, petrol and diesel vehicles also coming through
    • That is the focus for the future that all new Autogas stations of Aegis are under unified stations
    • In the Essar petrol stations around 5 or 6 of Aegis Autogas pumps have been put
    • A limited amount the main focus will be on our all Autogas network to put Essar branded petrol and diesel

      Top-Line Growth

      • It is misleading because international LPG prices go up and down
      • Focus should be on actual metric tonnes rather than LPG prices because they go up and down
      • In Q1 because of rising oil prices and gas prices a sudden jump is there 

      LPG import

      • There are fluctuations from time-to-time in import volumes
      • Do not see that as any major trend, major change in trend
      • The trend is very strong import growth continued for the year because of the penetration of LPG rising in the rural areas under the Ujjwala Scheme, etc. 
      • In Aegis imports Haldia has very strong imports, etc. 
      • When the oil companies schedule their deliveries of LPG imports or domestic production, there are fluctuations with that
      • Expect continued growth, strong growth in imports

      Domestic Production

      • Fluctuates depending on the production schedule
      • Domestic production expansion will be flattish or low single-digit kind of growth
      •  There is limited capacity on domestic production
      • The incremental growth in satisfying the increased LPG demand is going to come from imports
      • Quarter-by-quarter, there are sometimes fluctuations
      • Trend is very strong growth in imports as the Government of India continues to increase penetration particularly in the rural areas of LPG

      LPG prices

      • International LPG prices are rising
      • Impact on demand is not there due to LPG prices rising
      • Even though prices are rising, they are still from a fairly low base
      • Demand continues to be strong and expect that to continue.

      Competition

      • Mundra is active on building an LPG terminal.
      • There is enough imports which are projected to happen in West Coast India
      • Going to continue to build for that

      Liquid profitability

      • Different product mixes, chemicals, depends on trade flows
      • Sometimes the more chemicals are bought which are higher values, sometimes more bulk petroleum
      • Should not think too much into quarter-by-quarter figures of operating profit
      • It remains a steady basis
      • Until new capacity on stream,it is a steady business
      • The terminals of Mumbai, Kochi, Haldia are all full and operating at full capacity
      • Pipavav remains at roughly around 20% capacity utilization, that has not changed
      • It is a steady business and there are fluctuations
      • Focus for the future is bringing the new capacity of 100,000 kiloliters in Kandla
      • There is 25,000 kiloliters in Mangalore and the capacity expansion in Haldia of 35,000 kiloliters
      • Full operation in FY 2019 that will significantly add to revenues and profit
      • Gave Liquid terminal marketing team a very demanding target for the next 2 years in terms of revenues 

      Haldia LPG pipeline

      • Latest information is IOC is making good progress on that pipeline that this is the Paradip to Durgapur pipeline via Haldia, 
      • They are making good progress on that pipeline
      • Achieving 2.5 million metric tonnes is not dependent on that pipeline
      • Aegis can handle 2.5 million tonnes both by road and some other work to be done on future Rail movement of LPG
      • Pipeline will come and that will only enhance evacuation possibility
      • HPCL is building the largest bottling plant in Asia in Panagarh
      • They are actually very close to completing that bottling plant
      • Is great news for our progress towards that 2.5 million tonnes figure
      • Still have to lay pipelines from the Panagarh to Haldia terminal which they have committed
      • They have still not even started working on that
      • Aegis can still move by road LPG to that bottling plan
      • After 6 months of operation in Haldia Aegis is so far above the budget in Haldia
      • It is primarily HPCL and there is also BPCL cargoes which are coming in
      • They have completely stopped transporting any LPG from Vizag all the way to the Northeast
      • BPCL is also bringing good cargoes into Haldia. 
      • Growth in Haldia in this year is going to power Aegis earning overall as we have said but much above budget
      • Current run rate is far above the budget far above
      • Figure will be talking about between 3 years to 5 years from start of operation

      Pipavav Liquid Terminal

      • Focus has now shifted to Rail movement of LPG from Pipavav
      • Have been negotiating with Gujarat Pipavav Port
      • Decided that was the priority rather than Liquid Rail movement
      • There is a lot of scope for increased LPG throughput movement by Rail in Pipavav
      • Once contract agreement is signed with Gujarat Pipavav on LPG Rail movement, will again talk to them about Liquid Rail movement
      • Expansion was completed some quarters ago and it is going very well
      • Maintaining good volumes in Pipavav and utilizing all the tanks that put up to in storage.
      •  Also storing other gases like butylene for Reliance in Pipavav
      • Can add another 2-3, 4 but it is always dependent on when the volumes are there
      • Breakthrough on Rail movement in Pipavav would then determine the future.

        Mumbai Terminal 

        • The throughput volumes cannot increase beyond 1.1 million tonnes
        • Everything is on road transport except for the Reliance contract on propane which goes to the pipeline because there is only road tankers can be handled on a daily basis
        • That is the current run rate that doing right now in FY 2019
        • Chakan pipeline is completed to Poona can start moving products in that 1.2 million tonne capacity pipeline
        • That is the only way the company can raise the throughput in Bombay (Mumbai) towards 1.4 million tonnes
        • Completed interconnection of 2.8 kilometers in December 2016

        Timeline On The New Terminal In The West Coast

        • There is no timeline
        • Going for meetings and negotiations on deals are happening
        • Take time because these are very-very large projects deal 

          Demand CAGR

          • Expect to be somewhere between 6% to 8% demand growth
          • Areas like Northeast, it is going to be higher because the penetration is lower
          • Being governed by how fast the public sector companies IOC, HPCL, BPCL are building out that rural penetration distribution network in the Ujjwala Scheme
          • They are growing as fast as possible 

          Aegis Logistics Market Share for Imports

          • That is a dramatic increase being talked about for the last few years which is expected to be 25% to 30% market share
          • Not only the new Haldia terminal but perhaps the next couple of deals
          • Dramatic increase from currently around 15% of handling of LPG imports to around 25% to 30% 
          • It depends on building that terminal capacity the extra terminal capacity

          Tax Rate

          • All Indian Accounting Standards has been implemented as of this year
          • Target an effective tax rate of around 20% to 22% for next financial year
          • Pretax profit irrespective of the increase in the effective tax rate will be growing well
          • Rising post-tax profit in the current year even though there is an increase in the effective tax rate.

          Future Outlook 

          Aegis Logistics Q4FY18 Liquid Capacity expansion.png
          • The growth in revenues and profits will come from the major capacity increases in the following 3 projects.
          • • Kandla   
            • First, the 100,000-kiloliter project in Kandla. 
            • Project was completed in Q4 of FY 2018
            • Project is complete, waiting for the final permission to fully start the operations.
          • •  Mangalore Port   
            • The second project is a 25,000-kiloliter project in Mangalore Port. 
            • Project should be completed in Q1 of FY 2019 and then, the final permission to start operations
          • •    Haldia
            • The third project the 35,000-kiloliter expansion in Haldia
            • Expected to complete project in the first-half of FY 2019
            • Q4FY18 was much better than Q3FY18 for Haldia port
            • Current run rate, is far above 40,000 tonnes to 50,000 tonnes per month budget
            • Budget was 0.5 million tonnes for the first full year operation
            •  3 years to 5 years is a realistic time frame to achieve 2 mn to 2.5 mn 
          • There was very good throughput in all the terminals as far as Haldia, Bombay (Mumbai), and Pipavav
          • Expect that resulting in 29% growth in overall LPG volumes in those 3 terminals
          • Will maintain the full kind of full results in Pipavav and Mumbai going ahead
          • Can increase throughput further is that Uran pipeline connection
          • Waiting for HPCL to finish their Chakan project, might be the end of calendar year 2018 to complete that project
          • Connected into that Uran pipeline some time ago but they are not using that
          • Road evacuation from the Mumbai terminal for the LPG
          • Expect greater volumes in Mumbai
          Aegis Logistics Q4FY18 LPG expansion.png
          • Growth in FY19
            • Lot of it depends on Haldia volumes
            • Bombay (Mumbai) and Pipavav to continue the current run rate which is
            • Going to be the major incremental volume growth on last year’s 1.74 million tonnes
            • The growth rate depends on whether the customers tender and whether they on their own requirements and whether they import themselves or whether they tender more
            • The company makes $3 to $4 per tonnes in Singapore
            • If IOC, HPCL, BPCL, want to bring product then bidding would be done
            • If they find that they can import themselves through the national oil companies of Saudi Aramco and others, cannot force them to come up with them
            • Main focus is how much LPG can be handled in terminal
            • FY 2019 will see continued strong growth in imports for India as a whole and in Aegis terminal
          • Scenario by FY 2020
            • The gap is rising between domestic production and domestic consumption, which means more imports
            • Gap is going to be increasing because domestic production is stagnant
            • More imports mean more terminals
            • Indian Oil is trying to build 1 terminal in Kochi, which is a 30,000 terminal
            • Got into some problems with National Green Tribunal
            • BPCL is trying to construct 1 more terminal in Haldia a 30,000 tonnes terminal which is under construction
            • Apart from those 2 public sector projects, only Aegis is building LPG terminals
            • Currently planning another 2 LPG terminals in collaboration with the public sector
            • Bulk of the incremental import capacity is going to come from either public sector or Aegis
            • India should then be able to handle the imports by FY20

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          Other Concall Summaries of Aegis Logistics

           

           

          Aegis Logistics Q3FY18 Concall Summary

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          Financial Highlights

          • Total revenues for Q3 FY18 were Rs.1,443 crores versus Rs.1,248 crores year earlier that is the rise of 16%.
          • The total segment EBITDA for the company was Rs.83.94 crores versus Rs.69.77 crores year earlier that is a rise of 20% for the Q3 FY18
          • Profit after tax for the company was for the group was Rs.56.44 crores versus Rs.41.43 crores year earlier that is the rise of 36%
          • Profit after tax after minority interest for Q3 FY18 was Rs.53.54 crores versus Rs.36.86 crore year earlier a rise of 45%.
          • EPS for the Q3 FY18 was Rs.1.6 versus Rs.1.1 which was up 45%
          • Earnings per share for the 9M FY18 reached Rs.4.47 versus Rs.2.67 nine months year earlier so that is the rise of 67% at this year so far nine month cumulative in earnings per share

          Segment analysis

          Liquid Terminal Division

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          • Revenues for the Q3 FY18 were Rs.40.3 crores versus Rs.39.33 crores year earlier so steady.
          • The EBITDA for the division was Rs.24.58 crores versus Rs.23.56 crores steady again.
          • The Haldia liquid terminal remains strong and that the new Kandla liquid terminal the project is almost complete.

          Gas terminal division

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          • Revenues for the Q3 FY18 were Rs.1,401.8 crores versus Rs.1,208.7 crores 16% up year-on-year. 
          • EBITDA was Rs.59.36 crores for Q3FY18 versus Rs.46.21 crores year earlier that is a strong rise of 28%

          Sales volume analysis

          • The total throughput volumes handled at three terminals was 542,741 metric tons versus 433,725 metric tons year earlier that is a rise of 25% year-on-year
          • It includes whole LPG handled at our terminals including the public-sector throughput, Reliance contract throughput as well as our industrial distribution


          Projects

          • This was the 100,000 kilolitre project around 83,000  kilolitre is already complete and the balance 13,000 kilolitre should be completed in the next month

          Sourcing volumes

          • LPG sourcing volumes were 305,990 metric tons versus 350,418 year earlier that is a decline of 13% in LPG sourcing volumes
          • It is just that this is the time of year when they are going to the new tenders for 2018. So until that get sorted out I think should they delay some of the volumes until the next year.
          • Packed LPG cylinder volumes for Q3FY18 were up 9% that is 3,496 metric tons versus 3,207 tons earlier. 
          • Bulk industrial distribution was 11,546 metric tons versus 5,647 metric tons a rise of over 100%.
          • Auto gas sales were 6,015 metric tons versus 5,944 metric tons year earlier so steady. 
          • In Q3FY18 34,000 metric ton was the throughput in Haldia and it is ramping up rapidly
          • The Bombay and Pipavav are at full capacity- 283,000 tons in Mumbai and 225,000 tons of throughput in Pipavav.
          • The performance at Haldia is better than expected

          Product mix

          • Some changes in product mix depending on which cargo, which products and we have different charging for different product so you might see some changes in revenues and margins because depending on which products come in.
          • Bulk petroleum we charge less than certain chemicals specialty chemicals, etc.
          • The nature of the business is that only then you increase revenues when you are operating at full capacity
          • In LPG, you need to build up more capacity if you want to see greater revenue and earnings

          Industry outlook

          • India importing roughly about 10 million tons of LPG
          • By FY35 it will be about 16- 20 million tons
          • The company’s intention is to take around 25% to 30% market share of India’s imports.
          • The company produce these terminals for the next 30-40 years, it is difficult to predict the market demand beyond 2035, but the company will try to cater to the demand

          Goa port demand

          • There is a possibility of a considerable demand as much as half a million tons of Demand
          • This could be met from Goa port because this caters to the  bottling plants of the oil companies particularly in Northern Karnataka as well as Goa
          • Some of that is being fed from Bombay some of which is being fed by Mangalore port

          Ujjwala scheme

          • LPG consumption is booming including from below the poverty line customers all over the country including in the Northeast where we have just started in Haldia.
          • Target increased to 80 million customers and they have already reached 50 million
          • The scheme will reach the poor eventually- they cannot buy a 14.2 kg cylinder
          • Aegis retailer division or even the public sector can offer them smaller cylinder where the ticket cost is much smaller.
          • Aegis is now selling 4 kg and we are even selling 2 kg
          • The most important thing is get the poor people using LPG, get them connected, get them used to it and then as people become more prosperous, they will use more of it.
          • We should take this as a long term perspective as the government want every household to be using LPG and Aegis just going to have a strong positive impact on demand.

          Company Outlook

          • 100,000  kilolitre liquid terminal in Kandla will start
          • Additional land available we can expand more than 100,000 kilometers in the future
          • Haldia LPG volumes sales started in Q3 FY18 and we will see a big jump in Q4 FY18.
          • Pipavav and the Mumbai terminals are concerned both are operating at full capacity and we expect to maintain these high volumes through 2018.
          • The Kandla and the Haldia expansion, you know we have a 50,000  kilolitre expansion going on in Haldia liquid and in the Kandla 100,000  kilolitres, these are going to be main growth for the liquid revenues in the next year.
            Haldia project
          • 500,000 to 600,000 metric ton budget in terms of volume so that was a 12 month- from Q3 FY18 to Q3 FY19
          • Over the next 5 years, we reach 100% capacity of utilization of 2.5 million tons
            Annualized throughput capacity
          • Mumbai throughput was almost on 2,83,000 tons
          • The company is operating at full capacity in Mumbai at the moment, probably more than full capacity and it is difficult to sustain that every single day for 365 days, so we do not annualize Q3 FY18

          Tendering status for the sourcing business

          • Update in the next quarter

          Plans for Kandla liquid terminals

          •  No updates for now, till its get operational

          Updates on the new projects

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          • 1st one is getting closer to kind of contractual stage.
          • The project will be the largest LPG terminals that Aegis has done in its whole history
          • 2nd one is in negotiating phase
            HPCL Uran Chakan pipelone
          • The HPCL part would be done in next 3-6 months, probably

          BPCL terminal on the East Coast

          • No updates

          IOCL

          • Constructing polypropylene plant in their Paradip refinery
          • It effectively takes away part of their LPG which currently they must be distributing in the eastern region.
          • Bulk of the Haldia market is really going to be just imports of LPG through the terminals in Haldia rather than from Paradip.

          Customer strategy

          •  Focusing on existing customers
          • Continuing expanding the auto gas network

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          Aegis Logistics Q1FY18 Concall Summary

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          Financial Highlights

          • Total revenues for Q1 areRs. 856 Crores versus Rs. 739 Crores, 15.8% growth on YoY basis.
          • Total segment EBITDA for Q1 isRs. 66.8 Crores versus Rs. 56.3 Crores, 18.7% growth on YoY basis.
          • Profit before tax isRs. 49.1 Crores versus Rs. 38.6 Crores, 27.2% growth on YoY basis.
          • Profit after tax for the Company isRs. 46.8 Crores versus Rs. 31.7 Crores, 47.6% growth on YoY basis.
          • Profit after tax after all minority interest isRs. 40.4 Crores versus Rs. 27.5 Crores, 47% growth on YoY basis.
          • Q1FY18 is steady in terms of financials but in the second half FY18 from Q3 onwards company expects a steep jump in profits as the new projects like the Haldia LPG terminal will be fully operationalized.

          Liquid Terminal Division

          • The revenues for quarter one areRs. 42.7 Crores versus Rs. 37.6 Crores, 13.5%growth on YoY basis.
          • EBITDA for Q1 for liquid terminal division isRs. 27.9 Crores versus Rs. 21.1 Crores, 32.2% growth on YoY basis.
          • The growth driver is the new capacity which is commissioned in Haldia, which is helping to boost the profits.
          • Other terminals are doing well with the exception of Pipavav,which is still reasonably soft but Q1 FY 2018is better than Q4in FY 2017.
          • Incremental increase in EBITDA in the liquid terminal division of 32% mostly accounted for by the very good performance of the new capacity in Haldia.

          Gas Division

          • Revenues for Q1 areRs. 813.3 Crores versus Rs. 701.7 Crores, 11.6% growth on YoY basis.
          • EBITDA for gas division isRs. 38.9 Crores in Q1 versus Rs. 35.1 Crores, 10.8% growth on YoY basis.
          • LPG throughput volumes in two terminals in Mumbai and Pipavav, in Q1 is 301.5 thousand metric tonnes versus 278.6 thousand metric tonnes, 8%growth on YoY basis.
          • The reason behind not so spectacular growth is company not yet got Haldia coming through which should be coming through in Q3.
          • Sourcing volumes for gas is also up 10% on on YoY basis.
          • AGI sold in Q1 is 232,612 metric tonnesversus 211,371 metric tonnes, 10% growth on YoY basis.
          • Packed LPG Cylinders business is basically static, 2,946 metric tonnes in Q1 versus 2,927 metric tonnes, YoY basis.
          • Bulk industrial sales of LPG industrial distribution is very good in Q1 as  it is 8,836 metric tonnes versus 5,231 metric tonnes, 69% growth on YoY basis.
          • Auto gas is 6,204 metric tonnes in Q1 versus 5,763 metric tonnes, 7.7%, growth on YoY basis.
          • Mumbai debottlenecking is done to the extent of one part, which is the Uran pipeline connection, company completed last December nine months ago.
            • Company expected Chakkan pipeline to be ready by October 2017 but HPCL says that now it is delayed up to the March 2018.
            • Once  it is completed (expected in next financial year), it is expected that HPCL will start using this pipeline facility and cutting down road traffic.

          Capex And Expansion Plans

          • New capacity in Haldia Phase II which is 35,000 kiloliters will be completed in Q1 of FY2019
          • New capacity in Kandla 100,000 kiloliters, will come on stream in Q3 and Q4, which will boost the liquid terminal revenues in the second half of the year.
          • For gas capacity, company is adding another 10,200 metric tonnes of LPG capacity in Pipavav.
          • Half of this expansion is completed i.e. three spheres of the six spheres are completed, the balance three spheres will be completed by the end of this September ’2017.
          • This expansion will lead to exponential growth in revenues from Q3 & Q4.
          • LPG Terminal Projects
            • Company is working on the next cycle of LPG terminal projects after Haldia.
            • The company is working on at least two LPG projects going forward and it is reaching a stage where company is getting ready to probably start work .
            • It is expected to put these LPG projects before Aegis board very soon, possibly in next board meeting.
            • Company is very near to signing its next LPG project.
            • Next project is still a little further away as company is still doing some commercial negotiations.
            • Company is making good progress on those next two projects and it will bring it to the board of Aegis for approval and after that details like of size of capacities, location etc will be shared, but it is for the future earnings call.
            • Company has received a bulk of the environmental permissions already for the said two projects
            • Company has already identified three possible anchor customer for the new LPG projects.
            • For new projects company is looking for pipeline connectivity similar to Haldia and also for rail & road connectivity.
            • Working with a public sector client for gas project in South India.

          • LPG Bottling Plant in Haldia

            • Though the Haldia project is a bit delayed but company has received in written from HPCL that HPCL is willing to use Hadldia facility asap.
            • Company has not yet been able to get a sourcing agreement and throughput which will be done at Haldia as HPCL is concernedthat they have not released the tender for the supplies for Haldia.
            • Throughput step up jump from the coming quarters will be much more than the sourcing jump.
            • In The Haldia Probject Company’s subsidiary has been financed through loans by the holding companies so once the subsidiary company issues new shares and gets the money from the JV partner ITOCHU it will be the used to pay back the loans of holding company so there will be no tax effect
            • For Haldia LPG project, the mechanical completion is done and a few days ago company started the commissioning of the project with the gassing up process and that is going on.
            • Though the Haldi a LPG project is delayed, company expects to complete commissioning by end of September’ 2017.

          Future Outlook

          • For liquid terminal division, company expects continued steady growth for quarter two and bigger revenues and profits in the second half of the financial year.
          • ITOCHU deal is expected to be completed as per the legal agreements next month in October, they will be remitting a Rs. 250 Crores for that equity stake.
          • Company expects a very large jump in profits when the new projects of the Haldia LPG terminal, the Pipavav, LPG terminal, the Kandla liquid terminal, Haldia liquid expansion etc., are commissioned in September.
          • HPCL is an anchor customer in Haldia.
          • Company has already identified and reached an agreement in principal with the anchor customer however not yet signed agreement.
          • Since price of petrol is being revised daily, linkage of prices of CP, LPG does not exist anymore. Resulting better margin for auto gas.
          • Provisioning of taxes is low due to implementation of Ind-As and write back of deferred tax.
          • Due to change in income tax rules, change in base year company will see non cash component in the range of 5-6 crores for all quarters of FY 2018.
          • Current throughput at Mumbai about 80000 tonnes a month, expected to grow once Mumbai-chhakan pipeline will be completed. It is expected to grow to 1.3-1.5 million tonnes per year from currently 1million tonnes.
          • As Reliance is planning to replace propane by ethane to there is a change in opportunity for the Aegis and Aegis will propose backup plan to reliance which should be acceptable to reliance.

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          Aegis Logistics Q4FY17 Concall Summary

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          Financial Highlights

          Aegis Q4FY17 Financials
          • The revenues for 2016-'17 financial year was Rs. 3,938 Crores versus Rs. 2,213 Crores year earlier, rise of 78% yoy. 
          • Total segment EBITDA for the year was Rs. 246 Crores versus Rs. 225 Crores year earlier, rise of 9%.
          • Profit before tax was Rs. 172 Crores for the year compared to Rs. 153 Crores year earlier, which is a rise of 12%, and net profit after tax was Rs. 134 Crores as compared to Rs. 126 crores year earlier, rise of 6%.
          • Liquid terminal division revenues for FY17 was Rs. 154 Crores versus Rs. 170.6 Crores year earlier, and the EBITDA was Rs. 90.7 Crores for FY17 as compared to Rs. 102.4 Crores year earlier.
          • For gas division, revenues in FY17 was Rs. 3,779 Crores versus Rs. 2,043 Crores year earlier. EBITDA for the year FY17 was Rs. 155 Crores versus Rs. 123 Crores, a rise of 26% yoy.
          • As per the details of investor release, ITOCHU will invest Rs. 250 Crores approximately US$39 million
          • Aegis will use part of funds from ITOCHU to significantly accelerate the building of next two LPG terminals, which will most likely be on the West Coast of India.
          • A change in government pricing for auto LPG and follow where they used to have the auto LPG pricing 40% cheaper than petrol but now started doing 50% cheaper.
          • As Pipavav is concerned, currently expecting at 1.4 million tonnes, and are probably somewhere in the range of 800,000 to 1 million tonnes.
          • Strategic sense made for both the companies (ITCHOU & LPG) which also makes financial sense in good valuation and will use part of this money Rs. 250 Crores to invest in other Aegis projects like the two LPG terminals 

          Key Company Highlights

          • ITOCHU of Japan, will acquire new shares and take a 19.7% stake in subsidiary HALPG called Hindustan Aegis LPG, which is the Aegis subsidiary, developing and building the LPG terminal in Haldia
          • The negotiation carried out with ITOCHU in Haldia on the valuation, was based on discounted future cash flows of their project, taking into account number of years of projections which is around 10 years of future cash flow projections
          • ITOCHU is the second largest LPG company in the world
          • In quarters '16-'17 Aegis Group International Singapore, directly doing the sourcing business and was no more businesses in Hindustan Aegis which is also the only business in Haldia LPG terminal.

          Capex

          Aegis capex
          • The whole industry starting from the oil national companies is in a rush to build LPG import capacity.
          • Using Uran, Aegis interconnections into Uran-Chakan pipeline, once infrastructure is ready at Chakan then the total capacity of pipeline is 1.2 million tonnes a year.

          Growth

          • The Aegis Auto Gas business, reached 23,217 metric tonnes for the FY17 versus 21,680 metric tonnes, a rise of 7.1% in sales volume and all the LPG segments growing and contributing to the bottom line, resulting in the good increase in the gas division EBITDA last year
          • Packed LPG Cylinders business under the brand name Aegis Puregas, achieved 12,521 metric tonnes for the year FY17 versus 11,904 metric tonnes year earlier, a rise of 5.2%
          • The significance of the ITOCHU deal announcement that is going to speed up Aegis's process even further because the infusion of these funds is only going to speed up the process of building and the next couple of LPG terminals.

          Key Operational Highlights

          • The Kandla and Haldia capacity expansion along with very strong business in Mumbai terminals and the existing terminal in Haldia and Kochi these are all doing well
          • The proposed deal with ITOCHU for 19.7% stake in the Haldia LPG project and once deal is completed, will significantly speed up Aegis's next phase of expansion in the LPG business specifically for the next two LPG terminals
          • According to Kandla, Pipavav is a new port, in which its difficult to persuade customers to start out and expect this 100,000 kiloliters when it is commissioned from day one to be fully occupied.

          Strategy

          • With BPCL, HPCL had one major contracts with all the other customers and the target for AGI, Aegis Group International in Singapore of 1 million tonnes
          • Planning 100 turns a year in Haldia, which is 100 times, 25,000 Crores to 2.5 million tonnes which already achieving in Mumbai
          • Pipavav, Mumbai started selling gas into North East India through their joint venture in Singapore AGI

          Other Updates 

          • Haldia is over 90% capacity utilization and Pipavav unfortunately is still weak but the Q4 is below 20% capacity utilization
          • The demand forecast for India are much higher than was projected earlier because the penetration of LPG is increasing at a much more rapid pace due to new government schemes like the Ujjwala scheme for below the poverty line

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