Sesa Goa has announced its fourth quarter results. The company's Q4 consolidated net profit was up 21% at Rs 1,462 crore versus Rs 1,213 crore, year-on-year, YoY. Its consolidated net sales were up 40% at Rs 3,915 crore versus Rs 2,800 crore, YoY.
The managing director of the company PK Mukherjee in an interview on CNBC-TV18, spoke about the company’s third quarter results. He also spoke about the outlook of the company going forward.
Below is a verbatim transcript of his comments on CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. For complete details watch the accompanying video.
Q: Your realizations for iron ore were about USD 104 this quarter. Take us through the market dynamics now and whether you think this level of realization is sustainable?
A: Yes, for the last couple of months we are seeing that the demand is quite strong. We don’t have any reason to believe that in the near future there is any significant change in market sentiment. While sometimes the price goes up and down within a rangebound way but we feel that this sort of market will hold on.
Q: Are you confident for FY12, Sesa Goa should be able to hold triple digits in terms of realizations?
A: As we see today, yes.
Q: You mentioned that sales are going to be half and half between spot and fixed. Where is it that spot rates are trading now and at what rates has Sesa Goa been able to lock-in for the longs?
A: What I said was that our sales contract - 50% is purely spot contract and 50% more or less is what we had done last year on a long-term contract basis. But the price mechanism is not fixed for a long-term contract basis. Previously it used to be annually changed, now long-term contracts that is contracts of Japan and Korea or Europe those are changing on a quarterly basis.
Some of the long-term contracts which we have entered into, in the last couple of years, the price mechanism there also is based on the spot market. So, currently, the whole 100% is more or less on real time price.
Q: What are your expectations for volume growth in FY12 given that you will now start shipments from Karnataka etc what kind of volumes should we expect to see?
A: If Karnataka exports are allowed to happen freely from now onwards, we expect a volume growth of 15-20% in FY12.
Q: Your tax rate was also very high this quarter which surprised a few people. Are we to expect at 35% tax for FY12 as well?
A: The 35% is not the rate one can achieve at any point of time unless there is a negative depreciation effect. This quarter it has gone up because the benefits were coming from the export business. We are expecting on a QoQ basis, that anytime the Karnataka export ban would be lifted but that has not happened.
So for that the corresponding hit has come in this quarter. That is why the effective tax rate only for the quarter has gone up. Going forward, we can expect in FY12 a 28-29% effective tax rate considering the depreciation benefit that we are expecting this year out of our capex.
Q: Post the money that Sesa Goa had to spend both for the Petronas stake and for the open offer on Cairn, how much cash on books remains for Sesa Goa?
A: As of now, there is roughly about Rs 4,000 crore of cash. March 31 we had roughly Rs 10,682 crore after making the payment of Bellary. Out of Rs 10,682 crore, we have already spent Rs 6,600 crore odd for 10.4% deal of Petronas. So the balance is remaining in the books right now.
Q: How much has Sesa Goa been able to get from the open market in that open offer?
A: Open offer result will be out only after April 30. I don’t think it will be right on my part to give daily scorecard on this account.
Rate hikes, non-linear growth to drive profit: KPIT Cummins
The managing director of the company PK Mukherjee in an interview on CNBC-TV18, spoke about the company’s third quarter results. He also spoke about the outlook of the company going forward.
Below is a verbatim transcript of his comments on CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. For complete details watch the accompanying video.
Q: Your realizations for iron ore were about USD 104 this quarter. Take us through the market dynamics now and whether you think this level of realization is sustainable?
A: Yes, for the last couple of months we are seeing that the demand is quite strong. We don’t have any reason to believe that in the near future there is any significant change in market sentiment. While sometimes the price goes up and down within a rangebound way but we feel that this sort of market will hold on.
Q: Are you confident for FY12, Sesa Goa should be able to hold triple digits in terms of realizations?
A: As we see today, yes.
Q: You mentioned that sales are going to be half and half between spot and fixed. Where is it that spot rates are trading now and at what rates has Sesa Goa been able to lock-in for the longs?
A: What I said was that our sales contract - 50% is purely spot contract and 50% more or less is what we had done last year on a long-term contract basis. But the price mechanism is not fixed for a long-term contract basis. Previously it used to be annually changed, now long-term contracts that is contracts of Japan and Korea or Europe those are changing on a quarterly basis.
Some of the long-term contracts which we have entered into, in the last couple of years, the price mechanism there also is based on the spot market. So, currently, the whole 100% is more or less on real time price.
Q: What are your expectations for volume growth in FY12 given that you will now start shipments from Karnataka etc what kind of volumes should we expect to see?
A: If Karnataka exports are allowed to happen freely from now onwards, we expect a volume growth of 15-20% in FY12.
Q: Your tax rate was also very high this quarter which surprised a few people. Are we to expect at 35% tax for FY12 as well?
A: The 35% is not the rate one can achieve at any point of time unless there is a negative depreciation effect. This quarter it has gone up because the benefits were coming from the export business. We are expecting on a QoQ basis, that anytime the Karnataka export ban would be lifted but that has not happened.
So for that the corresponding hit has come in this quarter. That is why the effective tax rate only for the quarter has gone up. Going forward, we can expect in FY12 a 28-29% effective tax rate considering the depreciation benefit that we are expecting this year out of our capex.
Q: Post the money that Sesa Goa had to spend both for the Petronas stake and for the open offer on Cairn, how much cash on books remains for Sesa Goa?
A: As of now, there is roughly about Rs 4,000 crore of cash. March 31 we had roughly Rs 10,682 crore after making the payment of Bellary. Out of Rs 10,682 crore, we have already spent Rs 6,600 crore odd for 10.4% deal of Petronas. So the balance is remaining in the books right now.
Q: How much has Sesa Goa been able to get from the open market in that open offer?
A: Open offer result will be out only after April 30. I don’t think it will be right on my part to give daily scorecard on this account.
Rate hikes, non-linear growth to drive profit: KPIT Cummins
Tags: Sesa Goa, PK Mukherjee, Udayan Mukherjee, Mitali Mukherjee, Karnataka exports, Petronas, Cairn
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