TOP CORPORATE NEWS : 24 Apr, 2017

corporate-news

TOP Headlines:-

• ONGC aims to increase gas production by 30% to 30bcm
• ACC Q1: Higher operating costs negates improvement in volume
• Government levies 6% excise duty on biodiesel
• USFDA issues warning letter for Divi’s labs Vizag unit II
• Ultratech Cement Q4FY2017: Higher energy cost affects earnings

TOP CORPORATE NEWS : 24 Apr, 2017

ONGC aims to increase gas production by 30% to 30bcm
Oil and Natural Gas Corporation (ONGC) aims to increase its gas production by 30% to 30bcm (from 23bcm currently) in next 3-4 years at a total investment of $11 billion as per media reports.
ONGC expects its Daman offshore fields to be fully ramped in 2018 while Krishna Godavari basin blocks, Ratna and R-Series fields are expected to commence production by 2019.
The company targets to start production from its CBM blocks in Jharkhand in 2020. We highlight here that this news in media from quite some time – Long term positive for ONGC.

ACC Q1: Higher operating costs negates improvement in volume
ACC Q1CY2017 result highlights (standalone): Higher operating costs negates improvement in volume and realisation
The standalone net sales for the quarter grew by 8.1% YoY to Rs3,174 crore (net of excise duty). The growth in revenue was on account of higher volumes (up by 3.8% YoY) and better realization (up 4.2% YoY). The company registered better volumes as the impact of demonetization declined and higher sales from expanded capacity at Jamul and Sindri plant.
During the quarter OPM declined by 190 basis point YoY to 13.1%. Hence, Ebidta/tone declined by 9.0% YoY to Rs631. Higher power & fuel cost (up 10% YoY on per tone basis) and freight cost (up 9% YoY) affected overall operating margins.
Reported earnings for the quarter stood at Rs211.5 crore as against Rs234.6 crore on account of increase in Interest (up 34% YoY) and depreciation (up 15% YoY).

Government levies 6% excise duty on biodiesel
OMCs (IOCL, BPCL and HPCL): The government has levied 6% excise duty on bio diesel (vs 0% previously) and thus the price of bio diesel is likely to increase by Rs9/litre as per media reports.
The OMCs are mandated to blend bio diesel with regular diesel at 20% (vs 5% blending currently) and thus increase in price of bio diesel would be negative for OMCs as price of bio diesel may become higher than regular diesel price of Rs62.55/litre in Mumbai.

USFDA issues warning letter for Divi’s labs Vizag unit II
Divi’s Lab: USFDA has issued warning letter for Divi’s labs Vizag unit II, to which, company will respond with a detailed plan.
This is neutral for Divis; Unit II has already got an Import alert with certain product exempted.

Ultratech Cement Q4FY2017: Higher energy cost affects earnings
Ultratech Cement Ltd Q4FY2017 result – Higher energy cost affects earnings despite improvement in realization.
Ultratech posted standalone net sales (net of excise duty) of Rs6,595 crore (up 3% YoY) for Q4FY2017 on back of higher realization while demand remained muted during the quarter.
The domestic grey cement volume (cement + clinker) almost remained flat YoY at 13.4 million tone (up 21% QoQ). The average blended cement realization grew by 5% YoY to Rs4940 per ton.
Despite improvement in realization operating Profit Margin (OPM) contracted by 213BPS YoY on account of increase in fuel cost (up by 16% YoY on per tone basis) leading to overall increase in operating cost per tone (up 8% YoY). Consequently, EBIDTA per tone decline by 6% YoY to Rs957.
Further, higher interest expense (up 36% YoY) and higher effective tax rate (31.8% against 25.9% in Q4FY2016) more than offset higher other income (up 71% YoY) leading to decline in adjusted net profit (down by 10% YoY) at Rs702 crore.

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