The Aegis Group is engaged in terminalling of oil products, chemicals and liquefied gases and sourcing as well as retailing and distribution of LPG. These areas require specialized infrastructure at key ports such as specialized berths, fire-fighting equipment, pipelines, transit storage and handling facilities and, above all, safe and environment-friendly handling practices. Fortunately the Aegis Group is well positioned in this regard.
The oil and gas industry comprises three major components – upstream, midstream and downstream. The upstream segment comprises exploration and production (E&P) activities, the midstream segment is involved in storage and transportation of crude oil and gas and the downstream segment is engaged in refining, production of petroleum products and processing, storage, marketing and transportation of the commodities such as crude oil, petroleum products and gas. The group is engaged in both the midstream and downstream segments.
As energy consumption increases in India, growth in demand is likely to require sophisticated and safe logistics services. Deregulation of the oil sector will lead to new entrants in petroleum retailing and bulk marketing, involving integrated logistics services. The Aegis Group also services the terminalling requirements of bulk liquid chemical importers and exporters through its five bulk liquids terminals.
Liquid Logistics Division
Liquid terminalling revenues were at an all-time high of Rs. 153.40 crores (previous year Rs. 130.82 crores) for the year, an increase of 17.26 per cent. Normalized EBITDA of the division was also at a record high of Rs. 97.39 crores for 2014-15 (Rs. 83.47 crores), a rise of 16.67 per cent. The performance of the Kochi terminal improved over the last year and is expected to perform even better with the coastal movement of petrol and diesel. Future growth in this division will come from the new capacity at the Haldia Dock Complex with its storage capacity of 60,190 KL increasing to 69,280 KL, and from the fully commissioned 120,000 KL liquid terminal at Pipavav Port in Gujarat operating for the full year at higher capacity utilization.
The group demonstrated its logistics expertise by offloading bulk liquid cargo via ship to shore pipelines into its storage tanks, refilled the product into ISO containers and transported them by rail to the customer’s facilities several hundred kilometres away, thereby delivering a cost-effective logistics solution to the customer.
In the Operations and Maintenance (O&M) business, the existing contracts with the national oil companies and other customers are continuing satisfactorily. The Aegis Group won several new contracts, including six inland terminals for Hindustan Petroleum and the Marine Oil Terminal at Jawahar Deep.
Gas Division
The Aegis Group captures the complete logistics value chain, starting from sourcing, terminalling to retail distribution of LPG. In 2014-15, the division recorded revenue of Rs. 3,762.60 crores. Sourcing volumes declined marginally, but gas throughput volumes increased at both Mumbai and Pipavav. Furthermore, the gradual increase in CNG prices closer to the market level has improved the competitiveness of LPG as an automotive transport fuel. The normalized EBITDA for the gas division increased to Rs. 84.65 crores compared to Rs. 60.47 crores the previous year, as the higher throughput volumes resulted in stronger margins. The same applied in the distribution business, with better margins in the second half of the year.
New developments
The Aegis Group entered into a joint venture agreement with ITOCHU Corporation by selling a 40 per cent share in Aegis Group International Pte. Ltd. (AGI) to Itochu Petroleum Co. (Singapore) Pte. Ltd. ITOCHU is one of the largest global LPG companies by sales volume and a key global player in the segment. The entry of a new strategic partner is aimed at raising the market share of AGI in India’s LPG imports by following a strategy of attaining cost leadership.
The group which has been allotted five acres of land at Kandla port is seeking additional land in order to build a new terminal as a gateway to the north of India. This will mark the fifth port in the chain of terminals around the coastline of India. Pursuant to the commissioning of two new LPG spheres at Pipavav, construction has started on another two, bringing the total number to six with an eventual LPG storage capacity of 8,100 MT available by the end of FY 2015-16.
As part of the multimodal logistics capability, the Pipavav terminal has also installed loading arms at a railway gantry for the loading and unloading of liquid cargo and onward transportation by rail.
Operating performance
Revenue from operations was at Rs. 345.22 crores for the year under review. Gross profit [before net interest, depreciation, tax, hedging cost and foreign exchange loss (gain)] and PBIDT, increased by 180.25 per cent to Rs. 156.66 crores (previous year Rs. 55.90 crores) on account of higher other income and increased business profits. Profit before Tax was higher at Rs. 132.54 crores (Rs. 30.84 crores), and profit after tax increased to Rs. 107.83 crores (Rs. 19.41 crores).
The group’s revenue for the year amounted to Rs. 3916 crores. Profit before tax for the year rose to Rs. 142.22 crores (previous year Rs. 79.90 crores), an increase of 78 per cent on year on year basis due to new capacities, higher margins and other income. Profit after tax for the year rose to Rs. 112.31 crores (Rs. 68.68 crores), an increase of 63.53 per cent on year on year basis.
Revenues of the group for the liquid division was higher for the year by 17.26 per cent at Rs. 153.40 crores (previous year Rs. 130.82 crores) due to an increase in capacity and better capacity utilization. Normalised EBITDA moved up to Rs. 97.39 crores compared to Rs. 83.47 crores in 2013-14, an increase of 16.67 per cent. Revenues and margins continued to remain strong.
The revenue for the gas division during the year was Rs. 3762.60 crores. The normalized EBITDA increased to Rs. 84.65 crores as compared to Rs. 60.47 crores the previous year, mainly due to improved margins and higher throughput volumes.
The company has commenced construction of 9,090 KL of additional storage capacity at its Haldia liquid tank terminal. The new tanks, to be commissioned during FY 2015-16, will increase capacity by 15 per cent. It recently doubled its LPG storage capacity at Pipavav to 5,400 MT. In the light of growing demand for LPG in the region, the company has decided to raise its capacity further by 50 per cent, to 8,100 MT. This additional capacity will be available for use in FY 2016-17.
The company continues to look for opportunities to lease or acquire land at both minor and major ports in India.