Rupee depreciation, steep rise in global LNG prices and economic slowdown, impacted Gujarat Gas’ gas sales volumes in C12 and 1QC13. However, now the LNG prices have softened and the company expects sales volume to pick up, says SBI Cap
Due to increased LNG cost, the blended gas cost increased 34.8% year-on-year and 9.1% quarter-on-quarter to Rs24.4/scm, leading gross margin to dip to Rs4.5/scm compared to Rs5.7/scm in 4QC12 for Gujarat Gas Company Ltd. The company’s 1QC13 results on operational front were in-line with brokers’ estimates on lower volume and higher LNG cost. Net sales of the company increased 18.9% year-on-year and 0.8% quarter-on-quarter to Rs7.6 billion led by improved realisation.
On 1 February 2013, Gujarat Gas took 4.2% price hike in industrial segment and 8.5% in CNG. With higher other income, decline in the company’s net profit was limited to Rs595 million (declined 15.6% quarter-on-quarter). These are the observations made by SBI Cap Securities on Gujarat Gas in its performance analysis.
Gas sales volume declined 16.2% year-on-year and 2.2% quarter-on-quarter to 264mmscm due to lower volumes in industrial segment as gas cost was high, sums up SBI Cap Securities.
Margins are also expected to improve from hereon in view of price hikes, forecasts SBI Cap Securities. Bottom line of the company is expected to remain subdued for the next two years on lower sales volume. However, in the long term the company plans to improve volumes in order to increase bottom line.
Gujarat Gas received authorization from the Petroleum and Natural Gas Regulatory Board (PNGRB) for the city gas distribution areas of Surat, Bharuch and Ankleshwar. The company has filed tariff application with PNGRB for its transmission pipeline. However, due to high ROE (return on equity) of over 30%, the company is vulnerable to tariff reduction from PNGRB, as was ordered for Indraprastha Gas. This is an operational performance risk, pointed out by SBI Cap Securities.
The SBI Cap Securities report concludes on a positive note: “We expect better financial performance of the company going forward with gas sales volume to pick up gradually.” For shareholders and new investors there is a word of caution and a ‘hold’ recommendation.
The US authorities are investigating possible tax evasion by the American residents of Indian origin through use of their accounts with HSBC India
The Hong Kong and Shanghai Banking Corporation Ltd (HSBC) has said it may face 'significant' penalties from the US authorities regarding an on-going probe into suspected tax evasion by the US-based clients of its Indian unit, among other cases.
The US tax department is investigating possible evasion of federal income taxes by the American residents of Indian origin through use of their accounts with HSBC India.
In a regulatory filing, HSBC said it is cooperating with the US Department of Justice and the Internal Revenue System (IRS) in their probes into whether certain HSBC companies and employees acted appropriately in relation to certain customers with US tax reporting requirements.
The disclosure was made by UK-based HSBC as part of an update of the on-going "regulatory and law enforcement investigations", along with the bank's first quarter results.
The probe began after one Vaibhav Dahake was charged by the US authorities "with conspiracy to defraud the US by using undeclared accounts in the British Virgin Islands and at HSBC India to evade his income taxes".
As per the court documents filed by the government in that case, certain employees of HSBC Holdings and its affiliates operating in the US had assured Dahake that accounts maintained in India would not be reported to the IRS.
The government had further said HSBC India in 2002 opened a 'representative office' at an HSBC USA office in New York City to enable NRIs living in the US to open accounts in India.
Later in 2007, HSBC India opened a second representative office at an HSBC USA office in California, purportedly "to make banking transactions more convenient for the NRI community based in California," as per the Justice Department documents.
Although HSBC India closed those offices in June 2010, the US government suspected that NRI clients might still access their accounts at HSBC India from the US.
The government had further told the court that "NRI clients have told IRS investigators that NRI representatives in the US assured the clients that they could invest in accounts at HSBC India without paying US income tax on interest earned on the accounts and that HSBC would not report the income earned on the HSBC India accounts to the IRS."
About the case involving its Indian unit, the banking giant said that HSBC Bank USA in April 2011 had received a 'John Doe' summons from the IRS, directing it to produce records with respect to US-based clients of an HSBC Group company in India. "We have cooperated fully by providing responsive documents in our possession in the US to the IRS," it added.
In the US tax parlance, the 'John Doe' summons is one issued by the IRS to a third party to provide information on an unnamed, unknown taxpayer with potential tax liability. The unnamed person is addressed as 'Jon Doe' in such summons.
About another case, HSBC said it had also received in April 2011 a subpoena from the US markets regulator SEC, directing HSBC Bank USA to produce records related to HSBC Private Bank Suisse SA's cross-border policies and procedures and adherence to US broker-dealer and investment adviser rules and regulations when dealing with US resident clients."HSBC Bank USA continues to cooperate with SEC," it said.
The US government is already in talks with its Indian counterpart with regard to an Inter-Government Agreement for implementation of its FATCA (Foreign Asset Tax Compliance Act), which would require the banks and other financial institutions operating in India to share details about their US-based clients including NRIs with the IRS.
The only business that was transacted during the second phase of the Budget session was passage of the Finance Bill marking the completion of the Budgetary exercise and the Railway Budget without any discussion after walkout by the Opposition
The Budget session of Parliament was on Wednesday abruptly adjourned sine die with the second phase turning out to be a total washout amidst demands for the resignation of Prime Minister Manmohan Singh, law minister Ashwani Kumar and railway minister PK Bansal.
With the sudden curtailment of the session, key legislations like the National Food Security Bill and the Land Acquisition Bill could not be passed.
The government tried hard for passage of the Food Security Bill in the Lok Sabha but opposition BJP stood ground saying it would facilitate its passage only if the Congress removed Bansal and Kumar.
The only business that was transacted was passage of the Finance Bill marking the completion of the Budgetary exercise and the Railway Budget without any discussion after walkout by the Opposition.
Opposition members led by the BJP today forced an adjournment of Parliament till noon over an alleged scam in top railway appointments, the coal block allocation issue and demands for the resignation of Prime Minister Manmohan Singh.
Members of the BJP, Shiv Sena, Akali Dal, SP and BSP trooped into the Well in both the Houses raising slogans on a host of issues ranging from corruption to alleged atrocities on Dalits in Uttar Pradesh.
With not much work done in the House, Lok Sabha Speaker Meira Kumar chose not to make her customary valedictory address.
Rajya Sabha Chairman Hamid Ansari made a terse comment on the functioning of the House saying the record of work done and not done in the second half of the Budget Session was in public domain and did not require any commentary.
He also put three questions including has the balance between deliberation, regulation and accountability totally been lost and have the members of this body assessed the impact of frequent disruptions.
The second phase of the session, which began on 22nd April, was adjourned sine die two days before its scheduled end.