My understanding in that tariff decline by ~50% (Rs 34 to Rs18) will completely wipe out profitibility of GSPL.

From PNGRB perspective, its clear that their incentive to provide customer services at cheapest tariffs, and as long as GSPL survives/does not break , they are fine.

Something that I am trying to understand here:

What incentive do GSPL management has to fight with low tariff order by PNGRB? My understanding is that , with largely fixed compensation, enhancing profitibility of GSPL will not be driving force for GSPL management.

The promoter of GSPL is again governed by government of Gujarat, with hardly any incentive to drive profitibility of GSPL. As long as GSPL continue to discharge its tasks (maintining pipepline) and does not break, the promoter should be fine.

So, who is going to fight any adverse impact on GSPL when promoter and management do not have any incentive to do so. Is there any other influential shareholder (Institutional shareholder) who has high stake in GSPL and hence the incentive to influence management and government and take steps to fight PNGRB orders?

Please suggest?

Proposed dividend outflow is minuscule : 2.89 Cr equity shares x 0.60/- = 1.73 Cr approximately which anyway wouldn’t have any material impact on debt /interest reduction.

I think its more of a signal to investors that they are confident of OCF gearing up in coming quarters.

This seems to be more of a non-issue if you read the annual reports going back to 1997.

• Ramakant Pilani and Raunak Pilani both don’t have any shareholding in the company.
• Ramakant Pilani was the earlier managing director along with Ramesh Pilani as Chairman, but the baton was handed over to Rishi after 2008. Ramakant and Ramesh were not mentioned in any annual reports until the company turned around after the BIFR episode and the net worth became positive.
• Despite being a CEO, Ramakant Pilani has never attended a conference call or any media interviews. He has been paid less than the CFO, Ramesh Pilani (father of Rishi Pilani). All the financial results have been signed by Rishi Pilani, Chairman and Managing Director, which makes Mr. Ramakant seem more like a placeholder CEO to me.
• Rishi Pilani is the one who turned around the business by moving it away from bulk chemicals struggling with cyclicality and focusing more on increasing capacity and margins in the LST business.
• Rishi Pilani, along with his family, has bought shares multiple times from the open market. They also gradually bought equity from the debtors after the BIFR episode, displaying clear ownership in the business.
• The next big bet is the LPG terminaling business. A 50,000-ton capacity in JNPT with 100 asset turns per annum (which AEGIS seems to be achieving) could mean an annual LPG throughput of 5,000,000 tons. This 5 million tons could easily translate to an EBITDA of 480 Crore (given that the LPG business has an 80% EBITDA margin) for the JV.

Assuming the forgery amount is 45 Cr and the company is held liable for the entire amount (which shouldn’t be the case unless bank proves that they had all the fraud detection measures in place and company didn’t have any internal controls in place), it is around 60% of the annual PAT. The stock is already down around 15% from the price at which promoters bought the shares. The news is already priced-in unless the amount turns out to be much more than 45 Cr.

Disc: Invested. Biased.

Results Ashirwad