Indus Gas Limited Experiences Revenue Decline
Indus Gas Limited (AIM: INDI) is navigating through challenging times as it reports its amended half-year financial results. The latest figures reveal a considerable drop in both revenue and profits for the period ending September 30, as the company grapples with various operational challenges.
Financial Results Overview
The company reported adjusted revenues of US$ 2.34 million, marking a stark decline from US$ 26.18 million achieved during the same period last year. Profitability also suffered, with operating profit and profit before tax each decreasing to US$ 1.24 million, compared to US$ 22.61 million and US$ 22.63 million, respectively, in 2023.
Indus is also making provisions for a notional deferred tax liability, which stands at US$ 0.61 million, a significant reduction from US$ 9.88 million in the previous year’s interim report.
Gas Production and Supply Challenges
The company’s gas production is sourced from the SGL, SSF, and SSG fields. Currently, all of its output is sold to GAIL, the government-operated gas authority in India. However, since February 2024, GAIL has reduced its gas off-take, attributed to necessary maintenance tasks on a gas turbine at their customer’s power plant.
Indus Gas is enduring disruptions in gas supply levels, considering these ongoing maintenance issues. The company has indicated the possibility of seeking additional external or shareholder funding should the situation continue to necessitate that support.
Domestic Gas Pricing Trends Affecting Revenue
According to revised domestic gas pricing guidelines, effective from April 8, 2023, the sale price of gas is established at 10% of the monthly average of the Indian crude basket, as communicated by the Petroleum Planning and Analysis Cell (PPAC). Throughout the period ending September 2024, the gas sale price fluctuated, reaching a high of US$ 8.90 per MMBTU and a low of US$ 7.85 per MMBTU.
Future Outlook and Strategic Moves
Jonathan Keeling, the Chairman of Indus Gas, highlighted the company’s commitment to enhancing gas off-take with GAIL, actively working with the operator to stabilize and potentially increase supplies moving forward.
This financial update presents a pivotal moment for Indus Gas Limited as it maneuvers through fiscal adversity while striving to maintain operational integrity and future profitability.
Frequently Asked Questions
What is the current financial standing of Indus Gas Limited?
Indus Gas Limited reports a substantial decline in revenue and profits, with adjusted revenues dropping to US$ 2.34 million.
What caused the decline in gas off-take by GAIL?
The decline in gas off-take is primarily due to ongoing maintenance issues at GAIL's customer’s power plant.
Is Indus Gas Limited considering external funding?
Yes, the company may seek external or shareholder funding if operational issues persist.
How does gas pricing impact Indus Gas's revenue?
The revised domestic gas pricing guidelines have influenced revenue, with sale prices fluctuating significantly within the reported period.
What future strategies is Indus Gas implementing?
Indus Gas is focused on increasing gas off-take through collaborations with GAIL to improve operational efficiency.
