The Hindu Business Line : GAIL to invest Rs 20,000 cr in next 5 years

Mr Proshanto Banerjee (right), Chairman-cum-Managing Director, GAIL, with Mr J.K. Jain, Director - Finance, addressing a press conference in the Capital on Thursday. — Ramesh Sharma

New Delhi , June 23

GAIL (India) Ltd on Thursday unveiled an ambitious expansion plan involving capital investments of around Rs 20,000 crore over the next five years.

"The plans touch upon areas that expand beyond natural gas transmission business to petrochemicals, power, LNG, exploration and production (E&P) and CNG in India and abroad," Mr Proshanto Banerjee, Chairman and Managing Director of GAIL, said at a press conference here.

Mr Banerjee said GAIL plans to spend Rs 13,000 crore building four pipelines in the next five years. He, however, said that the figure was a rough estimate of the pipeline cost and actual cost would be known when the detailed feasibility reports are prepared.

The company plans to invest Rs 3,000 crore each for Jagdishpur-Haldia pipeline and Dadri-Nangal pipeline, Rs 2,000 crore for Kochi-Coimbatore-Bangalore pipeline and Rs 5,000 crore in Kakinada-Uran pipeline, he said.

It plans to borrow $150 million from overseas lenders this fiscal year to fund higher capital expenditure, including pipeline construction.

Further, the company is also planning an investment of Rs 5,200 crore in setting up a 28,000-tonne Assam Petrochemical Complex and Rs 7,000 crore in a 7,00,000-tonne Petrochemical Complex in Kochi. In Iran, a one million-tonne gas cracker is being considered in collaboration with National Petrochemical Co of Iran, he said.

On the power sector, Mr Banerjee said GAIL has already made an entry in the sector through its participation as an equity holder as well as gas supplier in Gujarat State Energy Generation (GSEG), Hazira, with a 12 per cent stake.

"We are in the process of acquiring a 10 per cent stake in the Doraha power project, which may go up to 26 per cent. We are also discussing a stake in the Bawana power project," he said. GAIL plans to expand its city gas distribution network to Madhya Pradesh, Rajasthan and Gujarat. By next year, GAIL would reach out to Pune, Kerala and Karnataka.In the year 2004-05, GAIL along with GSPC, had struck oil in the Cambay basin block CB-ONN-2000/1 and the commercialisation of the block is expected soon, he said adding, "we would restructure our E&P group and make it a strong area of focus."

Increase in sales turnover, PAT

Announcing the audited results for 2004-05, Mr Banerjee said GAIL has reported a 15 per cent growth in sales turnover and 5 per cent increase in profit after tax (PAT) for the year. Sales turnover went up to Rs 12,412 crore compared to the 2003-04 figure of Rs 10,827 crore. Profit after tax during the year was up by 5 per cent at Rs 1,954 crore from Rs 1,869 crore during the previous year. The earning per share (EPS) increased to Rs 23 per share in 2004-05 as against Rs 22 per share in the previous year.

"The bottom-line growth of 5 per cent was achieved despite 166 per cent increase in subsidy sharing in domestic LPG and PDS kerosene from Rs 428 crore in 2003-04 to Rs 1,137 crore in 2004-05. Without the subsidy element, the profit before tax (PBT) would have increased by 24 per cent to Rs 4,008 crore and PAT would have increased by 27 per cent to Rs 2,727 crore."

The board of directors of the company has recommended a final dividend of 40 per cent for 2004-05. The top line growth is cumulative result of overall increase in the natural gas business, polymer sales and also in LPG transmission, he said.

Mr Banerjee said that GAIL has received revenue of Rs 293 crore and a PAT of Rs 70 crore from its group companies including joint ventures, associated companies and foreign subsidiary GAIL Global Singapore. Based on the consolidated financial statements, the total earning of GAIL was Rs 14,207 crore and the PAT stood at Rs 2,024 crore.

Dabhol project

Commenting on the Dabhol Power Project, Mr Banerjee said GAIL would hold 28 per cent stake in the special purpose vehicle, being set up for revival of the $2.9-billion power project. Besides GAIL, the SPV will see participation from National Thermal Power Corporation (NTPC), Indian financial Institutions and Maharashtra State Electricity Board (MSEB) and is likely to be registered in 10 days time.

GAIL was hopeful that after deciding on the liability of Dabhol Power, the DRT would in next 3-4 months transfer the company's assets to any firm or a consortium willing to take over the company with the pre-decided liabilities and repayment schedule.

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