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Higher subsidy outgo has resulted in 14 per cent drop in GAIL (India) Ltd's net profit for the fourth quarter of FY 2011 at Rs 783 crore.
“The subsidy burden in the quarter went up to Rs 902 crore, from Rs 338 crore in the corresponding quarter previous year. This is the highest-ever subsidy paid for any quarter or even in a fiscal. There should be an increase in LPG prices, as at $116/barrel prices of international crude oil, the current system just cannot be sustained,” said Mr B.C. Tripathi, Chairman, GAIL.
Net sales in the three-month period rose 36 per cent compared to the same period last year.
The increase in subsidy outgo follows the Government's directive to upstream companies such as ONGC, Oil India and GAIL to contribute 38.7 per cent of the loss incurred by OMCs for selling petroleum products below market cost. Earlier, they used to compensate OMCs by paying a third of the total subsidy.
In the quarter, GAIL's income from natural gas trading rose 53 per cent to Rs 7,153 crore, while the net sales from petrochemicals business increased 25 per cent to Rs 1,031 crore. Meanwhile, revenues from natural gas transmission went up 23 per cent to Rs 912 crore.
For the full fiscal 2010-11, the net profit increased 13 per cent to Rs 3,561 crore. Net sales for the year went up 30 per cent at Rs 32,459 crore. “If the subsidy levels were the same as last year, the net profit would have gone up 25 per cent. The impact on our margins is of Rs 500 crore through the year,” Mr Tripathi said.
In the last fiscal, GAIL's total subsidy payout touched Rs 2,111 crore, an increase of 59 per cent over the previous year.
Mr Tripathi said that the board has recommended a total dividend payment of 75 per cent. It has also approved international borrowings such as a $150 million loan from the Bank of Tokyo and a further $300 million borrowing in foreign currency bonds. This will be part of the Rs 3,325 crore borrowing target for the year to fund its Rs 7,692 crore capex target.
Besides, a 100 MW wind power project for Karnataka and Tamil Nadu has received board nod and is due for completion by March next year.
GAIL shares on the BSE rose 1.65 per cent to Rs 433.65 on Monday.
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