GAIL gets into proactive mould

Amidst revamping priorities, time to build for itself a brand image

Murali Gopalan

The Gas Authority of India has indicated that it is keen on accessing the LNG terminal of the 2,184mw Dabhol Power Company. There are three bidders for the entire project and the one that pips the others to the post can enter into an exclusive agreement with GAIL for the LNG terminal. This could even be in the form of an equity partnership if the facility is spun off post-acquisition.

Regardless of the outcome of the Dabhol race, GAIL has clearly decided to become proactive as a key participant in the hydrocarbons sector which will see a complete facelift with the dismantling of the administered pricing mechanism. GAIL is largely dependent on the Oil and Natural Gas Corporation for its supplies and has now decided to conceive a medium-term plan which will see the creation of a gas sourcing group so that gas supplies are not affected if ONGC does decide to market it on its own. In this case, it makes sense to begin finalising supply contracts with other producers of gas.

What is significant in GAIL’s revised priorities is the move to set up a department exclusively for marketing. The navratna will create a slot for director (marketing). Thus far, the director (planning) was the person entrusted with practically all vital responsibilities but the new chairman and managing director, Proshanto Banerjee, believes that this will have to change now. “In my opinion, marketing will have a key role to play in GAIL’s plans and I am going to recruit people with experience in the field. We have just created a corporate planning department and retail will be a very crucial activity for the immediate future. We have a market share of over 90 per cent but that should not lend any room for complacency,” says Banerjee. Observers agree with this view as GAIL is otherwise, for all practical reasons, a mere pipeline transportation company.

GAIL is keen on getting into other areas where its expertise can be put to good use. ONGIO is a 50:50 joint venture of ONGC and Indian Oil Corporation set up to render consultancy services on a commercial basis. GAIL has conveyed its intention to join the consortium as it believes it can play an active role here in the field of gas. Apparently, Engineers India Limited could be the fourth partner in the JV and ONGIO will now be better equipped to offer advisory services ranging from exploration and refining to engineering and marketing.

GAIL’s participation in ONGIO makes sense given that it had participated in the centre’s crossholding exercise three years ago and had subscribed to 2.5 per cent of ONGC’s equity. The latter and IOC have picked up five per cent each in GAIL which means that it’s time to work together in key areas. The endeavour has kicked off and alliances with IOC and ONGC could start happening in areas like R&D or gas hydrates. Time and again, there have been reports doing the rounds that GAIL has just not taken the lead in strategic decisions and this is something that Banerjee would want to set right. It makes sense for GAIL to consider joining hands with a professionally run entity like Larsen & Toubro whose expertise in engineering will help build synergies with GAIL’s pipeline projects.

On the subject of pipelines, experts believe it’s time for GAIL to examine the option of becoming an equity holder in Petronet India’s pipelines. There has been a flurry of announcements on LPG pipelines to be set up by GAIL and it makes sense to have these projects routed through the Petronet India banner. After all it was created with product pipelines in mind and there is no reason to assume that LPG does not qualify. GAIL is a partner in Petronet LNG and its inclusion in the pipelines holding company will certainly help define its role better in the oil sector.

Interestingly, Banerjee has created a special cell styled the “CMD Open House” where there is an interface with employees on the e-mail. It is apparent that the people within are completely committed to the welfare of their company. GAIL has a workforce of slightly over 3,000 of which nearly 85 per cent are professionally qualified. Banerjee says that the youngsters in his corporation are very focused on the key issues concerning GAIL. “I have found that this by itself is an amazing reflection on the quality of people we have. They are intelligent and sensitive to the environment they work in,” he adds.

In the midst of this revamping of priorities, GAIL must remember that a lot needs to be done to build its brand image in the market. People know very little about the company and it’s time to rope in a top advertising agency to plan an aggressive campaign for the future. Efforts in marketing should obviously include being visible in the retail market on the lines of IOC, BPCL and HPCL. This is, doubtless, a tough exercise but there is no reason why a company keen on building a new vision can’t make this a reality.