The petroleum and natural gas ministry has asked GAIL (India) Limited to furnish details of its proposed plans to issue bonus shares to its shareholders.
In its performance review by the high level inter-ministerial committee of the Department of Public Enterprise (DPE) under the ministry of heavy industries had in August 2007, GAIL had assured the committee that it would consider the issue of bonus shares and would discuss the issue at the level of its board of directors. The petroleum ministry has asked GAIL to furnish comments on the issue.
According to DPE guidelines, CPSEs having reserves and surplus more than three times of their paid-up capital are expected to declare bonus shares. GAIL has not issued any bonus shares in the recent past. On a paid-up capital of Rs 845.65 crore, the free reserves of the company stood at Rs 10,547.26 crore, which is about 12.5 times of the paid-up capital. In addition to the issue of bonus shares, the ministry has also sought details on GAIL?s capital expenditure plans on expansion and diversification including exploration and production.
GAIL has incurred plan capital expenditure of Rs 499.53 crore in 2004-05, Rs 1,111.04 crore in 2005-06 and Rs 1,834.94 crore in 2006-07. Its cash and bank balance as on 31.3.2006 stood at Rs 4,495.94 crore. The debt-equity was 0.19:1, which indicates that the company has got huge potential to tap debt market for meeting its capex requirements.
During 2007-08 and 2008-09, GAIL has huge investment plans for its pipe projects, E&P programme, its petrochemical ventures besides projects related to city gas, telecom and coal gasification. GAIL?s debt-equity of 0.19:1 indicates that the company has got huge potential to tap debt market for meeting its capex requirements. The ministry has asked GAIL to furnish detailed comments on the issue of meeting its capex plans.
As noted by the inter-ministerial committee, the ministry has asked GAIL to comment on the observation of the IMC relating to its MOU targets. The IMC had observed that MOU targets should be fixed in realistic manner so that the targets for a year should not be less than the actual achievements for the previous year.
