Public sector gas marketer GAIL India is well positioned to take advantage of the country?s growing shift towards natural gas as a clean source of energy. Meanwhile, there are significant upsides for the company?s polymer business in the medium- to long-term, given the low consumption of the product in India, compared to developed countries.
?As I look back over the past 25 years, we derive considerable pride and satisfaction in the company?s achievements and progress. It started as a one project company and today it has 19 joint ventures, subsidiaries and associate companies, of which six are outside India?s borders,? says BC Tripathi, chairman and managing director GAIL.
The company plans to increase its pipeline network from 7,220 km to 13,825 km by the financial year 2012-13 and has lined up investment of Rs 30,000 crore.
GAIL?s net profit jumped 240% to Rs 860 crore in the third quarter of the current financial year on the back of strong growth in revenues from gas transmission and LPG sales. In addition, a lower subsidy burden ? that is, Rs 455 crore compared with Rs 905 crore in the same period of the previous fiscal ? also supported the company?s profitability. The company registered 40% growth in its revenues from natural gas transmission business. GAIL earned revenues of Rs 853 crore as against Rs 610 crore in the corresponding period of the previous fiscal.
In India, the pace of capacity addition in pipeline network has been rather slow until recently, because of the absence of a regulatory authority and the low availability of natural gas from domestic sources. But now that the government has put in place a regulatory body, the Petroleum & Natural Gas Regulatory Board (PNGRB), pipeline projects are likely to be rolled out at a faster pace.
?The next priority is to expand the company?s retail presence through CNG and PNG supply in cities and along highways to rapidly expand its reach and presence across the country,? mentions Tripathi.
GAIL?s strategy is to integrate vertically in the upstream hydrocarbon sector as well as in downstream retail gas, petrochemicals. The company has participating interests in 27 oil & gas exploration blocks in India and abroad. Its Cambay basin block has started production and other discovered blocks are also getting ready for production.
The company also expects to benefit from increased LNG availability in coming years. The total LNG availability in the country is expected to increase to 56 million standard cubic metre per day (mmscmd) by 2011-12 from the current 30 mmscmd.
GAIL is also increasing its presence in the trading of imported natural gas. It is buying LNG under long-term contract as also from the spot market. Trading in natural gas is a lucrative business and volumes are expected to grow fast. GAIL already has retail gas presence in 15 cities and plans to expand its footprint to 50 cities by 2012-13.
Tripathi mentions, ?The company has also initiated steps to deploy technology to facilitate its diversification in emerging business as well as bring greater efficiency in existing operations.?
GAIL is expanding its presence in the petrochemical business, which already contributes about 30% of the company?s total revenue. The company has an installed capacity to manufacture 410 lakh of polymers at its Pata plant in Uttar Pradesh. It is already undertaking implementation of a capacity expansion project to raise the manufacturing capacity to 5 lakh by the end of the current fiscal. The company has envisaged raising capacity of the Pata plant to 1 mmtpa in the long term.
The company is setting up a 2,80,000 tonnes-capacity petrochemical plant in Assam. GAIL also holds 19% equity in ONGC?s upcoming Dahej petrochemical project in Gujarat.