Demonetisation adversely impacts GAIL -Governance Now

Demonetisation adversely impacts GAIL

Overflow of inventory forces GAIL to find new places for storage

GN Bureau | November 22, 2016

#PSU #demonetisation #GAIL

In what could be seen as a direct impact of demonetization on the transport sector, huge inventories have piled up at Gas Authority of India Limited’s (GAIL) petrochemicals facilities as hundreds of trucks continue to remain off roads. This has forced GAIL authorities to hunt for new warehouses and other modes of transport to dispatch products to its customers, reported The Economic Times.

“We are witnessing problems as the movement of trucks has slowed which has certain impact. We are stocking in our store. There is no reduction in our production. But our stocks are moving up in our warehouses. The plant inventory has gone up by 50 percent,” chairman B C Tripathi told the newspaper. He pinned his hopes on improvement of cash availability in a week or ten days.

The cash crunch has forced truck drivers to keep their vehicles off the road as they are unable to pay for fuel and food. Petrochemicals, produced using petroleum and gas, find use in several industries. The cash crunch is cutting both ways by curtailing demand as fewer end users have cash to purchase stuff, and by restricting supply as factories can’t keep producing goods that don’t leave their gates, the newspaper reported.

A gas-based petrochemicals complex at Pata, near Kanpur in Uttar Pradesh is owned and operated by GAIL while it also controls a petrochemicals facility in Assam and is a part owner in another in Gujarat.

As inventory overflows, GAIL is looking out to arrange new places for storage. “Efforts are on to create alternative warehouse to bring respite,” Tripathi said. All the petrochemical products at GAIL are carried by trucks, not train, Tripathi remarked, which is why the company is now searching for an alternative carrier. “We are talking to Container Corporation. They are a PSU. They can move products,” said Tripathi.

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