Russia-Ukraine war affects GAIL’s profit despite highest revenue

PAT plummets to Rs 5,302 Cr in FY23 from Rs 10,364 Cr in FY22, PSE plans capex of Rs 10,000 Cr FY 23-24

geetanjali

Geetanjali Minhas | May 19, 2023 | Mumbai


#Public Sector   #PSU   #GAIL   #Energy   #Gas   #Russia-Ukraine War  
Sandeep Kumar Gupta, chairman and managing director, GAIL, addresses a press meet in Mumbai on Friday
Sandeep Kumar Gupta, chairman and managing director, GAIL, addresses a press meet in Mumbai on Friday

GAIL (India) Ltd has reported Revenue from Operations of Rs 1,44,302 crore in FY23 as against Rs 91,646 crore in FY22. Profit before Tax (PBT) in FY23 stood at Rs 6,584 crore as against Rs 13,590 crore in FY22. Profit after Tax (PAT) in FY23 stood at Rs 5,302 crore as against Rs 10,364 crore in FY22.

Sandeep Kumar Gupta, chairman and managing director, GAIL, said here Friday that due to the Russia-Ukraine war gas prices became very high, impacting the company’s profit despite its highest-ever annual revenue of Rs 1,44,302 crore which was up 57 per cent for FY23.

Quarter on Quarter basis, Revenue from Operations was reported at Rs 32,858 crore in Q4 FY23 as against Rs 35,380 crore in Q3 FY23. PBT registered a growth of 165% to Rs 591 crore in Q4 FY23 as against Rs 223 crore during Q3 FY23.PAT increased by 146% to Rs 604 crore in Q4 FY23 as against Rs 246 crore in Q3 FY23.

During the quarter, Natural gas transmission volume stood at 108.23 MMSCMD in Q4 FY23 as against 103.74 MMSCMD in Q3 FY23. Gas marketing volume stood at 96.46 MMSCMD as against 89.89 MMSCMD in previous quarter. LHC sales stood at 230 TMT as against 248 TMT & Polymer sales stood at 118 TMT as against 65 TMT in comparison to previous quarter.

On Consolidated basis, Revenue from Operations stood at Rs 1,45,875 crore in FY23 as against Rs 92,874 crore during FY22. PBT in FY23 stood at Rs 7,256 crore as against Rs 15,464 crore in FY22. PAT (excluding non-controlling interest) was Rs 5,616 crore in FY23 as against Rs 12,256 crore in FY22.

Revenue from Operations on quarterly basis stood at Rs 33,264 crore in Q4 FY23 as against Rs 35,940 crore in Q3 FY23. PBT in Q4 FY23 stood at Rs 689 crore as against Rs662 crore in Q3 FY23.PAT (excluding non-controlling interest) was Rs 634 crore in Q4 FY23 as against Rs 414 crore in Q3 FY23.

Gupta said that the company has incurred its highest ever Capex of Rs 9100 crore, an increase of 15% than the annual target of Rs 7,918 crore during FY 2022-23 mainly on Pipelines, Petrochemicals, Equity to JVs, etc.

He stated that company has successfully implemented unified tariff w.e.f. 1st April 2023 which will help India to achieve the One Nation One Grid One tariff model and boost the gas consumption in distant areas.

In the current fiscal, Gupta said they plan to spend Rs 10,000 crore out of which Gail plans to borrow up-to Rs 7,000 crore and balance through internal accruals.

Given the global economic conditions, the largest gas distributor in the country, plans to raise funds from domestic market. Gail’s overall long term debt at present stands at Rs 9,800 crore and the new bank borrowings as per SEBI mandate will be for a tenure of over five years. One fourth of borrowing will be through bonds. Gupta expressed confidence that FY24 will be robust for internal resource generation and there will not be any problem in continuing with the capex. He however clarified that Gail will not be looking at pipeline monetisation because oil and gas companies are able to raise necessary resources from the markets.

Gupta also said that Gail’s first green hydrogen electrolyzer plant is coming up at Vijaipur, Madhya Pradesh with a capacity of 4.3 tonnes per day. “This will be commissioned this year itself.”

Speaking on Gail’s foray into green energy Gupta said, the company is seriously looking at entering the solar energy components space and will be looking at all the options, including tie-ups. “It is also confident of commissioning a green hydrogen production in the calendar year 2023 itself. Gail is also contemplating entering into the ethane cracker, but the plans are still on the drawing board.”

On the current demand-supply ratio, the top officer explained that due to supply disruption since May 2022, post Ukraine-Russia war, the supplier should have supplied by cargo sourcing from other geographies due to the fact that this was a portfolio contract, “but they did not supply. Due to the fact that the petrochemical segment was affected, gas prices were not viable, we had to keep their plant shut while have it running at lower levels for a substantial period of the year as we had to service our customers who had been tied up at long-term prices.”

He added that Gail has initiated legal proceedings against Russian energy giant Gazprom for failure to supply Liquified Natural Gas following the complications arising out of Russia's invasion of Ukraine.
"We are taking up legally against them to press for specific performance and to claim the damages, and our request for arbitration has been filed...in the London court,” he said.

Without divulging the exact sum that the company is claiming, he said, Gail has recommended its representatives for the arbitration while its supplier is yet to appoint one.

Gupta said even though now with normal supplies since March this year, but the price being paid by Gail is higher than the spot market prices because the contract entails a price, which is an average of nine months. “The company was getting the full allocation as per the contract and hopefully that it would continue. And definitely, there is no cut as far as our downstream customers are concerned nowadays."
He added that at present gas supplies are coming from Qatar, US, Russia and Australia and they are now scouting for places for new volumes.  

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