Gail to raise Rs 15,000 cr from overseas

GAIL (India), the country's largest transporter and marketer of natural gas, plans to raise over Rs 15,000 crore through overseas borrowings over the next five years. This is part of the Rs 25,000 crore the company plans to spend in the 11th Five Year Plan ending 2012.

"Over 60 per cent of our foreign borrowings will be through external commercial borrowings (ECBs). This is primarily due to high domestic interest rates," GAIL Director (finance) RK Goel said.

The company is also likely to sell part of its stake in Oil and Natural Gas Corporation (ONGC) to fund its projects, which include addition of almost 5,000 km of pipelines over the next five years.

GAIL holds 2.4 per cent stake in ONGC, which at today's share price of Rs 909 is worth Rs 4,672 crore.

"A date for the stake sale has not yet been fixed," Goel said.

The gas utility's debt-equity ratio is 0.12:1. "The debt-equity ratio gives us the freedom to raise debt. Moreover, we are close to being rated by Moody's, which will make it easier for us to raise money overseas," Goel said.

Even as the company's debt increases, GAIL would attempt to keep its debt-equity ratio over the next five years at 1:1, Goel said.

The company has also lined up expenditure of Rs 2,744 crore during the current financial year. Of this, Rs 1,761 crore will be spent on laying new gas pipelines, Rs 500 crore on oil and gas exploration, Rs 146 crore on petrochemicals, and Rs 268 crore on new projects. GAIL currently generates around Rs 2,000 crore every year through its pipeline business.

The company, which currently operates around 6,000 km of pipelines across the country, plans to raise Rs 2,500 crore as debt in this financial year.

"Part of the Rs 2,500 crore that we plan to raise will go into meeting our Rs 6,000-crore capital expenditure plan for the next financial year," Goel said.

The company today said that its net profit for financial year ended March 31 rose 27 per cent to Rs 2,386.67 crore from Rs 1,878.14 crore in the previous financial year. "This is despite a 40 per cent increase in the subsidy the company had to provide on domestic cooking gas (LPG) and kerosene," GAIL Chairman UD Choubey said.

Without the subsidy, the net profit would have increased by 49 per cent to Rs 3,444 crore, Choubey said.

He added that during the year, gas sales increased marginally to 67.83 million cubic meters a day from 67.63 million cubic metres a day in the previous year. The results, which were declared on Tuesday did not cheer investors. GAIL's share price on the Bombay Stock exchange fell 4.16 per cent to Rs 281 even as the Sensex rose marginally by 16.05 points on Wednesday.