Gujarat Petronet to offload more stake

Gujarat State Petronet Ltd (GSPL), the wholly-owned subsidiary of the state-run Rs 1,100 crore Gujarat State Petroleum Corporation Ltd (GSPCL), is open to offload further stakes to interested companies.

GSPL, which is laying 2,200 km long gas grid across Gujarat, would give preference to state government-run companies. Only last week, GSPL had offloaded its 20.5 per cent stake to the India Development Fund (IDF) at Rs 90 crore. The company needs to bring in additional equity worth Rs 40 crore for a healthy debt-equity ratio position.

State-run Gujarat Industrial Development Corporation (GIDC), Gujarat Narmada Valley Fertilisers Company (GNFC) and Gujarat Maritime Board (GMB) have shown interest im picking up stake GSPL with the state government deciding to offload 10 per cent additional stake at around Rs 40 crore.

Interestingly, while the state government about a month back decided to divest sake in at least 12 state-run enterprises, a decision for offloading stakes of GSPL was taken about a year ago. A strong opposition from within the government had stalled the proceedings.

"After several rounds of discussions with the government and with the concerned ministries, the company officials managed to convince the state government about the necessity of offloading at least 30 per cent stake. This would not only make the banks and financial institutions (FIs) encourage to fund the upcoming gas pipeline projects but would also help the firm maintain a healthy debt-equity ratio," the sources said.

"The company's financial position will strengthen if an additional 10 per cent is offloaded. IDF picked up 7.20 crore equity shares at Rs 12.50 per share, amounting to Rs 90 crore, which represents 20.5 per cent of the equity of GSPL.

According to the source, before closure of the deal with IDF, the state government had decided to offload GSPL's stakes only to one of the profit-making government enterprises.

State-run Gujarat Mineral Development Corporation (GMDC), Gujarat Industrial Development Corporation (GIDC), Gujarat Narmada Valley Fertilisers Company (GNFC) and Gujarat Maritime Board (GMB) had shown their interests in picking up stake in the GSPL.

But GMDC backed out saying its fund constraints and three other enterprises also were not ready to pick up the stakes at once.

"Following this, GSPCL top management initiated discussions with IDF of Infrastructure Development Finance Corporation (IDFC) Asset Management Company as IDFC already showed interest in the company and its gas grid project. But IDFC was sceptical in picking up stakes at a premium in the initial discussions.

"Later, GSPCL assigned an agency to value its shares and another round of discussions convinced IDFC to pick up stakes with Rs 2.50 premium on each share of Rs 10," said an official in state Energy and Petrochemicals Department. C K Koshy, chairman of GSPCL, and D J Pandian, managing director, could not be reached for their comments.

Meanwhile, IDF also has shown its keen interest in picking up further stakes in GSPL as Darius Pandole, Chief Operating Officer (COO) of IDFC Asset Management, said, "We might consider increasing our stakes in GSPL at a later stage."