While announcing the rating, Moody's have stated that with an extensive pipeline network, GAIL is strongly placed to take advantage of the strong demand and increased gas supply environment. The rating also reflects that 70% of the EBIDTA is derived from its relatively stable and reliable gas transmission and LPG business as well its high level of diversification and the synergies apparent in its different segments.
The credit rating exercise was initiated by the company to facilitate borrowing in domestic as well as the international markets to fund the future growth plans of the company. The company has huge funding requirements in the next five years to meet the capex requirement in the areas of gas transmission and gas processing in India and abroad. The rating would help GAIL in ensuring on-time availability of the required funds, in rupees and /or in foreign currency. GAIL is also thinking of getting a second international rating done which would further widen the scope for mobilizing international debt funds at the most competitive rates.
The company had appointed Citigroup and HSBC as its rating advisors. The rating exercise involved rigorous due diligence by Moody's covering the existing operations as well as future business plans.