• GAIL plans to double revenue in five years: Chairman

    GAIL is planning to double its revenue and expand profit by 50% in five years, aided by a planned capex of Rs 1 lakh crore in new pipelines, city gas and petrochemicals projects, chairman Manoj Jain has said.

    GAIL, which recorded a profit of Rs 6,000 crore on a revenue of Rs 75,000 crore in the last fiscal year, expects contributions from transmission and gas marketing to rise in its overall revenue over the next five years.

    “Transmission should be a larger pie as compared to today because revenue-wise gas prices may not be that high. Marketing, trading will also be slightly bigger, but petrochemicals, we feel that, since other players are also coming, the market will have more capacity and our share in the market may be slightly lower. Within in the company, petchem should be in the range of around 25% or so,” said Jain, who took over as chairman and managing director last week. At present, transmission, gas marketing and petrochemicals contribute almost equally to the company’s revenue.

    Besides growing the business, the priority would be to raise employee satisfaction so that there is more loyalty and motivation for them to contribute, Jain said.

    GAIL will need about a year to hive off its pipeline business into a subsidiary once the Cabinet has approved such a proposal, Jain said.

    Collapsing gas prices in the spot market is the biggest risk today for the company, Jain said. “Gap between spot and long-term is widening and that‘s a risk for those volumes which are not tied yet,” Jain said. GAIL has multiple long-term contracts for gas with suppliers in the US and Russia and a sharp fall in spot market makes it harder to sell expensive long-term gas to customers. GAIL has committed customers for much of its long-term volumes. About 2 million tonnes of its US liquefied natural gas (LNG) volumes aren’t tied yet.

    So far, GAIL hasn’t faced trouble from any significant customer and is able to sell all its long-term LNG. The company has also been offering spot gas to long-term customers to help them lower overall cost of their fuel.

    Over the next five years, GAIL plans to spend about Rs 40-45,000 crore in laying 7000 km of new gas pipelines, Rs 10,000 crore in expanding petrochemicals capacity and Rs 40,000 crore in building new city gas infrastructure, Jain said.

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