X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
"There is significant growth potential in the core business of Natural Gas distribution." - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • A  A  A
  • Apr 7, 2001

    "There is significant growth potential in the core business of Natural Gas distribution."

    Mr. Robert Thomas is the Managing Director of Gujarat Gas Company Ltd. Mr. Thomas started his career with British Gas and has been associated with the company since. He has been involved in the gas transmission and distribution business for the past 20 years. During this period he has been exposed to the various functions including engineering, marketing & finance and management services.

    In an interview with Equitymaster.com, Mr. Thomas spoke on the prospects of the energy sector and natural gas in particular. He has stressed on the shareholder wealth that the company has and is focused on creating.

    EQM: Briefly, with respect to the energy sources sector, please comment on the existing industry scenario? How do you see the industry evolving in the next three years?

    Mr. Thomas: India is striving to achieve higher GDP growth rates and hence, the growth in energy demand would be driven not only by converting the customers who do not have access to (or have access to inefficient) energy sources, but also from the growth in demand linked to the growth in GDP. Thus, generally, in a developing country, energy demand is likely to grow at good rates.

    The primary sources of energy are coal, oil and gas. Natural Gas has a number of advantages over other sources e.g. Lower carbon emissions resulting in less pollution and lower deposition of carbon on equipment (resulting in lower downtime and maintenance costs), no storage and handling requirements etc. Additionally, since a pipeline delivers Natural Gas and there is a meter for every customer, there is no adulteration and the customer pays only for the fuel that enters his premises. All this has resulted into a worldwide preference to switch to Natural Gas.

    In India, a similar trend is visible. According to the Ministry of Petroleum, the production of Natural Gas in India was in excess of 27 million standard cubic meters during 1999-2000. The Hydro-carbon Vision 2025 states that the demand for Natural Gas will be in excess of 300 million cubic meters by the year 2011-12. This implies that the demand will grow by around ten times in the current decade and gas would have to be imported to meet this huge demand.

    Thus, Natural Gas is the fuel of the future.

    EQM: What is the capacity of the pipelines operated by Gujarat Gas and what is the utilisation rate? Is the company currently planning on setting up more pipelines in the country?

    Mr. Thomas: Gujarat Gas has a pipeline network of more than 1,500 Kms. This network has been made up of pipelines of different diameter based on the present demand and future potential expansion in each area. Hence, capacity of each pipeline as well as the utilisation rate would be different.

    Gujarat Gas is looking for opportunities to expand its pipeline network. However, plans to set up more gas pipelines would be subject to the availability of gas as well as Government approvals apart from our internal approvals process.

    EQM: The company faces a shortage in the supply of gas; what steps is it taking to overcome the supply risk and what is the time frame for achieving this objective?

    Mr. Thomas: Yes, one of the biggest constraints is availability of gas. Cairns Energy has already announced that it has found substantial volumes of gas in the Cambay field. BG is in negotiation to buy this gas and this is likely to mitigate the concern to a significant extent.

    EQM: With the Government permitting private investment in E&P does Gujarat Gas have any intentions of bidding in the current round of NELP-II?

    Mr. Thomas: Gujarat Gas does not have any intention of entering into E&P. There is significant growth potential in the core business of Natural Gas distribution and hence, there is no need to look for other businesses like E&P which are not the core strength of Gujarat Gas.

    EQM: Does the company have any plans of expanding its pipeline network to Northern Gujarat? What kind of investments would this require?

    Mr. Thomas: As already mentioned above, Gujarat Gas is keen to expand the network. However, the same is subject to Government approval and availability of gas. Hence, at this point of time, it would be premature to talk of network expansion to Northern Gujarat or investments required for the same.

    EQM: What initiatives is Gujarat Gas taking to enhance shareholder value?

    Mr. Thomas: Gujarat Gas has been consistently enhancing shareholder value. Dividend payouts have been increased from 40% in 1997 (just before BG acquired GGCL) to 60% in March 1999, 80% on annualised basis in December 1999 and 100% for the year ended December 2000. Thus, dividend payout has been increased by 20% every year for the last three consecutive years. This was done despite making sufficient provision for contingent liabilities in line with best international accounting practices. Gas volume sales, which were at 0.52 mscmd (million standard cubic meters per day) in March 1997 have been doubled to more than 1.0 mscmd in December 2000. The Gross Block, which was at around Rs. 1.11 bn has also been almost doubled to touch Rs. 2.13 bn during the same period. All this was achieved without diluting the equity.

    It is proposed to continue to add shareholder value by further increasing gas throughput. The Hazira - Ankleshwar pipeline, which has a potential to deliver up to 4.0 m cubic meters per day (without compression) currently, transports only 0.4 mscmd. With new gas discoveries in the region as well as the potential import of LNG by a number of players, GGCL is poised to take the first mover advantage.

     

     

    Equitymaster requests your view! Post a comment on ""There is significant growth potential in the core business of Natural Gas distribution."". Click here!

      
     

    More Views on News

    GAIL: A Good Show (Quarterly Results Update - Detailed)

    Mar 27, 2017

    GAIL (India) Ltd has announced results for the quarter ended December 2016. reported 9.4% year on year (YoY) decline in sales, while bottom-line grew 45.4% YoY.

    ONGC: Higher Realisations on Crude Support Performance (Quarterly Results Update - Detailed)

    Mar 17, 2017

    ONGC has announced results for the quarter ended December 2016. The company has reported 9.2 % year on year (YoY) growth in sales, while bottom-line grew 197% YoY.

    Mahanagar Gas Ltd (IPO)

    Jun 21, 2016

    Should one subscribe to Mahanagar Gas IPO?

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    GUJARAT GAS SHARE PRICE


    May 26, 2015 (Close)

    TRACK GUJARAT GAS

    • Track your investment in GUJARAT GAS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MARKET STATS