• APRIL 3, 2000

Gas Authority of India Ltd to raise Rs 3 bn by way of bonds

According to the Economic Times, Gas Authority of India Limited (GAIL) plans to raise Rs 3 bn by way of bonds from the domestic market through development financial institutions and Rs 1 bn by way of private placements.

GAIL is a natural gas distribution and transmission company that has India’s only pipeline infrastructure extending to 3,900 kms.

GAIL has an overall expansion plan of Rs. 12 bn, out of which 8 bn will be brought in from internal accruals. With the firming up of global crude oil prices, liquefied natural gas is emerging as a cheaper alternative to crude oil. GAIL is ideally positioned to take advantage of this shift in preferences especially in view of its excellent infrastructure for distribution and transmission of liquefied natural gas.

GAIL is also planning to make forays into the sector of telecommunications in line with the potential for the sector.

It will also engage in exploration for fresh resources of natural gas. The borrowing will also facilitate the completion of two LPG plants and a new pipeline project. GAIL will also be able to improve upon its existing pipeline infrastructure, enabling better marketing and distribution of its products.

It may also enable GAIL to enter into more joint ventures with domestic and overseas partners for manufacture, exploration and distribution. It will enable GAIL to improve its domestic market share from 23%.

The debt equity ratio of the company, which stands at 0.4, is likely to go up to 0.8 times equity as a result of the borrowing. The move to borrow at the present is a move in the right direction as many analysts are of the opinion that interest rates have bottomed out, as a result of the recent cut in the Cash Reserve Ratio and the Bank rate by the RBI recently.

GAIL has firmly established itself as a market leader ever since moves to import natural gas from Iran, Oman, Qatar through international pipelines have run aground owing to infrastructural problems.

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 (Research Analyst) bearing Registration No. INH000000537 (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, Canada or the European Union countries, 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 (Research Analyst)
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