GAIL to raise ₹25,000 cr debt ahead of expansion

The board of state-owned natural gas explorer and producer GAIL (India) Limited, in its meeting held today, approved raising ₹25,000 crore by issuing secured or unsecured, redeemable and non-convertible bonds. The decision to raise funds comes as the PSU plans to foray into chemicals and clean energy space and diversify from the current natural gas transmission and distribution business.

"The board of directors in its meeting held today, i.e. August 17, 2022, inter-alia, approved to borrow monies together with the money already borrowed by the company up to the limit of sum equivalent to ₹25,000 crore in one or more tranches," says a stock exchange filing.

The money will be raised by way of a rupee term loan up to the limit of ₹25,000 crore. The company could raise funds via foreign currency term loans or external commercial borrowing. It can also raise funds via the issuance of rupee-denominated, listed or unlisted or secured or unsecured non-convertible bonds.

The GAIL India stock closed 0.15% down at ₹134.90 today, largely in line with the sector that dipped 0.05%. The PSU stock fell after touching an intra-day high of ₹136.1. It has fallen today after two days of consecutive gains. GAIL is trading higher than 5-day moving averages but lower than 20-day, 50-day, 100-day and 200-day moving averages.

GAIL had recorded a 116% increase in revenue at ₹37,572 crore in the April-June quarter of FY23 as against ₹17,387 crore during the same quarter last year, mainly on increased gas marketing and transmission volumes, better marketing spread and higher product prices. The company's profit rose 91 % to ₹2,915 crore as against ₹1,530 crore last fiscal. GAIL's consolidated revenue rose 116% to ₹37,942 crore, while PAT was ₹3,253 crore in Q1 FY23.

GAIL operates about 14,500 km of trunk natural gas pipeline, representing nearly two-thirds of the country’s existing network. The average gas transmission through this network during FY22 was 110.98 MMSCMD vs 104.20 MMSCMD in the previous fiscal year. GAIL holds a 68% share in the country’s natural gas transmission. It is also working on an additional 5,000 km of natural gas pipelines to bolster transmission quantities.

Among the recent projects, GAIL commissioned the 533-km Bokaro-Angul Pipeline section of Jagdishpur Haldia and Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) in April-June. With this, 1,642 km of JHBDPL, popularly known as Pradhan Mantri Urja Ganga, has been commissioned.

In line with the government's ‘National Hydrogen Energy Mission’, GAIL is setting up a green hydrogen production unit with a daily capacity of 4.3 tonnes at Vijaipur, Madhya Pradesh. The unit will produce green hydrogen using polymer electrolyte membrane technology based on water electrolysis.

GAIL is also setting up a 10 MW PEM Electrolyser for producing green hydrogen and has also entered into MoU with Gujarat Alkalies and Chemicals Limited (GACL) to set up a 500 KLPD bioethanol plant in Gujarat.