Submitted To:
Prof. Sanjeela Mathur

Submitted By:
Manvi Dani (18) PGDM-IB VII




























The Indian gas market is expected to be one of the fastest growing in the world over the next two decades: the IEA forecasts gas demand to increase at 5. the Indian energy (and gas) sector has been built on state-owned companies such as ONGC. The year 2009 therefore marks a turning point for the Indian gas market: with new supplies available. 2000).Meanwhile a third LNG terminal is expected to start in 2010. 2009) reaching 132 bcm by 2030. In particular. To address the supply shortfall. the existence of a dual pricing system and the lack of a transparent. Some players are present at many levels of the gas value chain. 5|Page . production and other processes. The conditions for private companies to operate in the Indian market are difficult. the New Exploration Licensing Policy (NELP) opened Exploration & Production to private and foreign companies. The government is now considering introducing an Open Acreage Licensing Policy (OALP). biomass and waste (27%) and oil (26%) while the share of natural gas is only 6%. But challenges remain. Like in many markets. Indian primary energy supply is currently dominated by coal (37%). and in particular the gas industry. Before 2009. it is necessary to have a look back at the historical development of the energy industry. An Industry Analysis” provides an objective analysis on the Oil & Gas sector in India along with detailed information on the exploration. the Indian government passed some reforms at the end of the 1990s to encourage domestic production and the construction of liquefied natural gas (LNG) terminals. Indian gas consumption increased to 59 bcm in FY 2009/10. Annual consumption figures and future growth projections are also included in this report. Indian gas production is expected to double between 2008 and 2011 due to the start of the Krishna Godavari KG-D6 field in April 2009.To understand the Indian gas market and its current issues.4% per annum over 2007-30 (IEA. from 43 bcm in FY 2008/09. OIL and GAIL. This has been relatively successful: after Stagnating since the early 2000s. due to government interventions on gas prices and allocation. predictable and stable regulatory framework. and see how gas market players were created or entered the market. illustrated by NELP‟s failure to attract the major international oil companies and the long battle over the allocation and price of KG-D6 gas. but has seen the entrance of some significant private Companies in the past few years. gas demand potential was estimated to be 20 or 30 bcm higher than actual use as consumption had been constrained by the lack of supply for over a decade (MoPNG.It is also crucial to understand how the regulatory framework was set up and the interactions between the government and the industry.

This industry includes the global processes of: Exploration. Transporting (often by oil tankers and pipelines). Marketing petroleum products. challenges and critical success factors for the growth of the industry. and. Refining. Extraction.It gives a detailed overview of the opportunities. Figure: 1 6|Page .

and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. pesticides. The downstream sector includes oil refineries. The downstream industry touches consumers through thousands of products such as petrol. drilling of exploratory wells. and  North America 40%. synthetic rubber. Upstream. jet fuel. including pharmaceuticals. lubricants. petroleum product distribution. 2. ranging from a  Low of 32% for Europe and Asia. retail outlets and natural gas distribution companies. Petroleum is vital to many industries. other fuel oils. heating oil. The upstream sector includes the searching for potential underground or underwater oil and gas fields.  Africa 41%. fertilizers. Oil accounts for a large percentage of the world‟s energy consumption. 7|Page . asphalt. 3. and the selling and distribution of natural gas and products derived from crude oil. Midstream operations are usually included in the downstream category. and thus is a critical concern for many nations. diesel oil.  Other geographic regions‟ South and Central America 44%. Downstream. plastics. gasoline or petrol. and plastics. Midstream and . natural gas. fertilizers.The largest volume products of the industry are fuel oil and gasoline (petrol). and is of importance to the maintenance of industrialized civilization itself. pharmaceuticals.  Up to a high of 53% for the Middle East. antifreeze. asphalt and petroleum coke. jet fuel. Petroleum is also the raw material for many chemical products. pesticides. The industry is usually divided into three major components: 1. Such products include liquefied petroleum gas (LPG). solvents. and propane. petrochemical plants. diesel. The downstream oil sector is a term commonly used to refer to the refining of crude oil.

to 250 MTOE. it is anticipated to grow about to 25% by 2025. at an annual growth of 3. supported by rise in availability through domestic and imported sources of gas. from 2004. From the current share of 10% of the energy basket of the country. About 60 % of its crude import is from Middle East.  Future Prospects: India‟s current gas transmission pipeline length is estimated at 11900km (GAIL: 8000km. and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value. in 2004-2005. Natural gas comprises 14% of India‟s primary energy consumption at present and demand for natural gas is also likely to increase at an annual growth rate of 7. with developed nations being the largest consumers the production. KEY FINDINGS:  India. During the same period domestic production from existing developed reserves is expected to grow at approximately 2. GSPL: 2000km. INDUSTRY HIGHLIGHTS:  IRG has recently downgraded its positive outlook on the Crude & Natural Gas Industry to Neutral outlook in December 2011. Oil comprises 36 % of India‟s primary energy consumption in 2005.   The consumption of natural gas grew at a CAGR of 2. RGTIL: 1400km.3%. The domestic production of crude oil has been in the range of 30-34 Million Metric Tons from 2001-2005. However power and fertilizer would require the maximum amount of gas in quantitative terms. met 75 %of its crude oil demand through imports. distribution.The world consumes 30 billion barrels (4. during 2025.7 % in the period 1999-2005. Growth in demand catapult the overall demand to 196 Million Metric Tons in 20112012 and 250 Million Metric Tons in 2024-25.6%.5 %.  Demand for oil is expected to grow from 119 Million Tons Oil Equivalent (MTOE). The demand from a variety of consuming sectors.8 km³) of oil per year.  Favourable demand outlook for natural gas in India to continue: Demand for natural gas has been growing and continuing to grow at an unrelenting pace. OIL/AGCL: 500km) 8|Page . refining. and is expected to grow both in absolute and percentage terms driven by overall economic growth.

with a capacity of around 283MMSCMD as per a report format from ICRA dated October 2011. the pipeline network in India currently covers mainly the western.Further. GAS COMPANIES MARKETING SETUP COMPANIES     ONGC & JVs OIL GAIL OIL ITSELF (EXCEPT RAJASTHAN MARKETING THROUGH THROUGH GAIL) CAIRN ENERGY LTD. with the network being limited in southern and eastern India. GSPCL ITSELF ITSELF Table: 1 9|Page . central and northern parts.

COMPANY PROFILE 10 | P a g e .

GAIL also has interests in the Liquefied Natural Gas (LNG) business and in city gas distribution projects both in India and overseas. G-Lens) Liquid hydrocarbons (propane . GAIL group of companies accounts for:          About 3/4th of natural gas transmitted in India through pipeline. GAIL has made significant contribution to the nation‟s economy by supplying natural gas through its pipeline network for:  Generation of over 87.  Production of over 145million tonnes of urea.INTRODUCTION TO GAIL GAIL (India ) Limited was incorporated in August 1984 is engaged in transmission. gas processing and downstream petrochemicals (which use natural gas as a primary input). Gas supply for about ½ of the country‟s gas based power generation. Operating more than 2/3rd of country‟s CNG station. Almost 1/5th (21%) of polyethylene produced in the country. Gas supply for about ½ of the country‟s fertilizer produced. More than ½ of the natural gas sold in India. Pipeline transmission of around 1/4th of the country‟s total LPG. LPG produced for every 10th LPG cylinder in the country. pentane) City distribution gas (CNG. GAIL enjoys dominant position in the natural gas business with a market share of 75%. The company is the only transmitter of gas with a national presence through its pipeline network covering 7850km. 11 | P a g e . PNG) Telecom (Gailtel) Since 1984.Apart from these businesses. More than ½ country‟s piped natural gas supply. MAJOR PRODUCTS AND BRANDS: Petrochemicals (G-Lex.000 MW of power.

it grew organically over the years by building a large network of natural gas trunk pipelines covering a length of around 7000 km. The thrust is to continue the relationship with existing customers as well as add new customers..500 crores which have been approved by the Board of the Company under Navratna Power? Today the company has interest in the business of natural gas. These new Pipeline would include large trunk Pipelines along with smaller Pipelines which would connectivity along trunk lines so that prospective sources and consumers are connected. Exploration and Production. subject to requisite approvals. LPG. it is today and integrated energy company along the natural gas value chain with global footprints. of new pipelines in the year 2011 at the estimated cost of Rs. specially the transmission segment. Starting with a natural gas transmission co. 12 | P a g e . Having started as a gas transmission company in the year 1984. In the year (2007-08) the Board of the Company has recommended the issuance of one bonus share for every two equity shares held.7 lakhs vehicles in the country today running on CNG supplied by GAIL and over 7 lakhs households on piped natural gas (PNG) in the country. The major focus of the company is to maintain its dominant position in the gas business. GROWTH: The company has completed nearly two and half decades of an eventful journey. Households in the country Over 5. The Company has added another 5000 km. Production of LPG for over 7cr.  Production of petrochemicals of around 4 lakhs MTs which is used in the plastic industry. and over 1900 LPG Pipeline Transmission network. City Gas Distributions and is steadily developing its overseas presence. 14. liquid Hydrocarbons and Petrochemicals.


Figure: 2   In addition to supplying natural gas to various consumers.35 MMTPA of liquid Hydrocarbon including LPG from domestic consumption. GAIL produces around 1. GAIL has also setup 7 LPG plants and a petrochemical plant to extract value added products from gas. 14 | P a g e .

multi-benefit project would not only utilize clean development mechanism (CDM) for power generation. The goal set by the company includes doubling of top and bottom lines in the near future. With the APRDC going functional. which are known to cause acute heart diseases. Kanpur. the hospital has acquired a system for pulmonary lung function testing and other base line investigation of air pollution related diseases.845. Indore. Mathura. Vijayawada. GAIL is set to supply Natural Gas in 23 cities under “Blue Sky Project” in Mumbai. but also lead to conversion of gas as well as increased energy efficiency.  GAIL has initiated steam conversion project based on waste heat recovery system from GAIL‟s gas turbines. Kochi. at a cost of about Rs. entry of new competitors. which is more than seven times the original investment of rs. Pune.  Gail has consistent track record of dividend payment. This rare. 3400cr. Delhi. Chennai.65 cr. CORPORATE STRATEGY ADOPTED BY GAIL: The company has develop a long term strategic plan which has been reoriented during the year. Jhansi. Sholapur. keeping in view the unfolding demand and supply scenario. Bareilly.230 cr. Lucknow. Gwalior. and changing dynamics in the market place. Ujjain. bringing down its equity holding to 57. APRDC also works as R&D for development of facilities for diagnosing suspended particles.4 cr. of India. The strategy developed to realize the set goals is as under: 15 | P a g e . one of the major projects of GAIL has been setting up of AIR POLLUTION RELATED DISEASE DIAGNOSTIC CENTRES (APRDCs) in over 20 cities in various parts of the country. Rajahmundry.345 % and thereby contributing to the exchequer and additional amount of Rs. Agra. to the shareholders including Govt. The Government has been disinvesting its shareholding in GAIL from time to time. Ahmadabad.  To Combat the Pollution. and Bangalore. Allahabad. So far GAIL has disbursed dividend of Rs. 6. Hyderabad. by the Government in its equity capital. In the area of corporate social responsibility. Kota.

to 12000 km. This requires the introduction of Compressed Natural Gas for the automotive sector and Piped Natural Gas for commercial and domestic use in 230 cities in a phased manner. The company also plans to strengthen E&P capability and resources by participating as major partner/operator in domestic E&P bidding. Tying up with producers and suppliers for marketing and transmission of natural gas on long term and sustainable basis. such a rapid rise in expected demand and realignment of sources of gas supply will interact to determine the robust future gas structure. 3. there is a need to look at new sources that are coming up. The present sources of natural gas are projected to deplete in the coming years and therefore. with the laying of new pipelines by 2011-12. Expanding of the pipeline structure from 7000 km. This is likely to be realized by security more gas from new gas finds and pursuing early finalization of contract with customers and suppliers. the company is stepping areas having synergy with existing businesses by entering into new and emerging gas rich countries with focus on sourcing of gas and participating in downstream activities. This would involve investment both domestic on-land and offshore fields. 16 | P a g e . The company is aggressively pursuing gas sourcing options both from the new domestic sources as well through international sources by way of Pipelines and LNG routes. On the globalization front. the segment wise business performance of the company is as under. Pursuing of city gas distribution opportunities in the country. In the area of Petrochemical business. During the year under review. the company is examining the possibility of expansion of petrochemical complex and exploring Greenfield opportunities in the sector in India and abroad. This would help in developing E&P as a self sustainable business for augmenting additional supplies of natural gas. The natural gas demand in India is at an inflection point and increase forces are at work that could dramatically increase the natural gas demand. with a balance portfolio of developmental and exploratory projects. BUSINESS SEGMENT PERFORMANCE The company has been achieving an all round excellent rating by government of India since a MOU signing.1. Collectively. 2.

HDPE and LLDPE.e. E&P activities had gathered momentum.91. The gas discoveries in blocks A1 and A3 in Myanmar are maturing to development stage and various studies preliminary to finalization of the development plan 17 | P a g e .10. which has been enhanced by 1.000 TPA Assam Petrochemical Complex at a investment of Rs. 5460 cr.8 MMTPA of LPG. 3) LPG TRANSMISSION AND OTHER LIQUID HYDROCARBONS The company has 7 LPG plants in the country.754 million MT in the year 2007-08. Natural Gas continues to constitute the core business of the company. The company is the only company in India which owns and operates Pipelines for LPG Transmission. 1300 km. 2) PETROCHEMICALS The company owns and operates gas based integrated petro chemical plant at Pata. LPG transmission throughput was 2.000 MT.10. UP with a capacity of producing 4. of network is in the southern part of the country.000 MT and polymer sales was 3. medium and large industrial units to meet their energy and process requirements.043 million MT of LPG.000 TPA.156 million MT of Propane and 0. the production of polymer was 3. The company continues to have focus on securing gas supplies from international markets.00. During 2007-08. It supplies over 80 million cubic meter of natural gas per day as fuel to power plants.348 million MT which mainly include 1. total liquid hydrocarbon liquid production was over 1. The company is currently in the process of setting up of 2.000 TPA of polymers i.80.1) NATURAL GAS The company owns and operates a network of 7000km of natural gas high pressure trunk Pipeline.000 TPA from the earlier capacity of 3.074 million of Pentane.LNG and transnational Pipelines are the two prevalent modes of cross border gas trade and the company has been making all efforts to bring Natural Gas in the country. of which connects western and northern parts of India and 600 km. In the year 2007-08. The company‟s share of gas transmission business is 79% and it holds 70% market share in gas marketing in India.86. The LPG transmission system has a capacity to transport 3. feedstock for gas based fertilizers plants to over 500 small. 4) EXPLORATION AND PRODUCTION In line the company‟s strategy and towards integration along the energy chain. IT has 1900 km LPG Pipeline network.0.

34% Nil Table: 2 18 | P a g e . Presently. 56 in Oman . GujaratSaurashtra. Bengal. During the year under review. Assam and Cauvery. These blocks were awarded to GAIL consortium in CBM-III bidding round.6.7lacs sq km. Mumbai. km.90 Crore has been generated as revenue. the company is involved in oil and gas exploration activities over and acreage of 1. The company‟s telecom business unit-„GAILTEL‟ has approximately 13. two of which are in Chhattisgarh and one in Jharkhand.3 cr. the company has build up an OFC network for leasing of bandwidth as a carriers „carrier‟. The company now holds a participating interest between10% to 80% in 27 oil and gas exploration blocks. Cambay.and its implementation is underway.  BUSINESS HIGHLIGHTS:  Dominant position in the natural gas transmission business with around 75% market share domestically.A beginning has been made by a company in earning revenue from E&P activities. GAILTEL achieved profit before tax of Rs. 5) COAL BED METHANE The company has been participating interest in 3 coal bed methane blocks within the area of 1561 sq. PROMOTERS AND STOCK INFORMATION Key Promoters Market Cap Promoters Holding % Pledged DETAILS Govt of India Rs 47758 crores 57. The company has got stake in A1 and A3 blocks in Myanmar and block no. One of the on-land block in Cambay basin started commercial production from Feb 2008 and Rs. 6) TELECOMMUNICATION Leveraging on its Pipeline network. Of these 9 are on land blocks and 18 are off shore blocks. there are 24 blocks which are in basins such as Mahanadi. In India.

of India holding 57.2011 Comfortable leverage owing to more reliance on internal accruals for funding the capex requirement.05 20698.56 4000.39 Table: 3  MANAGEMENT / INDUSTRY HIGHLIGHTS:   Govt.52 0. a company‟s sales could rise.29 FY 11 32458.05% 10.64 1.63 1.18 16601.4 19.97 4534. It is a useful tool in analyzing the company‟s earnings after tax. It is used to determine the net earnings of the company after paying the production as well as finance expenses. but if costs also rise.34% Industry outlook.17 19040.64 17. that leads to a lower profit margin than what the company 19 | P a g e .13 NA 0. Crore Net Sales OPM % PAT % CASH PROFIT TNW ATNW TOL /ATNW TOTAL DEBT / ATNW DSCR CURRENT RATIO FY 10 24996.19 16.23 19. For example.75 15028.03.55 22729.3 1.57 1.14 16. PAT MARGIN (%) PAT margin is also known as net margins.Neutral (IRG)  PROFITABILITY ANALYSIS: I.73 1. It is a ratio which is used to determine the final earnings of the company on every one Rupee of sales generated.27 43.45 5180.23 FY 12(Estimate) 39346.65% 12.49 17009.43 0. In Rs.35% 10. FINANCIAL HIGHLIGHTS:   Satisfactory liquidity position with cash / bank balance (including FDs) of Rs 2131 crores as on 31.

This is an indication that the company needs to curb its expenses.00% 2009 2010 2011 2012 PAT MARGIN % 12.had when it had lower profits.79% 10.00% 2.00% 8.00% 0.00% 4. II. YEAR PAT MARGIN % 2009 11. EBIDTA MARGIN (%) EBITDA Margin is also known as operating margin.00% 6.97% 10.79% 2010 12.00% 10.00% 12. It is a ratio which is used to determine operating efficiency of the company.56% 2011 10.45% Table: 4 PAT MARGIN % 14. Profit after tax divided by net sales has shown an increment in 2010 and then it has declined YOY but it does mean the profit has declined.e.97% 2012 10. The ratio is used to measure 20 | P a g e .  This is an indication that the company needs to curb its expenses.56% 11.45% Figure: 3 Interpretation:  PAT margin i.

One must look at the operating margin ratio on Y-O-Y and Q-O-Q basis and also compare the same with the peer group.00% 10.00% 5.05% 2012 16.65% 17.35% Table: 5 EBIDTA MARGIN% 25. The higher the operating margins its good for the company as it has a higher income available to take care of its other fixed cost such as interest on debt. YEAR EBIDTA MARGIN% 2009 18.05% 16. the less operating expenses and the bigger company‟s earnings are. what would be the earnings of the company after paying of fixed and variable costs of production. An increasing EBITDA ratio indicates better performance of the company. A higher value would indicate that the company is able to keep its income at a sufficient‟s operating profits i.00% 20.00% 18.23% 2010 19.00% 2009 2010 2011 2012 19.e.23% 15.00% 0. 21 | P a g e .65% 2011 17.35% EBIDTA MARGIN% Figure: 6 Interpretation:    The higher the EBITDA margin value.

17 2012 5180.00 4534.55 Table: 7 CASH PROFIT 6000.55 Figure: 8 Interpretation:   It is the profit i.00 5000.00 1000.37 3000.00 3606.18 5180.00 2009 2010 2011 2012 CASH PROFIT 4000.00 0. obtained by adding depreciation to PAT (profit after tax). 22 | P a g e .37 2010 4000.e.00 2000. GAIL has consistent increase in its cash profit YoY.17 4000. PERFORMANCE ANALYSIS I. CASH PROFIT: YEARS CASH PROFIT 2009 3606.18 2011 4534.

Mr. The major customers include Indraprastha Power Generating Company Limited. 89 for SBPS and 7 for pentane. the online customer ledger was demonstrated to show the dynamic ledgers of some customers who were present at the inauguration. Parle Biscuits. “We have also put in place an accounting system which will allow our customers to have instantaneous access to their ledger details over the internet. It catered to 296 customers: 20 for natural gas and R-LNG.805 crore. Duraline India Private Limited and Resham Polymers. Banerjee informed. The branch office will enable customers to acquaint themselves with the products and services offered by GAIL. The office was inaugurated by Chairman and Managing Director Mr Proshanto Banerjee in the presence of more than 200 customers of R-LNG.” On the occasion. Kajaria Cermaics. Speaking on the occasion. During 2003-04. 42 for propane. “The Delhi Branch Office will provide a single point destination to our customers located in the NCR. Honda SIEL. Propane. Banerjee said. Yamaha Motors Private Limited.” The customers appreciated the initiatives being taken by GAIL to improve the customer services. SBPS & Pentane products. GAIL opened its Delhi Branch Office on April 15. the Delhi Branch Office was part of the Corporate Office and had total sales of Rs 1.GAIL CUSTOMER SATISFACTION In an effort to increase customer satisfaction and provide a one-point destination to all customers. 23 | P a g e . OSRAM. Mr. Maruti Udyog Limited. 2004. Petrochemicals. 138 for polymer.

employees are expected to take initiative and surpass the expectations of the organization. Right from the early stages. 24 | P a g e . the objective has been to achieve highest levels of business growth with a lean and thin workforce. the organization would attain greater heights. GAIL as an organization values commitment. “Engaging our employees for superior results" has been one of GAIL success mantras as it fall under Hewitt‟s Best Employer Zone in terms of the latest Employee Engagement Survey. integrity and sincerity. GAIL being a dynamic organization believes that investing in people by means of training and development and by providing growth opportunities to its employees.GAIL EMPLOYESS ENGAGEMENT GAIL has been one of the success stories amongst the PSU over the last two decades and the relentless pursuit of excellence has been possible only due to GAIL talented and highly motivated workforce. collaborative & supportive working environment and informal work culture are some of the facets of GAIL which makes it a very exciting company to work for. Since inception. In fact. dedication. Freedom to work and respect for individual's opinion are the mantras very much prevalent in day-to-day working of GAIL. This is demonstrated not only by continuously increasing "Year-wise Value added per employee ratio" but also GAIL has one of the highest profitability per employee ratio amongst all the PSUs. Close working relationship with peers & superiors.

This could compete with GAIL‟s transmission pipelines thus impacting the revenues and the overall performance of the company. Moreover. The price of natural gas is not only competitive to these alternative fuels but also less volatile resulting in demand growth out spacing the supply. to expand its existing pipelines at relatively low cost to meet any increase in supply arrangements with all of the major natural gas producers in India and purchases substantially all the natural gas produced by ONGC. Besides.  Another natural gas transmission player GSPL (Gujarat state PETRONET Ltd) has PNGRB to lay three cross country pipelines across India. growth in demand for gas has continuously out spaced its supply. SUBSTITUTION THREATS: In India. leading to a gas deficit scenario. GAIL is better positioned. The length of the said pipeline is 3800 kms. potential competitors could face issues in locating adequate supplies of natural gas. RGTL is another private sector player who could provide competition to GAIL in future.COMPETITIVE ANALYSIS:  The gas transmission has significant natural barrier which include substantial investment that would be required by a new entrant in order to duplicate the natural gas transmission and processing facilities operated by GAIL and the relatively long lead time before such assets would generate a reasonable return on investment. it will be insufficient to meet the entire demand. although supply is expected to increase at faster rate. OIL and the existing JVs operating in India. Given below the data and graph for demand for natural gas for various segments in India and supply for natural gas as projected by MoPNG in India. Going forward. Natural Gas primarily competes with alternate fuels such as Naphtha and LPG. given its existing asset base. 25 | P a g e .

YEARS SECTORS(mmtpa) POWER FERTILISER CITY GAS 2011-12 149 57 18 2012-13 186 68 22 2013-14 213 68 29 2014-15 243 68 37 PETRO CHEM REFINERY 4 4 4 4 Table: 9 DEMAND FOR NATURAL GAS FOR DIFFERENT SEGMENTS IN COUNTRY 300 250 213 200 MMTPA 150 100 57 50 0 2011-12 2012-13 2013-14 YEARS 2014-15 18 4 149 186 Power Fertiliser 68 22 4 68 29 4 68 37 4 City Gas Petro Chem Refinery 243 Figure: 10 YEARS SUPPLIERS ONGC OIL JVs/ PRIVATE 2012-13 25 3 13 2013-14 28 3 13 2014-15 27 3 12 2015-16 24 3 11 Table: 11 26 | P a g e .

 Significant sovereign ownership and strategic importance. considering the value of its investments. access to surplus deposits. 27 | P a g e . WEAKNESS:  GAIL being a PSU confronts procedural delays from government of India with respect to certain approvals.NATURAL GAS SUPPLY PROJECTION 30 25 25 20 MMTPA ONGC 15 10 5 0 2012-13 2013-14 2014-15 2015-16 3 3 3 3 13 13 12 11 OIL JV/Pvt 28 27 24 Figure: 12 I. This t times delay the company‟s projects and could act as an impediment for further growth as well. and comfortable debt protection measures. which is characterized by high entry barriers.  Low financial risk profile.SWOT ANALYSIS STRENGTH:  Leadership position in natural gas transmission sector.  Regulated and stable returns have resulted in healthy profitability and stable cash generation in the past. BUSINESS MODEL .  Benefits derived from downstream integration into Liquefied Petroleum Gas (LPG) and petrochemicals.  High financial flexibility. high profitability. considering its strong structure. and good standing among lenders.

Leveraging pipelines for Telecom. This results in availability of gas in domestic markets. Since GAIL in the transmission business. Since GAIL has a chunk of revenues coming from old pipelines. its revenue could be impacted in the next few years. in the process also impacting ROCE. 28 | P a g e . As per the government of India directives. low availability of gas results in lower capacity utilisation and hence lower revenue. Petrochemical industry expected to grow at CAGR of 17% over a period of 3years. OPPORTUNITIES:      GAIL finds huge gas in KG (Krishna & Godavari) and Mahanadi basin increasing the availability of natural gas. GAIL has been sharing the under recoveries of the national Oil marketing companies.This may result in government deregulating the natural gas prices. it share the subsidy burden relating to only LPG not on any other fuel like petrol and diesel. The output has declined to 30 MMSCMD from the level of 50+ MMSCMD. it is exposed to the risk of sharing the under recoveries with the Oil marketing companies is taken by the government of India and could differ from time to time. in order t make LPG affordable to domestic consumers. This could affect the revenues from the existing pipelines while it could enhance the revenue from new pipelines. Since Government of India is a major stakeholder in GAIL. PNGRB has fixed the returns for natural gas transmission companies at 12% of ROCE as against of 12%of ROE earlier. which is going to boost the realization. However one of the advantages enjoyed by GAIL against other upstream players is that as of now.  The regulator has revised the gas transmission pricing norms.  Since FY 11 the output of the KG D6 block operates by reliance industries has started to decline. This growth need petrochemicals capacity expansion The overall gas production is set to double within 3 to 4 years thus demand meeting the supply . it could impact the GAIL‟s revenue. Entering into exploration business. For FY 11 the company had made a provision of Rs 2111crs on account of sharing the under recoveries of OMCs. Till FY 11 the total subsidy burden shared by GAIL amount to Rs 10650 crores. since the 2003-2004. Therefore if KG D6 gas production does not improve in near future.

nuclear energy. Domestic marketing makes the company subject to threat of subsidy burden and pricing policies of petroleum ministry. Fluctuation in Gas and Petrochemical Price. Intense Domestic Competition Shift to Alternative Sources of Energy like hydro energy. thermal energy. 29 | P a g e .     Potential for efficiency gains Transmission system upgrading/expansion Strong domestic energy demand growth. Increasing Demand for LNG. Changes in national energy policy. The main problem is that the price of gas is regulated by the government. wind energy. Rising investment requirement for new upcoming project. THREATS:         Rise in natural gas prices can lead to reduction in margin in petrochemical business. Expanding Indian Natural Gas Market. Petrochemical prices may go down in the next two years on account of capacity additions in the industries.

GAIL enjoys high financial flexibility on account of strong financial position and good standing among lenders. 30 | P a g e . 301. with more reliable on internal accruals for funding the capex requirement.  Leverage The company‟s leverage ratios are at comfortable level on account of substantial net profit and low dependence on external debt.67. Due to healthy cash generation . the company‟s debt coverage indicators remain robust.CONCLUSION  Revenue The company‟s revenue registered a growth of around 30% in FY2011 over FY2010. the company earned Rs.77 crores from dividend and FD interest income respectively. With healthy growth in profits.2 crores and Rs. The company‟s cash & bank balance (including fixed deposits) stood at Rs 2131croresas on March 31. 2011. GAIL‟s borrowing level have remained below expectation with TOI/TNW for FY11 at 0.  Non operating Income The company enjoys dividend and interest income on account of its investment in various group companies/JVs and through fixed deposits with banks.  Cash flow / Liquidity The company liquidity position is satisfactory on account of high net profit earned by it resulting in high cash accruals. 91.This was mainly backed by improved physical performance in gas transmission segment and increase in APM gas prices. During FY2011.

html Law & Practices.BIBLIOGRAPHY AND REFERENCES Book Referred: http://www.js p?symbol=GAIL http://www.indiainfoline.asp www.P.N 31 | P a g e http://www.asp#axzz1vu9Uwoq8 http://en.gail.pdf IA%29%20LTD/GAIL/532155/Scrips http://www.htm - http://en.investopedia.indianfirms. Websites and Blogs: -

Sign up to vote on this title
UsefulNot useful