GUJARAT GAS

Gujarat Gas posted a set of dismal numbers for Q2FY14. The company posted a consolidated net sales of Rs.828 crore, which was very flat YoY. The operating costs were down 7% at Rs.664 crore and this was thanks to the lower raw material cost. The company ended the quarter with a net profit at Rs.119 crore, down 19% sequentially and down 20% on YoY.

In terms of volume of gas sold, it sold 247 million metric standard cubic metre (mmscm) in current Q2 v/s 239 mmscm on YoY. During the quarter, the company connected 7600 new residential customers, taking the total tally to 36,000 till end of 9M in FY14 and this is most certainly much better than 34,600 connections made in entire of FY13. The company at present supplies CNG gas through 54 CND stations. Thus pricing power will ensure long term sustainability of margins. Earlier, there was major speculation over the 65.12% stake sale of British Gas but it all came to a rest after British Gas sold controlling stake in its Indian subsidiary to the state-owned company Gujarat State Petroleum Corporation (GSPC) for Rs 2,464 crore. BG’s shareholding was acquired by Gujarat Distribution Networks Limited (GDNL), a company in which 100% is held by GSPC Group. GDNL along with GSPC made an open offer to acquire additional 33.34 million shares constituting 26% of the fully paid-up share capital of Gujarat Gas at price of Rs 314.17 per share. This stake buying though disappointing to shareholders of the company will prove good for the company in the long run.