Jain revives GAIL Gas stock market hopes
GAIL has not given up on a more than five-year-old plan to list its gas retail subsidiary GAIL Gas on the stock market.
"We are discussing this (GAIL Gas listing) at various levels," GAIL director finance RK Jain said during the company's second-quarter earnings conference call on October 31 (2023). "We certainly have this in mind, but it is difficult to provide a timeline."
A well-placed source adds that GAIL wants first to carry out a 'reverse merger' transferring some or all its gas retail assets to GAIL Gas before the stock market launch. "We will take a final call on this next year (2024-25)," he says.
A gas sector source explains that GAIL wants to strengthen GAIL Gas through the proposed reverse merger, emulating GSPC Gas's 'reverse merger' into Gujarat Gas on June 12 (2013). "GAIL hopes to create more value for GAIL Gas by bunching all city gas retail operations under one entity," he tells us.
"Listing will not only give a much-needed boost to GAIL Gas but also facilitate business growth." GAIL's exposure to the city gas retail business is reflected in three ways.
First, GAIL directly operates six PNGRB-authorised areas received without competition: Varanasi in Uttar Pradesh, Khorda and Cuttack in Odisha, Patna in Bihar, and Ranchi and East Singhbhum in Jharkhand. Second, GAIL partners in seven joint ventures: IGL, Central UP Gas, Aavantika Gas, Bhagyanagar Gas, Green Gas, Maharashtra Natural Gas and Vadodara Gas.
Mumbai-based Mahanagar Gas is an associate company. Third, GAIL operates city gas areas through GAIL Gas.
In total, including its JVs and subsidiaries, GAIL is authorised to work in 67 areas, including Delhi, Mumbai, Hyderabad, Bengaluru and Kolkata. GAIL tells us these gas retail networks provide around 66% of the country's 11m household gas connections.
Of India's 5600 CNG stations (correct on March 31, 2023), GAIL and its JV and subsidiary companies operate 2360 CNG stations or 42%. "In 2022-23, we connected more than a million households to piped gas networks in our authorised areas," we hear.