GAIL (India) Ltd., the country’s largest gas distributor, on Thursday, reported a 77.5% slump in March quarter net profit after high gas prices and supply disruption from Russia impacted earnings across businesses.
The company posted a net profit of ₹603.52 crore in January-March compared with ₹2,683.11 crore in the same period a year earlier, according to a stock exchange filing.
The fall in profit was because gas volumes dropped due to high prices and a snag in supplies from Russia.
“High prices and non-availability of lower price long-term LNG affect every segment of business,” GAIL chairman and managing director Sandeep Kumar Gupta told reporters here.
Because of high prices, some consumers shunned buying gas and instead used cheaper liquid fuels like naphtha. This along with a former unit of Russian energy giant Gazprom stopped liquefied natural gas (LNG) supplies because of sanctions that followed the Ukraine war, resulting in lower gas volumes transmitted through GAIL pipelines.
GAIL not just earns from selling gas but also from transporting fuel.
Besides, lower supplies meant the company had to cut supplies to some customers, including its own petrochemical plant.
The natural gas transmission business reported an operating loss of ₹16.41 crore in the fourth quarter of the 2022-23 fiscal (April 2022 to March 2023). Pre-tax earnings from natural gas marketing declined 72% to ₹487.40 crore, while the petrochemical business reported an operating net loss of about ₹401 crore.
“We had to take a hit practically in every segment of the business,” Mr. Gupta said.
With prices softening in recent weeks, GAIL has got supplies shored up and is now supplying gas to full contracted volumes to all consumers since March 16.
Sefe Marketing and Trading Singapore Pte Ltd. (SMTS), erstwhile Gazprom Marketing and Trading Singapore Pte Ltd., has also resumed normal supplies of LNG, Mr. Gupta said, adding volumes and margins are expected to return to normal in the current year.
For the full 2022-23 fiscal, net profit halved to ₹5,301.51 crore while revenues soared 57% to ₹1.46 lakh crore.
Mr. Gupta said prices of gas internationally have softened, which will boost consumption in the country.
Gas consumption is likely to see a 6-7% growth, he said. “We hope the situation should normalise. We don’t anticipate prices to be very high (this year).”
During the March quarter, natural gas transmission volume stood at 108.23 million standard cubic metres per day while 89.89 mmscmd of gas was sold.
Mr. Gupta said the company incurred its highest-ever capex of about ₹9,100 crore during FY2022-23 mainly on pipelines, petrochemicals and equity to JVs, which is 15% higher than the annual target of ₹7,918 crore.
For 2023-24, GAIL has planned a capex of about ₹10,000 crore, which will be funded through a combination of internal accruals and borrowings.
The company is already in the market to borrow ₹1,500 crore.
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