GAIL profit dips 9 pc in Q2 on gas marketing woes

But low prices hurt the firm financially. GAIL reported a pre-tax loss of Rs 334.55 crore on its natural gas marketing business as the pandemic impacted demand. "The COVID-19 pandemic globally and in India has impacted business in general and caused a slowdown of economic activity," GAIL said. The firm said its physical performance has improved as compared to the previous (April-June) quarter and reached almost normal levels.

GAIL India Ltd, the nation's biggest gas company, on Tuesday reported 8.5 per cent drop in September quarter net profit after losses on gas marketing offset gain made in the gas transportation business. Consolidated net profit of Rs 1,068.16 crore, or Rs 2.47 per share, in July-September, is as compared with Rs 1,167.58 crore, or Rs 2.59 a share, net profit in the year-ago period, GAIL said in a filing to stock exchanges.

Turnover slipped 23.7 per cent to Rs 14,104.80 crore largely due to lower gas prices during the quarter. The company said after relaxations in the lockdown conditions and with the resumption of economic activities, the volumes picked up in all segments to normal levels in the quarter under review.

The physical performance improved by 18 per cent in natural gas transmission, 9 per cent in gas marketing, 10 per cent in LPG transmission, 22 per cent in petrochemical sales and 12 per cent in liquid hydrocarbon sales. But low prices hurt the firm financially.

GAIL reported a pre-tax loss of Rs 334.55 crore on its natural gas marketing business as the pandemic impacted demand. The loss was however lower than Rs 614.06 crore pre-tax loss in April-June. The business had Rs 241.72 crore of pre-tax profit in July-September 2019. The firm which owns most of the nation's cross-country gas pipeline network saw its pre-tax profit from the gas transportation business rise 27 per cent to Rs 1,021.18 crore in the second quarter of the current fiscal.

With the resumption of economic activity bringing back demand, the petrochemical business clocked a pre-tax profit of Rs 176.31 crore as compared to a loss of Rs 82.32 crore in the year-ago period and Rs 154.43 crore in June quarter of the current fiscal. "The COVID-19 pandemic globally and in India has impacted business in general and caused a slowdown of economic activity," GAIL said.

The firm said its physical performance has improved as compared to the previous (April-June) quarter and reached almost normal levels. "The group has assessed the possible impact of COVID-19 in preparation of financial results based on the internal and external sources of information and expects no significant impact on the continuity of the business on a long term basis, the useful life of the assets and overall financial position of the group," it said.

Later in a statement, GAIL said its petrochemical business has seen a major turnaround with production volumes jumping by 65 per cent to 221,000 tonnes as against 134,000 in June quarter. Manoj Jain, Chairman & Managing Director, GAIL said the company's plants and pipelines have achieved a pre-COVID level of performance.

He further added that though the capex during the first quarter was affected due to lockdown, GAIL has moved swiftly to make up for the lost time and is trying to accelerate the progress in its ongoing projects. At a post-earnings investor call, GAIL Director (Finance) A K Tiwari said the company expects to meet the full-year capital expenditure target of Rs 6,500 crore for the current financial year. For 2021-22 , capex is expected at Rs 6,600 crore.

During April-September, the company received 41 LNG cargoes from the US, with 15 having been sold overseas and 26 coming to India, he said adding October 2020 to March 2021 would be better than the first six months of the current fiscal for LNG trading business. He said the company has no plans for buyback of shares nor has has plans to sell its stake in China Gas.