Mukesh Ambani invests Rs 12,725 cr in gas pipeline firm RGTIL

It's making huge losses as gas production from KG basin in the Bay of Bengal has declined

Billionaire Mukesh Ambani has invested Rs 12,725 crore more in his unlisted gas pipeline company, Reliance Gas and Transportation Infrastructure (RGTIL), by way of share capital and unsecured loans, helping the loss-making firm’s net worth turn positive at Rs 877 crore in 2016-17 from a negative net worth of Rs 2,519 crore in the previous financial year.

The company, which transports gas from the Andhra Pradesh coast to its clients in western India, is making huge losses as gas production from Reliance Industries’ Krishna-Godavari (KG) basin in the Bay of Bengal has declined.

In its regulatory filings, RGTIL said a continued fall in gas production from the KG basin resulted in lower capacity utilisation of pipeline and consequent losses and erosion in net worth. “In order to meet the external debt obligations, promoters have provided funds by way of optionally convertible preference shares and unsecured loans to the tune of Rs 12,725 crore as on March this year, due to which the net worth of the company has become positive,” it said.

While the company is privately held by Mukesh Ambani-controlled firms, its fortunes are tied to production from RIL’s gas fields.

RGTIL said its long-term prospects had improved considering increased exploration activities in the KG basin and expected commissioning of LNG terminals. The company made lower net loss of Rs 391 crore in 2016-17 (FY17), compared to a loss of Rs 1,736 crore reported in the 2015-16 (FY16). The company’s finance costs fell by 31.6% to Rs 1,054 crore from Rs 1,540 crore.

The company’s revenues from operations declined 21.8% from Rs 1,050 crore to Rs 821 crore in the same period. However, its other income tripled from Rs 125 crore in FY16 to Rs 377 crore in FY17.

With fresh infusion of capital, the company’s debt reduced by a fifth to Rs 13,160 crore as on March 2017 as compared to Rs 16,240 crore reported in FY16.

RGTIL’s 1400-km pipeline has the capacity to transport up to 85 million metric standard cubic metre per day (mmscmd) of natural gas. The ramp-up in transportation will depend on the extent of increase in production by RIL and gas production by other discoverers, ratings firm Crisil said last month, while giving it the top rating.