GAIL Q4 profit dips 69% on Dabhol investment write-down

State-owned gas utility GAIL India Ltd today reported 69 per cent drop in fourth quarter net profit as it wrote down the value of its investment in Dabhol power plant.
Net profit for the January-March quarter of the last fiscal was Rs 260.16 crore, or Rs 1.54 per share, as against Rs 832.13 crore, or Rs 4.92 a share, net earnings in the same period a year before.
"We took an impairment of investment in Ratnagari Gas and Power Pvt Ltd (the company that runs Dabhol power plant) for Rs 783 crore," GAIL Chairman and Managing Director B C Tripathi told reporters here.

The decline in net profit would have been higher but for Rs 489 crore it got from listing of its joint venture Mahanagar Gas Ltd by way of sale of shares through an IPO.
"The quarterly profit without the impact of the above impairment is Rs 1,043 crore, which is higher by 25 per cent on year-on-year basis," he said.
Turnover was up 16 per cent at Rs 13,644 crore.

For the full fiscal 2016-17, net profit was up 57 per cent at Rs 3,503 crore mainly becaue of "a turnaround in the company's petrochemical business, increase in profits from gh gas transmission business and partial sale of stake in MGL", he said.

But for the impairment and one-time gain from MGL share sale, GAIL's net profit in the fiscal year ended March 31, 2017 should have been Rs 3,797 crore, he said.
Tripathi said the 1967 MW Dabhol power plant is producing just 500 MW of power and its 5 million tonnes a year LNG import facility is operating at just 1.5-2 million tonnes in absence of a breakwater to shield the port from high tidal waves.
The impairment was taken because of accounting requirement to reflect the value of GAIL's investment at current operating capacities, he said.
The project is being demerged by separating power and liquefied natural gas (LNG) units. GAIL will get charge of the LNG block while state-owned power producer NTPC would be the largest shareholder in the power block.

"We have tendered for building breakwater and it should be complete by 2019. The LNG terminal will then operate at its full capacity," he said.
Tripathi said GAIL Board has proposed a final dividend of Rs 2.70 per share totalling to Rs 1,535 crore for 2016-17, up by 120 per cent as compared to FY 2015-16.
During 2016-17, GAIL also issued Bonus share in ratio of one bonus share for every three equity shares held.
GAIL, he said, registered a 73 per cent jump in sale of petrochemicals was up by 73% while natural gas marketing and transmission volumes were up up to 10 per cent.

Tripathi said GAIL is currently executing gas pipelines worth Rs 20,000 crore and another Rs 10,000 crore worth of lines are under various stages of evaluation.
The pipelines under execution include Jagdishpur-Haldia line that will take the environment friendly fuel to the east. Current projects will be completed by 2019-20, taking GAIL's pipeline network to 15,000 km from current 11,000 km.