GAIL’s net profit slips 55% year-on-year in the second quarter of FY23
India’s state-owned GAIL on Friday reported a 55% drop in its consolidated net profit to ₹1,305 crore for the July-September quarter of this fiscal year due to lower gas sales due to power outages. supply of a former unit of its Russian supplier, Gazprom.
On a sequential basis, the decline in net earnings was more pronounced. It fell 60% from ₹3,251 crore in the first quarter of FY23.
GAIL’s consolidated revenue increased by 77% year-on-year to ₹38,970,000,000 in the second quarter of FY23. On a quarterly basis, GAIL’s total revenue increased slightly by 2.5% from ₹38,033 crore in Q1 FY23.
GAIL CMD Sandeep Kumar Gupta said the company has incurred capital expenditures of around ₹3,970 crore in the current half-year, mainly on pipelines, petrochemicals, joint venture equity, etc., or 53 % of annual target.
GAIL has been declared a candidate for resolution by the creditors’ committee for the acquisition of JBF Petrochemical through the corporate insolvency resolution process. With this, the company will further expand its presence in the southern part of the country, he added.
In accordance with shareholder approval, the company issued bonus shares in September 2022 in the ratio of one capital share of ₹10 each for two existing capital shares of ₹10 each. Accordingly, earnings per share have been restated for all comparative periods presented in accordance with Ind AS 33, it added.
Decline in gas sales
During the quarter, natural gas transport volume was 107.71 million standard cubic meters per day (MSCMD) in Q2 FY23 compared to 109.47 MSCMD in Q1 FY23.
Gas sales volume stood at 92.54 MSCMD compared to 100.84 MSCMD in the previous quarter (Q1 FY23). Liquid Hydrocarbons (LHC) sales stood at 231 thousand tons (TT) against 220 TT and Polymers sales stood at 108 TT against 109 TT compared to the previous quarter.
“Due to ongoing geopolitics, there has been an interruption in liquefied natural gas (LNG) supplies from one of the company’s long-term LNG suppliers. The company has taken various measures, including reducing supplies to downstream customers and its internal consumption at the Pata petrochemical plant by reducing petrochemical production to have sustainable operation,” GAIL said in a stock exchange regulatory filing.
In 2012, GAIL signed a 20-year agreement with Gazprom to purchase 2.85 million tonnes (mt) of LNG. Supplies began six years later and were expected to reach full volume in 2023. Gazprom Marketing and Trading Singapore (GMTS) had signed the agreement on Gazprom’s behalf. GMTS was transferred to Gazprom Germania and in early April Gazprom relinquished ownership of the German unit. Subsequently, the former Gazprom unit defaulted on LNG deliveries to India.
To counter this, last month GAIL signed a memorandum of understanding with Abu Dhabi National Oil Company (ADNOC) to explore opportunities for collaboration in LNG supply and decarbonization, including short-term sales agreements and long-term.