New Delhi/Mumbai: GAIL (India) Ltd, the nation’s biggest gas distributor, plans to invest Rs 3,413 crore ($812 million) this fiscal.

The company will spend Rs 2,565 crore on expanding its network of pipes carrying gas across India, chairman Upendra Dutta Choubey said in New Delhi on Tuesday. It will use cash reserves to fund the expansion and doesn’t plan any borrowings in this fiscal year, he said.

GAIL India will invest Rs 500 crore on exploring for oil and gas and Rs 187 crore on petrochemicals, he said.

The company said profit rose 6% in the fourth quarter on higher revenue from gas and chemical sales.

Net income increased to Rs 722 crore in the three months ended March 31 from Rs 681 crore a year earlier.

The state-run distributor is adding pipelines and chemical capacity to boost revenue and offset slowing profit from selling gas, which accounts for half its revenue. The company paid Rs 1,314 crore in the last fiscal year as subsidy to help state-run refiners cover part of their losses from selling fuels below cost against Rs 1,488 crore a year earlier.

“The company is investing in other businesses to ensure that losses from subsidy payments don’t affect future earnings,” said Ballabh Modani, an analyst with Mumbaibased Enam Securities Pvt, who recommends investors buy the share.

Sales in the quarter rose 27% to Rs 4,935 crore from Rs 3,883 crore last year. GAIL India will pay investors a dividend of Rs 6 a share for the financial year ended March.

GAIL plans to spend $4 billion on two plants that would each annually produce 1 million tonnes of ethylene, used in making textiles and plastics, Choubey said on October 17, 2007.

The company’s finance director R K Goel had then said the firm may borrow Rs 1,500 crore in the first quarter of the next fiscal year (which began in April, 2008).

India controls gas prices, forcing suppliers such as GAIL to sell at roughly half the US benchmark price at Henry Hub in Louisiana.

GAIL India plans to import as many as six cargoes of liquefied natural gas this year for the Dabhol power plant in western India, said A K Purwaha, director for business development.

LNG will be imported in spot tenders in cargoes of 1,35,000 cubic meters each, he said.

GAIL and NTPC Ltd, the nation’s biggest power producer, each own an equal stake in the Dabhol project, which houses a 2,144 mw generation unit and an LNG import terminal.

The plant built by Enron Corp in 1996 and formerly known as Dabhol Power Co has been renamed Ratnagiri Gas and Power Pvt Ltd. The project was shut in the summer of 2001 after the state-run distributor stopped paying its bills, saying prices were too high. It was revived in April 2006 after a five-year shutdown.

GAIL is considering a plan to give free shares to shareholders, Choubey said on Tuesday. The company said in March it plans to issue bonus shares.

Source : DNA