GAIL Q4 results mull over subsidy burden, petrochem revenues high

GAIL Q4 results mull over subsidy burden
GAIL (India) Ltd. formerly known Gas Authority of India Ltd. has recently declared a revenue growth of around 25 percent under its petro-chemical segment in the fourth quarter results. The trading of Natural Gas also generated revenues as high as Rs. 7,153 crore.

Company's consolidated net profit for the year grew 20.8% to Rs 4,020.97 crore as the results from ventures and subsidiary segments remain highly profitable. Revenues grew almost 30% to Rs 35,106.65 crore.

Yet the profits seem to be falling as March 2011 quarter includes three times subsidy burden on oil prices as levied by the government. The operating profit margins fell 630 basis points to 14.5%, to Rs 901.7 crore. Another reason was more than a double increase in staff cost to Rs 275 crore that the company came across in the same quarter.

The subsidy burden of GAIL for Q4 FY11 surpassed the average burden of around Rs 400 crore seen in the other three quarters of this fiscal.

On top of that, GAIL is planning for further expansion projects of Rs 27,000-crore for which it has planned to borrow Rs 14,200 crore by FY13. Such bulky cash outflows are affecting the finances and the current scrip trades 13.7 times its consolidated profit in financial year 2010-11; comparatively lower than its smaller counterparts.

Read more about: results, gail, oil and gas, bse, nse
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