This story is from June 27, 2005

Gas find: GSPC sees turnover skyrocketing

Narayan B Bhatt / TNN / Jun 27, 2005, 21:36 IST

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AHMEDABAD: The huge gas find by Gujarat State Petroleum Corporation (GSPC) could see its turnover spurt to over Rs 12,000 crore in 4-5 years time.

Gas find: GSPC sees turnover skyrocketing

AHMEDABAD: The huge gas find by Gujarat State Petroleum Corporation (GSPC) could see its turnover spurt to over Rs 12,000 crore in 4-5 years time. Fivemajor listed state PSUs — GSFC, GNFC, GACL, GIPCL & GMDC — had a combined turnover of Rs 7000 crore in 2004-S05.
So, in spite of being one of the youngest of all state PSUs, GSPC is set to emerge as the largest in a few years time, though its turnover was Rs 536 crore in 2003-04.
On a conservative net profit margin of around 10 percent, it's profit of about Rs 1,200 crore in 4-5 years time would be more than the total net profit of Rs 726 crore achieved by the 5 currently listed PSUs. The profits would double to Rs 2,400 crore if the company were able to raise its margins to 20 percent.
GSPC's MD, DJ Pandian, told TOI that over the next two years the company will spend Rs 1,500 crore to begin commercial production in the first field by end of 2007.

"Initially GSPC will spend Rs 500 crore from its internal accruals. Thereafter, another Rs 500 crore will be raised through debt as currently the company is debt free. The remaining Rs 500 crore will be funded through an initial public offer (IPO) which will happen in the next 6-12 months," added Pandian.
On Sunday, it was announced that GSPC has found 20 trillion cubic feet...
...of natural gas reserves worth about USD 50 billion in Krishna Godavari basin.

A leading Mumbai-based merchant banker said that while everyione will pitch for managing GSPC's upcoming IPO, it is still too early to arrive at any valuations.
Gujarat government directly owns around 95 per cent of GSPC's share capital.
Some idea of what GSPC's potential value could be can be estimated by looking at the financials of two major gas distribution companies, GAIL and Gujarat Gas.
GAIL's stock price is Rs 222 per share, with a turnover of Rs 12,435 crore and net profit of Rs 1947 crore in 2004-05. Gujarat Gas share price closed at Rs 913 onMonday.
For the year ended December 2004, it posted sales of Rs 653 crore and a net profit of Rs 77 crore.

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