GAIL India, the nation's largest natural gas distributor, said profit in the fourth quarter plunged to a third from a year earlier, after the company incurred a one-time loss on an investment in a joint venture. Net income for the quarter ended in March stood at 2.60 billion rupees ($40 million), compared with 8.32 billion rupees a year earlier, the state-owned company said in a statement on Monday. Mumbai-based brokerage Kotak Institutional Equities had expected a profit of 11.18 billion rupees.
GAIL said the latest quarter included a provision of 7.83 billion rupees towards a loss in the value of its stake in joint venture Ratnagiri Gas and Power. Sales from operations grew more than 16% to 136.44 billion rupees. Revenue from petrochemicals business jumped more than 57% to 17.66 billion rupees, aided by expansion in capacity of its plant in the northern Indian state of Uttar Pradesh. Natural gas sales grew 13% to 103.71 billion rupees, while gas transmission revenue expanded 14% to 11.74 billion rupees.
GAIL has been grappling with unsold inventory of expensive long-term contracts of U.S. natural gas which it had bought in the early part of this decade when prices were higher. The U.S. natural gas exports are priced based on domestic prices, while global LNG sales are linked to the price of crude oil. GAIL had got into the agreement with U.S. suppliers when global oil prices hit $100 a barrel, while American gas prices slumped amid a boom in production from Shale fields.
However, amid a global glut and a slump in prices, GAIL struggled to find customers for the expensive gas. In a news conference on Monday, Chairman B.C. Tripathi said the company will swap 1 million tons of imported LNG through time contracts in the next fiscal year, he said. According to a Reuters report in March, GAIL has signed its first time-swap deal with Swiss trader Gunvor to sell some of the U.S. LNG.
India plans to more than double its liquefied natural gas import capacity to 50 million tons a year, as the nation seeks to reduce pollution and cut reliance on thermal fuels such as coal. India imports more than three-fourth of its crude oil requirements. Revenue from LPG and liquid hydrocarbons sales increased 30%. GAIL's LPG business has benefited in the second half of the last fiscal year from higher prices and lower domestic gas prices.