Gail plans firms for construction, pipelines
PUBLIC sector gas transportation major Gail India plans to set up two new corporate entities—a pipeline manufacturing firm and a construction company. The proposed companies could be two separate JVs with strategic partners where Gail would have minimum 50% equity stake in each. The plan is part of company’s strategy to enhance its turnover from Rs 16,047 crore (2006-07) to 50,000 crore by 2011. Confirming the move, Gail chairman & managing director UD Choubey told ET: “We are considering to set up two companies with or without strategic partners. In case of JVs, we would join hands with top domestic or international players in the respective fields.” It is learnt from official sources that the company is in the process of instituting feasibility studies for the two projects and the report would be soon placed before the board for its approval. The proposals are in sync with company’s plan to execute massive projects both within the country and abroad in the next five years. Explaining strategy a gail official said: “Pipeline laying is approximately 35% of the total project cost. Gail is expected to invest about Rs 16,000-Rs 18,000 crore in expanding its pipeline networks within the country in the next five years. Our own projects alone would involve construction works worth Rs 6,500-7,000 crore. Based on this, the proposed construction company would be able to generate a profit of Rs 1,400 crore in the next five years by executive only Gail’s projects.” Gail’s strategy to set up a separate pipeline firm is driven by two factors; while profit motive is secondary, it is primary concern for the company to make available pipes for massive projects it would undertake in the next five years within the country and abroad.