British Gas, GAIL plan to offload stakes in Mahanagar Gas
By The promoters have so fa | 10 Oct 2002
Mumbai: The UK-based British Gas and the Gas Authority of India (GAIL) are exploring possibilities to reduce their stake holdings in Mahangar Gas (MGL), the compressed natural gas and piped gas supplier in Mumbai.
GAIL is a public sector gas distributor. Currently, British Gas and GAIL have a 49-per cent stake each in MGL, while the Maharashtra government holds the remaining 2 per cent.
Institutional sources say British Gas and GAIL wish to reduce their equity from 49 per cent to 35 per cent. As per the current plan, the promoters together would hold just 70 per cent equity, while the remaining 28 per cent will be offloaded either to the public or to financial institutions.
The Maharashtra government is also working on a proposal to increase its stake in MGL from the current 2 per cent to 10 per cent. The sources say premier financial institutions like IDBI, IDFC and ICICI are evaluating options to acquire minority stakes in MGL. No final decision has been taken so far.
MGL officials respond: “The promoters have plans to reduce their stake in the company. But they have not finalised any plans to reduce their exposure in MGL. It can take place either through an initial public offering or by offloading the minority stake to some strategic partners.“
The promoters have so far invested around Rs 300 crore in MGL. At present, the gas supplier has over 1 lakh piped gas customers and around 30 CNG stations in Mumbai. The natural gas allocation to MGL is at 1.5 million standard cubic metres per day (mscmpd), while only 0.6 mscmpd is sold. The debt portfolio of MGL is around Rs 63 crore.
The company has plans to invest another Rs 150 crore in the current fiscal to expand its piped gas and CNG activities. This investment will be mobilised through internal accruals and debt.