GAIL profit down 10% as subsidies rise

GAIL reported a 10-per cent drop in its second-quarter net profit after a steep rise in its subsidy outgo. Net profit dropped to Rs985.38 crore in the July-September period compared to Rs1,094.41 crore a year ago.

''Our profit is down primarily because of a 39 per cent rise in outgo towards LPG subsidy,'' Tripathi said, adding the company paid Rs786 crore towards subsidizing cooking gas against Rs567 crore in the year-ago period. Also, there was a sharp fall in profit in the trading and LPG transmission businesses.

These factors more than offset the good show of the natural gas transmission and petrochemicals segments, which showed growth in profits despite a fall in volumes. This was largely because operating margins fell more than 400 basis points over the same period last year to around 12 per cent.

The trading businesses which salvaged GAIL's results in the June quarter slipped badly in the September quarter. Compared to the same period last year, the gas trading segment's profit fell around 15 per cent, while the LPG trading segment's profit fell more than 80 per cent.

Also, though LPG transmission volumes grew marginally, the segment posted an operational loss of around Rs49 crore. This followed the Directorate General of Hydrocarbons (DGH), the downstream regulator, derecognising revenue of Rs123 crore during the quarter due to revision of LPG pipeline tariff.