Calcutta, Nov. 6: Indraprastha Gas, the natural gas distribution company, would be investing Rs 183.3 crore in the current year to expand its network in the adjoining areas of Delhi, said managing director A. K. De.
The company operates in Delhi at present, but now intends to expand its network to Gurgaon, Faridabad and Noida. “We are currently studying the feasibility of our proposed expansion,” De said.
Indraprastha Gas has budgeted an investment of Rs 147.3 crore in its CNG (compressed natural gas) distribution network, and Rs 36 crore in its PNG (piped natural gas) business.
While CNG is an auto-fuel, PNG is a substitute of liquefied petroleum gas (LPG) — the most popular domestic cooking gas. PNG, the company claims, is 50 per cent cheaper than LPG.
“Already some 78,000 vehicles in Delhi run on CNG. Since the fuel is substantially cheaper than other auto-fuels, there’s great appetite for it in the adjoining areas of Delhi as well. People living in the suburbs now have to drive down to Delhi to get CNG.
“PNG, too, is fast gaining popularity. We already have 11,000 PNG customers in Delhi. Most of them are domestic users. We see great business potential in distributing PNG in the suburbs of the capital,” De said.
The investment will be financed out of internal accruals and borrowings. The company has an approved line of credit of Rs 300 crore from Oil Industry Development Board.
Alongside, Indraprastha Gas is getting listed on the stock exchanges with an IPO of four crore shares, which represents 28.57 per cent of the company’s equity capital.
Indraprastha Gas was promoted by Gail (formerly Gas Authority of India Ltd) and Bharat Petroleum Corporation Ltd (BPCL). The two companies hold 22.5 per cent apiece, while the government of Delhi holds 5 per cent.
Of the balance 50 per cent, IL&FS and Infrastructure Development Finance Company (IDFC) hold 20 per cent each, and 10 per cent is held by Unit Trust of India (UTI).
IL&FS, IDFC and UTI are divesting four crore shares out of their current holding of seven crore shares through the IPO. Since it is a sponsored IPO, there will be no change in the company’s equity capital of Rs 140 crore.