Mumbai: The Petroleum and Natural Gas Regulatory Board (PNGRB) has approved the transfer of six city gas distribution (CGD) areas from Gail India to its wholly owned subsidiary Gail Gas, paving the way for the subsidiary’s proposed initial public offering (IPO).
The restructuring is expected to strengthen the business structure of Gail Gas and help unlock value ahead of its planned listing.
Six CGD Areas to Be Transferred to Gail Gas
According to an executive aware of the development, PNGRB has allowed Gail India to transfer the following six CGD areas to Gail Gas:
- Varanasi, Uttar Pradesh
- Patna, Bihar
- Khordha (Bhubaneswar), Odisha
- Ranchi, Jharkhand
- Cuttack, Odisha
- East Singhbhum (Jamshedpur), Jharkhand
The transfer means Gail India will no longer directly own these CGD assets once the restructuring is completed.
The move is expected to strengthen Gail Gas’s operating portfolio and create a more consolidated structure ahead of its proposed public offering.
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Gail Gas Plans ₹3,000 Crore IPO
Gail Gas is planning to raise around ₹3,000 crore through an initial public offering.
The company is targeting a stock market listing by the end of the current financial year.
Following the restructuring, Gail India is expected to dilute a minority stake in Gail Gas through the proposed IPO, while continuing to remain the parent company.
The proposed listing is part of Gail India’s broader efforts to unlock value from its wholly owned CGD subsidiary.
PNGRB Approval Paves Way for Proposed Listing
The PNGRB approval is an important step in the restructuring process as the six CGD areas form part of the business that Gail Gas is expected to operate following the transfer.
The restructuring will allow Gail Gas to consolidate the relevant CGD assets under its own business structure, which is expected to support its proposed IPO.
An executive familiar with the development said the regulatory approval for transferring the six CGD areas has paved the way for the IPO.
Gail Gas Operates CGD Networks Across 16 Areas
Established in 2008, Gail Gas is authorised by PNGRB to develop city gas distribution networks across 16 geographical areas.
The company currently has operations across several states, including:
- Madhya Pradesh
- Haryana
- Uttar Pradesh
- Karnataka
- Uttarakhand
- Odisha
- Jharkhand
- Chhattisgarh
With the transfer of the six additional CGD areas, the restructuring is expected to further consolidate Gail Gas’s presence in the city gas distribution business.
Gail India Expected to Dilute Minority Stake
After the restructuring, state-owned Gail India is expected to dilute a minority stake in its wholly owned subsidiary through the proposed IPO.The transaction would provide Gail Gas with access to the public capital markets while allowing Gail India to retain a majority interest in the subsidiary.
Gail India and Gail Gas had not responded to emails seeking comments on the development until press time on Wednesday.
Proposed IPO to Unlock Value in Gail Gas
The proposed ₹3,000 crore IPO is expected to provide a public market platform for Gail Gas and potentially unlock value from Gail India’s city gas distribution business.
The transfer of the six CGD areas and the subsequent listing process will be key steps in separating the relevant CGD operations into Gail Gas’s consolidated business structure.
The company is targeting completion of the listing process by the end of the current financial year, subject to the required regulatory and market processes.
About Gail India
Gail (India) Limited is a Maharatna Central Public Sector Enterprise under the Ministry of Petroleum and Natural Gas, Government of India. It is India’s leading natural gas transmission and marketing company and has interests across natural gas transmission, distribution, processing, petrochemicals and related energy businesses. Gail India operates through subsidiaries and joint ventures, including Gail Gas, which focuses on the city gas distribution business.
