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Maharashtra Natural Gas Ltd (MNGL), a joint venture between GAIL India and Bharat Petroleum Corporation (BPCL), was incorporated in January 2006 to undertake the city gas distribution business in Maharashtra. It currently runs the business in Pune and eyes more city gas distribution (CGD) licences. In an interview to FE, MNGL chairman RK Goel outlined his company's future plans.Your company is a relatively new entrant. What has been the experience so far?MNGL is running a city gas distribution project in Pune. It started operations in October 2008 after securing authorisation from the petroleum ministry. Currently, it is supplying 0.6 million metric standard cubic metre per day (mmscmd) gas to household, commercial and industrial consumers in Pune. The household segment is our biggest consumer, drawing 75-80% gas. We have two mother stations and 13 substations for supplying compressed natural gas (CNG) in the city and its suburbs. We sold 6 lakh kg CNG in the financial year 2008-09. This figure is projected to go up to 45 lakh kg in 2009-10.Who are MNGL's promoters and how much stakes they hold?GAIL India and Bharat Petroleum Corporation Ltd (BPCL) are the two main promoters of MNGL and they hold 22.5% stake each in the company. Of the rest, IDFC and IL&FS each hold 20% and Axis Bank 10%. The Maharashtra state has also stated its willingness to pick up 5% equity in the project.How is the growth prospect of CGD business?As per guidelines issued by the Petroleum & Natural Gas Regulatory Board, industrial and commercial consumers with gas demand up to 50,000 standard cubic meter (scm) are required to source gas from CGD. Consumers with demand between 50,000 scm and 1,00,000 scm have an option to meet their gas requirement from CGD. Only consumers with gas demand above 1,00,000 scm are required to go to the main pipeline for gas supplies.What was the investment made so far? What is the company's capital expenditure plan for 2010-11?We have planned an investment of Rs 125 crore this fiscal. Our investment in 2008-09 and 2009-10 was Rs 60 crore and Rs 90 crore, respectivelyHow do you plan to finance your capital expenditure programme?We have approached the Oil Industry Development Board (OIDB) for a Rs 100-crore loan for funding our capital expenditure planned in CGD business. Of this, Rs 62 crore has already been approved by OIDB. This is the first loan sanctioned by the OIDB for any CGD project.Earlier, OIDB would extend loan to oil sector projects only.How is MNGL's business doing? When do you expect to generate profit?Our turnover was Rs 12.8 crore in the financial year 2008-09. This is projected to go up to Rs 95 crore in 2009-10. As a new company, we have been incurring losses. Our losses in 2008-09 stood at Rs 37 crore, which came down to Rs 15 crore in 2009-10. We expect to generate profit this year.What are your future growth plans?We will compete with other companies for the allocation of CGD projects in other cities of Maharashtra. Besides, we also plan to develop power projects with capacity in the range of 25-50 mw along the Dahej-Panvel-Pune pipeline under the public-private partnership model. This is a new business proposal and we plan to take it to the board for approval soon.We have 0.4 mmscmd of surplus gas that can be used to fire power plants. Returns from power generation are lucrative. There are many townships like defence cantonment in Pune that are facing acute power shortages. They can buy power from these projects.
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