Gujarat Gas Company Ltd (GGCL) will ramp up its cogeneration (cogen) business to achieve the targeted 100 mw by 2012, envisaging a CAGR of 37%.
MUMBAI: Gujarat Gas Company Ltd (GGCL) will ramp up its cogeneration (cogen) business to achieve the targeted 100 mw by 2012, envisaging a CAGR of 37%.
The Rs 700-crore Ahmedabad-based company plans to spend Rs 50 crore to expand the cogen business and expects it to turn profitable during this calendar year.
The company’s cogeneration divison is engaged in providing financing and maintenance services to industrial units which plan to convert their captive naphtha-powered power plants to combined heat and power units using natural gas.
Gujarat Gas has also been aggressively boosting its CNG business — expanding its CNG infrastructure from 2 stations in 2002 to 20 in 2006. In 2007, it is expected to add 8 more stations and has earmarked Rs 60 crore for the same.
The company plans to incur an additional capex of Rs 115 crore for 2008 as well, which would be financed through internal accruals.
GGCL, the biggest gas player in Gujarat, expects its Vapi and Jhagadia units to start contributing to the topline this year and become profitable by next year. The company will continue to focus on higher margin retail industrial and CNG segments.
Talking to DNA Money, Mehul Thanawala, manager-corporate affairs, GGCL, said, “Apart from expanding our cogen business, we will ramp up our CNG business . Currently CNG contributes 5% to sales.”
Experts said GGCL operates in one of the most industrialised states — Gujarat, which accounts for 35% of the total natural gas consumed in the country. The demand in Gujarat could jump to 94.5 million metric standard cubic meter per day (mmscmd) in 2010 from 54.1 (mmscmd) in 2005. Surat, Vapi will be the major demand centres. This augurs well for GGCL as it has a strong foothold in Surat, Bharuch and Ankleshwar.
The Gujarat State Road Transport Corporation’s (GSRTC) move to convert its fleet to CNG is also a potential windfall for GGCL. Analysts said the new moves are likely to boost CNG volumes and improve GGCL’s margins going forward. However, as some of its gas supplies are denominated in dollars, any weakening of the rupee could hurt bottomline, they added.
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