Mukesh Ambani puts ~12,725 cr more in gas business

Billionaire Mukesh Ambani has invested ~12,725 crore more in his unlisted gas pipeline company, Reliance Gas and Transportation Infrastructure (RGTIL), by way of share capital and unsecured loans, helping the loss-making firm’s net worth turn positive at ~877 crore in 2016-17 from a negative net worth of ~2,519 crore in the previous financial year.

The company, which transports gas from the Andhra Pradesh coast to its clients in western India, is making huge losses as gas production from Reliance Industries’ Krishna-Godavari (KG) basin in the Bay of Bengal has declined.

In its regulatory filings, RGTIL said a continued fall in gas production from the KG basin resulted in lower capacity utilisation of pipeline and consequent losses and erosion in net worth. “In order to meet the external debt obligations, promoters have provided funds by way of optionally convertible preference shares and unsecured loans to the tune of ~12,725 crore as on March this year, due to which the net worth of the company has become positive,” it said.

While the company is privately held by Mukesh Ambani-controlled firms, its fortunes are tied to production from RIL’s gas fields.

RGTIL said its long-term prospects had improved considering increased exploration activities in the KG basin and expected commissioning of LNG terminals. The company made lower net loss of ~391 crore in 2016-17 (FY17), compared to a loss of ~1,736 crore reported in the 2015-16 (FY16). The company’s finance costs fell by 31.6 per cent to ~1,054 crore from ~1,540 crore.

The company’s revenues from operations declined 21.8 per cent from ~1,050 crore to ~821 crore in the same period. However, its other income tripled from ~125 crore in FY16 to ~377 crore in FY17.

With fresh infusion of capital, the company’s debt reduced by a fifth to ~13,160 crore as on March 2017 as compared to ~16,240 crore reported in FY16.

RGTIL’s 1400-km pipeline has the capacity to transport up to 85 million metric standard cubic metre per day (mmscmd) of natural gas. The rampup in transportation will depend on the extent of increase in production by RIL and gas production by other discoverers, ratings firm Crisil said last month, while giving it the top rating.