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Indraprastha Gas' offer for sale

By Our Special Correspondent

CHENNAI NOV. 4. Indraprastha Gas Ltd. (IGL), which pipes natural gas into Delhi for use by a host of consumers, will go public following the decision of its institutional investors who co-promoted the company to sell a part of their shares through the book-building route.

Gas Authority of India (GAIL) and Bharat Petroleum Corporation (BPCL) hold 22.5 per cent each in the Rs. 140-crore paid-up share capital of the company. The Government of National Capital Territory of Delhi (NCT) has 5 per cent. Infrastructure Development Finance Company (IDFC) and Infrastructure Leasing and Financial Services (IL&FS) have 20 per cent each while the Unit Trust of India (UTI) has 10 per cent holding.

The three institutional investors are together selling four crore worth of equity shares of Rs. 10 each. IL&FS and IDFC will each sell 1.6 crore shares. The UTI will offload 80 lakh shares. Out the four crore shares on sale, three lakhs are reserved for employees/whole-time directors and the like. The net offer to the public is 3.97 crore shares. However, it is clarified that no single bidder will be allotted more than five per cent of the post-offer paid-up capital of the company, that is, 70 lakh shares.

Under the original shareholders' agreement, the initial public offer should be made before March 2005. Since the institutions are bullish on the market conditions, it has been decided to go for a public offer through the book-building route.

A. K. De, Managing Director of the company, is confident that the book-building route will facilitate discovery of a fair price, given the track record of the company in the short span since it came into being a few years ago. The company supplies CNG for the automobile sector in the National Capital Territory of Delhi. It has created a steel pipeline network of 125 km. It has 115 CNG dispensing stations supplying to over 77,000 vehicles. Further, it supplies PNG (piped natural gas) to domestic and commercial consumers. It has so far created a 240 km of medium density polyethylene (MDPE) network for PNG customers. It now supplies PNG to over 10,000 domestic consumers and 95 commercial customers.

In a freewheeling chat with this correspondent, Mr. De hinted that IGL could consider debt recast what with interest rate regime heading southward. Quizzed if this would result in the foreclosure of its existing debt with Oil Industry Development Board (OIDB), he said it was a possibility.

The OIDB had sanctioned a long-term unsecured loan of Rs. 100 crores to the company on March 23, 2000 at the rate of 12 per cent payable quarterly. This rate was pared to 11.25 per cent in June 2000. An additional sanction of Rs. 200 crores was made subsequently. Of the sanctioned amount, IGL had availed Rs. 68 crores. As on March 2003, the outstanding is Rs. 64.88 crores. The interest rate is now further cut to 9.25 per cent.

The company has drawn up a Rs. 183-crore investment plan for the current year — Rs. 147 crores for building more CNG filling stations and Rs. 36 crores for beefing up the network to reach natural gas to households. These are most likely to be funded through internal generation. "Our sales revenue is around Rs. 1.20 crores a day," Mr. De said. IGL, he said, had plans to expand its operations to Gurgaon, Noida, Greater Noida and Faridabad.

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