NEW DELHI: State-owned GAIL (India) Ltd registered a 498%year-on-year jump in its net profit to Rs1,530 crore for the quarter ended 30 June, driven by better performance in natural gas marketing and transmission, improved gas marketing margins and better price realization for petrochemicals.

The public sector unit’s turnover for the first quarter rose 44% year-on-year to Rs17,352 crore.

Reacting to the earnings, shares of GAIL rose nearly 6% on the BSE to Rs151.45 apiece today.

“The increase in the profits is mainly attributable to better physical performance in Natural Gas Marketing & Transmission, improved margins in gas marketing due to favourable market conditions and better price realization in Petrochemicals and Liquid Hydrocarbons," GAIL said in a statement on Thursday.

Improved petrochemical margins have been a constant theme in the current ongoing results season for Indian hydrocarbon energy majors in the backdrop of a growing demand for petrochemicals in the country. According to Crisil Research, India has a petrochemicals manufacturing capacity of 14 mtpa and recorded a domestic market size of 15 million tonnes in FY20.

“GAIL is also expanding Polypropylene production capacity by setting up 500 KTA PDHPP Unit at Usar (Maharashtra) and 60 KTA PP unit at Pata (Uttar Pradesh) with an approximate investment of Rs10,000 crore. During current financial year, GAIL has capex plan of Rs. 6,600 crore," the statement said.

There is a growing interest in India’s petrochemical space. A recent case in point being Russia’s largest integrated petrochemicals firm PJSC SIBUR Holding being in talks with state-run Indian Oil Corporation Ltd (IOC) for a partnership to set up a large petrochemical facility in India as reported by Mint.

“During the quarter, Natural Gas Transmission and Natural Gas Marketing volume increased by 19% and 18% respectively as compared with corresponding quarter in previous year. The volume growth is due to normalcy of the business activities as against nationwide lockdown during Q1 FY21," the GAIL statement said.

GAIL’s performance comes in the backdrop of India’s petroleum regulator authorising a 33,764 km of natural gas pipleine network for the country’s gas grid. India has 19,998 km of operational natural gas pipeline and 15,369 km under various stages of construction.

GAIL chairman and managing director Manoj Jain said in the statement the PSU is “focussed on development of National Gas Grid and currently GAIL, along with its JVs, is executing Pipeline Projects of around 8,000 kms with investment of around Rs. 38,000 crore."

This comes in the backdrop of India’s push for a gas-based economy. The country consumes around 145 million standard cubic meters a day (mmscmd) of gas. Gas comprises about 6.2% of India’s primary energy mix, far behind the global average of 24%. The government plans to increase this share to 15% by 2030. India’s gas demand is expected to be driven by the fertilizer, power, city gas distribution, and steel sectors. India’s energy demand is expected to grow at 4.2% per year over the next 25 years.

“GAIL is exploring possibilities for expanding its footprint in renewables," the statement added, quoting Jain.

Given its focus on building a clean energy portfolio, in addition to participating in competitive bids, GAIL is also looking to acquire solar projects from private firms. This comes in the backdrop of a change in the global energy architecture, with India at the centre of oil majors’ future growth plans and state-run firms pivoting towards solar and wind energy.