Deloitte submits Gurgaon CGD valuation report

Vol 22, PW 15 (16 May 19) People & Policy

After finally receiving Deloitte's report, the Supreme Court will have a hard time deciding which figure to accept for the valuation of the Haryana City Gas (HCG) retail network in Gurgaon outside Delhi.

Expect the court to resume work in July when judges evaluate the final report submitted by Deloitte India on May 9 to HCG and Indraprastha Gas (IGL) which wants to extend its reach beyond Delhi to Gurgaon. As an "ongoing concern" Deloitte estimates the HCG business is worth Rs1527cr ($218m) taking into account future projected turnover.

This is the number HCG will undoubtedly be hoping the court chooses when it re-convenes. But Deloitte has also given a second much lower figure of Rs200cr ($28m) for the (mainly) CNG station and pipeline infrastructure.

This is the number IGL will undoubtedly be hoping for. "The Supreme Court will have a difficult time deciding," admits an IGL source.

He adds the company was unhappy with a draft report shared by Deloitte on May 5, with a deadline to comment by May 7. "Many discrepancies were identified.

The main one was Deloitte's assumption of a (government-subsidised) APM gas allocation for 25 years. Nor do we agree with the asset valuation.

HCG has built only 'daughter' (booster CNG) stations not online 'mother' stations which cost more. HCG also found fault with Deloitte's draft report.

"We made a lot of comments," adds a source.

Both IGL and HCG are disappointed Deloitte's final report did not address their concerns. On October 30, 2018, Supreme Court judges ordered HCG and IGL to appoint Deloitte Haskins and Sells to carry out a valuation following their joint submission to amicably end a dispute over APM gas allocation to Gurgaon. Deloitte's report was meant to be submitted by November 30, 2018. "But there were many hearings of the case since November," says a senior IGL source. "That’s why the report was delayed. There was also confusion over whether the valuation should be based on the business as an ongoing concern or only assets." During the April 8 hearing, the court criticised HCG for not disclosing information about its assets to Deloitte. "We were concerned that Deloitte would do the valuation based only on assets," adds HCG. "But we shared all information when the court assured us Deloitte would also evaluate the business as an ongoing concern." Deloitte charged Rs35 lakhs ($50,000) each to IGL and HCG for its effort.

Deloitte submits Gurgaon CGD valuation report

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