CGD companies stare at huge Coronavirus losses

Vol 23, PW 11 (09 Apr 20) Midstream & Downstream

Traffic in Indian cities has disappeared under the lockdown, and it's hitting gas retailers hard, with at least four companies reporting CNG sales down by up to 90%.

"No vehicles are on the street," says a CGD retailer. "Not even public transport buses."

Gas retailers are bracing for a considerable hit to revenue and profits: CNG makes up between 35% of sales, for new entrants like GAIL Gas, and up to 75% for established companies like Indraprastha Gas, Mahanagar Gas, Central UP Gas and Gujarat Gas. Also worrying is a sharp reduction in piped gas supplies to almost nothing for factories and businesses, that have closed down.

"You see gas sales only to factories in the pharmaceuticals, fertilisers, milk processing and essential sectors," we hear. "But that's a trickle."

Industry sources say the lockdown happened at the "wrong time" for the CGD sector. "Usually the last quarter (January to March) of the fiscal is peak sales season," says one retailer.

"Customers want to end the fiscal on a high note and install new machinery, complete projects and a lot more vehicles move around carrying people and goods." Another source adds the last quarter usually sees a spike in industrial production because of good weather and the lack of public holidays.

"Customers get a clear 90 days for production," we hear. "Usually inventories (of manufactured goods) are built up (in preparation for the monsoon season)."