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GAIL issue proves sceptics wrong: CMD

Ashok Dasgupta


Mr Proshanto Banerjee, CMD, GAIL

New Delhi , March 8

THE Chairman and Managing Director, GAIL, Mr Proshanto Banerjee, is today a very happy man indeed.

Not only did his body language show it all, it was also exuberance that he exuded while rattling off the final numbers of the gas major's initial public offering (IPO) to Business Line here.

The CMD's elation stems from a number of counts. For one, for proving the sceptics wrong. Contrary to initial worries, the issue has been a huge success. "The numbers talk for themselves," he says.

Secondly, he is overwhelmed by the fancy that the retail investors took to the offering. And thirdly, the very success of the IPO proves that the share was not overpriced, as some consultants had noted when GAIL entered the market. And so Mr Banerjee felt that the GAIL story needs to be told - the fact that not only private sector or the privatised sector, but even the public sector can hold on to its own. GAIL shareholders, he assures, will not regret being a part of the PSU, because the company has still a long way to go.

"For a first couple of days, we came across a lot of scepticism regarding the outcome. But today, when we have seen the final numbers, we are actually more than delighted ... and that's why I felt that the GAIL story needs to be told," said Mr Banerjee.

"We started with an issue size of 8.46 crore shares and the original amount sought to be mopped up was Rs 1,564 crore. That was the target and the floor price was Rs 185 with a five per cent discount for the retail investors. What has now actually happened is that the allotment price after the book-building is coming to Rs 195. Number two, we got oversubscribed 9.28 times, accounting for a mop up of Rs 14,518 crore," he says. But can he keep a part of the oversubscription? "No," he says. "The IPO is limited to 10 per cent, and so, as the allotment price is higher by about Rs 10, the total mop-up will be about Rs 84 crore higher than initially envisages," Mr Banerjee explains.

"Again, at one time it was though that the retail investors in India would not respond favourably to the GAIL offer. We have found that 3,72,414 investors have applied in totality, out of which only 320 are QIBs (Qualified Institutional Bidders). So the remaining 3,72,000-plus are basically individuals, NRIs, HUF and high networth individuals. This shows a very large response of the retail investors," he says. And with a smile, belying his immense pleasure, he adds: "From what I am told, I am not an expert, the last such large response was in the case of the Maruti IPO some time in July 2003, where the total number of investors was some 3.13 lakh or so. So I think, it is a very significant achievement for GAIL." As for the FIIs, a total of 152, out of which the top 10 in the list from various countries show that our road-shows have been worth the while. "In fact, out of the total amount subscribed (Rs 14,518 crore), 61 per cent has come from foreign investors, 18 per cent from the Indian investors - that accounts for about 79 per cent - and the remaining from the retail side, including high networth individuals," said Mr Banerjee. GAIL will continue to be a Government-owned company, because even after the divestment, 57 per cent of the shareholding will be with the Government, and some 9.6 per cent shares are held by IOC and ONGC.

"And, it is the declared policy of the Government that in the foreseeable future, the oil and gas sector will continue to have three flagship companies and one of them is GAIL. But we do also believe that the reflection of the company's worth in the stock market is also something we value, and that happens when the liquidity goes up, the retail investors and the QIBs develop stakes in the company and lastly, but not the least, that it has brought in good money for the Government," says Mr Banerjee.

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