GSPC mulls financial restructuring to pare down debt

India’s only state government controlled oil and gas major Gujarat State Petroleum Corporation (GSPC) is contemplating massive financial restructuring in order to reduce its burgeoning Rs 20,000 crore debt.

After selling its stake in the KG gas block to ONGC, the oil and gas company is mulling over a full-fledged financial restructuring of exiting business, trimming down stakes and also diluting stakes in various other verticals.

GSPC is under heavy debt of close to Rs 20,000 crore, which is putting pressure on the financial well-being of the company and, at the same time, hampering additional borrowings for developing other oil fields. However, on the positive side, the company has a large trading business, gas transmission pipeline and city gas business.

The company’s fortune, which was expected to brighten post the discovery made in 2005 of KG basin block, turned out to be a total disaster for the company as it did not yield the desired results after 10 years of investment worth Rs 19,576 crore, which has put a big dent on the financials of the gas company.

The deal in hindsight will help company pare down its mounting debt and at the same time free up resources for development of other fields and business.

The shares of subsidiary GSPL (Gujarat State Petronet Ltd) have surged close to 15 per cent post the announcement of ONGC deal and all the developments pertaining to parent GSPC trimming down its huge debt pile.

The stock of GSPL was trading at Rs 157.20, up 1.1 per cent on NSE.