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Gujarat State Petronet Ltd. has a 54% stake in Gujarat Gas Ltd., which amounts to a market capitalization of Rs 197 billion, much higher than Gujarat State’s m-cap at Rs 156 billion.
Major concerns for the above anomaly have been –
1. expected decline in tariffs of the company due to over-utilization of the high pressure grid, and
2. concerns over the usage of cash.
Gujarat State Petroleum Corporation, the parent company of Gujarat State Petronet with a 37.6% stake, has traditionally been a debt ridden company, raising concerns whether the cash generated by Gujarat State Petronet may be used to reward minority shareholders.
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