Bringing In Synergy And Stability
Natural gas distribution company Mahanagar Gas’ CFO S.M. Ranade has seen the company grow almost from its birth in 1995 till now when it managed to steer its way to becoming one of the key players in the field of piped gas. And naturally, for Ranade, who came on board in 1996, the journey has been full of challenges and rewards. He however describes the 22-year journey in this company as extremely enriching and satisfying.
The company that began as a 50-50 JV between Gail (India) and British Gas clocked a meagre turnover of about Rs 16 crore and loss of Rs 9 crore for the year ended March 1999. MGL, in 2001, declared maiden dividend of Rs 0.50.
Cut to the present. It has a turnover of over Rs 2,000 crore with a profit after tax of Rs 393.43 crore as on March 2017. In 2017-18, the company announced an interim dividend of Rs 8 per equity share. In July 2016, Mahanagar Gas was listed on BSE and NSE with a bumper response. The public issue subscribed more than 64 times the shares on offer. “We never imagined that it would be such a success,” says Ranade. He recalls how tension had gripped the senior management before the IPO as key parameters like margin, return on equity and volume growth showed southward trend between 2013 and 2016 due to various reasons including sharp drop in global prices.
“This was a big thing and we were a little worried. But we dealt with the investors with brutal honesty. We explained the reasons for a rather lacklustre performance on key financials including those on profits and return on equity. That helped and we managed to oversubscribe our issue,” Ranade says.
Being the CFO, Ranade has played an extremely crucial key role in steering the company from a stage when survival was being questioned, to the present, when most brokerage firms and stock market experts consider MGL as one of the most stable firms. But the going has not been easy for MGL and its senior management. In the initial phase, investors showed reluctance in putting in money into MGL. Reason? The concept of piped gas was not only alien in Mumbai but security concerns were predominant.
“We almost had to request people to take piped gas,” says Ranade, adding that as the CFO of the company and being part of the senior management, his role was not restricted to just finance.
The company in the initial phase, decided to supply free gas to 100 households in Mumbai’s Chembur area just to create awareness. Ranade, who was part of this decision making process, adds how it was a tall task for the company to acquire customers just about two decades ago. “Today the situation is totally different and we have queues/ people desperately wanting (for) piped gas connection,” he says. It even held meetings with unions of taxi operators to explain to them the benefits of CNG.
The company, in a bid to ramp up its supply, also started targeting industrial sale. The company, after its inception, even found it difficult to raise debt capital. Way back in the 1990s, people had not even heard of piped gas, leave alone trying it, as security concerns were paramount.
Ranade used his own personal relations with bankers and financial institutions to garner Rs 20 crore as bridge loan after which he approached the financial institutions. After this initial sum, Ranade and his team managed to get another Rs 150 crore term capital sanctioned from IDBI.
Ranade is a happy man today. “It has given me an amazing job satisfaction and we are set to achieve new heights,” he adds.
