Gujarat gas Limited has announced the re-appointment of M/s Ernst & Young LLP as its Internal Auditors for the financial year 2026-27. The decision was approved by the company's Board of Directors during their meeting held on March 12, 2026, as communicated to the stock exchanges under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Board Decision Details

The re-appointment ensures continuity in Gujarat Gas Limited's internal audit functions, maintaining the established relationship with Ernst & Young LLP. The company has fulfilled its regulatory obligations by providing detailed information as required under SEBI Listing Regulations and the SEBI Master Circular bearing No. HO/49/14/14(7)2025-CFD-POD2/1/3762/2026 dated January 30, 2026.

Ernst & Young's Industry Expertise

Ernst & Young LLP brings substantial credentials to the role, operating through over 700 office locations across more than 150 countries. The firm combines local knowledge with global experience through its structured organization comprising the Executive and Regions, which oversee global strategy, brand, business planning, investments and priorities across 22 Regions grouped under three geographic Areas: Americas; Europe, Middle East, India and Africa (EMEIA); and Asia-Pacific.

Specialized Capabilities

The audit firm demonstrates significant strength in relevant areas for Gujarat Gas Limited:

• Risk Advisory Team: Over 13,200 professionals across India
• Oil & Gas Specialists: More than 150 experienced professionals
• Flexible Service Model: Scalable team structure with industry and technical subject matter resources

Extensive CGD Industry Experience

Ernst & Young's deep sector experience in the City Gas Distribution (CGD) industry positions them well for Gujarat Gas Limited's requirements. The firm has worked with numerous prominent companies in the gas sector, including Gujarat Gas Co. Ltd. (including GSPC Gas), Gujarat State Petronet Limited (GSPL), Mahanagar Gas Ltd., Adani Total Gas Limited, Torrent Gas Ltd., Megha Gas, Indian Oil-Adani Gas Pvt. Ltd., Pipeline Infrastructure Ltd. (PIL), Indraprastha Gas Ltd., AG&P, Think Gas, Gail Gas Ltd., Sabarmati Gas Ltd., and Vadodara Gas Ltd.

Regulatory Compliance

The re-appointment follows proper corporate governance procedures, with Gujarat Gas Limited ensuring full compliance with regulatory requirements. Company Secretary Sandeep Dave communicated the decision to both BSE Limited and National Stock Exchange of India Ltd, maintaining transparency with stakeholders and regulatory bodies.

Gujarat Gas Limited has received a credit rating reaffirmation from CRISIL Ratings Limited, maintaining its top-tier 'CRISIL AAA/Stable' rating on long-term bank facilities worth Rs 3,350 crore. The rating agency published its rationale on March 9, 2026, highlighting the company's strong market position and financial stability.

Rating Reaffirmation Details

CRISIL Ratings has maintained its confidence in Gujarat Gas's creditworthiness, citing the company's robust business risk profile and strong financial metrics. The rating reflects the anticipated benefits from the ongoing merger with Gujarat State Petroleum Corporation (GSPC), Gujarat State Petronet Ltd (GSPL), and GSPC Energy Ltd (GEL).

Business Performance and Market Position

Gujarat Gas operates as India's largest CGD player by gas sales volume, commanding approximately 25% market share. The company maintains 27 CGD licences across 44 districts in six states and one Union Territory, serving over 23 lakh domestic connections, 833 CNG stations, and close to 4,400 industrial units as of December 31, 2025.

However, operational performance faced challenges in fiscal 2026, with volumes declining to 8.63 mmscmd in nine months compared to 9.73 mmscmd during the same period in the previous fiscal. This decline primarily resulted from reduced demand in Morbi clusters due to increasing premium of natural gas over propane.

Financial Strength and Liquidity

The company demonstrates superior liquidity with cash and bank balances exceeding Rs 1,500 crore as of March 31, 2025, compared to Rs 916 crore in the previous year. Both Gujarat Gas and GSPC maintain debt-free balance sheets, with annual cash accruals expected to exceed Rs 1,000-1,100 crore, sufficient to fund projected capital expenditure of Rs 800-1,000 crore.

Merger Synergies and Strategic Outlook

The pending merger with GSPC, India's second-largest gas trading company, is expected to create significant synergies. GSPC's trading business generated revenues of Rs 12,200 crore in nine months of fiscal 2026, though this represents a decline from Rs 15,600 crore in the corresponding previous period. The merger awaits the final order from the Ministry of Corporate Affairs following a hearing held on February 18, 2026.

Post-merger, the transmission business will be demerged and listed separately as Gujarat Transmission Ltd (GTL) within the next 6-7 months. The combined entity will benefit from GSPC's extensive sourcing agreements and infrastructure access, with 60-70% of Gujarat Gas's current sourcing already done through GSPC.

Risk Factors and Challenges

Despite the positive rating, CRISIL identified several monitorable factors:

• Supply chain risks: Potential disruptions from Middle East conflicts affecting gas supplies from Qatar and other regional sources
• Volume pressures: Continued impact of natural gas premium over alternative fuels in price-sensitive industrial segments
• Regulatory exposure: Ongoing risks related to gas pricing mechanisms and policy changes
• Geographic expansion: Project execution risks in newer geographical areas awarded under recent licensing rounds

The rating agency noted that any material expansion or investment leveraging the combined balance sheet will remain under close monitoring, though management has appointed external consultants to evaluate new business opportunities.

Market Leadership and Diversification

Gujarat Gas's diversified customer profile provides revenue stability across multiple segments. The company has demonstrated resilience in maintaining EBITDA per scm at Rs 5.5-6.0 range despite volatile input costs. CNG and non-Morbi PNG industrial and commercial segments showed volume improvements, supported by expanding infrastructure.

The stable outlook reflects CRISIL's confidence in the merged entity's ability to maintain its market-leading position with robust operating performance, backed by healthy volume growth potential and stable realization levels in the medium term.