GAIL (India) Ltd., India's largest gas transmission and marketing company, was set up by the Government of India in August 1984 to create gas sector infrastructure for sustained development of the natural gas sector in the country. Company started 2800-km Hazira-Vijaipur-Jagdishpur (HVJ) pipeline in 1991. During 1991-93, three LPG plants were constructed and some regional pipelines acquired. GAIL began its city gas distribution in Delhi in 1997 by setting up nine CNG stations, catering to the city's vast public transport fleet. In 1999, GAIL set up northern India's only petrochemical plant at Pata.

GAIL signed the country's first Service Level Agreement for leasing bandwidth in the Delhi-Vijaipur sector in 2001, through its telecom business GAILTEL. In 2001, GAIL commissioned worlds longest and India's first Cross Country LPG Transmission Pipeline from Jamnagar to Loni. In 2007-08, GAIL formed a subsidiary (GAIL Gas Limited) for City Gas Distribution and City Corridor Business. In 2008-09 , GAIL Gas limited won the rights for rolling out city gas distribution projects in Meerut, Sonepat, Dewas and Kota. GAIL has Joint venture companies in Delhi, Mumbai, Hyderabad, Kanpur, Agra, Lucknow, Bhopal, Agartala and Pune, for supplying Piped Natural Gas (PNG) to households and commercial users, and Compressed Natural Gas (CNG) to the transport sector. Company has participating stake in the Dahej LNG Terminal and the upcoming Kochi LNG Terminal in Kerala. Company has equity participation in three Egyptian companies: Fayum Gas Company SAE, Shell CNG SAE and National Gas Company SAE. It also has a wholly-owned subsidiary company GAIL Global (Singapore) Pte Ltd in Singapore.

GAIL has expanded its operations into gas processing, petrochemicals, liquefied petroleum gas transmission and telecommunications. It has also extended its presence in power, liquefied natural gas re-gasification, city gas distribution and exploration & production through equity and joint ventures participation. GAIL is integrating all aspects of the Natural Gas value chain (including Exploration & Production, Processing, Transmission, Distribution and Marketing) and its related services. Company has 7,200 km of Natural Gas high pressure trunk pipeline with a capacity to carry 155 MMSCMD of natural gas across the country. It’s 7 LPG Gas Processing Units, produces 1.2 MMTPA of LPG and other liquid hydrocarbons. It’s gas based integrated Petrochemical complex at Pata with a capacity of 4,10,000 TPA produces polymers. Company also has 1,922 km of LPG Transmission pipeline network with a capacity to transport 3.8 MMTPA of LPG. Except this, company also has 27 oil and gas exploration blocks and 3 Coal Bed Methane Blocks. Its subsidiary GAILTEL has 13,000 km of OFC network offering bandwidth for telecom service providers.

GAIL will invest Rs 60 billion to lay 1,000 kilometer of natural gas pipelines across the country during this financial year 2010-11. GAIL had commissioned 600 kilometer of pipelines during the 2009-10. Over 1,500 kilometer of pipelines is under construction in Gujarat, Madhya Pradesh, Haryana, Rajasthan, Punjab and some other states. GAIL had earlier announced plans to invest Rs 280 billion to construct about 5,000 kilometer of pipelines by 2013 under the 11th Five Year Plan.

India’s consumption of natural gas in the energies is less then 10%, while the world average is around 24%. Hence, there is huge potential for gas consumption in India. At current market price, stock is trading at 12.4 P/E multiple of its FY 2011 estimated EPS. We recommend investors to “BUY” “GAIL” for medium to long-term investment horizon.