The stock of city gas distributor Indraprastha Gas lost over 40 per cent during April 9-10 this year. This followed the directive of the downstream regulator PNGRB (Petroleum and Natural Gas Regulatory Board) that the company slash its network tariff and compression charge by around 60 per cent — with retrospective effect from April 2008.

The regulatory directive, if implemented, would have resulted in the company posting losses from operations and eroded its net worth. Indraprastha Gas sought relief from the Delhi High Court, but the stock continued to slip due to the prevailing uncertainty.

The High Court quashed PNGRB’s order on June 1, which resulted in the stock gain almost 30 per cent. Yet, the earlier losses have not yet been fully recouped due to concerns that the regulator will appeal against the judgment in the Supreme Court.

Over the past year, the stock has been under pressure for other reasons too. News in mid-January about a proposed cap on marketing margins of gas companies took a toll. But PNGRB later clarified that it did not have power to regulate this aspect.

Also, Indraprastha Gas has been sourcing costlier imported gas to make up for the short-fall from the KG-D6 fields of Reliance Industries.

This affected its margins and profit growth, and dampened market sentiment.

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