GAIL (India) Limited and Coal India Limited (CIL) have announced the incorporation of a Joint Venture (JV) company, named Coal Gas India Limited, to establish a Coal-to-Synthetic Natural Gas (SNG) Project at Eastern Coal Field. The formation of this JV has received necessary approvals from the Department of Investment and Public Asset Management (DIPAM) and NITI Aayog under the Ministry of Coal, Government of India, through its letter dated February 19, 2024.

Key Details of the Joint Venture

The newly formed JV, Coal Gas India Limited, has been established with the aim of setting up a Coal-to-SNG Project. The authorized share capital of the company is ₹11 crore, with an initial paid-up capital of ₹1 lakh.

• CIL's Contribution: ₹51,000 (51% equity)

• GAIL's Contribution: ₹49,000 (49% equity)

The project is expected to significantly contribute to India's energy sector by utilizing coal gasification technology to produce Synthetic Natural Gas (SNG) and other related by-products.

Objectives and Scope of the JV

The formation of Coal Gas India Limited is aimed at achieving the following objectives:

1. Establishment of Coal-to-SNG Project:
   The primary objective of the JV is to set up a Coal-to-Synthetic Natural Gas (SNG) plant, which will convert coal into SNG, addressing the growing energy needs of the country.

2. Diversification of Product Portfolio:
   The JV will engage in manufacturing organic and inorganic chemical compounds and other products derived from Syngas (Synthesis Gas). This diversification is expected to bolster India's energy security by utilizing domestic coal reserves.

3. Development of Associated Infrastructure:
   The JV plans to augment and create infrastructure for the processing of coal, including captive coal mining, coal beneficiation, coal imports, and equipment facilities to support the coal-to-SNG project.

Regulatory Approvals and Compliance

The formation of the JV was approved by the Ministry of Coal, Government of India, via its letter CA-28018/33/2023-CA dated February 19, 2024. The approval process involved due diligence and vetting by DIPAM and NITI Aayog, ensuring that the project aligns with India’s energy and industrial development goals.

Shareholding Pattern and Capital Structure

The shareholding structure of Coal Gas India Limited is as follows:

• Coal India Limited (CIL): 51% equity stake (5,100 equity shares at ₹10 each)

• GAIL (India) Limited: 49% equity stake (4,900 equity shares at ₹10 each)

The JV has been incorporated with an initial paid-up capital of ₹1,00,000 to facilitate the commencement of project-related activities.

Nature of Consideration and Cost of Acquisition

The acquisition of shares by both CIL and GAIL has been undertaken through cash consideration.

• CIL Investment: ₹51,000 for 5,100 equity shares at ₹10 each

• GAIL Investment: ₹49,000 for 4,900 equity shares at ₹10 each

Industry and Business Operations

Coal Gas India Limited will operate in the coal gasification industry, with a focus on converting coal into Synthetic Natural Gas (SNG). The company aims to address India’s growing demand for natural gas and related products, contributing to the nation’s energy transition and reducing dependency on imported natural gas.

Timeline and Project Implementation

Since this is an incorporation of a JV, no specific timeline has been mentioned for the completion of the acquisition or project commencement. However, further updates regarding project milestones and progress will be communicated in due course.

Brief Background of the JV Entity

• Name: Coal Gas India Limited

• Date of Incorporation: March 25, 2025

• Industry: Coal Gasification and SNG Production

• Presence: India

• Turnover for Last 3 Years: Not Applicable (Newly Incorporated Entity)

Strategic Importance of the JV

The incorporation of Coal Gas India Limited marks a significant step toward leveraging India’s coal reserves to reduce the dependence on imported natural gas and boost the domestic production of Synthetic Natural Gas (SNG). The JV is expected to:

• Promote Coal Gasification: Drive clean energy solutions through coal gasification and SNG production.

• Support India’s Energy Security: Strengthen India’s energy security by reducing reliance on imported natural gas.

• Foster Economic Growth: Create opportunities for domestic industries by supporting downstream chemical manufacturing and infrastructure development.

Disclosure to Stock Exchanges

As required under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, GAIL and CIL have notified the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) about the formation of this JV.

Conclusion

The formation of Coal Gas India Limited by GAIL and CIL is a strategic move to establish a Coal-to-Synthetic Natural Gas (SNG) Project aimed at promoting clean energy and industrial growth in India. The JV, with CIL holding 51% and GAIL holding 49% equity, is expected to play a crucial role in diversifying India's energy portfolio and supporting the country’s transition to cleaner sources of energy.

All stakeholders, including investors and regulatory bodies, have been duly informed of this development, and further updates on project progress and implementation timelines will be shared in subsequent disclosures.

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