Company Overview

Incorporated in 1998, Indraprastha Gas Ltd (NSE: IGL) took over Delhi City Gas Distribution Project in 1999 from GAIL (India) Limited (Formerly Gas Authority of India Limited).

The project was started to lay the network for the distribution of natural gas in the National Capital Territory of Delhi to consumers in the domestic, transport, and commercial sectors. With the backing of strong promoters – GAIL (India) Ltd. and Bharat Petroleum Corporation Ltd. (BPCL) – IGL plans to provide natural gas in the entire capital region. ¹

The transport sector uses natural gas as Compressed Natural Gas (CNG), the domestic and commercial sectors use it as Piped Natural Gas (PNG) and R-LNG is being supplied to industrial establishments.

The Company is in the City Gas Distribution business and provides safe and uninterrupted gas supply through its extensive distribution network to transport, domestic, commercial and industrial consumers. The operations of the Company is spread over NCT of Delhi, Noida, Greater Noida, Ghaziabad & Hapur, Gurugram, Meerut (except area already authorised), Shamli, Muzaffarnagar, Karnal, Rewari, Kanpur (except area already authorized), Hamirpur & Fatehpur districts, Kaithal district and Ajmer, Pali & Rajsamand.

The Company has two following associate companies that operate as CGD Companies –

• Central UP Gas Limited (CUGL), in the areas of Kanpur, Bareilly, Unnao and Jhansi in Uttar Pradesh, and;
• Maharashtra Natural Gas Limited (MNGL), in the areas of Pune and nearby areas of Pimpri, Chinchwad, Chakan, Talegaon, Hinjewadi, Sindhudurg, Nashik and Dhule district in the state of Maharashtra, parts of Valsad district in Gujarat and Ramanagara in the state of Karnataka.

Industry Overview

Indian Natural Gas Industry

The oil and gas sector is one of the core industries in India. It plays a major role in influencing decision making for all the other important sectors of the economy. The government is creating an enabling environment to make India a USD 5 trillion economy by 2025 and this sector is closely related to this agenda. Therefore, with the growth of the Indian economy, the demand for oil and gas is projected to singularly grow more in the coming years.²

Natural gas is the cleanest fossil fuels among the available fossil fuels. However, Natural gas currently makes up only 6.2% of all energy consumed in the country. Gas as clean fuel has been given a top priority and Indian Government wants to make the Indian economy as a gas-based economy. In this regard, the government is targeting its share to rise to 15% by 2030. The current consumption of gas comprises around 50% of domestic output and the remaining consumption is met through imports. There has been an increased dependence on imports over the years.

Presently, the industry is facing challenges due to the spread of COVID-19, which has led to a nation-wide lockdown. The demand for natural gas has decreased since March, 2020, the beginning of lockdown. Near standstill transport sector along with prolonged closing of several factories and manufacturing units during the lockdown has dented natural gas demand. With the ease down of lockdown situation, the demand is picking up and expected to reach at its normal level in the second half of the current year FY 2020-21.

City Gas Distribution Sector in India

City Gas Distribution (CGD) refers to the transportation or distribution of natural gas to consumers in domestic, commercial or industrial and transport sectors through a network of pipelines. This business has attracted several companies to lay a network of gas pipelines over the last decade. The sector has been witnessing growth over the past years with the expansion CGD network in various parts of the country.

City gas distribution networks are being expanded with coverage of around 70% population and 50% area of the country till 10th round of bidding by PNGRB with massive investment plans. In order to promote the development of CGD network, the Government has accorded priority in domestic gas allocation to PNG (Domestic) and CNG (Transport) segments. The government has also taken up initiatives for the expansion of the city gas networks, by opening ‘Make in India’ market for ancillary equipment needed for piped natural gas to households and refuelling CNG vehicles. The expansion of CNG and PNG services will also create huge employment opportunities in this sector.

Additionally, the PNGRB has proposed 44 new geographical areas for the upcoming 11th round of bidding for city gas distribution (CGD). The aim is to make environment friendly fuel i.e. CNG/PNG available to public at large.

Business Overview

Compressed Natural Gas Business

During the year, the company showed growth of 8.4% in CNG business besides augmenting its CNG infrastructure in Delhi and NCR. The Company achieved a new milestone by setting up 550th CNG station in FY 2019-20. The Company was catering to 11.45 Lakhs vehicles in Delhi & NCR.

The Company had introduced prepaid card for its CNG customers in order to promote digital payments. Till now more than 90,000 cards are under circulation catering to 110,000 vehicles. Company has taken more initiatives in Digital Payments at CNG stations for the benefit of customers, wherein UPI payment was introduced at CNG stations through wallet payments mode. Also, the company has tied up with Bhim UPI for enabling UPI payments collection from all modes of payment. The combined effort towards digital payment collection has helped in a growth of 33% in digital payment collection this year vis-à-vis last year.

Company has conducted joint promotion activities with Maruti, Bajaj, Mahindra, Ford and Hyundai at the CNG stations. Due to constant follow up with the car manufacturers, they have launched Company fitted CNG variants, which are becoming very popular among the customers and thus boosting the sales of CNG.

Piped Natural Gas Business

PNG - Domestic Connections

PNG continued to be focus area of the Company during FY 2019-20. Total more than 2.72 Lakhs new connections were provided which is the highest number of connections in a single financial year in the history of the Company. In order to create the PNG awareness further amongst target customers, a successful integrated campaign was run during the year.

The company increased its steel pipeline network from 1006 kms in FY 2018-19 to 1150 kms in FY 2019-20 and its MDPE network from 12,022 kms in FY 2018-19 to 13,455 kms in FY 2019-20.

The Company has taken many new initiatives such as digital marketing, 360-degree PNG publicity drive including launch of Mobile Promotional Vehicle & increasing customer contact channels through Mobile App, QR Code, IGL Website etc., and successfully running many attractive customer schemes to increase the PNG customer base.

The Company had total 13.74 Lakh connections in Delhi & other geographical areas as on March 31, 2020.

PNG – Commercial & Industrial

During the financial year, the company continued its thrust on the Commercial & Industrial segment which is one of the potential growth areas in the coming years. The company achieved a growth of around 22% in sales volume in Industrial Segment & around 8% in Commercial Segment during financial year 2019-2020. In terms of number of customers, the industrial customer base increased from 1,770 in March, 2019 to 2,435 in March, 2020 and Commercial customer base increased from 2,506 in March 2019 to 3,143 in March, 2020.

In Delhi, Delhi Pollution Control Committee (DPCC) has banned all other industrial fuels except PNG and has advised all industrial customers (wherever PNG is available) to switchover to PNG. The company has efficiently co-ordinated to implement the mandate given by DPCC by facilitating industrial customer for smooth switchover to PNG supply. In this regard, the company has been able to convert ~90% of Industrial Customers located in NCT of Delhi on to PNG Supply.

Associate Companies

Central U. P. Gas Limited (CUGL)

CUGL is engaged in City Gas Distribution in the cities of Kanpur, Bareilly, Jhansi and Unnao in Uttar Pradesh. The company holds 50% of the paid-up equity share capital of CUGL.

CUGL achieved a gross turnover of Rs. 345.33 Crores and Profit After Tax of Rs. 73.64 Crores for the financial year ended March 31, 2020.

Maharashtra Natural Gas Limited (MNGL)

MNGL is in City Gas Distribution business in Pune, Pimpri, Chinchwad, Chakan, Talegaon and Hinjewadi, Nasik GA (Nasik, Dhule & part of Valsad), Sindhudurg GA in the state of Maharashtra and Ramanagara GA in the state of Karnataka. The company holds 50% of paid-up equity share capital of MNGL.

MNGL achieved a gross turnover of Rs. 1074.45 Crores and Profit After Tax of Rs. 223.33 Crores for the financial year ended March 31, 2020.

Financial Highlights

During the year ended March 31, 2020, the gross turnover of the Company increased from Rs. 6336.66 Crores in FY2018-19 to Rs. 7131.29 Crores in FY2019-20 showing an increase of 12.54%.

The Profit After Tax (PAT) increased by 44.47 % from Rs. 786.67 Crores in FY2018-19 to Rs. 1136.54 Crores in FY2019-20.

The consolidated PAT during FY 2019-20 is Rs. 1248.99 Crores against Rs. 842.10 Crores in the previous year.

Segment Wise Performance

Compressed Natural Gas (CNG) - IGL’s majority portion of the revenue accrues from sales of CNG amounting to Rs.5426.40 Crores in FY 2019-20, showing a growth rate of 13.97 % over previous year. The Company has 555 stations through which it provided gas to 11.45 lakh vehicles, with an average sale of 33.67 lakh kg per day in 2019-20.

Piped Natural Gas (PNG) - The total sales of PNG grew by 8.21% to Rs. 1704.89 Crores in FY 2019-20 from Rs. 1575.57 Crores in FY 2018-19. Sales volume of PNG increased from 552.52 mmscm in previous year to 619.05 mmscm in FY 2019-20, registering a growth rate of 12.04%. IGL provided 2.72 lacs new PNG connections during FY 2019-20. As on March 31, 2020, total PNG connections were provided to 13.74 Lakh households and 5578 Commercial & Industrial consumers. The Company’s pipeline infrastructure expanded from 13,028 kms in FY 2018-19 to 14,605 kms in FY 2019-20.

IGL Standalone December 2020 Net Sales at Rs 1,446.16 crore, down 13.1% Y-o-Y ³

Reported Standalone quarterly numbers for Indraprastha Gas are:

• Net Sales at Rs 1,446.16 crore in December 2020 down 13.1% from Rs. 1,664.17 crore in December 2019.
• Quarterly Net Profit at Rs. 334.87 crore in December 2020 up 17.97% from Rs. 283.85 crore in December 2019.
• EBITDA stands at Rs. 526.58 crore in December 2020 up 18.98% from Rs. 442.56 crore in December 2019.
• IGL EPS has increased to Rs. 4.78 in December 2020 from Rs. 4.06 in December 2019.

References

1. ^ https://www.iglonline.net/english/Default.aspx?option=article&type=single&id=10&mnuid=89&prvtyp=site
2. ^ https://www.iglonline.net/english/5000_media/Investor_Relations/ANNUAL_REPORT_2019-20.pdf
3. ^ https://www.moneycontrol.com/news/business/earnings/igl-standalone-december-2020-net-sales-at-rs-1446-16-crore-down-13-1-y-o-y-6488971.html