IGL’s net profit grew 16.7 per cent year on year (YoY) in FY19 on revenue growth of 27 per cent. Nearly three-quarters of its revenues come from sales of CNG, with the remainder coming from PNG sales to residential and industrial/commercial segments and sales to other CGD networks. During the year, volumes grew 14 per cent overall.
IGL expanded its pipeline infrastructure to 13,028 km in FY19, from 11,673 km in the previous year. IGL has now expanded beyond the Delhi region and has started building infrastructure in the geographical areas of Meerut (except area already authorised), Muzaffarnagar and Shamli districts in Uttar Pradesh. The company has also started supply of CNG and domestic PNG in earmarked areas of Gurugram and Karnal districts.
According to Ranganathan, IGL’s customer base will increase to 2 million in three years and will cross 2.5 million in eight years.
In order to increase the average consumption from the current 0.34 standard cubic metres per day (scmd) to 0.5 scmd, IGL is promoting gas appliances such as geysers and rice cookers through its channel partners. Besides, diesel gensets will be another area of growth. “A diesel genset generates power at Rs 19 a unit, but with gas it can be done at Rs 14,” says Ranganathan.
While IGL faces the challenge of its markets being opened up to other plays, it is looking to expand its physical reach to other cities by bagging more geographic areas in the CGD bidding round. “We have 16 districts in three states of Uttar Pradesh, Haryana and Rajasthan with us. These areas will start contributing to our growth in five years,” he says.
IGL had earlier bought a 50 per cent stake in Central UP Gas, which supplies PNG to Kanpur, Bareilly, Jhansi and Unnao. It has now received authorisation from the Petroleum and Natural Gas Regulatory Board for development of CGD networks in the geographical areas of Kaithal (Haryana), Ajmer, Pali, Rajsamand (Rajasthan), parts of Kanpur, Fatehpur (Uttar Pradesh) and Hamirpur (Haryana) districts. The company is also looking for inorganic growth by acquiring stakes in other CGD companies.
In addition to this, it has also acquired a 50 per cent share for Rs 190 crore in Maharashtra Natural Gas, which is engaged in city gas distribution activities in Pune and nearby areas. These acquisitions have not just provided geographical diversification but also helped in improving its consolidated earnings by approximately 10 per cent.
The Centre’s National Infrastructure Plan (NIP) aims to invest Rs 1.95 trillion in the petroleum and natural gas industry in the coming five years. Of this, CGD is expected to have a major share. Indraprastha Gas
should be a key beneficiary.