INDRAPRASTHA GAS

An equal joint venture by Gail and Bharat Petroleum, Indraprastha Gas supplies gas in the National Capital Region. It started with selling gas for powering Delhi's public transport fleet, but has subsequently entered the piped natural gas (PNG) segment for home and commercial use. The company recently completed 10 years of operations and sells 2.2 million standard cubic meters of gas per day (MMSCMD). Majority (95%) of the company's sales come from CNG (used for powering buses, three-wheelers and taxis), 5% from commercial customers and 3% from households. The company has been given marketing exclusivity in NCT of Delhi for three years. It has also received regulatory approvals for setting up city gas distribution network in Delhi's satellite towns of Greater Noida, Ghaziabad, Sonipat and Panipat. 

   IGL gets gas supply from Gail under administered price mechanism (APM). It grants IGL priority in the event of stoppage or any disruption in the supply. In addition, the company has signed agreements with BPCL and Gail for additional gas and has recently started marketing RLNG. It has also entered into an agreement with Reliance Industries for 0.31 MMSCMD of gas from the KG basin.

GROWTH DRIVERS:

The company has lined up Rs 1,600 crore of capital expansion plan for next the three years. The number of CNG vehicles in Delhi have grown at a CAGR of over 25% in the past five years and is expected to continue growing rapidly considering the governmental impetus. While the penetration in the existing market improves, geographical expansion will ensure sustenance of growth. In FY09, IGL started supplying in Noida and Greater Noida areas and will soon enter other adjoining cities where it has obtained regulatory approvals.

FINANCIALS:

After a high-speed growth phase between FY02 and FY07, when sales grew annually at 40% and profits at 84%, the company has entered a plateau. Since FY07 its net sales have grown at a CAGR of 17.8% while net profits grew at 14%. In the past five years, IGL's net worth has grown at a CAGR of 22.1%, while gross block grew at 14%. The company's 40% operating margin has fallen to 35% level in the past couple of years; however, the company has maintained its net profit margin above 20%. IGL's return on capital has been consistently above 40% in the past few years, while it remained a debt-free and cash-rich company.