Adani Total Gas Ltd Management Discussions

Global Economic Overview

The global economy displayed remarkable resilience in 2023, navigating a steady yet slow recovery with disparities evident across regions. According to the International Monetary Fund (IMF), global growth held steady at a modest rate of 3.2%, compared to 3.5% in 2022. However, underlying risks and vulnerabilities persist due to escalating geopolitical conflicts, inflation, prolonged higher interest rates, volatility in energy and food markets, and sluggish recovery in China. Furthermore, the Red Sea crisis has caused one of the biggest diversions of global trade in decades, leading to delays and heightened expenses for shipping lines that are avoiding a waterway that normally handles 12% of the worlds maritime trade. As the crises continue to unfold, its far-reaching impact on global trade is becoming increasingly evident. Despite these challenges, signs of stable growth, robust performance of the United States and several large emerging market and developing economies, coupled with inflation returning to target levels in advanced economies, indicate a diminished risk for the global economy.

Global inflation continues to recede at a faster pace from 8.7% in 2022 to 6.8% in 2023. Despite headline inflation experiencing a decline from its unprecedented peaks, core inflation has remained persistent and is expected to decline gradually.

The price of Brent crude oil averaged USD 83 per barrel in 2023, down from USD 101 per barrel in 2022. However, the spot price of Brent crude oil averaged USD 90 per barrel in April 2024 due to escalating tensions in the Middle East, attacks on Russian refineries and voluntary 0PEC+ production cuts through Q2 2024. Despite these challenges, crude oil price volatility has remained low for the majority of 2024, attributed to substantial spare crude oil production capacity.

Region-wise Growth (%)

Region	2024 (P)	2023	2022
Global Economy	3.2	3.2	3.5
Advanced Economies (AEs)	1.7	1.6	2.6
Emerging Markets and Developing Economies (EMDEs)	4.2	4.3	4.1
India	6.8	7.8	7.0
China	4.6	5.2	3.0

(P- Projections)

(Source: International Monetary Fund)

Performance of Major Economies United States: The US economy expanded more quickly than expected. Its GDP increased from 1.9% in 2022 to 2.5% in 2023. The US has witnessed the strongest recovery among major economies, marked by a stronger performance in private consumption, swift containment of a looming banking crisis, tight labour market, and rising wages.

China: Chinas GDP grew from 3.0% in 2022 to 5.2% in 2023, primarily due to higher government spending. The shakier economic growth recovery of China in 2023 is attributed to depression in the real estate market and tepid demand. Chinas central banks announced cutting the reserve requirement ratio (RRR) for all banks by 50 basis points (bps) as part of a slew of measures to support the fragile economy.

United Kingdom: The GDP in the UK decreased from 4.3% in 2022 to 0.1% in 2023. The decline in growth reflects tighter monetary policies to curb still-high inflation and the lingering impacts of high energy prices.

Japan: Economic growth in Japan increased to 1.9% in 2023 from 1.0% in 2022, bolstered by pent-up demand, a surge in inbound tourism, accommodative policies and a rebound in auto exports that had earlier been held back by supply chain issues.

Germany: The GDP in Germany shrank by 0.3% in 2023 from 1.8% in 2022, due to the impact of high energy prices, weaker industrial demand and higher interest rates. (Source: IMF Economic Outlook, April 2024: Economic Times)

Outlook

The global economy is expected to maintain its resilience in 2024. The IMF projects sluggish global growth at 3.2% for both 2024 and 2025. The global economic outlook in 2024 will be shaped by elevated interest rates as the fight against inflation persists, withdrawal of fiscal support amid high debt weighing on economic activity, low underlying productivity growth, a tight job market and economic uncertainties. Global headline inflation is expected to decrease to 5.9% in 2024 and 4.5% in 2025. Furthermore, according to the forecast of the Energy Information Administration (EIA), the Brent crude oil price is expected to average USD 88 per barrel in 2024 and USD 85 per barrel in 2025.

Furthermore, the prolonged Russia-Ukraine conflict has the potential to further dampen the overall economic outlook of the European Union. Additionally, an escalabion in geopolibical bensions in Wesb Asia could raise energy and commodiby prices, reduce energy supply, increase bhe risks of supply disrupbions, and pose downside risks for bhe disinflabionary brend and bhe overall global economy. However, brighb aspecbs, such as fasber disinflabion, sbronger-bhan-expecbed economic performance of bhe US and several large emerging markeb and developing economies, economic sbimulus measures in China, and Europes resilience amid ongoing conflicbs will bolsber bhe oublook of bhe global economy.

(Source: IMF Economic Oublook, April 2024)

Indian Economic Overview

Amid a challenging global economic landscape and deberiorabing geopolibical condibions, India shines as a beacon of opbimism, proudly holding ibs posibion as bhe worlds fifbh-largesb economy and expecbed bo conbinue leading as bhe fasbesb-growing major economy. Indias GDP growbh remained buoyanb ab 7.6% in FY 2023-24 as againsb 7% in FY2022-23, supported by robusb domesbic demand, moderabe inflabion, a sbable inberesb rabe environmenb, and sbrong foreign exchange reserves. Furthermore, an accelerabed pace of economic reforms and increased capibal expendibure facilibabed consbrucbion acbivibies and creabed employmenb opporbunibies across bhe counbry. The Inbernabional Monebary Fund (IMF) commended Indias economic resilience, robusb growbh, and nobable progress in formalisabion and digibal infrasbrucbure. Moreover, Indias G20 presidency in 2023 has demonsbrabed ibs capabiliby bo caber bo global needs and provided a plabform bo address global concerns. India posibioned ibself as an abbracbive desbinabion for invesbmenbs in energy bransibion inibiabives.

Growth of the Indian Economy

	FY 2023-24 (E)	FY 2022-23	FY 2021-22
Real GDP growbh (%)	7.6	7.0	9.1

(E- Esbimabes)

(Source: Minisbry of Sbabisbios & Programme Implemenbabion)

As per bhe Second Advance Esbimabes of Nabional Income, 2023-24, a double-digib growbh rabe of 10.7% in bhe Consbrucbion secbor and an 8.5% growbh rabe in bhe Manufacburing secbor have conbribubed bo bhe GDP growbh in FY 2023-24. Moreover, Indias IIP growbh during April-February FY 2023-24 sbood ab 5.9%, up from 5.6% in bhe corresponding period in bhe previous year. The Elecbriciby secbor recorded a growbh of 6.9%. The Mining and Manufacburing secbors also recorded a higher growbh of 8.2% and 5.4% respecbively during bhe same period.

The growbh in gross value added (GVA) ab Basic (2011-12) Prices is pegged ab 6.9% in FY 2023-24 as againsb 6.7% in FY 2022-23. Furthermore, Indias per capiba income is esbimabed bo reach Rs 2.14 lakhs in FY 2023-24, achieving remarkable growbh of 8.0%. The escalabion in disposable income hasprompbed increased household consumpbion in urban and rural regions, sbimulabing demand growbh across secbors.

While major advanced economies conbinue bo grapple wibh inflabion, India effecbively managed ibin FY2023-24. CPI inflabion is on a downward brajecbory and eased bo 4.85% in March 2024. According bo bhe Reserve Bank of India (RBI), CPI inflabion is esbimabed ab 5.4% for FY 2023-24. Headline inflabion is expecbed bo gradually decline albhough ib remains volabile due bo repebibive food price shocks. The RBI keeps bhe policy repo rabe unchanged ab 6.50% and sbays prepared bo implemenb effecbive measures bo reach bhe 4% inflabion bargeb while supporting economic growbh.

The sbrucbural inbervenbions implemenbed by bhe governmenb will conbinue bo sbrengbhen bhe infrasbrucbural and manufacburing base, creabe economies of scale, increase exports and make India an inbegral part of bhe global value chain. The governmenbs flagship programme Make in India has made significanb achievemenbs and is now focussing on 27 secbors under Make in India 2.0 bo make India a manufacburing hub.

(Source: Minisbry of Sbabisbios & Programme Implemenbabion: Minisbry of Finance; RBI; Minisbry of Commerce & Indusbry)

Interim Budget FY 2024-25

The Inberim Budgeb 2024-25 reflecbs bhe governmenbs conbinued focus on inclusive developmenb, economic sbabiliby, secbor-specific developmenbs, environmenbal susbainabiliby and sbrabegic global posibioning. Ib sebs bhe foundabion for bhe vision of a Viksib Bharab (Developed India) by 2047, focussing on demographic, democrabic and diversiby sbrengbhs.

The governmenb has raised bhe capibal expendibure oublay by 11.1% bo Rs11.1 lakhs crore for FY 2024-25, which would be 3.4% of bhe GDP. The allocabion for bhe Minisbry of Road Transport and Highways (MoRTH) increased by 2.8% bo Rs 2.78 lakhs crore for FY 2024-25. Furthermore, Rs2.55 lakhs crore has been allocabed for bhe Minisbry of Railways, surpassing bhe previous years record of Rs2.4 lakhs crore. The proposals for bhe developmenb of 50 airports and 3 major economic railway corridor programmes (i) energy, mineral and cemenb corridors, (ii) port connecbiviby corridors and (iii) high braffic densiby corridors are expecbed bo enhance bhe counbrys infrasbrucbure and improve logisbics efficiency and reduce cost. The government has also increased the outlay for the Production Linked Incentive (PLI) scheme by 33.5% to Rs 5,200 crore.

The budget places a strong emphasis on sustainable development and allocates Rs600 crore for the National Green Hydrogen Mission and Rs 8,500 crore for the development of solar power grid infrastructure. Furthermore, the initiative Pradhan Suryodaya Yojana (PMSY) aims to instal rooftop solar power systems in one crore households, enabling them to obtain up to 300 units of free electricity each month. Moreover, the budget emphasises expanding and strengthening the electric vehicle ecosystem by supporting manufacturing and charging infrastructure. With these measures, the increased budgetary allocation is poised to foster the development of a robust ecosystem for renewable energy.

(Source: Ministry of Finance)

Outlook

Indias economic outlook is optimistic as it reaps the benefits of demographic dividend, physical and digital infrastructure enhancements, increased capital expenditure and the governments proactive policy measures such as Production Linked Incentive (PLI) Schemes. According to the IMF, the Indian economy is expected to advance steadily at 5.5% in 2024. Private and government investments are expected to be the primary drivers of economic growth in 2024, backed by improving prospects of rural consumption due to the easing of inflation and increased spending in an election year. As per the Reserve Bank of Indias forecast, CPI inflation is expected to decline to 4.5% in FY 2024-25. However, volatile food prices hinder the trajectory of disinflation and obscure the inflation forecast.

Spillovers from geopolitical tensions, political stability, volatility in global financial markets, geoeconomic fragmentation, and climate shocks are the key risks to the growth and inflation outlook. However, the Indian economy has withstood recent upheavals and is well-positioned to navigate forthcoming uncertainties. Its advantageous geopolitical position will help it capitalise on supply chain diversification and reshoring, increase its global competitiveness and boost exports. Furthermore, India is striving to achieve sustainability goals through decarbonisation and leveraging growing investment and trade opportunities through enhanced technology transformation and improved governance to ensure inclusive and broad-based growth. The Indian economy is poised to emerge as one of the global economic powerhouses and become the third-largest economy in the world by 2030.

(Source: IMF Economic Outlook Update, January 2024:

Economic Times)

Overview of Global Energy Sector

Despite fluctuations in Brent Crude oil prices ranging from USD 71/bbl to USD 94/bbl, crude oil exhibited lower volatility compared to FY 2022-23, attributable to a combination of factors such as subdued demand, availability of Russian crude, and OPEC production cuts. Some volatility was seen towards the end of FY 2023-24 resulting from the Israel-Hamas war and supply chain disruptions due to attacks in the Red Sea region.

The global natural gas landscape exhibited significant improvement compared to the previous financial year, leading to a softening of natural gas prices. Although LNG prices were much lower than the highs observed in the aftermath of the Russian invasion of Ukraine due to a mild winter, Asian spot prices remained significantly higher compared to the pre-COVID levels. Global LNG production capacity increased by 13 BCM, however, could not completely offset the demand generated in Europe. As per the Q1 2024 Gas Market Report published by IEA, the gas markets are expected to return to growth going forward.

Overview of Indian Energy Sector

India imported nearly 88% of crude oil and 45% of natural gas during FY 2023-24. While the domestic production remained almost stagnant in case of crude oil (29.4 MMT, +0.7% Y-o-Y), the natural gas domestic production saw a moderate growth (33.3 BCM, +5.8% Y-o-Y) during the financial year. The crude oil constituted nearly 30% of Indias primary energy basket and natural gas constituted just under 5%. Driven by a combined effect of accelerating economic growth and volatility in international crude prices, the consumption of petroleum products (products derived from crude oil) increased by just around 4.5% during FY 2023-24.

Domestic Consumption of Petroleum Products

	UoM	FY 2023-24 (P)	FY 2022-23	FY 2021-22
Petroleum Products (all)	MMT	233.3	223.0	201.7
LPG	MMT	30	29	28
MS	MMT	37	35	31
HSD	MMT	90	85	77
FO/LSHS	MMT	5.5	7	5

(P: Provisional)

Source: Petroleum Planning & Analysis Cell, Ministry of Petroleum & Natural Gas, Gol

International crude oil prices remained volatile during FY 2023-24 due to a demand slowdown, OPEC supply cuts and the crises in the Middle East, with crude oil prices (Indian Basket) fluctuating between USD 74/bbl and USD 94/bbl.

The consumption of natural gas, on the other hand, which had witnessed a sharp decline of 6.5% in FY 2022-23 (vs. FY 2021-22), as a result of the Russia-Ukraine war, recovered strongly and increased by nearly 11% in FY 2023-24 (vs. FY 2022-23), as global natural gas prices remained reasonably stable due to softened demand and increased global supply.

Domestic Consumption of Natural Gas

	UoM	FY 2023-24 (P)	FY 2022-23	FY 2021-22
Natural Gas	BCM	66.63	59.97	64.16

(P: Provisional)

Source: Petroleum Planning & Analysis Cell, Ministry of Petroleum & Natural Gas, Gol

Natural gaspricesexhibited expected seasonalfluctuations, peaking from October to January, and gradually softening by the end of FY 2023-24. Henry Hub spot prices remained within USD 1.71 /mmbtu to USD 3.2/mmbtu. This global softening of natural gas prices resulted in a lowering of average LNG import price for India, from USD 16.4/mmbtu in FY 2022-23 to USD 11.0 /mmbtu in FY 2023-24, which ultimately caused a surge in demand of LNG import to 30.9 BCM, an increase of 17.5% Y-o-Y.

The LNG import capacity increased by 11.7% to 47.7 MTPA due to the addition of Dhamra LNG import terminal (5 MTPA), commissioned in May 2023. The average utilisation of LNG import terminals in India stood at 48.9%, ranging between 12% and 95% across terminals.

City Gas Distribution

The Government of India continued its efforts to expand the coverage of City Gas Distribution (CGD) in the country, and successfully concluded the 12th CGD Bidding Round, at the end of which nearly 100% of the countrys area has now been authorised. During FY 2023-24, the number of CNG stations grew by 22% and total PNG connections grew by nearly 17%. Furthermore, the Kirit Parikh panel recommendations on natural gas pricing (APM) provided much-needed gas price stability to the priority segments of CNG (Transport) and PNG (Domestic). During the entire financial year, the Administered Price Mechanism (APM) price remained at USD 6.5 /mmbtu for these two segments. However, some of the benefits of this price stability were eroded because APM gas could only be allocated partially, as domestic production struggled to meet the growing demand for natural gas in the segment.

Natural gas consumption in the CGD segment stood at 13.49 BCM, 12% increase compared to FY 2022-23. The growth potential of the CGD segment can be illustrated by the fact that the number of CNG stations is still around 10% of the total number of MS/HSD retail outlets (excluding rural ROs) and the number of domestic PNG connections is just under than 4% of active domestic LPG customers.

Growth in CGD Infrastructure in India

	UoM	FY 2023-24 exit	FY 2022-23 exit	FY 2021-22 exit
CNG Stations	Nos.	6,861	5,665	4,433
Domestic PNG	Nos.	1.29 crore	1.10 crore	LIGN=RIGHT>0.93crore
Commercial PNG	Nos.	41,360	37,772	34,854
Industrial PNG	Nos.	18,756	16,563	13,215

Source: Petroleum Planning & Analysis Cell, Ministry of Petroleum & Natural Gas, Gol

Natural Gas Vehicles

CNG vehicle sales surged in FY 2023-24, growing by nearly 37%, constituting both CNG-only and CNG/MS dual-fuel categories. The total number of CNG vehicles sold in FY 2023-24 alone accounted for 15% of the total number of CNG vehicles on road by FY 2023-24 exit. Furthermore, the number of CNG-driven vehicles accounted for nearly 31% of total 3W sales and 11% of total 4W sales in FY 2023-24 across all categories. Interestingly, the sales of CNG-fuelled buses showed a significant drop in FY2023-24, indicating a shift of focus of state and municipal road transport authorities from CNG to EV, even though CNG buses constitute less than 1% of total CNG-fuelled vehicles on road.

Sales of CNG Vehicles

	UoM	FY 2023-24	FY 2022-23	FY 2021-22
CNG 3W	Nos.	3.6 lakhs	2.5 lakhs	1.3 lakhs
CNG 4W+	Nos.	6.7 lakhs	5.0 lakhs	3.6 lakhs
Total	Nos.	10.3 lakhs	7.5 lakhs	4.9 lakhs

Source: Vahan Dashboard, Ministry of Road Transport

& Highways, Gol

FY 2023-24 also witnessed bhe inbroducbion of Liquefied Natural Gas (LNG) vehicles in the country, in the Heavy Commercial Vehicles segment, with 280 LNG vehicles registered during the year.

E-Mobility

Due to the consistent drive to promote EV adoption in the country, EV sales increased by 41% in FY 2023-24 on Y-o-Y basis. The 3W segment saw a 56% Y-o-Y growth and constituted 37% of overall EVs sold in FY 2023-24. The 4W category, on the other hand, which constituted only 5% of overall EVs sold, saw an 83% increase in sales on Y-o-Y basis. The 2W segment still retained its dominating position with a total 57% share in new EVs sold, as well as still accounting for nearly 48% of total EVs on road. Just over 3,500 e-Buses were sold during this period, however, this number is expected to grow rapidly with the launch of PM e-Bus Sewa Scheme in August 2023, which targets to deploy 10,000 e-Buses in the country.

Sales of Electric Vehicles

	UoM	FY 2023-24	FY 2022-23	FY 2021-22
e-2W	Nos	9.47 lakhs	7.28 lakhs	2.53 lakhs
e-3W	Nos	6.25 lakhs	4.02 lakhs	1.84 lakhs
e-4W	Nos	0.90 lakhs	0.49 lakhs	0.20 lakhs
e-Bus	Nos	3,516	1,937	1,067
e-M&HCV	Nos	204	207	-
Total EV	Nos	16.66 lakhs	11.81 lakhs	4.57 lakhs

Source: Vahan Dashboard, Min is try of Road Transport 8- High ways, Go I

As per data available on the EV-Yatra portal (managed by BEE), while there are more than 80 PSU and Private Charging Point Operators (CPO) building and operating charging infrastructure in the country, the number of Public EV charging stations (PCS) is just over 16,500, equivalent to a ratio of 250:1 public charging station to EV, which is much lower than 20:1 ratio which is considered optimum for countries with mature EV segment.

Compressed Biogas

With increasing focus on energy transition and decarbonisation, India spearheaded the launch of the Global Biofuel Alliance, with the aim of increasing the production and demand of biofuels globally. If produced responsibly, biofuels have the potential to significantly reduce the extraction and consumption of fossil fuels, thus reducing overall greenhouse gas (GHG) emissions in the economy.

The Government of India launched a unified registration portal for the GOBARdhan scheme in June 2023, with the aim of streamlining various policies and incentives provided to the Compressed Biogas (CBG) segment in the country. The two key CBG-focussed policies notified in FY 2023-24 are-

i. Market Development Assistance (MDA) for the promotion of organic fertilisers with a budget outlay of Rs 1,452 crore from FY 2023-24 to FY 2025-26. Under this scheme, a financial incentive of Rs1,500/ MT will be provided for the sale of organic manure (FOM / LFOM / PROM) produced at the CBG Plant. Accordingly, the Fertiliser Control Order (FCO) has been suitably amended in July 2023, to include organic manure produced by the CBG plant.

ii. Compressed Biogas Obligation (CBO) for phase-wise mandatory blending of CBG in CNG (Transport) and PNG (Domestic) segments of the CGD sector. CBO will be voluntary till FY2024-25, and mandatory blending obligation would start from FY 2025-26 in a phase-wise manner, from 1% in FY 2025-26 to 5% in FY 2028-29.

While the CBG segment is still in its early stage, as per details published by PPAC in March 2024,13 CBG plants were commissioned in FY 2023-24, bringing the total to 53 plants commissioned under SATAT. As per the end-of- year review of GOBARdhan, scheme more than 120 CBG plants are under construction as on January 2024.

ATGL Business Overview

Company Overview

ATGL is engaged in the business of city gas distribution (CGD), supplying PNG to industrial, commercial, and residential segments and CNG to the automotive segment. ATGL is present in 33 Geographical Areas (GA) covering nearly 10% of the countrys population. ATGL holds a 50% stake in the JV, Indian Oil - Adani Gas Private Limited (I0AGPL), which is also a CGD entity with a presence in another 19 geographical areas (GAs). ATGL is providing piped natural gas to 8.20+ lakhs domestic, 5,626 commercial, and 2,705 industrial consumers, and is operating 547 CNG stations across its GAs. ATGL has also commissioned 02 LCNG stations in areas without natural gas pipelines.

Development of New Geographical Area (GA)

ATGL is progressing well on CGD infrastructure development in the newer GAs awarded in the 9th, 10th and 11th rounds, successfully overcoming various challenges like lack of natural gas pipeline, inherent lack of natural gas demand, and longer than expected regulatory processing times. In the reported year, the Company built 12,023 km of steel network, 2 LCNG stations, and 547 CNG stations in these GAs.

Enhancing Natural Gas Volumes

ATGL has successfully continued to enhance its natural gas sales volumes to 865 mmscmd, a 15% Y-o-Y growth, recovering most of the C&l volumes that were lost due to high natural gas prices due to the Russia-Ukraine war in FY 2022-23. This has been achieved by adopting a more dynamic pricing approach, enabled by an improved natural gas sourcing portfolio.

Operational Excellence

Adopting a digital-first approach and early adoption of digitalisation among industry peers has enabled ATGL to improve its operational performance and mitigate costs associated with unplanned disruptions.

Our Diversified Energy Solutions

E-Mobility

Joining Indias journey towards cleaner transportation, ATGL formed a wholly-owned subsidiary, Adani TotalEnergies E-Mobility Limited in FY 2022-23, with an aim to build EV Charging Infrastructure (EVCI) across the country. The EVCI segment also fits well with ATGLs strategy of expanding business expansion beyond ATGLs core CGD areas and has added a new customer base that was not served by the CGD segment previously. In the reported year, total 606 EV charging points across 14 states have been commissioned and are open to the public.

Compressed Biogas

Staying ahead of the curve, ATGL forayed into the Compressed Biogas segment by forming a wholly-owned subsidiary, Adani TotalEnergies Biomass Limited. Aiming to develop both Agri-waste to CBG and Municipal Solid Waste (MSW) to CBG projects, ATBL successfully commissioned the 1st Phase of Indias Largest Agri-waste to CBG plants in Barsana, near Mathura (UP), with total 600 TPD of feedstock process capacity. The Company also won award to build and operate two MSW to CBG plants, in Ahmedabad and Rajkot with 500 TPD and 250 TPD feedstock processing capacity respectively.

LNG for Transport and Mining (LTM)

Indias energy transition journey is incomplete without decarbonising the heavy transport and mining segment, which currently uses diesel as fuel. While various new technologies like EV and Green Hydrogen (GH2) are being developed for these segments, they have not reached the commercial viability stage yet. Liquefied Natural Gas (LNG) presents an immediate solution for this segment on a short to mid-term basis. Considering this, ATGL is now embarking upon building an LNG retailing network at strategic locations near industries, mines, ports, and highways.

Pilot Project on Hydrogen Blending in CGD

With an eye on the future of energy, where GH2 is to play a critical role in achieving net-zero targets, ATGL has started working on a pilot project on hydrogen blending in its CGD network. The pilot project, announced in August 2023, will be capable of on-site production and blending up to 8% of H2 in a limited section of its CGD network in Ahmedabad. GH2 is considered to be an important fuel of the future and through this pilot, ATGL intends to develop capabilities in this segment.

Joint Ventures

Indian Oil Adani Gas Private Limited (IOAGPL)

IOAGPL is a Joint Venture between Indian Oil Corporation Limited and Adani Total Gas Limited, and is a CGD entity present in 19 GAs. Towards later half of FY 2023-24, the Company crossed the average daily gas sales of 1.0 mmscmd, recording a growth of 16% on Y-o-Y basis. With 1.55+ lakhs PNG customers and 356 CNG stations, it is one of the leading CGD entities in the country.

Smart Meters Technologies Private Limited (SMTPL)

SMTPL is a Joint Venture between Adani Total Gas Limited (ATGL) and GSEC Limited, and is in the business of manufacturing mechanical and smart gas meters targeted at the CGD segment. In FY 2023-24, the Company supplied 1,92,680 quantity of gas meters. The Company also received Certification of Dutch Agency during the FY 2023-24, which now enables it to export the smart gas meters to international markets.

Financial Performance

Financial and Operational Performance

The annual sales volume stood at 864.89 MMSCM in FY 2023-24 as against 753.00 MMSCM in FY 2022-23 with 15% Y-o-Y volume growth. The Companys revenue stood at Rs 4,813.48 crore as on March 31, 2024 as against Rs 4,683.23 crore in FY 2022-23. The EBITDA grew by 26.78% from Rs907.38 crore to Rs1,150.36 crore while the PAT grew by 23.27% from Rs 529.82 crore in FY 2022-23 to Rs 653.10 crore in FY 2023-24. Profitability improved mainly due to volume growth in the existing and new geographical areas.

Infrastructure and Operations Update

• Total CNG stations increased to 547 following the addition of 91 new CNG stations in FY 2023-24

• Cumulative steel pipeline network stood at 12,023 inch-kms, with 1,268 inch-kms, laid in FY 2023-24

• Number of domestic customers crossed 8.20 lakhs with 1,15,898 customers added in FY 2023-24

• Number of Industrial and Commercial Customers stood at 8,331, with 896 customers added in FY 2023-24

Key Financial Ratios and Return on Net Worth

The key financial ratios compared to the last financial year are as under:

Particulars	Current FY ended March 31, 2024	Previous FY ended March 31, 2023	Changes between current FY and previous FY	Reason for change
Debtors Turnover	13.31	17.66	-24.63%
Inventory Turnover	363.70	328.33	10.77%
Interest Coverage Ratio	8.92	10.11	-11.80%
Current Ratio	0.58	0.39	46.83%	During the year, Company has repaid short-term borrowing which resulted in reduction of current liabilities.
Debt-Equity Ratio	0.41	0.47	-11.56%
Operating Profit Margin (%)	22.9%	18.6%	23.40%
Net Profit Margin (%) or sector-specific equivalent ratios, as applicable	13.4%	11.2%	19.72%
Return on Net Worth (%)	20.1%	19.7%	1.78%

Notes:

a. Above ratios were based on the Standalone Financial Statements of the Company.

b. Definitions of ratios:

1. Debtors turnover: Average trade receivable by revenue from operations for the year.

2. Inventory turnover: Average inventory (excluding Stores and spares) by Cost of Goods Sold for the year.

3. Interest coverage ratio: Total EBIT by finance cost for the year.

4. Current ratio: All types of Financial and Non-Financial Current assets by all types of Financial and Non-Financial current liabilities.

5. Debt equity ratio: Current and Non-current Borrowings by total equity at the end of the year.

6. Operating profit margin: Operating EBIDTA by revenue from operations for the year.

7. Net profit margin: Profit for the year by total income for the year.

8. Return on net worth: Profit for the year by average Total Equity.

Financial and Operational Performance Highlights of the Joint Venture Company Indian Oil Adani Gas Private Limited (IOAGPL)

IOAGPL is a joint venture company of Indian Oil Corporation Limited (IOCL) and Adani Total Gas Limited (ATGL). IOAGPL was commissioned to develop City Gas Distribution projects across the country through a network of underground pipelines for the distribution of environment-friendly fuel (natural gas). IOAGPL has authorisations for 19 GAs across India.

The revenue from operations is Rs 1,973.64 crore in FY 2023-24. The PAT grew 23.29% Y-o-Y to Rs 44.50 crore in FY 2023-24 from Rs 36.09 crore in FY 2022-23. The sales volume is 359.59 MMSCM in FY 2023-24.

Financial and Operational Performance Highlights of the Joint Venture Company Smart Meters Technologies Private Limited (SMTPL)

SMTPL is a joint venture company of Adani Total Gas Limited (ATGL) and GSEC Limited. ATGL infused its first equity in SMTPL on October 8, 2021.

SMTPL was incorporated in October, 2019 with the objective to manufacture smart meter and other gas meters.

The revenue from operations is at Rs 19.29 crore in FY 2023-24.

Financial and Operational Performance Highlights of the Subsidiaries

ATGL has formed two subsidiaries in FY 2022-23, Adani TotalEnergies Biomass Limited (ATBL) and Adani TotalEnergies E-mobility Limited (ATEL). ATEL expands its presence in 217 cities across 22 states for EV charging stations. ATBL has successfully commissioned its first biogas plant in Barsana in FY 2023-24.

SWOT Analysis

Strengths

i. Marketing exclusivity for City Gas Distribution in Geographical Areas for the next 4 to 8 years, and Infrastructure exclusivity for another 20+ years.

ii. Pan-India presence, with operations in 94 districts, covering 10% of the countrys population resulting in reduction of time-to- market for new products & offerings.

iii. Deep domain expertise developed over18years of infrastructure development and natural gas retailing, resulting in best-in-class execution capabilities and cost leadership.

iv. Brand recognition and credibility result in customer loyalty, lower price sensitivity, and talent retention.

v. Strong balance sheet and cashflows resulting in lower cost of Debt.

vi. Digital-first approach enabled digitalisation of operations by using tools developed in-house.

vii. Recognised in the industry for its stewardship and thought leadership.

Weaknesses

i Natural gas segment is inherently tax inefficient due to the applicability of VAT and thus is less preferred by price-sensitive consumer segment.

ii. Limited experience in new areas of businesses, like EV, CBG, and GH2 where ATGL intends to diversify.

iii. Due to demand unpredictability, a significant portion of non-APM gas is sourced via short-term arrangements resulting in higher sourcing costs.

Opportunities

i. As the Indian economy is growing rapidly, the energy demand is set to grow faster - ATGL is in the right place at the right time with its portfolio of energy solutions.

ii. The increasing focus of policymakers and energy consumers on addressing air pollution and decarbonisation has created demand for new and cleaner sources of energy like natural gas (CNG, PNG, and LNG), Compressed Biogas (CBG), EV, GH2, etc.

iii. With gas sales volumes growing further, there is an opportunity to integrate up the value chain, in terms of gas sourcing and trading, thus delivering more value to the customers.

iv. With many mature CGD GAs approaching the end of marketing exclusivity, there is an opportunity to expand gas sales to newer geographies, instantly expanding the Total Addressable Market.

v. Opportunity for market consolidation.

Threats

i. The threat of volatility in international natural gas prices is expected to intensify going forward, especially considering that India currently imports nearly half of its natural gas consumption.

ii. Threat of unexpected policy change in the CGD sector which is highly regulated.

iii. Threat of lower price of alternate fuels to both PNG and CNG segments.