Indraprastha Gas Ltd Management Discussions

Global Energy Industry

In CY 2024, global energy demand grew by 2.2%, marking a faster pace than the average over the past decade. Emerging and Developing Economies (EMDEs) accounted for over 80% of this growth. Advanced economies also saw an increase in energy demand, with the United States recording the third- highest absolute growth in 2024, following China and India. The growth in global energy demand was supported by higher industrial usage and increased gas consumption for power generation. In addition, renewables accounted for the largest share of growth in total energy supply, followed by natural gas, coal, oil, and nuclear.

Outlook

This rise in global energy demand was driven by increased electricity consumption for a variety of purposes, including

greater demand for cooling, higher industrial usage, and the growing electrification of transport. Additionally, energy prices moderated during the year, with global oil prices declining from their peak levels in CY 2022.

Looking ahead, global energy demand is projected to rise by 18% by 2050. This growth will largely stem from emerging economies, supported by growing populations and a strengthening middle class. Economic expansion in emerging economies such as India will play a key role, as these regions are expected to contribute approximately 95% of the total increase in global energy demand by 2050. Moreover, natural gas is expected to remain the fastest-growing fossil fuel in the long run, and coal and oil are predicted to peak in the near to medium term.

Indian Natural Gas Industry

Indias natural gas market can be described as moderately fragmented and is entering a new phase of growth. This transformation is supported by significant infrastructure development and supportive policies implemented by the Indian government. The Petroleum and Natural Gas Regulatory Board (PNGRB) remained focused on expanding the natural gas market in India. The volume of natural gas consumption in FY 2025 was 72.3 BCM (billion cubic meters), up from a historic volume of 67.5 BCM. This reflects the growing preference for natural gas as a primary energy source in India.

Moreover, during the reported year, Gujarat and Maharashtra accounted for 36% of Indias natural gas market. Further to this, digitalisation, such as smart monitoring and predictive maintenance, emerged as a competitive differentiator. Along with this, key distributors in the industry deployed Internet of Things (IoT) to optimise Compressed Natural Gas (CNG) dispenser uptime.

Outlook

Natural gas is projected to play an important part in the energy mix, regardless of the pace of the energy shift. Natural gas demand is expected to increase significantly in the immediate term. In addition, gas-based blast furnaces and gas-based direct reduction of iron (DRI-Sponge Iron) may increase demand for gas. Indias natural gas demand is projected to rise by nearly 60% by 2030, marking a significant shift in the countrys energy mix. This growth is expected to be fuelled by the expansion of city gas distribution networks, increasing industrial demand, and the use of natural gas in power generation. With rising awareness of urban pollution and the ban on polluting fuels such as pet coke and furnace oil, we may expect gas to become more popular among industrial, MSMEs, and commercial users. The broader energy landscape is set for transformation, driven by strong economic growth, rapid urbanisation, and accelerated industrialisation. Policymakers continue to push for this shift, underlining a commitment to cleaner energy and environmental stewardship. Moreover, with the completion of the National Gas Grid (NGG), all of the refineries that are now disconnected from the gas grid will be able to connect to gas, increasing gas usage.

Government Initiatives

• Expansion of the national gas grid to improve connectivity and boost natural gas availability across regions

• Allowing LNG imports under the Open General License (OGL), giving power plants the flexibility to procure gas on commercial terms

• PNGRBs approval of around 33,600 km of pipeline under the One Nation, One Gas Grid initiative to create a unified national network

City Gas Distribution Sector in India

The CGD can be understood as a distribution system where natural gas is made available to customers through underground pipelines. The CGD industry in India has experienced significant growth, supported by an increasing preference for cleaner energy sources and substantial investments in infrastructure, aligned with Indias broader energy transition strategy. Moreover, the advancement in CGD infrastructure has positively contributed to the industrys growth by enhancing accessibility and supply reliability.

Established players in the industry have consistently expanded their geographical presence through strategic acquisitions and joint ventures to tap into new regions and customer bases. Product innovation has focused on developing advanced CNG/PNG infrastructure and implementing digital solutions to improve customer satisfaction. Additionally, key players have invested in backwards integration by setting up manufacturing units for allied equipment such as gas meters and compressors.

Compressed Natural Gas (CNG) has emerged as the dominant segment in the CGD industry due to the increased adoption of CNG vehicles across the country. This was followed by the industrial segment, which holds the second-largest share in the Indian CGD market. The integration of IT-OT convergence solutions has enabled real-time monitoring of critical assets, thereby improving operational efficiency within the industry.

Outlook

The domestic industry is anticipated to exhibit positive growth at a CAGR of 13.06% from 2025 to 2030, reaching a market size of USD 20.93 billion by 2030. This growth will be further supported by infrastructure development, which will enhance the distribution of natural gas across various sectors. Additionally, the anticipated growth is closely linked to technological innovation, improved operational efficiency, and environmental sustainability.

Government enablers for the CGD sector

• A scheme for the Development of Pipeline Infrastructure (DPI) for injection of CBG into the City Gas Distribution (CGD) network has been launched to provide financial support for extending pipeline connectivity from the CBG plant to the city gas distribution grid.

• The government has accepted and implemented the recommendations given by the Kirit Parikh Committee. This includes setting a minimum (floor) and maximum (ceiling) price for natural gas. This decision has eliminated uncertainty and provided a sense of stability, which is critical for long-term planning and investment in the sector.

• The Indian Government prioritises the household PNG and transportation CNG segments while distributing

natural gas. This guarantees a steady supply for domestic necessities as well as public transportation. By prioritising certain segments, the government enhances the City Gas Distribution (CGD) network, allowing it to provide important services more efficiently and reliably.

• To ensure an adequate supply for CNG (transport) and PNG (domestic) consumers, the government has begun redirecting domestic gas from non-priority industries such as power generation. This step contributes to meeting increased demand in key categories that have a direct influence on daily life.

• CGD Projects have been given Public Utility status by the Ministry of Labour and Employment. Various State Governments have implemented a number of policy and administrative efforts to encourage the use of natural gas.

The Indian Government also plans to connect all states to the

main natural gas pipeline network by 2027.

Exhibit 1: CGD Consumption - Past and Projected

Source: CGD Industry: Navigating the Growth-Profit Trade-Off

Company Overview

Indraprastha Gas Limited (IGL)

IGL was founded in 1998 as a joint venture between GAIL (India) Limited and Bharat Petroleum Corporation Limited (BPCL), to undertake City Gas Distribution (CGD) projects. The Company supplies Compressed Natural Gas (CNG) for transport, as well as Piped Natural Gas (PNG) for industrial, domestic, and commercial use. The critical role played by the Company has positioned it as Indias one of leading City Gas Distribution Company. Moreover, it envisions becoming a leading clean energy solution provider in India. IGLs operations cover various regions, including the NCT of Delhi, Noida, Greater Noida, Ghaziabad and Hapur, Gurugram, Meerut (except the already authorised area), Shamli, Muzaffarnagar, Karnal, Rewari, Kanpur (except the already authorised area), Hamirpur and Fatehpur districts, Kaithal, Ajmer, Pali, Rajsamand, Banda, Chitrakoot and Mahoba districts.

The Companys association with GAIL and BPCL has not only enhanced its position in the industry but has also helped it expand its operations. It has been consistently contributing to Indias energy landscape by promoting the adoption of natural gas. Along with this, its focus on innovation, customer satisfaction, and environmental sustainability has remained consistent over the years.

IGL has shareholding in three companies and among them two are Associate Companies and one is a subsidiary.

Company Name Shareholding of IGL

CUGL	50%
MNGL	50%
IGTL (Meter Manufacturing JV)	51%

IGLs Objectives

• Provide safe, convenient and reliable natural gas supply.

• Promote a cleaner, environment-friendly alternative in the National Capital Territory (NCT) of Delhi and other GAs of the Company.

Strengths of the Company

• Strong Entry Barriers

Through a first-mover advantage and consistent infrastructure upgrades, IGL has established high entry barriers. Moreover, PNGRB has granted marketing and infrastructure exclusivity to IGL for certain regions, limiting the entry of other players in those areas.

• Strong Infrastructure

Upgradation of infrastructure, such as the pipeline network, compressor stations, and marketing network, has helped the Company roll out CNG and PNG distribution networks across its operating regions.

• Strong Parent Company

Constant backing from its promoter companies GAIL and BPCL—enables IGL to derive technical and managerial strength, leverage operational synergies, tap into the natural gas distribution expertise of GAIL, and benefit from the retail marketing skills of BPCL.

• Strong Workforce

The Companys skilled and experienced workforce plays a key role in driving growth and sustaining its strong industry position through their expertise and implementing sound decision-making skills.

IGLs Performance in FY 2025

Financial Performance

Performance Analysis of IGL during FY25

• Gross turnover increased from Rs. 15,403.13 Crores in the year 2023-24 to Rs. 16,399.70 Crores in the year 2024-25.

• Profit after Tax (PAT) decreased from Rs. 1,748.08 Crores in the year 2023-24 to Rs. 1,467.59 Crores in the year 2024-2025.

• Earnings per share of the Company showed decrease of 16.09% from Rs. 12.49 in year 2023-24 to Rs. 10.48 in year 2024-25.

• Net worth of the Company as on 31st March 2025 was Rs. 9,284.02 Crores as compared to Rs. 8,551.74 Crores as on 31st March 2024.

• As on 31st March 2025, IGL is a zero debt Company.

Ratio Analysis

Particulars	For the year 31 March 2025	For the year 31 March 2024
Debtors turnover ratio	19.08	16.08
Inventory turnover ratio	804.15	799.44
Current ratio	1.07	1.07
Operating margin %	9.14%	12.64%
Net profit Ratio %	8.91%	11.31%
Return on net worth %	16.46%	22.36%

Current Sales Volume Mix

Despite the surge in gas pricing, IGL has exhibited strong growth in terms of volume on a yearly basis. The Company achieved its highest-ever sales volume of 3280.87 mmscm, equivalent to 8.99 mmscmd, during FY 2024-25.

Opportunities

Expansion to new regions

Exploring opportunities to expand its presence beyond traditional strongholds provides the Company with a chance to drive volume growth.

Increased demand for CNG-based vehicles

Previous years figures have been restated in line with the current year figures.

Segment Wise Performance

The Company has its presence in following segments:

Compressed Natural Gas (CNG) - IGLs majority of the revenue accrues from CNG sales which has increased to 2432.50 mmscm this year from 2298.27 mmscm in the previous year showing an increase of 5.84%. The Company had 954 stations as on 31st March 2025, through which it provided gas to around 21 lakh vehicles.

Indias CNG vehicle industry is anticipated to grow at a CAGR of 6.88% from 2025 to 2029, presenting a major growth opportunity for IGL to meet the increasing demand for CNG distribution and infrastructure services.

Supportive Government policies

The Indian Governments consistent focus on promoting the use of clean and efficient fuels creates a growth opportunity for the Company by ensuring policy support and encouraging profitability and expansion within the industry.

Urbanisation

Piped Natural Gas (PNG) - The Company has recorded PNG sales volume of 848.37 mmscm in the year 2024-25 as against 786.20 mmscm during the year 2023-24 resulting in an increment of 7.91% in volumes. IGL provided 3.70 lacs new PNG connections during the year 2024-25. As on 31st March 2025, total PNG connections provided stood at 30.07 Lakh households and 12,141 Commercial & Industrial consumers.

India is witnessing rapid urbanisation, and by 2036, 40% of the countrys population will be living in urban areas. This offers IGL the opportunity to expand its CGD network and cater to the growing demand for clean energy in these regions.

Compressed Biogas (CBG)

As a participant in SATAT (Sustainable Alternative Towards Affordable Transportation), the Company has a significant opportunity to diversify its fuel portfolio with renewable CBG and tap into new revenue streams by supplying environmentally friendly fuel.

Threats, Risk & Concerns and Mitigations

Risk Description

Unavailability & Price of Natural Gas

Domestic/APM (Administrative Price Mechanism) natural gas is in limited supply and reduction in its allocation leads to rising input gas cost. High Natural Gas prices in international market also remains a matter of concern for city gas business. CGD companies also face challenges with CNG prices coming closer to petrol and diesel prices.

Mitigation Strategy

Your Company is actively participating in gas purchase through Indian Gas Exchange (IGX) to consider multiple options for sourcing gas volumes to achieve optimum input gas cost. Also, flexibility in gas purchase contracts with linkage to different indices gives room for exploring Short Term/Spot Market to achieve price advantage.

Risk Description	Mitigation Strategy
Adoption of Electric vehicles	The Company is in process to rebrand itself, positioning CNG as a green fuel and at par with EV. Company is also working to enhance the CNG filling experience at stations to reduce the risk. Also, the Company is preparing itself for meeting the challenge by becoming a part of value chain in electric mobility business and setting up of EV charging facilities at its CNG stations. The Company has already installed and commissioned 33 EV charging facility in NCT of Delhi (as on 31.03.2025) and further has plans to install 50 EV Chargers to be a part of EV Infrastructure. With introduction of CNG in two wheelers segment, the Company will be adding new segment for CNG Sales & will help in mitigating the risk of loss of sale due to EVs.
With the government introducing various incentive/enablers through FAME policy, the popularity of electric vehicles has grown in India. These vehicles may impact the market share of CNG fuelled vehicles in the medium to long term.
Delhi Govt. is planning to introduce its EV policy 2.0 to accelerate adoption of EV and create charging infrastructure targeting public and private transport sector in NCT of Delhi.
Profitability of emerging GAs (Geographical Areas) CGD being a Capital Intensive Project requires Capex commitment towards Minimum Work Programme (MWP) and involves considerable gestation period. Therefore, acquisition of customers in relevant segments-PNG and CNG takes time.	However, the Company is monitoring the profitability report of these GA(s) frequently, conducting strategic planning and marketing drive, along with commissioning of necessary CGD infrastructure to ensure faster adoption of NG as a fuel in these GAs.
Cyber-Security Threat A breach in the data security systems internally or externally may lead to unauthorized access/ data loss/ corruption of data and thus loss of confidential information which may result in loss of strategic advantage or loss of credibility.	The Company has ensured that various checks and measures are in place which include (and not limited to) Web application firewalls, data backup, cyber insurance, implementation of 24 x 7 security operation centre, etc. Third-party Cyber Security audit are also being conducted periodically.

Internal Control

The Company has adequate internal control procedures commensurate with the size and nature of its business. For the FY 2024-25, M/s T R Chadha & Co LLP, Chartered Accountants and in-house audit team carried out internal audits and the internal audit reports prepared by them were placed before the Audit Committee.

Human Resource

The workforce of the Company has always remained integral to driving its growth. The HR strategies focused on attracting and retaining a pool of skilled and driven individuals. IGL places strong emphasis on promoting a healthy and positive working environment, thereby helping the organisation retain its workforce. Additionally, employees were offered learning and development opportunities to help them recognise their capabilities and enhance their leadership and managerial skills. Moreover, employee safety and well-being are prioritised through the adoption of effective measures and practices across the organisation. IGLs employee strength is 720 employees.

Environmental Consciousness

The operations of the Company revolve around the widespread promotion of environmental sustainability. Moreover, the Companys focus on providing safe, clean, and reliable energy solutions has further positioned it as one of the best clean energy solution providers in India. Further to this, the focus of the Company aligns with the aim of transitioning India into a low-carbon economy.

Cautionary Statement

This Management Discussion and Analysis Report contains statements that may be considered "forward-looking statements" under applicable laws and regulations. These statements include the Companys goals, plans, estimates, expectations, and predictions. Results may vary significantly or materially from what is stated or suggested. Demand-supply circumstances, modifications to national and international laws, tax laws, economic events both inside and outside of India, and other elements like labour relations and litigation are significant developments that may have an impact on the Companys operations.