Indraprastha Gas Limited · NSE:IGL
Indraprastha Gas — Non-Deal Roadshow (January 2005)
35 slides from Indraprastha Gas's roadshow presentation, January 2005
Slide 1: Indraprastha Gas Limited Corporate Presentation
Indraprastha Gas Limited Corporate Presentation January 2005 CNG for Clean & Green Environment
Slide 2: Agenda
Agenda • Overview of Indian Oil & Gas sector • Overview of Gas sector • CNG and PNG business in India • Indraprastha Gas • Critical Success Factors • Opportunity • Growth Strategy • Financial Overview • Risks CNG for Clean & Green Environment
Slide 3: Overview of Indian Oil & Gas sector
Overview of Indian Oil & Gas sector CNG for Clean & Green Environment
Slide 4: Structure of the sector
Structure of the sector • Aggregate consumption of petroleum products107 MMTPA, Gas demand is 120 mmscmd, supply of 80 mmscmd. • Sector dominated by Public Sector Undertakings: ONGC, IOCL, GAIL, HPCL & BPCL. • Reliance Industries (RIL) a formidable private sector player. • Cairn Energy, British Gas,
Slide 5: Gas sector
Gas sector Demand Supply Scenario* • Demand (120 mmscmd) outstrips the supply (80 mmscmd) m m s cm d FY04 Demand 120 Supply 80 Gap 40 • ONGC and OIL combined produce 90% of gas. Natural Gas User Profile* Spong Others • Gas from APM fields subsidized to the Iron 13% extent of 50% of the price, Non-AP
Slide 6: Sector in phase of Market Development
Sector in phase of “Market Development” characterized by: • Strong Volume growth •Gradual buildup in competition. CNG for Clean & Green Environment
Slide 7: Availability of Gas to Increase
Gas availability is expected to increase as: • Recent gas discoveries by: – Cairn (Western coast) – RIL (KG D-6) – ONGC & others • Import of LNG by: – Petronet LNG Limited: • Dahej Terminal already operational • Kochi terminal expected by FY08 – SHELL: • Gas import expected shortly from Hazira (Guja
Slide 8: Gas Pipeline Policy likely to be finalized
Gas Pipeline Policy likely to be finalized: • Draft gas transmission pipeline policy issued: – Issues of “Open Access” and “Common Carrier” discussed – Final policy expected shortly National transportation Network to expand: • GAIL plans to roll out National Gas Grid • RIL has proposed pipeline conn
Slide 9: CNG & PNG Business In India
CNG & PNG Business In India CNG for Clean & Green Environment
Slide 10: CNG & PNG Activity in India
CNG & PNG Activity in India • Compressed Natural Gas (CNG) & Piped Natural Gas (PNG) usage in India is limited. • Consumption of CNG estimated at 1.3 mn kg/day while PNG at 2 mmscmd with usage limited to select markets (eg: Delhi, Surat, Bharuch, Vadodara, Mumbai). • IGL (Delhi), MGL (Mumbai), GGCL,
Slide 11: CNG & PNG Activity in India
CNG & PNG Activity in India CNG Sales mn kg/day Annualized CNG stations Vehicles serviced IGL 0.82 299 128 90591 MGL* 0.48 175 90 141050 GAIL 0 0 2 466 Gujarat Gas 0.01 5 5 5000 Total 1.31 479 225 237107 PNG Sales mmscmd Annualized Number of consumers IGL 0.1 17 19000 MGL 0.5 172 195054 Gujarat Gas
Slide 12: Indraprastha Gas Limited
Indraprastha Gas Limited CNG for Clean & Green Environment
Slide 13: Brief History
Brief History • A JV between GAIL & BPCL. Government of National Capital Territory of Delhi also a shareholder. • Incorporated to implement CNG & PNG expansion programme for commercial and domestic use. • Got an impetus when Supreme Court directed all public transportation vehicles in Delhi to switc
Slide 14: Gas Pipeline Network to Delhi
DESU/Delhi CNG NCT MARUTI DADRI NETWORK FARIDABAD TCL-BABRALA GAS PIPELINE CHAINSA NETWORK TO DELHI MATHURA Gas received from GAIL AGRA/FEROZ via HVJ pipeline NTPC AUR CFCL CNG and PNG sales through owned BORERI infrastructure ANTA VIJAIPUR DAHEJ KHERA 42”*610 km HBJ EXISTING LINE JHABUA km Hazir
Slide 15: Value Chain of CNG
Value Chain of CNG STEEL PIPELINE – NATURAL GAS CARRIER 19-22 Kg/cm2g 19-22 Kg/cm2g CNG CNG Compressor Compressor 250 Kg/cm2g Mobile Mobile 250 Kg/cm2g Cascade Cascade Storage Storage Cascade Cascade MOTHER ONLINE STATION Dispenser Dispenser STATION <=200 Kg/cm2g <=200 Kg/cm2g CNG CNG Vehicle Vehicl
Slide 16: CNG Business
CNG Business 0.80 mn kg/day Vehicles 100 • CNG business has shown robust growth 0.70 90 since FY00. 0.60 80 70 0.50 mn kg/day 60 000 nos • Sales have grown at 200% CAGR over 0.40 50 past 4 years. 0.30 40 30 0.20 20 0.10 • Increased CNG dispensing stations from 10 - - meagre 30 to over 128 in 4 years
Slide 17: PNG Business
PNG Business 12 Sales Consumers 14000 • AT present PNG penetration in Delhi 10 12000 is low (< 1%). 10000 8 8000 6 • Business contributes 3% to turnover. 6000 4 4000 2 2000 • Daily sales of 50K scmd, largely - 0 contributed by commercial segment. FY01 FY02 FY03 FY04 • Management is committed to grow
Slide 18: Porter's 5 forces model
Porter’s 5 forces model Threat • Economic benefits far out way the threats of substitutes Bargaining Internal Rivalry Bargaining power power of Buyers of Suppliers Low • Regulated by • Virtual monopoly government ensures LOW bargaining power Entry Barriers • Strong barriers to entry CNG for Clean &
Slide 19: Critical Success Factors
Critical Success Factors It is the skill, not strength that governs the ship! (*) *- Fuller Thomas CNG for Clean & Green Environment
Slide 20: Critical Success Factors
Critical Success Factors Macro: Industry Level Micro: Company Level • Supply- Demand • Distribution network • Regulatory Issues • Entry Barriers • Political interference • Balance Sheet Strength • Pricing Power CNG for Clean & Green Environment
Slide 21: Critical Success Factors: Macro
Critical Success Factors: Macro Macro: Industry Specific • Supply- Demand: Demand far out ways supply • Political interference: Concern exists till appointment of regulator • Regulatory Issues: Regulator to address micro issues Impact common for the industry CNG for Clean & Green Environment
Slide 22: Critical Success Factors: Micro
Critical Success Factors: Micro Micro: Company Specific • Distribution network: IGL has wide penetration of network • Entry Barriers: Strong barriers to entry as: – Assured supply of gas – Deep penetration of network • Balance Sheet Strength: – Size of Rs 4 bn, with Debt Equity Ratio 0.2. – Under le
Slide 23: Opportunity for IGL
Opportunity for IGL “Small opportunities are often the beginning of great enterprises!” -Demosthenes (384 BC - 322 BC) CNG for Clean & Green Environment
Slide 24: CNG sales in Delhi can expand significantly
CNG sales in Delhi can expand significantly • At present, 90,000 vehicles consume 0.8 mn kg/day of CNG in Delhi. • Consumption growth from existing fleet of vehicles can be pegged to economic growth. • Boost in CNG sales likely as: – Most of the existing LCVs run on HSD. Delhi Government is likely t
Slide 25: Potential of new geographies lucrative
Potential of new geographies lucrative • New geographies also offer lucrative market. 50 45 Autos Taxis Buses Cars • Local governments of 40 35 adjoining regions are 30 000 nos likely to follow Delhi 25 20 model considering its 15 10 success. 5 - • Existing fleet of vehicles in Faridabad Gurgaon Noi
Slide 26: Untapped PNG market
Untapped PNG market • Due to regulatory compliance, preference was given to CNG business over PNG. • With successful roll out of CNG infrastructure, management is now committed to grow PNG business. • Present PNG penetration in Delhi is <1% on base of 3.5 mn users. • Marginal 1% y-o-y shift from LPG
Slide 27: Growth Strategy of IGL
Growth Strategy of IGL “Strategy is buying bottle of fine wine when you take a lady out for dinner. Tactics is getting her to drink it!” -- Frank Muir CNG for Clean & Green Environment
Slide 28: Growth Strategy of IGL
Growth Strategy of IGL • Stress is to improve asset turnover in Delhi • IGL’s strategy centered around improving the asset turnover rather than aggressive expansion of network. • Plans are to: – Capitalize on the future regulatory initiatives for CNG business – Improve penetration of PNG business: •
Slide 29: Growth Strategy of IGL
Growth Strategy of IGL – Expand in new geographies: • Tap geographies where gas supply not an issue: Gaziabad, Faridabad, Noida, Gr. Noida and Gurgaon. • Planned capital outlay of Rs 2 bn over next 4 years for rolling out infrastructure. • Already 2 CNG dispensing stations operational at Noida. CNG
Slide 30: Strong Financials
Strong Financials CNG for Clean & Green Environment
Slide 31: Snapshot of Profit & Loss A/C
Snapshot of Profit & Loss A/C Rs mn FY02 FY03 FY04 H1FY05 H1FY04 Net Sales 1187.7 3069.1 4262.1 2209.3 2020.0 % Growth 158.4 38.9 EBIDTA 297.7 1191.9 1695.5 909.6 810.4 % Growth 300.3 42.2 PBT 120.2 870.2 1286.0 661.6 580.5 % Growth 623.9 47.8 Tax 59.0 320.6 464.1 253.9 210.4 PAT 61.2 539.8 821.9 40
Slide 32: Snapshot of Balance Sheet
Snapshot of Balance Sheet Rs mn FY02 FY03 FY04 Equity 1400.0 1400.0 1400.0 Reserves 28.6 532.6 1076.5 Networth 1428.6 1932.6 2476.5 Debt 570.0 798.8 600.0 Capital Employed 2114.3 2957.7 3508.5 Net Fixed Assets 2282.3 3445.7 3769.4 Working Capital (169.7) (488.0) (260.9) Capital Deployed 2114.3 2957.
Slide 33: Key Ratios
Key Ratios Key Ratios FY02 FY03 FY04 H1FY05 H1FY04 EPS 0.4 3.9 5.9 2.9 2.6 OPM (%) 25 39 40 41 40 NPM (%) 5 18 19 18 18 RoCE (%) 16 32 39 RoE(%) 4 28 33 Book Value 10 14 18 CNG for Clean & Green Environment
Slide 34: Risks
Risks • Adverse Regulatory Intervention : Unlikely • Acute shortage of gas in India: Unlikely CNG for Clean & Green Environment
Slide 35: Thank You!
DISCLAIMER: This presentation contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections ab