Adani Total Gas Ltd Management Discussions.

Global economic overview

The global economy reported de-growth of 3.3% in 2020 compared to 2.9% in 2019, However, the economy demonstrated considerable resilience in posting a reasonable recovery through the course of the year under review.

2018 2019 2020 2021
Real GDP growth (%)(Source: IMF) 3.6 2.9 (3.3) 6.0

The Indian economy reported a smart recovery following the first lockdown quarter of 2020-21.

The Indian and state governments selectively lifted controls on movement, public gatherings and events from June 2020 onwards, each stage of lockdown relaxation linked to corresponding economic recovery. The recovery was not linear but across-the-board and the country reported a consumption revival that translated into better performance for a number of industries.

Y-o-Y growth of the Indian economy

2018 2019 2020 2021
Real GDP growth (%) 7 .0 6.1 4.2 (7.3)
Growth of the Indian economy, 2020-21
Q1, Q2, Q3 Q4,
2021 2021 2021 2021
Real GDP growth (%) (23.9) (7.5) 0.4 1.6

(Source: Economic Times, IMF, EIU, Business Standard, McKinsey)

Indian economic reforms and recovery

The Indian government introduced a number of reforms to catalyse national economic growth during the year under review.

The Union Cabinet approved the production- linked incentive (PLI) scheme for 10 sectors, which is expected to accelerate the manufacturing momentum within India.

The cumulative impact of the various reforms was improved consumer sentiment and improving Goods and Services Tax (GST) collections in the second half of 2020-21. Besides, foreign direct investments (FDI) into India increased 13% to US$57 Billion in 2020, the digital sector being the biggest catalyst.


The World Bank projected the Indian economy to grow by 8.3% in 2021-2022, making it one of the fastest- growing major economies once more. (Source: Business Standard)

Global natural gas industry

There has been a steady increase in the consumption of natural gas the world over for reasons of safety, cleanliness, cost and convenience. Natural gas production and consumption have been steadily growing across the decade leading to 2020, validating the long-term potential of the segment.

At the OECD level, natural gas reported an increase in production. The OECD Americas region was the global sectorial driver for the second consecutive year as the United States remained the worlds largest natural gas producer. The Asia-Oceania countries under OECD reported a continued increase in demand. On the other hand, the production of natural gas in the European OECD countries declined.

China established its position as a principal driver of global LNG dynamics next to Japan and Korea. For the second consecutive year, the highest increase in LNG imported volumes came out of China (Source: IEA).

Indian natural gas industry

The Indian natural gas consumption reported a CAGR of 5.1% between 2015-16 and 2020, rising to ~175 MMSCMD in 2019-20. Consumption was majorly driven by a demand from the downstream fertiliser and power sectors, which cumulatively accounted for 42% of the domestic gas consumption in 2019-20. Other major end-use sectors comprised the emerging city gas distribution segment (~17%) and refineries (~12%).

Given the fall in domestic gas output in 2019-20 and rise in demand, the share of LNG imports rose to 53% compared to 41% in 2015-16.

The natural gas demand was impacted in 2020-21 on account of Covid-19. Despite the current scenario there was a significant recovery in second half of the 2021. The natural gas demand stood at 166.1 MMSCMD, which was around 94.8% of the 2020 natural gas demand.

Review of natural gas consumption in India 2016 – 2021

Despite domestic production being lower, the government prioritised end-use sectors for the supply of natural gas. Sectors with regulated prices (fertilisers and city gas distribution) and limited affordability (power) enjoyed a higher priority in gas supply as opposed to sectors with market-determined products (industries, steel plants and refineries). The demand for natural gas was influenced by the cost competitiveness of LNG vis--vis alternative fuels.

Segment-wise break up of natural gas consumption in India

Source: MoPNG, PPAC

Among the sectors generating a sustained demand for natural gas, the fertiliser, CGD and power sectors accounted for around 62.40% of the total gas consumption of 166.1 MMSCMD in 2020-21. CGD accounted for 15.22% of the overall natural gas demand in 2020-21.

Outlook on gas demand

The demand for natural gas looks promising as the Indian government is committed to enhance the role of gas in the countrys energy mix from a little over 6 per cent to 15 per cent. Much of the demand growth is expected to be generated from the city gas distribution network and fertiliser units on account of improved domestic gas supply, governmental policy/financial support and expeditious gas infrastructure creation.

Besides, increasing number of liquefaction terminals across the world as well as upcoming/expanding regassification terminals in India, is also likely to enhance market supply, strengthening LNG demand in India. With high affordability and/or higher priority in allocation, sectors such as fertilisers and CGD are expected to catalyse the demand for natural gas across the coming decades.

City gas distribution segment in India India enjoys a high gas demand potential;

the country is likely to emerge as one of the largest consumers of natural gas in the world across the coming years. The Covid-19 pandemic accelerated the transition from the consumption of oil and coal to gas and renewables during the lockdown period.

Demand for natural gas in India is expected to grow attractively, catalysed by environmental concerns, operationalisation of Indian Gas Exchange, domestic energy companies investing in infrastructure and the Indian government committed to enhance the role of gas in the countrys energy mix from a little over 6 per cent to 15 per cent.

From 2009 onwards, the Indian gas regulator PNGRB granted authorisations to entities for laying, operating and expending CGD infrastructure to would empower them to supply gas to end-users in identifiedauthorised geographical areas (GAs).

Until recently, PNGRB granted authorisations to entities to develop CGD infrastructure in ~228 geographical areas through 10 rounds of competitive bidding auctions. Over the years, these auctions generated active participation from private and public players, widening the CGD network to 228 GAs across more than 406 districts. The result is that much of Northern India, Western India and some parts along the coastal line in Southern and Eastern India were covered by the growing CGD infrastructure. Work was in progress in most of the 136 GAs awarded in the last two years, which could sustain higher city gas volumes across the coming decade.

CGD demand trend over past five fiscals

Over 2016-20, CGD gas consumption increased from 14.9 MMSCMD to around 29.7 MMSCMD, based on 18.8% CAGR. For 2020-21 the CGD demand stood at 25.3 MMSCMD, which was around 85% of the 2019-20 demand. Despite the current Covid scenario in 2020-21, there was a significant recovery in the second half of the 2020-21.

For long, CGD remained limited to states like Gujarat and Maharashtra and Delhi, marked by the availability of natural gas resources and pipeline infrastructure. However, following active policy and regulatory support from the government, active investments in LNG terminal capacity and gas pipeline infrastructure as well as demand growth from industrial and commercial consumers, the CGD market has now expanded to other states.

It is expected that the governments active policy support and deepening industrial and CNG penetration will catalyse demand over the medium-to-long term.

Industrial / commercial PNG demand outlook

Industrial PNG was the primary catalyst of CGD demand in India for the past few years. The segment is expected to remain the bulwark for CGD demand on account of supportive regulations along with expanding gas network coverage, especially after the CGD bidding rounds 9 and 10. Despite the current situation there has been a significant increase in the number of Industrial and commercial across the country, which shows that there is a increasing thrust to convert into piped connections. Commercial PNG connections increased from 30,622 in 2019-20 to 32339 in 2020-21.

PNG and Industrial connections increased from 10258 in 2019-20 to 11803 in 2020-21. Moreover, the National Green Tribunal (NGT) identified ~100 industrial clusters with critical pollution levels that could add to the overall gas consumption basket once the gas infrastructure has been commissioned in the next few years. This appears promising for the sector, considering the stringent norms prescribed by the government in implementing the ban on polluting fuels. For instance, CGD demand significantly increased in Gujarat following the NGT order to ban coal gasifiers in 2019. As a result, gas consumption in the Morbi region increased to 5.1-5.2 MMSCMD in 2019-20 from 2.9-3 MMSCMD in 2017-18. Lower spot LNG prices accelerated the conversion in the industrial PNG segment in the past two years.

CNG demand outlook

The CNG segment posted 5.6% growth in 2019-20 owing to its cost-advantage over petrol. The conversion of vehicles from petrol to CNG will sustain over time, given the latters cost advantage. Further, there has been a sharp increase in number of CNG station from

2207 in 2019-20 to 3101 in the fiscal year which shows a growth in number of CNG stations by 40.4% across the nation. This will help in creating an ecosystem across the country, which will boost the demand for CNG. However, there exists a threat from electric vehicles, which could impact CNG growth over the medium-to-long-term, especially in the three-wheeler segment. In the medium term, CNG vehicles penetration will increase owing to a lower cost of purchase, better refuelling timelines as well as availability & beneficial total cost of ownership.

Despite a high adoption of EVs in the two- and three-wheeler segments, a rapid rise in CNG infrastructure and expanding reach of CGD could ensure healthy demand growth for natural gas offtake across the medium-to-long term.

Domestic PNG demand outlook

The governments decision to limit the use of subsidised LPG cylinders coupled with growing gas infrastructure availability could benefit domestic PNG demand.

In the past, the government restricted a higher penetration of household PNG connections. There is every possibility that the government could make the annual income criteria more stringent to moderate the subsidy burden related to the LPG segment, which could catalyse the size of the PNG segment. Total household PNG connections, estimated at ~78.2 Lakh in 2020-21, are expected to increase over 500 Lakh in the coming decade due to increasing CGD penetration in new areas and the governments commitment to increase gas consumption. Besides, gas consumption per connection could also increase in line with rising disposable incomes and aspirations.

Investment outlook

Investments in downstream natural gas transmission pipelines, liquefied natural gas (LNG) terminals, and city gas distribution projects remained subdued up to 2016-17, due to declining domestic gas production and surging LNG prices. Investments began picking up only from 2017-2018 onwards following the governments encouragement to infrastructure development and the use of cleaner fuel. In 9th round CGD bidding, PNGRB offered 86 geographical areas, which included 174 districts across 22 states and Union Territories.

The attractive participation in this round led to the award of 50 geographical areas in the CGD bidding round 10. Investment in overall natural gas infrastructure is expected of over Rs.4 Lakh Crore in the development of gas supply and distribution infrastructure in the next five years as the government target is of more than doubling the share of the environment-friendly fuel in its energy basket to 15 per cent by 2030.

The government is considering providing policy/financial support (such as viability gap funding) to improve the feasibility of new pipelines, which could catalyse investment. Healthy growth is also expected in CGD investment due to improved domestic gas supply. In February 2014, the government announced a domestic gas allotment to meet the entire demand from the CNG and PNG segments.

Since guaranteed domestic gas allocation significantly improves project investment economics, there is an expectation of the government assuring domestic gas supplies to CGD entities in new GAs as well. The PNGRB proposed 44 new GAs for the upcoming 11th round of CGD bidding, covering districts in Central, Eastern and Southern India. The Pradhan Mantri Urja

Ganga Yojana is expected to increase gas consumption in Eastern states, catalysing the revival of gas-based urea plants, gas supply to industrial units and the development of CGD infrastructure addressing the growing needs of CNG, domestic and industrial PNG consumers.

Benefits of PNG

Affordable: Natural gas continues to be a superior energy choice, marked by cost economy.

Comfortable: Natural gas water heaters recover twice as fast and have more hot water available than an electric model.

Clean: Natural gas is a clean burning fuel with a low environment impact. High-efficiency natural gas furnaces are more environment-friendly than geothermal heat pumps. Natural gas fireplaces can reduce up to 99% pollutants and particles emitted into the air compared to wood.

Useful: Gas is constantly fed into the system so there are no hassles of handling, refilling & changing of cylinders; no storage is required, leading to safe, easy and secure handling. PNG is distributed through pipelines directly to the consumption point.

Cost-effective: Gas generates higher savings over conventional fuel. Pipeline delivery protects against inflation in transportation costs.

Safe: Natural gas appliances have a safety record with the auto shut-off function. The absence of the need to store at the customers premises ensures consumer safety. PNG, being lighter than air, makes it possible for leaked gas to dissipate and minimise any chance of flammability.

Benefits of CNG

Reduced fuel cost: Compressed Natural Gas (CNG) provides almost 40%-60% savings over conventional fuels like petrol and diesel.

Environmentally friendly:

Compressed natural gas (CNG) is one of the cleanest burning transportation fuels. CNG burns cleaner than petroleum-based products because of its lower carbon content. CNG produces the fewest emissions of all fuels and contains significantly less pollutants. CNG produces 20-30% fewer greenhouse gas emissions and 95% fewer tailpipe emissions compared with petroleum products. Because CNG fuel systems are completely sealed, CNG vehicles produce no evaporative emissions.

Reduced maintenance cost: CNG does not contain lead, so spark plug life is extended because there is no fouling. CNG does not dilute or contaminate crankcase oil, so intervals between oil changes and tune-ups are extended. Pipes and mufflers last longer because CNG does not react with metals, which reduces maintenance costs while extending overall engine life.

Performance advantages: CNG is superior to petroleum-based products because natural gas has a high octane rating compared to alternative fuels. CNG vehicles experience less knocking and no vapor locking, since natural gas is already in a gaseous state. CNG vehicles enjoy superior starting even under severe cold or hot weather conditions.

Safety: Compressed natural gas (CNG) storage tanks are stronger and safer than gasoline or diesel tanks, reducing the likelihood of accidental release. If released, CNG disperses quickly into the air instead of on the ground, reducing the risk of fire or ground contamination. Moreover, CNG gives off little to no emissions during refueling.

Growth drivers

Increasing GDP: India witnessed a consistent growth in its GDP after the country went through an economic decline in the first quarter of 2020-21. After a rise from (23.9)% in Q1 to (7.5)% in Q2, the country witnessed a further rise in the GDP with Q3 standing at 0.4%, with a further growth of 1.6% in Q4.

Per capita income: The per capita income in India witnessed a consistent Y-o-Y increase in the 10 years ending 2019-20 and a decline only in 2020-21 (a reality that could soon correct).

Urbanisation: The population in India is expected to increase from 1.38 Billion in 2020 to 1.52 Billion in 2036, with a 70% increase estimated to come out of urban India, strengthening the demand for natural gas.

Automotive industry: The Indian automotive industry emerged as the fifth-largest auto market in 2020 and is expected to reach Rs.16.16 - 18.18 trillion (USD 251.4-282.8 Billion) by 2026 as there is a growing preference for personal mobility.

Petroleum substitute: The increase in petrol prices towards the end of 2020-21 is expected to strengthen CNG demand, which is priced lower.

LPG price hike: The increasing price hikes in LPG cylinders is expected to increase the demand for LNG. (Source: Trading Economics, The wire, Economic Times, Business Standard, IBEF) Regulatory and policy support

The Central Government has been encouraging States to adopt or develop take cues from the draft city gas distribution policy and implement the same at the state level. Standardised and documented policy by state administration is expected to bring immense benefits in terms of transparency, responsibility and improved ease of doing business.

PNGRB vide public notices, has clarified that any entity other than the authorised entity can setup LNG station for dispensing of LNG as liquid fuel for the transport sector. The said notices have brought in clarity as regards to the setting up LNG fueling stations as well as established marketing exclusivity of CGD entities in their geographical area.

PNGRB notified regulations for authorisation of gas exchanges, which is expected to lead to the establishment of multiple gas exchanges, gas marketing hubs that will aid in developing the gas markets in the country. The Central government took detailed reviews of CGD network development and played an active role in supporting CGD network development. The government aims to set up Compressed Bio-Gas (CBG) production plants and make available CBG for use in automotive fuels.

This will promote a better use of agricultural residue, cattle dung and municipal solid waste while providing additional revenues for farmers. The Ministry of Petroleum and Natural Gas allocated Rs.15,944 Crore for 2021-22 (Source:, the allocation remaining unchanged from the revised estimates for 2020-21. Of the total allocation, the subsidy on LPG is the largest component of the Ministrys expenditure, including approximately 87% of the allocation. The next round of city gas bidding is likely to cover over 300 districts with a projected investment outlay of around Rs.1.2 Lakh Crore. (Source: Money control)

Company overview

Adani Total Gas is in the business of developing city gas distribution networks to supply PNG to the industrial, commercial and residential segments and CNG to the automotive segment. Adani Total Gas has a presence in 19 geographical areas in the states of Gujarat, Haryana, Madhya Pradesh, Uttar Pradesh, Chattisgarh, Karnataka, Tamil Nadu, Rajasthan and Odisha.

The Company has a joint venture (50:50) with Indian Oil Corporation (Indian Oil-Adani Gas Private Limited) and it has a presence in 19 geographic areas in the states of Uttar Pradesh, Punjab, Haryana, Kerala, Uttarakhand, Karnataka, Goa, Bihar, West Bengal and the Union Territory of Daman.

Financial overview

Financial and Operational Performance

The annual sales volume were at 515.13 MMSCM as compared to 582.21 MMSCM. The degrowth was on account of Covid-19 and was majorly in the first half of the year. In the second half of the year the company saw a V-shaped recovery in volume and touched a peak volume of over 2 MMSCMD.

For the year ended 31st March, 2021, revenue stood at 1,784.47 Crore as compared to 1990.90 Crore in 2019-20. Despite the volume impact, with the efficient gas sourcing and cost optimisation, the company was able to grow its profitability. EBITDA grew by 17.14% from H 639.15 Crore to Rs.748.68 Crore while PAT grew by 8% from Rs.436.24 Crore in 2019-20 to Rs.471.95 Crore 2020-21

Infrastructure and Operations Update

• Total number of CNG stations reached at 217, the addition of 102 new CNG stations in 2020-21 Cumulative steel pipeline network was 705 Km, with 170 kms laid in 2020-21

• Number of domestic customers were 0.48 Million, 40939 customers added in 2020-21

• Number of Industrial and Commercial Customers at 4966, with added 500 customers in 2020-21 Commissioned 3 CGS in new GAs

Key ratios and margins

Particulars FY ended 31st March, 2020 FY ended 31st March, 2021 Explanation
Debt-equity Ratio 0.27 0.25 NA
Return on Net worth (%) 33.79% 27.50% NA
Earning Per Share 3.97 4.29 NA
Debtors Turnover (Times) 26.04 20.57 NA
Inventory Turnover (Times) 24.86 16.50 Due to rise in inventory and lower cost of goods sold
Interest Coverage Ratio (Times) 14.33 16.95 NA
Current Ratio (Times) 0.94 0.28 Cash Balances in form of Fixed Deposits whose original maturity is more than 12 months have been classified as Non- Current Financial Assets
Operating Profit Margin (%) 29.90% 39.50% Due to lower gas cost and cost optimisation
Net Profit Margin (%) 21.40% 25.80% NA

Financial and operational performance highlights of the joint venture company Indian Oil Adani Gas Private Limited (IOAGPL) Indian Oil-Adani Gas Pvt. Ltd. (IOAGPL) is a joint venture company of Indian Oil Corporation Limited (IOC) – a Maharatna Company of Government of India and Adani TOTAL Gas Ltd. (ATGL), a leading city gas distribution company.

IOAGPL was formed to implement City Gas Distribution projects across the country for the distribution of environment friendly fuel (natural gas) through a network of underground pipelines. IOAGPL has authorisations for 19 GAs across India.

The revenue from operation grew by 15% YoY to Rs.354.28 Crore in 2020-21 from Rs.309.30 Crore in 2019-20. EBITDA grew 19% YoY from Rs.62.00 Crore to Rs.74.48 Crore in 2019-20 to Rs.74 Crore in 2020-21. Sales volume grew 19% from 93.61 MMSCM in 2019-20 to 111.38 MMSCM in 2020-21

SWOT analysis


• Operating in a licensed and regulated sector with 8 years of marketing exclusivity and 25 years of network exclusivity

• Strong parentage and support of stalwart promoters

Adani & TOTAL

• The Company comprises an experienced senior management and leadership team

• There is a strong customer-centric focus coupled with digitisation initiatives

• The share of digital payments by value and number of transactions is high

• There is a safety first culture in everything at ATGL

• The company is a member and equity shareholder of the Indian Gas Exchange

• The company enjoys a growth record in financial numbers


• The Companys operations are restricted to defined geographical boundaries

• Probable delays in project execution due to the non-availability of a single window clearance or delays in permissions


• Indian Gas Exchange will allow market-driven natural gas pricing

• Open access will allow entry into high potential metro cities

• Indias energy demand is expected to grow rapidly across the next decade

• There is a growing government focus on building a gas-based Indian economy

• The construction of LNG terminals is expected to cover the entire national coastline

• There is a growing opportunity to diversify into unregulated allied businesses

• The company will leverage the dealer owned-dealer operated and company owned-dealer operated network for fuel retailing following the revision of the fuel retailing policy

There is the possibility of a consolidation in the sector

• Growing population and shift in consumption preference could catalyze natural gas demand

• There has been a positive sales growth momentum


• The companys existing geographic areas could be up for open access following the end of marketing exclusivity

• Volatile RLNG prices could affect prospects

• Change in the gas allocation policy by the Government for CNG & PNG (domestic) segment could impact margins

• There is growing competition from alternative fuel sources

• There could be unfavourable regulatory changes regarding natural gas import ‘Safety First culture at ATGL

ATGL is committed to ensure continuity of natural gas supply, safety and reliability of services to customers and committed to demonstrate continual improvement in Quality, Occupational Health, Safety & Environmental (QHSE) management. ATGL institutionalised practices for sustainable development.

‘Safety first in everything we do at ATGL is integral to the ATGL culture. Safety is not just a value but a business pre-condition at ATGL. ATGL believes that all types of injuries, illness and incidents are preventable. Nothing is more important to the companys success than employee safety. ATGL formulated a business continuity plan, which helped ensure continuity of services during the pandemic period. Structured program was implemented to ensure health & safety of employees, contractors and other stakeholders during the pandemic.

ATGL deepened its responsibility to conduct operations with proper regard for the environment and to the health and safety of all those involved in its operations and the public at large. .

ATGL established its Integrated management system (IMS) and was accredited for the ISO 9001:2015 Quality Management System, ISO 14001:2015 Environmental Management System and BS OHSAS 18001:2007 Occupational Health and Safety assessment Series. Regular internal and external audits were conducted to verify the adherence and effectiveness of the system and procedure. ATGL determined and provided resources needed for the establishment, implementation, maintenance and continual improvement of the QHSE Management System through process charts, QHSE system procedure and the management program as required.

ATGL also complied with the Adani Groups Occupational Health & Safety Procedures and Safety Management System (SMS). ATGL defined ten ‘Life Saving Safety Rules based on Business specific high risks and a history of past incidents. Rules were framed to target and reinforce critical behaviors and processes that ensured safety performance, particularly in high risk areas of the business. An awareness on life-saving rules was provided through audio visual training to all employees and contractors.

ATGL conducted HAZOP and QRA studies for its CGD business through PNGRB-approved third parties. It aimed to pro-actively identify hazards and take actions to prevent and mitigate risks.

ATGL implemented a structured training program for different stakeholders. Safety induction training was imparted to all employees and contractors. Safety, technical & operation competency (STOC) training was provided to all contractor employees. Employees and contractors were trained on permit to work, job safety analysis and other critical HSE procedures. PETZL rope access system training was imparted to plumbers engaged in high risk riser jobs at heights.

ATGL established, implemented and maintained processes needed to prepare for and respond to potential emergency situations including actions to address risks and opportunities. ATGL established an Emergency Response and Disaster Management Plan (ERDMP) for all geographical areas. Emergency response drills were periodically conducted; lessons were communicated and corrective actions ensured.

An ERDMP Plan was updated and certified as per PNGRB requirements. The company established procedures to ensure that there was an appropriate response to unexpected or accidental incidents. Area with resources for Emergency timely response to any emergency, working 24x7 with the customer care team. The Emergency Response Management System app was launched to capitalise on digitisation to enhance emergency preparedness.

ATGL encouraged employees and stakeholders to report safety concerns/hazards/near misses and other incidents through a mobile/web-based Incident reporting system. All incident/accidents were promptly and transparently reported. The lessons learnt from the near-miss and incidents were shared with all employees and contractors to ensure similar incident were prevented.

ATG Lensures that its assets performed reliably and safely throughout various stages of their life cycle. This was achieved through risk-based inspections, surveillance and monitoring of the network 24x7 and compliance with respect to PNGRB IMS and T4S regulations. The Integrity Management System (IMS) was in place for all geographical areas.

ATGL developed a comprehensive IMS manual in line with PNGRB regulations. Regular audit (once in 3 years) on ISM/T4S was conducted by a third party as per PNGRB and compliance was in place. Asset integrity blueprint was chalked out to ensure that ATGL assets provided business continuity without compromising safety.

ATGL participated in celebrations like National Safety Week, Road Safety Week, Environment Day, Fire Safety Week to enhance safety awareness among employees, contractors and stakeholders. ATGL increased safety awareness of customers by organising industrial safety awareness programmes, sharing CNG safety tips, and distributing dos and donts for domestic safety. Special awareness drives were conducted through the social media and radio.

ATGL achieved its ‘Zero fatality target during the year. Some highlights of 2020-21 comprised the following:

• Significant training was conducted covering 34518 person-hours for employees and stakeholders.

Training in line with need identification-based subjects on critical HSE procedures was imparted.

• ATGLs governance structure comprised Business

Safety Council headed by the CEO and the leadership team, driving six safety task forces for enhancing the safety system. A new task force on mechanical integrity and Quality Assurance was formed to take care of process safety requirements. Each task force framed annual key performance indicators and action plan for continual improvement.

• A comprehensive program on contractor HSE assessment and enhancement (Parivartan, a Green Cap program) was launched. Significant improvement in contractor performance was observed during third party HSE capability assessments carried out.

• Contractor safety management was implemented, addressing six steps starting from pre-qualification to post-contract evaluation. Safety Risk Field audit tool was used to check contractor safety compliance on a weekly basis.

• Actions were taken based on Vulnerability Safety

Risk Study to minimise risks.

• Digitalisation initiatives were taken comprising

ERMS (Emergency Response Management System), mobile app-based contractor training and engagement, vehicle tracking system for logistics safety and camera-based critical job monitoring

• Reward and recognition program was implemented as well as consequence policy for ensuring HSE accountability at each level

• Exchange of best practices and knowledge sharing sessions were conducted with TOTAL

• Third party periodic comprehensive asset integrity audit was completed for all operational assets to improve asset quality/HSE/performance

• Special campaign on Dial before Dig was rolled out to prevent third party damage to assets. Awareness programmes through radio and social media, team building initiatives with other utility companies and corporation bodies comprised few initiatives of this campaign.

• Behavior-based safety program Suraksha Samwaad provided good results to achieve a positive change in peoples behavior towards safety.

• HSE SOP and technical standards were standardised for uniformity and ease of implementation across locations

• All incidents/accidents were promptly and transparently reported, investigated and lessons learnt shared through safety alerts & audio visual means.

Development plans for new geographic areas

The Company commenced project activities of developing infrastructural network in the 13 awarded GAs during the 9th bidding round and 2 GAs awarded in the 10th bidding round. Even as the overall commitment appears ambitious, the company has responded with GA-wise breakdown and a comprehensive strategy directed at meticulous project rollout. The company responded with a multi-pronged strategy for developing a successful implement action plan, comprising the following:

Focus in advancing market plan: Though the Minimum Work Program is spread over eight years, ground work has been carried out to create a launch pad in the initial three years, a stepping stone for creating the required infrastructure and ecosystem to meet the commitments within the time. The companys focus is to create a steel pipeline infrastructure in the first three years to cater to the technically feasible demand centres.

Focus on Demand Center: Following the ground work to create the launch pad, ATGL will deepen its penetration of the domestic, commercial, industrial and CNG markets. Simultaneously pockets for domestic connection, potential industrial/commercial connections will be identified to enable GA gasification.

To meet this, the MDPE network was created in these identified pockets for realising and monetising piped gas consumers across all segments, extending beyond the MWP in search of new markets.

LCNG/LPNG route: Following the 9th & 10th bidding rounds, the GA dynamics have changed from cities to cluster of multiple districts across a single state or multi states. In some of the GAs there have been instances of long-distance tap-offs availability or demand centres which are far off from the entry point of GAs in the GAs, which makes time-consuming and capex-intensive to reach the demand centres and respective charge areas. ATGL judiciously opted to create a virtual pipeline network which can be feasibly fed from the LNG terminals by setting up small LNG stations to cater to CNG and PNG needs faster and cost-effective methods, thereby overcoming the impediments in the absence of connectivity.

CNG rollout: For early CNG rollout, ATGL carried out agreements with the respective OMCs for setting up COLO CNG stations along with the floating of EOIs for setting up a dealer station network across all the GAs. The network supply capacity was strengthened by setting up mother stations at appropriate CGS location/LCNG Locations and commission daughter booster stations, expected to advance CNG stations operations till the time taken for reaching of the pipeline network.

Early monetisation:

Whereas MWP has its own significance, it will be catalysed by financial strategy will focus on early monetisation, establishing market eco-system and optimising cost operations. The project roll out and related activities will be strategised to attain positive financials as early as possible from the commencement of CGS and downstream operations, while progressively shifting focus to RoCE and RoE over eight years. The early monetisation strategy will focus on encashing monetary gains from the existing market and eco system and generate early revenues.

Manpower hiring: Key to this ambitious MWP roll out strategy will be timely manpower requirement. ATGL is better placed in this regard; the Company has experienced and loyal manpower from the CGD background since the company went into this business around 15 years ago.

To address new resource requirements, an HR strategy was drawn out for meeting requirements across various functions depending on GAwise needs. ATGL was able to place experienced hands and leverage its strength at new GAs, which helped in the roll out of the project in all GAs conducting pre-project activities with a timely kick-start of activities.

Regional structures:

ATGL carved out all the Geographical Areas in three regions with a combination of GA clusters headed by experienced senior executives from a City Gas Distribution background. The region-based structure helped concentrate efforts, accelerate decision making and spread project risks, resulting in smooth project execution.

Corporate strengthening:

From a project execution viewpoint, three key functions were identified for effecting MWP achievement at the corporate level that comprised techno-commercial, project management office and Center of Excellence (Technical), resulting in timely project implementation.

Automation and technology

As a part of ATGL 2.0, the company commenced its digital journey with Project Adani Delight.

The project aimed at the digitisation of processes across ATGL functions. The digitalisation comprised the following:

SCADA: The Company enhanced its SCADA system across all City Gate Stations, CNG stations, DRS and Cathodic Protection Transformer Rectifier units. As a management strategy ATGL will operate on all new GAs on SCADA from its inception. For this, ATGL has already initiated strengthening of the SCADA architecture & development of AG&NC (Adani Gas Nerve Centre), which will act as the central command & monitoring centre for all the 19 GAs.

GIS: The pipeline network laid was mapped in Geographic Information System, helping monitor and maintain the pipeline network. Data enhancement activities such as completeness of network mapping, land base updation, incorporating addresses of buildings, accuracy enhancements based on surveys etc. were undertaken continuously. User specific functions such as hyperlinking drawings/documents to features, layers visibility control, functionality to indicate on-going third-party activities and outage manager were introduced in the GIS. The GIS continued to provide useful information of the pipeline network for regular monitoring, repair and maintenance as well as emergency handling.

AMR system for I&C customers:

To strengthen the safety of operations and provide improved services to customers in an efficientmanner, AGL implemented Automated Meter Reading (AMR) system for all industrial and commercial customers.

My Adani Gas: ATGL launched a mobile application named My Adani Gas. A digital ecosystem/ platform which helps in collaborating with partners and stakeholders such as customers, vendors, contractors and employees. This facilitates PNG domestic customers to upload gas meter readings, identify meter readers, download forms like registration and name change forms, and for CNG customers to locate nearby CNG filling stations. It will provide the platform to collaborate with vendors, acquire new vendors, enable vendors/ contractors for service orders and track progress on service orders and manage their performance.

Emergency Response Management System (ERMS):

To manage emergencies like gas escape, leak or fire,effectively and reduce the response time with clear information of all such incidents, ATGL implemented an app called ATGL – ERMS. This app can be used by any internal and external bodies including employees, partners and the public.

Touchless Revenue Management:

The company introduced Touchless Revenue Management (TRM) to enhance capabilities in traditional revenue management. As a part of this initiative, the company implemented eNACH (automatic clearing) of payment against invoice generation and digitally signed invoices on Whatsapp. This is a part of the companys Go-Green Go-Digital initiative ATGL is on a journey to become a Smart and Digital Utility company, ATGL aims to automate processes and operations, enhancing operational efficiency. The companys Nerve Centre comprises a Central Digital Command Centre for better monitoring, operational control and quick decision-making.

Human resource management

Adani Total Gas Limited is a fast-growing organisation that has become the largest CGD company in India in terms of geographic areas. In the face of this rapid 162 growth, the company has invested in a high performing culture by recognising and rewarding exemplary performers. At ATGL, we ensure that development and progress are sustainable and all-encompassing for people and the environment in line with the companys philosophy of courage, trust and commitment.

The company promotes inclusiveness, ownership, pride and respect in employees to increase their motivation and engagement. The entire workforce of Adani Total Gas exhibits a One Team spirit and works collectively to address organisational goals.

The company developed best-in-class practices and embraced an effective operating model that helped build competencies in organisation development, performance effectiveness, talent management, learning, development and talent acquisition.

Talent acquisition:

The companys talent acquisition strategy is aligned with organisational goals and focused on a competent workforce environment, responsibility, entrepreneurial attitude and collaborative capability.

Learning culture:

ATGL invests in rigorous planning and investment in developing technical and behavioural / managerial skills of employees. Using various platforms, including e-learning, the learning culture has been amplified across all employees.

Talent management: The company defines individual and organisational goals and areas of responsibility based on which the performance is evaluated. The entire process is defined, robust and transparent, ensuring fairness. The process starts with a goal setting exercise at the start of the financial year and ends with year-end appraisal.

Risks and concerns

Regulatory regime: The City Gas distribution business is governed by the regulatory regime established by the Petroleum and Natural Gas Regulatory Board (PNGRB). PNGRB has framed various regulations relating to the technical, safety commercial and business aspects, which the Company needs to abide by at all times. Non-compliance with the regulatory stipulations can have ramifications on the day-to-day business, including continuance of authorisations / operations of the CGD entity. The regulatory regime keeps evolving based on market dynamics and changes in regulations, whenever effected, can have an adverse impact on the Company. An example of such change was the open access regime under which the CGD entity will have to provide access to its network capacity to third parties desirous of gas marketing in its Geographic Area.

Non-availability of natural gas:

Our natural gas supply requirements for CNG and Domestic are met by the allocation of domestic natural gas from the MoPNG at a price determined in accordance with the New Domestic Natural Gas Pricing Guidelines 2014 (Pricing Guidelines). Any increase in the cost price of natural gas or any reduction in allocation amount of domestic natural gas can have an adverse effect on our business, results and cash flows.

Foreign currency risk: The prices of domestic natural gas and the RLNG we purchase are denominated in United States dollars, while the selling price is in Indian Rupees. In the event that we are unable to pass on the cost of any devaluation of the Indian Rupee to our customers on a timely basis, or at all, our business, results of operations and cash flows could be adversely affected.

Competition from alternative fuels:

The Companys customers have an alternative to move towards other fuels with a cost advantage. If such a scenario were to arise it would impact the Companys business. CNG constitutes around 45% of the total sales volume of the Company and is competitive compared to alternative fuels like petrol and diesel. The large scale adoption of electric vehicles or hydrogen are examples of innovative and alternative fuels that could impact our business.

Safety risk: The CGD network and system are designed in line with the T4S (Technical Standards and specifications including Safety Standards) regulations laid down by PNGRB. All the existing networks of ATGL are compliant with T4S regulations and have been certified so by the independent consultants empanelled with PNGRB. All the networks are also compliant with the Emergency Response and Disaster Management Plan regulations of PNGRB.

Robust integrated management systems, risk assessment, work permit system and periodic audits will ensure that adequate controls are in place to minimise risk in construction and operations phase to As Low As Reasonably Practicable (ALARP)

Internal control systems

The Company has strong internal control procedures commensurate with size and operations.

There is a well-established Internal Audit system established through Internal Auditor that consists of professionally qualified accountants, engineers and

• SAP experienced executives which carries out extensive audit throughout the year, across all functional areas and submits its reports to Management and Audit Committee about the compliance with internal controls and efficiency and effectiveness of operations and key processes risks.

Some key features of the Companys internal controls system comprise:

• Adequate documentation of policies and guidelines.

• Preparation and monitoring of annual budgets for all operating and service functions.

• Internal audit scope with the frequency of audit being decided each year for proper coverage for various areas / functions. The audit plan is formally reviewed and approved by Audit Committee of the Board.

• The Company has a strong compliance management system.

• The Company has a well-defined delegation of power with authority limits for approving revenue and capex expenditure, which is reviewed and suitably amended on an annual basis

• The Company uses ERP system (SAP) to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information.

• Apart from having all policies, procedures and internal audit mechanism in place, Company periodically engages outside experts to carry out an independent review of the effectiveness of various business processes.

• Internal Audit is carried out in accordance with auditing standards to review design effectiveness of internal control system & procedures to manage risks, operation of monitoring control, compliance with relevant policies & procedure and recommend improvement in processes and procedure.

The Audit Committee of the Board of Directors regularly reviews execution of Audit Plan, the adequacy & effectiveness of internal audit systems, and monitors implementation of internal audit recommendations including those relating to strengthening of companys risk management policies & systems.

The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the protection of the Companys assets. This is to timely identify and manage the Companys risks (operational, compliance-related, economic and financial).

Cautionary statement

Statements on the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations and others may constitute "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied. Several factors that could significantly impact the Companys operations include economic conditions affecting demand, supply and price conditions in the domestic and overseas markets, changes in the Government regulations, tax laws and other statutes, climatic conditions and such incidental factors over which the Company does not have any direct control. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.