Indraprastha Gas Ltd Management Discussions

Global Energy Industry

Overview

Global energy demand increased 1.3%, or 8 exajoules (EJ) and the global energy intensity improved by nearly 2% in CY 2025. Growth moderated from the previous year due to weaker activity in energy-intensive industries across select regions. Despite slower growth, all energy sources contributed to higher demand. Solar PV (photovoltaic) and natural gas led the increase.

Natural gas accounted for around 17% of global energy demand growth. Oil contributed approximately 15%, while solid bioenergy and waste also added to growth. China remained the largest contributor to global energy demand growth in 2025. The United States recorded a notable acceleration demand growth exceeding 2% during the year. India reported slower demand growth of about 1%, among recent lows. An early monsoon reduced cooling demand and electricity consumption. Rapid renewable capacity additions also lowered coal consumption.

Global natural gas demand increased by around 1% in CY 2025, equivalent to approximately 40 bcm. Demand growth was concentrated in the United States, the European Union and the Middle East. Higher gas consumption in the power sector offset the use of oil. The buildings sector emerged as the largest driver of global natural gas demand growth in 2025, contributing almost 70% of incremental demand, largely due to colder winter weather in the United States and the European Union. Regional consumption trends reflected macroeconomic conditions, pricing and weather patterns. In the United States, natural gas consumption increased slightly above 1%. Colder winter conditions primarily drove the increase.

Global energy market dynamics are increasingly being driven by emerging economies, including India, Southeast Asia, the Middle East, Latin America and Africa. Southeast Asia remains one of the fastest-growing energy markets globally.

Against this backdrop, geopolitical developments continue to influence global energy markets. The renewed conflict in the Middle East has heightened concerns over energy security and supply continuity. Escalating tensions in a key hydrocarbon-producing region have increased risks to shipping routes, energy supplies and commodity prices. While the immediate impact is reflected in price volatility, the broader implications are more significant. Import-dependent economies, including India, remain vulnerable to higher energy costs, supply constraints and inflationary pressures arising from prolonged disruptions in global energy trade.

Indias natural gas industry spans domestic production, LNG imports, pipeline transmission, city gas distribution and consumption across the residential, commercial, industrial and transport segments. Growth is driven by expanding gas distribution networks, pipeline infrastructure and increasing natural gas use in hydrogen production. The CNG segment is recording the fastest growth. Urban fleet conversion and expanding dispensing infrastructure support this trend.

Piped Natural Gas (PNG) demand is also rising through new residential connections and wider network coverage. The CGD market expanded from 15,051 MMSCM in 2024-25 to 16,516 MMSCM in 2025-26. The competitive landscape comprises upstream exploration and production companies, transmission operators and city gas distributors. Gas transmission remains moderately concentrated, with the national pipeline operator handling a substantial share of transmission volumes.

Geopolitical developments in the Middle East have increased supply risks and procurement costs. India remains exposed, with over 60% of its LNG imports sourced from the region. To maintain supply continuity, the Government redirected domestic natural gas and regasified LNG to priority sectors, superseding existing allocation arrangements. The first priority covers domestic PNG, transport CNG and LPG production. Fertiliser production constitutes the second priority. The third includes tea estates, manufacturing units and other industrial consumers connected to the national gas grid. Under the fourth category, City Gas Distribution (CGD) entities must supply industrial and commercial consumers. These measures were aimed to mitigate supply disruptions arising from the conflict in West Asia.

Natural gas supplies remain stable under the revised allocation framework. India currently produces approximately 90 MMSCMD (Million Metric Standard Cubic Metres per Day) of natural gas domestically. Domestic PNG for households and transport CNG continue to receive uninterrupted supplies. Additional LNG cargoes continue to arrive through alternative supply routes. Domestic production and import arrangements remain adequate to meet anticipated demand, including under prolonged supply disruptions. Power generation for households and industry remains protected.

Natural gas is expected to play a key role in Indias energy transition. It can reduce oil imports, replace coal in emission-intensive regions, support renewable energy integration and improve urban air quality. The sector is entering a structural growth phase, supported by favourable policy measures and expanding infrastructure. Indias natural gas market is projected to reach 108 BSCM by 2030 and 180 BCM by 2040.

The Union Budget for 2026-27 allocated Rs. 30,443 Crores to MoPNG, representing a 2% increase over the revised estimate for 2025-26. The revised estimate for 2025-26 was 54% higher than the original Budget estimate. The Government also exempted Compressed Biogas (CBG) blended with Compressed Natural Gas (CNG) from central excise duty. It continues to target a 15% share for natural gas in Indias primary energy mix by 2030.

The Government of India notified the Natural Gas and Petroleum Products Distribution Order, 2026 under the Essential Commodities Act, 1955. The Order establishes a streamlined and time-bound framework for developing and expanding natural gas pipelines. It addresses delays regulatory approvals and land access, enabling faster development across the country. The Order also seeks to facilitate the expansion of piped natural gas (PNG) networks and improve last-mile connectivity. These measures are expected to accelerate the adoption of cleaner fuels across residential, transport and industrial segments. The Order also enhances energy security and supports Indias transition to a gas-based economy

The North East Gas Grid project is being implemented by Indradhanush Gas Grid Limited (IGGL). The project receives Viability Gap Funding and capital grants covering 60% of the estimated project cost of Rs. 9,265 Crores. The pipeline network is expected to ensure reliable and uninterrupted natural gas supplies across the region. Greater gas availability is expected to support industrial growth while lowering environmental impact. The Union Budget 2026-27 further strengthened the programme through higher allocations. Budgetary support increased to Rs. 700 Crores from the revised estimate of Rs. 300 Crores for 2025-26, representing a 133% increase

Table 1: Allocation for the Ministry of Petroleum and Natural Gas (in Rs crore)

Note: RE is revised estimates, BE is budget estimates, % change from 2025-26 RE to 2026-27 BE. IGGL is Indradhanush Gas Grid Limited - part of North East Natural Gas Pipeline Grid.

Sources: Union Budget Documents 2026-27; PRS. Source: PRSIndia

The Government introduced competitive bidding schemes to procure power from Gas Based Plants (GBPs) throughout peak demand periods. During the 2025 crunch period (March–October 2025), selected GBPs supplied 1,477 MU of electricity. The scheme improved utilisation of gas-based assets, enhanced peak power availability and strengthened grid reliability

Indias City Gas Distribution (CGD) sector operates in a moderately fragmented market with multiple participants. Growth is driven by rising urbanisation, supportive policy measures and rising demand for cleaner fuels. The sector plays an important role in Indias clean energy transition by advancing the Governments target of increasing natural gas to 15% of the primary energy mix. Through the supply of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG), the sector improves energy access, reduces emissions and serves a diverse customer base comprising households, industries, and the transportation segment. Its growth is also supported by the increasing adoption of CNG vehicles, particularly in commercial transportation, where higher prices of refined petroleum products have encouraged a shift towards CNG-powered vehicles. CGD infrastructure has expanded significantly in recent years. The industrial segment remains the largest consumer of natural gas supplied through the CGD network. The Petroleum and Natural Gas Regulatory Board (PNGRB) has directed CGD entities to shorten the time between consumer applications and gas supply. The Government has also accelerated approvals for network expansion across states and union territories.

In the near term, the sector may face pressure from lower natural gas availability arising from disruptions in West Asia. Reduced LNG supplies could affect daily sales volumes across certain markets. Industrial and commercial PNG consumers are expected to experience the greatest impact because of their higher dependence on imported LNG. Despite these near-term challenges, the sector continues to benefit from favourable structural drivers. Expanding urbanisation, supportive regulations and growing environmental awareness are expected to sustain demand. Natural gas adoption continues to increase because of its lower emissions than conventional fuels. Advances in gas distribution technology are improving network efficiency, reliability and customer service. Continued infrastructure investment is expected to expand market reach and strengthen competition. Greater consumer awareness of air quality is also supporting wider adoption of cleaner energy solutions, particularly across urban centres.

The Government of India has launched coordinated measures to ease LPG dependence and speed up PNG expansion amid heightened energy security concerns. Consumers holding both LPG and PNG connections face restricted LPG refills to encourage full migration to piped gas. PNGRB has directed State Governments to grant immediate CGD infrastructure clearances, deem pending applications approved, and dispose of fresh requests within 24 hours. The Petroleum and Explosives Safety Organisation (PESO) has similarly been instructed to prioritise and clear CGD-related applications within 10 days of receipt. As an incentive, States get a 10% additional Commercial LPG allocation for implementing reforms that reduce LPG use and accelerate PNG adoption.

Indraprastha Gas Limited (IGL) was incorporated in 1998 as a joint venture between GAIL (India) Limited and Bharat Petroleum Corporation Limited (BPCL) to develop City Gas Distribution (CGD) infrastructure. The Company was established to supply safe, reliable and convenient natural gas to residential and commercial consumers while promoting cleaner transportation fuels in the National Capital Territory of Delhi. Since inception, IGL has expanded its infrastructure to meet evolving customer demand. As of 31 March 2026, the Company serves approximately 23 Lakhs CNG vehicles, more than 34.4 Lakh households and over 13000 commercial and industrial customers. The Company continues to strengthen customer engagement through digital platforms and technology-enabled services. It has expanded its pipeline network, compressor stations and distribution infrastructure across multiple geographical areas.

IGL operates across the National Capital Territory of Delhi, Noida, Greater Noida, Ghaziabad and Hapur, Gurugram, Meerut (excluding the authorised area), Shamli, Muzaffarnagar, Karnal, Rewari, Kanpur (except the already authorised area), Hamirpur and Fatehpur districts, Kaithal, Ajmer, Pali, Rajsamand, Banda, Chitrakoot and Mahoba, Faridabad (part) districts. This network has played a critical role in meeting customer requirements across multiple Geographical Areas (GAs) and diverse customer segments. Its association with GAIL and BPCL provides strategic and operational advantages. Continued infrastructure expansion and service enhancement have strengthened IGLs position among Indias leading City Gas Distribution companies. The Company also aims to emerge as a leading provider of clean energy solutions in India.

IGL has built strong entry barriers through its first-mover advantage and continuous investment in infrastructure upgrades

Regular infrastructure enhancements have enabled the rollout of CNG and PNG distribution networks across its operating regions

Ongoing support from the promoter companies enhances technical and managerial capabilities while enabling operational synergies

A skilled and experienced workforce continues to play an important role in supporting growth and maintaining a strong industry position

Operations are concentrated in the Delhi-NCR region, where high population density, expanding urban infrastructure, and rapid industrial growth support sustained demand for its products and services

Gross turnover increased from Rs. 16,399.70 Crores in the year 2024-25 to Rs. 17,785.36 Crores in the year 2025-26.

Profit after Tax (PAT) decreased from Rs. 1,467.59 Crores in the year 2024-25 to Rs. 1,364.10 Crores in the year 2025-2026.

Earnings per share of the Company showed decrease of 7.06% from Rs. 10.48 in year 2024-25 to Rs. 9.74 in year 2025-26

Net worth of the Company as on 31st March 2026 was Rs. 9,986.70 Crores as compared to Rs. 9,284.02 Crores as on 31st March 2025.

As on 31st March 2026, IGL remained a zero-debt Company

worth %*

*The Return on Net Worth Ratio has declined from 16.46% to 14.16% on account of decline in Gross Profit during the year which is mainly attributable to increase in average Cost of Natural Gas Purchased during the year.

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

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

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.

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.

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.

As a participant in SATAT (Sustainable Alternative Towards Affordable Transportation) and CBG-CGD Synchronization scheme, 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.

With an employee strength of 709, the Companys employees remain central to its long-term growth and business performance. It continues to foster an inclusive and engaging workplace that supports talent retention and organisational effectiveness. Human resource policies focus on attracting, developing and retaining skilled professionals. The Company periodically reviews its policies and employee benefits to maintain competitiveness and align with industry practices. Employee well-being remains a key priority. The Company continues to strengthen its Health, Safety and Environment (HSE) framework to reinforce workplace safety and operational excellence. Learning and development also remain central to capability building and organisational growth. The Company follows a policy of equal opportunity and does not discriminate based on gender, disability or caste.

IGL remains committed to responsible environmental management and climate action. It continues to provide safe, clean and reliable energy solutions while reducing its environmental footprint. Natural gas, the Companys primary product, offers lower emissions than conventional fuels and supports Indias energy transition. As part of its long-term sustainability agenda, the Company has prepared a draft Net Zero Policy. It continues to expand access to cleaner fuels while pursuing measures to reduce emissions across its operations.

The Company has adequate internal control procedures commensurate with the size and nature of its business. For the FY 2025-26, 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 are placed before the Audit Committee.

This Management Discussion and Analysis Report contain 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.