IRM Energy Ltd Management Discussions

Economic Overview

Global Economy1

In CY 2024, the global economy maintained a steady pace of growth, recording a 3.3% expansion despite ongoing geopolitical tensions, evolving trade dynamics and adjustments in monetary policy. Governments across the world prioritised policy reforms aimed at fostering innovation, enhancing supply chain resilience and promoting economic diversification to support long-term stability.

Global inflation saw a notable decline, easing from 6.6 in CY2023 to 5.7% in CY2024, largely due to cumulative effect of monetary tightening and relatively stable energy prices. This stabilisation reinforced consumer and business confidence, strengthening the overall economic recovery.

Emerging markets and developing economies were the primary drivers of global growth, recording a 4.3% expansion, significantly outpacing the 1.8% growth observed in advanced economies. This divergence was fuelled by robust domestic consumption, increased foreign investment and a strategic pivot toward reduced reliance on external trade.

Outlook

Looking ahead, the global economy is projected to grow at a moderate pace, with forecasts of 2.8% in CY 2025 and 3.0% in CY 2026. This trajectory is underpinned by easing inflation and the sustained impact of monetary policy measures. Growth in emerging markets is expected to hold steady at 3.7%, while developed economies are likely to experience a gradual recovery, reaching 1.4% in CY 2025.

Inflation is anticipated to ease further, declining to 4.2% in CY 2025 and further to 3.5% in CY 2026, which should reinvigorate discretionary spending and support economic momentum.

Despite recent global trade setbacks from tariff escalations, the global economy remains adaptable and resilient. Governments and businesses are proactively adjusting by tapping into new markets and streamlining operations. Simultaneously, strategic investments in technology, healthcare and infrastructure are expected to productive and set the foundation for sustainable, long-term economic growth.

Indias Economy2

Indias economy recorded a 6.5% growth in FY 2024, demonstrating resilience against global headwinds like geopolitical tensions, supply chain disruptions and changing patterns of trade. The services sector emerged as a prime growth driver, supporting overall economic activity. At the same time, rapid development in digital infrastructure enhanced access to credit and financial services, increasing demand across industries and sustaining economic momentum. Inflation too eased, from 5.4% in FY 2024 to 4.7% in FY 2025, contributing to greater macroeconomic stability.

Investment activity gained traction, driven by robust manufacturing exports and a surge in capital goods imports. Infrastructure development and industrial expansion remained pivotal to the Government of Indias motive, reinforced through the Production Linked Incentive (PLI) Scheme 2.0. To give additional boost, Reserve Bank of India took its first-rate reduction in half a decade, reducing the repo rate by 25 basis points from 6.5% to 6.25% and further to 6%.

Indias renewable energy industry also registered record expansion in FY 2025, with 29.52 GW of new capacity added, pushing the total installed capacity of 220.10 GW. Solar energy led the way with 23.83 GW in new installations, while wind capacity increased to 50.04 GW. Bioenergy and small hydro supported broader energy diversification and rural electrification. These milestones are important indicators of progress toward the 500 GW national target of non-fossil fuel capacity by 2030 in line with Panchamrit climate goals.3

Outlook

Indias economic outlook remains optimistic, driven by public investment in infrastructure, strong manufacturing growth and improving trade and financial services. The Government of Indias focus on capital expenditure will enhance rural demand, whereas rapid development of both digital and physical infrastructure will support industrial momentum. However, global economic uncertainties, tariff shifts and supply chain disruptions may affect trade dynamics and raise input costs, potentially compressing manufacturer margins. While global slowdown risks may dampen investor sentiment in the short term, Indias relative economic stability could attract foreign investments to look beyond the US markets.

Indias renewable energy sector continues to gain momentum, with 169.40 GW of capacity under development and 65.06 GW already tendered, including hybrid and round-the-clock projects. Backed by favourable policies, technological advancements and expanding infrastructure, the sector is positioned to become more diversified and resilient. These strides reinforce Indias leadership in clean energy and contribute significantly to its climate goals.

Industry Overview

Indias oil and gas industry remains a cornerstone of the nations energy ecosystem, driving economic growth and supporting industrial development. As of early 2025, the sector is characterised by robust demand, investments in both upstream and downstream infrastructure and a strategicpushtowardsenergysecurityanddiversification. Crude oil production has shown moderate growth, while natural gas output is on an upward trajectory, supported by new discoveries and enhanced extraction techniques. Despite being a major importer of crude- primarily from the Middle Eastern countries, recent policy measures are encouraging increased domestic exploration and production activities.

On the downstream side, India is expanding its refinery capacity, with several modernisation and upgrade projects underway to meet the rising domestic consumption for petroleum products. The governments push for clean energy and the expansion of city gas distributionnetworksaredrivingnaturalgasconsumption, particularly in urban and industrial clusters. Additionally, growing investments in LNG infrastructure and pipeline networks reflect Indias ambition to raise the share of natural gas in its energy mix.

Outlook

The outlook for Indias oil and gas sector remains cautiously optimistic. Although the sector faces headwinds from global price volatility and geopolitical uncertainties, Indias growing energy needs, favourable policy environment and adoption of advanced technologies position the sector for steady growth. As the country transitions towards cleaner energy sources, changing demand patterns will emerge. However, oil and gas will continue to remain vital to Indias energy security, supporting economic advancements in the medium term.

Indian Natural Gas industry

Indias natural gas market is poised for robust growth with sustained investment in infrastructure and supportive government policies. Building on the momentum seen in 2023, expansion of the City Gas Distribution (CGD) network and growth of Liquefied Natural Gas (LNG) import terminals will lead to considerable growth in gas consumption in industrial, transportation and power generation segments. Policy support for CGD expansion and Compressed Biogas (CBG) production, is not only providing a clean energy mix but also gradually reducing dependence on imported crude oil.

Moderate growth in domestic gas production, especially from Krishna-Godavari deepwater basin, is helping to partially offset the rising LNG import demand. Despite this, LNG will continue to be an integral component of Indias gas supply due to its scalability. The CGD sector continues to be the primary driver of this growth, owing to its cost advantage over liquid fuels and the rapid proliferation of Compressed Natural Gas (CNG) infrastructure, especially among small and medium industrial consumers.

Aligned with the International Energy Agencys (IEA) projection of a nearly 60% rise in gas consumption by 2030, India stands at a threshold of a transformative shift. Nevertheless, key challenges persist, including modest domestic production growth and increased exposure to global LNG price volatility. Strategic policy measures such as promoting LNG in heavy-duty transport, reviving stranded gas-based power assets and accelerating CGD network development could unlock further demand and solidify Indias position as a major player in the global gas market by the decades end.

Expansion of the National Gas Grid

The Government of India has planned to increase the National Gas Grid from the existing 20,000 km to around 35,000 km. This expansion will facilitate the availability and accessibility of natural gas throughout the country, enabling a transition towards a gas-based economy.

City Gas Distribution (CGD) Network Expansion

With the 11th CGD bidding round, initiated on September 17, 2021, the Government aims to expand the CGD network to reach 96% of Indias population and 86% of its geographic area. It is imperative for offering piped natural gas to residential consumers and compressed natural gas for vehicles.

Urja Ganga Gas Pipeline Project

Also referred to as the Jagdishpur-Haldia-Bokaro-Dhamra Natural Gas Pipeline (JHBDPL), this venture seeks to supply piped cooking gas to domestic consumers and fuel to industries in eastern India. The project, which was initiated in 2016, is continuing to drive industrial growth and create scopes for employment in the region.

Make in India and Atmanirbhar Bharat Initiatives

In a bid to foster self-sufficiency, the Government of India has invested in policies such as Purchase Preference linked with Local Content (PP-LC) in the oil and gas industry, to encourage local production and seek ways to minimise imports.

Indias City Gas Distribution (CGD) sector is experiencing rapid growth fuelled by governments target to increase the share of natural gas in the energy mix from 6.4% to 15% by 2030 and CGD networks expanding rapidly, particularly in urban and semi-urban regions. As of the end of 2024, India had around 14 million Piped Natural Gas (PNG) connections and 7,400 Compressed Natural Gas (CNG) stations, reflecting the growing reach of this infrastructure.

To meet the 2030 targets of 120 million PNG connections and 17,500 CNG stations, the sector will require a tenfold increase in PNG rollouts and 60% rise in the pace of CNG station development compared to recent averages. This growth is supported by rising demand from residential, commercial and small industrial consumers seeking cost-effective and cleaner alternatives to liquid fuels. The sectors fundamentals are being strengthened through improved pipeline connectivity, revised gas allocation priorities and pricing reforms.

However, the CGD industry faces notable challenges. High infrastructure costs, inconsistent offtake in certain regions and pending implementation of open access norms present hurdles to seamless expansion. Addressing these issues will be crucial for achieving scale and efficiency and for enabling a truly nationwide gas-based ecosystem.

Expansion of CGD Network:

The Government of India has authorised CGD networks in 300+ Geographical Areas (GAs) covering approximately 98% of Indias population and 88% of its geographical area. This is aimed at creating a robust natural gas infrastructure to increase accessibility and promote cleaner energy.

National Gas Grid Development:

Under the Urja Ganga project, significant progress has been made in expanding the infrastructure for natural gas. The North East Gas Grid is also being developed to improve connectivity and availability in remote areas.

Promotion of Natural Gas Usage:

The Government of India is working towards increasing the share of natural gas in Indias energy mix from approximately 6% to 15% by 2030. CGD projects are pivotal to achieving this target through the widespread availability of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG).

Ease of Doing Business:

Policy reforms and simplifications have been introduced to streamline the authorisation and implementation processes for CGD operators. This includes faster approvals, single-window clearances and enhanced support from state governments.

Financial and Infrastructure Support:

Budgetary allocations and policy frameworks have been aligned to encourage private sector participation and investment in CGD projects. Support includes viability gap funding, especially in marginalised regions.

Green Energy Push:

Emphasis on transitioning to cleaner fuels has led to integrating CGD networks with other green initiatives, such as bio-CNG and hydrogen blending.

Company Overview

IRM Energy Limited (IRMEL), a group company of Cadila Pharmaceuticals Ltd., is an integrated and value-driven energy enterprise focused on the development of natural gas distribution projects across India. Serving a wide array of customers across industrial, commercial, domestic and automobile segments, the Company is dedicated to meeting the energy needs of its customers through reliable and sustainable solutions. Backed by the legacy of its parents group Cadila Pharmaceuticals, IRMEL benefits from decades of industry presence and diversified business strengths.

IRM Energy has established itself as a prominent City Gas Distribution (CGD) company, operating in Geographical Areas (GAs) such as Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu and Gir-Somnath (Union Territory of Daman and Diu and Gujarat) and Namakkal and Tiruchirappalli (Tamil Nadu). The Company operates a pipeline network of over 5,671 inch-kms and serves 75,000+ domestic connections, 214 industrial units and 412 commercial customers. It also manages strategically placed CNG retail stations. With a strong emphasis on safety, customer service and technological innovation, IRMEL continues to be one of the fastest-growing CGD players in India.

Financial Performance

Gross turnover for FY 24: 9,565.40 million and for FY 25: 10,563.55

Consolidated Profit after tax for FY 24: 856.63 million and for FY 25: 452.02

Consolidated Earnings per share of the Company for FY 24: 24.47 and for the FY 25: 11.01

Consolidated Net worth of the Company for FY24: 9,317.61 million and for the FY 25: 9507.22

Ratio Analysis

Consolidated

Particulars	For the FY 2024-25	For the FY 2023-24
Asset turnover ratio	0.83	0.92
Current ratio	2.32	3.41
Debt to equity	0.15	0.25
Interest coverage	4.34	5.36
Gross profit margin%	24.51	27.40
Operating margin %	13.40	19.39
Net profit margin %	4.63	9.62
Return on net worth %	4.75	N=RIGHT>9.19
ROCE%	8.84	12.85
Return on asset%	3.54	8.24

Technological Innovation & Digital Transformation at IRMEL

The company has consistently leveraged digital technology to improve operational efficiency, strengthen safety protocols, manage operational costs, maximize asset performance, and elevate customer satisfaction. With continued expansion of both its pipeline network and customer base, the company has responded to growing operational demands by implementing a unified and forward-looking digital strategy.

Since its inception, the company has maintained a stable and sustainable operational management framework. Through a range of targeted digitalization and automation initiatives, it has achieved several key milestones aligned with its long-term goals of sustainability and operational excellence.

A key element of the Companys transformation strategy is the development of a unified digital platform. This platform consolidates existing automated systems and digital tools with advanced data analytics capabilities. By doing so, it enables faster, more informed decision-making that supports the secure, efficient, and reliable transportation of natural gas, while ensuring the integrity of essential infrastructure.

Progress has already been made in defining the projects scope and objectives, as well as outlining the platforms technical architecture. These foundational steps reflect the Companys commitment to delivering a seamless and effective digital operations model.

Key Digital Initiatives and Achievements

• End-to-End Domestic Consumer Management

The Company implemented a digital solution called PNGnet to manage every stage of the domestic consumer journey. This includes customer registration, invoice handling, service activation, billing, payments, support after service begins, and management information system (MIS) reporting. By combining these functions into one platform, PNGnet increases efficiency and improves service quality and data tracking.

• Digital Payment Ecosystem

To make bill payments easier and reduce cash handling, the Company linked several digital payment services such as BillDesk, Bharat BillPay, WhatsApp, and QR codes, with PNGnet. This setup gives customers secure and flexible payment options, cutting down foot traffic at customer service centers and improving both efficiency and user experience.

• GIS-Based Asset Mapping

A Geographic Information System (GIS) was introduced across all areas to digitally map and manage the gas distribution network and infrastructure. This system improves the accuracy of asset location data, provides better access to network information, and helps the Company plan maintenance more effectively while making data-driven decisions.

• Automated Meter Reading (AMR)

To monitor gas flow and system performance more accurately, the Company uses AMR technology at key locations like City Gate Stations (CGS), District Regulating Stations (DRS), and customer sites. This allows remote, real-time reading of data, cutting down on manual effort and boosting accuracy and efficiency.

• Workflow Digitalisation

Combining GIS and AMR enabled the Company to digitize critical workflows—like reporting incidents, managing gas transactions, and maintaining equipment. A new maintenance module was added this year to support predictive, conditional, and corrective repairs. It automatically generates maintenance tasks and records detailed service histories, removing the need for manual tracking.

• Preventive Maintenance & Emergency Response

The Company uses a GIS-integrated mobile app for regular checks to prevent leaks and service interruptions. A dedicated call center-based emergency system ensures quick action when needed.

• Customer Support Infrastructure

The Company runs customer care centers throughout its service regions, backed by a 24/7 toll-free helpline. Additional support channels like mobile apps provide quick responses to questions, complaints, and service needs.

• Centralized Digital Platform for CNG Operations

A complete digital system has been launched for managing CNG operations, beginning with Banaskantha GA. This platform supports station activities, document management, compliance checks, and performance tracking, all of which help raise operational standards.

• Transparent Billing & Easy Payment

Innovations like same-day spot billing, customer portals, and AMR allow users to view bills promptly and monitor their usage history. Multiple digital payment options—including UPI, net banking, and QR scanning—offer added convenience.

• Service Updates and Notifications

The Company keeps consumers informed through timely SMS, email, and app messages regarding maintenance schedules and service interruptions, strengthening trust and transparency.

• Awareness Campaigns for Safe Gas Use

Focused outreach programs help educate communities about safe and efficient gas usage. Attractive offers and registration plans have also been rolled out to increase customer sign-ups and loyalty.

• SCADA Alarm Enhancements

An upgraded SCADA system now allows engineers to search alarm records by date and time, making it easier to investigate issues and fine-tune CNG system performance.

• Customer-Centered Digital Innovations

The Company continues to invest in tools that add value for consumers through digital engagement, ease of use, and environmentally sound practices.

• Self-Service Through Digital Platforms

Customer portals and mobile applications let users manage their accounts, view usage, make payments, and request services—putting control into the hands of the customer.

• Commitment to Sustainability

Sustainability remains a priority in the Companys long-term goals. Initiatives are aimed at reducing emissions, promoting clean energy, and using natural gas responsibly. These efforts support both public health and Indias broader clean energy transition.

Future Focused

Giventheimportanceofnaturalgascoststoitsoperations, the Company has established strong partnerships with prominent natural gas suppliers such as GAIL, IOCL and RIL-BP. Additionally, it is collaborating with the India Gas Exchange to ensure timely and competitive pricing for natural gas. The Company views its vendors as key business partners and fosters mutually beneficial relationships to ensure the prompt delivery of essential equipment and products for efficient project execution.

Our journey is defined by partnerships, policy alignment, and purpose-driven innovation. With a future-forward vision and deep roots in Indias energy ecosystem, IRM Energy is not just adapting to the energy transition we are fuelling it.

Corporate Social Responsibility (CSR)

The Companys CSR initiatives are aligned with its objective to contribute meaningfully to the socioeconomic development of the communities. The key focus areas include childhood care, education, public health, skill development for employability and environmental sustainability.

During the reporting period, structured programs were implemented such as setting up advanced infrastructure to promote science and education, and establishing an IT-based vocational education centre for children with special needs to foster inclusive learning. To strengthen healthcare services, the Company facilitated for enhancing diagnostic infrastructure.

Environmental responsibility was addressed through activities aimed at protecting natural resources and promoting the use of renewable energy. In addition to ongoing programs, the Company undertook location-specific, need-based initiatives, such as facilitating gas connectivityforcrematoriumsinnearbyareastoenhance local infrastructure and reduce environmental impact.

All CSR activities are executed under the oversight of the CSR Committee, with outcomes tracked against defined goals to ensure accountability and effectiveness.

Human Resource

Human resources form a critical component that supports the Companys sustained growth. IRMEL has consistently worked towards creating a vibrant and productive work environment, with a focus on attracting, retaining, and developing skilled talent. During the reporting year, the Company pursued lateral hiring and campus recruitment through its ‘Udgam initiative.

To support professional growth, the Company implemented relevant learning and development initiatives aimed at upskilling employees in line with evolving industry trends. These initiatives also helped employees align their personal development with changing professional demands.

Employee engagement activities contributed to boosting morale and enhancing workforce productivity. Performance evaluations were conducted through a structured Performance Appraisal system, based on pre-defined Key Result Areas (KRAs) and competency assessments.

As part of its focus on employee health and safety, the Company arranged periodic health check-ups during the reporting year.

Internal Control

The Company has instituted a comprehensive internal control framework aimed at ensuring the integrity of financial reporting, operational efficiency and adherence to applicable legal and regulatory requirements. This framework is supported by a multi-tiered governance structure, that review and guide internal processes on a periodic basis.

Dedicated internal audit functions, both in-house and external, conduct regular assessments of operational and financial processes. These audits are designed to identify control gaps, recommend corrective measures and ensure compliance with statutory obligations. The audit findings are reported to senior management and the Audit Committee of the Board, which monitors the timely implementation of corrective actions.

Through systematic monitoring and control procedures, the Company aims to mitigate risks associated with fraud, misstatement and non-compliance. These measures help provide stakeholders with reliable financial information that supports informed decision-making while maintaining transparency and accountability.

Health, Safety and Environment (HSE)

IRMEL believes in People, Society and Environment- First

IRMEL places People, Society, and the Environment at the core of its operations, prioritising robust HSE practices across all levels. A top-down approach ensures leadership involvement in instilling a strong safety culture at every site.

IRMEL is committed to-

Creating an environment where all staff members are dedicated to HSE practices

Aiming for continuous improvement in the HSE management system by evaluating performance regularly and implementing necessary adjustments

Regularly reviewing the HSE Policy to ensure its continued relevance and effectiveness

Effectively communicating and implementing the HSE Policy at the GA level

IRMEL has maintained an injury-free workplace with Zero Loss Time Injuries (LTI) reported to date.

Training and development for building Safety Culture

Ensuring that the entire workforce receives mandatory and relevant HSE training from time to time, including both internal and external training. These training and development initiatives has been beneficial for the skill development and competency building for the employees/workers as well as the Company. Through these training, the employees/workers are able to adapt to changing business environment & new technologies, increased work accuracy & performance and improved their efficiency & effectiveness.

Regulatory Compliance

From a compliance standpoint, all GAs are audited and certified for T4S, IMS, and ERDMP by PNGRB-approved third-party agencies. Compliance with environmental and safety regulations is monitored consistently in line with applicable laws from state pollution control boards and other authorities.

Emergency Preparedness and response

Emergency preparedness includes conducting Level 3 mock drills in partnership with district disaster management teams and mutual aid groups. Hazard and operability studies (HAZOP) and quantitative risk assessments (QRA) are conducted to assess risks associated with steel pipelines and CNG stations. The objective is to ensure that all operational risks remain within the ALARP (As Low As Reasonably Practicable) region, minimising potential harm to people, property, and the environment. Accidents, near misses, and safety incidents are investigated to identify root causes and prevent recurrence. Findings are shared across operational units as safety alerts. IRMEL also participates in mutual aid arrangements for emergency support across sites.

Safety Audits

Routine safety audits and inspections are conducted by the HSE department to assess risk, verify control effectiveness, and ensure compliance with internal and external safety standards. These inspections span critical operational areas, including storage, pipelines, vehicle fleets, hazardous materials handling, and workplace ergonomics.

Environment

Natural gas is the cleanest and most efficient fossil fuel, producing fewer emissions compared to other fossil fuels

Compared to other conventional fossil fuels, natural gas produces significantly less carbon monoxide, sulphur dioxide, dissolved solids and airborne particulates— all of which can be hazardous to the health of humans and animals

The Company is pursuing to reduce its impact on the environment at the workplace or site by conserving resources, cutting down on waste production and avoiding contamination

IRMEL is constantly expanding its network to facilitate the transition from traditional fuels to natural gas, helping to produce less pollution.

Ensure the HCV/MCV operation on Nature gas instead of conventional fuel reducing the carbon foot print

Disposal of Hazardous waste at authorized recycler and as per the SPCB norms.

Monitoring the Environment condition such as Ambient air, Noise and stack monitoring for ensuring compliance to consent condition for IRMEL facilities.

Cautionary statement

The Statement in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include demand supply conditions, changes in government and international regulations, tax regimes, economic developments within and outside India and other factors such as litigation and labour relations.