IRM Energy Ltd Management Discussions

Global Economic Perspective¹

The global economy expanded by 3.2% in the year 2023, demonstrating remarkable resilience in the face of several economic adversities, like geopolitical challenges and fluctuations in commodity prices. This has led to inflationary pressures across both advanced and emerging markets.

In order to fight these headwinds, central banks of several economies employed strategies. They implemented interest rate increases, supressing the escalation. Despite persistent geopolitical tensions, disrupting global supply chains and trade, inflation rates declined more swiftly than anticipated from their peak in 2022, resulting in gradual economic recovery and job creation in the US, Europe and other emerging markets.

The Chinese economy continued to experience strain throughout 2023, a trend expected to persist even in 2024, given its significant manufacturing capabilities and supply chain influence, posing a potential risk to global economic stability. Owing to the rising foreign institution investor interest, several emerging economies like India, Vietnam and Mexico are expected to show a positive growth trajectory.

Outlook

The prices of coal and natural gas will continue to decline form their previous peaks in CY 2024, by 25.1% and 32.6%, respectively. The gas market is predicted to become more balanced due to increased supply, decreased demand, and high storage levels.

Sources: IMF Primary Commodity Price System; and IMF staff calculations. Note: Volatility is the standard deviation of log differences in monthly prices over the respective periods. Base metals, food, cereal, coal, and natural gas are price indices. The crude oil price refers to the IMF average petroleum spot price.

Indian Economic Overview²

India is the third largest economy in the world after US and China in terms of purchasing power parity. It ranked fifth in terms of market exchange rates. According to high frequency indicators, the Indian economy is maintaining the same momentum it had in the first half of the year even in the face of many upgrades for 2023-24 and 2024-25 by multilateral agencies.

Companies in the oil and gas industry made up the largest portion of the profit gain overall, aided by higher marketing margins.

The announcements made in the Interim Union Budget 202425 align with the goal of "Viksit Bharat," which is to create a prosperous nation that is in harmony with the environment, has access to modern infrastructure, and offers chances for all of its residents and regions to realise their full potential. The capital expenditure push, particularly on roads and railroads, has persisted in order to maintain the economic growth pace.

Outlook

The Viksit Bharat initiative by the Government is poised to improve the quality of infrastructure in the country, enhance the productivity and competitiveness of the Indian economy. It is also expected to catalyse private investment and job creation.

Indias growth is expected to continue to be robust, with projections of 6.8% in 2024 (FY25) and 6.5% in 2025 (FY26).

This robustness is due to both expanding working-age population and persistently strong domestic demand.

Industry Overview

The manufacturing sector rebounded with a growth of 6.5 % as compared to 1.3 % in 2022-23, supported by higher profit margins of corporates as input cost pressures tapered. Mining and quarrying activity grew robustly due to higher production of coal and natural gas. Electricity, gas, water supply and other utility services registered 8.3 % growth in 2023-24 (9.0 % in 2022-23).

Natural Gas production (weight- 6.88 %) increased by 11.3 % in the CY 2023. Its cumulative index increased by 6.0 % during April to February 2023-24 over the corresponding period of the previous year

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This press release is embarged against publication telecast or circulation in any medium till 5:00 PM today i.e. 28th March 2024

Performance of Eight Core Industries Yearly index and growth rate base year :2011-12=100

Sector	Coal	Crude oil natural gas		Refinery products fertilizers steel cement electricity					overall index
weight	10.33	8.98	6.88	28.04	2.63	17.92	5.37	19.085	100
2012-13	103.2	99.4	85.6	107.2	96.7	107.9	107.5	104	103.8
2013-14	104.2	99.2	74.5	108.6	98.1	115.8	111.5	110.3	106.5
2014-15	112.6	98.4	70.5	108.8	99.4	121.7	118.1	126.6	111.7
2015-16	118	97	67.2	114.1	106.4	120.2	123.5	133.8	115.1
2016-17	121.8	94.5	66.5	119.7	106.6	133.1	122	141.6	120.5
2017-18	124.9	93.7	68.4	125.2	106.6	140.5	129.7	149.2	125.7
2018-19	134.1	89.8	69	129.1	107	147.7	147	156.9	131.2
2019-20	133.6	84.5	65.1	129.4	109.8	152.6	145.7	158.4	131.6
2020-21	131.1	80.1	59.8	114.9	111.6	139.4	130	157.6	123.2
2021-22	142.3	77.9	71.3	125.1	112.4	163	156.9	170.1	136.1
2022-23	163.5	76.6	72.4	131.2	125.1	178.1	170.6	185.2	146.7
apr-feb 22-23	156.9	76.5	72.2	129.9	125.8	175.7	168.1	185	145
apr-feb 23-24	176	76.9	76.6	134.8	131	198.3	183.3	197.6	156.2

Growth rates (on Y-o-Y basis in percent)

Sector	Coal Crude oil natural gas			Refinery products fertilizers steel cement electricity					overall index
weight	10.33	8.98	6.88	28.04	2.63	17.92	5.37	19.85	100
2012-13	3.2	-0.6	-14.4	7.2	-3.3	7.9	7.5	4	3.8
2013-14	1	-0.2	-12.9	1.4	1.5	7.3	3.7	6.1	2.6
2014-15	8	-0.9	-5.3	0.2	1.3	5.1	5.9	14.8	4.9
2015-16	4.8	-1.4	-4.7	4.9	7	-1.3	4.6	5.7	3
2016-17	3.2	-2.5	-1	4.9	0.2	10.7	-1.2	5.8	4.8
2017-18	2.6	-0.9	2.9	4.6	0.03	5.6	6.3	5.3	4.3
2018-19	7.4	-4.1	0.8	3.1	0.3	5.1	13.3	5.2	4.4
2019-20	-0.4	-5.9	-5.6	0.2	2.7	3.4	-0.9	0.9	0.4
2020-21	-1.9	-5.2	-8.2	-11.2	1.7	-8.7	-10.8	-0.5	-6.4
2021-22	8.5	-2.6	19.2	8.9	0.7	16.9	20.8	8	10.4
2022-23	14.8	-1.7	1.6	4.8	11.3	9.3	8.7	8.9	7.8
apr-feb 22-23	15.3	-1.6	1.5	5.2	11.5	9	9.8	10	8.2
apr-feb 23-24*	12.1	0.5	6	3.8	4.1	12.9	9.1	6.8	7.7

*Provisional

Y-o-Y is calculated over the corresponding financial year of previous year

Outlook³

Indias natural gas consumption is expected to triple by 2050. Over that time, natural gas consumption is expected to expand at a predicted pace of 4.4% annually. It is more than twice the annual growth rate of China, the next-fastest-growing nation, at 2.0%.

Indian Natural gas industry⁴

The Petroleum and Natural Gas Regulatory Board (PNGRB) has approved a network of about 33,592 km natural gas pipelines across the nation in an effort to establish a National Gas Grid (One Nation, One Gas Grid). It has also improved the natural gas supply nationwide.

The bulk of the expansion in natural gas consumption is expected to come from Indias industrial sector, particularly from the countrys rising ammonia output, which aims to reduce imports of fertiliser. In order to meet this growing demand, Indias domestic natural gas supply and imports will require to increase more significantly than in previous years to meet this growing demand.

Annual natural gas consumption in India by sector (2022-2050)

billion cubic feet per day

Among these, 12,206 km of pipelines are in various stages of development, making up 23,173 km of operational natural gas pipelines. These include spur lines, tie-in connectivity, SubTransmission pipelines (STPL) and dedicated pipelines.

The fertiliser industry consumed the large amount of natural gas in 2022-2023 (33%), followed by the power sector (13.9%), refineries (6.7%) and city and local natural gas distribution networks (including road transport) (20.5%).

Natural Gas production during the year 2022- 23 stood at 34.45 Billion Cubic Meters (BCM) which is 1.5% higher than production of 34.02 BCM in 2021-22. ^

Residential/commercial Electric power Transportation Industrial

Government initiatives

The Government has a target to raise the share of natural gas in energy mix to 15% in 2030.

Several steps taken by the Government to meet this target include

• Expansion of the National Gas Grid Pipeline

• Expansion of City Gas Distribution (CGD) network

• Setting up of Liquefied Natural Gas (LNG) Terminals

• Revision in the domestic natural gas pricing (APM price) to link it to the Indian Crude Basket, enabling substantial reduction in price to the end customer

• Allocation of domestic gas to Compressed Natural Gas (Transport) / Piped Natural Gas (Domestic) CNG(T)/ PNG(D) in no cut category

• Allowing marketing and pricing freedom with a ceiling price to gas produced from high-pressure/high- temperature areas

• Deep water and ultra-deepwater and from coal seams

• Sustainable Alternative Towards Affordable Transportation (SATAT) initiatives to promote Bio-CNG, etc.

https://www.eia.gov/todayinenergy/detail.php?id = 61423

https://mopng.gov.in/files/TableManagements/IPNG-Annual-Report-2022-23-web.pdfn

I.2: Trends of Natural Gas Production , Consumption and imports

year	Natural gas production (BCM)	%growth in natural gas production	consumption of natural gas (bcm)	%growth in consumption of natural gas	imports of LNG(BCM)	%growth in imports of LNG
2013-14	35.41	-12.96	51.83	-9.33	17.25	-0.88
2014-15	33.66	-4.94	50.3	-2.94	17.61	2.06
2015-16	32.25	-4.18	50.18	-0.24	19.05	8.19
2016-17	31.9	-1.09	54.41	8.43	23.56	23.69
2017-18	32.65	2.3	58.47	7.45	26.73	13.46
2018-19	32.87	0.69	60.6	3.66	28.55	6.78
2019-20	31.18	-5.14	62.61	3.31	32.35	13.33
2020-21	28.67	-8.05	60.98	-2.6	33.2	2.61
2021-22	34.02	18.66	64.16	5.21	31.03	-6.54
2022-23	34.45	1.25	59.97	-6.53	26.3	-15.22

City Gas Distribution Sector in India⁵

A City Gas Distribution (CGD) network is a system of interconnected pipelines that provide natural gas to residential, commercial or industrial customers as well as CNG stations located within a designated geographic area. The development of CGD networks is contingent upon the accessibility of gas sources or trunk gas pipeline connectivity, as well as the techno-commercial viability within a GA. Piped Natural Gas (PNG) is an eco-friendly cooking fuel which is delivered right to the doorsteps of private homes via the CGD network. It also supplies CNG, a clean fuel, to the transportation industry. The quality of the air is enhanced and car emissions are reduced in metropolitan areas.

Strong emphasis has been put on the expansion of city gas distribution (CGD) networks across the country. It covers 407 districts with a potential to make gas accessible to over 70 percent of the population. The distribution networks would enable the supply of cleaner cooking fuel (like, PNG) to households, industrial and commercial units as well as transportation fuel (like, CNG) to vehicles. There is an expected investment of Rs 120,000 crore over the next 10 years.

The city gas distribution (CGD) sector is rapidly increasing due to Indias growing need for natural gas. The CGD sectors profitability has been impacted by the worlds skyrocketing gas costs. In order to mitigate the effects, the government adopted

the Kirit Parikh Committees recommendations and approved the updated domestic natural gas pricing scheme, which imposes a ceiling and floor price for APM gas. Additionally, the PNGRB recently changed its rules to permit connected gas pipelines to have a single rate. The importance of digitalisation is growing as CGD networks spread throughout India. In order to digitalise, CGD players are putting in place centralised realtime monitoring and control systems.

Predictive maintenance, real-time condition monitoring, SCADA, GIS, queue management, logistics management systems, asset monitoring and smart metering solution installation among others are some of the key application areas.

By 2030, MoPNG projects that 17,700 CNG stations and 120 million PNG connections will be available nationwide. In addition, a pipeline measuring 12,206 km is currently being built. The industry offers a wide range of opportunities to different stakeholders.

Government initiatives⁶

• 10 crore LPG connections were provided under PM Ujjwala Yojana since 2016 (as of January 8, 2024)

• Since domestic gas is cheaper than imported gas, the government has allocated domestic gas to meet the requirements of PNG and CNG segments of CGD sector and no cut category has been applied to it.

• The Ministry of Labour and Employment (MoLE) has granted Public Utility Status to the CGD projects.

• The Ministry of Defence has issued guidelines for the use of PNG in residential areas and unit lines.

• In an effort to improve Indias domestic gas supply, the government plans to implement tax breaks for City Gas Distribution (CGD) organisations that interface with Compressed Biogas (CBG) facilities.

• Ministry of Housing and Urban Affairs has advised The State Board regarding changes to the applicable building code that would enable the provision of gas pipeline infrastructure in residential and commercial buildings during the architectural design stage.

• MOHUA advised NBCC and CPWD to implement PNG provisions in all government housing complexes.

Company Overview

IRM Energy Limited was established as a Private Limited company under the Companys Act on December 1 2015. Later the Company converted into a public limited company changing its name to IRM Energy Limited.

An integrated value-driven energy company, IRM ENERGY LIMITED (a group company of Cadila Pharmaceuticals Ltd.) is creating natural gas distribution network for commercial, residential, industrial and automotive clients throughout the authorised districts. The business is dedicated in helping its customers meet their energy needs.

Having developed strong city gas distribution networks and connected various customer segments in the existing Geographical Areas (GAs) of Banaskantha District in Gujarat, Fatehgarh Sahib in Punjab and Diu and Gir-Somnath in the Union Territory of Daman and Diu and the state of Gujarat, IRM Energy Limited (IRMEL) is a leading City Gas Distribution (CGD) company.

In its operational geographical areas, IRM Energy provides natural gas to 66,228 residential consumers, 195 industrial customers and 340 commercial customers as of March 31, 2024. Additionally, the Company has built a network of 82 CNG retail outlets with 314 dispensing points in different parts of its geographical areas.

The Petroleum and Natural Gas Regulatory Board (PNGRB) also granted IRM Energy Limited the sole right to develop the CGD infrastructure and provide natural gas in the Tamil Nadu districts of Tiruchirappalli and Namakkal in the eleventh bidding round. The Company holds the authorisation to provide PNG (Piped Natural Gas) to industrial, commercial and residential customers, as well as CNG (Compressed Natural Gas) as an alternative fuel for cars.

IRMEL is dedicated to maintaining the highest levels of safety and providing exceptional customer service, as well as reaching out to every potential natural gas user in its authorised GAs.

Financial performance

Gross turnover for the FY 23: 10,391.35 million and for the FY 24: 9,565.40 million

Consolidated Profit after tax for FY23: 631.36 million and for the FY24: 856.63 million

Consolidated Earnings per share of the Company for the FY23: 21.18) and for the FY24: 24.47

Consolidated Net worth of the Company for FY23: 3,464.20 million and for the FY24: 9,317.61 million

Ratio Analysis⁷

Consolidated

Particulars	For the FY 2023-24	For the FY 2022-23
Asset turnover ratio	0.92	1.49
Current ratio	3.63	2.21
Debt to equity	0.25	0.93
Interest coverage	5.36	5.19
Gross profit margin%	27.40	20.44
Operating margin %	16.06	12.13
Net profit margin %	9.62	6.44
Return on net worth %	9.19	18.23
ROCE%	12.85	14.08
Return on Asset%	11.28	12.27

Strengths of the Company

Technological advancement

These technological advancements have not only improved operational efficiency and safety but have also enabled better asset management, cost reduction, and enhanced customer service.

With the growing number of assets, pipeline networks, and an expanding customer base, our operational processes have become increasingly complex. This complexity necessitates a unified digital platform that can integrate all existing digital and automated solutions, further leveraged with advanced data analytics for informed decision-making.

An effective and sustainable operations management system is essential for the safe and uninterrupted supply of gas to consumers and the integrity of gas assets. Since the inception of gas supply, IRMEL has focused on developing a robust operations management system throughout the organization. The company is committed to embracing digitalization and automated technology in a sustainable and cost-effective manner. The IRMEL team has successfully achieved several milestones in digitalization and automation. Notable projects include:

• PNGnet Software for Domestic Consumer Lifecycle

Management: This comprehensive software covers customer enrolment, payment processing, customer commissioning, bill generation, bill payment, customer service management, and management information systems (MIS).

• Digital Payment Solutions for Bill Payment: By

integrating platforms such as Bill Desk, Bharat BillPay, WhatsApp payment, and dynamic QR codes with PNGnet, IRMEL has significantly reduced cash handling at customer care centres. These integrations offer customers multiple convenient payment options, thereby minimizing the inconvenience of long queues for bill payment.

• Geographical Information System (GIS) for Digitalization of Gas Pipeline Network and Assets:

Implementing GIS across all geographical areas (GAs) has brought the gas infrastructure (including pipelines and other assets) onto a digital platform. This digitalization enables the visualization of assets, retrieval of related information for analysis, and supports informed decision-making.

• Automated Reading of CGS, DRS, Industrial and Commercial Customers: Automated reading systems have enhanced the monitoring of critical parameters and gas consumption. This technology reduces the need for human intervention in data collection, compilation, storage and management, thereby facilitating better resource utilization.

• Digitalization of Workflow: With the implementation of GIS and Automated Meter Reading (AMR), many critical operations and maintenance processes have been digitalized. This digitalization has improved information flow and operations management. Key processes that have been digitalized include incident and third-party activity reporting, gas sales and purchase reporting, preventive, corrective, breakdown, and condition-based maintenance, and industrial and commercial joint metering and billing.

• CNG fill post automation: IRMEL has been exploring automation in fill post data fetching while filling mobile cascades. In conventional method, manpower is must to note down the initial and final reading of pressure and mass flow meter along with the data of HCV. RFID (Radio Frequency Identification) technology-based fill post automation reduces the manpower intervention to record the necessary data which reduces the time to generate log sheets.

• Digitalization in CNG Operation: IRMEL took a leap in Digitalization world with implementation of digital platform to manage CNG operations starting with Banaskantha GA. This digital solution encompasses digitalization of forecourt operation, statutory compliance, Asset management, dashboard reporting, and centralized documents management which shall enhance CNG operation efficiency, centralized data access with consistency and compliance monitoring.

• SCADA Alarm module modification: After completion of Alarm module modification in SCADA, engineers shall be able to download and access alarm history with desired date and time which can help understating root cause of breakdown and behavior of CNG compressors.

IRMELs commitment to continuous improvement and innovation ensures the delivery of safe, reliable, and efficient gas supply to its consumers.

Focus on sustainability

Company strongly believes that sustainability is the strategic approach for doing business and creating long-term value for all the stakeholders of the company. In every aspect of its business, while contributing to the energy need of the consumers, company is also committed to building on Indias clean energy mix, safeguarding the planet by cutting down emissions, and enabling people to live clean and breathe easily.

Customer focused development

Customer-focused development revolves around understanding and prioritizing customer needs, leveraging technology to enhance service delivery and maintaining a commitment to safety and reliability. This approach not only boosts customer satisfaction but also drives operational efficiency and sustainability.

With customer centricity in its core, IRMEL is always striving to enhance the experience of its customers to their expectations and beyond. Company is also leveraging various digital initiatives which helps in efficient operations as well. In each customer segment, company is also creating continuous awareness among its customers about the safe and efficient usage of natural gas through various campaigns at society and individual level. To make the switch to natural gas economic and convenient for customers, company has introduced various attractive registration plans and promotional schemes in all segments. The following customer-focused initiatives have been implemented to elevate customer satisfaction:

• Personalized Customer Support: IRMEL has established customer care centers in all operational areas, each with dedicated teams to handle inquiries, complaints, and service requests promptly and efficiently. A centralized call center with a 24/7 toll-free number offers multiple channels for customer support, including hotlines and mobile apps, ensuring accessibility and convenience.

• Proactive Communication: IRMEL keeps customers informed about service schedules, maintenance activities, and any supply disruptions through SMS, emails, and notifications. This transparency builds trust and helps customers plan accordingly.

• Transparent Billing: IRMEL provides clear and detailed bills that help customers understand their consumption patterns and charges. With the help of initiatives like spot billing, self-billing, online portal etc. company displays transparency and efficiency and helps customers to view their billing history and usage statistics.

• Flexible Payment Options: IRMEL has implemented various digital payment solutions, such as UPI based payment, online banking, and dynamic QR codes. This flexibility reduces the need for physical cash transactions and long queues at payment centres.

• Automated Meter Reading (AMR): IRMEL has deployed an automated metering system for commercial and industrial customers that automatically sends usage data to a centralized system, providing access to daily and hourly consumption patterns. This technology eliminates manual meter readings, reduces errors, and ensures accurate billing.

• Regular Maintenance and Inspection: IRMEL uses a GIS-integrated mobile application for the maintenance and inspection of customer installations, ensuring that the gas distribution infrastructure is regularly inspected and maintained to prevent leaks and ensure a continuous supply.

• Emergency Response: IRMEL has established a robust emergency response system that customers can rely on in case of gas leaks or other emergencies. Call center representatives are trained to handle emergency calls effectively and dispatch assistance promptly.

• Customer Portals and Apps: IRMEL has developed user- friendly digital platforms where customers can manage their accounts, view usage statistics, pay bills, and contact customer service. Mobile applications offer the convenience of accessing these services on the go.

Strategic Partnerships

Shizuoka Gas Co. Ltd (ShizGas), the fourth largest gas company in Japan and with vast experience in the CGD sector, has formed a strategic business alliance with IRM Energy. ShizGas infused equity into IRMEL in March 2022. IRMEL aims to capitalise on synergetic business opportunities the partnership provides. The company is evaluating opportunities with ShizGas to import and wholesale R-LNG to India through bilateral contracts on a gas exchange platform. This will not only help the company source R-LNG at competitive price, but also open new growth opportunities to tap the natural gas market in India. ShizGas will also bring its expertise in industrial burner technology, increasing benefits for IRMELs industrial customers. Leveraging the technical knowhow of ShizGas in system engineering and application, IRMEL intends to offer solutions to industrial customers, especially in the new GA of Namakkal and Tiruchirappalli, for seamless transition from other fuels to natural gas. This will help the company optimise the consumption of natural gas.

Future focused

Considering the criticality of cost of natural gas in its business ,The company has forged active collaborations with various leading natural gas suppliers like GAIL, IOCL, RIL-BP and also is working closely with India Gas Exchange for best possible price discovery of natural gas on timely basis. The company considers its vendors as business partners and nurtures healthy business relationship for timely delivery of critical equipments/ products for speedy project implementation.

Opportunities

Generally city gas distribution (CGD) companies are optimistic about long-term growth prospects. Given the strong

operating cash flow, balance sheets are capable of handling investments through low or zero leverage. Several positive

factors are driving the CGD business at the moment.

• One such factor is the revision in the domestic natural gas pricing (APM price) by the government to link it to the Indian Crude Basket and setting a ceiling to the price which has reduced the volatility. There is no real alternative to cooking gas for most households and gas is an attractive alternative to petrol and diesel for transport given that the government and many car manufacturer have decided to gradually phase out petrol and diesel vehicles.

• The company is looking at consolidation by merger and acquisition of distressed players. There is a focus on incentives and promotions to drive light commercial vehicle (LCV) conversion and OEM sales of natural gas vehicles. Higher number of gas-driven LCVs would result in a jump in volumes and thats a big opportunity. The company also see investments into LNG fuelling stations, which would add to the convenience for trucks, apart from the cost-cum-environmental benefits of switching to LNG.

• The government is looking to push up the share of natural gas to around 15 per cent in the energy mix from the current 6 per cent. Import facilities (terminals, evacuation infrastructure) for LNG are also being developed.

• The company is also looking to add 40-60 CNG stations per year, accompanied by pipeline connectivity. PNG expansion is also on the cards.

• Projected growth in the number of vehicles equipped with compressed natural gas (CNG) due to CNGs cost- effectiveness as a fuel over other fuels;

• Presence of industrial clusters in Mandi Gobindgarh (Fatehgarh Sahib) and Namakkal and Tiruchirappalli (Tamil Nadu), the Company sees growth potential in and around the GAs it operates in.

• Benefiting from significant floating demand, Banaskantha is situated on the Delhi Mumbai Industrial Corridor (DMIC).

• Diu and Gir Somnath stands to gain from the fluctuating demand, particularly from visitors to the Gir Sanctuary and the Somnath Temple.

• Due to the National Green Tribunals (NGT) restriction on polluting fuels including furnace oil (FO) and pet coke, there will be a rise in demand for PNG in Fatehgarh Sahib. Future 130-acre pharmaceutical park will also increase demand.

• Trichy is a well-known centre for engineering goods manufacturing and transportation. The regions high LPG usage rate offers conversion opportunities.

• Namakkal being a major transport hub and number of poultry industries has a good demand potential from transport segment, especially with major highways like NH44 and NH544 passing through the district.

IRMEL aims to capitalise on synergistic business opportunities. For example, IRMEL has made a strategic business alliance with Shizuoka Gas. With extensive expertise in the CGD industry, Shiz Gas is the fourth-largest gas firm in Japan based on natural gas sales volume in 2021.

As a Japanese energy provider, IRMEL believes that Shiz Gass business operations will benefit greatly from its expertise and ethical business standards. In accordance with its partnership with Shiz Gas, the firm plans to share expertise about LNG trailer and satellite tanks and apply best practices in the areas of natural gas distribution, system engineering, operation and maintenance, energy conservation and CO₂ reduction.

Increase in Government initiatives for use of natural Gas

Growing energy needs

Infrastructure development

Urbanisation

Threats, Risk and Concerns, and Mitigations

• Risks related to regulations: The City Gas Distribution abides by a set of rules that are supervised by the Petroleum and Natural Gas Regulatory Board (PNGRB). For a predetermined amount of time, the PNGRB had given the CGD players exclusive marketing rights in their respective regions. Competitors may try to enter the current GAs and supply gas to specific customers once such regulatory reforms are put into place.

In the current GAs, the Company has demonstrated its credibility in terms of effective supply chain, operational and stakeholder risk management. The competing companies face significant challenges, including the need to establish a natural gas distribution system before competitors can enter the Companys operational area after the exclusivity of marketing and infrastructure expires.

• Macroeconomic considerations: Supply chain

interruptions and a raised price of compressed natural gas (CNG) can be observed due to a number of macroeconomic issues, including pandemics and international conflicts. The increased CNG price may thus impact the financials of the Company.

• Growing trend of electric vehicles: The government has introduced several incentive programmes, as a result of which, electric vehicles are becoming more and more popular in India. Over time, these vehicles might become a danger to vehicles that run on compressed natural gas (CNG).

The Company has signed an MoU with Mindra EV to establish EV charging infrastructure at DODO and COCO Stations for five years.

• Fire Risks: Since the Company deals with inflammable gases , fire safety is of utmost importance. It has made this a top priority and taken measures to reduce the risk.

CSR

The Company undertakes projects that support womens empowerment, health, education, childcare, environmental protection and the adoption of renewable energy solutions. IRMEL has previously launched programmes to train young people from disadvantaged and impoverished homes in skills. In the chosen project regions, company has also launched programmes aimed at restoring, developing and enhancing natural resources for the benefit of tribal and rural populations.

Internal Control

The Company has many committees to make sure that the internal control is managed efficiently and that there are no discrepancies in the management. The Company has established various processes and conducts audits to make sure that the internal control of the Company is strong and is audited regularly. The Company does this to make sure that the

stakeholders get reliable financial reporting for management decisions and adherence to relevant laws and rules in order to reduce the possibility of non-compliances.

Human resource

At IRMEL the employees are trained on a regular basis to increase their operational excellence and productivity. The Company also ensures the maintenance of compliance standards on safety and quality. It has performance-linked incentives for the employees who are eligible as per the human resource policy.

The Company makes sure that its strategies align with its HR procedures and that these procedures are successfully applied across the entire enterprise. It aims to encourage, accept, uplift and fulfill each team members unique and group potential.

IRMEL views lateral hiring as an important component of its recruitment strategy since it facilitates the identification of industry veterans who offer an alternative viewpoint on operations.

HSE

At IRMEL it is believed to conduct a business in a way that would put "People", "Society", and "Environment" "First" simultaneously serving its different stakeholders.

IRMEL is committed to-

• Create an environment where all staff members are dedicated to HSE and raise awareness throughout the Company.

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

• Review the HSE Policy regularly to provide value.

• Make sure that the entire workforce has received compulsory and need-based HSE training.

• Ensuring that the design and implementation of products and services adhere to the applicable norms, standards, procedures, engineering practices, and legal/ statutory requirements in terms of health, safety, and the environment (HSE).

• Determine any possible dangers associated with the tasks being done and take steps to reduce them to protect the workers health and prevent injuries in the offices or at the location.

• Aim for continuous improvement in the HSE management system by evaluating performance regularly and implementing the required adjustments.

Environment

• Because it burns cleaner than other fossil fuels, natural gas is the most environment friendly and efficient fossil fuel.

• Compared to other conventional fossil fuels, natural gas produces significantly less carbon monoxide, sulfur 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 in all of the actions at the workplace or site by conserving resources, cutting down on waste production and avoiding contamination.

• IRMEL is constantly trying to increase its network so that consumption of traditional fuel can be replaced, resulting in less pollution.

Cautionary statement

The Statement in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be forwardlooking 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 labor relations.

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