Adani Total Gas Ltd:Annual Report 2023-24 Analysis

Adani Total Gas Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Adani Total Gas Limited (ATGL) was established in 2005. It is a joint venture between Adani Group and TotalEnergies (formerly Total S.A.) of France.

Headquarters Location and Global Presence:

The company is headquartered in Ahmedabad, Gujarat, India. ATGL primarily operates in the Indian market. While TotalEnergies is a global partner, ATGL’s direct operational presence is largely within India.

Company Vision and Mission:

While the publicly available specific vision and mission statements can vary, ATGL generally focuses on:

• Vision: To be a leading integrated gas distribution company in India, driving sustainable growth and contributing to a cleaner energy future.
• Mission: To provide safe, reliable, and convenient access to natural gas for residential, commercial, and industrial customers while adhering to the highest safety and environmental standards.

Key Milestones in Their Growth Journey:

• 2005: Formation of the Joint Venture between Adani Group and TotalEnergies.
• Expansion of CGD (City Gas Distribution) network across various geographical areas in India.
• Focus on CNG (Compressed Natural Gas) and PNG (Piped Natural Gas) infrastructure development.
• Strategic acquisitions and partnerships to expand its geographical footprint and customer base.
• Significant investment in infrastructure development.
• Expansion into electric vehicle charging infrastructure.

Stock Exchange Listing Details and Market Capitalization:

Adani Total Gas Limited is listed on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). Market capitalization fluctuates depending on market conditions and company performance. Refer to financial websites for up-to-date information.

Recent Financial Performance Highlights:

Review recent quarterly and annual reports for accurate financial data: revenue, profit, debt, growth rates, etc.

Management Team and Leadership Structure:

• Executive leadership: Key positions usually include the CEO, CFO, and other functional heads (Operations, Marketing, etc.).
• Board of Directors: Includes representatives from both Adani Group and TotalEnergies.

Notable Awards or Recognitions:

Check their website or press releases for recent awards related to operational excellence, safety, sustainability, etc.

Their Products #

Complete Product Portfolio with Categories:

• Piped Natural Gas (PNG): For residential, commercial, and industrial use.
• Compressed Natural Gas (CNG): For use in vehicles.
• Electric Vehicle (EV) Charging Infrastructure: Services for EV owners.
• Biofuels: Exploration of biogas and related sustainable alternatives.

Flagship or Signature Product Lines:

• City Gas Distribution (CGD): Core business focus, encompassing both PNG and CNG.

Manufacturing Facilities and Production Capacity:

ATGL doesn’t directly “manufacture” gas; instead, it focuses on distributing it through its infrastructure. Production capacity relates to CNG compression and PNG distribution network capacity, which expands as they commission new stations and pipelines.

Quality Certifications and Standards:

ATGL adheres to relevant industry safety and quality standards for gas distribution, including certifications related to pipeline integrity, safety protocols, and environmental compliance.

Recent Product Launches or R&D Initiatives:

• Focus on expansion of EV charging network and related services.
• Exploration of biogas and other renewable gas sources.

Primary Customers #

Target Industries and Sectors:

• Residential: Households for cooking and heating.
• Commercial: Restaurants, hotels, hospitals, and other businesses.
• Industrial: Manufacturing plants, factories, and other industrial units.
• Transportation: Vehicle owners using CNG.

Geographic Markets (Domestic vs. International):

ATGL primarily operates within India.

Major Client Segments (Agricultural, Industrial, Residential, etc.):

• Residential: Significant focus on expanding PNG connections.
• Commercial: Targeting businesses seeking cleaner fuel alternatives.
• Industrial: Providing natural gas for various industrial processes.
• Transportation: Expanding CNG infrastructure to cater to vehicle demand.

Distribution Network and Sales Channels:

• Pipeline infrastructure: Extensive network for PNG distribution.
• CNG stations: Network of stations across authorized geographical areas.
• Partnerships: Collaborations with real estate developers, industrial parks, and other organizations.

Major Competitors #

Direct Competitors in India:

• Indraprastha Gas Limited (IGL)
• Gujarat Gas Limited (GGL)
• Mahanagar Gas Limited (MGL)
• Hindustan Petroleum Corporation Limited (HPCL)
• Bharat Petroleum Corporation Limited (BPCL)

Competitive Advantages and Disadvantages:

• Advantages: Strong parentage (Adani Group and TotalEnergies), established infrastructure in certain regions, growing focus on sustainability.
• Disadvantages: Dependence on gas availability and pricing, regulatory uncertainties, competition from other fuel sources (LPG, electricity).

How They Differentiate From Competitors:

• Focus on expanding its CGD network in newly authorized areas.
• Emphasis on customer service and reliability.
• Increasing investment in EV charging infrastructure and sustainable energy solutions.

Industry Challenges and Opportunities:

• Challenges: Volatility in natural gas prices, regulatory changes, competition from alternative fuels, infrastructure development challenges.
• Opportunities: Growing demand for cleaner fuels, government initiatives promoting natural gas adoption, expansion of CGD network, growth in EV adoption.

Future Outlook #

Expansion Plans or Growth Strategy:

• Geographical expansion: Expanding its CGD network to new geographical areas.
• Infrastructure development: Investing in new pipelines, CNG stations, and EV charging infrastructure.
• Customer acquisition: Targeting new residential, commercial, and industrial customers.

Upcoming Products or Innovations:

• Focus on expansion of EV charging infrastructure.
• Exploration of biogas and other renewable gas sources.

Sustainability Initiatives or ESG Commitments:

• Reducing carbon emissions from its operations.
• Promoting the use of natural gas as a cleaner fuel alternative.
• Investing in renewable energy sources.
• Compliance with environmental regulations.

Industry Trends Affecting Their Business:

• Increasing demand for cleaner fuels.
• Government initiatives promoting natural gas adoption.
• Growth in electric vehicle adoption.
• Fluctuations in global natural gas prices.

Long-Term Vision and Strategic Goals:

• To be a leading integrated gas distribution company in India.
• To contribute to a cleaner energy future.
• To create value for its stakeholders.

3-Year Trend Analysis of Key Financial Metrics #

• Revenue from operations has shown a fluctuating trend, with a significant increase in FY23 to ₹4,683.23 crore, followed by a minor increase to ₹4,813.48 crore in FY24.
• EBITDA has consistently increased, from ₹815 crore in FY22 to ₹907 crore in FY23 and ₹1,150 crore in FY24, reflecting improved operational efficiency.
• Profit After Tax (PAT) increased from ₹529.82 crore in FY23 to ₹653.10 crore in FY24, a 23.27% growth Y-o-Y.
• Total assets have steadily increased, from ₹4,429 crore in FY22 to ₹5,636 crore in FY23 and ₹6,524 crore in FY24.
• The debt-equity ratio remained stable at 0.41 in FY22 and FY24, with a slight increase to 0.47 in FY23, indicating balanced leverage.
• Net debt to EBITDA ratio has decreased, at 0.89 in FY24 from 1.18 in FY22 and 1.11 in FY23.
• Return on Capital Employed (ROCE) has shown a slight increase, at 21.73% in FY24 from 20.02% in FY22.
• Return on Equity (ROE) increased, at 20.09% in FY24 compared to 17.40% in FY22.
• Inventory Turnover has consistently increased, rising from 268.57 in FY22 to 363.70 in FY24.

Business Segment Performance #

• ATGL operates primarily in the City Gas Distribution (CGD) segment, which accounts for 99.07% of its revenue.
• CNG sales volume reached 557.20 MMSCM in FY24, representing approximately 64% of total sales volume, with a Y-o-Y growth of 21%.
• PNG sales volume comprised the remaining 36%, totalling 307.68 MMSCM, with industrial PNG increasing by 1% Y-o-Y to 215 MMSCM.
• Commercial PNG sales volume increased by 13% Y-o-Y to 21 MMSCM.

Major Strategic Initiatives and Their Progress #

• Accelerated infrastructure deployment in new Geographical Areas (GAs), with 12,023 inch-km of steel pipeline and 547 CNG stations established by the end of FY24.
• Expansion into E-Mobility with 606 EV charging points commissioned across 14 states.
• Phase-1 of Barsana Agri-waste to CBG plant (225 out of 600 TPD) was commissioned in March 2024.
• Launched a pilot project for blending green hydrogen (GH2) into the CGD network.
• Digitalization initiatives, including the SOUL platform and Centres of Excellence (CoEs), have been implemented to enhance operational efficiency and customer experience.
• Introduction of LNG for the transport and mining (LTM) segment, with the first two LNG outlets under construction.

Risk Landscape Changes #

• The primary risks identified include:
  • Regulatory changes (e.g., PNGRB regulations and policies from the Ministry of Petroleum and Natural Gas)
  • Volume and price risks associated with natural gas sourcing.
  • Competition from alternative fuels, notably electric vehicles and hydrogen.
  • Infrastructure risks and delays.
  • Safety risks inherent in handling combustible fuels.
• Climate change risks and opportunities, the Company has aligned with national and international initiatives for Net Zero emissions.

ESG Initiatives and Metrics #

• Reduction in emission intensity by 12.43% in FY24.
• Renewable energy sourcing accounts for 2.18% of total energy mix.
• Planted over 270,000 trees and conducted environmental awareness programs in 120 schools.
• Achieved zero reported incidents of sexual harassment, bribery, or anti-competitive behavior.
• The Company’s ESG initiatives includes Greenmosphere project, with over 15,000 students trained on climate awareness
• Maintained a zero-fatality rate.
• Ranked above India’s largest gas company on the Dow Jones Sustainability Index (DJSI) and received the Golden Peacock Award for HR Excellence.

Management Outlook #

• ATGL is focused on becoming a one-stop shop for energy solutions, expanding its customer base and geographical presence.
• The Company is aligned with the Government of India’s vision of increasing the share of natural gas in the primary energy mix from 6% to 15% by 2030.
• Continued investment in CGD infrastructure, with plans to invest ₹10,000 crore to ₹15,000 crore over the next 5 to 8 years.
• Expansion of E-Mobility infrastructure, with plans to invest ₹900 crore to ₹1,000 crore over the next 3-5 years.
• Development of CBG business, with plans to invest nearly ₹1,500 crore to ₹2,000 crore over the next 3-5 years.
• ATGL will provide value-added services like food & beverages stores, grocery stores etc.

Detailed Analysis #

Financial Analysis of Adani Total Gas Limited #

3-Year Comparative Analysis (Consolidated) #

( in crore)

Significant Changes in Major Line Items (>10% YoY) #

• Non-Current Assets: Increased by 16.13% from FY23 to FY24, primarily due to additions in Property, Plant, and Equipment, and Capital work-in-progress.
• Current Assets: Increased by 16%, and Total Current Assets by 20.05% from FY23 because Company has more current assets from FY23.
• Equity: Increased by 21.74% from FY23 to FY24, driven by retained earnings (profit for the year).
• Non-Current Liabilities: Increased significantly by 135% from FY23 to FY24 mainly due to an increase in Non-current Borrowings.
• Current Liabilities: Showed a decrease by 17.45% for FY24 because of current borrowings.

Working Capital Trends #

( in crore)

• Working capital has improved and showing positive growth , though remained negative, indicating that the Company’s current liabilities exceeded its current assets.

Debt Structure and Maturity Profile #

( in crore)

• The debt structure indicates a mix of short-term and long-term borrowings.
• Maturity Profile represents contractual undiscounted payment.

Off-Balance Sheet Items #

( in crore)

• The Company has contingent liabilities, primarily consisting of claims against the Company, not acknowledged as debts.
• Corporate guarantee is extended to a Joint Venture Company.

Adani Total Gas Limited (ATGL) Financial Analysis #

Revenue Breakdown #

• Segment: Sale of Natural Gas.
• Geography: Revenue operations in FY 2023-24: ₹ 4,813.48 crore, primarily in India.
• CNG sales for FY2024: 557 MMSCM, with 21% Y-o-Y volume growth.
• PNG sales (industrial, commercial, and residential): 308 MMSCM.
  • Industrial PNG growth: 1% Y-o-Y.
  • Commercial PNG growth: 13% Y-o-Y.
  • Domestic connections increased by 1.16 Lakhs.

Cost Structure Analysis #

• Cost of Natural Gas and Traded Items: FY 2023-24: ₹ 2,848.32 crore (decreased from ₹ 3,083.28 crore in FY 2022-23).
• Employee Benefits Expense: FY 2023-24: ₹ 66.71 crore (increased from ₹ 55.68 crore in FY 2022-23).
• Finance Costs: FY 2023-24: ₹ 111.45 crore (increased from ₹ 78.43 crore in FY 2022-23).
• Other Expenses: FY 2023-24: ₹ 456.53 crore (increased from ₹ 366.27 crore in FY 2022-23).

Margin Analysis #

• Operating Profit Margin: FY 2023-24: 22.9% (up from 18.6% in FY 2022-23).
• Net Profit Margin: FY 2023-24: 13.4% (up from 11.2% in FY 2022-23).
• EBITDA: Increased by 27% Y-o-Y, reaching ₹1,150 crore.

Operating Leverage #

• Increase in EBITDA (27%) exceeding revenue growth (3%) suggests operating leverage.

EPS Analysis #

• Basic and Diluted EPS: FY 2023-24: ₹ 5.94; FY 2022-23: ₹ 4.82.

Cash Flow and Liquidity Analysis #

Operating, Investing, and Financing Cash Flow (Consolidated, FY 2023-24 vs. FY 2022-23) #

• Operating Cash Flow (OCF): Increased to ₹955.13 crore from ₹852.85 crore.
• Investing Cash Flow (ICF): Net cash used in investing activities was ₹769.12 crore, primarily driven by CAPEX, compared to ₹1,166.59 crore in the previous year.
• Financing Cash Flow (FCF): Net cash outflow from financing activities was ₹77.73 crore, a change from the cash inflow of ₹294.54, due to an increase in finance costs.

Working Capital Management Efficiency #

• The debtors turnover ratio decreased to 13.31 in FY 2023-24 from 17.66 in the previous year.
• The inventory turnover decreased to 363.7 in the current year from 328.33 in the previous year.
• The trade payables turnover ratio decreased to 10.22 from 14.61.

Dividend and Share Buyback Trends #

• A dividend of ₹0.25 per share was declared, identical to the previous year.
• Total dividend payout for FY 2023-24 remained constant at ₹27.50 crore.
• There were no share buybacks reported during the last three years.

Debt Service Coverage #

• The interest coverage ratio for the year decreased to 8.92x compared to 10.11x in the previous year.

Liquidity Position and Cash Conversion Cycle #

• The current ratio improved significantly to 0.58 from 0.39, due to the reduction of short-term borrowings and current liabilities.
• Cash and cash equivalents increased to ₹137.16 crore from ₹12.04 crore.

Financial Analysis: Key Performance Indicators & Trends #

Profitability Ratios (3-Year Trends) #

Return on Equity (ROE) #

• FY24: 20.09%
• FY23: 19.7%
• FY22: 18.95% Trend: ROE has consistently increased over the three years, indicating improved profitability relative to shareholders’ equity.

Return on Capital Employed (ROCE) #

• FY24: 21.73%
• FY23: 21.6%
• FY22: 22.71% Trend: ROCE is relatively stable during last 3 years.

EBITDA Margin #

• FY24: 23.9% (1,150.36 / 4,813.48)
• FY23: 19.35% (907.38 / 4,683.23)
• FY22: 25.42%(815.00 / 3,206) Trend: Operating profitability, as measured by EBITDA margin, has declined then increased over these year.

Net Profit Margin #

• FY24: 13.57% (653.10 / 4,813.48)
• FY23: 11.31% (529.82 / 4,683.23)
• FY22: 16.33% (523.64/3206) Trend: Net profit margin, reflecting the percentage of revenue retained as profit, has declined and then Increased over this period.

Liquidity Metrics #

Current Ratio #

• FY24: 0.58 (1,014.38 / 1,761.97)
• FY23: 0.39 (858.48/2189.43) Trend: The current ratio has increased in FY24 but remains below 1, suggesting potential challenges in meeting short-term obligations with current assets.

Efficiency Ratios #

Inventory Turnover #

• FY24= 30.6 *FY23= 34.04

The Inventory turnover slightly declined in FY24 compared to the previous year.

Receivables Turnover #

*FY24 =13.31 *FY23= 17.66 Receivable turnover indicates a decreasing trend.

Leverage Metrics #

Debt-to-Equity Ratio #

• FY24: 0.41
• FY23: 0.47 Trend: The debt-to-equity ratio has decreased, signifying a reduction in financial leverage.

Interest Coverage Ratio #

• FY24: 8.92
• FY23: 10.11 Trend: The interest coverage ratio has declined, indicating a lower ability to cover interest expenses with earnings.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• ATGL aims to become a global leader in ESG practices, targeting a top ESG rating across the energy utility sector, with operational net zero roadmap.
• The Company has a Net Zero emissions target by 2045, focusing on Scope 1 and 2 emissions.
• ATGL aims to achieve 30% reduction in emission intensity by 2030. 12.43% reduction achived.
• ATGL plans to invest ₹ 10,000 crore to ₹ 15,000 crore in its core CGD business over 5 to 8 years, aligning with India’s goal to increase natural gas share in the energy mix to 15% by 2030.
• Diversifying the business into low-carbon segments such as biomass, E-Mobility, hydrogen blending into the network.

Competitive Advantages and Market Positioning #

• ATGL is among India’s largest private city gas distribution businesses, holding a strong position with 52 geographical areas (including 19 IOAGPL GAs).
• It has a demonstrated project execution expertise, and robust nationwide infrastructure.
• It’s recognized for customer-centricity, operational excellence, and technology utilization, with 98% of revenues digitized.
• Established a strong asset base with minimal leverage.
• IOAGPL collaboration has provided 903 CNG stations and over 9.7 connections.

Innovation Initiatives and R&D Effectiveness #

• ATGL has implemented a digital transformation initiative called “SOUL” to integrate technology, processes, assets, and personnel onto a single digital platform.
• The Company has revamped the My AdaniGas mobile application to enhance customer convenience.
• ATGL has initiated a pilot project for blending green hydrogen into the CGD network.
• The company invested ₹2.67 crore on R&D, with a specific focus on renewable energy transition and carbon footprint reduction.

M&A Strategy and Execution #

• ATGL acquired a 50% stake in Smart Meter Technologies Private Limited to ensure gas meter supply and capitalize on the growing CGD sector.
• There is a planned acquisition of three additional Geographical Areas (Ludhiana, Jalandhar, and Kutch (East)), although it is not yet completed.

Management’s Track Record in Execution #

• Management has shown strong operational performance, with a 15% volume growth to 865 MMSCM despite market challenges.
• The Company has achieved a 27% Y-o-Y EBITDA growth (₹ 1,150 crore) and a 23% increase in Profit After Tax.
• They have expanded the E-Mobility business to 606 charging points and successfully commissioned Phase-1 of India’s largest compressed biogas plant.

Capital Allocation Strategy #

• A capital management plan is in place, aiming for optimal capital use and enhanced shareholder value, by lowering Net Debt to EBITDA Ratio of 0.89X.
• ATGL prioritizes sequential asset commissioning and monetization of low-capex businesses.
• Significant investments are planned in CGD infrastructure (₹ 10,000 crore to ₹ 15,000 crore over 5-8 years), E-Mobility (₹ 900 crore to ₹ 1,000 crore over 3-5 years), and Compressed Biogas (₹ 1,500 crore to ₹ 2,000 crore over 3-5 years).
• The Company has planned to establish network of 50 LNG retail outlets with a capital outlay of ₹200-250 crore over 3-5 years.

Organizational Changes and Their Impact #

• Established 18 independent Centres of Excellence (CoEs) to drive operational excellence through technology, automation, and process changes.
• Implemented HR initiatives like ‘Expanding Horizon’ for internal employee growth and the ‘My Customer My Pride’ program for enhanced customer experience.
• There have been changes in the Board of Directors and Key Managerial Personnel, with new appointments and resignations as detailed in the Directors’ Report.
• The company launched employee engagement programs such as “Appreciation Week” and “Employee of the Month” awards.

ESG Framework: Adani Total Gas Limited (ATGL) Analysis #

Environmental Metrics and Targets #

• ATGL’s Scope 1 emissions were 80,497 tCO2e, and Scope 2 emissions were 37,517 tCO2e, resulting emission intensity is 12.43% in FY 2023-24.
• Total energy consumption for FY 2023-24 was 694,623 GJ.
• Renewable energy constituted 2.18% of the total energy mix, with 898 KW of solar rooftop capacity installed.
• ATGL aims for Net Zero emissions (Scope 1 and 2) by 2045, with an interim target of 30% emission intensity reduction by 2030.
• Freshwater withdrawals totaled 72,323 m3, with zero discharge of hazardous wastewater.
• 6,984 tCO2e emissions were mitigated.
• Methane Leak Detection and Repair (LDAR) survey was conducted for 3,367 km, and 100% of the operation’s fleet has transitioned to CNG.
• ATGL Invested `1.65 crore in the enviornmental initiatives.
• Planted more than 2.7 lakh trees.

Social Responsibility Programs #

• ATGL, in collaboration with the Adani Foundation, invested `13.55 crore in CSR activities.
• 957 students were provided with free education.
• 2,194 farmers benefited from the Varanasi Bio-Conversion Project (VBCP).
• 3,000 man-days of local employment were created for women through skill development.
• The Company ensures 100% procurement from local suppliers.
• ATGL developed a Biodiversity Park in Gota, Ahmedabad, covering 36,200+ sqm, generating 1,536 MT/annum of oxygen.
• The Company undertook a forest restoration project covering 20 hectares of degraded habitats.

Governance Structure and Effectiveness #

• The Board of Directors has 50% independent directors, including one woman director.
• The Board has established statutory committees (Audit, Nomination and Remuneration, Stakeholders Relationship, Risk Management, Corporate Social Responsibility) and governance sub-committees.
• There is a dedicated Corporate Responsibility Committee with 100% Independent Directors to guide on ESG matters.
• 100% of the Board of Directors have undergone ESG upskilling.
• There were zero reported incidents of corruption, bribery, anti-competitive behavior, breach of data privacy and cybersecurity, or sexual harassment.
• 64.62% employees are trained on human rights and prevention of sexual harassment.

Sustainability Investments and ROI #

• ATGL invested `27.90 crore in digital initiatives.
• `2.67 crore was spent on R&D.
• The company spent 1.23 crore on employee well-being initiatives,and 42.89 lakhs spent on trainings.
• ATGL has invested to 100% assessment on Health & Safety Practices for plants and offices.

ESG Ratings and Peer Comparison #

• ATGL achieved a DJSI score of 54 (2023), up from 50 (2022), ranked above India’s largest gas company.
• ATGL’s CDP Climate Change score improved from ‘C’ to ‘B’.
• Sustainalytics rated ATGL with a risk score of 23.9 (Low Risk), improved from 24.6 (Medium Risk).
• Received the Golden Peacock Award for HR Excellence in 2023.

Regulatory Compliance and Future Preparations #

• ATGL adheres to the Petroleum and Natural Gas Regulatory Board (PNGRB) regulations, including T4S (Technical Standards and Specifications, including Safety Standards).
• The Company states full compliance with the applicable provisions of various laws and regulations such as, Water Act, Air Act, Environment Protection Act, Employees Right and Saftey Act.
• The Company actively engages in advocacy discussions for regulatory and policy alignments.
• The Company has received AA rating from rating agency ICRA.
• The Company is working on a pilot project for blending green hydrogen (GH2) into its CGD network.

Forward Outlook: Financial Analysis and Future Projections #

City Gas Distribution (CGD) Segment #

Management Guidance and Assumptions #

• Committed to nation-building and aligning with India’s goal of increasing natural gas share in the primary energy mix from 6% to 15% by 2030.
• Believes companies need to redefine capabilities and constantly innovate.
• Expects untapped opportunities in MSME and heavy transportation segments to drive growth.
• Prioritizing the laying of steel pipelines and the swift rollout of CNG stations.
• Plans to invest ₹10,000 crore to ₹15,000 crore over the next 5 to 8 years in the core CGD business.
• Aims to become net zero in terms of carbon footprint by 2045.

Market Growth Forecasts #

• The Indian government aims to increase the share of natural gas in the primary energy mix from 6% to 15% by 2030.
• Natural gas consumption is projected to increase from the current 185 MMSCMD to over 500 MMSCMD by 2030.
• Natural gas trunk pipeline network is projected to grow from ~24,600 km to ~34,000 km.

Planned Strategic Initiatives #

• Accelerate infrastructure deployment in new Geographical Areas (GAs).
• Expand the natural gas ecosystem and enhance adoption of cleaner energy solutions.
• Enhance customer experience through value-added services at CNG stations.
• Launch awareness campaigns to educate consumers and increase CNG fuel demand.
• Implement a comprehensive 360-degree digital strategy to enhance customer experience.
• Conduct regular PNG awareness campaigns in newly developed residential areas.
• Early monetization of newly built infrastructure

Capital Expenditure Plans #

• Planned investment of ₹10,000 crore to ₹15,000 crore over the next 5 to 8 years.
• Prioritize asset commissioning, focusing on monetizing low-capital expenditure businesses first.

Efficiency Improvement Targets #

• Implement capital management plan to enhance shareholder value.
• Achieve operational excellence through technology, automation, and process re-engineering via Centres of Excellence (CoEs).
• Maintain cost leadership through competitive gas sourcing and operational efficiency.

Potential Challenges and Opportunities #

• Challenges: Competition from alternative fuels like electric vehicles (EVs) and hydrogen. Regulatory changes and global geopolitical tensions impacting gas prices.
• Opportunities: Increased allocation of domestic gas under the Administrative Price Mechanism (APM). Implementation of carbon market standards, supporting India’s Nationally Determined Contribution (NDC) goals. Expansion of EV charging infrastructure, supporting India’s EV growth.

E-Mobility Segment #

Management Guidance and Assumptions #

• Views the EV charging business as aligned with its vision to provide sustainable fueling solutions.
• Strategic building of charging networks, focusing on heritage sites, tourist locations, green corridors, and B2B offerings.

Market Growth Forecasts #

• The Indian government targets 30% of new vehicle sales to be electric by 2030, necessitating extensive EV charging infrastructure.
• India is poised to become one of the largest EV markets globally.

Planned Strategic Initiatives #

• Expand B2C footprint and deepen B2B engagements.
• Forge alliances with fleet operators and introduce RFID card usage for cab drivers.
• Offer preferential pricing for high-net-worth individual (HNI) users.
• Increase presence across India, strategically locating charging points.
• Explore opportunities in E-charging solutions at Educational Institutes, e-buses at Airport Airside, e-coach charging solution, Wayside Amenities, large fleet hubs (150+)

Capital Expenditure Plans #

• Planned investment of ₹900 crore to ₹1,000 crore over the next 3-5 years.

Efficiency Improvement Targets #

• Streamline operations and enhance customer experience through digital platforms from booking to payment.

Potential Challenges and Opportunities #

• Challenges: Competition from established players in the EV charging infrastructure market.
• Opportunities: Leverage the Adani Group’s brand and infrastructure expertise. Capitalize on the government’s push for EV adoption and infrastructure development.

Compressed Biogas (CBG) Segment #

Management Guidance and Assumptions #

• Committed to developing both agri-waste and Municipal Solid Waste (MSW) based CBG plants.
• Management to achieve self-sufficiency in CBG production.
• Welcomes continued policy support to the CBG segment.

Market Growth Forecasts #

• Government support through phase-wise blending of CBG up to 5% by FY 2028-29.
• India has the world’s largest cattle population, providing a large raw material base for biogas, though with low current conversion rates.

Planned Strategic Initiatives #

• Capitalize on new agri-waste and MSW to CBG opportunities.
• Collaborate with industry stakeholders to develop the CBG sector.
• Build in-house expertise in feedstock sourcing and bio-fertilizer.
• Actively participate in Expression of Interest (EoI) and Tenders for MSW to CBG plants in various Urban Local Bodies

Capital Expenditure Plans #

• Planned investment of nearly ₹1,500 crore to ₹2,000 crore over the next 3-5 years.

Efficiency Improvement Targets #

• Leverage expertise and market reach in the natural gas sector to foster development in the CBG segment.
• Optimize biogas production to convert waste into valuable resources.

Potential Challenges and Opportunities #

• Challenges: Dependence on policy support and successful collaboration with industry stakeholders. Technological and operational challenges in scaling up CBG production.
• Opportunities: Alignment with the government’s vision for clean energy solutions. Promote scientific waste management and a circular economy.

LNG for Transport & Mining (LTM) Segment #

Management Guidance and Assumptions #

• Aims to provide energy transition solutions to India’s long-haul, heavy-duty transportation, and mining segments.
• Focus on decarbonization of fleets by providing LNG as a transition fuel.

Market Growth Forecasts #

• Untapped opportunities in heavy transportation and mining are expected to drive significant growth in LNG demand.

Planned Strategic Initiatives #

• Build a network of 50 LNG retail outlets along major highways, ports, mines, and industrial hubs.
• Form strategic partnerships with OEMs, technology providers, and financing agencies.

Capital Expenditure Plans #

• Planned investment of ₹200 crore to ₹250 crore over the next 3-5 years.

Efficiency Improvement Targets #

• Enhance the adoption of sustainable and efficient mobility solutions across various segments.

Potential Challenges and Opportunities #

• Challenges: Establishing the necessary infrastructure and supply chain for LNG distribution. Competition from existing fuel options and emerging alternatives.
• Opportunities: Position ATGL as a leader in providing cleaner fuel solutions for heavy transportation and mining, contributing to decarbonization efforts.

Scenario Analysis and Sensitivity to Key Assumptions #

• Gas Pricing Volatility: A significant increase in global LNG prices could impact ATGL’s margins and competitiveness, particularly in the industrial and commercial PNG segments. Conversely, sustained lower prices could boost demand and profitability. Sensitivity analysis should be performed on gas sourcing costs and their impact on EBITDA and PAT.
• Regulatory Changes: Changes in government policies, such as APM gas allocation or carbon market standards, could significantly impact ATGL’s operations and profitability. Scenario analysis could model different regulatory environments and their potential effects.
• Competition: Increased competition from alternative fuels (EVs, hydrogen) could impact market share. Sensitivity analysis could model various adoption rates of competing technologies.
• Infrastructure Development Delays: Delays in pipeline laying or CNG station construction could slow down revenue growth. Scenario analysis could incorporate different project completion timelines.
• Demand Growth: Changes in demand potential of more than 160 MMSCMD in MSME and heavy transportation.
• Internal Carbon Pricing: Implementation by the company has been factored by considering business growth in alternative energy, thus calculating the emission reduction.
• Decarbonisation: Levers including renewable energy adaptation, Green Hydrogen blending and other alternatives.

Audit & Compliance Analysis #

Auditor’s Opinion and Qualifications #

• Standalone Financial Statements: Unqualified opinion. Presents a true and fair view in conformity with Ind AS.
• Consolidated Financial Statements: Unqualified opinion.
• Qualification Note: Previous year (FY22-23) standalone financial statements were audited by a predecessor auditor (Shah Dhandharia & Co LLP) who had expressed a qualified opinion.
• Audit Trail Observation: Composition non-compliant with Section 149 of the Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Penalties imposed by stock exchanges. The audit trail feature was not enabled at the database level for the accounting software SAP S/4 HANA.

Key Accounting Policies and Changes #

• Accounting Standards Compliance: Complies with Indian Accounting Standards (Ind AS) under Section 133 of the Companies Act, 2013.
• Policy Changes: Adopted the Disclosure of Accounting (amendment to Ind AS 1) from April 1, 2023. Impacted disclosure of accounting policy information.
• Accounting Treatment: Consistent application of selected accounting policies with judgments and estimates.
• Revenue Recognition: Recognized upon the transfer of control of promised goods or services. Includes varied pricing structures.
• Fair Value Measurement: Financial Instruments at fair value are based on a three level model.

Internal Control Effectiveness #

• Internal Financial Controls: Unmodified opinion on the adequacy and operating effectiveness of internal financial controls.
• Risk Management: Maintains a Risk Management Committee (RMC) and a digital business platform (SOUL) to drive automation, digitalization, and innovation.

Regulatory Compliance Status #

• General Compliance: Generally complied with applicable laws and regulations.
• Secretarial Audit Observation: Non-compliance with the composition of the Board of Directors and Nomination and Remuneration committee, leading to penalties from stock exchanges.
• SEBI Compliance: Submitted quarterly compliance reports on Corporate Governance to the stock exchanges.

Legal Proceedings and Potential Impact #

• Pending Litigations: Disclosed in Note 43. Claims against the Company not acknowledged as debts.
• Show Cause Notice from SEBI: Received relating to the validity of the Peer Review Certificate of predecessor auditors.
• Management’s View: No material consequences from allegations in a short seller report and no material non-compliance with laws and regulations.
• Ongoing Disputes: Demand note of INR39.18 crore received from Haryana Shehri Vikas Pradhikaran (HSVP). Paid 25.58 cr. till March 2024.

Related Party Transactions #

• Disclosure: Disclosed in the notes to the financial statements in accordance with Ind AS 24.
• Arm’s Length Basis: All transactions were at arm’s length and in the ordinary course of business.
• Significant Transactions: Numerous transactions exceeded 10% of the total transactions of their respective type.

Subsequent Events #

• Dividend Recommendation: Board recommended a final dividend of ` 0.25 per equity share.
• No Other Material Events: As of April 30, 2024, no other subsequent events requiring recognition or reporting were identified, other than the proposed dividend.

Analysis of Accounting Quality and Regulatory Risk Assessment #

• Accounting Quality: Unqualified audit opinion suggests overall good accounting quality. Observation from the Secretarial Auditor regarding the previous auditor and the accounting software’s audit trail features indicates an area to improve.
• Regulatory Risk: Highlighted by non-compliance to the composition of Board and Committees, penalties were imposed.