OIL & GAS INDUSTRY

Indraprastha Gas Limited

Incorporated in 1998, IGL took over Delhi City Gas Distribution Project in 1999 from
GAIL (India) Limited (Formerly Gas Authority of India Limited).
The project was started to lay the network for the distribution of natural gas in the
National Capital Territory of Delhi to consumers in the domestic, transport, and
commercial sectors. With the backing of strong promoters – GAIL (India) Ltd. and
Bharat Petroleum Corporation Ltd. (BPCL) – IGL plans to provide natural gas in the
entire capital region.
The two main business objectives of the company are -

 To provide safe, convenient and reliable natural gas supply to it’s customers
in the domestic and commercial sectors.

 To provide a cleaner, environment-friendly alternative as auto fuel to residents

of the areas of NCT of Delhi; districts Gautam Budh Nagar, Ghaziabad, Hapur,
Muzaffarnagar, Shamli, uncovered parts of Meerut & Kanpur, Fatehpur and
Hamirpur in Uttar Pradesh; districts Rewari, Gurugram, Karnal and Kaithal in
Haryana; and, district Ajmer, Pali & Rajsamand in Rajasthan. This will
considerably bring down the alarmingly high levels of pollution.

The transport sector uses natural gas as Compressed Natural Gas (CNG), the
domestic and commercial sectors use it as Piped Natural Gas (PNG) and R-LNG is
being supplied to industrial establishments.

Shareholding pattern of Indraprastha Gas Ltd.

 Management of the company
 IGL Board is fairly well diversified with ten members including two each from
GAIL and BPCL, one from Govt. of Delhi and five independent directors.
 The company is beneficiary of its strong parentage and gets significant support
from GAIL and BPCL relating to operations and management.
 By virtue of the presence of Govt. of Delhi as a minority shareholder, the
company gets support for speedy administrative approvals.
 The company has highly qualified senior management personnel with several
years of experience in Oil & Gas sector.

Background
Incorporated in 1998, IGL is a Joint Venture of GAIL and BPCL. Govt. of NCT of Delhi is
also holding 5% equity IGL started its operations in NCT of Delhi in 1999 with only 9
CNG stations and 1000 PNG consumers Today IGL has its operations in NCT of Delhi,
Noida, Greater Noida and Ghaziabad with 340 CNG stations, 6.36 lacs residential
consumers and 2.6 thousand industrial / commercial customers Fueling the largest
CNG Bus fleet in the World

Area of Operation
Delhi: National capital of India has huge demand potential:
 where all public transport vehicles have to be necessarily run on CNG in view of
the directions of the Hon. Supreme Court of India.
 Has the highest number of private cars compared to any other city of India
 Thickly populated having large number of residential & commercial complexes
and hospitals etc..
Noida: Most advanced city of state of Uttar Pradesh having huge potential for
CNG, PNG-Residential and commercial volumes.
Greater Noida and Ghaziabad: Residential cum Industrial towns of Uttar Pradesh
having huge potential demand for PNG Residential, Commercial and Industrial.
Segments:
PNG
PNG is mainly methane – CH4 with a small percentage of other higher hydrocarbons.
The ratio of carbon to hydrogen is least in methane and hence it burns almost
completely making it the cleanest fuel. It is procured from the oil / gas wells and
transported through a network of pipelines across the country.

Benefits
Experience the versatility and performance of this reliable energy source. With PNG you
don't need to make any choices, for its characteristics make it the best option for
domestic and commercial purposes.

1. Uninterrupted supply
The source of PNG supply in Delhi is the famous Hazira-Bijaipur-Jagdishpur
(HBJ) pipeline of GAIL (India) Limited. PNG offers the convenience of ensuring
continuous and adequate supply of PNG at all times, without any problem of
storing gas in cylinders.

2. Unmatched convenience
The domestic consumers have to take upon themselves the trying task of
booking an LPG cylinder refill, time and again. Then starts the wait for the
deliveryman to deliver the cylinder. Switching over to PNG renders this entire
exercise unnecessary. PNG also eliminates the tedious routine of checking LPG
refill cylinder for any suspected leakage, or it being underweight, at the time of
delivery. Moreover, the user is spared the inconvenience of connecting and
 disconnecting the LPG cylinder when out of gas. Precious space, occupied by
LPG cylinders is also saved.
3. Safety
The combustible mixture of natural gas and air does not ignite if the mixture is
leaner than 5% and richer than 15% of the air-fuel ratio required for ignition. This
narrow inflammability range makes PNG one of the safest fuels in the
world. Safety Tips

Natural gas is lighter than air. Therefore, in case of a leakage, it just rises and
disperses into thin air given adequate ventilation. But LPG being heavier will
settle at the bottom near the floor surface.

A large quantity of LPG is stored in liquefied form in a cylinder. With PNG, it is

safer since PNG installation inside your premises contains only a limited quantity
of natural gas at low pressure i.e. 21 millibar (mbar).

On leakage, LPG expands 250 times, which is not the case with PNG. Supply in
PNG can be switched off through appliance valve (inside the kitchen) and
isolation valve (outside kitchen premises), which fully cuts off the gas supply.
4. Customer support
Round-the-clock customer support is assured through 24 hrs number 1800 102
5109(Toll Free) backed by control rooms, which are manned by engineers and
trained technicians. Thus complaints, if any, are promptly redressed.

5. A versatile fuel
Natural gas is being used predominantly as a versatile fuel in many major cities
catering to domestic and commercial applications, as a cooking fuel, for water
heating, space heating, air conditioning, etc.

6. Environment friendly
Natural gas is one of the cleanest burning fossil fuels, and helps improve the
quality of air, especially when used in place of other more polluting energy
sources. Its combustion results in virtually no atmospheric emissions of
sulphurdioxide (SO2), and far lower emissions of carbon monoxide (CO),
reactive hydrocarbons and carbon dioxide, than combustion of other fossil fuels.

In fact, when natural gas burns completely, it gives out carbon dioxide and water
vapour. These are the very components that we exhale!
 CNG

CNG stands for compressed natural gas. It is gaseous fuel and is a mixture of
hydrocarbons mainly Methane. For use in Automobiles as fuel, it is compressed to a
pressure of 200-250 Kg/cm² to enhance the vehicle on-board storage capacity.CNG
is a fossil fuel substitute for other auto fuels such as petrol, diesel, Auto LPG etc.

IGL has been supplying CNG to over eight lakh vehicles, through its robust network
of above 326 CNG stations in Delhi, Noida, Greater Noida and Ghaziabad. IGL has
been supplying CNG to almost all vehicle categories i.e Bus, Cars, Passenger
Vehicles and Commercial vehicles as well.
CNG is also being supplied to transport undertakings such as DTC’s, UPSRTC’s
and DIMTS Cluster Busses as well. IGL is supplying CNG to World Largest CNG
fleet.

Benefits

1. Green   fuel -
Commonly referred to as the green fuel because of its lead and sulphur
free character, CNG reduces harmful emissions thus reducing the effect of
global warming. Being non-corrosive, it enhances the longevity of spark
plugs. Due to the absence of any lead or benzene content in CNG, the
lead fouling of spark plugs, and lead or benzene pollution are eliminated. 

2. Safety:
CNG is less likely to auto-ignite on hot surfaces, since it has a high auto-
ignition temperature (540 degrees centigrade) and a narrow range (5%-
15%) of inflammability. It means that if CNG concentration in the air is
below 5% or above 15%, it will not burn. This high ignition temperature
and limited flammability range makes accidental ignition or combustion
very unlikely.
3. Low operational cost
The operational cost of vehicles running on CNG, as compared to those
running on other fuels, is significantly low. At the prevailing price of fuel in
Delhi, Operational cost of CNG vehicles is 66% lower than petrol and 28%
lower than diesel.

4. Increased life of oils

Another practical advantage observed is the increased life of lubricating
oils, as CNG does not contaminate and dilute the crankcase oil.
COMMERCIAL & INDUSTRIAL USAGE

Natural gas is a versatile fuel which is gaining immense popularity for Industrial and
commercial usage.
Under the commercial sector all leading hotels, restaurants, malls, commercial
complexes and hospitals in the Delhi & NCR are being supplied PNG by IGL
In the industrial sector, PNG is being used to run boilers, furnaces, ovens, hot water
generators, thermifluid heaters, gas turbines for power generation and Vapour
Absorption Machines (VAM) for heating and cooling applications. Industries have saved
on cost and storage space by using PNG and in turn pollution levels have also gone
down.
Industrial and commercial segments are expected to see a significant growth and would
remain one of the the focus areas for the organization. IGL is currently serving over
6000 industrial & commercial customers.

Benefits
Apart from direct savings in switching over to Natural Gas, other benefits associated
with the clean fuel are-

 Versatile Applications PNG can be used for a number of applications like

Heating, Power Generation, Cooking, Air-conditioning etc.
 Uninterrupted Supply IGL offers the convenience of continuous and adequate
supply of PNG at all times through well laid infrastructure of pipelines.
 Safety PNG being lighter than air is safer.
 Environmental benefits PNG is a clean/environment friendly fuel. It does not
leave any unpleasant soot, ash or odour.
 No spillage and pilferage In case of fuels like HSD and LDO, there are
considerable chances of spillage and pilferage. In case of PNG these losses are
invariably done away with, as PNG is supplied through pipes.
 No Adulteration possible which is otherwise a common problem with other liquid
fuels.
 High Combustion Efficiency
 Billing - No up-front payment The daily bills, settlements and reconciliation are
also avoided as the consumer is billed after usage
 No Storage Required PNG does not require any storage tank or storage space
since it is supplied to you through pipelines.
 Better Inventory Management The manpower and time that was earlier being
used for ensuring minimum stock levels of LPG, HSD and LDO, can be used
elsewhere.
 No daily liasioning The consumer is spared the task of liasioning with oil
companies and co-ordinating with them for ensuring the daily supply of fuel,
because PNG is supplied directly through pipes.
 No preheating required In case of PNG, no preheating is required which leads to
considerable savings on auxiliary power cost
  Lower maintenance cost With PNG, soot or ash accumulation and greasy
spillages are absent from the appliances. Maintenance costs are thus, driven
down.

SWOT Analysis
Strengths
 Expensive Stars (DVM)
 Consistent Highest Return Stocks over Five Years - Nifty500
 Stocks with Consistent Share Price Growth (subscription)
 Growth in Quarterly Net Profit with increasing Profit Margin (YoY)
 Company with No Debt
 Annual Net Profits improving for last 2 years
 Company with Zero Promoter Pledge
 MFs increased their shareholding last quarter
 Stocks where Mutual Funds Increased Holdings in Past Month

Weakness
 Inefficient use of shareholder funds - ROE declining in the last 2 years
  Inefficient use of assets to generate profits - ROA declining in the last 2 years
 Decline in Net Profit (QoQ)
 Decline in Net Profit with falling Profit Margin (QoQ)
 Declining Net Cash Flow : Companies not able to generate net cash

Opportunity
 Brokers upgraded recommendation or target price in the past three months
 High Momentum Scores (Technical Scores greater than 50)
 Rising Delivery Percentage Compared to Previous Day

Threats
 Stocks with Expensive Valuations according to the Trendlyne Valuation Score

Competitors
Balance Sheet
Profit & Loss Account
Cash Flows

Conclusion
From the above competitors table we can see that Indraprastha Gas industry have been
compared with other major six companies in India. From the table is clear that in all the
areas like market capital, sales turnover, net profit and also total asset, reliance have a
very high position with a remarkable difference in their respective values. While we
analyse the competition we can determine that the company possess a dominancy over
the market. It is very difficult for the competitors to come over the reliance position.
Considering the fact that the company profit is from the market it is important for
reliance to maintain this status with more marketing strategies.

I have understood how reliance industries have come up in such a highly competitive
market like in India and also they were able to establish their name in international
market also. Form this report we can see that the company is not just focusing on one
industry whereas it have many subsidiaries and associates which helping them to be
stable when the economy is down.

I would like to thank InsideSherpa and Citi for the chance of participating in the Institutional

Banking Virtual Internship. I practiced skills that I have learnt so far and developed new ones through
extensive research.