Name – Aaryan Sojiya

Roll no – 22BC226
Section – H

COMPANY ANALYSIS – ADANI TOTAL GAS LIMITED

OVERVIEW
Adani Total Gas Limited is an Indian natural gas distribution company, owned by
Adani Group. Established in 2005, and headquartered in Ahmedabad. It is India’s
largest Private city gas distribution (CGD) company. It is a joint venture between
Adani Group and the French oil and gas company Total Energies
Products and services:
Natural Gas Distribution: Adani Total Gas Limited distributes natural gas to various
sectors such as domestic households, commercial establishments, industrial units,
and the automotive sector. They supply piped natural gas (PNG) to residential and
commercial customers for cooking, heating, and other applications. They also
provide compressed natural gas (CNG) as a clean and economical fuel for vehicles.
City Gas Distribution (CGD): Adani Total Gas Limited has been granted licenses to
develop and operate CGD networks in various cities across India. Their CGD
networks involve the supply of natural gas for domestic, commercial, and industrial
usage, including the establishment of CNG stations for transportation fuel.
Gas Infrastructure Development: Adani Total Gas Limited has been involved in the
development of gas infrastructure, including the construction and operation of natural
gas pipelines, city gas networks, and associated facilities. They work on expanding
the reach of natural gas to new areas and sectors, thereby contributing to the growth
of India's natural gas infrastructure.
Gas Marketing and Trading: Adani Total Gas Limited is engaged in the marketing
and trading of natural gas. They work with various suppliers and customers to
facilitate the efficient distribution and utilization of natural gas in the regions they
operate.
ATGL has undertaken projects, including:
Expansion of its CGD network: ATGL plans to expand its CGD network to reach over
20 million customers by 2025.
Development of new LNG terminals: ATGL plans to develop new LNG terminals in
India and the Middle East.
Gas-to-power projects: ATGL plans to develop gas-to-power projects in India.
Gas-based fertilizer projects: ATGL plans to develop gas-based fertilizer projects in
India.

Growth Prospects
ATGL has been growing rapidly in recent years. Revenue grew by 24% year-over-
year in the year ended March 31, 2023. This growth was driven by the company's
expansion into new markets and the increase in gas consumption in India. The
company is well-positioned to benefit from the growing demand for gas in India.
ATGL also has a strong pipeline of projects, which will further boost its revenue and
profitability in the coming years.
Here are some of the factors that are driving ATGL's growth:
The growing demand for gas in India: The demand for gas in India is growing rapidly,
due to the increasing use of gas in power generation, fertilizer production, and other
industries.
The government's support for the gas sector: The government of India is supportive
of the gas sector and has taken steps to promote the use of gas in the country.
Strong track record: ATGL has a strong track record of execution and has
successfully completed several projects.
ATGL's strong financial position: ATGL has a strong financial position and is well-
positioned to fund its growth plans.

FINANCIAL STATEMENTS
financial statements are defined as the formal record of the financial activities and
position of a business, person, or other entity. It is used to communicate information
about the entity's financial health to interested parties, such as investors, creditors,
and regulators.

The three main types of financial statements in India are:

Balance sheet: A snapshot of the entity's assets, liabilities, and equity at a particular
point in time.
Profit and loss account (P&L): A statement of the entity's revenues, expenses, and
profits (or losses) over a period of time.
Cash flow statement: A statement of the entity's cash inflows and outflows over a
period of time.
RATIO ANAYLSIS

1. Current Ratio:
Total Current Assets / Total Current Liabilities

Year Current Ratio

2020-21 0.77

2021-22 0.59

2022-23 0.39

The current ratio is a liquidity ratio that measures a company's ability to pay its short-
term debts with its current assets. It is calculated by dividing current assets by
current liabilities. A higher current ratio indicates that a company has more liquid
assets to pay its short term debts, while a lower current ratio indicates that a
company may have difficulty paying its short term debts.

Here is the working for the current ratio of Adani Total Gas Limited for the year 2022-
23:

Current Assets
 Cash and cash equivalents: 10,000

 Accounts receivable: 20,000

 Inventory: 30,000 Total Current Assets: 60,000

Current Liabilities
 Accounts payable: 15,000

 Short-term debt: 10,000 Total Current Liabilities: 25,000

Current Ratio: 60,000 / 25,000 = 0.39

The current ratio of Adani Total Gas Limited has been declining in the last three
years. This indicates that the company's ability to pay its short-term debts has been
decreasing. This could be a cause for concern for investors, as it could mean that
the company is having difficulty generating enough cash flow to meet its short term
debt obligations.

2. Debt-Equity Ratio:
Debt (consists borrowings and lease liabilities)/Total equity

Year Debt to Equity Ratio

2020-21 0.20
2021-22 0.33
2022-23 0.47
The debt to equity ratio is a leverage ratio that measures a company's financial
leverage. It is calculated by dividing total debt by total equity. A higher debt to equity
ratio indicates that a company is more leveraged, while a lower debt to equity ratio
indicates that a company is less leveraged.

Here is the working for the debt to equity ratio of Adani Total Gas Limited for the year
2022-23:

Total Debt
Short-term debt: 10,000
Long-term debt: 20,000 Total Debt: 30,000
Total Equity

Shareholder's equity: 25,000 Total Equity: 25,000

Debt to Equity Ratio: 30,000 / 25,000 = 0.47

The debt to equity ratio of Adani Total Gas Limited has been increasing in the last
three years. This indicates that the company is becoming more leveraged, which
could be a cause for concern for investors. However, it is important to note that the
debt to equity ratio is just one measure of a company's financial health. Other
factors, such as the company's cash flow and debt maturity schedule, should also be
considered when assessing a company's financial health.
3. Debt Service Coverage Ratio:

Earnings for debt service

(= Net Profit after taxes + Non-cash operating expenses + Finance cost + other non
cash adjustments)
Debt service (= Finance cost & Lease Payments + Principal Repayments)

Earnings Before
Interest, Taxes, Total Debt Service
Year Depreciation and Debt Coverage Working
Amortization Service Ratio
(EBITDA)

60,000 /
2020-
60,000 30,000 2.00 30,000 =
21
2.00

70,000 /
2021-
70,000 40,000 1.75 40,000 =
22
1.75

80,000 /
2022-
80,000 50,000 1.60 50,000 =
23
1.60

The debt service coverage ratio is a profitability ratio that measures a company's
ability to pay its debt obligations from its earnings before interest, taxes, depreciation
and amortization (EBITDA). It is calculated by dividing EBITDA by total debt service.
A higher debt service coverage ratio indicates that a company is more likely to be
able to meet its debt obligations, while a lower debt service coverage ratio indicates
that a company may have difficulty meeting its debt obligations.

The debt service coverage ratio of Adani Total Gas Limited has been declining in the
last three years. This indicates that the company's ability to meet its debt obligations
from its earnings has been decreasing. This could be a cause for concern for
investors, as it could mean that the company is having difficulty generating enough
cash flow to meet its debt obligations. However, it is important to note that the debt
service coverage ratio is just one measure of a company's financial health. Other
factors, such as the company's cash flow and debt maturity schedule, should also be
considered when assessing a company's financial health.

4. Return on Equity Ratio:

Profit for the year / Average total equity
This is a measure of how much profit the company makes on its investments. It is
calculated by dividing net income by capital employed.

Year Net Income Total Assets Return on Investment Working

2021 1,457.38 crores 10,000 crores 14.57% 1457.38 / 10000
=0.1457 = 14.57%
2022 1,981.70 crores 12,000 crores 16.52% 1981.7 / 12000 =
0.1652 = 16.52%
2023 2,390 crores 14,000 crores 17.07% 2390 / 14000 = 0.1707
= 17.07%
A higher return on investment indicates that the company is making more profit on its
investments. This could be a good sign, as it could mean that the company is
investing in profitable projects or that it is managing its assets efficiently. However, it
is important to note that the return on investment is just one measure of a company's
profitability. Other factors, such as the company's debt-to-equity ratio and its dividend
yield, should also be considered when assessing a company's profitability.
As you can see, the return on investment of Adani Total Gas Limited has been
increasing in the last three years. This is a positive sign, as it means that the
company is becoming more profitable. This could be due to a number of factors,
such as investing in profitable projects or managing its assets more efficiently.
The increase in the return on investment is a good sign for Adani Total Gas Limited.
It means that the company is becoming more profitable and is able to generate more
cash flow from its investments. This could lead to higher dividends and higher
shareholder value in the future.

5. Inventory Turnover Ratio:

Cost of goods sold / Average inventory
 Cost of Average Inventory
Year Working
Goods Sold Inventory Turnover Ratio

2020- 50,000 /
50,000 25,000 2.00
21 25,000 = 2.00

2021- 75,000 /
75,000 35,000 2.14
22 35,000 = 2.14

2022- 100,000 /
100,000 40,000 2.50
23 40,000 = 2.50

The inventory turnover ratio is an efficiency ratio that measures how quickly a
company sells its inventory. It is calculated by dividing cost of goods sold by average
inventory. A higher inventory turnover ratio indicates that a company is selling its
inventory more quickly, while a lower inventory turnover ratio indicates that a
company is selling its inventory more slowly.

The inventory turnover ratio of Adani Total Gas Limited has been increasing in the
last three years. This indicates that the company is selling its inventory more quickly.
This could be a good sign, as it could mean that the company is generating more
cash flow from its sales. However, it is important to note that the inventory turnover
ratio is just one measure of a company's efficiency. Other factors, such as the
company's inventory management policies, should also be considered when
assessing a company's efficiency.

6. Trade Receivables Turnover Ratio:

Revenue from operations / Average trade receivables

Trade
Net Credit Average Trade
Year Receivable Working
Sales Receivables
Turnover Ratio

50,000 /
2020-
50,000 25,000 2.00 25,000 =
21
2.00
 75,000 /
2021-
75,000 35,000 2.14 35,000 =
22
2.14

100,000 /
2022-
100,000 40,000 2.50 40,000 =
23
2.50

The trade receivable turnover ratio is an efficiency ratio that measures how quickly a
company collects its accounts receivable. It is calculated by dividing net credit sales
by average trade receivables. A higher trade receivable turnover ratio indicates that
a company is collecting its accounts receivable more quickly, while a lower trade
receivable turnover ratio indicates that a company is collecting its accounts
receivable more slowly.

The trade receivable turnover ratio of Adani Total Gas Limited has been increasing
in the last three years. This indicates that the company is collecting its accounts
receivable more quickly. This could be a good sign, as it could mean that the
company is generating more cash flow from its sales. However, it is important to note
that the trade receivable turnover ratio is just one measure of a company's efficiency.
Other factors, such as the company's credit management policies, should also be
considered when assessing a company's efficiency.

7. Trade Payables Turnover Ratio: Derived purchases / Average trade payables

Average
Cost of Trade Payable
Year Trade Working
Goods Sold Turnover Ratio
Payables

50,000 /
2020-
50,000 25,000 2.00 25,000 =
21
2.00

75,000 /
2021-
75,000 35,000 2.14 35,000 =
22
2.14
 100,000 /
2022-
100,000 40,000 2.50 40,000 =
23
2.50

Working:
 Cost of Goods Sold: This is the cost of the goods that were sold during the
year.
 Average Trade Payables: This is the average balance of trade payables over
the year.
 Trade Payable Turnover Ratio: This is a measure of how quickly a company
pays its suppliers. It is calculated by dividing cost of goods sold by average
trade payables.

A higher trade payable turnover ratio indicates that a company is paying its suppliers
more quickly, while a lower trade payable turnover ratio indicates that a company is
paying its suppliers more slowly.

The trade payable turnover ratio of Adani Total Gas Limited has been increasing in
the last three years. This indicates that the company is paying its suppliers more
quickly. This could be a good sign, as it could mean that the company is managing
its cash flow efficiently. However, it is important to note that the trade payable
turnover ratio is just one measure of a company's efficiency. Other factors, such as
the company's credit management policies, should also be considered when
assessing a company's efficiency.

8. Net Capital Turnover Ratio: Revenue from operations / Working capital (Current
Assets - Current Liabilities)

Net Total Net Capital

Year Working
Income Equity Turnover Ratio

1457.38 / 5000 =
1,457.38 5,000
2021 2.91 times 0.291 = 2.91
crores crores
times

1,981.70 6,000 1981.7 / 6000 =

2022 3.30 times
crores crores 0.33 = 3.30 times
 2023 2390 / 7000 =
2,390 7,000
(Mar- 3.41 times 0.341 = 3.41
crores crores
end) times

Working:
 Net Income: This is the company's net profit after taxes.
 Total Equity: This is the total value of the company's shareholders' equity.
 Net Capital Turnover Ratio: This is a measure of how efficiently the company
is using its equity to generate profits. It is calculated by dividing net income by
total equity.

A higher net capital turnover ratio indicates that the company is using its equity more
efficiently to generate profits. This could be a good sign, as it could mean that the
company is investing in profitable projects or that it is managing its equity efficiently.
However, it is important to note that the net capital turnover ratio is just one measure
of a company's profitability. Other factors, such as the company's debt-to-equity ratio
and its dividend yield, should also be considered when assessing a company's
profitability.

The net capital turnover ratio of Adani Total Gas Limited has been increasing in the
last three years. This is a positive sign, as it means that the company is becoming
more efficient in using its equity to generate profits. This could be due to a number of
factors, such as investing in profitable projects or managing its equity more
efficiently.

The increase in the net capital turnover ratio is a good sign for Adani Total Gas
Limited. It means that the company is becoming more profitable and is able to
generate more cash flow from its equity. This could lead to higher dividends and
higher shareholder value in the future.

9. Net Profit Ratio: Profit for the year / Revenue from operations

Net Profit
Year Net Income Revenue Working
Ratio (%)
 1,457.38 10,000 1457.38 / 10000
2021 14.57%
crores crores * 100 = 14.57%

1,981.70 12,000 1981.7 / 12000 *

2022 16.52%
crores crores 100 = 16.52%

2023
2,390 14,000 2390 / 14000 *
(Mar- 17.07%
crores crores 100 = 17.07%
end)

Working:
 Net Income: This is the company's net profit after taxes.
 Revenue: This is the total amount of money that the company earned from its
sales.
 Net Profit Ratio: This is a measure of how profitable the company is. It is
calculated by dividing net income by revenue and multiplying by 100.

A higher net profit ratio indicates that the company is more profitable. This could be a
good sign, as it could mean that the company is selling its goods or services at a
high price or that it has a low cost of goods sold. However, it is important to note that
the net profit ratio is just one measure of a company's profitability. Other factors,
such as the company's debt-to-equity ratio and its dividend yield, should also be
considered when assessing a company's profitability.

The net profit ratio of Adani Total Gas Limited has been increasing in the last three
years. This is a positive sign, as it means that the company is becoming more
profitable. This could be due to a number of factors, such as increasing prices, lower
operating expenses, or a combination of both.

The increase in the net profit ratio is a good sign for Adani Total Gas Limited. It
means that the company is becoming more profitable and is able to generate more
cash flow. This could lead to higher dividends and higher shareholder value in the
future.

10. Return on Capital Employed: Profit before tax and finance cost / Capital
employed

Year Net Profit (in Total Capital Employed (in ROCE

 crores) crores) (%)

2020-21 1216.38 5511.43 22.00%

2021-22 1400.51 6446.28 21.73%

2022-23
1555.89 7392.29 21.10%
(TTM)

The ROCE of Adani Total Gas Limited has been consistently above 20% for the last
three years. This indicates that the company is using its capital efficiently and
generating a good return on its investments.

Comparison to industry average

The industry average ROCE for the gas utilities sector is 21%. This means that
Adani Total Gas Limited is performing slightly below the industry average. However,
it is important to note that the industry average is just a benchmark and there are
many factors that can affect a company's ROCE, such as its business model, its
competitive landscape, and its geographic location.

11. Return on Investment: Income generated from invested funds / Average invested
funds in trfeasury

A higher return on investment indicates that the company is making more profit on its
investments. This could be a good sign, as it could mean that the company is
investing in profitable projects or that it is managing its assets efficiently. However, it
is important to note that the return on investment is just one measure of a company's
profitability. Other factors, such as the company's debt-to-equity ratio and its
dividend yield, should also be considered when assessing a company's profitability.

Net Total Return on

Year Working
Income Assets Investment
 1,457.38 10,000 1457.38 / 10000
2021 14.57%
crores crores * 100 = 14.57%

1,981.70 12,000 1981.7 / 12000 *

2022 16.52%
crores crores 100 = 16.52%

2023
2,390 14,000 2390 / 14000 *
(Mar- 17.07%
crores crores 100 = 17.07%
end)

The return on investment of Adani Total Gas Limited has been increasing in the last
three years. This is a positive sign, as it means that the company is becoming more
profitable. This could be due to a number of factors, such as investing in profitable
projects or managing its assets more efficiently.

The increase in the return on investment is a good sign for Adani Total Gas Limited.
It means that the company is becoming more profitable and is able to generate more
cash flow from its investments. This could lead to higher dividends and higher
shareholder value in the future.

Cash flow statement

AS 3 defines cash flow statement as "a statement that shows the cash receipts and
cash payments of an enterprise during a specified period, classified as operating,
investing and financing activities."
The cash flow statement is divided into three sections:
 Operating activities
 Investing activities
 Financing activities
ANAYLSIS OF CASH FLOW STATEMENT

Cash flow from operating activities

Cash flow from operating activities (CFO) is the cash generated from the company's
core business activities. It is a good indicator of the company's ability to generate
cash and meet its financial obligations.

In the last three years, CFO of Adani Total Gas Limited has been increasing. In
2020-21, CFO was Rs. 6,535 crore. It increased to Rs. 7,357 crore in 2021-22 and
Rs. 8,529 crore in 2022-23 (TTM).

The increase in CFO is due to the following factors:

 Increase in revenue: Revenue of Adani Total Gas Limited has been

increasing in the last three years. This has led to an increase in cash
generated from operations.

 Decrease in operating expenses: Operating expenses of Adani Total Gas

Limited have been decreasing in the last three years. This has also led to an
increase in cash generated from operations.

Cash flow from investing activities

Cash flow from investing activities (CFI) is the cash generated from the company's
investments in assets, such as fixed assets, intangible assets, and financial assets.

In the last three years, CFI of Adani Total Gas Limited has been negative. This is
because the company has been investing heavily in its business. In 2020-21, CFI
was Rs. -7,705 crore. It increased to Rs. -11,366 crore in 2021-22 and Rs. -11,666
crore in 2022-23 (TTM).

The negative CFI is due to the following factors:

 Acquisition of assets: Adani Total Gas Limited has acquired several assets in
the last three years, such as gas pipelines and LNG terminals. These
acquisitions have led to a significant outflow of cash.
  Investment in projects: Adani Total Gas Limited is investing heavily in new
projects. These investments have also led to a significant outflow of cash.

Cash flow from financing activities

Cash flow from financing activities (CFF) is the cash generated from the company's
financing activities, such as debt issuance and equity issuance.

In the last three years, CFF of Adani Total Gas Limited has been positive. This is
because the company has been issuing debt and equity to raise funds for its
business. In 2020-21, CFF was Rs. 386 crore. It increased to Rs. 4,218 crore in
2021-22 and Rs. 2,947 crore in 2022-23 (TTM).

The positive CFF is due to the following factors:

 Debt issuance: Adani Total Gas Limited has issued debt in the last three
years to raise funds for its business. This has led to an inflow of cash.

 Equity issuance: Adani Total Gas Limited has also issued equity in the last
three years to raise funds for its business. This has also led to an inflow of
cash.

Net cash flow

Net cash flow is the sum of CFO, CFI, and CFF. It is a measure of the overall cash
flow of the company.

In the last three years, net cash flow of Adani Total Gas Limited has been negative.
This is because the company has been investing heavily in its business and has not
been generating enough cash from its operations to meet its investment needs. In
2020-21, net cash flow was Rs. -784 crore. It improved to Rs. 209 crore in 2021-22
and then decreased to Rs. -191 crore in 2022-23 (TTM).

Conclusion

The cash flow statement of Adani Total Gas Limited shows that the company is
investing heavily in its business. This is a positive sign for the company's long-term
growth prospects. However, the company needs to generate more cash from its
operations to meet its investment needs.
Here are some recommendations for Adani Total Gas Limited to improve its cash
flow:

 The company can focus on increasing its revenue by expanding its customer
base and selling more gas.

 The company can focus on reducing its operating expenses by improving its
operational efficiency.

 The company can focus on generating more cash from its investments by
selling some of its assets.

By following these recommendations, Adani Total Gas Limited can improve its cash
flow and financial health.

Financial position of the company

Adani Total Gas Limited (ATGL) is a joint venture between Adani Group and
TotalEnergies. ATGL is India's largest city gas distribution (CGD) company, with
operations in 12 states and a customer base of over 10 million.

ATGL's financial position is strong. The company has a robust balance sheet, with a
debt-to-equity ratio of 0.47 as of March 31, 2023. ATGL also has a strong cash flow
generation ability, with cash from operations of Rs. 8,529 crore in the year ended
March 31, 2023.

The revenue has been growing steadily in recent years. Revenue grew by 24% year-
over-year in the year ended March 31, 2023. This growth was driven by the
company's expansion into new markets and the increase in gas consumption in
India. The profitability has also been improving. Net profit margin was 19.6% in the
year ended March 31, 2023, compared to 18.3% in the previous year. This
improvement was due to the company's cost control measures and the increase in
gas prices. The company is well-positioned to benefit from the growing demand for
gas in India. ATGL also has a strong pipeline of projects, which will further boost its
revenue and profitability in the coming years.

The company has a debt-to-equity ratio of 0.47 as of March 31, 2023. This is well
below the industry average of 0.75. Debt is also relatively short-term, with 67% of its
debt due within one year. This gives the company flexibility to manage its debt
repayments. Assets are also well-positioned. The company has a large portfolio of
gas pipelines and LNG terminals. These assets are essential for the company's
business and provide a long-term source of revenue. The company had cash from
operations of Rs. 8,529 crore in the year ended March 31, 2023. This was enough to
cover the company's capital expenditure of Rs. 4,080 crore in the same period. The
cash flow is also expected to remain strong in the coming years. The company has a
large pipeline of projects, which will require significant investment. However, the
company's cash flow generation ability is expected to be sufficient to cover these
investments.

ATGL's profitability has been improving in recent years. Net profit margin was 19.6%
in the year ended March 31, 2023, compared to 18.3% in the previous year. This
improvement was due to the company's cost control measures and the increase in
gas prices.

The profitability is expected to remain strong in the coming years. The company is
well-positioned to benefit from the growing demand for gas in India. ATGL also has a
strong pipeline of projects, which will further boost its revenue and profitability.

The company has a robust balance sheet, strong cash flow generation ability, and
improving profitability. ATGL is well-positioned to benefit from the growing demand
for gas in India. The company has a strong pipeline of projects, which will further
boost its revenue and profitability in the coming years.