FUTURE IGL Chairmans Speech

Dear Shareowners,


In most aspects, FY 2016-17 was one of the most challenging years for the Oil and Gas industry. However, at Indraprastha Gas Limited (IGL), it was a year that provided us with a platform to demonstrate our core capabilities, backed by our proven track record and value-creation methodologies. Our operational competitiveness and business strategies enabled us to respond to the changing market scenario. As a result, we retained the trust of our investors and maintained a resilient financial position.


Economic review


The global economic growth continued to face headwinds, reporting weak growth numbers for 2016. The crude oil prices remained under pressure with increase in supply from the US and Middle East beyond the expectations of the markets. Coupled with this, government has laid emphasis on better fuel pricing reforms and placed impetus on alternate and greener fuel energy which has only fuelled further growth opportunities for us in this sector.


The past one year witnessed two events in the country’s economic history. One was demonetization that resulted in withdrawal of legal tender of high value currency notes, and the second being implementation of GST, which has brought the country under a new tax regime, to bring in greater transparency.


Financial performance


Your Company’s focus on stronger operational performance and higher profitability continues unabated. Despite a marginal increase in the gross turnover, we were able to increase our net profit by 36.28% on a year-to-year basis. The pressure on pricing for Compressed Natural Gas (CNG) and Piped Natural Gas (PNG), on account of reduced input cost, caused the revenues to be flat. In numerical terms, we clocked Rs.4205.43 Crores of revenue in 2016-17 (against Rs.4052.14 Crores in 2015-16) and registered a net profit of Rs.571.07 Crores (against Rs.419.05 Crores in the previous year). Against this strong operational performance, your Board has recommended final dividend of 50%, in addition to interim dividend of 35% for the year 2016-17.


Operational performance


The major highlight for the year was our endeavor towards expanding CNG business of the Company. The Company started its operation in a new geographical area of Rewari in Haryana. We also successfully piloted the project of CNG based two wheelers, which was launched by the Hon’ble Minister of State I/C (P&NG) and appreciated by our stakeholders. This being a novel concept, we expect growth and revenues to increase from this segment in the long run.


On the core business front, we continued our steady network expansion. We expanded our CNG infrastructure with commissioning of 81 new CNG stations (including the 78 stations at retail outlets of Oil Marketing Companies). This has taken our total installed compression capacity to 71 Lakhs kg/ day as on March 31, 2017. We recorded our best performance till date for the PNG segment, providing more than 1.05 lacs new domestic PNG connections in the year ending 31st March, 2017. We also gained in industrial and commercial segments for PNG, adding customers in the industrial belts of Noida, Greater Noida, Delhi and Ghaziabad. We expanded our steel pipeline network to 778 kms (from 707 kms in 2015-16) and MDPE network to 9940 kms (from 9443 kms in 2015-16) during the year 2016-17. It is heartening to see that our investments in associate companies are bearing fruit and I am confident that our widespread network and innovative marketing will further widen our market presence.


The execution of our strategies resulting in a balanced business approach would not have been possible without the commitment of our team. We continue to invest in nurturing their skills through various training and development programmes. Their talent and determination has positioned us to continue to deliver value for our stakeholders.


Health and safety of our employees and customers constitute a critical aspect of our business sustainability. Safety inspections of CNG vehicles are done periodically on random basis to ensure compliance of safety standards. A detailed HSE Policy and regular safety audits ensure compliance of all safety rules and regulations. As a result, we crossed 106 Million Man Hours of accident free activity as on March 31, 2017 and were conferred with the Safety Innovation Award by Institute of Engineers and Certificate of Appreciation from National Safety Council for 2016-17.


Engaging better with customers


The evolving landscape for City Gas Distribution (CGD) requires us to address consumer requirements with ease and convenience. A growing consumer base across all our consumer segments, makes it imperative for us to focus on Information Technology. With focus on IT, our technology-led services have helped us to provide better services to our customers. The launch of ‘IGL Connect’ (mobile friendly app) and ‘INSTAPAYMENT’ (for facilitating online payment) has helped our customers to connect and engage better with us.


Holistic development


At IGL we have always believed in ensuring growth and development for a wider stakeholder community. We undertook several initiatives for empowering people in the field of education, healthcare, skill development and women empowerment. Initiatives like ‘IGL Swasth Sarthi’ and ‘IGL Suraksha Yojna’ have empowered the Driver community to a great extent. Our efforts towards sustainable development have got us recognition by way of various CSR awards.


Road ahead


We stand at the threshold of an era of change and constant evolution for cleaner energy. There has been a growing concern on the pollution levels in Delhi and NCR towards which, judicial and other Statutory Authorities have intervened. We continue to expand our operations in new geographical areas and strengthen our market presence in existing areas. We expect our entry into Gurugram, Haryana to be another game-changer and drive business growth across our business segments. Today, IGL is well positioned to continue to execute its defined plans and deliver significant and sustainable value for years to come.


On behalf of the Board of Directors, I take this opportunity to thank the Government of India, Petroleum and Natural Gas Regulatory Board and all departments of the Central and State governments, our valued Customers, all the authorities and agencies for their unstinted support to your Company.


I, along with my colleagues on the Board, would also like to thank each and every employee of IGL for all the hard work put in by them.


Finally, I would like to thank each one of you from IGL’s family of Shareowners, for the confidence and trust reposed in us. With your support and blessings, I am confident that we shall continue to strive to deliver long-term value in the coming years.


Warm Regards


S. Ramesh


Chairman

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