Talks are on with Tata and Mahindra about electric vehicle charging station: AK Jana, MD, IGL

AK Jana, Managing Director, Indraprastha Gas Limited (IGL), talks about September quarter results, demand situation for CNG, plans related to electric vehicle charging stations and expansion plans during a candid chat with Zee Business Executive Editor Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: IGL has posted good numbers for the quarter ended September 30, 2020, where the profit grew by almost 9% to Rs 308 crore on QoQ basis but it is 8% below if compared on YoY basis. What led to this growth is it due to the declining gas prices or the strong growth in volumes?

A: Two-three things have happened, not only that price has reduced due to input cost has gone down. But, in addition to that, we have also reduced our operating and maintenance cost, a lot. Apart from this, our associates and joint ventures, like CUGL in Kanpur and MNGL in Pune and we have received a dividend of around Rs 35.5 crore from them. These are certain things due to which our PBT has increased if compared to the second quarter of the last year. PAT is around 19% down because the last year’s PAT was around Rs 381 crore and it stands at Rs 308 crore this year. In this particular quarter of the last year, we had to adjust the tax due to corporate tax reduction. Due to this, we had to adjust the tax that we paid in the previous quarter and this led to a fall. But if we continue to walk at this rate then we will be able to cross the last year’s EBITDA margin, which stood at 6.4%. We are expecting that we will be posting an EBITDA margin of 7% by the end of this year.

Q: The Demand for diesel and petrol has risen to pre-COVID level. Is the case same in gas?

A: If I will talk about the diesel, petrol and transport sector then we have reached around 90-93% levels. There are two sectors, mainly the schools and colleges, where school buses were consuming around 4 lakh CNG peer day as against our 34 lakh per day consumption. The second is related to the IT sector, which is doing work from home due to which the public transport, like Ola and Uber mainly have closed and would have recovered to around 50% hardly. Due to this, we had an estimation that we should go down by 10-12% as against that it is 7% down, at present. This means that people are using private cars because of the social distancing and the conversion rate that existed in the pre-COVID era of around 5,000 vehicles per month in which 50% were factory fitted and 50% included the one that was converted. Interestingly, the figure had reached around 7,500. And, we have a target to take it to up to 10,000 and we are continuously working for it and for the purpose we are talking with all the manufacturers, like Maruti, Hyundai and Skoda, so that the conversion rate goes up.

Q: IGL is also planning to foray into the electric vehicle (EV) charging stations in tie-up with Mahindra Powerol. Tell us more about this and what are the revenue expectations from this business?

A: We are discussing and deliberation on EVs. So, on a sample basis, we have established two charging stations in cooperation with two companies, Tata and Mahindra, to see that understand the time that is spent and the problem that occurs. However, we have not been able to decide on it, yet, but very soon the decision will be made on the mode in which we should go, i.e. swapping or charging. The decision is likely to be made by December on the mode in which we will go for maybe swapping. We have aggressive targets of establishing around 50-60 stations but have not made any decision on with whom and how it should be done but we will be coming out very soon.

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Q: The government intends to increase the number of CNG stations in the country and your company has a target to increase it up to 10,000 stations. Then how many of the stations have been opened and how you will increase it? What are your expansion plans?

A: As far as CNG stations are concerned, then after the ninth and tenth round, around 10,000 CNG stations should be established in the next 4-5 years. Currently, there are around 3,000 CNG stations, which means around 7,000 CNG stations should be established in the next five years. So, if we look at the current 3,000 CNG stations than 555 CNG stations belong to us and we are thinking to establish another 500 new CNG stations in the next three years. This is our plan. As far as CapEx is concerned, we have a target of around Rs 1,000 to 1,200 crore every year.