Annual Report 2016-17 Download
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MAHANAGAR GAS LIMITED ANNUAL REPORT 2016 –17 POISED FOR GROWTH. INVESTING IN TOMORROW. As we enter an era of new-age energy, natural gas is gaining strength as the preferred fuel when compared to the efficiency and eco-sustainability of conventional fuels. With its cost competitive advantage, the natural gas industry is at a pivotal point of expansion for the ‘Age of Clean Energy’. Despite short term economic and industrial cycles, there is a momentous long-term opportunity for natural gas to play a much larger role in our energy-hungry economic landscape. The need for alternative fuel options is especially evident in Mumbai and its adjacent regions, which is where we enjoy market exclusivity. This dense urban-industrial cluster is witnessing the fastest expanding population growth in the country, spurring an urgent growth in demand for convenient and affordable clean energy. Natural gas, as an environmentally friendly fuel, is not only expected to cater to the demand for cooking and transportation fuel, but with raw-material gas costs remaining low for the foreseeable future, it is expected to play a key role in this region’s economic growth in the coming decades. With robust infrastructure and a well-primed operational efficiency, in addition to being the sole city gas distribution entity for its authorised regions, Mahanagar Gas Limited (MGL) is ideally positioned to lead this transformation. Today, MGL is strategically positioned to capture the benefits of this large and growing market by leveraging on its competitive strengths. With longer term growth opportunities in under-penetrated Raigad also under our belt, and with a focus on new areas coming under distribution bids, MGL is set to deliver sustainable growth and create value for the long term. COMPANY OVERVIEW COMPANY City Gate Station, Sion-Wadala CONTENTS At a Glance 2 Board of Directors 22 Our Financial Highlights 4 Corporate Information 24 Our Performance Highlights 5 Management Discussion & Analysis 26 Our Journey of Growth and Excellence 6 Directors’ Report 44 Message from the Chairman 8 Business Responsibility Report 80 Q&A with the Managing Director 10 Report on Corporate Governance 92 Expanding Boundaries to Reach you 12 Independent Auditors’ Report 118 Putting Technology to Work for you 14 Balance Sheet 124 Enriching Wealth of our Stakeholders 16 Statement of Profit and Loss 125 Ensuring Safety and Reliability 18 Statement of Cash Flows 126 Our Gas Distribution Network 20 Notes to the Financial Statements 129 ANNUAL REPORT-2017 | 1 At a Glance Mahanagar Gas Limited (MGL) is one of the The Company is promoted by GAIL (India) Limited (GAIL) and BG Asia Pacific Holdings Pte. Ltd (BGAPH) {ultimately owned by largest city gas distribution (CGD) companies Shell group}, each of who holds 32.5% of our Equity Shares. GAIL in India. With over 22 years of experience in is a Maharatna public sector undertaking and the largest natural gas transmission company in India. BGAPH is headquartered in supplying natural gas in Mumbai, MGL is the Singapore and is a part of the Shell Group. It is also a leader in sole authorised distributor of compressed the international exploration and production of oil, natural gas natural gas (CNG) and piped natural gas and LNG. (PNG) in Mumbai, Thane urban and adjoining MGL distributes natural gas through an extensive CGD network of pipelines. It has the exclusive authorisation to lay, build, expand municipalities and the Raigad district in the and operate in accordance with the Petroleum and Natural Gas state of Maharashtra, India. The Company Regulatory Board Regulations 2008 in Mumbai until 2020, in Thane Urban and adjoining Municipalities until 2030 and the distributes CNG for use in motor vehicles Raigad district until 2040. and PNG for domestic household as well as for commercial and industrial use. km 4,838 Pipeline Network 0.54mn CNG Customer Base mn 0.95 Domestic households with PNG connection 2 | MAHANAGAR GAS LIMITED COMPANY OVERVIEW COMPANY 3,218 203 Commercial consumers CNG Filling Stations, of which supplied with PNG 14 are company-owned 62 2.5695MMSCMD Industrial Consumers Volume of Natural Gas supplied with PNG Supplied in FY 2017 MAHANAGAR GAS LIMITED ANNUAL REPORT-2017 | 3 Our Financial Highlights EBIDTA (` Crore) Net Wotrh (` Crore) 7 9 40 6 8 28 , 7 1 04 , 6 6 1 5 , 0 0 1 3 5 8 5 3 6 4 1 2 5 6 , 5 5 3 1 , 1 FY2013 FY2014 FY2015 FY2016 FY2017 FY2013 FY2014 FY2015 FY2016 FY2017 Figures upto FY2015 are as per erstwhile GAAP (IGAAP) Figures upto FY2014 are as per erstwhile GAAP (IGAAP), however proposed dividend is not recognised, in line with Ind AS. Shareholding Pattern as on 31st March, 2017 Promoter and Promoter Group Government Others Mutual Funds FIIs / FPIs 10% 5% 10% 10% 65% 4 | MAHANAGAR GAS LIMITED COMPANY OVERVIEW COMPANY Our Performance Highlights z Added 6.45 km of steel and 185.2 km of PE Pipeline network, leading to 4,838 km of gas pipeline spread across Mumbai and its adjoining areas, and Raigad. z Daily reduction of over 1,400 tonnes of pollutants in Mumbai with the use of CNG. z Added 1.62 lakh customers to supply PNG and CNG. z During the year, 0.075 mn vehicles were added for CNG supply and 0.0865mn domestic households were connected for PNG. In addition, 402 commercial and 4 industrial consumers were added. z Added 15 CNG Filling Stations for small and medium vehicles. CNG filling facility at 17 depots is operational for over 3,341 public transport buses run by BEST, MSRTC, TMT and NMMT to provide pollution-free travel to the citizens. CNG Customers (Million) PNG Customers (Million) 5 9 4 . 5 0 . 6 0 .8 7 0 0 4 .8 . 0 0 2 0 .4 .7 0 4 0 .6 6 0 .3 0 9 .2 0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2013 FY2014 FY2015 FY2016 FY2017 CNG Volume (MMSCMD) PNG Volume (MMSCMD) 0 9 . 7 0 1 6 7 8 . 7 . 0 . 1 6 1 .6 2 1 .5 1 3 .6 2 0 .6 0 9 .5 0 6 .5 0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2013 FY2014 FY2015 FY2016 FY2017 ANNUAL REPORT-2017 | 5 Our Journey of Growth and Excellence 12-13 11-12 3rd CGS at Taloja & 4th CGS at Ambernath 10-11 150th CNG dispensing station 08-09 2nd CGS at Mahape 97-98 Pipeline PE - 2,500 km & Steel - 250 km Natural gas supply & transportation contract with GAIL Net Worth ` 0.76 billion 6 | MAHANAGAR GAS LIMITED 16-17 COMPANY OVERVIEW COMPANY 15-16 200th CNG dispensing station Listing on 14-15 NSE and BSE 13-14 New GA Raigad Net Worth 110% ` 18.4 billion allocation of domestic gas Pipeline PE – 3,800 km & Steel - 380 km MGL is the sole authorised distributor of CNG and PNG in Mumbai, Thane urban and adjoining municipalities and the 18.2% Raigad district. 19 Year CAGR of Networth ANNUAL REPORT-2017 | 7 Message from the Chairman I am pleased to present your Company’s yearly performance review for the year 2016-17. We successfully completed the IPO of the company in July 2016. I record my sincere thanks and appreciation to all investors who participated in our IPO and have stood by us with their investments in MGL. We had a strong year in FY 2017, marked by a dividend increase, growth in earnings and higher customer acquisitions. Our profit has grown by 26.5% and we reported volume growth of 5.7% during the year. Our results were driven by several factors, including operational efficiencies, growth in number of customers and subdued oil prices. In addition, our cost competitive and reliable gas sourcing arrangement and robust project delivery have helped establish extensive network, increasing our ability to reach more customers in our existing areas. Building on the strong foundation, we are confident to pursue the opportunities that await us. We believe that ability to recognise the right opportunity and deploy our talent and resources quickly - will allow us enhance our growth and reach. We have successfully commenced work on building infrastructure in the Raigad district. Furthermore, to increase the penetration in transport and domestic sector, we have till date set up 203 CNG stations and have reached 0.95 mn Mr. Akhil Mehrotra, Chairman homes. Growth Opportunities The penetration of CNG and domestic PNG is still low but increasing in Mumbai, Thane Urban and adjoining municipalities. This provides us with immense opportunity to grow in our existing areas. We had a strong Furthermore, the government now allocates domestic year in FY 2017, natural gas upto 110% demand of CNG and domestic PNG. This gives us the assured availability and cost advantage marked by a dividend against other competing fuels such as petrol, diesel and high speed diesel, paving the way for volume growth in future. increase, growth in In addition, the Central and State Government have been earnings and customer promoting the use of natural gas by maintaining lower tax rates compared to alternate fuels. With the Central acquisitions. Government gradually phasing out LPG subsidy, substitution to PNG is only set to increase. The government has also mandated the conversion of all app based aggregators’ taxis to clean fuel, which will boost demand manifold. The app 8 | MAHANAGAR GAS LIMITED COMPANY OVERVIEW COMPANY based taxis and aggregators have been given a 12 month On behalf of the Board of Directors and the entire time schedule to convert from alternate fuels to clean fuels management team, we would like to thank you for your trust like CNG. as we continue our journey to be amongst top-performing CGD Company.