Adani’s Gas Expert

WHEN SURESH P. MANGLANI joined Adani Gas four years ago after heading Reliance Industries’ commercial fuel retail business, it was a small company with less than ₹1,400 crore revenues. Adani Gas was formed in Ahmedabad in 2005. It was one of India’s oldest private city gas distribution (CGD) companies. In FY18, revenues were just ₹1,395 crore, and it handled 479 MMSCM (million metric standard cubic metres) gas with CGD networks in Ahmedabad, Vadodara, Faridabad and Khurja in UP. The network catered to just 3.15 lakh households, 1,250 industrial units, 2,400 commercial units and 70 CNG stations. That was mainly due to slow expansion of CGD network and highly regulated nature of the gas business.

“In 2014, only 6% of India’s population which lived in big cities had access to PNG at home. Now, after 10 & 11th bidding rounds (for building CGD networks), our entire population is going to get piped gas,” says Manglani.

The growth took off after the company got listed in November 2018, thanks to government’s ambitious CGD network coverage targets. That was the time Adani Group chairman Gautam Adani asked his nephew Pranav Adani, managing director (Agro, Oil & Gas) and director of Adani Enterprises, to develop the CDG business. Manglani was onboarded for spearheading the gas expansion plans.

Adani Gas and its separate JV with IndianOil, Indian Oil Adani Gas Private Ltd. (IOAGPL), together won 22 out of 86 cities in the 9th round of CGD auctions towards 2018-end. By FY20, revenues increased to ₹1,991 crore, with the company supplying 145 MMSCM to 4.36 lakh homes, 4,500 commercial and industrial consumers and 115 CNG stations. Despite Covid-19, it added 40,939 home PNG connections, 500 commercial and industrial consumers and 102 CNG stations over the next one year.

Another push came in FY22 when Adani Gas became Adani Total Gas (ATGL) after entering into a partnership with Total, which invested over ₹5,150 crore in 2020. Now the Adani group and Total together hold 74.8% stake as of June 2022. It won 14 new geographical areas (GAs) in the 11th round, reaching 52 GAs (including 19 GAs of IOAGPL), to become India’s largest CGD player. Revenues jumped 80% in FY22 to ₹3,206 crore. The company commissioned 117 stations in a year, taking total CNG stations under ATGL to 334. Together with IOAGPL, the number of CNG stations increased to 550. ATGL added 85,840 new connections during the year, taking total PNG home connections to 5.64 lakh. Industrial and commercial connections increased to 5,676 with 710 new clients in a year. Combined CNG and PNG volume was 697 MMSCM, an increase of 35% over FY21.

Now, PNG home connections have crossed six lakh, after the company started 15 new CNG stations in first quarter of FY23 and took total network to over 6,086 inch km of steel pipeline on the back of new GAs in 9th and 10th rounds. With 52 GAs under the belt, Adani and Total are planning to invest ₹20,000 crore in CGD and gas infrastructure over the next eight years to cover at least 15% of India’s population and over 1,500 CNG stations. “Now with more GAs, our annual spend in expansion of the CGD network will significantly increase in the coming years”, says Manglani, an expert with nearly three decades of experience in the field. “We expect ATGL’s gas volumes (excluding IOAGPL) to grow at a CAGR of 41.3% to 1,451 MMSCM over FY21-24, while revenue and net profit are expected to record CAGR growth of 45.6% (to ₹5,238 crore) and 38.7% (to ₹1,228 crore), respectively, over the period,” says equity research firm Ventura. “Our group’s capabilities in other segments like shipping and infrastructure and prudent bets on long- and short-term booking of gas have been the keys to our performance,” says Manglani. “The chairman (Gautam Adani) says you should share your expertise in gas distribution to benefit the sector as India’s gas distribution infrastructure is yet to shape up,” says the 57-year-old professional.