Chapter 1

CORPORATE FINANCE OF IGL LTD.
ACKNOWLEDGEMENT
I wish to express my to Mr. Rajesh vedvyas for giving me an opportunity to be a part of such an esteem organization and for helping me to enhance my knowledge by granting permission to do my summer training project under their guidance. I am grateful to Mr. Rajjat Kumar my mentor, for his invaluable guidance and support during the course of the project. He provided me with his assistance and support at all the times when needed also he has been a significant being who helped in the completion of this project. I am also thankful to Mr. Saibal biswas, who helped me as and when required with his big reservoir of experience and knowledge.
Santosh Kumar Gupta
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PREFANCE
MBA is a masters degree, which equips a student with much needed corporate comprehension & academic knowledge to ensure ones step in corporate world would leave a mark. Every student of MBA, as a part of the curriculum, is required to undergo a practical training in a reputed corporate organization for a stipulated period of 6 to 8 weeks. This training is usually undertaken after the completion of first year of MBA. This training period is of utmost importance for a student as it proves to provide a firsthand expertise and understanding which in turned helps in preparing them for corporate world. It has been a blessing for me that for my summer training project I got an opportunity to work with one of the esteem organization. During the shot span of two months, I have learnt about pricing mechanism, working capital, mutual funds, fixed maturity plan, gilt funds and other investment options.
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TABLE OF CONTENT Chapter 1: INTRODUCTION 1.1: Need for the study.....6 1.2: Objectives of the study..7 1.3: Background....8 1.4: Research methodology....9 1.5: About the company...11 Chapter 2: INDUSTRY OVERVIEW.....15 Chapter 3: ORGANISATION STUDY
3.1: Profile of IGL..27
3.2: Vision of IGL...29
3.3: SWOT Analysis .......30
3.4: Companys Operations..31
3.5: Structure of Finance Department .30
Chapter 4: WORKING CAPITAL MANAGEMENT IN IGL...43
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4.1: Credit Management53
4.2: Inventory Management68
4.3: Receivables Management70
4.4: Investment analysis........81
4.5: Ratio Analysis...84
4.6: Cash Management.92
4.7: Financial Analysis.95
Chapter 5: LIMITATIONS, CONCLUSIONS & RECOMMENDATIONS...96
Chapter 6: ANNEXURE..99
Chapter 7: BIBLIOGRAPHY106
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CHAPTER 1: INTRODUCTION This project deals with the study of working capital management, what exactly is the working capital; how the working capital requirement of a company is maintained and managed efficiently. Every business needs funds for two purposes for its establishment and to carry out its day- to-day operations. Long terms funds are required to create production facilities through purchase of fixed assets such as p & m, land, building, furniture, etc. Investments in these assets represent that part of firms capital which is blocked on permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw material, payment of wages and other day to day expenses etc. Working capital is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. Net working capital is working capital minus cash (which is a current asset) and minus interest bearing liabilities (i.e. short term debt). It is a derivation of working capital that is commonly used in valuation techniques such as DCFs (Discounted cash flows). Working Capital = Current Assets Current Liabilities. A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt
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and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable and cash. Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing shortterm debt and upcoming operational expenses. This project deals with working capital management. It involves two things
I) - current assets management, II) -financing of these current assets. Current assets include: cash, marketable securities, bills receivable, inventory, prepaid expenses etc. this project only cash, inventory, and bills receivable management have been reviewed for the concern, under study.
Every business needs adequate liquid resources in order to maintain day-to-day cash flow. It needs enough cash to pay wages and salaries as they fall due and to pay creditors if it is to keep its workforce and ensure its supplies. Maintaining adequate working capital is not just important in the short-term. Sufficient liquidity must be maintained in order to ensure the survival of the business in the long-term as well. Even a profitable business may fail if it does not have adequate cash flow to meet its liabilities as they fall due.
There are two concepts of working capital- gross and net.
Gross Working Capital focuses on
- Optimization of investment in current asset. - Financing of current asset
Net Working Capital focuses on
- Liquidity position of the firm - Judicious mix of short-term & long-term financing.
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1.1 Decision criteria

By definition, working capital management entails short term decisions - generally, relating to the next one year period - which is "reversible". These decisions are therefore not taken on the same basis as Capital Investment Decisions (NPV or related, as above) rather they will be based on cash flows and / or profitability. One measure of cash flow is provided by the cash conversion cycle - the net number of days from the outlay of cash for raw material to receiving payment from the customer. As a management tool, this metric makes explicit the inter-relatedness of decisions relating to inventories, accounts receivable and payable, and cash. Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims at a low net count. In this context, the most useful measure of profitability is Return on capital (ROC). The result is shown as a percentage, determined by dividing relevant income for the 12 months by capital employed; Return on equity (ROE) shows this result for the firm's shareholders. Firm value is enhanced when, and if, the return on capital, which results from working capital management, exceeds the cost of capital, which results from capital investment decisions as above. ROC measures are therefore useful as a management tool, in that they link short-term policy with long-term decision making. See Economic value added (EVA).
Management of working capital Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the current
assets (generally cash and cash equivalents, inventories and debtors) and the short term financing, such that cash flows and returns are acceptable. y Cash management. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs.
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Inventory management. Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials - and minimizes reordering costs and hence increases cash flow; see Supply chain management; Just In
Time (JIT); Economic order quantity (EOQ); Economic production quantity y Debtors management. Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and allowances. y Short term financing. Identify the appropriate source of financing, given the cash conversion cycle: the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to cash" through "factoring".
1.2:Objective
y y
To study the concept followed in IGL regarding their management of Working Capital. Try to design a model that can judge the efficiency of their policies regarding to the same.
y y y
To understand the importance of Working Capital Management. To analyze the liquidity position of the organization. To analyze the short-term financing policies and patterns, which affect the working capital of the organization.
y y y
To study the factor that affects the Working Capital Management at IGL. To find out the Profitability and Operational efficiency of the organization.
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1.3: Background
There exists a huge difference between what we study in our classroom and what actually being followed by the corporate when it comes to the financial world.So,a summer training programme is just a way to get interacted with the corporate world and try to adopt the working habit and try to learn the practical applications of all the theories, procedures and techniques adopted. The topic for the project taken i.e. Working Capital Management & Pricing Mechanism, involves the study of the policies of management of IGL to make best use of their financial resources and the techniques they use to do so. These policies aim at managing and the the current short term
assets (generally cash and cash
equivalents, inventories and debtors)
financing, such that cash flows and returns are acceptable.
Relevance of the Project: With the study of Working capital management of IGL, it seems that Working Capital is important because maintaining a balance of income to debt can be difficult and owners must be diligent to assure that it is kept. Sometimes it takes a little assistance to maintain levels of fluidity or make major purchases. If working capital dips too low, a business risks running out of cash. Even very profitable businesses can run into trouble if they lose the ability to meet their short-term obligations. Working capital financing can be used as a fast cash option to cushion the periods when the flow is not ideal or readily available. Even when owners are meticulous in managing working capital, finding the right levels to remain comfortable and competitive can be difficult. As IGL is one of the largest & well-based organizations, where working capital management has efficiently worked.
IGL has achieved the following Goals: y To ensure a healthy return on investment by maximizing operational efficiency, capacity utilization and productivity.
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To continually improve and redesign systems, processes and practices in order to ensure error prevention and response time.
To adopt internal customer focuses as a means to external customer satisfaction.
To treat human resource as the key to Quality Excellence and ensure development and satisfaction in employees.
To ensure high quality of inputs through proactive interaction with suppliers.
To meet obligation towards the society as a responsible corporate citizen.
To provide value for money to all stake holders.
To follow ethical business philosophy at all time
1.4: Research Methodology:

The methodology adopted for the project is divided into two parts: 1): Qualitative Analysis 2): Quantitative Analysis.
y y y
Qualitative Analysis: It is required to study the business profile of the Organization,
its nature, its functionality, the hierarchy and the functioning of management, the performance of the Company in last few years and what policies they adopt and studying what role the Working Capital plays in a manufacturing, transmission and pricing concern.
y
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It is required to analyze the Current Assets and the Current Liabilities position of the
Company, the statement of Working Capital Changes, estimating the Working Capital Requirement, calculating and analyzing Operating Cycle, analyzing the Working Capital Ratios to reveal the financial position and soundness of the business and to provide a good basis of qualitative analysis of the financial problems and use of modern tools to show the trend of Working Capital for future year. y Step 1- It focuses towards the preparation of the project to compile all the material
facts available on the subject like Annual Report of the company, Working Capital information and the data about the performance of the in last few years.
Step 2- To calculate Working Capital Ratios so that the financial soundness of
company can be estimated. Further to calculate the Operating Cycle to know how frequently its stocks gets converted into cash.
Step 3- To undertake a through SWOT analysis.
The project involves the study of current policies of IGL regarding there Working
Capital Management and analyzing the techniques of managing the working capital by the organization in an efficient way. At last giving valuable comments and recommendations wherever required to make their policies much more efficient. For doing this it is important to go through the working of the organization, its current financial status, future prospects, information regarding its financial ratios, the strategies of competitors. y The major purpose of descriptive research is to give a description of the state of
affairs, as it exists in the present. The main characteristic of this method is that researcher has no control over the variables. The researcher can only report what has happened or what is happening. What, where, when, how are the researcher and why. Descriptive Report is that subscription which answers or addresses all these questions. The study mainly based on the secondary data which refers to that form of information that has been already collected and is available. These include some internal sources within the company and externally these sources include books and periodicals, published reports
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and data of HNGIL and the annual reports of the company. Interaction with the various employees of the accounts department has also been a major source of information.
1.5:About the company:

Indraprastha Gas Limited is in retail gas distribution business supplying compressed natural gas (CNG) to the transport sector and piped natural gas (PNG) to domestic and commercial sectors. The Company also supplies re-gasified liquid natural gas (R-LNG) to 16 industrial consumers. The total number of CNG stations increased from 181 to 241 between the fiscal years ended March 31, 2009, and March 31, 2010 (fiscal 2010), which included 69 mother stations, 46 online stations, 46 daughter booster stations and two daughter stations. The Company extended the piped natural gas distribution infrastructure to the new areas in Delhi, which includes Sarita Vihar, Jasola, Dwarka (Sector -1 to 12), Rohini, Pitampura, Janakpuri, Maya Enclave, Saket, Hauz Khaz, Paschim Vihar, Vikaspuri, Dilshad Garden, Mayur Vihar, Vasant Kunj, Pushp Vihar, Aram Bagj, Nivedita Kunj and Vasant Vihar. As of March 2010, the Company has provided PNG connections to over 122,000 domestic and 300 commercial customers.
Investment Rationale
Demand push from favorable government regulation to pave way for expansion: Indraprastha Gas Limiteds first mover advantage gives it a virtual monopoly in Delhi because of its investment in gas infrastructure across the city. Due to increasing demond for natural gas on the back of government regulation for LCVs into CNG, the company has planned to expand geographically across Delhi and neighboring areas. Alongside, these areas also hold huge potential to generate demand of PNG. With increase gas supply due to commencement of KG basis gas production and capacity addition at Dahej terminal, IGL would effectively supply PNG to satisfy industrial demand, which is facing supply constraints.
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Financial Review:
The company has been showing consistently good financial performance both in terms of turnover and profitability. During the year, gross turnover of the company increased by 26% from Rs. 9621.37 million in year 2008-2009 to Rs. 12131.31 million in the year 2009-2010. Profit after tax also went up by 25% from Rs. 1724.74 million in 2008-2009 to Rs.2154.96 million in 2009-10. y Dividend:
COMPANYS directors are pleased to recommend dividend of 45% (Rs. 4.50 per share) as against 40% (Rs. 4/- per share) in the last year. The proposed dividend including corporate dividend tax would absorb Rs. 734.64 million.
Future outlook:
NCT OF DELHI Company has drawn out plans to further consolidate its presence in the NCT of Delhi by investing Rs. 915 million during the financial year 2010-11 for CNG expansion.
CNG being an eco-friendly and economical fuel, a large number of private car manufacturers are introducing their CNG variants. Due to wide acceptance of CNG, there has been a large-scale conversion of private cars into CNG mode. This segment will give a boost to CNG sales in the coming years.
IGL has planned a large expansion in PNG segment. A capital expenditure of Rs. 1940 million has been earmarked for augmenting infrastructure in the existing areas as well as for expansion in new areas of Delhi during the financial year 2010-11. The company has plans to provide new PNG connections to over 50000 domestic households.
EXPANSION PROJECTS IN NATIONAL CAPITAL REGION (NCR)
IGL has planned capital investment of Rs. 2400 million for the NCR towns of Noida, Greater Noida & Ghaziabad to augment its CNG and PNG infrastructure.
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SHAREHOLDING PATTERN
INDIVIDUALS 10% CORPORATES 8% OTHERS 1%
F.I. INVESTORS 12%
INDIAN PROMOTOR 45%
INSURANCE CO. 3% GOVT. 5% F.I 3%
M.F 13%
PHYSICAL PERFORMANCE:
During the year, the Company recorded sales as under: (Figures in standard Cubic Meters)
Product CNG PNG TOTAL FINANCIAL RESULTS:
2010-11 695,127,167 87,310,564 782,437,731
2009-10 605,255,608 54,257,774 659,513,382
ITEMS Net Sales & other income Profit before Depreciation & Tax Depreciation Profit before tax Provision for tax Profit after tax
2010-11 10992.24 4018.90 774.52 3244.38 1089.42 2154.96
2009-2010 8789.91 3262.94 674.34 2588.60 863.86 1724.74
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Profit brought forward from previous year Profit available for appropriations APPROPRIATIONS: Proposed dividend Corporate dividend tax Transferred to general reserve Profit carried forward
4732.53 6887.49
3835.43 5560.17
630.00 104.64 215.49 5937.36 6887.49
560.00 96.17 172.47 4732.53 5560.17
Company Description:
Incorporated in 1998, IGL took over Delhi City Gas Distribution Project in 1999 from GAIL (India) Limited (Formerly Gas Authority of India Limited). The project was started to lay the network for the distribution of natural gas in the National Capital Territory of Delhi to consumers in the domestic, transport, and commercial sectors. With the backing of strong promoters-GAIL(India)Ltd. And Bharat petroleum Corporation Ltd. (BPCL)- IGL plans to provide natural gas in the entire capital region.
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CHAPTER 2: INDUSTRY OVERVIEW
STRUCTURE OF INDIAN ENERGY SECTOR:

Energy has been universally recognized as one of the most important inputs for economic growth and human development. There is a strong two-way relationship between economic development and energy consumption. On one hand, growth of an economy, with its global competitiveness, hinges on the availability of cost-effective and environmentally benign energy sources, and on the other hand, the level of economic development has been observed to be reliant on the energy demand. Energy intensity is an indicator to show how efficiently energy is used in the economy. The energy intensity of India is over twice that of the matured economies, which are represented by the OECD (Organization of Economic Co-operation and Development) member countries. Indias energy intensity is also much higher than the emerging economiesthe Asian countries, which include the ASEAN member countries as well as China. However, since 1999, Indias energy intensity has been decreasing and is expected to continue to decrease.
This could be attributed to several factors, some of them being demographic shifts from rural to urban areas, structural economic changes towards lesser energy industry, impressive growth of services, improvement in efficiency of energy use, and inter-fuel substitution. Indian Energy Sector fulfils around 90% of the energy requirements in India. The majority of India energy
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needs are fulfilled by energy from coal. The inadequacy in the supply of energy is balanced out by energy imports from other countries. The India energy scenario shows a drift in the energy balance mainly due to the differed energy sources in India. The India energy policy states the measures taken by the Government of India to meet all the energy requirements and deal with the energy crisis India might face if proper energy policy and energy management is not undertaken. These include mass energy conservation and efficient use of energy. Also various energy zones have been demarcated for large-scale energy harvesting and then using it efficiently by energy conversion to other more usable forms of energy by using various energy conversion devices. The study of energy in India includes:
TYPES OF ENERGY:
Non-Renewable Energy: Petroleum, Natural Gas and Coal Renewable Energy: Solar Energy, Hydroelectric Energy, Wind Energy, Nuclear Energy, Tidal Energy, Hydrogen Energy, Wood Energy, Energy from Biomass or Bio-fuel, Chemical Energy and Geothermal Energy.
SOURCES OF ENERGY IN INDIA

The various energy resources used in India include fossil fuels providing petroleum and natural gas and coal mining that cater to the coal energy demands in India. y The sun is the source for solar energy that is converted to electrical energy using solar panels. y The vast water resources in and around India are utilized by conversion of the kinetic energy from the flowing water as in waterfalls and the dams built on various rivers into electric energy. y y The energy of the tides and tidal waves is also utilized for electrical energy harvesting. The usage of wind energy comes in the form of windmills and huge wind energy farms for generation of usable energy forms by transformation of the kinetic energy of the wind
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into energy units. y Other sources of energy in India include biomass energy by burning bio-fuels available in large quantities owing to the huge domestic cattle population in India. y Energy is also derived from the vast timber resources of the country. This forms the wood energy. y Nuclear energy or atomic energy from radioactive materials has been developed into a vast industry in itself. y Geothermal energy is an unlimited natural energy source that utilizes the steam from hot water springs that acts as energy boosters to drive turbines of power plants. y y The various chemicals are used for chemical energy generation used in batteries. Even the hydrogen available in large quantities in the environment has been captured and utilized as an energy source by reacting hydrogen with oxygen.
The energy sector in India has been receiving high priority in the planning process. The total outlay on energy in the Eleventh Five-year Plan is Rs.854123 crores (19%) at 2006/07 prices, & for annual plan of year 2009/10 it is Rs.115574 crore.In the recent years, the government has rightly recognized the energy security concerns of the nation and more importance is being placed on energy independence. In the recent years, Indias energy consumption has been increasing at one of the fastest rates in the world due to population growth and economic development. Indias commercial energy demand is expected to grow more than 4% per year rapidly than in the past as it goes down the reform path in order to raise standards of living. A large part of India's population does not have access to commercial energy. Despite the overall increase in energy demand in India is still very low compared to other developing countries. India is well-endowed with both exhaustible and renewable energy resources. Coal, oil, and natural gas are the three primary commercial energy sources. Indias energy policy, till the end of the 1980s, was mainly based on availability of indigenous resources. Coal was by far the
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largest source of energy. However, Indias primary energy mix has been changing over a period of time. Despite increasing dependency on commercial fuels, a sizeable quantum of energy requirements (40% of total energy requirement), especially in the rural household sector, is met by noncommercial energy sources, which include fuel wood, crop residue, and animal waste, including human and draught animal power. However, other forms of commercial energy of a much higher quality and efficiency are steadily replacing the traditional energy resources being consumed in the rural sector. Resource augmentation and growth in energy supply has not kept pace with increasing demand and, therefore, India continues to face serious energy shortages. This has led to increased reliance on imports to meet the energy demand. With the recently held INDIA ENERGY CONGRESS in New Delhi, certain predictions were being discussed regarding the demand and availability of energy resources in India in coming days. The Integrated Energy Policy Report prepared by Planning Commission, Govt. of India, has estimated Energy supply and demand for India till 2032 and concluded that a significant d emand-supply g ap is expected to build in future. Considering GDP growth of 8% per annum, the demand for oil is estimated to be over 480 Million Tonne (MT) by 2032 as against production of 35 MT. With this alarming demand-supply gap the import dependency will be rising, having an overall impact on the economy. For Natural Gas, the demand is estimated at around 600 MMSCMD while the domestic production would meet only 50% of the demand. Coal will continue to play a major role in meeting energy requirement of the country. Bu t even so, against a demand of over 1000 MTOE, domestic production is expected to be only around 550 MTOE. India is the 5 largest energy consumers in the world but per capita primary energy consumption is only 375 kgoe, t h whereas China stands at 1511 k go e and the world average is 1687 kgoe. India has 17% of worlds population but only 0.8% of worlds known oil & gas resources. With the present production rate, the current recoverable reserves in oil, natural gas and coal would serve the country for 21 yrs, 36 yrs and 114 yrs respectively. Currently over 70% of Indias energy needs are being met by imports. The energy requirement is expected to grow in the coming years and it is projected that India would become the 3rd largest energy consumer by 2020, after US & China.
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Recent concerns about climate change are challenging traditional thinking or approach. Energy shortages can disrupt economic development, so a well diversified portfolio of domestic or imported traded fuels and energy services is required. This challenge relates to the long-term continuity of supply as well as to the short-term quality of service These and other similar issues require a re-assessment of supply potential of the different energy sources already available today or to be developed in the near future. What is the right energy mix for the years to come?
Challenges regarding efficient use of fossil fuels: Transforming primary energy into an end-use ready energy product is becoming an increasingly challenging process. Given the high cost of energy, this process must be as efficient as possible. It must also be efficient in using other natural resources, such as land and water, and be as clean as possible. The final uses of energy, in particular, hydrocarbon-based fuels, must also be efficient as that will also reduce the carbon emissions. There are solutions already in existence addressing these impacts and others are being developed. Given India's fossil fuel dependence, and the continuance of coal usage over the foreseeable future from an energy security perspective, it is essential for the government to mandate use of more efficient and commercially proven thermal generation technologies while also contributing to global efforts in developing viable advanced technologies such as for carbon capture and storage, IGCC etc.
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Indian scenario India, the worlds fifth largest consumer of primary energy, is struggling to supply additional energy to fuel its economic growth. The Indian energy requirement shall keep pace with growing GDP during the next few decades. Currently, coal is the primary source of energy for the nation, followed by oil. Natural gas comes in next but with a small share in the energy basket. The countrys heavy dependence on coal and oil for 85% of the energy is a concern from the environment as well as energy security perspective. Natural gas first came into picture around 1980 in India, when natural gas exploration was started at Bombay High oil fields by ONGC. Until then, whatever natural gas was found anywhere was flared up, in the absence of knowledge about its value. Now, companies have even started looking for non- associated gas fields. Share of natural gas, as a primary energy source, is expected to grow from 8 % in 2004 to around 23% in 2032 in the overall basket. As per the India Hydrocarbon Vision 2025, the natural gas. demand is expected to be 313mmscmd by 2011- 12 While India has significant natural gas reserves, its domestic supply is not likely to keep pace with demand and the country needs to import significant amounts of gas either as LNG or via pipeline.
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As of now (till 2009), India has been importing over 20% of its natural gas requirement. New sources of gaseous fuel like coal bed methane (CBM) will be opened up, with the advent of the NELP (new exploration licensing policy) and CBM policies.
INDIAN GAS SECTOR:

Owing to the climate change concerns worldwide, the emphasis on clean energy is increasing day by day. Natural gas, with its inherent environment-friendly nature, is assuming greater significance in the energy sector. Share of natural gas in Indias energy basket has gradually increased to 9%. Although it is still low, compared to the world average of 24%, the steep growth in demand coupled with recent increase in supplies owing to the large discoveries on the east coast has instilled the confidence that the natural gas contribution in Indian energy sector will significantly increase. The likely increase of share of gas in consumption pattern in Indian context is further supported by the fact that only around 20% of Indias sedimentary basin has been explored.
Demand for natural gas has been increasing world over due to increase in energy requirements & being environment friendly. Natural gas, accounting for 24% of the total global primary energy supply, is the third largest contributor to the global energy basket. The global gas markets are integrating rapidly & the new market structures are evolving. More importantly, the Asian gas markets are leading the growth in global sector, with special investment focus on countries like India & China. With Chinas energy demand growing by 15% & Indias by 7.8%, these two Asian giants are projected to be the leading gas consumers by the end of the year 2020.
LNG has been one of the key drivers of the global gas market integration. With an almost 75% increase in liquefaction capacities from 87 MMTPA to more than 150 MMTPA over the past 10 years, share of LNG in global gas trade has grown from 14% to 26%. By meeting the buyers expectations through price & contractual flexibilities, destination flexibilities LNG trading has emerged as a truly global & mature business.
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At the same time, trans-national gas pipeline have continued to be a dominant gas supply option, especially between contiguous nations, & have emerged as a dominant integrating factor. The Iran-Pakistan-India pipeline & the Turkmenistan-Afghanistan-Pakistan-India pipeline are receiving the highest attention from the concerned Governments.
MAJOR KEY PLAYERS IN INDIAN GAS SECTOR

Oil And Natural Gas Corporation (ONGC) Hindustan Petroleum Company Ltd (HPCL) Bharat Petroleum Corporation Ltd (BPCL) Gail (India) Limited Indian Oil Corporation (IOC) Reliance India Limited (RIL) Gujarat State Petroleum Corporation Limited (GSPCL) British Gas Limited
y y y y y y y
Indian Oil & Gas Industry Recent developments in Indian oil and gas market.
In the last two years, India has reported 21 oil and gas discoveries, including major gas finds in the Krishna-Godavari Basin by Reliance-Niko Consortium and Cairn Energy, in Vasai by ONGC, near Surat by Niko and most recently in Rajasthan by Cairn Energy.
The total discoveries in the last two years amount to over 800 million metric tonnes of oil and oil equivalent gas. The Cairn Energy discovery is the largest oil discovery in the country in the last 20 years. The discoveries in recent years are significant in terms of gas finds as you can replace one energy fuel with the other. As of now, India produces around 65-70 metric million standard cubic meters per day (MMSCMD) of gas as against the requirement of 120 MMSCMD, which is 60 per cent of the requirement.
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The discoveries being more in gas, we can be buoyant and bullish about the prospects. The discovery of gas by Reliance Industry on the eastern shore in the Krishna-Godavari basin is estimated to be 10-14 trillion cubic feet (TCF) of gas, which translates into 25-35 MMSCMD. This is a huge amount. The gas in the block held by Reliance could be a little more than estimated. The second major discovery is of (Cairn Energys) Lakshmi in the Gulf of Cambay with about 3 MMSCMD and from Ravva satellite field off Andhra Pradesh coast there has been an increase in production of gas. There have been a number of other small discoveries in the eastern shore by the Oil and Natural Gas Corporation (ONGC), as also on the western shore. We also have gas from Myanmar, on the border with India, to look forward to. It is estimated that the offshore block, in which two state-owned companies have 30 per cent equity stake, is around four to six trillion cubic feet as of now. Some estimate that this could be as much as 1442 TCF. We are studying to bring this gas to India and are working on the pipeline for this. Lastly, India has developed two liquefied natural gas (LNG) terminals. One is the Petro net LNG at Dahej, which has been commissioned to supply 17 MMSCMD gas. This could be doubled very shortly. We also have the Shell terminal in Hazier, which would be providing us 8-10 MMSCMD gas once it is commissioned by the year-end.
In addition, India is increasingly being viewed as an aggressive spot LNG buyer. The recent gas discovery in the Krishna-Godavari (KG) Basin has also raised hopes of increase in domestic natural gas production in the future. The Iran- Pakistan-India pipeline proposal, after a long period of uncertainty, now seems to be moving forward. As regards the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, Indias prospects as a partner are now looking brighter. The recent approval of a market-evolved price for the gas from the Krishna-Godavari basin has set a good precedent for the development of market-determined pricing for natural gas in the country. Internationally, the petrochemicals industry has been one of the drivers of industrial development, constituting 40% of the global chemicals market. World over, the petrochemicals industry is integrated with the refineries/gas sector.
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Although Indias present petrochemicals production and consumption is small by global standards, it is amongst the fastest growing markets in the world. Indias per capita consumption is 5 kg as against the world average of 25 kg. During 2007-08, to ease the financial burden on the public sector oil marketing companies (OMCs) arising out of controlled domestic prices of petrol, diesel, PDS kerosene and domestic LPG in the face of spiraling crude oil and petroleum product prices in the international market, the Government of India had raised the prices of petrol and diesel marginally. Besides this, the Government also issued oil bonds to the OMCs to partially compensate for the losses suffered by them on account of inadequate pass-through of prices to the consumers. The government has issued bonds worth Rs 10,305 crores for 2008-09 to the three state-owned oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) partially compensating their revenue losses arising from the sale of fuel at government-determined rates, which are often below the cost. The three public sector oil companies lost about Rs 103,300 crores in 2008-09 by selling the four fuels below cost price. The government has issued oil bonds worth Rs 60,967 crores to the three companies so far. They have also received discounts worth Rs 32,000 crores from stateowned upstream companies ONGC, IOC and Gail India on the purchase of raw materials such as crude oil and liquefied petroleum gas (LPG). The prevalent scheme of subsidies and pricing has resulted in a huge price-insensitive demand expansion for these products. The Ministry of Petroleum & Natural Gas has set up a corpus fund of Rs. 100 crores, with contributions from the national oil companies and the Oil Industry Development Board, to undertake Hydrogen research activities with Indian Oils R&D Centre as the nodal agency. The proposal of setting up the Petroleum, Chemicals & Petrochemicals Investment Regions (PCPIRs) is another important initiative by the Government of India. By offering a transparent and investment-friendly policy and facility regime, PCPIRs aim to attract major investment, both domestic and foreign, in these key industry segments. The Indian hydrocarbon sector spends around Rs. 200-250 crores on R&D every year, which is meager, compared to its annual turnover of over Rs. 4, 00,000 crores. In the context of globalization and the need for improving energy efficiency and developing indigenous technology and alternative fuels, the expenditure on R&D
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efforts needs to be scaled up substantially, with enhanced participation from the private sector players.
Risks and concerns;

The oil and gas corporations have been suffering losses due to price controls on the four principal petroleum products. y The subsidies received from the Government, discounts from upstream companies and the oil bonds issued by the Government only partially offset these losses. Due to lag in receipt of oil bonds, the borrowings have increased considerably. y However, due to the contribution of the Government and the Reserve Bank of India in relaxing lending norms to the oil companies, the Corporations are able to maintain crude oil imports and payment obligations. y With strain on liquidity, while there is no let-up in the ongoing projects, new projects are being undertaken on priority and strategic need. IGLs and IOCs exploration & production (E&P) business portfolio has increased steadily over the years. However, with no major breakthrough as yet, the risks normally associated with such investments linger till commercial discoveries are made, which are expected to be clear in another couple of years down the line. y The other big challenge in the medium term will be to make sure that funds are available for the large capex plans that the company needs for its strategic growth in the future. One big project is the 15 mt refinery-cum- petrochemical project at Paradip on the east coast resources need to be found to go ahead with the project
Challenges and Opportunities
A growing economy and a dynamic industry present a number of opportunities and challenges to the Corporations as a key energy supplier. With increasing globalization and competition in the sector, the challenge the Corporations face is in transforming into the least-cost supplier of quality products and services to customers.
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In addition, the Companies are also considering entering into other energy sub-sectors to complement its own line of business. With RILs gas flowing, Mahan agar Gas Indias biggest city gas distributor is in expansion mode to transport the gas from south Mumbai to suburbs such as Bhayandar, Mira Road, Navy Mumbai and Thane. The company is investing over Rs 2,200 carors to lay the infrastructure and add new connections. Others like IGL, RIL, Indraprastha Gas, Sabarmati Gas, Green Gas, Avantika Gas and HPCL are also expanding their networks. In the recent years, the IGL has been making efforts to tap opportunities across the entire value chain of the oil & gas business. It has forged strategic alliances in the E&P sector. Having successfully entered the petrochemicals sector, it has ambitious plans for the future. IGL and other oil and gas companies have a very eye on rival oil companies, globally as well as within India, that are growing through acquisitions of oil producing companies and assets. With oil prices at record highs, these acquisitions do not come cheap. One treasure chest that has been held in reserve for such needs, are Indian Oils and IGLs staking in sister oil company ONGC. Worth about Rs 18,000 crores at last count, companies hope to be able to tap into this, if push comes to shove. Overall, as we head into election year and oil price increases seem more and more unlikely the debt funding shall increase for oil and gas companies.
GAS DEMAND
On the background of fast GDP growth, & the economic reforms process in India, the Indian Natural Gas Sector is showing signs of accelerated growth driven by a number of demands pull factors. The current consumption of about 100 MMSCMD of gas in India is primarily shared by the power & fertilizer sector to the tune of 42% & 31% respectively. This is followed by petrochemical 4%, city gas- 4%, CNG -- 4%.The consolidated gas demand by 2011-12 is estimated to be 283 MMSCMD.
GAS SUPPLY
On the gas supply side, the domestic supplies would be primarily driven by the expected supply from the KG Basin by RIL in 2009-10. The supplies projected by ONGC in the next 5 years are
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expected to fall. The supplies from the private players/JVs are expected to increase primarily due to gas supply by RIL from 2009-10 onwards & by GSPC looking at the overall demand projections & the expected domestic supplies; there would be a supply shortfall.
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CHAPTER 3: ORGANISATION STUDY

Indraprastha Gas Limited (IGL) the sole supplier of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in the National Capital Territory of Delhi today announced its audited annual financial results for 2010-11. The companys gross turnover has increased to Rs. 1952 crores in FY 11 from Rs. 1213 crores in FY 10, thereby showing a growth of 61 %. The net profit in FY 11 showed a growth of 20% going up from Rs 215.5 crores in FY 10 to Rs. 259.77 crores. During 2010 - 11, total sales volume grew by 28% over the previous year. The average daily gas sale during the year has gone up to 2.75 mmscmd from 2.14 in the previous year. The board has recommended a dividend of 50% for consideration of the members in Annual General Meeting. In Q4 of 2010-11, the companys net profit for the quarter increased from Rs. 51.49 crore in corresponding period last year to Rs 69.16 crore in FY11. During this period, IGL registered a turnover of Rs. 566 crore as compared to Rs. 324 crore in the corresponding period last year thereby registering a sales value growth of 75% in financial terms. There has been an overall sales volume growth of 32% over the corresponding quarter in the last fiscal. Product wise, CNG recorded sales volume growth of 16%, while PNG recorded sales volume growth of 136% in the quarter as compared to last year.
3.1: Company Profile

IGL has already embarked on a massive expansion programme in NCT of Delhi as well As NCR. There has been a major increase in demand due to all round conversion of Vehicles to CNG and increased acceptability of PNG as a domestic fuel. Capex of over Rs 3000 crore has been earmarked for expansion of the infrastructure in Delhi, Noida, Greater Noida and Ghaziabad for the next five years. IGL is currently on a fast track expansion of its infrastructure. 278 CNG stations have already been commissioned by IGL. Over 60,000 new domestic PNG connections are planned to be added in 2011-12 taking the total number of domestic PNG connections in Delhi, Noida, Greater Noida and Ghaziabad to over 3lakh. Over 30 new CNG stations
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have also been planned to be added in the region. The role of IGL in checking the vehicular pollution in Delhi is well acknowledged both at national as well as international forums. IGL has well laid out its city gas distribution infrastructure in Delhi, Noida, Greater Noida and Ghaziabad which consists of over 4500 Kms of pipeline network. The network has connected nearly 2,50,000 households and commercial establishments. IGL is meeting fuel requirements of over 4 lakh vehicles running on CNG in NCR.
HISTORY:
Indraprastha Gas Limited (IGL), incorporated in 1998, is a public sector undertaking, engaged in distribution of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) in Delhi.It is among the top 500 Indian companies by market capitalization.
The transport sector uses natural gas as Compressed Natural Gas (CNG), the domestic and commercial sectors use it as Piped Natural Gas (PNG) and R-LNG is being supplied to industrial establishments. IGL took over Delhi City Gas Distribution Project in 1999 from GAIL (India) Limited ( Formerly Gas Authority of India Limited).The Project was started to lay the network for the distribution of natural gas in the National Capital Territory of Delhi to consumers in the domestic, transport, and commercial sectors. The company started with 9 CNG stations and 1000 PNG consumers. Today, the company has crossed 163 CNG stations and 1,22,000 domestic and 300 commercial PNG customers.
IGL is amongst the first few companies in India to commercialize the use of Compressed Natural Gas (CNG) for the automotive sector. They were the sole producer and marketer of Compressed Natural Gas to the automotive sector in the National Capital Territory of Delhi (NCT of Delhi), which includes the capital of India. The company has entered into a joint venture with Site Energy to set up City Gas Distribution Projects at Son pat and Pan pat located at Haryana.
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With the backing of strong promoters- GAIL (India) Ltd. and Bharat Petroleum corporation Ltd.(BPCL)-IGL plans to provide natural gas in the entire capital region.
The two main business objectives of the company arey To provide safe, convenient and reliable natural gas supply to its customers in the domestic and commercial sectors. y To provide a cleaner, environment-friendly alternative as auto fuel to Delhi's residents. This will considerably bring down the alarmingly high levels of pollution.
3.2:VISION of IGL
To be the leading clean energy solutions provider, committed to stakeholder value enhancement, through operational excellence and customer satisfaction. This Vision statement signifies five major attributes for the organization: y y Commitment to environment. Providing complete energy solutions thereby going beyond CNG for transport and PNG for cooking applications. y y y Enhancing value for the stakeholders including customers, shareholders and employees. Achieving excellence in our operations. Providing satisfaction to the customers.
MISSION:
To accelerate and optimize the effective and economic use of Natural Gas and its fractions to the benefit of national economy.
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STRATEGY:
IGL aims to further expand its core business of Natural Gas Transmission & Marketing, to capture larger share of the growing market. IGL wishes to move upstream to secure gas supplies for the core transmission business. Additionally, investments in petrochemicals and city gas distribution are being planned to enhance margins and increase sources of revenue. Further, the company is exploring and investing in international opportunities with a strategic rationale of gaining international presence.
3.4: SWOT ANALYSIS:

Strengths: y IGL has been given marketing exclusivity in NCT of Delhi for three years w.e.f. January 1, 2011 y As per the Petroleum and Natural Gas Regulatory (PNGRB) regulations. IGL has network exclusivity up to December 2025 in the NCT area. y y Supply is secured as the Company has been allocated 2.7 mmscmd of regular supply. IGL has continuous adopted the latest technology as a result of which the quality of its products has also improved. y Lower debt in the books along with healthy return ratios gives confidence in the Companys ability to raise debt for future expansion.
Weaknesses: y Future expansion activities would be dependent on ability to secure additional gas supplies.
Opportunities: y CNG is replacing traditional fuels like petrol & diesel. CNG is about62% cheaper than Petrol and about 40% cheaper than diesel.
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Introduction of Radio Taxis and high capacity buses running on CNG in Delhi along with increase in number of CNG variant models by car manufacturers presents a significant opportunity for the company.
y Threats: y
Shift towards usage of PNG by industrial and commercial segment.
Competition from other players is possible after December 2011 as the companys marketing exclusivity is valid till December 2011 only.
Alternative modes of transport like metro rail posses a threat.
MARKET POSITION:
Indraprastha Gas Ltd (IGL) was incorporated in the year 1998. It is promoted by GAIL (India) Ltd., Bharat Petroleum Corporation Ltd (BPCL) and Government of Delhi. IGL is into retail gas distribution business. It supplies Compressed Natural Gas (CNG) to transport sector, Piped Natural Gas (PNG) to domestic as well as commercial sector and Re-gasified Liquid Natural Gas (R-LNG) to industrial sector in National Capital Territory (NCT) of Delhi and National Capital Region (NCR) towns.
Expanding its already strong presence in New Delhi.

CNG-IGL supplies CNG to transport sector in NCT of Delhi and NCR towns from FY10, company also started supplying CNG in Ghaziabad. Total number of CNG stations during FY10 went up to 241 from 181 in the previous year. IGL's CNG sales volume grew by 15% to around 695 mmscm in FY10.
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PNG- Demand for PNG has been increasing due to environmental benefits, better quality, low maintenance cost and increasing difference in price of LPG and PNG. IGL's PNG sales volume grew by 60-92% y-o-y to 87 mmscm in FY10. As of 31st March 2010, company has provided connections to 182000 domestic and 355 industrial customers.
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PNG -A Typical Gas Supply Scheme
R-LNG segment-IGL provides R-LNG to industrial sector in NCT of Delhi and NCR towns in FY10 the company supplied R-LNG to 21 customers in Delhi. It also started supplying R-LNG to Noida and Greater Noida during FY10.
Secured gas supplies-
IGL has tie-ups with GAIL, BPCL, and Reliance Energy for regular gas supplies, It required around 782 mmscm of gas during FY10 which was fulfilled by these companies.
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KEY RISKS
y y
Volatile gas prices Government regulation in respect of price and distribution network.
Stock Performances vis-a vis market Returns(%) YTD 1-m 3-m m IGL 55 9 3 74 12-
NIFTY
12
-1
19
Note; 1) YTD returns are since April 1, 2010 to Dec 20, 2010. 2) 1-m, 3-m, and 12-m returns are up to Dec 20, 2010.
BUSINESS OVERVIEW:
IGL (India) Ltd, a truly dominant gas major, has been turning out disciplined financial performance with excellence in project management, service quality and customer satisfaction. Building on with business strength, IGL has set its future vision to be a Dominant company in Natural gas business.
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BUSINESS PORTFOLIO:
Natural Gas: PIPELINE PROJECTS:
IGL is supplying piped gas to around 1.33 lac domestic, 313 commercial, 15 small industrial consumers and CNG to over 2.50 lac vehicles through 164 CNG stations in Delhi. IGL is also operating three CNG stations in Noida, two CNG stations in Greater Noida, two in Ghaziabad, three in Faridabad and four CNG stations in Gurgaon. IGL is the largest CGD entity in terms of CNG sales and vehicles in India and is fast spreading its CGD network beyond its existing areas of operations. IGL has received authorization from MOPNG for CGD in Delhi & its suburbs, viz. NOIDA (Gautam Budh Nagar), Gurgaon & Faridabad. PNGRB has authorized IGL for CGD in NCT of Delhi. Till date, IGL has made an investment of Rs.727 crores. In view of the competing scenario, IGL has also submitted bid for the city of Meerut and Sonepat in the bidding process initiated by PNGRB. GAIL has 22.5% stake in the Company along with BPCL as equal partner.
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MAJOR ACTIVITIES IN 2010-2011: Projects:
The PNG supply has also been extended to Sector 61 in Noida and Sector Sigma, Beta I, Alpha of Greater Noida. Your Company also started PNG supply for the first time in the town of Ghaziabad in Ram Prasth colony during 2009-2010. During 2010-11, the Company plans to extend its PNG distribution network to Chitrakoot, GTB Enclave, Dwarka (Sector-8), Paschim puri, Rajender Nagar, Patel Nagar, Kirti Nagar, Keshavpuram, Model Town, Derawal Nagar, Gujranwala Town, Mukharjee Nagar, Hakikat Nagar, Kingsway Camp, Tagore Park, Outram Lines, Punjabi Bagh(E), Rajouri Garden, Hari Nagar, Ashok Nagar, Yamuna Vihar, Preet Vihar, Geeta Colony in NCT of Delhi. In Noida, your Company has planned to spread out its network in Sectors 33, 34, 35, 39, 50, 51 and 52. And in Greater Noida Company shall extended its PNG network.
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During the year the Company added 44,000 PNG connections and 40 commercial customers. As on 31 st March 2010, the Company has provided PNG connections to over 182,000 domestic and more than 355 commercial customers.
R-LNG BUSINESS:
IGL is presently supplying R-LNG to 21 industrial consumers in Delhi. Your Company has also started supplying R-LNG to the industrial segment in Noida and Greater Noida and these cities shall contribute major volumes of gas sale in industrial segment from 2010-2011 onwards. In the city of Ghaziabad also, the work of extending supply to industrial and commercial segment is progress and supplies shall commence during the year 2010-11. IGL has already tied up with GAIL and BPCL for gas supply for meeting the demand of this segment.
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FUTURE OUTLOOKe:
NCT OF DELHI:
IGL has drawn out plans to further consolidate its presence in the NCT of Delhi by investing Rs.915 million during the financial year 2010-11 for CNG expansion. CNG being an eco-friendly and economical fuel, a large number of private car manufacturers are introducing their CNG variants. Due to wide acceptance of CNG, there has been a large-scale conversion of private cars into CNG mode. This segment will give a boost to CNG sales in the coming years. IGL has planned a large expansion in PNG segment. A capital expenditure of Rs.1940 million has been earmarked for augmenting infrastructure in the existing areas as well as for expansion in new areas of Delhi during the financial year 2010-11. The Company has plans to provide new PNG connections to over 50000 domestic households.
EXPANSION PROJECTS IN NATIONAL CAPITAL REGION (NCR):
IGL has planned capital investment of Rs. 2400 million for the NCR town of Noida, Greater Noida & Ghaziabad to augment its CNG and PNG infrastructure. IGL plans to tap prospective industrial users of natural gas in industrial segment in these towns in the coming years.
PRICING MECHANISM OF NATURAL GAS: SOURCING OF GAS: GAIL THE SOLE SUPPLIER
On the gas-sourcing front, which is an important aspect of the CGD business, IGL has a supply agreement with GAIL. GAIL is the sole supplier of Administrative Price Mechanism (APM) natural gas to the company. IGL has signed a Gas Purchase Agreement for 2.0 MMSCMD (1.9 MMSCD for CNG and 0.1 MMSCMD forPNG) with GAIL , which was valid till CY 2010 and extendable on mutually agreed terms.
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GAS SOURCE FOR IGL:

Suppliers GAIL GAIL GAIL GAIL RIL BPCL Region NCT OF Delhi Noida, Greater Noida Faridabad Gurgaon Contracted Supply (MMSCMD) 2 0.2 0.25 0.25 0.15 0.24
IGL has further been allocated 0.7 MMSCMD of natural gas by the Ministry of Petroleum and Natural Gas (MoPNG) to expand in NCR cities. Gas is received at various points of the HaziraBijaipur-Jagdishpur (HBJ) pipeline around Delhi. As the gas cost is denominated in Rupee terms, IGL is insulated from exchange risks. The gas is currently available at subsidized prices, which is called APM prices. However, as per the gas pricing order, APM prices are to be revised upwards by 20% p.a. for four years to align it with market determined prices.
IGLs pricing Strategy in CNG and PNG segment

The selling price of CNG/PNG is determined by adding network changes and marketing margin to the cost of natural gas. Government does not interfere in fixing the selling price. The gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has capped the return rate on the pipeline network operation at 14% of capital employed on a pre-tax basis.
CNG pricing details as on February 2011:

Particulars Gas cost (A) Network charges (B) Compression Charges (c)
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Unit Rs./Kg Rs./Kg Rs./Kg
Delhi 12.95 4.6 6.66

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Corporate Tax (D) Marketing Margin (E=F-A-B-C-D) Selling price (F) Excise 14.42% Consumer price(charged to customers)
Rs./Kg Rs./Kg Rs./Kg Rs./Kg Rs./Kg
0.23 0.85 25.29 3.66 29.00
Similarly, in the domestic PNG segment the price is indexed to the administered retail selling price of domestic LPG (14.2 Kg) cylinder in the NCT. In the small commercial users segment, PNG is indexed to commercial LPG (19Kg) cylinder in the NCT of Delhi, taking in to account the respective heating values of natural gas and LPG. Large commercial users are the PNG users replacing Light Diesel Oil (LDO) and commercial LPG. Thus, price in the segment is indexed to weighted average price of LDO and commercial LPG in the NCT taking into account the respective heating values of gas, LPG and LDO.
INVESTMENT RATIONALE:
Marketing exclusivity makes IGL a monopoly player until jan 2012:
In January 2009 PNGRB (Petroleum and Natural Gas Regulatory Board) has allotted to the Company marketing exclusivity for Compressed Natural Gas Distribution for 3 years in the NCT of Delhi, Also the company was allotted network exclusivity for 25 years.
Strong demand for CNG in NCT-Delhi:
The Government of NCT of Delhi has directed all Light Commercial Vehicles (LCVs) operating in NCT of Delhi to convert to CNG mode. The company has drawn up plans to augment its infrastructure to meet the growing demand of CNG.
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Ability to pass on cost inflation:

In the past IGL has successfully been able pass on the incremental cost to the end users. It has gradually hiked the CNG prices from Rs 19/kg in June 2009 to Rs 29/Kg currently. Even post price hike, CNG is much cheaper than Petrol and Diesel retail prices.
Robust Capex plan to tap the market:
Indraprastha Gas has 3 years marketing exclusivity and also has 25 years of network exclusivity. Hence the company has taken an aggressive capex plan. The company has planned a capex of Rs 6.0 billion in FY 11 and also Rs 6 billion each in FY 12 and FY 13E for the expansion of its CNG as well as its PNG network.
Margin differential to remain a key entry barrier for new players:
The government has allocated 2MMSCMD of gas to Indrapratha Gas ltd at APM rate of USD 4.2 per MMBTU. The current market rate for natural gas is around USD 12 to 13 per MMBTU. Post the lapse of the marketing exclusivity clause in NCT-Delhi for Indrapratha gas it will continue to be a margin differentiator between IGL and the new players.
Valuation:
We have valued the stock on weighted average of stock price arrived based on three different valuation parameters. On a PE basis we arrived at a value of Rs 370/share @ 25% weight; On Discounted Cash Flow based analysis we arrived at value of Rs 365/share @ 50% weight. On the third parameter EV/EBITDA we arrived at a value of Rs 360/share @ 25% weight. Based on the weighted average target stock price thus arrived, at Rs. 365 per share, we recommend BUY on Indraprastha Gas Ltd. With an investment horizon of 12 to 15 months.
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CHAPTER-4
WORKINK CAPITAL MANAGEMENT:

Working capital, also called net working current assets, is the excess of current liabilities .All organizations have to carry working capital in one form or the other. The efficient management of working capital is important from the point of view of both liquidity and profitability. Poor management of working capital means that funds are unnecessarily tied up in idle assets hence reducing liquidity and also reducing the ability to invest in productive assets such as plant and machinery, so affecting the profitability.
Working Capital Management may be defined as the management of firms sources and uses of working capital in order to maximize the wealth of the shareholders. The proper working capital management requires both the medium term planning (say upto three years) and also the immediate adaptations to changes arising due to fluctuations in operating levels of the firm.
A firm should maintain a sound working capital position and there should be optimum investment in working capital, working capital refers to the administration of current assets, namely cash, marketable securities, debtors, stock (inventories) and current liabilities.
Working Capital Management is the process of planning and controlling the levels and mix of Current Assets of the company as well as financing the asset. It may be regarded as the life blood of the business, its effective provision can do much to ensure the success of a business, while its inefficient management may lead not only to loss of profits but loss to ultimate downfall in a going concern.
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Analysis of working capital is of major importance to internal and external analysis because it is closely related to the current day to day operations. Many times Working Capital refer to Circulating Capital. Here circulating capital means those assets changed with relative rapidity from one form to another.
The importance of Working Capital can better be understood by the word of V.E.Ramamurthy:- Working capital is one segment of capital structure of the business and constitutes an inter woven part of the total integrated business system.
Concepts of Working Capital:

There are two concepts of Working Capital generally we take into account. Such as Gross Working capital and Net Working Capital.
Gross Working Capital:
It refers to the firms investments in Current Assets. Current Assets ate the assets which can be easily converted into cash within an accounting year. It includes Cash, Short-term securities, debtors and Bills receivables.
Net Working Capital:

It refers to the difference between Current Assets and Current Liabilities. Current liabilities are those claims of outsiders which are expected to mature for payment within an accounting year and includes Creditors (accounts payables) , Bills payable, outstanding expenses.
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On the basis of time: Fixed or permanent working capital:
The volume of investment in current assets an change over a period of time. But always there is minimum level of current assets that must be kept in order to carry on the business. This is the irreducible minimum amount needed for maintaining the operating cycle. It is the investment in current assets. Which is permanently locked up in the business, and therefore known as permanent working capital.
Variable/temporary working capital:

It is the volume of working capital. Which is needed over and above the fixed working capital in order to meet the unforced market changes and contingencies. In other words any amount over and about the permanent level of working capital is variable or fluctuating working capital. This type of working capital is generally financed from short ter souse of finance such as bank credit because this amount is not permanently required and is usually paid back during off season or after the contingency.
BALANCED WORKING CAPITAL POSITION

The firm should maintain a sound working capital position. It should have adequate working capital to run its business operations. Both excessive as well as inadequate working capital positions are dangerous from the firms point of view.
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Excessive working capital means holding costs and idle funds, which earn no profits for the firm. The dangers of excessive working capital are as follows:
It results in unnecessary accumulation of inventories. Thus, chances of inventory mishandling, waste, theft and losses increase.
It is an indication of defective credit policy and slack collection period. Consequently, higher incidence of bad debts results, which adversely affects profits.
Excessive working capital makes management complacent which degenerates into managerial inefficiency
Tendencies of accumulating inventories tend to make speculative profits grow. This may tend to make dividend policy liberal and difficult to cope with in future when the firm is unable to make speculative profits.
DETERMINANTS OF WORKING CAPITAL
Nature of business:
The working capital requirement of the firm is closely related to the nature of its business. A service firm, like an electricity undertaking or a transport corporation, which has a short operating cycle and which sells predominantly on cash basis, has a modest working capital requirement. On the other hand, a manufacturing concern like a machine tools unit, which has a long operating cycle and which sells largely on credit, has a very substantial working capital requirement.
Seasonality of Operations:
Firms, which have marked seasonality in their operations usually, have highly fluctuating working capital requirements. If the operations are smooth and even throughout the year the working capital requirement will be constant and will not be affected by the seasonal factors.
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Production policy:
A firm marked by pronounced seasonal fluctuations in its sales may pursue a production policy, which may reduce the sharp variations in working capital requirements.
Market Conditions:
The market competitiveness has an important bearing on the working capital needs of a firm. When the competition is keen, a large inventory of finished goods is required to
Promptly serve customers who may not be inclined to wait because other manufacturers are ready to meet their needs. In view of competitive conditions prevailing in the market, the firm may have to offer liberal credit terms to the customers resulting in higher debtors. Thus, the working capital requirements tend to be high because of greater investment in finished goods inventory and account receivables. On the other hand, a monopolistic firm may not require larger working capital. It may ask customer to pay in advance or to wait for some time after placing the order.
Condition of Supply:
The time taken by a supplier of raw materials, goods, etc. after placing an order, also determines the working capital requirement. If goods as soon as or in a short period after placing an order, then the purchaser will not like to maintain a high level of inventory of that good. Otherwise, larger inventories should be kept e.g. in case of imported goods.
Business Cycle Fluctuations:
Different phases of business cycle i.e., boom, recession, recovery etc. also affect the working capital requirement. In case of recession period there is usually dullness in business activities and
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there will be an opposite effect on the level of working capital requirement. There will be a fall in inventories and cash requirement etc.
Credit policy:
The credit policy means the totality of terms and conditions on which goods are sold and purchased. A firm has to interact with two types of credit policies at a time. One, the credit policy of the supplier of raw materials, goods, goods, etc., and two, the credit policy relating to credit which it extends to its customers. In both the cases, however, the firm while deciding the credit policy has to take care of the credit policy of the market. For example, a firm might be purchasing goods and services on credit terms but selling goods only for cash. The working capital requirement of this firm will be lower than that of a firm, which is purchasing cash but has to sell on credit basis.
Operating Cycle:
Time taken from the stage when cash is put into the business up to the stage when cash is realized. Thus, the working capital requirement of a firm is determined by a host of factors. Every consideration is to be weighted relatively to determine the working capital requirement. Further. The determination of working capital requirement is not once a while exercise; rather a continuous review must be made in order to assess the working capital requirement in the changing situation. There are various reasons, which may require the review of the working capital requirement e.g., change in credit policy, change in sales volume, etc.
Objectives of Working Capital Management:
There is a twofold objective of the Working Capital Management.
Maintenance of Working Capital and Availability of ample funds at the time of need.
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The basic goal of Working Capital Management is to manage each of the firms Current Assets and Current Liabilities in such a way that an acceptable level of net working capital is always maintained in the business. As a matter of fact, a business can not survive in the absence of a satisfactory ratio between its current assets and current liabilities. Management is setting policies with respect to general operations, purchasing, financing, expansion and dividend must work with the limitation set by the working capital position.
Thus, the objective is to ensure the maintenance of satisfactory level of working capital in such a way that it is neither inadequate nor excessive. It should not only be sufficient to cover the current liabilities but should ensure a reasonable margin of safety also.
ESTIMATING WORKING CAPITAL NEEDS

Current Assets Holding Period. To estimate working capital requirements on the basis of average holding period of current assets and relating them to costs based on the companys experience in the previous years. This method is essentially based on the operating cycle concept.
Ratio of Sales. To estimate working capital requirements as a ratio of sales on the assumption that current assets change with sales.
Ratio of Fixed Investment. To estimate working capital requirements as a percentage of fixed investment.
Risks in working capital management

Two types of risk are inherent in Working Capital Management such as risk of liquidity and opportunity loss. A firm has to take judicious mix of these risks and plan for contingencies.
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Liquidity risk:
It is the non availability of cash to pay liabilities that falls due. Even so it can cause not only loss of reputation but also make condition favourable for getting the best terms on transactions with outside world. Hence the need for:
y y y
Cash forecasting or Cash budgeting to plan short term supply and demand; Inventory of cash and near cash quick assets; Power to draw or borrow in emergency situations- planned instant resources for contingencies;
Opportunity loss:
The other risk in the working capital management is the risk of opportunity loss-the risk of having too much or too little inventory to maintain production and sales, the risk of not granting adequate credit for realizing the achievable level of sales. In other words, the risk of opportunity loss is the risk of not being able to produce more or sale more on both. And therefore not being able to earn the potential profit, because there were not enough funds to support locked up or deployed in the four stock variables of the gross operating cycle- the three inventories of raw material, work-in-process and finished goods and book debts. The higher is the cost of funds deployed and therefore lesser the profit. Thus, management of these four types of assets or working capital involves trade-off between risk and profitability.
Sources of working capital

The company can choose to finance its current assets by
Long term sources Short term sources

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A combination of them.
Long term sources of permanent working capital include equity and preference shares, retained earnings, debentures and other long term debts from public deposits and financial institution. The long term working capital needs should meet through long term means of financing. Financing through long term means provides stability, reduces risk or payment. And increases liquidity of the business concern. Various types of long term sources of working capital are summarized as follows:
Issue of shares:
It is the primary and most important sources of regular or permanent working capital. issuing equity shares as it does not create and burden on the income of the concern. Nor the concern is obliged to refund capital should preferably raise permanent working capital.
Retained earnings:
Retain earning accumulated profits are a permanent sources of regular working capital. It is regular and cheapest. It creates not charge on future profits of the enterprises.
Issue of debentures:
It creates a fixed charge on future earnings of the company. Company is obliged to pay interest Management should make wise choice in procuring funds by issue of debentures.
Long term debt:
Company can raise fund from accepting public deposits, debts from financial institution like banks, corporations etc. the cost is higher than the other financial tools. Other sources sale of
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idle fixed assets, securities received from employees and customers are examples of other sources of finance.
Short term sources of temporary working capital:

Temporary working capital is required to meet the day to day business expenditures. The variable working capital would finance from short term sources of funds. And only the period needed. it has the benefits of ,low cost and establishes closer relationships with banker.
Some sources of temporary working capital are given below:
Commercial bank:
A commercial bank constitutes a significant sources for short term or temporary working capital . This will be in the form of short term loans, cash credit, and overdraft and though discounting the bills of exchanges.
Public deposits:
Most of the companies in recent years depend on these sources to meet their short term working capital requirements ranging from six month to three years.
Various credits:
Trade credit, business credit papers and customer credit are other sources of short term working capital. Credit from suppliers, advances from customers, bills of exchanges, promissory notes, etc helps to raise temporary working capital
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Reserves and other funds:
Various funds of the company like depreciation fund. Provision for tax and other provisions kept with the company can be used as temporary working capital. The company should meet its working capital needs through both long term and short term funds. It will be appropriate to meet at least 2/3 of the permanent working capital equipments form long term sources, whereas the variables working capital should be financed from short term sources. The working capital financing mix should be designed in such a way that the overall cost of working capital is the lowest, and the funds are available on time and for the period they are really required.
Some of the decision taken in Working Capital Management is:-
An adequate supply of raw materials. Cash to meet the operational payments. The ability to grant credit to customers. The capacity to wait for market for its finished products. Investments in various current assets. Appropriate source of fund to finance current assets. Proportion of long term and short term funds to finance.
Working Capital Limits FUND BASED CREDIT LIMITS:

4.1. CASH CREDIT/ PACKING CREDIT:
The cash credit facility is similar to the overdraft arrangement. It is the most popular method of bank finance for working capital in India. Under the cash credit facility, a borrower is allowed to withdraw funds from the bank up to the cash credit limit. He is not required to borrow the entire sanctioned credit once, rather, he can draw periodically to the extent of his requirement and
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repay by depositing surplus funds in his cash credit account. Cash credit limits are sanctioned against the security of current assets. Cash credit is the most flexible arrangement from the borrowers point of view.
2. DISCOUNTING OF BILLS
Under the purchase or discounting of bills, a borrower can obtain credit from a bank against its bills. The bank purchase or discounts the borrowers bills. The amount provided under this agreement is covered within the overall cash credit or overdraft limit. Before purchasing or discounting the bills, the bank satisfies itself as creditworthiness of the drawer. Though, the item bills purchased implies that the bank becomes owner of the bill. In practice, bank hold bills as security for the credit. When a bill is discounted, the borrower is paid the discounted amount of the bills, (visa, full amount of bill minus the discount charged by the bank). The bank collects full amount on maturity.
NON FUND BASED CREDIT LIMITS: 1. LETTER OF CREDIT
Commonly used in international trade, the letter of credit is now used in domestic trade as well. A letter of credit, or L/C, is used by a bank on behalf of its customers (buyer) to the seller. As per this document, the bank agrees to honor drafts drawn on it for the supplies made to the customer if the seller fulfills the conditions laid down in the L/C. The L/C serves several useful functions:
It virtually eliminates credit risk, if the bank has a good standing. It reduces uncertainty, as the seller knows the conditions that should be fulfilled to receive payment.
It offers safety to the buyer who wants to ensure that payment is made only in conformity with the conditions of the L/C.
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2. BANK GUARANTEE
Bank Guarantee is very similar to Letter of credit but it is provided for much longer period compared to letter of credit. Bank Guarantee funds very small portion of working capital
BANK FINANCE FOR WORKING CAPITAL
Banks are the main institutional sources of working capital finance in India. After trade credit, bank credit is the most important source of financing working capital requirements. A bank considers a firms sales and production plans and the desired levels of current assets in determining its working capital requirements. The amount approved by the bank for the firms working capital is called credit limit. Credit limit is the maximum funds which a firm can obtain from the banking system.
In the case of firms with seasonal businesses, banks may fix separate limits for the peak level credit requirement and normal, non-peak level credit requirement indicating the periods during which the separate limits will be utilized by the borrower. In practice, banks do not lend 100 percent of the credit limit; they deduct margin money. Margin requirement is based on the principle of conservatism and is meant to ensure security. If the margin requirement is 30 percent, bank will lend only up to 70 percent of the value of the asset. This implies that the security of banks lending should be maintained even if the assets value falls by 30 percent.
Forms of Bank Finance
A firm can draw from its bank within the maximum credit limit sanctioned. It can draw funds in the following forms:
Overdraft Cash credit Bills purchasing or discounting

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Working capital loan
Overdraft. Under the overdraft facility, the borrower is allowed to withdraw funds in excess of the balance in his current account up to a certain specified limit during a stipulated period. Though overdrawn amount is repayable on demand, they generally continue for a long period by annual renewals of the limits. It is a very flexible arrangement from the borrowers point of view since he can withdraw and repay funds whenever he desires within the overall stipulations. Interest is charged on daily balances on the amount actually withdrawn subject to some minimum charges. The borrower operates the account through cheques.
Cash credit. The cash credit facility is similar to overdraft arrangement. It is the most popular method of bank finance for working capital in India. Under the cash credit facility, a borrower is allowed to withdraw funds from the bank up to the sanctioned credit limit. He is not allowed to borrow the entire sanctioned credit once; rather, he can withdraw periodically to the extent of his requirements and replay by depositing surplus funds in his cash credit account. There is no commitment charge, therefore, interest is payable on the amount actually utilized by the borrower. Cash credit limits are sanctioned against the security of current assets.
Purchase or discounting of bills. Under the purchase or discounting of bills, a borrower can obtain credit from a bank against its bills. The bank purchases or discounts the borrowers bills. The amount provided under this agreement is covered within the overall cash credit or overdraft limit. Before purchasing or discounting the bills, the bank satisfies itself as to the creditworthiness of the drawer. Though the term bills purchased implies that the bank becomes owner of the bills, in practice bank holds bills as security for the credit. When a bill is discounted, the borrower is paid the discounted amount of the bill (viz., full amount of bill minus the discount charged by the bank). The bank collects the full amount on maturity.
Letter of credit. Suppliers, particularly the foreign suppliers, insist that the buyer should ensure that his bank would make the payment if it fails to honour its obligation. This is ensured through a letter of credit (L/C) arrangement. A bank opens an L/C in favour of a customer to facilitate his
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purchase of goods. If the customer does not pay to the supplier within the credit period, the bank makes the payment under the L/C arrangement.
Working capital loan. A borrower may sometimes require ad hoc or temporary accommodation in excess of sanctioned credit limit to meet unforeseen contingencies. Banks provide such accommodation through a demand loan account or a separate non-operable cash credit account.
Security Required in Bank Finance
Banks generally do not provide working capital finance without adequate security. The following are the modes of security which a bank may require.
Hypothecation. Under hypothecation, the borrower is provided with working capital finance by the bank against the security of movable property, generally inventories. The borrower does not transfer the property to the bank; he remains in the possession of property made available as security for the debt. Thus, hypothecation is a charge against property for an amount of debt where neither ownership nor possession is passed to the creditor.
Pledge. Under this arrangement, the borrower is required to transfer the physical possession of the property offered as a security to the bank to obtain credit. The bank has a right of lien and can retain possession of the goods pledged unless payment of the principle, interest and any other expenses is made. In case of default, the bank may either
Sue the borrower for the amount due, or Sue for the sale of goods pledged, or After giving due notice, sell the goods.
Mortgage. Mortgage is the transfer or a legal or equitable interest in a specific immovable property for the payment of a debt. In case of mortgage, the possession of the property may remain with the borrower, with the lender getting the full legal title. The transferor of interest
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(borrower) is called the mortgager, the transferee (bank) is called the mortgagee, and the instrument of transfer is called the mortgage deed.
Lien. Lien means right of the lender to retain property belonging to the borrower until he repays credit. It can be either a particular lien or general lien. Particular lien is a right to retain property until the claim associated with the property is fully paid. General lien, on the other hand, is applicable till all dues of the lender are paid. Banks usually enjoy general lien.
REGULATION OF BANK FINANCE
Banks have been following certain norms in granting working capital finance to companies. These norms have been greatly influenced by the recommendations of various committees appointed by the Reserve Bank of India from time to time. The norms of working capital finance followed by bank since mid 70s were mainly based on the recommendations of the Tandon Committee. The Chore Committee made further Recommendations to strengthen the procedures and norms for working capital finance by banks.
TANDON COMMITTEE
In August 1975, Reserve Bank of India appointed a study group under the chairmanship of Mr. P.L. Tandon, to make the study and recommendations on the following issues:
Can the norms be evolved for current assets and for debt equity ratio to ensure minimum dependence on bank finance?
How the quantum of bank advances may be determined? Can the present manner and style of lending be improved? Can an adequate planning, assessment and information system be evolved to ensure disciplined flow of credit to meet genuine production needs and its proper supervision? a
The observations and recommendations made by the committee can be considered as below:
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Norms: The committee suggested norms for inventory and accounts receivables as many as 15 industries excluding heavy engineering industry. These norms suggested, represent maximum level of inventory and accounts receivables in each industry. However, if the actual levels are less than the suggested norms, it should be continued.
The norms were suggested in the following forms: For Raw Materials: Consumption in months. For Work in Progress: Cost of production in months. For Finished Goods: Cost of sales in months. For Receivables: Sales in months.
It was suggested that the industrial borrowers having an aggregate limits of more than Rs. 10/Lakhs from the banks should be subjected these norms initially and later it can be extended even to the small borrowers.
Methods of Borrowings: The committee recommended that the amount of bank credit should not be decided by the capacity of the borrower to offer security to the banks but it should be decided in such a way to supplement the borrowers resources in carrying a reasonable level of current assets in relation to his production requirement. For this purpose, it introduced the concept of working capital gap, i.e., the excess of current assets over current liabilities other than bank borrowings. It further suggested three progressive methods to decide the maximum limits according to which banks should provide finance.
Method I: Under this method, the committee suggested that the banks should finance maximum to the extent of 75% of working capital gap, remaining 25% should come from long-term funds, i.e., own funds and term borrowings.
Method II: Under this method, the committee suggested, that the borrower should 25% of current assets out of long-term funds and the banks provide the remaining finance.
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Method III: Under this method, the committee introduced the concept of core current assets to indicate permanent portion of current assets and suggested that the borrower should finance the entire amount of core current assets and 25% of the balance current assets out of long-term funds and the banks may provide the remaining finance.
It was further suggested that if the actual bank borrowings are more than the maximum permissible bank borrowings, the excess should be converted into a term-loan to be amortized over a suitable period depending upon the cash generating capacity.
Style of Lending: The committee suggested that the cash credit limit should be bifurcated into two components, i.e., Minimum level of borrowing required throughout the year should be financed by way of a term loan and the demand cash credit to take care for fluctuating requirements. It was suggested that both these limits should be reviewed annually and that the term loan component should bear slightly a lower arte of interest so that the borrower will be motivated to use least amount of demand cash credit. The committee also suggested that within overall eligibilities, a part of the limits may be in the form of bill limits (to finance the receivables) rather than in the form of cash credit.
Credit Information Systems: In order to ensure the receipt of operational data from the borrowers to exercise control over their operations properly, the committee recommended the submission of quarterly report system, based on actual as well as estimations, so that the requirements of working capital may be estimated on the basis of production needs. As such, the borrowers enjoying total credit limits aggregating Rs. 1 crore and above were required to submit certain statements in addition to monthly stock statements and projected balance sheet and profit and loss account at the end of the financial year. The working capital limits sanctioned were to be reviewed on annual basis. Within the overall permissible level of borrowing, the day-to-day operations were to be regulated on the basis of drawing power.
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Follow up, Supervision and Control: In order to assure that the assumptions made while estimating the working capital needs still hold good and that the funds are still being utilised for the intended purpose only. It was suggested that there should be proper system of supervision and control. Variations between the projected figures and actuals may be permitted to the extent of 10% but variations beyond that level will require prior approval. After the end of the year, credit analysis should be done in respect of new advances when the banks should re-examine terms and conditions and should make necessary changes. For the purpose of proper control, it suggested the system of borrower classification in each bank within credit rating scale.
Norms for Capital Structure: As regards the capital structure or debt equity ratio, the committee did not suggest any specific norms. It opined that debt equity relationship is a relative concept and depends on several factors. Instead of suggesting any rigid norms for debt equity ratio, the committee opined that if the trend of debt equity ratio is worse than the medians, the banker should persuade the borrowers to strengthen the equity base as early as possible.
Action taken by RBI According to the notification of RBI dated 21st August, 1975, RBI accepted some of the main recommendations of the committee.
Norms for Inventories and Receivables: Norms suggested by the committee were accepted and banks were instructed to apply them in case of existing and new borrowers. If the levels of inventories and receivables are found in excessive than the suggested norms, the matters should be discussed with the borrower. If excessive levels continue without justification, after giving reasonable notice to the borrowers, banks may charge excess interest on that portion which is considered as excessive.
Coverage: Initially, all the industrial borrowers (including small scale industries) having aggregate banking limits of more than Rs. 10/- Lakhs should be covered, but it should be extended to all borrowers progressively.
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Methods of Borrowing: RBI instructed the banks that all the covered borrowers should be placed in Method I as recommended by the committee. However, all those borrowers who are already complying with requirements of Method II should not slip back to Method I. As far as Method III is concerned, RBI has not taken any view. However, in case of the borrowers already in Method II, matter of application of Method III may be decided on case-to-case basis.
Style of Credit: As suggested by the committee, instead of granting entire facility by way of cash credit, banks may bifurcate the limit as (i) Term loan to take care of permanent requirement and (ii) fluctuating cash credit. Within the overall limits, bill limits may also be considered.
Information System: Suggestions made by the committee regarding the information system were accepted by RBI and were made applicable to all the borrowers having the overall banking limits of more than Rs. 1 Crore
The primary objective of working capital management is to ensure that sufficient cash is available to: meet day-to-day cash flow needs; pay wages and salaries when they fall due; pay creditors to ensure continued supplies of goods and services; pay government taxation and providers of capital dividends; and Ensure the long term survival of the business entity.
It is critical to understand that Profit is not Cash. A company can be very profitable but it can collapse simply because it has insufficient cash/liquidity to pay its relevant bill (as stated above),any company liabilities are settled with cash and not by profit. Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities.
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As above, the goal of Corporate Finance is the maximization of firm value. In the context of long term, capital investment decisions, firm value is enhanced through appropriately selecting and funding NPV positive investments. These investments, in turn, have implications in terms of cash flow and cost of capital. The goal of Working capital management is therefore to ensure that the firm is able to operate, and that it has sufficient cash flow to service long term debt, and to satisfy both maturing shortterm debt and upcoming operational expenses. In so doing, firm value is enhanced when, and if, the return on capital exceeds the cost of capital; See Economic value added (EVA).
Adequate working capital
As I stated bout keeping adequate working capital is the mantas towards the success of financial management. The term adequate working capital refuters to the amount of working capital to be kept with the organization to met its daily operations. Large investment in fixed assets not sufficient to run a business successfully. Adequate working capital is equally important. Without working capita fixed assets are like a gun, which cannot shoot, as there are no cartridges.
It is said that inadequate working capital is a disastrous: where as redundant working capital is a criminal waste. It is clear that the company cant invest all its funds in current assets to increase working capital. at the same time it requires to keep sufficient funds with it. So a proper leverage between both ends is needed to assure proper running of the business. It needs to keep adequate working capital with it. Neither less nor more than needed.
Advantages of adequate working capital:

Adequate working capital provides certain benefits to the company they are:
Increase in debt capacity and goodwill:
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Adequate working capital represents the financial soundness of the company. If one company is financially sound it would be able to pay its creditors timely and properly. It will increase companys goodwill. It crests confidence among investors and creditors. Thus a firm with adequate working capital can raise requisite funds from market, borrow short term credit form banks, and purchases inventories of raw material etc., for the smooth operations of its business.
Increase in production inefficiency:
With adequate working capital the firm can smoothly carryout research and development actives and thus adds to it production efficiency.
Exploitation of favorable opportunities:
In the presence of adequate working capital, a company can avail the benefits of favorable opportunities. Adequate working capital will help the company to have bulk purchases, Seasonal storage of raw material etc., which would reduce the cost of production, thus adds to its profit.
Meeting contingencies adverse changes:
A company can easily face certain business and economic crises a company having adequate working capital can successfully meet contingencies such as business oscillations, financial crisis arising from heavy losses etc.,
Available cash discount:
Maintenance of adequate working capital enables a company to avail the advantage of cash discount by making cash payment for to the suppliers of raw materials and merchandise. Obviously it will reduce the cost of production and increase the profit of the company.
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Solvency and efficiency fixed assets:
It helps to maintain the solvency of the company. So that payments could be made in time as and when they fall due. Likewise, adequate working capital also increases the efficiency for fixed assets insofar as their proper maintenance depends upon the availability of funds.
Attractive dividend to shareholders:
It enables the company to offer attractive dividend to the shareholders so that sense of security and confidence will increase among them. It also increases the market values of its shares.
Demerits of inadequate working capital:
Having inadequate working capital les to so many of dangers as it doesnt fulfill its purpose. Some are given below:
Loss of goodwill and creditworthiness:
As the firm fails to on or its current liabilities it loses it goodwill and creditworthiness among its creditors. Consequently, the firm finds it difficult to procure the requisite funds for its business operations on easy terms, which ultimately results in reduced profitability as well as production interruption.
Firm cant make use of favorable opportunities:
The firm fails to undertake the profitable projects, which not only prevent the fir from availing the benefits of favorable opportunities but also stagnate its growth.
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Adverse effects of credit opportunities:
The firm also fails to avail the attractive credit opportunities but also stagnate its growth.
Operational inefficiencies:
In leads the company to operating inefficiencies, as day to day commitments cannot be met.
Effects on financial capacity:
Inadequacy of working capital also weakness the shock absorbing capacity of the firm because it cannot meet the contingencies arising form business oscillations, financial losses, due to shortage of working capital.
Non achievement of profit target:
The firm cannot implement operational plans due to unavailability of fund. Which will lead to non achievement of profit margin?
Dangers of redundant working capital:

As the inadequate working capital is dangerous to the firm, redundant working capital also brings hazardous condition in to the company. Let us discuss the dangers of redundant working capital to the company.
Low rate of return on capital:
Excessive or redundant working capital implies the presence of idle funds that earn no profit to the firm. So it cannot earn a proper rate of return on its total investments, whereas profits are distributed on its total investment, whereas profits are distributed on the whole of its capital.
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Decline in capital and efficiency:
Since the rate of return on capital is low the company tempts to make some adjustment to inflate profit to increase the dividend. Sometimes this unearned dividend paid out of the companys capital to keep up the show of prosperity by window dressing of accounts. Certain Provision, such as provision for depreciation, repairs and renewals are into made. This leads to decline in operating efficiency of the firm.
Loss of goodwill and confidence:
Lower rate of return leads to lower dividend available to share holder. This leads to down fall in market value of the companys share and markets the shareholder lose their confident in company.
Evils of over capitalization:
Excessive working capital is often responsible for giving birth to the situation of overcapitalization in the company with all its evils. Over capitalizations is not only disastrous to the smooth survival of the company but also interests of those associated with the company.
Destruction of turnover ratio:
It destructs the control over turnover ratio. Which is commonly used in the conduct of an efficient business?
It is evident from the foregoing discussion that a company must have adequate working capital pursuant to its requirements. It should neither be excessive not inadequate. Both situations are dangerous. While inadequate working capital adversely affects the business operations and profitability. Excessive working capital remains idle and earns no profits for the company. So company must assure its working capital is adequate for its operations.
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Considering Working Capital of IGL, I have analyzed three things such as Inventory management, Receivable management and Cash management of IGL in order to get its short term financial position.
4.2: Inventory Management :

As we very well know that IGL is the producer of NATURAL GAS & is in business of the same, it has a strong demand for these products both in domestic markets. So it has to maintain proper inventory in order to meet the demand of the products. Inventory management in general involves a trade-of between the costs associated with keeping inventory versus the benefit of holding inventory. Higher inventory results in increased cost from storage, insurance, spoilage and interest on borrowed funds needed to finance inventory acquisition. However, an increase in inventory lowers the possibility of loss of sales due to stock outs and the incidence of production slowdowns from inadequate inventory.
Just-in-time (JIT) requires that the specified materials be in the place of manufacture or assembly at the appropriate time to minimize excess inventory and to reduce wastage and expense. JIT succeeds when there are a limited number of transactions; few disturbances due to unscheduled downtime, depending instead on periodic maintenance; the grouping of production processes to reduce the movement of work-in-process; and a significant focus on quality control (QC). QC minimizes downtime and the holding of buffer or safety stock to replace defective materials. In traditional JIT, the company owns the inventory of components and parts, assuring access as the next production operation begins. New economy JIT places the materials at the manufacturing or assembly site, but title remains with the vendor until production begins. This relationship requires suppliers to optimize the stock of inventory, holding only those items that have been specified or are known to be required based on a statistical analysis of purchasing history. Both the provider and the user of materials are forced to develop a strong partnering attitude and minimize the adversarial stance often observed between purchasing counterparties.
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Objectives of Inventory Management in IGL:
To ensure continuous supply of materials, spares & finished goods. To avoid both over-stocking & under-stocking of inventory. To maintain investments in inventories & the optimal level as required by the operational & sales activities.
To keep material cost under control so that they contribute in reducing cost of production & overall costs.
To eliminate duplications in order or replenishing stocks. This is possible with the help of centralizing purchases.
To minimize loses through deterioration, pilferage wastage and damages. A clear cut accountability should be fixed at various level of organization.
Effective Inventory Management:-
A system to keep track of inventory A reliable forecast of demand Knowledge of lead times Reasonable estimates of
Holding cost . Ordering costs . Shortage costs A classification system
Raw Materials/Purchased Components.
Product Diversity. The greater the variety of products that a company manufactures, the greater the amount of raw materials and components that it must keep on hand. For each type of product, the company needs to have a minimum stock of materials and components on hand. This is
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especially true when the companys finished products have few if any components in common. Commonality of components contributes considerably to the minimization of inventory. An excellent example of this is the automobile industry. Many different models of cars actually have many components, including the frames, in common. In fact, there are many different models of cars that are actually the same car, despite different appearances and perceptions of quality. Supply Chain Management. Technology has had a dramatic impact on inventory management and has resulted in drastic reductions in all forms of inventory. When a company goes online with its vendors; its product needs are automatically communicated to those vendors electronically. This shortens lead times, reduces mistakes, and accelerates the supply process. Greater competitive intensity forces suppliers to provide faster delivery of high-quality products. Safety stock can be reduced when quality problems are reduced. Concentration / Diversity of Vendors Technology, especially the business-to-business (B2B) capabilities of the Internet, has created both incredible supply chain turmoil and incredible opportunity at the same time. Internet hookups between vendor and customer give that vendor a considerable competitive advantage, assuming that the vendors performance remains at the highest quality levels. On the other hand, product web sites and transportation logistics have created a nationwide supply market. Companies used to buy product from relatively local vendors. Now they can access the Internet and locate suppliers all over the country. The intensity of the resulting competition, along with very dependable transportation support from companies like Federal Express and UPS leads to lower purchase costs, shorter lead times, and less inventory.
4.3: Accounts receivables:

It arises due to the credit sales affected by the firm. While it may appear advisable to sale against cash only, conditions in the market like a highly competitive one, might compel a company to give credit in order to affect sales. Moreover, extending the credit often result in higher sales and hence higher profits. These receivables are influenced by a number of factors like credit policy, market strategy, pricing policy, type of buyers, credit allowed by the competitors, etc.
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Receivable management in IGL:
IGL has strong demands of products both in domestic markets. The Company is generating 60% of total sales through export sales and remaining through domestic sales. As per the sale order dispatch instruction received from the marketing office for export/domestic sale the dispatch department segregates and prepares the materials for dispatching the same by Pipelines for domestic sale & through ship in case of foreign sales. The material is handed over to the transporter. On completion of dispatch of the consignment as per dispatch advice, the dispatch department sends all the dispatch documents with delivery invoice & copy of L.R. to the finance department. On the basis of this the finance department makes commercial invoice which takes care of taxes and other duties over and above the cost of product and sends it to the marketing office which may be in the form of Bankers cheque, bank draft or in the form of letter of credit opened by the buyer. The buyer opens a letter of credit with its banker and sends to the banker of IGL for execution of sales order.
SHORT-TERM INVESTMENTS-
WORKING CAPITAL LOAN:

Now a day RBI plays a role of regulator, rather than exercising a great deal of control over the functioning of commercial banks. It lays down policies and frames broad guidance within which the banks are allowed to formulate their own policies for implementation at their end.The broad guidance of RBI to various areas of functioning such as deposits, cash management and credit. In earlier days, when credit was scarce RBI controlled the bank in a significant manner through various control measures. Credit authorization scheme which come into operation way back in nov, 1965 was one such scheme which directly exercised a check on advances granted by banks to large borrowers. Under the scheme prior authorization from RBI was necessary before sanctioning any fresh credit limit of Rs 1.00 cr or more to any single party or limit that would take the total limit enjoyed by such party to entire bank system to Rs 1.00 Cr or more. The main objectives to the scheme were as under:
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To ensure that additional bank credit is in conformity with the approved and priorities and that the bigger borrowers do not preempt scarce resources.
To enforce financial discipline on the larger borrowers, where necessary, on uniform principles.
Where borrowers are financed by more than one bank, to ensure that the customers proposal is assed in the light of the information available with banks.
To bring about improvement in the techniques of credit appraisal by banks and their system of follow up.
As a major policy changed announced by RBI on 8th Oct 1988, the existing system of prior authorization by RBI under credit authorization scheme for sanction of working capital limits/ term loans above the prescribed cut-offs point was renamed as Credit Monitoring Arrangement (CMA) and reserve bank assumed to sanction of term loans as
Well as working capital limits beyond stipulated level. Thus banks were required to report to the RBI for post sanction scrutiny any sanction/renewal of credit limits to borrowers enjoying working capital facilities (funded) of Rs 10 Cr and above and sanction of additional limits to the existing borrowers which would take their total fund based limits from the entire banking system to Rs. 10 Cr and above. Similarly, reporting for post sanction scrutiny was compulsory for all sanctions of term loans of Rs. 5 Cr and above from entire banking system. The reporting under CMA was basically to serve the same objective as was being served under CAS. However, due to changing scenario banks were given more and more freedom to carry out their operations. On the basis of recommendation of three groups set up bye RBI and also the internal inventories as also receivables keeping in view the production/processing cycle of the industry as well as financial and other relevant parameters of the borrowers. Guidelines relating to the mandatory formation of consortium were withdrawn and banks were given the discretion to adopt the consortium/ syndication or multiple banking routes. The cash credit system which facilitated to some extent preemption of credit was replaced by the loan system in the case of large borrowers. Consistent with these measures, operational freedom to banks in more and more areas granted and even the earlier prescription in of MPBF based on minimum current ratio 1.33:1 was withdrawn.
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New System of Reporting
In order to have database in relation of flow of bank credit to borrowers in various industries, a new system has been brought into effect replacing earlier CMA. As per this system, bank should report to reserve bank, in respect of borrowers availing of working capital credit or term loan (including deferred payment guarantee) limit of Rs 10 Cr or above from the entire banking system, on a fortnightly basis (i.e. from 1st to 15th and 16th to last date of month) additional/enhancement in credit limits or reduction therein effected, in prescribed Performa. In respect of borrowers availing of working capital credit term loan limit (including deferred payment guarantee) of Rs 1 Cr or above but less than 10 Cr from banking system, bank should report monthly basis, again in prescribed proforma, giving industry wise break up of net additional credit limits sanctioned. The fortnightly statement covering sanctions made during the fortnight (i.e. between 1st and 15thand 16th to end of month) should be sent as to reach reserve bank of India( IECD) positively by the end of the following week and the monthly statement should be sent as to reach as to reach reserve bank before 15th of the month following the month to which the report relates
How does IGL arrange working capital Loans from the banks?
Step 1: It approaches a bank for sanctioning of Working Capital Loan. For this the company has to submit the performance sheets for the last three years & the Annual Report. Apart from this Company Profile, Industry Overview is to be submitted. 5 year CMA reports & other documents are also required to submit. Then Credit Rating Agency rates it worthiness as to find riskiness of repayment of the Loan.
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Step 2: After the submission of all the relevant document the bank prepares Appraisal Memorandum Note, in which It shows all the required information regarding the company like
Company Background.(Company, group, promoters) Companys operations & products. Production, sales information, manufacturing facolities. Key customers. Financial performance. Industry Scenario- Inter Company comparison.
Working Capital Assessment. Historical Analysis. Loan policy guidelines. Deviations from Loan policy. Corporate governance practices. Credit Risk Factor & their mitigation.
Step 3: Bank delivers Sanction Letter with the discounted rates that are applicable to the Company.
Firstly the Bank mortgages on Companys Inventories and Receivables as the security of Working Capital Loan.
Secondly it takes mortgage on Fixed Assets.
Then it instruct the Company to prepare
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Stock Statements for different Plants as per different Products produced by the Company.
Financial Follow up Report I- which is prepared quarterly basis.
Financial Follow up Report II- which is prepared half yearly.
Documentation:
There are various documents need to be signed at the time of renewal or inducting any bank to the consortium. The various documents are as below:
Loan Agreement Hypothecation agreement for movable machinery Hypothecation agreement for movables and book debts Counter Indemnity
The above are the standard agreements asked for by the banks. There may be other additional agreements asked for by some of the banks as per their internal guidelines. But no personal guarantee papers should be signed.
The common seal has to be affixed on the documents, wherever necessary. The common seal has to be witnessed by the Company Secretary and one of the directors of the Company.
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Joint Documentation:
Joint documentation is executed between the company and the consortium of banks for the working capital facilities extended by the consortium to the company. The documents comprising joint documentation are:
1) Working capital consortium agreement 2) Joint Deed of Hypothecation 3) Inter se Agreement between bankers 4) Letter of Authority to lead bank by other consortium banks 5) Letter of Authority to second lead bank by other consortium banks 6) Undertaking to create charge on the assets of the company.
After taking into all the provisional formalities JSL has to go for credit rating of its financial instruments in order to check the credibility of the company to repay back the loan taken from the Banks or from other Financial Institutions.
Documentation:
There are various documents need to be signed at the time of renewal or inducting any bank to the consortium. The various documents are as below:
Loan Agreement Hypothecation agreement for movable machinery Hypothecation agreement for movables and book debts Counter Indemnity
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The above are the standard agreements asked for by the banks. There may be other additional agreements asked for by some of the banks as per their internal guidelines. But no personal guarantee papers should be signed.
The common seal has to be affixed on the documents, wherever necessary. The common seal has to be witnessed by the Company Secretary and one of the directors of the Company.
Joint Documentation:
Joint documentation is executed between the company and the consortium of banks for the working capital facilities extended by the consortium to the company. The documents comprising joint documentation are:
1) Working capital consortium agreement 2) Joint Deed of Hypothecation 3) Inter se Agreement between bankers 4) Letter of Authority to lead bank by other consortium banks 5) Letter of Authority to second lead bank by other consortium banks 6) Undertaking to create charge on the assets of the company.
After taking into all the provisional formalities JSL has to go for credit rating of its financial instruments in order to check the credibility of the company to repay back the loan taken from the Banks or from other Financial Institutions.
OPERATING CYCLE:
OPERATING CYCLE is the time duration required to convert sales, after the conversion of resources into inventories, into cash.
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FINANCIAL PERFORMANCE OF IGL:

Gross turnover of 12131.31 million for the year ended March 31, 2011 showed a growth of 36% over the previous year turnover of Rs.9621.37 million. Profit before tax has been Rs.3244.38 million as against Rs.2588.60 million in the previous year. Profit after tax has been Rs.2154.96 million as compared to Rs.1724.74 million in the previous year.
SHARE CAPITAL:
Share capital of The IGL comprises Equity Share Capital of Rs.1,400 million.
RESERVES & SURPLUS:
Reserve & surplus of the IGL were Rs.7985.29 million as at March 31, 2011 as against Rs.6854.49 million as at March 31, 2010 million as at against Rs.5434.17 million as at March 31, 2009.
EARNING PER SHARE:
Earnings per share for the financial year 2010-2011 have been Rs.15.39 compared to Rs.12.32 in the previous
Indraprastha Gas Ltd Detailed Annual Results (2004 - 2011):

Standalone
Particulars
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 (Rs.Cr) (Rs.Cr) (Rs.Cr) (Rs.Cr) (Rs.Cr)
Mar-06 (Rs.Cr)
Mar-05 Mar-04 Mar-03
(Rs.Cr) (Rs.Cr) (Rs.Cr)
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Gross Sales Other Income Total Income Total Expenditure
1,952 3 1,754 1,252 502 13 489 103 126 0 260
1,213 15 1,099 697 402 0 402 77 106 3 216
962 22 879 553 326 0 326 67 89 -3 172
810 16 729 406 323 0 323 63 93 -6 174
706 10 624 359 265 0 265 60 73 -5 138
600 5 526 307 219 2 217 57 57 -3 106
450 8 458 266 192 3 189 48 47 1 93
419 9 428 250 178 7 171 42 30 16 82
307 2 309 189 120 8 112 26 17 15 54
PBIDT Interest PBDT Depreciation Tax Deferred Tax Reported After Tax Extra-ordinary Items Adjusted After Profit Profit
Extra- 260
216
172
174
138
106
93
82
54
ordinary item
EPS (Unit Curr.) EPS (Adj) (Unit Curr.) Calculated (Unit Curr.) Calculated EPS EPS
18.6 18.6
15.4 15.4
12.3 12.3
12.5 12.5
9.9 9.9
7.6 7.6
6.6 6.6
5.9 5.9
3.9 NA
18.6
15.4
12.3
12.5
9.9
7.6
6.6
5.9
3.9
(Adj) (Unit Curr.) Calculated
18.6
15.4 15.4
12.3 12.3
12.5 12.5
9.9 9.9
7.6 7.6
6.6 6.6
5.9 5.9
NA 3.9
EPS 18.6
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(Ann.) Curr.) Calculated
(Unit
EPS 15.4 12.3 12.5 9.9 7.6 6.6 5.9 NA
(Adj) (Ann.) (Unit 18.6 Curr.) Book Value (Unit Curr.) Dividend (%) Equity Reserve Surplus Face Value & 0.0 50.0 140 863.9 10.0
0.0 45.0 140 685.5 10.0
0.0 40.0 140 543.4 10.0
0.0 40.0 140 436.5 10.0
0.0 30.0 140 327.5 10.0
0.0 25.0 140 238.7 10.0
0.0 20.0 140 172.5 10.0
0.0 15.0 140 111.8 10.0
0.0 5.0 140 53.3 10.0
Non-Promoter Holding Shares(Mn) Non-Promoter Holding (%) 55.00 55.00 55.00 55.00 55.00 55.00 55.00 55.00 55.00 77 77 77 77 77 77 77 77 77
PBIDTM(%) PBDTM(%) PATM(%)
28.77 28.01 14.89
37.28 37.28 19.99
38.26 38.26 20.22
45.82 45.82 24.71
43.21 43.21 22.47
42.01 41.59 20.38
42.72 42.03 20.60
42.40 40.68 19.60
39.21 36.58 17.59
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4.4: INVESTMENT ANALYSIS:

Mutual fund in India is a kind of instrument for investment of money. In mutual fund in India, a large number of investors function through a fund manager who buys bonds or stocks.
The advantages of Mutual fund in India are that they are easy to make investments in and are also very cost efficient. Depends on the objective of the funds like long term growth and low risk factore or high income growth with high risk factor or low growth rate and stability of principal, fund manager invests in respective fields on behalf of shareholders. For individual investors it is very easy type of investment because someone else manages their funds, take care of accounts and invest money over many different available securities.
TYPES OF MUTUAL FUND SCHEMES:

Open-ended mutual funds:
A fund operated by an investment company which raises money from shareholders and invests in a group of assets, in a group of assets, in accordance with a stated set of objectives. Open-end funds raise money by selling shares of the fund to the public, much like any other type of company which can sell stock in itself to the public. Benefits of open-end funds include diversification and professional money management. Open-end fund offer choice, liquidity, and convenience, but charge fees and often require a minimum investment.
Why Funds close: An open-end mutual funds value is determined by the value of the underlying securities. In cases where the share volume is determined to be excessive and unmanageable, the fund can be closed with a new one then opened to investors.
Time Frame: Open-end mutual funds have no time frame required for investors to remain in the fund.
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Close-Ended schemes: Close-end mutual funds are mutual funds that trade like securities. As opposed to issuing new shares when someone sends more money in for purchase, the buyer must find a seller usually through a broker the same way she would buy or sell an individual stock. When open-end mutual funds become too large, they can be closed and traded on a supply-and-demand scenario and hold a price according to that demand and its profitability.
Short-term Investments Repurchase agreements (repo) A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security buyer effectively lends the seller money for the period of the agreement. Most repos are overnight.
Commercial paper Issued by large corporate borrowers and backed by the Credit worthiness of the issuer. An alternative mechanism for borrowing that is usually less costly and more flexible than bank loans.
U.S. Treasury bills The most liquid money market security, issued in maturities to one year, and backed by the full faith and credit of the U.S. government. Other forms of U.S. Treasury obligations include notes (with maturities of two to 10 years) and bonds (with maturities of 10 to 30 years).
Returns as on 10 June, 2011:
S NO SCHEME NAME
AUM ON
AS FUND 31ST RATIN
PRE-TAX
POST-
RETURN (14 TAX

Page 84
GNITMS
MARCH 2011
DAYS ANNUALISE D)
- RETUR N
Crisil1 DWS Ultra Short Term Fund-IP* 1621.06** AAAf ICRA2 Kotak Flexi Debt-IP* Principal 3 Near Term Fund 1080.41 1414.36 mfAAA ICRAmfAAA ICRA4 HDFC FRIF-STF-WP* Sundaram Ultra Short Term-Super 5 IP* 1173.48 1736.68 mfA1+ CAREAAA ICRA6 Kotak Floater-Long Term* ICICI Prudential Flexible Income 7 Plan-Premium Plan* Canara 8 Robeco Treasury 2294.09 Term 3024.41 ####### 2708.33 mfAAA CrisilAAAf ICRAmfAAA ICRAmfA1+ ICRA10 Reliance Money Manager-IP* HDFC 11 Cash Mgmt-Treasury ####### 8809.17 mfA1+ ICRAmfAAA ICRA9896.64 2275.01 mfAAA ICRA8.67 8.65 6.55 6.53 8.69 6.56 8.73 6.59 8.77 6.62 8.78 6.63 8.80 6.64 8.81 6.65 8.82 6.66 8.84 6.67 8.84 6.67 8.89 6.71 9.08 6.86
Conservative*
Advantage Fund-Super IP* Templeton Ultra Short
Bond Fund - Super IP*
Advantage-Wholesale* UTI Treasury Advantage Fund-
12 13
IP* DSP Money Manager Fund-IP*
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mfAAA Crisil14 L&T FI - STF - IP* 1352.90 AAAf 8.62 6.51
* Funds with the new tax structure of 32.45% effective from 01 june, 2011 ** Aum as on 30th april, 2011
4.5: FINANCIAL RATIOS:

RATIOS: AN OVER VIEW
Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment.
Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing.
A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company's competitors have profit margins of 10%, we know that it is more profitable than its industry peers which are quite favorable. If we also know that the historical trend is upwards, for example has been increasing steadily for the last few years, this would also be a favorable sign that management is implementing effective business policies and strategies.
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RATIO ANALYSIS OF JSL
Ratio Analysis is one of the powerful tools for financial analysis. I have studied and analyzed the following ratio of JSL. a. Liquidity Ratios
a.
Activity Ratios
A.
Liquidity Ratios :
Liquidity ratios measure the short-term solvency, i.e., the firms
ability to pay its current dues and also indicate the efficiency with which working capital is being used. Commercial banks and short-term creditors may be basically interested in the ratios under this group.
Current Ratio=
Current Assets Current Liabilities
Quick Ratio =
Current assets- Inventories Current Liabilities
Inventory Turnover Ratio:
Inventory Turnover Ratio=
Cost of goods Sold Average Inventory
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Particulars Profitability Ratio EBDITAM PATM ROCE ROE Capital structure ratios Debt-Equity Ratio Solvency Ratios Current Ratio Interest Coverage ratio Valuation ratios EPS (Rs) CEPS (Rs) BV/Share Price/BV P/E
FY2008 FY2009
FY2010
FY2011E FY2012E FY2013E
45.4% 25.3% 43.0% 31.3%
38.1% 19.7% 35.7% 24.8%
37.2% 20.0% 36.1% 26.4%
29.7% 14.7% 27.4% 25.2%
28.2% 13.3% 26.7% 24.7%
25.0% 11.0% 23.2% 21.7%
0.00
0.00
0.00
0.30
0.36
0.42
1.58
1.69 114.32
1.27 108.91
1.33 32.45
1.08 15.62
1.11 11.50
12.89 17.36 41.17
12.12 16.93 48.82
15.55 21.08 58.98 5.26 19.93
18.06 26.59 71.74 4.18 16.74
21.03 33.26 87.88 3.40 14.0
22.73 37.26 104.76 2.85 12.9
OBJECTIVE OF RATIO ANALYSIS:

A ratio is a numerical relationship between one item and another. For the purpose of financial statement analysis ratios are calculated between different items given in the financial statements. The ratio analysis would enable the computation of not only the present earning of the business enterprises but also the estimation of the future earning capacity as well.
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The ratio analysis would also enable the management to find out the overall as well as department wise efficiency of the firm on the basis of the available financial information.
The management can easily locate the areas of efficiency. The solvency of the firm can be determined with help of ratio analysis. Ratio analysis of past results in respect of earning and financial position of the enterprise is of great help in forecasting the future results. Ratio analysis thus helps in preparing the budgets.
It is easy to understand the financial position of a business enterprise in respect of shortterm solvency, capital structure position etc.
Ratios enable the users of the financial information to determine the liquidity, solvency, profitability etc of a business firm since information is useful.
SA firm cannot only compare its results with other firms in the same industry but also its own performance over a given period of time. Accounting ratios calculated and tabulated for a no of years enable the users of financial information to determine the future results on the basis of past trends
Factors Affecting Working Capital Management:

Some of the factors that can affect a firms working capital level are:
Type/Nature Of Business
Working capital level is generally higher in manufacturing based versus service base organizations
Some of the factors that can affect a firms working capital level are:
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Type/Nature Of Business
Working capital level is generally higher manufacturing organizations based versus service
in base
Depends on the Volume of Sales
The higher the sale, the higher is the level of working capital required
Seasonality
Peak seasons like festive seasons require a higher level of working capital
Length of Operating And Cash Cycle
A longer operating and cash cycle increases the level of working capital
Policies:
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For a firm, it can exercise a few options/policies when considering the risk return aspect when managing its working capital. The following describe the different policies:
(1) MATCHING APPROACH/POLICY
OR
HEDGING
This approach or policy is a moderate policy that matches assets and liabilities to maturities.
Basically, a firm uses long term sources to finance fixed assets and permanent current assets and short term financing to finance temporary current assets
Simple illustration:
A fixed asset/equipment which is expected to provide cash flow for 8 years should be financed by say 8 years long-term debts
Assuming a firm needs to have additional inventories for 2 months, it will then sought short term 2 months bank credit to match it.
(2) CONSERVATIVE APPROACH/POLICY
Conservative because the firm prefers to have more cash on hands
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Fixed and part of current assets are financed by long-term or permanent funds
As permanent or long-term sources are more expensive, this leads to lower risk lower return
Having excess cash at off-peak period hence the need to invest the idle or excess cash to earn returns.
(3) AGGRESSIVE APROACH/POLICY The firm want to take high risk where short term funds are used to a very high degree to finance current and even fixed assets
Depends on the Volume of Sales
The higher the sale, the higher is the level of working capital required
Seasonality
Peak seasons like festive seasons require a higher level of working capital
Length of Operating And Cash Cycle
A longer operating and cash cycle increases the level of
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working capital
Policies:
For a firm, it can exercise a few options/policies when considering the risk return aspect when managing its working capital. The following describe the different policies:
(1) MATCHING OR HEDGING APPROACH/POLICY
This approach or policy is a moderate policy that matches assets and liabilities to maturities.
Basically, a firm uses long term sources to finance fixed assets and permanent current assets and short term financing to finance temporary current assets
Simple illustration:
A fixed asset/equipment which is expected to provide cash flow for 8 years should be financed by say 8 years long-term debts
Assuming a firm needs to have additional inventories for 2 months, it will then sought short term 2 months bank credit to match it.
(2) CONSERVATIVE APPROACH/POLICY
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Conservative because the firm prefers to have more cash on hands
Fixed and part of current assets are financed by longterm or permanent funds
As permanent or long-term sources are more expensive, this leads to lower risk lower return
Having excess cash at off-peak period hence the need to invest the idle or excess cash to earn returns.
(3) AGGRESSIVE APROACH/POLICY The firm want to take high risk where short term funds are used to a very high degree to finance current and even fixed assets
4.6: CASH MANAGEMENT:
Importance of Cash:
Cash is the balancing figures between debtors, stock and creditors. Without adequate cash to meet working capital demands, it is impossible to extend credit, order stock or pay creditors.
Managing Cash or Cash management involved the following: Efficient banking-making sure money received is banked as soon as possible, making payments the most efficient way, and ensuring any surplus balances are put to interest earning use. Here the liquidity, risk and return of investment must all come into play with the length of time before funds are needed playing an important role. The basic in cash flow control is to ensure funds are available when needed. For the immediate short term trend:
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Weekly or monthly forecasts are prepared for comparison with actual results. If these forecasts indicate unacceptable balances or deficits are likely at some point, it will be necessary to decide how these can be covered. Immediate solutions will include increased borrowing, rescheduling plans and payments, or even sale of an asset. For the longer term trend: Longer term cash flow control will include all aspects of the business including working capital and fixed capital control, capitalisation, trading and dividend policy. For example it may be able to improve cash flow by improvements in operating efficiency or higher sales prices, improved working capital control, or revised fixed asset investment plans.
Cash flow forecasts:
An integral part of the budgeting process. The objectives of the cash budget are to: integrate trading and capital expenditure budgets with cash plans; anticipate cash surpluses and deficits in time to generate plans to deal with these; and provide a facility for comparison between budget and actual outcomes.
Accountants role in Working Capital management: Accountants have an important part to play in all aspects of working capital management from internal control procedures like invoice authorization through reporting processes (such as production of aged debtors lists and cash flow forecasts). They use various types of ratio analysis as important indicators of working capital strength which can be applied internally or external.
INVENTORY MANAGEMENT:
The objective of Managing Stock is to:
establish the proper stock control levels so as to ensure that excessive stocks are never carried (and working capital thereby sacrificed) but that they never fall below the level at which they can be replenished before they run out.
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Failing to maintain proper stock level will mean that working capital is tied up in the business. Keeping levels to the minimum required for efficient operations will keep costs down. Stock control involves in many aspects like the controlling of buying, handling, storing, issuing, and recording stock. Some of the major factors to consider when establishing the control levels are: working capital available and the cost of capital; average consumption or production requirements; reordering periods-the time between raising an order and receiving delivery of goods; storage space available; market conditions; economic order quantity (including discounts available for quantity); likely life of stock bearing in mind the possibility of loss through deterioration or obsolescence; and The cost of placing orders including generating and checking the necessary paperwork as well as physical checking and handling procedures.
AT IGL:
1.Raw materials and Finished products arevalued at cost or net realisable value,whichever is lower. Finished productsinclude excise duty and royalty whereverapplicable.
2. Stock in process is valued at cost or net realisable value, whichever is lower. It is valued at cost where the finished products in which these are to be incorporated are expected to be sold at or above cost.
Stores and spares and other material for use in production of inventories are valued at weighted average cost or net realisable value, whichever is lower. It is valued at weighted average cost where the finished products in which they will be incorporated are expected to be sold at/or above cost.
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Surplus / Obsolete Stores and Spares are valued at cost or net realisable value, which ever is lower. Machinery spares, which can be used only in connection with an item of fixed asset and their use is expected to be irregular, are capitalised with the cost of that fixed asset and are depreciated fully over the remaining useful life of that asset.
4.7:WORKING CAPITAL FINANCING:
1.WAGES & TAXES:
a. All short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.
b. Employee Benefits under Defined Contribution Plan in respect of provident fund is recognized based on the undiscounted obligation of the company towards contribution to the fund. The same is paid to the provident fund which is administered through a separate trust.
c. Employee Benefits under Defined Benefit Plans in respect of leave encashment, compensated absence, post retirement medical scheme, long service award and other terminal benefits are recognized based on the present value of defined benefit obligation, which is computed on the basis of actuarial valuation using the Projected Unit Credit method. Actuarial liability in excess of respective plan assets is recognized during the year.
d. Provision for current tax is made as per the provisions of the Income Tax Act, 1961. Deferred Tax Liability / Asset resulting from 'timing difference' between book and taxable profit is accounted for considering the tax rate and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred Tax Asset, if any, is recognized and carried forward only to the extent that there is virtual certainty that the asset will be realized in future.
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CHAPTER-5 SCOPE, LIMITATION, CONLUSION AND RECOMMENDATIONS

The policy employed by the company with regard to its working capital should clearly defined and documented. An adequate organization installed as meta-management can aver impact across all functions and processes. Responsibilities and processes have to be defined, whereby working capital objectives aver to be integrated into the companys incentive system. For monitoring the financial lows, it is advisable to set adequate working capital targets periodically on the companys wide basis and to institutionalized control and reporting mechanism. Many companies consider working capital as very important. It has been seen that size of company can also be related to working capital of the company. The main objectives of every business are maintaining liquidity. A high level of trading activity characterizes liquidity. It is safer to invest in liquid assets than illiquid ones because it is easier for you to get money out of the investment.
The industry requires a huge infusion of capital investment for upgrading and rebuilding of its Furnaces and machines. To keep pace with the latest technological development for up gradation of technology, a constant review is also required Since this industry is very elastic in terms of cost and any upward revision in cost has a big toll on its profitability. Major investment is in fixed capital or working capital. It is not an easy task to gather such a huge capital for setting up a glass industry. Relatively the process of setting of Glass Industry is very time consuming as it requires huge technical set up taking much longer period of gestation before the final production.
Scope and limitations of study
The study is strictly based on the mathematical interpretation of the figure.
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Limited time period, so extensive study of the topic is not possible.
The undertaken research work would be confined to the operational & financial performance of IGL INDIA Ltd.
All the work is dependable on the secondary data being provided by IGL INDIA Ltd...
The study is for eight weeks, from 19 APRIL to 18 JUNE 2011
CONCLUSION:
The company seems to be plagued with high inventory and poor liquidity position which is rendering the company its position where the company has to resort borrowing from financial institution adding to interest cost of production. The company has also has a very low turnover ratio indicating that inventory holding is very high as can be seen from the aging of the inventory. The Companies will concentrate on optimizing the individual process chains as well as on the subject of reporting and incentive system. The main task is to develop an enterprise wide concept in view with working capital management.
There is always a scope of improvement. Although the processes followed in the company for the management of current assets are well defined and efficient, yet after an intensive study of the same it was found that some lacunae existed in the same. Different remedies have been suggested for them in the recommendations. Also a survey of different people of the finance department of the company at different hierarchical levels was undertaken for their opinions regarding their field of expertise, the existing method of working and the changes they would like to incorporate to increase the efficiency. The answers have then been analyzed and stated. Current assets management forms a major part of the working capital management. And at HCL due importance has been given to it .Much emphasis is laid on efficient management of the current assets of the company in order to increase the profitability of the company.
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RECOMMENDATIONS
As the Company enjoys as the largest producer of gas and are in transmission business also & having enough Funds after IOCL (Indian Oil Corporation Limited). It should focus on its fund requirements from open market also which could provide cheaper source of funds as compared to Bank financing. Short term funding can be done through Commercial Papers, Money market instruments, Certificate of deposits etc. which could provide less risky funds with high rate of liquidity.
Another important segment is that it has a strong order book both in domestic market as well as foreign markets. It should have to devote its production in a more efficient manner without compromising on the quality of the products.
Each and every field of activity involves certain degree of risk. IGL might face risk of rise in price of raw material like steel etc. but it has to maintain its cost within a limit in order to put its stand among its competitors. Cost efficiency with high class productivity with the help of improved technology will make the pipe giant a global performer.
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CHAPTER-6
ANEXXURE Financial Analysis

EBIDTA/SCM (Standard cubic meter) to sustain though, EBIDTA Margins to fall
To sustain the higher growth in volume, IGL would have to source more of R-LNG, which will put pressure on its EBIDTA margins. As per our estimates, EBIDTA margins would decline from 37.2% in FY10 to 25.0% in FY13E. However, IGL is expected to continue to maintain its EBIDTA/SCM.
High Depreciation and Interest cost to hurt Profit margin
During FY2005-10, IGL posted 18.3% CAGR in net profit. Despite increase in CNG Sales volumes in future, over FY2010-13E, we expect IGLs net profit to increase to 3,182.7 mn from 2,528.9 mn at a CAGR of 14.2%.
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This is mainly on account of increase in gas cost, marginal increase in realizations and higher depreciation due to estimated cap-ex of ` 30,000 Mn in coming 5 years. On account of higher depreciation and interest cost, PAT margins would fall from 20% in FY10 to 11.0% in FY13E.
Roe to decline over long term but would manage to stay above 20%
Historically, IGLs Roe has been around 30.0% levels. In future, due to the expected increase in gas costs, high depreciation, we expect Roe to contract to 21.7% in FY13E. Though, we expect, increase in realizations would help Roe to stay above healthy 20%.
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Sensitivity Analysis of Effect of Price variation on EPS
To protect its margins IGL has to pass on the incremental cost of gas to its consumers. Being a monopoly player in Delhi and NCR region IGL has always been passing on the incremental input cost price hike to its customer and we believe IGL will continue to do so in the coming years as well. We have carried out a sensitivity analysis on EPS to show the impact of change in price.
Scenario-1: If IGL is not passing on the increase/decrease in cost of gas The following table shows EPS sensitivity to change in purchase price without any accompanying increase/decrease in the selling price. In the given set of assumptions, with every 1% change in price, EPS changes by ~2.2% in FY12E and ~2.4% in FY13E.
FY12EEPS Purchase price variation -5% Base case 5%

GNITMS
FY13EEPS Rs. 28.4 22.7 19.1
FY12E Change(%) 12.6
FY13E Change(%) 16.1
Rs. 24.5 21.0 19.0
-12.5
-16.1
Page 103
10%
16.3
15.4
-25.1
29.0
Scenario-2: If IGL is passing on the increase/decrease in cost of gas
The following table shows EPS sensitivity to change in selling price with accompanying increase/decrease in purchase price. In the given set of assumptions, with every 1% change in selling price, EPS changes by ~2.4% in FY12E and ~2.6% in FY13E.
FY12EEPS Selling Price variation -5% Base Case 5% 10% Rs. 19.2 21.0 24.5 27.3
FY13EEPS Rs. 19.9 22.7 28.0 29.3
FY12E Charge(%) -13
FY13E Charge(%) -14
12.8 25.6
14.5 29.0
Key Concerns:
High entry barriers outside Delhi:
GAIL has set up six more JVCs (Joint Venture Companies) for CGD projects in various cities. GAIL Gas has submitted EoI (Expression of interest) for 7 cities (Kota, Jhansi, Matura, Sonipat, Dewas, Gwalior and Ghaziabad). GAIL Gas won 4 cities viz Dewas, Kota, Meerut and Sonepat in the first round of bidding of PNGRB. These initiatives by GAIL could increase entry barriers for IGL for expanding city gas distribution business to other cities.
GNITMS
Page 104
Spurt in LNG prices:

Since only 2.7 MMSCMD of APM gas has been allocated to IGL in its area of operation, IGL has to depend more on R-LNG sourced from Petronet LNG, as the expected demand is expected at ~4.35 MMSCMD by FY13E. Any adverse impact on sourcing of R-LNG can derail the volume growth plans of IGL. If the global LNG prices firm up further, it could lead to very significant increase in input costs, which it has to pass on to the end consumers.
Regulatory hurdles:
IGL has a mandate for operating in Delhi, Greater Noida and Ghaziabad. Despite the initial mandate, final approval is pending for Noida and Ghaziabad. Though 50% of the FY11-15E capex is still in Delhi region, IGL is aggressively rolling out in other NCR areas as well (excluding Faridabad & Gurgaon) which could expose IGL to risks it future plan.
Peer Group Comparison

Being a pure city gas distribution company, IGL is comparable only to Gujarat Gas Corporation Ltd. (GGCL), which is operating in Gujarat State. GGCL is Indias largest private sector player in the City Gas distribution business in India and supplies gas to more than 230,000 domestic, commercial, industrial customers and serve over 80,000 compressed natural gas users. At current market price (CMP) of ` 299, IGL is trading at 14.0x its FY12E EPS as compared to 19.6x for GGCL. On P/BV basis also, IGL (3.5x) is cheaper than ascompared to its closest peer, GGCL (4.7x).
Company
Sales(Rs mn)
Net profit(Rs mn)
EBITDAM %
PATM%
ROCE%
ROE%
Indraprastha Gas
17,089.7
2421.7
29.5
15.9
36.1
26.4
GNITMS
Page 105
Gujarat Gas
18,421.7
2590.1
24.1
14.1
28.8
23.4
Outlook and Valuation

Given its monopoly in NCR region, strong volume growth in CNG and PNG segment, and the aggressive expansion plans for establishing the CNG and PNG infrastructure in the operational areas, we believe IGL is in a favorable position to exploit the growing opportunity in the CGD segment. We expect the revenues to register a CAGR of 30% during FY10-13E and bottom line to register a 13% CAGR during the same period. We have valued the company based on DCF methodology. The rationale behind opting for DCF method over other valuation methodology is because of the predictability of the cash flows. Our EPS estimate of ` 21.0 and ` 22.7 for FY12E and FY13E respectively, imply earnings CAGR of 14% over FY10-13E. At current level of ` 299, the stock is trading at 14.0x and 12.97x FY2012E and FY2013E earnings. IGL has historically traded in the range of 13-16x of its one year Forward Earnings. Hence, we initiate our coverage on IGL with a BUY recommendation with a price targetof ` 357, which is a 19% upside from the current price level.
DCF Valuation Summary Valuation Summary
Rs Mn
2011E
2012E
2013E
2014 E
2015 E
2016 E
2017 E
2018 E
2019E
Sales Revenue EBITDA
17,151.7 22894. 7 5,088.2 6465.2
28936
30961 33128 35447 37929 40584 43,425.2 .9 .9 9925. 41 1040. 25 2126. .2 .3
7236.6
8669. 23
9276. 08 977.0 8 1987.
10620 11363 12159.0 .18 1107. 84 2275. .60 1180. 16 2435. 2605.51 5 1257.55
Depreciat ion Cap-ex
393.93
532.53
671.13
918.0 5
6100.00
6100.0
6100
1857.
GNITMS
Page 106
69 Charge in 253.55 WC FCFF -2630.9 -798.64 -883.3 4818. 04 -517.55 222.56 50.70
73 55.77
87 61.35
75 67.48
06 74.23 81.65
5148. 56
5502. 05
5880. 13
6284. 49
6716.95
Note: Free Cash Flow to firm=EBITDA(1-t)+(Depratiation*t)-(Cap-ex)-(Net change in Working Capital).
Terminal Value (Rs Mn) Present Value (Rs Mn) Less: Net Debt (Rs Mn) Equity Value (Rs Mn) No of shares (Mn) Per Share Value (Rs)
96399.56 51620.82 1,607.00 50,013.82 140.0 357
WACC Assumptions Beta Market Risk Premium Risk free Rate WACC Terminal Growth Rate 0.76 4.0% 8.5% 10.7% 3.0
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CHAPTER-7 BIBLIOGRAPHY:
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CORPORATE FINANCE OF IGL LTD.

Santosh Kumar Gupta

CORPORATE FINANCE OF IGL LTD.

CORPORATE FINANCE OF IGL LTD.

3.1: Profile of IGL..27

3.2: Vision of IGL...29

3.3: SWOT Analysis .......30

3.4: Companys Operations..31

3.5: Structure of Finance Department .30

Chapter 4: WORKING CAPITAL MANAGEMENT IN IGL...43

CORPORATE FINANCE OF IGL LTD.

4.1: Credit Management53

4.2: Inventory Management68

4.3: Receivables Management70

4.4: Investment analysis........81

4.5: Ratio Analysis...84

4.6: Cash Management.92

4.7: Financial Analysis.95

Chapter 5: LIMITATIONS, CONCLUSIONS & RECOMMENDATIONS...96

CORPORATE FINANCE OF IGL LTD.

CORPORATE FINANCE OF IGL LTD.

CORPORATE FINANCE OF IGL LTD.

There are two concepts of working capital- gross and net.

Gross Working Capital focuses on

- Optimization of investment in current asset. - Financing of current asset

Net Working Capital focuses on

CORPORATE FINANCE OF IGL LTD.

1.1 Decision criteria

CORPORATE FINANCE OF IGL LTD.

CORPORATE FINANCE OF IGL LTD.

assets (generally cash and cash

equivalents, inventories and debtors)

financing, such that cash flows and returns are acceptable.

CORPORATE FINANCE OF IGL LTD.

To adopt internal customer focuses as a means to external customer satisfaction.

To ensure high quality of inputs through proactive interaction with suppliers.

To meet obligation towards the society as a responsible corporate citizen.

To provide value for money to all stake holders.

To follow ethical business philosophy at all time

1.4: Research Methodology:

Qualitative Analysis: It is required to study the business profile of the Organization,

CORPORATE FINANCE OF IGL LTD.

Step 2- To calculate Working Capital Ratios so that the financial soundness of

Step 3- To undertake a through SWOT analysis.

CORPORATE FINANCE OF IGL LTD.

1.5:About the company:

CORPORATE FINANCE OF IGL LTD.

EXPANSION PROJECTS IN NATIONAL CAPITAL REGION (NCR)

CORPORATE FINANCE OF IGL LTD.

F.I. INVESTORS 12%

INDIAN PROMOTOR 45%

INSURANCE CO. 3% GOVT. 5% F.I 3%

Product CNG PNG TOTAL FINANCIAL RESULTS:

2010-11 695,127,167 87,310,564 782,437,731

2009-10 605,255,608 54,257,774 659,513,382

2010-11 10992.24 4018.90 774.52 3244.38 1089.42 2154.96

2009-2010 8789.91 3262.94 674.34 2588.60 863.86 1724.74

CORPORATE FINANCE OF IGL LTD.

630.00 104.64 215.49 5937.36 6887.49

560.00 96.17 172.47 4732.53 5560.17