IRM Energy is a city gas distribution (CGD) company with operations at Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (Union Territory of Daman and Diu/Gujarat), and Namakkal & Tiruchirappalli (Tamil Nadu), engaged in the business of laying, building, operating and expanding the city or local natural gas distribution network. They develop natural gas distribution projects in the geographical areas (GAs) allotted to them for industrial, commercial, domestic and automobile customers.
IRM Energy supplies natural gas to two primary set of customer segments:
CNG (Compressed Natural Gas): Customers include operators of public transport vehicles such as taxis, auto-rickshaws, and private vehicles such as cars, buses, light goods vehicles and heavy goods vehicles.
PNG (Piped Natural Gas): PNG customers are broadly classified into three segments, which are, industrial PNG (small, medium and large-sized enterprises), commercial PNG (such as hotels, restaurants, bakeries, hostels and community halls) and domestic PNG (predominantly using PNG as cooking gas).
Strengths And Risks
+ Exclusivity in CNG and PNG Supply : IRM Energy is the sole distributor of CNG and PNG in the GAs awarded to them for the period of exclusivity granted. They also have network exclusivity rights of 25 years for infrastructure creation for all GAs.
+ Diverse Customer Portfolio : They have built strong relationships with a diverse customer base including industrial, commercial and domestic customers. They provide competitive offerings and have successfully established a distribution network.
+ Strong Parentage : IRM Energy is backed by the strong parentage of Cadila Pharmaceuticals Limited, which has a legacy of over three decades in the domestic pharmaceutical industry. Cadila Pharma holds 49.50% equity shares. The strategic and financial support provided by Cadila Pharma, with their experience in domestic industry has significantly helped them overcome certain entry barriers such as requirement of large investments.
+ Cost-effective Gas Sourcing : They have strategically acquired GAs with connectivity to cross-country natural gas pipelines within the GA boundary, which reduces the cost of transportation. For instance, GAIL’s Dadri-Bawana Nangal gas pipeline passes through Fatehgarh Sahib.
+ Financial Performance : IRM Energy has grown their revenue over the years, supported by healthy year-on-year growth in volume, driven by infrastructure augmentation as well as increased penetration.
- Government Policies : They are dependent on government policies for allocation of natural gas and cost of gas supplied for CNG and domestic PNG customers (the Priority Sector). Any reduction in allocation of natural gas or any increase in the cost of gas could adversely affect our business and cash flows.
- Defined Locations : Their city gas distribution network can only be set up in areas where they get allotment from the PNGRB. Their operations are restricted to defined geographical boundaries and the natural gas requirements in these regions may be affected by various factors outside IRM’s control.
- Competition : Their existing GAs could be open to access for others after the end of infrastructure and marketing exclusivity from PNGRB after which the company may no longer be the sole distributor in these regions.
- Legal Proceedings : There are two criminal litigations, 29 regulatory actions and 12 material tax litigations involving their Promoters. In the event of any adverse outcome, our Company’s and our Promoter’s business operations and reputation may be affected.
FAQs What is the IRM Energy Limited IPO? +
When will the IPO open? +
What is the lot size of the IPO? +
How to apply for an IPO? +
When will the IPO be allotted? +
When is the IPO listing date? +
