City Gas Distribution company Mahangar Gas (MGL) is looking at a significant expansion in its CNG infrastructure while also looking to acquire existing renewable energy assets to develop its green portfolio, the company’s managing director Ashu Shinghal told FE.
Additionally, the company plans to spend Rs 1,000 crore in the upcoming fiscal year 2025-26 as capex compared with Rs 800 crore in the current fiscal year.
“We have been doing 25 CNG stations every year. This year, we expect to set up 80 stations. Right now we are selling CNG at 48% discount to petrol and 18% discount to diesel. People are getting more confident about availability of CNG across the highways and hence CGD entities are also building CNG infrastructure on highways,” Shinghal said, adding that the CNG market is growing pretty fast.
“With renewable energy, we are also exploring. It’s a vast area. We are thinking about existing assets and also thinking of bidding for RTC (round-the-clock) power,” Shinghal said, adding that the company will come out with its net zero targets by next year.
On the profitability front, MGL expects to register decent numbers in FY25 but lower than last year’s on the back of higher procurement costs this fiscal. Further, the recent deallocation of domestic gas to the company is said to have some impact on the company’s margins.
“This year, the profit will not be as high as last year because in nine months of FY25 we are at Rs 750 crore. Last year we were at Rs 1,280 crore. So I don’t think we will be able to do that number, but still, it’s a very decent performance as far as the financial numbers are given,” the MD said.
He further added that the more important thing is that the company is growing at a rate of 12% year on year on the volume part. “So, financial results can be slightly up or down, but what is more important is that volume growth is there. That gives more sustainability to the company in the long run. That’s what more investors are looking at also,” he said.
The company has registered a growth of 12% in its volume in the first nine months of FY25 compared with just 5.5% in FY24.
MGL is also in the process of merging back its wholly owned subsidiary Unison Enviro and hopes to complete the process in FY26. The company hopes that the subsidiary’s assets will be better utilized in depreciation and tax benefits.
Speaking on the potential price hikes in CNG sales going forward, Shinghal said that if further deallocation of domestic gas happens, the company may have to pass on the hike but a part of it can also be absorbed depending on the portfolio and the cost at which MGL is able to source the gas.
“We think with this deallocation happening, some of the smaller entities will find it difficult to operate. So there can be some consolidation in the district. We are exploring several options, but nothing on the card,” Shinghal said when asked if the company is looking to tie up with other companies.
The company expects to maintain an EBITDA per scm of Rs 9-11 for the coming few years.
While expanding its core business in the CGD space, the company is also looking to diversify into LNG and renewable energy.
“We have plans for battery cell manufacturing and formed a joint venture with India international battery company, which is a US company. We have got the land, the project is already approved for investment. Within 1-1.5 years we expect 1 GW factory to be set up,” said Shinghal.
