Adani Gas Ltd

Investor Presentation

August 2018
Legal Disclaimer
Certain statements made in this presentation may not be based on
historical information or facts and may be “forward-looking
statements,” including those relating to general business plans and
strategy of Adani Enterprises Limited (“AEL”), its future outlook and
growth prospects, and future developments in its businesses and
competitive and regulatory environment, and statements which
contain words or phrases such as ‘will’, ‘expected to’, etc., or similar
expressions or variations of such expressions. Actual results may differ
materially from these forward-looking statements due to a number of
factors, including future changes or developments in its business, its
competitive environment, its ability to implement its strategies and
initiatives and respond to technological changes and political,
economic, regulatory and social conditions in India. This presentation
does not constitute a prospectus, offering circular or offering
memorandum or an offer, or a solicitation of any offer, to purchase or
sell, any shares and should not be considered as a recommendation
that any investor should subscribe for or purchase any of AEL’s shares.
Neither this presentation nor any other documentation or information
(or any part thereof) delivered or supplied under or in relation to the
shares shall be deemed to constitute an offer of or an invitation by or
on behalf of AEL.
AEL, as such, makes no representation or warranty, express or implied,
as to, and does not accept any responsibility or liability with respect to,
the fairness, accuracy, completeness or correctness of any information
or opinions contained herein. The information contained in this
presentation, unless otherwise specified is only current as of the date
of this presentation.
AEL assumes no responsibility to publicly amend, modify or revise any
forward looking statements, on the basis of any subsequent
development, information or events, or otherwise. Unless otherwise
stated in this document, the information contained herein is based on
management information and estimates. The information contained
herein is subject to change without notice and past performance is
not indicative of future results. AEL may alter, modify or otherwise
change in any manner the content of this presentation, without
obligation to notify any person of such revision or changes.
No person is authorized to give any information or to make
any representation not contained in and not consistent with this
presentation and, if given or made, such information
or representation must not be relied upon as having been authorized
by or on behalf of AEL. This presentation is strictly confidential.
This presentation does not constitute an offer or invitation
to purchase or subscribe for any securities in any jurisdiction,
including the United States. No part of its should form the basis of or
be relied upon in connection with any investment decision or any
contract or commitment to purchase or subscribe for any securities.
None of our securities may be offered or sold in the United States,
without registration under the U.S. Securities Act of 1933, as
amended, or pursuant to an exemption from registration therefrom.
This presentation is confidential and may not be copied or
disseminated, in whole or in part, and in any manner. This presentation
contains translations of certain Rupees amounts into U.S. dollar
amounts at specified rates solely for the convenience of the reader.
2
City Gas Distribution
Industry Overview
 Natural Gas – A Low Cost, Clean & Efficient Source of Energy
Abundance Availability Affordability
Acceptability
Gas Value Increasing Expanding Price decline,
Less polluting,
Proposition Liquefaction Imports / commoditized,
clean and green
capacity infrastructure fungible

Global Gas export capacity increasing 50% between 2016-20 Infrastructure around natural gas import is accelerating

425 398 401 407 80 73

400 374
375 60 53
350 328 44
325 299 40
300 28
265 24
275 245 248 16
20
250
225
200 0
14 15 16 17 18e 19e 20e 21e 22e China LNG (MMTPA) India LNG (MMTPA) India Pipeline ('000 KM)
FY 16 FY 20E

Poor air quality in cities supporting gas adoption Gas is cheaper than oil linked fuel ($/MMBTU)

Iran 3 Oil Linked Fuels

Gas Price
Nigeria 5 11.3 10.8
Pakistan 5 8.7
7.8
7.1
B'desh 6 6.3
Saudi Arabia 6 No of Cities 3.7
2.7
China 16
India 31

0 10 20 30 40

World’s 100 cities with worst Air Quality

From a fragmented and regional market, natural gas now a global commodity. Supply is driven by new discoveries and demand
by rapid infrastructure development

4
India’s Natural Gas Demand on a secular growth path
Environmental commitments, “Make in India” initiative, need for energy security makes natural gas a priority

Lower Gas Consumption per Capita (Cbm/person) India Contracted and Uncontracted LNG Demand

30,630 21,449
2,367 1,678
253 152
80

UAE Qatar United Thailand Bangladesh China India

States

Gas as % of primary energy consumption declining National Priorities

60 61 • Paris agreement requires 35% reduction in CO2 over 2005 level

51 49 49 50
46
40 42
36 37
• Reduce oil import 10% by 2020
32
28 30
26 26

10 10 10
• Balance energy mix- gas 6% to 15%, by 2022
8 7 7 8 8 8 8 8 8 9 7 7 6 6

2000 2002 2004 2006 2008 2010 2012 2014 2016 • 100% LPG/PNG penetration
Gas as % of Primary energy Prmary Energy Gas Consumption

India has lagged, but given the global glut, this might be a advantage with significant uncontracted demand.
Gas and Renewables together serves the twin purpose of climate and growth

5
 City Gas Distribution (CGD) infrastructure generates demand
China Gujarat
Gas consumption increased 4 times compare to India Highest CGD penetration and gas has 25% share in energy mix
LNG as transport fuel picked up due to LNG infrastructure compare to national average of 6%

Gas demand in India Vs China (In BNSCM) Gujarat (Natural Gas Pipeline and Gas)
250
India China
188 195
200 172
Gas Consumption

151
137
150
111
84 93
100 73
59
41 48
35
50 71
60 61
42 51 49 49 46
32 36 37 40
- 30
FY 03 FY 05 FY 07 FY 09 FY 11 FY 13 FY 15

China LNG demand as auto fuel is rising as LNG station

increasing
200 2800 3000
2667
180
Heavy Duty trucks('000)

2230 2500
160
140 1824 LNG Station (Nos)
2000
120
100 1500
80 175
777 137 1000
60 124
40 203 304 74 500
20 101
14 17 22 38
0 0
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16

Heavy duty Trucks ('000) LNG station (in Nos)

Consensus at political & judicial level to replicate Gujarat model , i.e. to increase gas share to 25%

6
Massive Infrastructure Investment in Oil & Gas sector is underway
Carrier first- Commodity latter. Infrastructure will unblock latent demand.

Ongoing Infrastructure Investment

India Gas Pipeline and CGD Network

• LNG terminals from 4 to 11; 6 under construction, 2

terminal from group company

• Pipeline network of 16000 kms extended by

13000kms work is started on most of stretches.
Expanding upto Northeast

• City Gas Distribution from 78 to 250 cities by 2020,

bids for 86 GAs covering 174 cities are underway
and will be awarded by August 2018

• Incentives to explore and extract gas, 1st round

under OLAP/HELP is going on.

• Small oil field 1st round concluded and second

round launched
Blue star denotes proposed 146 GA for CGD bidding

About $23bn will be spent in the next 5 years to build oil & natural gas infrastructure.
Approx. $1 bn VGF has been granted to GAIL to build pipeline infrastructure with likely unbundling

7
 Indian CGD is ready for next growth cycle
CGD to provide base load to Gas Economy. Government is aggressively pushing Compressed Natural Gas and Piped Natural Gas

India Gas Demand is Increasing Trinity of Supplies, Infrastructure and Prices to drive gas demand

500 252
219
190
400 167
150 Gas
MMSCMD

300 Supplies
191 206
157 173
200 131
0 139
0 146
121
0 117
0 Increase
in Gas
100 Demand
Distributi
0 Competit
on
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 ive Price
Infrastru
Normalised Bull cture

CGD demand adequately covered by domestic production Growth Drivers

38% 38%
• 120 districts have high pollution levels
140 40%
35% • Stringent emission norms. SC suggestion to ban Fuel Oil &
120 31% 35% Petcoke on pan India basis
29%
100 26% 30% • Coverage to increase to 322 cities (total >700 districts)
21% 25% • Favourable regulatory support for CGD
80 19% • Tax arbitrage between liquid fuel and Gas
17% 20%
60 122 • Energy security by balances energy mix
100 103 108 15%
97 92 88 91 • Industrial automation supports gas as fuel
40 87
46 10% • Domestic production of natural gas is rising and expected to
41
20 31 36
16 17 18 22 27 5% grow considerably
0 0% • Fuel Oil production declining at refineries
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 • Absolute constrain on LPG production and Import infrastructure
India CGD Demand Domestic Productiom • Highway, Inter city traffic, MHV, 2W will drive demand
CGD as % of Domestic Production • Urbanisation and High rise building supports CGD

CGD will have wider political patronage due to its wider, small consumption intensity (Household, passenger vehicles, small
enterprises)

8
Natural Gas: Clean Fuel for Swachh Bharat (Clean India)
Fuel for urban India, clean India, digital India, GST compliant India

CNG has significant price advantage over Petrol Khurja- Case Study

INR/ ltr energy equalized Demonetization, GST roll out and environmental pressure changing the
80.00 fuel landscape.
Aprox 60% cheaper than Petrol, varies
city to city
60.00
Small town about 100 Km from Delhi is famous for ceramics art work. 150
33.44 units making hand crafted pottery and ceramic work.

40.00 14.83
9.06 Unorganized sector, avoided using natural gas which leaves a trail and can
11.78
20.00 reveal financial data.
29.22
22.64
Used all kinds of fuels – Furnace Oil, PetCoke, Kerosene, Rubber/Tyre Oil,
-
as emission monitoring not a deterrent
Petrol CNG
Brent/ Gas S&D Cost/ Margins Taxes
The tri–combination of Demonetization, GST and SC’s decision to ban
Furnace Oil, PetCoke has proved to be a game changer for fuel mix.
Natural Gas Vehicle Penetration is low and will increase
November 2016 our total PNG sale in Industrial segment at Khurja was
India 1% 2000 SCMD.
Thailand 1%
China 2% December 2017 sales, increased to 16000 SCMD, registering 8 fold growth
Brazil 2%
Egypt 3% FY 19 will reach 80000 SCMD, growth of 4000% in 2 year expecting 100%
Banglade… 11% units on Natural Gas.
Iran 15%
Pakistan 33% Industry is happy with ease of use with gas: saving space/ easy to handle/
on tap/ pay after use/ safe and reliable. It has improve the product quality.
0% 10% 20% 30% 40%
NGVs as % of total vehicle population

Apart from less polluting and ease of operation, Natural Gas will continue to have significant competitive advantage over
liquid fuel

9
Regulatory Framework, Policy Landscape
Regulator Framework
Petroleum and Natural Gas Regulatory
Board
Asks for bids for Municipal areas based
upon
• Network Tariff-20%
• No. of Domestic Connection-50%
• No. of CNG Outlets-20%
• Inch KM of Pipeline-10%
Awards 25 years concession
• Awardee to build the network over
8 years
o Network exclusivity for 25 yrs
o Marketing exclusivity for 8 yrs
• No regulation around marketing
margin
In essence, Utility Business with a market economy flavour - largely unregulated
* Compressed Natural Gas
Pricing Mechanism Recent Policy Impetus
• No regulatory control on Sales Price
• Allocation of domestic gas for household
• Sales price are benchmarked to alternate
and transportation segment
fuel in each segment
• Public Utility status to CGD
• Natural Gas will have clean and Green
premium over alternative fuel • CGD eligible for funding from infra cess
• Prices are more stable and less volatile • LNG approved as fuel for highway
than liquid fuel
transportation
Gas Sourcing Mechanism
• Natural gas is likely to be included in GST
• Government allocates gas for CNG &
• Push for LPG penetration in rural area
domestic use
• Strong entry barriers by regulation-
• Gas for other segments bought from open
market exclusivity
• Sourcing is fair mix of short term and spot • Ban on Fuel Oil in NCR and SC suggestion
contracts
to ban pan India
• Term prices are benchmarked to Brent
• Massive infrastructure in oil & Gas
crude
• Main suppliers are GAIL, GSPC, IOCL
10
City Gas Distribution
Business Overview
Adani Enterprises: Demerging its City Gas Distribution business

Adani Gas Limited (AGL) operates the CGD business and is currently 100% subsidiary of AEL

• AGL is operating in 4 cities , authorised for new 13 cities and its 50: 50 joint venture
Largest Private Sector CGD
with Indian Oil Corporation Limited, has been authorised for 18 cities.
player in India with significant
• CGD is end customer facing business, listing of AGL will provide AGL with brand
growth opportunities
awareness for future growth

• AGL will be a pure play gas marketing and distribution company.

Focused Pure Play Gas
• All the CGD assets will be housed under AGL
Marketing and Distribution
• Focused management team to capture emerging opportunity in Gas as Green Fuel

• Unlocks value of CGD business currently embedded in the value of AEL

Shareholder Value Unlocking • Shareholders to get direct exposure to high growth CGD business of AGL, removing any
holding company discount

Post demerger, AGL is to list on stock exchanges tentatively by Q3FY19

12
Adani Gas: Pure Play Gas Marketing and Distribution

Adani CNG

1300+
Industrial 325,000
17 + 18 70+ 6000+ Residential
cities CNG stations Kms pipeline 2300+ customers
network Commercial

Largest private player in India’s City Gas space with over a decade of experience

250+ Rs 1200 cr Rs 1300 cr A+

Human Capital Asset base Revenue Domestic Rating

Balanced growth across customer segment and geography

13
Future Growth Plans and Strategy
Growth in Existing GAs
Focus on valuable segments
• Actively pursue new industrial &
commercial loads
• Expand CNG station infrastructure
in the operating area
Optimum supply portfolio
• Multi source portfolio to improve
supply security
• Actively manage supply portfolio
Manage costs
• Use of technology & enablers for
cost minimisation
• Performance milestones based
deliverables monitoring
Plan for 50 Geographic Areas in next 5 years
Investment for Growth
New bid opportunity
• New geographic area addition via
CGD bidding by PNGRB
• Project selection based on robust
techno-economic criteria
Organic growth
• Tap unconnected zones in the
operating area
• Integrated expansion model with
Industrial / CNG as anchor load
• Strict investment discipline
Cost Efficiencies
Leverage Group strengths
• Leading private player in the
Country
• Expertise across the value chain
Synergy benefits
• Leverage Adani Group gas
infrastructure across the country
• Process and cost efficiencies
using technology, automation and
customer service
14
Adani Gas Expanding CGD Network

AGL is directly operating in 4 cities and added 9 cities in recent bidding rounds through IOCL JV, All 9 cities to be operational by 2021

Rapidly expanding footprint focus on creating gas corridor

As on date Likely Scenario by FY 2025

AGL AGL AGL IOAGPL Total

As on Date Existing-4 New-9 New-18

Volume (MMSCMD) 1.4 2.4 2.7 5.4 10.5

CNG Stations (No.) 65 130 300 600 1030

Steel Pipeline Network

500 750 1000 2000 3750
(in KMs)

Domestic Customer
0.35 0.60 2.30 3.10 6.00
(Million)

 New Bids are focused around demand centres

 Out of 13 GAs of AGL - for 7, revenue will start from Q1FY20

 Aspirations to add more cities to portfolio in upcoming bidding

rounds

Largest private sector CGD. Well positioned to expand the network

15
The JV with IOCL: Public sector pedigree with private sector expertise
Petronet LNG, IGL with 50% private ownership are success stories in Indian gas sector, IOAGPL to replicate and exceed the
same in CGD JV will have private sector character

Domain Expertise Infrastructure

• Processes Logistics & resources
• Manpower Borrowing Capacity

• Strong commitment of promoters

• Promoters has stake in 5 upcoming LNG terminal

• Economics of scale will allow

• Continued cost leadership

• Competitive sourcing of gas, IOC is importing LNG

• With IOC good support at government/ regulatory levels

• Easy access to ready marketing infra of IOCL, 25000 retail outlets

• Competitive finance

• Ability to hire talent

• Easy to scale on technology platform developed by AGL

• Strong safety practices adopted at AGL

IOAGPL is in perfect position to participate in growth driven by new geographies and intensify growth within developed
cities

16
Adani Gas customer base is well spread out across segment and cities
Pure play CGD company with 10 year of operational track record

Customer segment wise volume distribution City wise volume distribution

The Differentiators
Commercial Khurja
Domestic Vadodra
3% 2%
8% 6%

• Balanced product segment mix

Faridabad • Wide customer base

29%
CNG
Industrial 52% Ahmedaba
37% d
63% • No single entity greater than 2% of revenue

• Cost leadership – Lowest operating cost in the industry

• Under penetrated market in Gujarat and NCR

Gujarat volume distribution NCR volume distribution

Domestic Commercial • Management Depth
Commercial
4% 1%
Domestic 4%
10%
• Strong Brand

• Technology driven only CGD company to have SCADA

Industrial CNG
Industrial
CNG
52% 45% 50% based operation
34%

• Supply chain integration with new terminals

Well established player, competitive advantage from low operating cost, scale advantage for new cities

17
Resilient Operations Resulting into Strong Financial Performance
Sales Volume Mix (MMSCMD) Revenue (Rs Crs)

1,800
1.50 1,629
CAGR 4% 1.3
1,600
1,416 1,385
1.1 1.1 1,400
1.20 1.1 1.0 1,205 1,162
1,200
0.63
0.90 0.51 1,000
0.57 0.52 0.47
800
0.60
600

0.30 0.68 400

0.55 0.56 0.57 0.61
200
- -
FY 14 FY 15 FY 16 FY 17 FY 18 FY 14 FY 15 FY 16 FY 17 FY 18
CNG PNG Total

Operating EBITDA & Margin Adj PAT (Rs Crs)

400 30% 200

26% 173
350 24% 180
22% 25%
160 142
300
20%
140
250 16%
115
120
96
200 15% 100
374
10% 80
150 317
288 10%
233 60 48
100
172 40
5%
50 20
0 0% 0
FY 14 FY 15 FY 16 FY 17 FY 18 FY 14 FY 15 FY 16 FY 17 FY 18
Op EBIDTA (Rs Cr) EBIDTA Margin (%)

18
Robust Business Model with Optimum Cost & Returns Matrix
Gross Margin (Rs/SCM & %) Op EBIDTA & Op Cost (Rs/SCM)

37% 38% 9.00

14 40%
7.64
33% 8.00
12 35% 6.93 6.89
7.00
30% 5.79
10 25% 6.00
10.10 25%
9.56 9.65 5.00 4.20 4.13
8
8.51 20% 4.00 3.22 3.21
3.05 2.82
6 5.97 11.81 11.80 12.34
11.09 15% 3.00 2.17
16% 1.67
4 7.69 7.73 2.00
7.53 7.11 10%
4.96 1.00
2 4.47
5%
-
0 0% FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
FY 14 FY 15 FY 16 FY 17 FY 18
Opex (Per SCM) Op EBIDTA (Per SCM)
PNG CNG Total Gross Margin (%)

Free Cash Flow (Rs Crs) Returns on Capital Employed (%)

49 25% 35%
21%
33
12 40 19% 18% 30%
20%
125 16%
30 25%
141 15% 20% 19%
78 11% 19%
0 16% 20%
10%
50 15%
10%
5%
10%
121
91 0%
93 5%
77 173 FY 14 FY 15 FY 16 FY 17 FY 18
-5% 0%
FY 14 FY 15 FY 16 FY 17 FY 18
FCF (Post Capex) Capex IOAGPL Equity ROCE ROE

19
Q1FY19 Result Highlights

CGD Volume (MMSCMD) Op EBIDTA & PAT (Rs Crs)

1.38 102

1.21 93

0.72 54
0.65 0.66
0.56 42

Total CNG PNG Op EBIDTA PAT

Q1FY18 Q1FY19 Q1FY18 Q1FY19

 Q1 FY19 City Gas Volumes increased by 14% to 126 MMSCM vs 110 MMSCM in Q1 FY18

 Q1 FY19 Op EBIDTA increased 10% to Rs 102 Cr vs Rs 93 Cr in Q1 FY18

 Q1 FY19 PAT increased by 29% to Rs 54 Cr vs Rs 42 Cr in Q1 FY18

20
Key Investment Highlights

Natural gas has become a major source of clean fuel based energy across the world with heavy investment in production,
✔ transportation and distribution infrastructure

✔ Lower cost and cleaner than other fossil fuels

✔ India has lagged; however now serious efforts to catch up: $23bn earmarked

✔ Exponential multiyear growth expected

✔ Adani Gas is the largest private sector player – well positioned to take advantage of this growth

✔ Cost leader, strong balance sheet and superior execution capability should help in building pan India CGD infrastructure.

21
Sustainability

Education Livelihood development

• Adani Vidhyamandir • Vocational training
• Underprivileged Children • Cattle vaccination
• Training Volunteers for teaching • Animal Husbandry
• Girl Child Education • Skill upgradation

Health Rural Infra Development

• Mobile dispensary • Pond deepening
• Immunization for kids • Check dam construction
• Teaching sanitation in rural area • Village drainage system
• HIV/AIDS awareness campaign • Roads, drinking water, power etc.

• Adani Gas Limited (AGL) is mainly doing CSR activities through its group arm Adani foundation.
• Adani foundation is non profit organization, set up for doing CSR activities for Adani group
• Till date AGL has spent Rs. 8.75 Cr towards CSR activities
• AGL is also doing direct donations to various other charitable institutions. Till date AGL has donated around Rs. 6.38 Cr to
such organizations.

CSR Expense (INR Cr) FY 15 FY 16 FY 17 FY 18

CSR Spent by AGL through Adani foundation 1.66 1.97 2.29 2.83

22
Thank You