IRM-Energy-Limited-IPO-Elitewealth

IRM Energy IPO Company Profile:

IRM Energy Limited is a city gas distribution (“CGD”) company in India, 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. The company is an integrated value-driven energy enterprise, developing natural gas distribution projects in the geographical areas (“GAs”) allotted to it for industrial, commercial, domestic, and automobile customers, and it has built its competency as a CGD company by the development of our existing GAs since 2017. The company focuses on meeting the energy needs of customers in its GAs through its pipelines and CNG station network at a competitive price, while maintaining high safety standards

The Petroleum and Natural Gas Regulatory Board (“PNGRB”) grants the company the authority to operate in a GA, along with an exemption from being under the purview of a ‘common carrier’ or ‘contact carrier’ for the transmission of natural gas within the GAs. Exemption from the purview of a ‘common carrier’ or ‘contact carrier’ allows the company exclusivity to operate in the GA and install the pipelines for supply of natural gas. This exemption provides the company with a ‘marketing exclusivity’ for transmission of natural gas, for a limited period prescribed by the PNGRB, within each of the GAs.

 


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    IRM Energy IPO Details:

    IPO Open Date Not Available
    IPO Close Date Not Available
    Listing Date Not Available
    Face Value ₹10 per share
    Price Not Available
    Lot Size Not Available
    Issue Size 10,100,000 shares

    (aggregating up to ₹[●] Cr)

    Fresh Issue 10,100,000 shares

    (aggregating up to ₹[●] Cr)

    Offer For Sale Not applicable
    Issue Type Book Built Issue IPO
    Listing At BSE, NSE
    QIB Shares Offered Not more than 50% of the Offer
    NII (HNI) Shares Offered Not less than 15% of the Offer
    Retail Shares Offered Not less than 35% of the Offer
    Promoters Dr. Rajiv Indravadan Modi, Cadila Pharmaceuticals Limited, and IRM Trust

    IRM Energy IPO Financial Analysis:

    Particulars 6M of FY-23(in cr.) FY-22(in cr.) FY-21(in cr.) FY-20(in cr.) CAGR
    Revenue from Operations 504.12 546.14 211.81 165.66 48.8%
    Other Income 2.76 3.05 0.73 0.47
    Cost of Goods Sold 367.12 248.23 77.07 67.71 54.2%
    Excise Duty on Sale of Compressed Natural Gas 33.25 39.00 22.24 18.10  
    Employee Cost 3.97 7.16 4.11 3.86
    Other expenses 38.97 65.33 35.18 26.28
    EBITDA 63.57 189.48 73.94 50.18 55.7%
    EBITDA margin% 12.61% 34.69% 34.91% 30.29%  
    Depreciation 9.82 15.04 12.00 9.18
    Interest 11.40 22.08 15.86 9.67
    PBT 42.35 152.36 46.09 31.33 69.4%
    Total tax 9.23 38.80 10.96 10.24
    PAT 33.12 113.56 35.13 21.09 75.3%
    PAT margin% 6.57% 20.79% 16.58% 12.73%  

    Revenue Contribution from CNG and PNG:

    Particulars Banaskantha Fatehgarh Sahib Diu and Gir Somnath NG Trading Total
    CNG% PNG% CNG% PNG% CNG% PNG% CNG% PNG% CNG% PNG%
    6M of FY-23 90.57% 9.43% 9.06% 90.94% 99.37% 0.63% 0.00% 0.00% 44.54% 55.46%
    FY-22 91.53% 8.47% 11.89% 88.11% 99.88% 0.12% 0.00% 100.00% 51.12% 48.88%
    FY-21 89.85% 10.15% 27.24% 72.76% 99.99% 0.01% 0.00% 100.00% 75.41% 24.59%
    FY-20 92.95% 7.05% 64.18% 35.82% 100.00% 0.00% 0.00% 0.00% 88.34% 11.66%

    Major Shareholders of  IRM Energy IPO :

    S.NO. Name of the Investors No. of Shares % of shareholding
    1 Cadila Pharmaceuticals Limited 14,978,535 49.50%
    2 Enertech Distribution Management

    Private Limited

    8,670,126 28.65%
    3 IRM Trust 5,580,238 18.44%
    4 Shizuoka Gas Co. Ltd. 890,000 2.94%
      Total 7,47,03,565 99.53%

    IRM Energy IPO Strengths:

    • IRM Energy Limited is the sole distributor of CNG and PNG in the GAs awarded to it, for the period of exclusivity granted under the PNGRB authorizations. The company has marketing exclusivity until June 2023 for the Banaskantha GA, until September 2023 for the Fatehgarh Sahib GA, until September 2028 for the Diu & Gir Somnath GA, and until March 2030 for Namakkal & Tiruchirappalli GA, recently acquired in the eleventh round of bidding. The company has also been granted network exclusivity rights of 25 years for infrastructure creation for all the GAs, including laying down of pipelines and CNG distribution network within the GAs under the authorization received.

    • IRM Energy Limited has developed strong in-house project management capabilities, complemented by robust operation and maintenance processes. The company’s relationship with vendors, suppliers, and contractors has enabled it to expand its network in a timely and cost-efficient manner.

    • IRM Energy Limited has established strong relationships through collaborative efforts with a diverse customer base including industrial, commercial, and domestic customers. The company provides competitive offerings while maintaining a customer-centric approach and making continuous efforts to upgrade its services, by leveraging technology across all its customer operations. The company has successfully established a distribution network of CNG and PNG to customers. It served 168 industrial customers, 88 industrial customers, 96 industrial customers, 59 industrial customers, and 30 industrial customers as of September 30, 2022, September 30, 2021, March 31, 2022, March 31, 2021, and March 31, 2020, respectively.

    • IRM Energy Limited is backed by the strong parentage of an Indian multinational entity, Cadila Pharmaceuticals Limited (“Cadila Pharma”), which has a legacy of over three decades in the domestic pharmaceutical industry. Cadila Pharma holds 49.50% of the company’s Equity Shares as of the date of this Draft Red Herring Prospectus. The strategic and financial support provided by Cadila Pharma, with their experience, spanning over three decades in domestic pharmaceutical industry has significantly helped the company to overcome certain entry barriers such as the requirement of large investments, among others.

    • IRM Energy Limited has also signed a MoU with Mindra EV Private Limited on August 24, 2022, for setting up an EV charging infrastructure at DODO Stations and COCO Stations for a period of five years. This enables to further the company’s vision of transitioning towards becoming an energy-oriented company.

    • IRM Energy Limited has 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, whereas the Gujarat State Petronet Limited (“GSPL”) gas pipeline passes through Banaskantha and Diu & Gir Somnath, and the Indian Oil Corporation Limited’s Encores Tuticorin pipeline passes through Namakkal & Tiruchirappalli

    • IRM Energy Limited has grown its revenue over the years, supported by healthy year-on-year growth in volume, driven by infrastructure augmentation as well as increased penetration in the Banaskantha and Fatehgarh Sahib GAs. Ban by the National Green Tribunal (“NGT”) on the usage of polluting fuels, primarily in the Mandi Gobindgarh, Fatehgarh Sahib has spurred overall growth in volumes from the industrial segment. On account of this, the industrial customers of the company have grown from 30 to 96 from Fiscal 2020 to Fiscal 2022. The company’s strong financial position and healthy operating efficiency coupled with favorable regulations provides it with the financial flexibility to expand its network in its existing markets and expand to new markets in India. 

     

    IRM Energy IPO Risk Factors:

    • IRM Energy Limited is dependent on third parties for sourcing and transportation of natural gas. Any disruption in the receipt of such natural gas from these third parties, or delay or default in timely transportation of the natural gas could lead to a disruption or failure in the supply of natural gas by the company, which could adversely affect the business, reputation, results of operations and cash flows.

    • IRM Energy Limited is dependent on Government policies for the allocation of natural gas and the cost of gas supplied for its CNG and domestic PNG customers (the “Priority Sector”). Any reduction in the allocation of natural gas or any increase in the cost of gas could adversely affect the business, reputation, operations, and cash flows of the company.

    • IRM Energy Limited’s operations are restricted to defined geographical boundaries and the natural gas requirements in these regions may be affected by various factors outside the company’s control, which may adversely affect the business operations, profitability, and cash flows.

    • IRM Energy Limited’s existing GAs could be open to access for others, following the end of infrastructure and marketing exclusivity as prescribed under the PNGRB authorizations, post which period the company would no longer be the sole distributor in these regions, resulting in a potential loss of customers and decrease in the profit margins.

    • IRM Energy Limited is heavily reliant on its CNG and industrial PNG supply operations and any decrease in sales, may hurt the business, operation, financial condition, and cash flows of the Company.

    • Cadila Pharmaceuticals Limited, one of the Promoters of the company, has provided corporate guarantees to third parties for the loans availed by the Company. In the event the Company defaults on any of the loans availed, the Promoters will be liable for the repayment obligations. Further, the Company has provided corporate guarantees to third parties for the loans availed by Farm Gas Private Limited and Venuka Polymers Private Limited, IRM Energy Limited’s Associate Companies. In the event these Associate Companies default on any of the loans availed, the Company will be liable for the repayment obligations.

    Objects of the Issue:

    IRM Energy Limited proposes to utilize the Net Proceeds from the Issue towards funding the following objects:

    • Funding capital expenditure requirements for the development of the City Gas Distribution network in the Geographical Areas of Namakkal and Tiruchirappalli (Tamil Nadu) in Fiscal 2024, Fiscal 2025, and Fiscal 2026;
    • Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company
    • General corporate purposes

    IRM Energy Limited IPO Prospectus:

     Registrar to the offer:

    Link Intime India Private Limited

    Tel: +91 22 4918 6200

    E-mail: irmenergy.ipo@linkintime.co.in

    Investor grievance E-mail: irmenergy.ipo@linkintime.co.in

    Contact person: Shanti Gopalkrishnan

    Website: www.linkintime.co.in

    SEBI Registration: INR000004058