Positron Energy IPO: A Spark of Hope or a Short Circuit?

Positron Energy Introduction

Positron Energy Limited is a forward-thinking company in the energy sector, renowned for its innovative approach to renewable energy solutions. The company is dedicated to advancing sustainable energy technologies and reducing the global carbon footprint.

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Brief about

Summary of the business

Positron Energy Company for the initially 11 years were mere engaged in the Management & Technical Advisory Services of Oil and Gas Industry. Later on, in the FY 2018-19, our promoters planned to commence the aggregation business of Coal Bed Methan Gas (CBM) for supplying to industrial unit. After having successful business of CBM Gas aggregation also, as per the demand of industrial units, our Company in July 2022 decided to aggressively commence the business of Natural Gas aggregation for such industrial unit.
Positron Energy Company was started by our Promoters Mr. Rajiv Menon, Mr. Manav Bahri and Mr. Sujit K Sugathan. Promoters have combined experience of more than 45 years in the Gas and Oil Industry. Our Promoters have been pillars of Company’s growth and have built a strong value and eco – system. With their enriching experience and progressive thinking, we aim to continue to grow in the Oil & Gas industry.

History

Positron Energy Company was originally registered in the name of “Positron Energy Private Limited” and received a certificate of incorporation dated February 15, 2008 from the Registrar of Companies, Gujarat, Dadra and Nagar Haveli under The Companies Act, 1956. Later on, our Company was converted into a Public Limited Company pursuant to shareholders resolution passed at Extra-ordinary General Meeting of our Company held on December 23, 2023 and the name of our Company was changed to “Positron Energy Limited ”. A fresh Certificate of Incorporation consequent upon conversion from Private Limited Company to Public Limited Company dated January 02, 2024 was issued by the Registrar of Companies, Ahmedabad. The Corporate Identification Number of our Company is U01403GJ2008PLC052932.
Company for the initially 11 years were mere engaged in the Management & Technical Advisory Services of Oil and Gas Industry. Later on, in the FY 2018-19, our promoters planned to commence the aggregation business of Coal Bed Methan Gas (CBM) for supplying to industrial unit. After having successful business of CBM Gas aggregation also, as per the demand of industrial units, our Company in July 2022 decided to aggressively commence the business of Natural Gas aggregation for such industrial unit.

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Promoters & Board of Directors

• Promoters of Positron Energy Company are
  • Mr. Rajiv Shankarankutty Menon
  • Mr. Manav Bahri
  • Mr. Sujit K Sugathan.

Board of directors

Share Holding pattern

Qualitative Factors

• Customized Solutions and Services
• Adaptability to Changing Gas Pricing Landscape
• Embracing Government Reforms
• Diversified Portfolio for Future Growth
• Experienced Leadership and Execution Team

Strategy

• Continued focus on maintaining high quality standards in our Consulting Services for oil and gas companies and expanding this segment of our business.
• Developing new applications to meet the market demand
• Expanding Market Access
• Overcoming Regulatory and Market Challenges Strategy
• Optimizing underutilized pipeline infrastructure strategy
• Reform Driven Growth Strategy
• Adapting to the changing natural gas pricing landscape strategy
• Expanding the business in the industrial & commercial sector for natural gas.
• Re-Alignment of Old Gas Contracts

Industry Outlook

OIL AND GAS INDUSTRY: INDIAN PERSPECTIVE

The oil and gas sector is among the eight core industries in India and plays a major role in influencing the decision- making for all the other important sections of the economy.
India’s economic growth is closely related to its energy demand, therefore, the need for oil and gas is projected to increase, thereby making the sector quite conducive for investment. India retained its spot as the third-largest consumer of oil in the world as of 2022.

The Government has adopted several policies to fulfill the increasing demand. It has allowed 100% foreign direct investment (FDI) in many segments of the sector, including natural gas, petroleum products and refineries, among others. The FDI limit for public sector refining projects has been raised to 49% without any disinvestment or dilution of domestic equity in existing PSUs. Today, it attracts both domestic and foreign investment, as attested by the presence of companies such as Reliance Industries Ltd (RIL) and Cairn India. The industry is expected to attract US$ 25 billion investment in exploration and production by 2022. India is already a refining hub with 23 refineries, and expansion is planned for tapping foreign investment in export-oriented infrastructure, including product pipelines and export terminals.
India’s crude oil production in FY23 stood at 29.2 MMT (33.66 BCM).

Market Size

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• Domestic Natural Gas Production- The domestic Gross Production of natural gas for the from April-September 2023 period has shown an increase of ~4% when compared from AprilSeptember 2022 i.e., an increase of ~695 MMSCM from 17184 MMSCM in April-September 2022 to 17879 MMSCM in April-September 2023.
• LNG Import to India : The LNG Imports in volume terms increased by ~12.7% i.e. from 13680 MMSCM in the period April-September 2022 to 15416 MMSCM in the period April-September 2023. However, the LNG Imports in US $ terms has shown a decrease of ~ 31.2% i.e. from US $ 9.43 Billion in the period April-September 2022 to US $ 6.49 Billion in the period April-September 2023. (*Data may vary from DGCIS data)
• LNG Terminal Capacity Utilisation : With the commencement of operations of Dhamra LNG terminal, the total LNG capacity in the country has increased to 47.7 MMTPA (Konkan LNG Terminal only HP stream of 2.9 MMTPA is commissioned). The utilization of LNG terminal capacity of 47.7 MMTPA in the period April September 2023 ranged from ~12.5% (Mundra LNG Terminal) Million to ~94.31% (Dahej LNG terminal).
• From Natural Gas availability perspective: Total Consumption (including for internal use i.e Net Production+ LNG import) showed an increase of ~ 8.1% to 32920 MMSCM (April-September 2023) from 30451 MMSCM (April- September 2022).
• Sectoral Consumption of Natural Gas: Major Sectors for NG consumption during April-September 2023 were Fertilizer (31 %) , CGD (20%), Power (15% ), Refinery (8%) and Petrochem (4 %)
• Natural Gas Pipeline infrastructure- is an economical and safe mode of transporting natural gas by connecting gas sources to gas consuming markets. Gas pipeline grid determines the structure of the gas market and its development. Therefore, an interconnected National Gas Grid has been envisaged to ensure the adequate availability and equitable distribution of natural gas in all parts of the country. At present (upto June 2023), the Natural Gas pipeline network in the country is about 35,515 Kms (P) km long including Tie-in connectivity, dedicated & Sub Transmission Pipelines (STPL) . In order to make available natural gas across the country, it has been envisaged to develop the National Gas Grid and the same are at various stages of development. This would ensure easy availability of natural gas across all regions and potentially help to achieve uniform economic and social progress.
• In terms of Gas Distribution infrastructure, in CNG there are 6035 CNG stations in 283 GAs/CNG area being operated by about 57 CGD entities and in PNG there are 11876511 PNG connections (DPNG- 11819955 Nos., Commercial- 39123 Nos, Industrial- 17433) in 216 GAs being operated by about 50 CGD entities.

Road Ahead

Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation. Crude oil consumption is expected to grow at a CAGR of 5.14% to 500 million tonnes by FY40 from 202.7 million tonnes in FY22. In terms of barrels, India’s oil consumption is forecast to rise from 4.05 MBPD in FY22 to 7.2 MBPD in 2030 and 9.2 MBPD in 2050. Diesel demand in India is expected to double to 163 MT by 2029-30, with diesel and petrol covering 58% of India’s oil demand by 2045. Demand is not likely to simmer down anytime soon, given strong economic growth and rising urbanisation.
Indian refiners would add 56 million tonnes per annum (MTPA) by 2028 to increase domestic capacity to 310 MTPA. India is planning to double its oil refining capacity to 450-500 million tonnes by 2030.
Energy demand of India is anticipated to grow faster than energy demand of all major economies globally on the back of continuous robust economic growth. Moreover, the country’s share in global primary energy consumption is projected to increase to two-fold by 2035.

Natural Gas Industry

As per recent GOI declarations, in India the share of natural gas in energy basket is 6.7%. The Government has set a target to raise the share of natural gas in energy mix to 15% in 2030. Various steps have been taken by the Government in this direction. These, inter-alia, include expansion of National Gas Grid (24,623 kms operational and 10,860 km under construction), expansion of City Gas Distribution (CGD) network (300 Geographical Areas (GAs) with Minimum Work Plan of approx. 12.50 crore PNG connections, 17,751 CNG Stations and 5.42 lakh inch-km pipeline by 2023) and setting up of Liquefied Natural Gas (LNG) Terminals (current 47.7 MMTPA capacity to 66.7 MMTPA),etc. As regards increase in production of Natural Gas, there has been approx 20% increase in natural gas production from 28.7 billion cubic meters (BCM) in 2020-21 to 34.45 BCM in 2022-23. For increasing domestic gas production, Government has notified Hydrocarbon Exploration and Licensing Policy (HELP) on 30th March 2016. Government further notified policy reforms on 28th February 2019 with concessional royalty/royalty holiday provisions, relaxed approvals, reduced revenue share from Category II & III type of basins for early monetization of fields along with Marketing and Pricing freedom for natural gas.

Business Data

Verticals

• Gas Aggregation And Sales
  • Natural Gas
  • CBM Gas
  • LNG Dual Fuel

Product wise break-up

Customer dependency

Supplier dependency

Competition

Positron Energy company operates in a highly competitive market with a multitude of players ranging from small enterprises to large regional, national, and international entities. The competitive environment is shaped by factors such as service quality and pricing, which significantly influence clients’ decisions in choosing their service providers.
Positron Energy recognize that maintaining a high standard of service quality is paramount in our competitive landscape. Positron Energy extensive experience in the industry positions us to meet and exceed customer expectations. In our competitive market, pricing is a crucial factor influencing client decisions. Positron Energy approach involves offering competitive and value-driven pricing structures to attract and retain clients. We acknowledge the presence of competitors with similar business divisions. Positron Energy diversified portfolio allows us to cater to a broad spectrum of client needs, differentiating us from competitors with a more focused approach.
In navigating this competitive landscape, our commitment to quality, innovation, and customer satisfaction remains unwavering. Positron Energy understand the challenges posed by a diverse and dynamic market, and our strategic approach positions us to thrive amidst competition.

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Business risk factors

• Positron Energy Company had negative cash flow from operating activity in recent fiscals, details of which are given below. Sustained negative cash flow could adversely impact our business, financial condition and results of operations.
• Positron Energy are dependent on third parties for sourcing natural gas. Any disruption in the receipt of such natural gas from these third parties could lead to a disruption or failure in the supply of natural gas by us, which could adversely affect our business, reputation, results of operations and cash flows.
• The Company is dependent on a few numbers of customers for sales. Loss of any of this large customer may affect our revenues and profitability.
  • Positron Energy top ten customers contributed 91.03%, 87.55%, 95.42% and 95.70% of our total sales for the financial Period ended on November 30, 2023 and year ended on March 31, 2023, 2022 and 2021, respectively.
• Positron Energy have executed Gas Sales Agreements (GSAs) with our Suppliers. These contracts have contractual obligations on both sides. Both the parties must ensure that the provisions of the GSA are followed meticulously. Among the various Terms in the GSA, the Obligation arising out of Take or Pay clause adversely impacts the Buyer. Failure to abide by the provisions of the GSA, especially Take or Pay obligation could adversely affect our business, reputation, results of operations and cash flows.
• Company is obtaining approximately 80% of its total supplies of natural gas from two major private suppliers of the Country. Any disruption in the supplies from these companies will adversely affect our business, reputation, results of operations and cash flows.
• Positron Energy is dependent on Government policies. Any adverse change in the Government Policies may affect the business, reputation, operations and cash flows.
• Different VAT taxation regimes in different States adversely affect the Company’s capability of supplying the gas at optimum price to its end users.
• In the event alternative fuels become more economically feasible, our business, results of operations and cash flows could be impacted.

Financials

Key Financial Ratios

Key Performance Indicators

(₹ in Lakhs)

Balance Sheet

(₹ In Lakhs)

Profit & Loss

(₹ in Lakhs)

Cash Flow

(Amount ₹ in Lakhs)

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Capital structure

(₹ In Lakhs)

SWOT ANALYSIS

• Strengths
  • Innovative Technology: Positron Energy Limited is known for its cutting-edge technology in the energy sector, which can provide a competitive edge.
  • Strong R&D: The company invests heavily in research and development, leading to continuous innovation and improvement in their products and services.
  • Experienced Leadership: The management team has extensive experience in the energy industry, which helps in strategic decision-making and navigating market challenges.
• Weaknesses
  • High Operational Costs: The advanced technology and R&D investments lead to high operational costs, which can impact profitability.
  • Limited Market Presence: Compared to larger competitors, Positron Energy Limited has a smaller market share, which can limit its influence and growth potential.
  • Dependence on Key Personnel: The company relies heavily on its key personnel for innovation and strategic decisions, which can be a risk if they leave the company.
• Opportunities
  • Growing Demand for Renewable Energy: With the global shift towards renewable energy, there is a significant opportunity for growth and expansion.
  • Government Incentives: Various government incentives and subsidies for renewable energy projects can provide financial benefits and support expansion.
  • Technological Advancements: Continued advancements in energy technology can open new markets and improve efficiency, leading to cost savings and increased profitability.
• Threats
  • Intense Competition: The energy sector is highly competitive, with many established players, which can impact market share and profitability.
  • Regulatory Changes: Changes in government policies and regulations can affect operations and profitability, especially in the renewable energy sector.
  • Economic Fluctuations: Economic downturns can reduce investment in energy projects and impact the company’s financial performance.

IPO Details

Positron Energy Limited IPO Details

Object of the issue

Litigation involved

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