Case Study
The better the question The better the answer The better the world works
Case Study

Case study: How a leading Indian CGD optimized capital cost and improved profitability

Leading city gas distributor is on its journey to improve profitability and enhance capital productivity.

Future ready organization
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The better the question

To become future-ready, can we modernize yet simplify?

We are helping the company improve profitability and optimize cost efficiency.

India has a high potential of gas demand and is likely to become one of the largest consumers of natural gas globally in the coming years. The share of natural gas in the primary energy mix could reach 20% by 2030.

One of India’s leading consumer gas distribution companies has grown rapidly year-on-year to become one of the market leaders in the space. In the backdrop of the Indian government trying to increase access to gas to about 70% of the population by 2025, the company wanted to further strengthen its business functions to become future-ready. In order to take up the massive growth in the offing, they were cognizant of the need to build up the organizational capability and modernize key aspects of the business in order to ensure sustained growth.

EY worked with the company to improve its overall profitability and optimize capital costs. We helped them drive their future growth and expansion vision through transformation of their key business functions.

Key business functions for profitability improvement
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The better the answer

We took an integrated approach for cost reduction and CAPEX NPV enhancement

EY strengthened key business functions for profitability improvement and capital productivity enhancement.

EY conducted a detailed diagnostic to crystalize the organization’s capabilities and define next steps to simplify and optimize operational processes.

The initiatives identified across the board included revenue / pricing and cost optimization across operations and maintenance, procurement, logistics, inventory and taxes. Besides these, EY identified initiatives to enhance capital productivity (project NPV) and optimize capital cost. 

Key focus areas of transformation of an Indian CGD major
Capital productivity enhancement
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The better the world works

The company is realizing EBITDA and capital productivity enhancement

The transformation was backed by the right design and implementation coupled with strong change management.

An assessment of the outcomes of the ongoing project reveals that the CGD company has started to realize multiple benefits of the transformation, both in terms of lowering capital costs and in terms of increasing operational efficiency. EY has identified initiatives for capital productivity enhancement by up to 30% in some geographies, capex optimization in key categories and initiatives for profitability improvement in the range of 5 to 10% of spend value for the respective items. The implementation of these initiatives is currently underway.

Capital productivity improvement

30%

Profitability improvement

5-10%

EY’s multi-functional capabilities enable it to serve organizations with the right methods, skill sets, and technologies to improve revenue and profitability.

Transformation Realized

Transforming businesses through the power of people, technology and innovation.