Rajesh Vedvyas, managing director, said each station would cost Rs 10 crore. "The stations will be set up in the next two-three years," he said.

The Delhi government recently met the company's management asking it to expedite the addition of new stations to end long queues for CNG. IGL sells CNG to fuel vehicle engines, and has 163 stations in Delhi now.

IGL will fund the expansion from internal accruals, Vedvyas said. He said the number of cars converting to CNG engines has increased to 3,500 per month from 2,000 earlier after the government hiked the price of petrol by Rs 5 per litre and diesel by Rs 3 per litre on June 4.

IGL expects to earn Rs 900 crore revenues this fiscal, from Rs 818 crore last fiscal. Net profit is expected to be Rs 175 crore, same as last fiscal.

Manmohan Singh, director (commercial), IGL, said this was because of "very high" capital expenditure, "leading to higher depreciation and affecting net profits as well".

IGL has an agreement with its promoter GAIL to buy two mmscmd at an administered price of just above $2 per mBtu to be sold in Delhi.

It has asked the petroleum and natural gas ministry for allocation of another one mmscmd of gas to fulfil rising demand. "If we get additional gas at market price and not administered price, we will take a call then on how to go ahead with our plans,"
Vedvyas said. He added that IGL has enough room to increase retail prices of gas. The non-administered price for selling gas is as high as $6-7 per mmbtu on long-term contracts basis.

IGL retails CNG in Delhi for Rs 18.90 per kg compared with its counterparts who charge Rs 22 per kg in Mumbai, and Rs 27 per kg in Gujarat, Gurgaon, Faridabad and Vijayawada. An analyst said IGL can very well blend the administered-price gas with the non-APM gas to average the cost and increase sales price.

The analyst said, "IGL enjoys high operating margins at about 40%. If it gets gas at the market price, it can easily blend it with administered-price gas and sell it at slightly increased price while lowering margins a little."

IGL is now eyeing expansion into areas around Delhi such as Meerut, Bulandshaher and Ghaziabad, Rohtak, Sonepat and Panipat.

Ashim Batra, chief GM (marketing), said, "We have established infrastructure in Delhi, and will incur only incremental cost if we expand into contiguous areas."