Industrial Goods, Natural Gas

Everest Kanto Cylinder: Enabling the CNG boom in India

Everest Kanto Cylinder Ltd. is the market leader in the CNG Cylinders industry with a share of 55%.

(A) Introduction

Everest Kanto Cylinder Limited_ EKC - logo

Everest Kanto Cylinder Ltd. (EKC) is India's largest manufacturer of seamless steel gas cylinders. The company was established in 1978 and also is based in Mumbai, Maharashtra. In India, EKC has two production plants: Tarapur, and also, Kandla SEZ. Additionally, Manufacturing facility coming up at Mundra, Gujrat. The company also operates a few foreign production facilities: Two facilities at Jebel Ali Free Zone(JAFZA), Dubai, One in Pittsburgh, USA through CP Industries Holdings Inc. and another coming up in Hungary.

EKC's industrial, CNG, and jumbo cylinders are used for high-pressure storage of gases such as oxygen, hydrogen, nitrogen, argon, helium, air, and others and find applications in a wide range of industries such as manufacturing, fire equipment/suppression systems, medical establishments, aerospace/defence, and automobiles, among others. Tata Motors, Bajaj Auto, Hyundai, Toyota, BOC India, Praxair, Mahanagar Gas, and, also Adani Gas are among the 150 clients in these vertical categories.

(B) Journey

Journey Everest Kanto Cylinder PAWealth

(C) Executive Management

EKC Executive Management PAWealth

(D) Shareholding Pattern

Shareholding EKC PAWealth

(E) Revenue Segments

EKC stores high-pressure gases such as oxygen, hydrogen, nitrogen, argon, helium, and air in its industrial, CNG, and jumbo cylinders. These cylinders work in a wide variety of industries, including manufacturing, fire equipment/suppression systems, medical establishments, aerospace/defense, and automobiles.

Here are some specific examples of EKC cylinders in different industries:

Manufacturing: EKC cylinders store gases used in welding, cutting, and other manufacturing processes.

Fire equipment/suppression systems: EKC cylinders store gases used in fire extinguishers and other fire suppression systems.

Medical establishments: EKC cylinders store gases used in medical procedures, such as oxygen for patients and anesthesia.

Aerospace/defense: EKC cylinders store gases used in aircraft and other aerospace applications.

Automobiles: EKC cylinders are used to store CNG (compressed natural gas) in vehicles.

(F) Manufacturing Facilities and Capacities

Manufacturing Facilities  Everest Kanto Cylinder PAWealth

Existing Capacity and Utilization

Capacity Utilixation Everest Kanto Cylinder PAWealth

Planned Capacity Expansions

Planned Capacity Expansion  Everest Kanto Cylinder PAWealth

(G) Cost Structure

Cost Structure  Everest Kanto Cylinder PAWealth

The chart shows the cost structure as a percentage of net sales of Everest Kanto Cylinder Ltd. (FY23), as well as the expenses of EKC.

Raw material expenses are the largest expense, hence, accounting for 61.24% of net sales. This is likely due to external factors or that the company uses high-quality materials in its products.

Power and fuel costs are the second largest expense, at 5.43% of net sales.

Employee costs are 8.63% of net sales.

Other expenses make up the remaining 15.96% of net sales. This includes a variety of other expenses, such as marketing, transportation, and taxes.

The pie chart shows that Everest Kanto Cylinder Ltd., markedly has a high cost structure. This means that the company needs to sell its products at a high price in order to make a profit. However, the company's high-quality products and strong brand may allow it to do so.

(H) Financials Parameters

Financials EKC PAWealth

Company has grown its revenue at 10% in past 10 years, while its PAT decline at a CAGR of -0.37% in tha last 7 years.

DuPont Analysis

Du Pont Analysis EKC PAWealth

Terms of Trade of Everest Kanto Cylinder Ltd.

Tot Everest Kanto Cylinder PAWealth

(I) Management Discussion & Concall highlights


  • The market for industrial gases in India is expected to expand at a CAGR of over 11% until 2023. Also, CNG demand is expected to accelerate at 14-16% CAGR between fiscals 2020 and 2030. Hence, Key drivers include the Central Government's goal to expand gas's portion of India's entire energy mix to 15% by 2030 (from 6% today).
  • The Indian government recently launched its National Green Hydrogen Policy. In addition, India's Hydrogen demand is predicted to increase 5-fold to 28 MT by 2050 from 6 MPTA in 2020.
  • The number of City Gas Distribution stations are also expected to increase to 8,500 by FY2025 from 3,101 stations in FY2021.
  • Key growth focus on the expansion of sales for the CNG cylinders driven by increased demand from the automobile sector, in general, which includes PVs(Passenger Vehicles) and CVs(Commercial Vehicles).

Concall Highlights

  • The company’s expansion efforts have been strategically decelerated due to weak demand, as well as the external factors.
  • Capacity Utilization % for Q1FY2024 is 55%, while for Q4FY2023 it was 60%.
  • The launch of the new composite cylinder is expected to have a positive impact on sales in the next quarter, as well as the financial year.
  • Moreover, Commercial vehicles have been the main driver of EKC's CNG cylinder sales. Hence, Sales of CNG cylinders for passenger vehicles have been growing, with deliveries to Hyundai, Mahindra, Tata Last Mile Mobility, and others. Talks with Maruti Suzuki regarding the supply of cylinders are still ongoing.
  • The sales of CNG cylinders are projected to increase after automobile manufacturers, when, they clear their previous inventories. Presently, EKC’s supply share for CNG automobiles is 50%.



  • Extensive industry experience of the promoters with established market position furthermore, The promoters have an experience of over 30 years in manufacturing of CNG, industrial cylinders and cascades of various capacities.
  • Diversified customer mix: EKCL has diversified customer mix consisting of OEM (Original Equipment Manufacturers) like Bajaj Auto Limited, Tata Motors Limited, Ashok Leyland and also a lot more established companies.


  • Exposure to volatility in raw material prices and also foreign exchange fluctuation.
  • Working capital intensive nature of operations, as well as the volatile production expenses.


  • The aggressive push by the government to increase the market share of CNG from 11% in 2022 to 20% in 2030. Hence, There is an increasing number of CNG gas stations throughout the country.
  • Increasing demand for oxygen, hydrogen, nitrogen, and carbon dioxide, for industrial uses is expected to expand at a CAGR of over 11% until 2023.
  • Increasing investment in hydrogen vehicles for Commercial, as well as, Passenger Vehicles also government policies such as the National Green Hydrogen policy to increase GCD Stations from 3101 to 8500 in FY25
  • Increased investment for new product developments such as composite cylinders which could allow the company, to enter a new product market.


  • Increasing adoption of substitute technology such as EVs, instead of using CNG vehicles.
  • Use of substitute products for gas storage such as composite cylinders or new developed products.
  • Increasing competition from domestic competitors, as well as global companies from countries such as China.
  • Sustained high CNG prices could also impact the future outlooks of the company.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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