Aegis Logistics Ltd
NSE:AEGISCHEM
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
283.25
841.1
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q1 FY '23 Earnings Conference Call of Aegis Logistics Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Rasika Sawant from Orient Capital, Investor Relations partner. Thank you, and over to you, Rasika.
Good day and welcome to the Q1 FY '23 Earnings Conference Call of Aegis Logistics Limited. Today on this call, we have Mr. Raj Chandaria, Chairman and Managing Director, along with senior management team.
This conference call may contain forward-looking statements of the company which are based on beliefs, opinions and expectations as of today. Actual results -- statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. A detailed safe harbor statement is given on Page #2 of company's investor presentation, which has been uploaded on stock exchange and company's website.
With this, I hand over the call to Mr. Raj Chandaria for his opening remarks. Over to you, sir.
Okay. Thank you very much. Good afternoon. I am joined by our Chief Financial Officer, Mr. Murad Moledina, and we will jointly be presenting the FY '22-'23 Q1 results as well as the outlook for the rest of the year '22-'23 and various business updates.
So let me start by reminding everybody -- everyone of our vision for the company. Our vision is to be the leading provider of logistics and supply chain services to India's oil, gas and chemical industry. And everything we do is aligned with this vision. And let me say that the successful commencement of our partnership with Vopak along with the successful launch of the Kandla LPG terminal and the growth projects currently under implementation. With those, that vision is certainly coming into clearer focus.
Now you will recall that we had an overall -- a good overall performance for the whole year of FY '21-'22. And I'm pleased to present to you another strong performance for Q1 FY '22-'23 to build further on the profit growth that we saw last year. Revenues increased to INR 2,235 crores versus -- sorry, I have a typo here. Revenue INR 678 crores year-on-year as a result of -- primarily as a result of the higher sourcing volumes that we had referred to in the previous call.
Normalized EBITDA for the group increased to INR 164 crores in Q1 versus INR 114 crores in the previous year, a rise of 43% over the previous year, which is, I believe, a lifetime high. Profit before tax rose to INR 131 crores compared to INR 90 crores year-on-year, and that's a rise of 46%, which is for profit before tax. Profit after tax for the group was INR 107 crores versus INR 72 crores year-on-year, and that is a rise of 49%.
And we believe that this marks a strong platform for robust profit growth during this fiscal year. On the basis of this -- of the excellent results that we've seen in Q1, I'm confident in our future performance. I'm also pleased to report that the Board of Directors has declared an interim dividend of INR 1.50 per share.
I would now like to hand over to Mr. Moledina, our CFO, to go through the underlying segment numbers. So Murad, can I hand it over to you, please?
Thank you. We start with Liquid Terminal division. The revenue for Q1 FY '23 were INR 81 crores, which is a lifetime high, versus INR 66 crores year-on-year. That is an increase of 23%. The EBITDA of Liquid Terminal division for the quarter rose to INR 55 crores, which is again an increase of 12% year-on-year.
Coming to Gas Terminal division. Revenues were INR 2,155 crores for the quarter versus INR 612 crores year-on-year. The EBITDA for the quarter was INR 109 crores versus INR 65 crores in the previous year quarter -- the same quarter, a rise of 68%. We continue to see growth for the Gas division with sourcing throughput and distribution volumes improving.
I will now try and explain with the sales volume analysis. Starting with the throughput volumes, the LPG volume for the quarter handled at 3 terminals of Mumbai, Haldia and Pipavav were at 6.37 lakh metric tons versus 5.67 metric tons year-on-year. This was despite a 10% lower volume recorded at Haldia on account of Haldia port taking up upgradation of both the jetties where the group handles LPG. But this will, however, help an increase of throughput volumes going forward from Haldia.
The company had good volumes at Mumbai, as it continued to operate at full capacity with IOC, HPCL and BPCL all bringing imports. The LPG rail gantry at Pipavav continues to perform well and is delivering considerable cost savings to our customers, which is driving the improved volumes at Pipavav.
The Bulk Industrial segment delivered [indiscernible] metric tons in Q1 versus 30,900 metric tons year-on-year, representing 176% growth over previous year and a lifetime high. And margins in this segment remained stable.
With Kandla LPG terminal now operationally stabilized, we believe that the distribution business will continue to register impressive growth going forward.
The commercial and domestic cylinder segment, which sells to hotels, restaurants and small-scale industries under the pure Aegis, pure gas brand and to the domestic household segment under the Aegis Chhota CIKANDER brand were higher with Q1 sales of 5,973 metric tons versus 5,039 metric tons year-on-year, registering a 19% increase.
Autogas sales were also higher at 5,148 metric tons in Q1 versus 3,567 metric tons a year earlier, an increase of 44%. Margins remained stable and healthy. The sales volume of sourcing business was 229,992 metric tons versus 100,052 metric tons year-on-year. As reported previously, we expect this to increase -- we expect this increase in volumes to continue throughout the calendar year.
With that, I would now like to hand over back to Mr. Raj Chandaria.
Okay. Thank you very much, Murad.
So let me now turn to the business update for the quarter and the outlook for the rest of the year and also the update on the CapEx plan. During the quarter, Pipavav port continued its work on making the jetty LPG compliant -- sorry, the LPG compliance -- sorry, making the LPG jetty compliant for handling VLGC with the completion expected now sometime during Q3, which when completed will further improve competitiveness of Pipavav LPG logistics hub.
Work also continues at Kandla oil jetty #3, which will also be VLGC compliant when the work is completed. And that is expected sometime during this -- by the end of this financial year. We understand that work continues well on the -- by IHBL that's the Indian Oil, Hindustan Petroleum and Bharat Petroleum consortium, which is building the KGPL LPG pipeline, to which, if I can remind everyone, both Kandla port [indiscernible] Kandla and Pipavav port will be connected. Phase 1 is expected to be completed this year as well.
So in terms of the outlook for FY '23 -- the rest of FY '23, both Gas and Liquids segments continue to perform well. And it is our expectation that this year's profit will continue to grow robustly. We expect our Liquids business, which is a bit leading position in the key ports of India, to perform well for the rest of the year especially in line with good economic growth in the country.
The same applies to the LPG segment. And as I said in the previous call, we are confident that the distribution business is going to flourish and add to our base throughput business.
As far as the project update is concerned, I'm pleased to confirm that the project work has now commenced full swing on all the expansion projects announced last year, and we will keep giving updates in ensuing quarters and when the work progresses and we are nearing commissioning of any of these projects.
Finally, as far as the Aegis Vopak joint venture is concerned, as I informed you previously, the joint venture has achieved a successful closure and is performing in line with expectations. And along with our partners, we are constantly evaluating business opportunities and proposals and are confident that the combination of our strength will lead to the interesting projects in the future.
So I think that concludes my formal presentation, and we can now move on to take questions. Thank you.
[Operator Instructions] We take the first question from the line of Gazal Gupta from JM Financial.
So I have a couple of questions. The first question would be that there is a huge spike in other expenses from -- going from INR 39 crores to INR 106 crores. If possible, could you please provide the breakup of that?
And the next question is related to the volume of different segments. So as mentioned, there's a sudden spike in the distribution segment in this particular quarter. I just wanted to understand that what drove this particular growth. And can we expect a similar number for the coming quarters?
And for the Logistics segment, so as mentioned that there was a 10% decline in volume due to Haldia. But on a quarter-on-quarter basis, the volume decline is approximately 20%. So could you please explain that -- the remaining 10%, why was there a decline? That's all from end.
Murad, do you want to just take up the income and expenditure, please?
Yes. Regarding your first question, the other expenditure includes JV-related expenses, which is mentioned in the notes to the quarterly results amounting to INR 62.08 crores. So that is what is the reason for the other expenditure increase. As far as your next question on -- sorry, it slipped my mind. What was it?
So my next question was that I wanted to understand that there is a sudden spike in the distribution segment for this particular quarter. Just wanted to understand that what drove this growth and can we expect a similar number in the coming quarters?
Yes, we can expect on similar lines -- as we have mentioned, Kandla terminal has stabilized operations, and we have started it off as a distribution hub for industrial area nearby including Morbi. And we expect such healthy volumes in ensuing quarters also.
As regards to your Haldia question -- on Haldia 10% lower and quarter-on-quarter, we are down by 20%. Q1 generally is not strong. So you have to compare year-on-year, where we have done an improvement on throughput volumes in spite of 10% fall in Haldia volumes.
Okay. And I just have one more question. So since distribution segment is a high-margin business, and there is a sudden spike. So -- but the...
I think we have lost it.
Yes, we've lost the connection. We move on to the next participant, Chirag Vakharia from Budhrani Group.
I have a couple of questions. So first, I want to understand the Liquid Terminal revenue has gone up, but [indiscernible] hasn't increased.
That is because we have just done additions of CRL terminal land frames terminals in the Liquid segment, where EBITDA improvements and product mix, et cetera, will take a few quarters. And then you will see the improvement in the EBITDA of Liquid also.
Okay. Okay. Sir, secondly, what is the volume in bulk gas categories? Sir, I missed that number.
In bulk, we have cropped 85 -- sorry, just give me a moment. We have done 85,300 metric tons versus 30,900 tons in the June quarter last year.
At the cost of being repetitive, this is sustainable, sir? .
Yes, we just explained, right.
So this is on account of the supply to Morbi, right? .
To industrial areas in and around Kandla.
Okay. And sir, reason for high other income?
The valuation of options, which we have under the JV.
[Operator Instructions] We take the next question from the line of Rajesh Agarwal from Moneyore.
Sir, the increase in volumes of bulk is because of a shortage of natural gas or LNG. So it is sustainable for industrial going forward because a lot of tile companies are now using propane?
Murad, do you want me to answer that?
Yes. Yes.
Yes. Yes. I think, obviously, from the last 3 participants, they have been surprised at the spike in distribution volumes. And I think this is correct. We believe that the LNG or natural gas, whether it be liquefied form or compressed form or any other form -- biform, there is going to be quite a supply crunch and price problem with -- high price problem with natural gas, whichever form it takes.
Now the propane prices have also spiked up, all energy prices have spiked up. But we believe that the closest fuel to natural gas is propane and/or LPG, and so we are quite hopeful that this trend is going to continue. In fact, not only are we hopeful, we are confident that the trend is going to continue for some time to come.
So for us, there is no capacity constraint whatever is the volume we can supply.
Yes, that's correct.
And sir, can you give the corresponding figures on the fourth quarter of bulk volumes and auto LPG volumes?
Murad?
We don't have it here, but we can give you offline, yes.
We take the next question from the line of Gazal Gupta from JM Financial.
Sorry, I got disconnected the last time. So I was discussing about the EBITDA. So since distribution is high-margin business, but my EBITDA on a Q-o-Q level is almost flat. I just wanted to understand the dynamics of EBITDA per ton. Has it changed for the logistic and distribution segment? Or it would be really helpful if you could provide an average number of the value for EBITDA per ton for these 2 segments.
This -- you have to compare like-for-like, which is June quarter with June quarter last year, where there is an increase in EBITDA of 68%. If you compare it with the previous quarter, then you have to also compare the volumes where, as was discussed in the earlier question, throughput is lower by 20%. So as such, you would have seen flattish EBITDA when compared to the previous quarter.
Q1 is generally, as mentioned earlier, not strong in every financial year. This year, the EBITDA for Q1 is lifetime high. So we have broken that where even in Q1, we have done a good performance as far as gas terminal is concerned.
We'll take the next question from the line of Lavanya from UBS.
So despite being repetitive, I just wanted to ask on distribution volume. Do you see any potential softness in near term because of some shutdown which is happening in Morbi? They have announced like 1 month shutdown, so that might impact current quarter volumes. Do you have any sense there, sir?
Murad, do you want to answer that?
You see, Morbi shutdown is not more than 15 to 20 days in the month of August. And we have not yet been selling huge volumes in Morbi to get affected by that. This distribution -- bulk distribution volumes are from 3 ports, which is Mumbai, Kandla and Haldia. So as such, we do not see much or a significant effect on our distribution volumes in the ensuing quarters also.
Okay. Got it. And on other income, can you just help me understand a bit more on why is it higher? I missed an earlier question.
That is the valuation of options under the JV to be amounting to INR 76 crores.
We take the next question from the line of Himanshu Yadav from Edelweiss Wealth Research.
2, 3 questions. Murad, you said that on a Y-o-Y basis, we are taking 10% kind of softness in Haldia. And despite that, sir, it seems like there is also some softness at Mumbai and in the other ports. Otherwise, our quarterly volume should have been even better. I mean could you just talk about that? I mean just Haldia 10% softness does not explain the softer volumes.
We have increased throughput volumes from 567,000 metric tons to 637,000 metric tons despite a 10% fall in Haldia volumes. So that explains that there is an increase in the other 2 ports, which is namely Mumbai and Pipavav. So I mean that's all I have to say on this.
Right. But sir, last year, this quarter, I mean, Haldia volumes were, I guess, itself very weak because we lost some share to BPCL.
Yes, that continues. BPCL is still not there. It is comparable volumes. If BPCL would have been there in last year Q1, then that would have been -- adjustment would have been required. But it's a comparable volume. And we have seen increase in Mumbai and Pipavav. And Haldia, there is softness of 10%, which we see in the next quarter being corrected as the jetties have now become operational and upgraded. So it will enable us a better turnaround for shift going forward.
Sure, sure, sir. Could you also talk about what is the current cash and debt position of the company?
So currently, in June, we are carrying cash of -- I mean, balance sheet, of course, you will see in September, but we are carrying around INR 1,500 crore of cash in the balance sheet. Debt stands at around -- on a consolidated level, it stands around INR 900 crores.
Right. So sir, when we were saying that from Vopak we would be getting around INR 2,600 crores of cash, so how much of that has come in...
We had said that 75%, which is INR 2,000 crores, we will receive. And very pleased to say that we have received INR 2,050 crores from the deal. And the tax is INR 300 crores, and then we have done investments. So that is why INR 1,500 crores stands in our balance sheet.
We take the next question from the line of Depesh Kashyap from Equirus Securities.
I just have one that why there was no contribution of Kandla port in the throughput volumes, as it got commissioned in the month of May? And what is the guidance for full year from Kandla port itself?
Murad, can I just answer that question?
Yes. Yes.
Yes. So as far as Kandla port is concerned, we at the moment do not have a throughput agreement with any of the major oil companies. Of course, we are working on that, and we are confident that, that will come through. This has been the pattern in Haldia. It is in the pattern in Pipavav. It is the pattern also in Kandla, but it will take some time to get 1, 2 or 3 of the customers throughput in volume through Kandla. Generally, these companies have -- are a little cautious. They want to make sure things are running smoothly before they commit.
And also, of course, we are waiting for the VLGC -- completion of the VLGC upgradation work at [indiscernible]. So we don't have any concerns that, ultimately, we will be operating Kandla on the same basis, as we are operating the other terminals. But at the moment, the distribution business is highly profitable, and we continue to operate Kandla achieving the same kind of margins, in fact, possibly better margins in terms of overall total margins on the distribution basis. So I think let's not read anything into it for 1 quarter. Let's see how the story unfolds.
But do you think that, that agreement will be based in this quarter? And you earlier guided around 0.7 million tons, right, for the Kandla port in the first year. Do you go by that number still?
I think and -- I would not like to speculate as to the exact date at which we would be able to secure agreements with any customer. So whenever the customer feels that it's the right time for them to bring cargo, they will bring it. But we are just mentioning that we are confident that this will happen.
As far as the specific financial performance projections and so on, Murad, can I ask you to just take that one?
Yes. So Kandla, when we said 0.7 million tons and at an EBITDA of 1,000, it's a INR 70 crore EBITDA contribution for a 12-month period, I think we are well on course to achieve that whether with a model of throughputting or distribution. So we are well on course to achieve that target of generating EBITDA of around INR 70 crores for a 12-month period from Kandla. I think that is what is important.
Got it, sir. And lastly, sir, Murad, sir, you just answered the previous question that you have received a cash of INR 2,050 crores from Vopak, but in the notes of the account, you have mentioned around INR 1,098 crores, right? So I just want to understand what is the difference regarding.
No, no, we have said that Aegis has received INR 2,050 crores. As has been explained many times in the past, this is from the JV. So out of the equity which has been brought in, which is INR 1,098 crores, and INR 350 crores for purchase of Hindustan Aegis shares and the borrowing which the subsidiary JVCO has done and paid to Aegis, all of this put together is INR 2,050 crores on group level. And that has been explained many times over in the past.
Got it. And so the borrowing that has been done at the JV level will be serviced by Vopak, right, not by Aegis as such?
It will be serviced by the JVCO.
We take the next question from the line of Digant Haria from GreenEdge Wealth.
This was explained, I think, in 2 separate questions in this call, but is extra other income and extra other expenses, should they be seen as offsetting each other?
No, they are of different nature. And we follow the rules and the law laid down by India Accounting Standard. And accordingly, they have been presented in the financial results.
No, no, Murad, I get that. But like just if somebody wants to take a broad view of the operating numbers, is it that in the quarter when other incomes are going to be high because of the revaluation, other expenses are also going to be high? And when they're...
In our investor presentation, if you look at these has been shown under other allocated net expenditures. So we have netted out in that -- in the investor presentation if you look at the P&L in our investor presentation.
Okay. Fine. And maybe the next question is just...
Segment results, it is not reflected in the normal as EBITDA. It is outside the normal as EBITDA.
Right, right. No, no, fine. I get it. And then my second question is just on this Kandla-Gorakhpur pipeline, like what's the progress there. And like what do we expect once that pipeline is built like which of our terminals can actually see a massive number bump up in the throughput, just a macro commentary on this. That's it from my side.
Yes. So just the Kandla-Gorakhpur pipeline is -- as we've mentioned, is being constructed. It's a very large pipeline and leading from Kandla port with a connection also to Pipavav port. So both our ports and terminals will be connected to that pipeline and running through the heartland of India also way to Gorakhpur. It has a -- and the pipeline allocation to Pipavav, Murad, what was the figure, Pipavav allocation? .
1.5 million tons has been planned for throughputting out of Pipavav port.
Yes. And then, of course, a significant amount to Kandla as well. And as I said, both our terminal will be connected to this Kandla-Gorakhpur pipeline. So -- and of course, the pipeline is being constructed by Indian Oil, Bharat Petroleum, Hindustan Petroleum consortium. They are working on it hard. But as we've seen in previous sort of things that the pipeline construction is not in our control.
So we are -- I don't think we can give a precise date as to when we'll start seeing throughput through there, but we can certainly state with confidence that both Pipavav and Kandla, we will be throughputting LPG on behalf of these public sector companies.
Also to add here that IHB has taken the position of land in Pipavav in our premises to build the pumping station, which would then connect to the KGPL pipeline. The work has started at Pipavav port.
One last question, if I may ask. This 85,000 metric tons of gas that we did in the retail volumes, in that, is there any one-off kind of a thing because this quarter was very good for weddings, restaurants, typically the commercial LPG cylinder users? Or it was the Morbi effect where we have started supplying propane?
No, no one-off. And it is Kandla terminal, which has started, has also contributed. And we have said it earlier, Mr. Raj has also explained, that we expect this to be quite healthy growth in bulk distribution in the ensuing quarters.
[Operator Instructions] We take the next question from the line of [ Ritwik Sheth ] from One-Up Financial.
A few questions from my end. Firstly, on the Vopak JV, I would like to get details on the gross debt ex Vopak JV that is Aegis excluding the Vopak JV and the cash position and then Vopak debt and cash position if possible.
This is consolidated accounts. We do not do accounting in this manner. So -- but if you ask me what was the debt before the Vopak JV came in, then it was around INR 450 crores.
Okay. Which has gone to now INR 900 crores?
Correct. Yes.
Sure. Sure. And this INR 1,500 crores of cash would be sitting exclusively on the standalone balance sheet?
Yes, which is other than the JVCO. So it will be in the stand-alone or it's 100% subsidiary.
Okay. But not Vopak?
No, no, no, not Vopak.
Okay. Sure. Okay. So technically, our net debt, if you look at then excluding the JV, our net debt would be somewhere in the negative INR 1,000-odd crores?
Yes.
That is a fair understanding.
Yes.
Sir, my second question is again on the Vopak JV. I believe Q2 FY '23 will be the first quarter of all the assets into the JV, so it will get consolidated in the book except all the Mumbai projects. All the other assets will be coming in from the JV, right? And there will be a reduction of minority interest with the extent of 49%. So is this understanding right?
Yes, it is line by line consolidation. And minority interest will be there, which would be 49% of the JVCO profits carved out for the JV partner. And that is reflected in our results, which have been published. The minority interest is reflected there.
Right. And how many like days or what was a date of the JV -- the assets getting transferred?
We said 25th of May we completed the JV.
Okay. A little more than 1 month.
Yes.
Okay. Sure. And sir, my final question is on the gas throughput volumes. We've been stuck in a range in the last few years. Taking a medium-term view, you said 3 to 5 years, where do you think the throughput volumes will be trending? We're about 30 lakh, 31 lakh on an annual basis. Where do we see this going, say, in the next 3 to 5 years with our capacity in place and multiple growth levers that you mentioned in the presentation also? So I wanted to get a sense on this.
Yes. I think the throughput volumes, we continue to be bullish on the overall throughput of -- overall LPG demand and throughput in the country. Now with our 4 terminals, we are really well positioned to take advantage of that. The overall demand for LPG is continuing to increase at 6% to 7% per annum, sometimes in the higher. And in fact, I believe that it will be higher than 6% to 7% growth.
And to the extent, as far as I can see that no further terminals are planned by anybody else, so I think we are confident that the growth in capacity that we have will get utilized. We've just seen one example of a new capacity coming on stream in Kandla and the advantages and opportunities that has given us in terms of the distribution. So whether it comes from throughput or distribution, we are really confident that the LPG demand and our position to supply that demand is -- we are well positioned to capitalize on that.
Okay. Would you -- like could it be possible for us to grow in, say, double digits over the next 3 to 5 years from current ways?
We don't give specific numbers, but I standby the comments that we have made always in the past that our -- we can grow our business and our earnings at between 25% to 40% per annum on a consistent basis based on what we have, the assets we have in place. And obviously, LPG throughput and distribution profits are going to be a significant portion of that.
We take the next question from the line of Jay Shah from [ Capital PMS ].
Sir, my question is more on the broader front. Do you feel that there is a chance that the way globally crude prices are falling and that between our products and alternate fuels as the petrol and diesel and other crude derivatives, do you think that there can be a shift again to the primary fuel vis-a-vis using LPG or other gases? Do you think there's a possibility?
Murad, I'm going to take that question. I think, look, as far as crude oil prices up and down, I think the crude oil is not a direct substitute for LPG and never will be. It's just -- it's too dirty. Crude oil does have an impact on the pricing benchmarks for LPG because it's a widely traded commodity and it's easy to benchmark. And so crude oil -- the price of crude oil can be correlated with the price the announced Saudi CP price for LPG.
So I think it's definitely correlated with the price. But in terms of the actual substitutability, the closest substitute for LPG is natural gas, which many of you have asked in the past. But always, natural gas -- the threat to LPG is natural gas.
And as I mentioned earlier, the 2 fuels, natural gas and LPG, propane, butane will continue to coexist for many years, so I'm not relating it to crude oil. I think what the future of natural gas, the way it plays out is more relevant, I believe, to -- than crude oil to LPG.
So I believe that with clean fuel and the environmental pressures that everybody is under, including India with commitments of carbon emission -- reducing carbon emissions step by step and more, the only way for India to move forward is to continue its transition to a combination of less polluting fossil fuels in the short to medium term, like LPG, like natural gas. And of course, as the development is renewable and other clean -- zero-emission fuel happened, it's not going to happen overnight, but it will happen to move forward with that.
So I'm not particularly concerned about crude oil and its price fluctuation other than -- obviously, it does affect the price of LPG. I think the biggest thing that we have looked for is natural gas and what its trajectory, its availability to India, given what's happening in Europe, switching away from Russian gas. A lot of gas, natural gas is moving towards -- Middle Eastern gases moving towards Europe as well and also to Japan and Korea and China, of course, as they continue on their journey towards cleaner fuels.
So it's a very interesting scenario that's unfolding, and -- but we believe that we are very well positioned to take advantage of the move towards cleaner and -- cleaner fossil fuel with our strong position in LPG and on the 4 terminals that we now have.
We take the next question from the line of Himanshu Yadav from Edelweiss Wealth Research.
One is, since 2 new liquid terminals will be there in our numbers now on, could you spend some time talking about those in terms of how comparable they are or aren't with any of our existing terminals? I mean, I just want to have some color on how to think about the profitability of Friends Group and the potential over there and also the terminal which we have got from Vopak into the JV.
Yes. Murad, let me just answer, and then you can also add in any case on this because you are familiar with the acquisition of Friends Group and so on. But our assessment is that the addition of these 2 facilities, the CRL terminal and the Friends Group terminals is really has put us in a very commanding position in Kandla port in terms of the marketplace.
We still have some work to do to rationalize and improve the efficiency, as some [indiscernible] we pride ourselves on our margins in the Liquid business in the 60 -- north of 60%. And right now, neither of the 2 recently acquired terminals are in that operating stats on the profitability ratio.
Of course, our objective will be to bring them up to that level. And so I think just literally a couple of months ago, the possession of them and now starting to improve, we believe that ultimately those 2 new terminals with the extra capacity of -- Murad, how much of the extra capacity with -- almost 700,000 kilo liters between the two terminals?
Yes.
Yes, almost 700,000 kilo liters extra coming on to our -- under the Aegis company. And as we start working on improving the profitability. We believe that this will become significant contributors to the overall liquids profitability. And of course, the other term terminals -- Liquid terminals in the expansion, which I think we should also not forget, in Bangalore, in Haldia and soon to start in Kochi and so on, we'll also bulk up the liquids business.
And I believe that liquids has in the past been sort of not given a new recognition because it is a slower growth business. It's not -- if I can use the word, not as sexy as LPG, but it is a very, very consistent and profitable business. And we are really proud to have that business. So Himanshu thank you for asking that question, but we look forward to some good results from liquids.
Murad, over to you in case you want to add anything, any comment on the...
Yes. I also add that with the acquisition of these 2 terminals, there will be a lot of synergy of cost, and a lot of duplication of expenses will be avoided. We will also rationalize the storage because we -- because of constraint of capacity, we also -- and we had to also store low-value items which now -- with the increased capacity, we will have a lot of leeway to play around and entertain and store more high-value products. This will be a process and will take a little time, but you will see a huge advantage and EBITDA in the coming times. Very good step that has happened in the Liquid Terminal division.
Sure, sir. But if you could just help in some guidance or some numbers for these other terminals which have been introduced for the first time into the numbers. So any ballpark or any guidance would be helpful.
We do not give terminal-wise, either in Liquid or in Gas, specific numbers. But you will see overall improvement in the Liquid Terminal division in revenue as well as EBITDA.
Okay. Okay. And sir, I have in fact still a follow-up to the comment which you said that you expect LPG consumption to grow 6% or plus. What is driving, I mean, your assumptions behind this. I mean last 3 years, it has been below 6%. And with the pipe natural gas coming into many metros, our case for any higher LPG consumption is actually derived from increasing users in Tier 2, 3 cities and in the rural areas. So I mean if you're saying that you expect the 6% kind of growth, do you have like a short term in mind? Or do you expect that this 6% kind of growth will be there for a 5-year plus? And under what presumptions are you expecting this growth?
Yes, I think, look, historical data and what we see on the ground in terms of the various incentive schemes that the government is pushing to try and move the entire country onto more sustainable and less -- and safer cleaner fuel. First of all, let me just tell you that nothing moves in exactly a straight line. So I think if you -- we've seen quite a lot of disruption in all businesses, including LPG, over the last couple of years because of what happened with COVID and so on.
But I think we're -- that's behind us now. We're back on track. There are things that happen. For example, if the price of LPG, which is now essentially -- for the Indian public is the market-driven prices, subsidies very little. If the price does go up too much, people would try to economize and so on. So nothing, as I said, move in a straight line.
But if you take the overall mix between industrial use, domestic use and the issues arising from natural gas -- cost of natural gas and so on, we believe that we standby that number that the growth of LPG will continue at the rate of around 6%, 7%. And as I said, one year it may be 5%, that may go up another year. So we stand by that number of 6%, 7% in the longer term.
We take the next question from the line of Saurabh Shroff from QRC Investment Advisors.
Congratulations on a very strong set of numbers. My first question was on the sourcing business. It's good to see a really strong recovery, I guess, over the last 2 years in the first quarter. But we are still a far cry from, let's say, what the pre-COVID era volumes were. So just wanted to understand, is this just a function of the NOC not putting out enough tenders? Or is it lack of availability or supply tightness given what is happening in the energy markets globally? And how do you see this evolving over the next few quarters?
Yes. So I think, obviously, the disruption that happened at the time of COVID with the NOCs -- which national oil companies, which are, of course, the primary supplier to the domestic market. In some cases, they have overordered and then they certainly had too much inventory, so they underordered and so on. So I wouldn't -- I totally agree with you that sourcing volumes really went down significantly. But I think we are back on track. We won 18 cargoes and new -- last year, which are currently being delivered, which accounts for the kind of excellent topline numbers for sourcing.
The new tenders are coming out very shortly and will be ready in a month or 2. And we'll be billing for that like we normally do along with our partner, Itochu Corporation. So we are confident that we are back on track. Of course, the reason why we are even more confident than previously because we hold energy scenario with customers -- everybody in the world scrambling for gas, whether it be natural gas, LNG, liquified natural gas or propane or butane or LPG combination, everybody is scrambling. So with our strong sourcing capability with our partners, Itochu Corporation, we believe we are very well positioned to secure both the ships and the cargoes for bringing gas for the national oil companies.
And of course, it's not just that. It's also getting gas and shipping that gas as cheap as possible price. So as we mentioned, the 2 ports that are right now not VLGC capable, which is basically Pipavav and Kandla as they come into -- as they become VLGC capable, we'll be able to offer to the national oil companies even more cost-effective cargoes because you can't bring in the VLGC there and also offer them the [indiscernible] storage. I think we are very well positioned to do well in the sourcing business.
I would point out that sourcing, of course, is not a huge profit contributor. It does -- so is very welcome. But it's -- but it certainly gives us a very close working relationship with the national oil companies as well. Murad, anything to add?
Yes, sir. I think, yes, that's is about...
And my second question is more on the distribution business. So we are obviously adding to dealers and retailers, et cetera. And I guess the idea is that we want to eventually sort of grow this business much more. So where are you seeing this sort of growth coming from? Obviously, we are going into a new geography with our distribution, but I would imagine that there are incumbents in terms of the natural -- sort of the big oil companies already there. So are we seeing new customers coming to us? What is our sort of value proposition? Are we cheaper? Is our service better? Are we doing something that they are not able to do that we will continue to sort of grow this business and, eventually, I guess, take share?
Yes, good question. Look, the distribution business is a very competitive business because, you're right, we have established incumbent figures -- company. Not only are the national oil companies, which are, of course, dominant players, are very present in that business. But also, we have Reliance Industries. We have SHV, an important global LPG player and so on.
So we have a number of total -- of course, another multinational and so on, a number of players. It is quite a crowded playing field. But I just would like to also mention that we do not compete on price. This is the characteristic of Aegis that we will never -- our business is not -- our management is instructed that we do not compete on price.
We compete on service, the quality -- assured quality of the product, our technical capabilities to ensure that there's safety and the reliability because we have our own terminals.
So I think it's -- the value proposition is we will do all of the above, that basically reliability of supply, you're never going to get stocked out. You're never going to get saying, "I'm sorry, we have a priority to supply our domestic customers this year -- this month, there will be no -- less gas available for you and so on." We compete on those terms, not on price.
So we are confident that whatever the incumbents are -- we are an incumbent, of course, we've been in this business for many years. But with our tremendous network now of 4 terminals and more to come, as we've said in previous call, the value proposition is service and all of the things that come with that.
Sure. That's happening to -- and I guess one final question. I guess, auto LPG in India generally hasn't done much like compared to what we are seeing on the natural gas side. Is it just the lack of availability and that most of our LPG gets imported is that the reason? Or like what do you put as the reason why this market isn't big? Or if you think it's going to be much bigger, what is going to change for it to be significantly better?
Yes. Auto LPG, you're right, the market has not been growing very rapidly because there has been a push to -- by the government and by the car companies to push compressed natural gas, CNG, over LPG. And while the auto gas market has been certainly present, let's say, volume range on an all India basis of between 250,000 to 300,000 metric tons a year, and we are a very small portion of that, it's certainly been a very profitable niche for us and will continue to be a very profitable niche.
I would say that there are many factors, which are bucketing the auto LPG business. One is the presence of -- up to now, at least the presence of subsidized CNG. So they go with the process that when you are trying to compete with us, government subsidized product, it's difficult. Then the only thing we were counting on is that the subsidized product may not be as easily available.
But we believe that this is going to change, and it is changing, that if you follow what's going on in the world of natural gas, natural gas cannot be subsidized for much longer. The price of natural gas land in India in excess of $25 per MMBtu. And you are trying to sell subsidized CNG to automotive at $6 or whatever, it's just not sustainable going forward.
So we believe that CNG, while everybody is pushing for its -- LPG has no subsidy, is totally market-driven fuel, it will continue to have its position. It's very competitively priced with petrol, and of course, it's a much cleaner fuel. So while I can curve with you that it's not been setting the world on fire, LPG as an auto fuel is a niche position, but we can earn good margins. We continue to be -- to sort of push hard on expanding our network.
I would say the other thing is that the rollout of stations and the commissioning of new stations has been frustratingly slow. A lot of it is to do with the fact that while the ease of doing business in India on a headline basis has certainly improved, and India has improved its position by 3 places in the ease of doing business on a global basis. I think if you go down to the local level, nitty-gritty level, the ease of business certainly has not improved because you have so many NOCs from local officials and so on. And it's very, very difficult to get things done on a local level. So the headlines are, "yes, it's so easy of doing business in India," but it's not an easy on the local level. So I'll leave it at that.
Sure. And one finally, our dealers and distributors, who we are sort of empanelment, we're adding sort of gas stations, what kind of breakeven are they experiencing as they sort of, I guess, franchise out with us, et cetera? Is it turning profitable business for them over time? Or are they sort of counting on this being one-off, maybe many other things that we will retail, i.e., that maybe they'll have some sort of a store or retail or whatever? Just to sort of understand better the ecosystem and how profitably the entire chain is doing, that's the last question from me.
Yes, again, a very good question. I think the model that we are pushing very hard now is a multifuel distribution, which is ultimately, we are not building this -- our network of retail fuel distribution just for 1 year or 2 years, we're building it for many, many years to come. So we have finalized on a model of multifuel distribution.
Today's basically a partnership with -- we have with Nayara Energy where we have co-brand stations that are selling petrol, diesel and auto LPG. And they're very successful, and dealers are very happy because they have 3 revenue resources. So that's certainly a model going forward. And who knows, in the future, if the electric revolution takes place, maybe we put chargers, we put whatever. But at the moment, they are focusing on the 3 fuel.
And we've seen that whenever there is a multifuel distributor, they make good money, good returns on investments, and they're happy. The old model of just having only stand-alone auto LPG has taken a bit of beating, and so we're trying to push the multifuel station concept much more.
Thank you. In the interest of time, this was the last question. I would now like to hand over the conference to Mr. Raj Chandaria for closing comments.
Yes. Thanks very much. Some very interesting questions, and I hope we've been able to answer them successfully.
I'd just like to leave everybody that, look, we've been through a bit of a rough patch both in the country and in our company, where we had a little bit of a slowdown in our earnings. A number of other things happened. But I'm confident that -- as we ended last year with a positive note, I'm confident we end this quarter with a very positive note that we are back on track. A number of projects are coming down the pipeline as it were, apart from just completing the Kandla LPG terminal, which was our flagship terminal, bigger and better things are coming. So really looking forward to the next 2, 3 quarters, we report some good news.
And with that, I think I'd like to close the conference call and thank you.
Thank you.
Thank you. On behalf of Aegis Logistics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thanks. Bye-bye.