Adani Total Gas Ltd

NSE:ATGL

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Post Q1 FY '24 Results Conference Call of Adani Total Gas Limited hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Probal Singh from ICICI Securities. Thank you, and over to you, Mr. Probal.

[Unknown Analyst]

Thank you, Zeko. Welcome, everyone. Appreciate the time taken to attend this call, which is the post Q1 '24 results discussion for Adani Total Gas Limited. We have members of the senior management from Adani Total Gas with us, starting with Mr. Suresh Manglani, who will be Executive Director as well as the Chief Executive Officer of the company; Mr. Parag Parikh, who is the CFO; and Mr. Priyansh Shah, who looks after Investor Relations.

So without further ado, I'll hand it over to management for the brief opening remarks on the results, and then we'll get into Q&A. Over to you, sir.

[Suresh Manglani, executive]

Thank you, Probal, and good evening, everyone. I'm Suresh Manglani. Let me extend a very hearty welcome to all our investors, analysts and funds who are participating in this call for taking all their time, in today's call on Q1 FY '24 results of Adani Total Gas.

Today, Adani Total Gas' Board met in Andaba and has approved the Q1 FY '24 results. We are pleased to share the financial results of Adani Total Gas for the quarter 1 of FY '24.

First, let me give you the highlights of the CGD infrastructure for the quarter 1. Our CNG network has now increased to 467 stations with 88 stations, being in a full formated CoDo, or company-owned dealer-operated, or DoDo, dealer-owned dealer-operated format. Our strategy is to focus on creating more CNG stations in the CoDo and DoDo format. Out of these 460 CNG stations, it includes 1 CBG station, compressed biogas station, which we commissioned in the last quarter, Q4 of financial year '22-'23. This CGD station is located in [indiscernible], which is outside our geographical area, because CGD is permitted to be set up anywhere in any location in India.

Our steel pilot infrastructure, which is our backbone has now increased to 11,224-inch kilometer. This steel pipeline is, as I said, is a backbone for creating CGD Infra and supplying natural gas to CNG and more and more PNG consumers.

During this quarter, we added almost [ 200 ] [indiscernible] with 24,000 new homes. And now our consumer base has increased to 7.28 -- roughly INR 7.3 lakhs. And we also have 7,615, 7-6-1-5, industrial and commercial consumers on pipe natural gas. In this quarter, we added 180 customers, roughly 2 customers every day in 90-days period. With this, our pan-India footprint along with our JV, IOAGPL, which is with the Fortune 50 company, IOCL, in CNG stations has reached to 748. So 467 hours, 277 IOAGPL, total put together 748 station and serving over 8.27 lakh homes and 8,228 industrial and commercial consumers along with our JV.

With the fast acceleration of CNG network, it is encouraging. The automobile OEMs to develop and accelerate delivery and promotion of CNG vehicles and consumers to opt for and convert their vehicle on CNG is now being available across the country.

Now on the operational and financial part, as you might be aware that in the beginning of the quarter, the CGD sector was given a boost by Government of India by approving APM price reforms, which has helped to curb the volatility in the gas prices in the APM part, which is roughly 60% of our total volume, which we sell and brought gas prices down by putting ceiling of $6.50 and a floor of $4. And this has been stabilized for the period of 2 years.

ATGL consumers as we have also passed through the benefit which came, have benefited. And entire industry consumers have not benefited it. So is the CGD consumer. And this is going to help us to build the momentum for both CNG and PNG. Our volume on of CNG and PNG, in aggregate, which has grown by 8% to 1-9-8, 198 MMCM as compared to last year in quarter 1 FY '23.

On the financial front, revenue from operations stood at INR 1,135 crores, up by 2% as compared to Q1 FY '23. With increase in volume and cost optimization, we have achieved highest ever quarterly EBITDA of INR 255 crores, up by 12% as compared to year-on-year basis quarter 1 FY '23. Profit before tax and profit after tax have grown to INR 199 crores, which is profit before tax and INR 148 crores, which is both up by as compared to previous year same quarter.

Besides focusing, which is our core business on the CGD side as I enumerated to all of you, we have also now embarked upon the journey on the e-mobility and biomass side. On the e-mobility business, which we incorporated in a new SPV, Adani Total Energy's Key Mobility Limited in the Q2 of the last year, we have now already set up 141 charging points across 40 strategic locations like airports and [indiscernible] and various other highways, et cetera. And we have target to set up almost 3,000 charging clients in the future -- in the near future. Also, we are also developing and looking forward exploring a large number of B2B partnerships.

For the bio business, we are building one of the India's largest biogas plant in the state of Utter Pradesh, and we expect to commission the phase 1 of this plant in this financial year, '23-'24.

Lastly, on the ESG front, ATGL continues to focus to create positive impact on environment and society at last. We have the unique program called Greenmosphere, which I had been giving you details in every quarter. Greenmosphere is a low-carbon society initiative of Adani Total Gas, which focuses on planting more and more trees. We have already planted more than 2.2 lakh plants in this -- under the Greenmosphere initiative. A large number of more plants are expected to be planted in this -- under the Greenmosphere. Similarly, we conduct low carbon society awareness in various schools and also conducting energy audits for all of our installations. So it's kind of a holistic program, which we do in ATGL.

As you are aware, that ATGL to the highest standards of safety, and safety is a precondition to work. We inculcate a strong safety culture at ATGL, which helps us to build safe and reliable network and infrastructure across India.

Recently, as a matter of pride that ATGL has won safety award in the category of outstanding commitment in road safety by corporates at a conference organized by recently. Lastly, I would like to acknowledge and be thankful the role played by our shareholders, consumers, dealers, suppliers, business partners, our employees and the analysts like yourself who are participating in the call and giving us your inputs, where do we our focus.

So let me begin the for the questions. Thank you very much once again.

[Operator]

[Operator Instructions]

Our first question is from the line of Kirtan Mehta from BOB Capital Markets.

[Kirtan Mehta, analyst]

I wanted to understand more about the CNG sales structure that we are seeing post decrease in the APM prices. So are you seeing the improving vehicle conversions in your sales area?

[Suresh Manglani, executive]

So Kirtan, it's a good question. I'm sure it must be in many, many other participants' minds as well that after this reform of pricing, APM pricing, what is the impact we are all seeing in the CNG industry, and it's a very good question. And the answer is, since it is a very positive reform, it will -- we see a positive impact happening.

18% was the growth in our CNG volume. It will be a mix of both. The existing consumer using more CNG now as well as the conversion which are taking place. Plus we have added some more stations as well in the newer geographic areas. So it's a combination of that. But to -- it could be suffice to say that, yes, since it is now going to provide a better payback period to the consumers who are converting, it will certainly bring more and more consumers towards the CNG side. And that is what we are witnessing when we are setting up the new CNG stations, volume throughputs are going up.

Similarly, while you have asked the question on CNG side, actually, we also see the traction on the PNG side, which is the home consumers because we immediately pass through the benefit of the reduction in the price. Significantly, there was a very good impact on the price reduction. And as you see our turnover percentage going up is 2% because of this. But while there was a good growth in the volume, but since we reduced the prices, the turn work impact has been moderated. But we do see the impact on the new registrations being -- interest being shown by our PNG consumers.

So overall, I think it's a very good support from government of India to the CNG industry. We all have reciprocated by passing through the benefit, and we are hoping that this will really sustain and bring the momentum of the good volume because there is a stability of 2 years of the APM price as well.

[Kirtan Mehta, analyst]

Just sort of a follow-up. In terms of your 18% Y-o-Y volume growth, significant proportion of this growth is actually driven by the very fast pace infrastructure addition that is the CNG station that you are undertaking. Is there a way to sort of isolate that and see a like-to-like convergence in terms of are we seeing the more number of vehicle tractions? Is there any way you can share that data?

[Suresh Manglani, executive]

One of the important is that it's in a public domain the way OEMs are showing their number of vehicles being sold on CNG. OEMs after OEMs are coming up with a new model. Today, [indiscernible] sold many models. So I think we are seeing clearly the momentum in the market on conversion. And when we see the data on conversion, that also gives us encouragement that now numbers are going up.

So it is not purely see new CNG station takes some more time to develop ecosystem. So while this quarter, we must have set up, it will take another quarter or 2 for bringing the more volume ministration. It is, as I said, mix of this. We could somehow next quarter, if you want, or some time our team will talk to you. We can see how much is the conversion increase, which is happening segment by segment. Certain information also can be provided.

[Kirtan Mehta, analyst]

Sure, sir. The PNG side also, it's interesting to see that the growth is coming through. I just want to understand, we have been hearing about the deepening competition from propane across different areas. Initially, I think it started with Gujarat. Now we are seeing the impact in Dehli side as well. So are you also facing the increased competition from propane in your GAs?

[Suresh Manglani, executive]

So one good thing is reason I think you are seems to be in a complete track of the sector. And this is bang on the point that, yes, there has been a good competition, which is being seen by the CGD industry across in terms of alternate fuels, whether LPG and propane. Also, there is an intensification by this LPG and propane suppliers. So we have also experienced.

But being a consumer-friendly company, company of Adani Group and Total Energies, we also have an agility to respond to the market calls. That's the region we have certainly been competitive. We have responded to these calls. We have also given complete understanding of the forward outlook of our consumers that today you miss it but how the natural gas is going to be coming to you. And wherever we have warranted for us to support the consumers we have supported. So that's the reason overall while we have seen the competition across our geographic area because industrial consumers will certainly see which fuel is better for them and cheaper for them. So they are interchangeable, so they are going for propane or LPG, but we have been able to retain a good volume, and some new volumes have been brought in. So overall, we are seeing 8% volume growth. PNG is still we are expecting that more growth should come now as the prices are tightening for the propane and LPG.

[Kirtan Mehta, analyst]

Just responding to sort of your agility, are you also looking to lock in the lower LNG prices, which are available for the rest of the year or particularly for the winter to protect the margins or to continue to offer the competitive gas prices to the customers?

[Suresh Manglani, executive]

So I think as we have been saying in every quarter and since you follow this sector so very well, you must be keeping track of our calls, but we have a good portfolio. We have a multi index. We have multi-tenures, multi suppliers. So yes, we keep ensuring that whenever we get an opportunity and if the volumes are required without exposing ourselves, we are locking in. We are putting the volume in our portfolio. And this is a continuous exercise for the CGD company, particularly of the dimension of our size.

When you see GGL33 geographical area and [indiscernible] expanding in -- expanding business expanding. So we keep looking, and we are ensuring that we take the full benefit of market but not going over board, but because we see still the moderation is happening. More domestic gas is also coming up.

[Kirtan Mehta, analyst]

Right. Just one last question probably from my side. In terms of the -- looking at the petrol and diesel prices, do you see a risk of the prices coming down? And in turn, do you see a need for lowering the CNG prices if and when the prices go down?

[Suresh Manglani, executive]

Currently, putting any guess on what is going to happen petrol and diesel prices at the -- as a listed company may not be the right guess, actually. What we have always responded to the market that always we have seen that we have been competitive to the alternate fuel.

We have seen the consumer interest as a first priority, and we have responded to that call always, as you see. So I think our prices are affordable to consumers. There is a good spread on petrol diesel prices. And as and when market warrants us to take some more responses, we would be able to do that to make sure the consumer gains at the end and our volumes continue to grow.

[Operator]

[Operator Instructions] Our next question is from the line of Yogesh Patil from Dolat Capital.

[Yogesh Patil, analyst]

Am I audible?

[Suresh Manglani, executive]

Yes, you are audible, loud and clear.

[Yogesh Patil, analyst]

Sir, question is related to propane again. So government has recently reduced the import duty on propane. So how do you see this development? Based on your understanding, will be duty team for long term and this duty continue to acquire any new industrial customer? That's my first question.

[Suresh Manglani, executive]

So Yogesh, first of all, thank you for I think being present on the call, I think, regularly. Your voice has become quite conversant to me.

Again, a good question. It's -- this is the way a sector has to be dynamic. When we saw propane prices going down and we were facing a lot of competition, and this came up another good development, at least for the CGD industry that when the custom has gone up, for whatever reason, government has seen the increase the custom duty, that has certainly brought some traction on the natural gas demand once again from industrial consumers. So we -- this is a positive development for CGD industry was supplying natural gas.

And what would be the future development? As I said in the earlier question, which was asked by Kirtan, that we have been responding to the market calls. So I think even today, we have been providing competitive prices when the market has gone, petrol and diesel, both have gone down. Sorry, the propane LPG both prices have gone down, still we have been able to respond and grow the market. And we would continuously be responding to the market calls, whether custom duty goes further down, this is the call which policymaker will take -- what we need to do in our business that we need to respond to the market cost to sustain and grow our business, and that's what you will see us doing it.

[Yogesh Patil, analyst]

Okay. So sir, my second question, can you please tell us the APM gas share in your priority segment sales for the quarter, Q1 [indiscernible]?

[Suresh Manglani, executive]

Sorry, I didn't follow the question.

[Parag Parikh, executive]

Yes. APM...

[Suresh Manglani, executive]

Parag will respond to you because he has understood your question. Maybe you are asking some detail on the APM allocation yes. [indiscernible] in the quarter.

[Parag Parikh, executive]

So Yogesh, I think as far as the APM allocation is concerned, while we were with a deficit of 19% in Q4 and starting from the month of April, we saw the export committee getting into implementation. For the quarter, we are at 14%. But if I were to see starting from April to June, there is a downward trend. So while we were starting from 19% for the fourth quarter, and it went down, it came to 17% in April. By the month of June, we are almost just about getting down to single digits. So that's the trend that we are seeing as far as the APM deficit is concerned. But on a quarter basis, we have a deficit of 14%. Does that answer, Yogesh?

[Yogesh Patil, analyst]

Yes. So it is clearly indicating that the APM gas allocation is inching up. Is that a correct understanding?

[Parag Parikh, executive]

That's correct.

[Suresh Manglani, executive]

That's correct, Yogesh.

[Yogesh Patil, analyst]

Okay. Sir, next question is again related to the same APM and mostly on the policy front. So government is providing close to 90% of ATM gas to all the CGD sector, mostly for the power segment. Sir, do you see any kind of a risk of regulation, CNG and PNG prices in the near future from the side of the government?

[Suresh Manglani, executive]

No. Actually, if you see this APM pricing has been in existence for a quite a long time. It's a stated policy of a government to support larger public interest. We are simply a provider of infrastructure and the PNG and the supply to the consumers. So what government has developed is a rightful policy so that the PNG and CNG reaches to the large masses. So we don't see any risk of reversal of a government policy of providing APM gas or then bringing any curtailment or any restrictions on the pricing because the fuel infrastructure development is taking place. So I'm sure whatever was the objective of bringing APM price is being met by the CGD sector in terms of looking and growing the momentum of the infra development.

[Yogesh Patil, analyst]

Okay. Let me try to reframe the question again. Do you see any kind of regulation or provision in PNGRB laws or in their book that will directly, indirectly can regulate the CNG or the DPNG prices? I think this is a straightforward question.

[Suresh Manglani, executive]

So I'll give you the reply also. PNGRB is regulating infra. The tariffs which we have to charge when the open access comes on transporting the gas for a third party or compressing the PNG so they are regulating the infrastructure part.

The commodity is not regulated. Commodity is to be dollar. Commodities we are getting APM and there are -- if you see, there are natural competition, which we all see. If I have to come to your home to give you PNG, you will see the LPG price, which is available to you as the money, which you give to us for a new service commission. So it is not that CGD companies are having complete freedom to do what they want to do it. At the end, there are several natural competitions, which we face in terms of every animal. And I agree with you, CNG, you need to spend INR 40,000, INR 50,000, INR 60,000 for the kit. And you will expect some payback period. You have to sacrifice your boot space. So I think there -- and there is a petrol price, diesel price, which is available to you or the EV which is available to now, the CBG price. I think there are adequate natural competition with CGD company has to mitigate through and offer an attractive value proposition to the end consumer. And that's what we are doing it.

And if you see our pricing, whether in terms of home PNG or a CNG across all geographical areas have a good spread, it provides convenience, it provides cleaner fuel, it provides reliability. I think that's what the consumer is looking forward. So I don't see any restrictions coming up on PNRG on the commodity side today.

[Operator]

[Operator Instructions]

Our next question is from the line of Hardik Solanki from ICICI Securities.

[Unknown Analyst]

Yes. Am I audible?

[Suresh Manglani, executive]

Yes, you are, please Yes.

[Unknown Analyst]

Yes, sir. We understand that the EBITDA per SCM for the quarter has more than INR 12 SCM. And in the last quarter, it was INR 10. So I just want to understand how the gas sourcing is. And also, I want to understand what is our industrial and commercial volume. That is question number 1.

Secondly, also, you can just give the growth guidance long term and the area-wise growth guidance. That would be really helpful.

[Suresh Manglani, executive]

So Hardik, I'll give you a brief answer, and then Parag will take the more detailed response to you.

On the EBITDA per SCM, which you asked, it is a resultant of several components. One certainly will be the good gas portfolio, which we have been building, and that is resulting into the better margins, which gives us more play to redeploy our cash for the infrastructure development.

Second is the OpEx excellence, which we do on a continual basis. So I think when you will compare and you are analyst, so you must be seeing results of all the companies or the other data points. So you will see there is a good benchmark, which we set for the OpEx in terms of every component. So it's a resultant of good gas sourcing portfolio development as well as the OpEx excellence, which happens on a continuous basis. That's then you see it slightly the EBITDA margin has gone up. But more detail I think you wanted. I think Parag will provide to you the other further information. Parag, take it.

[Parag Parikh, executive]

So I think as far as improvement of margins are concerned, rightly, it is a combination of both the global gas costs coming down, which is enabling us to look at a good portfolio. Also on the C&I side, whilst APM reduction has been passed on to the end consumer, similarly on the OpEx side, there has been an improvement, which improves the EBITDA margin by almost 10%. So that's actually out of the 20%, 22% improvement in the per SCM margin, almost half of that is in terms of operational efficiency, while the balance is in terms of having a very active competitive sourcing of that, especially on the C&I side.

As far as volumes and volume mixture is concerned, we have almost close to about 65% of the overall volumes being -- comprising of CNG or the transportation fuel, while about 35% is through the PNG. Within that 35%, about 25% -- or 25% of that as an absolute number is industrial, whilst 8% is domestic and 2% is commercial. So this is a composition as far as the volume breakup is concerned.

[Unknown Analyst]

Okay. And can you also help us to understand the long-term volume growth even if area-wise, it would be helpful. And one more follow-up, what was the average gas sourcing cost for the quarter, the LNG gas sourcing cost?

[Parag Parikh, executive]

So as far as volumes are concerned, increasingly as the newer geographies are now beginning to be built up, they are beginning to get commissioned. More and more proportion of the volume is taken from the newer geographies.

If I have to look at the split, we were at almost 85% as far as quarter-to-quarter was concerned on the year-on-year number. That number gradually will now come down in favor of the newer geographies as new geographies have started commissioning. At this juncture, about close to 74% to 75% is from the existing GAs while 25% is actually coming from the newer geographies. So that's as far as the contribution in terms of volume is concerned from all the new geographies.

As far as the gas cost is concerned, APM cost is very well known. As we've said, we are able to now source at the cap of the $6.50 per SCM, the blended cost for us is at close to INR 32 per SCM. Like I mentioned a little while earlier, there is about a 14% deficit on the quarter on the APM side, which means that is also being, in a manner, sourced from the LNG gas. As far as our C&I portfolio is concerned, C&Is are a little over INR 40 in terms of procurement for the quarter.

[Operator]

[Operator Instructions]

Our next question is from the line of Mr. Mayank Maheshwari from Morgan Stanley.

[Mayank Maheshwari, analyst]

A few strategic questions from my side, if you can help on that. The first one was in terms of now that you have been expanding these years, can you just give us an idea of where you feel the most excited about in terms of the GAs or kind of doing better than your expectations, where you think there could be more work to be done? And also, how are you seeing in specific GAs the breakeven in terms of number of quarters, months that you can kind of talk about in a big picture perspective. That will be helpful.

[Suresh Manglani, executive]

So Mayank, thank you for coming on the call. On the lighter side, when you ask which geo is more [indiscernible], it's like asking a mother which baby you love more. I think all the GAs we have been with all strategic thinking. Every geo is critical because it belongs to the people. We are supposed to provide PNG to the people, who belongs -- who are getting in the GA, and we have obligation and responsibility. So I think it's not that our choice, which GA should dole out more, which should have ones. Every baby is equal to the mother and same is all GAs for us, smaller or bigger. Yes, we would be accordingly putting our team sizes for the -- all of GAs, which was a bigger one, a smaller one.

Currently, I think if you ask us, we are quite excited because government has done its job of performing the APM price. We are seeing moderation of the LNG price and domestic gas production is going up. So that is what is ingredients which are good for the CGD industry. All we need to do now is to respond to those calls and put up more and more infrastructure, and that's what we are doing across all geographic areas I'm speaking to you. All 33 GAs, we are actually developing the infrastructure and some. Even the 11 [indiscernible] large number of stations have been put up and more are coming up. We are now developing the blueprint on the pipeline and soon also will get awarded. Detail engineering work is going on. So I think the excitement is there across all geographical areas.

Of course, you are seeing the results existing geographical areas are mature, so they are giving us good numbers. Newer 9 and 10 are GA are now being -- started giving a better number if you see the proportion, whether in EBITDA, volume or infra, budget everywhere, they are occupying better space. And soon, you'll see 11 occupying better space. [indiscernible] is a very good geographical areas, whether we call the Burgel Akola, Amravati. All the geographic areas appears to be quite good.

[Mayank Maheshwari, analyst]

Sir, I think -- and one related question to this earlier comment that you mentioned around gas sourcing and APM pricing, definitely, it helped the CGD sector this year. But the bigger picture thinking, and you can correct me if my understanding is wrong is that the government is effectively trying to kind of make gas prices more marketing rather than getting more when they were reducing its intervention in the gas markets locally as well over the next 5 years or so. So is there a thinking process at NGTL level in terms of over the last 5 years when you have your entire network in play, the gas pricing will be a lot more free. So will that impact the way you're kind of deploying your capital today?

[Suresh Manglani, executive]

You see, I see you being analysis of a sector very extensively. And I am the beneficiary of receiving a lot of reports on you and a very good laid out report. I'm sure you are also putting our efforts besides your team. So you understand this sector well.

I think the foundational work is being done through these policy frameworks. We are going to -- we are also responding to these calls of expanding and accelerating our infrastructure. At the same time, being one of the largest CGD company and always looking for good opportunities to develop a very good optimal portfolio without much exposing ourselves. I think we definitely will be looking for an opportunity to have a longer-term tie-up of some volume, mitigating certain risk from our side, that is what the team is working so that even if after 5 years when the gas prices becomes [indiscernible], one, the strong foundation has been late, consumer broad-basing has been done, and the portfolio has been developed in such a way that we don't cost too much to the end consumer. So that is what is the job of a responsible management, and that is where we are all working towards it.

[Mayank Maheshwari, analyst]

And I think the last thing was more in terms of the new energy and new fuels and you talked about CGD, yes. so like any other things that you have been doing that you want to kind of highlight on the new fuel side that you're trying to do right now?

[Suresh Manglani, executive]

So actually, the DNA for us is that we see what is the challenge and the problem statement and this is where we try to seize the opportunity. And that is where we did when we seize the opportunity for e-mobility as well as the CGD, the biomass. And currently, the plants are one plant is under construction, major one, and others are going to be coming up in the near future. E-mobility is also spreading very well. So idea is to provide multifueling choice to the end consumers.

Now of course, we are looking -- the way we are seeing the policy reforms coming up on the LNG for our long-haul vehicles. We saw PNGRB giving the complete clarification on that any company, any entity can set up LNG station and supply the LNG in the liquid form to transport sector. China, Europe and various countries, we can see in the world already getting almost matured on LNG for the long haul. So I think we are also exploring. India has a huge opportunity. 40% of our diesel is consumed by the transport vehicles, heavy vehicles. So our team is working to see which -- how do we move on this accelerated basis. We are talking to a lot of industries that can we do the decarbonization of their fleet.

So I think that's another opportunity -- yet another opportunity, which we are looking forward to seize as well as quickly get into that business opportunity. So you will see us setting up LNG stations for transport vehicles, particularly the trucks as well as the long-haul buses. So we will have CNG as our fuel, which we are developing in 94 districts, EV, Pan India, CGD Pan India, LNG for transport vehicles, Pan India.

[Operator]

[Operator Instructions] Our next question is from the line of Mr. Probal from ICICI Securities.

[Unknown Analyst]

I just had a couple of very brief questions. One, you mentioned about the deficit of priority gas for the quarter at 14%. And we have seen across the industry that this deficit obviously has been growing. I think it varies between 10% to 13%, 14% depending on the player.

Now just looking forward, you mentioned about the kind of aggressive expansion plans you have. You yourself along with IOC are developing almost 50 new partly developed in the process of developing. Now as a thumb rule from what we have seen, any medium-term restrict will consume around 0.2 MMSC [indiscernible] in a period of around 5 years from the start of development. So if I look ahead over the next 3 to 5 years with almost 102 new GAs coming to, that's almost a 20 MMSC incremental requirement in itself. So how do we sort of look at the domestic gas supply or the priority gas supply situation. You did mention, of course, about the kind that you are looking out for additional term contracts. But how do we sort of look at margins getting impacted over the medium term, given that the priority gas even at the slightly advantageous price proposed by the government, the quantity of that itself can probably go as low as maybe even 60% in the next 3 years, given the way the CGD demand is going. Just your thoughts on that.

[Suresh Manglani, executive]

So Probal, I think a very good question, and I think your math is correct that India would require more and more gas. We have committed 2017 net zero. And gas -- and the energy basket has to grow as per our government commitment from 6.5% to -- today 6.5% to 7% to 15%. So I think we have to play important role.

Now we need to see there is a commitment by the government and the policy that PNG for homes and CNG for transport, they have committed for that will be under no cut category, we provided as a first priority. Today, APM is coming to us, APM is going to fertilizers and other priority consumers.

We believe that as the we start growing, one on domestic side, also a lot of question, we are actually confident that the larger interest is getting sold of PNG for homes and CNG for transport. Entire it's aligned to the government division, if you see whether 6.5% to 15% or net zero going or providing convenient and reliable, safer and better cleaner fuel. So we are confident that the way we have seen the reforms happening with vibrancy, we would continue to get the gas, all the city sectors will continue to get government gas, APM gas, which is still available in the sufficient quantity. Today, we are not using more than 22 million, 23 million, and still there's a lot of gas available. And as and when more and more gas discoveries are happening, productions are happening. I think government is at win. I think this larger interest will continue to be served by the government policy. And we would be making -- ensuring that we remain responsible to respond and develop infrastructure on an accelerated basis. So we are not having that concern in our mind.

While, as I said in the previous questions, when I was answering that as a company of Adani Group and Total Energies, very, very large promoter groups, we certainly keep our eyes open to see what opportunities are available, how much we should lock in for a longer term, medium term and short term and that we'll continue to do it. Our aim would be not to cause much burden to the consumers, even if tomorrow some dynamic policies are developed.

[Unknown Analyst]

So the other question I had is more from a policy perspective. Obviously, the government has done a lot over the last decade to promote gas usage and sort of help out the costs for the operators. But one of the things that strikes us is that unlike in the NCR region, this move to make state transportation mandatorily convert to clean fuels is something that's perhaps been still a little bit lacking, specifically in Gujarat, and I specifically referred to Gujarat because that is the case of the most evolved and the most sophisticated gas infrastructure in our country.

But do you think that, that has actually been a constraint at all in terms of the pace of synergy adoption for some of your existing areas? New areas, of course, you have over all of India, so it's not really a factor. But do you think that, that is mandatory is something that can actually push CNG usage more aggressively?

[Suresh Manglani, executive]

See, one thing which we are certainly seeing that almost everyone, including yours and myself would like to live a cleaner life, more greener life, actually. So I think that is what even in the minor policymakers. You can see regularly and as you are analyzing these sectors, state after state, bus transport undertaking up taken taking after spews after spews. I think we are seeing transition towards clear fuel, whether it is CNG or whether it is LNG for transfer longer long-haul buses or whether it is EV or tomorrow future in order to be hydrogen. I think each one of the policymaker is looking at how do we decarbonize because one is you need better India, but also you need lesser import of this oil. So from both perspectives, I think the good developments are happening.

When you spoke about a decade reform, I think one of the very important reform, which has taken place and which will take place is the constitution of an energy tradition committee. And that committee report is in the public domain. And if you see, they have developed a very excellent road map, the plan of incentivization, plan of how do we take it forward on the CNG side, which vehicle we should focus, which vehicle should go for in EV and LNG. I think it is now with the government of India. I'm sure there will be a lot of deliberations will be happening along with the industry. And you will see more and more boosting up will come, more and more handholding and that will happen and perhaps maybe mandatory requirement. But I think directionally, what we see in India is that there is a movement towards cleaner fuels, and we would be beneficiary of the cleaner fuel on CNG, on EV, on CPC and LNG front, all the forefronts.

[Unknown Analyst]

Understood, sir. If there are no other calls, we move to concluding remarks.

[Operator]

Yes, sir.

[Unknown Analyst]

All right. Thank you, everyone, for making the time. I will just ask the management if they have any closing remarks for us and then we can close the call.

[Priyansh Shah, executive]

Yes. Thank you. Thank you, Probal and ICICI Securities for hosting the call. And any questions, any participants, they can write to us. Thank you so much.

[Unknown Analyst]

Thank you, everyone. You can now exit the call. Appreciate your time. Have a nice day.

[Operator]

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.