Adani Total Gas Ltd

NSE:ATGL

Earnings Call Analysis

Adani Total Gas Posts Robust Growth

Adani Total Gas shared results for H1 and Q2 of FY '23/'24, revealing a strategic expansion in their CNG network to 483 stations and growth in their PNG consumer base to now cover over 9 lakh homes, including through joint ventures. They experienced a significant volume increase for CNG by 20% in Q2 and 19% for the half-year compared to last year's corresponding periods. On the financial front, the company's prudent capital management supports ongoing CapEx, with an expected average annual outlay between INR 1,200 crores and INR 1,500 crores, underscoring a strong financial position and commitment to growth.

Expanding Infrastructure and Consumer Reach

The expansion of Adani Total Gas's footprint in the compressed natural gas (CNG) market is evident through its increase to 483 stations, including one compressed biogas (CBG) station. Leveraging company-owned dealer-operated (CoDo) and dealer-owned dealer-operated (DoDo) formats, the strategy aims to scale up these types of stations. The backbone steam fiber infrastructure has ballooned to 11,448-inch kilometers, signifying the company's dedication to reaching a broader customer base across various geographies for piped natural gas (PNG) and CNG services. New connections include 27,873 homes to PNG in Q2 and over 7.56 lakh homes in total, along with a growing industrial and commercial consumer base of nearly 8,000. The combined efforts with IOCL have led to over 9 lakh homes connected to PNG and more than 8,500 industrial and commercial consumers.

Strong Operational and Financial Growth

Operational advancements have led to a significant 20% year-over-year growth in CNG volume, reaching 136 million metric standard cubic meters in Q2. This, along with a moderate increase in APM gas prices and a consequent reduction in CNG and PNG prices by the company, resulted in a total volume increase of 10% in Q2 and 9% in the first half of the year, despite a slight decline in PNG segment volumes due to alternative fuel price dynamics. Financial achievements include revenues reaching INR 1,178 crores and a notable 23% rise in EBITDA to INR 290 crores for Q2. Profits before and after tax have also pleasingly ascended by 20%, standing at INR 225 crores and INR 168 crores, respectively.

Innovations in e-Mobility and Biological Ventures

Adani Total Gas's venture into e-mobility has swiftly led to 221 charging points across 64 locations, with a roadmap to amplify this number to over 3,000. With 600 additional charging points in progress, the company is swiftly advancing in the e-mobility sector. On the biological front, the company is constructing India's largest biomass plant, pushing forward with the first phase expected to commence by March 2024. Winning a tender for a 500-ton-per-day municipal waste plant further signifies expansions into sustainable waste management. In line with increasing its mobility service offerings, ATGL is also entering the LNG space for heavy vehicles, complementing its existing CNG, e-mobility, and CBG portfolio.

Digital Transformation and Commitment to Customer Delight

Digitalization is a front-and-center priority for ATGL, as demonstrated by the creation of SOUL, a platform for standardization and automation of operations company-wide. The revamped MyAdani Gas app is another stride towards enriching the customer experience, enabling convenient access to services through mobile and desktop devices. Moreover, Health, Safety, and Environment (HSE) remains a fundamental concern, with a holistic approach to training and ensuring the safety of workers being continuously enforced.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Adani Total Gas Limited Q2 FY '24 Earnings Conference Call, hosted by PhillipCapital India Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Nitin Tiwari from PhillipCapital India Private Limited. Thank you, and over to you, sir.

[Nitin Tiwari, analyst]

Thank you, Seema. Good evening, ladies and gentlemen. On behalf of PhillipCapital, I welcome everyone to the second quarter and half year earnings call of Adani Total Gas Limited. From the management team, we have the pleasure of having with us today Mr. Suresh Manglani, ED and CEO; Mr. Parag Parikh, CFO; Mr. Priyansh Shah, who represents the IR.

I shall now hand over the call to the management team for the opening remarks, which shall be followed by a Q&A session. Over to you, sir.

[Suresh Manglani, executive]

Thank you, Nitin. Good evening, everyone. Let me extend a hearty welcome to all our investors, analysts, friends for taking out their time and participating in today's call on H1 and quarter 2 financial year '23/'24 results of Adani Total Gas. .

First, let me give you the highlights on the CGD infrastructure side as on 30th September 2023. Our CNG network has now increased to 483 stations which includes 1 CBG station. Out of 43 CNG stations, 92 stations are company-owned dealer-operated, which we call CoDo and dealer-owned dealer-operated, we call it a DoDo format. Our strategy is to continue to increase more and more CoDo and DoDo format stations in the future.

Our backbone steam fiber infrastructure has now increased to 11,448-inch kilometer. This forms part of a backbone CGD infrastructure helping company to expand its reach of PNG and CNG to large masses across all of our geographic areas. We have added 27,873 new homes on PNG in quarter 2 and 51,801 new homes on PNG in the first half of financial year. And in aggregate, we are serving 7.56 lakhs homes on the PNG. Similarly, in the quarter 2, we have added 2342 new industrial and commercial consumers and 414 industry and commercial consumer in the first half of this financial year, increasing total number of consumer base of industrial and commercial consumers to 7,849. Nearly, we are nearing to the 8,000 mark on the commercial industrial consumer base.

With these, our pan-India footprint, if I add our JV partner, along with IOCL, which we have formed a JV company, IOAGPL, Indian oil Adani Gas Private Limited. If we add the numbers of IOAGPL, our CNG stations have now increased to 785 across the all geographical area of Adani Total Gas 33 and 19 geographical areas of IOAGPL. And our PNG consumer base has now grown over 9 lakh homes. Industrial commercial consumers has surpassed 8,500 numbers.

ATGL continues to progress on the infrastructure front, which will help in converting more and more consumers on CNG and. This infrastructure growth progress has added in achieving superior all-around operational and financial outcomes.

Now let me share with you the operational and financial numbers achieved by the company during this quarter 2, July to September and the first half year, April to September. With the fast acceleration of CNG network and recent moderation of an APM gas prices by Government of India and consequent reduction in the CNG prices by the company -- CNG and PNG prices by the company, we have witnessed increase in the CNG volume by 20% to 136 million metric standard cubic meter for the quarter 2 as compared to the corresponding quarter of the last financial year. So there is a quarter-to-quarter 20% growth in the CNG volume on a year-on-year basis.

The CNG volume has increased to 264 MMCM when we take the first half of the year. On a year-on-year basis, we have achieved 19%, 20% quarter-on-quarter and 19% on a half-year-to-half-year basis, this half year versus the last half year of the previous year.

While on overall basis, company witnessed an increase in the volume by 10% in quarter 2 and 9% in first year -- first half year, our in case of the PNG segment, the volume slightly declined by 3% on a year-on-year basis to 75 million metric standard cubic meter and 5% decline on year-on-year basis to 145 million, largely due to lower alternate fuel prices resulting into lower offtake of PNG by industrial consumers. So summarizingly, overall volume growth has grown by 10%, CNG volume has grown by 20% in this quarter as compared to the previous corresponding quarter to the last year.

On the financial front for the quarter 2 as compared to the last year quarter, year-on-year basis. Revenue from operations for this quarter has stood at INR 1,178 crores. EBITDA for this quarter 2 has increased by 23% to INR 290 crores. Profit before tax and profit after tax have also increased to INR 225 crores is the peak, INR 168 crores is the PAT, which both have been -- were up by 20% each as compared to the previous quarter of last year.

For the half year, April to September '23 versus April to September '22, our EBITDA has increased by 17% to INR 545 crores. Our PBT and PAT have increased by 14% each to INR 424 crores is the profit before tax for the first half and INR 315 crores is the PAT for the first half year, 14% increase on the -- on the PAT and PBT, 17% increase on the EBITDA side in the first half year versus the previous half year.

You are also aware that we have embarked upon business opportunities in both e-mobility side and the biomass side, and let me now give you some slippage on those businesses. On the e-mobility side, we have -- in a very short span of time, we have achieved the operationalized deal with energize charging point, 221 charging points across 64 locations and we have partnered with several B2B partners. And there, we have been installed EV charging points across India.

Soon, our plan is that we will extend this 221 numbers to over 3,000 charging points on both B2B format, B2C format and on hubs, which we intend to create across the country. As I'm speaking to you, over 600 e-mobility charging points in several stages of the progress. Many are awaiting for the discom connections. The moment it comes, we will connect and many are under construction. So 600 more EV charging points are going to be soon added. And in the full future, we'll have 3,000 charging points. The teams are doing a good work on e-mobility side. The plan is that we create more hubs also in the country.

On the bio business side, you are aware that we are building India's largest biomass plant in the state of Utar Pradesh. We are expecting -- it is 600 tonne per day feedstock plant which will be -- which has been planned in 3 stages -- 3 phases. The Phase 1 of 225 tonnes per day, we are that we are striving our best to commission in this financial year by March '24. You will be all happy that during this quarter 2, July to September, company has also won the tender in Ahmedabad Municipal Corporation, which was floated on municipal solid waste for 500 tonnes per day. And we have started the work on the -- starting development of this plant in Ahmedabad. We are also looking forward for both formats, the municipal solid waste in several parts of the country as well as the non-municipal waste, which will include the agri waste, et cetera, also in the several parts of the country. We have already identified several locations where our teams are now working.

Further, as a part of our strategic spend into adjacent businesses, ATGL is also looking towards expanding our footprint on transport and mining. We already started. We already identified a couple of lands and the LNG stations are in now -- we work has been awarded. So we are developing LNG stations at the strategy location and we keep expanding -- like the CNG session, we'll keep expanding the LNG stations also across the country. So as you see, the company is now becoming more of a mobility partner offering CNG, offering e-mobility, EV changing, CBG and soon we'll be offering the LNG for the heavy vehicles as well.

ATGL has been constantly embarking upon digitalization and has created a platform which we have called SOUL, which will have standardization and automation of multiple operations across the company. Further, its journey from customer care to customer delight, ATGL has revamped MyAdani Gas app, which helps consumers to carry out the all activities at their mobiles and their desktops, which enhances the customer experience and the delightness.

You are all aware that HSE is the most critical aspect which -- as a gas company will take care. On the HSE front, the precondition to work, as we always announced and we have continued our holistic approach of enhancing the training to the workmen of the contractors, our own employees. All our stakeholders are being trained -- training and safety programs have been run to ensure that we build a safe and reliable CGD infrastructure and maintain a track record of a 0 fatality across our all geographical areas.

ATGL has beside business of CGD, e-mobility, bios -- biomass and LNG for trucking and mining, we are also now -- we have been focusing on the ESG program, environmental, social and governance program. We have built a very strong platform framework on -- which has been fully backed by our Board of Directors and our promoters. This is enabling us to create a sustainable growth with collaborative development of the community.

Lastly, I would like to acknowledge and be thankful the role played by our shareholders, analysts, fund houses, consumer, dealers, suppliers, business partners and all of our stakeholders and more importantly -- and our all employees whether they are in corporate office, sites, project offices really complement all our employees for continuously quarter-on-quarter, giving her physical and financial performance. Thank you very much.

[Nitin Tiwari, analyst]

We can open the floor for the Q&A.

[Operator]

[Operator Instructions] We take the first question from the line of Mr. Amit from UBS.

[Unknown Analyst]

Sir, I have 2 questions. First, relating to the LNG for transportation. So can you give us the size of the market and what kind of margin you have to look at it here? And can we use over some of the existing stations for LNG for transportation or you have to develop the cases from the beginning or from the scratch?

[Suresh Manglani, executive]

Okay, the second question there?

[Unknown Analyst]

Yes. And sir, second question is relating to the recent developments on the EV side in Delhi because we are also having a different in that area. So what do you read of that policy? And did it have any impact on Faridabad as well?

[Suresh Manglani, executive]

So thank you, Amit. I think both the questions are very relevant and pertinent and let me try and give you the answer for the first LNG for transport. I think you have seen us giving full impetus on the CNG and now we are spreading CNG. CNG would have a large number of formats on the vehicle, as you are aware. If you see the size point of view, actually 40% of our diesel is consumed by the heavy transport vehicles. That's the size of how much market will get converted, we have the Energy Transition Committee report, which says that we should move towards LNG for heavy vehicles. So that recommendations are with the government.

But what we are seeing a desire in the corporate world for decarbonization. And that perhaps would help us to grow this market. We are beginning now. And as we -- we enhanced our touch points with the corporates, whether it's the FMCG companies or whether any format of the business. We are finding -- there is a desire that the corporate wants to move away and convert, of course, as starting with the pilots and then moving towards the entire fleet. We are also looking for the value proposition that what we are going to be offering because they have certain cost today. And there are multiple players involving this. The transporters who are involved, the fleet operators are involved and then the corporates are involved. Not corporates are not owning these heavy vehicles.

So we are working out all nuances of these businesses. And we have all our blueprint. So we feel that this is -- once it takes the momentum and we bring the right well proportion in the, I think there is a good potential on this side of developing LNG for transport and the mining businesses. This -- we can see international experience. I think there is a huge momentum in international side that corporates and the transporters are going towards the LNG for heavy vehicles because LNG does provide you a very high mileage. So that's the part on the size side.

Whether we will separate the station or we'll use our own infrastructure, it will be the mix of group because wherever we are developing L-CNG stations, in many places, we are developing small-scale LNG plants because their pipelines are not reached currently. Those places, certainly, we would take the benefit of that location to set up and depending upon the market potential, we will certainly take the benefit of our location available. LNG is available there. In any case, LNG is. So we would set up LNG station. And we'll strive that we develop in the neighborhood so that we use that place. But depending upon how do we get the translation of our current demand, which we are expecting in India. If we are able to convert several corporates and we are ready to provide a kind of a customized or dedicated LNG stations as well as we set up open-to-public LNG stations.

So both formats will run B2B and B2C, we'll be able to set up. This is the beginning of this business development. We are in quite positive part of the whole touch points, whichever wherever corporates we are going, our teams are working. Our partners are working. We will update you as in the next couple of quarters as we see the growth in this business.

The second question was your -- on the EV side. And I think there is a focus on this policy from Government of Delhi. I think what we are seeing is there is a market for fuel. There is a market for the fuel, which we can see that in -- across the country. As I said to you, there are vehicle formats, which would go for a CNG. There are value proposition, which we are offering versus EV on the CNG side. So we believe that we will coexist on a CNG will have a growth. We could see there is a large number of vehicles which are available, which is -- millions of vehicles of the existing vehicles are available for us, which is a market for CNG.

So in our view, while Delhi government has brought the policy, it is a choice of a customer. We believe hitting upon the value proposition which we bring on the table for a different type of commercial vehicle as well as the customers, we would be able to continue to sustain the growth in the CNG market.

[Unknown Analyst]

Okay. And sir, what kind of CapEx plan or targets you're looking for LNG for transportation? Because the market potential could be pretty big here. And my sense is that you won't to be limited by the restrictions which you have in the CNG business to grow depending on where that depends. So do we -- are we putting any targets on the number of CNG stations or CapEx here?

[Suresh Manglani, executive]

So I think you are doing a bit of good homework on the -- keeping yourself updated. I think, you are right, there's a huge opportunity. But as you have seen us every time in the investor call or media call, we have been saying as the SPV of 2 very large promoter, Adani group and Total Energies, I think we have a very robust capital management and allocation process.

Once we develop this print of this business, as we are starting now, you will us in the next quarter -- some quarter's call that capital allocation once the business is not becoming the -- initially anyway, capital allocation requirement would not be very large. So we anyway have a good capital allocation for our business side. So I think the numbers precise currently may not justify depending upon how the business is unfolded. But my request would be we would have a discussion in the next couple of quarters. We are focused on doing this opportunity.

As I said to you that we have already identified and some of these stations, our stations currently are under construction. So we hope we will first provide a whether we provide stations or people will convert the vehicle. I think we are taking that lead as a company that we would set up LNG stations. And the simultaneity we are talking to the corporates. We are seeing good traction around that. So I think you wait for getting our numbers. Current capital allocation is not as material as we are putting into CGD as well as other business opportunities. But here, there will be no restrain or constraints for the capital part. As we business requires dollar growth, we will be putting the allocation part.

[Operator]

[Operator Instructions] We'll take the next question from the line of Kirten Mehta from BOB Capital Markets. .

[Kirtan Mehta, analyst]

In terms of your previous remarks that you believe that the CNG will coexist with, but the products or it can go in the different vehicle classes. How do you see about sort of achieving the penetration level within the? What should you be planning it? Is this 35% to 40% penetration level, a good level to optimize to or where we develop our infrastructure? Or should we look at something like a 15% to 20% sort of a penetration level for the planning infrastructure?

[Suresh Manglani, executive]

I think you have a pointed question, but let me try and respond to you much better way as well. Actually, see, you saw the growth. EV has been there now for couple of years, Phase 1, Phase 2. There's a lot of exuberance on EV for supply side, incentive, demand side incentive, PLIs, I think we have seen -- and we are ourselves e-mobility side. We want to see that opportunity of e-mobility side. And when I make a statement, it will coexist, that testifies you, Adani Gas actually is in e-mobility as well as on a CNG we are putting investment in both sides.

So I think the -- we believe that we've seen this growth of a quarter to 20% over the previous one, while the EV also is expanding. So clearly, India is seeing a mix basket of a fuel which are going to be used for a pretty long time, we would -- we are seeing growing. EV growing. We are seeing CNG growing because Indian market is growing and people are getting more choices. So I don't think so that we should be putting the precise penetration number.

I think market exists for EV and market exists for CNG and a big market exist. Since your analyst and I'm sure you are looking at the OEM exuberance on CNG side as well. While a lot of EV models are coming at the same time, we are seeing several CNG models and CNG are being introduced. But I think we all have to see that these 2 fuels are not choice for a customer and people are -- optimal penetration level will be healthy from both the sides. And Adani Total Gas is very well placed sees with both opportunities. So we are investing heavily. You have seen that our numbers investment is going on in the CGD side, despite our friend asked the first question in Delhi, policy, we believe market will dollar for CME and make develop EV.

Similarly, in other geographic areas, our investment on INR 11th round, nine round, tenth round, existing GA everywhere it is continuously going on. So to my mind -- I think to my mind, I think we should not put the penetration number in those precise range as you suggested. I think you should see the positive aspect out of the few. And Adani Total Gas is poised to see the growth in both EV side and CNG side. And maybe my colleague, Parag, you want to add something? Parag, you want or anybody wants to add?

[Parag Parikh, executive]

I think transportation fuel is dynamic today. Very exciting. And therefore, you see even at ATGL, we are spreading ourselves across all multi-fuel categories. So you could see maybe EVs having a stronger penetration in the 2 wheelers. CNG could continue to remain as far as the 4 wheelers are concerned, as LCVs are concerned. We are setting up LNG stations, and that's primarily because we see on the long-haul trucks potentially a segment where LNG could get adopted. So again, coming back too early to put any penetration numbers across all segments, but there could be a customized fuel for different segments within transportation.

[Suresh Manglani, executive]

So Kirtan, I think you are happy with this answer or you see some more supplementaries from our side. We could -- we'll be happy to respond. Hello? Yes. The -- Kirtan was asking some questions. I don't know whether you lost.

[Operator]

Does that answer the question, sir?

[Suresh Manglani, executive]

Maybe he lost the connection, looks like.

[Operator]

[Operator Instructions] We take the next question from the line of Mr. Nitin Tiwari from.

[Nitin Tiwari, analyst]

Sir, my questions are like on the bookkeeping side. So I just wanted to understand what your CapEx has been for the first half of this financial year? And also if you can update us on your long-term CapEx plan, which you have updated last as well that that investment that you've planned for development of the 33 GAs that we have? That is one.

And then secondly, I wanted to understand that how would you rate the Ahmedabad, Faridabad and Vadodara? Can we consider them largely sort of saturated now? Or is there still more demand potential? So how do you see these GAs panning out in terms of demand? And also, if you can give us some sense and this is more pertinent, especially in the backdrop of electrification that we hear about more often and which you have also like try to answer to some extent in the initial question. So how do you see like demand developing in these other geographical areas, the 3 areas that we are holding? So if we take suppose 5 term -- sorry, 5-year or a 10-year view, so where do you see demand from these areas in your assessment in that time frame?

[Suresh Manglani, executive]

So I think I will answer to you some part of a question, and Parag will give you the CapEx numbers as well as we will have his feedback to you. .

When you said whether Faridabad, Ahmedabad or existing geographical area, saturated. Answer would not be the saturation in that sense that we have largely developed infrastructure. But you know the India, the way cities are expanding. In your own city, you wouldn't identify city 10 years back what it used to be and now what it is actually. Every area where I go, I see expanding and expanding the area as well as the intensification of population, intensification of a vehicle, old vehicle going, new vehicle coming. I think India is dynamically and very robustly growing even in the existing geographical area.

We are seeing volumes growth happening even in existing geographical area. We are seeing demand coming up from new pockets, untapped pockets, white spots where we are to dollar CNG stations or we need to extend the PNG network. So I think India, as it is expanding intense, we would continue to have not as large as required for virgin areas, but CapEx would continue to be there. And we are very happy to see that we have benefited -- we are getting benefited of this India's GDP growth or India's growth in terms of every possible aspect.

On the newer GS demand side, you see, you develop utility for generation. Now Ahmedabad, Faridabad or tomorrow, whether Mumbai, Gujarat, we developed 2 years back, you are seeing on today, Mumbai and other places, some growth is coming, and you continue to grow. You develop a generation. So -- and you see the traction as the infrastructure gets intensified. So I think we have just begun in the 9, 10 round, it takes 1 or 2 years, your surveys, permissions, preparations. Then we had a COVID. I think intensification of infrastructure is now happening in 9th and 10th round. Still last mile connectivity is now getting more developed. We are still on the steel and CNG side and very little on the LNG side of dollars, where we need to bring more and more home numbers and commercial consumers to our side.

So we see a very good volume growth as we have seen in the existing geographical area. It took of 10 years. And then we saw a huge growth in the volume. We are expecting similar things to happen in ninth and tenth round. And then we will see the 11th round coming. So the good thing is happening that the way we have build a portfolio. We had 4 existing. We a city like, which was adjacent to Faridabad, we expanded intensity there. We took the full benefit of making sure that fully connected even the 100-kilometer away from where the pipeline connectivity is there. We decided to invest and make the becoming completely gasified.

So we take very dynamic decision, decisions quite. So I think good portfolio will keep building volume because those areas will become older and the number -- the infrastructure yield will start increasing. So I don't want to put the finite numbers to you that what we will achieve. But I think the track of tells you that we are robustly growing. And we -- I hope that we'll robustly continue to grow both on the PNG and the CNG side and the businesses side. I think I'll hand over to Parag. And if you have supplementary questions, please do ask so that you are fully satisfied. Parag?

[Parag Parikh, executive]

So just to continue to add on a few things, on to begin with in terms of penetration, in terms of existing geographies and how they grow. Even if you were to look at even this quarter results, this quarter itself, existing geographies have grown at a volume of 8%. So to that extent, whilst these are relatively mature, we still experience a significantly high growth even in the existing geographies. .

On the same hand, because the new geographies volumes keep getting added, what used to constitute about 15% to 17% as far as the new geographies volume is concerned, today, it is almost 26%. Both on the existing geographies growing and the addition of the volume coming from the new geographies is contributing to the growth. So that's from a volume perspective. From a CapEx perspective, we continue to build our network. You have seen intensification is there on the ninth and tenth round. The 11th round geographies intensification would come again in the coming year. Overall, CapEx, including commitments, we may be somewhere in the range of about INR 900 crores and we would have spent almost INR 350 crores out of which in the first half of the year.

So that's the kind of CapEx that we would have incurred. And we continue to remain with the same CapEx cycle on an average INR 1,200 crores to INR 1,500 crores on an annualized basis.

[Operator]

We'll take the next follow-up question from the line of Kirtan Mehta.

[Kirtan Mehta, analyst]

One more question in terms of the steps that you've been using to the new vehicles into the region. We have seen recently that Mahanagar Gas has sort of come with a scheme of 1.5 lakh to 5 lakh for some of the heavy commercial behaviors. Have you used some kind of in your structure? And how do you find sort of the uptick against the incentive structure?

[Suresh Manglani, executive]

Correct. in hope, Ketan bhai, you got our answer to the previous question fully. I thought you got disconnecting between. Was our answer was adequate for you?

[Kirtan Mehta, analyst]

Yes, sir. I think I understand your point of view. .

[Suresh Manglani, executive]

Okay. And I hope you also appreciate?

[Kirtan Mehta, analyst]

Yes, sir.

[Suresh Manglani, executive]

Okay. So I think on the side of incentive, I think as we always say, that not one size will never fit all actually. So we have been doing these incentives. Of course, we are not publicized as we've seen the Mahanagar Gas coming up. But our incentives customized ways for converting various formats of vehicles being in vogue for several years now, and we continue to do that. We also partner many times retrofitters.

So I think we continue to ensure that we capture the market, which is available to us in our existing geographical area and see continuously from our side, there could be some scheme running in, let's say, Ahmedabad very differently than what we've done in and what we've done in the Assam or the. So I think our teams are quite agile. We have our professionals working in each of our geographical area, through what would work for that market. And that is the way we are customizing.

And hopefully, when we see the publicity happening, maybe our teams also do the similar now because social media, et cetera, are available. So you will see our schemes launch happening. We do customer to customer or maybe segment to segment or with OEMs or the retrofits when they do the conversion, but we have taken the point well noted that we should do more so that you are also fully aware that not only we are growing volume, but we are also ensuring that customers are benefited with these schemes. And we'll see schemes being launched dynamically, regularly from a or region to region.

[Kirtan Mehta, analyst]

Just one more follow-up. In terms of the cost benefit analysis how many months of CNG consumption would you think you would be sort of -- what was the rate back you will be looking at why you are designing the incentive schemes?

[Suresh Manglani, executive]

See, you put it yourself. While if you ask public transport operator, we will tell you I need just as this is pay back. But as a customer, you or me would say if it is 12 to 18 months, 2 years is a good period that I could convert because I will the vehicle for a couple of years. I think it is a packaging. Now you could have which CNG offers a very good incentive compared to the petrol or diesel. That is one inherent benefit which comes to you, which gives you payback. And secondly, when we give some benefit on the conversion that reduces the CapEx which you put in. So I think it will be individual to individual or a fleet to fleet, but his expectation would be necessarily as big as minimum as possible.

From our side, we'll try to balance the interest of both our as well as fleet operators or the ideal customers who are willing to do. But we believe, I think anything many vehicles -- also will depend upon what is a mileage you are expected to do every day. If you are transporting if it is LCV, for example, if you're doing 200 to 300 kilometers per day, your payback would be very different from the LCV, which is making mileage of 60 kilometers a day. Similarly, if you are using your vehicle only to go to office and come back versus a business house who's using continuously, paybacks will be very different. So I think it's a very different packaging, which we do. In my view, 12 to 18 months or 2 weeks is a very good payback, but many of our customers, they get much lesser payback.

[Kirtan Mehta, analyst]

One more follow-up on the e-project.

[Suresh Manglani, executive]

EV?

[Kirtan Mehta, analyst]

EV policy. A question comes from a property of whether it can hamper the CNG demand in the some of the schemes which are not fully backed by the subsidy or the availability of the vehicles. Does it delay sort of the EV consumption as well as CNG consumption? And does it sort of in turn of reduce the intermediate demand? Particularly, I'm coming from the innate like Maharashtra has placed the order for the EV buses but some of those buses are not arriving. And they are committed to the EV buses and not taking the CNG buses. So in that sense, we...

[Suresh Manglani, executive]

Kirtan, I was saying that there is a market for every fuel. When you gave example of Maharashtra, I'm sure you're aware that MSRTC has floated the tender of 5,000 buses on LNG as well. 1,000 buses on CNG. So I think you can see even within the Maharashtra, which you gave you an example, people are opting for a different fuel. So I think they are evaluating what is the value proposition of the tender. .

While there will be a policy which will have a gestation period, which will have some more time. And I'm sure there will be consideration and reconsideration happening for each stakeholder of the government. They would look at every type of a consumer the success of that fuel in particular, format, customer choice has to prevail. In our view, eventually, everybody wants to have a customer choice to prevail. So to us -- I mean, we see every fuel having its market and occupying its market. It would depend upon how much market you capture is value proportion which you put on the table.

If I increase my CNG price, customers will go away. If I give a moderate customer price at a good value proposition and also a good quality of service that you are able to come and fill the CNG not in the queue. Perhaps, you will choose for it. On the other hand, if you give a very good EV charging, fast EV charging, not the 35 minutes, 40 minutes takes it, you may perhaps see that whether that is good enough versus the high CapEx, which we incur.

So I think it's an evaluation of CapEx, OpEx quality of service and sustainability and the reliability several factors will work. And are you when we are noting in this business, we have evaluated the fuels which are existing policies, which have been coming to our view is that the will continue to be there for the fuels quite some time in India.

[Parag Parikh, executive]

And Rahul tried on Head of Marketing and AGL. I just like to add one more data point to support what Suresh is saying that you might be aware that the Ahmedabad Municipal Transport Service has also taken out a tender to procure about 200 CNG buses very recently a couple of months back, a total of about 570 buses, 300 of which are CNG and they have taken out the tender for 200 more. So as Suresh saying, there is a sort of a balanced diversified fuel policy that all states and municipal corporations are taking as they're moving forward. And I think that Adani Gas will be able to possibly leverage itself take advantage of the diversified sustainable fuels that the country would want to buy.

[Operator]

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. .

[Priyansh Shah, executive]

Thank you. Thank you all the participants for attending the call and thanks within Capital for hosting the call for ATGL. If any further questions are there, you may write to us. Thank you. Thank -- thank you management Mr. Suresh sir and Parag sir and the entire time.

[Suresh Manglani, executive]

Thank you. Thanks.

[Operator]

On behalf of PhillipCapital India Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.