Adani Total Gas Ltd

NSE:ATGL

Earnings Call Transcript 2022-Q4

[Operator]

Good morning, ladies and gentlemen. I'm Momita, moderator for the conference call. Welcome to Adani Total Gas Limited Results Conference Call. [Operator Instructions]

Please note this conference is recorded. I would now like to hand over the floor to Mr. Tushar Pendharkar. Thank you, and over to you, sir.

[Unknown Analyst]

Thank you. Good morning, ladies and gentlemen. My name is Tushar Pendharkar, I'm from the Ventura Securities. Welcome to Adani Total Gas Results Conference Call. We have with us today Mr. Suresh P. Manglani CEO of the company; Mr. Parag Parikh, CFO of the company; and Mr. Priyansh Shah, who is the part of Investor Relations team.

I would now like to hand over the call to the management for opening commentary. Over to you, sir.

[Suresh Manglani, executive]

Thank you, Tushar. Good morning, and thank you very much for participating in this call. Let me, at the outset, extend a hearty welcome to all of you for taking out your time and participating in today's call, on FY '21, '22 results as well as Q4 results of Adani Total Gas Limited. ATGL wishes all our friends on this call and their families healthy and safe lives.

As we have been stating that at AGM, we are adhering to the highest safety standards as a precondition to work, and this shall be our key imperative to build safe and reliable CGD networks across India. We inculcate a strong safety culture in ATGL and keep on striving for higher standards on health and safety. All our employees and partners working for us are being continuously trained on strong practices of HSE. ATGL has continued its track record of a zero fatality for the year '21, '22.

First, let me appraise you all on the important developments that have happened. ATGL during the year '21, '22 has won new 14 geographical areas. So now our total tally has increased to 33%. We had 19 and 14 more have come, so 33. Our JV part, IOAGPL as 19 geographical areas.

So our footprint has spread now to 52 geographical area, which translates into 125 districts in pan India.

Another important development which has happened is that the Board has approved the formation of 2 wholly-owned subsidiaries, SPVs. One for e-mobility business and another for biobusiness. This will be immensely advantageous considering that ATGL and its promoters have a strong infrastructure and utility presence across India, and we have already set up our first EV charging station in Ahmedabad as well as second one when we set up now at Ahmedabad airport. We have launched a state-of-art completely revamped new mobile app for our consumers My AdaniGas app. I will request all of you to please download on your mobile. Experience the new app and do send us your constructive feedback.

The Board of Directors of the company met yesterday and have approved the results for financial year '21, '22 and the quarter 4 January to March '22.

Let me appraise you all on physical progress. On the infrastructure front, ATGL continued its strong development of infrastructure. We have added 117 -- 1-1-7 more new CNG stations. The total tally has increased now to 334 -- 3-3-4 as on March '22. If I add a good performance given by our JV IOAGPL, our total number of stations in India now have increased to 550 -- 5-5-0 number of stations.

We have added 85,000 new homes on a pipe gas supply despite COVID, despite various other developments. Our growth on home numbers have continued. And today, our total tally has increased to 5,64,000.

Yet another important development which has taken place that we have continued to add new businesses on piped gas, the restaurants, the hotels, gurudwaras, crematoriums, industries.

So in this year, we have added 710. Two consumers every day in a year, roughly, new consumers on piped gas. So total tally has now increased to 5,676 of industry and commercial consumers.

Similarly, on the front of steel pipeline, MDPE pipeline, there have been a very strong growth. We have been virtually laying 1 kilometer of a steel pipeline every day and 2 kilometers of MDPE pipelines on a daily basis in ATGL.

Another important part on the CNG station is that, as I have been stating in my previous calls that we are developing a robust portfolio of CNG station. Out of 334, 59 stations now, 18%, are on a CODO, company-owned dealer operated; or a DODO, dealer-owned dealer operated. These stations gives us the complete brand full-fledged outlet for consumers to get a better access than ingress and [outgress] and a much better efficiency of services.

We will continue to increase number of stations, but also increase the percentage or the number of CODO and DODO stations in our portfolio.

As you're all aware, I can see some of our good friends again on the call that -- who have been tracking oil and gas sector. There have been an unprecedented development on international front, which have brought volatility on -- not only on the prices, but also on the gas supplies part.

So we have encountered -- CGD industry has encountered the challenges of high gas prices on RLNG. In '21, '22, we also saw APM price going up from $1.79 to $2.9 per MMBtu, and effective April that price has gone up to $6.1 MMBtu. So these are very important development for CGD industry.

Despite all these challenges, which took place on gas price rise, commodity supplies, APM price rise, there was also some shortfall in supply of APM gas because there was a significant growth in APM volume. And we believe that there is a constructive work is going on to see how improvised the allocation methodology of APM as well as the supplies on APM side. We believe that the issue of 100% supplies will get restored very soon.

So despite all these challenges, let me summarize the performance, which have been delivered by Team ATGL. For the financial year '21, '22, our overall volume stood at 697 MMSCM, which is up by 35% as compared to the previous year volume.

The CNG volume grew to 360 MMSCM, which is 58% higher than the previous year. Piped natural gas supplies because of some curtailment from our gas suppliers as well as the development of the price size, et cetera, the PNG has grown 17%, still double digit, we have been able to achieve 17% at 337 MMSCM.

The revenue during the year, '21/'22 have grown to INR 3,206 crores up by 80% vis-a-vis previous year. EBITDA for the year '21, '22, has grown, and it is now, once again, yet highest-ever EBITDA of INR 815 crores, INR 815 crores, up by 9% vis-a-vis previous year.

Our PBT and PAT, both for the financial year '21, '22 have grown by 8% and 7% to INR 679 crores and INR 505 crores, respectively.

Let me brief you about the financial performance of the company for the quarter Q4 FY '22.

For the quarter, which has gone by, the overall volume stood at 189 MMSCM. This was a quarter which saw significant volatility in pricing as well as on the supply side.

But still, we have been able to achieve 14% growth on a year-on-year basis. CNG volume were at 100 MMSCM, up by 33% in this quarter vis-a-vis previous year and PNG volumes were up by 2% at 89% MMSCM. Sorry, it was down by 2%, my mistake, down by 2% at 89 MMSCM for the reasons which I stated earlier.

The revenue from operations have grown to INR 1,065 crores increase of 73% on a year-on-year basis. EBITDA was INR 141 crores. PBT was INR 104 crores and PAT was INR 76 crores.

So despite those challenges in this quarter, which CGD industry has gone through, the numbers have been very strong on INR 141 crore, INR 104 crores, and INR 76 crores on EBITDA, PBT, and PAT respectively.

ATGL continues to have a focused approach besides developing business core CGT business now EV business and bio business going forward. Our focus has been holistically on also seeing what all we could do on a climate change and a community development.

So from that front, we have been continuously focused on sustainability part.

During the year FY '22, ATGL has taken several initiatives on our ESG program. As I had been stating earlier, we are continuously ensuring that our every office owned by us, every station of CODO, DODO, every CGS, all stores owned by us, basically, all assets of ATGL will have solarization. And that's what is continuing.

Today, we have already completed 35 sites, which have a solarization. 550 megawatts is getting -- 550 kilowatts is getting generated. And we hope that we soon will have 1 megawatt solar power being committed at our sites.

ATGL has converted more than -- around 53% of our fleet -- the LCV and CVs, which we use to move CNG from mother station to daughter booster stations. Typically, those are diesel vehicles, but we have taken a policy to 100% convert them or hire new vehicles, 100% on CNG. So we have now achieved 53%. Gradually, our aim is to reach 100% target during '22/'23, and we are hopeful to achieve that target. It is another very important initiative which we have taken, we have given the name called Greenmosphere. This is a unique initiative which ATGL took and launched a very holistic program on climate change on 24th December 2021. This will create a culture or a kind of environment on the low-carbon society. This has 3 parts. One is developing or planting more and more trees in the geographic area where we are working.

So in Ahmedabad, now we are along with the Ministry Corporation, we are developing an oxygen park. We already planted almost 50,000 saplings. So it's a nature park, which is being developed. And this is the way we will be doing in all other geographical areas also.

Second is ensuring that we do energy audits very regularly of all our sites, all the stations. We also facilitate energy audits for our industrial commercial consumers and going forward in the future, we also facilitate a very affordable energy audits at homes So that we actually see that our low carbon society starts getting developed. It will change their electricity from normalized LEDs and so many other small, small steps.

The third important part is to develop a long-term goal is that we create this culture through education. So our teams of experts, internal, external are going to the various schools and colleges to create the awareness about low carbon society, about Greenmosphere. So that this gets habit at the young age students, these habits of developing low-carbon society, conserving energy usage, optimizing energy usage is developed.

So this is a very unique initiative. We have provided all the details on our website. Those of you who are interested to please go through that website page. We would really welcome your suggestion on how do we further improve and make this program more vibrant.

As I stated, and you saw that yesterday in the Board meeting, 2 new SPVs have been approved. Very shortly, we'll announce the name and complete details about those 2 SPVs. the one of SPVs for e-mobility and other is for a biobusiness. ATGL has drawn the biobusiness plan. And now through this SPV, we would be executing the biobusiness plan, we'll be implementing very soon. Developing compressed biogas plant from waste to wealth -- conversion of a waste to wealth in various parts of the country. Within our GA, outside of our GAs.

As I stated last time, ATGL has approved a constitution of a new committee in its endeavor for enhancing its governance. A dedicated corporate responsibility committee has been constituted to provide impetus on the goals of ATGL towards environment, social and governance.

Also, I would like to bring to your notice that yesterday, while there is -- we already had 4 independent directors on the Board. Board was delighted to onboard Mr. Sashi Shankar, ex-CMD of ONGC who is very renowned and knowledgeable professional. We all know having a very rich experience in an oil and gas side onboard as an independent vector.

So our Board will have now 5 independent directors and 4 promoter directors. 2 each from Total Energy and from Adani Group. This again reinforces the Adani and Total Energy's group focus on enhancing the governance standards on a continuous basis. I am confident that with the continued support from all stakeholders and motivated team, Adani and Total -- and yes I'm very proud of Team ATGL, the journey ahead is going to be much more exciting and successful. We would like to acknowledge the role played by our shareholders, consumers, dealers, suppliers, business partners, stakeholders like yourself who are constructively participating in this call and give us a lot of addition.

So we are thankful for their trust and continued support. Thank you very much. Let me now open the call for questions. Thank you.

[Operator]

[Operator Instructions]

So our first question from Mr. Yogesh Patil from Axis Capital.

[Unknown Analyst]

Sir, I have a couple of questions related to policy and the pricing part. The first one is related to -- could you please share the percentage breakup between the APM gas and the market price gas used for the priority sector during the quarter? And what was the average cost of gas used for the priority sector? If you could share the numbers?

[Suresh Manglani, executive]

Thank you, Yogesh, for, again, joining on the call. As you are rightly aware, I think there has been a slightly shorter supply as far as APM Gas is concerned. And we've been substituting this with RLNG. Currently, for the quarter, our shortfall was 24%. So that's the short supply as far as APM is concerned. The first 2 quarters were reasonable. I think we started facing APM shortfall from the third quarter. And that's -- it has moved around the 23%, 24% over the last 2 quarters.

[Unknown Analyst]

And any ballpark number or idea about what was the average cost of gas used for the priority sector during the quarter?

[Suresh Manglani, executive]

So I think any shortage as far as APM was concerned was being supplied through the portfolio of our contracted gas, and to add to that, some of the additional requirements as a growing entity on procuring in the spot market. So it has been a combination of both. And it is at that portfolio level that we're applying gas across each of the segments.

So if you look at it from a portfolio of cost, if you look at it from a portfolio of cost or from our annualized EBITDA. Our annualized EBITDA, if you were to see for the fourth quarter, they will be at a number close to about 31% as far as December was concerned. And if you look at it from an annualized perspective, it will be at 25%.

[Unknown Analyst]

Sir, my second question is related to commissioning of new geographical areas. Is the company receiving a full APM gas allocation for your new geographical areas or for a priority sector say?

[Parag Parikh, executive]

So Yogesh, a very, very important question, and I think you have been a regular participant. So thank you very much. You see while you were asking questions on EBITDA percentage, you will see the numbers are there with you, complete detailed numbers. It's been our conscious call of quarter 4 that we want to calibrate our pricing to make sure the consumer affordability enjoys PNG and CNG. It allows us to build a strong foundation of a more infrastructure and broad-base the consumers. So it's been -- it's not a surprise to us that our EBITDA as percentage has come down. We felt temporarily even if we need to accommodate on EBITDA side, but we don't want to compromise on the volume growth side, on infra growth side.

Then you see 35% growth of volume. And also, you see broad basing of a number which I already narrated in the call. Now coming back, are we getting APM gas. We are certainly getting. And APM gas, as I stated in my statement that we were getting virtually 100% gas. There is a procedural part 6-month average, et cetera, which sometimes 7%, 8%, we get a shortfall.

But during this period because the demand has bounced back significantly, the APM requirement as an industry as a whole, ATGL and all other industries are playing -- doing good work. So it has significantly gone up. And due to which one is on a procedural part, other was on some sort of a supply.

So put -- combined together, there is currently some short fall in APM supply. Entire CGD industry is constructively working and engaging with the government. We see a very strong support from government. Every time we see the full assurance that APM gas supply offers have been made that we are getting full supply. And we are expecting that there will be improvement on our methodology and allocation as well as on the supply of APM gas, not only for existing geographical areas, the 9th and 10th round, and also now for 11th round year GA which we were [indiscernible]. We are not seeing any serious concerns on APM supplies.

[Unknown Analyst]

Okay. So more or less, you are sure that the APM gas will get restored to what was the earlier 110% level of the priority sector sales. Is that correct understanding?

[Parag Parikh, executive]

No, no. This is what we are expecting, and this is what we see. Government has been very strongly supporting. You see -- you can see that the kind of a vision government has set. Today, virtually an entire India CGD licensing has been awarded.

Now momentum is building up. Government wants to make sure that every home has a PNG supply, every nook and corner has a CNG station. So this is a collaborative process. We are confident that government policymakers are working to make sure APM supplies are restored to maintain this moment of growth.

[Unknown Analyst]

Okay. And any time line, sir, about the same?

[Parag Parikh, executive]

Very soon.

[Unknown Analyst]

Okay. And the last question from my side that do you see any possibility that the government will intervene and cap on the APM gas price hike in the second half of FY '23? As most of us are calculating that APM gas price in the second half of FY '23 would be in the range of $10 to $11 per MMBtu. Sir, do you see any cap or ceiling on that side or government will intervene? Any thoughts from your side on this?

[Parag Parikh, executive]

See, there are 2 parts to this pricing part. One is the government policies has been formulated in a manner that we, as a CGD player can certainly foresee what is coming. As you also calculate $11, we will calculate $10, somebody is calculating $9.5.

To a large degree, we can see what is coming. It allows us to prepare now we definitely expect some bids to come from policymakers, but a lot has to be done by ourselves as well. We need to see how do we reconfigure, how do we solidify our diversified gas sourcing portfolio. So that we're still on an average portfolio basis, our cost is reasonable and we are able to provide the supplies to the end consumers on an affordable basis. So that's one target which we need to take on ourselves, and we have undertaken. You can see our portfolio continuously, we are evolving. We are bringing different -- different supply sources so that we can build a good portfolio. This is one.

Second, also, we need to see how do we optimize our OpEx as well as CapEx. There is always a scope for an improvement. And you can see from our numbers, we have been -- while new GAs provides initially ramping up the volume is going on, OpEx will be relatively higher. But if you see it in comparison, our OpEx have been very efficient. So I think we will do our bit and we do expect because government wants to ensure that the momentum is continuing. There will be discussion, solutions will be put on the table. How do we stabilize? How do we ensure that prices are stabilized for end consumers. It's not for CGD, it for end-consumer whose prices have to be made affordable. We are certainly committed with the government that we would like to -- as a CGD industry, I'm saying -- we would like to maintain this moment of growth. I am expecting that there will be some solution around it.

[Operator]

The next question from Mr. Nitin Tiwari from YSL.

[Unknown Analyst]

Sir basically, when you mention back to the question of ATGL gas supply. So while you mentioned that there are concerted efforts between the city gas companies and the government in order to ensure that price resolves. But my concern is that still gas is limited, so how do you see in your discussions with government that we are thinking of cementing this issue of supply shortfall because whatever gas is there, that's allocated to other sectors as well as like power and fertilizer and other sectors. And the supply is limited and growth in the size is also limited. So what is basically the thoughts going on in the government, if you can give us some insights on that. And then perhaps I'll ask you another question.

[Suresh Manglani, executive]

Thank you, Nitin. Difficult to give you what is going on in the minds of a government. I can give you what is going in our mind, actually. From a policy front, since you track this sector, and you have a good understanding, you know that CNG and PNG Home has the highest priority on a gas APM allocation. And that is the policy of a government of India. And we are seeing government giving highest priority. That's the reason you are seeing such a keen interest from not only ATGL but now 35, 40 companies participating in this nation building of a CGD growth.

So in our view, it is not only the limited supply APM, which is -- only has to be augmented. There are multiple ways to look at this holistic process that how do we ensure that APM gas and along with some -- what government is working on finding some more sources of gas, how do we bring in, like they have already added CBG in the APM pool.

Similarly, there will be some more mechanism. What we understand that MoPNG, GAIL, PPAC, all they've been working. We have been participating in some of the discussions that there is a commitment that APM gas supplies will be improvised as well as allocation methodology, which is today once in 6 months, that also could be attempted to improvise for that. So that there is -- growth is not -- because we get a good growth, supply doesn't come as a more -- shortfall is not coming.

So I think while it is difficult to say that what government is thinking, but our view is that government commitment and assurance is giving us complete belief that there will be a good solution around it and very soon it will be there.

[Unknown Analyst]

Understood. That's helpful. My second question is on your CBG business that you basically alluded to earlier in the call. So what is sort of investment we are looking at in the business and what kind of production we can get in terms of -- how much of our dependence on [indiscernible] gas, can you actually reduce if -- how much capacity that you will be putting. If you can let us know.

[Suresh Manglani, executive]

Sorry, you are talking about compressed biogas, Nitin? Am I correct?

[Unknown Analyst]

Yes, yes. That's correct.

[Suresh Manglani, executive]

So as I said, we have recently got our business plan approved. We would be looking now very potentially high sites because CBG requires that we need to have a size which are closer to the feed stock and also strategically located for location of the finished product, like a CPG or the organic fertilizers, which will be manufactured in that plant.

So right now, our teams are working. We have identified some of the sites. The viability is going on. So you will see there is a significant investment initially around 4 to 5 big sized plants is what we are focusing. Of course, we would like to make sure that these are commercially viable plant, which we'll demonstrate for -- so that not only us, many more participants come and develop waste to wealth for this country. This is where our aim is.

Parag would like to give some highlights on the investment?

[Parag Parikh, executive]

Like I said, we are initially screening a few of them. I think the first one largely is identified in the state of Uttar Pradesh. And that's where we are looking at building our first one. And 3, 4 more -- 3 to 4 more sites, we are in the process of shortlisting both in terms of bilateral basis as well as in potentially the newer tenders that could come on the CBG front.

On both areas we are seeing. As an entry, we may look at a variety of feedstocks. So it could start from agro to cow dung, to maybe even MSW. So we are looking at all kinds of feedstocks as far as our initial entry is concerned.

As far as investment is concerned, these are not very large CapEx-driven assets. So while we have a business plans and we are still identifying our sites, you should not see this as a large investment relative to the core CBG business. But certainly, it allows us to move our dent in the CBG space, both in terms of geographies where we are there as well as the good part of the CBG business is that allows you to also go and step out of the geographies where you are not

there. So that's how we are seeing the space.

[Unknown Analyst]

Sorry I didn't get that last part about the geography and stepping out of the geography.

[Parag Parikh, executive]

So the interesting part of CBG is that unlike the CGD business, which is a license-driven business, you can actually set up PP anywhere. So to that extent, it allows us to do both. Expand already where we are there as present as well as establish our presence where we are not there from the CGD side.

[Unknown Analyst]

Understood. So I understand that it's not a very large space, but in a ballpark would help us letting us know what would be a tentative investment on a pulp plant basis that we're looking at.

[Parag Parikh, executive]

So typically, I think in the initial size over the first 2 years, we may look at maybe somewhere in the range of INR 300 crores to INR 400 crores as CapEx. So like I said, they are not very large in the overall relative business of the CGD, but investments will be INR 300 crores to INR 400 crores. The execution cycle, of course, of CBG business is much shorter. And you should then expect them getting operationalized much faster.

[Unknown Analyst]

Understood. So INR 300 crores to INR 400 crores is a typical investment over a period of 2 years in setting up CBG plant and getting that operationalized. Is that correct?

[Suresh Manglani, executive]

That's correct.

[Unknown Analyst]

And staying on the topic of CapEx, my final question, one last question, sir. What was our CapEx in FY '22 and what's the time CapEx for FY '23 and also on the basis between existing and new [indiscernible]?

[Suresh Manglani, executive]

So in terms of CapEx for the year of FY '22, we have done close to a CapEx of INR 1,000 crores. And like we've always maintained, as far as our existing geographies are concerned, we will be at the CapEx of INR 1,000 crores to INR 1,200 crores. Certainly, the newer geographies that we've recently been awarded will add to this CapEx cycle. All the new geographies put together would come close to about INR 8,000 to INR 10,000 crores as far as the program for the initial 8 years is concerned. So you should add approximately another INR 1,200-odd crores as far as the newer geographies are concerned.

And on top of all of this, the small sort of investments that we continue to do, like I said, CBG will see about INR 300 crores to INR 400 crores. And we are also -- again, as a provider -- fuel provider, we are also -- ventured into the EV space. So on the [indiscernible] side of infrastructure and you will also see some incremental investment coming in the EV business.

[Unknown Analyst]

Understood. So ballpark like you know anywhere between INR 2,500 crores to INR 3,000 crores is what the reasonable number looks like?

[Suresh Manglani, executive]

Absolutely, absolutely. That's a reasonable number. Certainly, the newer geographies, they have just recently been awarded and there is an initial startup time for the first 6 to 9 months before you actually get down into any heavy CapEx. So you may not see that 2,400, 2,500 in the immediate year, but the following year, you should see CapEx of 2,400, 2,500.

[Operator]

The next question from Mr. Sabri Hazarika from Emkay Global.

[Sabri Hazarika, analyst]

So I have 2 questions. The first one is you mentioned that there was a 24% shortfall in APM allocation in Q4. So what is the number currently?

[Suresh Manglani, executive]

So the current number since -- as I stated, we are expecting improvisation of allocation methodology and also the volume going up. So in the similar range, the APM shortfall is continuing because our growth is continuing. Of course, there has been some sort of improvement, but currently, same shortfall is continuing.

[Sabri Hazarika, analyst]

So it's 24%, 25% itself. Okay. And is this the case with every player or it is different among different players?

[Suresh Manglani, executive]

No. Actually, it could be different for different players. That's the reason I have been emphasizing that -- it depends upon the methodology, which you are aware that the way it has been laid down that every 6 months past becomes an allocation for the next 6 months. So since our growth has been 35%, that's the reason we are facing the shortfall a bit higher. There could be other players whose shortfall could be lesser or some other players that offshore part would be higher as well.

And GA to GA, it will vary in our case and GA to GA, it will vary in other place cases. But I think this -- as I said, there is a very good understanding of the government side, GAIL, PPAC side, and we definitely are seeing constructive engagement of improvising the allocation methodology as well as the volume part. So we would see this getting significantly improved. That's what is our expectation.

[Sabri Hazarika, analyst]

Okay. So earlier in the call, you mentioned that 7% to 8% shortfall is because of the procedural or formulaic reason. And the remaining is because of like a lot of demand coming up from new GAs and rapid growth. Is that correct?

[Suresh Manglani, executive]

See, it cannot be attributed that way. This was our experience in the previous quarters, if you see. But as we are -- as our growth is augmenting the shortfall overall is 24%. Now there would be some shortfall because of the procedural aspect, some because of the significant growth. It's a combination of both. But as I said, both are getting addressed. So it's not a serious concern for us.

[Sabri Hazarika, analyst]

And this formula is like endorsed by the Supreme Court. Is that right?

[Suresh Manglani, executive]

I wouldn't say that formula is endorsed by the Supreme Court. Supreme Court doesn't endorse the formulas actually. The policy which has been laid down is what we could see actually. The formula is an offshoot of policy actually. Because there are inherent operational issues of maintaining gas pipeline pressures, gas pipeline integrity. So definitely, the GAIL has developed along with the government and PPAC, a formula which allows system integrity to be maintained.

So I think formula is an offshoot to make sure that system integrity and operational efficiency is maintained. Now since it's been a couple of years, we have seen it. The growth is happening. The 6-month period average because of the growth significantly is happening, the government and everyone has understood this. So there are various options are being considered. And we expect some improvisations will come on that side. And as we see -- as all of you have seen, despite the shortfall, despite -- the significant increase of RLNG prices, we have been able to still deliver INR 815 crores EBITDA for the year. That is what you should see as a resilience of ATGL that we are able to revert back with the growth with EBITDA. So while calibrating the pricing, if you see our prices also have been calibrated for end consumers. I think that is what is the perspective on a positive part I would impress upon all of you. Of course, you are wise enough to see the numbers the way you would like to see.

[Sabri Hazarika, analyst]

Right, absolutely. And is there any meeting relating to APM gas allocation revisit? Is it expected in the month of May?

[Suresh Manglani, executive]

No, this is as an industry there is a continuous work, which we do actually. There is -- I don't have any current call or an invitation for any further meeting, but what we see is that there is a complete access to us to go to the government. Authorities meet anyone because there has been a complete access to us. Because government also knows and we also know this is a collaborative project. CGD development for a pan-India basis of this magnitude requires all stakeholders to collaborate each other. And that is what is going on. It is not a 1 meeting or 2 meeting. It's a continuous engagement.

[Sabri Hazarika, analyst]

Right. Second question is, was there any shortfall in terms of LNG -- contractual LNG during the quarter?

[Suresh Manglani, executive]

Rahul, you want to participate?

[Unknown Executive]

Yes. Yes, Rahul Bhatia, I'm Head of Marketing and Business Development at Adani Total gas. So good morning to all of you.

Yes, there was certain supplies constrained from certain suppliers, and that came up because of the Ukraine-Russia military conflict from about end of February. So based on those, we also calibrated certain supplies to our customers and we allow them -- we put forward a program where they could offtake at take or pay levels at the contract price. And if any customer has a certain supply demand requirements over and above that, then we have the option to offtake that at prices which were actually less than the prevailing RLNG price.

So as Mr. Manglani mentioned, we were very calibrated in our approach, and we were able to strike a very good balance between the constraint of gas supplies from certain customers and the supplies to our markets.

[Operator]

The next question from Mr. Varatharajan Sivasankaran from Antique Limited.

[Varatharajan Sivasankaran, analyst]

A lot of questions on this allocations, I also had a couple of questions. One, when was the additional allocation stopped? So was it effective 1st of October?

[Suresh Manglani, executive]

Could you please -- good afternoon. Can you be slightly be louder for us, please. Audio is not very clear, please.

[Varatharajan Sivasankaran, analyst]

Yes. So this stoppage of additional allocation, since when you had this issue, was it 1st of October? Or was it even before that?

[Suresh Manglani, executive]

So you are talking about APM or non-APM? RLNG?

[Varatharajan Sivasankaran, analyst]

APM.

[Suresh Manglani, executive]

No, there is no stoppage of allocation. I think the -- sorry?

[Varatharajan Sivasankaran, analyst]

Additional allocation, I mean to say.

[Suresh Manglani, executive]

Not even additional I'm saying this is -- every GA gets an allocation at the instruction itself. There is no stoppage by the government on any allocation topic. Now we have got 14 geographic areas. If you go to the government and we want to start tomorrow, the allocation will be given to us.

[Varatharajan Sivasankaran, analyst]

No, I understand. Let me rephrase it. When was the time when it was frozen at those levels?

[Suresh Manglani, executive]

Sorry? You audio is not clear.

[Varatharajan Sivasankaran, analyst]

When was the APM location frozen at those level. Was it effective 1st of October or even before that?

[Suresh Manglani, executive]

No, this is I'm saying, there is no freezing of allocation. Actually, as I was explaining to you, there is no freezing of allocation, there is no stoppage of a new GA development. There is a full support from every possible quarter that we should continue to maintain this momentum. What has happened is, as I explained, there has been a huge growth in the industry infrastructure of a CGD as a whole. Volumes have come back, not only past one plus the new infrastructure also has started delivering the volume. So that there has been a very significant growth in the volume and the APM gas started slowly giving shortfalls there.

So it was not -- but there is a continuous supply of gas to us, as I was explaining in the previous call. On an average, around 24% shortfall has resulted now. Earlier, we used to have 7% to 8%, 9% shortfall, but the growth is giving us 24% shortfall. Some of our friends may not have grown 35%, they will have a lesser shortfall perhaps. Some may have grown better than us, then there will be a higher shortfall could have been there. So I think there is no freezing of allocation. There is a complete support. And as I said now since there are learnings coming from here and also government wants to maintain the momentum, there are constructive discussion and engagement. We see there is going to be -- we are expecting the way we have discussions are going on, there will be improvisation of the allocation methodology as well as there could be improvement in the volumes, APMs, some other sources. But ultimately, CGD support will come from -- this is going to be coming from government side. This is what we are understanding from our engagement.

[Varatharajan Sivasankaran, analyst]

And my other question was if the situation persists for some more time. Would we be considering going slow on the rollout of new GAs and new outlets?

[Suresh Manglani, executive]

Not at all, actually, not at all. Our commitment continues to remain there. Parag just now explained our CapEx rollout plan that will remain because we -- as a large player and also with a strong support of total energies on LNG supplies or our understanding of our gas sourcing, I think what -- if the way you suggest even if the hypothetical scenario comes in, the way our diversified portfolio is there, we would be coping up with the supplies to the -- our consumers, but there will be no slowing down of the CapEx plan.

[Varatharajan Sivasankaran, analyst]

Fair point. I have one last question, that is on the same issue. In case we assume that on time the government were to come and say, we can't give you additional volumes. How would [indiscernible] ...

[Suresh Manglani, executive]

Your audio is difficult to understand, actually. Maybe there are some different locations.

[Varatharajan Sivasankaran, analyst]

Yes, Okay. So in case the government were to come back and say, we are unable to give you additional volumes. How will it affect our business plans going forward? I mean, is there any serious issue in terms of a rethink or a rollout plan? Or would you -- do you think sufficient economics in terms of arbitrage between [indiscernible] even if we are to increase the LNG composition from 24% currently to maybe 30%, 35%, 40%. Is it sustainable at that at those levels?

[Suresh Manglani, executive]

As I was suggesting you that -- we are not seeing that hypothetical scenario. To begin with you, we have to respond to you because as I was -- I've been explaining from my CEO statement continuously on the several questions that what we are going to see and what we are expecting with -- there are -- it's not that we are -- the government is not working on it. Government is supporting it. Government has been listening to all CGD players, and we are seeing on the ground that there is going to be some improvisation of the allocation methodology. There will be improvement in the supply. So we are not seeing that hypothetical scenario of the way you are looking at that, there could be freezing of allocation, there could be...

[Varatharajan Sivasankaran, analyst]

No, I understand and appreciate that point. I just want to know in case that's something like that happens, does it really affect the business model or we are good even then?

[Suresh Manglani, executive]

No, no, you see as a progressive management, you will appreciate that those all the simulations we will be definitely doing it in our systems. And we will be presenting ourselves to how do we cope up. But since we are not seeing that scenario -- hypothesis the way you have put across, I think we are looking at a very positively that CGD momentum is going to grow much better than what is today.

[Operator]

Next question from Mr. Raj Gandhi from SBI Mutual Fund.

[Unknown Analyst]

Sir, as you mentioned, they might tweak the policy to accommodate this growth, because the 6-month lag does not help when the entities are growing and all. But let's say, in terms of resolving the issue of the physical availability of the quantum of availability of APM gas per se, there you mentioned biogas, they will add but that should be a very less quantum right, in terms of how do you kind of resolve the issue of getting more absolute volume of gas for the sector, given that CGD as an entity as overall, let's say, even if the sector grows by 20% odd, given the plan and the kind of additional gas required immediately and going forward. How do we resolve -- as you cannot further take away from power and fertilizer given how situation is there.

[Suresh Manglani, executive]

So as I've been stating, the vision of our CGD growth is from Government of India. The honorable Prime Minister has laid on a very strong vision. PNGRB has continuously been coming out with the newer rounds. And now 100% of India has been covered. Large investment of almost INR 2 lakh crore has been committed by the CGD entities of our service and many other CGD players. India wants to see that investment. India wants to have piped natural gas. India wants to see CNG growth happening.

At least the last 30 years, I've been seeing policymakers have been looking at several critical issues or complicated issues, and very good policies have been developed. So I don't see that hypothesis of there will be freezing or lesser allocation of APM gas. I think government is seized of this matter. There has been a constructive engagement. We are seeing a full support. We are seeing complete handholding of CGD industry. So I think we should leave it there that there is going to be a improvisation of methodology as well as the volume to make sure that CGD entities are enabled to continuously grow this momentum of a growth. This is an interest of a nation, actually, not only ATGL or other CGD players. This is for the India, we need piped gas across the country. Everyone should get a pipe natural gas, a reliable supply in the kitchen. So I think with these kind of larger goals, we would see solutions around it. We would see supplies coming. Policy has stated CNG and the PNG Home is a first priority in gas. All ingredients are very positive. So I think we should see positively in my view.

[Unknown Analyst]

And okay, like you mentioned biogas, any other avenues in your opinion, like you one specific input you gave, maybe biogas is now planned. So any other such ideas, which can kind of resolve the gas availability issue per se?

[Suresh Manglani, executive]

I said biogas because the policy has been laid down, I can only say what policy has been announced. What is in the mind of a policymaker is difficult for me to predict actually. What we could see, perceptively, we could see when we meet, when we -- as the industry discuss. We see a complete support and alignment of a government actually. They would like to support and they will continue to support. And you see we all have grown up because of our support of government, actually, if you see.

So I don't think so there will be any lagging behind from any quarter of any authority or any government that CGD industry suddenly will be facing such challenges. I think those challenges will be overcome because everybody wants momentum of growth to happen.

[Unknown Analyst]

Sure, sure. And sir, just as a group, because as a group, you are very active on this new energy, hydrogen, solar, batteries and all. So in that sense, how do you see your investments into the CGDs and all, maybe you mentioned that you think there is space for everyone, all type of fuel, and gas as a mix is very low and all. But if you could just help us understand more granularly in terms of how do you think about investments into CGDs when you have alternative emerging fast tenders for e-buses, talks of -- pullover, all the cab aggregators being asked to move on EVs and all such kind of policies. So how do you see investment into CGD in context of this multiple fuel? If you could just throw some more granular light on your thought process here?

[Suresh Manglani, executive]

No, no, sure. Actually, in fact, these are the questions were raised to us even in the last call. And we have been stating that as we see it, we would see a mixed paradigm of fuels in India persisting. We have a very vast country with a diversified vehicle segments. So we will definitely see EV getting its foot stronger because of the -- particularly in the 2-wheeler segment significantly because that's the immediate target, if you see all the policy which you read even the draft battery swapping policy, which has come, you will see from there, the focus is significantly on the 2-wheeler side.

So I think EV will be there and we already announced that we have been venturing into EV side and in fact, to give complete impetus, focused attention, we have, in fact, formed in our Board has approved formation of a special purpose vehicle for EV business.

So both Total Energy and Adani Group have been working, heavily investing on renewable energy. So I think we will see CNG continuously on a fuel of choice for many more years. We would also see EV taking participation in fuel sites on 2-wheelers, 3-wheelers, maybe 4-wheelers also in some way, the new 4-wheelers, which are coming. But it is going to take time in India. You see international experience on EV side. It has taken a long time for EV ecosystem to be developed. So until then, we'll see CNG definitely becoming a fuel of a choice. And we are seeing, despite the price increases which have been done, whatever affordability we have ensured, we still see a significant growth coming in CNG vehicle conversion. We see OEMs after OEMs coming out with the new variants. Maruti has, I think, 9 to 10 variants now. Every other OEM is coming out of the CNG-OEM variance.

So we are seeing good growth on the CNG side. We see in the future also continuous growth is happening.

And one other thing which I've been saying, why are we calibrating the pricing because we would like to broad base our consumer base. We would like to make sure the volumes are growing. So once we broad-base CNG customers, we will reap that benefit in the future as well.

So I think that's the whole purpose of this calibration of the price that we provide CNG at affordable price, conversion continues to grow. When EV is coming, we seize the opportunity of EV. The bio came in, CBG is coming in, we are seeing the opportunity of CBG as well. We shall future-proof ATGL even from future fuels, which are going to be coming. Cleaner fuel supply is going to be our goal. CNG is considered as a greener and cleaner fuel.

So I think I hope I am clear. As that we get into the more future, you will have more calls from our side, and we will definitely be responding to all your specific questions as well.

[Unknown Analyst]

Okay. Just here, as you mentioned, sir, the growth is going good. We are all seeing it. But let's say, just as in how you think about it in terms of return on investment, let's say, there is a lot of growth, you keep on investing. So next 8, 10 years, there is a lot of which comes and all, but let's say, 10, 15 years, hence, of all this, what to start converting back to alternate. So from a recovery of investment perspective, let's say you invest so much over the next 10 years, there is volume growth. And then from 10, 15 year hence, you start dipping. So obviously, 10, 15 years is not good enough to recover your investment. So from that perspective, what's your thought around that?

[Parag Parikh, executive]

So I think the way to look at this business is that while you are seeing high growth and these high growths are coming continuingly from the fact that when you look at different segments within the CGD space, we are seeing very good conversions in the CNG space.

Whilst if you look at domestic households, these are more the perpetual and the annuity kind segment within the business. but it will take its own time in terms of conversion.

In the interim, there's growing awareness in terms of improved and cleaner fuels. And therefore, if you see the industries and the commercial establishments, actually wanting to move more on a permanency as far as natural gas is concerned. So the way to look at it is that while you will see longer sustainable growth, but a lot will depend in terms of how you expand and build your volume across these years.

And within that, you will see a lot more momentum coming in the initial years as far as CNG as a segment is concerned. And over time, you'll see some of the other segments like domestic households, which are more stable, per consumer, much lower in terms of usage, but there will be more stable and on the longer term. So that's how you should see in terms of the balance of the segment. And to fill with that is the industrial segment, where there is massive conversion of cleaner fuel.

[Suresh Manglani, executive]

I just wanted to supplement what Parag said is right. One of the overarching goal or a mission of government is to increase the share of natural gas from current 7% to 15% by 2030. It's humungous. Now if CNG is going to -- that's the reason there is a huge support to CNG industry because we are an important vehicle to contribute to that goal. So when you travel across the country, you will see large number of SSIs, MSME, restaurants, hotels are yet to be actually gone in CNG -- piped natural gas.

So I think we see continuous growth of both CNG and significantly on the PNG side also as we grow in the newer and newer geographies.

So while investment is growing, volumes are growing. So I think there will be a reciprocation of ROS also. And you have seen our track record. We are quite conscious of what we invest and how do we reap the return on investment.

[Operator]

We have a follow-up question from Mr. Nitin Tiwari from YSL.

[Unknown Analyst]

Just had a first query around LNG sourcing. So do we have a Russian LNG as well in our portfolio? And if not, then do we have the flexibility of getting in Russian LNG should it gets available at a cheaper price going forward?

[Suresh Manglani, executive]

You're asking about Russian LNG?

[Unknown Analyst]

Yes.

[Suresh Manglani, executive]

As Nitin, you know that as ATGL, we have been buying RLNG. See it's a regasified LNG from -- there is a sufficient number of suppliers including Adani Total, ATPL, which is the SPV of Adani-Total Energy, so GAIL. There are several other suppliers of RLNG. They import LNG at whatever the best prices are commodities available. I'm sure if there are opportunities of Russian gas available cheaper, our Indian suppliers who are currently sourcing LNG, they shall source and that benefit will pass through to CGD players like ours.

So those benefits will definitely pass through. We do buy RLNG, and that is a reflective of the market, including the best prices cargoes, which are coming. Because there is a sufficient competition in India on RLNG supply, and we see a number of terminals growing. So we have very healthy trend on R&D side. We are currently not importing directly cargoes from Russia or other countries.

[Unknown Analyst]

I'll tell you the reason I asked is, I understand that [indiscernible] would be forcing through suppliers because like you know, Total is a partner and -- so would that become a sort of -- would that be a constraint in terms of sourcing any Russian cargo. I mean, are others using any Russian sourced cargo, I am just asking from that perspective because of the ongoing conflict that is there between Europe and Russia and because of the embargoes, which are placed on Russian crude oil and natural gas as well. And Europe is incrementally considering putting more embargoes going down the year.

So I was just asking if should there be an opportunity of cheaper Russian cargo being available? And would that -- would your partnership with Total put you like in a situation where you would not be able to source that -- just can you give some clarity on that?

[Parag Parikh, executive]

So Nitin, let me actually clarify you. In fact, we have been clarifying in previous calls that ATGL is sourcing its gas supplies, whether RLNG, domestic gas bidding, all on an arm's length basis. Our partner is one of the participants in our process. So if they are unable to source Russian gas, if it is -- that is the part of the policy, our Indian friends will source it. So we will see what is the best available price of our LNG and we source it. So there is no constraint on our side in sourcing the best priced LNG available in the market. And that's what we do and that's the region numbers are getting reflected that despite RLNG being so high, APM price getting revised, supply getting constrained from suppliers. ATGL delivered INR 815 crores EBITDA for the year '21, '22. We have grown -- given the growth of 35%.

So we have been able to ensure that these all developments have been taken care. Our partner may import Russian LNG, may not import. At the end of the day, it's arm's length sourcing of our LNG. Our partner may supply, as a participant who comes to the best terms or somebody else will supply who gives the best terms to us. So we have arm's length arrangement on the sourcing part .

[Operator]

So we have another question from Mr. Kishan Mundhra from Antique Research.

[Unknown Analyst]

Sir, just one question from my end. So sir, have you guys recently gone out in the market and looked to buy long-term LNG, I mean just to strengthen your LNG portfolio? And if yes, how has been your experience, I mean, with regard to the pricing and the terms being offered.

[Suresh Manglani, executive]

So I think it's a very good question. Though you have come quite towards the end, but I think you have still asked a very good question, which has not been asked from us. So I think you see, we have always been experiencing low priced gas. And generally, all of us, we were actually securing short term, medium term and more of a spot gas to meet our requirements. But the current development, which took place, which has shooted up the price is so high. Certainly, all of us have gone back to strategy, and we have started looking at what do we do. So the sourcing of long-term gas of what period, of which indices, how much volume is what we are now deliberating. But there will be some portion of a long-term gas in our portfolio, and we all are working towards that, so that we make sure that our portfolio gets diversified, we will have some portion of a spot. Some medium, short term, some will be on Brent, some could be in JKM, JCC.

So we are trying to diversify to make sure that there's a risk mitigation is happening inherently in the portfolio itself.

So to answer you that we have not done a long term currently, barring I think, a very small volume, which we did recently, very, very small volume, but that is not relevant for '21, '22.

But going forward, we would like to have -- we'll see how the response comes from the market and how the prices are going to be hovering around in the future, but we have a desire to add long-term volume in our portfolio now.

[Unknown Analyst]

Understood. Understood. But any initial indications regarding the terms or the pricing being offered?

[Suresh Manglani, executive]

No, as I said, we have not gone to the market currently on the long term. It all will depend upon finally, we decide how much period which indices is a brand, JKM, JCC or combination of this. Then how much volume you are going, all these combinations will determine the response from the market. But as we are always considered the largest CGD entity, we have strong parentage of Adani Group and Total Energy. We believe that once we go to the market, we would get the best of our terms and best of the price.

[Operator]

Ladies and gentlemen, that would be the last question. Now I hand over the floor to the management for closing comments.

[Unknown Executive]

Thank you. Thank you. Thank you, everybody, for joining the annual and the fourth quarter analyst call. Thank you for actively participating. And lastly, thank you, Ventura, for organizing this call.

[Suresh Manglani, executive]

Thank you.

[Parag Parikh, executive]

Thanks, everyone.

[Operator]

Thank you, sir. Ladies and gentlemen, with this, we conclude our conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may all disconnect your lines now. Thank you, and have a good day, everyone.