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GAIL (India) Ltd
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Gentlemen, good day, and welcome to Gail India Limited Q1 FY '21 Earnings Conference Call hosted by AMBIT Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call on your touchtone phone -- please note that this conference is being recorded. I now hand the conference over to Mr. Vivekanand from AMBIT Capital.
Thank you, and over to you, sir. Thank you, Sia. Good evening, everyone. It is my pleasure to welcome all the participants and the management of Car India Limited, led by Shri Rakesh Kumar Jain, Director of Finance, along with other senior executives. On behalf of Ambit Capital, it's a pleasure for us to receive all of you this evening. I would now like to request Shri Rakesh Kumar Jain to give you his initial comments, and then we can move on to the Q&A. Over to you, Rakesh, sir.
Thank you, Mr. Vivekanand from Ambit Capital, my colleague sitting with me here in our boardroom. My dear friend from investors and analyst community. A very good afternoon and warm welcome to Gail's earnings call for Q1 2024. At the outset, I thank you all for attending this earnings call. I am pleased to share with you that we'll receive will commit from CAG with respect to financial statements for financial year 22-23 which is 14th year in a row. Further, our Ganeshpur unit received 18th cost excellence our first position in manufacturing sector, public medium category from the Institute of Cost Accountants of India. Also by acquisition of JV at Petrochemica Limited, it has successfully become only on subsidiary with effect from 1st June 2023. And the name has been chased to Masal Mangalore Petrochemicals Limited. -- that Gail has seen a very challenging business environment in previous quarters of financial year 2022, '23 for regions explained to you during various calls and communications. The success seems to be easing, and going forward, we expect a favorable outlook and better business prospects. GS results for quarter ended 30th June 2023 have been declared today and physical performance in gas marketing, gas transmission, petrochemicals and LSC segment has improved in Q1 financial year '24 as compared to previous quarter. Gross turnover for the quarter stood at INR 32,013 crores. PBT stood at INR 189 crores, an increase of 20% over the previous quarter, PAT at INR 1,412 crores, an increase of 134% over previous quarter. On a consolidated basis, Gail a turnover of INR 32,755 crores in Q1 financial year 2024 versus INR 3,086 crore in previous year, down by 1%. PBT is up by 231% to INR 23 crore, and PAT is up by 15% to INR 179 crores. The CapEx for Q1 financial year '24 is approximately INR 2,400 crores. And this is on pipelines. I'd be specific INR 967 crores on pipelines, petrochemical, approximate INR 530 crores CGD approximate INR 69 crores, operational CapEx, INR 135 crores equity contributions to JPF and others, INR 660 crores, et cetera. The company has also embarked upon alternative energy like lean hydrogen, renewable energy and biotin projects, which are additional importance and would provide a transition to sustainable future, and now I would like to share the performance highlights of Q1 2024. Financial highlights. -- starve stood at INR 3,138 crores in Q1 financial year Q1 '21 as against INR 3,684 crores in Q4 financial year '23. There is a marginal decrease of 2% due to natural gas pricing being settling down. Profit before tax during the quarter increased to INR 1,889 crores as a gas INR 591 crores in Q4 financial year '23, up by 22%, mainly due to better performance by our gas marketing segment on account of increasing gas marketing spread, decrease in inventory loss, increased tariff realization in gas translation, along with better performance of petrochemicals segment. The pace during the quarter increased to INR 1,412 crores as against INR 604 crores in Q4 of financial year 2023, up by 134%, mainly for the reasons explained above. Now I'll come back to the physical performance for the current quarter versus previous quarter. Physical numbers for our business segment during the quarter are as under gas marketing volume increased to 98.84MMSPMD in current quarter as against 96.6 MMSCMD in previous quarter. The increase in volume is mainly due to increase in LNG sales on account of reaction in downstream cut on resumption of SMT supply and offset within decrease in overseas volume. Natural gas transmission volume increased by 8.1 MMS CMB to 16.33 MMSCMD in the current quarter as against 108.2 MMSCM in previous quarter. The capacity utilization is 56% during the Q1 '24. The increase in transmission volume is attributed to increase in Resales on account of relaxation in downstream cut on reduction of FMF supply. Polymer production increased to 164 TMT as against 140 TMT last quarter. The plant was ramped up post resumption of supply by SMT capacity utilization was 82% for the quarter. LSV production increased to 243 TMT as against INR 232 in previous quarter with capacity utilization was 69%. Transmission stood at INR 173 TMT as against 179 PMT in the previous quarter on account of Jammagalloni LPG pipeline capacity augmentation by 750 TMT total LPG transmission capacity increased from 3830TMTtoR4580 TMT and capacity utilization was 94% during the quarter. Now with respect to consolidated financials for Q1 as compared to Q4 financial year '23. The consolidated turnover in current quarter stood at INR 3,765 crores as against INR 33,056 crores in Q4 financial year '23, marginally down by 1%. The PBT in current quarter is INR 283 crores as against INR 689 crores in Q4 financial year '23, up by 31%. Compared INR 192 crores for us INR 634 crores in Q4 financial year '23 Q4 financial year 23%, up by 183%. Now coming back to Gilshan infrastructure of 154 CNG stations and approximately 270,000 BPM connections during the current collections. During the current quarter, 1 new CNG station and approximately 7,000 new CNG corrections were added. The physical volume is 0.3 MMSCMD during the quarter. In the next 2 years, we'll target to add over 100 new CNG stations and 2 lakh new BPMB connection. Now coming back to our wholly-owned iGas Limited. During the current quarter, gross turnover stood at INR 2,192 crores as against INR 252 crores in Q4 financial year decrease of 13% and this million on account of decrease in natural gas prices and bulk trading quantity. PPT code INR 102 crores as a gas INR 90 crores in Q4 financial year '23, increase of 13% per excluded INR 76 crores as are INR 67 crores in Q4 financial year increase of 13%. The physical volume during the quarter remained flat at around 5.26% MMSCMD. During the current quarter, 1,600 new BPM collections were added. Gaslog with subsidies has infrastructure of 870,000 PNG collections and 456 CND stations. We another subsidiary company, Bengal, Gas Limited as on 30th June 2023 Bengal Company Limited is having plus CNG stations, 13-kilometer pipeline and 8,000 domestic PFG connections and infrastructure made available. During the quarter, current quarter 2 new changes station and 2 kilometer pipeline was aged. Now coming back to the project performance. Mumbai has put the pipeline. This pipeline total length of pipeline is total length of 17, double 5 millimeter activities are moving in full swing and Mumbai a projection of less 698 square meters expected to be completed by December 23. Regarding Jayashali, Bokaragawra pipeline, 250 kilometers out of porter pipeline length of 3,293 kilometers have been commissioned, and the remaining part is expected to be progressively completed by June 24. Telkom over-made pipeline of land 423 kilometers is likely to be completed by December 23. NGR we had authorized to gain on 1 July 23 to lay the Guldasht-Kuja natural gas pipeline, having length of 160 kilometers which is 36 months. Regarding Malta pipeline, length of 253 kilometer original portion of the plant around 100 tickets expected to be completed by December 23. Baronial pipeline, 363 kilometer reception out of INR 717 crores has been commissioned. Baronial portion is expected to be commissioned completed by October 23. Now let me give you some outlook about our barrier segment, and this outlook is short to medium term. Intact of natural gas transmission company has implemented integrated tariff with effect from 1 2023 post implementation of integrated tariff of INR 8.61 per MMBtu. The transmission revenue have seen an upside of approximately INR 660 crores in Q1 financial year '24, and this increase is expected further increase with the volume ramp-up, which is expected to grow by 6% to 7% from existing level of 116 MMSCMD. Let me tell you, once again, currently, we are flowing around 16 MMSCMD volume and it is expected to grow by 6% to 7%. Increase in transmission volume from 16 MMSCMD to 123. We expect by the end of this financial year, we will be enriching transmission volume at the level of 123 under PMD. Further, during next 2 to 3 years, there will be increase in transmission volume by around 5 MMSCMD. That means we are expecting the transmission volume will be somewhere around 130 to 140 MMSCMD. Further, the company has submitted a representation of a review of the moderation done by PNGRB in the tariff order as integrated tariff of INR 68.5 was committed to the regulator gas tariff of INR 58.6 per MMBtu was approved. You may recall that Hal submitted tariff 68.55 regulator approved INR 58.6 and the major reduction regulator has done on account of fuel cost which is INR 576 per tonne, and they consider the fuel cost at the rate of $3.61 and that price does not exist. So there are some more parameters, but this is a significant parameter that I saw that bring to your notice, and we expect that tariff will be increased and INR 576 on the date of issue of order on an NPV basis, it will further increase. Gas marketing for financial year tally has witnessed challenges in profitability of gas marketing segment and various mitigation efforts were put in place despite all challenges Galwas able to cook gas marketing profit of INR 3,000 crores during financial year '22 23 global gas market is settling down as many of the negatives such as elevated spot price shortfall, geopolitical situation is improving. This is visible from the volume ramp-up in domestic conjunction. Let me remind you that during the analyst call we had in Mumbai at the end of the financial year in May 2023, we said that we expect to earn marketing margin of approximately INR 3,500 crores, and today, we maintain the same -- that at least we are marketing margin of INR 3,500 crores in financial year '23, '24 as informed earlier, and this is also evident and supported by the fact that during the current quarter, that is Q1 FY '24, we earn marketing margin of approximately INR 1,000 crores is planning to source long-term natural gas supplies approximate to the tune of 7 to 8 MTPA from sources in Ste-benne by 2030 and do not intend to depend on one country for more than 1 to 2 MMTP volumes. This will help to protect from certain shops like 5 in spot prices at disruptions like SMP and supply disruption we had. Polymer production stood at 164 TMPS47TMT in last quarter. The production has increased on account of plant being operated at higher load further during the year '23, '24. It is expected that we will test the nameplate capacity of around 180 to 10,000 metric tonnes. Liquid atro-carton production stood at 243 TMT in Q1 financial year '24. And during the year, production is estimated at a same previous level production -- also to protect the margin in LHC segment well is effectively involved in hedging of LSC prices. LPG prices, betas. That's all from my side regarding the overview of performance of various segments and project progress. The management of the company is available and we'd like -- we'll be glad to clarify on any questions that you may have. Over to you, Mr. Vivekanand. Thank you.
Thank you very much. We will now begin with the question-and-answer session. Anyone who is on your touchtone telephone. If you wish to remove yourself from the question queue, you may press it. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take the first question from the line of Mr. Amit Rustagi from UBS.
Yes, sir, thanks for this wonderful performance on the transmission and other segments. Sir, I have 2 questions. One is, can we assume in the transmission segment, that's the revenue we have earned on 116 MMCM volume, this kind of revenue run rate will be maintained even in the Q2 to Q4? And can we analyze this revenue and it will -- it is adding towards INR 10,000 crore plus on an annualized basis?
Second question...
And the second question is, can you give us a breakup of the transmission costs because in this quarter also, we have witnessed higher transmission costs. So can you give us a breakup like how much was the fuel cost and how much was the normal expenses in this quarter? On the transmission side?
Okay. With respect to your first question, we expect that this transmission revenues not only to be maintained but to further increase and your expectation of INR 10,000 crores we are likely to achieve. Okay... And with respect to transportation costs, -- as we said in our annual earnings call that we were tearing the costly gas, that is the dollar OP for MMB, which we purchased some time in last quarter -- last quarter of calendar year '23 in order to make the immediate reduction in the allocation which we had. So that is one impact, which we had during this quarter, and if you want the amount, we can also see that is one impact that we are having -- that is around 66... That... INR 172 crores, we have booked extra cost during this quarter, which is no more going to exist in coming quarters. Second, we also made a provision of around INR 60 crores on account of one arbitration case the company had. So that is another one-off in this segment. So around INR 233 crores to be precise, these one-offs or costly gas, which we don't see in coming quarters.
Okay. Sir, can you give us like an annual run rate because there has been a significant increase in revenues. However, there has been a significant increase in cost, even if I adjust this INR 233 crores. So for example, like I am assuming 1.5 MCM gas consumption in the transmission segment. at an annual at a cost of around $12 per MMBTU. Will that be a correct estimate for the fuel and power cost or the compression costs in this segment?
Yes, for the reduction in the allocation of PM gas, the $30 or sub-dollar will be the cost, which we are likely to be booked to our fuel in our compression.
Okay, got it. Sir, just one question more on the CTS distribution. So are we looking to monetize any of our City-gas distribution assets because we are seeing a significant amount of profitability coming from MNGL, Gail gas is doing well. So what is the plan on outlook on monetization of any of the entities in the city gas distribution.
The one is our folio subsidiary, certainly, that call we can take and we are evaluating. Another is a joint venture. So 2 promoters have to sit together and take a call. Nevertheless, we are reviewing and considering the same for monetization. So that evaluation part or the germination part is in hand.
Okay, sir. Got it, sir. Got it. So thanks a lot for this. I'll come in the queue. Thank you...
Thank you.
Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference [Operator Instructions]. please limit your question to participants. We take the next question from the line of Mr. Probal Sen from ICICI Securities.
Congratulations on the strong sort of numbers. I just had a couple of questions. One is with respect to the trading segment, sir, do you now have any volumes available for overseas sales to take advantage of the a beta and basing it on the grant that now with the Gazprom new subsidiary, I presume all of the lost volumes are now actually flowing through into our company, all the 8.5, 9. So are there any volumes available for hedging or opportunistic sales outside the country?
Whatever volume we have from overseas, we have intent to bring all the volumes to India. So therefore, in terms of the availability of volume, certainly, we don't -- and we see any trading of volumes in the international market, except to what we have done in past for the current year and next year. And -- but this -- when I'm making this statement, this does not mean that we will not do it, but in case some arbitrage is available. We find that we can take the advantage of the situation. Certainly, U.S. volume being flexible volume. We'll continue to do that. But in terms of requirement, there is no extra additional -- or we have any surplus volume level, which we think that we will not bring to India. We intend to bring 100% volume to India.
So no such sales actually happened in Q1, sir? Is my understanding correct?
We have not done any trading specifically. As I said, whatever contracts we did in past in terms of ships and all those are continuing, and we have not done any specific cargo trading in Q1.
Right. One housekeeping question, sir. Can we -- you spoke about the CapEx that has been done in 1Q of around INR 400 crores. I just wanted to get a sense of what FY '24 CapEx guidance is for the overall year.
We intend to expand around INR 9,000 to INR 10,000 crores as CapEx during current financial year.
So would it be possible to break it down on segments. Is there any change from the presentation was... The specific figure,
Probal, I'm coming to the specific note quick earn. I'm coming to the specific figures. We intend to invest around INR 5,000 crores on pipelines, INR 1,400 crore in petrochemicals and operational CapEx in the same range than equity around INR 1,000 crores and the NP around INR 300 crores and city-gas distribution around INR 200 crores fee. This is around INR 90, INR 100 crores we are estimating as of now.
Understood.
Let me correct you. There is a -- let me give a revised figures. This is -- let me come back again. So what I said about price or a petrochemical around INR 3,000 crores. In additional told you the figure of 2023. So INR 55 crores, INR 4,000 crores is petrochemical, around INR 3,000 to be specie INR 3,200 crores, and we also intend to incur operational CapEx, INR 700 crores and the CGIR 200 crores, and then the equity contribution -- substantial equity contribution is there during this year, around INR 3,500 crores. As you know that we have acquired JBF-petrochemicals already, we upgrade INR 20 crores, INR 100 crores as equity contributions. So this is what we plan for the 2324.
All right. I'll come back at us Thank you.
We take the next question from the line of Mr. Abhishek Nigam from BNK Securities.
So first question is on the petrochemical loss. So my understanding is, I mean, if I look at your volumes, you are now operating almost close to 80% or so utilization. The north has reduced on a Q-on-Q basis, but it still remains. So if you could just give us some clarity on what is happening there? So that's my first question.
Unfortunately, the petrochemical prices in international market has come down significantly. Even if you compare with the Q4 last year, it has come down by INR 8,000, and if you compare with the whole year, it has further come down. That's what is hurting us though still we are able to reduce the loss. We are not only able to recover variable costs, but also to some extent, the fixed cost part of it. And as we produce both because Q1, we did not use to be capacity, we will further able to recover our fixed cost. And second, the -- this is the history. But future what we expect that this is -- there has been a significant drop in the LNG prices. We are capable of sourcing the better gas at a better price. So therefore, the -- this significant improvement as we close the year, but it is actually difficult to give me a precise figure will be better off than Q1 '24.
Fair enough. So that's very helpful, and the second question from me is on the tariff revision. So as you mentioned that Neal owed a lower tariff, and they took into consideration over fuel costs, and we were trying to tell them to come up with a more real estate tariff number. Sir, is it possible for you to sort of give us a sense of the timing when this further division could come through? I know this is tough because it's really the PNGRB, but -- any clarity would be very helpful.
Actually, the moment the tariff order was issued within the time line, we've made our submissions to PNGRB. They had us once and then now put the date for hearing us again in November. Of course, they have given a very delayed date. So we have action in hand, we'll go them and expedite that debt to be earlier did because the sooner they do, it will helpful from the customer's point of view because you know the tariff is calculated on basis, the delay will gel will get each year, but a customer will get loaded because of the net budget value of the money. So we are concerned also from a customer point of view. We will get the money maybe by November. But if not, by now, but certainly, we should get by the end of this financial year. But as you already said, it's difficult because if the regulator's job when they take up it, our job is only to expedite and which we are doing.
Sure. Sir, that's very helpful...
Yes. We'll take the next question from the line of Mr. Maulik Patel from Equirus Securities. Go ahead Sir,
a couple of questions. One is on the volume side. This 16 MMSCMD volume has been one of the highest. Can you just give some kind of guidance or the colors and where we can see this volume because there is a couple of auctions happen in the domestic side, particularly MGA, where the volume is still ramping up, and what do you expect this by the end of this financial year, the volume can be for the Crash segment? That's the question number one, sir.
So as I said in my opening remarks, currently, we are transmitting 116, and by the end of the year, I said and your question is, we will expect to reach by 123 MMSCMD.
This growth is coming from this segment?
Yes. So growth will come because, as you know, that we were not running Parapan to its full capacity, we expect 1.5 MMSCMD to come from there, and when I said 116 , it does not include the volumes. So as you are a Barona, which they were in shutdown for past 1 week. So they take 4 MMSCMD. RCF Tal was growing almost 1 MMSC on the left and restoration of Darpan pipeline. As you must have gone through the papers news that there is a disruption in supply through the Adriana line. So almost 4 million volume has gone there and increase in our CGD. As you know, that TGVs our growing business -- so these are the areas we expect the volume will come, but there will be one negative. Currently, NTPC is taking almost 5 CMD of volume because of the seasonal demand of power. So that will go down. If you net of all these things will reach more than 122.
Okay, sir. Got it. Sir, second question is on Dabhol. The break for facilities were supposed to be completed. So do we expect it to be completed by this year and the next year, you may not require to use the for -- or the age will be available throughout the motion? --
Yes. That's what we are expecting this weather should be the last weather where we are not having breakwater not able to run at full capacity. And from next year onwards, after this monsoon, we'll be able to run at full capacity.
Approximately how many cargoes you ship to the monsoon from proto the hedge?
Can you tell?
At an average 4 cargoes per month.
That will be removed around 12 to 16 cargoes that motion period?
During this monsoon period.
Okay. Thank you. Thank you very much and wish you all the best.
The next question from the line of Sabri Hazarika Emkay Global.
I have -- I mean, I have 2 questions. The first one is in your petrochemical, I think, again, the gas cost or the fixed or the fixed costs, something -- I mean that is -- the cost is quite high. So was there this costly cargo being like put in petrochemical also? Or is it just the normal line of business? What could be the average LNG price for the petchem segment in Q1?
Average LNG price, which we have consumed...
Yes.
Yes. So we have used LNG or gas at an average price of $13 per MMBtu.
Okay. So that is for the pet-chem?
Yes.
Okay, and you expect this to go down going ahead?
Certainly, market has gone down, why we will be putting higher cost gas to petrochemical...
Right, sir, and sir, second question is a conceptual question regarding the hydrogen blending that you are doing. So this blending of hydrogen that happens in CCT network. So this is again expected somewhere or it is consumed in the PNG connections directly?
First, we are adjusting this hydrogen, the green hydrogen, not the green hydrogen. So our one of the CGD pipeline, antics in DoD. We experimented by 2% reduction by volume and increased to 5%, and it is in PNG, which is largely being used.
Right. But it is burned as fuel only. It's nothing like not a transportation as such of hydro...
No. Actually, there is a challenge to use hydrogen beyond a certain point in NG...
Okay,
The next question is from the line of Mr. Vishnu Kumar, Value Research. Yes, sir, please go ahead your question.
I have 2 small questions. One is currently Gail is getting revenue from 5 of the blocks. What is your projection of I think...
We are not able to hear you. Can you come loudly?
Hello -- can you hear me now?
That's yes.
Okay. So I have 2 small questions. Question number one is related to your exploration and production business. So currently, you are getting revenue from 5 blocks. So what is the projection for addition of revenues from E&P going forward? That's one question. The other question is related to the cost escalation in your petrochemical project, which is somewhere around approximately increase of INR 4,000 crores. So what is the reason for such an escalation. So these are my 2 questions.
Yes. First question, the E&P revenues, we expect largely to revenue remain in the same range, which we are today.
Okay. So you're not expecting any additional blocks coming online for production and sales?
No.
Okay.
And with respect to cost escalation, the -- most of the orders for the serious PPV process during the Ukraine war, and there -- at that point of time, there was a lot of hike in steel prices, in particular. That is one region, and second reason is there after selection of license, we do detailed engineering. And then vital engine suggested some more items or some more quantity which we are required to procure are regions, which actually resulted into estimated increase in CapEx -- that's all.
Okay. So there is an additional cost, which will be incurred on some external equipment that is coming because of the detailed feasibility to port...
There are some. There are some.
The next question is from the line of Mr. Yogesh Patil from Dolat Capital.
And for taking my question... Sir, you say $13 per was the gas cost for the petrochemical unit, and you also mentioned that the gas cost will come down. Then at what cash cost do you expect the petty come back to the EBITDA level profit? And what is the current utilization rate of petrochemical unity in the July month? And have you planned any entente shutdown for the bitcoin going forward?
So your first question at what level we will be at EBIT level in profit. Can you give me the price -- which price will be prevailing throughout the year? It all depends on the price of polymer. So at current prices, if you ask me specific around $10 plus is the breakeven price for petrochemical. And below that, we will be having profit -- and second, the July onward, certainly, we are -- we have ramped up our plant, and we will be at normal capacity.
Okay. No mentors down plan for the next month.
No, we don't -- and we said because we had a lot of opportunity when we were not using our plant. So we could carry out all those maintenance during that...
Okay. My second question is, sir, the commissioning of the Mana LNG terminal. So is that the correct understanding your GAAP requirement for the compressors of the transition pipeline has come down because Amarin commissioned?
Actually, our -- the gas compression food requirement remains almost in the same range. The only time we consume a little bit more, but it is not going to go down. It will remain in the same range.
And what is the current share of ABM gas in that total gas requirement for the competition?
For-- Are we currently allocation is 0.4.
Okay. So it has come down from 0.6% to 0.4%. And do you expect that will continue 0.4 in...
It will further go down.
The next question is from the line of Mr. Raj Gandh from SBI Mutual Fund.
Here your intake, there was a fair bit of difference between your integrated tariff and the unified tariff, which came up and there was some 10%, 12% differential there. So how should we read through on this differential?
The differential margin quarter 1 of this financial year and which we have also disclosed in our accounts. Now PNGRB has revised the unified tariff acquired -- so that differential in we have started recovering, and by the end of this financial year, there should not be any outstanding. If I understood your question correctly, this is the answer.
But the integrated tariff, which P&G passed the order, then subsequently, the unified tariff came in 12% higher and then it's been further revised upwards. So I'm just wondering on the bridge between the integrated tariffs and the unified tariffs -- because that Jonathon volume distribution is fairly different. So the aggregate average tariff, the unified tariff comes much higher than the integrated tariff, and ideally, it is supposed to be similar to integrated tariff, right? I presume, so I'm just trying to understand the bridge between the 2.
Ideally, what we are telling maybe Ireland because regulation provides for distribution of revenue entitlement into Jonas with based on formula. -- and risk all change in volumes remains with the transporter. -- sometimes that may be helpful to or allow to recover a bit higher for some time, it may be same or sometimes it will be near to get a little lower. So ideally, yes, but ideally, volume does not flow in the same way the journal distribution is done because that is done on estimation basis...
Sure, sure, sure. And is there a true-up of the same, whether you ever recover under recover on discounts.
I said that risk of general distribution remains with the transporter.
Okay. Sure, sure.
Thank you, sir. The next question is from the line of Mr. Aditya Suresh from Macquarie Group.
First on your CapEx plan. Now in terms of the petrochemical business, we've been EBIT loss peaking over the past several quarters now, what sort of return on capital employed targets are you looking at while you're allocating a very large part of your CapEx towards petrochemicals. I guess the concern really is that you're spending so much on chemicals, but this is going to further dilute your group returns. So maybe some thoughts on that first.
New plant, new investment, we are doing petrochemical probably whatever we have incurred. I think that should not be -- we are not in a portion discussion. But whatever new CapEx we are incurring on PDSPP, we are having -- we are meeting our hurdle rate and even beyond that. So we are hopeful that we'll be able to area.
Any specific targets you can share, sir, like in terms of any specific return targets or under what margin assumptions you may be able to meet those numbers?
I think it's specific let us not discuss, but we can -- I can at the moment say that we are able to meet our rate our analysis, even with the revised cost.
And then the second question was on gas transition. So there are clearly quite a few moving parts here on your tariffs and your OpEx. I was wondering if you can give any guidance on EBITDA per SCM. Is that possible at all for you?
Maybe he is asking EBITDA per not be revenue for SCM. I will come back actually. This data will certainly be able to give you. But let me give a statement. You should be increased by the performance of this transmission segment, and this segment is going to use a significant part of revenue and profit going forward, right from now.
The next question is from the line of from May from Avendus pack.
Is Vishnu from Spark Capital. Sir, if I heard you right, sir, you mentioned 135 to 140 M in the next few years. Is that right? And which -- is this driven by the supply increase? Or are you seeing some real demand that is coming from certain sectors. If you could just help us understand where do you see this growth coming from?
So let us start from under 16, which we are transmitting today. I said that by the end of this year, we'll reach 123. And also I provided a breakup, but for the benefit of everybody, let me reiterate once again. Currently, we are consuming almost 1.5 MSM at our Patoka plant. So once we are on forest, which we are today, we'll increase 1.5 MMSCMD. Currently, our Baroda Siri, which takes 4 MMSCMD volume not going that will be added, RCSR MMSCMD, our restoration of Badri pipeline, the institute, which happened very recently, will be added to this 164 MMSCMD and CGD, as you know, our ever-growing business, at least one MMSCMD will come from there. There will be 1 minus LTPC because of seasonal demand currently drona bill come down. So this will make more than 123. And what do we expect in coming 2 to 3 years, at least 3 to 4 MMSCMD will come from CGD business again because PGD will have continuous increase of demand. IGGL, 2 MMSCMD will come. Of course, it will come progressively maybe by 2035, but it will start from 25, 26. Refinery LRN, which will take around 2 MMSCMD will start from 1 will reach to 2, and then major chunk will come from IOCL refineries Parati.8, healthier 1.2, baroni.5%; at, say, 0.5 million and Bongo y 0.7. So these are the areas which will provide another at least 15 MMSCMD volume and will take us through 138 to 140.
So this you've seen by FY -- calendar year '25, we'll get there or...
So I told you 324, we will be ending up by INR 123. And in another 2 -- 1 to 2 years from there, will reach 140.
Understood, sir. Sir, on the gas transmission business, if you could just give us the volume that you're currently utilizing, I mean, in terms of gas utilization which is using for the transmission -- is 1.27, 1.3. What is the number now?
If you ask me, the average congestion in fuel is around 1.35 to 1.4%.
1.35 to 1.4, of which 0.4 is domestic, rest is price at $14 this quarter?
Not 14, the domestic basically around $12 because we have -- we can source from domestic sources as well as the ability to have around that price.
Okay.
The next question is from the line of Mr. Ketan Mehta from Bob Capital Markets.
Thank you, sir, for giving this opportunity. On the -- we are envisaging 135 to 140 SMB volume in the next 2 to 3 years. So what would be the pipeline utilization at that point? We are currently at 56%, how would the pipeline utilization change in anticipation of the new pipeline, which are coming through? And second related question was in terms of what is the current ROC that we can earn based on the tariff formula 56% utilization? And how would that change in next 2 to 3 years' time frame.
Yes. No. I think let us not be specific, you can work out what ROCE we are earning because capital employed and all the profitability level. But with respect to your question on capacity utilization, actually, from here on, we will have 2 more pipelines, which will be commissioned, one in Mumbai and another is Secoo, which will add to our capacity of 20 CMD. And I am telling that we will be reaching around INR 140. So on estimated basis will be around 60% capacity utilization.
One more question was about the bank loci pipeline. Could you give us the latest update in terms of the last mile that is remaining to be completed when is now it's targeted to be completed?
Target, do you have target -- we actually -- let me find out the target that I think it is next year of November -- October or November next year, but I will give you the exact time line, which we have given to ourselves, and the waste is in progress. We actually -- the issue was ROU. We are aligning some of the portion of that pipeline along the rose and some through fields. So we are using the hybrid approach to come over the situation of ARU. At that time line, I will give, but certainly before the end of next calendar year, maybe around October, Nomar. I will find out, and you can share offline.
Thank you, sir.
Thank you, -- we take the next question from the line of Mr. Vikash Jain from CLSA.
Hi, Resi, So I specifically wanted to drill a little bit deeper on cost or gas costs within the gas transmission business. If you can -- there's something which I just wanted to understand if you could explain, last year, the average pricing of gas because it is not changed by the quarter allocation was taken away, et cetera So the average dollar per MMBtu price that we paid for the gas consumed within the gas transmission business, and for the 1.4 MMSCMD, you said that there is about 0.4, which we are still getting from domestic, obviously, is that will also be taken away in the coming quarters. The remaining one, how much flexibility do we have to ship between spot, long term as well as the domestic HPHT gas. So those are the 2 parts of the question. One is the average cost of the gas that we consumed through the year last fiscal? And what did we do for this particular quarter to get an understanding of how much change would be on a Y-o-Y basis for FY '20 was...
Vikash, thank you so much. But first answer to first question, let me try to give you a possible right now or as we go offline, but Yes. Satish has just walked out No, no, last year. Last year, not Q1. Last... Definitely would have been... Will give you just hold on. Air... We'll give you offline. But regarding your second question, a related to how the switch overs from the LNG to domestic -- but if you know the tariff order, you have seen the tariff order. Tarifa provides that the ceiling prices PST will try to source the gas from -- mostly from domestic source to meet the requirement of fueling compression. That's what is our challenge and target and which we are continuously trying to do, and I will give you an answer to your first question maybe today or maybe offline, right now or offline.
Okay. And you said that -- you mentioned that for this particular quarter, the blended cost for that 1 CMD that you are using? How much is that for this particular quarter? This I can give you Otepaa water cost -- this quarter,
I think we have used more than $16 more than... $16... 16.6...
Yes, because my kind of possible guess is that your blended average cost for last year would not be so much lower -- so much higher as the 1 or 2 quarters of high gas for part of the volume kind of suggest because there was still allocation for domestic gas for the last part of the year, okay? So that is why versus '16, if we look at the current run rate versus the full average of last year, it would not be very different. That is what my guess is going to cause advert understand that...
We'll work out and actually compare your guests may be correct. So this year, the cost quarter is only 16.6%, but a large part of this quarter, April and why we used the carryover gas from last year. But it will go significantly down from Q2 onwards, but it certainly will not be a ten $12, $13 average basis.
Okay. Okay. So basically, whatever is the last cost part of that, the overall that might fall from 16 16 to 20 also, which is about a 20% on just on the gas cost, right? The other parts would be largely stable unless and until your 4 MMSCMD allocation is also taken away when gas costs will again possibly go up.
That is likely to go away.
So that is actually one concern within the overall CapEx part in the overall sort... Average will not go up because even 0.4% the price, we don't expect to go above 12%. Rather, it will bring down on an average basis below 16% because HPSC price is going to go down, so it will go down, not go up.
Yes... So for this quarter, I understand but whatever will be the number on access, it will obviously go up, right? Because this quarter, there is that $40 of the legacy of last year which were sopping strong. But on an overall basis, the cash cost will definitely go up Last year maybe because I don't have data. But from Q1 24, it will go down because it cannot be 16% on an average basis.
Sure, that's obvious. That's not new Okay.
And on from petchem, basically, this Pika sold on you were asking about last year. So on a ballpark basis, we last year had average of 12 plus.
Okay. So the last year, full year average is about $12 to $13 Yes, from a tenth overall segment OpEx was this particular year because of... Very bloated up 1Q would actually -- could end up being flat to slightly higher versus last year, right?
Maybe. But , last year, significant 1 cargo at $40 is a significant weighted average was -- but this year, either 12 or less than 12 remaining quarters. So it should -- the average should be around 12% to 30%. -- same by the last year.
Yes. So flattish versus losses. So there's not likely to be any OpEx savings versus last year in terms of the Gas Transmission segment
If price remains around 12% to 13% and last year it was 12 plus. So certainly, what you are telling is correct.
And if that point for MMSCMD goes away, then it would actually be 10s...
No, no, it will not be enough because that will sort at 12 or less than 12% average will not go up. Because the price gas price will be 12% only...
What sort of that in that in that case, on average lower than 12 because there is 0.4 of 1.4, which is a good 30% coming at the remaining 70% you are saying is 2 Maybe Vivekanand will give you detail.
But actually, that last year carryogas has increased the price significantly, but we'll share...
I'm not talking about 1Q. I'm not talking about all say in 2Q awards that you don't have that carryover some One MMSCMD out of 1.4 is obviously is about $12 or lower, right? And the point for is that... The average Right?
It has to be low. It will be it will be lower than until the full gas allocation is taken out.
Okay. Okay, sir. And petchems are as license that right now, both for polymers and for the LNG that you're using, would all of that be giving you some kind of hope of breakeven in set or we are close touch and go or even 2Q is difficult. EBIT...
Vikash, you are talking on a full year basis of Q2.
No, see full year prices prediction will be very difficult. But obviously, as footing from an excess yield perspective, we are the grid and extrapolate the current situation. or be near EBIT or EBITDA breakeven? Section is if this situation continues?
In Q2, unless prices goes up, we don't expect to be breakeven -- we make near to be breakout, but unlikely to assume breakeven a difference of $2 to $3. So we will be near to breakeven, but I cannot give you confirmation that will be breakeven.
So full year petchem profitability unless prices move significantly favorably is unlikely to be in the green...
Our input price goes down... Whichever prices move favorably, that import or out... Yes. So we -- actually, what happened in Q1, we didn't produce also because we were having inventory. So now that issue is not there. We are producing some contribution towards fixed cost now is positive because we are producing at full level. So that issue is not there. The remaining year also, we are likely to produce at full level. and the prices have softened. So the Q1, we used the higher price gas, we'll use the lower-priced gas, at least these are the certainties, and therefore, we will be better off than Q1 and Q2, Q3 onwards, we see more margins to our fixed costs or maybe towards profit. But as you also said, it is difficult because unless we know the price tenth price certainty.
Thank you, sir.
We take the last question from the line of Mr. Maulik Patel from Equirus.
Sir, for the LPG segment, are we getting the full domestic players? And what kind of a gas consumption can be bad for the currently?
For LPG, we are getting full domestic gas and the allocation is around 1.5. 1.7...
And we are getting this full number, right? Yes. And sir, in the petchem, you mentioned that currently at a price of around $10 per MMBtu of spot LNG, you may be breakeven, right, for the petchem?
I have not told that time you were LNG, I'm telling $10 to $11 maybe deliver LNG have to be lower than 1... Yes... So $10 to $11 lower gas, you can be breakeven in the petchem side.
Thank you...
Thank you, I now hand the conference over to the management for closing comments.
Thank you, dear investors and a lot of questions. We received -- Hopefully, we were able to answer most of the questions. I know 1 or 2 questions. We could not answer, and we'll be giving those answers offline. And thank you again for taking interest in Gail. Thank you very much.
Thank you, sir. On behalf of Ambit Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.