GAIL (India) Ltd

NSE:GAIL

Ladies and gentlemen, good day, and welcome to GAIL India Limited Q3 and FY '25 Earnings Conference Call hosted by Elara Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gagan Dixit from Elara Securities. Thank you, and over to you, sir.

Yes. Thank you. A warm welcome to everyone to discuss GAIL India Limited Q3 FY '25 results. It is our pleasure to be able to bring to you the management of GAIL India Limited, led by Shri R.K. Jain, who is Director, Finance; and other senior executives of the company. So with these words, I would now hand over the conference to the GAIL India Limited management. Over to you, sir.

Yeah. Thank you, Gagan. My dear friends from investors and analyst community, a very good afternoon to all of you to this earnings call for results of Q3 financial year '25. At the outset, I thank you all for attending the earnings call and would briefly touch upon the major highlights. I feel proud to share that GAIL has registered highest ever quarterly and 9 months PBT and PAT. In comparison to corresponding period of 9 months, PBT and PAT registered a stellar growth of 39%. It stood at INR 12,123 crores and INR 9,263 crores, respectively. This is on account of robust physical performance by almost all major segments and exceptional income of USD 285 million, which amounts to INR 2,440 crores as compared to similar period last year. I feel happy to inform our investors that company has declared an interim dividend at the rate of 65% of face value of shares for the financial year '24-'25, that is INR 6.5 per share.

On a standalone basis, GAIL has registered gross turnover of INR 34,912 crores, profit before tax of INR 5,029 crores and PAT of INR 3,867 crores in Q3 financial year '25. On a consolidated basis, during Q3 financial year '25, the turnover, PBT and PAT stood at INR 36,887 crores and INR 5,272 crores and INR 4,082 crores, respectively. I will take you through the major financial highlights. GAIL's gross turnover registered a growth of 6% and stood at INR 34,912 crores in Q3 financial year '25 as against INR 32,814 crores in Q2 financial year '25. The PBT and PAT during the quarter rose substantially by 46% and 45%, respectively, to INR 5,029 crores and INR 3,867 crores as against INR 3,453 crores and INR 2,672 crores in Q2 financial year '25, respectively.

This includes receipt of an exceptional income of INR 2,440 crores from SEFE Marketing and Trading Singapore as settlement towards withdrawal of arbitration proceedings. On a consolidated basis, the turnover registered a growth of 9% and stood at INR 36,887 crores in Q3 financial year '25 as against INR 33,861 crores in Q2 financial year '25. The PBT made a growth of 52% and was at INR 5,272 crores in Q3 financial year '25 as against INR 3,470 crores in Q2 financial year '25. PAT also followed the trade and registered a growth of 52% and stood at INR 4,082 crores in Q3 financial year '25 as against INR 2,694 crores in Q2 financial year '25.

I will take you through now through physical performance of Q3 as compared to Q2 financial year '25. The gas marketing volume during Q3 financial year '25 was 103.46 MMSCMD as against 96.60 MMSCMD in Q2 financial year '25. During the quarter, 37 LNG cargoes were imported, making it a total of 107 cargoes during 9 months as against 101 during April to December in '23-'24. Natural gas transmission volume decreased by 4% to 125.93 MMSCMD in Q3 as against 130.63 MMSCMD in Q2 financial year '25. The decrease is due to reduced offtake by Power segment, almost 3 MMSCMD and shippers volume 1 MMSCMD. The average capacity utilization stood at 60%, approximate 60%. Polymer production was 216 TMT as against 234 TMT in Q2.

Capacity utilization for the quarter stood at 106% of its nameplate capacity. LHC production was 283 TMT as against 252 TMT in previous quarter. The capacity utilization stood at 79%. The LPG transmission throughput stood at 1,157 TMT as against 1,124 TMT in previous quarter. The capacity utilization was 100% during the quarter. GAIL is -- about CGD GAIL is having direct authorization of 6 GAs and has an infrastructure of 195 CNG stations and 353,000 DPNG connections. During the quarter, approximate 5,000 new DPNG connections were added. The physical volume remained at 0.36 MMSCMD during the quarter. In the next two years, GAIL targets to add around 80 new CNG stations and around 120,000 new DPNG connections.

Now I will take you through the GAIL Gas Limited, which is 100% subsidiary of GAIL, the performance of GAIL Gas Limited. During the current quarter, turnover was down by 3% and stood at INR 3,043 crores as against INR 3,150 crores in Q2 financial year '25. PBT decreased by 7% and stood at INR 155 crores as against INR 167 crores in Q2 financial year '25 following cut in APM gas allocation. PAT was down by 8% and stood at INR 114 crores as against INR 124 crores in Q2 financial year '25. During Q3 financial '25, GAIL Gas along with JV added 25,000 new DPNG connections and 5 CNG stations and is having an infrastructure of 1,050,000 DPNG connections and 585 CNG stations.

In the next two years, GAIL Cargo targets -- GAIL Gas targets to add around 170 new CNG stations and around 5 lakh new DPNG connections. I will now take you through the status of ongoing projects. Pipeline projects, majority of the pipeline projects with Mumbai-Nagpur-Jharsuguda Pipeline, Jagdishpur-Haldia-Bokaro-Dhamra Pipeline, Kochi-Koottanad-Bangalore-Mangalore Pipeline and Srikakulam-Angul Pipeline are scheduled to be completed in coming financial year, that is '25-'26, whereas Gurdaspur-Jammu Pipeline is scheduled to be completed in financial year '26-'27. Petrochemical projects, majority of the Petrochemical project with 60 KTA polypropylene at Pata and 500 KTA polypropylene at Usar, 1,250 KTA KTA PTA at GMPL are scheduled to be commissioned in coming financial year.

Indradhanush Gas Grid Limited, IGGL's first phase is scheduled to be completed in financial year '25-'26, whereas Phase 2 and Phase 3 are scheduled to be completed in financial year '26-'27. Brief about CapEx; the CapEx for Q3 financial year '25 is approximate INR 2,122 crores, and this CapEx is mainly on pipeline, around INR 400 crores, petrochemicals around INR 750 crores, CGD project around INR 40 crores, operational CapEx and other projects, INR 770 crores, equity contribution around INR 130 crores. Now I will take you through the segmental outlook for short- to medium-term. In gas marketing in 9 months ended December 31, 2024, GAIL has achieved a physical volume of 99.84 MMSCMD and has earned marketing margin of INR 6,128 crores from this segment.

This INR 6,128 crores includes INR 2,440 crores that is one-off, as I shared, with respect to settlement of arbitration case with SEFE. We maintain the guidance of earning INR 4,500 crores of gas marketing margin in current financial year, excluding the exceptional income of INR 2,440 crores. We expect this number to be -- a total number to be around INR 7,000 crores, including the exceptional income in financial year '24-'25. I further wish to inform our friends from analyst community that as part of a group of three Indian oil and gas PSUs, GAIL has entered into a nonbinding MoU with Argentina state-owned oil and gas company, YPF.

The MoU covers the collaboration in exploration and production of hydrocarbon and critical minerals. Argentina is home to world's second largest shale gas reserve and carries potential of development, which will become a significant source of LNG for India in future. Gas transmission volume for '24-'25 is expected to be in the range of 129 MMSCMD to 130 MMSCMD. Average gas transmission volume for 9 months stood at 129.44 MMSCMD. Further, during next two to three years, transmission volume is expected to increase by 10 MMSCMD on a year-on-year basis. Polymer production stood at 612 TMT in 9 months for financial year '25.

The segment has remained profitable in 9 months for financial year '25 with a PBT of INR 121 crores as against loss of INR 399 crores in corresponding period during last financial year. Plant is currently running at more than 100% capacity, and we are targeting measures to enhance operational efficiency for sustainability. LHC production stood at 751 TMT in 9 months financial year as against 730 TMT in 9 months for financial year '24. Wide order dated 31st December 2024. MOPNG has ordered a cut in APM gas allocation to GAIL for LPG production. Due to this cut, we expect a drop of approximate 75 TMT in LPG production in Q4 financial year '25.

That's all from my side regarding the overview of the performance and projects. The management of the company is available, and we would be glad to clarify for any questions that you may have. Over to you, Gagan.

[Operator Instructions] We have our first question from the line of Probal Sen from ICICI Securities.

First, on the trading business, sir. This quarter, in terms of volumes, it seems the relative correlation between trading and transmission is a bit different, where transmission has reduced, but trading volumes have actually increased quite sharply. So how should we actually look at this correlation going forward for, let's say, the year next year? If we look at, let's say, 140-odd-MMSCMD around average for FY '26 for transmission, what should be building for trading? Just wanted to get your sense of that.

Actually, trading volume in this quarter has significantly increased because of the international sale almost [ 9 million ] of 9 MMSCMD has come from there. So there is no significant deviation as in transmission and marketing, it is going in a similar way. I think that is the disconnect which I should have explained that is creating confusion. So 9 MMSCMD has come from the international sales.

Got it. Okay. So sir, then the second question is, if we take out the onetime income of the settlement, which I presume is sitting, obviously, as you mentioned in the trading EBIT, then the trading EBIT for this quarter seems to have dropped very sharply on a Q-o-Q level or on a Y-o-Y level. Can you just take us through what has happened in terms of margins in this quarter?

Yeah, yeah. Very right. This quarter we had earned INR 400-plus-crores so precise INR 417 crores out of this trading business. The major reasons are two, three. One reason is that during this quarter, the prices of crude started falling. And what has happened because of that, we have a contract which has a 9-month average on sourcing side and on sales side, three months average. So it is immediately impacting because the recovery on three months basis and payment for sourcing is on 9-month basis.

So going forward, we will start getting the plus on account of the average changes because overall, it steps up. But immediately, it has impacted. That is one reason. It is around INR 200 crores plus that has given an impact. Second, during this quarter, the HH prices were a bit higher as compared to the previous quarter so our margin between the sales side, which is on crude and HH, which is unhedged. Normally, we are hedging to a great extent and the volumes which were unhedged had also impacted. Third, we have marketed volume more than the volume, which we have sourced. Normally, we do in order to take care of -- to avoid the risk of take-or-pay because normally in an international contract is 100% take-or-pay, whereas in downstream contract, it is 80%, 90% take-or-pay level.

So we normally sign contracts more than the source volume. So this month -- this quarter, what has happened, the -- most of the customers were drawing. And in order to fulfill those demands, we source spot cargoes, which were higher than the marketing price, which one-off situation sometimes happens sometimes we gain out of this also because when the spot prices are higher, lower we tend to gain. So this will happen during this quarter. And these two, three reasons have reduced our marketing margin in last quarter that is Q3. And this is also, you can say, the normal -- not a normal situation, that's how it has come down.

So if I were to quantify this, sir, you mentioned INR 200-odd-crores for the first reason, which was basically the mismatch in contract terms. For the other two reasons also it would be somewhere INR 200 crores, INR 300 crores each -- so that's caused the INR 800 crores, INR 900 crores loss.

More than that. It is for other two reasons, it is more than that, around INR 600.

INR 600 crores each for each region, is it?

No, no, no. INR 200 crores for first region that is 9 months average versus the 3 months average and the HH volume around INR 150 crores because of increase in price and fulfilled our commitment by sourcing because in this year, we have short of volume. '26 onwards, we have a lot of volume. So we have fulfilled our commitment in downstream by sourcing -- spot unfortunately was higher during this quarter, which led to INR 600 crores. So all these regions have led to more than INR 900 crores of drop.

Understood. Understood. Right, sir. That was my first. If I can sneak in one last question. How should we then look at -- you have given guidance of INR 4,500 crores, which is obviously going to be net this year, net of one-off. For next year also, should we work with somewhere around this number or can it improve once these?

We have been maintaining next year's number. We have in earlier earnings calls, given that marketing margin will remain in this range only for next year as well.

So around INR 4,500 crores minimum base case we should build in is what you're saying.

That has not put the word minimum at this stage, but we will be around INR 4,500 crores.

We have our next question from the line of Puneet Gulati from HSBC.

My first is, if you can also talk about any long-term PPAs that you're looking to tie up at this stage to reduce this kind of marketing volatility?

Already we have tied up. Actually, you know the international market is tied during 2025. So in order to meet those shortage of volume, we have signed 0.75 MMTPA that is one cargo per month from April onwards at a very good rate. So that is one contract we have signed. So we have mitigated those shortage on immediate basis. It means April onwards we have one cargo extra available during every month. Second, '26 onwards, we have signed contract for 1.53 MMTPA amounting to 1.5 cargo per month. So if you add both, in '26, we have 2.5 cargo additional. And this year, we have from April onwards one cargo per month.

Okay. So the loss that you incurred was INR 450 crores because of shortage of volume that should go away from next year onwards?

That's what I explained and not INR 450 crores. We have lost INR 600 crores because of this because we, as a responsible organization, continue to fulfill our commitment, we could have put, but we did not do that because we know that this is a temporary phenomenon, one-off case. A lot of time, we gained out of it also because sometimes spots are significantly lower than the contracted price that time we gave. But this time, unfortunate situation, the prices were higher. So this is one-off kind of situation.

So just to conclude on this from my perspective, do you think volatility in marketing will [Technical Difficulty] or because of your hedging policies it should reduce from here on?

It is already reduced. You see last three years we have been continuously giving you guidance that we are overshooting the guidance. We gave the guidance for '22-'23 for INR 3,000 crores in spite of geopolitical situation. We gave the guidance of initially INR 4,000 crores then INR 4,500 crores and ended up with INR 6,000 crores last financial year. This financial year, we gave the guidance of INR 4,000 crores to INR 4,500 crores until quarter two. In quarter two, we said that we will be at earning INR 4,500 crores, I'm maintaining that.

Understood. That's helpful. And secondly, there has been this trend of rising spot prices. Do you foresee a risk of your transmission volume on account of that, the growth that you're projecting of 10 million cubic meters for FY '26?

No, we do not find -- see any risk of transmission volume because -- nobody puts their plant on a spot price basis. Spot is only to mitigate the immediate need or one-off kind of situations or sometimes power plant consumes. So normally, the transmission volume does not get impacted because plant contracts for which plants which are coming along new pipelines for a longer period, they continue to take volumes. So therefore, we do not see any risk in terms of capacity utilization. We have been saying and last year, we said that our volume will increase around 10, which are nearing to 10. And again, we have given guidance for 10 MMSCMD for coming two years. We are hopeful that, that will happen.

And lastly, on this SEFE, while you recovered INR 2,440 crores, how much did you -- in your view, did you lose by them not supplying? Have you been able to recover the entire loss that you made during those quarters?

Settlement is like a marriage. You don't lose [ or gain ]. So we have done what we thought is best interest of our organization, both the organizations.

We have our next question from the line of Amit Murarka from Axis Capital.

So just wanted to understand like from which customers did you see a fall in transmission volume in third quarter?

Power, mainly power, 3 MMSCMD.

Okay. And are there anyone else as well because I think it's a drop of almost 6 almost.

The reduction is almost 4 million, 3 million has come from power. And one more unfortunate event has happened, one of the pipeline which is led by GSPL, not GSPL, the GSPL Group, the GIGL pipeline to IOCL, that has been authorized by PNGRB. That has taken away some of our volume.

So that would then be a permanent shift, right, I believe?

Yeah, I will not be able to say at this stage because we have challenged that.

Okay. And so generally like what is the outlook you gave like segment-wise outlook as well? So what is the outlook for Q4 and for '26, if you can provide?

Q4, which outlook you are asking?

I mean the customer-wise outlook. No, no, transmission customer-wise outlook you gave, right, power, fertilizer. So if you could just provide what is the outlook for those segments?

So we expect that we will be continue to transport around 129 MMSCMD to 130 MMSCMD, which will make the average yearly average also around that level, which I said in my opening remarks that we expect on a yearly basis, 129 MMSCMD to 130 MMSCMD and which actually 9 months average is 129.45 MMSCMD around that level. So we continue to expect that we will be doing in this quarter around that level.

Sure. Also, like is there any progress on the discussion with PNGRB on the transmission tariff revision?

Actually, PNGRB is doing a lot of many things. One, our tariff petition, they are processing, but bit slow. Anyway, that benefit is available to us. And the more they are delaying the more tariff increase will happen on net present value basis. PNGRB has also set up a committee -- industry committee to review the tariff mechanism to give -- to take -- to address the issues raised by various transporters, which will also benefit to this transmission company. Recently, they have held the committee with the industry. So all these things will give a lot of positives, and we are expecting that to happen in next financial year.

Okay. Next financial year, but by H1, H2, what would be the expectation now?

H1, H2 next financial year?

No, I mean by when next financial year, you mean towards the end of next financial year or would you think that will come earlier?

I give based on the understandings of PNGRB. So I gave the date last con call around 1st April. So it is becoming difficult for me to -- because I am also taking guidance from them or I am taking the information from them. So currently, I maintain the first quarter, they should come out with the tariff order.

Okay. Understood. Sure. And lastly, what was the input gas cost for petrochemicals?

You can say around $10.

We have our next question from the line of Sabri Hazarika from Emkay Global Financial Services.

Yes. So firstly, on this LPG APM allocation cut, so you would be cutting volumes, right, rather than running the plant in LNG?

No. LNG, it doesn't make sense for us to run the plant. So whatever APM allocation, currently, we are running the plant based on the current allocation. But being a portfolio player, we have the ability to source time-to-time LNG, which is affordable to LPG plant. So immediately, it is not available. We are hopeful that we will be able to source the LNG, which is actually making sense for us to run the plant at the level which has been designed or which we were [ running ]. So not immediate basis, but certainly beyond that, we'll be looking for the LNG at the affordable price.

Okay. And what could be your like targeted EBITDA? For this segment, I mean, do you have a target EBITDA or target earnings run rate where you'd be like -- based on which you'd be like taking a call on the LNG prices prevailing?

I will come back specifically maybe offline to this question. I'm not ready with the answer.

Okay. Secondly, on the petrochemical front, how do you see FY '26 in terms of like would you be like at a breakeven level or at a profitability level? How do you see FY '26 and especially on the back of the new plants also coming up actually?

Yeah. So firstly, about Pata. Pata, we expect that these prices are at bottom level. Currently price is around INR 88,000 per metric ton and these prices are at this level for quite some time. So we believe that this is the price level, which is at least going to maintain and there can be upside. So the issue is that how cheap gas we are able to give to Pata plant.

Recently, HS price were being higher, so we could not earn the profit what we would have thought a quarter back. So whatever we have earned in 9 months, we feel that next financial year, we will be better off because prices, we do not believe that it will go down. It may go up. But asset prices and the gas prices will soften. Therefore, this will increase good profit margin for Pata Petrochemicals, and we expect it will do better than this year.

With respect to the PDHPP plant, which is coming up, it is not a LNG or gas-based plant. It is a propane-based plant. So we have already tied up propane for long-term contract for 15 years. And propane and PDHPP, we have said polypropylene has good -- got a good correlation, and we expect that we'll continue -- we'll earn a good margin on sustainable level at PDHPP.

Okay, sir, fair enough. And just one small question about IGGL, you mentioned that Phase 1 would be ready in FY '26. So by Phase 1, what do you mean by -- I mean, it could be like all the three different routes under Phase 1? I mean, what kind of volume, especially for lines like Barauni-Guwahati and all you are expecting from this?

Do you have any information?

So we'll come back. You can just post this question, we'll be [Technical Difficulty].

We have our next question from the line of Varatharajan from Antique.

So on this LPG front, so far, whatever we are getting in terms of [ ATM ] is completely stopped or are we still getting any?

No, no, we are getting only 0.6 MMSCMD, 0.63 MMSCMD has been reduced. So we -- it is not complete stoppage.

So earlier how much are we getting?

We were getting 1.75 out of that 0.62 has been reduced. So 1.13 is available.

And was there -- like this is only half of the order which was actually put out in January. So the second half also could be cut? Is that how it is?

I'm not getting very clearly to you.

No, the 0.63 was half of what they originally proposed -- in phases, they'll do a particular volume. So this 0.63 is half of it or it is 100%.

One third.

One third, okay. And secondly can you just explain that 9 months versus three months thing which you mentioned on the trading side where we had to make that 9-month payment? And like how does it work on an ongoing basis.

Actually, I'm not getting very clearly to you. Can you please either audio, you have to be very near to -- I don't know why you are not -- I'm not getting.

Is this better? So this like 9 months, what you are referring to in terms of the payment, if you can explain how that mechanism works? And is it an ongoing arrangement that we'll continue to have the 9 months versus this 3-month discrepancy?

Actually, we have upstream contract where crude price is based on 9 months average, right? And downstream, this market is on 3 months average. So if you -- when the crude price falls, so immediate 3 months average, which we bill to customer is lower. So our realization goes down. But our purchase prices on 9 months, that is higher. But it actually sets up over a period of time because the prices on rolling basis, we are able to recover whatever we are losing currently.

Yeah, we understand that, sir. Would it be possible to give us like what volume is in this particular bracket under this contract?

So you can assume that around 10 million?

10 million cubic meters per day.

10 MMCMD, yes.

We have our next question from the line of S. Ramesh from Nirmal Bang Equities.

Just the thoughts on gas marketing, when you talk about this -- crude-linked sourcing and sale price and Henry Hub-based contracts. Given the volatility in crude price to assume crude prices will decline, how will that impact your delta in the Brent-linked contracts? Because if your 3-month average is going to continue to fall, will that not be a negative for the margins on the 10 million cubic meters a day. And similarly, if Henry Hub prices keep going up, wouldn't that also be a challenge in terms of being able to pass it on, on the unhedged portion? What are your thoughts on that?

Actually, largely Henry Hub contracts, we have tied up on a back-to-back basis. Even if Henry Hub prices increases, we will be able to pass on to customers. So that does not impact us significantly. Even in my detailed analysis, which I explained to one of our friend, which asked the question, it was only INR 74 crores, INR 70 crores, INR 80 crores, which impacted us.

So it does not impact us. Secondly, we do not expect Henry Hub price to be such a level continuously. Henry Hub was also $1.65, $2, $1.9 for quite some time. But all of a sudden, recently, it has increased and now it has started showing different trade. So even in the worst of time, it was impacting for the very, very miniscule volume, which we have not signed on a back-to-back basis.

And what about the crude prices, if they were to decline, how would that impact this lag between 9 months sourcing and 3 months?

It doesn't impact us on a yearly basis, almost we get a square -- because on a rolling basis, our sourcing start cheaper when -- because initially, 3 months will be at a lower rate, then I'm sourcing it higher later that higher prices goes out from the 9 months and we also start getting at cheaper rate. So therefore, we are able to recover. So on a rolling basis, it doesn't impact us.

Okay. Any inventory loss in the gas marketing segment in this quarter, similarly any inventory loss in petrochemical?

No. No, no.

Okay. Okay. Finally, on the CGD gas allocation and the new well gas, we understand that the APM gas is going to see a natural 7% decline that will be replaced by new well gas. So what is the kind of line of sight or visibility that the industry has in terms of the volume of new well gas that will be available for City Gas distribution to make up for the 7% decline?

Can you come back specifically? I'm not able to understand.

Yeah, yeah. So basically, we understand from [ Mahanagar ] Gas that there is a proposal to reduce the APM gas allocation further by 7% every year based on the natural decline of the APM gas production and that is likely to be replaced by the new well gas from ONGC. Now the question is to what extent will the new gas production go up to replace the 7% decline that is expected in the APM gas?

I think this is better that you ask ONGC because how much production will increase, I am not in a position to answer you.

We have our next question from the line of Mayank Maheshwari from Morgan Stanley.

My first question was related to the marketing side of the business. In terms of volumes for next year, considering the deallocation of gas for City Gas, do you think GAIL will be able to kind of take market share in terms of marketing next year, considering the requirements for City Gas on even LNG now?

Yeah. Actually, the right question. We have been able to side up for 5 years contract for a significant amount in last 2 months. And going forward, if gas is cut for CGD, we will continue to tap that market.

So sir, a follow-up on that, considering the requirements are reasonably big over the next 3 to 5 years, correct, I'm not talking about this next year. How are you kind of thinking about tying it up in terms of sourcing of volumes as well? Does that mean that you'll have to kind of be a bit more aggressive next year in tying up another 5-, 10-year volumes?

Yeah, we are already scouting for additional volume. As I explained to another question that just a month back, we tied up around 0.75 MMTPA. We have already tied up almost a year back for 1.53 MMTPA on different sources, and we are already in the market to scout for more volume to meet the increasing demand, not only from City Gas distribution, from other sectors which are coming along our pipelines.

And sir, on basis of what your conversations are, are people more inclined to use Henry Hub contracts back-to-back or oil-linked contracts or do want a mix half-half kind of a thing with long-term sourcing?

We have mixed kind of demand. When Henry Hub was around $2 to $3, a lot of demand was on Henry Hub basis. And when Henry Hub starts going down, people again start thinking about crude. So it's a period in which you sign the contract. People have very, very short vision; when the Henry Hub is down a lot of demand comes from Henry Hub.

When Henry Hub starts increasing, they look for crude. It depends on which time you are signing the contract. I remember 5 years back, nobody used to talk about Henry Hub. And now 3 months back, a lot of people were demanding Henry Hub. And in fact, we have tied up, as I said, all the volumes at Henry Hub, we do not have any extra volume. So it depends basically at which point of time people are coming to source the gas from us.

Fair enough, sir. And sir, last question was on Dabhol. Any update and progress on Dabhol?

Dabhol will be completed by March '25.

So the test cargoes are in or coming up now? So for the capacity, are you started kind of testing commissioning in terms of the breakwater, etcetera?

That's what I'm telling. The breakwater work will be completed by March '25. We have already prepared ourselves to take the approvals from Marine. And we expect that after March, by May, we will have the approvals from the authorities to bring the ship during monsoon. And until April-May, we are anyway able to bring cargoes at Dabhol. So what we believe is that here onwards, the Dabhol is a full weather terminal.

We have our next question from the line of Kirtan Mehta from Baroda BNP Paribas. The next question is from the line of Kirtan Mehta from BNP Paribas.

Yeah. First question was about marketing. How much of the volume in the marketing segment, which we are sourcing on HH basis, but selling on crude basis, would there be certain volume on that basis?

So nowadays, we are almost buying on assets and selling on assets. There is no basis most of the volume, buying some volume, which is very, very small volume, which we have ourselves kept it open. Otherwise, we have signed on back-to-back index.

Right, sir. Second question was about the APM gas allocation for the City Gas distribution sector. We believe in January around 2 MMSCMD allocation was offered higher on the APM gas business to City distribution sector. Against this around 1.3 MMSCMD volume was reduced for both GAIL and ONGC. Could you explain us where was the difference of 0.7 MMSCMD which was made available to the City Gas distribution sector?

I am not aware from where 0.7 came. Any of you know? No, I don't have any update or clue about it.

And when would the next allocation be revised? Would it be in February, middle of February that the next revision will take place?

It is quarterly revision, I understand from my colleagues.

The last question was about -- you mentioned about the GIGL volume taking over some of the IOCL volume. Would you be able to indicate the quantum that has flown there? And what would be ground for challenging this?

Actually, we already had a pipeline which was connected. And this pipeline as per PNGRB order I'm telling you was laid unauthorized. However, PNGRB has authorized by putting some penalty. So challenge is that the infrastructure, which was already there, contracted volumes were there. So if you allow that other pipeline to be laid, having the existing pipeline, that is not correct. That's what is [Technical Difficulty].

And how much of the volume is being challenged here? And what would be the volume which will have an impact because of that?

So I can tell you the volume may be more or less capacity of pipeline is around 9.5 million to 10 million. Currently, the volume flow was very less, 3 million to 4 million to 5 million. So capacity was more. So impact immediate has come from 4 million to 5 million. Sorry, I have corrected, 1.5 million.

[Operator Instructions] The next question is from the line of [ Mehul Panjwani from 40 Cents ].

Thank you so much for the elaborate explanations on the performance of GAIL. I have one question. You have mentioned that there is an impact which is going to be squared off by the fourth quarter. Is that for the entire INR 900 crores, which you mentioned or it is for a partial amount? I mean, if you can elaborate, explain that.

I have never said that it is going to be squared off in next quarter. I said over a period of almost a year, it gets squared off because a contract which is sourcing contract, [indiscernible] contract on 9-month average and downstream is 3 months average. So it can never be squared off in a quarter, but it starts going from this quarter onwards.

Okay. So can I say that it will happen from -- it will start happening from Q4 of FY '25 and it will end somewhere in Q3 of FY '25.

It will give -- it will -- whatever we have not been able to recover during last quarter, we'll be able to recover at least next year. That will start going down from this quarter and will recover in next year.

And sir is it impacting the entire INR 900 crores because of this impact or?

No, no. This entire INR 900 crores is not on that account. I specified three parts. One is the INR 200 crores is on this account.

Okay. Okay. And what are the -- sorry, if you can elaborate a little bit on the other?

We fulfilled our commitment in downstream by sourcing some spot cargoes because normally, we oversold the volume, then the source volume in order to take care of the issues of take-or-pay, 100% take-or-pay and upstream versus downstream 90%. And whenever shortfall happens, we actually source through spot. Sometimes spot prices goes lower, sometimes higher. This time, unfortunately, normally, we are able to source around that price or lower than that price. So that was the reason.

Okay, sir. So now this you're saying that you have sold more than what you could source -- or I mean, I'm not yet gathered what is exactly that, but is it because of government regulations or is it just a business?

You will be guided, not worry about it. What I am telling, the upstream contracts are 100% take-or-pay, right? Downstream are either 80% or 90%. It means downstream customer has a contractual obligation to take lesser than the upstream contract. Suppose in a situation, the downstream contract take lesser where we sell the 10% or 15% volume. In order to mitigate those obligations, we actually tie up for those 10%, 15% more.

Sometimes situation happens that customer takes 100% -- more than 100%. It means around the tie-up quantity, 110% and we fulfill those requirements through spot sourcing. That doesn't happen every time. That is what the statement. Second, the spot prices has largely given us benefit always that we were able to source cheaper gas to fulfill those increased obligations. But this time, in Q3, Q2, Q3 spot prices are a bit higher.

Okay. Okay. Yeah, sir, one more question is on tariff revision. You mentioned that somewhere in next financial year, we can expect tariff revision, right? So what is the current tariff? I mean -- and what is the -- what was the tariff revision? When was the last tariff revision which happened? And how much was the tariff revision?

Tariff revision happened with effect from 1st April 2023, right? And next question is what?

Yeah. And how much was the tariff revision.

It is INR 59 per MMBtu, INR 58.60 to be precise.

Okay. And what is the logic? I mean is there a logic which is used for revising the tariff or what is it? I mean -- or it's completely depending on the Board, the PNGRB? Does the tariff revision happen based on some rationale or it is just -- it depends on the PNGRB?

No, it happens on rationale. PNGRB had asked us from tariff petition. We filed in August '24. They are reviewing. Now they have to do public consultation and issue the tariff order, right? And the tariff order last time made -- they moderated around more than INR 10 from the tariff applications we submitted largely on account of gas price, INR 7 per MMBtu approximate.

They considered the gas price of $3.61 for internal consumption in compression, which is not even an APM price. Tariff order itself says you will be getting at least HPSV price. So there is a significant amount of under-recoveries available. We have submitted our tariff based on the price, which was indicated in the tariff order and tariff order processing normally is done in 6 months, but we expect -- it has be delayed -- we expect next quarter -- first quarter of next financial year.

So sir, what was the price which you have quoted in the document?

Sorry to interrupt, sir. May I please request you to rejoin the queue?

Sorry, sir, this is a follow-up question. I'm not -- I'm answering the -- I'm asking the question more detailed. Sir, if you can please clarify how much is the tariff you have quoted for revision?

No, we have committed INR 78 per MMBtu as against current tariff of INR 58.60.

Okay. Sir, last question, when is the record date for dividend?

I think 7th of next month.

We have our next question from the line of [ Shantanu Satia from Indian Petrol ].

I was just wondering that instead of the production of LPG, didn't the government offer you a subsidy like with the petroleum companies, a subsidy which can be paid to you if you continue your production at LNG prices?

There is no proposal or there is no information to us.

So I mean, if you are informed that subsidized to the amount of the [Technical Difficulty] production?

This is all hypotheses. We'll do when it comes.

We have our next question from the line of Somaiah V from Avendus Spark.

Sir, first question is on the downstream. You said there is a mismatch or a higher demand this time around. If you can just quantify the volumes there, it would be helpful. Sir, you said in the downstream, there is a higher demand so where you had to source spot cargoes. So what would have been that volume in MMSCMD, if you can just give that number, the mismatch number?

Last quarter?

Yes, sir, Q3.

Around 2 MMSCMD for last quarter.

So basically, 2 MMSCMD, we had to procure some spot to meet that extra demand that came from downstream.

Yes, yes.

Got it, sir. And also, these were mostly sold on Henry Hub or Brent, whatever we sourced on spot?

We have not linked to customer where sourcing because we have marketed and all the indexes where.

No, no. No, no. I'm looking for what is the customer -- what the customer ended up paying for this source. They ended up paying on Henry Hub or they ended up paying based on Brent-linked contracts.

That's what I'm telling. Both type of customers were there. We supplied spot cargoes wherever the shortage was there. It is for both kind of contract.

Okay, sir. Sir, also, we used to earlier say wherever there is basis risk between oil and gas or gas and oil in terms of sourcing to the point that we sell, we used to hedge. What is the quantum of hedging that we probably have, given that we are giving an outlook for next year in terms of what we can expect in terms of EBITDA? What is the quantum of hedging that we have and for how long we have hedged and what kind of spreads if you can give that would be?

Yeah. So spread, I have already said it is around INR 4,500 crores for next financial year. Regarding hedging, I already said that we have tied up most of the volume on back-to-back basis. Therefore, the requirement of hedging for covering the basis risk has gone down.

Understood, sir. So any minimal number that if you can give around hedging that also will be helpful. And also in Q3, any quantum that you can give on hedging gains? In Q3, was there any hedging gains, any quantum that you can give?

So we will give you right now. I do not have that information. We'll give you just come offline, we'll give you.

We have our next question from the line of Yogesh Patil from Dolat Capital.

Sir, you are guiding a MMSCMD volume growth in the gas transmission segment for a period of FY '26 over FY '25. So from where this gas will come, if you could provide some clarity or breakup on which sectors will be the gas consumers on your pipeline network?

Certainly. So CGD offtake, we expect 2 MMSCMD to 3 MMSCMD will increase because CGD is growing at the rate of around 12% even if 4 million volume increases in CGD sector, we have almost 70% pipeline infrastructure in the country. [Technical Difficulty] So CGD, we expect 3 MMSCMD volume will come from CGD. 1 million volume with progressive ramp-up will come from NRL -- the pipeline -- the refinery, which is alone IGGL and source is our Jagdishpur-Haldia-Dhamra pipeline. The incremental increase in refinery of IOCL, around 12 MMSCMD in total, Paradip 3.75, Haldia, 2.8, Barauni 2.6; Guwahati 0.6, [indiscernible] now 2.2. Further, we are also putting our pipeline like Mumbai-Nagpur-Jharsuguda and Srikakulam-Angul, which are going to be commissioned, their volume will also come.

We have our next question from the line of Vikash Jain from CLSA.

Rakesh-ji, if you could explain of your current volumes, what is the share which comes from refinery and petchem because these are very price-sensitive customers. What is the percentage share of the current transmission volumes, which comes from there, please?

Transmission volume, just hold on if we have marketing transmission. Vikash, we will give you. Actually, I have only marketing slide about breakup, but not the transmission slide.

Okay. If you could give the marketing share as well, sir?

Yeah, certainly. Meanwhile, my colleague have given me the transmission volume breakup, which you were asking for. Let me give total breakup. Fertilizer, around 41% share, CGD around 25% share; power, 7%; oil and refineries is 9%. And then internal consumption is around 6%, steel, 2% and others 11%.

Ladies and gentlemen, that would be the last question for today. And I now hand the conference over to Mr. Gagan Dixit from Elara Securities for closing remarks. Over to you, sir.

Yeah. Thanks to all the participants. Special thanks to the GAIL India management for sharing their views on the company's quarter three performance. We take this opportunity to thank Shri R. K. Jain and his team once again. Would you like to make any closing comments, sir?

Yeah, yeah. Thank you very much. And hopefully, we have been able to respond to your -- most of the questions. I remember one or two questions we could not answer immediately. And the participants can ask us offline. We will be able to respond. And if you have any more questions which you could not ask, please come back, we'll be able to respond to you. Thank you very much.

You can mail your questions to irc@gail.co.in.

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