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Petronet LNG Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Petronet LNG Limited hosted by Antique Stockbroking. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stockbroking. Thank you, and over to you, sir.
Thank you, Margaret. Good afternoon, everyone. It is a pleasure to welcome all the participants and the management for this call to be discussing the fourth quarter results of Petronet LNG. I'd like to hand over the floor to Mr. Debabrata to take the proceedings forward from the management side.
Yes. Good afternoon. First, we would request our Director of Finance to give his opening look.
Very good afternoon to all of you. This is V. K. Mishra, Director of Finance, Petronet LNG Limited. First of all, I would like to give a brief snapshot of the financial business for this particular quarter and the year, financial year 2021-22.
So first highlight is that we have generated first ever highest PBT of INR 4,470 crores -- INR 4,474 crores and highest ever PAT of INR 3,352 crores as against PBT of INR 3,968 crores and PAT of INR 2,949 crores. So the growth in PBT and PAT has been 13%, 14%, respectively. And again, if you look at the throughput in Dahej terminal as well as overall throughput in Dahej and Kochi, I would like to mention here that because of the higher LNG prices, the [ capacity ] of our volume has not been as high as we anticipated in the beginning of the year. But it's true, we are able to maintain our profitability, grew better. As you see the throughput in Dahej terminal has been to the extent of 178 TBTU and against 196 TBTU in the previous quarter and 204 TBTU in the corresponding quarter. And total throughput have been 190 TBTU in the current quarter as against 208 TBTU in the previous quarter and 218 TBTU in the corresponding quarter.
And overall throughput for the financial year 2021-22 has been 847 TBTU as against 896 TBTU in the previous financial year. And if you go to the financial results of the quarter, then it has been encouraging. Not as good as last quarter, but far, far better than the corresponding quarter of previous year. So PBT has been INR 984 crores as against INR 1,533 crores in the previous quarter and INR 856 crores in the corresponding quarter.
And PAT has been in current quarter to the extent of INR 750 crores as against INR 1,144 crores in the previous quarter and INR 623 crores in the corresponding quarter. So this has been the highlight and the growth of PBT has been 15%, whereas PAT has grown by 20% on -- when compared to the corresponding quarter.
So this has been the financial highlights. And apart from that, the company has declared a dividend of INR 4.50 per share, making a total of almost 150% as it was in the last year.
So that's all from my side. Now [indiscernible] open for questions.
[Operator Instructions] The first question is from the line of Abhishek Nigam from B&K Securities.
Just 2 questions for me. So on the tariff of Kochi, if you could just give us a sense of how much decline has happened in this year, here going forward? And second, in terms of the additional committed volumes, so when do the additional volumes start coming in? And how do -- we are building the ramp-up for this?
The first question is regarding how much impact it has been. So as I just wanted to intimate to you that, it has been reduced from INR 79.14 per mmBtu to INR 70. So this is the reduction which has taken place from 1/4/2019. And total impact, if you look at, it has been in the range of INR 214 crores. So that has been the hit which we have taken in the last quarter, Q4 this year. And now all the issues have been settled. And going forward, it will be charged at the rate of INR 70 per mmBtu and I think 5% increment will be there every year. So from 1/4/19 if you charge INR 70, then that's 5% every year. So that 5% has become now, how much is -- INR 81-point something is there per mmBtu
[Technical Difficulty]
Give me moment when I connect this. Sorry about the interruption, you may proceed now.
Yes. So total, I was just mentioning that tariff is INR 70 if you look at from 1/4/2019, and growth is there 5% each year. So it has risen to INR 81 in this year.
Okay. And sir, on the volumes, if you could give us some road map as to how we should build it and how much of the volumes -- additional volume?
Volume, actually, if you must be knowing the history of this contract of [indiscernible], you must be knowing that we had negotiated the contract way back in 2017. And it has been arrived at that for negotiation whereby we got the price reduced to some extent, we have taken some additional volumes to the extent of 1.20 MMTPA. So it has been committed by our officers that they will be committing 50% of that, [ 0.6 ] MMTPA we will be committing to our terminal, and I think this will be starting from 2023 onwards. So from that point of view -- from that time till the end of the contract, that will be the earning which will be flying into our terminal.
The next question is from the line of Puneet Gulati from HSBC.
Thank you for the clarification. Just a bit more here. So now there are no more receivables on account of Kochi. Is that understanding correct?
No more receivable on account of?
On account of Kochi.
No, no, it has been settled. It has been completely settled and all have arrived at an agreement. And we have, in fact, reached an agreement, a written agreement and now it will be the tariff. It will be charged at the rate of INR 70 from 1/4/2019. So it is settled now.
Yes. And INR 178 crore credit note has been given, which is basically...
Yes, yes.
Yes. So if I were to look at actual revenue, I should be adding this number to the top line on a normative basis?
If you need to see the actual revenue, you need to add INR 214 crores.
INR 214 crores you must have add, because INR 170 crores is still December, I think. So January to March it is becoming INR 214 crores. The total year is INR 214 crores.
Understood. Understood. Correct. And secondly, on your use and pay charges. So first of all, can you share what is the service income for the fourth quarter?
Service income for the quarter has been...
Fueling revenue, it has been to the extent of INR 2,000 -- for the quarter, you are asking?
Yes, for the quarter and full year revenue?
For the quarter, it's INR 463 crores. On annual basis, this is INR 2,389 crores.
Okay. And the number of INR 83 crores is inclusive over and above INR 463 crores? That's how I should read that?
The INR 460 crores is after reducing that, because we have already taken that -- we have included it, INR 83 crores we have included, because we have charged as income.
Correct. So INR 83 crores is a part of INR 463 crores.
Absolutely, absolutely.
Understood. And any progress on -- if you can give a bit more detail on what's happening on the CapEx program?
CapEx. So CapEx, we have been reiterating time and again that we are already constructing 2 tanks at Dahej with a cost of almost INR 1,200 crores. And another project which is coming in expansion of the Dahej, we are expanding by 5 MMTPA more, so capacity will increase from INR 17.5 crores to INR 22.5 crores. It will be completed in the next 3 years, maximum by 2024 and/or maybe beginning of 2025. So 5 MMTPA and perhaps we are doing in 2 phases. The first phase will be completed in 2024 itself. And the next phase, 2.5 MMTPA, will be complete in the next 6 months.
So basically, it's a debottleneck of the existing plant which we are carrying out. And through that, we are increasing the capacity. Total CapEx will be to the extent of maximum INR 600 crores. And you can see that it's a brownfield expansion. If you go for a greenfield expansion of such a 5 MMTPA terminal, you will have to spend not less than INR 5,000 crores to INR 6,000 crores. But we have been able to expand 5 MMTPA only with the CapEx of INR 600 crores.
So that's why it's low hanging fruit. We have taken that. And the net CapEx target is getting, target which we are going to construct the CapEx was around INR 1,700 crores. So this is what is the CapEx for Dahej terminal we are looking at. Apart from that, we have ambitious plan of having one terminal at the east coast which we are planning, and if it materializes, then it will be costing INR 1,500 crores to INR 1,600 crores initially. And it will be an FSRU terminal.
And apart from that, other things we are looking at are SS LNG, small scale LNG, things are also going on. We have already got some LNG dispensing units for 4 placing agents in Tamil Nadu, Karnataka. So accordingly, we are establishing growth for the registration with the IOCL. So CapEx is not much, but it's minor, because there are [ fees ] that is given to this LNG usage and transportation sector. So if it succeeds, then we can further expand it in other [indiscernible] areas too. So this is not a very big CapEx item. As soon as our other things could be cleared by the Board, they will convey you the CapEx.
But the petrochemical plant is still on the table?
Well, it is still on, because we have not taken Board approval. So we are still doing some studies and the detailed feasibility is to be conducted. All those things are going on. So we still have to get the solar port. So that is on. If again, I will discuss with you, it's very -- it's an opportunity for us that right now, there is huge demand for that petrochemical. And basically, it will be not a very big plant for the PDHPP only. So what we are doing is a propane dehydrogenated plant, you can say. The propane dehydrogenated plant, it's a PD plant. Basically, there is a huge demand for that particular item. And if you look at the margins there, it's very high. So it's connecting there with our business. So we are looking at that. But only thing after DFR is prepared and it is approved by the Board, then only we will come to you and say that we are undertaking this.
Okay. And how much have you spent on CapEx for the 2 tanks out of INR 1,200 crores?
We have spent, I think, INR 106 crores -- I'll just tell you, because the exact number I don't have right now.
Exact number and time line for completion of that?
A range of INR 200 crores maximum for [indiscernible] tanks.
And time line for completion?
INR 150 crores to INR 200 crores, you can take as estimate.
And what is the time line for completion for the tanks?
Time line is only, I think, 36 months from the date of beginning. It must be completed by 2024.
And would you do parallelly the extension of Dahej?
Yes, it's parallel. It's not correlated with tanks.
Okay. And that time line is also similar, '24, '25?
Almost similar. Only it may be exceeding, I think, 2024, maybe by June or May 2025.
And JP will be after that?
And first half will be -- actually, it's 2 phases. That's what I was telling. First phase will be completed by September, October 2024. And the next phase will be completed by 2025, March or April, maybe May maximum.
And the JP? Last one, sir.
JP will be -- there because we are -- we have to take -- to award the contract. So approval has been given by the Board, so we are undertaking that. It will take 3 years, you can say.
From now, 3 years from now?
From now, whenever we start, subject to the date.
The next question is from the line of Probal Sen from ICICI Securities.
Am I clearly audible?
Sir, I would request you to come closer to the phone.
Hello?
Yes, sir. Please go ahead.
I have 2 questions. One was with respect to the volumes decline even in terms of long-term cargoes for this quarter. I apologize if you covered it earlier. I just wanted to understand that the long-term cargoes pricing still remains fairly favorable, so what has sort of driven the kind of 20 TBTU Q-o-Q decline in terms of even long-term offtake? If you can just give us some sense of that?
Yes. Actually, it's as per ADP. If you look at the Annual Delivery Plan, so accordingly, there has not been any default. In third quarter, it is on the higher side, but this is as per the Annual Delivery Plan. So it's not that at each quarter, it is equally distributed. So as per the delivery plan with our suppliers, it is coming only as per that schedule. So it's maybe less than that, but there is no significant reason that we have not taken -- we are taking all the long-term delivery, whichever are scheduled there. So accordingly, we have taken, and...
So it's more of a normal contractual fulfillment rather than any slowdown in demand, is what you're saying?
There is no slowdown. It's a normal fulfillment of the contract and for the agreed annual delivery plan.
Sure. Okay. And the second question was, sir, if I aggregate the kind of CapEx plan, you did mention multiple plants, INR 1,200 crores for the 2 tanks, INR 1,700-odd crores for the jetty and about INR 600-odd crores for the brownfield expansion, which aggregates to about INR 3,500 crores, if I'm not wrong again. Now if we look at the financial performance and the balance sheet of our company, we are comfortably generating somewhere around INR 4,000 crores of operating cash flows on an annualized basis right now.
So just to understand that, how do we sort of then look at capital allocation in the slightly more medium term? You did mention the polypropylene dehydrogenated plant. I'm sorry, I don't know much about how much CapEx that would entail. But is there anything else on the anvil? Or is there a capital return plan that we should look forward to from the company? Just wanted to understand how you are looking at the whole capital allocation picture at this point of time.
Initially, CapEx will be low, but it will be picking up in the subsequent year, maybe 2, 3 -- 2 years later. So what I can say is that it depends upon the progress of the plant. Because once you start a plant, a lot of materials which have to be imported. And there is a lead time for all the materials. So only in the subsequent period that most of the CapEx will come. But initially, it will start in a modest manner. But later on, it will pick up.
The exact plan, I cannot give you, because it's too early to give anything of that nature. But I can only say that it is a wholesome program which we have drawn up and PDH PP plant, which comes up, then perhaps that will have huge effects. And for that also, we will be securing some debt also for that particular plant, 70% maybe debt. So that is our whole idea. So whatever cash we have, we will utilize it on to the extent of 30% in our future projects.
So I just wanted to ensure a that dividend continue to be paid at least at the rate of 100%, even if we go for a later CapEx. This is our endeavor and perhaps this is our plan also that we should continue to pay the dividend. And whatever financing is to be done, [ additionally ] to the extent of 70%, we should do from the market, from bankers, and 30% equity, we can get from our side.
Right. And any other international plants that are there, even in the planning stage at this point of time, sir? Obviously, the existing...
I don't think we can think of any plans right now, because there's no opportunity also. And it is always our endeavor, if you find an opportunity, we will think of it in terms of its merits. But right now, there is no [indiscernible].
The next question is from the line of Sabri Hazarika from Emkay Global Financial Services.
So I have got a few questions. The first one is, what is the current run rate like? I mean I think spot LNG has cooled also a bit, from more than $30 to around $20, $25 now.
It is $18.25 today.
Yes. So have you seen any uptick vis-a-vis Q4 average utilization, which was like, say, 80%, 81%, or is it the same?
For the Q4, I have just mentioned that it is now that prices have come down. But in March, it had been in the range of $35, $30. So our utilization in Q4 was not to that extent. I mean it was, if you look at it, around 79% on Dahej terminal. So that's why we can say because of high LNG prices, spot LNG is not coming to earlier in [indiscernible] it was coming earlier year. So -- but as you see, I am saying on the optimistic side that prices today are $18.25. If it comes to $15, $16, then perhaps it will suddenly start coming. So I'm hopeful that prices will come down basically in the next 2, 4 months and then perhaps more cargoes can come.
Anything on, I mean the coal shortage leading to higher LNG imports for power generation or anything on Russian imports also going up? Anything -- any comment on those fronts?
In fact, it is always very difficult to answer, because coal import in any case is there, not [indiscernible] caution that it's not possible to use gas for power generation. But I think when it comes to $15, $16, then perhaps even the power sector will pick up and they will take that. In fact, I have just seeing a circular just 2 days back. There is a circular also there, [ MLPG ] has directed GAIL to import RLNG -- to import LNG to compensate the city gas distribution companies, because domestic gas allocation is falling short and they are not having too much of domestic gas.
GAIL has been directed to not only bid for HDFC gas, but also they have been directed to impose more LNG and blend it with the domestic gas and work out a way to see if it can be supplied to CGD companies. So it's an interesting news for us also, because more cargoes are likely to come now. And hopefully, those cargoes will come and GAIL has been directed. Perhaps we are hoping that those cargoes will come to our terminal only, and that will further enhance our revenue picture.
All right, sir. And sir, you mentioned about this INR 204 crore impact from that Kochi terminal reset, Kochi tariff reset. So this is like in the numbers. I mean one has -- can adjust it if you were to come up with an adjusted number, right?
It has been adjusted. INR 214 crores. It is not INR 204 crores. INR 214 crores, so settlement of the Kochi tariff issues.
So your profit is lesser by that amount. This is one time...
Had this been to us, then we would have been even better quarter in the year. You understand and you see in third quarter, we have taken a hit of INR 65 crores BPCL settlement. But we paid more these together almost INR 275 crores more than that. We have adjusted, even then we have been able to generate so much of profit.
Right. And just one bookkeeping relating to the Ind AS impact. I think they would be able to tell what...
Yes. Yes. Sabri, the gross margin has been positive INR 144 crores. Then INR 50 crores negative as ForEx loss. And INR 83 crores depreciation, finance of INR 78 crores.
INR 83 crores depreciation and finance of INR 78 crores. What would be the trading margins for this quarter, which was like around INR 314 crores in Q3?
It's INR 396 crores.
Okay. This is INR 396 crores for Q4. Okay. And last question, Gorgon volumes in Dahej?
Gorgon volumes in Dahej. 21 TBTU for whole year.
Okay, fine. I can calculate it.
21 TBTU OITB.
The next question is from the line of Kirtan Mehta from BOB Caps.
In terms of the FY '23, would you be able to share more color on the volumes? Do you have the annual delivery plans available which can sort of give us an indication about the volumes?
Next year, you are asking about?
Yes, sir.
So I think it's very -- I think we should not discuss this issue right now. This is something we have to keep with us, disclose it later on. But now it is too early to say anything. But I am saying whatever contracts are there, there is flexibility to the extent of 80% they can exercise. So that part is there. So maybe that 100% is, they have not done [indiscernible], then perhaps up to 80%, they have to do. Otherwise, they will need to take loss. So I think -- and perhaps because long-term contract, in any case, nobody is leaving. Everybody is very, very eager to take on long-term contracts.
The only issue maybe is the capacity booking utilization. So that they are doing because prices will come down, so perhaps the transaction will increase. So whatever may be the annual delivery plan, it doesn't mean that, that is the only cargoes we will have. It depends upon the price. Prices are reasonable, $15, $16, then more port cargoes will come. We are, in fact, very much harping on those cargoes also which will come in future. So in any case, we will discuss it later on how much is the ADP, I don't have it ready next to me here, for the next year.
So in terms of the sort of the long-term cargoes cover roughly around 80% of the Dahej volumes, Is that the right understanding?
No. If you look at 17.5, I can tell you that is a [ lockout ]. 8.5 -- 7.5 MMTPA is gas and 1.425 MMTPA is [indiscernible]. So 8.5 is there. So it's almost somewhat less than 30%. So 17 and half, 18.5 divided by 17.5, almost 48%. 50% you can take. Because some Exxon Mobil volume is also coming to this state. So if we see that also, then it will be more than 50% which is through long-term cargoes.
Right. And in terms of the use or pay contract currently exist on about how much percentage of the volumes?
Almost 8.25 is there, plus I think -- almost, you can say, 8.25 you can take, which is almost -- how much percentage, I'll work it out, but you can work it out.
8.25 out of 17.5. That's what you are saying?
It is 47%.
Right, sir. And in terms of the INR 400-odd crore of charges that has been levied as use or pay charges, are there any initial sort of indications from the customer in terms of what sort of level would be expected -- accepted?
See, it's a contract, and we are fully confident that we'll recover it. It is as per the contract. So if they have not utilized, then perhaps we have to recover it from them.
You had previously commented that you would be open to sort of look at the time compensation, particularly for the cases which might be genuine or due to the COVID-related impact. So how much proportion of this revenue could fall under that category?
[indiscernible] talk about. And right now, we can say that it is there and nobody has approached us saying that we will not pay. So let us see what happens in the future. It's too early to speak on the matter what they will do and what we will do. So far, nothing is going on, on that aspect.
Right. So for this year, basically, while there was sort of a INR 270 crore of lower impact, because of the reversal, there was also INR 415 crore of the use or pay charges, which has been built in the contract, which is probably related to the contracts. But is that the right...
Yes.
Thanks, sir. I have a few more questions, but I'll come back in the queue.
The next question is from the line of Anubhav Aggarwal from Credit Suisse.
Am I audible?
You are audible, but there is some disturbance on your line, sir.
Okay. And sir, the question is on the use or pay contracts. So this contract on the service volumes, how long is this contract? Is if the customer wants to change it, then he gets the opportunity to change it?
No, it's not a contract which can be changed by the gas city. They have to honor the contract. So it's not like that they can change as per the contract. It's a firm contract, and it is valid, I think, up to 2035.
For everybody?
For everybody. So it's a very firm contract. It's not as if there is escape to it, because nobody can think of that.
And what's your sense, the guys who are, let's say, the service volumes, which are lower right now, are the tolling volumes [ they're low so right out ]. Are they not using gas [indiscernible] or are they using any alternative fuel right now?
It is not like that. What's happening is that the customers or offtakers who are having a long-term contract, they have no hesitation in bringing the cargoes and use the capacity. It's probably [indiscernible] all the offtakers, who have more tied up a long-term contract sourcing. So they are not able to bring so much of cargoes, but that doesn't mean that they will not honor the contract. It's only for the time being that they cannot bring, but as and when the price opens, perhaps, they will also bring and utilize the capacity. So -- and one more thing, and you are rightly saying that some of the customers have started using other fuels because of high LNG prices.
So that is true, because in Kochi, we have found that some of the customers are not using natural gas. So prices are too high for LNG. But those who are using long-term gas, they are using as usually. Why only the clarification in this regard is that, it's only very few partners, those who are not utilizing the natural gas. But of course, some of the customers are not using gas, and using alternate fuels.
But it's not in all the cases. But perhaps the kind of sentiment, kind of enthusiasm which should have been there had the prices been low, that is not there. People are not able to import gas, this spot gas, so that is the challenge.
Okay. Just one more question. What was the CapEx in [indiscernible]?
Your voice is not clear.
Yes, sir. Your voice is not clear.
CapEx in this financial year, last financial year. The CapEx incurred in fiscal year March '22.
CapEx incurred in '22, INR 270 crores almost.
INR 370 crores.
INR 270 crores.
The next question is from the line of Niharika Jain from Equitas Investment Consultancy.
So my question is regarding the Kochi capacity. So how are you going about it now that even the tariff has been revised and I think you were waiting for some GAIL pipeline to get completed. So I just wanted to get some clarity on this Kochi terminal?
Yes. Kochi terminal, as I already mentioned, that after this Mangalore-Kochi pipeline, consumption has increased. If you look at the capacity utilization, this year, we have utilized almost 31% capacity of Kochi terminal, as compared to 18% last year, but it should have been more than 30%, agreed. And because taxes are so high, the people are not able to import spot LNG. So that is a big constraint which has been gained in the current year and last year is -- financial year '21-'22. Otherwise, there is no issue.
And as far as the pipeline connectivity to Bangalore is concerned, that is already going on. As I mentioned in my earlier conferences also, that pipeline is already made up to Coimbatore and only a stretch of 250 kilometers from Coimbatore to Bangalore, that is to be completed. But that is a big challenge. Now farmers have again disrupted the pipeline construction activity in Tamil Nadu is the reason, as GAIL has informed us. And perhaps we have some working out on that how we can complete it, and they have suggested to go take the pipeline along the road instead of taking pipeline through fields of the farmers.
So big challenges are there. Although it's only 250 kilometers, it's a big challenge, but it will be done. They have assured us that they will be doing it. And after getting a nod from the state government of Tamil Nadu, they are going ahead. And we are hopeful that it should be completed in the next 1 or 2 years.
Okay. Okay. And I also have one more question on the long-term contracts we have for LNG. So I understand there are, I think, 3 running contracts, 2 are with RasGas for 7.5 and 1, so basically 8.5 from RasGas. And 1.43 around from Mobil Australia. So have we entered into any other long-term contracts in this Q4? Or are we in talks with anyone for long-term contracts? Because I think the new circular also has come where they would be, I think, needing LNG for blending of our CGD company. So just wanted to...
That's what I was telling [indiscernible], that there is a new-founded circular where they have clarified that for this charter in CGD factor, domestic gas shortage, GAIL has been asked to import more LNG. So taking us back to GAIL that they have been asked to import LNG and plant it with their domestic gas and then cultivate and sell it to CGD entities. So that is going on. That is an optimistic step [ that she ] has taken. So now we hope that more LNG will come.
The blending would be 70% domestic, 30% LNG. Could be 40%, 60%. 60% [indiscernible], 40% LNG, and rate can be worked out like that. So I think this is going on, and that is giving hope to us also that more cargoes will be coming to us. And perhaps that can further add to our revenues.
Yes, that is actually positive. No, I was trying to understand...
Long-term contracts you are asking. Long-term contracts, we are already going to extend this Dahej, for this RasGas contract for Dahej. So that we are already doing and the process is going on. We have started negotiation with RasGas. Task force has been constituted. And we are working on that because we have to ultimately finance by December 2022 for extension of the contract. And we have always taken a step right now and perhaps that we will finalize. So at least that will be extended. And maybe that more volume may ask for if there is a good price given to them -- to us for this purpose.
So maybe we may extend some volume also. But right now, we want to extend the existing one. And perhaps, as we are saying that more contracts are to be lined up, it's not a very perfect environment for negotiating for a long-term contract. Because the demand is so high, and after this Russian-Ukraine crisis, European countries are after all the suppliers, including Qatar Gas and others, who have a contract. So that is, in fact, is spoiling the market. For long-term contract also, it's not the right environment to initiate. But whatever contracts we have, that definitely will be expanded. And whatever additional volume we can take under that context, we will try to negotiate that.
Just a clarification for RasGas, meaning the December '23 one, so the quantity [ will freeze ] for the RasGas one which you are negotiating?
There is a provision in the contract that 5 years before expiry of contract, we have to finalize whether it has to be extended or not. Accordingly, we have time till December 2023. By '23, we will freeze it, what is the size, what should be the terms and all those things will be finalized. So 5 years before, we are going to finalize all those things.
The next question is from the line of S. Ramesh from Nirmal Bang.
Can you hear me?
Yes, yes.
The first part is, now LNG prices stabilize at $18 to $20. What's the kind of growth we can expect in terms of your regasification volumes? FY '23, '24, what kind of growth we can expect?
After the sell price today, I feel I'm very optimistic that more cargoes will come now. And if it comes to the level of almost $15, then perhaps it will be good for the gas industry also and people who are using natural gas. So I am hopeful that with this kind of pricing, certainly, there is a good hope that we can expect more LNG cargoes coming to India. And it's a good sign for all of us and perhaps we can further enhance over the revenue.
So if you look at your FY '20 volume, you had done 928 TBTU. So is that kind of volume possible in the next 1 year?
What kind of volume you are asking?
So this year, you have done 847 TBTU.
845 TBTU. Yes.
So is it possible to achieve about 8% to 10% growth in the next 1 year?
Even more than that, we would expect. But whatever it happens, let's see. We will do whatever we can do to see to the likely extent possible. Maybe 5% to 10% we will see.
And the second part is now based on this whole gas pool that can come to be managed by GAIL, is there any data available in terms of what's the additional volume of LNG that they might import and when it comes to your terminals, say over the next 4 to 5 years? Because most of that incremental growth will partly come from the new CGD DCs. So I was [indiscernible] is it possible to give some sense in terms of what the kind of additional cargoes you can expect to handle once there's more [indiscernible]?
You are asking for additional consumption going forward?
Yes. So based on this new arrangement to ensure that the allotment of gas for the preferential segment, LNG and overseas LNG, is arranged by GAIL by making up the domestic gas shortage through LNG imports. Is there any data available in terms of what the kind of additional volumes you can expect to do on the imported LNG cargoes or the preferential allotment over the next 4 to 5 years? Because whatever is being imported by the existing CGD and BP to make up the shortfalls already in the system. So we are talking about future growth potentially, it must be based on the growth in existing entities as well as the expansion of the new CGD entities. So is there any data you can share in terms of what the kind of incremental growth you can expect once that full mechanism starts operating in full swing?
I have a holistic data, as they say, but it's not that year-on-year rise. I can give you an estimate what we anticipated earlier that and what has been the government decided to increase the consumption of gas by 2030. And if you look at the government estimate, it's very much on the higher side. And we expect that by 2030, it should be in the range of almost 600 MMSCMD. And if you look at the current consumption, it's around 162 MMSCMD, so almost 4 times.
So what I'm saying, that growth is primarily because of CGD projects coming up. And also other factors will be utilizing as it will be -- effort will be starting to very -- places where the pipeline is not there. So I think that part, if it is covered by government and there's a gas pipeline is made in all the remote places, then perhaps consumption will increase. The only thing is that pipeline connectivity is not there to some of the remote areas where the demand may be there. So latent demand is there, but there's no supply in that side.
So I think this is giving a good hope that CGD entities will be laying pipelines, and then a small [ swath ] consumer is driving industrial and commercial consumers will be there. So that part is there. I am telling you that city gas distribution companies will be the biggest consumer of [ LNG ] in the future. Right now, it is potential sector consuming almost 49 MMSCMD, but in future. And if you look at second place, CGD is coming in the next place. We are planning almost 33 MMSCMD gas. There is power sector utilizing only 24 MMSCMD as the [indiscernible] there have a level PPA from April to February, almost March. It is like that, that CGD [indiscernible] will be 33 MMSCMD of that.
So I think as and when the CGD entities are completing their projects and they start taking gas, they will be still heading among all, next 4, 5 years. So that is giving a big hope to us that consumption will definitely increase. The only part that prices, which are looking at very high level right now, this is because of various geopolitical issues which are going on. You know very well. Russia-Ukraine has been there and there has been shortage in Europe of gas in the winter season.
So all those have contributed in this kind of unprecedented rise in LNG prices. But otherwise, it is not likely to remain at that level always. It will come down and then perhaps consumption will further growth.
Just one last part. If you're looking at the CGD business driving the growth in natural gas, isn't there a risk to that growth from the penetration of electric vehicles in the transportation sector for CNG and what is your assessment of that risk? And how do you see that play out for the next 2 years?
Yes. Repeat you question, CNG and PNG, you are talking about?
Yes. So if you're looking at the CGD sector driving the growth for demand for gas in India over the next 2 years and you take the demand from the transportation sector for CNG, isn't there an element of risk to that growth from the penetration of electric vehicles, particularly in the taxi segment and buses, as we go forward? So what is your assessment of that risk for the growth in natural gas?
No, I don't see that this is a threat to the CNG in transport sector. And whatever comes, it will not automatically retreat. Even you see -- even today, if you see EVs there, but even petrol and diesel vehicles are also there. They can stay side by side, and it's not necessary that one fuel coming up means driving out that entire stable. CNGs are still forming a very low percentage of the total vehicle segment. [indiscernible] diesel and petrol vehicles if at all e-vehicles and e-cars are coming up.
So I think CNG can still stay. It's not going to be a threat that will say e-vehicles will be coming, then there will not be any demand of CNG. CNG will continue to be in demand.
The next question is from the line of Iqbal Khan from Edelweiss. [Operator Instructions] The next question is from the line of Iqbal Khan from Edelweiss.
So like you mentioned that when been the pricing goes down [indiscernible] likely ramp up. But I'm not sure whether you...
Mr. Khan, your audio is not very clear.
Audio is not clear. I'm not getting it.
May I request you to speak on the handset.
Is it clear now? Is it clear now?
No, sir. It is muffled, your audio.
Come closer to the speakers.
I mean it's not [indiscernible].
I would request you to check your phone line and rejoin the queue. The next question is from the line of [ Amit Saxena ] from AS1 Capital.
I wanted to know the decrease in the profitability from INR 1,140 crores to close to INR 1,000 crore this quarter. What are the major factors driving it?
Major factor, I will just give you one item which can perhaps help you in the calculating. It has shown as compared to previous quarter you are asking?
The previous quarter, Q3 of '21-'22.
If you look at that, then the trading margin has increased by INR 68 crores as compared to previous quarter. And as compared to corresponding quarter, there has been growth of [indiscernible].
Major factor is, of course, this has been net trading margin. We have sold some gas in the [indiscernible] and that has increased our profitability to some extent. So this is the major reason. And if you look at other small [indiscernible] solutions are growing by [ INR 30 crores ]. So another major reason could be that. Then perhaps, as compared to previous quarter, if you see that the higher charges at Dahej into higher rates, so all those factors are contributing the [indiscernible] from 1st of January. So it is like that why it has increased.
As compared to corresponding quarter, the [ PBT ] has increased, but from the corresponding quarter, it was not increased, because downgrade is also there. We have been landing [indiscernible] charges, Kochi tariff charges, and the lower volume impact has been there. So that way it has not contributed [indiscernible] . But if you compare the quarters by fourth quarter previous year and current quarter, you'll find that there has been a substantial increase in the trading margin, INR 369 crores. That is a major factor and we have spent -- income has also increased to the extent of INR 17 crores and then many other factors are there, small, small factors. And inventory dilution is one of them of [ INR 30 crores ].
The next question is from the line of [ Ankur Agarawal ] from PhillipCapital.
Am I audible?
Yes, yes. Please go ahead.
Can you please provide a breakdown of the volume in terms of the long-term spot and the volume tied to your trading margin? And just to understand further, how should we -- one look at your trading margin going forward? If you can provide some over -- comments on that, that will be helpful.
You are talking about whatever trading that we have done, you are asking on that, or overall you are asking?
Whatever trading margin that you have generated, what are the volumes tied to that? I mean how should one look at that?
Volume, I think -- yes, see, the trading margin that has been generated during the -- as you know, during the financial year, the core prices have -- had been at a very high level. With about 9 to 10 TBTU of spot volumes that we have was given the volume numbers to you. These kind of trading margins coming on in the year. And as far as your question regarding the projections for trading margins, see, it depends on how the market is. Right now, the prices have fallen down to about $20. It will depend largely on the market. But the point is that if the difference between the long term and the spot prices are not too high, then in any case the terminal utilization will go up. Because people will start tying up the spot volumes.
And I will now [indiscernible] will start bringing these spot volumes, and the biggest position in the contracts, we'll see more landing. So it is either way, due to the higher -- this spot prices, there might be some volume disruption, but the trading margins are there. If the prices come down and the difference is not there between the -- not very high between the long term and the spot prices, in any case, the volume growth will be there eventually. So this is what we can tell regarding the trading margin and the volume scenario.
Okay. So for this quarter, for Q4, 9 to 10 TBTU is what the one in...
No, it is not 9, we have said that only 3 TBTU is there. But overall, in the year, I told that the major trading margin came from round about 10 TBTU.
And just one clarification. Trading margin for the current quarter, INR 396 crores, right?
INR 396 crores, exactly.
And what is the inventory valuation gain for the quarter?
INR 68 crores.
Ladies and gentlemen, due to time constraints, this was the last question for today. I now hand the conference over to Mr. Varatharajan Sivasankaran for closing comments.
Thank you, Margaret. Sir, I just had a couple of questions before we can close. One, if you can provide some perspective, if somebody were to go and hunt for a long-term contract today, what is kind of rates which are available? And second question is on Kochi. Earlier, you said in the price negotiation, you asked for additional commitment of volume from the offtakers. Have they come to you and committed any incremental volume?
So first question is regarding...
Long-term contract, if somebody were to today hunt for a long-term contract, what kind of terms are available now?
In terms of the long term contract, we are still basically banking on the contract which has been finalized by RPI with countries like China and Bangladesh and others. But at that point of time, they have contracted with 10.2% of the flow. I don't know this is the right environment or not, but we still are hoping that it should be around that. And if that happens, then it will be a favorable contract for future. And I think we have already started negotiation, but the environment is not like that, that people may agree to it, because of lot of turbulence in the market.
So we hope that we'll be able to settle this issue. And we have enough time, more than 1 year, to finalize all those things. And perhaps the ramp-up you are asking for, the revision in cost tariffs, it will be starting in 2026. And as I have said that it will be 0.6 MMTPA, which, in any case, means roughly 9 cargoes or so. So I think that is how we are planning to do. And perhaps it we will start from 9, almost 10 cargoes that will be coming from 2026. That's what offtakers have committed so far.
Sure. Thanks a lot. I wish to thank all the participants and the management for taking time out to attend this call. Thank you, everyone, and have a nice day.
Thank you, everybody.
Thank you.
Thank you. On behalf of Antique Stockbroking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.