GAIL (India) Limited

Good day, ladies and gentlemen, and welcome to the Q3 FY20 earnings conference call of Gale India Limited, 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, please signal an operator by pressing star 10-0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Deep Shah from Ambit Capital. Thank you, and over to you, Mr. Shah.

Thank you. Hello, everyone, and welcome to CQF 520, Results Consent Stall of J.D. Limited. Today, we have from the management, Mr. A.K. Tiwari, Director of Finance, and other senior executives. Now, I would like to hand over the floor to the management for open remarks. Post which, we can open the floor for questions. Thank you, and over to you, sir.

Thank you very much.

Thank you once again. I wish you a belated Happy New Year 2020. The New Year has brought a lot of festive visits. I take this opportunity to wish you a belated happy Makar Sarkranti, Pongal, Lowri, Basant functioning and our National Festival Republic Day. A very good evening to everybody and welcome to Gail's first earning call of the decade. At the outset, I would like to thank all the esteemed members of the investors and analysts certainly that you have taken out your precious time and shown keen interest in the results and performance outlook of Gale India Limited. We have already declared the Q3 FY20 results earlier today and the same is also available on Gale website. I'm sure that you had an opportunity to go through the same. I would highlight the segment-wise physical and financial performance of Gale for the quarter ending 31st December 2019, along with major factors contributing the same. As you know, the oil and gas have witnessed subdued prices over the recent past, mainly due to supply overhang and bleak demand outlook. The price realisation, particularly polymer and liquid hydrocarbon prices, have been increased during the past few quarters. I want to share with you that even in such a volatile environment, GAIN has been able to perform fairly well in the given circumstances. The performance we have achieved during the quarter and the year to date was not without our share of challenges. Not only we have faced them, but also succeeded to build a robust organization capable of delivering under adverse conditions. Now let me give some insight for the quarter. I would like to share the physical first. There have been robust physical performance during Q3 in almost all segments as compared to the previous quarter Q2. Gas trending has increased by 1.3 mmHgMd from 94.72 mmHgMd to 96.02 mmHgMd. Total LNG cargo sold outside India is 12. in Q3 FY20 as against 9 in Q2 FY20. Gas transmission has increased by 1.7 mmHg from 1.08.7 mmHg to 110.35 mmHg mainly due to increasing surface volume. LHC production is fairly stable during this quarter. LHC sales have also shown marginal increase And then LPG transmission also increased fairly by 44,000 metric tons. So the physical performance during this quarter was, in all the segments, was up. I would like to share the finances now. During the quarter ending December 31st, March 2019, GAIN has achieved cross turnover of 17,735 crores versus 18,010 crores in Q2 FY20, which is decreased by 2%. EVPR is 1,872 crores in Q2 FY20 versus 1,535 crores in Q2 FY20, increase of 22%. The PAC is 1,251 crores in Q3 FY20 in comparison to 1,064 growth in Q2 FY20 increase of 18%. The average price realization of petrochemical has decreased by 4,000.

Ladies and gentlemen, the line for the management is disconnected. Please stay on hold while we reconnect them.

Thank you. Ladies and gentlemen, thanks for patiently waiting.

We have a line for the management reconnected. Over to you, sir.

Yeah, yeah. So here I would like to highlight the fact that up to Q3 FY20 versus up to Q3 2019, the prices of polymer has reduced by across 19,500 per metric ton, which alone has an impact of 1,100 crores on the profitability. Similarly, for LSE segment, the prices have gone down by about 7,000 per metric ton, which has impacted the profitability of around 600 crores, up to T3 of 520 versus T3 of 519. Even with such major setback on account of external factors, GACE has been putting all out efforts, including cutting the input cost, operational efficiency, et cetera, to mitigate the impact and maximizing the profit. I am pleased to announce and inform that the board of the company has today approved an interim dividend of 6.4 per share, which will entail a dividend payout of 2,832 crores. This is the highest ever interim dividend payment by the company in terms of total dividend amount. Up to Q3 ended December 2019, GAIL has achieved capex of 3,818 crores mainly in the pipeline and other contributions towards equity. The total capex of GHGTPA project, that is, that is for Haldia-Bokaro-Dhambra pipeline, up to Q3 FY20, 8,800 crores and the total commitment is around 13,000 cores, of which we have received the grant of 3,221 cores from the government. The project of Dhobi from the Durgapur section of GSDDPM is going on, and the connectivity to matrix fertilizer is likely to be completed by end of financial year, and sale of 2.5 mm of simply to matrix fertilizer may start. Ganga Angul Pipeline, Bokaro Angul Pipeline, Vijaypur Auraya Pipeline are expected to be commissioned by December 2020. The Section 1 of KTMJ-12 that is Kochi Coconut Mangalore Pipeline is already commissioned and Kochi to Coconut Mangalore Section is under advanced stage of completion and commissioning which will be commissioned by March 2020. Further pre-commissioning activity at Ramagunda Fertilizer and Chemical Plant has already started. Daily supplying gas to plant for pre-commissioning activity and after commissioning, the gas supply to that strength of 2 mm HMD will commence. After inauguration of CGD at Chemtepur on 1st November 2019, The gas supply of all six EVGs awarded to GaleHack, that is at Varanasi, Patna, Qatar, Ganeshwar, Ranchi, and Jamshedpur has started, and volumes are slowly ramping up. There was a request from the analyst to include performance of GaleHack Limited. I'm happy to share with you that up to Q3 of 2020, The yield gap has achieved a turnover of 2675 crores, PVT of 167 crores and PAT of 109 crores. I listed this profit for three quarters of FY20 more than the profit for the full year FY2019. In FY2019, yield gap has earned PVT of 126 crores and PAT of 81 crores. During the three quarters of the current year, Gale Gas has added 13 new CNG stations and more than 50,000 new domestic connections have been connected. The performance of Gale Gas has been excellent and is expected to improve over the year on account of ramping up of new PVD volumes. Further, I would like to inform and share that the Cabinet Committee of Economic Affairs has approved the transfer of administrative control of Bruntwood Crackers and Polymers Limited, our subsidiary from the Department of Chemical and Petrochemicals, to Ministry of Petroleum and Natural Gas. The government has granted a 3D stock subsidy of 4,600 crores for 15 years to maintain the IRR at 10%. And if you see the consolidated accounts, 930 crores in Q3 FY20 had been accounted on account of the feedstock subsidy in the book of accounts. So you will find that in the consolidated, there is a jump in that. In along with other companies, so JV, companies, IGGN in the Danish, that grid limited, is implementing the gas pipeline infrastructure in Northeast states for over 1,600 kilometers with target cost of around 9,255 crores. To boost the development of gas infrastructure in Northeastern states, the government has approved the viability gas funding of 60%. Government of India has given an irreversible option to adopt new tax rates that is 25.16% the new option is under evaluation and a final decision will be taken before the close of the annual accounts. I would like to share the impact of union budget on GATE. In the union budget 2020, the finance minister announced extending the national gas grid from the current 16,200 kilometers, 27,000 kilometers, This indicates continued emphasis of the government on expanding the footprint of natural gas in the country. GAIL is already undertaking projects, having a total length of around 5,000 kilometers. This would provide impetus to the expansion plan of national gas sector, and GAIL being a dominant player in the natural gas and community focus. Government's continuous emphasis on CGT will further help to enhance the natural gas market in India. I would like to add here the environment, social, and government issues. The company places significant emphasis on environment and sustainability. DL has been included in FPAC. four good indexes for the third year in a row. GAIL's major sustainability initiatives include reuse of Preparation and Treatment Plant water at GAIL-BJPOO leading to saving of one lakh liter of water per day. Enhancement of recycling water pipeline network of GAIL-LBJ-BJPOO leading to saving of three lakh liter of water per day. Development of recently natural gas corridor resulting in flexibility in operation and optimization of pipeline operation, higher recovery of products at incidental plants, and for achieving food and energy savings. We believe in building trust among our stakeholders and ensure that transparent corporate governance is built in efficient and responsive services. I would like to state that the GAN is following higher standards for safety and upkeep of its assets. We have been achieving all physical targets of LHC and polymer production with zero major reportable incidents. LHC score has been devised on measurable parameters against each element of LHC management system. Monthly LHC score for the year 2020 is computed 96 against the excellent target of 94.5. The company takes risk management very seriously. It has a formal risk management structure in place and review regularly by the top management and various risk mitigation measures are taken against challenges that exist in internal and external environment. As a responsible corporate system, GAIN has taken various initiatives under CSR. The total spending of GAIN on CSR projects is higher than the mandated 2% of the profit. I would like to mention that the management is taking all possible efforts to maintain and improve the profitability while continuing to maintain its operations safe and sustainable. The company is targeting to optimize costs and to improve the operational efficiency. Superior performance, extraordinary customer services, timely completion of projects, and cost optimization are our key focus areas. With proper focus on cost and efficiency and innovation, I am confident the company will be able to boost margins and scale new highs. Yale has taken several digital initiatives to make company technological moving towards the digital Yatra during the quarter. We have taken various measures to digitize implied claims as well as for payment to the contractual supplier. Further, we'll organize industry needs on digital transformation in the significance of building greater synergy in leveraging emerging digital technologies such as machine learning, advanced analytics, cloud, digital tools for the mutual benefit of individuals, organizing as well as the industrial input synthesized. I'd like to share the burning, you can say, very important news which is coming in the newspaper regarding the AGR. We received a notice wherein DOT, Department of Telecommunications, has shown an outstanding amount of 1.33 lakh crores, including interest and penalties. computed on the entire revenue of GATE. As already intimated by GATE, the company has refuted the claim being an unrelated matter to the terms of license. Based on the legal opinions of and facts of the case, the company is of the view that the claims are not legally tenable and no amount is due or payable under the said notice. The company has also filed an application with the Honorable Supreme Court on 23rd of January for seeking clarification of the direction on Judgment Park. I think I have covered the major highlights of the company and now our team will be happy to take your questions. Thank you very much.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Anyone who would like to ask a question, please press star and 1 at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Yash Gupta from Angel Broking. Please go ahead.

Thank you for the opportunity, sir. My question is on the long-term contracts. Long-term contracts are linked to the group. How do suppliers link to the demand in India and what are their links to? You are asking about the long-term contracts which we have entered into? Yes, sir. So, the We have tied up customers here itself as well as we are setting in the international market wherever the opportunity is there. Back to back tie up is there and some of the volume we are also setting in the international market and depending upon the validity we have also written. So it is a continuous process.

So we have taken that particular risk in our hand.

The return is showing risk. I think we have presented the result and where the gas trading is there and you have seen the margin where the segmental profits, so where is the risk? The contracts are as natural hedges, you know. So if there is a back-to-back agreement, it's a path through as far as we are concerned. Okay. And in the past six months, the natural gas prices significantly come down. So in this long-term context, do we have any renegotiable contracts, renegotiable plots? With the supplier? Yeah. No, no, we don't.

These are all term contracts and binding on all parties, whether it's upstream or whether it's us or whether it's a downstream customer.

Okay, sure. Thank you, sir. Thank you.

Thank you. Thank you. The next question is from the line of Prabhasan from Centrum Broking. Please go ahead.

Thank you for the opportunity, sir.

First question was with respect to the petrochemical segment performance. You did mention about optimizing the sort of OPEX and costs for the segment.

I just wanted to understand, has there been any change in terms of the gas mix for the segment this quarter? Have we managed to get some lower-priced LNG in this segment or has it been mostly the fixed overheads which are now delivering operating the average because of your higher throughput both both are there both are there even with the production ramp up of more than 100 percent capacity production number one number two we are we are missing the portfolio taking the portfolios which is the cheapest cash for uh petrochemical depending upon the situation so that's both both has both has resented that way The price, as you know, as I have already explained to you, that the price was very, very, it was this case. And, sir, is it, have you seen any improvement at all in the PITCAM prices in the fourth quarter, in the first two months so far, what you have seen?

There is a marginal improvement.

Okay.

After the extent of what FOD has been in quantity.

Of course not, of course not. I was talking QOQ, sir, based on the Q3 numbers. On that number, has there been any improvement?

Yeah, but I think we have recovered by about 20-25%.

Okay, that is good to know. And so, last question was with respect to the natural gas trading business.

On a QQ basis, of course, our numbers have shown sharp recovery. But what we have seen in Q4 is LNG prices have dropped even further.

So, does it impact the US LNG portion at all or are we anyways well positioned even at these low levels? to continue to sort of show a stable performance from these levels? Or will it remain as volatile as it has been, you know, in the last three quarters? Any guidance, any color you can throw on this stuff?

Our contract in last one month when we are seeing this coronavirus because of which the prices are going down,

We have been performing the contracts in the upstream side which is the seller selling to us and we have seen the similar thing happening in the downstream side also. Buyers are also buying from us. In India, we don't see any performance issue and hence the prices are usual. The cargoes which are now being discharged, their prices were decided quite a few months ago.

So there is no change in our listing operation as of now.

But is it then said, extrapolate and say, as and when these prices start to become the base, let's say maybe two or three months down the line, if such softness persists, then there could be some challenges for placing US targets? We can't.

Going concern, we think that these prices are very temporary.

Because this is mainly because of so many ships, LNG ships going to China and then they are not able to getting discharged there. Sure, sir. They have to be sold elsewhere.

We think things will normalize in next 30 days. Okay. Okay, sir. Thank you. I'll come back if I have more questions. Thanks for your opportunity. Thank you very much.

Thank you. The next question is from the line of Malik Patel from Acura Securities. Please go ahead.

Thanks for the opportunity. Can we get an update on the Kochi-Mangal pipeline?

As I have already told that the Kochi-Mangal pipeline is under advanced phase of commissioning. Only few sections of 200 meters or around 50 meters or some other places are stuck up. That is being completed and by March end we are expecting to be fully commissioned.

Okay and some bookkeeping numbers what has been the capex so far in this particular quarter?

Up to quarter is Sorry sir can you just repeat it? Up to December Q3 around 4000 crores capex.

Okay, 4,000 crore capex. And so what's the capex for the full year, which we have assessed?

It's around 6,500 to 7,000 crores. Okay, thank you.

Thank you. The next question is from the line of Abdul Sabnish from CGS CIMB. Please go ahead.

Yes, so this is in relation to dividends. It's great news that you've declared a high dividend of 6.4. It was just 4 for last year. does it represent a major change in your payout strategy? Because the last few years have been sticking to virtually the minimum payout ratio compared to higher payout ratios than other oil companies. So can we see, how should we look at this? Is this a one-off thing to be given, or is it something in terms of a change in strategy in terms of how much you want to pay out on a consistent basis going forward?

Okay. As we have told that as per our government DIPAM guidelines, we have to pay 30% of FAT and 5% of network. That you know this is a DIPAM guideline, which is applicable. This time we have been asked to pay more by the government, so you are getting more. Well, I get that, sir, but I presume you have been asked to pay more actually every year in the past as well, right? So... What I'm trying to understand is this paying more, can we take, I mean, before every government will ask you to pay more, can we look at the higher payout as being largely now consistent? It will not be consistent. It will not be consistent. This is one of, I think. Okay.

And secondly, just pretty sharp, just maintaining your capex guidance despite capex being relatively lower in the first.

nine months.

So is that consistent?

Because as you look at this big jump in the fourth quarter, is it? Yeah, yeah. Because most of the... You will maintain. We have already sent 4,000 crores up to Q3 and then balance here around 2,000, 2,500 crores will be completed in the three months. Okay. Thank you. Okay.

Thank you. The next question is from the line of Vijayan Gupta from Edelweiss. Please go ahead.

Hi, sir. Thanks for the opportunity. My first question is on transmission. So if you could share some volume estimate for the Ujjaganga pipeline for FY21 and 22, and what would be the tariff for this pipeline? See, for Ujjaganga pipeline up to Dobi, some tariff has already been announced around 60. 63 per MM2 and the commissioning up to MATICS is under advanced stage so volume flow for up to March I can't predict that way but 21-22 it will be around 8-9 MM2 going forward other So it will be 4 to 5 or 6 annually, depending upon the commissioning of various fertilizer plants. And this tariff has been determined by PNGRB or is this bilateral? PNGRB, PNGRB, yes. And this would be applicable for the entire? No, for Phase 2 and Phase 3 they will further calculate and then reverse. This is up to Phase 1. Up to Patna or Dhobi you can say. Okay. And second question on trading. So we have seen a rebound in trading margins. So what happened to those cargoes which were supposed to be sold at oil link prices? to the fertilizer units, I mean are they being sold at spot prices and because of higher spot we have seen this rebound in margins and or I mean or as a supplier to those fertilizer units? It is back to back contest, there is no such, spot has no impact on that.

This increase because of higher margin in the .

Okay, you can explain, yeah please.

So this is, these are winter months, so some of the outside India FOB sales from our US project, they have fetched slightly higher margin because of that, mainly because of that and also we have been able to get some better margin in the in-country sale in India.

That has led to this higher margin. Okay. Is there any update on those five fertilizer units? You had mentioned last quarter that the cargos down for those units were sold in the sports market. When can we see those units resuming operations? This transaction is not there in this quarter, is it? No, so next year. Next year they will come up. Gorakhpur and Sindhri will come up next year. and only thereafter. And Metix will come at the end of this quarter. In Q1 of 2021.

And Ramagundam is about to also get commissioned now shortly within the next one and a half months, it should get fully commissioned. These are the pipelines.

Okay, thanks. Thank you.

The next question is from the line of Amit Shah from BNP Parita.

Please go ahead. Hi. I just have one question. In the past, you mentioned that you actually hedge 9 to 12 months forward. So I'm guessing taking advantage of the higher group sizes in the third quarter, would you have the visibility to say that the next two to three quarters from a gas trading perspective should look as good as how the third quarter looked or there is no way to say something like that?

It will be around third quarter but saving and all the mitigation measures as well as one of the ramping up of the consumption in India is there so that way it will be around that only as you have seen in the Q3.

Because by logic, Indian demand should probably pick up, right? Considering because of China, the prices have collapsed in the spot LNG market.

I don't think that may be one of the factors. A factor would be our pipeline is getting commissioned. More and more fertilizer and CCTs are coming up. So that will create an inside demand. With China, maybe a temporary... may not have much effect on that.

So is it fair to say that does spot LNG prices internationally at all matter to you? Like right now it's $3, it can be $6, does it change anything for you?

No, it doesn't.

On some of the transactions where it's required, otherwise it has no impact because we have Yeah, the downstream customers tie up on the chance contract or some fixed contract or whatever is there.

Because in the past you had highlighted that oil prices around $55 are not the most ideal for the gas trading business. So then how does that kind of tie up? Because effectively it all ties into the LNG price, right?

See, you are mixing two things. One is your crude prices and second whatever the demand production is there. The prices on the back to back which are there has no impact on our profitability, right? No, the business as a whole, not specific contracts. But if there is a difference between the asset prices and the brand prices, then whatever is there, we are also hedging. So it is different transactions together to have all the scenarios which are accounted in the books. You can't specify one point and then say that these are the only scenarios where you take the mitigation measures.

Okay, so then probably to simplify, and this is my last question, Is it fair to say that the gas trading business which actually saw some profit erosion in the second quarter, we will not see a quarter like this at least for the next two or three quarters? Is that fair? That I can't say.

Nobody can predict the prices. Okay, thanks a lot. There have to be brand prices, asset prices, where it goes. But as we have already told you that various integration measures, as many times we have told, is being taken up to arrest this. And we have shown the results. I think that is fair enough to judge. Okay. Thanks a lot.

Thank you. The next question is from the line of Amit Rastogi from UBS. Please go ahead.

Thanks for taking my question. So my first question pertains to what is the demand you are likely to see on the Kochi-Mengor pipeline? One, will it get commissioned?

And will it lead to higher volumes at Kochi?

Or do you think that already we have Gorgon supplies and they are sufficient in the Jumanji-Mengor? Yeah, please. So the present utilization of this pipeline is around 4 million cubic meters per day and we expect another 4 to come up once the full pipeline is ready up to Mangalore. Are you saying 4 NMC per day? Like equivalent to 1 million ton of LNG? Yes, 1 million ton of LNG is being sold off the terminal now. And you're saying after Mangalore gets connected, another 1 million PIN will get added?

Yes, that's right.

Okay. And so since we have a good mix of long-term and spot contracts, so do you see that when the regulator brings open access for the CDS distribution, we can look at some of the large industrial areas like Morbi, or other geographic areas in Gujarat which have a very high demand and if there is any open access or what is our strategy to tap the new customers on the industrial side? Mr. Amit, where is the closed access?

No, no, he is talking about CBD. For CBD? So, Amit, the CBD open access may come in future. Okay.

But we are already looking at those, as Mr. Tiwari told, we are already looking at those customers, whether in Morbi or elsewhere.

And we are trying to see how we can book capacity and get through to the customers. Because in between, there are these players who, you know, may not be giving capacity that easily.

Yeah, the titling capacity may be constrained or... There are other, you know, operators who have to be dealt with. It may take time also. Okay. So, then what could be the models?

So, apparently, like, can we set, like, one skill energy setup to supply gas in those areas?

All those things are going on already. We are working at many places on short-term energy, you know, models where we install the tank and we give them energy by road.

All those things are going on already, yeah. Which geographies are there more likely? Like which geographies you're trying or testing these models?

Any geography where the pipeline is not available for say 100 kilometers or 150 kilometers. The customer is being encouraged to set up an LNG redressification system, in-situ system wherein they install a tank and a redressifier and internal piping. And we give them LNG through tanker.

One tanker contains about 15 to 18 tons of LNG which may be sufficient for a small customer for many weeks maybe.

That's the model in summary. Okay, but do you think that model can work for Morbi as well? Because Morbi is not maybe in a 150 kg range of any LNG terminal.

No, Morbi, when the opportunity is there, we will do that also. Whenever the opportunity is there, we will do that. You know, these models are available.

End of the day, at the burner tip, the gas has to be competitive.

If it becomes competitive using the LNG model, people will buy it and we are looking at those models.

That's right. Okay, sir. Thanks a lot for sharing your information. Thank you. Thank you.

Thank you. The next question is from the line of Vidyadhar Ginde from ICICI Securities. Please go ahead.

Yeah, thank you. The first question is on the gas market in business.

So if you can give us an idea as to what proportion of your volumes for FY21, they are tied up, your contracted LNG volumes.

and has any volume at all been any cargo at all been tied up at a loss so so so uh you are you are asking about the us lng yeah if even if there's some other uh contracted lng which is not tied up not just us but mainly us i guess is how much of your contracted long-term contracted lng volume for sy21 what proportion if you could give us some idea 10 percent not tied up 15 percent or five percent whatever i will give you the exact figure up to uh q3 uh last quarter in q3 20 66 cargoes out of 66 cargoes 30 34 cargoes have been sold in the international market race has come here so That way we have done where about the... Sir, I'm asking about next year, sir.

FY21, for next year, how much of your cargoes you have tied up? I'm not asking for past. I'm saying for FY21, because you had said on the last earnings call that we have tied up most of the volumes until March 20, and some of the volumes until December 20. So I'm trying to get some idea on what proportion of your... remaining nine months of that is April to December or best is if you can give April 22, March 21, what proportion of your long-term volume you have tied up with customers?

So for the year 21, 22, the total for 2021, 2021, the total volume of gale is about 14 million tons, one four, 14.

Okay.

out of that about 8 cargoes as of now are unallocated 8 only 8 cargoes and those cargoes we keep getting demand here from our domestic marketing group so they will come here only as of just now just the ship for that this is the act and there was a second part to the question that out of these are any cargoes which you have now tied up so 8 are unallocated balance are allocated

So the ones allocated are any of those cargos booked at a loss or everything is either no profit, no loss or profit?

That way you can't give that figure because that loss and profit it is a forward depending upon these things so that calculation we can't give you on that way. You can only give the quarter to quarter whatever is there and you can what we want to say that

most of the cargoes have been tied up and some of the cargoes which are there will be tied up depending upon the demand scenario and the other and very very small only 8 are remaining your thing so that's very small now the second question was on Brahmaputra cracker so it's not very clear what you said about this so you said that about 4600 crores of the stock subsidy has been provided and you got 930 crores in the December quarter So this 930 crore relates to which period? It relates to the current year or it relates to more than one year period?

Let me further clarify to you. Brunkwood Crackers and Polymers Limited is subsidiary of Gain. And DCPL is operating in Assam, right? Correct. So in order to maintain the profitability IRR of 10%, the government has given physical subsidy of 4,600 crores for 15 years to maintain the IRR of 10%. So while closing the accounts, they have accounted 930.49 crores for the period 15, 16, 16, 17 and 17, 18.

So how much of this is for prior period?

That I can't say because you see their account, they have done it. You can easily calculate all our prior periods. All his prior periods.

So all his prior periods. And so this is all past period.

And can you give us the profit of Brahmaputra Cracker for 9 months and Q3?

At present, you can wait for a few minutes. Let me find out. And you can ask another question. We'll give the profitability. Let me find out. that was so actually uh okay then uh in terms of the volumes you are tied up that includes next year which you are talking of marketing for nine months uh the profit is uh 704 crores okay and q3 u3 is uh 848 crores because which has been absorbed with the losses of q1 and q2 so up to q3 is 704 crores okay okay so basically you have received no subsidy for the current year actually so which will come at some stage i presume there is a process involved in that okay so it comes with a lag is it

the order has recently come we will follow up ok last question what proportion of your contracted long term LNG is tied up and is expected to be sold to fertilizer plants in FY21 some rough idea everything is moral of the deal this we can't give you but the fertilizer plants which you mentioned which are coming up next year earlier so those are the plants which are going to take this long term contracted volumes only

are the confidential information absolutely no problem okay thanks a lot thank you thank you the next question from the line of Varka Ranjan from systematics please go ahead thank you sir can you give me an update on the separation of pipeline and marketing which keep hearing the media whatever you are seeing in the media that we are seeing in the media So there is no such, we have to anything further add up.

Okay.

The second question was, post the fertilizer plants, all of them starting up, how much of US volumes will still be, have to be placed outside?

Nothing. All of them will come here.

All of them will come here. Okay, so thank you.

Thank you. The next question is from the line of S Ramesh from Nirmal Bang. Please go ahead.

Good evening. Sir, if you look at your grass transition volume, it's gone up by about 3 million cubic meters a day. So, can you give us a sense in terms of where this growth has come from? And can you assume the incremental volume of that 4 million cubic meters that we mentioned over next year to be, you know, on the base of 110 million cubic meters a day? So, these are the ramping up consumption which has increased in the various segments. and it will ramp up so it is going on 110 is the volume of this quarter right 110.35 yeah so if there is an increase of a speed because last quarter we had a problem in optics on some of these several units we could not draw the gas so a part of the part of the increasing volume due to those customers who have started drawing gas or is it from some other customers It is a mix of that, customer drawing gas as well as the people's volume going up. That is the ramp up. Okay. And in terms of the FI21 and FI22 expectation on this fertilizer plant, what is your sense in terms of the timeline for this fertilizer company's commissioning? Like I said, you said you're ready to take that by end of March and I'm going down by, you know, end of March. But how about the other three plants? Are these projects progressing well or Is there a risk that there could be some delays in terms of their completion for 2021 or 2022? No, all the fertilizer plants as well as our pipelines are coming parallel. So that will come in this year, some of them, and then some of them in next year. By 2021, all these will come? All these, yeah. So they're all on track? Yeah, yeah.

Okay, thank you. Thank you. The next question is from the line of Bhavan Gandhi from BNK Securities. Please go ahead.

Thank you for taking my question, sir. Firstly, sir, if you can share with us, the regulator has loaded a public consultation document on reduction of tariff for taxation, for the tax reduction.

So can you quantify what could be the overall tariff reduction that GAIL might have to see?

We have no such figure at present. moreover whatever will be the tariff reduction will be actually reduction in the tax also so we should not be bothered sure sir and the second part sir if you can share with us the split of US energy volumes in the quarter that was paid to the domestic market and outside India that way we don't have such figures we can't split this quarter whatever the volume are there had been tied up and we are selling uh hello yeah hello next question yeah next uh uh no sir that's it for myself so thank you thank you the next question is from the line of Mayank Maheshwari from Morgan Stanley please go ahead

Thank you for the call. The first question I had was in any way are you taking advantage of the current prices and the last couple of months you have seen prices of SpotLNG. Is there any way Gail can actually benefit out of it?

We don't have such advantage because we have long term targets and our upstream downstream both are tied up so we don't have such advantage. Wherever it is there we can

very very very minimal okay and so the other question was related to the lpg segment if you look at your net realizations and lpg they have been largely flat on a sequential basis for the past two quarters despite this quarter you have seen some improvement in lpg prices any specific reason for that we'll come back

Thank you.

The next question is from the line of Pinak and Parikh from JP Morgan. Please go ahead.

So three questions.

First, can you give us a sense of the 14 million ton Gale contracts of LNG? how much at this point of time is scheduled or hedged to be sold outside and how much would be brought into India?

So, this last few months about 2, 2.5 million tons was sold, last 12 months 2.5 million tons was sold outside. Going forward we estimate this quantum to go down.

Understood, sir. Secondly, sir, at this point of time, given whatever hedges you would have entered, are any of your U.S. or any external volumes sold to a counterparty in China, which could be at risk because we have buyers declaring force majeure in China?

No, we have not sold anything to Chinese counterparties.

Thank you, sir. And the last question is, sir, we keep on hearing about the gas exchange in India. So can you give us some color as to is there any progress on it or is this just a media hype and is it where to take place? Would it in fact gain in any way in terms of how it sends its volumes into India? So this gas exchange, what you are listening, we are also listening. How it will come, we are deciding for that. And what could be the methodology, we can't say. which volume will be traded and that way. So, as soon as something concrete will come, we'll tell you. Okay, thank you, sir.

Thank you. The next question is from the line of Vikash Jain from CLSA. Please go ahead.

Hi, sir. This is on gas trading. Now, when you say that all your cargoes except eight are allocated, What exactly do you mean by allocated? I mean, what kind of hedges are we talking about? Hedges, are we talking about, when we are specifically talking about hedges, is it just, you know, hedging in terms of price or is it just hedging in terms of, you know, destination swaps? What could be the breakup of that if we could have some sense of that?

So what we can't share is, you know, what is the share of each of these.

But we can tell you there are back-to-back agreements, there are destination swaps, and there is something called financial hedging being done. So all told, we are able to tie up all the cargoes and sell them, you know, for the entire financial year.

Correct me if I'm wrong, but in case of destination swaps, the price risk would still, you know, to some extent remain on you. But in case of the others, of course, it will be lesser.

Only time can tell you what the risk is.

If at all it is there, that also can be hedged at that point of time.

So why I'm asking you is that it's a little bit confusing when you say that you're hedged, but you're saying that we can't really... So there are two types of risks.

One is a volume risk, one is a price risk.

volume risk is already covered and the price risk in terms of you know time is what may lead to some exposure which also can be hedged okay uh so i mean let me kind of because i understand that you've been rather there's only limited that you can share about your hedging policy in that case uh to kind of come down to the to the more results of those hedging So your gas trading profit last quarter was rather, you know, was a big, you know, in a depressed in a manner. This is not a big uptick from the last quarter. So as you are seeing the trends so far, nearly one and a half, you know, half of the quarter is over. There is no reason for us to believe that the coming quarter where the energy prices are very depressed, that's why we are concerned, would be closer to the 2Q number There is no reason for us to fear that. Is that a reasonable statement to make?

Yeah, reasonably, you can expect that.

So, you know, 3Q is a better, you know, guide for the future quarters rather than Q2Q.

We can't give you specific numbers at this stage because there are... Vikash, your question... Q4 is going to be as bad as Q2 or as good as Q3?

What is your question? My question is, which one is a better guide of future quarters? I understand that there is a move which can happen in terms of certain quarters. One of things happening like you were explaining last quarter. The answer is that Q3 is a better guide. That's right. That's all that I'm looking for. Thank you so much.

Thank you. We'll take the next question from the line of Rajkanti from SBI Mutual Fund. Please go ahead.

Hi, sir. Thanks for the opportunity. So, you know, you said the Gale Gas numbers. However, from what we understand, you know, city gas investments are spread across a lot of entities and even standalone has few of city gas investments. So, will it be possible for you to, you know, kind of consolidate and give us some number on the city gas? Because this is just one entity.

Yes.

Only Gale Gas which is 100% subsidiary of Gale. That is there that we can give you. And that number here, we have already given the number of Gale Gas.

Right, right. See, there is no particular entity, you know, your city gas investment, you know, from what I understand, you know, is spread across. So there is no as such legal entity but can you just you know aggregate the numbers across several entities what you have and just give one number for city.

These are available in the consolidated way because so many JVs are there who are in city gas like Mahanagat or IGL and then your green gas and so many other entities are there. Their consolidated number will be available. in the .

Right, right, right.

If you want to have any specific number for any that you can provide .

okay so let's say you know gale gas is there igl mgl is available outside that you know in your standalone various subs are there in your standalone how much investment would have gone into city gas by now any number that you can share that number i can't give you at present because uh every cities has a different investment number uh just one minute just give me one minute

Hello?

Yes.

On rough side, it is around 3,000 crores, you can say. The total investment. But these are the rough numbers I'm giving you, right? Okay, sir. Thanks a lot. There may be our share or something like that.

Right. Hello?

Thank you, sir. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Deep Shah for closing comments.

Thank you, Margaret. On behalf of Amrit Capital, I wish you all the very best and thank you everyone for joining the talk.

I now hand over the talk to the management for the closing comments.

Thank you very much. Thank you. I think it was a nice discussion with the investors and Management has tried to give all the information, including the demand which was there from the investors many times, related to the environment safety, related to the risk mitigation, and related to the other and others. So management has tried to give all the information in detail. And I think with this, thank you very much to all of you. And good evening again. Thanks a lot.

Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.