GAIL (India) Limited

On behalf of higher security, I welcome you all to the webinar of GAIL to discuss the first quarter FY21 earnings. Today to discuss the results in detail and share the performance outlook, we have Mr. A.K. Tiwari, Director of Finance of GAIL, along with the other senior officials. I will first request there is a finance deal to give an opening statement subsequent to which we can have the floor open for Q&A. Without much of a delay, I hand over the line to you, sir. Thank you. I have with me Mr. Raju Mathur, ED Corporate Affairs and VAT. And I have with me Mr. Raju Singhal, ED Marketing, ED Finance Mr. Ashim Rai, ED Marketing Mr. Sandeep Kumar, ED Finance Mr. RK Jain, and all other colleagues. So whole team is there to respond to you. and discuss with you. A very good afternoon and welcome to the Army call to discuss the Q1 FY 2020 performance of kids. I hope you and your families are safe during this pandemic. We have declared the result of the first quarter of the current fiscal year today, and you must have already received the same. I would like to give you a brief insight of the company's performance to bring more clarity. Here I would like to say that I will touch the details so that many queries could be responded to you, and totality I will give the overview. So, little bit time it will take. First of all, I would like to inform you that the provisional demand notice of Rs. 1,00,000 have been withdrawn by DOT. So as on today, there is nothing payable and dues are settled. So far as the physical performance are concerned, as you know that the country is still resisting against Coronavirus and has badly impacted the business during first quarter of June 2020. Gale has maintained its best to survive in this terrible time. but some situations doesn't remain under the control of the company. Due to lockdown of related industries, the physical performance of the company witnessed a decline across the segment. I would like to repeat once again, due to lockdown of related industries, the physical performance of the company witnessed a decline across the segments. The gas marketing segment, the gas marketing is at the 1.16 in Q1 FY20 as against 97.76 in Q4 FY20 declined by 17%. The gas transmission is at 90.22 as against 108.99 . in Q4 FY20 decline of again 17%. And the capacity utilization reduced to 45% as against 53% in Q4 FY20. The polymer production is to that 134 DMT in Q1 FY21 as against 208 DMT Q4 FY20 decline of 36%. and the capacity utilization reduced to 66% of our petrochemical plant as against 103% in Q4 FY20. The polymer cell increased to 183 DMT in Q1 FY21 as against 174 DMT in Q4 FY20, increase of 5%. The LSC cell is 265 DMT as against 302 DMT in Q4 of last fiscal year, decline of 12% and the capacity utilization was also reduced to 76% as against 85% in Q4 FY20. The LPG transmission is to that 963 TMT in the quarter as against 1040 TMT in Q4 FY20 decrease of 7%. The capacity utilization was 99% as against 109% in Q4 FY20. So you have seen that there is a decline in the physical performance in all the segments as well as the capacity utilization of the various plants as well as various services. I would like to give the trading and transmission segment outlook first. There was sharp reduction in the domestic gas production from OMGC reduced from 46 mmHg to 41 mmHg and consumption in the country. Gale faced a reduction of around 30% in gas sales and transmission volume during this quarter or maybe during the peak season of the pandemic. There have been significant impact in CGD sector. The consumption was reduced to 50% in April 2020 and around 40% in the month of May. Low demand in steel and other manufacturing sectors as most industries operated at reduced capacity. However, fertilizer and power becomes stable during that terrible time. I would like to give you the consumption pattern of gas. During Q1 FY21, domestic gas sales have reduced by over 4.4 MMSMD as compared to Q4 FY20. Oil and gas sales have declined by 7 MMSMD and transmission volume reduced by 7.4 MMHCMD due to reduction in supply to refineries and fertilizer plants. Overkill sales of US LNG was also impacted by more than 5 MMHCMD. Further, it is pertinent to mention that commencement of RLNG supply to various fertilizer units, that is native fertilizer, where the plant already commissioned and pending connectivity from KKMDPL pipeline. Ramakundam fertilizer plants under pre-commissioning and Mangalore chemical and fertilizer pending connectivity from KKMDPL project is also delayed owing to various reasons. It is expected that situation may improve from Q3 FY21 onwards. There have been a steady improvement in the consumption due to graded relaxation in the lockdown and increasing economic activities across all segments. Though the initial impact on natural gas demand was around 30%, the average decline during current quarter is approximately 70% due to consistent improvement in the optics. Currently GAIL is operating at more than 95% of FY20 trading and transmission volume, and we expect that in the next one to two months time we will surpass the FY20 level. I would like to give you just position, studies position, where we have our volume touched to 87, 1.29 mm CMD for gas trading and we have transmission around 111 mm CMD. So we have almost a pandemic level of the volume trading as well as the transmission. I would like to give you the outlook of the petrochemicals due to non-availability of the transportation for our polymers. after the announcement of lag lockdown there was an inventory buildup due to which we have to texture down of our plant both at part one and part two with effect from first april 2020 after the start of vacuums movement the plant restarted with effect from 18th april 2020 at partial capacity The permaplant regained its full capacity in the middle of May 20, and the total production loss due to lockdown shutdown was approximately 65,000 metric tons. The demand picked up after the relaxation in lockdown and gave top sale to 183 TMT in the quarter, recording an increase of around 5% over the last quarter. So far as the LPG and LSC segments are concerned, though the LPG demand was intact and its movement was not impacted, being covered under essential services, the demand for other LSC products like propane, pentane, and NAFTA were impacted due to lockdown. Now, I would like to give you the financial highlights in comparison to Q4 and this quarter. The active gross turnover of is 12,060 crores and 17,709 crores in Q4 FY20. There is decrease of about 32% mainly due to lower physical numbers as explained due to COVID-19, lower petrochemicals, LSC and natural gas prices, prices of petrochemicals reduced uh two thousand uh per metric ton and lsc reduced by 12 000 per metric ton so these these has impacted the profitability of our petrochemical and lsc segments the profit before Tax stood at 356 crore in Q1, as against 2,556 crore in Q4 FY20, decreased by 86%, mainly due to lower physical numbers, number one. Number two, lower prices of petrochemicals by around 2,000, as explained, and LSD by 12,000 per metric ton. And lower gas marketing is fake. Gale-rested PAT of Rs. 256 crore in Q1 FY20 as against 2018 gross. Here I would like to inform that the Q4 PAT of 2018 had an impact of adoption of lower tax to tax by the profit was not comparable that is not comparable in that way because it has impact of around 1800 to 2000 crores on the fact let us now give you insight into the segment wise analysis from drop in the profitability I know that our investors our people connected are more concerned about the gas marketing. So I would like to share our gas marketing segments in detail. Gas marketing segment PVT reduced from a profit of 6,000 crores in Q4 FY20 to a loss of 547 crores in Q1 FY21. The primary reason for such decline is reduction in the gas market due to reduction of gas demand in the country during Q1. This is the main reason. Yale has taken various measures to accommodate falling RLNG sales because of outbreak of COVID-19, and Yale canceled some of the cargos to reduce the nomination and reduce the nomination under PLR volume. CBD sector, which consumes around 14 mmCMD of domestic gas, was reduced to 6 mmCMD. Further, due to subdued prices in spot market, some customers are inclined for current RNG market. Hence, in order to retain the customers, the company has also taken steps to keep the prices aligned to the current market prices. There is a decline in the spread in current quarter due to lower growth and spot prices leading to lower sales realization without commensurate decline in the purchase cost of the imported gas. Here, I would like to once again mention that our volume, which was the pre-COVID situation, was at its core has reduced to 72. So, all this has impacted the volumes. And we have as already I have explained earlier. LNG cargos in the quarter as against 23 cargos in Q4 FY20. The situation for the gas marketing was exceptional and in spite of all the measures taken by Gale to minimize the impact, Gale suffered loss in the segment which was primarily driven by sudden crash in the demand and prices However, as already stated earlier, the demand has picked up, and we are already supplying more than 95% of FY20 levels. In energy transmission segment, the PVT was down from Rs. 870 crores in Q4 FY20 to 702 crores, a decline of 19%, which is largely in line with the decline in the physical volumes. In petrochemical segment, the PVD decreased from Rs. 71 crores in Q4 FY20 to loss of 164 crores, primarily on account of the loss of production due to shutdown and marginal decline in the average price realization by Rs. 2000 per metric ton. The demand has picked up and we are able to sell around 183 TMT in the quarter as against production of 134 TMT. The petrochemical plant is now operating at the full capacity. The PVT and LHC segment has reduced from 528 crores to 266 crores primarily on account of the lower price realization. The price, as already explained to you, reduced by Rs. 12,000 per metric ton. I would like to share the gale gas performance. The turnover and profitability of gale gas has dampened significantly in Q1 as demand in CGG sector was severely affected due to the impact of lockdown. The CNG volume for the quarter declined by 68% and bulk of industry's volume declined by 25% in the quarter as compared to Q4 FY20. This quarter GAIL achieved capex of Rs. 401 crores, which primarily includes equity contribution, operational capex and pipeline, In spite of the low capex during Q1, we estimate to achieve the capex of around 5,000 crores to 6,000 crores for the full year. We have a plan to expand around 9,000 crores in the next fiscal year, mainly on pipeline equity and petrochemicals. I would like to share the project performance. on account of the uh projects progress there was significant there was some significant impact during the quarter work has started in all our ongoing projects however there are some restrictions because of the social distancing and the local containment area related issues Cochin-Manglo pipeline section work has fully started and we are almost in the last stage of completing the section. SDT work in only small segment of Chandigiri River is going on. Rest is complete. We expect to complete it shortly. The supply of energy will commence in Manglo section, Manglo area. On the Pradhan Mantri, the total commitment as on date is over rupees 13,600 crores and the actual capex till date is 9,800 crores. We have been receiving the capital grant from the government regularly and till date the total capital grant received is 3,609 crores as against the total grant of 5,676 crores. I would like to touch upon the construction. progress. The Dhobik-Durgapur line up to matrix is expected to be completed shortly within coming two to three months. Dhamra Angul mainly by June 21 and Paradeep spur line by December 21. Bokaro Angul main line we expect to commission by December 20 and the spur line by June 21. Durgapur-Haldia pipeline we expect to commission by December 21. is expected to be commissioned by March 21. Also our progress has started as of now we feel that we will be able to maintain the progress and make up the lost time and we will be able to maintain our original schedule of December 21. Apart from this the city gas As well as the GAIL gas geographic area, the work has started in almost all areas. Presently, GAIL is supplying gas to all CCVDs with infrastructure of 41 CNG stations and approximately 56,000 CNG connections. I would like to touch upon the outlook. The total pipeline infrastructure in the country, as you know, is around 17,500 kilometers. Around 12,500 kilometers of CAIL and around 5,000 kilometers of other entities. Aligning with the government objective, CAIL and JLJV is building pipeline for around 8,400 kilometers and around 8,000 kilometers being undertaken by other entities. Neither new pipeline project undertaken by Gail are pipeline 700 kilometer investment of 3,000 crores, committing to the 36 months by July 22. Mumbai pipeline 1,705 kilometer investment of 7,800 crores, completion by May 23. pipeline 240 kilometer investment of 1200 completion by 22 pipeline infrastructure state for over 1,650 kilometer at project cost of 9,300 . So far as the unified tariff are concerned, suggested to PNGRE for determination of the unified tariff for all the pipelines. Under the mechanism, a single tariff would be applicable to all the consumers and would provide level playing field and enable the reach of the desk at far-flung area. PNVRB has web-hosted a public consultation document on a new methodology for fixing unified tariff. Entities have submitted their comments on the consultation document, and we expect that this will be completed soon. I have given the brief introduction of the financial results, outlook, and the reasons. I once again thank you for the time and patience. I request now if you have any questions, clarifications, that can be asked. Thank you very much. Over to Harsh.

Thank you, Tom. Harsh, you are on mute.

Well, as we assemble the queue for the Q&A, I would request all the participants to ask two questions in each so that, you know, we can cover as many participants and more diverse subjects along with, you know, along with management of GAIL. So, the moderator will now announce how to, you know, ask the question, and you will assemble in a queue so that the Q&A can be taken ahead. Go to you, moderator.

Thank you, Ash. Thank you, sir. So, we will just go in a sequence, and the moment I go ahead and announce your name, you would be allowed to see a phone icon. Please click on that phone icon, and then you could go ahead and put up your question. I have to click on that phone icon. So you will be enabled to speak up to her directly. And I would just like to say a special thanks to Mr. Bunton. How should I make this for you? Thank you. From Franklin to Brisbane. So Mr. Bunton, I'm just going to give you the access to the phone. If you can just click on that phone icon and please go ahead with your questions. If you can click on the phone, I can see. Okay. I think while Mr. Bunser joins us in, I'll go next to Doohi Ma'am, who has requested for the access. Your phone icon would also be enabled. If you can please click on it. And for others raising the question, please raise your hand. There's a phone icon on the left-hand side beside the wave icon. Please click on that. You should be able to join using your computer or you could also dial it in. Thank you, ma'am. You are on the unmuted line. Okay. Am I audible now? Yes, ma'am.

You are. Hello, sir. Thank you so much for this meeting and call. I actually have two very precise questions to ask you. One would be that I have seen Gail has had a pattern of issuing bonus on 1 is to 3 ratio, and last year we have seen it to be a 1 is to 1 ratio to its shareholder. And going forward, it is going to be with such heavy bonuses being given out, it is going to be more and more difficult for GAIL to maintain its additional shareholders, to increase the profitability, to ensure that the shareholders' wealth is only increasing. And the bonus does not lead to a reduction in the shareholders' wealth going forward. So one question is that what are the steps Gail is taking in that direction? And then is bonus a primary part of Gail's strategy going forward to keep its shareholders happy? Or is it just a means for Gail to, you know, just circulate some additional surplus funds that they have? That is one question. And the second question is that, The price to book of your company has been very low if I talk about last five years, even after good performance barring this quarter. If we talk barring this quarter, the return that profitability generated by GATE has been very good in the last five years, but the company's share price has not been able to go beyond its book value today. So, I am not able to understand why is it that the company is doing well and generating repeatedly good results, yet the book value is something that it is not able to cross. So, these are my two questions.

Thank you. Thank you very much. issuance of the bonus is not, hello?

Yes, yes, sir.

We are using the bonus is not the strategy. You can say whenever there is any means we want to be more and more clear to the investors and the shareholders. I think somebody can unmute me. I request to unmute the others. Now, so we are issuing the bonus as per the become guideline, but there is no such policy as we have of the bonus. So far as the prices are concerned, yes, thank you very much for asking this question. In fact, I ask this question to the investors more often that why the prices, in spite of our better performance, why the prices are not lifting, are not moving ahead. See, these are, I feel, is not very much related to each other because most of our investors are the government owned, around 52% and FIA are there. So I feel trading may not be that much in the market, number one. Number two, maybe investor may be viewing the gains performance differently, but to our performance are better than the expectations. As we have already told about the physical performance and the consistent performance in various areas. So these are the questions I often ask with our investors, why our prices are not moving as we are also performing better. So this question is still is not known to me how to reply.

Thank you, sir. We have next question from Mr. Rohit Aruja. Mr. Rohit, I have unmuted you. Please go ahead with your question.

Thanks for the opportunity. So just two questions from my side, one on the natural gas transition and one on the gas trading. So natural gas transition, coming to that, we've seen your volumes have been at around 90 mmCMD for the quarter, while for the industry data that we get from BPAC, the average volumes for the industry were around 152 mmCMD for gas consumption. So, our market share comes to around 60%, and usually we are at around 70 to 75% of the market share.

Any specific reason why our volume decline is there despite industry volumes being flat? Okay.

Can you repeat, please? if you look at today's transmission figure today we are actually pumping about 109.5 million cubic meters the q1 was not representative of the actual performance and presently we are pushing around 109.5 million cubic meter per day presently means in last few days so we are on track the during the covid period some part of the market where you know locally uh working and that is why that figure of 150 on the website of tpac and 90.22 because our you know most of the customers on our this thing uh major majority of them cgd companies were badly affected they went down by about 75 percent 75 to 80 percent during q1 that is the reason for that So we wanted to add this. Hey, actually, if you see the lines refinery, the lines consume the refinery only, which was not affected being at coastal and they were exporting their produce. So their consumption was more or less 90% plus. Similarly, some of the power plant, like current power plant that was running, so they were consuming full. And with that gas, you know, they don't have that much CNG sales as we have. So, their CNG sales was also affected, but ours was in a big way because we are a pan-India CNG, and because of lockdown, CNG was shut down quickly. So, because of all this, percentage here might be showing lower. So effectively, some local markets were still performing, like, you know, the Gujarat and some coastal areas. But Gale's pipelines are going, you know, deep into hinterland, and there the demand pattern was badly affected. That is the reason for that. Now we are back to 70% or more. We are now pushing about 109.5 million cubic meters per day. which was the usual before COVID struck. Yeah, please.

Okay, thank you. Thank you, sir. I just want to unmute you. Any other questions before we go next?

Yeah, I have one question on marketing. So we, you know, we were assured in the last call that most of our U.S. contracts volumes are hedged. And despite a lot of questions within the call that time, that there won't be much of a hit to our earnings, given the differential between the spot energy rates and the U.S. rates. But what has changed this quarter that led to you reporting more than 500 crore loss at the cross-market level?

Yeah. Rohit, we are not knowing that this COVID is going to come. so it has come it has impacted as i already told you that uh consumption has reduced our uh marketing uh which was there and the volume which was there which we have to consume was not done so all these have impacted the cumulative effect and we have to align with the market in some of the because the spot crisis was less so in we have to align for our sale also uh for aligning the spot prices so couple of regions combined together and this unprecedented COVID situation has forced us to have less consumption as well as the stress in the market also. So all these are combined together as lead to this situation. This is unprecedented and we expect as already explained by my colleagues that we are going to test now volumes. in terms of our gas marketing as well as transmission. So particularly in the case of the gas marketing, we are going to test that.

Thank you, sir. May I request Mr. Aishwarya to please join on the audio line by clicking on the phone icon. So everybody who has raised their hand, you have been given the two-way line. So, please click on the phone icon and connect using the computer audio so that I can unmute your line. So, while Mr. Aishwarya tries to join us, we have a question from Mr. Amat. So, Amat, you are on the unmuted line. Please go ahead with your question.

Yeah, thank you, sir, for giving me an opportunity. So, my first question pertains to Urdhya Ganga project. So could you give us a target about the volumes? Because now you have significant clarity on the completion timelines of this large project. And with particular names of the customers and their potential volumes in this segment. And then I will come back to the second question.

We expect the volume to be about 10 million cubic meters in the first year of its operation, with four fertilizer plants getting online. And thereafter, the refineries, once the refineries are getting online, we expect it to reach capacity, which is 16 million cubic meters per day. The first phase is likely to be completed by December 2020. This is what Director of Finance, Mr. Tiwari, told in his introductory remarks.

and the second phase later in next next year next calendar yeah just to add to this because this uh we have our project has been impacted because of this public situation some of the volume you could have sold like matrix plant as i have already told that this is already this is already ready and The project is infected as well as the other completion of the fertilizer plant has been infected. So, ultimately, we are going to have 10 MMHCMD around plus.

In fact, we expect the first customer at Gorakhpur to be connected in September now. They might start commissioning. You will hear it independently in the press. They have been talking to us about, you know, putting up the meters in on phase and all that.

Yeah. yeah sir could you give us the names of these four fertilizers and refineries and when you mentioned 10 mmc which year you think that after full completion of the pipeline or the f523

No, the names are well known. You know, these are the fertilizer plants at Gorakhpur, Baroni, Sindhri, and Durgapur. And the refineries are at Baroni and Paradip and Haldia. These are the major anchor load customers from this pipeline, in addition to about 20 CGD entities, which will come up online, whether it is in Odisha, West Bengal, or Bihar, or Jharkhand. Some of these CGD entities have already started operation like Patna has started operation, Banaras has started operation and Jamshedpur and Ranchi have started operation through cascade mode. So all the market seeding job is going on and Calcutta is about to start in next, you know, few weeks. Bhubaneswar and Katak are already working. Umpuri is also working and Dhyasugura is also working. All these You know, the pipeline mode is only to Patna and Banaras. All other CGD entities are likely to get connected in the next 12 to 18 months. So these are the bonus for this pipeline. We expect the pipeline to clock 10 million cubic meter in the first year, which will start sometime, you know, by end of this year. So the commissioning should be over by March or June of 2021. In the second phase, the refineries would come out.

Okay. And so my second question pertains to now PNJRB is talking about opening up CGDs where marketing exclusivity is already over. And do you think that you would like to enter some of these markets like maybe Morbi? And if you don't get any pipeline access for reaching out to these markets, then what are the options before us? if given open access by the regulator.

That is a strategic matter, and as of now, we are more concentrating on developing demand in our authorized GAs. We are at the same time working on the aspect that you would not like to diverge it now.

Okay. Thanks, sir, and thanks for giving a detailed answer to my questions. Thank you. Thank you.

Thank you, Amit. So we have next question from . I'm just unmuting you. You're on the unmuted line.

Hello. Am I audible? Yeah, how are you doing, sir? Thank you for the opportunity. So just on the gas, staying on the gas trading, I'm sorry to come back to that segment. You obviously mentioned about the damage due to probably lower volumes as well as you mentioned that you had to maintain, align with the lower spot LNG prices. Now, my question was more about what are you seeing from 2Q onwards and any sort of outlook you can draw, assuming that the world continues to sort of unlock, you know, albeit on a gradual basis, and the price sense that you see. Any guidance you can give for the next two quarters in terms of what we can expect? Because obviously the numbers have been far too volatile to get a handle on, you know, how to sort of look at this segment from a earning perspective. So far, We have already given the outlook of the trading as well as whatever the volumes we are going to, we have . And we have given that volume will be more in the coming period. So that way you can assume that it will be better. But we can't give you any fixed outlook because we do not know the prices. prices which are volatile and we do not have any much anticipation we have uh our stock prices we never expected this would fall like this so all these uh uh we can't uh clearly give you any outlook but volume we have already given and that will tell what could be the scenario in the taste but empirically you you may be aware tracking the market

uh the spot prices have gone up by more than one dollar now and the long term prices are also are looking up now they are higher by 1.5 dollars so that way you can make out what will be due to yeah segment

You mentioned about obviously the prices have obviously dropped by a little bit. But if I were to look at the margins, it seems that the costs on a per unit segment have also gone up. Is it purely a function of, you know, the fact that volumes are so low and there is some element of fixed cost there? Because they seem to have actually gone up quite sharply. The operating cost for the segment of this quarter. obviously if the production will be low then the fish cost obviously will cost will be more and you have as i have already mentioned that we have lost around 65 000 metric tons in the last quarter so obviously the cost of production will be more that's the very quite natural But since we have reached to our 100% more, then we expect to have a better realization in this quarter and further.

And have we seen some improvement in pricing also, sir, in Q2, in July and August?

Yes.

So pricing is also better than the Q1 levels is what we are seeing. Yes. All right. That's all from me, sir. Thank you so much for your time.

Thank you very much. Yeah, thank you, sir.

Sorry to come back again on LNG marketing, but I just want to understand this issue a bit better.

Do you make a loss on the inability to kind of place your in the U.S., or were these volumes which you brought to India, and there's kind of a timing mismatch because of the lockdown, what have you? So I'm trying to understand, where do you make the loss? Was it in the U.S. or in India on your volumes?

That's the first question. The second question is, could you give us an update on the proposed of your volumes, which you have swapped for 2021?

Thank you. We sell about 47, 46 million cubic meters of gas, of which 10 million is sold in the international market. And there was a bit of loss there, not much. Remaining volume is sold in the domestic market, which is about 37, 38 average. You know, this is a normal market scenario. So, we have not specifically, we have not made any loss on Qatari volume. There is no loss on that. It is the other part where What happens is when there is something as bad as COVID, the sales starts going down and the customer has two, three contracts. He may actually stop taking gas of some contracts which are slightly higher priced. Maybe the reason is that he's not able to produce to his liking. He doesn't have transportation agreement for his fertilizer or for his steel or something like that. So specifically, we can't point out the losses were related to some of the cargos that we had to cancel as was informed by director of finance shortly sometime before. And some of the gas which was, you know, it came in our inventory and we could not sell it. So we had to devaluate all those financial losses are there. Some of it we may want to recoup it in the coming quarter.

Just to add, Aditya, just to add to it, this COVID, as you know, the consumption has declined. So overall consumption has declined. There will be heat somewhere. Some part there. And some part it will be heat. And you can better understand that. so far as the domestic production are concerned though there was a little bit decline in the domestic production but that has been consumed and that over impact will be on the rlng so that that impact has come on our balances because of our not off taking or you can say still whatever you can say so these are the primary reasons on a very thumb rule we can say that these are the reasons for our So, can you just like elaborate a bit on the inventory markdown? As you said, I think that makes a lot of sense, but if you can put any light on the numbers there. Numbers is already reflected in the results. As I have already told that we had a profit of around 600 crores in Q4, and now it is about 527 crores. The number is already given.

within that what was the inventory loss like how much of that loss is because the inventory inventory was around 250 crores okay thank you and the second question what position for 2021 uh on your us volumes

I could not get .

For 2021, as we are also informed in the last annual meeting, about nine, ten percent volume is unsold. Rest all is sold.

Thank you. Thank you very much. Thank you, Aditya.

Thank you, Mr. Aditya. So, before we go to the next person who has raised a question, I would request the participants who would like to raise a question, please join on the audio line so that I can unmute you. I do see a couple of people who have tried to raise their hand, but if you please click on the phone icon, you can also join us on the audio line. So, next, we have questions from Mr. Vikash Jain. So, Vikash Jain, you are on the unmuted line.

Yeah, hi.

yeah please because yeah go ahead please yes hi uh so uh you know just uh staying with cash marketing itself uh what is actually a little disappointing is the fact that we the last call that we had was on 25th june which is when the quarter had only almost ended and a lot of you know at that point of time at least the expectation, I mean, it did not, at least to me, appear that there was so much problem which was going through during the quota. So that is where, you know, I think, is it just that the ability to predict is, you know, is so poor that, you know, even after the quota ending, we were not really so, you know, aware about it. That's something which is a bit of a, you know, a negative surprise, clearly.

Yeah. Yeah.

So, I think I have already told about the volume which was discussed during our discussions on June and that that given indication that is there there is going to be some consumption which was less and that that has reflected into our Q1 results. So I don't think any disappointment on that part is there, because you are knowing the volume, you are knowing the volume. Volume is an indicator for that. And the COVID is not, everywhere there is a problem. All industries are affected. So that has impacted the performance in this Q1. And it was well known. I don't think any disappointment should have been there. Really, we are feeling disappointed because we have not given you the better results, and you can understand our pain, and you can understand that in spite of our best efforts, we could not do it better. So, we are feeling that we are not very pleased, you can say, to announce this result.

Thank you, sir. We have next question from Mr. . So, Mr. , you are on the unmuted line.

Thanks for the opportunity, sir. Sir, one question. You have earlier mentioned that the PNGRB will announce this implementation of the tariff. Can you just go more in detail, what's the expectation and post-unification, how the tariff for this HVJ will be paid out? I think more colors on that would be really helpful.

yeah we can't give you any any any figure at this stage because png is evaluating the total scenario and i think soon within coming two to three months they are going to settle this unified tariff one place is known then we will inform you we have only provided the details and whatever our queries was there or whatever our information could have been there so we can't give you any number at this stage also they have already conducted the open house yeah they have put the draft regulation on their website so

you can think you know understand the direction that the ngrb is taking and as director finance was telling the two three months we should be able to get their final regulation on this yeah as a principle it should be revenue neutral any unified pipeline should get to a 12 percent return post tax return we don't know what comes there Please.

Thank you, sir. So, we have next question from Mr. . You are on the unmuted line.

Thank you very much, sir. So just trying to understand the gas marketing loss a bit better. So the reported loss is 517 crores at the gross level. Now, obviously, there would have been a profit at the domestic marketing of ONGC gas. This basically relates to the cargoes which are imported. You mentioned inventory loss was around 54 crores or so. So basically on the cargos on which the company incurred a loss, what was the per dollar spread in terms of MLB to you? Was it $3, $4, $5, which translates into this loss? The average spread loss?

See, first of all, I would like to correct that the event loss, I have told 250 crores, not 54 crores. So it was 250 crores. Understood, sir. and second we can't give you any number per cargo loss because it depends upon the market dynamics and situations whatever is there so whatever the trading has been done and whatever the market aligned prices where we have to sell to the customers that way the booking is done the number of cargoes are more so we can't give you any fixed number but the resultant i have given you is the 547 close loss

you want to add anything in the domestic gas that you are referring to we earn only 4.55 cents per mmbtu so uh that is that is the only earning that we get we don't get anything other than that in domestic and that continues to be 60 percent of our volume For remaining, we have, on some part, we have earned 20 cents. And somewhere in the other remaining volume, we may have lost $1 to $1.5. And that is how this whole figure is coming. We have not worked out individual segment, individual customer profit and loss, as Director of Finance was telling just now.

Sure, sir. So just to understand this better, spot LNG prices have moved around a dollar from the lows, and oil has whatever, been $45. So at this point of time, if the volumes have normalized, would it mean that this EBITDA loss is difficult to be repeated in the second quarter, or is the second quarter too uncertain to take a call at this point of time?

we we we would like to uh tell you as of now that our volumes have normalized and we had informed you that spot prices have gone up by one dollar long term prices have gone up by one and a half dollars now so um you can't have a hazard i guess what will happen you know 45 days of this quarter but as of now we think what you said is correct that this kind of loss will not should not be repeated

And secondly, we do not know the situation of the pandemic, which will burst or will be normal or the lockdown situation will be more or whatever is there. So any projection at this stage with the COVID-19 situation, it is very difficult to keep.

Thank you, sir. Next question from Mr. I'm sorry if I missed out your name. You are going to be on the unmuted line and there you are.

Thank you very much for the opportunity.

So just to confirm, is the domestic gas sale back to the 85, 86 MMSCMD level that's the normalized level? And within that, are we back at the levels 50 and 35, 36 MMSCMD levels for domestic and RLNG sale. If you could give an update on that. Second question is on the subtle outlook that you gave on the Urjaganga customer base, the 10 MMSCMD volume demand. So you also mentioned that you sell a similar quantity of gas in international markets. So do you think that you will, once the demand comes, let's say midway in 2022, would you not, you would not have to trade any cargos, you know, import and resell them?

Thank you. We expect to get that 10 million converted into domestic sale instead of international sale by June 21 and not in 2022. So June 21, we should be able to get all that volume which is being thrown outside back into the Indian market in the form of RLNG. Regarding your first question, as of today, an average of last 15 days, we have been selling 45 million cubic meter of gas per day in domestic, which is domestic gas, and about 39 billion cubic meter of RLNG. So demand has come back, and it is strong demand. uh this is you know with the usual caveat we don't know what will happen in next 45 days because the times that we are going through is such this is not uh you know we would like to continue with this performance but nobody knows because of covid if something happens then

As of today, we are normal. We have reached almost to the pre-pandemic.

Only CNG demand is. CNG demand is there. Even the CNG, even the PNG, CNG, the CGD sector, that gas demand has also come back to about 15 million, 15.5 million now. That is how we are able to state that we are back at the pre-COVID level.

Yes.

Yeah, please.

Okay. We have next question from Mr. Manoj on muted line.

My question is Mr. Manoj. Hello. Can you hear me? Muted line. My question is Yes, we can. We are not in a position to get you, sir. We can't hear you, Manoj. Hello?

Yeah, please go ahead.

Can you hear me now?

Yes. As far as your last call, you have been affixed to your customers by passing a baseline for food industry, okay? I just wanted to understand when you secure a safe bag for the nearest person that happens to be a long-term consumer, is it possible that some food industry or some gas industry will be able to pass on to your customers who own it?

I think there's some talk about your lines. I'm going to mute you again because we couldn't hear him. But anybody from the panel, would you like to address anything that you've got from him? Or should we go next?

So I think we could not get you. If you can contact separately to us, we will reply. We are not getting your questions.

I think there is some network line issue from his end. No worries, sir. We'll get back to you. On the other line, we have a question from Mr. Vardarajan Siva Sankaran.

i'm i'm using you thanks for taking my call sir uh i have two questions one uh once june 21 when you have entire u.s volumes being placed in india is there a difference in the contract structure that one is you know the fertilizer plants are linked to group and then this contract is still linked to henry hub and there could be a situation where this price variations could again

to some kind of losses completely make sure that we can't we don't have to think about any kind of a loss or such a topic so there is some difference between the source and you know the contract of the fertilizer plants and we have been managing that till now very successfully We hope we'll be able to manage that, but the hedging that we refer to is actually that part when we do the basis swap.

Can I understand this based on your answer that the fertilizer plant placement is linked to crude?

The contract is linked to crude?

It's not just the fertilizer plant. We have several customers wherein we are selling gas linked with crude and buying at Henry Hub.

Okay. That's what I wanted to understand.

The sale in the Indian market is linked to crude Some of the sale is linked to Henry Hart. Some of the fertilizer plant contracts are also linked to Henry Hart.

Very nice, sir. My second question is on, now that you said, like, you know, the prices have improved in the current quarter. Is there scope for any kind of inventory gain? You had inventory losses in the last quarter. I have not calculated that at present. Is there a scope? I mean, I'm sure you know. Depends upon the price and at the time of our booking, what would be the test case. We can't give you any number at this stage. That's fine, sir.

Thank you. Thank you. Next question for Mr. Tarun. Yeah, I am unmuted here.

Yeah, hi. Can you hear me? I just wanted to clarify one thing. Had your offtake of gas volumes been normal in the quarter, would you have earned some profits from the gas marketing segment, or there would have been losses, but perhaps lower than what you have reported? Essentially, what I'm trying to see is if the volume should have been normal, of course, there would not have been any inventory markdown. But was there a pricing differential because of which you had to report losses, or it was entirely because of mismatching supply and, you know, uptake, and because of that, you know, you had a uh loss uh to be accounted in the quarter because of the primarily because as i have already explained mismatch between the uh supply and consumption so that was the prime reason and then coupled with the prices also so so prices also plays important role in our profitability as i have told so both things go together to a better margin can we put it like this that since the prices were anyways adverse in the quarter had your volumes been normal would you have earned higher losses also possibly see we can't calculate like this because you have given the answer also to your question so yes obviously if one one the conjunction would have been better certainly there could have been less loss we can expect yes just one one more thing in which i want to clarify on the same topic uh you you have deferred some cargos uh right so Are there any take-or-pay implications which may be imposed by the LNG suppliers or, like, can we assume safely that given it's a, you know, I think you had clarified on the earlier call, so given that it's a pandemic scenario, most of the take-or-pay implications will be waived off. And if there is any such take-or-pay which you may also have to apply to your customers in case there is something on the supplier side.

There is no, there won't be any take-out pay liability because whatever volume we have not taken is under post-major, so we have cancelled that volume.

Okay. So there will be no, nothing which will be imposed on your side, neither are you, you have to impose anything on your customer side as well.

Yeah, we expect it to be like that only, but, you know, at the end of the day, they will accept it at the end.

It is likely to be like that, yes. Perfect. Thank you. Thanks a lot. Thank you very much.

Thank you, Dean, for handling it so well. I would like to hand over to Mr. Harsh Jogge. Mr. Harsh, you can please unmute your line. Harsh.

Yeah, thank you. Sir, as we conclude the call, actually, there are two questions that have come from, you know, the holders of the stock who are unable to attend the webinar. First, essentially, in the June quarter, have we paid any re-cash charges or have we accounted for any re-cash charges which are pertaining to take-or-pay under the take-or-pay ahead? And second, the agency work towards the inventory losses that have been booked. Any scope of those getting reversed in the second quarter as we move on? The first question is your regas charges. I think we have not done any. There is no regas charges. No user pay has been paid. And inventory losses, yes, we'll see what would be the price, and then we'll account for it. in this quarter if something is there. Understood. I think that answers most of the queries. There are a few questions which are there in the queue, but I guess for paucity of time, we'll have to skip them. I greatly appreciate Gale Management for giving us an opportunity to host this event.

I sincerely thank you, sir. And I would also like to thank all the participants who have got the call.

and participated in this webinar. Thank you very much. Thank you. Thank you very much. And I would like to say that if there are any questions left and if somebody wants to ask any clarification, uh they can ask from my team as well as to me and we love to reply whatever the clarifications are there so any participants who has not been able to ask the question and if some clarifications are required they can ask further also and we are available thank you very much thank you