GAIL (India) Limited

Ladies and gentlemen, good day and welcome to the Q2 FY22 Earnings Conference Call of Gale India Limited hosted by Alara Securities Pvt. Ltd. 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gagan Dixit from Alara Securities Pvt. Ltd. Thank you and over to you, sir.

Yes, thank you. A very warm welcome to everyone and happy Diwali to all. It is our pleasure to be able to bring to you the management of Gale, led by Sri A. K. Tiwari, Director of Finance, Sri R. K. Jain, ED FNA, Sri Shashi Menon, ED FNA, Sri R. K. Singhal, he is an ED Business Development and ENP, and Sri A. Kaviraj, he is ED Marketing. We would also like this opportunity to congratulate the management on its excellent set of numbers. So with these words, I would now hand over the conference to the Gail management. Over to you, sir.

Thank you. Thank you very much. Good afternoon, Gagan, from Ilara Securities, and my dear friends from investors and analyst community connected through phone call. A very warm welcome to Gail's earning call for Q2 FY22. Wish you all a very happy Dhanteras and very happy and safe Deepavali. May this season of festivities bring cheers, health and prosperity to your life and to the life of your family. We are thankful to you all for showing keen interest in the performance of Gail. The result of second quarter and half-year results have been declared earlier today, and I am sure you must be happy with the Gale's performance. I take pleasure to state that in H1, FY22, Gale has achieved highest ever half-yearly turnover, PBT, and FAT. Now I would like to give you a brief insight of the company's performance for the quarter and half year ending 30th September 2021. I would like to first start with physical performance. During the quarter the physical performance of the company has improved across all business segments mainly driven by higher demand in gas segment and better plant operation in petrochemical segment. Gas marketing increased to 97.72 MMSCMD in Q2 FY22 as against 95.95 MMSCMD in Q1 FY23, increase of 2%. Yale has entered into various long-term LNG contracts to meet increase in demand of natural gas in the country. As some of the anticipated demand did not stratify in the past year, Gale was selling some of its volumes in the overseas market. As the demand of the gas in the country is increasing, more and more of the long-term LNG is being brought to India. During the current quarter, the sale of RLNG has increased resulting in better physical performance of gas marketing segment. In fact, during the quarter, only 8 cargoes were sold overseas as against 14 cargoes in the previous quarter. Due to increased gas demand in the domestic market, the natural gas marketing increased to 114.32 MMS GMT in Q2 FY22 as against 107.66 MMSMD in Q1 FY22. Increase of 6%. The capacity utilization increased to 55% in Q2 FY22 as against 52% in Q1 FY22. The MATICS, presently the MATICS RFCL are running on full capacity with the commissioning of XURL plant and attaining full capacity by mid-22. The volume would further increase by approx. 6 mm CMT. Polymer production is stood at 216 TMT in Q2-FI22 as against 133 TMT in Q1-FI22, increase of 62%. There have been apprehension in the past over the reliability of the petrochemical plant. Last year we achieved over 100% capacity utilization and the plant is currently running smoothly at more than 100% capacity and we are confident to achieve 100% production capacity this year also. Polymers have increased to 221 TMT in Q2 FY22 as against 130 TMT in Q1 FY23 increase of 60%. Similarly, the LSC stood at 262 TMT in Q2 FY22 as against 250 TMT in Q1 FY22. The capacity utilization increased to 74% as against 69% in LSC segment. Similarly, the LPG transmission also had the sustained growth and the capacity utilization was 110% in this quarter. Let us now move on to the financial highlight. Gale achieved gross turnover of 21,477 crore in the current quarter as against 17,352 crore in Q1 FY22. There is an increase of 24% mainly due to increase in the natural gas marketing volume, higher natural gas prices, increase in the petrochemical sales, electricity, etc. Dividend stood at 3682 crores in Q2 FY22 as against 2054 crores in Q1 FY22, increase of 79%, mainly due to all around better physical performance, improved gas marketing spread, better prices in petrochemical analysis, improved petrochemical operating efficiency and increase in the other income, mainly dividend of 465 crores. The gas marketing segment showed a robust performance and the profit increased by around 189%. Similarly, the pack jumped to 2863 crores in Q2 FY22 as against 1530 crores in Q1 FY22. On a half-yearly basis, gale clock turnover of 38,829 crores as against 25,671 crores. In X1 of the last year, resisting increase of 51%. The PVT increased by 201% to 5,763 crores as against 1,907 crores. That also jumped to 4,393 crores. for the half year as against 1,495 gross mainly due to robust performance of energy marketing segment better average price realization in PC and LHC which is in comparison with the last H1 is 27,000 per metric in case of the petrochemical and 17,600 per metric ton in case of the LHC. On consolidated basis the turnover in H1 In H1, FY22 is 39,290 crores as against 25,926 crores, jump of 52%. The PVT in H1 is 6,268 crores as against 2,161 crores. And the PAT is 5,021 crores as against 1,766 crores. During the quarter, Gale received 22 LNG cargoes from US, 14 from Seven Pass and 8 from DCP. As per the cargo plan, out of these, only 8 cargoes were sold in overseas market and the remaining cargoes were brought to India either directly or through destination swap. Up to H1, 44 cargoes were sold, were brought and in the international market we have sold 20 cargos up to H1. On the CGD front, GAIL is supplying gas to all CGD with infrastructure of 81 CNG stations and the cumulative DPNG connection is 148,000. And the tapas spent so far is more than 1,000 crores. I'm happy to announce that the GAIL CGD business has become profitable during the current quarter. On GAIL gas, during the Q2 FY22, the gross turnover, gross revenue from operation is today 1,478 crores as against 1,212 crores. And PVT is 105 crores as against 72 crores. and PAT is 78 crores as against 53 crores. Gale gas along with the JVs subsidiary has infrastructure of 725,000 DPMG connection and 262 PNG stations. This year Gale achieved capex of 3180 crores up to September 21 mainly on pipeline, equity contribution, CGD project, petrochemical, operational capex, PMP etc. We have a plan to spend across 7,400 crores in current FY financial year and mainly in pipeline, equity and petrochemical. On Pradhan Mantri Urjaganga the total commitment is over 15,400 crores. And actual capex till date FY22 is 12,221 crores. We have been receiving the capital grant from the government regularly until the total capital grant received is 4,487 crores against the total capital grant of 5,176 crores. The GAIL along with its JV is executing pipeline project of 7,500 kilometers with a total investment of around 37,000 crores. GAIL is executing PP project at Pata and Usar with a total cost of 10,000 crores and the EPMC contract license selection has been done and work on the project is going as per schedule. On CSR fund, Gale focused on the CSR program in the area of health, sanitation, education, skill development. The total spending of Gale on CSR project is more than minimum mandate of 2%. On safety part, zero major reportable accident, incident during last five years and our HSE score is 97.3. as again the excellent target of 95. Gale due its presence in the natural gas play an instrumental role in transiting towards a low carbon economy. The complete special emphasis on environment and sustainability. Some of the key achievement during the past quarter in the area of sustainability are Certificate of Appreciation received from New Okla Industrial Development Authorities Development of the Organic West Composite Plant at Gale, Bhagodia and Gale participated in concentration and launch low carbon and climate resilient pathway for the Indian public sector enterprises. Various measures have been taken in the digitization and which includes all the stakeholders management suppliers, contractors, employees, even the retired employees. So that's the brief introduction on the financial results and the major highlights of the company. Yale management team is present here and to clarify any points that you may have. Over to you, sir.