GAIL (India) Limited

Ladies and gentlemen, good day and welcome to the Gale Limited Q1 FY25 Earnings Conference Call. As a reminder, all participant line will be in listen only mode and there will be an opportunity for you to ask question 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 conscience over to Mr. Abhishek Megham. Thank you, and over to you, sir.

Yeah, thank you, Fajal. Thank you, everyone, for taking our time for this first quarter of the 535 results call. We have with us from the management, Sri R.C. D.M., director of finance of the company, along with Adam, which is in the lead. And now, without any further delay, I will hand over to my team for opening remarks. Over to you, sir. Thank you, Abhishek. A very good morning to you. My colleagues present here, we are friends from investors and analyst community. Once again, good morning and very warm welcome to Gail's earning call for Q125. At the outset, I thank you for all of you to attending this earning call. It gives me immense pleasure to share with you Gail received many comments from CAG, for financial statement for the financial year 2023-2024 as this is 15th year in row. Gale has advanced its net zero carbon emission target for scope 1 and scope 2 emissions to 2035 from earlier stated target of 2040. Gale's results for quarter ended 30th June 2024 have been declared yesterday. I would briefly touch upon the major highlights for the quarter, and then certainly we can open the session for questions and answers. Financial highlights. Gas turnover increased by 4% to Rs. 33,627 crore in Q1 FY25, edge against Rs. 32,250 crore in Q4 FY24. And this is mainly due to robust physical performance in gas transmission segment, increased natural gas marketing volume in domestic market, and higher natural gas prices. Profit before tax increased to 3642 crore as against 2842 crore in Q4 financial year 24. And this is up by 28%. And it's mainly due to increased transmission volume and better gas trading margins. The profit after tax during the quarter increased to 2724 crore as a guess to 117 crore in the Q4 financial year 24. Again, there is an increase of 25%. On comparative quarter basis, Gail Clough turnover of 33,626 crore as a guess, 32,138 crore in corresponding period of the last year, an increase of 5% mainly on account of increase in gas transmission volume. and natural gas prices. Both PVT and PET increased by 93% to Rs.3642 crore and Rs.2724 crore as against Rs.1889 crore and Rs.1412 crore respectively and regions are same. Physical performance during the quarter Q1 FY25 as against Q4 FY24 Guess marketing volume during the quarter was 99.47 MMSCMD. It is almost flat. If you compare with the previous quarter, there it was 99.90 MMSCMD. Overall volume, as I said, is flat. However, there was an increase of 5 MMSCMD of volume in domestic market. And this growth is mainly driven by power. Natural gas transmission volume was 131.79 mm CMD in Q1 financial year 25 as against 123.65 mm CMD in Q4 financial year 24. The average capacity utilization was 63%. Polymer production was down by 86 mm TMT to 162 TMT in Q1 financial year 25 as against 248. in previous quarter due to annual turnaround which normal phenomena in our case we normally take annual turnaround during the period of April every year. LST production was 216 TMT as against 265 TMT in previous quarter. The decrease is also due to annual turnaround activity at Patta, C2, C3, Vijaypur and Gandhar units. LPG transmission was 1065 TMT as against 1114 TMT in previous quarter. The capacity utilization during the quarter. Consolidated financials for Q1 financial year 25 as compared to Q4 financial year 24, the consolidated turnover in Q1 financial year 25 stood at Rs. 34,822 crores as against Rs. 32,833 crores in Q4 financial year 24, which is up by 6%. The profit before tax in Q1 financial year 25 stood at Rs. 4,114 crore as against Rs. 3,099 crore in Q4 financial year 24 and this is again up by 33%. The profit after tax is Rs. 3,183 crore versus Rs. 2,469 crore in Q4 financial year 24 up by 29%. As you know, Gale also has six CGDs along its Jagdishpur-Haldia pipeline. We have an infrastructure of, under those CGDs, 189 CNG stations and 3.4 lakh DPNG connections. During Q1 financial year 25, 700 new DPNG connections were added. The physical volume is 0.3 MMSCMD during the quarter. In the next two years, GAIL targets to add around 80 new CNG stations and around 1,20,000 new DPNG connections. As you know, we have Gail Gass as our 100% subsidiary. Now, I will take you through the Gail Gass financial highlights for Q1 and also their plan for next two years. Gross turnover stood at Rs. 2987 crore as against 2853 crore in Q4 financial year 24. Increase of 5% and this is mainly on account of increase in revenue from CNG segment by 4% and bulk trading segment by 7%. Profit before tax stood at Rs. 149 crore as against 121 crore in Q4 financial year 24, and there is an increase of 23%. Profit after tax stood at Rs. 110 crore as against 92 crore in Q4 financial year 24, increased by 20%. The physical volume increased to 7.11 mm CMD in Q1 financial year 25. Increase of 3% mainly on account of increase in CNG sales. and 40%, sorry, increase of 3% mainly on account of increase in CNG sales and 14% bulk and trading by 4%. During Q1 financial year 25, Gale Gas along with its JV subsidiaries had added 27,467 new DPNG connections and two CNG stations having infrastructure of 10,03,000 DPNG connections. In the next two years, Gale Gas targets to add under 70 new CNG stations and around 5 lakh new DPNG connections. Now I will take you through the project performance. As you know, Mumbai-Nagpur-Jharsugda pipeline we are laying is a length of 175 km. Activities for laying this pipeline are in full swing and we expect this pipeline to be completed during current financial year. Regarding Jagdishpur-Haldia-Bokara-Dhamra pipeline, this is pipeline of 2986 km. Out of total pipeline, 2986 km has already been laid out of 3289 km and remaining part is expected to be completed progressively by March 25. Shikakula-Mangul main pipeline, this is 421 km pipeline. Work is under progress and spur lines are Work is under progress for mainline and spurline and 320 km is already completed and rest of the pipeline is expected to be completed during current financial year. Gurdaspur-Jammu natural gas pipeline, this pipeline is having length of 160 km likely to be completed by July 26. Other projects, PDHPP at USAR, capacity is 500 kTPA, project cost is 11,256 crore, mechanical completion is expected by April 25, and we expect commercial production by October 25. Till date, the progress is 69.5%. Polypropylene plant at Patta, capacity is 60 kTPA. Project cost is 1299 crore and expected to be completed during current financial year. And project progress is 87.4%. IPA at Usar, capacity is 50 kTPA. Project cost is 530 crore. Completion date is 24 months after licensor selection. Currently, we are in the process of selecting the licensor. We have Acquired one JBA petrochemicals. Now we call it a Gale Mangalore petrochemicals. Capacity of this plant is 1250 kTPA. Project cost is 4200 crore. We expect to be completed by June 25. With respect to capex, during Q1, financial year 25, we have incurred capex of 1659 crore, and this capex is mainly on pipeline, around 500 crore, petro-farm, again, around 500 crore, CGD projects, 30 crore, and capex on others, operational capex on others is around 400 crore. Estimated future capex for financial year 24-25 is 11,450 crore including the equity contributions and 2526 is 10,129 crore again including the equity contributions. Now I will take you through the segmental outlook. As you know that we have marketed almost 100 mm CMD of volume in the Q1 financial year 25. And we have been giving guidance to you that this year we expect to grow by approximate 5%. We are on that course. We have also given you the guidance regarding the marketing margin for the full financial year. We have said that whatever situation comes, we are expected to earn around Rs. 4,000 to Rs. 4,500 crore of marketing margin. We have given the kind of range to you this time. And we are on the course of achieving those targets. In Q125, we have already earned almost 1,994 crore rupees of marketing margin from this segment. And we expect to surpass the current target given to you, 4,000 to 4,500 crore. And for guidance purpose, you may consider now 4,500 crore as a minimum target for this financial year. Gas transmission volume, we have been giving guidance for now almost three years And we are on course. The guidance we have given for this financial year that we will transmit gas marketing around 130 to 130 mm CMD volume. You can see from the physical performance of Q1, we have transported almost 132 mm CMD to a precise 131.79 mm CMD. With respect to outlook for 25, 26, and 26, 27, maybe coming two to three years, we expect to grow our transmission volume by 10 to 12 mm CMD. Polymer production is stood at 162 TMT as against 248 TMT in previous quarter. And this is, as I explained to you, this is mainly due to normal plant shutdown, which we take normally in April. And this year also, we took in April. We are expecting an upside in this segment here on. As you know, the price are almost stabilized. The natural gas prices are also softened. We expect to earn, when we close this financial year, a reasonable amount of profit from this segment during financial year 25. Liquid hydrocarbon production stood at 216 TMT in Q1. And we have posted a PBT of 229 crore. The production is lower side in comparison to 265 QNT in Q4 financial year 25. Again, this is primarily due to turnaround activities. But the production level has been regularized since May 24. And we are course of achieving our capacities as we did in last year. And maybe more than that. Both for petrochemicals and LFCs. That's all from my side regarding the overview of performance and projects. The management of the company is available now with you. We would be glad to clarify any questions that you may have. Now I hand over to you, Abhishek.

Mr. Abhishek? Yes, Abhishek. Yes, sir.

Can you connect me to the conference?

So you're connected.

Okay.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet from HSBC. Please go ahead.

Yeah, thank you so much and congratulations on great numbers. My first question is on the gas transmission volume business. You've already touched 132 million cubic meters a day now. Are you expecting some bit of reduction in the current quarter given that the power demand from the gas station might slow down a bit or are you still seeing the same number flow through? In which case, is there an upside to your 132 million cubic meters guidance for fiscal 25th?

There is no upside as of now we are communicating. We maintain our guidance of 130 to 132 MSTMD on whole year basis. And currently it's still running at 132 or has it come down? As long as you are talking to me, we are on average 131 for four months.

For four months. Okay, that's very helpful. Secondly, on the marketing side, you know, you're almost halfway through guidance and now you're guiding for 4500 to be lower end. What should one assume the higher end of the guidance given the current hedging that you would have done so far?

You know, we have been given guidance for, you know, minimum. And there is a reason for that because In order to maintain that, we take a lot of positions in the market. We also do a lot of optimization activities in terms of swaps, shipping swaps. And whatever we have been able to lock as of now, the guidance is based on that. That's why we say it's a minimum guidance. And I can only say at this point of time, we are going to achieve the minimum guidance. And We will revise our guidance based on the results of Q2, during Q2 results are being called.

Okay, that's very interesting. And lastly, on your marketing volume increase that you're writing for 5 million, can you talk about what customers are looking at?

One is a normal growth in the country, which you have been witnessing, everybody is witnessing that gas market growth is there. A normal growth which comes from city gas distribution, almost 4 to 5 mm SEMD volume is growing. We expect that at least 2 mm SEMD, which is our market share, I'm not giving any... any upside on that, though we have ability to even surpass that. So we expect at least 2 mm CMD may come from there. Second, there is a sea change in the power demand. Last year we saw there was a demand from power, but this year significantly it has come up. And we expect the demand to continue, at least to me the peaking demand, there is a change. So that's another thing. Third, as we are laying the pipeline, concluding the commissioning the pipeline, the customers along those pipelines, maybe city gas distribution customers, maybe small consumers are coming up. That is third thing. Fourth, the fertilizer plants which were commissioned during last year did not take the volume on an average basis to the extent they could have taken. That will come up. So we expect overall there should be a demand. I'm talking on domestic market, at least that will grow. And we continue to play in international market as we have been doing for various regions.

Understood. That's amazing. Thank you so much and all the best.

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

Thank you for the opportunity, sir, and congratulations on a good set of numbers. This was with respect to the polymer shutdown. Can I get a sense of how many days the shutdown was for and what is the current run rate of petrochemicals that we are seeing in Q2 so far? Shutdown was almost for a period of one month, 30 days, 28 to 30 days. And if you talk of a current rate on a proportionate basis, it's 105%. I'm sorry, sir. What does that mean, proportionate basis? means if we delete the month of April, and then we work out the proportion for three months on pro-rata basis, we are running at a rate of 105%. It means we are going to achieve our capacity of 810, rather we target to surpass that. Okay, so despite the shutdown and one month not being there in terms of production, we still expect to somehow get to that 800,000 to 810,000. Activity is a part of design of plant.

Sure, sir.

Yeah. Yeah. Yeah. Unique activity we are carrying out. So that is already factored in. So we expect to not only touch our capacity, but we expect to surpass that.

Understood, sir. Understood. So the other thing is the guidance that is given in your briefing when you mentioned transmission volumes of 10 to 12 in an SPMD. That was for basically every year we expect to add that or the collective addition by FI26 on FI24 basis.

Okay, 24, 25 we have given 130 to 132. Right. 25, 26 we have already given 140 to 142. Now we have ability to give you, given 26, 27, we expect that again to increase around by 10 MMSC only. Understood, sir. One last small question if I may. With respect to Dhabol's great water facility, in your project update, apologies if I did not get that, any update on the timelines and progress on that, sir? Actually, Dhabol, as we said during the last earning course, should have been commissioned for all weather terminal before this monsoon. But because of some issue of, you know, their we could not complete before this mansion, but now activities are on the course. We have sorted out the issue of, you know, there was issue of way to take the reports to the, actually the site. And now we have got resolved that issue. So after this mansion, we will be able to complete. And this year, after this mansion, it will be an all-weather terminal.

Next year, we should not expect this topic that happens for four months.

Actually, this was unanticipated. There was some issue with local people, so that has been sorted out now. All right, sir. Thank you. I'll come back if I have more questions. Thank you so much for your time. Sure.

Thank you. The next question is from the line of Yogesh Patil from Dalit Capital. Please go ahead.

Thanks for taking my question, sir, and congratulations on the great set of numbers. Sir, gas... Yeah. Sir, gas transmission volume has increased close to 8 mm CMT on quarter-on-quarter. Can you give us an idea how much of this was from the gas power plant? As per our knowledge, you are directly supplying a gas to the gas power plant, so you will have a better idea on that side. Around 4 to 5 mm CMT per quarter. And that is still sustaining in the month of July? Yes. Like a gas power plant is one thing which has come up. But there are fertilizer plants which were under shutdown during quarter one. Had those plants been running, we would have even crossed 132. So we are still maintaining a 131 run rate. That I said to the answer to one of the questions raised by another participant. Yes, sir. I have a second question. In the last call, you mentioned that there is no APM gas allocation to the gas transmission segment. And despite that, your gas cost has declined sequentially, I mean quarter on quarter.

Any thoughts on this side, sir?

But this was supposed to be declined. We also said during those earning calls that the allocation for APM gas was reduced all of sudden in gradual manner from 16th August 2022, if I remember correctly. And then gradually it was reduced and by the end of March 23, the allocation was totally stopped. Is that right? Yes. So, it was totally stopped. So, since it was done all of a sudden, so we worked around that period while geopolitical situations were not favorable for gas marketing, gas price. So, during that period, we were required to purchase a high price gas in order to operate and maintain our pipeline. And slowly, slowly, gas prices have started softening. So, certainly, quarter on quarter, that impact which we faced during 2022-2023 started coming down. And now, we are almost at a normal level of gas prices for the purpose of consumption in compressors. Okay. Sir, recently, the P&JRB has revised about the LPG pipeline tariffs. Just wanted to understand the impact on the LPG business on the GAIL and if you could also share rupees per ton increase in LPG transmission tariffs would be helpful. The impact on GAIL is around 120 to 140 crore of profit of GAIL, the profit before tax, right?

120 crore.

120 to 140 crore on annual basis. Since this is being implemented for the first time, this will be proportionate for this year. And on annual basis, I have given the figure around 120 crore you can take. Regarding your question, how much it will increase? It will increase by 3.4%. The amount of tariff increased by PNGRV, we believe that it will increase the cost pattern by 3.4%. Okay, sir. And the last question from my side on the petrochemicals. Could you please share the cost of gas used for the petrochemicals and outlook for the petrochemical business in FY25-26 on the utilization level mostly? Actually, cost of gas sharing is a very difficult one because it's not that we give a particular gas to the petrochemical plant. We have ability to source various gases at various point of time. Whatever cheapest gas available, we will try to source and give to petrochemical plant. So it's not a thing which is a very, very, very kind of always that prices will be there. But regarding your question of profitability, I will not be able to give you a number, but I can give you one confidence that this year we are going to earn a reasonably good profit from petrochemical business. And Q1 results are showing that in spite being, you know, we were not operating for one month, we are almost breakeven. We have a loss of 42 crore and almost breakeven. So we will be now here on, we will be picking up, and at the end of the year, we have good, reasonably good market profits.

Thank you so much, sir, and good luck.

Thank you.

The next question is from the line of Nitin Tiwari from Philip Capital. Please go ahead.

Good morning, sir. Thanks for the opportunity and congratulations on a very good set of numbers.

So my question is related to your gas trading segment. So while we did see increase in the gas transmission side, our gas trading volumes are other flat and the operating profit increase is largely driven by margin.

So my question basically had two parts to this. how should we look at the gas trading volume number going forward? Like, you know, are we expecting, while you're guiding for a 5M, it may seem to increase, but like, you know, it has to happen in this quarter and what would be contributing to that increase going ahead and also in the years to come. And secondly, like, you know, on the gas trading margin side, how do we see this gas trading margin number? Because I suppose there are few contracts which have fixed margins, but few contracts have open margins. So what is a broad range where we can see where we can probably look at this margin if we have to look at it in per unit terms.

So that would be my first question, sir.

So our overall number remained flat as compared to Q4-24 and Q1-25. We are almost flat. But one thing I actually shared last time, but let me give one again. Those numbers of Q4 includes 10 mm CMD of volumes we marketed in the international market. In view of increased demand in the domestic market, we brought those volumes to India. Now, in fact, in domestic market where we have more delta available in terms of margin, volume already has increased to 95%. And I also said during the answer to one of the questions that we continue to be there in the international market to do various optimization and therefore from there that volume increase will come. So 4 to 5 mm CMD or 5 mm CT increase which I said is available already and the further increase if you want to see It is coming from power, I explained. It's coming from city gas distribution. The fertilizer plants, which did not take the volumes, full volume last year, they have sales contract with us, purchase and sales contract with us. And the normal growth, which is coming up along the pipeline, which are being commissioned. So we expect five CMD of volume should be achievable. And let us see. We are on the course as of date. And in terms of marketing margin, I have already given the guidance that in last analyst meet, we said 4,000 to 4,500 crore. We have given band. Now we are saying minimum 4500 crore we will earn during this year and we will revise our guidance based on the progress in another three months during Q2 financial year 25. So sir, if I understood this right, I mean your gas trading mix is changing with more overseas sales now turning towards India. So you are selling that volume within India and that is also leading to leading you to earn better margins. That's what it is, right? So that's the right interpretation? Yeah. So, and what I was actually asking in per unit terms was that if we calculate your gas trading margin on per unit of gas sales, it comes to about 70 cents per MMBT. So that's what I was asking, that how do we look at this number? I mean, like, you know, is it, like, you know, going to be at this? You should not calculate this 70 cents. Leave it on us. Because we have evaluated to change 70 cents to $2. We have evaluated to make it $2.5. Last month's close price for Henry was $1.90 per MMBTU. The Henry price sometime reaches $3. We do the paper trading. We take the benefit of arbitrage. If you maintain 70 cents on average side, it looks good. But let us do that and we'll give you the results.

Sure, sir. And so my second question is related to your pet chem segment.

So like the way you've given a guidance for gas trading, would it be possible for you to share some guidance in terms of what kind of profitability we can expect from this segment in this year and next year when your other capacity would also get commissioned? Maybe you can give some color over there. Actually, I said in answer to earlier participant question, we may not be able to give any number. We'll be I will be sharing that we will be earning a reasonably good profit because Q1 result if you compare with the corresponding year of last year you can work out it is far better where we lost significantly last year's Q1 and primarily region was the gas price. the polymer price remain at this level only, if you compare last year versus this year. We are able to source cheaper gas, as I said in answer to one of the questions, your question only with respect to gas marketing margins. We have ability to provide the cheaper gas through various sources, including the paper trading we are doing, even for petrochemicals. We continue to maintain our guidance that this year we will end with a reasonably good market. Understood, sir. Just that, you know, I wanted to understand if the current situation continues, then if you'll be able to help us with some number, but that's fine. I mean, if you're not able to help with the number currently. That would be all from me.

Yeah. Thank you. The next question is from the line of Sabri Hazarika from MK Global. Please go ahead.

Yeah, good morning, sir, and congratulations on a great set of numbers. Morning.

Thank you.

So, sir, I have a couple of questions. First, on the marketing side, I mean, we are almost at a 1,000 crore kind of run rate versus 4,500 crore that you have locked in. So, I was just wondering, was there any inventory gain impact also which was there in Q1? No inventory gain. No inventory gain. Okay, sir. And secondly, on the pipeline, I mean, it was previously taken up by another participant also. So you said that gas cost is like continuing to decline due to which the pipeline... No, I have not said that.

I am saying, I said it has now stabilized almost, it will be range bound. I said it declined because of the reasons of the geopolitical situations, all of sudden reduction of APM gas and finally it was totally stopped. So it continued to decline. Now we feel that it will be in this range only.

And in terms of anything specific to the domestic market, like there's been some news of Andhra Pradesh cutting back and other things. Anything that also contributed to the lower effects for the pipeline business?

Actually, it helps because gas is a competitive, is suffering from variations of taxes. Certainly, it is helping. And it particularly helps not only to the gas marketer like us, but city gas distribution companies are benefited most by it. And when they get benefited, we certainly get benefited. Because city gas distribution companies were paying higher input costs higher taxes and therefore their competition with the alternative fuel was becoming difficult. So now they have started progressing well because of this wet cut and then if they benefit, we also benefit because ultimately we are the flagship company in gas marketing.

Right, sir, got it. And so secondly, regarding this new pet camp project in Madhya Pradesh, so any details you would want to give on that?

I don't have any detail. I only saw we gave clarification to SEBI based on some paper news that as a commercial organization we continue to look for various opportunities where we should invest our money and this can be one of the area but no decision yet has been taken on putting petrochemical at Madhya Pradesh or any other place.

Okay, sir. Thank you so much and all the best.

Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.

Thank you, sir, for the opportunity.

Coming back to the gas transmission updates, basically, against the volume of growth of 6-7% during the quarter, quarter and quarter, we are seeing the gross margin increase of 33%. Would we be able to highlight the specific driver which has helped increase in gross margin you are talking of gas transmission gas transmission business yes it is seven percent so you yourself start a volume increase second what happens when there is a change in journals that also helps because weighted average that is changes third during quarter four we accounted for additional depreciation because of that we took a decision based on the opinion of icici that we were keeping five percent of accounts then we now took a call that we will not keep any value so that decision was taken last financial year last quarter we accounted for more depreciation that is now normalized from this quarter onwards so these and one more the gas price for internal consumption which is one of the participant asked that is continue to decline now it is stabilized so that is also factoring into all these factors are helping you know, for increased profit. Right. So, if I, my colleague has put this slide, if you see, there is a decrease of depreciation, 100 crore, fuel expenses, 86 crore, so, and some provisions were made in last financial year before, 36 crore, all these factors have helped us. Sure, sir. Thank you. The second question was about the 10 to 12 MMC in the group that we are guiding for FY26 and 27 in the transition volume. What is the market share that we are assuming? 70%. 70%. Pipeline business, you cannot assume any market share. Our existence is for 70% infrastructure, because this is a monopoly. Pipeline, transmission, a monopoly, wherever you exist, you continue to have those market shares. So we have 70%, almost 70% infrastructure share, so we continue to maintain those shares. So the country demand would grow by 15, 16, and we will get 70% of that as a transmission one, and that's the assumption. Yes, maybe more than that. If they come, either we put or some other, I am giving this based on current infrastructure. What we have or what we are laying. In terms of the project update, would you also be able to share on Bangalore-Kochi pipeline, the last leg that is remaining, what's the target date? We are on course and we expect to complete by this financial year. One more question. In terms of APM gas availability, what we hear is around 69%. So how do we see the availability of the APM gas changing? Do you have any input on that? APM gas for what? CGD. CGD. It will continue to decline because the market is growing. CGD is one of the growing sectors. It is the only sector which is growing with a double digit after one of the major consumer of gas after fertilizers. So if CGDs are growing, certainly it will continue to, you know, continue to decline. 69% may further come down. From the supply side, we are not seeing issues. It's only basically because of the demand, increased proportionate allocation will come down. Is that the way to look at it? Demand will continue to increase. The ICM allocation may come down. When demand increases, availability is limited. Certainly, it is likely to come down. Thank you, sir. Thanks for all this clarification and very detailed opening demand.

Thank you.

Thank you. The next question is from the line of Ajay Jain from Makrand Investments. Please go ahead.

Yeah. So very good numbers. Congratulations on that. So my query is basically on segment guest marketing. You have thrown some light on it. But, you know, if we compare quarter to quarter, we are not able to foresee what would be your profitability in that. Can you give us some guidance on how to calculate going ahead about your purchases in this gas marketing. Is it long-term basis or is it spot which you import? Or is it linked with the international prices when you purchase it? And how is it done, sir? If you could give us a little idea so that we can calculate. I have one more little idea that we will earn more than 45, at least 4,500 crores. Yes, that you've already given, sir. Just let me continue on this, sir. So there's so much variation. So is the international prices linked to what you import gas from U.S. and other places? Is it on a long-term basis that you have a contract? And how is the price determined? The reason behind it is I'm an investor. I just want to understand the business. of how it is done, what is the profitability that comes. Because every time a quarter result comes, the figures are so varied. I can give you examples like quarter one and quarter two. I mean, quarter four, you had 1,600 crores profit reflecting in that. And in quarter one, we are having 2,285 crores profit reflecting in this. Now, how is this worked outside? Because... We are not able to see it through. Even if you compare it year on year, we are not able to see through how is this calculated. I mean, at least some idea if we get how is the company performing, you know, before you give out the results, if we could be able to do that, it would do well, sir. Because the company is good, you're doing a very nice job, but we are not able to understand the business, you know, exactly how this is done. So if you could throw some color on it, it would really help us. Let me take you back three years back. We never used to give guidance on this marketing business because this was the one question which you are posing, people were not able to understand. So we started giving guidance way back in May 22. We gave that for 22, 23, 3000 crores. 23 to 24, we said 3500 crores. And now we have said 4,500 crore. Today I have said minimum 4,500 crore. And where from this guidance is coming and then I will come back to your question. We have almost 14 MMTP of contract currently operating. Out of those, now you can note it down because some of the answer to your question may be available. Almost 4.8 MMTP of contract we have from MediList, which is back-to-back, we have certain margins. APM, we have back-to-back, certain margins. Then almost 3 MMTP of contract we have from SMTS, which is GrooveLink contract. We have sourced on GrooveLink, marketed on GrooveLink. So you can assume that almost fixed margin which we get Then 5.8 MMTP of contract we have from United States. There we have marketed some of the gas at back-to-back index. And we have good margin and that is predictable. We work out based on that. Remaining what we do, we continue to remain in the market and we take positions. Like Henry has gone down to 1.9 in recent past it was 3. We continue to watch the market take positions to take the benefit of arbitrage. That is one thing we change. Second, we do destination swaps. When molecule has to travel from United States to India, almost $2.25 is a tariff. But we continue to optimize through swaps. Cargo is going from Middle East to United States. We are bringing from United States to the country. So we try to swap and optimize if there have been many situations for both the sellers or optimizers. So that we do. We also market the volume in international markets. So when we give you guidance, we work out what we have formed up when we are giving guidance. And we know that this is likely to be achieved. There is no, we do not have any doubt. But we continue to do optimization and that's how it increases. So this is world game. If you expect that we will be able to give you guidance. You want that, I can give, but that market may or may not support. Market may give different situations. So we give guidance and we continue to come back to you and revise our guidance based on those situations. Thank you so much, sir. So neatly and nicely explained, sir. Sir, can I just understand this way also? Just give me a second on this, please. We Sir, can we understand it that way that in quarter four, if the international price was $1.9, And in quarter one, it is $2.4. That means in guest marketing, you would do a good profit in it. For some of the volume, not for more volume. Okay, yeah. We do not have ability to earn more. But we have not marketed on same index. We can take positions based on future. Then we continue. It's not a subject which I can explain in a few minutes, but... But I have tried to give fair idea to your person. Minimum guidance. Can I put it on mail also if there is any further query to this regard? You can contact anytime. Thank you so much.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please restrict your question to one per participant. If you have a follow-up question, you come back in the queue. The next question is from the line of S. Ramesh from Nirmal Bank Equities. Please go ahead.

Hello, thank you, and good afternoon.

So in terms of the conversation with the regulator, P&GRV, do you have any sense in terms of when you will get the compensation for the cost of LNG which you used last year, which you were saying that the regulator is considering

And do you see any risk of the regulator revisiting your integrated tariff in the foreseeable future?

Our integrated tariff? What is that? Our integrated tariff? So I'm just trying to understand if there is any risk of the regulator revisiting your integrated tariff and reducing it. Revisiting on what basis? There is a defined regulation. Tariff is being worked out based on those regulations. Just because we are able to transport more volume, we are getting more revenues, can it reduce it? Because there is a defined regulatory returns which are available to us. And we cannot earn more than that. We are on the course of earning that. So, Unless the regulator says, for everybody we want to reduce the return IRR. That possibility, if it exists, then certainly it can happen. Otherwise, no. And on the compensation for the higher cost LNG used in compressors last year? Yeah, actually, we immediately after announcement of tariff, we approached the regulator and And if we calculate based on NPV basis, 8 to 9 rupees of reduction, because there was a reduction of around 6 rupees, but if you can't calculate NPV basis, 8 to 9 rupees is available to us in terms of gas price. We filed an appeal, but unfortunately, a lack of member legal of our appeal, I think that's what I understand, could not be heard. Meanwhile, we are in the course of filing the revised transmission tariff for integrated pipeline. There, our... higher prices can be considered because recently other transporters tariff was announced where they considered higher price than what we were allowed. We were allowed 3.61. Other companies tariff in the process that the regulator has given higher price. Certainly that is available to us and we hope that this will be done maybe in 6 months time and if not earlier then either by the end of this financial year or beginning of next financial year those are available to us on that present value basis. One more question. On the ONGC's KG gas production ramp up, do you have any sense in terms of what is the kind of volume you can expect and how much of that will you be targeting to tap?

I think ONGC has been projecting certain volume from KG basin but we have been hearing from them maybe one or two MSTMDs in this financial year we can expect and

larger volume in the next financial year, that is 25, 26, maybe in the range of 5 to 6 in MSCMD. But these projections have been coming from them, but they are getting delayed.

That's what we have been observing.

Okay. Thank you very much.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please restrict your questions to one per participant. The next question is from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead.

Thank you for doing the call. Just one question from my end. In terms of gas sourcing now, obviously you have kind of talked about reasonably well on how you think about demand. How are you seeing the sourcing strategy now going forward as you are in the market? How much could we expect crudeling contracts and rehabling contracts now going forward? Is there a mix you want to kind of get to over the next four to five years?

Actually, our intent will be to have a mixed portfolio. We have experience that helps us not only as a gas marketing company but also as a country because whenever there is a change in one basis, the other basis has helped us. So, we have recently sourced 1.53 mm TPA from two suppliers just on a true linked index and we are in the market and we certainly will continue to maintain our mix and make but the bottom line is that we look for cheapest source. While we try to have mix but we bottom line is that first we look which will be the cheapest and certainly the cheapest should also give us a mixed kind of portfolio. That helps.

Okay. Sure. Thank you.

Thank you. The next question is from the line of Vishnu Kumar from Evan Dispa. Please go ahead.

Thank you. On the Qatar contract, is there any change in the transfer of ownership from, say, the hedge to directly at Qatar to reduce some costs? And if so, is there any cost savings for us and the industry? We are still negotiating DSPs. detailed contract. I mean, I'm asking for the existing contract itself, sir, because we, one of our, one of... I'm not privy to any such discussion. Got it, sir. And just one question on the volume growth that you are highlighting from 132 to 152. We've been able to achieve whatever you highlighted earlier, but from here, what are the sectors that you are forcing when you go from 132 to 152? Any rough idea, if you can help us understand?

Okay.

Give me a moment. Most of this is going to come from the natural CGD growth, which is at least 12% or even higher CAGR.

Next comes the refineries along the eastern pipelines.

These two Haldia pipelines already Varani and this Paradi pipeline are getting supplies. They will ramp up and Haldia will get connected soon.

After that the two refineries along the Guwahati section of the pipeline.

So these refineries will be major contributors as far as transmission is concerned.

Then there will be newer customers along these pipelines, which are mainly in the steel sector and the ammonium sector, the methi companies. These sets of platforms will also be along the Sri Kakulam-Angol pipeline, which will be getting commissioned. and also some of them on the Dikdishpur-Haldia pipeline. So these are the major set of customers. Otherwise, there is going to be the natural growth also coming from some of the existing legacy customers.

Sir, on your CDT and refinery alone, what will be the absolute that you are considering, sir, from 152 to 152? The refinery segment will contribute around 8 to 10 mm STMD out of that. And CGD will contribute another maybe five to six MMS CLB. And remaining all will be a new set of customers and natural growth. Got it, sir. Thank you.

Thank you. The last question is from the line of Sumit Roha from SmartSend Capital Private Limited. Please go ahead.

Yeah. Hi, sir. Thank you very much for a detailed presentation and congratulations on excellent results. Sir, my question is more to ask you from an investor perspective, which clearly emphasizes on, I guess, going ahead in the proportion of the country's growth. So how do you see basically Gale over a two to three year perspective in terms of volumes, one, and secondly, sir, more on profitability because that will give us investors better perspective on how we are shaping up for the next three to five years, sir? I think for gas marketing, I have said we are likely to grow by 5% to 7%. 5% I have given for this year. Gas transmission, we have said for coming two to three years, we may grow by 10% to 12% as CMD. So from the perspective of growth, I have already said how we are likely to grow. Yes, sir. I mean, you have, but if you can throw some perspective on financial numbers as well, it would be helpful to get a better understanding. I have already given you guidance for this year, 4,500 crore minimum. And next year, you can assume maybe in similar range, 4,500 crore to 5,000 crore in same range. Okay. Okay. Fine. Okay. Fine, sir. Thank you, sir.

Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.

Thank you very much. It was pleasure talking to you. Hopefully, we have tried to give answers to your questions the way you expected. In case there was some more clarification or input is required, our team at management and investors relationship cell is available. They will be able to answer your questions. And I once again, thanks to you for taking interest and participating. Thank you very much.

On behalf of Motilal Oatswell Financial Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.