GAIL (India) Limited

Ladies and gentlemen, good day and welcome to Gale India Limited Q2F525 earnings conference call hosted by Phillip Capital India Private Limited. As a reminder, all participants 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 any assistance during the conference call, you may please signal an operator by pressing start then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Tiwari from Philip Capital India Privates Limited. Thank you and over to you, sir.

Thank you, Shita. Good day, ladies and gentlemen. On behalf of Philip Capital India Limited, I welcome everyone to Gale India Limited's second quarter FY25 earnings call. Today, we have the pleasure of having with us the senior management team of Gale, led by Director of Finance, Sri R.K. Jain.

I will now hand over the floor to the management for their opening remarks, which shall be followed by a question and answer session.

Over to you, sir.

Thank you, Nikhil. Thank you very much. My dear friends from investors and analysts community, good morning to and warm welcome to you for this evening call for Q2 financial year 25. At the outset, I thank you all for attending this earning call and would briefly touch upon the major highlights. And I'm happy to inform you that Yale has registered highest ever PVT and PET of 7095 crore and 5396 crore for first half in financial year 25. And this is mainly driven by strong marketing margins. increase in transmission volumes, and better pattern performance. On a standalone basis, in Q2 financial year 25, GAIL has reported gross turnover of Rs. 32,814 crores, VBT of Rs. 3453 crores, and PAT of Rs. 2672 crores. On a consolidated basis, in Q2 financial year 25, GAIL clocked a turnover of Rs. 33,861 crores, PBT of Rs. 3470 crores and PAT of Rs. 2694 crores. In gross turnover stood at 32,814 crores in Q2 FY25 as against 33,627 crores in Q1 FY25. The PBT during this quarter stood at Rs. 3453 crores as against Rs. 3642 crores in Q1 FY25. Back during the quarter stood at Rs. 2672 crores as against Rs. 2724 crores in Q1 FY25. Consolidated turnover in Q2 FY25 stood at Rs. 33,861 crores versus Rs. 34,753 crores in Q1 FY25. VVT in Q2 financial year 25 stood at rupees 3,270 crores as against 4,114 crores in Q1 financial year 25. AT in Q2 financial year 25 stood at rupees 2,694 crores as against 3,183 crores in Q1 financial year 25. The gas marketing volume sold during Q2 financial year 25 was 96.60 mm at CMD as against 99.47 mm at CMD in Q1 financial year 25. The decrease is mainly on account of reduced gas consumption by power sector due to prolonged monsoon and reduced average temperature. Natural gas transmission volume was almost flat at 130.63 mm at CMD in Q2 as against 131.79 mm MMX PMD in Q1 financial year 25. The average capacity utilization stood at 62%. Volume of production was 234 PMT as against 162 PMT in Q1. Capacity utilization for the quarter was 116%. LSP production was 262 PMT as against 216 PMT in previous quarter. The capacity utilization stood at 71%. LPG transmission through The report stood at 1144 TMP as against 1065 TMP this quarter. The capacity utilization was 98% during the quarter. DSCGD, Gaelic having the infrastructure of 194 CMG stations and 3,48,000 DPMG connections in the six geographical areas authorized to Gaelic. During the quarter, 3,765 new BPMG connections were added. The physical volume remained at 0.38 mm CMD using the quarter. The share of APM and RLNG in the physical volume is around 0.23 mm CMD and 0.15 mm CMD respectively. In the next two years, the target is to add around 80 new CMG stations and around 1,20,000 new BPMG connections. Gain Gas Limited, turnover was up by 5% at Rs. 3,150 crores, as against Rs. 2,987 crores in Q1 financial year 2015. The increase is mainly on account of 8% increase in sales volume from CNG segment, 15% from industrial segment, and bulk trading segment by 5%. PVT stood at Rs. 2,167 crores, as against Rs. 1,49 crores in Q1 financial year 2015. an increase of 12%. Fair storage rupees 124 crore as a gas 110 crore in Q1 financial year 25, up by 13%. During Q2 financial year 25, Gail Gas along with its JV added 26795 new BPMG connections and 8 new CMG stations and is having infrastructure of 10,000 to 30,000 BPMG connections and 580 CMG stations. I will take you through project performance. Mumbai-Napur-Jasukra pipeline. Work is under progress and the entire pipeline is anticipated to be completed progressively by June 25. Jagdish-Purhaldiya-Bukhara-Dhamra pipeline. This pipeline is of having length of 3289 kilometers. 2896 kilometer has been commissioned and remaining part is expected to be completed progressively by March 25. This pipeline is a 901-kilometer pipeline. 579 kilometers has been commissioned and the remaining part is expected to be completed progressively by March 25. This pipeline is a 421-kilometer, working under progress and likely to be completed by June 25. This pipeline is 160 kilometers working under progress and is expected to be completed by July 26th. Dhamra-Hazia pipeline. This pipeline is of 253 kilometers. 154 kilometers have been completed and remaining parts. This is basically West Bengal section. It is expected to be completed progressively by March 25th. Petrochemical projects. VDHPP at Hussar. Capacity of this plant is 500 kTPA. Project cost is 11,226 crore. Mechanical completion is by April 25, and project is expected to be commissioned by October 2025. Currently, the progress of project is 75%. TPA and PATA having capacity of 60 kTPA, project cost is 1299 crore, having target mechanical completion date of December 2024, and current progress of project is 91%. GMPL, that is Gage Mangalore Petrochemicals, having license capacity of 1250 kTPA, and approximate project cost is 4200 crore, having scheduled completion date of June 25th. CapEx during Q2-25. During Q2-25, CapEx incurred is 1885 crore, and this is mainly on pipeline, CGD projects, net zero renewables, operational CapEx, and others. Now I will take you through the segment-wise outlook for short to medium term. Yes, marketing business continues to demonstrate enduring performance and has informed in our earlier earning calls and investors meet, GAIL will be able to earn at least 4,500 crore rupees of marketing margin from this segment in financial year 2024-2025. Since we have already earned gas marketing margin of 3,287 crore in first half of financial year 2025, which is approximately 73% of the annual gas marketing margin guidance, GAIL will be again reviewed for further guidance and revised in during the result of Q3, financial year 25. Gas transmission volume for 24-25 is expected to be 130 mm CMD. Average gas transmission volume for H1 is stood at 131.21 mm CMD, which is in line with the guidance given to you. Further, during next two to three years, transmission volume is expected to increase by around approximately 10 to 12 mm CMD on year-on-year basis. Polymer production stood at 396 PMT in first half financial year 25. The segment has returned to profitability in first half 25 with a PVT of 116 crore against a loss of 461 crore in financial year 24. First half I am talking. We expect to make reasonable profit before tax from this segment in financial year 24-25. We further plan to optimize our sourcing to increase the bottom line of petrochemical business. LFC production is put at 468 TMT in first half 25. During the year, production is estimated to be at the same level as was in financial year 24. Also, to protect the margin and air segment, Gale is time to time taking hedging for its prices, the LPG prices, that is propane and butane. I think this is all from my side regarding the overview of performance and projects, the management of the companies available, and would be able to clarify on any questions that you may have. I now hand over to you, Nidhi. Thank you.

Thank you so much, sir. We will begin the question and answer session. Anyone who wish to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only headsets while asking a question. Ladies and gentlemen, to ensure that the management is able to address questions from all participants, please limit your questions to two questions per participant. For follow-up questions, you can rejoin the queue. We will wait for a moment while the question queue assembles. The first question is from the line of Frobel Sain from ICICI Securities. Please go ahead.

Thank you for the opportunity, sir. The first question is a little bit of a clarification. You mentioned in your opening briefing that trading volumes decline is due to the reduced gas consumption by power sector. However, if we look at the transmission volumes, they have remained broadly flat. I just wanted to understand from a very basic level, how should we basically then look at the mix between transmission and trading volumes, which seems to be sort of reducing if I look at the last two quarter trades. So in terms of building in numbers, even if transmission is at 130,000, trading volumes can actually fluctuate between 96 to 98, depending on which segments we are supplying to, sir? Thank you, Praval. Actually, our marketing volume, as I said, has gone down by 3 million, whereas the transmission volume remains almost flat, though it is down by almost 1 million if you compare quarter to quarter. And there are two factors why the transmission volume almost remained flat, maybe 1 million down, and marketing volume has gone down. The fact is that in Q1, our sector consumes significant amount of gas because of the weather conditions, and Q2, because of monsoon, it has gone down. That is the major reason, and why transmission volume remains almost same, and marketing volume remains came down because of this reason I think that in Q2 we did not supply the power whereas our plants was on the same which was not there in Q1. Okay so basically sir the transmission volume remaining flat meant that those that 2 MMSD or 3 MMSD went to either internal consumption or sectors where we don't actually get any marketing margin. Some marketeers have, because we were short of volume and we could not get the EPMC bid which comes regularly because we were not having volume. We participated during those bidding process but based on our prices which we were to source, we could not get those volumes. So, that is the reason that marketing volumes were not available to us and have gone to others. Got it. Okay. Thanks, sir. The second question I had was with respect to the petrochemicals. Obviously, we have seen a good recovery in terms of volumes. Just wanted to understand that what kind of runway should we be looking at for the second half? Are we confident we can maintain basically this 220... 230 TNT on a quarterly basis for the next couple of quarters. Yeah, we have in our guidance also said that and now I continue to maintain that this year we will be producing at the net rate capacity of Pata which is 810. We will be reaching around that level. So the current rate will continue to be maintained. Right. Last question, sir, if I may. The overall KPEX guidance, sir, you mentioned 1885 crores done in Q2. Can we get a sense of overall CAPEX done in H1 and H2 guidance? CAPEX you are talking? Yes, sir. CAPEX we have planned to incur around 8 to 9,000 crore of capital expenditure during this year.

Okay.

So we will be maintaining the current rate of capex, maybe a bit higher than current rate, because in second half, always the capex will be more than first half. So we will end up around 8,000 to 9,000 crores when we end this financial year. Got it, sir. I'll come back if I have more questions. Thank you so much for your time.

Thank you so much. We have next question from the line of Amit Moralka from Axis Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity. So my first question is on gas marketing segment. So I know that you've guided for a full year of about 4,500 calls, but... A bit louder.

It's a bit louder. I'm facing problem of getting your questions.

Oh, yeah, sure, sure. Yeah. So I was thinking on the first question is the gas trading segment. So I wanted to understand, like, what's the reason for the drop in the contribution, EBITDA and EBIT contribution from the segment in Q2 versus Q1?

Actually, Q2 is a normal return. Q1 was a bit higher. I will put it differently. We have given guidance of 4500 crore on yearly basis. If you see Q2, it was around 1200 crore. So, Q1 was higher than normative guidance. And why it was higher? Because we marketed, there are two, three reasons if you want to go specifically. One, we marketed almost 3 million more, that is one. Second, the The arbitrage available between the upstream contract, that is the Henry Hub, and downstream contract, that is the crude link contract. If you see crude prices during quarter one was higher as compared to quarter two. Henry Hub prices were lower as compared to quarter two. So, therefore, those arbitrage which were available in Q1 has reduced to some extent. These are the two primary reasons for our marketing margin reduction as compared to Q1. But we continue to maintain our guidance of 4500 per rupee.

Sure, sure. And... So is that the only reason the lower spread between the crude link LNG and rehab LNG? Or is there some other factor in Q1 as well? So is there any other factor beyond this? Because the fall is about almost 35% on a QOQ basis. So is that the only reason that the spread reduced?

There are two more reasons, if you want to. I said during questions by another participant that in Q1, we... we were having volumes for marketing Q2. We sourced the volume to fulfill our commitment. There was some shortage of volume and those volumes did not give those margins which were available in Q1. We sourced this for cargoes. And fourth reason is a reason that one of the upstream contracts has got 9 months average and downstream contract has got 3 months average. So 3 months average gives us less return and sourcing will be paid higher, but over a period of time, it gets better.

Sure. Got it. On KPX, I thought, like, in the last call, I think the guidance was for about 11,500 crores for the FI25. So are you guiding it lower now?

No, it is not lower. I was a bit conservative when I was explaining 9,000 crores. It may even touch 10,000 plus. 10,000 crore rupees. So we'll be touching that.

Okay. And also, any update on the transmission tariff revision that you said that the NGRD would soon decide upon?

So, we have submitted our tariff petitions to regulators, and it's almost more than one and a half months when we submit it. We expect the regulators to process our tariff petitions because there is a process of analyzing, analysis by them, then making a public consultation document, having public comment, and then analyzing and then making the tariff order. We hope that this tariff will be available as an approved tariff by March 21st and expected to be applied from 1st April. That's our current estimate.

Got it. Thanks a lot.

Thank you so much, sir. We have next question from the line of Sachin Mehta from Diamond Asia. Please go ahead.

Sir, I basically wanted to get your guidance on the PETCHEM project that we are expanding on the CAPEX side and the rationale behind doing this to justify the kind of ROC because I think even if you look at the mean margins that you would be making, there would be a significant dilution on the ROC.

So, if you can guide something on this.

Which petrochemical project you are talking about? The PETCHEM Expansion. Sorry?

The PETCHEM Expansion project.

So, if you are talking about the PDHTB plant at Hussar, So this project we conceived way back in 1819 and I explained that this is likely to be commissioned mechanically by APREL and also the commercial production by Aptuber. Actually, we do not have, there are various reasons. We do not have PP in our slate. We currently produce PE. We want to also have PP. Second, this is not natural gas based production. This will be based on propane. So I have been continuously giving this information that there is an excellent correlation, good correlation between propane as a sewage stock and polypropane as an output. When we analyze this and it continues to remain same even today, we are getting more than our hurdle rate and that's the reason. Third reason is that you know that our country's is growing, maybe at the rate of around 7%. And the polymer demand is also going in similar range. Therefore, the demand side, there is no problem. The crack margin side also, there is no issue because it is propane versus polypropylene. And third, it will help us in marketing because we do not have polypropylene in our market. But we are also looking to expand our Pata capacity as well, right? No, we are not expanding PATA capacity. What we are doing, two things we are doing. A small capacity addition in terms of polypropylene, that is 60,000 kTa we are putting. And the reason for the same is that we have polypropylene available from PATA. Currently, we are marketing that. In order to utilize and make better use of polypropylene, we envisage the PP plant at PATA. which is a very small capacity plant, 60,000 kPa at a tax of 1299 crores. That's the reason we are putting. Second, expansion is not an expansion. What we have said, we are laying a line, the pipeline from Vijayapur to Pata plant for carrying C2, C3. What is currently happening, we are extracting C2, C3 at Vijayapur, mixing in natural gas, Again, we are expecting at PATA. This actually results in 10% loss. In order to capture that loss, we are putting that line, and that is rather efficiency and improvement. And those defects would give us better return than the current capital expenditure. These two things that we are doing at PATA. This is now our third thing. Okay, sure, sure.

Thank you so much, sir. We have next question from the line of Punit from HSBC. Please go ahead.

Yeah, thank you so much and congratulations.

My first question is, are there any new pipeline projects that you envisage? Because I think other than Gurdaspur Jammu, you'll be pretty much done with the projects by June to October 2025. Anything new in the pipeline yet?

Yes, we are working on that. Rather, we have been expecting that regulator either will authorize directly or through bidding process we do not know but the pipelines which are authorized to other entities and having cancelled by the regulator we expect that those pipelines either will be authorized directly or maybe through bidding route those pipelines may come up in future very soon we expect and those are the pipelines we expect to be in our hold understood And is it possible to get a breakup of the other income for this quarter? Other income? Yes. Hold on. other income other income includes interest I am sorry other income includes the interest crore rupees the sale of steam which we are producing at Gandhar around 52 crore rupees BCPL, the product which we are marketing, those commissions, sell of it. That's how the other income improves. And dividend. Dividend income of 364 crore.

Yeah, okay.

Right? And the interest from customers or delayed payment interest on loan, which we have given to our joint venture subsidiary, which is 163 crore. And customer delayed payment is 51 crores. These are broad, broad things I have explained to you.

That's very helpful. Thank you so much. And lastly, if you can, you know, just update on what is still stopping you from, you know, updating your marketing business guidance. You're already 73% plus there, nearly there, 3,700 crores plus. So why not increase it this quarter?

Yeah, and I said that we are in the course of meeting the guidance of 4500 crores. As you already know that almost 73% we achieved and we are only completed two quarters. So, right now I will say that we are only in the course of meeting our guidance. In respect of revision in guidance, as we did in last year, we come to you in third quarter.

Alright, good. Okay, fine. That's all from me. Thank you so much and all the best.

Thank you so much. We have next question from the line of Malik Patel from Equus. Please go ahead.

Thanks for the opportunity. Just a couple of things. One, on the recent government notification where they reduced APM allocations to the CG receptor, your thoughts on that? What kind of outlook one could have for the gale gas, which is your subsidiary? And second is that, where do you see the gas consumption in the country in the next one year or so?

So, if I, because there is some issue of clarity of voice, if I understood you, the impact of the reduction in gas allocation, the impact on the city, and also if you are, you know, on gale. So, gale gas, we expect the impact of 16 crore rupees per month. Right? Right. And for Gale around 6 crore. But Gale as a company has a, you know, opportunity. There are two things which we are... Sorry, I have been corrected. 16 crore per quarter for Gale gas. And 6 crore per quarter for Gale. Gale as a company has an opportunity now to source and market more and more volume in terms of LNG to meet those demands which have come up because of the allocation. So we are very, very positive in terms of Gale as a company.

And do you think that in the future there will be less and less gas which will divert from the CNG sector from within the CGD and will go to the other sectors. From a policy perspective, because what we understand that there was already a reduction in the last one year or so to the CNG sector, and with the income. So what's your target? Will the government make CNG a much more market-driven business compared to the significant cheaper gas allocation?

So this is very difficult for me to answer what will happen in the future, but history suggests that in view of increased consumption by city gas distribution, expansion of geographic areas, certainly history suggests that this allocation may come down.

And you have raised the prices in your gas, the CNG prices, or the price revision is yet to be taken?

So, this call will be taken by Geiger. We are analyzing it. Certainly, there is impact, but during the course, they will certainly review their prices and considering the customer's demand, how it will be going to impact, they will take action. But as of yet, the price revision has to take place.

And just last question, what's the outlook on the Spot LNG, given that there are Spot LNG companies It's been very steady at $13 per MMBTU for the last couple of months. And the inventory levels in Europe are at a relatively higher level, but the price is not coming down. What's your thought overall on the spot LNG price, which you expect in 2025?

Actually, this is an abnormal situation. Normally, you find that the spot prices, except the Ukraine war situation or geopolitical situation, remains lower. Currently, the spot prices are a bit higher than normally it used to be. We expect the spot prices to come down, but all this is in future. Okay, thanks.

Thank you so much. We will proceed with the next question, which is from the line of Sabri Hazarika from MK Global. Please go ahead.

Good morning, sir. Few questions. Firstly, on the OPEC side, I mean, it shows that there's been some increase in transmission OPEC. Was there any particular factor within the pattern? The OFACs in transmission has increased because of increasing fuel consumption during this water.

And this was because of?

Fuel, increasing fuel consumption in compressors.

Okay. And this is going to remain like this or that can be declined?

Actually, More or less, when volume increases, certainly the levels of what we have seen recently will likely to be maintained. But that's not an area of concern because in terms of regulatory provisions, we are going to get back. Okay. Second, you mentioned that there was some shortfall in gas processing due to which you have to rely on for gas. in that term, I think, volume is also down. So, in a particular long-term LNG contract, where this shortfall happened or you have the mix of everything? Actually, scheduling of cargo sometimes happens in such a way that you feel that, you know, you don't get cargo in particular part of one or two cargo stores. But this is largely not from long-term contract. As I explained, basically, We regularly source from spot market. Almost you see our 10% to 15% volume of LNG is from spot market. We continue to source and we participate in various bidding which come particularly for fertilizer sector that is larger one. As I said earlier also, because the spot prices were higher, we did not source or when we sourced, we wanted to source, it was not actually meeting our marketing margin or kind of arbitrage was not available. So this particular situation has happened in Q2 and we continue to, of course, take the sourcing from spot market. So this Q2, there are two reasons. One, the allocation of cargo based on scheduling and secondly, we did not source the spot because the prices were high.

I would request you to rejoin the queue for more questions.

Okay, thank you.

Thank you so much. Participants, in order to ensure that the management is able to address all the questions, I would request you to please limit your questions to one question per participant. We will proceed with the next question, which is from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead.

So thank you for doing the call. Just a question in terms of your CAPEX spending around the PETCHAM expansion on the PET side. Can you just give us an update of how much has that been completed? What's left in spending on that?

Okay.

So as I said in opening remarks,

Actually, our major petrochemical project is CHPP Usar, and we have project cost of 11,256 crores. The project currently progresses 75%. So you can assume that around 45%, that is around 3,000 crores spending to be incurred on capex for petrochemicals.

Thank you so much, sir. The next question is from the line of Saurabh Handa from Citigroup. Please go ahead, sir.

Yeah, thank you for the opportunity. I have two questions. Firstly, on the tariff filing, is this a part of your regular tariff filing and when can we expect the public consultation process to begin?

It's a part of regular tariff filing. Actually, It's very difficult for me to comment on the regulators working when they will come up, but based on our past experiences, we can expect that maybe by December they can come up for public consultation.

Okay, sir. And just my second question, on your city gas investments, whether they are at the standalone entity or in gale gas, is there any thought process to look at restructuring these, streamline these investments?

So, we, as a company, about gale gas has not yet taken any call for restructuring of gale gas. This is in our mind, but Nothing complete I can share with you right now.

Okay, and nothing at the parent level or the various JVs as well?

So also we are looking for, you know, listing one or two JVs which we are in the process. And once we... we move forward and we take a call, we'll come back to you, but that we are certainly working and we are in a good stage.

Okay, so when can we expect an update on this, please? Two briefs. Okay, thank you so much.

Thank you so much, sir. We have next question from the line of Vikas Jain from CLSA. Please go ahead.

Thanks for taking my questions. Just, sir, firstly on depreciation, what has made it come down so much QOQ suddenly from 10?

Yeah, yeah. Because depreciation actually there are, in Q1, we had one time depreciation like we, as you know, that Pata Petrochemical was under shutdown for annual plant maintenance. So, whatever expenditure we do on plant maintenance and actually have to book in terms of the accounting standards along with the planned life. The planned life for Patawan has already been completed or almost completed. So we have to book one go, those expenditures. Second, for our similar expenditure is happened for pipeline maintenance. That is around 99 crore, 100 crore rupees. And thirdly, one of the shifts completed its leasing period and that also goes to depreciation. So all these factors have led to reduction in depreciation. So if you are interested in figures, the Pata 41 crore, overhauling at Hazira 99 crore and ship of IS 69 crore. So these three elements totals up to 234 crore which were one time in Q1.

And so ongoing, this should be the rate other than the capitalizations which are pending. Yes. So, I mean, if you or I'm sure Sanaji would have this ready for FY25, what is the kind of depreciation number that we are looking at given the pending capitalizations that we are talking about?

Around 3600 crores.

Around 3600 crores, which is going to be lower than FY25, you mean? No, no, no, no. Sorry, yeah, okay, sorry, sir, no, no, sorry. It was even lower, yeah, that was, yeah, correct. And at the same point of time, if I were to also look at the, you said 6 crore was the impact due to this gas allocation change from Gale. That is coming from where, if I may understand that?

I said 6 crore per quarter for Gale. And what is your question in this regard? That is coming from where, sir?

6CGD. Okay, the ones which are sitting in Gail. Yeah, yeah. Okay, okay. And just similarly, like depreciation, the capitalization of interest, what is it that, what level is it currently and what will that be expensing increase that we see as some of these pipelines capitalized? Increase in interest. Okay.

Because we immediately do not have that trigger and suddenly we communicate you offline. Okay. Thank you so much, sir.

Thank you so much. We have next question from the line of Yogesh Patil from Dollar Capital. Please go ahead.

Thanks for taking my questions and congratulations for the good set of numbers, sir. I have two questions. Sir, my question is related to recent LNG purchase contracts of those two MMTPA. Majority of them will start in January 2026.

We wanted to understand the pricing part of the LNG. Is it a Brent link or any other index link? And if it is Brent link, is it cheaper than the Qatar LNG? And considering these new LNG suppliers, do you want to give us the data guidance for the FY26-27 trade?

That would be helpful. So first, there is a correction. We have sourced 1.53 MFTPA from two sources, which were also in public domain, one from and second from Adnok, right? And second, these are group link contract. Third, certainly you can take it that this contract is cheaper than the current contracts, right? And regarding the EBITDA guidance for 26-27, we've come back. We have not worked out.

Okay. And then the last related to petrochemical. The majority of these petrochemical expansions will be mechanically ready in the next one year.

But on the practical terms, commissioning, stabilization, and the actual profit from this incremental petrochemical capacity, when one can expect the profitability out of these new incremental capacities, and any in-house estimates, if you have, you can share about the profitability of these new petrochemical plants. So, PDHPP is the only big project. Let us not talk of PP, which is very small. PDHPP is expected to be commissioned in 2025. That is FY26. The profitability from this project will start from 26, 27. We do not expect any profit in the year one, right? And the level of profitability will come back. Okay. And on the JBS side, sir, which we acquired and now innovating the projects on that side? JBS, as I said, it is likely to be commissioned in June 25th. So again, first year, we should not expect much things to happen. Next year onwards, we'll be having profit. And again, we'll come back because let us discuss about as we reach closure to the commissioning. Because sensitively market situations at that point of time, it is better to give any guidance when we are having some kind of maturity about the commissioning. So the major profitability can be expected post second half of FY27 only. Is that a correct understanding? Yes, because there will be a lot of things happening in FY26-27. Not only we will be commissioning one of the biggest plants of 500 KTP, that is one. the GMP as second, and third, already we have sourced 1.53 MMTP, the marketing will increase. Fourth, we have already given guidance that our transmission volume will increase from 10 million almost. Fourth, this will happen. And fifth, we are in the midst of, you know, looking for additional sourcing, which we are already sharing various communications that we have target to source 7 MMTP of LNG at least. by 2030, and already we have sourced 1.53 MFDPA, and in phases, we'll continue to add up to our existing volume. All these will certainly help us or add to our bottom line.

Thank you so much. We have next question from the line of Kirtan Mehta from Bob Capital Markets. Please go ahead.

Hello. Thank you for this opportunity, sir. One clarification on the petrochemical business. What was our gas sourcing cost for the petrochemical during Q1 and Q2? Okay. Just hold. We'll tell you. I'm going to call up for him. So in Q1 and Q2, Q1 around 8.5, approximate 8.5, and Q2 around 9. Right, sir. And one more question was on the marketing division. Over the past six months, if we look at the global market, we have seen spot LNG prices tightening, whereas we have seen the oil price expectation coming down for FY26. So what sort of impact would it have on our marketing business for FY26? The change in this external environment? Actually, our marketing margin, as we are moving forward, are getting stabilized. Because whatever long-term sourcing we have done, we have marketed now. All same index, back-to-back. mostly. So, the marketing margin is going to get stabilized. So, therefore, any change in spot price does not impact or not likely to impact our marketing margins. The marketing margin will actually go up for two reasons. One, our actual portfolio will increase. The demand in countries is increasing. Second, the spot prices at current level are not likely to remain. You can vouch for yourself historically the spot price is do not remain for a longer period at this level, and we almost market 10% of our portfolio on spot, so that I will provide arbitrage, or we'll be able to, you know, take care of the opportunities available in spot market. So, now to sum up, our marketing margin has stabilized, we'll move forward with more and more sourcing, the spot prices which are currently not helping, will help when the spot prices normalize. Thank you, sir. Just one more follow-up on the same. So, out of the 4500 crore guidance for this year, how much percentage of the profit is attributable to the back-to-back contract? So, this detail we can share with you, but it's not right now available. But you can assume that now we almost have contracted back-to-back. Maybe I'm giving only a ballpark number, maybe 80-85% almost we have done back-to-back. 75-80%. That is on the volume front, but out of the profit guidance of 4500 crore, how much upside is attributable to the non-back-to-back contract? Where we had the sort of a lower HH versus the arbitrage profits that have come from the tighter crude oil prices or other way round, the way we explained earlier in Q1. 20%, I said 75-80% back to back. The remaining is actually giving us those arbitrage based on market situations. Fine, sir. Thanks for this, Kala.

Thank you so much. We have next question from the line of S. Ramesh from Nirmal Bank Equities. Please go ahead.

Good morning and thank you very much and wish you the best of season greetings. So dwelling again on gas marketing segment. So is it fair to understand that now that you have placed all the gas we have sourced, how is the gas sourcing and the bidding balance for this quarter? Are you back to normal, you know, balance between what you're sourcing and able to place? And in terms of the volume balance, What is the kind of number we should assume for the second half compared to what you have done in the first half in terms of MMACMD? And when do you think we will see some growth? Because last year you had mentioned that you have spent about 5 million cubic meters per day of growth in gas marketing. So what is the kind of growth we could assume, say, in FY26 and FY27 in gas marketing?

Actually, marketing margin guidance we have given on an annualized basis. and we have reached 73% of that. For two quarters, we expect to continue to earn a reasonably good margin, but if you want to have guidance, we will give in Q3, not right now, which I have been maintaining. But we expect that our guidance of 4500 is likely to exceed. We do not want to give any number right now.

I'm not asking about the margin specifically, since you mentioned that The reason for the lower margin second quarter was because there was an imbalance between what you could source and place. I'm trying to understand whether you're back to normal sourcing and placement on a back-to-back basis this quarter. Secondly, what is the kind of growth one can expect in marketing volumes in the second half and say over FY2027?

Actually, this guidance also we expect that this year we should get 5 million volume growth this year And we continue to have similar growth in coming one to two years.

Okay.

And second thing is... I would request you to rejoin the queue as we have more participants online.

One last one on the debt. If you look at the current debt, where do you see the debt getting finalized once all the projects are capitalized? And what is the average interest rate on the debt?

So debts are likely to remain around same range, maybe 1 to 2,000 crore more from current level. The interest rate, if you want to know, around 7.5 to 7.6%.

Thank you very much, Vishal.

Thank you. Next question we have is from the line of Tarang Agarwal from Old Bridge. Please go ahead.

Hi, Kumari sir, just referring to one of the previous participants' questions on your... We are not able to hear you. Can you hear me now?

No. Your voice is a little muffled, sir.

Okay. Am I audible now? A bit better. Okay. Sir, just referring to the previous participant's question on your gap sourcing from Adnock and Vittal, You said that your new contracts are crude length and they're cheaper. So would the cost be cheaper in terms of the slope or would there be any other factors which would be determining the better procurement of the gas? And number two, how cheaper would these contracts be in context of your current contracts?

Actually, I will not be able to answer you this specifically. I can only say these contracts are cheaper and I can give you a rough number, maybe 50 cents to $1 or maybe more if we see both the contracts. But specifics may not be desirable or I should not.

Okay, sir. Just maybe not specific, but just wanted to the cost differential predominantly emanates from the slope, right? the agreed upon slope, or there could be other factors also which could drive the differential cost.

When you source through linked contracts, certainly slopes comes into picture.

Okay. And the number when you speak about 0.5 or 1 or whatever that number is... It is for your satisfaction because you are asking.

It may be around $1 or $0.50. Let us not discuss because it goes up to formula which we will not be able to share.

Sure. Okay. Thank you, sir.

so much. The next question is from the line of Kishan Mundra from Dam Capital. Please go ahead.

Hi, sir. Two questions from my end.

So firstly, you were exploring setting up a 1.5 million ton cracker in Madhya Pradesh. So is there any development on that front? Have you finalized anything?

Sorry, you come back again, please.

Sir, there were news articles.

Okay, I got your point. So, I have been answering this question in the last earning call also, sir, that we as a commercial organization evaluates all the possibility of investment which commercially shoots to us. Currently, we are evaluating a lot of opportunities including the ethane cracker. Regarding decisions, we have not yet taken any decisions.

Okay, understood. Second question is on the Dhabal breakwater. What is the progress on that front? When do we expect it to be completed?

And once completed, sir, what is the expected utilization that we can expect? So Dhabal terminal will be full weather terminal next month soon. The job is going on. There were some issues in between. Now job has started and we expect to be completed by February. Right? And as far as utilization is concerned, we will be able to utilize fully because currently we are sourcing cargo and bringing to other terminals. So when we have our terminal, we'll certainly be able to utilize to its capacity.

Okay. Understood. Thank you.

Thank you so much. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to management of closing comments.

Thank you very much. And we ask to participants from our investors and analysts community for their wholehearted support today and participating in such a number, asking a lot of questions. I know there was a time constraint. Some of the participants could not have asked or did not get the opportunity to ask questions. But we at GAIL are always available to answer you all the pending questions or some of the queries we could not answer offline. Thank you very much.

On behalf of Philips Capital India Private Limited, that concludes this conference. Participants may disconnect your lines. Thank you for joining us.