Earnings Call Transcript - XNSE:GSPLTRANS 2026-11-04

Operator

Ladies and gentlemen, good day, and welcome to the GSPL Transmission Limited Earnings Call Q2NH1 FY27, hosted by EY. 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 this conference call, please signal an operator by pressing star, then zero on your touchtone phone. I now hand the conference over to Mr. Vikas Verma from EY. Thank you and over to you, sir.

Speaker 1

Thank you, Ashi. Good evening, everyone. On behalf of GSPL Transmission Limited, I welcome you all to the company's Quarter 2 and H1FI27 earnings conference call. To discuss the performance of the company, we have with us from the management team, Mr. Prakash Karnik, Chief Executive Officer, Mr. Lokesh Agarwal, General Manager and Chief Financial Officer, Srimati Rajeshwari Sharma, Company Secretary, Mr. Devendra Agarwal, Head Commercial, Mr. Sartha Gautam, Head Procurement and O&M. Before we proceed with this call, I would like to draw your attention to the fact that today's discussion may contain some forward-looking statements that are subject to various risks, uncertainties, and other factors, which would be beyond management's control. We kindly request to bear in mind that there might be some uncertainty while interpreting such statements. We will now start the session with the opening remarks from the management team. Afterwards, we will open the floor for an interactive Q&A session. I will now hand over the conference call to Mr. Prakash for his opening remarks. Thank you, and over to you, sir. Thank you.

Prakash Karnik, CEO

Good evening, everybody, and warm welcome to earnings conference call of GSPL Transmission Limited. On behalf of the board and the entire management team, I thank our shareholders, investors, analysts, and stakeholders for joining us today. I will begin. By explaining who we are, how our business creates value, why our network is strategically important, and how we intend to build the next phase of growth. GTL is a focused pure-play natural gas transmission platform operating on an open access basis. In simple terms, we provide infrastructure that transports gas from domestic production sources, energy terminals, gas marketers to gas distributors, refineries, fertilizer plants, power producers, and industrial customers. GTL has a strategic and difficult to replicate network. Our Gujarat network extends approximately 2,900 kilometers, covering 26 districts, making it India's second largest natural gas network, serving 100-plus customers to 200-plus customer exit points, with financial year-to-26 contractual volumes of 40mm SCMD. Our network is connected to major district domestic gas supply sources, LNG terminals and consumption centers across Gujarat. What makes our network particularly stable is positioning within Gujarat, India's largest gas-consuming state. Gujarat accounted for approximately 22% of India's natural gas consumption in financial year 26 and host four operational energy terminals. GTL is the only grid connected to all operational LNG gateways in the Kujra. This connectivity enables us to link multiple sources of gas with diversified base of CGD, refinery, fertilizer, power, and industrial customers. Our bi-directional network design and SCADA-led operations further support system flexibility, reliability, and 24 by 7 monitoring. GTL is positioned for India's gas-led growth. India aspires to increase natural gas share in its energy mix from approximately 6% currently to 15% by 2030. Natural gas consumption is projected to increase from 188 mm SCMD in financial year 26 to 297 mm SCMD by 2030, supported by organization, industrial and manufacturing activity, cleaner fuel adoption, pipeline expansion, and development of LNG infrastructure. Within our customer portfolio, we maintain diversified exposure across these end-use segments. GTL is positioned to participate in this opportunity because our network connects supply with several of countries' key demand segments. Equally important, our customer portfolio is diversified which limits dependence on any single end-use category and gives us exposure to multiple sources of gas demand. Coming to our business performance, Q2 financial year 27 saw broad-based growth in transportation volumes across our key grids. Overall GTL volumes increased from 45 mm SCMD compared with 40 mm SCMD in quarter 2 of financial year 26, representing 12% growth. HP grid volumes grew 9% year-on-year. LP grid volumes increased 30% while HP grid volumes increased 16%. Our presence beyond Gujarat is supported by two of our joint venture companies, GIGL and GITL. GIGL operates approximately 1,439 kilometers of cross-country pipeline across Gujarat, Rajasthan, Haryana and Punjab, while GITL operates approximately 365 kilometers of pipeline connecting Andhra Pradesh and Telangana. Another important focus for us is creating capacity for the next phase of the growth. We are progressing on expansion-led capex program of approximately Rs 3,500 crores, covering more than 10 pipeline and connectivity projects aggregating to 700 kilometers. Combined with our existing approximately 2,900 network, these additions are expected to expand our overall Gujarat network to 3,600 kilometers. Project execution is gaining momentum with several projects now at advanced stage of implementation. In July 2026, we awarded EPC contracts worth Rs.1800 crores for Anjar-Palanpur pipeline project. Other projects under implementation include Jamnagar Dwarka, Vapiv Tarapur, Dahej Bhargut, and multiple spur lines and customer connectivity projects. Our approach going forward remains centered around expanding network reach, improving utilization, maintaining asset integrity, discipline, Capital allocation and diversifying our customer base. We believe our established infrastructure, strategic connectivity and planned expansion provide a strong platform to participate in growth of India's natural gas ecosystem. Over the next two years, our focus remains on discipline execution and maintaining operational and financial stability. As the ongoing expansion projects are commissioned, we expect additional capacity to progressively contribute to the growth. Looking ahead, our priorities are clear. First, expand network reach and connectivity. Second, improve utilization across our existing and new assets. Third, maintain safe and reliable operations through automation, preventive maintenance, and strong asset integrity practices. Both, broaden our customer base, and fifth, preserve financial discipline as we execute our investment program. We believe GTL combines the characteristics investors expect from high-quality infrastructure, a strategic and difficult-to-replicate network, a regulated and asset-backed business model, diversified demand exposure, visible expansion opportunities, and a debt-free balance sheet that provides financial flexibility. With this overview, I will now hand over to our CFO for detailed discussion on operational and financial performance for Q2 and H1 financial year 27. Thank you, sir.

Lokesh Agarwal, CFO

Good evening, everyone. We will have a brief overview of the financial performance for the quarter and half year ended 30 September 2026. In terms of key financial metrics, our standalone revenue from operations for Q2 27. Stood at 290 crores, representing a growth of 8% year-on-year versus previous year Q2 actuals of 267 crores. On a sequential basis, the growth was at 4.5% versus 277 crores in Q1-27. On a half-year basis, the H-127 revenue stood at 567 crores. Compared to 542 crores in the same period last year, registering a growth of again 4.5%. EBITDA, excluding non-operating income, which primarily includes interest from deposits, stood at around 169 crores in Q2-27 as compared to 169 crores in the same period in previous year. EBITDA margin for the quarter stood at 58.4%. On a half-year basis for H-127, EBITDA stood at 363.5 crores, being in line with previous year half-year EBITDA of 362.9 crores, with an EBITDA margin of 64%. Profit after tax on a standalone basis stood at 120 crores during the year versus 118 crores in the previous year, Q2. Being an increase of around 2%. On a standalone half-year basis, profit after tax stood at 258 crores versus 255

Speaker 3

crores in the corresponding period last year.

Lokesh Agarwal, CFO

Again, an increase of roughly 1.2% or so. The current state of balance, it provides us with enough financial flexibility. To execute our investments, we have already announced investments worth more than 3,500 crores, and we stand in a pretty good state to execute the same. As of September 30th, we are debt-free and have a net worth of approximately 7,150 crores. In first half of the year, we have executed capex of approximately 300 crores, and this is, in general, in line with our expansion program, which we have announced earlier. I now open the floor for questions and answers and hand over to the moderator. Thank you, everyone.

Operator

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Yogesh Patil from Dalat Capital. Please go ahead.

Speaker 12

Thanks for taking my question, sir, and wish you happy Diwali to all of you. The first question has related to the expansion plans of 3,500 crore. What would be the debt-to-equity ratio for this expansion plan, and have you received the board approval for raising a date for this expansion plan?

Lokesh Agarwal, CFO

Yep. So, see, the expansion plan is spread over a period of another two and a half years from now. And whilst we believe that we will be in a good state to complete this expansion through our internal accruals and current cash balances, if at all we are required to resort to limited financing, we would do that. We have significant financing approvals in place. We do not need to go for any subsequent approvals to execute these projects. I think there was one more part of your question. Yes, sir. So all of these projects are duly approved by the board? And are in various stages of implementation. So, there is, per se, I won't say there is nothing much which is still on the drawing board. Almost every project is now in the execution stage. Although these may be in various stages of execution, but almost everything is on ground now.

Speaker 12

Generally, we follow the 70 to 30 percent kind of a big-to-equity ratio for the pipeline projects. So, we will not follow that kind of rule for the 3,500 crore kind of expansion plan. Is that a correct understanding? Largely depend upon our internal cash flows, which will continue to support all these expansion plans. Is there a correct understanding about this?

Operator

So you're not audible. The management line, if you're speaking on mute, please unmute yourself.

Speaker 6

Hello. Am I audible?

Operator

Yes, sir. You are audible. The management line is on mute.

Operator

Management line, please unmute yourself. Ladies and gentlemen, the line for management got disconnected. Please stay on the line while I reconnect them. Yes, sir. You can go ahead with the answer.

Lokesh Agarwal, CFO

Yeah, sorry, Yugus, I think we got disconnected. So, I heard you saying the normal funding ratio is in the proportion of 70 to 30. And I take that well. But here, we believe at this stage in time, when we have limited projects in hand, and we know our requirements well, we believe we should be good to execute the internal accruals and current cash balances. Certainly, we continue to evaluate various options before us. Not that what we do now is in stone. We continue to evaluate our current project book, I would say. So in case anything else materializes, we will certainly look at even raising debt. As of now, we are not short of funds, so that's not something which is high on the agenda right now. But as we evaluate projects, if something exciting comes up, we will certainly not shy away from going for debt.

Speaker 12

Sir, the conclusion of the question was like that a 12% post-tax ROC kind of a returns we generate on the gas transmission pipelines. If we are not taking a date, then the cost of a date generates a low and the cost of equity generally is higher. And most of the internal accruals is considering equity which will be deployed for the expansion of all pipelines. So all in all, our returns will be limited. That was the thing. But yeah, I mean, I got from your side. My next question is on your presentation side. You have provided a transmission volume detail since Q1 FY26. We are trying to match the same with the earlier volume. Like, for example, in a quarter second FY26. Earlier, you had provided a 25 mm SCMD volume, and now in the latest yesterday's presentation, you have mentioned the 40 mm SCMD. How one should correlate or interpret these numbers for the same entity? Can you please elaborate?

Lokesh Agarwal, CFO

Yeah, so, see, the difference lies in the way we put across the numbers. So, previously, the numbers that was being shared were physical numbers, basically the physical molecules which would travel. Now, these are the contractual numbers, which appropriately reflect in revenue as well. So, and I think the way we were sharing data previously used to create a lot of mismatch. And a lot of questions around how we were reporting numbers, so we have tried to set this right in this first presentation, in this first outreach that we have with our investors, and hopefully we would be able to correctly correlate our revenue with volumes going forward.

Speaker 12

If this is a contractual volume, then in case of high pressure pipeline, we try to back calculate the tariff based upon the net of expenses revenue you have provided for the high pressure pipeline and the volume also you have provided. So, it comes little bit on a lower side. Instead of 18.10 rupees per mmBQ, it comes around 17.5 rupees per mmBQ. So, why this difference would be coming? Any clarity on this side?

Speaker 6

There would always be some variation.

Lokesh Agarwal, CFO

This is the gross calorific value. So, it may be very, very difficult to correlate exactly in terms of the tariff versus the transportation volumes. There would be some mismatch, but I believe what we provide now would sustain on a longer term.

Speaker 12

Okay, sir, my next question related to the…

Operator

I'm sorry to interrupt. Mr. Yogesh, can you please rejoin the queue for follow-up questions?

Speaker 12

Yeah, sure, sure. I'll come back.

Operator

Thank you so much. The next question is from the line of Mr. Vineet Banka from Nomura. Please go ahead, sir.

Speaker 5

Hi, sir. Thanks for the opportunity. So, on the existing pipelines of, I think, 2,900 kilometers, what is the existing useful life of these pipelines? I think, also, the next tariff division, when is the date?

Lokesh Agarwal, CFO

Pipelines, per se, on record, it would vary from, I would say, from section to section as to when these were actually installed. And typically, the first useful life that we ascribe is to the extent of 30 years, but not that the pipeline cannot be used beyond 30 years. So, these would always be subject to recertification reviews and increase in life of pipeline. There was a second part to your question. Can you repeat?

Speaker 5

When is the next tariff revision coming?

Lokesh Agarwal, CFO

So, the last revision was in 24, I think in April of 24, against a filing made in 23. So, we would go for next revision somewhere in 28 or so.

Speaker 5

And, sir, by 2028, when there is a next to be done, will the pipeline be completely used of the youthful life of 30 years, or will there still be some life left? Because I'm asking because after 30 years, we'll have to get a special approval for extension, and then it will have to come down meaningfully from current levels.

Lokesh Agarwal, CFO

Yeah, so prior to filing of, say, any revision, we will certainly review the life, and if there is a need for any revision in the life of line pipes, we will certainly obtain necessary certifications. Typically, PNGRB allows an increase in life of up to 10 years in a single trench. And to your another part, to the same question, we don't believe it will lead to reduction in tariffs. It may or may not lead to a positive impact, but it will certainly not lead to a reduction in tariffs. That is what we believe.

Speaker 5

12% ROC based on the current net asset value, right? So, because of depreciation, your asset gets depreciated, the value comes down. So, 12% of ROC, that is what you will use to get the tariff number. So, it has to come down, if I'm not wrong.

Lokesh Agarwal, CFO

So, there are two factors. Whilst I agree that it will be 12% on current net asset value. There is also an element of the value of asset at the time of retirement. So, that benefit gets stretched beyond 10 years. So, you get that benefit as well. And, of course, you get benefit of OPEX too.

Speaker 5

Anasar, what is the current net cash in the book, including the deposits?

Lokesh Agarwal, CFO

So, that would be to the extent of approximately 1,800 odd crews now.

Speaker 5

And is this again some deposit from the customer or this is the cash belongs to you?

Lokesh Agarwal, CFO

No, no. Largely, all of this belongs to us. The deposit from customer would be not a very significant amount.

Speaker 6

Okay. And...

Operator

I'm sorry, Beneet, sir. Can you rejoin the queue for follow-up questions? Thank you.

Operator

Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in this conference, please limit your questions to two per participant. Thank you. The next question is from the line of Sabri Hazarika from MK Global. Please go ahead.

Shabri Hazarika, Analyst — MK Global

Yeah, good afternoon, and two questions. Firstly, can you give us a roadmap of How this 3,500 crore capex program would percolate into tariff hike once it comes due in 2028, by that time, what would your capacity look like versus what it is now, and how much would be the capex which you will present before PNGRD, and roughly what kind of like tariff hike you are expecting from that.

Operator

Management line, we cannot hear you. Management line. Management line, we cannot hear you.

Operator

Ladies and gentlemen, the line for management got disconnected. Please stay on the line while I rejoin them. Yes, management line, you can go ahead with the answer.

Lokesh Agarwal, CFO

Sorry, we didn't even get to hear the question.

Shabri Hazarika, Analyst — MK Global

Yeah, I'll repeat. Yeah, so just like, I mean, this whole CapEx program of 3,500 crores spread across, say, two years. So you said the tariff will come for review in 2028, so that's like around one and a half years from now. Uh, so, uh, so, uh, so, uh, one and a half, two years from now. So, so just wanted to know, uh, out of 3,500 crore, what would be the, what would be the gross block addition that you would, like, uh, expect by that time, given that, uh, uh, 400 crore, 500 crore of depreciation is also there. And then, what is your assessment in terms of capacity, what it is currently, and how it will go up? And based on all these numbers, what kind of rough cut tariff hike do you expect once it comes for due in 2028?

Lokesh Agarwal, CFO

So, to answer the first part, I think we should be able to complete at least, I would say, approximately 3,000 odd crores by March of 28, and some part of the balance may spill into maybe April, May, June 28 or so. So, that is the plan, and we believe that's a fairly achievable plan. What was the second part? Capacity now and what would be the capacity by then? So, current capacity is around 36.5 and we expect that to go up by around 8 or 9 mm as anybody.

Shabri Hazarika, Analyst — MK Global

Okay, and based on these parameters, what is your upcut assessment for the terrify by that time?

Lokesh Agarwal, CFO

So, that is something we would leave to the regulator. We would not like to speculate on that part. We would rather execute and let the regulator decide.

Shabri Hazarika, Analyst — MK Global

Fair enough. So, and second question is just a small question on this GIGL, GITL. So, if I see the IOI growth, my revenue is up around 13%, 18%. Despite volumes going up by almost like 20%, 100%. So, I think these are like big out pipelines. So, just wondering if there is some take or pay adjustments here also, or otherwise the revenue should move exactly in tandem with the volumes. So, just wanted some clarity on that.

Lokesh Agarwal, CFO

Yeah, so there might be some mismatch primarily on account of ship or pay revenues versus the previous quarter. Okay, fair enough. Thank you so much. I'm all in the best. Thank you.

Operator

The next question is from the line of Shreyanj Mehta from Shree Capital. Please go ahead, sir.

Shreyanj Mehta, Analyst — Shree Capital

Yes, good evening, Mr. Karnit and Mr. Agarwal. Thanks for this call. This being our first investor call as a new entity, I'd like to ask a couple of questions on the basic business model as well. But before that, in line with the earlier question about the previous P&G ERB order of 2024, I believe that, you know, we had challenged this order at appropriate levels. So if you can give some understanding about what is the status of that challenge and when do we expect any outcome out of it. And secondly, in that order, nearly at every place where our claim has been denied, it is mentioned that it will be proved up in the next tariff division. How does this screwing up mechanism work, if you can just walk us through that, and will it be, kind of, will it give us, if there is any tariff revision decided later on, will it come with the previous effect, and has it also happened in our earlier tariff revision where our claims were denied? So, if you can just walk us through this, that's my first question.

Lokesh Agarwal, CFO

So, um... What we understand is the matter is still at the PNGRB appellate tribunal level, and they are yet to revert on any sort of order on our appeals. That is one. Two is anything which happens will certainly, we will certainly get a credit for the prospective, for the previous years, but the effect would be on a prospective basis only. So, I don't think with respect to any of our previous matters, we have received any adjudication so far from PNGRB.

Shreyanj Mehta, Analyst — Shree Capital

So, it's not as if our earlier claims were denied, but we don't have adjudication about that presence even till this date.

Prakash Karnik, CEO

Yes, yes.

Shreyanj Mehta, Analyst — Shree Capital

All right, fine. And when you say prove up, if you can just explain to the investors, how exactly does it work?

Lokesh Agarwal, CFO

So, typically that would mean, say, if, say, we were entitled to a tariff of, say, a rupee and PNGRB had allowed us 50 paise, so the balance 50 paise we can recover. On a prospective basis, whatever revenues we have earned in the previous years from which this revised tariff was supposed to be applicable. But we cannot go back and apply tariff on the previous supplies. That credit would be available on our subsequent transportation, not the previous ones.

Shreyanj Mehta, Analyst — Shree Capital

That kind of complicates the whole thing that, you know, you had some customers earlier with whom you had maybe one year, three years, five years contracts who have availed your services, and then the tariff gets revised, and you will be charging the new set of customers thereafter? I mean, how does it work?

Lokesh Agarwal, CFO

So, see, it's a combination of several factors and with the unified tariff policy in place. I don't think it matters much. Eventually, somebody has to pay. Somebody is paying for somebody else in the unified tariff regime. So, it won't matter much.

Shreyanj Mehta, Analyst — Shree Capital

All right. My second question is about the subsidiaries. Both the companies are presently making losses, and if you can just – because it is also a fixed tariff regime which we have over there. So, as compared to our regulated tariff in the parent company. How different is the business of subsidiary companies? Where exactly are we in terms of progressing and reaching some reasonable volume and revenue growth? What do we expect going forward, if you can give some understanding, please?

Lokesh Agarwal, CFO

Yeah, so you are right in saying that these are like fixed tariff businesses, and I think the real issue that we have been facing here is around volumes. And if you really look at the past track record, we have been in a scenario where we have been, I would say, kind of reporting or achieving better volumes by the day. I understand the gap is too large to bridge perhaps, but then, yes, we are, I won't say we are there tomorrow. It may take some time, but yes, we are on course. We all know these are like large infrastructure projects, and it takes time for industries to come up, large customers to come up along the way. So, which I think is a bit long-run process. We are on course, we need to maybe give some more time before we start reaping rewards of our investment.

Shreyanj Mehta, Analyst — Shree Capital

So, if I may ask, you know, in both these securities, Out of the capacity which we have for transmission, what percentage of capacity is presently under contract with the customers?

Lokesh Agarwal, CFO

We have few key customers along these lines, but I won't say these contracts will be good enough to kind of reach to a break-even point. So we need to keep developing more customers. In terms of specific contracts, I would need to maybe look into further details, greater details, and then come back.

Shreyanj Mehta, Analyst — Shree Capital

Sure, sir. We'll appreciate it. And lastly, about dividend policy.

Operator

I'm sorry, sir. Would you please rejoin the queue for follow-up questions?

Shreyanj Mehta, Analyst — Shree Capital

Sure. I understand. Thank you.

Operator

Thank you. Participants, please make sure that you limit your questions to two per participant. The next question is from the line of Mr. Malik Patel from Aquarius Securities. Please go ahead, sir.

Speaker 2

Hi, thanks for the opportunity. On this contracted volume, I just want to give some more clarity. Typically, your transmission service agreement with customers, let's say you have an agreement for 5 MMS EMDR volume for a period of one year, and you have a certain SLA, right, which is that 80% is the take or pay revenue. Now, let's assume that in this case of 5mm CMD of contracted volume, you will have on a 4mm CMD of take or pay. However, if customer actually transmit only 3mm CMD, in the earlier case, you would have reported only 3 as a volume, which was a physical transmission volume. Now, the number which you are reporting is 4, which is where you will get the revenue, because as a take or pay is there, or you are reporting 5. Which is a contracted volume.

Lokesh Agarwal, CFO

So, we would report 4 and not 5.

Speaker 2

Okay. So, this 45 is 4, right? Which is where you are generating the revenue? Yeah. Okay. Got it. So, that's first. Second is, on a CAPEX, ROU, ROW are with us for the last part of the pipeline and we are on track to complete our entire CAPEX by March 28th? All right. And do you see any delay in that? That's what the objective of the question.

Lokesh Agarwal, CFO

Yes, so I get your question. So on CapEx, I would say the major project which gets stressed to March 28 is Anjar Palanpur. Rest all we target to complete well before that. And even on Anjar Palanpur, I would say we have almost all approvals in place. And we are in a good place in terms of that particular project.

Speaker 2

Got it. And you will go for a refile and revision of tariff only after completion of Anjar Paragampur because that's almost 60-70% of your 3,500 crore kind of capex. Is that understanding correct?

Lokesh Agarwal, CFO

So, see, you know that one of our appeals is still pending at PNGRB, and typically we should go back with a revision request only after five years, unless we have good reasons to go prior to that. Since we already have a request pending at PNGRB, it may not make sense to go before 28. Okay.

Speaker 2

So, you will go after completion of this Anjar-Kwalampur pipeline, because then and then only the greater will consider that pipeline as in a part of your capex, as per the new PNDRB guidelines.

Lokesh Agarwal, CFO

Yeah, yeah, we can presume so.

Speaker 2

Okay, great. Thank you, and wish you a happy Diwali.

Lokesh Agarwal, CFO

Thank you, and wish you a happy Diwali as well.

Operator

The next question is from the line of Mr. Madhur Rathi from Counter Cyclical Investments. Please go ahead.

Speaker 2

Sir, thank you for the opportunity. Sir, I just want one clarification. Sir, what is the capacity of our two subsidiaries?

Operator

Hello, Benjamin Klein, we cannot hear you.

Lokesh Agarwal, CFO

So, between the two of them, the capacity stands at approximately 44 to 45 MMS CMD.

Speaker 6

Got it. Sir, that was for a moment. Thank you so much on all the rest.

Operator

Thank you. The next question is from the line of Mr. Ajay Raj Singh from Mihir Shah and Company. Please go ahead.

Speaker 3

Good evening to the management. So, I have a few questions. Hello?

Operator

Yes, sir. Please go ahead.

Speaker 3

So, from what I understand, the commissioning of the 3,500 crore captives for the 700-kilometer pipeline, so this will be all back-ended. So, the revenues from the same would start occurring from financial year 29 onwards. And with, again, just an additional question to this, do we see any issue of availability of gas for this or it should not happen like what maybe the pipelines are ready and we do not have availability of gas for the same?

Devendra Agarwal, Other

I don't think there is any issue about availability of gas because gas is available. I mean, although we, as GTL did, we don't deal with gas as a commodity. So we only transport gas. So we are not the owners of gas. But what we hear from the market is that there are a lot of projects and liquefaction projects. which are supposed to come online in 29-30, specifically from U.S. as well as the new Qatari projects, although some of the Qatari projects may get delayed because of the current situation. There are projects elsewhere, like for example Canada and Argentina, which would be ready to start supplying. By 28, 29, 30 timeframe. I don't think capability of gas would be an issue.

Speaker 3

Okay. My second question is on GIGL. So, one of the questions one participant had asked, so I got a part answer to it, but I would just like to ask you this, that in light of the HRL refinery starting, and also the final pipeline connectivity to HML also done, so do we see an impact on the volumes, and at some point of time, what is your vision for GIGL? Do you think it will, at any point of time, right now, I believe it's in a very low double-digit utilization. Do we see making a 12% ROE or maybe 12 to 15% ROE on GHGL at some point of time? So I would just like to have your vision on the scene because our subsidiaries have taken up a lot of our capital. And we also have to support it from time to time. So that was my concern on the idea. It would be good if you could address it.

Lokesh Agarwal, CFO

So, as you rightly said, new projects have come into being, and these are being scaled up gradually, and as they scale up, the demand for gas will also go up, and that's where I think we will also get benefited. Simultaneously, I would say, along the entire network, a lot of CVDs are also coming up, and that is also going to propel volumes. So, whilst I can understand we don't see good worth at this point in time, these are certainly assets which are going to provide better returns. Over a period of time.

Speaker 3

And just a small question, the dividend policy will be the same or what you have been following so far? I mean, based on last year, what about?

Lokesh Agarwal, CFO

Yeah, we expect to be at the same place in terms of dividend payout, whilst it remains a prerogative of the board. And certainly, we do evaluate our cash situations, the capital requirements and all of that stuff. However, we believe we will be in a position to retain those levels.

Speaker 3

Would the management at some point of time consider a buyback because the kind of net worth that you are having, 7,150 crore and the current market cap being half of it and cash if you are generating 500, 600 crore every year and already the capex that you have, you have enough cash for the same. So would you be looking at a buyback because that would eventually occur well for the shareholders from a wealth creation perspective as your projects, they start progressive commissioning?

Lokesh Agarwal, CFO

So, a good idea. The only thing is we are more focused right now on executing what we have on hand so that we can give superior returns in the course of next two or three years. I can understand there may not be much to see on an immediate basis, but certainly over a medium-term period, we would be in a position to offer superior returns. So, not that we discount the idea totally, but again not something which is there at the top of our agenda.

Speaker 3

And I would just request the management to maybe consider a barback at some point. Thank you.

Operator

Thank you. The next question is from the line of Mr. Kunal Tokas from Fair Value Capital. Please go ahead.

Speaker 4

Hello, I'm audible.

Operator

Yes, sir.

Speaker 4

Okay. Thank you and good evening. My first question is on GIGL, your subsidiary. How much CAPEX is yet to be done for that entity to connect to gas sources or customers? And if you can please stop statistics there in terms of how many customers you have. Which are connected, and how many customers are going to be connected, and what that capability will be on spur lines. And where do you source your gas from? Is it the KM field, or do you source it from DTL networking, Gujarat?

Lokesh Agarwal, CFO

Yeah, so... On the first part, I think in terms of pending capex, I would say GIGL is almost done with all that was to be done. They have a small, I would say outstanding capex of around 100, 110 odd crores, which is under execution. We do not see any major capex requirements beyond this in a near term basis, on a near term basis. In terms of specific customers, I will need to certainly get into details and share the same at a later stage.

Speaker 6

Okay, but can you at least tell me if there's 100 and 10 crore data

Speaker 4

such as spend, and are you committed to all major customers that you have on that route?

Lokesh Agarwal, CFO

Yes, yes. So, this capex which is currently on would be revenue accretive day one.

Speaker 4

Okay. Okay, so just to confirm that after it is hunted and tanked the road, there will be no insufficiency from an infrastructure point of view. The only thing that will remain is when the customers start ramping up on this, using gas from your network. Is that right?

Speaker 1

Yes, absolutely.

Speaker 4

Absolutely. Okay. And the second question is on GIT, your other subsidiary. It originally had a much larger pipeline plan, but because of problems with sourcing gas from the kg basin, you had to shorten. Materially. So, is that subsidiary incurring penalties from the PNGRB in terms of performance bonds because of not meeting it, and what is the status of that subsidiary?

Lokesh Agarwal, CFO

So, GITLC is profitable on a standalone basis. You are correct in saying that we have not made any major investments given the fact that there are sourcing issues given the KG Basin disaster. And in a way, we have tried to protect capital there. So, we continue to evaluate the situation, not that we are not willing to invest, but yes, we do not wish to get into a scenario where we invest and we do not find customers on way. So we continue to remain engaged with NGRB as well on the matter, and they are also, I would say, better updated than any one of us in terms of the current state of sourcing as well as. Customer-based.

Speaker 6

Okay.

Speaker 4

Are you incurring any penalties from PNJRB for not meeting your investment? None thus far. Okay. Okay. Thank you very much. Have a good day.

Operator

Thank you. The next question is from the line of Mr. Kronal Shah from Inam Holdings. Please go ahead.

Speaker 5

Hi, thank you for the opportunity. So, my first question is on this capex that we are undertaking of 3,500 crores. So, Anjar, Palanpur, Jamnagar, Dwarka. What are the demand pockets we are seeing, you know, to fill the capacities that we are adding in these regions?

Devendra Agarwal, Other

So Anjar Paranakur is basically, so Dwarka Jamnagar, basically we are connecting Jamnagar where there will be a source. I mean, there is a gas field offshore Dwarka operated by Sun Petro, and there are other entities also which are, you know. The other one is Anjar Palanpur. We intend to use Mundra terminal to transport additional gas in GIGL and GFPL. So Anjar Pallampur would basically be benefiting from additional volumes coming from Mundra LNG Tamar.

Speaker 4

Okay, got it, got it. Can you just highlight the volumes for this San Petro field, what is the volume expected there?

Devendra Agarwal, Other

Minimum 2.5 million and depending on further success it can go up. Okay, got it. Okay, great.

Speaker 5

And my second question is on the receiver cast.

Operator

I'm sorry to interrupt, sir. Can you please rejoin the queue?

Speaker 5

Yeah, okay.

Operator

Thank you so much. Participants, to ensure that the management is able to address your questions, please limit to one question per participant. The next question is from the line of Mr. Priyam from MK Capital. Please go ahead.

Lokesh Agarwal, CFO

Yeah, hi.

Operator

So, I wanted to understand, are there any penalties aside for missing volume projections in GIGL?

Lokesh Agarwal, CFO

No, as of now, we haven't faced any penalties.

Operator

So, if you're not able to fulfill certain volume, there's no penalties for that because the volume gap is still large right now.

Lokesh Agarwal, CFO

No, so, see, we have been fulfilling all the customer requirements, whichever is on way. So, there is no customer that is not being served.

Operator

Okay, got it. And when do you expect to reach profitability in GIGL?

Lokesh Agarwal, CFO

So, we have been making incremental progress. I think as situation improves, as new industries come along the way, it may be, I would say, maybe a period of another. Couple of years or so before we actually reach a break-even point for GIGL.

Operator

Got it. Okay. I'm sorry to interrupt, ma'am. Can you please rejoin the queue? Thank you so much. Participants, please limit your questions to one per participant. The next question is from the line of Mr. Devaraj from Forensic Investing. Please go ahead, sir.

Speaker 4

Namaste, sir. Sir, I want to know about the regulated equity, right? Whatever CapEx we have done, so is it covered by the regulated equity? And, sir, the second question is, new competition, which PNGRB can permit new pipelines?

Speaker 3

So, I think, so whilst I am not absolutely

Lokesh Agarwal, CFO

clear on the question, I would say PNGRB is right now clearing network on an open or shared basis only, so we do not see any major issue there. So I really couldn't understand your concerns around that. Sir, whatever we have capex, right, which we will

Speaker 4

go to the PNGRB, right, so it is covered under regular liquidity, right, because there are some issues, right, farmers don't give the land, and rent increases, or for acre that increases, so everything, is this risk covered in the regular liquidity?

Lokesh Agarwal, CFO

So, so, so, so couple of things, one is all the projects that we are executing are pre-approved through PNGRB, so we do not need to go for any subsequent approvals, one. Two, as I said, for almost all of the projects, we are right now on ground. We have most of the approvals in place, very difficult. When you implement projects at such a huge scale, you just cannot simply stand up and say, oh, everything is hunky-dory. So we will continue to face this and we will see to it that we take new steps to mitigate these challenges. And whatever cost we incur gets capitalized and is a pass-through cost.

Operator

Okay. The line for the current participant has dropped. So, we'll take the next question from Mr. Dhruvish Bujara from Urmin Group. Please go ahead.

Speaker 5

Hi, sir. Thanks for the opportunity. So, I have two questions. First, on the different policy, you said it is similar to what it has been. So, I just wanted to double-check that. So, as per Gujarat government PSU guidelines, it is 30% of PAT or 5% of net worth, whichever is higher. So, that number, it answers to 350 crore. So, are we saying we'll be paying 350 crore dividend this year? That's the first question.

Lokesh Agarwal, CFO

So, I think I clarified when I responded to that query that it's a prerogative of the board and board always takes into account several considerations like the planned capex and any other future requirements. So, we would say the current announcements or disbursements were basis board approvals, and all that I said was we expect to maintain disbursements at these levels, irrespective of our current CapEx projections.

Speaker 6

Okay.

Lokesh Agarwal, CFO

Got it.

Operator

I request you to rejoin the queue. Thank you so much. Participants, please limit your questions to one. The next question is from the line of Mr. Manish Peria from Saswat Vridhi LLP. Please go ahead.

Manish Peria, Analyst — Saswat Vridhi LLP

Yeah, hi. So, yeah, so the asset is newly listed. So, some of my questions might be quite basic. So, please feel my ignorance. So, if I look at the net kick effect, I mean the regulated effect on which we got the 12% return. So, this is something like 3,200 crores, I mean. And so, Sujat, I wanted to check that with the tariff that we have, with the volumes that we are doing, and with the life that is there, so it is counted by the cost of equity 11%. The 3,200 still stands, I mean, so I just want to confirm that.

Lokesh Agarwal, CFO

Yeah, that's true.

Manish Peria, Analyst — Saswat Vridhi LLP

The question I'm asking this is because you're doing the volume, something that you've shown in the presentation, something like more than 40 MMSEB, and in the regulatory tariff that has come out in 2024 by the regulator, so they say something like 31.57 or something like volume, so you're doing quite high volume, and you see you are going to generate this year the net profit, excluding other income of 400 crores, so that's equal to 12%. So you're doing more volume, but still getting 12% return. But the regulator was telling us much lower volume. The type was designed on much lower volume. So is there a risk? So that's why I'm going to check why this is the discrepancy here.

Lokesh Agarwal, CFO

Yeah, so see, there are three different networks that we are operating on. One is a high-pressure network, another is a low-pressure network, and a happy network. So, the high-pressure network is currently at around 36. That is what we reported for Q2. And that is pitched against the 31.4 or 31.5 odd figure, which PNGRB took during the last revision. So, not that we are substantially out, one. Two is anything beyond, over and above the threshold that we actually execute, we get a benefit for the 50% additional volume that we bring in, and that benefit gets compensated. We actually get credit for that benefit if we utilize it towards capital purposes. So, I would say it's kind of a win-win situation if we are actually executing beyond 75%.

Manish Peria, Analyst — Saswat Vridhi LLP

Okay, understood. Thanks quite a lot. Just to add maybe, like you said, about this dividend, I mean, I still not understood. So, the other participant also asked, I mean, 7,000 crore net worth, so 5%, I mean, so it can be quite high, right, 350 crore. So, you mean to say you will pay 5 rupees dividend that you're...

Lokesh Agarwal, CFO

See, it is difficult to declare a dividend for next year right now by me. We will have to leave it to the board. But then, yes, certainly what we believe is that we would try to make sure that the shareholders are rewarded at least at the same rate. That is the intent. If we cannot improve upon, we would try and make sure that we maintain it at the current rates. But no hard feelings, we cannot guarantee the numbers. Understood. Thanks a lot.

Operator

Thank you. The next question is from the line of Mr. Samir Shah from Wadudra Partners. Please go ahead.

Speaker 5

Yeah. Hello.

Speaker 12

Am I available? Yes, sir. Yep.

Speaker 5

So, do I understand that as your other income gets translated into capital work in progress, as your investments get translated into capital work in progress, we should be seeing over the next two, three years a drop impact, you know?

Lokesh Agarwal, CFO

Yes, so as we use our funds, the cash balances that we have towards capital expenditure, So definitely the interest income from deposits which are placed with the banks would come down and maybe reach a zero level. So to that extent, the PAT might get impacted.

Speaker 6

Thank you.

Operator

Thank you. The next question is from the line of Sriram, an individual investor. Please go ahead.

Sriram, Analyst — Individual Investor

Yeah. Hi. Can you hear me? Yes, sir. Yeah. Thank you for the opportunity. I have just one question on your capital allocation philosophy, because this is something that you will be encountering multiple times over. Today, you have 2,500 crores of cash. And IDAB, like management, is there to increase shareholder value. Now, this $2,500 of cash, you can put it in investments, or you can do a buyback because it is at 50% of this thing. And surely and definitely, the buyback is more value-accretive to shareholders. But instead, you will go and make an investment into these pipelines, which have an IRR cap of 12%. Now, in case there is a failed pipeline or something like the KG Basin happens, we don't get any cover on that. And as long as this cash is sitting in the company waiting to be invested, we lose on some IRRs. So the total IRR of the capital invested by the company will always, by design, be below 12%. In such a scenario, How is investing in new pipelines creating shareholder value? If the intent of the company is that I would place the interest of the government ahead of shareholder value, so be it. But please state it is what I am asking. Is shareholder value more important to the company or is the government interest and national interest more important to you? I just wanted clarity on that. That is my first question.

Lokesh Agarwal, CFO

Peace. See, I think if you really go through what we have done so far, we have really balanced our act. Whilst we have taken care of the national infrastructure requirements, we have also tried to reward our shareholders well. I understand your concern in terms of the fact that if we go for a buyback, that may actually bring in better returns for shareholders. But if you really look at it, the current cash balances are around 1,800 crores, and it is just a matter of time. Perhaps maybe in the third call from now, these balances may not be there, and we would be actually looking for funds. We have a robust expansion plan, of course. And these plans are not, I would say, figments of imagination. These are rooted in well-discussed, well-discovered plans where we see a source available and supply points available. So, these are all being done, keeping in mind the fact that we need to generate return for shareholders. I'm sure... Few of our shareholders appreciated the fact that we did not go on, we did not went into investing in GITL mindlessly the moment we got to know that the source was not there. So we continue with that philosophy. We will make sure that every penny that we invest, it gives its worth to shareholders and to the nation as well. Correct, sir. But it's not that 3,500 crore is all that we are going to invest. So, we have a long way to go. We have high aspirations. And so, we need to keep investing.

Sriram, Analyst — Individual Investor

Sir, my question is that whatever you invest, it cannot beat the 12%.

Operator

I'm sorry to interrupt, Mr. Sriram. You'll have to rejoin the queue for follow-up questions.

Sriram, Analyst — Individual Investor

Sir, that's only by choice question.

Operator

Okay, please go on.

Sriram, Analyst — Individual Investor

No, I'm just saying, I'll just follow on with it. Whatever is invested by the company, there is a regulatory cap of 12%. Now you put idle cash, now you put failed projects. The IRR is much below 10%. If that is the case, why is buyback not at the management listing? If the concern is, no, our national interest is more important than shareholder interest, so be it. Please state that is what I'm saying.

Lokesh Agarwal, CFO

No, no. So, see, for all of us, I am sure the national interest would be paramount. But I think the entire question is more around, I won't say, the returns that GTL is generating. It's perhaps more around investments which we made in GIGL. And that's where I think the higher base counts. But, but fine, we, we all take business decisions and it may go right and it may go long. But all that we are saying is that we are taking very nuanced decisions, very well thought through decisions. And we are trying to create a long term shareholder value. Thank you.

Operator

Thank you. The next question is from the line of Mr. Rishabh Jain, an individual investor. Please go ahead.

Speaker 1

Hi, sir. Good evening. For the financial side, I would like to know what would be the maintenance capex that you will incur each year and for the quarter to why the other expense increase.

Lokesh Agarwal, CFO

So, your question had two parts, right? One was maintenance capex and another? On the other expense, in the quarter too, it has increased.

Speaker 1

So, what's the reason behind that?

Lokesh Agarwal, CFO

Okay. So, see, the maintenance capex, we expect to maintain between, I would say, 60 to 100 odd crores on a year-to-year basis over a period of next couple of years. It can be at the either end of the spectrum. Okay, so in terms of other expenses, so the key factor was that we sent a lot of gas up north and which required us to operate compressor for longer hours compared to previous quarter. And that's where we had an increase in other expense costs. So, and these are like pass-through costs, so we will have this all back when we go for next revisions.

Speaker 1

Okay, sir. Thank you, sir.

Operator

Thank you. The next question is from the line of Mr. Nishat Shah from Pathak Export. Please go ahead.

Operator

Mr. Nishat? The line for the participant has dropped.

Operator

Due to time constraints, that was the last question. I now hand the conference over to the management for closing comments. Please go ahead.

Lokesh Agarwal, CFO

I thank everyone for joining us today and for the active participation and interest that all of you have shown. We are pleased to begin this structured engagement with the entire community and remain committed to maintaining a transparent and consistent communication panel. We also hope today's discussion provided some useful insights into our business and our priorities. In case there are any further questions, please feel free to reach out to our investor relation partner, Ernst & Young. We thank you once again for your interest in the company and look forward to a continued and meaningful engagement with all the stakeholders. Wish everyone happy festivities. Thank you.

Operator

Thank you, sir. On behalf of EY, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.