Mahanagar Gas Limited (MGL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Mahanagar GAS Q1 FY27 Earnings Conference Call hosted by Prabhudas Eladar, India Limited. As a reminder, all participant lines will be in the lesson 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 and operate the web pressing star 10-0 on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Indra Kumar Gupta from Prabhuda, Sziladhar, India, Private Limited. Thank you, and over to you, sir.

Thank you, Nisya. On behalf of PL Capital, we would like to welcome all the participants. So from the management, we have Mr. Praveer Kumar Srivastava, Managing Director, Mr. Achai Sina, Deputy Managing Director, Mr. Rajesh Patel, Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in the nature, and we believe that expectations contained in the statement are reasonable. However, these statements involve a number of risks and uncertainties that may lead to different results. We urge you to consider that quarterly numbers are not a reflection of long-term trends or indication of earlier results. With that said, I now hand over the call to the management over to you, sir.

A very good afternoon, and welcome to the earnings call of Maanagar Gas Limited for the first quarter of the financial year, 2026-27. I would like to thank all of you for attending our earnings call today. The ongoing geopolitical conflict in West Asia has triggered a global energy crisis, significantly affecting the availability and pricing of natural gas in India. There are initial signs of a gradual resumption of LNG shipments through the state foremost. Supply conditions remain uncertain and global LNG markets continue to experience volatility. Over 100% of our domestic PNG, DPNG requirement and the major portion of our CNG requirement are sourced from domestically produced natural gas, ensuring uninterrupted supply to our DPNG customers. And continued reliable supply to our CNG customers. Gas supplies to industrial and commercial customers are partly curtailed. Prices may be affected due to global indices in the near term. Once the war situation de-escalates, the prices are expected to reduce over a period. We continue to closely monitor the situation and remain committed to maintain uninterrupted gas supply to our customers. PNG Drive 2.0 has enabled MGL to substantially enhance the pace of domestic PNG conversions through focused operational improvements, resource augmentation, and stronger coordination with government agencies and other stakeholders. The initiative has laid a strong foundation for sustained growth, improved infrastructure utilization, and continued expansion of the PNG network while maintaining high safety standards and quality. MGL continues to create CGT infrastructure across its business segments in the license area. During the quarter, 97,461 DPNG conversions were achieved, taking the cumulative DPNG conversions to 2.17 million as on 30th of June, 2026. We have laid 156.57 kilometers of steel and PE pipeline, taking the total length of over 8,477.01 kilometers. We added one CNG station during this quarter, and with this, we have 519 stations as on 30th June 2026. We added 291 industrial and commercial customers during this quarter. As on 30th June 26th, we have 6,198 industrial and commercial customers. During the quarter, there is an addition of 26,007 CNG vehicles, and now we have more than 1.31 million CNG vehicles registered in our geographies as of 30th June 2026. Coming to MGL's operations compared to the corresponding quarter of last year. Average overall sales volume has increased from 4.456 to 4.766mm SCMD, which is an increase of 7.01% sales volume. Sales volume of the CNG has increased from 3.185mm SCMD to 3.496mm SCMD, which is an increase of 9.74%. Sales for domestic DPNG has increased from 0.571 MMSTMD to 0.623 MMSTMD, which is an increase of 9.09%. In case of industrial and commercial, sales volume has decreased from 0.698 MMSTMD to 0.648 MMSTMD, a decrease of 7.15%. During the quarter, we achieved overall average sales volume of 4.766 MMSTMD as against 4.672 MMSTMD in the previous quarter, which is an increase of 2.01%. Sales volume in case of CNG has increased from 3.349 MMSTMD to 3.496 MMSTMD, which is an increase of 4.39%. Sale of domestic DPNG has increased from 0.605 MMSTMD to 0.623 MMSTMD, which is an increase of 2.98%. In case of industrial and commercial, a 20% cut was implemented as per government directive. However, sales volume achieved a 0.648 MMSTMD as compared to 0.719 MMSTMD in the previous quarter. EBITDA from operation for the quarter is Rs. 343 crores as compared to the previous quarter EBITDA of 260 crores, an increase of 31.74%. Net profit after tax for the quarter is Rs. 194 crores as compared to previous quarter net profit after tax of Rs. 132 crores. An increase of 46.83%. During the quarter, we have successfully completed the transition from SAP ECC to SAP S4 HANA, achieving a key milestone in our digital transformation initiative. With this, I conclude and would now like to open the floor for questions. Thank you very much for your patience. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. 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 on the line of Robalzen from ICICI Securities. Please go ahead.

Thank you for the opportunity, sir. Just, you know, one appreciates that volume growth was probably lower primarily because of the decline that one has seen in the industrial and commercial segment. Now, while there is a 20% cut in terms of domestic gas or available gas allocation, just wanted to understand what our sourcing mix was for this quarter, and how are we looking at Q2 in terms of our sourcing requirements and supply availability? If you can break it down in terms of various sources, that will be right. That was my first question.

Are you only referring to sourcing for industrial and commercial?

No, overall will also be fine. You can give me an overall color on what the overall sourcing looks like today. Either percentage, volumes, whatever you can share.

At a company level, roughly 30% is available through APM. And maybe around 21-22% is available through NWG and pooled gas put together. Roughly 14-15% is through HPHD. So our actual signed contract with respect to Henry Hub was higher, but roughly 21-22% has been received through. HH contract and rest is, you know, some small brand contracts or whatever we could buy through IGX and SPOT. So this is broadly the breakup of gas.

Got it. Sir, as a follow-up then, what was the effective price then of the gas that we sourced other than the top hole in the case of the SPOT, LNG and Brent Lake? What was roughly the blended cost that this is there for the water?

So, if you look at, you know, our dependence on Brentlink as well as spot was very minimal. Of course, not so very minimal. At times, I think it has touched almost $20 per MMBTU. Whereas, we have received most of the gas through pooled mechanism, which was in the range of $12.50 to $13.00. And Brent-linked Around 13-14 dollars was the price during the quarter.

Got it, sir. The second question was with respect to gas realisation. Now, sir, obviously, there were some price increases taken for CNG and even domestic, but still the realisation improvement seems to be fairly stark. Can we get a sense of at least the range of pricing that was there in the industrial and commercial segment for this quarter?

So, as you know that we have been, you know, pricing our industrial and commercial customers linked to. Alternate fuel. In case of commercial, mainly linked to the bulk commercial bottle LPG, and for industrial commercial, it is FOL-DU. So, compared to the previous quarter, roughly, you know, there is an increase in the range of 27 rupees per cubic meter to almost 32 rupees per cubic meter. On the higher side, it is main realization in commercial segment. And industrial is in the lower range. This is the over last quarter I am talking about. This is the kind of increase we have seen. So last quarter was, you know, probably one of the lowest as far as, you know, Brent was concerned. And hence the realization for industrial was probably lowest. Probably this quarter, Q1 of this year, we have seen highest Brent and accordingly the price realization has also remained good. So, if you compare say around $60 to $63 Brent and this quarter if it was around $95 to $100, so that is what is the proportionate upside on realization with respect to industrial commercial prices.

Got it, sir. Last question, if I may. What was the volume, if I can ask from unison in this quarter's numbers? And what sort of guidance of margins are we sort of looking at, assuming, let's say, that this dispute or the conflict continues to be there for the next three months? What is the realistic margin number we can work with?

Volume, overall, as I think in the MD speech, 4.766 was the total volume at company level. Of that, around 3,22 or 0.322 MMS-CMD average for the quarter is towards Unison Enviro GAs. Now, does anybody guess that, you know, what may happen to the ongoing West Asia crisis? And maybe around 1st week of July, Everything was normalized, and suddenly it, you know, again started. You may be aware, once, you know, Hormuz was coming to a, almost, you know, the U.S. and Iran were reaching some agreement. Even government has withdrawn the pooled gas during that time. And again, after maybe, you know, seven, eight days, the thing started, and it has impacted supplies through Hormuz. So, prices of, since the supply is impacted, prices and the quantity available has also gone up. So, very difficult to tell you on, you know, what could be the margin for at least this quarter or going forward unless you have complete, you know, resolution on this conflict at West Asia. However, we have been making an attempt that how do we minimize our weighted average gas costs. So, we have taken some steps towards that, and hopefully we will be able to continue, but at a point of time, there could be a situation where gas cost is out of control. Generally, we don't put a curtailment on the supplies, and we try and meet the demand, except wherever it is possible to, you know. Put some curtailment with respect to larger industrial customer where it is possible to control. But performance at large, which is dependent for CNG, we don't push. You may see some spike, maybe at least for next one or two months. Currently, that is the situation which you can see in the pricing of JKM and the spot. So, very difficult call to take on margin. Definitely, it will be under pressure for at least one or two months until this crisis gets resolved or some settlement happens.

No, understood, sir. That is perfectly clear. Thank you so much.

I am all the best.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The next question is from the line of Yogesh Patil from Dollar Capital. Please go ahead.

Thanks for taking my questions and congratulations for the great set of numbers, sir. Sir, question is again focusing on the CNG volume growth 9.7% YY. What was the major volume growth driver for the CNG during this quarter? That's one. As you mentioned that 26,000 CNG vehicle addition during the quarter we have seen. Can you provide some kind of a breakup in PV, HCV, three-wheel, auto, buses? It would be helpful. And we wanted to know on the GA-wide CNG volume growth or overall volume growth on a YY basis that would be helpful.

So, Yogeshji, you know, as far as volume in a particular period is concerned, the dependence on the quarters addition of vehicle is not so high. It is the cumulative base of vehicle which actually makes the difference. And the number of stations which we have been adding in the last two years. Substantial number of stations have been added. Good amount of commercial vehicles have been added. Even private bus fleet have been added. Okay. We'll share the numbers actually during the quarter. What is the breakup? As far as, you know, volume growth is concerned, GA-wise. GA-2 is probably the highest selling GA, which is more than almost 2.1 MMS CMD. I already said earlier, SBUs of Unison is roughly 0.322 MMS CMD. Compared to last year, same quarter, it was almost 0.224. So, you can see it is almost growing more than 30-35%. Uh, yeah. One, also there is a growth marginally. Last year, it was in the range of 1.9 MMS CMD, whereas I'm talking about overall company volume GA-wise, not only CMD. And this quarter, it is almost 1.95 MMS CMD. And as far as Rai Gerd is concerned, it was roughly 0.33 last year, and this quarter, it is 0.4 MMS CMD. So, this is the growth across, and this is despite some reduction in industrial commercial volume, maybe almost to the extent of 8 to 9 percent. So, there is no dearth of demand as such, and traditionally, I think, monsoon also sees some amount of traffic jam, which helps us because the consumption of fuel goes up. So, that is one of the reasons.

Just wanted to continue on the CNG volume growth. Any guidance, overall basis on the volume growth you would like to give for FY27 and FY28?

See, both price and volumes are related, okay. So, as earlier question I answered, there could be some, you know, need to do a price increase also. Assuming that, you know, things come to a reasonable level and we are able to maintain the prices, then we do expect that growth should be in the range of 8 to 9 percent, only for CNG. And on industrial commercial side, today there is a lot of demand. It is, you know, our ability to supply connect. In fact, because of the curtailment of gas and force measure in most of the RLNG supplies coming out from outside India, we are not able to scale up the volume. Otherwise, you would have seen much more volume increase in industrial commercial as well. And with the PNG Drive 2, where government intends to, you know, Thank you.

Last question on the P&G industrial commercial side. Can you please share some gross margin details on the P&G industrial commercial? Calculations are suggesting that it has been sharply up on the sequential basis, at least in the Q1 FR27. So, do you think you will be able to maintain that higher gross margins on the P&G industrial commercial segment going forward?

So, in our case, I think the good thing is there is always a balancing between realization linked to Brent and... Maybe CNG and domestic, which has its own limitation due to the alternate fuel, which is very much seen in this quarter, where definitely we have slightly lost out and there was a pressure of margin in case of CNG, whereas it has been very well compensated through realization in Brent. And on our side today, what? Henry Hub contracts has also helped because Henry Hub index, which is mainly the input cost for shortage in the CNG as well as some part of industrial commercial. So if Henry Hub remains low and Brent remains high, definitely our margins will be high. And whenever, you know, Brent comes down and in turn, Indian crude market also comes down, then it saves our cost on the priority sector CNG and domestic PNG. So it is acting as a both balancing. Of course, this quarter is slightly abnormal. Generally, you don't see $100 plus Brent and this kind of a realization. So one has to look at what is the longer tenure return on industrial commercial rather than seeing only quarter on quarter. As Q4 was slightly abnormal with respect to lower margin because Brent was low and Henryov went up. Whereas this quarter is on the other side, both have helped us, price realization as well as gas cost. But at an overall company level, our endeavor is to maintain EBITDA margin in the range of 8 to 9 rupees per SCM.

Yes, sir. Thanks a lot. This was really helpful and all the best.

Thank you. The next question is from the line of Bineet Banka from Numura. Please go ahead.

Hi, sir. Thanks for the opportunity. Firstly, on the CNG price hike that we have taken over the last two, three months. So, assuming that your energy prices go back to pre-war level, and the government continues with the right-side speculating petrol diesel, so will there be rollback in prices for CNG, or will it be more aligned towards the differential versus petrol diesel?

So, we have been maintaining some legroom between petrol diesel prices and CNG prices. As you could see, roughly 40-45% CNG is competitive compared to petrol, and in the range of around 12% with respect to diesel. So that, if we try and maintain that, that should be sufficient enough for us to drive volumes. Now, in between or for a shorter intermittent period, if my gas cost increases, we may not change the prices so frequently because volatile prices is not good for, you know, people who want to go on adding their CNG fleets. So, from that perspective, we may have sometimes up and down, but if... For a permanent basis, if there is an increase in petrol diesel prices, definitely we would like to recover the gas costs, which is also already up, and we have not recovered that fully in case of CNG.

Okay, and second question is on the number of CNG buses that you have across all the GAs. And what is the view on the number going forward? Because I think there is a lot of effort from the government to electrify all these buses. And probably can you also share the total volume which is being taken by these buses?

Yeah, so we have roughly 6,000 buses, you know, which are flying, which includes both STU and private buses. The volume, if I say, from the STU, right, STU is the state transport undertaking. So, BST gives us about 90,000. Then we have MSRTC, which gives us about 34,000-35,000 kgs per day. And then there are a couple of other transports, which are very minuscule. So roughly they put together, give us about 4,000, you know, 3,500 kgs per day. And rest are the private buses, you know. So, in this segment, we now have a program, which is called the fleet program, which is now particularly aimed at this segment, you know. So, we have launched this program, and this has been kept in mind, keeping in view the threat, looming threat of EV, you know, which might, you know, over a period of time, disturb some of our major consuming segments. Which are Texans, you know, cars and three-wheelers. So this program, fleet program, is already giving us a good traction. So there are a lot of number of MOUs we have signed and quite a number of vehicles which we have already signed and which would be on road in the next few months, you know. So overall, I think the buses, the numbers that I have told, the buses volume, CNG offtake will be around 0.14, which is 4% of total CNG volume. Correct. Correct. 4% to 5%.

Okay. Yes. Thank you, sir. I'll get back.

Just would like to add here, you know, state transport undertakings may see some adoption of EV buses because of maybe they have... Thank you. And the revenue remains similar. So unless there is an availability of financing, etc., which is really difficult to get for private operators because there is no life cycle available and you get financing at a very high rate. So you won't see much penetration in the case of the non-STU operators for the buses. And that segment we are able to penetrate and whatever is the loss on VST side mainly has been compensated through these private buses as well as MSRDC adopting more buses.

Thank you.

Thank you. The next question is from the line of Vivekan and Subamarman from Ambit Capital. Please go ahead.

Yeah, hi, thanks for the opportunity. So, my first question is the JPEGs that you have done till now, and if you can break it across the base business, which is the three GAs and the UEPL, that's one, and the guidance for FI27, that's number one. And the related question is, Is it now much easier for you to increase your KPEX and serve markets that perhaps the government is now pushing you to do so because of the imperative to shift from cylinders to P&G? That is question one. The second question is on the APM allocation. So, I mean, as per P&G RB data, Jan to April, you had allocation of around 1.585 mm SCMD. Could you help us with the number for 2Q and also now that the emergency provisions have been reversed? What is the allocation formula or mechanism for domestic, both APM as well as new well gas? If you could elaborate on that, that would be great. Thank you.

As far as CapEx is concerned and with respect to PNG drive, you are right, certainly we will be enhancing the capital expenditure. Because this is a time where it is giving a very good opportunity for NGL to lay more and more line when all the government agencies are supporting to create the infrastructure and tap all the potential available, be it domestic, P&G, be it industrial, commercial. So our focus is on this year to create more and more pipeline, and accordingly our capex is going to go up. For Q1, we have already spent 350 crore. And if you see my number of domestic connections added is almost 95,000 for first quarter, which was never the case in the history. This is probably the first quarter where we have connected so many domestic customers in one quarter. And in line with that, our capex could see an increase of almost 1,500 to 1,800 crores, subject to availability of the manpower who does the ground-level job. There is a demand of material by all CEDs and across India. So there could be some bottlenecks. But as far as we are concerned, we will be making all endeavors wherever possible we will spend and put the infrastructure as fast as possible. So we are ready to spend almost in the range of 1,800 crore for FY2627. I don't know whether if I missed any of your questions.

My second one was on the APM allocation, the exact quantity in MMS-CMD, and since the emergency measures on gas allocation have been lifted, what is the mechanism of allocating APM, new well gas, and HPST now to MGL and the CGG sector?

First of all, HPHT is not an allocation base where you have to bid and you have to buy. Only thing is CGD gets the priority. So whenever a long-term contract is up for sale by the producers, HPHT is generally all CGDs try and take maximum, so it gets apportioned among all the CGDs. We already have, say, around... 0.6 long-term contracts, and we have consumed almost, you know, 0.2 or so through IGX. As far as APM and NWGN pooled is concerned, roughly 2 million through all these three sources have been coming to us in the last quarter. We are also not too sure about Q2, and it doesn't make sense me sharing that number for Q2. So, that's... That is the way. And I already said around 30% of my total potential is catered through APM in the earlier question.

That's helpful. Thank you so much.

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

Good afternoon, and congratulations, good set of numbers. So, against 95,000 domestic customers added, what has been the addition to the burning customer base during that quarter?

I'm talking about all burning. These are all converted burning customers. Okay, so some of them might not have occupied the flat. Okay, so you may see that in maybe another month or two months time, but all these are actively burning customers who have signed and taken up the gas.

Okay, and so full year, what is your expectation now in terms of addition?

And our endeavor is to do maximum. So, we may go, you know, from 1,000 number a day to more than that as well, 2,000, 3,000 also. But as I said, you know, this is currently, it is monsoon. The availability of plumbers, the availability of third-party engineers to do inspection, availability of meter, availability of, you know, pipe, etc., it all depends on this. We can do, you know, 8 to 10 lakhs given if there are no bottlenecks. In this year itself.

Okay, and any growth guidance, volume growth guidance for domestic TNG like you're going for TNB?

Volume growth, see, if you see, domestic is an area where the growth gets limited by the population and the household in that segment, right? As we have been saying in the earlier call and earlier, you know, all our meetings, that we have a potential of around 3.8 to 4 million households, okay? We were, we are already with almost 3.3 household and we are selling gas to almost 2.3 million consumers. So almost 50-60% of these connected but not consuming gas will be tapping because there is a pressure from government also. And they have a threat of, you know, bottle getting stopped if a building has a gas connection and they have not taken. For, you know, if this number conversion gets squeezed in next two to three years, definitely volume growth will be higher. Instead of five, six, it could go to seven, eight. But beyond that, it has to be through new geographies or new areas, okay? So I'm saying you can take a call on, you know, if I reach out to all 3.8 million or 4 million households and taking their average... Per capita consumption, say in the range of 0.35 to 0.4, that's the volume potential available in this segment. No, I'm talking about this year.

This year, I mean, we are like at 9-10% in Q1 itself.

So, this year, I connect only 5 lakh. Then 5 lakh into at least, you know, because these are the customers who are sitting on the fence, their consumption could be low. So, even if you take 0.3, it should add 0.15 MMS CMD if all of them start consuming gas. And it will be average of the year because you are connecting them throughout the year. So, at least 0.0607 kind of addition is seen on 0.6.

Thank you, sir. Thank you so much for this explanation and all the bits. Thank you.

Thank you. The next question is on the line of Kartik, Gada, from Multiple Welt. Please go ahead.

Yeah, thank you for the opportunity. Am I audible?

Yes.

So, just again, on the realization for industrial and commercial segment, you mentioned 27 to 32 rupees increase in per cubic meter terms. What would this be in percentage terms? Percentage to last year's realization. Okay, and the alternate queues would have been either unavailable or even dearer, right? That's why whatever was available was consumed. How is that situation now in Q2?

So Q2 until maybe, you know, first week of July, things were normalizing. Again, second week of July onwards, there are constraints on availability of liquid as well as probably gas, both.

Okay. All right. Okay. Yeah, that's it for my time. Thank you so much.

Thank you. The next question is on the line of Aryan from Equitas Investments. Please go ahead.

Hi, sir. Thank you for the opportunity. I really just wanted to get an understanding of our non-CVD initiatives. So, you know, over, let's say, the next three to five years, what do you expect your non-CGD initiatives that the company has taken to materialize in terms of revenue and profit?

So, you know, non-CGD, I think we have two, three initiatives. One is long-haul LMG. So, long-haul LMG, we have two stations which are commissioned. And currently, you know, only two sessions and volumes are in the range of, say, five times a day. It is just breaking even and not added much, so to say, which you can see the difference between my stand-alone and consolidated results. Okay. As far as the battery initiative is concerned, It is right now on a hold except that, you know, the sales which we are importing from Korea and trying out on multiple, you know, two-wheeler segment. So very nominal revenue which takes care of the salary of the people. So there is nothing which is, you know, substantial which has moved. Two, three reasons because, you know, the time we evaluated and entered the segment. Probably per kilowatt hour cost was in the range of, I'm sorry, revenue. Realization was $100 plus. But today the realization has come down in the range of $70, $75. And there was some constraint in infusion of capital by the other party as well. So we have been in the process of restructuring the whole project. So that is about the International Battery Company coming to EV, where the business is manufacturing the three-wheeler cargo vehicles and operating a logistics farm. That is a startup. So they have not yet broken even, but the whole sector of three-wheeler EV. Have seen challenges in terms of, you know, uptime of the vehicle, the pull available to maintain the vehicles and give revenue. So there is some amount of setback, but I think that is very usual when you have a new industry, new startup. So things are getting stabilized. So there also it has not yet broken anymore or it is making profits. Another is our initiative on compressed biogas. So there we have signed agreement and land allocation has happened through MCGM. We will be very soon setting up a plant of around 350 ton municipal solid waste, which is only the first phase of our proposed CBG plant with MCGM on the MCGM land. So, this is about the new initiatives.

Okay. Second, I just wanted to ask you, you gave me some color about the commercial and industrial space which was there, but you said industrial realization was not so high, so I'm just trying to understand if you could please reiterate why the industrial realization was not as high as the commercial realization.

So both depends on the different fuel from which you switch the customer to natural gas. In case of commercial, majority of the customers who are consuming bulk LPG moves to natural gas, and bulk LPG movement from last quarter to this quarter was higher, whereas the industrial side, more of the consumers are using LSH as FO, LDO. And there the price movement was not that high. And also the pricing with respect to large industrial customers, we give some discount to the alternate fuel prices so they make, you know, recover their capital costs. So, there is a difference in the pricing, difference in the fuel through which pricing link to the alternate fuel. So, obviously, there will be a difference. So, it can go other way around also. If the prices of LPG, bottled LPG comes down and LDOFO remains there, then you may see reverse movement also. But, typically, I am saying from Q4 to Q1, the realization increase in case of commercial was much higher or higher by at least, you know. 10 to 15% compared to industrial or a little more also in some cases. Also, we have, you know, new customers, Raigard area where we gave, you know, first three years committed discount of 10%, where more of industrial commercial basis is there. So, I was talking about the weighted average realisation considering the mix in different GAs, new and old customers.

No pressure. Thank you very much.

Thank you. The next question is from the line of Beneet Banka, Sir Nomura. Please go ahead.

Thanks for the opportunity again, sir. Sir, on the CAPEX, I think the number you said is 1,500 to 1,800 crore for this year. If I see the data... Yeah, if I see the cash flow, the operating cash flow is around, I think, 1100 crores. So, will there be a debt raise this year for funding the CAPEX?

We also have surplus on our balance sheet, and we are prepared to raise debt, because if my CBG plans are, we need money there as well. And we are a zero debt company, so we can always raise debt. Yeah, we are prepared to do that, yes.

Okay. And on gas pooling side, is it still continuing like it was in one queue or do you have some relaxation from the government?

Pool gas has been discontinued from around second week of July because government came with a notification that now Hormuz things are come to an end in this arrangement. The notification, which was giving priority for gas consumption of the domestically produced and otherwise also, was removed around 4th of July. And after that, gas was removed.

So you are getting around 1.5 MMCMD of energy of gas, which you have contacted with the gas.

That is slightly unfortunate. We are not getting that much. The reason is the force major. After that, within probably a week's time, again, U.S. and Iran things started, and supplies are impacting, and force measures are applicable as far as import is concerned. So we have represented that pooled gas mechanism should come back, but as of today, we are relying on without pooled gas.

In the absence of old gas and envia volume still not there, so are you possibly funding this shortfall using SPOT LNG?

Small amount of this was done because immediately you can't enter into a term contract. So yes, for maybe 15 days to 3 weeks time, we did buy SPOT, and we have taken some steps too. Enter into a slightly longer-term contract so that cost can be contained with some good amount of thresholds, so if things improve, we can always use both. But as I said earlier, I think this two, three months until West Asia crisis comes to some reasonable conclusion, this remains very volatile.

I don't understand when pooled mechanism is not there and the restrictions are relaxed, then why we are not getting the full quota of contracted NGF gas?

So, as I said, no. Immediately after that, the U.S.-Iran thing erupted and supplies are impacted. If supplies are not there, And with the government circular, if that pull mechanism is again back to square one, and it is going back to the people pre-West Asia crisis, so it may take some time at the end of government to rethink and do, or that's actually not in our hands, but we can only represent. That is what we have done.

Okay, sir. Thanks. Thank you.

Thank you. The next question is on the line of Vikas Jen from CLSA. Please go ahead.

Thanks for taking my questions. So, as things stand right now, can we say that, you know, the situation on availability as well as, you know, raw material availability, that is gas, as well as maybe pricing is pretty similar to the June quarter for, because everything's kind of come back in terms of. The war, yeah, I mean, overall crude prices are lower, but there will also be that three-month, generally, your pricing will be with a three-month lag, right?

So, if you see, I think, West Asia crisis started somewhere end of February 28th, and then the pool mechanism was put in place almost in the mid of March or something, correct? Now, that means Q1 was not at all impacted because, yes, the prices went up maybe $12.50 to $13, but today, probably, pool mechanism removed, gas not available, situation is slightly worse compared to Q1. Not equal. But, sir, your volume has gone up.

But your margin situation should be a bit better because you took a lot of the price hikes that you took.

Yes, so my hike in the first quarter was gradual. And let's say from February till now, I have taken 5 rupees per kg increase, which is available for this full quarter. So that is definitely a positive side, as you understand it very rightly.

And just to... From whatever I could, you know, from whatever which has already been discussed, the QOQ up move in margin, that largely comes from the fact that industrial and commercial did not see that quicker pass-through and a bigger impact in the March quarter. But that was one of the main reasons for the delta that we have seen, the QOQ improvement in margins.

Yes, you are right. Generally, we don't do any pass-through. We are building alternate fuel link prices, and so it's more driven by market, but that is why I always keep on saying that it is not right to compare quarter-on-quarter margin for at least this segment or even the company. I have created infrastructure for a long term, and over long term, you will always make money. Till the time, you know, you see Brent at a particular level and gas prices in the range of $12 to $14, you will always be in the money. Comparing quarter-on-quarter and during such difficult time, it's very difficult for anybody to say how margins will fare.

But your endeavor to get to, I think, 8 to 9 rupees margin. That target continues, right?

So, our endeavor remains, and you will have to appreciate that, you know, there are alternate fuels which are competing with us. So, you can't, within a range, you can always perform, but if the external factors completely go, you know, against the business model, then there will be some, you know, plus minus during a shorter period of time, like quarter or a half year.

Raj, just one other thing that, you know, if from whatever behavior we have seen during this last few months where there were extremes, what kind of a discount in the last few months or last few quarters, do you think volumes start getting impacted if diesel discount to diesel falls too? Say, below 15%, do you think that that's when volume growth starts getting impacted, below 20%? What is the broad number and understanding that we have?

Vikas, see, if you see the volume gets impacted only...

Volume growth.

Volume growth may get impacted, volume as such may not get impacted, because you have a base on which you are operating. Okay, so you may see slowdown in the vehicle addition and volume growth. But considering this is a temporary situation, we don't see that, you know, it should remain forever and you will have a very long term. So our endeavor should be I maintain the stability of price and don't impact that, you know, people's psychology of adopting CNG vehicle. So we will pass through this phase. It's not very difficult. You have seen that in last during COVID, during Ukraine invasion and now during this. So I don't see a challenge as such. Maybe at least for a balanced size of MGL and a financial strength of MGL, we are very confident that this will sail through.

Sure. Thank you, sir.

Thank you. The next question is from the line of Indra Kumar Gupta from PL. Please go ahead.

Thank you for the opportunity, sir. I understand that you gave the guide, I mean, gave a directional input on the volume not being very challenging, volume not being challenging, and challenges lies in the gas sourcing, but last quarter, I think you indicated that, you know, the volume growth would be in double digits, and this year, we may exceed habitat per SEM of 8 rupees. So does that remain maintained or is there any change considering the Cuban performance or what is the overall change in this?

I think last quarter we said volume growth will be higher single digit, or it may cross double digit. If CNG volume picks up beyond 8-9%, and industrial commercial volume goes 12-14%, then it is possible to go beyond 10% also. But with the gas supply getting curtailed, and if I have to restrict my supplies to 80%, Though we may connect everybody, we will, you know, sign lower DCQ to start with so that customer is connected. But gas consumption can be always scaled up once the situation eases out and supplies are restored properly. So comparing for this quarter or, you know, even for next quarter, it's anybody's guess how things will move. But when I say eight, nine rupees EBITDA, it is over a longer period of time and most of these factors remaining. Under the normal circumstances. Today, probably, circumstances are such that nobody is able to predict what could be the spot and what could be the gas availability also. As I said, our business, our composition of gas sale is more or less, you know, alternate fuel linked as well as CNG and domestic. It is balancing out what we have seen in this quarter.

Sure, sir. Thank you. Thank you.

Thank you. The next question is in the line of Jayesh Shah, an individual investor. Please go ahead.

Hi. Am I audible? Yes, sir. Thanks, sir. Thanks for taking the question. I just had a couple of questions, you know, while some of the questions that I had have been answered, but let's assume that things normalize, hormone normalizes, you know, price broadly, crude versus natural gas, you know, the spring normalizes. What is the kind of volume growth? If you are looking at 28, what is the kind of volume growth that I can really look at on a sustainable basis? Maybe 28th and 29th. So that was question number one. Any range that you would hazard to guide us to? Range for growth? Range for volume growth.

It should be in the range of 8 to 9 percent.

8-9%, I mean, for what it is. Okay, that's correct. Right. And just a second question, you mentioned that there will be a capex which will be done this year, approximately. So, does that have any impact on the dividend payout? We have been broadly around 30 rupees per share has been paid out as dividend. And any, I mean, thought around the… Is it meeting that capex through internal controls and not tech? Or what's the management process on that?

Dividend outflows certainly will not have any impact. We have been always saying that we will maintain the dividend and gradually increase it. So, the current level of dividend will be maintained despite higher capex. Okay. And as I said, our balance is 10. Look at CGD as an industry. If I was to cover my potential in the geographical areas which I am working on, I would have spent, say, 1,000 crore every 3 to 5, well, every year up to 3, 4 years to tap that potential. What am I doing is I am only pre-polling that capex. So if I spend now a little more, maybe in the subsequent years I will spend less because I am trying to... C is the opportunity which is today available due to the pressure on LPG and the very good opportunity which has come to the CGT industry. It is not that overall capex for the project to tap the potential in the geography is going up. In fact, it has reduced because my RI judges have come down, my speed of executing project becomes faster. It saves a lot of overheads. So it is only pre-pawning the capex. We are never saying that, you know... Whatever number of, you know, stations, kilometers of pipeline required to tap the potential, I will be doing a little earlier. That's all. So, if intermittently, if I have to borrow, TV can always borrow.

So, no, absolutely. I mean, you know, given the balance sheet strength and almost a debt-free kind of a, you know, balance sheet, borrowing is never going to be a challenge for the company. It's just that, As you rightly put it, we are preponing GAPEX and maybe, you know, there can be cash flow issues, which will be met. Cash flow towards GAPEX, which will be met by foreign. We don't see any cash flow issues.

Cash flow will be managed.

Nothing to worry about cash flow. Okay. Thanks.

Thanks so much, sir.

The last question is from the line of Arian from Equitas Investments. Please go ahead.

Thank you for taking the question. I just wanted to understand, you know, you explained to me about the non-CGD initiatives, but I just wanted to add, what is the management focus on this? So, are we focusing, are we putting heavy focus on the PV initiatives that we have? Or are we just saying that, you know, this is not our main domain expertise, so we will invest more of our time and resources in the CGD business? So, what is the management philosophy, then?

So, you know, it's a smaller investment considering the size of MGM, and our objective was to mainly understand the segment. Okay. Now, and as you are aware, any new initiative and startups will have this kind of a performance in the initial year. So, even if we, you know, so it's going to help us in understanding. For a long term, what all things can be, you know, put in our fold, considering if, you know, 12, 15 years down the line, really, you know, EV vehicle picks up. At least, you know, we understand the market very well. So, you may not see very sizable amount of management time and money being put in this segment for at least next three to five years, unless we have confidence and we know now this is the time when it will start running. We will definitely scale up at that time.

Understood, sir. And just the last question. So, you did say that you expect volume coming from the new GA, but are we planning to bid for any new GA when the tenders do come out, or is our philosophy claim that we will continue to focus on the existing GA that we have?

See, our existing GA, GA1, GA2, GA3 also has a lot of potential yet, and things are, you know, infrastructure is developing, there is a good amount of growth available in GA2 as well as GA3, and the UVPL SBUs, we have been saying that, you know, it has a potential of almost 1.2 MMS CMD, we are currently serving little more than 0.3, so it can still go fourfold, we are increasing there more than 30%, okay. And if required, we are open and we may look for any opportunity of acquisition as well. Because when the time is coming where APM is substantially coming down, so there are new entrants who may have... Managing issues. There are new non-gas operators that have also entered. So, you know, if we are able to use our ability of managing gas and acquire any companies, we are open to that as well. So, growth can come from inorganic mode also. And bidding is actually not open because most of the geographies are already bidded out by PNGRV.

I understand, sir. Thank you very much. All the best.

Thank you. Thank you. Thank you.

Thank you, ladies and gentlemen. We take that as the last question of the day. I would now like to hand the conference over to the management for the closing comments.

Thank you so much, everybody, for connecting on the call today. I'm happy to address any questions if you have offline. Thank you so much.

Thank you. Thank you so much.

On behalf of Prabhupada Ladha India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect yourself.