GAIL (India) Limited (GAIL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Gale India Limited Q1 FY27 Earnings Conference Call, hosted by Ambit Capital Private Limited. As a reminder, all participant lines will be in the listen only more, 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivekanand S. from Ambit Capital Private Limited. Thank you and over to you, sir.

Thank you, Palak. Good day, ladies and gentlemen. On behalf of Ambit Capital Private Limited, I welcome everyone to Gale India Limited's first quarter fiscal 27 earnings call. Today, we have the pleasure of having with us the senior management of Gale, led by its director of finance, Sri S.K. Sainhaji. I will now hand over the call to the management. For their opening remarks, which will be followed by Q&A session. Over to you, Sinajee.

Okay. Thank you, Vivekanand. I extend a warm welcome to all of you, and thank you for joining us today. I also take this opportunity to thank our investors and analysts for their continued trust and engagement with the company. For the financial year 26-27 began amid stark volatility triggered by the West Asia crisis, which impacted certain gale volumes. The company managed the disruption through a combination of portfolio flexibility and export sourcing, while continuing to support customer requirements and India's energy security. Gale's diversified portfolio proved to be a key strength in navigating the quarter effectively. During the quarter, the energy sector faced significant challenges arising from the geopolitical developments and supply disruptors. Before I move on to the operational and financial highlights, I would like to place or record my sincere appreciation for the entire Gale team. Our teams worked relentlessly to ensure continuity of the gas supplies and meet customer requirements. Their dedication, resilience, and customer-centric approach enable Gale to navigate the... Disruptions effectively while supporting India's energy security, which is reflected in the quarter's strong performance. In summary, Q1F by 27 demonstrated the resilience of the Gale's integrated business model

with strong financial performance supported by

portfolio diversification, discipline supply, management, and continued investors' strategic growth. During the key business highlights for the quarter, during the quarter, the entire 1,707-kilometer Mumbai-Nathpoo-Jasugawa pipeline become operational on 31 May 26, making a significant milestone in strengthening gale gas transmission infrastructure. Thank you. of Gale India Limited with effect from 6 July 26. was received on 14th July 26th. We discussed about the standalone profitability. Gross turnover for the quarter F by 27 stood at 38,912 crores at Jangeh's 34,591 crores in Q4 F by 26, reflecting growth of around 12%. Supported by elevated crude and LPG prices and bill diversified portfolio, the company delivered a robust During the quarter, PBT stood at the 5,773 crores, as engaged 1,577 crores in Q4 FY26. Pat stood at Rs. 4,292 crores, as engaged 1,262 crores in Q4 FY26. Moving to the consolidated financial. On consolidated basis, for Q1 FY27, turnover has stood at 41,277 crores compared to the 35,499 crores in Q4 FY26. Vista was 7,573 crores versus 2,703 crores in the previous quarter. PVTS stood at 6,268 crores as compared to 1,966 crores in Q4AY26. FAT, excluding minority interest, stood at 4,665 crores, and engaged 1,485 crores in Q4, FY26. Moving to the segmentized performance and outlooks. First, we discussed about the gas marketing. Due to the force measure declared by PLL, volumes from Qatar were impacted. Additionally, From 7 cargo, additionally 7 cargo from other contracts were also affected during the quarter. To meet the demand gap, Gale sourced 8s power cargo during Q1 FY27. Our gas marketing volume stood at 93.82 mmCMD, comprising 8.76 mmCMD in the international market. Favourable movement in price indexes supported the elevated marketing market spread during the quarter. Higher returns were generated from the Henry Hub link and JCC 9-month link sourcing, where the corresponding sales were not indexed on the same basis. F by 27 at around 4500 crores PVT. of the results for the subsequent quarter. Moving to the natural gas transmission. Natural gas transmission volume for the quarter F by 27 stood at 122.36 mm STMD and against 118.99 mm STMD in the previous quarter. The Q1 F by 27 transmission volume is broadly in line with the F by 26, 25, 26. The increase primarily on account of sleeper volume, which rose by around 4 mm C&P during the quarter. Based on the current operating trend and the Q1 F by 27, volume Of 122.36 MMS GMD, we now expect natural gas transmission volume for F by 27 to be around 123 MMS GMD, with the assumptions that the geopolitical situation continue. We will continue to monitor the evolving geopolitical situation and domestic demand, and we'll update the guidance if material changes work. The segment Incurred a loss of Rs.130 crores for the quarter. At present, the plant is running at 100% capacity and we expect it is to be at the break-even level during F by 27. We are actively pursuing the shift of Pata petrochemical complex from natural gas to ethane as a feeder stock to ensure long-term sustainable margins. Moving to the LSC and LPG transmission, in the LPG transmission segment, volume stood at 1077 TMT as against 1114 TMT in Q4 FY26, down by around 3% primarily due to disruption in the LPG import on account of the base history crisis. In the LSE segment, the company increased production by around 20% during the quarter, from 194 TMT to 232 TMT, supported by additional allocation of domestic new bale gas of approximately 0.597 MMS TMD. Production is likely to remain in the range of throughput during the last year. The LSD segment reported PBT of Rs.772 crores during the Q1F by 27, adds against Rs.144 crores in the previous quarter and Rs.489 crores in the previous financial year, added by higher FPG prices due to the best SDR disturbance. Moving to the CGD and Gale Gas Performance. CGD network across 6 GAs comprises 217 CNG stations and 2.63 lakhs DPNG connections. During Q1FY27, Gale's CGD business added about 20,069 DPNG connections and 3 CNG stations. Gale Gas Limited, which is only one subsidiary of Gale, currently operates 16 GAs directly and 9 GAs through its JV. During Q1 FY27, Gale Gas added about 16,610 DPNG connections. As on 28th June 26, Gale Gas held a network of 592 CNG stations and 7,93,684 DPNG connections. Over the next two years, gale gas target to add around 275 new CNG concentrations. 3.7 lakh new deepening connections. During the current financial year, current quarter, FY27, turnover of gale gas stood at 3,326 crores as against 3,227 crores in Q4 FY26. PVT increased by 3% and stood at 162 crores as against 158 crores in Q4 FY26. was up by 3% and stood at 120 crores as against 117 crores in Q4A by 26. Moving to the ongoing projects and topics, pipeline projects, JHBDPL remaining sections, KKMVPL phase 2, Gurdaspur-Jammu pipeline and C2-C3 pipeline are scheduled for completion in the current financial year. Good morning, everyone. Pipeline, DUP, DUP, PL capacity augmentation are scheduled for completion in FY27-28. JL, PL capacity augmentation is scheduled to be completed in July 28. Petrochemical projects, the 1250 KTA, PTA plant at GMPL is in advance stage of commissioning and should start. Production shortly. The 500 KTA PDXQ plant is scheduled to be commissioned in the next financial year. And moving the other CAPEX plant during the Q1 FY27, Gale incurred a capital outlay of 6,176 cores, demonstrating a strong progress across a strategic growth initiative. This sustained investments. Our commitment to strengthen gas infrastructure, enhancing downstream capabilities, advancing clean energy projects, and Energy transition and energy security objectives. We remain on track to achieve our F by 27 capacity. 5,500 crores. This concludes my overview of the quarter's performance, segment-wise outlook.

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

Hi, Mr. Sinha. Thanks for updating your guidance on transmission as well as marketing and PetCam. Just drilling deeper into the drivers of the transmission volume growth, if you can help us understand, you had a volume of 127mm SCMD in FY25. Now, clearly, FY26, FY27 were down years, very specific reasons, but how to think about the demand outlook beyond FY27, considering that the government is taking multiple steps to de-risk the country from the overexposure to LPG in certain sectors? Is there any change in demand outlook that you have experienced? As far as the government's push is concerned, that is my first question. The second one is on the gas sourcing side. So, some of your new contracts, particularly VTOL and ad hoc volumes, they will kick in now, right, this year. So, just trying to understand in terms of your long-term portfolio, what are the incremental deals that you are planning to sign? What would be the duration, benchmarks? If you could talk about that, it will be great. Thank you.

Okay. Thank you, Mr. Vivekanand. Coming to the first question for the demand, as you know, PNJRB has come up with a document, a paper, where it has mentioned that by 2030, the total demand will be 297 MMS CMD, as I guess currently 200 MMS CMD. So, there will be increase of about 100 mm ACMD, and 100 mm ACMD will come from first. From the CGD sector, second from the fertilizer sector, third one was the power sector, fourth one the industry, which includes steel, aluminum, etc. And last one is the LNG, long haul LNG truck. So these are the areas where demand will come in the future. And moving to the second question regarding the sourcing. So right now we have 16.5 mm TPA in our portfolio. And earlier our chairman has already told that we will source around 7 to 8 mm TPA by 2030, out of which we have sourced around 2.5. So rest we are on working on it.

Thanks for the color. Just to help us understand the, let's say, the roadmap, because the 2030 outlook, now we are not very far off. I mean, less than three and a half years. So, to understand how much of the 100 mm SCMD incremental demand will come from the various sectors, do you have any more working that you have done? Because I understand that the PNCRB had done this at a time when the market was very normal, there was an LNG glut expected globally, but the devastation war is likely to have changed many things here. So, in your view, what do you think is now perhaps updated? Demand projection that you are working with and you believe is plausible in, let's say, FI28 and FI29.

Basically, based on the current situation, we have not revised our volume, so we are totally relying on PNGR. So, certainly, there will increase. I have already told about the CGG sectors where the growth is around 10 to 12%. So, currently, it is around 45-46 mml CMD. And by 2030, as per the PNJRB, it will increase to 80-85 mml CMD. And second one in the fertilizer sectors, there will be around 10 to 12 mml CMD growth will come by 2030. Third one is the power sector. Currently, we are consuming in the power sector around 25-26 mmCMD. It will increase to 35 mmCMD. And in the other segments, I have already told you the long-term haul, truck haul, steel and cement. The growth will be happening in these sectors.

Right. Thank you very much, sir. Pallat, you may open the Q&A queue now. Thank you.

Yeah. Thank you, sir. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference call, please limit your question to two per participant. For follow-up, please rejoin the queue. The next question is from the line of Probol Sane from ICICI Securities Limited. Please proceed.

Thank you, sir, and congratulations on a strong set of numbers in a challenging environment. Just had a couple of questions. Number one, obviously, trading has surprised positively in terms of the margin performance. And yet, if we look at the guidance of 4,500 crore, what we are implying therefore is that there is a very steep decline in terms of the quarterly run date. If we look at what we have already achieved in Q1. So, how should we look at it, sir? Is this just excessive prudence at this point of time? And there's almost a decent probability of further upward guidance? Or, you know, is there a huge normalization that can happen when the, you know, JCC three-month linkage actually kicks in and converges to the 9-1 number? Just if we can understand it a bit more.

See, Prabhul, I think you have rightly pointed out this, we have been telling this in earlier, what Sterly calls also, that JCC index contract, which is for 2.8 mm TPA, 2.4 mm TPA, it is on 9 month rent, it is on Japanese food cocktail, but roughly it is same as registered rent, but it is covering 9 month average and that too with a lag of 2 months. And whereas all the downstream sales are on three months later, so there has been in earlier years also cash flow differences have been there, which are getting normalized over a longer period of time. So what we believe that this time in this quarter, there was abnormal jump in the Brent index numbers, which contributed to very high realization in terms of sales, and that has contributed significantly. But this is one of definitely, much of it will get cured within the year, that's what we understand. However, it depends on the level of date advent in the coming months, which is depending on so many international factors.

Got it, sir. Sorry to harp on this again, but another significant part of our trading portfolio is the 21 MMS India or 5.8 million ton of India. Yes, sir, it's very clear that NDIS prices are continuing to be at a discount to Asian energy prices. So, that advantage will still sustain. There is nothing specifically one-off about that phenomenon. I mean, obviously, the differential may narrow a bit, but is it fair to assume that that advantage will continue to sustain for us for even the rest of the year?

No, that, again, that depends on the levels of rent index and the energy of index in the remaining months. Of course, we are continuously striving to hedge certain volumes of the exposure which we are having on the first index. As far as Henry is concerned, roughly half or slightly less than half goes on back-to-back index and another maybe 20% goes for our own consumption in pasta. So the cross index, whatever is available, is not a very high number. Yes, definitely that is in a sweet spot right now. So that contributes positively to our top line and bottom line.

Got it, sir. The second question was about the LPG business, where you mentioned the additional allocation of 0.6 LMS CLD. So, in terms of production run rate, should we assume that the production run rate that we have achieved in this quarter, that will safely be maintained for the rest of the year? And what was the average pricing that we saw for our realizations in this quarter?

Basically, during the last... During the average price, during the last quarter, it was around 90,796. And moving to the production side, basically, we have allocated additional 0.597 MMSTMDs. So, earlier... Earlier, we had allocation of about 1.32. So, total, our allocation is around 1.9. So, based on the 1.9, we will be able to produce what we produced in the last quarter.

Understood, sir. I will come back for more questions. Thank you so much and all the rest.

Thank you, sir. The next question is from the line of Yogesh Patil from Dalat Capital. Please proceed with your question.

Thanks for an opportunity and congratulations for the great set of numbers, sir. A few questions from the petrochemical Pata facility. What was our average gas cost for the petrochemical during the quarter? And what gas price do we expect? Petrochemical operating profit will come into the positive side.

During the last quarter, the average price of petrochemicals landed price was $10.54 per mmbdu.

And, sir, any guidance that at what price we will be profitable on the petrochemical side? At what gas cost?

If around $13-14 landed price and selling price is around $130,000, there will be no profit and loss.

Oh, sir, next, related to USAR and the GMPL again. As you mentioned, the USAR is going to start the next year and GMPL very soon. But could you approximate timelines when these projects will be a fully commissioned? That's one. And secondly, when it starts contributing to the EBITDA, on a separate side, will it be a second half of FY28? Will you give us a guidance on the FR29 side of full profitability will reflect in FR29?

Basically, we have not buffed out profit for the F by 2728 for the GMPL and 3D HPV, but certainly our GMPL plant is under commissioning and production will start very soon. And regarding the previous plant, this plant, as per the timeline, it should be commissioned by June 27th, but it will take another 6 to 7 months, and it may be completed by December 27th.

So, last question on the PNGRB Action Plan 2027. So, sir, they have mentioned promotion of transfer and the competition in the gas infrastructure. Under this paragraph, PNGRB has mentioned that unbundling functions and creation of an independent transport system operator. What we understand, recently the gas distribution has cancelled the unbundling of the gale transmission in the trading segment. Can you just give us a little bit clarity on this topic?

Basically, in the year 2014, PNJRB came up with the... Clause 5A for the Unmolding of Gail. Unmolding means any entity which are in the transmission and marketing business has to be separated with effect from 1st April 27th. So for this, we were bent in the court, and the case is still pending, and recently PNJRB has withdraw the Clause 5A. from their regulation. So, right now, there is no obligation for the entities, which they engage in the gas consumption and gas marketing.

Okay, so then what will be the role of TSO, system operator, independent TSO?

The TSO will examine the third party. Basically, in any pipeline, we have 25% for the third parties, so open access. So, they will monitor the open access quantity.

Thanks a lot, sir, and all the best. Thank you.

Thank you, sir. The next question is from the line of Siddharth Chauhan from 361 Capital. Please proceed.

Hi, thank you for the opportunity. I have two questions. Firstly, in the gas transmission business, For system use gas, do we get HPHT gas, or do you have to rely on spot LNG? That's my first question.

Yeah, basically we are using HPHT gas. So, we had already purchased HPHT gas in the past, so we are using the same gas.

We are using HPHT that was earlier awarded to bidding, so it is available. Going forward, the PNGRB has come out with a regulation where Three-year long-term surveying, at least three years or more has to be done for securing the gas for the HVG purpose.

Understood. And any thoughts on that? Have we planned our sourcing for the next three years?

We are examining that and definitely HVG is a must for operating the pipeline, so we'll be planning that.

Understood. And lastly, on Dhabol LNG plant, when will the heating system be installed? And secondly, will it be fair to assume that all the incremental deals on sourcing side will be brought to Dhabol LNG for regasification?

The ambient heating system will be completed by next year by June 27.

Okay, and the next question was that will it be fair to assume that the incremental deals on the sourcing side, all the volumes will be brought to Dhabol LNG for recasification. So as you mentioned 7 to 8 mm TPA you are targeting by 2030 and you have already sourced 2.5.

So, generally, all the deals are having West India optionality available with Gale, where we can change the port or deflute the port. So, definitely, we will end aware once the terminal is fully ready to use as much as available slots as possible.

Thank you, sir, and all the best for the future.

Thank you, sir. The next question is from the line of Amit Murarka from Axis Capital. Please proceed.

Yeah, yeah. Good evening and sort of opportunity. So on the NG Hub, the NG, I believe a lot of it is back-to-back contracted. So just wanted to understand like what percentage of it is still open and how much is in the contract terms now.

So, I think, I think this has been answered a few minutes back in another question, but as I said, we had a portfolio, we have a roughly portfolio of 21 mm STMD on NREA, and out of which around half or slightly less than half is contracted back to back, another 20% goes for our own internal consumption in petrochemical complex,

remaining maybe...

25 to 30% is available for sale in rent contracts. So that is available on cross-index and we are time to time hedging and locking the margins for this cross-index basis.

So, and given the high differential right now between the two, between Henry Huffer linked and Brent linked, so is it fair to say that at least in second quarter or the near term, the margins that we capture from this open-ended volumes will still be quite high then?

Amit, our Pata plant was partly operational during quarter one. It started in the mid of May. So now it was operating on 50% load. Now Pata is fully operational on 100% load. So the volume which is designated for Pata will be consumed in Pata. So we will have less arbitrage available to play with HH.

Got it. But still, like, given that PetChem prices are also very high, so in that case, then the same margin will now get captured in PetChem to that extent.

Yeah, but we cannot be so sure of PetChem prices. It will anyway be determined by the market forces.

And price has already softened if you compare with the previous quarter.

Okay, sure. Okay, got it. That's it for me. Thank you.

Thank you, sir. The next question is from the line of Sumit Rora from Smart Sun Capital. Please proceed. Mr. Sumit, your line has been unmuted. Please proceed with your question.

Yeah, thank you so much. Yeah, hi, sir. Thanks a lot for the call. And many congratulations on a great result. Now, sir, I just wanted to get your sense on this gas marketing. You said that, you know, 4,500 crore is basically what you're targeting on a PBT level for the whole year. And you've done about 3,600 crore in the first quarter. Now, I also understood you said that this is linked to Brent, the dated Brent. Now, assuming, sir, you know, Brent is averaging around, say, $90 or between $80 and $90 even in the second half, I mean, the second quarter. How do you basically think this gas marketing number should look? You know, because that's a very big moving part in the result, right? Because if you see on a total PBT of 6,500, that is 3,600. So if you can help understand on that, then, you know, they'll get a better sense on numbers on gas marketing. And so secondly, also on the LPG, you know, you've reported 772 crore versus 205 crore. Now that is also quite a high number. So do you also see this 700 crore plus number sustaining for the balance of the other quarter, sir?

Moving to the second question, regarding LPG, the price of LPG during the last quarter, it was around $97.96, and price has already shortened during the current quarter. So certainly there will be decrease in the LPG probability. And regarding input side, so we are using some portion of the FEM gas, the price is around $7, and we are using some new well-filled gas. The gas price is around $12 to $13. So, based on the deep situation, whatever we earn profit during the last quarter, certainly this popularity will decrease during the current quarter. And regarding the gas marketing popularity, we reported around 3,353 crores at PVT level. So, we have already explained earlier that our total guidance during the current year, it is around 4,500 crores. So, if any change will happen in the coming days, so we will come up with a revised guidance.

Thank you so much for that. But, you know, just one thing. So, this 4,500 crore has been a number, you know, which is long spoken up since the last 2-3 years. So, do you think that it's more or less going to remain around here or at some point, you know, you're going to see a very sharp acceleration in those numbers?

The situation is very volatile, keep moving. It's changing every day. So the result... Extraordinary result that we got in quarter one is due to JCC and JCC nine months and three months arbitrage that we got. And over long run, these averages are going to converge. So second quarter, the JCC nine months average, it will reflect the current brand prices to some extent. So the margins are going to shrink as we go forward. So, the same kind of margins that we earned in quarter one may not be available in quarter two, and if Brent goes down significantly, we may lose on that number, because Brent's three months will start reflecting a lower number than our sourcing.

Okay, sure. Thank you, Madam. That's helpful. Thank you.

Thank you, sir. The next question is on the line of Sabri H. from MKGlobal. Please proceed with your question.

Yeah, good afternoon, sir, and a conversation from Stellar, Kofof, London. So, two questions. First is on the transmission side. I think the expenditure on the transmission side is quite low. If we adjust for the one which was done in Q4. So, was there like anything specific during Q1?

In the last quarter, there were provisions of 111 crores. Basically, provision has reduced from 111 crores to 11 crores. So, the total cost has decreased mainly due to the provision.

Okay, but, but there was nothing like, no change in gas, soaping, mixed water transmission? No, no, no, no. No one works, right?

Okay, okay, fair enough.

And second question is on your fertilizer plant, so. So these are all assured projects, right, in terms of 12% to 16% IRR, which I think the government has also stated. So they will always be like profitable or is there some risk of like cost overshooting and you are not able to make that much money? Is there any risk or it's a fixed return business, the fertilizer capex?

Basically, yesterday, the Ministry of Fertilizer has published the new urea policy for the investment. So, we are going for the two fertilizer plants. One is the Maharashtra and the other one is the Chaskisgarh. And all the plants are under active evaluation. So, whenever we, so, So, whenever we finalize our DFR and recent decisions will come in for you in subsequent.

Got it, sir. Thank you so much and all the best.

Thank you, sir. The next question is on the line of Mayank Maheshwari from Morgan Stanley. Please proceed with your question.

Sir, I had a question around how you have boosted the energy shock over the last quarter to improve your market share in marketing specifically. Is there something that you can tell us about? Because as you said, this is in a work time and your portfolio around mass sourcing has been helpful. Is there a way you can quantify in terms of long-term market share that you will be able to gain because of this energy shock?

Mayang, can you repeat your questions? Basically, we are not hearing.

Mayang sir, can you please use your handsets?

Can you hear me now? Yeah, yeah.

Okay.

Yeah. So, I was basically asking you, in terms of your long-term market share on marketing, on natural gas, how have you used the last quarter of shop, considering you had a good portfolio of sourcing, to increase your market share on more medium-term? Are you able to get more longer-term customers because of the shop and your ability to kind of supply the gas during these times?

Mayanka, this Middle East war, though it has given lot of lessons for the country, but definitely one lesson has come out very startlingly, that our dependence, the country's dependence on LPG is very much loaded on the Middle Eastern countries, whereas natural gas portfolio for the country is much more diversified. So, for the energy security of the country, it is very important, and even in the longer run, this message will continue that LPG has to be replaced in a very, very projectized manner with natural gas, whether it is for cooking, whether it is for industrial segments, and whatever segment. So, yes, that has given a big boost, and the government, the Ministry of Petroleum is also pushing very hard for more and more PNG connections for the homes, and even in the industrial... Customers, whether they are in the ambit of CEDs or large industrial customers, otherwise on natural gas pipelines, which used to earlier use LPG, they are all now coming up for tying up natural gas for their energy requirements. It is a big boost for the natural gas in the longer term.

As Dave specifically said, in terms of because you have been losing market share on marketing thread versus your transmission volumes, if you look at the gap has been widening over years, is that app that you can close over the next few years because of this or no?

Definitely, it will help improve, and one of the reasons for that, whatever factor you are saying, is the growth in the CGD sector. There are many of the CGDs, sometimes they are sourcing on their own, but as far as the pipeline transmission network, it is, Gale being one of the biggest pipeline transmission network owners, transmission volumes will continue to benefit.

From the volume growth in TV, we can understand that there has been substantial growth in industrial and commercial connections because those INC customers, they are avoiding LPG now, so they are taking new connections. So in coming quarter, we'll see that growth coming up.

And I think this is the last question on Jasur Gora pipeline. How much volumes do you think you can be going to this pipeline over the next couple of weeks and an impact on tariff overall, if at all any?

Currently, it is around 0.5 MMS GMD, and this will increase further, especially we are discussing in the Jasur Gora side. So there are a lot of industry in the Jasu Gora, so certainly they will consume gas in the coming days.

See, one or two years is a very small period, so many CGBs are there, they will gradually ramp up, but the most important thing is our two fertilizer plants, which we are working on, if they are approved, then they may take another 3-4 years, that will be a big boost on the volumes on the pipeline.

Thank you.

Thank you, sir. The next question is from the line of Beneath Banka from Nomura. Please proceed with your question.

Hi, sir. Thanks for the opportunity. I have a couple of questions. Firstly, on the gas trading side, was there any one-off? Like in the last quarter, there was a provision of 6.7 billion odd, and I think you told that this could be reversed in the coming quarter. So, was it reversed in this quarter?

No, this has not been reversed in the current quarter.

Yeah, I understood that. And secondly, on the LPG LHC business, I understand the volume currently, the domestic gas volume that you're getting around 1.9 MMCMD. So can you give a breakup of how much of it is APM price, how much is fuel gas price?

1.12 is the APM gas, and this is the new well-filled gas.

Oh, okay, sir. And so, Henry, you have gas that you're sourcing from the U.S., you said around 20% goes to Petchem plant. And if the same gas is sold on brand-linked pricing to some other customer, the margin will be much higher. So let's try to understand, are you better off to probably use this gas to be sold to some other customer rather than using it as a pet-can-free stock?

Basically, we are in the petrochemicals since 1999, so we have a market, we have a customer, so we have to produce, we have to run our petrochemical plants. At the certain levels. So, we have the Henry Hub gas around 21mm CMD, and our ED marketing has already clarified in detail. So, how much we are selling on the back-to-back basis, how much we are selling on cross-index, and how much we are consuming in our internal intelligence.

Okay, so one last question on LPG realization. So, usually when I compare this realization with Saudi contact price, it is largely in line, but this quarter there was a large divergence. Is it because of there is much higher spot premium over Saudi contact price because of whatever is happening in the Middle East, and also due to additional higher logistic costs, or anything else we should explain this price difference?

Basically, in the last quarter, the average crude price was around $96-$97. So, based on these crude prices, the price of the LPG has increased. And price is being fixed based on the Saudi Aramco indexes.

Okay, sir. Thank you.

Thank you, sir. The next question is on the line of Somer from Advance Park. Please go ahead.

Mr. Sommel, please proceed with your question.

As the line for the current participant is not active, we will proceed with the next question. The next question is from the line of Nitin Tiwari from Phillip Capital. Please proceed with your question.

Hi, sir. Good evening, and congratulations on very strong set of numbers. Thanks for the opportunity. A couple of questions from my side. So we have a number of projects which are commissioning over this year and next year as well. So how do we look at depreciation and interest? I mean, if you can give us some guidance on the run rate for depreciation interest going forward on either annual or quarterly basis.

Basically, in the previous quarter, we have already reviewed our life of the pipelines and the petrochemicals, so based on the current type of 40 years and 35 years of all the petrochemicals, the depreciation will be around 3200, 3300 cores in the coming year.

Okay, even after the commissioning of new pipelines, I mean, that is the broad. That, right, sir. And also, I mean, we have petrochemical project commissioning as well in next year.

Yeah, GMPL will be commissioned very soon, and PDSTP plant will be commissioned in the next year.

Right, sir. So, I mean, if we include all of that, then how would this 3,200 klo number move? Any sense on that?

Basically, the depreciation rate for the year. Petrochemicals, it is around 4%. So, you can calculate total PGSP cost around 11,256 crores. So, around 440 crores. Additional impact will be 312 crores for PGSP plants.

312 crores, sir. Got it.

And on the interest rate, The total finance cost for the current quarter was around 310 crores. You can calculate for the yearly basis, it will be around 1,200, 1,300 cores.

Yeah, I was saying that currently you would be capitalizing the interest on the debt on the plant, right? So that will get expensed later when the plant is commissioned. So how would the interest on it look?

Basically, total plant cost around 11,000 crores and based on the 60-40 something, total loan of the PDSV will be around 6,000 crores. So, 6,000 into 7, 440 crores. The total amount will increase by around 440 crores on early basis.

440 crores. Got it, sir. Yeah. And second question was on marketing margins. So, you did explain the gap between a nine-month and three-month JCT contracts, which led to the widening of margins. But you would have so thought of sport cargos in this quarter as well to make up for lost cargos from Qatar, right? So, how was the marketing margin on those cargos, if you can give us some sense, either in percentage of the price terms or in dollar per MMBT?

See, during these war times, we have been managing time to manage the volumes to our customers also, so we have purchased a lot of spot cargoes during the formal period, which are those at market price. So, ultimately, we have used a mix of both strategies to keep the customers... Supplied and also trying to protect the margins. One more factor which was playing out in this water was, though the prices were high, the power factor, the peak in power, especially during the summer months and during the evening hours, that consumption was substantial. And sometimes the summers are mild, but this year the monsoon has been deficient, so... Sir, even though the spot prices were high, the power plants did consume lots of spot gas.

Sir, so would it be fair to assume that, like, you know, you were able to make reasonable margins on the spot cargos as well?

Yeah, that's right.

Yeah. And last question, sir, I mean, just a clarificatory one. So, GCC sourcing is nine months with a two-month lag. I mean, how is the supply contract? Does it also have a lag or how does it work? I mean, suppose if a consumer is buying in August, so what is the three-month rent that we'll have to look at, understanding the price that will be…

It's just three preceding months, sir, whereas the… Putsing side is nine months with a lag of two months.

Got it, sir. Thank you so much, sir. That answers all my questions. I'll get back in the kitchen, sir.

Thank you, sir. The next question is on the line of Rikas Jain from CLSA. Please proceed with your question. Mr. Vikas, your line has been unmuted. Please proceed with your question.

Hi, sir. Thanks for taking my questions. Firstly, on gas transmission, because of the thing that you just mentioned of power having sudden demand during the seasonal demand jump that power saw, Is it fair to assume that current gas transmission volumes will obviously be not that high that we saw in the last quarter, and it's come off?

So, I have already told you that during the current year, you can assume around 123 mml CMD.

Yeah, I understand that, Sanazam, but does that include some kind of normalization due to, you know, that the hormone supply, et cetera, gets normalized, or, and, you know, that demand might also be very price-sensitive part. So as, like, if there is a sudden spike or collapse in LNG price, all of that can be more sensitive, right? So that's what I wanted to understand, that as supply, you know, as that... Summer season-related supply is gone. Has that led to some kind of a cool-off in demand?

Basically, in the summer season, particularly in the month of August and September, power sector consumed gas. And similarly, in the month of December-January, power sector consumed gas. So, based on all the factors, we have calculated the total figure of around 123 MMSEMD.

Okay. Okay, and would this figure change materially if, say, there is a, for some reason, maybe due to European feeling of, you know, LNG, if there is a spike by, say, a significant spike by $3-$4, would that demand figure change materially, or do you think that this is not that price-sensitive?

If, change it. I've been materially in the coming years, certainly we will come and inform you in the subsequent quarter. So right now, we don't foresee for any material change. So based on the current situation and we expect in the coming situation. So based on the total, the gas transmission volume will be around 123 MMCMG.

And just one more thing. Basically, LPG gas trading, you've just explained that obviously there'll be a period of catch-up because a lot of gains have been booked due to the benefits of the lag in this particular quarter. Similarly, for Petchem and LPG production, can I argue that, like you said, that because prices have cooled off from those very high levels? Profitability in second quarter, in the current quarter, would not be as good as the profitability in the first quarter. Is that a fair way of looking at things?

Basically, during the last quarter, the price of petrochemicals was around one last, just hold on, one last, one last 46,000 per metric ton, as compared to the 98. The main reason for increase in the profitability of the LSC, mainly the price increase in the price. Plus production, we have increased by 20%.

But since those prices are now have cooled off, so profitability for both of these segments will also be, you know, not that high, will get impacted in the coming quarter. So profitability of gas trading as well as Petchem as well as LPG production will all three of them will see some kind of a decline from where things are in the first quarter. Yeah, that's all my questions. Thank you so much.

Thank you, sir. The next question is from the line of Vivekanan S. from Ambit Capital. Please proceed with your question.

Sure. Thanks for the follow-up opportunity. So, my question is a bit broader on how the government is thinking about the policy framework post this crisis. So, before the crisis, the government was promoting the sector a lot and also coming up with frameworks that could make it very easy for you to execute projects. Now we see that there is an increased push towards DPNG as a segment. Are there any other major changes that you see? From the government side, that make you believe that the PNGRB vision 2030 of gas consumption increasing to close to 300 mm SCMD could become a reality? Are there any policy actions which perhaps we would have missed, which are happening behind the scenes that are likely to be a tailwind for the sector?

See, the government is also pushing on gas storage as a strategic energy security measure. Of course, it may not, it is being thought very seriously, but it may not give the impact so fast. But definitely, the intent is very much there and seriousness is there. And also then, coal gasification projects are being promoted by the government. There are policies which are... So, all these are the measures which the government is taking for increasing gas usage. And then, of course, compressed biogas was always on the front radar of the government, and probably some even better schemes are likely to come in near future, but we have to wait for the schemes to get published.

Sure. Okay. Just as a follow-up, is the government pushing you to take up more long-term gas sourcing or say look at alternate feedstock like ethane and also perhaps explore sourcing more from the U.S. because India has a trade negotiation with the U.S. where the government has committed to buying a significant amount of energy from the U.S. in the years to come?

So, as Gael, we are always on the lookout for sourcing from all parts of the world, and wherever we get a better deal, we will go by it, and as already told by Dr. Panis earlier, we had a sourcing roadmap for up to 2030, up to 2030, up to 2030, of which two and a half we have already done. We will continue to scout all the indices and all the geographies.

Sure. Thank you very much for your time, and now I would hand the conference back to you for closing comments. Sinajee, if you would like to say something in closing, that would be great.

Thank you. Thank you, Vivekanand. I have tried to get all your questions, and if any questions, please inform to our IR sales. So, Anjana, ma'am, you're looking after IR activity. So, please email to Anjana. Thank you. Thank you so much.

Thank you, sir. On behalf of Ambit Capital Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your line. Thank you.