Ladies and gentlemen, good day and welcome to GAIL (India) Limited Q3 and FY 2025 Earnings Conference Call, hosted by Elara Securities India Pvt Ltd. 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 the 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. Gagan Dixit from Elara Securities. Thank you, and over to you, sir.
Yes, thank you. A warm welcome to everyone to discuss GAIL (India) Limited Q3 FY 2025 result. It is our pleasure to be able to bring to you the management of GAIL (India) Limited, led by R.K. Jain, who is the Director (Finance) and other senior executives of the company. So, with these words, I would now hand over the conference to the GAIL (India) Limited management. Over to you, sir.
Yeah, thank you, Gagan. My dear friends from investors and analyst community, a very good afternoon to all of you. To this earnings call for results of Q3 financial year 2025. At the outset, I thank you all for attending the earnings call and would briefly touch upon the major headlines. I feel proud to share that GAIL has registered highest ever quarterly and nine-month PBT and PAT. In comparison to the corresponding period of nine months, PBT and PAT registered a stellar growth of 39%, stood at INR 12,123 crore and 9,263 crore respectively. This is on account of robust physical performance by almost all major segments and exceptional income of $285 million, which amounts to INR 2,440 crore as compared to the similar period last year.
I feel happy to inform our investors that the company has declared an interim dividend at the rate of 65% of face value of shares for the financial year 2024-2025, that is INR 6.5 per share. On a standalone basis, GAIL has registered gross turnover of INR 34,912 crore, profit before tax of INR 5,029 crore, and PAT of INR 3,867 crore in Q3 financial year 2025. On a consolidated basis, during Q3 financial year 2025, the turnover, PBT, and PAT issued at INR 36,887 crore and INR 5,272 crore and INR 4,082 crore respectively. I will take you through the major financial highlights. GAIL's gross turnover registered a growth of 6% and issued at INR 34,912 crore in Q3 financial year 2025, at just INR 32,814 crore in Q2 financial year 2025.
The PBT and PAT during the quarter rose substantially by 46% and 45% respectively to INR 5,029 crore and INR 3,867 crore, as against INR 3,453 crore and INR 2,672 crore in Q2 financial year 2025 respectively. This includes the receipt of an exceptional income of INR 2,440 crore from SEFE Marketing and Trading Singapore as settlement towards withdrawal of arbitration proceedings. On a consolidated basis, the turnover registered a growth of 9% and stood at INR 36,887 crore in Q3 financial year 2025, as against INR 33,861 crore in Q2 financial year 2025. The PBT posted a growth of 52% and was at INR 5,272 crore in Q3 financial year 2025, as against INR 3,470 crore in Q2 financial year 2025.
PAT also followed the trend and registered a growth of 52% and issued at INR 4,082 crore in Q3 financial year 2025, at just INR 2,694 crore in Q2 financial year 2025. I will take you through now physical performance of Q3 as compared to Q2 financial year 2025. The GAIL marketing volume during Q3 financial year 2025 was 103.46 MMS CMD, at just 96.60 MMS CMD in Q2 financial year 2025. During the quarter, 37 LNG cargoes were imported, making it a total of 107 cargoes during nine months, at just 101 during April to December in 2023-2024. Natural gas transmission volume decreased by 4% to 135.93 MMS CMD in Q3, at just 130.63 MMS CMD in Q2 financial year 2025. The decrease is due to reduced offtake by power segment, almost 3 MMS CMD, and surplus volume 1 MMS CMD.
The average capacity utilization was at 60%, approximately 60%. Polymer production was 216 TMT, as just 234 TMT in Q2. Capacity utilization for the quarter was at 106% of its nameplate capacity. LHC production was 283 TMT, as just 252 TMT in previous quarter. The capacity utilization was at 79%. The LPG transmission throughput was at 1157 TMT, as just 1124 TMT in previous quarter. The capacity utilization was 100% during the quarter. GAIL is about CGD. GAIL is having direct authorization of six GAs and has an infrastructure of 195 CNG stations and 353,000 DPNG connections. During the quarter, approximately 5,000 new DPNG connections were added. The physical volume remained at 0.36 MMSCMD during the quarter. In the next two years, GAIL targets to add around 80 new CNG stations and around 120,000 new DPNG connections.
Now, I will take you through the GAIL Gas Limited, which is 100% subsidiary of GAIL, the performance of GAIL Gas Limited. During the current quarter, turnover was down by 3% and stood at INR 3,043 crore, as against INR 3,150 crore in Q2 financial year 2025. PBT decreased by 7% and stood at INR 155 crore, as against INR 167 crore in Q2 financial year 2025, following cut in APM gas allocation. PAT was down by 8% and stood at INR 114 crore, as against INR 124 crore in Q2 financial year 2025. During Q3 financial year 2025, GAIL Gas, along with its JVs, added 25,000 new DPNG connections and 5 CNG stations and is having an infrastructure of 10,550,000 DPNG connections and 585 CNG stations. In the next two years, GAIL Gas targets to add around 170 new CNG stations and around 500,000 new DPNG connections.
I will now take you through the status of ongoing projects. Pipeline projects, majority of the pipeline projects, which Mumbai-Nagpur-Jharsuguda pipeline, Jagdishpur-Haldia-Bokaro-Dhamra pipeline, Kochi-Koottanad-Bangalore-Mangalore pipeline, and Srikakulam-Angul pipeline, are scheduled to be completed in the coming financial year, that is 2025-2026, whereas Gurdaspur-Jammu pipeline is scheduled to be completed in the financial year 2026-2027. Petrochemical projects, majority of the petrochemical projects with 60 KTA polypropylene at Pata and 500 KTA polypropylene at Usar, 1250 KTA PTA at GMPL are scheduled to be commissioned in the coming financial year. Indradhanush Gas Grid Limited, IGGL's first phase is scheduled to be completed in the financial year 2025-2026, whereas phase two and phase three are scheduled to be completed in the financial year 2026-2027. Brief about CapEx.
The CapEx for Q3 financial year 2025 is approximately INR 2,122 crore, and this CapEx is mainly on pipeline, around INR 400 crore, petrochemicals around INR 750 crore, CGD project around INR 40 crore, operational CapEx and other projects INR 770 crore, equity contribution around INR 130 crore. Now, I will take you through the segmental outlook for short to medium term. In GAIL marketing, in nine months, ended December 31st, 2024, GAIL has achieved a physical volume of 99.84 MMSCMD and has earned a marketing margin of INR 6,128 crore from this segment. This INR 6,128 crore includes INR 2,440 crore, that is one-off, as I shared with respect to settlement of arbitration case with SEFE. We maintain the guidance of earning INR 4,500 crore of GAIL marketing margin in the current financial year, excluding the exceptional income of INR 2,440 crore.
We expect this number to be a total number to be around INR 7,000 crore, including the exceptional income in the financial year 2024-2025. I further wish to inform our friends from the analyst community that as part of a group of three Indian oil and gas PSUs, GAIL has entered into a non-binding MOU with Argentina State Oil and Gas Company (YPF). The MOU covers the collaboration in exploration and production of hydrocarbon and critical minerals. Argentina is home to the world's second-largest shale gas reserve and carries the potential of development, which may become a significant source of LNG for India in the future. Gas transmission volume for 2024-2025 is expected to be in the range of 129-130 MMSCMD. Average gas transmission volume for nine months issued at 129.44 MMSCMD.
Further, during the next two to three years, transmission volume is expected to increase by 10 MMSCMD on a year-on-year basis. Polymer production stood at 612 TMT in nine months for the financial year 2025. The segment has remained profitable in nine months for the financial year 2025, with a PBT of INR 121 crore, as against a loss of INR 399 crore in the corresponding period during the last financial year. The plant is currently running at more than 100% capacity, and we are targeting measures to enhance operational efficiency for sustainability. LHC production stood at 751 TMT in nine months for the financial year 2025, as against 730 TMT in nine months for the financial year 2024. Vide order dated 31st December 2024, MOPNG has ordered a cut in APM gas allocation to GAIL for LPG production.
Due to this cut, we expect a drop of approximate 75 TMT in LPG production in Q4 financial year 2025. That's all from my side regarding the overview of the performance and projects. The management of the company is available, and we would be glad to clarify any questions that you may have or you present.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Participants are requested to limit their questions to two per participant and come back in the queue if they have no further questions. Thank you for your attention. We'll wait for a moment while the question queue assembles.
We have our first question from the line of Probal Sen from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir. Good evening. First, a question on the trading business, sir. This quarter, in terms of volumes, it seems the relative correlation between trading and transmission is a bit different, where transmission has reduced, but trading volumes have actually increased quite sharply. So how should we actually look at this correlation going forward for, let's say, the year next year? If we look at, let's say, 140-odd MMSCMD around average for FY 2026 for transmission, what should we build in for trading? Just wanted to get your sense of that.
Actually, trading volume in this quarter has significantly increased because of the international sales. Almost 9 MMSCMD of the 9 MMSCMD has come from there.
So there is no significant deviation as in transmission and marketing. It is going in a similar way. I think that is the disconnect which I should have explained that is creating confusion. So 9 MMS CMD has come from the international sales.
Got it. Okay. So sir, then the second question was, if we take out the one-time income of the settlement, which I presume is sitting, obviously, as you mentioned in the trading EBIT, then the trading EBIT for this quarter seems to have dropped very sharply on a QOQ level or on a YY level. Can you just take us through what has happened in terms of margin in this quarter?
Yeah. Yeah. Yeah. Very right. This quarter, we had earned INR 400+ crore, to be precise INR 417 crore out of this trading business. The major reasons are two, three.
One reason is that during this quarter, the prices of crude started falling, and what has happened because of that, we have a contract which has a nine-month average on sourcing side and on sales side three-month average, so it is immediately impacting because the recovery is on a three-month basis and payment for sourcing is on a nine-month basis, so going forward, we will start getting the plus on account of an average changes because overall it's set off, but immediately, it has impacted. That is one reason. It is around INR 200 crore plus that has given an impact. Second, during this quarter, the HH prices were a bit higher as compared to the previous quarter, so our margin between the sales side, which is on crude, and HH, which is unhedged. Normally, we are hedging to a great extent, and the volumes which were unhedged had also impacted.
Third, we have marketed volume more than the volume which we have sourced. Normally, we do in order to take care of or to avoid the risk of take or pay because normally in an international contract, it is 100% take or pay, whereas in downstream contract, it is 80%-90% take or pay level. So we normally sign contract more than the source volume. So this quarter, what has happened, most of the customers were drawing, and in order to fulfill those demands, we sourced spot cargo, which were higher than the marketing price, which one of situations sometimes happens, sometimes we gain out of this also because when the spot prices are higher, lower, we tend to gain. So this has happened during this quarter, and these two, three regions have reduced our marketing margin in the last quarter, that is Q3.
This is also, you can say, not a normal situation. That's how it has come down.
If I were to quantify this, sir, you mentioned INR 200 crore or so for the first reason, which was basically the mismatch in contract terms. For the other two reasons also, it would be somewhere in INR 200-INR 300 crore each. So that's caused the INR 800 crore drop.
More than that. For other two regions, it is more than that, around INR 600 crore.
INR 600 crore each for each region, is it?
No, no, no. INR 200 crore for the first region, that is nine-month average versus the three-month average, and the HH volume around INR 150 crore because of increasing price and fulfilled our commitment by sourcing because in this year, we have short of volume. 2026 onwards, we have a lot of volume. So we have fulfilled our commitment in downstream by sourcing spot.
We unfortunately were higher during this quarter, which led to INR 600 crore. So all these regions have led to more than INR 900 crore of drop.
Understood. Understood. Right, sir. That was my first. If I can sneak in one last question, how should we then look at? You have given guidance of INR 4,500 crore, which is obviously going to be net this year, net of one-off. For next year also, should we work with somewhere around this number, or can it improve once we have that?
We have been maintaining next year's number. Sir, we have in our year-end earnings call given that marketing margin will remain in this range only for next year as well.
So around INR 4,500 minimum base case we should have built in, is what you're saying?
Let us not put the word minimum at this stage, but we will be around INR 4,500 crore.
Got it.
All right, sir. Thank you so much and come back if I have any questions. Thank you for your time.
Thank you. We have our next question from the line of Puneet Gulati from HSBC. Please go ahead.
Yeah. Thank you so much for the opportunity. My first is, if you can also talk about any long-term PPAs that you're looking to tie up at this stage to reduce this kind of marketing volatility?
Already, we have tied up. Actually, as international market is tied during 2025, so in order to meet those shortage of volume, we have signed 0.75 TPA, that is one cargo per month from April onwards at a very good rate. So that is one contract we have signed. So we have mitigated those shortage on an immediate basis. It means April onwards, we have one cargo extra available during every month.
Second, from 2026 onwards, we have signed contract for 1.53 TPA amounting to 1.5 cargo per month. So if you add both, in 2026, we have 2.5 cargo additional. This year, we have from April onwards, one cargo per month.
Okay. The loss that you incurred was INR 450 crore because of shortage of volume. That should go away from next year onwards.
That's what I explained, and not INR 450 crore. We have lost INR 600 crore because of this because we, as a responsible organization, continue to fulfill our commitment. We could have put cuts, but we did not do that because we know that this is a temporary phenomenon, one-off case. A lot of times, we gained out of it also because sometimes spots are significantly lower than the contracted price. At that time we gained. This time, unfortunate situation, the prices were higher.
This is one of kind of situations.
Just to conclude on this from my perspective, do you think volatility in marketing will stay, or because of your hedging policies, it should reduce from here on?
It is already reduced. You see, last three years, we have been continuously giving you guidance, and we are fulfilling the guidance.
Correct. Correct.
We gave the guidance for 2022, 2023 for INR 3,000 crore. We met in spite of geopolitical situations. We gave the guidance of initially INR 4,500 crore and ended up with INR 6,000 crore last financial year. This financial year, we gave the guidance of INR 4,000-INR 4,500 crore until quarter two. In quarter two, we said that we will be targeting INR 4,500 crore and maintaining that.
Understood. That's helpful. And secondly, there has been this trend of rising spot prices.
Do you foresee a risk of your transmission volume on account of that, the growth that you are predicting of 10 million cubic meters for FY 2026?
No, we do not see any risk of transmission volume because nobody puts their plant on a spot price basis. Spot is only to mitigate the immediate need or one-off kind of situations or sometimes power plants consume. So normally, the transmission volume does not get impacted because plant contracts for which plants which are coming along new pipelines for a longer period, they continue to take volume. So therefore, we do not see any risk in terms of capacity utilization. We have been saying, and last year, we said that our volume will increase around 10, which are nearing to 10. And again, we have given guidance for 10 MMSCMD for coming two years.
We are hopeful that that will happen.
Okay. That's good. And lastly, on this passage, while you recovered 2.40, how much did you, in your view, did you lose by them not supplying? Have you been able to recover the entire loss that you made during those quarters?
Settlement is like a marriage. You don't lose or gain. So we have done what we thought is best in interest of organization, both the organizations.
Understood. That's helpful. Thank you so much. All the best.
Thank you. We have our next question from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi. Good evening. So just wanted to understand, from which customers did you see a fall in transmission volume in third quarter? Power, mainly power, 3 MMS CMD. Okay. And anyone else as well? Because I think it's a drop of almost 6, almost.
No, no.
The reduction is almost 4 million. 3 million has come from power. And one more unfortunate event has happened. One of the pipeline which led by GSPL, not GSPL, the GSPL group, the GIGL pipeline to IOCL, that has been authorized by PNGRB. That has taken away some of our volume.
Okay. So that would then be a permanent shift, right, I believe?
Yeah. I will not be able to say at this stage because we are challenged that.
Okay. Okay. And so generally, what is the outlook you give? Segment-wise outlook as well. So what is the outlook for Q4 and for 2026, if you can provide?
Q4, which outlook you are asking?
I'm trying to customer-wise outlook. No, no. Transmission customer-wise outlook you gave, right? Power, fertilizer. So if you could just provide what is the outlook for those segments.
So we expect that we will continue to transport around 129 to 130 MMS CMD, which will make the yearly average also around that level, which I said in my opening remarks that we expect on yearly basis 129 to 130, and which actually nine-month average is 129.45, around that level. So we continue to expect that we'll be doing in this quarter around that level.
Sure. Also, is there any progress on the discussion with PNGRB on the transmission tariff revision?
Actually, PNGRB is doing a lot of many things. One, our tariff petition, they are processing, but it's slow. Anyway, that benefit is available to us. And the more they are delaying, the more tariff increase will happen on net present value basis.
PNGRB has also set up a committee, industry committee, to review the tariff mechanism to address the issues raised by various transporters, which will also benefit this transmission company. Recently, they have held the committee with industry. So all these things will give a lot of positives, and we are expecting that to happen in next financial year.
Okay. Next financial year, but by H1, H2, what would be the expectation now?
H1, H2, next financial year?
No, I mean, by when next financial year? Do you mean towards the end of next financial year, or would you think that come earlier?
I give based on the understanding for PNGRB. So I gave the date last con call around 1st April. So it is becoming difficult for me to because I am also taking guidance from them or I am taking the information from them.
So currently, I maintain the first quarter base to come out with the tariff order.
Okay. Understood. Sure. And lastly, what was the input gas cost for petrochemicals?
You can say around $10.
Okay. Sure. I'll come back and ask you.
Thank you. We have our next question from the line of Sabri Hazarika from Emkay Global Financial Services. Go ahead.
Yeah. So firstly, on this LPG APM allocation cut, so you would be cutting volumes, right, rather than running the plant in LNG?
No, LNG, it doesn't make sense for us to run the plant. So whatever APM allocation, currently, we are running the plant based on the current allocation. But being a portfolio player, we have the ability to source time to time LNG, which is affordable to LPG plant. So immediately, it is not available.
We are hopeful that we will be able to source the LNG, which is actually making sense for us to run the plant at the level which has been designed or which we were running. So not immediate basis, but certainly, beyond that, we'll be looking for the LNG at that affordable price.
Okay. And what could be your targeted EBITDA?
For?
For this segment, I mean, do you have a target EBITDA or target earnings run rate where you'd be based on which you'd be taking a call on the LNG prices prevailing?
I will come back specifically maybe offline to this question. I'm not ready with the answer.
Okay. Secondly, on the petrochemical front, how do you see FY 2026 in terms of would you be at a break-even level or at a profitability level?
How do you see FY 2026, and especially on the back of the new plants also coming up?
Yeah. So firstly, about Pata. Pata, we expect that these prices are at bottom level. Currently, prices are around INR 88,000 per metric ton, and these prices are at this level for quite some time. So we believe that this is the price level which is at least going to maintain and there can be upside. So the issue is that how cheap gas we are able to give to Pata plant. Recently, at this price, we're being hit, so we could not earn the profit what we would have thought a quarter back. So whatever we have earned in nine months, we feel that next financial year we will be better off because prices, we do not believe that it will go down.
It may go up, but at these prices and the gas prices will soften. Therefore, this will increase good profit margin for Pata petrochemicals, and we expect it will do better than this year. With respect to the PDHPP plant, which is coming up, it is not an LNG or gas-based plant. It is a propane-based plant. So we have already tied up propane for long-term contract for 15 years. And propane and PDHPP, we have said that polypropylene has got a good correlation, and we expect that we continue will earn a good margin on sustainable level at PDHPP.
Okay. So fair enough. And just one small question about IGGL. You mentioned that phase one would be ready in FY 2026. So by phase one, what do you mean by I mean, it would be all the three different routes under phase one?
I mean, what kind of volume, especially for lines like Barauni, Guwahati, and all over, expecting from this?
Do you have information? So we'll come back. You can just post this question. We'll be required if you can.
Sure, sir. Thank you so much and all the best.
Okay.
Thank you. We have our next question from the line of Varatharajan Sivasankaran from Antique Stock Broking. Please go ahead.
Thank you for the opportunity. So this LPG plant, so far, whatever we are getting in terms of APM is completely stopped, or are we still getting any volume?
No, no. We are getting only 0.6. MMSCMD, right? 0.63 MMSCMD has been reduced, so it is not complete stoppage.
So how much are we getting?
1.75.
We were getting 1.75. Out of that, 0.62 has been reduced. So 1.13 is available.
Was there a, this is only half of the order which was actually put out in January. So the second half also could be cut. Is that how it is?
I'm not getting very clearly to you.
So the 0.63 was half of what they originally quoted. Basically, in phases, they'll do a particular volume. So this 0.63 is half of it, or it is 100%?
One-third. One-third.
Okay. Secondly, explain that nine months versus three months thing which you mentioned on the trading side on the console side. When we had to make that nine-month payment and already worked on an ongoing basis, we can.
Actually, I'm not getting very clearly to you. Can you please either audio? You have to be very near to, I don't know why you are not, I'm not getting it.
Sure. Sure. That's okay. Is it better?
Yeah.
So this nine months, what you were referring to in terms of the payment, if you can explain how that mechanism works and is it an ongoing arrangement that we'll continue to have the nine-month versus three-month discrepancy?
Actually, we have a 15 contract where crude price is based on nine months, nine-month average, right?
Okay.
And downstream, this market is on three-month average. So when the crude price falls, so immediate three-month average which we build to customer is lower. So our realization goes down. But our purchase price is on nine months, that is higher. But it actually sets off for a period of time because the prices on rolling basis, we are able to recover whatever we are losing currently. So that's.
Yeah, we understand that. Can you possibly give us what volume is in this particular bracket under this contract?
So you can assume that around 10 million.
10 million cubic meters per day?
10 MMS CMD, yes.
Okay. Thank you very much. I'll come back on that.
Thank you. We have our next question from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Good evening and thank you very much. Just the thoughts on gas marketing when you talk about this crude-linked sourcing and sale price, and they have the area-based contracts. Given the volatility in crude price, now to assume crude prices will decline, how will that impact your delta in the Brent-linked contracts? Because if your payment average is going to continue to fall, will that not be negative for the margins on the 10 million cubic meters a day?
Similarly, if they have prices keep going up, wouldn't that also be a challenge in terms of being able to pass it on on the unhedged portion? What are your thoughts on that?
Actually, largely, Henry Hub contracts we have tied up on back-to-back basis. Even if Henry Hub prices increases, we will be able to pass on to customers. So that does not impact us significantly. Even in my detailed analysis, which I explained to one of our friends which asked the question, it was only INR 74 crore, INR 70-INR 80 crore which impacted us. So it does not impact us. Secondly, we do not expect Henry Hub price to be such a level continuously. Henry Hub was also $1.65, $2, $1.9 for quite some time, but all of a sudden, recently, it has increased and now it has started showing different trend.
So even in the worst of time, it was impacting for the very, very minuscule volume which we are not tying on back-to-back basis.
And what about the crude prices? They were to decline. How would that impact this lag between nine-month sourcing and three-month?
It will impact us on a yearly basis. Almost we get a square of because on rolling basis, our sourcing starts cheaper when because initially, three months, we'll be at a lower rate, then I'm sourcing it higher. Later, that higher prices goes out from the nine months and we also start getting at cheaper rates. So therefore, we are able to recover. So on a rolling basis, it doesn't impact us.
Okay. Any inventory loss in the gas marketing segment in this quarter? Any inventory loss in petrochemicals?
No. No. No. No.
Okay. Okay.
Finally, on the CGD gas allocation and the new well gas, we understand that the APM gas is going to see a natural 7% decline that will be replaced by new well gas. So what is the kind of line of sight or visibility the industry has in terms of the volume of new well gas that will be available for city gas distribution to make up for the 7% decline?
Can you come back specifically? I'm not able to understand.
Yeah. Yeah. So basically, we understand from Mahanagar Gas that there is a proposal to reduce the APM gas allocation further by 7% every year based on the natural decline of the APM gas production and that it will be replaced by the new well gas from ONGC.
Now, the question is, to what extent will the new well gas production go up to replace the 7% decline that is expected in the APM gas?
I think this is better than you ask ONGC because how much production will increase? I am not in a position to answer you.
Okay. All right. I'll come back on that. Thank you very much.
Okay.
Thank you. We have our next question from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead.
Good evening, sir. My first question was related to the marketing side of the business. In terms of volumes for next year, considering the deallocation of gas for city gas, do you think GAIL will be able to kind of take market share in terms of marketing next year, considering the requirements for city gas on even LNG now?
Yeah. Actually, it's the right question.
We have been able to tied up for five-year contract for a significant amount in the last two months, and going forward, if gas is cut for CGD, we will continue to tap that market.
So, sir, a follow-up on that, considering the requirements are reasonably big over the next three to five years, I'm not stuck with this next year. How are you kind of thinking about tying it up in terms of sourcing of volumes as well? Does that mean that you'll have to kind of now be a bit more aggressive next year in tying up another five, 10-year volumes?
Yeah. We are already scouting for additional volume. As I explained to another question, that just a month back, we tied up around 0.75 MMTPA.
We have already tied up almost a year back for 1.53 MMTPA for different, different sources, and we are already in the market to scout for more volume to meet the increasing demand, not only from city gas distribution, from other sectors which are coming along our pipelines.
Sir, on basis of what your conversations are, are people more inclined to use Henry Hub contracts back-to-back or oil-linked contracts? I don't want to mix half-half kind of a thing with long-term sourcing.
Actually, we have mixed kind of demand. When Henry Hub was around $2-$3, a lot of demand was on Henry Hub basis. And when Henry Hub started going down, people again start thinking about crude. So it's a period in which you sign the contract. People have a very, very short vision.
When Henry Hub is down, a lot of demand comes from Henry Hub. When Henry Hub starts increasing, they look for crude. It depends on which time you are signing the contract. I remember five years back, nobody used to talk about Henry Hub. And now, three months back, a lot of people were demanding Henry Hub. And in fact, we have tied up, as I said, all the volumes are Henry Hub. We do not have any extra volume. So it depends, basically, at which point of time people are coming to source the gas from us.
And sir, last question was on Dabhol. Any update and progress on Dabhol?
Dabhol will be completed by March 2025.
So the test cargoes are in or coming up now?
Sorry?
So for the capacity, are you started kind of testing commissioning in terms of the breakwater, etc.?
That's what I'm telling. The breakwater work will be completed by March 2025. We have already prepared ourselves to take the approvals from Marine. And we expect that after March, by May, we will have the approvals from the authorities to bring the ship during monsoon. And until April, May, we are anyway able to bring cargoes at Dabhol. So what we believe that here onwards, the Dabhol is a full-weather terminal.
Very clear. Very clear. Thank you.
Thank you. We have our next question from the line of Kirtan Mehta from Baroda BNP Paribas. Please go ahead. The next question is from the line of Kirtan Mehta from BNP Paribas. Please go ahead.
Am I audible, sir?
Yes, sir.
Yeah.
First question was about marketing.
How much of the volume in the marketing segment which we are sourcing on HH business but selling on crude business, would there be certain volume on that basis?
So nowadays, we are almost buying on HH and selling on HH. There is no basis. Most of the volume buying some volume, which is very, very small volume, which we have ourselves kept open. Otherwise, we have signed on back-to-back index.
Second question was about the APM gas allocation for the city gas distribution sector. We believe in January, around 2 MMSCMD allocation was offered higher on the APM gas business to city gas distribution sector. Against this, around 1.3 MMSCMD volume was reduced for both GAIL and ONGC. Could you explain us where was the difference of 0.7 MMSCMD which was made available to the city gas distribution sector?
I am not aware. From where 0.7 is?
Any of you know?
No. I don't have any update or clue about it.
When would the next allocation be revised? Would it be in February, middle of February, that the next revision will take place?
February goes anywhere? February? It is quarterly revised, I understand from my colleagues.
Right. The last question was about you mentioned about the IGGL volume taking over some of the GIGL volume. Would you be able to indicate the quantum that has flowed there and what would be the ground for challenging this?
Actually, we already had a pipeline which was connected. And this pipeline, as per PNGRB, I'm telling you, was made unauthorized. Our PNGRB has authorized by putting some penalties. So challenge is that the infrastructure which was already there, contracted volumes were there.
So if you allow that other pipeline to be laid, having the existing pipeline, that is not correct. That's what is the volume.
And how much of the volume is being challenged here? What would be the volume which will have an impact because of this?
So I can tell you the volume may be more or less capacity of pipeline is around 9.5-10 million. Currently, the volume flow was very less, 3-5 million. So capacity was more. So impact immediate has come for 4-5 million.
1.5.
Sorry, I have corrected 1.5.
Sure, sir. Thanks for this clarification and all the best. Thank you.
Thank you. A reminder to all participants to please restrict yourself to two questions per participant. May you have follow-up questions? We request you to rejoin the queue.
The next question is from the line of Mehul Panjwani from Fortisense . Please go ahead.
Hello, sir. Good evening.
Good evening.
Thank you so much for the elaborate explanations on the performance of GAIL. I have one question. You have mentioned that there is an impact which is going to be squared off by the fourth quarter. Is that for the entire INR 900 crores which you mentioned, or it is for a partial amount? I mean, if you can elaborate, explain that.
I never said that it is going to be squared off in next quarter. I said over a period of almost a year, it gets squared off because a contract which is sourcing contract, a fixing contract of nine months average, and downstream is three months average. So it can never be squared off in a quarter, but it starts going from this quarter onwards.
Okay.
So can I say that it will start happening from Q4 of 2025, and it will end somewhere in Q3 of 2025?
It will give you whatever we have not been able to recover during last quarter. We'll be able to recover at least next year.
And is that going down from this quarter and will recover in next year? And sir, is it impacting the entire INR 900 crores because of this impact, or?
No, no. This entire INR 900 crores is not on that account. I specified three parts. One is the INR 200 crores is on this account.
Okay. Okay. And what are the, sorry, if you can elaborate a little bit on the other sector.
We fulfilled our commitment in downstream by sourcing some export cargoes because normally we oversold the volume, that is the source volume, in order to take care of the issues of take or pay, 100% take or pay in upstream versus downstream 90%. And whenever shortfall happens, we actually source through export. Sometimes export prices go lower, sometimes higher. This time, unfortunately, we are normally able to source around that price or lower than that price. So that was the reason.
Okay. So now, this you're saying that you have sold more than what you could source. I mean, I'm not yet gathered what is exactly that. But is it because of government regulations, or is it just a business?
You will be guided. Don't worry about it. What I am telling, the upstream contract is 100% take or pay, right? Downstream are either 80% or 90%.
It means downstream customer has a contractual obligation to take lesser than the upstream contract. Suppose in a situation the downstream contract takes lesser, where we sell the 10% or 15% volume. In order to mitigate those obligations, we actually tie up for those 10%-15% more. Sometimes situation happens that customer takes 100%, more than 100%. It means around the tie-up quantity, 110%, and we fulfill those requirements through export sourcing. That doesn't happen every time. That is first statement. Second, the export prices have largely given us benefit always that we were able to source cheaper gas to fulfill those increased obligations, but this time, in Q2, Q3, export prices are a bit higher.
Okay. Okay. Okay. Sir, yeah, sir, one more question is on tariff revision. You mentioned that somewhere in next financial year, we can expect tariff revision, right? So what is the current tariff?
I mean, and what was the tariff revision? When was the last tariff revision which happened? And how much was the tariff revision?
We didn't have passed with effect from 1st April 2023, right?
Okay. Okay.
And next question is what?
Yeah. And how much was the tariff revision? Tariff is INR 59 per between INR 58-INR 60 to be precise.
Okay. And what is the logic? I mean, is there a logic which is used for revising the tariff, or what is it? I mean, or it's completely depending on the board, the PNGRB?
Sorry, sorry?
Does the tariff revision happen based on some rationale, or it is just compared? It depends on the PNGRB.
No, no. It happens on rationale. PNGRB had asked us from tariff petition. We filed in August 2024. They are reviewing. Now they have to do public consultation and issue the tariff order, right?
And the tariff order last time made, they moderated around more than INR 10 from the tariff applications we submitted, and largely on account of gas price, INR 7 per MMBtu approximate. They considered the gas price of $3.61 for internal consumption in compression, which is not even an APM price. But tariff order itself says you will be getting at least HH price. So there is a significant amount of under-recovery available. We have submitted our tariff based on the price which was indicated in the tariff order. And the tariff order processing normally is done in six months, but this has been delayed. So the next quarter, first quarter of next financial year should come.
So sir, what was the price which you have quoted in the document?
Sorry to interrupt, sir. May we request you to rejoin the queue?
Sorry, sir. This is a follow-up question.
I'm asking the question more detailed. Sir, if you can please clarify, how much is the tariff you have quoted for revision?
We have committed INR 78 per MMBtu as against current tariff of INR 58.60.
Okay. Sir, last question. When is the record date for dividend?
I think 7th of next month.
Okay, sir. Thank you so much. I'll join the queue again. Thank you.
Thank you. We have our next question from the line of Santanu Saikia from Indian Petro. Please go ahead.
Hello, hi. I was just wondering that instead of the production of LPG, didn't the government offer you a subsidy like with the petroleum companies, a subsidy which can be paid to you if you continue your production at LNG prices?
There is no proposal, and there is no information to us.
So I mean, if you are informed that you will subsidize to the amount of the continued production, this is all hypothesis. We'll do when it comes.
Okay. Thank you.
Thank you. We have our next question from the line of Sumaya V from Avendus Spark. Please go ahead.
Thank you so much for the opportunity. I hope I'm audible. So first question is on the downstream. You said there is a mismatch or a higher demand this time around. If you can just quantitate the volumes there, it would be helpful.
Sorry? Yes.
So you said in the downstream, there is a higher demand, so we have to source spot cargoes. So what would have been that volume in MMSCMD if you can just give that number, the mismatch number?
Last quarter?
Yes, sir. Please.
Yeah. Just hold on.
Sure.
Around 2 MMSCMD for last quarter.
So basically, 2 MMSCMD, we had to procure some spot to meet that extra demand that came from downstream.
Yeah, yeah.
Got it, sir.
And also, these were mostly sold on Henry or Brent, whatever we sourced on spot?
We have not linked to customer where sourcing because we have marketed in all the indexes wherever.
No, no, sir. No, no. I'm looking for what is the customer, what the customer ended up paying for the source. They ended up paying on Henry or they ended up paying based on Brent linked contracts.
That's what I am telling. Both types of customer were there. We supplied spot cargoes wherever the shortage was there. It is for both kinds of contract.
Okay, sir.
Sir, also, we used to say wherever there is basis between oil and gas or gas and oil in terms of sourcing to the point that we said, we used to hedge. What is the quantum of hedging that we probably have, given that we are giving that output for next year in terms of what we can expect in terms of EBITDA? What is the quantum of hedging that we have, and for how long we have hedged, and what kind of spread that we can attribute?
Yeah. The spread I have already said, it is around INR 4,500 crores for next financial year. Regarding hedging, I already said that we have tied up most of the volume on back-to-back basis. Therefore, the requirement of hedging for covering the basis risk has gone down.
Understood, sir.
So any minimal number that you can give around hedging, that also will be helpful. And also, in Q3, any quantum that you can give on hedging gains?
Sorry?
In Q3, was there any hedging gains, any quantum that you can give?
What we will give you right now, I do not have that information. We'll give you just some offline. We'll give you.
Okay, sir. Thank you.
Thank you. We have our next question from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, sir. Sir, you are guiding us 10 MMSCMD volume growth in the gas transmission segment for a period of FY 2026 over FY 2025. So from where this gas will come, if you could provide some clarity or break-up on which sectors will be the gas consumers on your pipeline network?
Certainly.
So CGD uptake, we expect 2 to 3 MMSCMD will increase because CGD is growing at the rate of around 12%. Even if 4 million volume increases in CGD sector, we have almost 70% pipeline infrastructure in the country.
तुम्ही ज्या व्यक्तीशी बोलत आहात, त्याने तुमच्या कॉलला होल्डवर ठेवला आहे. कृपया लाईनवरच राहा. The person you are speaking with has put your call on hold. Please.
Hello.
Yes, sir. Please continue. Sorry for that.
Ha. So CGD, we expect 3 MMSCMD volume will come from CGD. 1 million volume with progressive ramp-up will come from NRL. The pipeline, the refinery which is along IGGL and sources of Jagdishpur Haldia-Dhamra pipeline. The incremental increase in refinery of IOCL, around 12 MMSCMD in total. Paradip 3.75, Haldia 2.8, Barauni 2.6, Koyali 0.6, Bongaigaon 2.2. Further, we are also putting our pipeline like Mumbai-Nagpur, Jharsuguda, and Srikakulam-Angul, which are going to be commissioned.
Their volume will also come.
Thanks a lot, sir.
Thank you. We have our next question from the line of Vikas Jain from CLSA. Please go ahead.
Thanks for taking my question. Rakesh-ji, if you could explain of your current volumes, what is the share which comes from refinery and pet chem. Because these are very price-sensitive customers. What is the percentage share of the current transmission volumes which comes from there, please?
Transmission volume. Just hold on if we have.
I need to marketing it. Transmission. Petrochemical demand. Okay. We don't have.
Vikas, we will give you. Actually, I have only marketing slide about breakup, but not the transmission slide.
Okay. If you could give the marketing share as well, sir.
Yeah. Certainly. Meanwhile, my colleague has given me the transmission volume breakup, which you were asking for. Let me give total breakup.
Fertilizer, around 41% share. CGD, around 25% share. Power, 7%. Oil and refineries, 9%. And then internal consumption is around 6%. Steel, 2%, and others 11%.
Thank you, sir.
Okay.
Thank you. Ladies and gentlemen, that would be the last question for today. And I now hand the conference over to Mr. Gagan Dixit from Elara Securities for closing remarks. Over to you, sir.
Yeah. Thanks to all the participants. Special thanks to the GAIL India management for sharing their views on the company's Quarter 3 performance. We take this opportunity to thank Shri Arijit and his team once again. Would you like to make any closing comments, sir?
Yeah. Thank you very much. And hopefully, we have been able to respond to your most of the questions. I remember one or two questions we could not answer immediately. And the participants can ask us offline.
We will be able to respond. And if you have any more questions which you could not ask, please come back. We will be able to respond to you. Thank you very much.
Thank you. You can mail your questions to ir@gail.co.in.
Thank you. On behalf of GAIL (India) Limited and Elara Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.