Good morning, everyone. Thank you for joining GAIL's Annual Investor and Analyst Meet, 2025, being organized via web conference. My name is Abhishek, and I cover the oil and gas sector at Motilal Oswal Financial Services. Before we begin this call, a request to all the participants to please keep your video on while you are asking a question. Also, a request if you can please rename yourself so as to display your organization name during the call. This Analyst Meet was earlier to be held as a physical meet in Mumbai, but due to unavoidable reasons, had to be converted into a virtual conference. We are joined today by a senior management from GAIL. We have with us Sandeep Kumar Gupta, who is the Chairman and Managing Director for GAIL India Limited.
Sri Gupta is a Fellow of the Institute of Chartered Accountants of India and also a Distinguished Fellow of the Institute of Directors. He has wide experience of over 36 years in the oil and gas industry. Before joining GAIL in October 2022, Sri Gupta held the position of Director of Finance since August 2019 on the board of IOCL. As Director of Finance, he was in charge of F&A, Treasury, Pricing, International Trade, Corporate Affairs, and Enterprise Risk Management. Sri Gupta is also Chairman of various other companies such as Mahanagar Gas, Brahmaputra Cracker and Polymer Limited, and GAIL Gas Limited, and Director on the board of Petronet LNG Limited. We are also joined by Sri Arke Jain, who is Director of Finance. He's a Cost and Management Accountant by profession and joined GAIL in 1992.
Prior to his appointment as Director of Finance, Sri Jain held the position of Executive Director of Finance and Accounts in GAIL. Additionally, Sri Jain holds the position of Director in Indraprastha Gas Limited, GAIL Gas, GAIL Global USA Inc., and GAIL Global USA LNG. As ED Finance and Accounts, he headed Corporate Finance and Treasury and took investment decisions in large infrastructure projects. He was also actively involved in investor relations and interactions with analysts' fidelity. Besides serving a long tenure at GAIL, he was on deputation to PNGRB as Joint Director of Commercial and Finance. Lastly, we are joined by Sri Sanjay Kumar, Director of Marketing. He is a graduate in Mechanical Engineering from IIT Kharagpur and also holds a Master of Business Administration degree. He joined GAIL in 1988 and has worked across domains, including gas marketing, CGD, LNG sourcing, trading, shipping, and business development.
This cross-functional and multifarious experience has enabled him to gain deep insight on all aspects of the gas and LNG value chain. Sri Kumar has played an important role in developing GAIL's overseas LNG trading business. He was Managing Director of Indraprastha Gas Limited, the largest CNG distribution company in India, before resuming charge of Director of Marketing GAIL. Now, without further delay, I will hand over to the management for opening comments.
Thank you very much, Abhishek. Good morning to all my friends from the research and analyst community. At the outset, my apologies for not being present physically, but you can appreciate what was the situation. Because of that, we had to call off this meeting and hold it on virtual mode. I welcome you all to the Analyst Meet of GAIL India Limited for Financial Year 2024-2025. We truly appreciate your taking the time to be with us. Throughout FY2025, we showcased the resilience and growth driven by our diverse portfolio. Despite challenges in global economy, our company had a landmark year, reaching unprecedented financial milestones and achieving the highest ever EBITDA, PBT, and Profit After Tax in GAIL's history. Further, improved operational performance was witnessed across all segments, barring the LHC segment owing to deallocation of EVM gas.
Before going to the financials for FY 2025, I would like to focus your attention to certain key business highlights. First, successful completion of the long-awaited breakwater project has been achieved at KLL Dabhol. This marks a significant milestone in KLL's journey towards becoming an all-weather port, which has increased GAIL's flexibility to efficiently respond to market dynamics. We are awaiting the final confirmation, final permission, which should be available in about a week's time, after which this will operate during the monsoon period also. GAIL has incorporated its wholly owned subsidiary, GAIL Global IFSC Limited, at GIFT City in Gandhinagar, Gujarat, which will focus on undertaking global and regional corporate treasury center activities to further expand our business portfolio and enhance financial capabilities. Furthermore, we intend to capitalize on strategic advantages in the future by expanding into ship leasing operations through this entity.
As you are aware, GAIL, along with its joint venture companies and subsidiaries, is authorized to develop city gas distribution networks in 72 geographical areas across the country. Among these, GAIL directly operates in six geographical areas, namely Varanasi, Patna, Ranchi, Jamshedpur, Bhubaneswar, and Kathak, which are currently in their early stages of development. In the financial year 2024-2025, these six GAs have shown impressive growth, with volumes increasing by approximately 25%. We are constantly reviewing these CGDs to optimize costs and enhance efficiencies. In order to have a single entity for development of GAIL's CGD business and for bringing business synergy, efficiency, and retail-focused business approach, the board has recommended to transfer six geographical areas of GAIL to its wholly owned subsidiary, GAIL Gas Limited. This was approved in the board meeting yesterday.
This is subject to approval of CCEA since these six GAs were authorized to GAIL by CCEA. PNGRB has recently proposed important reforms to the natural gas pipeline tariff structure, focusing on simplifying the tariff zones, capping tariff for CNG and domestic PNG consumers at the level of Zone 1 tariff, and facilitating commercial viability of isolated networks through tariff rationalization. These initiatives aim to boost investment, enhance infrastructure, and make natural gas more accessible across India. Further, PNGRB has started the tariff review process of our integrated pipeline network and had hosted a PCD in this regard. We expect the revised tariff to be announced by the end of the current quarter. This will have a considerable positive impact on GAIL's transmission segment revenues, as was also detailed during my interviews in the last week of March.
Now, proceeding with financials, the results for quarter and year-end at 31 March 2025 have been declared yesterday, on 13 May 2025. For FY2025, on a standalone basis, GAIL achieved gross turnover of INR 136,960 crore, PBT stood at INR 14,825 crore, an increase of 28% over the previous year, and PAT stood at INR 11,312 crore, an increase of 28% over the previous year. The strong performance of FY2025 is fueled by enhanced operational performance, with natural gas transmission seeing a 6% increase, natural gas marketing growing by 3%, petrochemicals achieving a 6% growth in production, despite LHC production declining by 5% due to reduction in APM gas allocation in quarter four. On a consolidated basis, GAIL clocked a turnover of INR 141,949 crore in FY2025 versus INR 133,130 crore in the previous year, up by 7%. PBT in FY2025 stood at INR 16,096 crore, and PAT stood at INR 12,450 crore, up by 26%.
The Board of Directors has recommended a final dividend of INR 1 per equity share for the financial year 2024-2025, subject to shareholder approval at the upcoming Annual General Meeting. This is in addition to the interim dividend of INR 6.50 per share declared previously. Consequently, the dividend payout ratio for the financial year 2024-2025 stands at 43.59%. Now, I would like to share the performance highlights of FY 2025. First, standalone. GAIL clocked the turnover of INR 136,960 crore in FY 2025 as against INR 130,284 crore in FY 2024, an increase of 5%, mainly on account of increase in gas marketing volume, increased transmission and petchem volumes, and better price realization in liquid hydrocarbons segment. The PBT increased by 28% to INR 14,825 crore as against INR 11,555 crore, and PAT by 28% to INR 11,312 crore as against INR 8,836 crore in the previous year.
There was an exceptional income of INR 2,440 crore on account of arbitration settlement with SMTS, which was accounted in quarter three of the current year. On quarterly basis, Q4 versus Q3 of this year, the gross turnover stood at INR 35,607 crore in the current quarter as against INR 34,912 crore in Q3 FY2025. The increase of 2% mainly is due to increase in sales of natural gas and petrochemicals. The PBT and PAT during the quarter stood at INR 2,701 crore and INR 2,049 crore as against INR 5,029 crore and INR 3,867 crore in Q3 FY2025. The decrease, as you are aware, is mainly due to an exceptional income of INR 2,440 crore accounted in Q3 FY2025 towards arbitration settlement with SEFE Marketing Singapore.
Moving to consolidated financials, on a yearly basis, the consolidated turnover stood at INR 141,949 crore versus INR 133,130 crore in the previous year, in the previous quarter, which is an increase of 7%. The PBT in FY 2025, sorry, this INR 133,130 crore was in the previous year, and the increase is 7%. The PBT in FY 2025 stood at INR 16,096 crore versus INR 12,595 crore in FY 2024, which is an increase of 28%. The PAT stood at INR 12,450 crore in FY 2025 versus INR 9,899 crore in FY 2024, which is an increase of 26%. On a quarterly basis, Q4 versus Q3 of this year, the consolidated turnover in the current quarter stood at INR 36,448 crore versus INR 36,887 crore in the previous quarter. The PBT in the current quarter is INR 3,240 crore versus INR 5,272 crore in quarter three of FY 2023. The PAT is INR 2,492 crore versus INR 4,482 crore in Q3 of FY 2023.
I would now like to share segment-wise physical performance and the outlook for this short to medium term. Gas marketing volume stood at 101.49 MMSCMD in 2025, an increase of 3%, as against 98.45 MMSCMD in the previous year. The increase is mainly due to increase in demand in domestic market and overseas sales. During 2024-2025, our gas marketing segment has exhibited robust performance. By clocking a PBT of approximately INR 7,273 crore, including the exceptional income of INR 2,440 crore, the gas marketing segment PBT for 2025 has exceeded our guidance of INR 4,500 crore. India's natural gas market is set for strong growth, fueled by significant infrastructure development, regulatory support, and increased global supply. As per recent report by PNGRB on India's natural gas projection for 2030, the natural gas consumption in the country is expected to reach 297 MMSCMD by 2030, assuming moderate growth.
Being the dominant player in the natural gas sector, GAIL is expected to capitalize on the growing demand. To cater this demand, GAIL intends to source another 5-6 MMTPA of LNG from different geographies by 2030. We are confident that in the current financial year, our gas marketing segment will generate a minimum of INR 4,500 crore in profit before tax. Additionally, we are actively pursuing short to medium-term tie-up with customers, which will further enhance our profitability. Moreover, we will implement all possible measures to optimize and improve efficiency within our gas marketing portfolio. Now, INR 4,000 crore, when I'm saying, I maintain the band of INR 4,000 crore-INR 4,500 crore, which band we had given to you in the earlier meetings. Coming to natural gas transmission, volume for FY 2025 stood at 127.32 MMSCMD as against 120.46 MMSCMD in the previous financial year.
The capacity utilization was approximately 61% in our natural gas pipelines. The increase in transmission volume is attributed to increased domestic consumption. We expect that gas transmission volume will be approximately 138-139 MMSCMD during FY 2025-2026. As already informed, the tariff review for GAIL's integrated network is in progress, which is expected to be implemented in FY 2025-2026. This is expected to have a significant positive impact on GAIL's transmission revenue. Coming to polymers, overall production of 827 TMT was achieved in FY 2024-2025, which is 102% of the capacity utilization. In petrochemicals, we closed FY 2024-2025 almost at break-even levels, despite increased input costs and stress on petrochemical prices. During FY 2025-2026, GAIL will continue to take various optimization measures to optimize and improve efficiency in petrochemicals and run the petrochemical plant at full capacity.
It is expected that GAIL will make reasonable profits in the PC segment during FY 2025-2026, provided the prices are favorable, both of the input as well as output. Coming to LHC, the production was down by 5% as compared to the previous year and stood at 947 TMT as against 996 TMT in the previous year. The capacity utilization was approximately 66%. The decrease is attributed to deallocation of APM gas for LPG production, with effect from 16 January 2025. In addition to various optimization measures taken to protect the margins, the matter was taken up with MoP&G for restoration of allocation of APM gas. By wide order dated 18 April 2025, MoP&G has allocated new well gas of approximately 0.32 MMSCMD to GAIL for LPG production. This has restored the reduction in APM allocation by approximately 50%.
We expect good margins and improved production from this segment in FY 2026. LPG transmission volume increased to 4,478 TMT as against 4,396 TMT in the previous quarter, and this was the highest-ever LPG transmission by GAIL. CGD, according to a recent report published by PNGRB, the CGD sector is anticipated to be the key driver of growth, with consumption expected to increase 2.5-3.5 times by 2030 and 6-7 times by 2040, from the baseline of approximately 37 MMSCMD in FY 2024, reflecting a CAGR of around 15% and 12%, respectively. Further, GAIL Gas Limited, a wholly owned subsidiary of GAIL, was incorporated in May 2008 for developing city gas distribution business as its focus area. GGL currently owns and operates 16 GAs across India and has 9 others as their JVs.
During the current financial year, that is FY 2025, GAIL Gas Limited's turnover stood at INR 12,231 crore as against INR 10,944 crore in FY 2024. PBT increased by 42% and stood at INR 615 crore as against INR 434 crore in FY 2024. PAT was up by 40% and stood at INR 451 crore as against INR 323 crore in FY 2024. During the current quarter, that is Q4 FY 2025, GAIL Gas Limited's turnover stood at INR 3,051 crore as against INR 3,043 crore in Q3 FY 2025. PBT decreased by 7% and stood at INR 144 crore as against INR 155 crore in Q3. PAT was down by 8% and stood at INR 102 crore as against INR 114 crore in Q3 FY 2025. In the next two years, GAIL Gas targets to add around 255 new CNG stations and approximately 309,000 new DPG connections.
As regards to Bengal Gas Company Limited, I just wanted to inform you that this pipeline has been completed and gasified by GAIL till tap-off point for Kolkata connectivity. GAIL has got the PESO approval on 26 November 2024 for the stretch Durgapur to IP8 and CGS Kolkata. Further, PESO approval from GAIL Terminal at IP8 to Bengal Gas CGS is received on 28 February 2025. It will take about one to two months for BGCL to complete the construction work on its part before it starts taking gas for Kolkata. Status of some of the ongoing projects. First, pipeline projects.
I am glad to inform that the majority of the pipeline projects, namely Mumbai, Nagpur, Jharsuguda, Jabalpur pipeline, Jagdishpur, Haldia, Bokaro, Dhamra pipeline, Kochi-Koottanad-Mangalore-Bangalore pipeline, and Srikakulam-Angul pipeline, are scheduled to be completed in the current financial year, that is 2025-2026, whereas Gurdaspur, Jammu pipeline is scheduled for completion in FY 2026-2027. Dhamra-Haldia and Durgapur-Haldia pipeline section of JHBDPL are pending for commissioning and expected to be commissioned by 31 December 2025. In petrochemical projects, again, I am glad to inform that all the three running petrochemical projects, that is 60 KTA polypropylene plant project at Pata, 500 KTA PDH polypropylene at Usar, and 1.25 MTPA PTA project at GMPL Mangalore are scheduled to be commissioned in the current financial year. In fact, Pata PP should happen very soon.
Coming to CapEx for FY2025, during the year, a CapEx of INR 10,512 crore was incurred, out of which INR 2,200 crore approximately is on pipelines, approximately INR 2,700 crore is on petrochemicals, approximately INR 3,000 crore is on leasehold assets. Operational CapEx is of around INR 1,600 crore, and the balance is towards net zero renewables, CGD, ENP, equity contribution, etc. That is 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 on any questions that you may have. Over to you, Abhishek. Thank you very much.
Great. Thank you so much, sir, for the opening comments. Very insightful. We will now start the Q&A session. Participants, may please raise their hand and state their name and firm name before asking a question. Again, a reminder to have your video in the on mode, please.
Please restrict yourself to two questions at a time. Okay, we have the first question coming in from Puneet Gulati. Puneet, if you can unmute and ask your question, please.
Yeah, thank you so much. Yeah, congratulations on good numbers. My first question is on your gas marketing business. The first part is when I look at the consolidated piece for this quarter, there is an INR 1,500 crore income versus standalone of INR 1,200 crore. What is that INR 300 crore attributable to? And secondly, your guidance of about INR 4,500 crore, do you see any sort of risk to that given what is happening with crude and Henry Hub, or do you think this is a locked-in number for the full year?
Thank you. It is GAIL Gas, which we have incorporated line by line. That is the difference. Okay, so it is, and that is not captured in the CGD business there.
Actually, this year we have regrouped marketing and CGD business of GAIL Gas. Earlier, it was getting depicted in CGD, so we have regrouped and bulk sale we have considered in marketing.
Understood. That's very helpful. Yeah. The second on your guidance for INR 4,500 crore of marketing, I mean, is there any risk? I mean, how should one think about the volatility in Brent and Henry Hub impacting the business, or have you locked this number for the full year?
While I'm always there, and the risks were there in the current year also, and even the previous years, but we are confident that with our portfolio, which is well diversified, both oil-linked as well as HH-linked, I think we are pretty sure that we will be maintaining, as per our guidance, of INR 4,000 crore-INR 4,000 crore in the coming years also.
Understood.
Lastly, if you can talk about where is the additional volume growth coming for your transmission business?
Chairman Sir has, during his opening remarks, stated that we are expected to transmit on an average basis INR 138-139 MMSCMD. We expect this volume, natural growth of CGD business, which we expect around 5 million increase will happen on country level. It will be more, but since our share is around 70%, we expect naturally that volume will come from there. IOCL Baruni 1.38 MMSCMD, then Paradip 2.35 MMSCMD, IOCL Haldia 0.5, IOCL Bongaigaon 0.2, Guwahati IOCL 0.2, IOCL Panipat requirement of 1.79 MMSC during 2025-2026. Earlier, there was a requirement of 1.3, we increased it to 1.79. So 1.79 from this. These are the areas from where we expect that these volumes will come.
Apart from the commissioning of new pipeline, Chairman stated, Mumbai, Nagpur, Jharsuguda, Srikakulam, Angul, there certainly will be having more customers.
Understood. That's very helpful. Thank you so much.
Great. Thanks, Puneet.
We have the next question from Nithin from Philip Capital. Nithin, please ask your question.
Hi, good morning. Thanks for the opportunity, sir. My question is related to your transmission segment. In this quarter, we had a drop of about 5 MMSCMD versus the previous quarter. If you can help us understand why that declining volume was there. When we see the guidance for basically FY2026, we are talking about almost like an 18 MMSCMD increase vis-à-vis where we have exited quarter four. I mean, like in the backdrop of the volume decline that we have seen in this quarter, does our guidance stand?
In addition to that, how was the first quarter going for us as far as transmission volume is concerned?
Transmission volume. Actually, I understand you're asking regarding transmission volume. Yeah, that we can explain. Right, sir. We had given guidance of 29-30 MMSCMD during last earning call. Based on our assessment, that will be somewhere around 129-130 MMSCMD. On yearly basis, we are less by 2.5 MMSCMD, even if we consider the 130 MMSCMD. This particular quarter you are talking about, there is certainly a drop of 5 MMSCMD. Largely, it has come down. 3 million volume of shippers has come down. IOCL 1.5 and BPCL 0.8. This is coming down because they are shifted to liquid fuel. This quarter, there is a drop in price of liquid fuel, so they switched over.
In our marketing volume also, there is a drop. KFCL was down during January 25. There were unplanned shutdowns by HURL, Phulpur, RCF, Thal. This all totally led to a volume of 4-5 MMSCMD if you compare with quarter three of this year. These are the specific reasons, unanticipated shutdowns by fertilizer plant. Shippers' volume came down because of the reduction in the crude price.
Great. That's helpful.
Sorry, Chairman also just reminded me. The GIGL volume also got shifted because we were supplying to Panipat Refinery through our pipeline. Then PNGRB in between authorized GIGL. From January onwards, that volume also got shifted to GIGL pipeline. Our appeal is pending.
Yes, sir. Basically, just a clarification on that. How is our first quarter volume going? That is one.
Secondly, when Chairman Sir pointed out our volume guidance, I think IOCL Panipat was also included in that guidance. I mean, given that now they have shifted to GIGL, does that guidance continue or do we have to take that out from our volume assumption?
No. When Chairman gave guidance, GIGL volume we have not considered.
There was a volume number given out for Panipat Refinery, right? Which is there in the guidance. That is the volume which is getting carried in GIGL, I suppose.
Yes, yes. We have not considered.
Sir, how's the first quarter going? I mean, this quarter?
Some plants are presently having a planned shutdown. The power demand, which was expected last year, it was very heavy power demand in May. That demand is slightly muted.
Presently, we are within the 120-125, 127 MMSCMD zone. We hope to pick up on this transmission volume very shortly as soon as the maintenance is over. We expect some power demand also to come by next week. As you understand by DF, certain plants will start taking gas as soon as the connectivity to them is completed. Perhaps the first quarter itself may not be a sufficient guidance for the full year volumes. What my CMD is telling, this all is about the pipeline groups in eastern India, JHBTPL and the Baruni-Guwahati section going up to Guwahati. Many consumers are getting ready there. In a short time frame of one or two months, a lot of transmission volume may come up.
We expect by the end of this quarter, perhaps in June and July, more volume should pick up.
That's the right summary, sir?
Yes. Yes, please.
All right, sir. Thanks so much for the answer, sir. I'll get back in the meeting.
Great. Thank you so much. We have the next question from Maulik Patel. Maulik, please go ahead.
Yeah, hi. Am I audible? Yeah. Thanks, Chairman. Thanks, Director of Finance and Marketing, for the opportunity. A few questions. On the CapEx side, what is the guidance which we are giving for FY 2026? And given your couple of large projects, particularly Pata, we are finishing the CapEx this year, almost around INR 18,000 crore-INR 20,000 crore of CapEx which we planned a couple of years back. And Mumbai-Nagpur pipeline and others are getting complete.
In future, is the CapEx going to shift more towards net zero and renewable side?
For initial year 2026, we expect to have capital expenditure of around INR 10,000 crore. Largely, it will be on petrochemical and pipeline, around INR 3,000 crore each. Net zero, as you also stated, more than INR 1,000 crore. Operational CapEx we incur every year, around INR 15,000 crore-INR 16,000 crore will be around that. City gas distribution and other small like LNG and CBG projects.
Sir, any update on the MP CapEx? Sorry, please.
You are correct that most of our petrochemical projects and pipeline projects are getting completed within this financial year, that is 2025-2026.
We have, besides the CapEx which DF mentioned on our renewable net zero initiatives, sought authorizations of several pipelines which are pending along the east coast of the country and several others which were not completed by other entities. Hopefully, we should get those authorizations on nomination basis. We expect that our CapEx pipeline will be strong in executing those pipelines in future.
Got it. You asked about
any update on that MP?
Yeah. We have not yet decided on that particular project still. We will inform you in due course of time.
Sure. Sir, second question is on the marketing side of LNG.
In the country, including you, IOC, GSPC, Arcelor, HP, they have all done some around 6-7 million ton of medium-term LNG contract linked to the HH and oil, which most of them will start, some of them will start in this calendar year, many of them will start in next calendar year. Now, if I look at this combined volume of all those, this medium-term contract can be in the range of around 25-27 MMSCMD. My question is that will this expand overall KITI, which the country currently has, or a lot of this volume will just replace the spot in the market, which is we import approximately what, 7-8 million ton of spot LNG in the market? Will that replace a lot of spot, or it will actually expand the KITI?
It's a very important aspect of the market, gas market in the country.
We believe the market is actually in evolution. This is the process where we used to have three or four importers up to 10 years ago. Today, we've got about 12 importers who are importing LNG cargoes into the country. Most of these importers are actually working on new projects also. Whether it is AMNS, they have already started another project in the eastern side, I think Paradip or some other place, or Deepak Fertiliser, which signed another medium-term contract that you were referring to. Everybody is actually trying to invest in a new facility. For that, they are sourcing some niche contracts. There are certain initiatives that they are taking, whether they'll be able to manage those volumes or not. They have taken that plunge. This is the way the market develops.
At GAIL, we take pride in the way we have developed the systems here. We are the torchbearer in this field. We do whatever we do, others follow in three months, six months, one year, three years, five years. We did a five-year transition, which you referred to. We started the receiving supplies last month. Others have now come up with the similar structure. We believe this will expand the market. The consumption of gas in the country will grow on account of these new contracts.
To add to what Sanjay Ji has just mentioned, I believe, pointedly on your question, it is both. It is replacement of spot volumes because of the volatility which has been seen in the past. Everybody wants to have a sort of a certain price. It is also to take care of the growth which is expected in the country.
It is both. The logic, perhaps, of the short medium-term contracts is that everybody is perhaps waiting to see more and more liquefaction plants coming in the US and the global growth, which perhaps will then have some effect on the price levels and the formulas also.
Got it. Sir, just last question. This is on the petchem side. Given that the spread has been very weak in the last one and a half years and the price of most of the petchems are at multi-year low and our big CapEx is also getting commissioned in this financial year, do you think that this CapEx commissioning will probably, or number one, at the operational level, do you expect to make it a break-even on these current prices or the current spread?
The second question is how much time you require to ramp up the facilities, particularly on the PDHPP side, which will probably commission in the next two to three quarters.
There is a difference between the Pata petrochemical and the PDHPP you are referring to. PDHPP is a propane-based facility. When we took the decision for putting this plant, we did this analysis for the past several years, and we found that there is a good correlation between the propane as an input and PDHPP as an output. The spread we envisaged at the time of envisaging the project, we decided to do that, our analysis, and still it holds good. It is not going to be a similar situation which you are experiencing in Pata when gas price goes up and petrochemical price goes down.
We expect those correlations in terms of the propane and PDHPP price will continue to happen. In terms of our capacity expansion, the first year, we expect that plant to run after commissioning maybe at 60%-70% level of capacity. In the second year, maybe around 90%, and then it may be at full capacity. That is the normal trend of any process plants.
Thanks, Kumar, for answering my question.
You were asking about the ramp-up. We believe that the production of PP in the country in this financial year would be about 7.9 million tons, and the consumption would be about 8.2 million tons. There is real scope for the plant to ramp up. Our plant will be commissioned this year. We hope to achieve full load after the usual teething period of three to six months. The profitability—
Thank you. Thank you very much.
The profitability metrics of our current petrochemical capacity is relevant only for the 60 KTA addition at Pata. 500 KTA at Usar, DF just explained that propane is the input there. At Mangalore, 1.25 MTPA is a new product altogether, PTA.
Got it, sir. Thank you very much, and wish you good luck, sir.
Great. Thank you so much. We have the next question from Vivek. Again, please stick to two questions at a time. We have a very long queue here.
Thanks. Sure. Thanks for the opportunity. Thank you, management, for the chance. Number one is on the CGD sector. Now, the PNGRB's scenario analysis presents the CGD sector as one of the key drivers of demand growth. They are very bullish. They are projecting two to three times demand from the CGD sector between now and 2030.
My question is, how confident is the management of this demand projection, given that there has been some challenge in the increased input costs? Secondly, there is also pressure from authorities, especially in the northern part of the country, to push for electrification mandates. In that light, what is your sense of the realistic volume growth rate that CGD can deliver and therefore drive overall gas demand growth? I will ask the second question after this answer. Thank you.
The market is so big that EV push that you are referring to, possibly you are referring to Delhi, DTC, etc., and the new registration rules, the draft rules that they have given out.
We believe CGD sector is, because of the reach, because of the 307 geographical areas that we have that PNGRB has authorized, the demand in the country in CGD sector would definitely double or more than double in the next seven, eight years. The current consumption in CGD sector is about 42 million cubic meters per day. It can easily reach 100 million cubic meters per day because the EV would not affect the market. The market is so big. The need for transportation is there. CGD will play its own role. EVs will play its own role. LNG as a fuel would also, for heavy-duty vehicles, play its own role. One or two EV push in one or two would not affect the growth of the CGD segment in the country. That's our view. Let me supplement our Director of Marketing.
The pressure will not be on gas-based vehicles. The pressure will be on the other fossil fuels like petrol and diesel, in particular, diesel. That is not a concern. Second, in order to give boost to this growth, there have been a lot of actions being taken place on the ground. Like Chairman, during opening remarks, said that the PNGRB is also looking for reducing the tariff for city gas distribution network companies from zone 2, zone 3, to zone 1. That will certainly help in input pricing. We also expect that as the business, as we are moving forward, the gas will also come under GST. These two will certainly take care of their input cost, even if they have to compete with other fossil fuels.
Okay. Thank you. That is very helpful. Just one small follow-up.
You've been talking about natural gas inclusion under GST. Is there any update to share in that regard and any expectation on what the rate would be and how it would alter the demand scenario? Thanks.
Any update in terms of rate is difficult, but we expect the gas will come very soon in GST. That is what we hear from the policymakers and power corridor. A couple of years back, a consultant had suggested a revenue-neutral rate of around 12% for GST to come for natural gas. In addition, pending GST, you may be aware that several states have reduced the VAT rates on CNG, namely Andhra Pradesh and Assam, which comes to my mind immediately. Right. My last question is on the volume that got shifted to the other pipeline, the GIGL pipeline that got authorized.
Would it be possible for you to comment on the volume shortfall that you're facing because of that? By when do you expect a favorable resolution on that front? Is this number part of your FI26 guidance?
This matter is sub judice. In our recent analysis, we have taken away this volume from our guidance. Okay. How much is the volume, sir? See, it used to be 5-5.5 million cubic meters, which we used to transport to Dadri. That has now reduced to about 2.5-3 million cubic meters per day. It may go down further.
Okay. Thank you very much.
I t's a complex contractual arrangement, actually, which cannot be explained. There are some other details also in this regard.
All right. Thank you so much for the clarification.
All the best.
Great. We have the next question from Prabhalsin from ICSI Securities. Please go ahead.
Good morning, sir. Thanks for the opportunity. A couple of questions. Firstly, on the petrochemical business, you did mention about the pricing weakness that has been one of the drivers of lower profitability. If I look at the current quarter, pricing, at least on a QOQ basis, seems to be flat. It is more the increase in costs that has led to the decline in profitability, at least in Q4. I just wanted your perspective on how you expect things to change. Even if pricing were to remain, let's say, flat, can we expect any positive delta in terms of costs, given that we will have a much larger capacity to play with in the next couple of years?
What impact it can have on costs and whether there are any sourcing cost advantages also because of the additional LNG volumes that we are seeing now? Just your comments on that. T hat's my first question.
Sure. ICSI Practition is still the input cost has gone down. As you must have followed that, during quarter four, the Henry Hub price, which gas we have allocated for Pata plant, most of the volume Pata plant consumed belongs to Henry Hub category or index base. So that Henry Hub price has gone down abnormally. If you compare this year, largely it remains around $3.5-$4 per MMBtu, which was almost 50% last year. We believe that the prices at this level are not going to continue. It's already started softening.
That will certainly help us in reduction or managing the cost for Pata, even if the output price remains the same.
Okay. Right now, in terms of the gas that is being allocated or the cost being allocated to petrochem, it is almost entirely benchmarked to Henry Hub. Is my understanding correct?
N ot entirely. Most of the volume is Henry Hub linked. We optimize from time to time, but most of the volume we are giving is Henry Hub-based volume. It is an operational matter, actually. We look at the cargos, and the optimum solution is provided for our petrochemical plant.
Understood. Understood. The second qu estion was with respect to the gas trading business. You gave a guidance, what you have mentioned, of course, of 138-139 MMSCMD in terms of transmission volumes. Should we infer that gas marketing volume should sort of grow in tandem?
If I take the same sort of correlation with 127 MMSCMD being transmission, we did about 101 odd MMSCMD in trading.
Is that a similar sort of volume we should look at for FI2026?
Marketing, separately. In transmission, our guidance is 138, 148, 159 million cubic meters per day in the next three years. In gas marketing, we expect to do volume of 108 million, 114, that is 113.7 million, and 120.3 million. These are our marketing projections.
Sir, with this kind of a growth, I understand that you're reluctant to give a more specific guidance. But INR 4,500 crore, can we just assume that on the line of what has happened in the last couple of years, this is an absolute bear case for a very conservative guidance in terms of profitability from this segment?
Let me take this question, Prabhal.
We have been given the guidance, what is possible at a minimum. If you have followed last three years' guidance, we gave 3,000, we surpassed that. Then we gave 4,500 crore, we achieved almost 6,000 crore. Last year, we gave guidance initially INR 4,000 crore- INR 4,000 crore. And again, we surpassed this guidance to INR 4,800 crore. That is the history. We continue to give you guidance, which is possible. Chairman, in opening remarks, said INR 4,000 crore-INR 4,500 crore, and we expect that to be achieved.
Understood, sir. Last question, if I may squeeze in.
Do you mind coming back? We have a long queue. I'm so sorry.
No problem. Thanks. Thanks.
Yeah. Thanks. Next question is from Varatharajan from Antique Securities. Yeah. Varatharajan, if you can go ahead, please.
Yeah. Thanks, Abhishek. Thanks to the management for the opportunity.
If you can provide the GAIL Gas and the six GA volumes and the breakup in terms of CNG and other gas, please. Abhishek, was it audible?
Y eah. Yeah. You're audible.
Yes. Yes. 7.31 MMSCMD during last year in GAIL Gas, right? And if you are interested in breakup, the bulk trading was 4.37 MMSCMD, supplies to top TAS Tripajam zone on unified price basis 1.27. And then PNG and CNG 1.67 put together. These are the three segments: PNG, CNG 1.67, TAS Tripajam down 1.27, and 4.37 bulk trading. This was full year or Q4, sir? Sorry? This was the full year or the fourth quarter?
Full year. Full year. Full year. If you are interested in Q4, I can give that also.
Yes. This was a full year.
So full year, quarter four, the PNG and CNG were 1.81.
The TAS Tripajam was 1.34 and bulk trading 4.18. Total 7.33. It is almost in the same range.
Okay. This includes the 6 GAs as well?
This is not including 6 GAs. 6 GA is still with GAIL. That volume will be added as and when it is actually part of GAIL Gas. Today, it is not.
Okay. In case you have those numbers, if you can please share that.
Currently, sorry, 6 GAs of GAIL, we are marketing about 0.4-0.45 MMSCMD of gas there. During Kumbh, we had the opportunity of marketing 0.5 million cubic meters also on many days. Our outlook is that these particular geographical areas would grow by about 25% volume every year, these 6 GAs. In due course, as my CMD announced, these will be merged with GAIL Gas. The volume projections are like that. Right. I'm sorry.
Out of the 0.4, what would have been the CNG, sir? CNG and non-CNG?
CNG is about 0.31, 0.3 to 0.33. 0.3. Between 0.3-0.35 MMSCMD is CNG.
That is good enough. My second question was on the trading business. One is that the shift to gas-linked contract from oil-linked contract last time you had highlighted is going on. What would be the proportion now? Are we really targeting a 100% complete shift?
No, we have a very good balance of different kinds of contracts. We are having Brent, which used to be our main LNG index. Presently, as Indian crude basket, some sort of proxy of Brent is being used in the country also. About more than 20-22 million cubic meters per day of gas that we receive is based on Henry Hub index. We have also done some additional contracts on Henry Hub index.
We believe in maintaining balance between HH index and the crude oil index. If possible, we'll be able to share that number. We do not plan to shift completely to gas-based index.
That is what. Fair enough. Sir, would you have the proportion currently? Would that help? Would that be available?
Maybe so, Varatharajan. But I failed to understand.
Do you believe that perhaps we should move away from one particular index and do?
No, no, definitely not. In fact, I always felt that perhaps we have a great portfolio of having different linkage gases. Just to put that into context, basically, we are only concerned about the variability in terms of the HH price movement direction vis-à-vis the crude price movement direction.
If you remember, history suggests that at some point in time, you had a problem, basically, because the crude prices have fallen very sharply, and hence we had losses. Alternately, we also made significantly higher profits when we had the crude prices remaining higher. We just want to understand what is the exposure in terms of that risk and accordingly take a call on that. That is all we wanted to understand. Definitely not advocating one way or the other. This question we have been answering in almost every earning call. We have a portfolio of almost 21 MMSCMD linked to Henry Hub. This had been a concern not today, maybe three years back. Now, almost 19 MMSCMD of volume, either we have marketed on back-to-back basis or allocated to Pata.
That volume does not have any risk with respect to the change in prices with respect to crude. 2 MMSCMD volume, certainly we have open available with us, and we have good risk managing capability. Recently, when the Henry Hub price went up and crude price went down, we took swaps. That's how we locked our margins. Even for the volumes we market on index different than this, we have an ability to lock the margins. Largely, this volume is marketed on the same index. Therefore, you can see that the volatility is not coming. Volatility is coming not because of this. We have one more contract, which has a nine-month average on sourcing side and three-month average on marketing side. There we face cash flow issues.
We have cash flow in terms of positive cash flow, more than $2-$2.5 at some point of time when the prices were moving differently. That is sometimes bringing the volatility. That should not concern you because that is a cash flow issue. If you are not getting this year, certainly you will get next year because average has to come to the same level if you match this. That is not an issue today. In terms of the question you asked, what is the percentage? We have almost 43%-44% based on handicap.
That is very useful, sir. Thanks a lot.
Great. Thank you, Varatharajan. We have the next question from S. Ramesh from Nirmal Bang Securities. Thank you very much.
If you look at your guidance for marketing segment, can you share what is the kind of assumption you're making for Henry Hub gas price and Brent crude? Because the U.S. energy agency is talking about Henry Hub going past $4 because of the demand for gas for the LNG liquefaction plants there. What is your underlying assumption for Henry Hub gas price and the Brent crude price?
I just answered to the question of Varatharajan that Henry Hub price is almost not a part of this computation because we have marketed on the same index. Only around 2 MMSCMD of volume is open. Whatever Henry Hub price remains, we have sold to the customer on the same index. That's the pass-through price.
Okay. Second thought is on the Dabhol LNG terminal with the breakwater coming in.
Can you share what will be the ramp-up in volumes and the impact on profitability for Concord LNG?
Last year, last financial year, about 21 cargoes were regasified there. This year, we expect, as my CMD informed you, that we are hopeful that the certificate will come within one week. We expect to do about 34-36 cargoes this financial year in this terminal.
Would that help you make profits there? What is the current trend in profitability there?
I'm not able to hear you, sir. No, no. Current year, current year, we did not have the positive profit, certainly, because we regasified only 21 cargoes. As we move to 34-36 cargoes, almost 15 cargoes if added, then it adds to the bottom line almost INR 300 crore. This year, certainly, we were not in positive because of the breakwater issue.
But going forward, we will have positive bottom line from this scale.
Thank you very much.
Great. Next question is from the line of Sabri Hazarika from Emkay Global.
Hello. Yeah. So just one question. If I look into your tariff outlook, we have this upcoming tariff hike. Beyond that, also, there are certain events like probably some of the new pipelines getting connected to the integrated network and also volumes flowing through the bid-out pipelines where I think the tariff levels are much higher. Do you see blended tariff trajectory also to continue growing for the next three or four years, or do you see it more to be stable in the current scenario?
You're asking for unified tariff or integrated tariff?
Integrated tariff for GAIL. I think I'm not sure if the Baruni-Guwahati line has been included there and also Bangalore line once it gets commissioned. I think that will also form part of integrated tariff. Net net, do we see the blended tariff going up by these events and also some color on the bid-out pipelines? Yeah. Yeah. Thanks.
It does not include the KKMBPL pipeline. Baruni-Guwahati is part of integrated tariff, but it does not include the KKMBPL pipeline because it is not yet connected with Bangalore. Once it gets connected, it will form part of integrated tariff, and it will certainly significantly add to the bottom line for GAIL. That is one part. Second, you were asking what are other factors. Our tariff already we have submitted, and that is under revision.
Once the tariff is revised, we expect the integrated tariff to go up from, say, current level of INR 58. We have submitted INR 77. Even on the conservative side, we consider INR 70-INR 72. That is also another increase which is available. The third increase is that we are actually moving from utilization of this pipeline from the level around 70%. As we move from 70% to 75%, and we expect this to be available during financial year 2025-2026, then we have the ability to recoup our lost volume from December 2022 because regulatory provision is that whatever volume we have not, whatever pipeline capacity we have not utilized for the past years from the regulatory change which has happened in December, we will have the ability to recover those losses in future years.
As we are growing in transmissions, our ability to have more than a regulatory rate of 12% will increase. That, we expect, will happen from at least financial year 2026-2027. Does that answer you, or you wanted some more information?
Yeah, that answers my question. Thank you so much. All the best. That's all.
Abhishek, you're not audible.
Great. Thank you, Sabri. We'll take one last question from Gagan Dixit. Gagan, please go ahead.
Yes, sir. Thanks for taking my question, sir. I broadly want to know, sir, the reason for the normalization of the marketing EBITDA quarter-quarter because I recall this December quarter, you said that if I remove the exceptional, there are around INR 6 billion at that time the EBITDA.
You broadly said three, four reasons that time that higher Henry Hub prices, LNG sourcing was nine-month average versus the selling price three-month average, and you sold more than the contracted amount. I think what are the changes that happened that lead to the, I mean, you have done some repricing or done more hedging or something changes the customers?
Something broadly, if you can explain the reason for the quarter-quarter normalization. Shared that why our marketing margin had gone down, and you have covered all those reasons that one, we were overcommitted in the market. Normally, we expect the customer not to take at 100% level, but sometime we experienced that, and last quarter had seen those, we experienced those things, and that led to a reduction in marketing margin. Second, you also covered the nine-month average versus three-month average.
Third, we also had some handicap exposure when crude goes down. Those were also impacting. This situation reversed during this quarter. The crude prices had recently gone down, but almost in last quarter four the drop was not there. Whatever significant amount we lost in Q3, this was not the case. The volume which we actually committed, overcommitted, those experiences also we did not see in this quarter. Therefore, we arrived at a normative level of marketing margin, which is around INR 1,000 crore-INR 1,200 crore. That is what we have seen in this quarter.
Yes. Sir, my second question is that you have given the marketing guidance of around 108 MMSCMD or 7 MMSCMD growth in the FY 2026, and then 12 MMSCMD growth over the next two years from 2026 to 2028.
If I do the math, this is equivalent to this year, almost 2 million ton LNG, and then after that, for two years, it is 3 million ton LNG. Can I safely assume that this is the LNG contracts that you are confident that you are able to get? I mean, 2 million ton around this additional, and then 3 million ton from 2026 to 2028.
Part of that volume we have already sourced. Going forward, we continue to work on the market on a weekly basis. Whenever there is an opportunity, we would source those volumes. Our guidances are on. The volume of 108 million that we are expecting this year will materialize. There are RLNG contracts. The LNG contracts is one way of doing it. There may be other ways also.
Yeah. Yeah, that is from my side. Thanks. Thank you so much.
That will be the last question for today due to time constraints. Any closing comments before we end this call?
Yeah. Thank you very much to all the participants. Ultimately, I want to say that transmission remains our biggest bet. With increased transmission volumes supported by the growth in the country, commissioning of the new pipelines, connection of the new plants with the grid, and revision in the tariffs of our integrated pipelines, as well as the changes in the regulations, which will also give us additional support for the isolated networks, this transmission income is the biggest bet. I believe our diversified portfolio in terms of price is very helpful for us to sort of attain the guided numbers on the marketing margin side. We remain very confident.
As well as petrochemical prices are concerned, while we do not see a very great upside, even if the prices are favorable. At the same time, we do not see a very major downside also in petrochemicals. It may largely be range bound. That does not in any case impact largely on the profits because that is a minuscule component of our total game. I am very confident that from these levels, after attaining this highest level profit in the history of GAIL, while this was also supported by a one-time settlement from GMTS in quarter three, I am confident that we will be able to maintain this performance in all times in future. Thank you very much.
Great. Thank you so much, everyone. You can now disconnect your line. Have a good day. Thanks.