Ladies and gentlemen, good day, and welcome to Indraprastha Gas Limited Q1 FY 2025 Conference Call, hosted by IIFL Securities. As a reminder, all the participants line 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harsh Dole from IIFL Securities Limited. Thank you, and over to you.
Thanks, moderator. Greetings, everyone. On behalf of IIFL Securities, I welcome you all for the first quarter FY 2025 earnings call of Indraprastha Gas. To discuss the performance of the quarter and share the operational outlook, we have the senior management team of the company. I'm pleased to introduce MD IGL, Mr. Kamal Kishore Chatiwal, Director Commercial, Mr. Mohit Bhatia, and VP Finance, Mr. Manjeet Singh. I'd request the management to make the opening remarks, subsequent to which, the call will be open for Q&A. Over to you, Manjeet Ji.
Good afternoon, ladies and gentlemen. I'm Kamal Kishore Chatiwal, Managing Director of IGL. A very warm welcome to all of you in the quarter 1 FY 2025 earnings call of IGL. To start with, I thank you all for taking out time and attending the call. To give a brief background of IGL, for some of you who may be a new joinee to this call, IGL is one of the leading CGD company in India. The company is currently operating in 11 geographical areas, spread across four states. We have a good mix of matured and emerging GAs, which has provided us both challenges and opportunities.
In terms of infrastructure development, we have developed steel pipeline network of more than 2,100 km and DP network of approximately 24,500 km, which provides natural gas to more than 27 lakh households, close to 5,000 industrial customers, 6,100 commercial customers. IGL operates more than 882 CNG stations, serving approximately 20 lakh vehicles. Now, speaking about the sales volume, CNG sales volume has increased year-on-year by 5%, this is after absorbing the decrease in CNG sales to DTC buses. The sales in Delhi is flat, which... We have seen a double-digit growth in the outside Delhi GAs. For PNG sales volume, our PNG sales has increased 7% year-on-year.
Further, breaking it down, we have seen a 16% increase in domestic segment sales, while our industrial and commercial segment sales have risen by 6%, demonstrating the increased adoption of PNG gas as a reliable and efficient energy source. Approximately an addition of about 16,000 new and retrofitted CNG vehicles per month is being witnessed during current quarter, as against an average of about 13,500 during the corresponding quarter of previous year. We are taking initiatives in industrial and commercial sectors to increase the sales in the sector, and we'll focus on this segment to contribute in volume growth.
When we divide this into statewide sales, year-on-year increase in overall sales is like this: increase of sales in Delhi is 1%, in UP it's 14%, Haryana 12%, and Rajasthan it is exceeding 100%, and one of the factor is that base is small there. There is a 1% decrease in sales in sequential quarters, as the quarter one is generally a subdued quarter, where sales volume are generally low, as schools remain closed due to summer vacation and school buses, vans are not plying. Further, there is a decrease in PNG demand due to movement of household for vacations outside Delhi, and also heat requirement is lesser in Q1 as compared to Q4. This was my opening remarks, and now I request our Director Commercial to give his opening remark.
Yeah. Thank you, Mr. Chatiwal. Good afternoon, everyone. I am Mohit Bhatia, Director Commercial of Indraprastha Gas Limited, and I welcome all our investors, fund houses, and analysts to participate in today's call. I presume that you would have gone through our financials, which were reported on 24th of this month. Let me share the highlights of our financial performance for Q1, and we are pleased to report that our sales volume for Q1 was 786 million Sm³ , which was up by 5% year-over-year on the first quarter, which counts to 8.64 million of sales per day. Vis-a-vis if we compare with last quarter, it was 8.2, so the growth of around 0.44 million per day.
Secondly, the revenue was INR 3,877 crores, which is almost 4% higher than the previous year.
Coming to the EBITDA, it was INR 582 crores. It was down by 9% over last year, mainly on account of the reduction in the CNG sales prices during the month of March. However, there is an increase of 11% on sequential basis. So the profit after the tax, that is the PAT, was INR 401 crores during the Q1 as compared to the last year of INR 438 crores. Despite decline in DTC CNG sales, sir, there is a overall increase in the CNG sales volume by 5% on the year-on-year basis, which suggests a growing preference for CNG vehicles among the consumers. The trend reinforce our optimism about the long-term potential of the CNG market and positions our continued growth.
In addition to that, I want to highlight specifically that we are seeing a promising development in the two-wheeler market. Particularly, we all know that Bajaj Motors has recently introduced CNG-powered two-vehicle bikes, and TVS has also shown keen interest in the similar offerings it is coming up. So with this, we expect that this trend is going to have a significant increase in the CNG sales in future, particularly. And we, as IGL, is geared up for the putting up the infrastructure for the two-wheeler segment, and we are confident to benefit from this shift as a leading player in this market. So with this, I once again welcome all of you for the open session for the Q&A.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Yeah, good afternoon, sir. Thank you for the opportunity. I had a couple of questions. Firstly, I believe it has been mentioned by MB sir earlier as well, that you are targeting about 9.5 MMSCMD of volume by the end of this year. Just wanted to clarify that this 9.5 is essentially the exit rate that is being targeted by the end of the year, or is that the average volume you expect to reach by the fourth quarter? Just to get some clarity on that.
Actually, last year, we closed it at around 8.73, and the first quarter is 8.64. If you look at the previous year, it was at 8.2.
Right.
There is an 8 point... From 8.2, we are at 8.64.
Sure.
Normally, the fourth quarter is the highest- because of the winter and also the number of stations what we have planned gets commissioned by that time. So we are targeting 9.5, exiting the fourth quarter at 9.5.
Understood, sir. Perfectly. Just a follow-up to that, in terms of achieving that, sir, how much of a role will the, you know, moderation in LNG prices play? In the sense that if there is once again a spike in LNG, given the constantly decreasing allocation of priority gas, is that sort of any sort of a downside risk to our expectations, or is this guidance building in that uncertainty over the next quarter?
Actually, that uncertainty we have already built in, in the sense- that, if you look at our EBITDA for SCM guidance, that is 7-8, 8.5 levels. We are at 6.76. Just, before the end of the quarter, we were about able to pass on INR 1 increase to the customers. So I believe that will be, next quarter will be more than 8. So we are into a comfortable range. So any adverse impact as far as LNG is concerned-
So I think we have some cushion to absorb that. That is factoring-
Yeah
In that any increase, unless there is a war like Ukraine-Russia war, there was a sudden spike up to-
Right
$40-$50 per MMBTu. Barring that, the price, minor fluctuation 10%-15% is factored in.
Understood, sir. Last two questions from my side. If we can quantify, and I apologize if you've already said this, but the absolute volume today, out of the 8.6 that we did this quarter, UP, Haryana and Rajasthan would be what percentage of this volume, roughly?
You see, the Delhi is now at 70%. Earlier, it was at 73%.
Okay.
Delhi is 70, and,
30% is, yeah.
Other than Delhi is now 30%, so they are increasing their share.
Understood.
If you look at state-wise, Haryana, UP is at 2.14.
Okay.
Delhi is 5.26. Haryana is 0.66.
Okay.
Rajasthan is 0.1.
Got it, sir. And sir, last question from my side, for FY 2026, therefore, given the exit rate of 9.5, what kind of growth rate can we sort of expect, given that the full impact of, you know, at least the EV conversion would already be in the system, whatever buses and all are remaining, would probably have gone to EV? So starting, I mean, for FY 2026 then, what sort of run rate should we be building in, from a volume perspective?
Actually, our target is 10%-12% growth, and now our LNG business has also started contributing. So last year, one of our stations got commissioned, and it is currently doing 4,000, 5,000 kg per day.
So, and this, we have planned 5-6 more stations, including one exclusive station for CONCOR. So we expect those volumes to also come in. In addition to that, our strategy is, the board is recently approved, in that the LNG station number is even higher in the next 5, 6 years. That's around 100. So that, coupled with, say, any green logistics requirement in the country, we are of the opinion that that, that sector is currently in at the nascent stage, and by 2026, by FY 2026, so that should contribute significantly. And whatever threat is there from EV would be, I think, more than negative, and so we see 10%-12% growth in next 5-6 years.
So just to just to supplement what Mr. Chatiwal just mentioned, see, as I said in the opening this thing also, that Bajaj Motors has already launched two-wheeler, and this segment is going to come up well. Around 30,000 bikes will be on the roads from maybe, i t has already started, and it will be further strengthened. So if this type of the two-wheeler segment picks up, we also look forward for substantial increase in the sales volume.
Understood, sir. Thank you so much for the detailed answer. I'll come back if I have more. Thank you.
Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. The next question is from the line of Somaiah V. from Avendus Spark. Please go ahead.
Thanks for the opportunity, sir. Sir, you did mention volume breakup GA-wise. Would it be possible to share volume breakup based on vehicles, cabs, autos, buses?
You see, I can give you the rough numbers, that 40% is passenger vehicle segment, then 40% is commercial segment, and 20% is buses.
Would it be possible to break between private cabs and autos also within this?
40%, what I, what I said was the private vehicles.
Cabs and autos-
Now, I'll give you the, breakup. Bus is at 18%, private cars 42%, and taxis at 13%, autos at 10%, and light goods vehicle is at 18%, and other mandatory vehicles at 40%.
So this is at a consolidated level, all GAs put together? A total CNG breakup.
Yeah, yeah, all GAs, all GAs.
Understood, sir. So then also, if you could quantify the impact of DTC buses in this quarter, and is it by and large over, what should we expect for the rest of the year? And also, I think there was 1,000 odd buses, CNG buses, that were supposed to get an extension in, I think, June. So, any update on that front?
You see, last year, in 2023, it was at 3.1 lakhs. The DTC volumes was at 3.1, which last year was 2.54, and it has been reduced to 1.5.
What, what do we expect for rest of the year, sir? This 1.5 would be maintained or it will,
No, no, no. By 2026, we have made it clear earlier also, in next 2-3 years, we expect the volumes from DTC to go away, because that is the stated policy of Delhi government.
Got you. So one last question. What would be the APM mix, current quarters?
You see, APM is at 62%, and 38 is RLNG.
This is for Q1, Q1 2025?
Q1, Q1.
Got it. Thank you.
Thank you very much. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, and congratulations for the good set of numbers. Sir, we wanted to understand, despite INR 2.5 per kg cut in the CNG prices in the second week of March, your CNG net realization per unit has been largely at the same level. So is it because of the geography-wise CNG mix, which is changing in favor of high, higher CNG price realization?
So actually, if you look at this net of tax, INR 2.5 amounts to around INR 1.77 per kg. But you know, we affected this from first week of March. So you can say that the fourth quarter, around 2/3 impact was there in fourth quarter. Or rather 1/3 was there in the fourth quarter, and the full impact was there in the first quarter. So net-net, if you see 1.7, net of tax, if you see, it will be even lesser than that, you know, if you reduce 14% also from that. And in SCM terms, it is slightly lower, even lower. So but in kg terms, it, that is the impact.
So, sir, you-
If you look at the impact, last year, we did EBITDA per SCM level. If you look at that, we did 6.58 per SCM in quarter four, and that has improved to 7.
4.
4. Right. Now, this improvement has been because of two reasons. One is that, there is some bit of operational efficiency that we have brought in, including reduction in gas loss. Second is the gas sourcing. There has been some improvement in gas sourcing, so our cost of gas has also gone down.
Okay. Sir, if you could share the capital expenditures for the first quarter and the guidance for FY 2025?
You see, we have a CapEx of INR 1,700 crores-INR 1,800 crores for the entire quarter, for the entire year, and for the first quarter it is at INR 297 crores, as against INR 202 crores in the previous year.
Last, from my side, as you mentioned, the LNG business has started. What would be the margins on the LNG business in terms of INR per SCM? Are it better than,
They are better than, they are better than CNG because there is, you know, the excise duty component is not there in LNG, and the selling price being the same, almost the same. So, there is better margins in LNG business, especially in GAs, which are closer to the shore.
Okay, thanks. Thanks for that.
I mean, the transportation cost is lesser if you are closer to the shore.
Okay, thanks, sir. Thanks, thanks a lot. Best of luck from my side.
Thank you. The next question is from the line of Sabri Hazarika from Emkay Global. Please go ahead.
Yeah, good afternoon. So, sir, just to clarify, you mentioned that DTC was 3.1 MMSCMD earlier, which fell to 2.5 in Q1 of FY 2024, and that is 1.5 MMSCMD in this quarter. Is that right?
Yeah, yeah. So actually, that is in kg terms, 3.1 k-
Okay, that's million kgs?
Yeah. [crosstalk] It is per day data. Per day, lakh, 3.1 lakh per day, kg.
Okay, lakh kg per day. Okay. Okay, sir. So, so this is the kind of fall which has happened in the last two, three years. And, okay, and secondly-
Well, almost, I would say that 3%-4% is balance, so that will slowly go away in next maybe 2-3 years. And the reason why that is not sudden is because some of the, there are electric tenders, what we believe is that they had brought out a bus tender. So that has, I think, failed. They do not get the bidders. So that was the reason.
Okay, sir. Is there any impact of this whole DTC share going down on the realization? Because from what I could understand, you give some sort of, like, discount to DTC, so the price there is lesser. So that has been also a contributing factor behind margin expansion for the company?
Yes, that is also one of the factors, that in the sense that, the discount is closer to INR 5 per kg.
Okay.
And it is in lieu of the stations that, I mean, they give us the land to set up stations, and we give them a bulk, and also the bulk discount there, because they are a bulk customer as also the state undertaking. So that was the reason. So that going away, that is a positive impact on the realization.
You're right, sir. Second question is on your gas cost. So, despite the sourcing efficiency and also we had seen some of the benchmarks basically going up and your allocation also going down, but is there anything specific behind gas cost actually remaining pretty stable or even down QoQ?
One of the reason is that you get, throughout the year, some opportunity when the spot comes down. So, we utilized one such opportunity to source, say, 5 lakh, 0.5 million, point, close to 5 lakh gas in that duration. So that was one of the factors. Because all other, rest of the contracts, we have long-term contracts, and we have linked 50%-60% and balance, Brent and, JCC linked, JKM linked. So those are the mix of our contracts. Most of them are long-term, long and medium-term. So, so that was the 5, 7, 8% window, so we could utilize that.
500,000 standard cubic meters per day?
Yeah, 500,000 SCMD gas was there.
SCMD, SCMD.
SCMD, okay. Sir, what was your CNG volume in kg terms?
CNG volume in kg terms. So, almost, at a daily level, if we say that it was around 47 lakhs, you can say, in the last quarter.
Okay, sir. Thank you so much, and all the best. Yeah.
Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thank you, sir, for this opportunity. In terms of the gas purchase, you shared that we have a 38% RLNG mix. Would we be able to split that mix into the domestically what we buy as HPHT, and what is basically the contracted and the spot one?
There was actually 0.4 of HPHT into that, that we got. Then we got some of the spot through IGX and other districts, and have balances through our short-term and medium-term contracts that we have.
Right. Would it be also possible to quantify what is our average gas transportation cost for us?
Average gas transportation cost is, actually, we are into Zone 2 tariff. Most of us, most of this is in Zone 2 tariff.
Right.
Currently, that is, the APM is at 79 plus 12% GST. APM, non-APM is at, 79, and, ceiling price, is, comes into zone three, so that is 114.52, plus 1 2%. Rest other long-term spot, everything is at, zone two tariff, that is $79 per MMBtu.
Understood, sir. You also mentioned about the latest plan for the LNG station. Currently, it's doing 4,000-5,000 kg. What would be the potential for each LNG station? How much they can do, depending on the number-
We believe, we believe they can go up to 20,000, if they are on the, I mean, they have the vehicle population is also there, and they are strategically located, so 20,000 they should do easily.
In terms of the CONCOR LNG station that we spoke about, what could be the potential for the same?
They have around 100 vehicles initially. So I would assume that if every second day they fill, so that filling is 400. So even if 50 fill, or 1/4 of those vehicles get filled every day, so that will be 10,000 kg per day.
Right.
That is under construction, and we are hopeful that by March, I mean, by the end of the year, that should be operational.
Thank you, sir. I'll get back in the queue.
Thank you very much. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you, and good morning. So, when you talk about these vehicle conversion numbers, going up from 13,500 to 16,000, that's not showing up in the kind of growth that you've reported for CNG. And this has been a challenge in the last 2-3 years. You have been reporting numbers, but there doesn't seem to be any direct linkage in terms of the growth percentage in CNG consumption compared to the vehicle additions. So when do you see that, you know, the actual CNG vehicle, CNG, sales growth actually synchronizing with the vehicle additions?
I think some of the impact could not be visible due to the DTC volumes going down. I'm hopeful that in next quarter, in quarter two, you will see a significant increase in CNG volumes.
When you say significant, what will be the percentage growth of YoY?
I mean, it should be around 8%-10%.
8%-10%. And secondly, if you look at the, LNG, vehicle strategy, LNG fuel sales strategy, so, in terms of the return on capital employed, how would it compare with the current, you know, return on capital employed on the CNG business? So because if you were to get about 5% additional growth from LNG, you need about 100 stations, according to my rough calculations. So would your CONCOR stations actually be priority in terms of the visible addition to LNG stations? And is that going to be incrementally growing faster than CNG sales? And in terms of ROCE, based on the per station expenditure, would it be comparable or higher than the ROCE you get on the current CNG business?
You see, it has a potential of higher ROCE, just because the volume, I mean, per station, would definitely be higher. Regarding CONCOR, this is more of a captive, kind of a thing. It is between a bilateral arrangement, you can say, where there are 60 stations all over India. We have an MOU to convert those to LNG, but they are also... As and when they pick up pace, we will set up stations. Currently, we are focusing on two stations, one in Greater Noida and other in Bangalore.
So that is there, but in case there is a uptick in, say, the heavy and medium commercial vehicle segment across India, if there are vehicles, so we get feelers that, yes, there is a demand for green logistics, especially from steel, cement, FMCG players and MNC players, that too, because, back, back home, there is a pressure there. So we see a great future for this LNG business, and ROCE definitely would be better because current taxation is favorable to set up a LNG station. And the cost, more or less, you know, a big, big, CNG station and LNG station, 10%-20% cost is higher, but the re- net realization is higher in LNG.
So if you look at the next two years, the growth will be still driven by the existing CNG and PNG sales. So should we look at LNG adding to a growth say from 2027?
So we will be setting up six stations, 5-6 stations this year. And one station that set up, because it is in a location with the Ajmer, and that too, it's not on Golden Quadrilateral , but on the other highway. So there, 4,000-5,000 it is doing, so that's a good number for that station. And in case 5-6 more come up, so they will be equivalent to the other big CNG stations that we have. So 20,000, one station selling would be a good volume.
Thank you.
So right now, our strategy is to put up in our GAs, so there it will be a mix of both LNG and CNG also. So easily, we can target 20,000.
Okay, thank you very much, I'm done with.
Thank you. The next question is from the line of Devang Patel from Sameeksha Capital. Please go ahead.
Yes, sir. I wanted to ask, will be our CapEx beyond the current year when, CBG plants, you know, we might do more CapEx to meet mandatory blending. Plus, you mentioned, two-wheeler infra, some initiatives and on LNG stations. So all put together, what could our CapEx be?
Yeah. So, that's fine. I think we have already a plan for 10 CBG plant for this year. And we are looking for the JV mode also. And one of the CBG plant at Narela, it is already in construction with the 100 metric ton MSW feedstock, which will be generating around 4-5 tons per day. And nine another are in the pipeline, and we are looking forward with the some land challenges, so but it is coming up. So this, we are looking into it. And regarding the CapEx thing, so one CBG plant CapEx is around INR 30-35 crores. So for 10, it will be around INR 300-350 odd crores.
This type of some strategy planning we already have lined up.
The promise, you know, indication of, you know, blending of more of CBG, will we be, you know, adopting?
Sir, voice is not audible. If it can be little bit louder.
We have for CNG plants?
Devang, can you repeat your question again?
On a continuing basis, what kind of blending targets would you like to reach for CBG?
The government has some plans for in the coming years around 5% of the blending. But as on date because it all depends upon the production and the quality in terms of purity of the CBG, so still a lot of things are going on. So the blending, the plans is there, but today, as on date, it is not though that high, the volumes are not that high. So I would just add to that, that the 5% blending mandate is there, so that is by 2030, progressively going from 1%-5%. So we plan to reach that 5% by one or two years in advance of whatever is the mandate. So that is our plan, that 5% of whatever volumes we are doing would be CBG.
Okay. So secondly, on the two-wheeler-
Three years. That is our target in next three years. Rather than five years, it will be in three years.
Okay. And for two-wheeler, are you indicating that you will need to set up separate filling stations or infra, or that will be, you know, subsumed in the current infrastructure?
No, no. So what we meant was separate dispensing dispenser for that. I mean, you have a car dispenser, and then you have a separate dispenser within the same station for two-wheelers.
Okay. Sir, lastly, if you're putting 100 LNG stations, and on your current base of 800, 900 stations, could LNG volumes, you know, contribute 10% to your total volumes once you have all these, in place in five years from now?
Actually, we were targeting, say, around 20%-25% coming from those 100 stations, because the per station volume would be higher. Say, current our CNG per station volume is around 6,000, so LNG would be doing, say, 10,000 average. So with that, we target around, say, 15%-20% of even more than that should come from LNG.
All these 100 will be within our existing geographical areas, or you can outside of our current GAs?
No, no, no. 8-10, we have planned in our existing GA as of now, but those hundreds are not limited to our GA, they are pan-India. Because as you know, LNG for setting up LNG station, you don't require any license. I mean, you can go to other GAs and set up there.
Okay. Sir, on, on industrial side, are we taking any measures to increase the volume growth? We had a better growth in Q4 that's come off in Q1, so are we looking at discounts or any other measure to improve the growth?
So fine. I think, nowadays, this Q1, we, we have touched around 0.8 million of industrial sales per day. Whereas, there is a growth of around, six to seven percent vis-a-vis, the last quarter. And, we are also looking on a special pricing also because it's a little bit competitive with the alternate fuels. So some formula based, linked to the, our sourcing, we are looking into that, and, we have also identified some of the industrial pockets, particularly in, Rewari, Bawal area, and Gurugram area, and, Greater Noida, and Ghaziabad, and, we're trying to target, those areas for, picking up the industrial volumes.
Fine, sir. Thank you so much for taking my question.
Thank you. The next question is from the line of Pratyush Kamal from InCred Capital. Please go ahead.
Hello, sir. Thanks a lot for giving this opportunity. I have two basic questions that I want to put forward, regarding this result. First would be, I wanted to know what is the bifurcation of the sourcing cost when you talk about APM, HPHT, and the RLNG, average RLNG? So, per SCM, what is the cost we are getting sourced from APM, HPHT, and RLNG? And second would be, again, about long-term renegotiation of the contract. So I think that the current contract, which you'll be, you might be having, that the Brent would be, let's say, 14% the slope, and with the Henry Hub, it would, might be 5.5 plus 1.15 into Henry Hub prices, right? So is there any possibility of the renegotiation?
When is the contract ending, and if yes, what could the probable formula be for this, renegotiations in the long-term contract?
You see, there is a possibility, I will, I will just answer the last question, and Director Commercial would answer the balance one.
Sure.
I would say there is a possibility of renegotiation in the sense that we can do a time swap of that. That, you know, the Qatar contract is the costliest contract as of now because of the 15% VAT. And in the future deal that has been done, the Gujarat VAT is not there because the deal is happening in Qatar. Okay, the transfer of the asset is happening, molecule is happening in Qatar, so that 15% is not there. So we are looking at the option of doing a time swap, that whatever volumes we have here, we swap it to the, that contract, the new contract, and then make up this, this quantity that we have swapped with other available contracts. That is the option that we are exploring. And regarding the other landed costs and all, that's to commercial.
So, like the APM and non-APM thing, which we are getting at around 38% or so, so it is landed cost is around INR 27-28 per SCM. Whereas, on the RLNG contracts, like we had some advantages, and that is why the results are also like that. On the medium-term contracts, the particularly the Henry Hub and all, we are getting around INR 34-35 per SCM, and the long-term initial contracts is around INR 50 per SCM.
Thanks a lot, sir. Just a quick question regarding the same, that what is the formula for that JKM? So I know that the Brent is 14%-15%, and the Henry Hub is 1.15, and 2 Henry Hub, 5.5 or something. And what is the formula for the JKM in that case, for your long-term contract? And how, what is the composition of this JKM in the total RLNG?
So it is around 38% is the RLNG, and around 60%-63% we are getting APM, as on date.
In the 38%, what is the composition of this JKM?
For? Sorry?
JKM, JKM. JKM. JKM contract.
JKM. JKM.
Yeah.
JKM, I think, JKM, JKM composition is [crosstalk] JKM would be 5%-7%. 5%-7%.
What is the formula which you have in this JKM contract?
I think we will get back to you. It is around 13% of the slope.
Okay.
12.75 plus some constant.
Okay.
Approximately 13% of the slope.
Okay. No issues. Thanks a lot for answering the question.
Thank you. The next question is from the line of Chirag from Keynote Capital . Please go ahead.
Yeah, thank you for the opportunity. So my first question is related to the operational efficiency that you were talking about, compared to Q4, FY 2024. I just wanted to know what was the one-time, apart from that one-time and other incentive expenses, what was the actual leverage that you have come to play off based on SCM?
One is that, the other things that we can do. Now, what we have done is that, reduction in, say, gas loss percentages is one factor, then, service contracts, you know, the optimization of service contracts and the power cost, that is also one of the factors. And going forward, we are looking at, replacing the power with the green power that is also fitting in our net zero, strategy also. So we will be replacing our existing power with the green power. That not only gives us the net zero, credit, but also it will reduce the, power and fuel cost drastically. So this operational efficiency measures will continue in the next, quarter also, and we may see, a good improvement in quarter two also.
Okay, so with this operating leverage and increase in sales in CNG, can I expect that in the next quarter itself, we can see the EBITDA per SCM going above from 7.4 to, like, 7.8 or 8?
We are targeting much more closer to 8, or rather in excess of 8.
Okay. What is the capacity expansion plan for the FY 2025?
You see, we are setting up 90 CNG stations, so our current compression capacity is, say, around 120 kg, so it will add another, say, 10%-15% of compression capacity. So 10, 12 lakh kg additional would be there, in terms of compression capacity.
Okay, and in terms of-
Number of stations would be 90, and I would safely say that 50% of them would be slightly bigger stations, in the sense that there is a wide range, what you call a station. So starting from one or two dispensers, it can go up to 10, 12 dispensers. So our target is to set up slightly bigger stations, so that per station the volume and efficiency is higher. And in terms of numbers, I've told that 90 CNG stations and 327,000 domestic connections, 2,000- odd industrial commercial connections, and 3,000 km of MDPE pipeline.
So roughly, can I say it will be about INR 1,000 crores-INR 1,200 crores?
So just to add, what Mr. Chatiwal said, see, we have the CapEx plan of around INR 1,700 crores-INR 1,800 crores for this year, and out of which, in Q1, we have already spent INR 297 crores, roughly INR 300 crores.
Okay. So, in it, this INR 1,700 crores-INR 1,800 crores includes that INR 300 crores, INR 350 crores of CBG plant, right?
No, INR 350 crores is the total cost, but the equity portion would be slightly less in that. And the most of the plant will not be 100% IGL owned. We will be the offtaker of that.
Okay,
100% offtake will be by IGL, but the plant owner would be 50/50 JV mode kind of a thing, and that too, in debt equity. So you can safely assume that if we look at 60/40, so 20% of that cost would be IGL's cost.
Perfect. Perfect. Got it. That is it, that is it from my end. Thank you, sir.
Thank you. The next question is from the line of Varatharajan Sivasankaran from Antique Capital . Please go ahead.
Thank you for the opportunity, sir. On this 90 stations, can you give me the breakup in terms of Delhi versus others?
See, Delhi, we have plan of around 10-12, and balance outside Delhi in our GAs.
Fair enough. And have any of these DTC outlets have been closed with the, when the-
With regard to DTC outlet, what Director Commercial just said, that is in 90, but some of the outlets, I'm happy to share that we have got confirmation from DTC that six of their closed stations, the stations where the dispensing has closed for DTC buses, they will be now giving us additional space over there to set up a hybrid station, where private vehicles can also fill. So it will be on the outer side of those stations, and we have done the feasibility and everything, and then we approach them with a request, because our infrastructure is already there. Only thing is, we need some space to develop the private vehicle dispensing facility. So that six sites we have got.
So in this case, if I were to understand correctly, you'll be kind of relocating those dispensing units and compressors to the outside of the peripheral area so that you can service other customers. Is that how it works? Or you-
Compressor area may not be relocated. Compressor part may not be relocated, but the dispensing, because it was earlier designed for DTC bus dispensing, so that slight remodification and then, some approach for the general public over there, and then they can dispense and come out of that.
Any write-offs we foresee on account of this phenomenon?
Can you repeat the question, please?
Any write-offs we expect on account of the sum of the assets you might abandon?
Very, very minor. Very minor, not very significant.
Sure. And finally, on this EV policy implementation, how have you monitored the progress, and if you have any idea, you can update us?
Are you talking about EVs, EV policy?
Yeah, EV policy implementation. How do you see the progress, and how we can, like, you know, look at the-
Currently, you know, the new vehicle, when we speak to Ola, Uber, because they are aggre- They say that they are not come falling into that category of. It is more applicable to aggregators who have vehicles more than 25. So they are more of a, I mean, a platform they say. That is the understanding, but our understanding is that it is applicable only to new vehicle addition, even if it is understood that way, coming from new vehicles after, say, 3-4 years down the line. So that would be on new vehicles would be on electric. And by that time, you know, the growth or the performance of EVs will also be available to everybody to assess the situation.
So we are hopeful that, in case we are able to keep our prices at the current levels, so EVs would find it difficult to compete. Because MNGL has done a study for Pune Municipal Corporation, where, you know, they could find that the CNG buses are more economical than electric by, say, 15%-20% over a life cycle year. So they, in fact, canceled a tender of electric and then switched to CNG buses.
Great, sir. Thanks.
Thank you very much. The next question is from the line of Vishnu Kumar from Avendus Spark. Please go ahead.
Thanks for your time, sir. So just wanted to understand, the incremental cost for the form of delivery for the new GAs, let's say, the incremental compression from other areas or the transportation cost. Generally, what is the high extra delivery cost? And is there any increase or decrease over the last one or two years in this?
You see, typically the cost, additional cost of, in case it is not an online station, is INR 10-INR 12 per kg.
Okay.
In case we are feeding that through a cascade. So that is the typical cost. So in case we do it online, immediately we save INR 10-INR 12.
Got it. So here, within this, how much would be, let's say, the compression bit, and what will be the transportation, sir?
The majority of that is in transportation, because compression you get only INR 2-INR 3 is the compression, and balance is the-
INR 7-INR 8.
Compression balance is the transportation.
Got it.
That includes the vehicle and everything.
Got it. Sir, do we compress for other CGBs net? Because we also understand, for the net, at the delta, there are some locations where we probably take from others, and some locations others can probably take from us. And there is an additional spread that we possibly may gain or lose, depending on the net quantum. So trying to understand on that side.
Yeah, we are doing it as and when a request is made. Say, for example, we are doing for AG&P, for the-
Okay
GA. That we are doing, and then for, I think, CUGL also we are doing.
Yeah.
We charge somewhere around INR 11.7 per kg.
Okay. I mean, so at the net, we will be gaining, sir, because we'll also be using the... I'm guessing we don't use any compression from others?
No, no, no, no. That is with our compression facility. So that INR 11.7 is entirely the compression cost that we charge for delivering them a compressed gas.
Understood, sir. What will be this particular revenue, or revenue that we probably would have got, sir? Is it like a large number?
It's not very significant. I mean, we don't count that as a revenue source. It's not very significant.
It's actually a stopgap arrangement by the company. Till that time, they have their own compression capacity, so it's a limited volume out there.
Got it, sir. Sir, trying to understand the margin delta here, because as we move away, as our incremental volumes come from the newer geographies, which has a higher costing for us. And at the same time, we obviously need to get to scale, only then we'll probably put a pipeline. That I understand. So how will our margin journey be here? Because we also understand that LNG share is going to go. CBG also, my guess is that the cost is higher. So incrementally on the costing side, we have more line items that is going to go up, and the volume side also, incrementally, the volumes are going to come at marginally lower volume. Sorry, lower margin. So how does the net play out for us?
Which means that probably in the medium term, maybe 7-8 also, we should be probably looking at a lower end. Or what is the driver that is possibly going to help us counter this, issue?
You see, typically in a CGD entity, they start the seeding activity first.
Correct.
When you start seeding through the daughter booster mode or through the cascade, so you have an additional cost of INR 10-INR 12. Now, that is the strategy for IGL also, that we started the seeding activity first, and parallelly, we started laying the steel infrastructure to make it online. And slowly now we are in the process of converting those daughter booster to online stations. So rather in our new GAs, the cost will come down, not increase. Because as we make them more online, as we lay the infrastructure, connect the pipelines, and the cost will come down, in fact. So we are expecting that going forward in next 2-3 years, our this daughter booster would reduce drastically and the cost to us would go down to that extent.
Currently, 7.4 includes the contribution from GAs also, which their volume is going to increase substantially. So we expect that going forward, this per unit margin will keep on increasing with increase in sales volume. There were a lot of CapEx already been done in the new GAs, and we hope that we'll get realization very soon on that.
Got it. Sir, any LCNG you are planning so that also reduces? Because I'm guessing pipeline is not going to solve problems across all the markets, because volumes might be thin. So any LCNG route that you are adopting to reduce this cost?
So, fine. I think we have already lined up for two LCNG stations in terms of small scale LNG stations for this year. One in Delhi and one in somewhere in UP, Noida type.
Got it, sir. Sir, and just one final-
Wherever the pipeline is not feasible, say for example, in one of our GAs, Rajsamand, Nathdwara, and Udaipur area, so that's a slightly rocky area where laying the pipeline is costly. I mean, the route would become a lengthy route, and the cost of laying pipeline goes up. So in those GAs, our strategy is to feed it through LNG mode. And there we would be setting up LNG stations to cater to the domestic as well as the CNG requirement also.
Got it, sir. Sir, you mentioned in one of the earlier questions that you will be directly changing the source from India to Qatar, whereby you'll be saving 15% of VAT. Could you just explain that a little bit more, sir?
No, no, actually, we will not be paying. The new Qatar contract-
Correct.
which PLL has signed, you know, the existing one, the delivery is at Dahej, therefore, it attracts it to 15% VAT, Gujarat VAT.
Correct.
Okay. Now, the new contract, they will be taking delivery in Qatar, so the, that is-
Agreed.
PLL will be changing hands in Qatar.
Understood.
15% VAT would not be applicable because the sale has happened somewhere, and they will be bringing in Dahej.
Got it.
So that all this is being done by GAIL and PLL.
Got it.
Now, we have our contract with GAIL, so that we are looking at, doing a time swap, so that whatever volume we have in the existing contract, we switch it to the next contract, and then, make up that volume through other contracts.
Sir, but when you take delivery, at the end of the day, you still take delivery at, say, Delhi, where probably, I mean, GAIL will not require to do any branch transfer, let's say, at Gujarat and then do it at Delhi to you. This 15% will not be applicable for you under the VAT?
No. Then, in that case, if we are able to do a time swap-
Okay.
Then it will not be applicable, because we will be then switching to some other contract where central GST is a 2% central GST is there, so those contracts we will be switching.
Got it, sir. And finally, on CBG, what will be your costing that, when we, when we mix it, and you just mentioned that in three years we'll get to 5%. What will be the cost to us for CBG?
CBG would be the cheapest gas available in the country, in the sense that, there is no transportation involved, there is less GST, only 5%, tax-wise, no transportation. So we are expecting the landed cost to be somewhere around, even 10%-12% cheaper than the APM. So INR 25-26 per SCM.
Got it, sir. Thank you, and all the best.
Thank you. The next question is from the line of Nitin Tiwari from PhillipCapital. Please go ahead.
Good afternoon, sir. Thank you for the opportunity. My question is related to the media news, which was doing the rounds about reduction in excise duty. So, what in your opinion are the possibilities? Do you think there is a case for reduction or removal of excise duty in CNG? That is the first question, sir.
So, I think we also had the inputs that somewhere in the budget it will be taken, but then we believe that there is some homework left, and the regulator as well as the ministry is working on that, and it may come up in future also.
But you feel that there is a case which is fit for a removal of excise? Because excise was implemented as the gas is getting compressed, so that's seen as a processing of gas. So, what is now that has changed that is leading the government to review their decision of imposing excise on CNG?
Some inputs have gone into it because still they're working as a ministry as well as a regulator. Because we understand, still, it is into the manufacturing process, the CNG and excise should be there or not. So still debatable, but we have also given some input, and, let's see how it comes out, because the government has to take the decision on that.
Sure, sir. And so continuing on the previous question, where you were explaining about the time swap. So that is still not clear to me. When you say time swap, basically, you are, you're switching, your current volumes for more offtake in future. That's what you're doing?
No, no. Time swap means what? Suppose I have contracted, say, 100 unit in this contract, like-
Right.
-let's say, X contract.
Right.
I switch it to Y contract, which is, starting from, 28 to, 10 years down the line, so 28 to 38. So I switch this volume to 28, right?
Right. But what happens to the volume?
That volume-
What happens to the volume that [crosstalk] Yeah.
This 100 that I have switched- There is a vacuum there of 100. That I make up with, say, I have 5, 6 other contracts, so I can make up with the other contracts.
No, no, that part I get, that if you don't offtake this volume, you will probably make it up with the other contracts that you have, right? But you are in a contractual agreement with GAIL for off taking this 100 units now. Given that you don't offtake this now, so would you be off taking more of it later, or you would be paying take-or-pay? I mean, how does it work?
No, no, no. We will not be paying take-or-pay. We will be just swapping this volume to that because it is again, the Qatar contract, last year's contract only.
You'll be off taking more in the renewed contract, is what you're saying?
Yeah, additional volume is there. The same volume with a new contract, and this will be a Henry Hub contract, say, for example. So I'm taking the volume from GAIL, but-
And secondly, sir, why is that I-
If that is possible, then, we will be able to, I think, make some saving in cost of gas.
Understood, sir. And secondly, sir, like, you know, on this topic only, on the VAT that you're paying in Gujarat. So why is that, like, you know, when there is an arrangement for paying the central VAT of 2% in taking the sales out of state, so why are we not following that policy for saving on the cost?
No, no, because we have already contracted that, so we are bound by the contract. That is the reason.
So the value chain right now is that the title transfer happens to PLL, and then from PLL to GAIL, and from GAIL to IGL at Gujarat only. Is that where it happens? Or the sale for between-
Exactly. Exactly. Yeah, PLL to GAIL is happening at, Gujarat, so they levy 15%-
Okay.
And GAIL passes on to the other customers.
So the sale from GAIL to IGL also happens within Gujarat only, and, or it happens in Delhi?
It happens in Delhi, but once it is, the tax component is there, the same is passed on.
Okay.
GAIL has offices in Delhi and other states also, so they make here, as per their policy, they make the sales from the local offices of the states. So when I'm buying something in Delhi, GAIL's office in Delhi, then they send it from Delhi only. They don't allow selling from Gujarat to IGL Delhi.
Right. So I mean, if I understood this right, the sale has happened between PLL and GAIL in Gujarat, so that's a 15% VAT component. Then, GAIL is transferring to you in, in, in Delhi, right? In, under the new contract, the sale between PLL and GAIL won't happen in Gujarat. That is what you are saying?
Yes, yes.
Okay, sir. Got it. And sir, lastly, on the cost of LNG station, so, like you explained, that there is a cost of about INR 10-INR 12 in case of daughter booster station in case of CNG. So what is a similar cost structure for an LNG station? I mean, if you can provide us that in terms of say compression, cooling and transportation.
No, LNG, you know, the cost of gas is even lesser than what the CNG cost is, final CNG cost after compression.
Okay.
If I compare the final CNG cost after compression and an LNG cost, so LNG cost is lower, that INR 10-INR 12 lower.
Okay.
The net realization is, you know, even better.
But sir, there would be some cost associated with the cooling of gas and, I mean, keeping the gas cooled and compressed, right? So,
No, no, I think there is some disconnect, because we are not cooling the gas. We are getting liquid gas, liquefied, LNG at port and transporting in liquid form only, under cryogenic conditions, storing under cryogenic conditions, and dispensing that under cryogenic conditions. So everywhere it is a cryogenic operation, so that is why the equipment is slightly costlier. But at no point, there is a change of phase.
No, that's understood, sir. I mean, that's what I'm saying, that, like in the case of a daughter station, because you are transporting the gas, so there's a cost of transportation of INR 7-INR 8 per kg is what you mentioned, right? So similarly, because LNG cannot be supplied by pipeline, you're carrying it by trucks. So what is an equivalent cost in case of LNG, is what I'm asking. And plus, like, you know, when you are maintaining-
INR 1 per 100 km.
One, and one tanker is what quantity, sir?
18 tons.
How-
17-18 tons. 17-18 tons per 100 km. 17,000-18,000. Suppose I am bringing from Dahej.
Okay.
Let's say that is 700 km, so INR 7, you can say.
All right. So one tanker of 17-18 tons, about INR 700 is what you're paying for carrying that gas. And,
Not 700, it will be INR 7 per kg. So the tanker is 17,000 - 18,000 kg.
Into 7.
Into 7.
Sorry, sir. This is, you said INR 1 per km per kg?
So sorry to interrupt you, Mr. Nitin.
It's, uh-
Due to time constraints, we will take that as the last question.
I was just, I was just seeking a clarification. I mean, that's, that's all that I'm doing. It's continuation of what I did.
Your understanding is correct. INR 1 per kg per 100 km.
Sure, sir. All right, sir. Thank you so much.
Thank you very much. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Harsh Dole for the closing comments.
On behalf of IIFL Securities, I'd like to thank the management for giving us an opportunity. Also, I realize there are a couple of questions which are unanswered. I'd request them to send an email to the investor relations cell at IGL, and they'll be more than happy to take it offline. Thank you very much for your time and attending this call. Really appreciate it. Any last remarks, sir?
Thank you, Harsh, for organizing this call for us. It was a wonderful experience, and we have got a lot of questions, which gives a different perspective of looking into this. We'll keep on interacting with our investors as, and when possible. We are doing it on quarterly basis, but we are also planning to have something in between, if required, to share some news that we have with you. So thank you very much.
Really appreciate, sir. Thank you. Moderator?
On behalf of IIFL Securities, that concludes this conference for today. Thank you for joining us, and you may now disconnect your lines.