Ladies and gentlemen, good day and welcome to Mahanagar Gas Q2 FY26 Earnings Conference Call. As a reminder, all the participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the Conference Call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this Conference is being recorded. I now hand the Conference over to Mr. Yogesh Patil from Dolat Capital. Over to you, sir.
Thank you, Shloka. And a very good afternoon to everyone. I would like to welcome all the participants to this Q2 FY26 Mahanagar Gas Limited Conference Call. We have with us management represented by Mr. Ashu Shinghal, Managing Director, Mr. Sanjoy Shende , Deputy Managing Director, Mr. Rajesh Patel, Chief Financial Officer, and Mr. Mahesh Panohtra, AVP Marketing.
Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature, and we believe that expectations contained in the statements are reasonable. However, these statements involve a number of risks and uncertainties that may lead to different results.
We urge you to consider that quarterly numbers are not a reflection of long-term trends or indication of full-year results. So now, I would like to hand over the call to Mr. Ashu Shinghal for his opening remarks, and then we can move to the question-and-answer session. Sir, floor is open to you.
Thank you, Yogesh. A very good afternoon to all of you, and I welcome you on behalf of Dolat Capital to the Earnings Call for the second quarter of this financial year FY26. I would like to thank you all for attending our earnings call today.
I would like to commence with an update pertaining to the approval of the scheme of amalgamation by the Honorable National Company Law Tribunal (NCLT), with its order dated July 23, 2025. And Unison Enviro Private Limited, a wholly owned subsidiary of the company, has amalgamated with the company, with MGL, with effect from 1st February 2024.
Accordingly, the financial statements for the previous periods have been restated to give effect to the said amalgamation. All figures referred to in today's address represent the consolidated performance of the organization as a single legal entity. MGL continues to create infrastructure across its business segments in the licensed areas.
During this quarter, 53,566 domestic households were connected, and therefore, we have established connectivity for nearly 2,094,000 households. We have laid 87.4 km of steel and PE pipeline, taking the total length to over 8061.62 km. We added 14 CNG stations during this quarter, and with this, we have a total of 485 stations as of 30th September 2025.
We added 116 industrial and commercial customers during this quarter, and as of the end of this quarter, we have 5,316 industrial and commercial customers. During the quarter, there is an addition of 27,150 CNG vehicles, and now we have more than 1,220 ,000 CNG vehicles registered in our geographical areas. Coming to MGL operations during this quarter, we achieved an overall average sales volume of 4.593 MMSCMD, as against 4.454 in the previous quarter, which is an increase of 3.11%.
Current quarter volume consists of CNG volume of 3.22, DPNG volume of 0.582, and 0.757 MMSCMD of gas that was supplied to industrial and commercial customers. Compared to the previous quarter, sales volume in case of CNG has increased from 3.185- 3.255 MMSCMD, which is an increase of 2.19%. Sales for domestic PNG have increased from 0.571 - 0.582 MMSCMD, which is an increase of 1.69%, and in the case of industrial and commercial, sales volume has increased from 0.698- 0.757 MMSCMD, which is an increase of 8.45%.
Average gas sales volume for Q2 of the current year compared to the previous Q2, previous Q2 in the previous year, has increased to 4.593 from 4.205 MMSCMD, which is an increase of 9.22% Q2 volume. Q2 volume consists of CNG volume of 3.255, DPNG volume of 0.582, and 0.575 MMSCMD that was supplied to industrial and commercial. Overall average gas sales volume for H1 of the current year compared to the H1 in previous year has increased to 4.524 from 4.116 MMSCMD, which is an increase of 9.91%.
H1 volume consists of CNG volume of 3.22, DPNG volume of 0.576, and 0.727 for industrial and commercial customers. EBITDA from operations for this quarter is INR 338 crore, as compared to previous quarter EBITDA of INR 501 crore. Net profit after tax for this quarter is INR 193 crore, as compared to previous quarter PAT of INR 320 crore. It may be noted that in Q1 this financial year, there was a one-time reversal of OMC trade margins. H1 EBITDA is INR 839 crore, compared to previous year H1 EBITDA of INR 850 crore.
Net profit after tax is INR 513 crore for H1, as compared to INR 576 crore in the H1 of the previous year. With this, I conclude my opening remarks and would now like to open the floor for the questions. Thank you very much for your attentive listening.
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 touchscreen 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.
Good afternoon, sir. Thank you. I hope I'm audible.
Yeah, you are.
Yeah. So just a couple of questions. First was just wanted to understand the reasons for the cost increase that we've seen, seems to be quite steep compared to last quarter. So in that sense, the margins have taken a little bit off it. Just wanted to understand any particular source which sort of increased in cost.
Was it APM allocation that decreased, or is there any other one-time factors that we should look at as a result of reflection of UEPL's numbers? If you can just expand on this a little bit to help us understand what has happened to margins this quarter.
Yeah. So, compared to, I think your observation is correct. Compared to Q1, Q2 margins are reduced. And also, your observation is right that mainly it is on account of gas costs, apart from some reason on account of a little bit realization and maybe very nominal on account of OpEx.
Coming to gas costs, there are three, four factors which have impacted the gas cost compared to Q1. Gas mix, okay, as we have grown in volumes, the weighted average cost has gone up because of catering through spot RLNG and HPHT. Some amount of NWG has also come down compared to Q1, and it has not been replaced in the equal proportion, APM. Okay. So APM plus NWG put together compared to Q1 has reduced. Okay. So that is another reason. So.
So how much is the percentage? Sorry to interject. If I can get a number in terms of Q1 versus Q2, APM plus NWG of the priority allocation.
APM has marginally reduced, say, from 1.7- around 1.68, and NWG has come down from $5 00,000- around $350,000. Okay.
Okay.
That's the absolute number I'm sharing with you.
Right, right. Got it. Got it.
Because of this, overall impact is roughly 70-75 paisa per SCM. Another important factor is exchange rate, which has moved up almost by, on average, for Q1 - Q2 by INR 2. So roughly, that has contributed a little more than 50 paisa per SCM. One more factor is there is a concept called uniform base price.
So apart from APM price, GAIL commingled the CBG gas, and so though applicable price of APM is $6.75, the effective price along with CBG was almost equal to $6.99 or $7 in a way. So there was an increase compared to Q1 of 20 cents, which roughly comes to around 20-22 paisa. Okay.
Right. Right.
Coming on to the revenue side, the realization, if you look at Brent as Brent was. Actually, one more factor in case of gas costs. In the Q1, there was some advantage in one month because of Brent coming down below $65, so we had APM price go up, whereas APM price on average has gone up in this quarter for all the months. It was at ceiling rather than anytime below ceiling. Okay.
Right. Right. Right.
In case of I&C realization compared to Q1, linked to alternate fuel has slightly come down. But there is a quite good amount of reduction in case of bulk LPG prices. So there, our commercial segment, we have lost out at least a little more than INR 2 on margin per SCM. Okay. So this is gas cost realization. And on OpEx, I think we have inched up by around INR 0.15-INR 0.20. So all that put together, you see EBITDA movement from around 9.68 to roughly INR 8 per SCM during the quarter. Okay.
Got it. Got it. Perfectly clear. Sir, if I can.
Yeah.
Sorry, sir. Go ahead.
We see that some amount of little bit compensation in terms of increase in APM has been done in this quarter, but marginally, not the full amount of NWG cut. So we see that going forward, there could be improvement in the gas cost. Okay.
Right. So just as a small follow-up then, with respect to, thank you for clearly articulating the impact on margin. But just to understand for second half then, how can we actually mitigate some of this? The exchange rate hit is going to remain there no matter what.
I guess the APM price can still reduce because crude has once again softened and can come below the ceiling price. But the exchange rate impact plus the impact of the low allocation to begin with, as you said, it's only marginally improved. So is there a price rise that we can be looking at? And if so, what kind of interval should we be sort of looking at for these cost increases to be passed through?
So I think you are giving the answer to me yourself that one of the options is definitely price rise, but we will be very cautious and calibrating before doing any price rise in case of CNG, where we are more to drive volume. Even in case of industrial commercial, we want to drive first volumes, and then margins actually can be or prices can be changed.
One more factor which is in our hand is if you see the gas composition, we have almost gone more than 0.3 HPHT or RLNG through IGX. So our all term contracts are getting fully consumed, and we are buying spot either HPHT or RLNG.
So we will be soon converting into term contract. Also, there is a likely availability of HPHT, almost 12 ,000,000. I think long-term contract is likely to come up in the month of January 2026. And I think that will give us a good respite, if not Q3, Q4 certainly. Okay. And of course, as you said, we have taken price increase also in the last quarter and some marginal INR 0.50 increase again in the month of October as well. So we will do our best to maintain margin.
Got it. Last question, sir. In terms of guidance, therefore, should we still be working with somewhere in the vicinity of INR 9, or do you think that it is more reasonable to expect a slightly lower number, at least for the second half of this financial year, and then maybe improving 27 onwards?
My guess is at least for Q3, you can hold on, or you can consider 8.5 could be, because I'm talking from perspective of what factors we can improve on.
Sure.
Depending on externally how much HPHT, because HPHT do come from at least Reliance on IGX very regularly.
Right. Right.
But every CGD is after that, and it is getting consumed fully. But long-term contracts, once it comes Q4, certainly we will have improvement. And as you said, Brent is breaching almost $65, so we may have a chance of APM price also slightly improving.
Going forward, the trend of Brent coming down is more likely, and all APM and NWG is linked to the Brent only. I mean, Indian crude basket, but that is also similar to Brent. Margins, if you see, last financial year, we had around INR 10, and this financial year, H1, we have INR 10.13. So overall, it is not very low. This quarter has been low, but let us see Q3, Q4, both the levers, as Rajesh explained, are available with us, and we will take a call once the time comes.
Perfectly clear, sir. Thank you so much for the detail now. I'll come back from.
Some respite has already come in terms of Gujarat tax, but of course, MGL is not getting so much of gas from Gujarat.
Right.
In the NWG increases, that respite is there. But we have to keep our watch on zone-wise tariff also.
Sure.
So considering all the factors, 8.5 could be a very reasonable range. Of course, upside can be there from there.
Got it. Got it. Got it. Thank you, sir. Thank you so much. All the best.
Thank you. The next question is from the line of Varatharajan Sivasankaran from Antique Stock Broking. Please go ahead.
Thank you for the opportunity, sir. So if I can just for a little more detail in terms of the procurement mix, each of them, what is the volume? You gave some details on the APM and NWG. If you can give us the other ones as well, HPHT and LNG, and in that as well, the breakup of Brent-linked as well as gas-linked.
So other than APM and NWG, Henry Hub-linked, we already have been saying in the earlier calls also, 1.45 SCMD is a term contract. We are fully consuming that gas as of today.
Okay.
And HPHT, 500,000 term contracts are there with us. Other than that.
500,000 is not including the 0.3 which you are taking from.
Yes. So if you include that 0.1 of RIL gas, it is 0.6 SCMD. So currently, we end up consuming somewhere around 0.3- 0.4 through IGX, which could be HPHT or RLNG.
Any other Brent-linked [inaudible] LNG that you are consuming?
Sorry, could you repeat?
Any Brent-linked LNG that you are consuming?
RLNG, there is nothing.
Small quantity of Reliance is being taken. Mostly, it is through Henry Hub of. `
And also this uniform base price, what is the current proportion of CBG which is being blended?
See, we have not shared the proportion with the consumer, but if you want to work out backward, let us say 6.75 is the APM price, and the blended price I'm getting it as around 6.98 or 6.99. You can work out what could be the proportion of CBG which is being blended. I'll work out, and then I'll share with you. Otherwise.
Not a problem. Yeah, I'll touch base with you later. In terms of this procurement of gas, the mix which you gave us, now, this includes Unison Enviro, or this is an old mix?
No, no, no. This I gave you excluding Unison Enviro right now. I have not given you the volumes of Unison Enviro. Unison Enviro also gets 100% for domestic. They get almost same 35%-36% for CNG. Balance, they also rely on the Henry Hub and other term contracts.
That's useful. Thanks a lot.
But their volume of I&C and all is very small. So for.
They are mainly consuming CNG.
Mainly consuming CNG.
Of course, if I can extend a little bit, the number of outlets which are planned in both the entities, if you can give us some idea for the current year as well.
Last year, we have put up 66 stations. This year, we are targeting around 80 stations in the whole year.
So far, till Q2, what has been completed?
15, I think 15 stations.
17 stations have been completed.
As of today, 17 stations have been completed.
But you know, this three, four months is a monsoon period. So completion of the stations typically happens mostly in the Q4. So we have got land in place most of the places. We have got material in stores, and some line laying and other activities are happening.
Permissions, of course, are being taken care of. So by year-end, we expect around 80 numbers to be put up. Plus, some stations, we do upgradation, which are daughter booster stations. We take them to online stations, put new DUs and other things so that the sale also improves from those stations also.
Thanks a lot. I'll join back in a few.
Thank you.
Thank you. The next question comes from the line of Harsh Kachchhi from Banyan Tree Advisors. Please go ahead.
Hi. Thank you so much for the opportunity. So I wanted to ask the question around, so can you please elaborate? Am I audible?
Yeah, you are audible.
Yeah. So sir, can you please elaborate on the EV policy? So we see a clear directional indication towards EV. So 5 years down the line, do you see the PNG volume mix changing, and what value do you think the new businesses and PNG business will hold then?
You're talking about EV policy of Maharashtra or overall?
No, the Maharashtra EV policy.
Yeah, I think the targets in Maharashtra EV policy are very clearly defined, but there is no mechanism written that how much and how it will be implemented because last time also, they had some draft, but it could not be implemented in total. Now, having said that, EV, yes, it will make an impact in some of the segments like two-wheelers and three-wheelers we have seen across India. But again, the number of vehicles which are getting added up is also there. Plus, in Mumbai, 3-wheeler penetration by EV is almost negligible.
So we can see the history that despite EVs being there since last four, five years, the penetration in Mumbai particularly has not happened in three-wheeler segment. So we can take it forward because there are several factors associated with it. One is that in Mumbai, the parking space is a big issue.
The charging infrastructure is still to be set up. Most of the autos, etc., they operate on driver-shift basis. So there is hardly any time for charging. And many of the most of these autos are parked on the road also. So there is no charging infrastructure there. In case of heavy vehicles, there is hardly any penetration of EVs.
In BEST, yes, there have been some buses which have come off EV, but we are in talks with BEST to see how we can see that some CNG penetration can also happen. Besides that, EV will not be having much impact. In the commercial segment, maybe some of the taxis are on EV or some private cars are on EV.
But those are not many, I mean, heavily running like private cars. They are second cars, typically of the owners, which they have first car, and they go for the second car as a high segment end, which is not a segment for CNG. So overall, net in net, we see EV will have an impact, but not to a great extent, at least as far as MGL is concerned.
Plus, high CAPEX of EV upfront cost and battery will be required to be replaced after five, six years is another point. And resale value of EV is also another issue which comes into the mind of the customer while purchasing the vehicle. And for CNG, we have already had two CNG modes of schemes for commercial segments, particularly. This year also, we will be launching in a different manner, B2B more of a CNG type of a scheme.
Right. And just to follow up on that, what value do you think the new businesses and the investments that you've entered into, the EV charging and the battery manufacturing and the retail LNG, so these new businesses, what value do these businesses have in terms of the top line and in a medium-term perspective, let's say in the next three to five years?
These are new initiatives and slightly different from our core business, like our investment in 3EV manufacturing and IBC. So first come to IBC. It is a manufacturing unit, so we have yet to put up the plant. Once it is put up, CAPEX is around 800 crore or so, and the top line will be INR 1,000 crore if we put up one gigawatt.
So you can do your mathematics. Maybe after one and a half, two years, when the plant is ready, one year or so, one and a half year, then we will have some 15%-20% in the top line. Bottom line will take some time because it's a new investment. Similarly, 3EV is just an equity investment, so it does not get consolidated on line-to-line basis. It just gets entry into our profit and loss one entry.
Even IBC also.
IBC will also be like that.
Profit entry. The profit.
So major impact will not be there in revenue and bottom line. Only the investment entries will be there in these two. MLPL is a joint venture. We have 51% equity. But again, as compared to MGL's 490 stations and 2,3 LNG stations which we have, they have put up 2 LNG stations, and three more will be put up in this year. So in overall perspective, the numbers will be quite minimal, so to say, to start with. But yes, after 7,8 years, we can have significant impact of these investments.
Okay. Thank you. And just one last question from my side. Can you please help us with the landed gas cost that is coming from different sources? So what is the landed gas cost for APM, for HPHT, and for RLNG?
I can give you a range. Let's say APM landed could be in the range of around INR 24-INR 25, depending on exchange rate. Okay. NWG, HPHT range is roughly INR 32-INR 37, or sometimes it goes up to INR 38. Pure RLNG prices were slightly higher, so it goes as high as INR 40-INR 42 per SCM, including transportation, everything.
Okay. Thank you so much.
Does that answer your question, Mr. Harsh?
Yes. I'll join back.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. So just from gas sourcing, I just wanted a clarification. So you mentioned that APM was 1.6-1.7 SCMD, so that doesn't include new well gas, right? What would be the quantum of new well gas?
New well, as I said, in Q1, it was around 500,000. Now it has come down to around 300,000.
Right. And you mentioned HPHT contracted. So what is that exactly, HPHT contracted volume?
Hello?
Yeah. And you also mentioned that you have some contracted HPHT volume of 0.5 beyond IGX sourcing of 0.3. So what would be this contracted HPHT volume?
Mr. Amit?
Yeah. I'm there. Can you hear me?
Yes. Actually, the management cannot hear you clearly. May you please get back to the queue?
Okay. Sure. Yeah.
Thank you. The next question is from the line. The line for the management seems to have disconnected. Please stay on the line while we reconnect the management line. Thank you. The management is reconnected. Mr. Amit?
Yeah. Yeah. Hi.
You may continue with your question, please.
Sure. Thanks. And I was asking, you also mentioned that you have some contracted HPHT volume of 0.5. Is that the same as NWG, or that's a different volume?
Oh, that's a different volume. NWG is what is coming from the legacy field, but at 20% higher than APM price, which comes from mainly ONGC and other legacy fields, domestic gas production. HPHT is high pressure, high temperature fields, which is priced differently. Only I think it's CGD get priority in allocation over other users in the industry. So because if I totally add up, then basically that would imply that there were no spot purchases in Q2, then spot LNG purchases.
No, I think you will reach around 4.2 or something. We are already at 4.5, etc.
Spot was there.
Spot was there last time.
Yeah.
Right. And when is the next review of APM expected?
Price, you mean, or allocation?
No, no. The volume. Because last time, I mean, it has been some time since the quantity has been reviewed.
APM volume has already come down to around 35%, which was earlier around 80-90%. So government has said that maybe a few months' notice will be given before changes. But what happens is that sometimes, depending on actual prediction and adjustments and some of the consumers not taking gas, some reallotment or readjustment is done at the GA's end to see that whatever gas is coming is reallocated in proportion to whatever the availability and takeoff.
So some adjustments do take place, but maybe actually it should happen year-on-year basis, but sometimes it happens more frequently, as we have seen in past one year or so. So we are not very sure, but maybe at least a few months, we will have the similar numbers, and after that, we may get some reduced volumes.
But whatever APM is getting reduced is getting converted into new well gas. So it's a matter of 10% of Indian crude basket to 12% of Indian crude basket. To that impact, there is there. And floor and ceiling, obviously, is there in the APM, which is not there in new well gas.
But again, as we move on, that floor and ceiling will also have $0.25 per MMBTU increase every year for the ceiling part. So the gap will narrow on both accounts because the allocation has already come down. So we are sourcing our other sources like HPHT and term contracts and NWG in place of APM. So we are prepared for a scenario where then the APM allocation goes further down.
Understood. Just also, I understand that for industrial customers, you have been giving a 10% discount for the new customers. So was that a meaningful impact on margin, given that industrial volumes have grown quite sharply in the recent quarters?
So the margin impact is not mainly because of the new customers or large customers given discount, but mainly because of the prices linked to the Brent, and Brent has remained in a range of lower range compared to earlier. What we do is that for industrial customers, I mean, we have seen both the options.
One is cost-plus option, where we have the cost of procurement and our O&M and other charges and give them a cost-plus offer. But that is not very acceptable by the industrial customers. So what we have done is that we give them an offer that whatever is the alternate fuel linked to that index, we give them the gas. So effectively, the commodity risk is with us.
But in the last one and a half, two, three years, we have seen that most of the time, we are comfortable with the offer which we have given to them. In this particular quarter, what has happened is that all these alternate fuel prices have come down slightly, and our cost of procurement has slightly gone up or remained same. So therefore, the margins have come down. But that is more than compensated if we see the volume addition which is happening in this segment. So on absolute number, we will still be making incremental profits.
Understood. Understood. And just last question, what would be the KPI guidance for FY26?
We should be clocking at least for the MGL three GAs around INR 900-1,000 crore, and for UEPL three GAs in the range of INR 150-200 crores. That's the plan as of now. So INR 1,100- INR 1,200 crore as MGL should be our CAPEX.
Okay. That's all from me. Thank you very much.
Thank you. The next question is from the line of Akash Mehta from Canara HSBC Life Insurance. Please go ahead.
Yeah. Hi. So firstly, I just want to understand in terms of the margin guidance. I mean, at what margin would you be comfortable, I mean, going ahead? And what is, I mean, for you all to kind of consider a price hike? If you could just give in terms of, is the INR 9-INR 10 per SCM range still there, or we should lower it in terms of the current fiscal?
I think we have to balance both those things. One is that we are looking at volume growth also. So as you have seen that this Q2 has been much better in the volume growth. Overall, H1 versus H1, we see we are already around 10% volume growth, H1 of last year versus H1 of this year. Then price hike and other things are not, I mean, we can't disclose what is going to happen or what are our policies in that. But one thing is sure that procurement cost has gone slightly up. There have been exchange rate variation.
And depending on alternate fuel prices, we take a call about every month, we decide prices for industrial and commercial and DPNG, not DPNG, but the PNG part of it. Whereas CNG, it is a trigger-based price increment or decrease depending on whatever happens. So there have been certain changes like Gujarat VAT, as Rajesh mentioned. There's going to be another impact of the. Zone-wise.
Zone-wise tariff plus petrol diesel price movement also we have to watch and the growth numbers and our margins. So margins, yes, you are right. It has come down this quarter. But going forward, we expect margins should not be the main concern because growth, if it is maintained in the company, the margins will take care of itself.
Overall profitability will take care of itself if the growth is maintained. So margin can vary from earlier guidance. We have said INR 9.5. We were saying INR 8.5-INR 9.5. Now, maybe in this quarter, as was discussed earlier, maybe INR 8.5 could be the new guidance. INR 8.5-INR 9 should be a comfortable range to go for this time.
But it is very dynamic in nature, like how the crude moves, how the petrol diesel prices move. And therefore, it's very difficult to predict that what is the exact number of margins we are going to maintain. But we are more focused on the volume growth, which has been the signal we have been getting from most of the investors that the growth in volume is more critical as compared to margins.
Sure.
Despite the fact that if you compare the margins with other competitors, and even us, we have been having margins around INR 6.5 to INR 7 or even slightly lower in maybe if you take two, three years back time. So INR 8, INR 8.5 is still a much better one, except for one financial year where the margins are very high. But besides that, this similar range has been what we are working at.
Sure. That's helpful on the guidance front. Just on the volume side, or in terms of the just wanted to understand in terms of the schemes, you all, I mean, how if you can just help us understand in terms of on the commercial front and how you all run the scheme in terms of the entire year, does it run like a few months or a quarter? And are there any schemes on the OEM side also or any tie-ups on the OEM PV front as well, or it's only on the commercial front?
Hi. This is Mukesh. As far as CNG is concerned, so we are coming up with a program which is called the Fleet Program. Now, this is a digital program wherein all the incentives are going to be built in along with loyalty. So previously, last year, we had run time-based schemes for two quarters.
There were some schemes for both new vehicle purchase as well as retrofitment segments. We were giving some discounts, incentives to bring in some parity with the diesel vehicles. And second, to give the retrofitter, the customer who was retrofitting, some kind of support in terms of the retrofitment cost.
So now, this year, we have decided that we will run a Fleet Program scheme, which will be there throughout. It will not be for a quarter or two. This will be running throughout the year with all the incentives built in. So when I say incentives, this is particularly for the transporters. And it will have for the new vehicles, there are slabs.
So we have derived some slabs based on the number of vehicles. And then with each increasing vehicle or when the slab is higher, the discount is also higher. As far as retrofitment is concerned, we shall be incentivizing based on the remaining life of the vehicle.
So the higher the remaining life, when you retrofit from diesel to CNG, the higher is the incentive. So that scheme is there. Apart from that, we also are doing MOUs with individual parties if they come to us in bulk. For example, state transport undertakings, almost about 600 buses, both new and retrofitment, are likely to be introduced in the coming months. BEST has about 200, and there is Thane Municipal Transport. They are retrofitting about 240 buses.
Type approval is in the process, and then so and so forth. As far as industrial and commercial is concerned, there are certain schemes which we are having in place right now to push this segment. There are various incentives which we are giving right from the consumption. If there is an increase in consumption by, let's say, a certain percentage, there is some scheme.
Then there are certain waivers also there in terms of refundable fees and all. That's how we
mostly, when we say the discount what Mukesh has mentioned, is basically when the purchase of vehicle is happening, we give them the fuel cards, not in the capital cost of the vehicle. That also revenue comes back to us in terms of both profit and, I don't know, booking how you.
Volumes. You booked in the top line.
Yeah. You explained that. How do we do the booking of the fuel card?
So fuel card is booked as an expense in the monthly commitment of buying the vehicle, and vehicle is booked. Okay. So it goes as an expense of marketing expense in the P&L on the operating expense side. And the card value, it is used by the transporters. Whatever volumes he consumes is booked as a revenue on the top line.
What Mukesh explained was that last two years, we have run for two quarters, Q3 and Q4, the CNG mode self. So that we have revisited, and we are going with the ongoing scheme with the fleet operators or bulk consumers, B2B type.
Sure. Sure. That's quite helpful. Yeah. Thanks for the watch.
Thank you.
Thank you. The next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead.
Yeah. Hi, sir. Is it possible for you?[inaudible]
Nilesh, may you please get closer to your handset? Your voice is very low.
Yeah. Am I audible now?
Yeah.
Yes, sir.
So is it possible for you to share GA-wise volume split?
GA-wise?
GA-wise volume. There are now 6 GAs. So maybe around.
For GA 1,2 , and 3 would be helpful.
GA 3 is roughly 0.35. Okay. That is Raigad I'm talking about. And GA 1 and GA 2 is equally divided, roughly 1.95-2 SCMD. Okay. And as far as Unison is concerned, roughly 0.25 or 250,000 SCMD, all three GAs put together.
Okay, and sir, is it possible for you to share YOY growth in GA 1, 2, and 3?
You want compared to past year or this year?
Yes. Yes.
YOY.
Last year, this quarter.
Just a minute.
Sir, meanwhile, the question is on UEPL. See, when you are guiding 8.5 or between 8- 9 kind of a EBITDA per SCM, are you considering UEPL also, or it is just GA 1, 2, 3 put together?
Including UEPL now, everything we will report is because UEPL is a merged entity. It is no longer a 100% subsidiary. It is a part of MGL. So as I mentioned in my opening remarks also, all the previous numbers have also been restated. That is how we have disclosed our accounts. So henceforth, numbers will be as MGL as an entity basis. So all the numbers which we are discussing is on all the 6 GAs put together.
Before this, Mahanagar and Unison , the merged entity number, if I calculate the UEPL EBITDA per SCM, it seems that it is lower than our MGL entity, standalone entity. Is my calculation correct?
Very minor differences there. It's not very lower than MGL. I think it is.
It was in the range of INR 7.
INR 7-INR 8.
INR 7-INR 8 per day. We were in INR 9-INR 10. They were in INR 7-INR 8. Not very different. Their volume is very low. I mean, 0.25 out of 4.3, which we are having, 4.3, 4.4. The overall impact is not a very significant one.
Also, UEPL GAs are growing more than 30%-35%. So we observed that overall overheads are getting absorbed very fast, and per SCM overheads are coming down. If I see last year per SCM overheads and this year, in case of UEPL GAs, it has come down almost by INR 1. So with volumes going up, with volumes going up, it will fall in line with MGL.
Okay. Just for volume, regarding my first question, GA-wise volume last year?
In case of GA 1, you could see a growth of around 6-7%. GA 2, maybe around 10-12%. GA 3 could be more than 15%.
Okay. Thanks a lot, sir.
Thank you. The next question is from the line of Indra Kumar Gupta from Prabhudas Lilladher. Please go ahead.
Hello. Am I audible?
Yes.
Yeah, yeah.
Please continue.
Yeah. Actually, sorry to say that, but can you please repeat the allocation for APM and spot, HPHT, and Ravva, spot? And also the percentages out of the total volumes that have been sourced. Thank you.
So APM, as I earlier said, in the range of 1.7 SCMD, including domestic PNG consumption. Okay. PNG and domestic PNG consumption. HH, Henry Hub link contracts is around 1.45. HPHT, including the old Reliance, is around 0.6. And the balance was consumed through SpotGas, which could be HPHT and RLNG also in the range of 0.5 ,000,000. And NWG was earlier 0.5 ,000,000. Now it is in the range of around 0.3 SCMD.
Okay. Okay.
Mr. Indra Kumar, does that answer your question?
Yes. Yes. Thank you.
Thank you. The next question is from the line of Aditya Singh from Multibagger Stocks. Please go ahead.
Good evening. Am I audible?
Yeah.
Yeah.
Sorry, I have two questions regarding the guidance that you have given. I was just wondering that if you could tell us a little more in detail about Q3 and what kind of volume can we expect in Q3?
We have H1 to H1 has been growth. We have achieved 9.9%. This Q2 versus Q1 has been 3.1%. I mean, going with the schemes which we have already launched again this year, this month, we will be launching it or maybe in early November. Q3 can see slightly better growth as compared to Q1 and Q2.
Also, sometimes seasonal variation happens because of festivals, holidays of schools, and other such parameters. Sometimes quarter-on-quarter variation is there. Yes, as mentioned earlier, also since 10% growth has happened H1 on H1. Last year, we grew 12% year on year. This year also, we are expected to grow 10% or more after end of the year.
After the end of the year. What kind of a discount margin are we expecting?
That we have discussed that earlier. Currently, we are having INR 8 in this quarter.
For the quarter.
And around INR 10 for half-yearly H1 for this whole financial year. So last year, we have INR 10 for the full financial year. Now, going forward, if we think Q3, Q4 will be in range of INR 8.5-INR 9, so overall, again, it will be in the similar range of INR 8-INR 8.5-INR 9.5 somewhere. Considering INR 10, but of course, it included one-time transaction of OMC trade margins in Q1. So overall, I mean, it will be in the similar range of INR 8.5-INR 9.5, the guidance which we gave earlier also, but maybe in INR 8-INR 9 also.
Slightly very dynamic situation, depend on crude movement, depend on Brent movement, exchange rate variation, and alternate fuel prices. So volume growth also we look at, keep an eye on. So that is slightly flexible. What, again, as spoken earlier, we are also focused on volume growth, which is our key parameter.
Okay. I'm sorry for repeating the question. I joined a little late. I will just leave with asking one last question. I was just wondering that are we targeting any new geographical areas or are we sticking to the ones that we have told before concalls?
Already, we have six geographical areas. Any new M&A opportunity or consolidation, if it happens, takes time. And we are waiting and scouting for such opportunity. So obviously, we are looking for something, but nothing to declare to the market as of now.
Yes. Thank you so much.
Thank you. A reminder to all the participants. If you wish to register for a question, you may press star and one on your touch-tone phone. The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go ahead.
Thank you, sir, for the opportunity. Could you highlight the number of vehicles added during Q2 and how the vehicle traction has been in the recent festive month, October?
Cumulatively, we have taken 27,000 number Q2. And H1 and H1 is, again, these numbers are single number, including small number of Unison also. So H1 on H1, we have got 59,000. Last year, we have got 44,500 in H1. This year, it is 59,400 cumulatively for the H1. And mainly, it is coming from private cars, around 8,200, 6,000 is taxis. 3-wheelers are 7,000 or so, and balance other small commercial vehicles and others.
Do we also have any color on the October numbers?
October?
MGL numbers.
I'm sorry. MGL.
Yes. So October, if I have to give you the numbers, which is there for almost not for the entire month, but about 10,000 vehicles have been added in MGL. So normally, if I talk about MGL, we had about 56,000 , 57,000 55,000- 60,000 vehicles in the first half.
And sorry, around 40,000- 45,000 vehicles in the first half and about 55,000- 60,000 in the second half. So that trend has been maintained even though there has been a slowdown in Q2 as far as passenger vehicles are concerned because of the GST announcement, which happened in August.
The distributors didn't stop picking up the vehicles. Q2 has been a little slower, but if I look at the overall numbers, it has remained the same. I mean, there has not been a drop, or we can look at it the other way that there has not been much growth because of this. In Q2, on 22nd of September, a lot of people had probably understanding that GST something is going to happen.
So September numbers were slightly subdued, and then all the purchases started happening after last week of September to Diwali. So October is definitely a good number. We'll have to see whether that October momentum continues still. But on an average, I think 25,000 vehicles a quarter is what our guess is.
Sure. And in terms of the fleet program that we are targeting, what's the range that we expect to consider it as a successful program, successful scheme?
scheme is a scheme which is going to be there forever. It is not a time-bound scheme. It is a number of weeks. So I'll just give you the example of last year, last and last year, when we had launched Mahotsav scheme, which was typically aimed at commercial vehicles with the gross vehicle weight of 3.10 and above. So last financial years, we added about 700 vehicles during these three months.
And previous year, we had added about 200 odd vehicles. So that was the kind of jump which we saw. So now we are going with the program, which is there forever kinds. And it also takes care of other needs also of transporters. It is just not only the incentive. We are also taking care of their payment needs. So the digital payment solutions we are providing, which the demand has come from the transporters itself.
So we expect in the long run, and the focus of the company is also on the commercial vehicle segment now, which we are also supporting through our infrastructure builder, which is predominantly in and around customer hubs, vehicle transport hubs. That's the infrastructure also is getting added up. So that will one main point with the commercial vehicles is that they want bigger stations to fill heavy trucks and other vehicles. So we are opening some of the outlets in GA 3 also, where outlets are bigger and urban area also.
Plus, for seeing that the volume goes up, our Wadala station will be having around 55-56 dispensing arms and around 25-26 dispensing units, which would be at one location perhaps in the whole country. So that is expected to be commissioned somewhere in March, April, this financial year end time.
So that will give at least one station wherein few should not be there in case so many DUs are there at one location. That will give boost. Plus, we are adding two more new stations near South Mumbai. Those are also going to be expected commissioned in this financial year. So that will also add on to good CNG availability in the main city.
Since the focus is on commercial vehicles, would we have any plan to launch incentive scheme for LNG for long-haul vehicles?
LNG is slightly different ballgame. So we are in discussion with the customers that what is their need because there are several parameters to LNG, the route they follow, and the pricing with respect to diesel. So LNG scheme as of now, we don't have anything in mind, but we are talking to different customers and trying to customize their needs and our offer based on their needs. It is more of B2B segment, so it's very different from CNG sales.
Sorry, Mr. We offer in terms of capital contribution for LNG vehicle. But certainly, volume-based and slab-based discounts we are offering. If somebody is consuming more LNG, then we are offering some discount for a month.
That scheme is already there.
Fuel cost schemes are there, not on the capital contribution for their vehicles.
Right. Thank you.
Thank you. The next question is from the line ineet Banka from Nomura. Please go ahead.
Thank you for the opportunity. Just one question from my side. So why is the other income lower on a YoY basis? Is it because of softer performance? I think there are a lot of mutual fund investments in your portfolio. So is it because of that or something else?
One is maybe you might have seen earlier as a standalone MGL. And we had, I don't know whether you're talking about consolidated or standalone MGL.
No, I'm looking at consolidated numbers.
Okay. Then in that case, consolidation, yes, there is some amount of in line with the market, returns on the mutual funds have come down this quarter compared to Q1. Other than that, we have removed certain things like minimum bill pay and delayed payment in case of domestic customers because we have gone digital.
And there could be some people whose email ID or mobile is old, so we are not penalizing them. So there are also some small INR 50 lakhs or a crore of rupees fee might have been lost. And as we said earlier, MGQ, we have done away in most of all the industrial and commercial customers.
These are the primary reasons. And sometimes to drive domestic registrations in Raigad and weaker section of the society, we have done away with registration connection fees of INR 500 per connection. So cumulatively, these are some small sources of other income, which has come down in Q2.
Okay. Compared to before consolidating UEPL, we had an interest income of around INR 19 crore last year from loan given to UEPL. What happens to that amount now?
So that is why I asked you whether standalone or consolidated. On consolidated, it was anyway getting eliminated, income of one and expense of other. Now that will not remain as far as MGL standalone or consolidation is concerned.
Okay. So the extra money which we'll have will be carved in some investment, and that will earn some interest or whatever income, right?
No, no, not really that way. Suppose I was funding something for geographical areas of Unison. Okay. Now it is part of within MGL only. So the CAPEX will get funded from this. So it will not appear on the books at all. The fund requirement for CAPEX will be similar. Pre and post, earlier it was happening in two legal entities.
So you could see some income as a standalone MGL and some expense as standalone UEPL. On consolidation, it was already knocked off. Now it is since one entity, the transaction will not happen that way. But fund requirement or surplus doesn't increase with either of us. I hope you understand.
Yeah. Yeah. So why this sharp rise in staff cost? Again, consolidated numbers, so Q1 versus Q2, the staff cost is up quite a bit, around INR 10 crore odd.
Generally, what happens is in Q2, there is a pay revision. So one element is this. We do two times actual valuation in a year. And Q2 actual valuation because of the bond market rates have gone down. So actual liability, which is in a way a book, not a cash outflow, but a book entry has gone up. And thirdly, a lot of vacation and all that people avail LTA, etc. So these are 2, 3 reasons. Also, there were some awards given to the employees linked to AGM in this quarter. So compared to Q1, it is higher.
Okay. Thank you so much. All the best.
Thank you. We will take the last question coming from the line of Ramesh Sankaranarayan, an individual investor. Please go ahead.
Thank you and good evening. So can you help us understand any adjustments in the P&L and balance sheet as a result of the amalgamation? And secondly, is there any cost savings or tax benefit you expect going forward following the amalgamation?
Ramesh, good evening.
Good evening.
Thank you for this question. I think you are one of the seasoned investors. So I expected this question from you. Yes, there are a couple of benefits in terms of tax savings. Let us say when I used to render some service of providing gas from here or transportation, there could have been GST.
So whatever transactions are within the same entity, so that minimal amount of GST goes away. The largest benefit has come in terms of while my investment in UEPL is eliminated against the asset which are transferred from UEPL to MGL. And gap between the tangible and intangible asset, a good amount of proportion has been assigned to license costs.
And this license cost is allowed to be depreciated under income tax as per our understanding. Of course, there could be some scrutiny and challenges, etc. On a consolidated basis, we will be getting a tax benefit for the license cost. Maybe up to March 25, both the years since amalgamation order is effective, 1st February 2024, returns for 2023, 2024, and 2024, 2025 filed with income tax are getting modified with these impacts.
Our guess is around INR 35 crore worth of income tax benefit will accrue for these two years itself. Okay. That is the major. In terms of book, you may not see that increase in the general reserve or both entities put together.
The reason is UEPL was a, in a way, loss-making entity. There we were not recognizing on a standalone basis deferred tax liability. Whereas when it is part of MGL and it's a part of profit-making entity, not only for the current higher depreciation in books, but also for the past depreciation, we have recognized deferred tax liability in the books. Okay,s o there will be certainly cash flow benefit, but you are not seeing that on a general reserve or a profit as of now, which you will see going forward.
So will you see a reduction in your effective tax rate, say, over the next two, three years?
Yes. Yes.
How much would that savings be in terms of percentage or basis points?
So just I'll give you an example. I think they had accumulated losses of, let's say, INR 50-60 crores, one-fourth of that. That is 25%. We have not recognized that right now in the books, and we will be recognizing that only when the assessment happens. Okay, and overall, on account of license costs, as I said, for these first two years itself is in the range of INR 35 crores. But yes, that will be for another 2 years or 2.5 half years more.
Okay. So just a couple of more follow-up thoughts. One is, if you look at the GST benefits for CNG vehicles, when do you see that kick-in in terms of incremental growth in CNG vehicle sales? And assuming that there is a lag of around three or six months, do you see that materially adding to your volume growth in CNG volume, say, at least by first quarter of next year?
And then assuming that happens, would that materially give you some additional operating leverage benefits in terms of improving your percentage margin and unit EBITDA margins? How do you see that?
Unit EBITDA margin may not get impacted by volume increase as such. Maybe I would say it may get adversely impacted if my APM allocation remains same and I have to go for more market-determined gas price. But certainly, as Mukesh said earlier, October has seen a good amount of vehicle in the range of 10,000 vehicles getting added.
But yes, that is some amount of vehicle purchase held by people expecting GST benefit in the month of September. But because of the overall vehicle prices coming down, I think vehicle numbers, if you see newspaper, not only CNG, even petrol, diesel vehicles have numbers have grown. And with the kind of schemes we are planning, we are confident that volumes will grow and absolute profit in totality will grow. And unit margin, I think we have already given guidance in the earlier questions.
Yeah. GST has reduced for petrol, diesel also. So the 28%-18% has come for both the vehicles. But yes, with respect to EV, the gap has been narrowed down. So it will have some impact, but I mean, it's very difficult to quantify how much it will get impacted.
Okay. So on the new investments you're making in International Battery Company and 3ev, given the kind of tailwind we have seen in IPOs from such emerging businesses, internally, do you have any tentative plans to list IBC maybe in the next one or two years? What is the thought process there?
It's very early to say that. First, we have to put up the plant. We are still in the CAPEX investment phase. So once the plant is put up and starts running, have some balance sheet to strengthen the balance sheet, then we can think about listing. But as of now, there is no plan for listing of either of these investments.
One last thought before my squeezing regarding the Maharashtra Pollution Study under the auspices of the court order. What is the status of that? Any finalization of that report?
We had several rounds of meetings. The committee has met, and now more or less the recommendations are ready. So maybe within a few weeks, we will final review and submit it to the authorities.
Okay, G. Wish you the best of reasons. Thank you very much and wish you all the best.
Thank you, Ramesh.
Thank you. Thank you, everybody, for being on the call.
Thank you. I would now like to hand the Conference over to the management of Mahanagar Gas for closing remarks.
Thank you, everybody, for joining in, taking your precious time for this call. And I wish you all season's greetings, belated Happy Diwali, and forthcoming Happy New Year. Thank you so much.
Thank you, sir. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you, Yogesh.
Thank you.