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Ladies and gentlemen, good day, and welcome to the Q3 FY '21 Earnings Conference Call of GAIL India, hosted by BOB Capital Markets Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Ahuja, Head of Research and Oil and Gas Analyst at BOB Capital Markets. Thank you, and over to you, sir.
Good evening, everyone. Welcome to GAIL's Q3 Conference Call. On behalf of BOB Capital Markets, it's a pleasure to host the management. From the management, we have Mr. A.K. Tiwari, Director of Finance, and other senior management. I hand over the floor to Mr. Tiwari to take this forward.
Thank you. Thank you very much, Mr. Rohit and my dear friends from investors community. A good afternoon to all, and welcome to GAIL's Q3 FY '21 Earnings Call. We have declared the results of the third quarter of the current fiscal year today, and I'm sure you must have -- be happy with the overall performance of the company. Before I get into the financials, I'm pleased to inform you that the GAIL had emerged as a winner in the Investors Relation Award 2020 under the category of [ CFT ] Disclosures. The award has been given by IR society,in collaboration with BSC and KPMG India based on the various parameters, including feedback from buy side and sell side. I thank all the investors in responsing their faith and confidence in the transparency and disclosures of GAIL. This award is a testimony of the GAIL's effort in maintaining and improving its investors relation. We will continue with our endeavor to make our IR program one of the best in the industry. I once again thank all the investors on behalf of GAIL. I would like to inform that GAIL has also received the prestigious Golden Peacock Award for excellence in corporate governance for the year 2020. This reward we are going to receive today at 5:00 p.m. I am also happy to share with you that the much awaited Kochi-Mangalore section of KKBMPL was commissioned in November and was dedicated to the nation by Honorable Prime Minister in January '21. With this, we have started supply of 0.8 MMSCMD of gas to Mangalore Chemicals & Fertilizers. Further, the 348-kilometer Dobhi-Durgapur section of JHBDPL up to Matix Fertilizer has also been completed and dedicated to the Nation on 7 February 2021. The pipeline will help revival of HURL-Sindri Fertilizer plant and will supply gas to Matix Fertilizer plant in Durgapur. This also support our CNG and [ PNG ] supply to 10 districts at Satra, Palamu, Koderma, Giridih, Dhanbad, Bokaro, Hazaribagh and Deoghar in Jharkhand and Paschim Bardhaman, Purba Bardhaman in West Bengal. The gas supply to Matix plant for commission is likely to start in March, and plant is likely to be on full load by April '21, leading to a gas supply of 2.47 MMSCMD. The gas in HURL-Gorakhpur Plant has started and their pre-commissioning activities are in progress. The gas supply will go up to 0.5 MMSCMD by March '21 and likely to double by September '21. The other plants, namely Barauni and Sindri, the pre-commissioning activities are likely to start in February/March '21 and commissioning by November '21. In one of the previous con calls, 3 investors had suggested that the GAIL should go for buyback of shares. You are already aware that the GAIL has announced buyback at the rate of [Technical Difficulty] per share with a total buyback size of INR 1,046 crores. In addition, GAIL has also declared interim dividend of INR 2.5 per share in January. Now let me give a brief insight of the company's performance for the quarter. The fiscal performance of the company during the quarter has improved in all segments. The COVID impact, which was seen in Q1, had started to recover in Q2 and now in Q3. The impact on fiscal performance has been fully neutralized. All plants have attained normalcy and operating at optimal capacity utilization. There was no major shutdown of any plants and pipelines during the quarter. In fact, the petrochemical plant and LPG transmission pipeline is operating at more than 100% capacity. The gas marketing is stood at 95.62 MMSCMD in Q3 FY '21 as against 88.6% MMSCMD in Q2 FY '21, increase of 8%. The gas transmission is stood at 110.35 MMSCMD in Q3 FY '21 as against 106.44 MMSCMD in Q2 FY '21, increase of 4%. The capacity utilization increased to 54% as against 52% in Q2 FY '21. The polymer production is stood at 233 TMT in Q3 FY '21 as against 221 TMT in Q2 FY '21, increase of 6%. The capacity utilization increased to 114% as against 108% in Q2 FY '21. So we can say that the Pata Petrochemical Plant is fully stabilized and running more than 100% capacity. Similarly, the polymer sales increased to 231 TMT in Q3 FY '21 as against 224 TMT in Q2 FY '21, increase of 3%. The LSC sales is stood at 319 TMT in Q3 FY '21 as against 297 TMT in Q2 FY '21, up by 8%. And the capacity utilization in the current quarter is 88% as against 81% in Q2 FY '21. Similarly, the LPG transmission is stood at 1,038 TMT in Q3 as against 1,058 TMT in Q2 FY '21, increase of 3%. The capacity utilization was 114% as against 111% in Q2 FY '21. Now I would like to give the financial highlights. GAIL achieved gross turnover of INR 15,386 crores in the current quarter as against INR 13,611 crores in Q2 FY '21. There is an increase of 13%, mainly due to improvements in fiscal performance across all segments; increase in price of RLNG; and increase in petchem price, which is approx 8,000 per metric tons. PBT is stood at INR 1,868 crores in Q2 as against INR 1,551 crores in Q2 FY '21, increase of 20%, mainly due to better fiscal performance, higher price realization of petrochemicals. GAIL registered PAT of INR 1,487 crores in Q2 FY '21 as against INR 1,239 crores in previous quarter, clocking an increase of 20%. On a 9-month basis for the period from April to December '20, the turnover declined by 24% to INR 41,057 crores; PBT declined by 30%, INR 3,774 crores; and PAT declined by 17%, INR 2,983 crores, mainly due to having the impact of lockdown pandemic in Q1. Now I -- let me give you some details of the segment-wise profitability. In NG Transmission segment, volume and revenue has improved. The PBT is INR 977 crores in Q2 FY '21 as against INR 1,009 crores. As I have already told in Petrochemicals segment, the PBT increased to INR 423 crores in Q2 FY '21 as against INR 170 crores in previous quarter. In LSC segment, the PBT has marginally improved to INR 283 crores in the current quarter as against INR 280 crores. In Natural Gas Trading segment, the loss narrowed to INR 74 crores in Q2 as against a loss of INR 365 crores in Q2. So on account of the better price realization in domestic market and increase in the crude and the spot market, we have been able to have the better margin in Gas Trading segment. During the quarter, GAIL received 23 LNG cargoes from U.S., 15 from [indiscernible] and 8 from BCP as against 20 cargoes in Q2 FY '21. Total 64 cargoes received up to Q2 FY '21. Out of this, during the quarter, 11 cargoes were sold in the overseas market [Technical Difficulty] were brought to India, either directly or through destination share. The total 26 cargoes were sold outside India up to Q3 FY '21. If you see the GAIL Gas performance during the quarter, the revenue from operation of GAIL Gas was INR 1,058 crores as against INR 951 crores, increase of 11%. Similarly, the PBT increased to INR 87 crores as against INR 61 crores. The CGD sector has shown a very sharp recovery from Q2 onward after suffering a major setback in Q1. The total gas sales by GAIL Gas increased by -- to 4.91 MMSCMD in Q2, which -- as against 4.7 MMSCMD in Q2. As regards the CapEx, this quarter, GAIL achieved CapEx of INR 1,739 crores in current quarter as against INR 1,530 crores in Q2. Total CapEx up to Q3 is INR 3,670 crores as against the plan of INR 6,600 crores. And we are going to achieve this total CapEx of around INR 6,600 crores in this year. So far as the project performance are concerned, the gas in -- of Ramagundam Fertilizer & Chemicals have started and commissioning activities are in progress. Presently, RFCL is drawing gas to the level of 1 MMSCMD and which is likely to go up to 2 MMSCMD by March '21. On the Pradhan Mantri Urja Ganga commitment as on date is of INR 14,500 crores, and the actual CapEx still -- is around INR 10,700 crores. We have been receiving capital grant from government regularly. Until date, the total capital grant received is INR 4,084 crores as against the total grant of INR 5,176 crores. The status of the various pipeline projects are: Vijaipur-Auraiya Pipeline is expected to be commissioned by March '21; Sultanpur-Jhajjar-Hissar Pipeline and Haridwar-Rishikesh-Dehradun Pipeline is expected to again commission -- commissioned by April-May '21; Dhamra-Angul section of JHBDPL by December '21; Bokaro-Angul by December '21; Durgapur-Haldia by December '21; Barauni-Guwahati by December '21. So we are on track to complete all the pipeline projects as listed. Srikakulam-Angul Pipeline, which is having 700 kilometers, investment of INR 2,700 crores, we are expecting to complete by July '22; Dhamra-Haldia Section 2 40-kilometer, investment of INR 1,200 crores, we are expecting to complete by November '22; Mumbai-Jharsuguda Pipeline, 1,755-kilometer, investment of INR 7,800 crores, we are expecting to complete by May '23. Gas pipeline infrastructure in Northeastern states, which is 1,650-kilometer at a project cost of INR 9,300 crores, are actively in material and all procurement are being done. So that is also on track. After commissioning of HURL plant, RFCL and completion of connectivity to Matix, which has [Technical Difficulty] sale in the domestic market will increase by approx 11 MMSCMD. On the CGD front, GAIL is supplying gas to all 6 CGDs with infrastructure of 49 CNG stations and approx 1 lakh PNG connections. The present flow is increasing day-by-day with the commissioning and with the CNG stations. We have [Technical Difficulty] operation of its plant has been done -- has been our priority. So we have achieved zero major reportable accident during last 4 consecutive years, and there is no such any major reportable accidents, which are there. So we have given the brief introduction on the financial results and the major highlights of the company. We would be happy to clarify on any points that you may have. Forward to Rohit, please. Thank you very much.
[Operator Instructions] The first question is from the line of Probal Sen from Centrum Broking.
Am I audible, Tiwariji?
Yes, sir. Yes, sir.
This was on broader guidance. You obviously gave us a flavor of how demand across sectors is taking up. But for transmission volumes, sir, assuming that there is another couple of MMSCMD increase, in Q4, if we exit at around 112-odd MMSCMD, what sort of volume guidance can we look forward to, sir, for FY '22?
As I have given the projections, if the volume of sale will increase, transmission will also increase. So that way, it will be up. See we cannot give any fixed number at this moment because so many infrastructure which has been created are trying to have their consumption base and transmission will increase. CNGs are coming. Our pace of the pipeline are increasing. So growth will be there. It will be not less than 5% to 7%, my perception is there over the transmission volume we have at present.
Right. Got it. So that range is good enough, sir. And the second question was with regards to the Petrochemical segment. Obviously, the segment has done very well in this quarter. Well ahead of, I think, what most of us were looking. Is it possible, sir, to break up the EBIT improvement or the EBITDA improvement that's happened in the segment in terms of how much is due to pricing and how much is due to volumes?
See, both are contributing. But as the production is going to be more than 100% and we expect that it will be not less than 110%. So that way, our fixed cost adoption will be there. And yes, prices, we don't have much control, but we expect that as I came to know from the team that prices are going to be stable and increase further also. So we expect that in the Petrochemical segment, we are going to have better margins. And if some details are required, we'll give you separately.
Sure, sir. Sir, one last question, if I may. On the U.S. or rather on the Natural Gas Trading segment, in January, of course, spot LNG prices in Asia have reached record levels. Is it fair to assume that Q4 one would -- one has already seen the losses narrow for gas marketing from the previous quarter. Can we expect numbers to return to, let's say, profitability, given the Asia price trends that we're seeing so far?
Yes, yes. We are quite hopeful.
The next question is from the line of Nafeesa Gupta from Bank of America.
Sir, my question is on the cost in the LPG and other liquid hydrocarbon segment. Any reason why this shot up substantially in this quarter?
Yes, I'm not getting that. Would you please come again? Little -- please tell. I could not get what you are asking.
Sir, the cost in the LPG and other liquid hydrocarbon segment. They have been significantly up in this quarter. Any particular reason why?
Prices are there, and the production is good. We had a good utilization. All these factors have contributed. Prices are around 3,000 [Technical Difficulty]
And sir, if you could just repeat the number of LNG cargoes that we've imported in this quarter?
I have already given the number...
You have a target price for FY '21, how many have you achieved in the first 9 months?
The number of cargoes from U.S. if we see, out of -- in this quarter, out of 23 cargoes, 11 cargoes were only sold internationally and 12 for [Technical Difficulty]
The next question is from the line of [ Avdhut Sabnis ] from [ Anchor ] Capital.
Yes, sir. I'll repeat the question relating to -- I have a specific question that if you look at the LPG and hydrocarbon segment, I'm comparing numbers in the third quarter versus the second quarter, okay? If you look at revenues, there's an increase in revenue in the third quarter related to second quarter. Revenues will capture volumes as well as pricing. Whereas, if you look at -- for example, if you look at EBIT, okay, it's virtually flat [Technical Difficulty] at INR 280 to INR 282 crores, flat on a quarter-on-quarter basis, despite the fact that this segment will consume [ APM ] gas, the prices have dropped substantially on a quarter-to-quarter basis. So could you explain as to why the profitability is flat despite increase in revenue and likely decreasing cost?
You are talking about the LPG segment -- LSC segment?
yes, LSC, yes.
LSC segment.
See, detail analysis, I can't give you because there are the mix of the transactions which are there. But 2 factors have contributed. One is the -- 3 factors rather. Price, and second is our good production level, and third is our sales also has contributed these things and price of the cost of gas also. So all these mix are there. If you want to have a particular detailed -- all these things, then we can provide separately. These are the mix of the transactions which are there.
Okay. My next question...
But you want to know?
Very simple, sir. As you said, revenue is production, whatever volume and price is captured in the revenue number...
See, on a very rough calculation, we can say that INR 83 crores are around on account of the -- this price. And approximately, we have -- our cost of input has also reduced. PAT also -- was also up. So that has contributed negative INR 138 crores. And there was certain quantity also, which was in the reduction is there. Yes, it has increased -- or down. Reduced, yes. In Q2, reduced 3 metric tons, yes, reduced. So that has also contributed around INR 33 crores. Detail, we can provide if you want separately also. That's not -- interest.
Okay. My next question relates to Reliance Gas company. They have put out 2 tenders, one for 5 and one for 7.5. That's all in the public domain. And we now know who the customers are for the entire 12.5 MMSCMD. Now given that customers are known, could you give us some clarity on how much of the 12.5 could come on your network?
See, what we have bought is about 2 MMSCMD from out of 7.5 --
From Reliance Gas.
From Reliance Gas [Technical Difficulty] together, it is about [Technical Difficulty] So it's between 1 and 2 MMSCMD that we have bought. Now how much of this will flow into GAIL Network? That will depend on the buyers of those volumes. Some of them -- some of that volume is bought by some Gujarat-based plants. So they will have the option to take this gas directly from East West to GSPT Network. So all of it may not really flow into pipeline network.
I get that, sir. I'm asking how much is total? Where the customer doesn't have a choice and he is in your network. So including your volumes, how much is total come on your network?
I've told you, our net -- our volume is about less than 2 and more than 1 MMSCMD out of this 12.5, which will definitely flow into our network.
And just last question on petchem. For the fourth quarter, is there any line shutdown? Or can we expect the same level of -- broadly same level of what we have seen in third quarter?
There was no plant shutdown. Same level of production was there in Q2, Q3 as well.
No, no. I'm asking for fourth quarter, sir. Is there any shutdown plan for...
There is no plan.
The next question is from the line of Amit from UBS.
Thanks for a wonderful set of numbers. Sir, my first question relates to the utilization of Urja Ganga Pipeline. So you have mentioned about 11 MMSCMD volume. Could you give us a broad breakup that -- what set of consumers like each fertilizer plant is going to consume over the next 6 months? Because I think you mentioned from September, it -- we will -- we would reach around 11 MMSCMD on that network.
Yes. So on rough side, we can say that Ramagundam will take around 2 MMSCMD; HURL-Gorakhpur, HURL-Barauni and Sindri, each will take around 1.9 MMSCMD; Matix Fertilizer, again, 1.5 from RLNG will be there and then CBM Gas will be there. Put together, it will be 2.47 MMSCMD, and these are the numbers. And then some CGDs will [Technical Difficulty] put together are coming to around 11.
Yes. But sir, my as I'm understanding that some of these fertilizer plants like Barauni, Sindri and Gorakhpur, they may not be fully ramped up by September '21. So do you expect that these fertilizer plants will be fully ramped up by September '21, in next just next 6 months?
Our estimate is by -- for December, it will be fully ramped up. That indication we have given. But chronologically, they will start, say, for Gorakhpur by 21.5 MMSCMD and then ramp up to 1.89 or so. So these -- similarly, Sindri also will come up. Barauni, we are also expecting their plant. So Gorakhpur is already on the pre-commissioning stage. So that's what we can expect. Matix, I have already told that plant is ready. Commissioning activities started because the plant was shutdown for a long period. But we have reached -- our gas has reached there. As soon as they want, they will take it. So I think in the coming 1 year or so, the 11 or 12 MMSCMD is very optimistic number, and it will come.
And sir, what tariff of Urja Ganga? What is the broader tariff for Urja Ganga Project?
They have given a tariff of around 64 or so -- INR 64 per MMBtu up to Phase 1. They have not declared further tariffs, so it will be declared and then we'll inform you.
Okay. And sir, my second question relates to how many LNG cargoes, like this year, as we see, you're bringing almost 50% of the cargoes from U.S. in India and 50% cargoes are disposed of internationally. Now how do we see this ratio getting changed over next 2 years? So what is the outlook for FY '22? And what is the outlook for FY '23?
See, as the consumption in the country will increase, the sale in the international market will be less day-by-day. So these RLNG will be consumed by these fertilizer plants and other areas also, other industries also. So slowly, it will come out, but this will come down.
Maybe that by the end of December '22, we start getting entire volume in India, very likely, if these grants comes up in time. That's -- and in '23, there will not be any volume which will be -- selling in international market.
Unless there are opportunities.
Unless there are the arbitrage opportunities. We'll look.
Yes.
And sir, just last question from my side. What is the expectation on InvIT? So which pipeline do you think we would be transferring for the InvIT, because Finance Minister also announced in the budget that GAIL's some of the pipelines would be monetized over the next 1 or 2 years?
Yes. The announcement is from the last -- only 10 days have been passed away. And is a very complex installation. So we can't specifically tell which pipeline will go. Whatever you are seeing in the market, we are also seeing in the market. This pipeline has gone, and it will generate these things. But on commercial point of view, we'll -- we are evaluating and then will inform suitably because there is a mechanism of involvement by GAIL, we will inform to SEBI, we will inform to many other. So we'll inform at the appropriate time. We are also assessing what would be the best way of doing that in this transaction.
The next question is from the line of Manish [ Jain ] from [ Gol Alwyn ] .
We wanted to know the payback period for the CapEx that GAIL is making over the next 5 years? Basically, what is the IRR that you expect on this CapEx? And the second related one is, from your current pipeline in kilometers, this CapEx of 5 years will take you to what level of pipeline in kilometers?
For your first question is there, 12% IRR is the theoretical figure, which is given by PNGRB. So our expectation is 12% IRR. But actually, we cannot give you any number because every pipeline has different scenario, volume, tariff and prices. So we cannot give any exact number of the pipeline which we are laying. But we expect that our -- as soon as our volumes are increasing, our bottom line will also increase. And we don't -- we can't give any number at present that we don't know the tariff scenario of JHBDPL Pipeline. You know the KKBMPL Kochi Pipeline volume utilization. So these things will ramp up. And the industry when they are -- start consuming, I think the -- but we are very sure that the bottom line will increase. We -- for that number can't be given at present.
About the length of the pipeline, GAIL currently have 12,800-kilometer, another 5,000-kilometer is expected in another 4 or 5 years. So we will have 18,000 to 19,000-kilometer supply in the next 3 or 4 years.
The next question is from the line of Mayank from Morgan Stanley.
I had just one question. This was regarding the point you mentioned earlier in your opening remarks on 6 to 7 pipelines that will be getting completed by end of 2021. How much do you think will be the volumes that can potentially expect in 2022 from these pipelines?
See, I have already given the number about the pipeline, which is under -- in process of commissioning, so that 11 MMSCMD. But the other pipelines which are there, Srikakulam, Dhamra-Angul, Mumbai-Jharsuguda, these pipelines and Barauni-Guwahati. So we have estimated the number, but that number, again, depends upon the industries which can consume. You can expect growth, as I have already told, 5% to 7% that can be expected whatever the current level is there, that we are also assuming that the volume upside will be there. And we are quite hopeful with the coming cities, which are coming up, CNGs which are coming up and LNGs which are there connected with our main pipeline, which are there, that industries will consume. So there will be upside on the volume that much I can say.
The next question is from the line of Vidyadhar Ginde from ICICI Securities.
My question is on the gas trading marketing part. So how much of your U.S. LNG cargoes are fully tied up for FY '22? And I presume that given the current conditions, all of them are tied up profitably without either breakeven or profitability?
For this FY '22, we are almost fully tied up. We -- either we have sold those volume or whatever is left, we intend to bring entire volume to India. So for FY '22, entire volume is tied up. Maybe a 1% or 2% is loose, that's all, okay?
And profitability?
That I cannot say because every transaction is executed at [Technical Difficulty] in different prices. So I can't tell you offhand profitability or at loss. But it should be likely to be marginally profitable only.
So only marginally profitable? Or are you confident that from -- if not Q4 this year, but at least next year, you should, given the condition and if oil prices remain where they are, can you say --
No, no. See, whatever is brought to India, that is anyway profitable because that international volume is transferred to domestic growth, okay? And especially that crude running about 60, it is always profitable. So now what remains is international sales. So I'm saying in international sales will be -- it's likely to be marginally profitable overall.
Okay. And what proportion of your volumes next year will be international? And how much domestic?
So about last year also, we have sold about between 40 to 55 cargoes, 2 to 2.5 MMBtu. So this year also, it will be about 2 or maybe slightly less, 2 MMBtu.
2 outside India?
So yes.
These are -- can't be given. It depends upon the consumption in the country as the fertilizer plants will ramp up. So we'll be consuming more and more. So it will slow down, slowly and gradually.
It will be less than previous year, definitely.
Yes.
See, what I was trying to understand is the impression one has is that last year, there are some volumes given the very low spot energy prices and then the oil price collapsed.
Correct.
Some volumes were tied up at a loss. And you were hoping for opportunities at later stage if spot LNG goes, we can hedge or something. And so not probably hedge, it was uncovered volumes. On that front, are things substantially better next year? And so next year, most of the quarter, as things stand, you are likely to be in the black?
No, no. Next year, we are quite hopeful that it will be not black. It will be good.
Yes, yes, you'll be very good. Similar to earlier year.
Yes, maybe.
FY '20 -- FY '19/'20, similar that kind of...
Yes, we expect that way, but it depends again with the prices which are there.
But my understanding was that you use hedging to sort of lock yourself in. Is that -- so it's not fool proof or...
Hedging is also one of the instruments. It has -- we have to predict the prices and many times the hedging may not be profitable also. So there are many, many scenarios which are there. Hedging is one of the mitigation measures which we have taken. If in the domestic market, consumers are -- we have tied up, then there is a plus. We can't tell you margins --
Sir, I am assuming that none of the volumes which are -- you plan to sell in India, there is a delay or something. I'm assuming that everybody takes volumes as expected in that case, you should be.
Yes. We expect that.
Yes, yes. One last question. You have this number of EBIT, which you have disclosed, which in stand-alone on the Gas Trading front is INR 73 crores, INR 74 crores. And then there is INR 157 crores in consol. So how does that -- I think even in earlier quarters, the consol number was higher.
I'm not getting that.
Your gas trading EBIT is disclosed both in stand-alone earnings and consolidated earnings. Consolidated gas trading EBIT loss is larger. It's about INR 157 crores, INR 158 crores compared to INR 73 crores EBIT loss in stand-alone. Can you just tell us what is support entity or somebody the loss incurred by that?
No, no.
I will come back to you, the numbers.
Do you have another question? I will come back separately and give you the answer. Let me find out the calculation.
And Q4, are we reasonably confident of being in the black because there we are in the [ midst ] of the quarter?
Yes, yes.
Yes.
And not just in the black but quite well?
Yes, we'll do, [ bhai ].
The next question is from the line of Sabri Hazarika from Emkay Global.
I've got -- first, I've got 2, 3 clarifications. So you mentioned that 11 MMSCMD you are expecting in the next 1 year. So this 11 includes Sindri and Barauni fertilizer plants as well, right?
Yes, yes.
Okay. And second clarification is the Barauni-Guwahati Pipeline will also be ready by December 2021?
Barauni-Guwahati, yes, we are expecting --
In the December 2021?
Also to be ready. But December '21 [Foreign Language]
But it will take time.
It will be next year only. Barauni-Guwahati, you are talking?
Yes, Barauni-Guwahati, yes.
Barauni-Guwahati will take time.
Okay. And...
Just 1 minute. Yes, yes, it is December '21, right? [Foreign Language] Yes, yes, please sorry.
Okay. And third clarification is that this LPG EBIT, the EBIT that you reported has remained INR 280 crores in both Q2 as well as Q3, despite the fact that APM gas prices have corrected and other international LPG prices have gone up. So was there any one-off on -- anything on that front during Q3?
No. LPG -- one-off, just 1 minute. There is no one-off. It is a slight increase in the quantity also in Q2 to Q3 and price is also -- price has returned, price.
Your profit should have gone up significantly Q-o-Q in Q2 and Q3.
Yes.
It has -- that has remained flat. Any reason behind that?
The price is there and some adjustment on the -- means adjustment, we say in the average cost of input which has given negative in that frame.
Some prior period adjustment on cost cutting?
No, nothing. No such one-off is there.
Okay, sir. Okay. Fair enough. Now, I have just one question. This is relating to that transport system operator, which the Finance Minister announced. Now there has been -- it is going on in the news flows, but there is like lack of clarity in terms of what would be the nature of this agency. So would it handle the entire material grid in the country, including GSPL and Reliance pipelines? Or -- and whether it would be taking commercial interest in this pipeline? Or it will just be operator [Foreign Language] just operational power? So anything on that? Any clarity on that?
Yes. This is a new concept of government, which has been announced in the budget. And so far, our understanding goes that some operator will be there, who will oversee. See, our pipelines, which are there at present, are operating around 13,000 kilometers of the pipeline. And this is to take interest of the customers, and it is clearly written in the budget that indiscriminate way. So just to inform you that we have already 1 quarter where a third party can book their capacity. And you know that the capacity utilization of the pipeline at present is around 50%, and most of the pipeline are [ interested. ]And through that portal, one can put their volume from where they want and tariff is already declared by the PNGRB. So what the basic concept goes that for -- as a operator, as a some third-party overseas, they will regulate the -- they will oversee that these booked pipeline hydraulics are there and so many other factors which are required. I think some transport service operator will be there and they will charge some money, so we understand. But total details will be -- will come up from the Ministry and then we can say it. It is just a formation, which they will visualize and then it will be done. But we expect that the total pipeline should come in not only the GAIL pipeline. Other pipelines, GSPC and other pipelines which are there, that will be part of this deal. So -- and one can book their capacity based on the availability of the pipeline from one corner to another corner. So our -- it is -- we cannot give as much detail as this moment because it is a very recent announcement. As soon as something comes up, we'll share.
The next question is from the line of S. Ramesh from Nirmal Bang.
First on the petrochemical business, given the increase in the LNG prices, do you see any impact on the EBITDA margins in the fourth quarter?
Yes, it will be almost same. We expect that the prices will remain the same. And quantity, our production level, sale level, will be up. So we expect there a better margin.
Okay. And secondly, on the unified tariff mechanism, once that is notified, the regulator is talking about revenue neutrality for the pipeline operator. So in accounting terms, then you report quarterly and annual results, do you see any reconciliation issues, which will lead to some movement in your P&L? And who will actually reconcile the balancing part? How do you expect that? Because the regulator just stays the pipeline operator and the customer have to work out the arrangement. So how do you think the tariff mechanism will actually ensure that there is revenue neutrality and your transportation returns are protected on an annual basis?
See, this is a new concept or guideline, which has come up. We have also taken up the matter. There are many -- regulatory part is there, accounting part is there, that is not very clear. So we are taking up. As soon as this clarity will come, we'll inform you.
And one last question. Now again, going back to this question of the spot LNG prices increasing. Do you see any negative impact on the consumption of the spot LNG in the Indian market? And how do you see the growth in the natural gas volumes in the fourth quarter and then the coming quarters overall for the market?
No, there will not be any negative impact on volume. Our sales volume will be maintained and keep growing. Besides this spot prices were up only for a month or 2. January and February, they've already -- they have already come down substantially and likely to remain soft, at the level where they are presently or a little softer only. So therefore, they're very unlikely to affect any demand.
Okay. If I may squeeze in one last part. In terms of the potential movement of natural gas to GST, do you see that kind of benefiting GAIL and the transportation companies and the consumers because you have the benefit of input tax credit? And how much do you think that can lead to overall savings on the cost of gas to the consumer? Any workings you may have done on that?
On GST, you are asking?
Yes.
No, we have not done anything because things are very dynamic, keeps changing. Even [ VAT ] profiles keep changing from state to state. So we don't have any level. So how can we calculate as of now? We don't even know what will be the GST level.
Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to Mr. Rohit Ahuja for closing comments.
Thank you all for attending this call, and it was a pleasure to host GAIL management, and I congratulate them again for a good set of results. And wish you all the best for the future, sir. Thank you.
Thank you. Thank you, Rohit. And I also thank you for this con call. And if any question or if any queries are there, my team is there, myself is there because in the con call, some questions might not have been answered or there may be some clarifications which are required. Please feel free to contact us, and we will inform you whatever that the details are required.
Thank you, sir.
Thank you very much. Thank you.
On behalf of BOB Capital Markets Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.