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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to Mahanagar Gas Q4 FY '22 Earnings Conference Call, hosted by Yes Securities Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Tiwari from Yes Securities. Thank you, and over to you, sir.
Thank you, Aman. Good evening, everyone. I welcome everyone to Mahanagar Gas Limited's Fourth Quarter and FY '22 Earnings Call. We have the pleasure of having with us today the senior management team from Mahanagar Gas Limited, represented by Mr. Sanjib Datta, Managing Director; Mr. Sanjay Shende, Deputy Managing Director; Mr. Rajesh Patel, Chief Financial Officer; and Mr. Rajesh Wagle, Senior Vice President, Marketing. .
I will now hand over the floor to the management for their opening remarks, and that shall be followed by an interactive Q&A session. Over to you, sir.
Thank you, Nitin. 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 the expectations contained in the statement are reasonable. However, the nature involves a number of risks and uncertainties that may lead to different results. The risks and the uncertainties relating to this statement includes, but are not limited to, risks and uncertainties regarding fluctuation in sales volume, fluctuation in foreign exchange, other costs and our ability to manage growth. I urge you to consider that quarterly numbers are not a reflection of long-term trends or an indication of full year results. They should not be attempted to be extrapolated or interpolated into a full year number.
Thank you, and over to you, sir.
Thank you very much. Good afternoon, and welcome to the earnings conference call of Mahanagar Gas Limited for the fourth quarter of the financial year 2021, 2022. I would like to thank all of you who have connected for our earnings call today.
India is witnessing recovery and economic activity after COVID, accelerated pace of vaccination, uptick in consumer and business confidence with better outlook on the general economic situation have resulted in a greater degree of optimism. However, adverse residual effects of the pandemic across the globe, coupled with major geopolitical upheavals have resulted in a surge in commodity prices matched by high inflation. Crude oil price had soared to above $100 per barrel. And likewise, imported RLNG prices have touched new highs.
For MGL, Q4 of FY 2021, 2022 was impacted by the third wave of COVID resulting in lower sales volume, but the recovery has been fast and the average gas volume sold in March 2022 increased by 14% as compared to that of January 2022. Despite the second and third waves of COVID, we could fast track our infrastructure creation efforts across MGL's existing license areas during the last financial year. During the last quarter, 79,130 domestic households were connected and thus, we have established connectivity with about 1.86 million households. During FY '21, '22, we provided connectivity to 2.62 lakh households and bettered our previous best of providing 1.98 lakh connectivity. We led 125 kilometers of steel and PE pipelines in the quarter, thereby taking the aggregated pipeline lengths to about 6,221 kilometer. We added 14 new CNG stations in the last quarter. With these, we currently have 290 stations. We also added 107 industrial and commercial consumers. And thus, as on quarter end, we have 4,339 industrial and commercial customers.
In respect of our Raigarh geographical area, we are connected to 53,030 domestic households, and 23 CNG stations are currently operational. During the quarter, we laid 26.23 kilometers of pipeline in Raigarh GA, thereby taking the total length of pipeline to 346 kilometers. Such expansion of our pipeline network has also resulted in commissioning of the first online CNG station in Raigarh GA at Somatane. In January 2022, the company achieved inch kilometer target as per PNGRB's minimum work program for Raigarh GA. You may recall that we had already achieved the cumulative number of domestic PNG connections target by March 2020. So with this, the company fully met its minimum work program targets for Raigarh. Possibly MGL is the only CGD company, which has completed its minimum work program against the bid-out license area. This shows the company's sincerity adhering to its commitments.
Coming to MGL's operations. Average sales volume for the year ended 31st of March 2022 is 2.999 mmscmd, whereas it was 2.211 mmscmd in the corresponding period last year. Thus, there is an increase of [ 35.63% ] in the overall sales volume compared to the previous year. Average sales volume for the year ended 31st March 2022 of 2.999 mmscmd consists of CNG volume of 2.114 mmscmd, domestic PNG volume of 0.466 mmscmd, and industrial and commercial segment volume up 0.419 mmscmd. Compared to the previous year, sales volume in case of CNG has increased from 1.415 mmscmd to 2.114 mmscmd, which is an increase of 49.4%. In case of industrial and commercial sales, volume has increased from 0.332 mmscmd to 0.419 mmscmd, which is an increase of 26.2%. Domestic PNG sales volume has increased marginally from 0.464 mmscmd to 0.466 mmscmd, which is an increase of 0.43%.
EBITDA for the financial year 2021, 2022 is INR 924 crores compared to previous financial year EBITDA of INR 934 crores. EBITDA margin is at 25.96% for financial year 2021, 2022 compared to previous financial year EBITDA margin of 43.39%. Net profit after tax for financial year 2021, 2022 is INR 597 crores compared to net profit after tax for previous financial year of INR 620 crores. Aggregated sales volume to the priority sector was more than available APM gas allocation, which resulted in shortage in the range of 15% to 17% during the quarter. This gap was met through purchase of market price gap.
Spot gas prices remained high due to various global factors. Thus, priority sales volumes beyond APM gas allocation and substantial increase in spot gas prices has put pressure on the margins of priority sector during the quarter. Nevertheless, as a customer-focused company, we met the total demand of priority sector without imposing any dry out. However, the company undertook upward revision of CNG and domestic PNG prices in January 2022 from INR 63.50 per kg to INR 66 per kg, and from INR 38 per SCM to INR 39.50 per SCM, respectively. Government of Maharashtra reduced VAT on natural gas from 13.5% to 3% with effect from 1st of April 2022. And consequently, prices of CNG and domestic PNG were reduced to INR 60 per kg and to INR 36 per kg -- per SCM, respectively.
Further, notified price of APM gas was revised from USD 2.97 per MMBTU to USD 6.14 per MMBTU with effect of 1st of April 2022. And the company passed through the above increase in gas costs through its retail, CNG and domestic PNG prices in a phased manner during April 2022, and revised CNG and domestic PNG prices from INR 60 per kg to INR 76 per kg, and from INR 36 per SCM to INR 45.50 per SCM, respectively, by the end of April 2022.
In case of supplies to the [ I&C ], industrial and commercial customers, high RLNG costs had put pressure on margins as the industrial and commercial sales prices are linked to alternate fuels, which did not see similar increases. The company has partially recovered the margins by charging premium over alternate fuel linked prices. To reduce dependence on spot gas and optimize overall gas purchase portfolio, the company had entered into a contract for purchase of term gas during Q3 for a period of 18 months. And during Q4, another term contract was signed for a period of 5 years.
Coming to quarter-on-quarter comparison, average sales volume for Q4 of FY 2021, 2022 is 3.170 mmscmd and is lower than previous quarter average of 3.303 mmscmd. This reduction is mainly due to third wave of COVID, which struck in January 2022. Such average sales volume of 3.170 mmscmd consists of CNG volume of 2.277 mmscmd, domestic PNG volume of 0.474 mmscmd, and industrial and commercial volume of 0.418 mmscmd. Q4 EBITDA has substantially improved to INR 215 crores as compared to INR 103 crores in the previous quarter. EBITDA margin has increased to 19.83% for Q4 compared to previous quarter EBITDA margin of 10.03%. Net profit after tax for the quarter has increased by 132% to INR 132 crores from previous quarter net profit after tax of INR 57 crores. As you would be aware that on 6th of May 2022, Ministry of Petroleum and Natural Gas has come out with the guidelines for domestic gas supplies to CNG and domestic PNG segments of CGD networks. The guidelines aim to meet 100% of CNG and domestic PNG requirement of CGD entities through a mix of domestically produced APM, non-APM and HPHT gas duly supplemented through term or spot RLNG as required. CGD entities are now expected to get such full natural gas 2.5% over and above their 100% requirement of CNG and domestic PNG segments of each geographical area calculated on the basis of consumption in the previous quarter. Such revision in gas allocation policy is expected to have a positive impact on CGD sector with regard to availability and overall pricing, thereby facilitating the CGD companies to deliver better results.
MGL Board of Directors has approved a final dividend of INR 15.50 per equity share for financial year 2021, 2022. Thus, along with the already paid interim dividend of INR 9.50 per equity share. Total dividend for financial year 2021, 2022 stands at INR 25 per equity share, which is an increase of 20% from the 230% dividend paid for financial year 2020, 2021.
With this, I conclude and would now like to open the floor for questions. Thank you very much.
[Operator Instructions]. The first question is from the line of Prabol Sinha, sorry, Prabol Sen from ICICI Securities.
Sir, the first question was with respect to the gas supply new guidelines that you mentioned, which would be net positive. Just to understand what has been put out is basically that 2 things. One is shortening of the review period to a quarter from 6 months. And second, it is still basically the intent to supply 100% gas on a best effort basis. But if we look at the domestic gas supply that has been made available over the last several months, very clearly, there is no additional domestic gas that will be made available. And the balance has to be made from premium gas as well as [ spot LNG ]. So I'm just kind of trying to understand how does it change things for us from what is there currently where, in any case, 15% to 18% gas is being met by market prices. So what changes with respect to these guidelines, sir, if you can just give us some thoughts on this?
Okay. I mean it's just a couple of days. So we still haven't got to do a full analysis yet, but what we believe would -- the way it would pan out will be that immediately, whatever spot gas or term gas, which we are procuring on our own and pushing into the priority segment, we have replaced by whatever market price gas -- GAIL is able to procure immediately. Maybe, in the immediate term, it could be spot. So maybe our spot [indiscernible] spot, but at a common price for all CGD companies. And since this is a part of onetime thing, it's a sustained kind of a policy thing. Over time, GAIL will try to procure some [ HPHT ] gas at whatever price ceiling, which is now coming in as per the formula and pool that into the requirement for CGD. If that HPHT gas contracting takes some time, until then, our understanding is GAIL will also explore getting into some term RLNG contracts, which could be cheaper than current spot prices and pool that into the CGD gas requirement. So it looks like a positive step. How much actual the quantum of reduction in gas cost, that we will have to see as the time goes by.
Right. And just to -- as a follow-on to that, in the near term, sir, mentioned that you have signed a term LNG contract, which has extended even in this year for another year or so. So can we get a sense barring whatever domestic allocation is there? What kind of -- how many term energy contracts do we have? And what volume are we tied up for the next year or 18 months right now?
We have got 3 term gas contracts, not all are RLNG, 1 is for domestic gas, and that is with Reliance. We have 1 with [ GSPC ], and we recently have entered into 1 with GAIL for the Henry Hub.
Okay. So is it possible to share the volumes that have been tied up, sir? .
Volumes in these contracts are [indiscernible]. So volumes, I don't know how much turndown, you can go, et cetera, that we will not be able to disclose.
Okay. Sir, the other small question I had was with respect to the margin profile. I think it was mentioned that alternate fuel pricing, at least an initial part of Q4 was adverse compared to your LNG-based pricing for industrial commercial. What we have seen is if we look at one major alternate fuel for us tends to be commercial LPG prices. And those have obviously gone up very sharply in line with the fact that Asian LPG prices have been going up very, very fast. And we are also seeing LNG prices have come off a little bit at least in April. Is it fair to assume that in this kind of a scenario, the margin profile can improve fairly sharply, at least over Q1? Is that something that you're seeing on the ground, on your pricing front?
Could you repeat your question, please?
I was saying that for the industrial and commercial, sir, LPG tends to be a fairly material alternate fuel for us, from a pricing standpoint. And our understanding is that LPG prices have been going up fairly sharply. And at the same time, LNG prices and spot LNG prices have come off a little bit in the last couple of weeks in April. So are we seeing any improvement in terms of our pricing power and, therefore, margins in industrial, commercial segment in 1Q of FY '23?
Yes, that was, all other things being constant, yes. These 2 factors would lead to an increase in gross margin. However, we also need to keep in mind that we -- when the LNG prices were very high, we had got the substantial premium over alternate fuels. So once the prices of LNG have pulled down on our bid, we have also given some relief to our customers from that very high premium level. But on an overall basis, yes, hopefully, it should be positive.
Mr. Sen, we request to join the queue for any follow up. [Operator Instructions]. We have the next question from the line of Aishwarya Agarwal from Nippon India AM -- MF.
Sir, have we taken enough price hikes for the CNG so that our margin reaches to INR 10 per SCM.
If you noted in this speech, price of CNG was INR 60 per kg as of 1st April. And currently, it is at INR 76 per kg, and in similar proportion increase has happened in domestic also. This price increase fully covers the APM gas cost increase from INR 6.14 -- from $2.97 per MMBTU to $6.14 per MMBTU.
So my question remains, sir, are we used -- we earlier used to do some INR 10 per SCM margin. So are we -- have we reached there or we need to take some more price hikes to reach there because lots of volatility in the prices in between, which has led to volatility in the margins also, which we have been reporting the last 2 quarters?
If you look at price rise, which was taken up to Q4, it covered the amount of RLNG being used in the priority sector. So current price rise, which we have taken, is mainly towards APM price rise from $2.97 to $6.14. And now the spot prices coming down and also the way just now we spoke [ pooled ] gas, I think prices are likely to remain and it covers more or less the [ pooled ] cost as well at the current level.
Sure. Got it. Second question, sir. Yes, go ahead.
If you look at margins, I think overall company or SCM margin is in the range of around INR [ 13.60 ] something. And if you look at margins of priority sector also, we are almost making a similar level of margin if you look at '19, '20 level of margin. Of course, I think 2021 was slightly abnormally high because of APM prices are very low. So barring that year, more or less, we are in line with the margins, which we have been making in the past as far as priority sector is concerned.
Sure, sir. This is helpful. Second question is, with this -- I mean, how do we see the growth as of now, the growth in the CNG volumes are? What I can see that the fourth quarter has a weaker growth on a quarter-on-quarter basis, and that may be because of the COVID I hear and lesser number of days. But how do you see the growth now on a year-on-year basis at this point of time? .
Well, if you take out the COVID period, basically last 4, 5 years, we have seen our CAGR of about 5%, 6% or so. But now we are seeing a better growth back to back. A lot of growth is coming now from the CNG segment. There's a combination of factors, which has resulted in that. One is that petrol and diesel prices are at historically high levels. Second is almost all OEs now are coming up with factory fitted CNG variants at not just entry level, even the mid-level cars, et cetera.
Apart from that, of late, a lot of commercial goods vehicles have started coming with CNG variants as OE from factories. And because of the price of diesel, there is a good number of new CNG-fueled commercial vehicles, which are coming on to the market.
If I may add to that, no, the commercial vehicles addition is very good every quarter-on-quarter and almost 2,800 number of vehicles have been added in this quarter as well. And this number is likely to continue for some time because of OE vehicles on CNG.
Sir, that is very good. And the last question, sir, if I may, that -- from 1st of October, when this APM gas prices will further move up to, say, $9, and we have some gas available from the GAIL as per the new policies, I mean at that point of time, I don't know what the diesel prices will be, but I mean our growth and the margins are also dependent on the diesel side, correct?
You are right. I think it is anybody's guess what will be the price in October of alternate fuels like diesel and petrol. And also, currently, the spot price is at a particular level, that may also come down, okay. So we'll have to wait and watch how it pans out with respect to APM price, spot price, what is the [ pool ] price, which comes up? And also, as you said, alternate fuel prices. And accordingly, we'll have to take an appropriate decision, keeping in mind how does it impact the CNG vehicle conversion, et cetera. So we will try and balance out the volume growth and pricing book. However, our endeavor will be always want to add on to new vehicles and add on to the gross margin on absolute terms going forward.
But there is no clarity of ONGC's gas prices being -- having some caps, which can help [ petty ] gas companies.
No, not really. We haven't heard anything on those lines. And only thing is we are hoping that by September or so, GAIL should be in a position to source some term gas or HPHT gas too, which will replace the spot gas, which will -- which currently may go into pool. So that decrease in cost, to some extent, will offset the cost of APM price increase. So the final number, as Mr. Patel has said, we'll have to wait and see how it pans out. Currently, we do have sufficient headroom because petrol is 120 plus in our [ GAs ]. Diesel is also about INR 104, INR 105. We are at INR 76.
[indiscernible] terms, we are almost at a discount of around 55%, 57% compared to petrol and almost [ 28% and 30% ] compared to diesel as of today.
The next question is from the line of Vikash Jain from CLSA.
On the LNG, on the contracts that you mentioned, you mentioned 3 of them. One was -- one is with GSPC, The other is with, I think, the U.S. LNG contract, and thirdly is the new gas contract or the [ deepwater gas ]. So all of those 3, what is the tenure of these contracts? These are like 5-year contracts? These are -- how long are these contracts?
2 of these for 5 years terms, 1 is for 18 months.
1 is 6 years, 1 is 5 and 1 is 18 months.
And -- so in the current scenario, where after this policy has come into being, is it fair to say that these contracts will be more than your requirement of industrial and commercial gas in terms of volumes? Because you're...
No, not really. The way all these contracts are structured, we have [indiscernible] managed. Within the contract, there will not be any impact as far as industrial and commercial volumes are concerned. It is within the minimum threshold.
We have [indiscernible] enough downward [indiscernible] in these contracts to ensure we don't land up on our take-or-pay regime.
Okay. Basically, you've been doing industrial, commercial about 0.4 mmscmd or a little more than that, and these contracts add together to be lesser than that, you have enough flexibility around that, yes...
Yes, but [indiscernible] industrial and commercial volume also growing at a good rate now.
Yes, of course, of course, of course. Yes. And so for the remaining -- now just coming back to this new policy that has been announced, now is my understanding correct that the domestic gas allocated to [ city gas ] has been fixed at the level, which were prevailing 6 months back. So -- and as [ city gas ] demand rises, the gap between that level and whatever is the demand will all be filled up by either spot or term or the new [ deepwater ] gas. So domestic gas will not keep falling down for now, is that understanding correct?
No, no. We don't have that kind of clarity available to us right now. So I don't think the minster, ministry -- pricing order also goes to that level of retail.
But it does mention that there will be some domestic gas and remaining has to be fulfilled by LNG or whatever way or deepwater gas, right?
[ Whatever ] the shortfall.
Yes, whatever is the shortfall, I mean, so that's why I meant that, that shortfall is based on a fixed level of domestic gas that you think is not sure, that you're not sure, right? .
No, that explicit clarity is not available in public domain.
Fair point. Fair point. So this -- is it fair to now understand that first will be on 16th, I think, 16th is when it starts, right? So from here on at the start of every quarter or will it be at the start of every month, a pooled cost price will be declared by GAIL or who's running the pool?
GAIL is running the pool.
[ PPSC ] will probably [indiscernible] the price and GAIL will run the pool.
Mr. Jain, request you to join the queue for any follow-up. As there's still participants waiting for their turn. The next question is from the line of Sabri Hazarika from Emkay Global.
So I have 2 questions. The first one is related to this domestic gas guidelines only. I wanted to know if -- I mean, if you are getting the allocations from 16th of May for this quarter, then it would be the total priority sector volumes of last quarter, which will be considered, right, which is both APM plus the amount of LNG you are using, or will it be jus APM?
So it will be considering the sales volume of priority sector of last quarter. And on to that 2.5% after the circular or the ministry guidelines.
Not last quarter's APM allocation? It will be last quarter's total...
Last quarter APM [indiscernible]. It will be last quarter's priority sales volume, plus 2.5% [ overtime ].
CNG and domestic PNG sales volume.
So for example, just a hypothetical situation in Q1, I suppose if you are doing, say, you are doing certain amount of priority sector volumes, where sizable, say, 25% component is LNG. So next, in the subsequent quarter, this LNG part of priority sector would also be part of the pool. And on top of that, you'll get 2.5%. Is that right? .
Obviously, otherwise, it does not make any sense, right? If today...
Yes. Okay. Okay. And then, I mean, it is basically at this juncture also last quarter, I mean, spot energy, whatever you have been using that will be replaced with the pool gas, that's what you are saying, right? From this quarter?
Exactly. Right.
Okay. Okay, sir. Secondly, I've got a few small bookkeeping questions. The first one was what was the overall shortfall of priority segment for the full year, you said 15% to 17% in Q4, what would this be for the full year?
Full year was in the range of the very difficult to answer, but around 8%, 9% on an average. Full year, April till -- April '21 to March '22, including the period of COVID when full allocation was available, so roughly 8% to 9% it was.
Okay. And what would be your average industrial and commercial price for the full year? .
Average commercial and industrial price for the full year, commercial -- industrial, roughly INR 47 per SCM. I'm talking price realization [indiscernible], and commercial roughly INR 55, INR 56 on average for the full year.
Okay. And what would be the Q4 industrial volumes and commercial volume breakup?
Industrial volume was 0.252 mmscmd and commercial in 0.166 mmscmd, Q4 this year.
The next question is from the line of S. Ramesh from Nirmal Bang. .
[indiscernible] in this new arrangement...
Ramesh, your voice is breaking. I request you use the handset. There's an airy disturbance from your side, right.
Hello, can you hear me now? Hello?
You're not very clear, sir. Can I request you to please be a bit loud?
Yes. Can you hear me now?
Yes.
Yes.
Yes. So with reference to the new gas allocation scheme to be managed by GAIL. Now in terms of your ability to respond to change in your overall blended cost of gas, how would it change in terms of the lead [indiscernible] because so far, you are controlling your gas procurement and the blended cost and the price for all CGD companies. How do you see this impacting the way you change prices every month or every quarter, particularly for the industry [indiscernible] where you renew it every month, and for CNG and the domestic PNG prices happen when you change the cost of gas, [indiscernible]. How do you see this play out?
Let me clarify. I think you are mixing up the 2 things. The APM gas allocation was always given by government, only in whatever post COVID because of the shortfall, we started buying and using spot for this segment. Whereas industrial and commercial, we always had market determined gas, and it will always remain that way. Whatever new guidelines has come, it is only for the APM. So whatever happened post COVID and individually, the CGD started blending or putting their own spot gas. Now that part has been address through this pooled gas mechanism. So there is no change as far as our freedom to buy gas and other things concerned. Priority gas was always available through government and it will be available going forward as well. However, it now will be in this new guideline, and it will be a pooled mechanism through which the gas will come to CGD.
Second thing is in terms of the [indiscernible] accounts regarding the trade commission payable to [ OMC ], what is the impact, which are provided for in this quarter? And what is likely to give the full impact once the trade commissions are finalized?
Yes. As far as impact is concerned, we have taken appropriate provisions in the beginning. So there is no impact as such additional in this quarter compared to earlier quarter or earlier 9 months. Okay?
So for the full year, what would be the impact in rupees per SCM or in rupee crores? Can you quantify that?
See, whatever is the ministry guideline, in line with that, we have made appropriate provision. And there is no additional impact as such for Q4.
No, sir, for the full year, if you have to understand how it's going to impact your future pricing and margin, it would be useful if you can share that information in terms of what is the value of that impact you have provided for? Because obviously, in terms of the commercial impact, there is a reduction, right? .
Just like gas price increasing and we do the [indiscernible] in the pricing, similar is the manner for which trade discount also we factor in, while doing the pricing. So we have already done that factoring in and it will continue to -- we continue to do so. There is no impact on the margins per SCM on account of this factor at all.
Sure [indiscernible] 1 last question. What is the kind of CapEx you have in mind for FY '23 and '24?
Current year, I think we have spent in the range of INR 600 crores. It should be nearly INR 600 crores or a little more than that. However, company is ready to go for more CapEx than that also and we have approval in place from both, but it depends on how things pan out with respect to permissions, which we need from local authorities, sometimes railway crossing, availability of land, for putting up CNG stations, et cetera. So we are geared up to do require amount of CapEX, and it could be in the range of INR 600 crores, INR 700 crores for the next year as well.
The next question is from the line of Maulik from Equirus. .
So one question. CNG volume took a relatively larger dip in this quarter on Q-o-Q basis. Is there -- was there any impact of this MSRTC strike, which was happening in Maharashtra since November 2021?
MSRTC has only a couple of hundred buses, it's negligible, it's not even 0.2% or 0.3% of our volumes.
And second question is that on -- related to this policy, as you mentioned that you had in this [indiscernible] term contract, which you signed in the last 4, 5 months, 1 with GSPC and second one was with GAIL for Henry Hub. Now if -- and I understand that both of their -- the pricings are currently lower than the spot LNG, prevalence for LNG prices. Does that -- you will have a increase in the cost post implementation of this policy in your further the priority sector volume?
[indiscernible] on Friday. So can you give a little more specific, what you are referring to?
Basically, in your current in your priority volume mix, right, you have 1 on the APM and you have these 2 term contracts, which you signed in the last couple of months, right? This term contract pricings are currently probably in the range of $12 to $16 per MMBTU as you mentioned in a term contract, whereas the spot LNG currently is in the range of $20-plus MMBTU. Now if GAIL gives you this APM price [indiscernible] GAIL created in a pool of APM and spot LNG, which [indiscernible] spot LNG is available and then supply to you. The pool price will be higher than the current price, what you are getting it today?
No. Or whatever is the gap in our priority volume requirement, mostly was catered to spot, okay. So that'll get replaced by the spot, which is going to get tied up by GAIL for all CGDs put to together. That's not going to have any...
So in the immediate term, we are not expecting to see any material change in our cost of gas. However, going forward, maybe a month, 2, 3 months, depending on how GAIL is able to source term gas, be it domestic or be it RLNG, we are hoping that our cost of gas will go down.
But now [indiscernible] because earlier there was no clarity and everybody was using spot, at least now there is a clarity and it will be replaced in the medium to short term with term, RLNG or [ HPHT ] gas, which will reduce the cost substantially.
It's a big uncertainty, which has gone away in our gas sourcing.
Mr. Maulik, we request you to join the queue for any follow-up. [Operator Instructions]. If time permits, you may join the queue for any follow up. The next question is from the line of Iqbal Khan from Edelweiss.
As usual, I have 2 questions. One is bookkeeping question. So you mentioned that the industrial and commercial customer is around 4,339. Could you please give us the breakup of the industrial and commercial customers separately? And you also mentioned that the...
We are not able to hear you clearly.
Mr. Khan, request you to use the handset, please. Your voice is muffled.
Can you hear me now? Is it better now?
Yes, please go ahead [indiscernible].
Little better.
I wanted the breakup of the industrial and commercial customers, which you mentioned that it is 4,339. So I wanted a breakup of that, and also, if you can give...
Mr. Khan, your voice is still breaking. I request you to come in network area, please.
I hope it is better now.
Yes, this is much better.
About industrial customers, number of industrial customers and number of commercial customers.
Yes, and that and also breakup of the [ BEST fleet ]. In the last quarter, you had mentioned that it was around 2,200 CNG buses, 800 diesel and 200 EVs. So could you please give us the current breakup of the [ BEST fleet ].
Yes, can I address your first question because your voice has not reached us. First question answer is, we have around 88 industrial customers and rest is commercial customers. Total [indiscernible]. 88 is industrial and rest is commercial, which is around 400 -- 4,200 plus. What is your next question?
Yes. And the next question was the current [ BEST fleet ]. So in the last quarter, you had mentioned that there is 2,200 CNG buses, 800 diesel buses and 200 EVs, in the last quarter you had mentioned about this. So could you please breakup the...
[indiscernible] around 2,500 buses from this BEST, TMT, et cetera, and around 600-odd buses from private operators. So it makes around 3,100 buses roughly.
Next question is from the line of Varatharajan Sivasankaran from Antique Limited.
I just wanted clarity on the 5% CNG volume drop. You addressed it partially, but you didn't give full explanation what drove the decline.
Sorry, can you please repeat the question? You're not audible.
On a Q-o-Q basis, your CNG volumes are down 5%. So what drove that decline? Was it that...
No [indiscernible] hardly [ 0.4%, 3% ] down compared to [ PNG ]. PNG? You are saying [ CNG ] volumes?
Yes, that's right.
Yes, [ CNG ] volumes are down by 4% compared to the previous quarter, mainly due to January and February had impact of third wave of COVID. So I think there was a restriction on traffic and all that mobility. So that has impacted.
[indiscernible] mentioned for the quarter. Is it all new vehicles or there is a significant portion [indiscernible].
We are actually not able to hear you.
Varatharajan, please use the handset, sir.
Is it better now?
Yes.
Yes.
Yes. The 2,800 CV numbers you mentioned, Were they all OEM vehicles? Or was there a significant portion which was retrofitted as well? Any kind...
[indiscernible] OEMs, very, very few retrofit. Retrofits and commercial motor vehicles are almost negligible.
Almost negligible, and would you have a similar kind of a feel in terms of the private vehicles, what proportion could be OEM? What proportion could be retrofitted?
It's, again, predominantly probably around maybe 90% or so the OE. Retrofit is now slowly going away because all the manufacturers are coming out of factory fitted variants, which customers typically are more comfortable with. There is a warranty behind it. There's a manufacturer standing behind it. The quality is much better. So previously, when OE fitted models are not there, then a lot of people used to retrofit.
Next question is from the line of [ Niharika Jain ] from Equitas Investment Consultancy.
So in the current quarter, the total domestic sale is of [ 2.75 ] mmscmd, which is CNG and PNG domestic. So -- and we already -- in last quarter, you had told that we have 0.15 mmscmd of 18 months of LNG contracts and some 0.1 mmscmd. So how much of quarter 4 quantity did we get from contract? And how much did we procure from spot?
These are -- should be roughly [ 0.45 to 0.5 ].
[ 0.45 to 0.5 ] of? What are we talking about, sir?
[indiscernible], term contracts you're asking, right?
Yes, yes. So term contracts, how much were we be able to procure in quarter 4?
All the 3 contracts put together roughly [ 0.45 ].
Okay. And spot would be around -- you mentioned around 14% or so. So out of 2.75, 14% would be the shortfall towards the APM, is it?
So you are now right now asking only about -- I gave you a figure for the company level. Are you asking right now about only priority sector?
Only priority sector, yes.
Okay. So 2.75 on the average, roughly 2.5 was APM and rest is spot, not terms, [indiscernible] 0.25.
Okay, sir. So contract went towards commercial and industrial you mean? I'm just trying to understand the 2.5...
Yes, the term contract is primarily for industrial and commercial. You're right.
And if there is any volume flexibility in it, we can try to optimize our cost of gas. If that gas cheaper and if additional flex is there, we can push some into the priority segment in place of spot and vice versa.
Ms. Jain, request you to join the queue for any follow-up. Our next question is from the line of Harsh Bohra from VT Capital.
Am I audible?
Yes.
Yes.
Sir, my question was regarding the mobile refueling unit. So is there only one MRU? Or have we added more during the quarter?
We are on the verge of giving 3 more LOIs for -- again, there is a change in terminology, this is not an MRU. This is now called our CDU, [ composite ] dispensing unit. And in a few days' time, we are expecting to give 3 more LOIs.
Sir, and what will be the time line after issuing the LOIs? The time it will take to commit on to the ground?
Well, it is difficult to pinpoint that, but we are hoping that maybe 6 or 8 months, that should be the moment because currently, the safety regulations, et cetera, they are slightly -- the one which we ran, we got under a pilot program kind of a thing. And now that we want to run this as a regular business, probably the safety and other regulators will be taking a closer look and examining before giving the final approvals for commercial applications.
Okay. Sir, and what are the GAs you are looking to implement this new composite dispensing units, like Mumbai, Thane and Raigarh.
It's primarily for city areas, where land parcels of sufficient size are not available because if we get 400, 500 square meters of land, we can easily set up -- if the pipeline is not there, we can set up a conventional [ DBS ] there, which is usually more cost-effective than a CDU. It is only in case where it's only 150, 200 square meters of land and that land is not available for 10, 15 years in such a shorter duration, then we can deploy the CDU there. And the -- if after 3 or 5 years, the [indiscernible] the land go away, you can always relocate that CDU to another [indiscernible] somewhere.
The next question is from the line of [ Mukesh Manik ] from [ Vallum Capital ].
Am I audible?
Yes, you're audible.
Sir, just one question from my side. The commission that we are paying to OMC, are they on a margin basis? Or are they on kind of fixed cost per SCM basis?
It's [ per kg ], per [indiscernible].
So this is the price of gas or a decrease in the price of gas.
Can you repeat your question.
No, no there is no linkage with the type of gas.
So they are fixed per kg?
There is no linkage with the selling price. There is no linkage with the purchase prise of gas. It is our number, fixed number in rupees per kg, which can vary from time to time.
Sir, but because the [indiscernible] commission to vary?
Sorry? Yes. Yes, it varies. Usually, it's higher in city areas and lower in semi-urban and rural areas. That's broadly to reflect the difference in the cost of land.
The next question is from the line of Kirtan Mehta from BOB Caps.
You had mentioned about 2,800 [ convergence ] happening on the commercial side in Q4, could you give us sort of the level of [ convergence ] that you've seen in Q4 across different category of vehicles and also for the annual FY '22? .
You want other than commercial vehicle numbers?
Yes, sir.
Yes. So in Q4, cars and taxis put together, roughly 13,300 plus, then 3-wheelers, roughly 2,300, buses roughly 140, then other than small LCV trucks, roughly 680. Total is around 19,260 vehicles.
Right.
Q4.
Right, sir. Is it possible to get the similar detail for FY '22 as well, collective?
FY '22? Full year?
Yes. Full year.
Full year, total number of vehicles added around 62,500. It consists of cars and taxis in the range of 45,000; 3-wheelers roughly 6,400; buses 200 plus; then trucks around 1,500; and the LCVs in the range of around 9,400 plus.
The second question would be in terms of the volume outlook for FY '23, would you be looking at sort of repeating a 4% to 6% growth? Or you mentioned that you are seeing a better growth available. So what sort of the numbers is possible this year?
FY '23, we are hoping for a growth better than that 5% to 6%. And what the final number is, let's see what -- at least 7%, 8% could be possible, if not more. Again, it will depend a lot on various factors. What kind of differential price will be there between CNG and alternative fuels because the CNG is the biggest chunk, almost 3/4 of our volumes. Industrial, as we enter into Raigarh and a few other places with [ pipe ] gas now that we are expecting some increase in volume there also.
Domestic and commercial steadily increases. We have more than 1.2 lakh customers of domestic customers for additional gas every year. They contribute a little bit, but that doesn't add too much to overall [indiscernible] consumption is a bit low, but yes this also contributes, and about 300-odd commercial customers we add on every year, they also contribute a little bit.
But if you look at a base year effect before FY '22, April, May, there were some issues, Jan '22, there were some issues, percentage growth could be double digit.
The next question is from the line of [ Ankit Agarwal ] from [ Philip Capital ].
Am I audible?
Yes, you're audible.
Yes. Just wanted to...
Just a little louder..
Yes. Is it better.
Yes.
Just one clarity I needed. You said 2.5 mmscmd is the APM gas volume that you've got. And the priority sector, total consumption was around 2.75. So that implies a shortfall of around 9%. Is that correct? Whereas you mentioned, 15% to 17% shortfall in [indiscernible].
Yes, yes. Percentage given of about 15% to 17% is also right because January and February, there was a COVID impact. So that percentage, which we are mentioning, is at a peak level. So if you see March, it was higher, 17%, [indiscernible] February it was 15%. It was lowest in the month of January because the sales volumes were impacted and it was lower than available APM also.
Okay. Sir, just one clarity I needed also. On the -- do you see any visibility -- is there any visibility on the reallocation of the APM volume that you have? Some visibility there? Is there a chance of increasing the APM volumes or there is as such no clarity on that?
[indiscernible] circular, new prizes and new allocation order has come out in [indiscernible] for clarity. That's the only clarity we have.
Thank you. Ladies and gentlemen, due to paucity of time, that would be our last question for today. I now hand the conference over to the management for the closing comments. Thank you, and over to you.
So thank you, everybody, for joining and having a productive discussion. Thank you very much.
Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Yes Securities Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.