Mahanagar Gas Ltd
NSE:MGL
Mahanagar Gas Ltd
NSE:MGL
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Earnings Call Transcript
Other Earnings Calls
Ladies and gentlemen, good day, and welcome to the Mahanagar Gas Limited Q4 FY '23 Conference Call hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. S. Ramesh from Nirmal Bang Equities. Thank you, and over to you, sir.
Good evening, and thank you very much. On behalf of Nirmal Bang Institutional Equities, I have big pleasure inviting you all to the 4Q FY earnings call with the management of Mahanagar Gas Limited. The company is appended by Ashu Shinghal, Managing Director; Rajesh Patel, the Chief Financial Officer; and Mr. Rajesh Wagle, Senior Vice President, Marketing. So may I hand over the call to [indiscernible] statement, on which we'll have our opening remarks to the management and Q&A. [Indiscernible], over to you.
Welcome to the participant of this call. Before we begin, I would like to mention that some of the statements made in today's discussion that are maybe forward-looking in nature, and we believe that the expectations contained in the statements are reasonable. However, these statements involve a number of risks and uncertainties that may lead to different results. The risks and the uncertainties related to these statements include, but are not limited to fluctuations in the 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. With that said, I'll now hand over the call to management. Thank you and over to you sir.
Thank you so much. A really good afternoon to all connected with the call. And on behalf of energy management, I welcome all to the earnings call of this fourth quarter results of financial year 2023. I would like to thank all of you for attending our call today. Just to give you a brief of the financial performance and the physical numbers of the company. And before that, just to take some numbers on the -- to set the tone, domestic gas prices and gas allocations have remained challenged during this financial year. However, with the notification of government on high HPHT, that is right resurgence areas. Given the part allocation to CGD and new domestic gas pricing policy from 23, April 23, this has given a good relief to the CGD sector. In February 23, gas from HPHT is available to CGD for CNG and domestic CNG priority allocation as per MoPNG notification dated 13th January. The said CGD entities in replacing earlier costlier LNG, RLNG for CNG with HPHT gas. Further, the government also has changed the APM pricing formula and accepting key recommendations of Kirit Parikh Committee with effect from 8th of April 2023. APM gas in Note priced at 10% slope to Indian crude basket on a monthly basis with a floor of $4 per MMBtu and a ceiling of $6.5 per MMBtu for the first 2 years and annual escalation of $0.25 per MMBtu there after 2 years. New guidelines remain silent regarding derecognition of APM pricing and removal of ceiling price for HPHT produced gas prices. Post availability of HPHT gas and parity, NGL reduced its CNG prices we reset from 1st of February 2023 by INR 2.5 per kg. That is from INR 50 per kg to INR 87 per kg. Further post implementation of new pricing formula CNG prices were again reduced, effective sell 2023 by receive per kg started from INR 87 per kg to INR 79 per kg. Similarly, domestic CNG prices were also reduced by INR 5 per SCM with the same effective date of 8 April from INR 54 to INR 49 per SCM. And we'll continue to create CGD perception desire across its business segments in the license area. And during the quarter, 92,274 domestic households were selected. And thus, we have established connectivity for nearly 2.17 million households. That is 22 lakh households. We have also laid 128 kilometers of steel and key pipelines, thereby taking the aggregate length to 6,535 kilometers. We have also added 12 new CNG stations with these, we have now 13 CNG stations as of March, 31 March 2023. We also did 115 industrial and commercial customers during this quarter. And thus, on the financial year-end, we had 4,558 I&C customers. In related to [indiscernible], we have connected to 68,033 domestic households and 28 PNG stations are currently operational. During the quarter, we laid around 10 kilometers of pipeline in [ water ], where by taking the total length of pipeline to 32 kilometers. This expansion of pipeline network has created a good ecosystem for CNG and PNG in this area. The first CVS and first modernization was also commissioned in GA-3. Coming to NGL operations now, average sales volume for the year ending 31st March '23 of 3.420 mmscmd against 2.999 mmscmd in the corresponding period last year. Therefore, there is an increase of 14.1% in the overall sales volume compared to the previous year. Average sales holding for the year ended -- current financial year range is 3.43%, which consists of 2.492 mmscmd for CNG, 0.487 mmscmd for domestic PNG and [ 0.44544 ] for I&C segment. Compared to the last year, sales volume in case of CNG has increased from 2.11 to 2.49. That is an increase of 17.8%. In case of IMP sales, volume has increased from 0.419 to 0.444, that is an increase of 5.95%. Domestic PGs has also increased from 0.466 to 0.87 mmscmd, that is an increase of 4.45%. Coming to this quarter-on-quarter comparison as a sales volume of Q4 FY '23, 3.372 as compared to previous quarter of 3.412 mmscmd. Such average sales volume per average sales volume of 3.7% of CNG volume of 2.41, domestic PNG volume of 0.51 and I&C volume of 0.452 mmscmd. Compared to the previous year, previous quarter, overall volume has reduced due to 2.6% reduction in CNG volumes. This is primarily due to CNG prices of INR 39.5, which has been now reduced to 27% and further reduced to 79 wider. First, we expect that the reduction in these CNG prices, new growth volumes would pick up. EBITDA for the financial year INR 223 is INR 1,184 crores compared to previous financial year EBITDA of INR 934 crores. That is an increase of 28%. Net PAT profit after tax is INR 790 crores compared to a PAT of INR 597 crores in previous financial year. That is an increase of 32%. Q4 EBITDA has substantially improved to INR 390 crores as compared to INR 256 crores in the previous quarter, mainly a result this is revered due to reduction in weighted average cost of gas during this quarter. Net PAT for the quarter has increased to INR 269 crores from previous quarters of INR 172 crores, an increase of 56%. I'm happy to announce that Board of Directors has also included a final dividend of $0.16 per share per equity share for financial year 2023. The total dividend for the year, including interim dividend already paid in INR 26 per share. That is 20% on the face value of INR 10 per equity share. With this, I conclude, and would like -- I would now like to open the floor for the question and thank you very much for your patience.
[Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities.
Two questions. One, you spoke about the HPHT gas replacing country LNG. If we can kindly give some details in terms of the overall volumes that we have, what is the extent of HPHT gas that we have in our portfolio? And how much was the LNG consumption for this quarter and for this year?
I think very appropriate questions from your side. HPHT for Q4, we have used is around 0.19. Okay? And balance was APM as far as CNG and domestic PNG is concerned. CNG and domestic put together was roughly the volumes were slightly down in top of CNG, around 2.9 mmscmd. And both the CNG and domestic requirements are fully catered through APM and HPHT. You also asked what was the spot of our LNG. During the quarter, roughly, we have bought around 0.1 crores of mmscmd spot and rest was through term contracts, which we have in place for I&C.
Got it. Great. The second question was with respect to volume growth. Now you have earlier highlighted a certain case that you sort of aim to achieve in terms of price of this business. My question was with the kind of steel production in CNG prices that have been afforded due to passing on of the domestic gas cost? Do we see a stronger demand momentum at least in the near term of FY '24? Or are we still sort of maintaining the broad guidance of 5% to 6%?
We have been always indicating or within the guidance of roughly 5% to 6%, right? If you look at my volume growth since FY 2018, '19 till 2020 to '23, despite forward and despite volatility in gas prices and high gas guidance, we are still clicking a ADR of around 4.5%, very near to 5%. Right. And with now the curiosity recommendation and prices coming down, we see that CNG will pick up. There is also with rival area getting connected, we are -- we have lined up I&C. So those volumes will also be added. And I think in case of domestic CNG, we have a very normal growth rate where we are generally looking on an average 5% to 6% every year. However, since the last 2 years, a number of domestic connections, we have substantially increased We are almost rating to flap houses as and when they start consuming gas, our free like at least 1.5 lakh past burning the same year and rest get added in the subsequent years as and then let gets occupied. We hope that CNG as well as domestic and I&C. All 3 put together, we should be in a position to give a volume growth on a long term, this is around 5% to 6%. However, we have always look at our pricing and see elasticity of demand with respect to CNG to see how do we trade-off between volume and the price and achieve the targeted volumes as well as profitability.
Just to add, I mean, this is a kind of a business of usual scenario, if there is any upside on account of any environment related initiatives, either from allowed or from the force, this number can only go up. If you see that the numbers have been impacted because of COVID during the last few years and also because of high LNG prices, the price of CNG increasing quite a good -- I mean, quite a very short interval for INR 56 to INR 89. So as we mentioned, now it has come down. So we expect that the number should pick up and maybe 5% to 6% can be take better than that also.
Just to add very this little impact. But during Q4, specifically, there were some buses of BEST. Stance not as a result of PNG who are under testing almost for a month or so and around 300 plus buses remain off the road. That has also contributed a little reduction in our PNG volumes, okay, which was one time. Now all those buses are back on the road, and we are seeing normal consumption by BEST as well in the month of April and maybe 2nd of March.
Got it. Thank you so much for such a detailed answer is very useful. I'll come back. Have a nice day. Thank you.
[Operator Instructions] The next question is from the line of Abhilasha Satale from Quantum AMC.
My question is again related to volume only. So in the -- during the quarter, we have seen some reduction pole. So how has the conversion move in the cost? And with the reduction in pricing, this mean any pickup in the communities. And of course, if it will be the number of [indiscernible] at number of any of you can give number of.
If you see quarter 2, quarter 3, we were generally having a vehicle on CNG roughly in the range of INR 15,500 to 16, 17,000. Q4, there was a little reduction and the number is roughly 14,000 approximately then. Within that, how much you wanted to know, how much is the commercial vehicle adding.
Partly...
Commercial vehicle is roughly 1,400 plus. Small commercial vehicles, tempos and trucks put together, roughly INR 1,250.
Okay. So I missed the number for Q4. Did you mention that because Q2, Q3 you said INR 15,000, 17,000 in Q4 was that number?
INR 14,000 roughly INR 13,700 crores.
Okay. And with the reduction in the prices, what we have seen in Q1, are you seeing the momentum picking up as well as the convenience are consuming?
Once we drop the price on April, we witnessed an economic increase of about 7% in the volumes.
Okay. Okay. And any -- as you go forward, what where the reduction has come to '18-time the maximum, we are competing with the pareto -- or is there any further on that as we optimize costs is the serine price reduction expected in future.
Depends on many factors. One is that how the sector and diesel prices are faring. Second is what is our total cost of equipment. Whatever the reduction due to carpark has happened, we have passed on to the customers. But we will again reset the situation on a month-on-month basis. And if there is something more which can be passed on to gain the volumes, we will be certainly looking at it.
Okay. And just the last one, like, as our cost structure has also shifted downwards and you patent of the benefit to the consumer. So yes, what is our target? Or what did you see our EBITDA per range of we should be able to maintain.
The EBITDA for a function of a lot of factors, okay. So apart from CNG and domestic and the available gas prices, AOM as well as HPHT or any other gas we use for priority. We have industrial and commercial segment where our price is linked to alternate fuels. So if alternate fuels like realization is good, we may be in a position to make good margins. And also those term contracts are linked to different index. So depending on the index movement, the cost of gas will get retold. So all these factors will determine what should be the overall EBITDA for SPM for the company. However, with respect to major part of our volume that is CNG and domestic, we see a comfortable position at least for the next few months and a quarter or so because as you may be aware, with 6.5 cap on priority gas spot prices also are reasonably down in the range of $10 to $12. HPHT available in the range of around $12 plus okay. So we expect that at least next few months, we should be in a position to maintain our margin. Also, since now as earlier Andy said, CGD has a priority allocation for HPHT. We have participated in the last round of HPHT auctioned by Reliance, and we have -- we have tied up something. Further, there is HPHT around coming up in this month and also maybe 4, 5 months. So we will be evaluating spot what is beneficial for near term and then time for long-term gas under HPHT also. So by large, we feel that at least next few months and quarters, we should be in a position to have a good control over gas costs.
The next question is from the line of [indiscernible] from ITI Limited.
Sir, my question is on our total volume financial on the side. So I mean you have some idea about how much is standing moderate my private car, which are canola happens and by the wheeler also. Is there any [indiscernible]?
I think we answered this question on previous calls also, just I will repeat once again. Buses comprise about 8% of our CNG volumes. Then auto shops is about 35% or so private cars and taxis aggregate of occur would be about 45%. The remaining would-be commercial code vehicles like small light commercial vehicles, trucks, et cetera.
Okay. And sir, last question, what is the penetration in terms of the car prices available versus that on the private car because of Almas completely on the now be better if we are what earnings of electrification.
If you look at penetration in the last year operation and taxes, it was 100% penetration. If you look at private cars, we have also 4-pack of them in our estimate of a total convertible population of about INR 12 lakhs. So that is about 33% penetration, Penetration is very, very low in the commercial goods vehicle segment, hardly 2% or 3%. And that is one segment, which we are looking to grow as much as possible because of some positive moves have happened. OEs have now started coming out of factory-with goods vehicles on CNG. Previously, only option was for retroping, ut now across the range, right from light commercial, small commercial, intermediators going up to about 18 tonnes range. You have CNG variants, which are attributed and available with full warranty and backup from the OE for service and support, et cetera. Plus, given the fact that CNG is also becoming of more of an India phenomenon there. All the highways going out of Mumbai now as CNG right up to Vivo, mum, Gujarat, Rajaram, Belgium and right on CNG without using petrol and any other fuels. If you go towards June, you can work to one-end, Begaright up to Banglore, without having to put in pectoral overplace or Marshals go, you have CNG and margin. We go on boards go and at the strict of our house stations there, then now getting some go up, the whole bet tied up to go now as CNG, but is also encouraging that option of CNG for the port vehicle and of course, private medical also who travel in the city. The penetration part on the EV part, most of the penetration which we are seeing is happening in the 2-wheeler segment actually. If you look at the national wide or even state-wide numbers. Yes, Harsha, as reasonably and if you come back to the states, Marshals going slightly better than the penetration of EVs and 4-wheelers, private cars. But what we need to keep in mind that is actually a different market segment, passenger cars, come in entry-level when they come in seton, when they're coming on, mature-level high level, et cetera. The EVs are coming in at the high-level predominant of course. So a 10 lakh plus market segment is where we entrain is happening. Whereas a large majority of the private sorption in CNG is happening at the entry gen, which is October of INR 7 lakh or on those models. So it not is impacting our volume CNG volume growth here.
Yes. It was more potent now or auto and what type of India.
Mr. Rajesh, we request that you return to the question queue for follow-up questions. The next question is from the line of [indiscernible].
So my question is from the UEPN subsidiary. So did we get the final approval on the acquisition?
The final approval is we have to be seen because that is a lock-in period of 5 years, which is ending in September '23. So we expect by October or November, the approval from the regulators should be available, and then the transition will take place of transferring the share and the money transfer.
Okay. Do we have the volume number for UEPN for FY '23?
Around 0.1 mmscmd.
The next question is from the line of [indiscernible].
I just had simple 2 questions. First of all, you said that we have a revenue target of, say, 5% to 6% growth, right?
Not the revenue volume... The volume target.
Okay. So like what would be the revenue target, if there is any for…
There's also many other factors like the cost of procurement, which is a pass-through cost. So revenue actually depends on the cost of procurement and the pricing which we do.
Okay. And do we -- will we be able to see the previous 35%, 40% EBITDA margins going forward? Like how long would it take? Yes, the OPMs.
As far as percentage is concerned, in case of CGD, let us say when my P&G was priced at INR 50, okay. And later on when gas prices went up by, say, INR 20. And I have to pass through that INR 50, maybe whatever was my margin within INR 50, I retained it as intact. Let's assume I have a margin of INR 10 in my earlier price of recuts. My price went up to INR 70 because of gas for the increase. My margin still remains at INR 10. So as a percentage, 10 on 50 and 10 on 70 percentage come it will reduce. But that is not relevant as far as. Our performance is concerned. So we measure everything in terms of volumes and what is the margin you are making in absolute terms for SP then as a percentage on... Yes.
The next question is from the line of [indiscernible].
Thanks for the opportunity. Sir, can you help us understand how much will be the percentage APM deficit in FY '24, assuming high 6% volume growth and the similar number for FY '23.
FY '23, roughly, we have got APM around 90% to 93%. And if I'm not very pessimistic or optimistic also, we should get around 88% to 90% in FY '23, '24 as well. However this allocation will keep on change -- this I'm referring to domestic gas all maybe an yes, right? However, with availability of HPHT on priority for CNG and domestic, I think the major concern is not there and also spot is comfortable today and going down. Okay.
So you mentioned 88% to 3%?
Around 93%, we have got APM.
And is that expect?
Next year, we assume that it should be in the range of 80% to 90%.
You look at February of '23 onwards, if you APM and HDHT, 100% they are only for previous part of the year for compensating -- having to put in some for market price we have into the priority base... Every August, government has allocated H on priority to CGD sector. So HDHT is almost 100% of PNG and CNG volumes. [indiscernible]
The next question is from the line of Shubham Shukla from Voyager Capital.
My first question is on our EBITDA margin. So even though we had a great quarter on this front. It is the highest in the last 5, 6 quarters. But if I look at the past 9, 10 years, we closed the year with lower EBITDA margin ever. So are we expecting to 35% plus leverage impact any time soon?
EBITDA margins of 33%... Can you repeat the question?
Like are we expecting those 30, 35 levels plus EBITDA margin that we had to...
As I said earlier, sometimes back, we -- I think it is not right to monitor our EBITDA margin in percentage terms. If gas prices go down from here, I may reduce pass on the gas cost reduction. So my person will not improve. If the staff prices go up, I'll pass through that I pass on that burden on to the consumer and the percentages fall. So looking at margin for us or CGD companies in terms of percentage to sale price is not a very right parameter to look at. For... Per kg is a very good parameter to look at it.
Normally, the cost is passed through, so we don't keep that margin with us. So rupee for SCM will be a more afflicted parameter to make the proper asset...
Sorry, I didn't get that. Can you repeat that again?
We are saying percentage EBITDA to the sales is not a correct parameter to just the performance. But then parameters are retired to the part but I seen. That is the volume sold. That was mainly because of selling price is very, very strongly correlated with the purchase price. And that is what most the selling price of most. Our other costs, non-gas costs, et cetera, on that now, they are more or less stable. It is only the gas purchase price, which has wide fluctuations, which impacts our gas selling price. So per KG office for SCM margin is relatively moving in a narrow range. You will see EBITDA percentage terms swinging off and doing down pretty significantly. That's why we don't usually use that as a measure.
Okay. And just like your guidance, any like how like revenue growth and we are advertising for FY…
Revenue growth, again, is as we replied this earlier, again, dependent on the cost of procurement and pricing we do. So primarily depends on the prices, but prices are also dependent on the cost of procurement. And we have to see what is the atomic fuel sizes, petro diesel and other alternates. So revenue is, again, like we see the revenue year-on-year growth of around 55%. But the cost of procurement has also gone up significantly. Therefore, the PAT has only increased by lower margin as compared to revenue. So revenue is more or less pass-through if the cost of procurement goes up, we have to increase the prices, the revenue goes up. However, the profitability is not much impacted on that aspect.
The next question is from the line of Varatharajan Sivasankaran from Antique Stockbroking Limited.
Sir, [indiscernible], you had earlier guided for some upgradation of outlets. So has there been any upgradation done within the last quarter that it be the financial year?
Upgradation of outlets in...
Yes. You are basically planning to the defense…
Pardon, can you repeat the last part? I thought we are planning to add dispensing units, that is part of your expansion program earlier, which you had guided for? CNG stations are upgraded in 2 manners, one that we had new can stations, which is around '24, '25 new CNG stations were added in this financial year in the whole financial year. And almost 41 CNG stations were upgraded. When we say upgraded, it means either addition of compressor dispenser or capacity upgradation or things like that. So in total, we have done 65 upgradation and new CNG station in the whole financial year.
And this run rate is expected at.
And this year, '23, '24 you are asking?
Yes.
'23, '24, we are set up more aggressive targets in terms of new CNG stations and upgradation will be in the similar lines.
I understand of that number? Or is there... Number of…
Is all new stations is expected to be added this financial year and around 30, 40 upgradations may happen.
Any breakup between Mumbai and Target, sir?
All 3 GSP development, mostly new stations will be coming in G2 and 3. G1 is already exhausted. GA1, when we say it is Main Mumbai and GAs Pune Navi Mumbai, San and Navi Mumbai and GA3 is rider. So GA2 and 3 will be -- are expected to see more of a growth in terms of [ CanGas ].
Are the the CapEx guidance for...
I mean, we are not getting or vice properly.
There CapEx guidance, sir?
CapEx? This year, we have done around INR 580 crores, and we should be doing around INR 500 crores to INR 600 crores, depending on how the permissions are available, available space we are putting up these stations, et cetera. So we will be doing CapEx in this range.
For both years to '24 as well as '25?
Yes.
The next question is from the line of Hemang Khanna from Nomura.
Sir, just 3 quick questions for my side. Sir, if you could help us understand on the operating cost side, what is exactly the reason costs have remained largely steady Y-o-Y and large materially down Q-o-Q. Secondly, on the I&C realization, which you could help us with the realization for this quarter? And lastly, on what would be -- you've given us this -- you had test these numbers earlier, but what is oil be the total gas forcing for FY '24?
Total GAAP sourcing for... FY '24.
Yes. What is the breakup across the Cas?
We don't have exact breakout assets. But let's say, whatever is our requirement for CNG and domestic PNG will be through APM and HPHT mainly. If there is any shortfall in that, it will be catered through LNG spot RLNG -- and rest, as far as IT is concerned, we have the term contracts in place as far as cash or C is concerned.
And sir, what would be the total HPHT, which is tied up already.
We have roughly earlier reliance point one, and now we have side recently in the RL auction, 0.1 to 0.2. But of course, the earlier on pricing is different and the new HPHT pricing around $12.12 per entity.
Right, right if you could help with the anti-realizations and operating costs.
Realization and operating costs. Yes. So current quarter, you're saying Q4...
Yes.
So current quarter realization of I&C, there was some improvement, but the margins have improved mainly because of the reduction in gas costs. So the Henry hub liners as well as spot and other term contract, the prices were very favorable. And realizations have remained more or less same as last quarter, okay?
Understood. Answer on the operating costs for this quarter or any one-off or anything to call out in this...
I think operating cost, there is not much change, more or less, I think things are, let's say, hardly INR 10, INR 20 a difference. And usually, in the quarter 4, our maintenance activity, spare consumption, et cetera, goes up. Most of the activity of pipeline entice also happens post rains. So if you look at my overall OpEx for SCM is around INR 545, which remains a little lower in the first 2 quarters and it increases in second and third quarter. So second and third quarter has been in the range of around 1.75. Okay. If you look at on an average annual OpEx, it has come to around INR 5 45, whereas last year it was around INR 9 on increase of 6%, which is very normal, considering infection and other general increase in the cost levels.
Definitely, sir. And just lastly, on a follow-up. So do you expect largely these with the kind of pricing visibility that we have that margins will remain elevated in the years to come? Or maybe go back somewhere around the third quarter kind of numbers which you have seen over.
I think it depends on a lot of factors, as Andy said earlier, depends on the alternate fuel prices. depends on petrology prices as far as CNG is concerned. Okay. However, as we said, now with availability of gas in and also balance gas available through HPHT. Spot price is also coming down. In case of I&C also all the industry in contract prices have stabilized a lot, okay. So we see that at least a few months going forward and maybe 1 or 2 quarters, cash cost is going to be under a normal level what we have experienced in Q4.
The next question is from the line of Yogesh Patil from Dolat Capital.
Sir, can you please share what was the APM gas allocation for the quarter 4? And what is the current proportion of PNG for the priority segment. Sir, this question is important from the point of view of your gross margin improvement in the quarter. If your CNG volume has declined sequentially and your improved APM gas sourcing remain at the same level in the absolute number, then it is that the APM share in the priority basket is higher than which leads to the lower cost of gas and that has ultimately led to the gross margin improvement. Is that a correct understanding on the APM side?
Partly, yes, because we have had availability of around 2.73% mean during Q4, okay? But the reason for gas cost reduction is a reduction of spot and replacement with HTHP. Okay. So earlier quarter, I had consumed in the overall company around 0.36 of spot, whereas I have got in Q4 around 1.89 mmscmd HPHT. Also, the prices of spots in Q3 were roughly average of $33. Whereas in Q4, it has come down to as low as $17 per MMBtu a little more than $17, okay? So the gap, which I replace part to HPHT compared to Q3, there was a reduction of $33 to $12.5. And the spot is at [indiscernible] had a reduction of $3 to $7. So overall, gas cost has reduced because of these 2 factors, HPHT and spot price reduction. Apart from these to the term contracts, be it Ricom contract or Gal Henry a term contract or GSPC. All of them have seen a reduction in the rate of at least $1 to $3 in the term contract as well. So all this put together has added up, very good leveraging gas costs, which we have been able to reap and the profits are reflected in those lines.
Sir, my second question is related to Asian gas prices, which are reduced from $8.6 to $6.5 per amenity. Have you passed on the full benefit 100% benefits to the consumer or some benefits are retained?
We have parted the full benefit to the consumer. And I mean, finer calculation and impact will be seen in case something over is available, we'll pass on again. But as of now, whatever is the direction that is $2 per rent from $8.57 to $65 per MMBtu has been passed on to the consumer.
Okay. And sir, last question from my side. One of our medium-term LNG contracts with GSPC will expire in June 23. So what is the plan? Are we considering a port LNG will replace that volume? Or are we trying to extend the same contract with the lower flow?
We have currently not taking any decision on this because under our Henry long term contract, we are now getting full quantity almost okay. So which had a quarter -- so there, we will be getting almost equal gas what we were doing under GSPC contract. And since my requirement of CNG and domestic is getting catered through HPHT gas, which we already tied up in 1. And also currently, HPHT gas is also available through exchange and spot is loving around $10. So I think next 3, 4 months is a comfortable situation. We will review that, and we'll take an appropriate time a call whether to tie up for a long-term lease no. But we see certainly tied up some amount of HPHT in next few rounds as and when it is available. One ground is available in this month, another maybe in the month of October or November this year.
We have 5-year contract, we already signed with Reliance shares for cost of May, which is similar volume, which GSPC added.
Okay. And then the last one, sir, a new show about a bit waste treatment plan to produce the compressed biogas. Can you provide some details about that?
Yes, I think in the newspaper, this was reported that BMC has announced one plant, which we are in discussion with BMC to put up a plant at a suitable location wherein they will be supplying the base and it will be CBD plant, that is compressed by our gas plant of around 300 to 400 tonnes of handling capacity of waste and producing around 15 tons per day -- so this plant is still to be configured. BMC is now also called MCGM that is the mitral corporation of tetra. So the cantons are still not closer. We are in discussion with them for signing an MOU when detailed project report will be prepared and then FID will be done.
Mr. Yogesh, we request that you return to the question queue for follow-up questions. The next question is from the line of Sabri Hazarika from Emkay Global Financial Services Limited.
So if we look into Q4, I think that taper SCM was one of the highest, probably the highest bearing 1 quarter when it went up to 40%. And now you have mentioned that the gas costing mix is somewhat similar at least for the next 1 to 2 quarters. And you have also like passed on whatever biggies accrued from lower opium gas price. So from a 1 to 1.5 quarter perspective, is this INR 12 to INR 14 per M EBITDA sustainable now? Or do you think that you could be like passing on further and bring the margins to more normalized levels?
Q4 EBITDA, I mean, if you talk about EBITDA per SCM is INR 9.5 year-on-year. And Q4 is INR 12.8. So slightly better as compared to the full year. We will have a relook at these numbers in going the future. I think some more price reduction is required, we will do that. But right now, we are not indicating any such time.
I mean we understand that I think in the industrial commercial, it is completely a formula-driven mechanism. But on CNG and domestic changes, I think I'm sure like group companies, they have some EBITDA port in their mind and based on that day to the pricing. So in your case, also, is it the same or you'll be taking it as it comes?
So we will be looking at elasticity of demand as a [indiscernible] concerned. If you find that the volume momentum as expected is not coming off, then we'll review our pricing because that any time price review is in our hands.
And EBITDA for SCM is always hovering around INR 8 to INR 10 in that range. So we are still in INR 9.5 on the full year basis. So I mean, similar type of profitability is being maintained. One quarter, yes, you are right, last quarter was slightly much better. But do you see going ahead? How does it this year rollout?
So under the challenging circumstances, maybe like INR 9 to INR 10 could be -- I mean, of course, not the final, but could be something which we can assume, right?
Yes. In that sense, we are comfortable in that range.
Sir, one bookkeeping question, what was the industrial volume for Q4 as well as FY '23 as on?
In Q4, I'll give you the volume combined commercial and industrial.
I think the combined is there, I just needed for industries.
Actually, there has been some... Indication. So it won't be really after to, if you look at the look at the… Is around 0.45... For Q4 and for the full year is around 0.44.
Okay. 4.45%, that is for the... Testing. And has there been any change in the GP SCM conversion for you? Or is it the same 1.4 700?
Seen a marginal drop, it is from -- I mean, it's about 1.36 1.37, it is ranging around [indiscernible] fluctuates phones very small range.
In Q4, right?
Yes. On a few days, if there's an upset in the engine plant at Huron, we get relatively richer gas, but then that.
The next question is from the line of Nitin Sharma from MC Pro Research.
Step up on this. Lastly, as you started deploying CDUs, -- can you help us understand what happens to all this year? What kind of volumes came from it? How many have been deployed? And what is the plan for FY '23?
Unfortunately, the CDU rollout is still soon a few regulatory hurdles. So currently, the approvals which we are getting from peso are not permitting us to deploy the CDU into spirit of aspect, which is becoming more like a location-specific approval where I can't really move the CDU around. So and it makes more -- if you have fixed to any location, it makes more economic sense to have a small conventional series, which is much cheaper than a series. You can have larger sales volumes also. So where we -- though we have given a couple of given out 2 or 3 LOIs for some parties to deploy CDUs, we haven't seen much progress on that. So there is still work to be done there on the regulatory front, the...
The next question is from the line of Kirtan Mehta from BOB Capital Markets.
One question on sort of the growth rate that we have seen in GA1, GA2, would you be able to sort of give a breakup of the volume growth that we have seen in these 2 GAs?
We make up the volume... There just one -- before that answer just one point I'd like to make a big chunk of our volume is CNG, 70-plus percent. And as far as GA1 and GA2 are concerned, a huge common boundary is in -- between Hari Nauman, et cetera, where vehicles keep coming in and out in and out at depending on the convenience, either GA1 or GA2-- so attributing any particular growth rate and analyzing it that way is slightly difficult because we are almost seamlessly connected. If you look at the PNG sector, yes, where we can have some proper numbers because the household or industries and commercial establishments. They're either in GA1 or in GA2.But the analysis becomes a bit difficult when it comes to CNG.
Right, sir. Understood. And would you -- you also mentioned about sort of signing up of some of the industrial consumers for rigard with the implementation of CGI. Would you be able to give us an insight what kind of volume growth that we could see in FY '24 and FY '24 by connecting them?
We should see at least a double-digit increase in our industrial sales.
Overall, so when we are saying on a base of 0.45 mmscmd that we have seen, we can see double-digit...
Improves commercial also. So we are talking of industrial, which will be 0.3...
Understood. And how long the run rate would be Mani then basically, the way we are looking at the rise the GA potential is somewhere in the range of 0.5% to 0.6 mmscmd. How much of that proportion would be the industrial demand?
Industrial would be about 0.25. But again, there is another issue there because when we are taking the industrial amount of 0.25, it is the potential where typically gas penetrate against those alternate fuels, which are being used by these customers. Otherwise, the total industrial fuel consumption of GA3 is huge, it takes the coal, et cetera. Now if there is some restriction on the use of solid fuels and polluting heavy fuels, et cetera, then the demand can go much higher. But given the current situation, where we are only able to replace relatively higher cost liquid fuel because the price of market price gas, which we have been used for IT is high, then we are looking at these kinds of numbers.
Understood. And one more question, if I can squeeze in. In terms of the -- in the commercial or sort of the light commercial vehicles and tempo, that is your target segment. So what kind of these sort of payback period or what kind of sort of the implicit savings could move to with that segment of the consumers to sort of transfer into a faster growth of conversion, would you be able to say what is your sense around that number?
In the last year, the differential between CNG and visible a lot much. Now the differentiator increased a bit, and we are at about a 16% discount to be. If you look at our small or light commercial goods vehicles and compare its diesel the iron CNG, the price difference is not that different. So the driver for the adoption of CNG in light commercial and e-commerce sales, not have something like brand or small, is more to do with what is the daily running of that vehicle and in which area it runs and whether it can conveniently reduce CNG or move. And since all these boxes are getting picked, we were seeing those a few thousand of these vehicles adding on every quarter. Q4, we will underpin more numbers because of the reasons which we mentioned. But going forward, we are expecting that offer to increase.
The next question is from the line of [indiscernible].
Yes. Thank you, and good evening, and or we close the session. So I'd like to have your thoughts in terms of what is the contribution from new OEM vehicles in your conversion for first quarter? And do you see any increase in the number of new OEMs CNG vehicles that Mark talking about really ambitious growth plans for CNG vehicles. So what is your view on that?
You're talking of commercial vehicle or commercial…
Both. Because Berlin ideal they're talking about primarily new CNG cars, but in your looking at both. So we'd like to have a color in terms of if you're looking at the overall number of conversions, what would be the split between an actual generic physical conversion and OEM models. And in the recent give some solar on cars that start to be great.
But profit in has almost negligible with so many OEs coming in so many CNG variants, whoever had to retrofit earlier because finding patrol expenses are hiring a lot and we would have already retrofit ed. And probably 95% plus is additions coming from the OE market. If you look at the adoption in private car, et cetera, now Q1, Q2, Q3 on average, we are seeing about 11,000 to 13,000 local additions per quarter. Q4, that has gone down to about 9,000. Now in the small commercial vehicles, again, Q1, Q2, Q3 is the range of about 1,600 to 2,000 Q4 has come up about 1,300. We are hoping that this Q4 dip was mainly because of pricing. And April number, I get to come in for the rate of conversion. So we'll get an idea of the atom another few days or weeks. But we are hoping that the price function again now good, the CNG water option should improve. GMF started making new models also. So this year, '23, '24, we expect people have more choices and therefore, CNG prices being attractive should get a better conversion.
On that note, let me thank the management of Mahanagar Gas for being agile to host this conference call. And we also thank all the participants for very enlightening experience. May I now pass on the preceding to the management for closing comments.
Thank you so much for all joining for this call. If we are -- because of past of time if somebody has not got the answer completely. They can always write to us separately and we will be giving the copper answers. Thank you so much for supporting the company, and we look forward to have your support in coming years.
On behalf of Nirmal Bang Equities, that concludes this conference. Thank you for joining us, and you may disconnect your lines.