Mahanagar Gas Ltd
NSE:MGL
Mahanagar Gas Ltd
NSE:MGL
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Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Earnings Conference Call of Mahanagar Gas Limited, hosted by Nirmal Bang Institutional 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 Institutional Equities. Thank you, and over to you, sir.
Good evening, ladies and gentlemen. On behalf of Nirmal Bang Institutional Equities, I have great pleasure in inviting all of you to join the fourth quarter FY '25 earnings conference call with the management of Mahanagar Gas.
Representing the management, we have Mr. Ashu Shinghal, Managing Director; Mr. Sanjay Shende, Deputy Managing Director; Mr. Rajesh Patel, Chief Financial Officer; and Mr. Rajesh Wagle, Senior Vice President, Marketing.
So 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 believe that expectations contained in the statements are reasonable. However, these statements involve a number of risks and uncertainties that may lead to different results. We urge you to consider that quarterly numbers are not a reflection of long-term trends or indication of full year results.
With that said, let me hand over the call to the management. Over to you, Mr. Shinghal.
Thank you, Ramesh. On behalf of MGL, a very good afternoon to you, and welcome to the earnings call of Mahanagar Gas Limited for the fourth quarter of the financial year 2024-'25. I would like to thank all of you for attending the call today. MGL continues to create CGD infrastructure across its business segments in the license area. During this quarter, 150,142 domestic households were connected and thus, we have established connectivity for nearly 2.83 million households. We have laid 236.07 kilometers of steel and PE pipelines, taking the total length to over 7,459 kilometers. We also added 24 stations during this quarter. And with this, we have overall 385 stations as on 31st March '25. We have also added 164 I&C industrial and commercial customers during this quarter.
And therefore, as on 31st March '25, we have 5,105 industrial and commercial customers. During the year, 40 CNG stations were added, taking total to 385 numbers as on 31st March. We added 343,000 domestic households and therefore, have established connectivity for nearly 2.83 million households. PE pipeline laid during the year is in excess of 491 kilometers, taking the total length to 7,459 kilometers. We've witnessed addition of 98,215 CNG vehicles, which is the highest numbers of CNG vehicle addition in our areas of operation since inception. And now we have more than 11 million CNG vehicles running in our geographies as of 31st March. In respect of our geographical area, Raigarh, up to March '25, we have connected 95,714 domestic households and 65 CNG stations, which are currently under operation. During the quarter, we have laid 21.27 kilometers of pipeline in Raigarh, therefore, taking the total length to 466.94 kilometers.
Coming to MGL overall operation quarter-on-quarter comparison, average sales volume for Q4 -- there was some disturbance. Coming back to the average sales volume of Q4 '25 is 4.194 MMSCMD as compared to the previous quarter of 4.116 MMSCMD. Such average sales volume of 4.194 MMSCMD consists of CNG of 2.934 MMSCMD, domestic PNG of 0.59 MMSCMD and industrial and commercial volume of 0.67 MMSCMD. Average sales volume for the year ending 31st March '25 is [ 4.052 ] MMSCMD, whereas it was 3.609 MMSCMD in the corresponding period last year. Thus there is an increase of 12.27% in the overall sales volume compared to the previous year. Average sales volume for the year ending 31st '25 is 4.052 MMSCMD consisting of CNG volume of 2.878 MMSCMD, domestic PNG of 0.554 MMSCMD and industrial and commercial volume of 0.621 MMSCMD.
Compared to the previous year, sales volume in the case of CNG has increased from 2.591 MMSCMD to 2.878 MMSCMD, which is an increase of 11.08%. Domestic PNG has increased to 0.554 MMSCMD, which is an increase of 6.53% and the I&C sales have gone up to 0.621 MMSCMD, which is an increase of 24.46%. EBITDA from operations for the quarter is INR 378 crores as compared to the previous year quarter EBITDA of INR 314 crores, which is an increase of 20%. Net profit after tax for the quarter is INR 252 crores as compared to the previous PAT of INR 225 crores, which is an increase of 12%. EBITDA from operations for the financial year is INR 1,510 crores, previous [ to ] financial year EBITDA of INR 1,843 crores, which is a -- the reduction is mainly due to reduction in APM allocation and increase in gas costs impacting margins adversely. Net profit after tax for the whole financial year is INR 1,045 crores compared to net PAT for the previous year of INR 1,289 crores.
Now coming to the Unison Enviro Private Limited operations, which is a wholly owned subsidiary. The company has added during the quarter 15 CNG stations, connected 4,997 domestic households and added 3 industrial and commercial customers and has laid 61.34 kilometers of steel and PE pipeline. UEPL has added 26 stations during this year, which has taken its total number to 82 stations. The company has also added 12,002 domestic households and established connectivity for nearly 39,000 households and added 9 industrial and commercial customers during the whole financial year. UEPL has laid 95.63 kilometers of steel and PE pipeline, taking the total length to over 361 kilometers.
There was addition of 13,678 vehicles in the UEPL area. And therefore -- and also now UEPL has totaled 54,000 CNG vehicles in the geographical areas as on 31st March '25. During this quarter, UEPL has achieved an overall average sale of 0.208 MMSCMD as against 0.192 MMSCMD in the previous quarter, which is an increase of 8%. Current quarter volume consists of CNG volume of 0.189 MMSCMD and PNG volume of 0.0186 MMSCMD. During this year, UEPL has achieved an overall average sale volume of 0.182 MMSCMD and -- against 0.129 MMSCMD in the previous year, which is an increase of 41%. In the year ending this financial year 31st March '25, MGL as a consolidated entity has achieved total sales volume of 4.235 MMSCMD.
I'm happy to announce that the Board of Directors has approved a total financial dividend -- final dividend of INR 18 per equity share for this financial year. The total dividend for the year, including interim dividend already paid is INR 30 per share. That is 300% on the face value of INR 10 per equity share.
With this, I conclude and would like -- now like to open the floor for the questions. Thank you very much for your patiently hearing.
[Operator Instructions] The first question is from the line of Yash Nandwani from IIFL.
Yes. Sir, firstly, on the sharp increase in OpEx per SCM this quarter. I understand there was some marketing scheme for CNG in fourth quarter and also CSR expenditure typically gets booked in the last quarter. So could you please share the amount spent on marketing and CSR in fourth quarter?
In the fourth quarter, marketing is around INR 11 crores. And as far as CSR is concerned, roughly INR 10 crores is the expenditure on CSR in the last quarter. Apart from that, I think the increase is mainly attributable to generally maintenance activities have taken up higher in the fourth quarter compared to all other quarters. So balance is attributable to that, somewhat attributable to consultancy and maybe 1 or 2 pipeline rents we have added in the last quarter.
Okay. And secondly, sir, could you please provide the volume growth separately for each of the geography, Mumbai, Thane and Raigarh?
We can separately share it with you because there are some details involved in it.
And sir, last question was mix breakdown of 4.2 MMSCMD, how much came from APM, NWG, RLNG and spot, if any?
Out of 4.2 MMSCMD, roughly [ million ] is APM. That is I'm talking about average because there was some increase in January, February, and it kept on changing. So on an average for the quarter, it is 2 million. Around 0.5 million is HPHT, around 1.35 million to 1.4 million is term contracts, which includes Brent linked as well as Henry Hub and balance is through IGX. Majority of IGX is HPHT available on a short-term basis and some small amount of spot. That is the breakup for the quarter, roughly 4.2 million.
Sure, sir. And how do you expect this mix to evolve in the upcoming quarter?
So right now I think the allocation of APM has come down to around 1.67 MMSCMD. But correspondingly, there is an increase in the NWG available, which is around 0.65, okay? So bearings replacement of APM with NWG, more or less things should remain same. And whatever is the incremental volumes that should be initially sourced through IGX on a short-term basis. And once it stabilizes, we will enter into further term contracts, which could be either HH, Brent or available HPHT in the market as and when it comes up.
We'll take our next question from the line of Nirmal Gore from Aditya Birla Sun Life.
Sir, I just wanted to ask you if there is any status from the Bombay Airport led Committee on the transition?
Yes, I think discussions are going on. There were 4, 5 meetings already held. And we can't disclose much of it. But yes, positive discussions are happening about the directions given by the High Court, which is that how to curb the pollution primarily and also to promote CNG and EV adoption in the whole area. So the committee was formed 2 months back, several meetings are held, and we will submit our report maybe in a month's time to the High Court. And then it will be further disclosed to the public.
The next question is from the line of Yogesh Patil from Dolat Capital.
Sir, as you just mentioned, 1.3 MMSCMD is LNG gas sourcing. Can you break it down in how much is crude-linked and Henry Hub, if possible?
Around 1.27 MMSCMD is Henry Hub linked and 0.1 MMSCMD is Brent linked.
Okay. Sir, my second question is related to the current environment. Considering the crude prices at $62 per barrel and majority of your gas basket is linked to the crude, then the question is can you guide us on the revised EBITDA margins for the FY '26?
No, we are not directly linked to crude, as Rajesh just mentioned. Our majority of term contracts are linked to Henry Hub. HPHT is a index, which is based on 3 -- basket of 3 indices and the lower of the fees taken. So we can't say that our majority of term contracts are linked to crude basket. Coming to the other part that the crude has come down, but Henry Hub has remained stable more or less. So...
Maybe you are referring to IBC also linked to in a way indirectly to the crude. Yes, if that comes down, but -- Indian crude basket, yes. So that may give us a saving because almost...
New Well Gas is linked to the Indian crude basket, which is at 12%.
Also APM.
And APM also. So if $62 is the current rate and every month average is taken. So again, the ceiling is there. So currently, the ceiling is $6.75 per MMBtu. So if the crude remains below $67.5 per barrel, then the APM prices will come down. And similarly, the 12% to IBC will also be on a lower side, because earlier, the crude was ranging -- trading in the range of $75 or $80. So this benefit will lower the procurement cost on the average procurement basis for the total portfolio, and that will be reflected into our better EBITDA margins.
Coming to your EBITDA margins, this year -- this quarter, we have earned around INR 10, but -- and on the whole for the year is again INR 10. So it depends what is the procurement cost and how much of it we can sustain and how much we can pass on. Depending on that, we can have a guidance of around INR 9 to INR 11 as EBITDA margin for the whole year, coming '25, '26. But you will appreciate that the things are very dynamic in nature. Also there are geopolitical things, which again may result into wide fluctuation in either crude or gas prices. So let us see how the things roll out and then we will take a call on the EBITDA margins because EBITDA margins depend on the alternate fuel price, the procurement cost, our margins and how much we can absorb, how much we can pass on to bring more stability into CNG prices.
Let me quickly add on the same side, sir. Henry Hub gas prices, which is the major portion of your LNG linked gas sourcing, that has also come down. I will not say sharply, but that has declined by 25% to 30% in last 1.5, 2 months period kind of a time. So will it help you to improvise your EBITDA margin guidance for FY '26?
So, Yogesh, I think if you look at Henry Hub, whatever $3 plus or $3.5 nearly was in last few months, 4 to 5 months of last year. But if you take the average, it was still lower. So we'll have to watch out for the full year because we will be comparing the average which prevailed in '24, '25 with the average which will prevail in '25, '26. So I think we'll have to wait and watch and then have...
EBITDA margins, see, we are better performing than our competitor peer companies. So I think INR 9 to INR 11 is a very healthy margin. Previously, we were having a margin of around INR 7, INR 8. So it's not very unhealthy, I would say.
Okay. And lastly, sir, PNG industrial and the commercial is growing at 20% on a volume side year-on-year basis. So the same pace of growth can be expected from this segment in the coming quarters? And if you could elaborate on the major growth areas of this segment?
The largest chunk of that growth has come from large industries. We have managed to connect -- reach a few new areas and connect a few very large industries where who had not been taking gas for a long time. I mean this rate of growth of 20-plus percent, I mean, has been unprecedented and sustaining it at this rate may not be possible for too long. However, our current I&C sale, which is about between 0.6 MMSCMD to 0.7 MMSCMD, we can foresee that going up to about 0.9 MMSCMD or 1 MMSCMD in the next couple of years or so. Beyond that, as things stand today, we will have to find some ways to break into the solid fuel market because the addressable potential which we see in the FO and other addressable liquid fuel industry is about 1 million, 1.1 million.
The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund.
In terms of the CNG promotion scheme that we have run through FY '25, how was these sort of taken by the consumers? How much we spent and how much vehicles get added under different categories during the FY '25?
In the current year, the scheme which we ran from October '24 to March '25, a total of 624 vehicles were added through the scheme, which were primarily medium and large commercial vehicles with a gross vehicle rate of more than 3.5 tons and about 30-odd buses. And the spend which was there was about INR 2 lakh to INR 3 lakh per vehicle. And...
Overall, in this, we have spent around INR 32 crores to INR 34 crores on the promotional schemes for vehicles. And for the quarter, it was INR 11 crores.
Considering that these are -- the per capita CNG consumption of these vehicle classes are slightly on a higher side, we get a pretty good payback. And since the method of incentives through a CNG sales card, which can only be used at our CNG stations, we are ensuring that we get all the associated volume out also from these vehicles at our stations.
And if you see overall conversion for the year, this is highest in the history of MGL. That is 98,215 number of conversions happened during the year against around 77,000 last year. So this is a result of all these things, the scheme, the consistency in the CNG prices and the infrastructure improvement, which is happening in our geographical areas.
Do you plan to continue this in FY '26 as well?
We are keeping a close eye on the market and also in constant discussion with OEs. Look, we ran this last year. We ran this year. Again, we need to make sure that it is a marketing scheme, which gives a push to the volumes and not something which is customers anyway will wait and say, okay, every year this is going to come or something. So we will watch the market and time our schemes accordingly. And especially in the schemes where paybacks are relatively high, like for these large commercial vehicles, we will incentive them. Similarly, we are also looking at incentivizing any customer or anybody who comes as a bulk customer to us. We...
Bus fleet operators.
Bus fleet operator or a very large transporter. Then we can do one-on-one MOUs with them also to incentivize them or nudge them towards CNG.
Right. Could you also give us a breakup of the 98,000 vehicles that has been added during the year?
Around 55,000 is private car, 7,000 is taxis, 25,000 is 3-wheelers, small commercial and other commercial vehicle is around 7,000 and balance is -- 3,000 is 2-wheeler also. And around 350 is the buses or 450 is around the buses for both MSRTC and some NMMT buses are there.
And just last question from my side. We have been entered into 2 -- basically, we invested into 2 companies, 3EV and the battery JV. Could you give us the progress on them?
Yes. 3EV, we have already -- we have committed for 32% equity and there is a capital of around INR 96 crores. So that was linked with certain progress to be made. So we have paid 3 tranches and around INR 23 crores is balance. So they have started making progress. It is a start-up company. So it takes some time for the company to pick up. But the signs are good. The market is now getting established. They have produced around 850 vehicles during this financial year. With respect to the Indian -- International Battery Company, IBC, we have committed for 1 gigawatt in the first 2 phases and following it up to scale up to maximum 5 gigawatts.
Currently, the company has been formed. We have got the land and the site work has started. So maybe within 12 to 15 months -- 12 to 14 -- 15 months, the plant should be in place. We have already given them the initial equity and 40% commitment of equity is there from our side, 60% will be contributed from IBC U.S.A.
In terms of the marketing efforts, IBC have already started seeding the market by importing the battery cells and making battery packs in India from South Korea, okay? So we have a line of customers, which is getting built up. And the response is quite good in terms of vehicle performance using the battery packs manufactured by IBC.
Right. And in terms of the 3EV, what would be sort of the milestones that we'll be looking for in FY '26?
Currently, they are producing around 200 vehicles a month, okay? So on an average, 2,400 vehicles. Maybe that will be ramped up by a few hundred more vehicles. There is another plot which has been taken to add the capacity. So once that starts, we will be in a better position to tell you their annual capacity on vehicle production.
The next question is from the line of Maulik Patel from Equirus Securities.
Just one question. You mentioned that you have almost 1.27 MMSCMD of Henry Hub linked volume. That number has gone up over the last 2 quarters. I mean, that's if you look at from the basket of close to 4 MMSCMD, that's more than almost 30% of the volume which come from Henry Hub. And -- so do you have any strategy that you want to have a good mix of Henry Hub and oil link, given that oil link on the spot is very low in the current supply mix or are you comfortable with this kind of ratio as the volume increases, you will keep increasing the Henry Hub volume?
I think you're right in terms of proportion of Henry Hub currently in our total portfolio of term contract is higher. I think in the further needs, we will evaluate and definitely, we will be inducting Brent link if it is available at good index for next 5 to 6 years term contract. And we are open to that. Certainly, it's not that only we will be -- I mean we will balance out in next term contract whenever we tie up.
But overall portfolio, if you see there is -- I mean, Henry Hub is there, but we have HPHT of around 0.6 MMSCMD, which primarily indirectly is linked to crude. And NWG is again crude -- Indian crude basket and even APM is Indian crude basket. So it is not that we are overtly depend -- I mean, our portfolio is inclined to Henry Hub. It is a balanced portfolio, I would say.
Okay. And how much of NWG you have -- you got in Q4 and currently, you are getting?
How much is?
How much NWG volume you got in Q4?
NWG.
In the Q4, roughly 0.1 of NWG was available. And currently, we have around 0.65 of NWG in the month of April, I'm referring to.
Got it. And just another question. The industrial growth has been very strong. I think in the last couple of quarters, you have been reporting almost 20% kind of volume growth on the industrial side. I mean what's driving this growth? And in your assessment, will this kind of growth profile will continue in FY '26 or what's your view on that side?
We have partially answered this question some time back. However, just to repeat, there are 2 main drivers to this growth. One is the call which we took that we will guarantee the customer a [ 3% ] or 10% discount on the alternate fuel without any floor. That has helped many customers to get onboarded. Second is, we have managed to physically reach out to quite a lot of large customers and lay our pipeline right up to their promises, which has also led to this increase in volume. So we made our terms and conditions more favorable, and we backed that up by physical connectivity, which has led to this growth in volume. We are expecting this a similar growth to continue for some time, but not very long. Of course, I mean, last point is if there is any environmental related upside in terms of air quality and something happening to solid fuels, et cetera, then this can grow exponentially.
Got it. Yes. And the last question on the regulatory side, there's a High Power Committee has been set by PNGRB to look at the open access and CGD network open access. What's your view on that side? And let's say, it's come that the network is getting open for third party to access, why do you see MGL in terms of either benefiting from that particular policy or going to see some competition in many of your key areas?
The committee is still to give their recommendation. It's an internal committee constituted by PNGRB. Further, you must appreciate that the matter is subjudice the -- under Delhi High Court and the discussions are going on. So PNGRB, when they constituted this committee they all -- and when they mentioned about infrastructure exclusivity, they have categorically mentioned that this all is -- consultation is being done, and this will be subject to the final decision taken by the Delhi High Court.
Now having said that, if the exclusivity has to end, there are 2 parts to it, infrastructure exclusivity and marketing exclusivity. The infrastructure exclusivity, there is a provision in the regulation itself to increase by 10 years, in the bracket of 10 years after completion of 25 years. So in 2 of our areas, we have already applied and it can get -- I mean, PNGRB is considering for extension of that. And world over, what we have found is that infrastructure exclusivity is generally available to the -- to the entity which is working in that area.
Coming to the marketing exclusivity, it has a mixed thing, because we will be getting paid for the utilization of our assets as and when the areas get opened up. And we will -- we can also go to other geographies and other entities to trade our volumes. So it's a mixed thing. We will be getting returns on our investments, and we will have an opportunity to work in other places also and others will also have an opportunity to work in our areas. But all that is subject to Delhi High Court decision, the High Power Committee, as you mentioned, and the way PNGRB opens up the sector and the way the whole thing rolls up because there are a lot of finer details about how the things will be rolled out, the regulations, the mechanism and the way who will be allowed to come in different areas and so on and so forth.
So we have to watch because it will be a mixed bag for us. It will be an opportunity for us also to go in other geographies and at the same time, other people to come in our geographies. So it's either win-win or loss-loss for both the parties, but we think it is a step in the right direction as far as the marketing exclusivity is concerned. But let us wait for the Delhi High Court decision for coming -- before coming to any conclusion on this.
We'll take our next question from the line of Mayank Maheshwari from Morgan Stanley.
My question was related to LNG and how has LNG trucking kind of picked up in the GAs for you? And what are you seeing in terms of trends or any incentives that you're kind of giving around the entire LNG market for trucking?
Mayank, we already -- in case of MGL, we have our running station at Savroli, which presently is around selling around 4 tons of LNG every day. Our JV company, MLPL has already started one station in Aurangabad. And the second station at [indiscernible] in MP near Nagpur was commissioned in this year mechanically. So we should start selling the LNG by end of the quarter 1. Two more stations, one in Amravati and one in -- Amravati has already started construction and JNPT station will also be completed in this financial year, probably by Q3 of this year.
We see a very good potential, as we keep on adding the stations, we are getting the customers. Presently, we have 3 main customers, one is CONCOR and GreenLine as well as some other companies. And going forward, we see that at least another 10 to 12 stations in Maharashtra itself will be required to cater to the demand from trucking. On the supply side, not only Ashok Leyland, but Volvo Eicher is also very committed on providing the various models of LNG. And we see the demand coming from that side also.
The next question is from the line of Hardik Solanki from ICICI Securities.
Yes, sir. As you mentioned the allocation, just want to check what was the allocation, the APM allocation and new gas allocation for the Q4 and what is in April so far? Can you break down that?
APM allocation for Q4 he's asking.
And New Gas Well (sic) [ New Well Gas ].
And New Well Gas.
As I said, APM was roughly -- Q4 was 2 million and very small quantity of NWG around 0.1 million.
And what is for the April so far, APM and New Gas Well (sic) [ New Well Gas ]?
Right now, we are getting APM of around 1.67 and 0.65 of New Well.
Okay. And so whatever the additional growth we come up or whatever the additional requirement would be for the CNG segment that will be fulfilled by the New Gas Well (sic) [ New Well Gas ], right? Is that understanding correct?
Yes. So APM after using for domestic whatever is remaining, then NWG, then we have HPHT contracts. And if there is any shortfall that gets catered through Henry Hub or we buy it from IGX on a spot basis also, HPHT.
Sorry, just getting confused. The New Gas Well (sic) [ New Well Gas ] of 0.65 MMSCMD that will be constant for certain time frame or it will get increased as the volume get increased?
No, let me just clarify. The APM quantity is not getting reduced. What is happening is, the APM overall kitty is same. Some of the APM, which is getting reduced is reclassified as New Well Gas. In fact, the APM reduction was lower and the New Well Gas addition was more in April. But overall, if we see the quantity of gas remains the same, except that the reclassification of APM at -- which is at a ceiling of $6.75 will be sold at a higher price, but the quantity of gas remains the same. So as Rajesh was mentioning that if we have to increase CNG volume 10% growth, so maybe we have to source gas from other sources also like Henry Hub or HPHT depending on -- because see, overall CGD consumption in the country is growing, whereas APM is stagnant or may increase slightly.
So whatever the growth is happening, the shortfall needs to be met through other sources, be it HPHT or term contracts. The same will be situation for MGL also that APM kitty, either NWG and APM put together if the requirement is more for the industry, then we have to source it through other sources.
The next question is from the line of Nitin Tiwari from PhillipCapital.
Just bookkeeping ones from my end. So what was the CNG sales in kg in this quarter? And also if you can break the industrial and commercial volumes down...
One second know.
Sure, sir.
In terms of kgs, it was 2.934 million kgs per day.
2.934 million kgs per day.
That is SCMD.
MMSCMD.
MMSCMD ad 2.16 kgs -- million kgs per day in terms of kgs -- 2.161 million kgs per day.
Understood, sir. And the breakup of industrial, commercial volumes in respective industrial and commercial segments?
Out of total I&C volume around 0.14 MMSCMD is the commercial volume.
0.14 MMSCMD per day.
Yes, 0.14 MMSCMD and rest is industry.
We'll take our next question from the line of Kartik from CLSA.
I just wanted to ask about the OpEx. So I can see that OpEx on a year-on-year basis has gone up 22% to [ INR 8.1 billion ], which is roughly [ INR 1,818 crores ] and gross profit has been down 6%. So just wanted to get a sense on how we should be thinking about OpEx from here on?
See, as far as OpEx linked to volume is concerned, mainly CNG volume, certainly, it will go up because most of the expenses apart -- even gas is linked, then power and fuel, the dispensing charges, the LCV transportation in case of transportation of gas to non-online station or Daughter Booster Station from Mother Station. So all those expenses are volume-linked and certainly, they have gone up, okay? And apart from that, some of the onetime expenses like sales promotion, we have taken up in this Q4 mainly the drive to do a lot of maintenance of the old pipeline, old equipment, et cetera. And as I earlier said, in Q4, CSR -- this year CSR expenditure on a yearly basis is also more because average profit of last 3 years was up. So what we are spending around INR 16 crores, INR 17 crores has gone up to around INR 22 crores, INR 23 crores, okay? And sales promotion is another addition, which is added in the OpEx to push the CNG volume or CNG vehicle adoption.
Sir, could you please give a breakdown? So like INR 22 crores is the CSR expense, INR 32 crores is the marketing expense. So beyond that, everything else is CNG, like volume-linked expenses or is there anything else in that mix?
Yes, yes, no, no. Other than that, mostly volume-linked things are there. And as I said, some part of -- mainly Q4 numbers you referred to. There is some increase in maintenance of around INR 15 crores to INR 17 crores in the quarter 4 mainly.
So how do you think of this for like as in terms of guidance for FY '26 and FY '27?
On an annual basis, I think the expenses will remain except onetime expenses like sales promotion depending on how much we roll out next year, maybe in the similar quarter or something, it should remain. Some amount of variable expenses, like transportation of gas from Mother Station to Daughter Booster going forward will reduce in a way, because today, we have only one CGS in our Raigarh GA. We are already in the process of setting up other GA. So once we have a CGS there, the transportation, which is happening from little far will reduce, and that will reduce the cost, okay? And even in GA-2, I have a lot of Daughter Booster stations. So if those stations get slowly connected through pipeline, that will also save on the transportation costs, et cetera, okay?
So one last thing. Do you still have the similar guidance on volume and margin for FY '26, '27, like 10% volume growth and INR 10 to INR 12 of unit EBITDA SCM?
Yes, I think volume growth will be in the range of 10%, plus/minus 1%, maybe it can be more than 10% also, because you see the momentum has come on CNG part as well as industrial and commercial this year also, we have some scope to increase. DPNG, we have been steadily growing. And again, 7%, 8% DPNG can -- growth can come up. So volume side, similar numbers are expected this financial year also. With respect to the margins, we have just discussed maybe INR 9 to INR 11 is the right guidance for the next financial year. This year, we have been -- we have got INR 10, but one correction is there. So we can -- we may come down to INR 9.5 if that correction is taken into place. Otherwise, INR 9.5 to INR 10, INR 10.5, INR 11, that range would be our expectations.
The next question is from the line of [ Falguni Datta from Mansarovar Financials ].
Yes. My question has been answered.
Sorry to interrupt, ma'am. Your voice is low. So can you...
Yes. My question has been answered.
Right, ma'am. The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund.
In terms of the CapEx, what's our guidance for FY '26? And what would be the broad breakup?
We are expecting around INR 1,300 crores CapEx for FY '26. And again, around INR 150 crores will be in UEPL, and we are also in the process of merging UEPL back to MGL. So collectively putting together INR 1,300 crores will be the number expected this financial year.
Broad breakup between CNG and pipeline, if it's possible to share?
CNG should be in the range of INR 200 crores odd in Mumbai -- I mean -- sorry, MGL and maybe INR 50 crores to INR 75 crores, depending on how many stations and sites you get in case of UEPL as well.
Balance is both a mix of PNG, steel pipeline, PE pipeline and operational CapEx. So as Rajesh mentioned, around INR 300 crores will be in the -- for CNG, around INR 500 crores will be in -- for PNG, including pipelines. The pipelines will be around INR 200 crores and OpEx will be around INR 100 crores.
Replacement CapEx.
Replacement CapEx. Around that number broadly.
And in terms of the -- there has been a sort of clarity on that we will have 2 quarter clarity on the allocation of APM. So has it already been implemented? Or when is it likely to get implemented?
No, the allocation of APM happens from time to time, but typically, based on certain triggers, because this gas is being produced locally by ONGC and -- mainly by ONGC and GAIL does the balancing act. So there are certain minor adjustments, but some trigger points do happen like year-on-year reduction of APM and reclassification NWG as per Kirit Parikh committee and DGS recommendation is done by Ministry and implemented by GAIL. So those things happen on a regular interval basis.
But also to just reply to what you asked, that committee -- the government recommendation that you will get a guidance 2 quarters ahead, that is not yet formulated.
Okay. Yes, we get some notice, but not 2 quarter notice, if that was your question.
I think there was a question earlier on GA-wise volume breakup. 1.93 MMSCMD was sale for GA-1, 1.88 MMSCMD is volume for GA-2 and balance around 0.25 MMSCMD or 250,000 SCMD is for GA-3.
[Operator Instructions] The next question is from the line of Hardik Solanki from ICICI Securities.
Sir, as you said that the CapEx guidance would be around INR 1,300 crores. So can you just break down these GA-wise, how much would be to the new GA and basically in GA-3 and how much would be in the GA-1 and GA-2?
See very, very strict breakdown cannot be given, because depending on availability of site, the CapEx will be done. But broadly, around 30% could go to GA-3, rest, I think almost 65% will be in GA-1 and GA-2.
And INR 1,300 crores also include around 15%, 20% in UEPL.
UEPL.
The next question is from the line of [ Karthi ], who is an investor.
Sir, with respect to the reduction in the APM gas already, is there any discussion on a CGD basis, industry basis for either reduction of excise or inclusion of NG in the GST regime with government? Because I seem to understand that at present the volume of APM is at 40% and gradually it may be phased out to zero.
So considering the parameter, whether any discussion is there as a CGD industry as a whole to include either reduction in excise or maybe inclusion of NG and GST wherein it will promote the more usage of NG and will align with the government vision also for increasing the gas volumes from 6% to 15%. Is there any discussion going on? I just wanted to know on that.
A lot of discussion is going on. In fact our regulator PNGRB has also been following it up with Ministry for one reduction -- elimination of excise duty on the CNG and -- CNG as well as LCNG also. And second is the inclusion of gas in the GST. So we were hoping that something positive should come out at least in next GST Council Meeting as well as in the next budget. But the discussions are going on for both these items, one is GST as well as excise duty.
See, discussions always happen within the industry also, as a industry association also, the things are getting discussed, and they have been put up in right perspective to both MoPNG and regulator and other ministries because final decision will either come from GST Council or from the Finance Ministry regarding excise duty. So everything is not in control of the association or the CGD industry. But yes, we keep on pressing our views to the right forums.
Sir, and my second question is related to the I&C volumes. So if we see in Q4 FY '25, the volumes from I&C are at 0.59 MMSCMD. So with wherever areas where MDP and steel network is charged with connection of further prospective I&C customers, what is the outlook for the I&C volumes over the next 3 years? Maybe medium term we can consider.
I think we answered this question sometime back. Currently, our I&C volume is between 0.6 MMSCMD and 0.7 MMSCMD, and we are looking to take it up to about 1 MMSCMD, 1.1 MMSCMD in a couple of years.
We will take our last question from the line of Mr. S. Ramesh from Nirmal Bang Institutional Equities.
So before we close the call, I just had a couple of thoughts. One is if you look at the slowdown in the auto sector, they're growing in that 2%, 3%. What is the kind of run rate one can expect in terms of CNG vehicle additions? What are you seeing this month? And secondly, if you look at the price increases you've taken between December and April and the kind of stabilization in the input gas cost, are we now there in terms of having passed on most of the gas cost changes and eventually, will we see the volume growth and the price increase helping you improve the top line growth and margins? How do you read that situation over the next 1, 2 years?
There were multiple questions, Ramesh, on this. But going one by one, see the procurement cost has gone up as APM has come down substantially for CNG. As far as CPNG is concerned, we are getting 100% APM allocation. So there there's no problem.
Coming to CNG, yes, it is a very dynamic situation. Currently, we are getting around 36% APM and balance is sourced through multiple basis, HPHT, New Well Gas, Henry Hub and a mix of plus some balancing spot gas also. So since the crude has come down substantially in the last few months, so we think that we will be able to manage with the current prices. But again, it is a very dynamic situation. Depending on the alternate fuel prices and our cost of procurement, how it looks like in the next few months, we will take a call on final whether to increase or decrease the prices.
With respect to margins, yes, we are comfortable as has already been answered. The volume growth, again, has been addressed at around 10% volume growth is expected. With respect to CNG vehicle additions, we are adding around 98,000 this year, which is a huge number as far as year-on-year growth is also concerned. The auto sector, I mean, again, all the fuels are working closely, like that cannot be said that CNG volumes over the country is going up. If you see some of the reports, CNG was the highest sale in terms of percentage growth, around 46% year-on-year, whereas EV has come down slightly. So it again keeps on changing year-on-year and also push is there for promoting EV and CNG vehicles even in Mumbai and Delhi, even that Mumbai High Court Committee has been constituted. So we see that as an upside if pollution is to take into place into consideration. So we may get some upside from the High Court Committee recommendations and acceptance by the High Court. So overall, we see it is a mixed bag where we have some positives and some adverse things to deal -- some challenges to deal with.
Thank you very much. With that, we shall close the call. We should thank all the investors and analysts for joining the call with some insightful questions. And we thank the MGL management for giving us this opportunity to host the call and for answering all the questions patiently. Thank you very much, sir. Have a good day. Thanks a lot.
Thank you, everyone, for joining for today's investor call.
Thank you.
Thank you.
Thank you. On behalf of Nirmal Bang Institutional Equities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.