Aegis Logistics Limited (AEGISLOG) Earnings Call Transcript & Summary

I'll be presenting the quarter 1 results for FY '21. This was an average set of results for Q1 during the height of the lockdown. You will see the impact of the peak lockdown from April to June 2020 in these results. We do expect, however, some improvement in quarter 2. That's the current quarter, July, August, September. And particularly in the second half of this financial year 2021, FY '21, as the lockdown restrictions ease in many states and as some of the new projects come on stream. So I would say that quarter 1 was -- which was the peak lockdown period in April, May, June in India, was probably -- will be probably the worst quarter of the year, but then things will improve. Total revenues for Q1 was INR 636 crores versus INR 1,955 crores a year earlier. Total EBITDA for the group was INR 118 crores versus INR 112 crores a year earlier. That's a rise of 5% year-on-year. The normalized profit before tax, that means excluding the employee stock protection -- stock purchase plan of INR 42.1 crores, which is a noncash accounting charge, the normalized profit before tax was INR 92 crores versus INR 84 crores a year earlier. That's a rise of 10% year-on-year. And the normalized profit after tax for quarter 1 was INR 79 crores versus INR 62.3 crores a year earlier, rise of 27% year-on-year. And finally, the normalized profit after tax after minority interest, that means all profits are tax available to Aegis shareholders in Q1, was INR 71.8 crores versus INR 56.9 crores a year earlier, a rise of 26% year-on-year. So as I said, an average set of results in Q1 with the normalized net profit after tax up by 26% year-on-year during this lockdown period, April, May, June 2020. But we do expect some bounce back in the business as COVID restrictions are lifted gradually in India. And as you'll see, when I go through the underlying results, the Liquid Terminal division held up well during Q1, and that supported overall profits for Aegis Group. So now turning to the segment analysis. So as I said, very pleased to report an all-time high for our Liquid Terminal division during this difficult period of April, May, June. So Liquid Terminal division revenues were a record INR 55.4 crores for Q1 versus INR 49.5 crores a year earlier, a rise of 12%. The EBITDA was particularly good, INR 39.9 crores for this division, Liquid Terminal division, versus INR 32.1 crore a year earlier. A healthy rise of 24% in year-on-year EBITDA for this division. And as I said, this is a really good result for this division despite COVID as the business model is storage-based fees, which remain healthy as almost all the tanks in the terminals, in the various terminals, are full, except Pipa. And it's good to see this stable source of profits during this difficult period. Now turning to Gas Terminal division. Revenues in Q1 were INR 581 crores versus INR 1,906 crores a year earlier. That's quite a drop, particularly in our sourcing volumes in -- from our subsidiary in Singapore. As the PSUs, the public sector units, basically stopped many tenders and many spot imports of LPG around May, June due to the overbooking of cargos. There was also, of course, a sharp drop, particularly in April, in international LPG prices. So a big drop in our buying -- sourcing of gas for the public sector as well as a big drop in prices. You all know that in April, there was negative oil prices, crude oil prices. So they were not negative LPG prices, but it fell down to around $238 per ton, for example, in April, which was, I believe, the lowest LPG -- international PE prices since the 1990s. Now that particularly affected the revenues for our -- the prices for our sourcing business. Now I'll go through the underlying sales volumes in our key market segments, which will also show the impact of COVID. First, as I normally take you through the key metric of the LPG throughput logistics volumes in our 3 LPG terminals of Mumbai, Pipa and Haldia. And this, in quarter 1, was 700,349 metric tons versus 558,066 metric tons a year earlier, a 25% increase year-on-year. But as I guided in the last earnings call, quarter-on-quarter, that means comparing this figure of 700,349 metric tons versus quarter 4 of the previous financial year, that was a small drop of 4% on the last quarter's throughput Q4 of 728,000 metric tons. So what was happening during this lockdown period to LPG imports and the throughput in our terminals in Aegis? It's a little complex picture. I hinted at it in the last earnings call, but I thought it might be helpful for many of you for me to go through the key things that were going on, on the ground during this peak lockdown period, April, May, June. So the basic headline is there was an oversupply of LPG during this quarter in India. The PSUs had overbooked imports, particularly in the month of April. There was a very strong expectation from the PSUs for demand during the April month because this was -- they were anticipating the prime minister's new 3 free LPG cylinder scheme during the lockdown. This was announced by the government of India in, I think it was shortly during -- from the start of the lockdown at the end of March, early April, that the government would be giving customers in India, domestic customers, 3 free LPG cylinders during this lockdown period. So obviously, in anticipation of that, the PSUs expected a big rise in demand. However, this did not actually take place. Demand remained normal at normal levels despite this free cylinder scheme. So there was, as a result, a pileup of ships at ports and with refineries restarting production of LPG in May, there was an oversupply. So lots of high inventories were built up, especially in the west coast terminals and the south terminals. East coast terminals were actually okay, but the overestimation of demand leading to higher imports meant very high inventories in the west coast terminals and the south in this quarter 1. And finally, just like Aegis' own retail division, during the lockdown, the PSUs themselves saw a sharp drop-off in their commercial LPG sales in hotels, restaurants, industrial sales and the Autogas volumes during the peak lockdown period, April to June, because, obviously, no hotels and restaurants were operating, no Autogas sales pretty much because there was no movement of cars or taxis or auto rickshaws. And obviously, the industry was also shut down, particularly in the month of April. So therefore, their own demand for LPG throughput from the Aegis terminals for their own retailing was less than normal. So that's what happened. But despite that, we still were able to make 700,349 metric tons in quarter 1. As I said, a 4% drop quarter-on-quarter. A small drop, but still a 25% increase year-on-year. Next segment is the Aegis' own, I'm coming to the Aegis' own retail volume, starting with our bulk industrial sales distribution to industrial customers of LPG. [ AUTO1 ] was 7,414 metric tons versus 26,277 metric tons a year earlier. That's a sharp drop of 72% year-on-year as most industry was shut down during the quarter. Autogas was also down. Only 2,944 metric tons in Q1 versus 6,442 metric tons a year earlier. That's a drop of 4% year-on-year. As I said, no movement of auto rickshaws, taxis and private cars, particularly in April and May. Then we come to the commercial -- our commercial and domestic LPG segment, market segment, which is the Aegis-branded LPG cylinders, Puregas, Aegis-branded, Puregas in the commercial segment, hotels, restaurants and Chhota CIKANDER for the domestic segment. Sales in Q1 were 2,553 metric tons versus 4,537 metric tons a year earlier. That's a drop of 44% year-on-year. Again, to repeat, all hotels, restaurant sales, migrant labor sales also were down for the domestic segment due to the lockdown. And finally, as far as sourcing is concerned, as I mentioned, only 158,287 metric tons in 3 months in quarter 1 of sales from our subsidiary in Singapore, Aegis Group International, versus 452,471 metric tons a year earlier due to the sharp drop in PSU spot imports, particularly from May -- in May and June. April was a strong month, but then May and June really dropped off as they had overbooked April. So to summarize our Gas division. A small drop of 3% in -- sorry, a small drop of 4% in our LPG throughput volumes, which still represent around 80% of our EBITDA for the Gas division that the LPG throughput volume. So that is a very key metric. But a small drop of 3% in LPG throughput volumes quarter-on-quarter, still a rise of 25% year-on-year with 700,000 metric tons for quarter 1. But we were -- despite that rise, we were still hit badly in our retail sales volumes during the lockdown. And as a result of these 2 factors, during this period in quarter 1, we did see a 3% drop in EBITDA for the Gas division year-on-year, which is the first time for some years that the Gas division has stalled in a particular quarter. I don't remember this for many years. But obviously, this -- I think most of you will agree, this is understandable during the peak lockdown period of April, May, June, a 3% drop in EBITDA in the Gas division, I would argue, is not too bad, not too bad in the circumstances of this peak lockdown period. But the Liquid Terminal division did very well. In fact, we saw a 24% rise in EBITDA for quarter 1, which supported the overall profits for the group. Now let me come to the projects update, the impact of COVID that we expect during future quarters. And obviously, the outlook for the rest of the year FY '21. Let me start with the project update, and then I'll go on to the outlook for sales and profits during the rest of the year. Starting with the Chakan pipeline for our Mumbai terminal. This is the pipeline connecting our Mumbai LPG terminal to Uran and then Chakan on the outskirts of Pune, which most of you will recall, is a very strategic pipeline for the future. So I'm pleased to inform you that after the commissioning in June, the throughput through the pipeline has now gone up to every other day in the month of July. This is the current month, July, that we started it in June and now the throughput has actually reached once every other day through that pipeline. So basically, 15 days in July there was throughput. Of course, there remains a tanker movement -- a road tanker movement as well. And as I said in the last earnings call, we expect the maximum capacity of this pipeline to be reached from October onwards. And that's as a result of some -- still some technical work with boosting the capacity, which both HPCL and Aegis is doing. And we expect that maximum capacity to be reached from October onwards. And that will add to earnings growth from Q3 onwards of this financial year. Q3, Q4 will be boosted significantly by additional volumes for our Mumbai terminal through this pipeline. The second project, which is coming on stream in Q3, is the Railway Gantry project in Pipa. As most of you recall, this, again, is a very strategic project, which we've been working on for a number of years, but it's coming close to the end now, this project. This will connect up our Pipa LPG terminal by rail, particularly to the north of India, to bottling plants in the north of India. The project is going on in full swing. I'm very, very happy that since the month of April, when we were able to restart that project, the project has been going on full swing. And we expect actually to start the rail movement of LPG from quarter 3 from Pipa. And again, just like the Chakan pipeline, we expect this to significantly boost earnings growth from Q3 onwards with more throughput in our Pipa terminal from Q3 onwards when we are able to commission that Railway Gantry. So those are 2 important projects which are going to boost second half earnings in FY '21. Next is the Kandla LPG project, which is the 4 million ton annual capacity LPG terminal that we are building in Kandla. That project is also in full swing. And as I said in the last earnings call, we expect to commission that in Q4 of FY '21 with a full impact of earnings growth next year, FY '22. But we expect to commission that in January, February, March of 2021. Next, some liquid terminal projects. The Mangalore liquid terminal project, expansion project of 50,000 kiloliters that we're building in Mangalore, that project is also on track. Very happy that, that project is also in full swing. We expect this to be fully completed by Q4 of FY '21. That is the last quarter of this financial year and impact on earnings in FY '22. I'm very happy to say that the 50,000 kiloliters has already been presold. That means all the tanks have already been pretty much prebooked by customers, which gives you a good indication of demand for this important terminal expansion in Mangalore. You will recall that we already have a 25,000-kilo leach terminal in Mangalore. This is an expansion of another 50,000 so that is full as well the existing terminal, but this is additional capacity, which is already prebooked, presold, and that's a good sign. And I actually think this will be a pretty good revenue and profit generator for the Liquid Terminal division in FY '22 as -- because of some of the products that we're handling -- could be handling there, including bitumen, for example, which goes into roads, et cetera, which are higher-margin products. So it's a good product mix there, and it will be a successful launch when we are able to commission that by the end of -- by Q4 of FY '21. So that will impact on next year's earnings. Also, there is a expansion in our Haldia terminal of another 12,000 kiloliter liquid. A small expansion, but we expect to complete this in the current quarter by Q2. So there will be an impact on Liquid Terminal division earnings from Q3 of this year from Haldia. And I think that's -- these are the main projects. So I think the summary on the projects is the Chakan pipeline as well as the Pipa Railway Gantry is going to be a significant boost to sales volumes -- throughput volumes from Q3 onwards in this financial year onwards. And that is not really affected by COVID particularly, that -- irrespective of that, these projects are coming on stream and we've been working on these projects for a number of years. It's good to see them coming on stream by Q3 of this year. And the other projects which I mentioned, including liquid projects in the Kandla LPG, are going to really impact, particularly in the next financial year's earnings growth FY '22. So now let me come last to the outlook as we see it for FY '21 for the rest of the financial year. Despite the challenges of COVID seen, especially in quarter 1, which I said was the peak lockdown period and probably the most difficult period for most companies, including Aegis, I think we did okay. As I said, it was an okay set of results in Q1 despite that -- the impact of COVID. But the good news is, at least, we expect some improvement in LPG sales volumes, particularly in -- starting in quarter 2 in this current quarter, July, August, September. So I believe that quarter 2 will be better in terms of LPG sales volumes compared to quarter 1. And then as I said, quarter 3 and quarter 4, we do expect a jump in LPG throughput volumes because of the Chakan pipeline project maximum capacity being reached and the Pipa Railway Gantry. And that's going to impact on full year earnings. But as I said, it will probably be more from Q3 and Q4. The retail LPG segment is going to take some more time to bounce back. As you all know, COVID restrictions are -- it's complex picture in different states. Restrictions are loosened sometimes in some states, and then they suddenly reimposed -- local lockdowns are reimposed in states. I give you the example of Karnataka, which was fully opened up in June, including important cities like Bangalore. We saw quite a big bounce back, in fact, in the month of June, for example, in Autogas sales in state of Karnataka, which is our most important state. I get weekly figures on Autogas from our Head of Retail. But then suddenly, in month of July, they were -- went back into some COVID restrictions and therefore, movement of taxis, auto rickshaws, et cetera, declined in July. So there are -- we -- it's difficult for us to forecast what's going to happen with the retail LPG segment, which is a high-margin segment for Aegis. So it does have an impact on EBITDA for the Gas division. But look, irrespective of COVID, we do expect, as I said, some boost to earnings growth in FY '21, especially in Q3 and Q4 due to, well, the Liquid Terminal business has remained strong during COVID, and we expect new capacity also coming onstream in Mangalore and Haldia, et cetera. We expect that good performance in Liquid Terminal division to continue irrespective of COVID restrictions because of the business model that we have over there, which is storage-based fee. And I believe that, that is going to support growth for Aegis Group as a whole in FY '21. Chakan pipeline, as I said, will add to the Mumbai terminal throughput from Q3 onwards. The Pipa Railway Gantry will add to LPG throughput from Q3 onwards as well. So those are the 3 key factors which are -- which I think will keep profits growth going in this year, in FY '21. But I think it's difficult. The headwinds of the COVID restrictions on the retail LPG segment are still expected, obviously, to impact the retail division profits for FY '21. But while all this goes on, Aegis will continue to grow and invest in our projects for the year ahead. We have a very strong balance sheet with very little debt, and we are producing strong free cash flows from all the profits that I mentioned, and so that's good. So we continue to grow and invest for the future. And final two points. Let me just talk a little bit about what are -- what the industry expects for LPG demand in India, consumption of LPG, India as a whole. The government is still projecting a 6% growth in consumption of LPG for this financial year, FY '21. So around 26.5 million metric tons versus 25 million metric tons in FY '20. And imports will, obviously, grow accordingly as well. So the overall picture for LPG demand, despite some volatile period, April, May, June, with PSUs overbooking and all that. But despite that, for the year as a whole, they expect a fairly normal 6% growth in consumption of LPG for the year as a whole. So our plans to boost LPG handling capacity, our own Aegis LPG handling capacity, from 5 million metric tons currently to 9.2 million metric tons by next year, by FY '22, remain on track. Obviously, that is mostly the Kandla LPG project and some expansion in Pipa as well. So we continue to remain bullish about LPG demand and imports, not only this year but years ahead, and which is why we're increasing capacity from 5 million metric tons to 9.2 million tons because the case for LPG, particularly domestic household cooking gas, remains a long-term and very strong case. And that's why we are continuing to invest in building our capacity. And finally, we continue to massively build up our national retail distribution network so that when COVID restrictions are over, we stand ready to expand our retail sales volumes. As we put in our investor presentation for the last few quarters, we have a national plan for building a national network for our retail sales, retail market division. And we are currently in 7 states, but we're building that out to 20 states, which is virtually national from our current 7 states. And I have been discussing every week with our retail division on the phone how important during this lockdown period it is to continue signing up new dealers, new distributors, new dealers, new Autogas stations. We continue to build and also new sales officers as well, which is very important because, ultimately, it's boots on the ground which increases our presence in those 20 states from 7. And we are actually hiring, we are hiring a lot of people, which is good at a time of increased unemployment in India that we are -- at least we are expanding our retail distribution network because this is as good a moment as ever to keep working on building that distribution network. Because one day, hotels, restaurants, auto rickshaws, taxis, we, in India, will go back to at least some bounce back from where we are today, certainly where we were in the peak lockdown April, May, June. And that's very important because as I've been emphasizing, we expect this retail LPG division of Aegis, which is high margins, we expect this to be a big engine of growth. Apart from the expansion of our LPG terminal capacity, we expect the second big engine of growth for many years ahead, not only the next 5 years, but next 10 years and beyond, to be the Aegis-branded LPG, the retail segment in industrial sales, commercial sales, that means hotels, restaurants and the domestic LPG segment as well. We expect this to be a major engine of growth for many years to come, 5 years, 10 years and more. And that's why even during this difficult time in India, when the economy is down, but we are continuing to invest and build out our distribution network. Okay. That completes my presentation. We can now take some questions.

[Operator Instructions] We'll take the first question from the line of Jiten Doshi from ENAM Asset Management.

Yes. Anish, congratulations on a decent set of numbers in a very challenging environment. Now I think I'm going to straight jump into the future because I think there's very little visibility of what's happening in the current year '21, F '21. I believe you are very bullish on the business, and hence, you're going ahead with a lot of CapEx in this environment. So just to understand from you, if your ultimate capacity in the Gas division should be about over 12 million, and I think you're also looking at rapid expansion on the liquid side, if I look at your next 5 years cash flows, you're going to accrue at least INR 500 million cash. What is it beyond this that the company is looking at? Because you don't have any debt, I think your projects are all well funded and you're already on sort of course to execute what you're having on hand. So what are the next big areas that you're seeing for growth with this kind of cash that's going to come into the company?

Yes. You have raised this with me a few times, so I'll give the same answer. You're right about our big increase in capacity, of course, in LPG, for example, in the next 5 years. Right now, publicly, we have said that we are going from 5 million to 9.2 million. But we will -- and that's in the current plans, et cetera. But as I said, there is further -- during the next 5 years. There is further debottlenecking that we're going to do. That means increase -- we propose increasing our capacity even in existing terminals like Mumbai, like Haldia and Pipa as well. So that is one part of the expansion that we -- even though they are existing terminals, even in the -- in those locations, because we see natural growth of imports, we actually are, right now, working on various projects. Those are not yet announced, but I've certainly made it clear that we are going to be looking at increasing capacity even beyond the current 9.2 million tons that we have planned in those. So those are projects there. And some of those projects may not just be building more tanks. Some of those projects are may be making sure that there's more evacuation options, which is a very crucial part, which may mean railway connectivity, which may mean more pipelines. Or even in Haldia, what we -- what I did say about 6 months ago that we are, for example, exploring the possibility of barge movement, barge movement through rivers. So there are a number of projects. And as they come forward, those are not just simply building more storage tanks for LPG, but they could involve that. They could also involve more evacuation options. So that's one part of it. As and when those projects are ready, of course, we will bring it to the Aegis Board and then ultimately, we will announce it to investors. And as you know, we are working right now during this lockdown period. We've been working on one additional LPG terminal in the south, which is our remaining terminal that we need to build to kind of complete our necklace of LPG terminals. We have not yet got the land over there, and we're working on that, and that is why it's not possible to say what that is. So that is the kind of CapEx program that we have in the existing LPG terminal business as far as that is concerned. We do also have, over the next 5 years and 10 years and beyond, a very big plan of -- and actually, I would emphasize, that is the -- probably one of the biggest growth engines going forward, 5, 10 years, as I said, in the retail LPG division. That means a series of bottling plants, LPG bottling plants. We have got a plan to -- from our current 13 bottling plants that we are currently using in Aegis to go up to 37 bottling plants, including buying land in certain key locations, et cetera. This is some of the things that you need to do in order to build that national retail distribution network. So there will be some capital expenditure involved there. By the way, in that we are not only building greenfield bottling plants, but because there are distressed assets out there, bottling plants, we are actually taking advantage of that and buying up those bottling plants. I believe, for example, that we are working on two currently. It takes a long time, unfortunately, working with the banks and financial institutions to go through all the bureaucracy of buying those. But for example, we are currently buying that. So -- and then, of course, building out the Autogas stations and the network and then the dealers. Now building up the Autogas stations is not a high CapEx thing and even building the dealer distribution network in cases of -- for the commercial business, that is not a high CapEx. But it is -- because it's franchised, but there is some small CapEx involved in terms of building out that as well, particularly on the marketing. So that is the picture for the next 5 years. And as far as -- and also there will be an investment in marketing, okay? It's not what we call CapEx in equipment. But we will be investing more into building up the Aegis LPG brand. So that will go in the P&L. But -- and these days, of course, we do use different types of marketing, particularly digital marketing, et cetera, which is much lower cost than the old style marketing. Anyway, that's the next 5 years.

Anish, you still don't answer my question. Last year, you did a volume of 3 million, and you had an EBITDA in the Gas division of about more than INR 460 crores. And your retail is only going to increase, which means sort of your mix is going to get better. So at probably at 9 million or 10 million, you'll do an EBITDA of nearly INR 2,000 crores. So if I just extrapolate that to the next 5 years, there is going to be at least more than INR 3,000 crores or INR 3,000 crores, INR 3,500 crores of cash that's visible to anybody who's just doing his math correctly. So what you gave me an account for is not more than INR 500 crores or INR 1,000 crores. So what happens to the other INR 2,500 crores? And what happens to the big picture? That's what -- because I think you're in a very super period of time where you can really change the orbit and actually grow exponentially into something else also without leveraging your balance sheet. So that's the answer we are seeking. These are the same businesses that you're talking about.

Yes, I'm not going to answer it in any detail, but I will give you some, at least indications, this is the same thing I've told you offline, which is that -- because I've been talking about the next 5 years and broadly, yes, we are going to be strongly cash generative, et cetera. The numbers maybe we can argue about, but anyway. But we are definitely examining, and I have nothing more details to give, that after 5 years, what -- where do we go with all that strong profits and cash flow being generated. And what I can indicate is we are going to stick within the terminal space, within the -- because that is our core competence. We are not going to be investing in anything else. So two things I can -- and give you a hint. We are looking at some acquisitions because we do believe -- nothing specific right now that's why I'm just giving you an indication. But there are -- there is possible consolidation in the -- particularly in the liquid terminals space because there are distressed companies out there as well. So that is one area that we're looking at. Regarding -- and then as far as further expansion is concerned, beyond LPG, we are looking at some options. Again, let me say, it would be in the field of terminals and other types of gases, not LPG. So -- but using the core skills that we have. There are many other gases, as you know, not just LPG. But that's all I will say right now. And obviously, some of those projects will require large CapEx if they go forward. But they would -- what I'm assuring investors is that we are certainly working on those things right now because one has to plan any kind of diversification beyond our existing two divisions of LPG and liquids. We have to plan that now well in advance. So we are working on that, and I've certainly indicated that to you offline, but I will not give any more specific.

Sure. My second and last question is what is the targeted ROI, the minimum that you look at when you're looking at all of this? Because today, you have a very healthy return on capital employed. Would you be able to maintain it or better it as you go forward with the product mix changing?

I think the honest answer to that is the LPG business is a very super high return on invested capital. I believe, and I checked the figures last week with our finance department, I believe that in the Gas division, we are, currently, I mean, if you look at the average of the last 4, 5 years, we are currently operating at something like 40% pretax, 40% return on invested capital in the Gas division. In the Liquid Terminal division, we are around 20%, around 18% to 20%. So the blended return on invested capital for the company is a blend of those two. So I think it's unlikely, I can't say for sure, it's unlikely that other types of projects will be able to achieve 40% plus kind of return on invested. That is an unusually high profitability in the LPG division because of the nature of the industry dynamics. But I think what we would be targeting, given that we expect our weighted average cost of capital in Aegis is around, we estimate, is around 12%, we would normally look at projects in this kind of 20% to 25% range. That part would be what we would be looking at. So I don't -- but I don't think 40% plus is realistic for every...

So the blended, as long as the 40% business is growing, your blended number will always be higher than 30%? So that's the important fact.

That's what we are hoping. And of course, with -- particularly with the retail division, which is very low, the capital employed is very low in that retail division and very high margin, the more we can grow that, that will support earnings growth for long years to come in terms of the LPG division. So that will continue to grow, and that's how we're planning.

We take the next question from the line of Depesh Kashyap from Equirus Securities.

I have two quick ones. Sir, the volumes were very low in the distribution business in this quarter, but what is EBITDA per ton that you made in the distribution business, given that the LPG import price are very low?

So the EBITDA that we made in quarter 1 remained stable, even though the sales were very low because we didn't reduce prices, expecting that, oh, actually, there will be more sales volumes. There was no demand because of the restrictions. So the margins were stable. But obviously, because the sales volumes were very low, didn't have much impact on profits in this quarter. But we maintained margins. We've always -- one of the beauties of this retail division is that we've had -- we have stable margins. And so LPG prices fell a lot. As I said, the international PE prices fell a lot. We reduced our prices commensurately, we just parked that on. Theoretically, that's what we did. And the margins were stable because the costs had fallen. But obviously, the sales were down heavily because of the COVID restrictions. So stable margins.

But sir, in the hotel LPG division, if I look at the LPG retail numbers, that are like pretty stable, right? The petrol, that's a 40% discount to petrol price, right? So that has not fallen. But your import prices have hovered. So I think the normal INR 10,000 per ton EBITDA that you used to talk about, that must have increased, right?

No. I think the actual margins, and I have the figures for -- it's -- I mean, it may -- it averages around INR 10,000 a ton. It was lower before. But I said for the last few quarters, it's averaging around that, it might swing a little bit. But anyway, it's theoretical because we had very small sales of Autogas. So these are all theoretical in the sense that there were actually very little sales because there was nobody buying.

Understood. Sir, second question is that I see the interest expense has dropped by INR 3 crores in this quarter. Like can you please highlight or what led to that? And what should be the going forward interest expenses?

Yes. Actually, I asked the same question to my CFO. So maybe he can answer. Murad, why don't you answer on the interest expense, the same answer you gave me?

Yes, we are building cash and we are generating income. Plus the interest cost has fallen drastically as far as we are concerned. So all the new loans are coming sub between 7% odd, when a year or 2, the previous year, it was 9% plus. So falling interest rates and building up the cash balance, which we have, is leading to practically nil interest cost net, if you look at it. And that's how the trend is, I believe, would be going forward.

Next question is from the line of Rajendra Mishra from IDFC Mutual Fund.

I had just a couple of queries just to understand that. So one is this LPG terminal, which we have or which you're planning, so 5 will go to mind. So this is considered in the LPG Gas division? Or is it considered in the Liquid Terminal division?

No. The increase to 9.2 million is the Gas division. That's only the Gas division. Liquid Terminal is something different. But what I referred to was our increasing the LPG terminal capacity from 5 million to 9.2 million, that's gas.

So this entire 9 million will be is considered in the Gas division revenues, right?

Yes, that's right. And that's the capacity. And then the revenues are how much LPG you throughput. So do you throughput 3 million, which is what we did last year, out of that 5 million capacity. Do you throughput, 4 million, 5 million? That's how the revenues come.

Okay. And second and the same thing is this LPG terminal division, whatever we have is entirely captive? Or do we also do third-party throughput?

As far as LPG is concerned?

Yes, yes.

Actually, the whole point of the LPG terminal is its open user. So we handle for anybody who wants to import. The captive part, which is our retail division, is a smaller part of volumes, maybe as little as 10% of our volumes or actually even less than that, sorry. So the -- it's an actual open user terminal. The main customers are the PSUs, that means IOC, HPCL, BPCL, we also have some industrial customers. But the main customers are third party, and that's how we charge them fees, throughput fees, for handling the LPG for them. That's how we make money. So the opposite of what you said. It's actually not captive, it's open user.

Understood. So you're saying out of this 5%, only 10% is currently used captive and 90% is basically on open user?

Maybe it won't be less than 10% in terms of...

Understood. And last thing is if you could just give a -- so you shared some CapEx plans and project updates. On a currency basis and also maybe once these investments come online, so maybe on FY '20 basis and FY '21 basis, if you can have a CapEx split between the 2 divisions. So sir, overall CapEx, how much is the overall gross block, how much is into liquidating...

Yes. Let me cover some of that, and then Murad can comment if I've left anything out. So in terms of the current projects that are going on -- and I'll just quickly list them, you can write it down. So this is currently going on. There's a INR 35 crore project for the Mangalore liquid terminal, the 50,000 -- INR 35 crores, that's going on right now. So we're spending that money. That's already planned. That CapEx is already planned for this year. There is a small expansion in Haldia, which is INR 10 crores for the 12,000 kiloliter project, INR 10 crores. The Railway Gantry in Pipa is -- and the additional spheres project is INR 75 crores CapEx, the LPG thing, and that is going on right now. And then finally, the CapEx is in Kandla, that LPG terminal, the big LPG terminal, the 4 million ton throughput capacity terminal is INR 350 crores. That is also going on. So that CapEx, some of those projects have been going on since last year, like Kandla, some of them are this year. So the CapEx will -- and then some of that CapEx will -- the amounts will still go into even the next financial year. So between FY, should we say, between FY '20, that was the last year and FY '21, the current year, bulk of this CapEx that I just mentioned would be carried out. So far, we have not mentioned any other CapEx for FY '22 or FY '23. But I just said to Jiten Doshi or [ Vinam ], that, yes, we are currently working on further CapEx for FY '22 and FY '23, particularly in FY '24 and FY '25, particularly for the next 4 years. Haven't yet -- we haven't yet announced what those projects are, but I gave an indication that further CapEx will be in debottlenecking of the Haldia, Pipa and Bombay terminal -- Mumbai terminals -- LPG terminals. There is a project that we're working on for a new terminal, greenfield LPG terminal in the south. And then more bottling plants, going up to 37 bottling plants, some of which will be acquisitions, some of which will be greenfield projects, et cetera. And then possibly some more small liquid terminal expansions. But probably in the existing terminals, particularly places like Haldia. So that's basically the plan for CapEx for the next 5 years, including FY '20, the last year, including this year, I've given you the figures and then future CapEx to be announced.

And last, on this distribution network that you plan to build across 21 states, what is the date by which you want to complete this? Or it's open-ended?

It's open-ended. It really is open-ended because we don't stop after 5 years. But we have approved a marketing plan and business plan for our LPG division, which I approved, I and my brother, Raj, approved as co-CEOs. We approved this in, I think it was in February of this year, 2020. It seemed like a long time ago. And that is in our investor presentation on Page 22, if you're interested. That gives the goals and objectives of that 5-year growth plan. But that will get us up to 5 years. After that, we will continue growing that national distribution network. As I said, the good news is it's not very high in CapEx, it's very high in margin. So it's a beautiful business. But the most important thing that we need to do is build out the distribution network, the dealer distribution network, appoint those dealers, which takes time, build those Autogas stations, which takes time. And also most important is two other things, which I don't normally emphasize, but I would like to emphasize, which is invest in manpower. We actually have to appoint area sales managers for every state, which we are in the process of doing. We're almost complete, in fact, for those 20 states. We have to appoint territory sales managers within those states. These are permanent employees of Aegis. And we also have to appoint sales officers. These are the sales reps who go and actually service the shops, the retail outlets, the kirana shops, that we are selling the domestic Chhota CIKANDER brand, et cetera. So there's a lot of hiring that we are doing, which is good for at a time like this when people need jobs. And we are actually getting a lot of resumes. So that's an investment and also investing in marketing, which is going to be required to build the brand of Aegis, Chhota CIKANDER and Puregas in the commercial segment. And so those are not CapEx, but these are investments which do go into our expenses in the P&L. But they are investments which will result in returns as we build out that retail sales volumes.

We take the next question from the line of Pranav Mehta from Valuequest.

Yes. Yes, sir. Congratulations for the good performance in a tough quarter. So first question is on your gas throughput business. So like you have laid out the near-term triggers for Mumbai and Pipa. Similarly, can you model some -- throw some light on the triggers for the Haldia terminal? So we have seen great ramp-up in the last couple of years. But now to take it to the next level, what kind of triggers do you see? Especially in the light of the BPCL terminal also, I'm assuming, will be operational within the next 12 months. So what are the plans there? That's the first thing. The second question is on the Liquid division. So do we see that this kind of volumes can be sustained here? Because in the Q4 call, you did allude to an expectation of some softness in demand from domestic chemical industry, et cetera, due to COVID. So -- but our performance has been very good. So do we expect to sustain these kind of volumes in the liquid side of the business? These are my two questions.

Thank you. Both good questions. I appreciate them. As far as the Haldia LPG is concerned, yes, you're right that the BPCL terminal, which, of course, was stopped the lockdown, but now they've restarted the work, we would expect that to be commissioned perhaps in the next 6 months, and the work is ongoing. However, this has been planned because our anchor customer is HPCL. And what I've mentioned many times is that they are currently operating their bottling plant in a place called Panagarh, only at 50% capacity utilization. This is the largest bottling plant in the country and in the continent of Asia. It can consume 0.5 million tons of LPG. They are currently only operating that at 50% capacity utilization. It was commissioned last year, and they've built up 50%. Not because they can't operate at full capacity, but because HPCL is actually building out their distribution network, their dealer network. They're still under penetration into northeast of India and Bengal, particularly. So we are currently planning, our marketing team has planned that in their budget, that the -- maybe currently, the throughput in Haldia is about 80% HPCL, 20% BPCL. That when BPCL goes out, that 20% will be taken up by further expansion or further capacity utilization of Panagarh. In other words, HPCL will take over that. That's what we're currently planning. Now I have to tell you that despite this difficult quarter, Q1, the Haldia terminal was actually -- the east coast was actually doing record amounts. So the west coast terminals were a little -- a small drop, as I said, in throughput, but the Haldia terminal was doing great. So that just shows you that demand, where -- remember, the penetration of LPG is lower than the national average in the northeast of the state, so Bihar and West Bengal and Odisha. They are making great progress, HPCL, in building out that distribution network. And so at the moment, we have a total potential capacity -- throughput capacity of 2.5 million tons in Haldia. I will not break out the exact figure for this year that we expect. But we are still not there at 2.5 million. But we are operating the Haldia terminal at much, much higher volumes than we had budgeted even for this year. And yes, even then taking into account BPCL going out sometime in the next 6 months. So I think the answer to the Haldia question is the progress is good in Haldia in terms of LPG throughput volumes, particularly from HPCL as they build out their distribution network and as they raise capacity utilization of that Panagarh bottling plant. As far as the liquid volumes are concerned, yes, you are quite right to remind me that in the last earnings call, which was only a month ago, I was suggesting that maybe there might be some softness going forward in the Liquid Terminal division this year due to impact on chemicals, et cetera. Well, look, I have to say, surprisingly, and I talk regularly to our Liquid Terminal division marketing team, surprisingly, business has remained good in all the terminals, with the exception of Pipa, which remains at low capacity utilization. But all the other terminals, whether it's Kandla, whether it's Bombay, whether it's Haldia, whether it's Mangalore, whether it's Kochi, has remained strong. And so at the moment, and you can ask me this question again after the quarter 2 earnings, but at the -- and we just had July, for example, business is actually holding up very well. It could be that the -- because the business model here is storage-based fees rather than throughput, it's the customers, whether they're chemical manufacturers, whether they're traders or whether they're even the PSUs, the HPCL, BPCL, et cetera, petroleum, they still need the storage because they need to store that -- those inventories. And we get paid as long as they store it. So almost all the tanks are full. And so I think that business has held up surprisingly well. And petrochemical storage, chemical storage as well as petroleum storage because the customers need storage, even if the goods are not moving quite the evacuation, the throughput in this business is not moving quite as fast as it used to be because of COVID. But despite that, they still need to store their inventories. And so it's a surprisingly good result. And as you rightly said, I'm very pleased to see record set of results that is a proof in quarter 1 during the height of the lockdown, that actually we saw a 24% rise in EBITDA in that division. So at the moment, actually, I would like to change slightly the guidance that I was -- sales guidance that I was talking about in the last earnings call. Obviously, it's difficult to predict, but we can talk quarter by quarter. But at the moment, that business is actually looking surprisingly good.