Aegis Logistics Limited (AEGISLOG) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to Q3 and 9 Months FY '21 Earnings Conference Call of Aegis Logistics Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anish Chandaria, Vice Chairman and Managing Director for Aegis Logistics Limited. Thank you, and over to you, sir.

Thank you very much. I'll be presenting the Q3 FY '21 results today, that is October to December 2020 results. I would describe this set of results as a continued good recovery in the quarter-on-quarter profits as compared Q3 as compared to quarter Q2, as India as a whole moves to recovery from COVID-19. The results are still slightly lower on a year-on-year basis, but they are moving in the right direction, and I think are good proof of a recovery for Aegis. Total revenues for Q3 were 1,545 crores versus 650 crores in quarter 2. So you can see a jump in the revenues quarter-on-quarter. Just as a reference, it was 2,168 crores a year earlier. The total EBITDA for Q3 was 147 crores versus 124.8 crores in quarter 2. That's a rise of 18% quarter-on-quarter, and this is evidence, as I said, of a good recovery quarter-on-quarter. Again, looking at the previous year's EBITDA, Q3 of last year of FY '20, it was INR 160 crores a year earlier. So that's a small -- still a drop of 8% year-on-year, even though the quarter-on-quarter has risen by 18%. So there is a slight, still not quite overtaken pre-COVID EBITDA year-on-year. The normalized profit before tax, that means excluding the employee stock plan of 14.04 crores in the quarter, Q3, the normalized profit before tax was 120.2 crores in Q3 versus 101 crores in Q2, quarter-on-quarter rise of 19%. And compared to a year earlier when the normalized PBT was 130 crores, that's a drop of 7.5%. Again, consistent with the EBITDA. It's 7%, 8% less than last year, but still a recovery from quarter 1 and quarter 2. The normalized profit after tax, again, excluding the employee stock plan, that's the noncash employee stock plan was 92.25 crores in quarter 2 versus 78.2 crores in quarter 2, a rise of 18% year-on-year. And finally, the normalized profit after tax after minority interest, after all minority interests, which means profit after tax available to Aegis common shareholders at Q3 was 85 crores versus 70.8 crores in the previous quarter, quarter 2. So then again, a quarter-on-quarter rise of 20%. So as I said, a continued good recovery from quarter 1 and quarter 2 into quarter 3. And we think that's going to continue in quarter 4, that kind of recovery. And we are hoping to achieve the kind of pre-COVID sales and profit levels. We're approaching that point now. And then it's a question of moving beyond that to have a complete recovery. Now let me go through the segment analysis, starting with as usual, with the Liquid Terminals division. The strong performance continues into Q3 that we had in the previous quarters. The revenue for the quarter 3 was 56.8 crores versus 56.4 crores in quarter 2, and by the way, 54.7 crores a year earlier. So that's as steady as she goes of a performance in terms of the quarterly performance of revenues. And EBITDA also was exactly the same, 39.2 crores in quarter 3 versus 39.4 crores in quarter 2. So the same and also a rise compared to the previous year, which was 38.4 crores in the EBITDA. So as I said, continued stable, high level of revenues and profits in our Liquid Terminal division, which has been pleasing. Now we come to the Gas Terminal division, which the revenue for quarter 3 was 1,489 crores versus 594 crores in quarter 2. So that's a big rise, as I said, in the sales revenues, and I will go through the reasons for that when I come to the underlying sales volumes. The EBITDA was 108 crores in quarter 3 for the Gas division versus 85.4 crores in quarter 2. That's a big rise of 26% quarter-on-quarter in the EBITDA of Q3 compared to Q2. By the way, a year earlier, we were down by about 11% pre-COVID EBITDA. So still not completely recovered in sales volumes to pre-COVID , but we're on the way as far as the Gas division is concerned. And that is confirmed by our underlying sales volumes by all the various market segments in Q3, which I'll go through. First and most important, the LPG throughput handling volumes for our 3 terminals in Mumbai, Pipa and Haldia. In Q3, it was 775,316 metric tons, 7-7-5-3-1-6, metric tons, versus 722,514 in quarter 2. So that's a rise of 7% quarter-on-quarter. It was much higher in quarter 3 pre-COVID, around 958,000 tons a year earlier. So we still have not gone above the pre-COVID throughput levels, but we are on the way, as I will discuss a little later in the outlook. But it is pleasing to see a 775,000 metric tons quarter 3 throughput in our terminals for LPG. Industrial sales in quarter 3 were 23,250 metric tons versus 23,621 metric tons in quarter 2, so broadly stable. Autogas was sharply up in Q3, 6,159 metric tons in quarter 3, versus 4,756 metric tons in quarter 2. So that's a quarter-on-quarter rise of 29%. And that clearly shows more taxis and cars movement as the COVID restrictions throughout India were lifted. So obviously, in October, November, December, that's quite a sharp rise in our sales. But it's still below -- 16% below our sales volumes pre-COVID in the same time last year Q3, which was 7,328. So that's 16% lower than the previous year, but well on the way to recovering those kind of sales volumes now. And we hope that to continue in Q4 as more movement is there, post-COVID. As far as the LPG cylinder segment is concerned, that is the commercial and domestic market segments are concerned, Q3 was also sharply up, 6,042 metric tons versus 4,440 -- 4,499 metric tons. In quarter 2, that's a rise quarter-on-quarter of 34%, sharp rise. Again, hotels, restaurants were recovering sales as people started going back to hotels and restaurants. So our sales to that segment increased, but still not back to pre-COVID sales. We are still 8% down year-on-year in terms of pre-COVID sales levels. But again, evidence in quarter 3 of a quite sharp recovery in our retail sales quarter-on-quarter at 34% up in that segment. And sourcing in Q3 374,322 metric tons versus 142,911 metric tons in quarter 2. Again, a sharp rise as the national oil companies started sourcing more gas through the private sector tenders including our company, Aegis Group International. And that's quite a bit up on Q1 as well, obviously, in quarter 3. Okay. So that concludes my presentation of the results. Now I'll give a short projects update. All the project work in the Kandla LPG project, the Mangalore liquid project and the Haldia liquid project are on track for completion in Q4, that means January to March 2021, this current quarter. Everything seems to be on track, and we expect to complete and commission all 3 of these projects in Q4. I'm pleased to inform you finally that we are -- we were able to commission the railway gantry in Pipa in December 2020, that is last month. And the first rigs that is the railway wagons were delivered full of LPG to IndianOil in January to one of their Delhi plants and 1,000 kilometers away through the rail. And it's very nice to see that, that finally after so many years of hard work, finally this was commissioned. We got all the railway permissions and the first deliveries were made in January. Now it will take a few weeks now to streamline and increase the volumes, not only for IOC, but to start delivering even for HPCL and BPCL but we start first with IOC. So it will take a few weeks to start maximizing the throughput volumes in Pipa as we expect. But it's started, and I'm pleased to see that. And you'll see those in the volume figures in coming weeks and months increasing. We shall add to the kind of LPG throughput handling volumes -- figures -- quarterly volume figures. I can also, at this stage, say that the Chakan pipeline in Mumbai, the Uran-Chakan pipeline has been working closer to the maximum capacity. That means the Mumbai terminal, we've -- in the month of December, we completed all the -- we and HPCL completed all the necessary technical work that we need to, to achieve those kind of maximum throughput figures in Mumbai. And we're not quite yet at the maximum capacity. We expect that to come through in the coming weeks as well. But we actually saw a sharp increase in the Mumbai throughput in December itself once all the technical work for the pipeline. So that's good for, again, for LPG throughput volumes in future quarters, not only in Q4 but in the whole of FY '22. So those 2 projects, the Mumbai Uran-Chakan pipeline and the Pipa railway gantry are now complete as far as the project work is concerned. And now we have to get the benefits of higher throughput volumes in both terminals, Mumbai and Pipa in the coming weeks and quarters and years ahead, to be honest. Okay. Now let's talk about the outlook for Q4, and I think I'll repeat it. The Chakan pipeline in Mumbai and Pipa railway is expected to increase our throughput volumes further in Q4, as well as the next financial year and years to come. So that's obviously going to improve our outlook for Q4 because of Mumbai LPG throughput and Pipa LPG throughput. Also I can say that the retail LPG segment, which I referred to in quarter 3, should improve further in sales in Q4. That is our expectation versus Q3 as we look to go beyond pre-COVID sales. It's obviously a long road back from -- in terms of auto gas and in terms of the commercial and domestic segment. But as I said in quarter 3, we were getting 80% to 90% of pre-COVID sales already in quarter 3. So we have a prospect in Q4 and then certainly in the next financial year of moving finally beyond pre-COVID sales levels. And obviously, that will impact a lot on our profits as well going forward into Q4 as well as into the next financial year as Aegis recovers fully from COVID -- the COVID restrictions. And as I say in every earnings call, but I'd like to repeat, Aegis will now be accelerating the construction of the necklace of LPG terminals with the added connectivity projects, including railway and pipeline interconnections. In the coming weeks and quarters and months, you will hear much more from us of a new cycle of very specific and detailed project plans to accelerate these projects. As I said, it's really -- you're going to hear from us now that the -- at least as far as Aegis is concerned, the coronavirus restrictions are over. You're going to hear from us, some specific and detailed acceleration of a new cycle of projects in the LPG and liquid terminals there, including the connectivity projects. And that's very exciting, and we're going to -- you're going to hear more of that, which means that Aegis is on the next growth cycle for the next 3 years. But nothing more to say on that today, but we're going to be coming out regularly with very specific and detailed plans on the future, next 3-year growth cycle. Now that the Kandla LPG and the Mangalore liquid and Haldia liquid projects are coming to a close in this quarter, quarter 4, obviously, we will be announcing the next cycle of growth. And we have also good hopes on continuing to build our national retail LPG footprint as I've laid out many times before, with the Aegis branded Autogas, commercial, industrial, and domestic market segments under the Aegis brand name. And this will become a major driver of Aegis growth for years to come, along with completing the next list of terminals, the retail going to a national LPG retail footprint. We expect to continue that. And we continued throughout the coronavirus crisis to continue to build our distribution network. And we see an acceleration in those growth plans in the coming 3, 4 years, and that's going to be a big driver of Aegis growth. So that completes my presentation of the Q3 results. I can now take some questions.

[Operator Instructions] The first question is from the line of Priyankar Biswas from Nomura.

So my first question is regarding the SPG volumes and more -- and more likely on the outlook specifically. So in this particular quarter, we have seen that there has been a significant uptick in sourcing, whereas the uptick in the terminal link has been relatively lower than the uptick in sourcing. So in that respect, is there some deferment of volumes that have potentially happened in 3Q that we can be looking at into 4Q, possibly?

No, there's no real linkage between sourcing and the volumes in our -- there's no direct linkage -- obviously, that means more imports are coming in, but there's no direct linkage. I think what really matters in terms of forecasting LPG throughput volumes, which, as I said, 775,000, was up 7% quarter-on-quarter from quarter 2 and 775,000 is higher than the 700,000 in quarter 1. So you can see that every quarter has risen. But I think what really matters in terms of forecasting volume growth in the LPG terminals is the very specific factors for each terminal. For example, what was happening in Mumbai in terms of the Chakan pipeline. Until that was reached, the kind of maximum capacity level, which it has in December because there was some technical work going on, we would not -- so actually, this rise in quarter 3 to 775, a lot of that was because of increased volumes in Mumbai, although that was only 1 month in December. So now we'll see 3 months of that increased volumes in Mumbai, which will -- not just December in quarter 4. So that's going to show up in the results. Similarly, as far as Pipa is concerned, while the railway gantry project was going on with all the disruption that entails because a huge amount of construction work was going on as far as in railway gantry, obviously, the volumes in Pipa have not been as high as we would expect. But now that, that project is over and commissioned, we're -- and obviously, the first -- only the first deliveries were to IOC in January, we will see in coming weeks and months and quarters much higher volumes in Pipa. So I think the prospects are good for Q4 and succeeding quarters in LPG throughput in the 3 terminals, Haldia, Pipa and Mumbai for the reasons. So in other words, there were specific projects which needed to be completed so that we can expand the throughput in those terminals, which you will see in the coming quarters. And then obviously, we have the Kandla LPG terminal starting in Q1 of the next financial year, that will be in April, we expect to commission. So you'll start seeing that number. So we're going to see a cycle now of rising throughput volumes in our terminals, not only because of Mumbai work, the project work, the Chakan pipeline, the Pipa railway gantry, Haldia, as well as the Kandla. You're going to see a sharp increase in the next year of throughput volumes, which is obviously going to come through into the figures and into the bottom line. So it's not really related directly to the sourcing volumes. It was specific project work that we needed to complete in Mumbai and Pipa, particularly.

So in essence, so like broadly towards at least the 4Q end, at least the Mumbai and Pipa should be at their potentials, at least the maximum potentials. Would that we be a right assessment?

I would say Mumbai, yes. Pipa, I would not like to complete because we -- because it's a new thing, moving by rail. I would still say that it will take a few months for it to achieve the kind of maximum throughput levels. It might even take 2 or 3 quarters for us. But it's certainly going to result in an incremental volume growth in Pipa in Q4. But I don't think -- it will still take a few quarters. Because we're just starting with IOC. We still have to sign up BPCL and HPCL. But now that the project is over and now that we can prove that the -- it has worked with the first rail wagons in January, obviously, we'll build on that commercially. But there's no more project work. So I think you'll see some further throughput in quarter 4 from Pipa, but it will take some further months for it to kind of go towards the kind of maximum throughput levels. But as I said, I think it's all possible now to see that coming through to the throughput volumes.

Sir, just 1 more question from my side. So in Pipa, what I understand is that the port can't really accommodate VLGCs at this point of time. So is there any plans at least from the port management or otherwise that they intend to do something to address this issue so that maybe Pipa terminal can achieve its full potential from an LPG perspective?

That is an excellent question, and I have an excellent answer. That's an excellent question. You're absolutely correct in that. And the good news is we have agreed a plan with the port where they're going to make the existing Jetty VLGC compliant. That plan is underway as we speak. So they've already started dredging work, et cetera. So in just a few months' time, and don't ask me to give an exact timeframe, but a few months, we expect to be able to handle VLGCs in Pipa as per the plan jointly agreed with APM, GPP, and Gujarat Pipavav port. And you're right that, that will actually increase the volumes further in Pipa in the coming months. That is actually one of the reasons why we will not achieve the maximum until the VLGC compliance is there. So I think we'll say more about it once that work is over with the port. That's work being done by the port, not by us, we don't have to do anything. But we have put a lot of -- we've had a lot of meetings, virtual meetings between us with the port over the last few months, and that plan has been agreed and they are implementing as we speak. So in a few months' time, and that's one of the reasons why we will not achieve the maximum yet from Pipa. But even before we get to VLGC compliance, just the simple fact of installing this railway gantry means that we can still handle midsized gas carriers, MGCs, ships in Pipa. And that does mean -- but yes, that's one of the reasons why it will take some time to reach the maximum throughput volumes in Pipa. But it will certainly mean an increase compared to Q3 in Pipa. And that will show through in the results.

So does this mean that once this VLGC compliance is done, so we should -- we can possibly exceed the 0.5 million tons that we typically budget for? Or is the 0.5 million tons per year actually includes like VLGC compliance...

I think we can improve on the 0.5 million tons in Pipa, yes. We can improve once the VLGC compliance. And remember our expected capacity in Pipa is 1.6 million tons. So there's a long way to go. We're not -- but the railway is key to that. And we're not going to reach 1.6 million tons -- I can tell you right now, we're not going to reach that this year. So -- but there's a long way to go. But as the importance of the -- the importance of the railway means -- and the VLGC compliance means that we will be -- I think we will go above 0.5 million tons a year in Pipa.

[Operator Instructions] The next question is from the line of Depesh Kashyap from Equirus Capital.

So I just wanted to understand the throughput market share trends. I understand that in 3Q last year, market share was exceptionally high at 24%. But their numbers seem little muted as compared to Indian LPG imports in November and December. So just wanted some color on the competitive intensity. Are you seeing any pressure from new terminals, especially Mundra?

Not really. To be honest, what I said was that until we -- it has more to do with the evacuation issues that we had in Mumbai as well as in Pipa. It's not really to do with competitive pressures. It's more to do with our internal, should we say, connectivity and logistics issues, which we have resolved now. We resolved both Pipa with the railway as well as Mumbai Chakan pipeline, which was commissioned only in June. But then in other words, we had constraints to evacuate more LPG in Pipa and Mumbai. But now -- so it has nothing really to do with competitive impressions. But now that we resolved both those in the month of December, at long last, the future looks bright for both those terminals. And that's why I'm very proud to be able to say that, yes, we commissioned Pipa and we are now approaching the kind of maximum levels of evacuation that we could see in Mumbai, which I remind you, we are now targeting 1.5 million tons of throughput per year in Mumbai versus the run rate of 900,000 to 1 million tons in Mumbai that we could maximum do with just road tankers because of this pipeline. So that gives you a sense that Mumbai will now go from that kind of run rate of 1 million -- 0.9 million to 1 million tons to the kind of 1.5 million tons annualized. That's an additional 0.5 million tons. And we have similarly said that, look, Pipa, at least to go to the kind of 0.5 million tons in the first annualized, the first thing. But then to go further, once this VLGC-compliant Jetty is sorted out by the port, then we can even go further as I just replied to the other person. So the range of Pipa would be somewhere between 0.5 million to 1 million tons a year annualized once both of those are -- sorry, once the VLGC issues compliant Jetty is done. So that's -- it's -- if you combine the incremental volumes in Mumbai of 0.5 million tons and potentially 0.5 million to 1 million tons extra in Pipa, that's a big jump in our throughput volumes. So it's not really due to competitive pressures, it has to do with our own, should we say, evacuation issues in these 2 terminals which have now been -- are now been or getting resolved.

Understood, sir. You have talked about Mumbai and Pipa. Can you maybe talk about Haldia also? Like has the BPCL terminal been operational there?

Yes, BPCL terminal has just been commissioned towards the end of December. So we will see a diversion from BPCL of their cargoes from our terminal to their own terminal, particularly in Q4. But the good news is that HPCL has given us their plan for 2021 calendar year. And they are building in quite a good growth in their volumes, which we think over the coming quarters will make up for the loss of that BPCL volume. That was always the plan. For example, I've mentioned several times that they have a plant in a place called Panagarh, the largest LPG bottling plant in Asia, which last year, that means 2020, was only operating at 50% capacity utilization. In other words, that plant can take 0.5 million tons per year. They were only using it for 250,000 tons a year. So that plant alone would make up for the BPCL volume. And that's what they're planning. I'll have more to say about it in -- possibly in the next 3 to 6 months about some further growth plans that we have with HPCL. I don't want to say it right now in Haldia, but that gives us a lot of confidence as far as volume growth in Haldia about -- because I know what we are negotiating with HPCL right now in terms of volume growth. But I'll say more about it in the -- possibly in the next -- it might be in the next earnings call at the end of May. We might be ready to say something on that. But the plans are afoot to completely replace the BPCL volume with further volume growth from HPCL because they are going so fast on building their distribution in the Northeast region. So things are looking very positive as far as full year is concerned as well.

[Operator Instructions] The next question is from the line of Rajesh Kothari from AlfAccurate Advisors.

Good numbers, congratulations on these good numbers. My first question is on Pipa. Sir, you mentioned one -- but I think you have talked about an incremental one, am I right? Because 0.5 is already -- you're already seeing 0.5 million, but then you are talking about incremental.

Yes, we were not in the last few months because of the disruption of the project work of the railway gantry. We were not doing such a high run rate in Pipa. It really did affect operations. So what I'm saying is that in -- from Q4 onwards and in succeeding quarters, you're going to see a bounce back from Pipa, just purely because of 2 factors. One was no disruption of project work, which means that some days, we had to completely stop LPG evacuation because there was welding work and all that going on. So naturally then, we couldn't -- for safety reasons, we couldn't do that. So that disruption is all over and now separately, the railway gantries commission. So on both reasons, we're going to see a good bounce back in throughput in Pipa. And then third side of it is, as I said to someone earlier, once we resolve the VLGC-compliant Jetty, there will be a further boost to Pipa...

So my confusion was the capacity is 1.6, correct? Without the port -- without considering the work which port has to do, in FY '22, we can do one considering the railway line has come up?

Well, what I would say is without the port finishing their work, I think the range we could get is somewhere between 0.5 to 1 million tons. But if the port completes its work as per our plan, then we can go towards, over time, over 1 or 2 years. We can go maybe 1 or 2 or 3 years, we can go towards that 1.6 million. That is the plan. So it requires the VLGC issue to be resolved for us to get to that maximum level. But even before we get to that, we could still get an incremental 0.5 to 1 million tons from Pipa compared to current levels because of this railway gantry.

What is the current level? That's where there's confusion, because when you say current level, should we assume FY '20...

It was much -- I won't give the exact figure, but it was much lower than 0.5 million tons annualized.

No, no, no, that I understand. I'm saying in FY '20, your volume -- [ our capacity ] was roughly 1.6. And volume, we generally assume about 0.5 kind of thing...

It was lower than that because of the disruption of the latest -- in the last few months, the disruption of the project work.

I'm talking about FY '20, sir.

Yes, FY '20, because the project was going on in FY -- sorry, you mean in the previous -- yes, sorry, yes, in FY '20, you're right. It was around 0.5 million tons but that was...

You're right. So I'm saying from 0.5 million, for the recent quarter where we would have lost the volume because of the construction of the work, from 0.5 million, even if the railway comes up, but the port doesn't come up, that doesn't add [ 5 lakh ] because I always thought railway can add 5 lakh.

That's why I said 0.5 to 1, but it will reduce some of the road transport. That will go into railway instead. So it won't be a full incremental thing...

Oh, I see.

So it will -- because obviously, it will be much cheaper for them to move by rail rather than by road. So it won't be completely -- there'll be a mix of road and rail. And that's why I think the range of 0.5 to 1. And of course, it does depend commercially on whether we -- what volumes we strike with IOC, HPCL and BPCL. Obviously, that is a commercial matter. But I think you have answered it fairly, fairly well, that even without the VLGC getting sorted out, that, that is a matter of time. We think we can get to the kind of 0.5 to 1 million ton range, including the railway and road in Pipa, which is a big jump from where we were in the first 3 quarters of FY '21. But you're right, it will -- first job is to go back to where we were in FY '20, which was it was around 0.5 million tons. You're absolutely right.

And with these all new lines which are coming up in the railway line, Haldia, the change of customers from BPCL to HPCL in Mumbai and Uran pipeline coming in, generally, we look at EBITDA per ton as you rightly guided every time. Do you see any significant change in the mix resulting into some change in EBITDA or you think that, that remains by and large where going by the normal lines what you already said?

Yes, that remains stable. The EBITDA margins remain -- we expect to remain stable in India for LPG, but it's all about volume, volume growth, which is why we spent so much time talking about how much extra volumes we can -- the margin will remain stable, we believe.

The next question is from the line of Kashyap Jhaveri from Emkay Investment Managers.

Thank you very much for the opportunity and progress on good quarter-on-quarter improvement in the numbers. I have just 1 question. In December last year, we had reached a run rate of [indiscernible] and about 1 million tons on throughput. Post that, there has been a couple of disruptions, one in terms COVID; second in terms of the power of gantry, which to some extent, reduced the volumes there. But looking at, let's say, January and February of last year and the kind of contracts that we have in hand, does that 1 million tons per quarter -- is that something in sight for next year?

You mean the total? Because we put volumes or total...

Yes. No, no. LPG throughput.

Yes, so I've got the graph in front of me. Here our Q4 of FY '20 was 728,000 tons, okay? And we are now going to Q4 of FY '21, right? January, February, March 2021. We expect to be doing better than 728,000 tons for the reasons I gave about Pipa railway gantry and Mumbai Chakan pipeline. So that -- we will now be kind of growing to above pre-growth sales in the throughput volumes, we expect, not only because of Pipa and railway gantry as well as Mumbai Chakan pipeline. But then, of course, in the next quarter and Q1 of the next financial year, we expect to commission the Kandla LPG terminal, which I've said the budget is somewhere -- the first full year budget is somewhere between 0.7 to 1 million tons, 700,000 to 1 million tons is the budget we range for Kandla. So when you add that up, plus the kind of run rate that we expect from Q4 onwards in Mumbai, Haldia and Pipa, then I think it's quite easy to see that we would expect to do better than -- far better than FY '20. We would be going up to much higher figures.

But sir, my question is slightly different. So if I recall quarter 3 transcript, when we did the peak on to volumes, which were about 95,000 tons, we were sort of not expecting the run rate on a quarterly basis to be coming down versus that -- that's what I can recall from the transcript. So what I want to understand is that post-December last year, Q4 was impacted by lockdown somewhere in the middle of March. But looking at January, February volume then, I really -- so the expansion that you mentioned should ideally add over the number of what we used to do then, right? And not probably just compensate for whatever has been lost during the COVID period. So my question is that, that 958,000 tons, at some point of time, we were sort of expecting that to be benchmark volumes going forward. But unfortunately, COVID happened. Excluding these expansions, does the existing network, 958,000 tons or let's say, about 1 million tons, does it look doable for the existing network, whatever we are adding will add over and above that?

I would put it like this. I think 958,000 tons was an outlier, it was probably -- if the average for the last year, that is the average for FY '20 was 756,000 tons, that is the average for the 4 quarters of FY '20, okay? The average for the 3 quarters of this year, FY '21, which has obviously been affected by COVID is 733,000 tons. So I think look at averages rather than just 1 quarter of 958,000. So the first job is we need to get FY '21 to the average of above 756,000 tons, which is the full quarter average of FY '20, yes? Forget about 958,000, I think let's look at the average for the year. So -- and by the way, the average -- so the average for FY '20 was 756,000 tons per quarter. The average for FY '19 was 631,000 tons, The average for FY '18 was 436,000 tons per quarter, yes? So I repeat, first, and the average for 3 quarters of this year, without quarter 4 is 733,000 tons per quarter. So our first job is let's get the average quarterly rate, including quarter 4 for this year FY '21 back to above 756,000 tons, which is the pre-COVID quarterly sales. And I think we will do that. I think there's a very good chance we'll do that because of these 2 projects of Pipa and Mumbai. And then we'll obviously add to that with the Kandla LPG volumes in FY '22. So I would put it like this. In FY '22, We will be -- I think we will beat that 958,000, even that quarter 3 figure in FY '22, but the -- not just 1 quarter. Because of Mumbai, Pipa and Kandla LPG, we would be very likely to sustain the kind of -- just by the max that I just said, we'll be very likely to sustain the kind of above 1 million tons a quarter kind of figure, yes? So far above the averages that we saw in -- even in pre-COVID because of Kandla, Pipa, rail as well as Mumbai and Haldia, we would be -- we'll be going above 1 million tons a quarter. That's, I think, fairly definite.

[Operator Instructions] The next question is from the line of Jiten Doshi from ENAM Asset Management.

Firstly, thank you so much. You have changed your presentation. We felt we were reading the same one for the last 5 years. So thank you so much. This was very nice. I need to now really ask you, you're talking about 1/5 additional terminal in South India. What would be the minimum size you would be looking at? About 4 million?

Yes, so I can actually answer that, for one. Obviously, it's subject to getting land, and we don't have the land yet, but we're working on it. But if the land comes, we are planning a size which is greater than Kandla. That is obviously dependent on how much land we get. If we get the land that we expect, then we would be building bigger than Kandla, which is a 4 million ton capacity. So that is -- would be bigger. How big? It depends on the size of the land. But yes, we're definitely planning bigger than Kandla, 4 million ton capacity in the South.

Now you spoke about the overall volumes. What's really interesting is how much do you see in the retail business? Because that's your higher-margin business. There, you've hit a quarterly average of 35,000. Now given there is 35,000, and you were way below the last year's average of 41,000. It's moving 20,000, 29,000, 41,000, that's what the presentation says. And you're currently, for the 9 months, at 27. Do you believe you will go and make up that in quarter 4 and make it 41?

That is a very good question, a INR 64,000 question. At the moment, the signs are good. Obviously, we've just had January. And the signs are good. I would not like to give a definitive answer, but very much -- at least say our target and budget for our recent team is, in quarter 4, to reach the kind of pre-COVID sales levels in quarter 4. That means the 41,000 that you mentioned. So that is our target. I hope that we achieve it and signs are good after 1 month of January. So you're right. And our average as per that chart is only 27,000 tons per quarter in the 9 months, right, with the 3-quarter average. So you're right. The first job is to get back to the kind of 41,000 quarterly average sales, which we are targeting in Q4. And then obviously, in the next financial year, to start growing again to higher than pre-COVID sales. That is exactly the plan. And that's going to actually have a meaningful impact on profits in quarter 4 because it's high margins as well as in FY '22 and in future years. So that's very much the plan, yes.

So tell me 1 thing, Anish. Can this go to a run rate -- let's say, in F '22, can you push it to about 100,000 per quarter? The way you're ramping up all across, there should be at least 400,000 to 500,000, right?

I will not give a very specific answer, but I think that's unrealistic. We know what is in the pipeline in terms of -- because it's a slow process of building the gas stations, it's a slow process of signing up the dealers. So I think that -- I would not recognize that kind of quarterly performance. And let's hope that there is no more COVID restrictions with it. But look, over the next 4 years, which is -- I laid out a 5-year plan last year, I think it's very much clear based on that, what kind of volumes we're talking about. A lot of growth -- a lot of incremental growth to kind of achieve those kind of 100,000 tons a quarter is going to depend on the domestic segment, the domestic cylinder segment, which we have set a 5-year target of 300,000 tons a year, okay? So you can -- if we're going to do 100,000 tons a quarter in the retail business, which is 400,000 tons a year, I'm saying that a lot of that is going to have to come from the domestic cylinder. And that's going to take a few years, probably, as I said, perhaps 4 more years. So I don't think we'll achieve the kind of 100,000 tons a quarter just yet, but it's going to take the medium term. That means possibly another 3 to 4 years. But that is the plan, yes.

So my only last question is that when you build, let's say, another 5 million at Mangalore or wherever you're planning to, you will be at roughly about 15 million. At best, what could you utilize that 15 million? That's my first question. And then, let's say, in 5 years' time, what would the mix be? How much would come from retail? What can at best come from retail? Can you make it, let's say, 2 million a year? What is that number that you can do at best? That's what I'm just trying to ask you.

Yes, so on the latter question, as far as retail is concerned, as I said, a 5-year target, which means 4 years from now by 2025. The budget that we have set our retail team is to kind of achieve 300,000 tons on the domestic...

Quarterly basis.

300,000 tons per year on the domestic annual basis, cylinder. Around 50,000 tons a year on the Autogas, so that's 350,000 tons. And probably around 100,000 tons a year on the commercial side. That's the hotels and restaurants. So I think if my math is correct, that's around 450,000 tons a year in about 4 years' time by 2025.

So Anish, I'm not as good as you in math, but last year on a volume of about 300,000 -- 3 million, I'm sorry, you hit a 433 crores EBITDA in this Gas division. So basically, if I were to say that you go now to that rated capacity, including wherever you open up in South, so in 5 years, can the math with a higher retail suggest to me that you can hit about 2, 2,500 crores per year kind of EBITDA? Is that possible if you execute well and you achieve the top line?

I don't think that's possible. That's far too high. And even if you do the math properly, there's no way you can achieve it.

Last year was a fluke, is what you're trying to say?

I just don't think that, that is a realistic prospect because, obviously, the ramp-up of capacity, even though we're going to build -- and I haven't said exactly how much right now. If we look at our capacities, we're talking about 9.6 million tons, I believe. I don't think we can do those kind of -- yes, 9.6 million is what we're planning in terms of throughput capacity. So I don't recognize the 15 million tons capacity that you talked about. It will take -- we have not even got the land in the South and all that. That will take some time. But even with that, it's going to take years to build up the kind of sales volumes, possibly longer than 5 years to achieve the kind of higher throughput capacities, added to that, the rollout of the retail. So I think if you do the modeling, and that's the only way you can do this rather than talk back at the envelope, I don't recognize that kind of EBITDA figure that you mentioned of 2 to 2,500 tons. If you do the modeling, it will be lower than that, but a very significant increase from where we are today in terms of EBITDA.

Okay, so you could be 500 crores lower, but that possibility exists.

Possibility would exist. And what I would say, and the final comment I would say, this is something very relevant to you, Jiten, and -- in the coming weeks, you're going to -- and I just repeated this. And listen carefully because this is relevant to everybody, you're going to hear some very significant development of how we are going to accelerate our plans of growth. Some of those are, yes, the new terminals in the South, new terminals in the South, but some of them are connectivity projects to -- and some of the things which we've never even discussed. So we are going to hear a series of projects. We have a project list actually that -- and we're going to accelerate that plan. If those plans all come through, then -- what then -- I think the higher EBITDA numbers possibly might come. Maybe not as high as what you said, but that might come. So watch this space, we're going to accelerate our growth plan over the next 3 years, and very significant, specific projects that we will -- will do that. And the difference is like this, which we talked in the board of Aegis yesterday. If you can do those projects in 10 years, if you can instead do those projects in 3 to 4 years, it obviously ramps up the kind of EBITDA growth figures and all that. So based on what I've said right now, at least the current investor presentation, it will be what it is. But if -- when we announce those new growth plans and acceleration of new plans, you would see an even higher -- very specific projects, of even higher growth rate if we're able to execute things, which ordinarily would have taken perhaps 8 to 10 years, we -- we're going to do it in the next 3 years simultaneously throughout India, and plus the retail growth that we said. So you can ask me again after hearing those plans, and I think it will be very interesting to hear that. But we...

Right. This is all on the Gas side, but why is this step [ not on ] treatment of the Liquid division?

Actually, no, you're wrong. It's not only on the Gas side. You're going to hear from us -- again, I don't want to be very specific today, but you're going to hear from us some very significant expansion in the Liquids business as well. Quite transformational. So both LPG and...

I'm just saying when you add all those numbers, is the possibility in 5 years to where we are pointing out, including Gas and Liquid and everything? Otherwise, it's like we're quite -- we've been waiting for that day.

We wait to hear those plans and then you can ask the question again.

So you'll announce it by, let's say, Feb end is what you're saying?

I'm going to be announcing in the coming weeks and months those projects. So I don't want to give a specific timeframe.

Fine. So before 31st March, we are hoping to hear from you.

That's a good expectation for some of them, but not everything will be announced all in one go, but yes, some of the things will be. But it's very exciting. And you can -- you've known me for long enough with making statements. It's exciting plans, which we'll also answer. Again, I don't want to go too far, but we will also answer the question which you -- you've referred to a lot, that what do we do with all this cash flow and what is going to be generated. So we're going to give some strong indications on what our plans are beyond the next 5 years as well.

Sure. And we can hope that your dividend policy also might go up a little bit in the interim.

You will hear a little bit about that as well in the coming weeks. So there's going to be a lot of announcements. Please do attend these earnings calls and investor calls. There's going to be a lot of announcements in the coming years.

So every quarter, you always keep us on the edge. Hopefully, next quarter, once and for all, just reveal everything so the suspense is gone.

Yes, sorry, we will be able to reveal quite a lot in the next investor call that we do. And that's all I'll say for now.

The next question is from the line of [ Samir Patel ] from [ KUN ] Fund.

First, can you [ continue with the top ] figures, which will come in FY '22?

I believe that, that's over. Murad, are you there on the line? I think this is the final quarter.

I can answer that, yes. So in Q4, yes, I think another 28 crores will come and that's the end of it. Next year, nothing will come.

Okay, okay. Secondly, on the new CapEx end, so the one that you were planning to announce in the South. So any clue on that?

No clue today. You're going to hear more about it in the coming weeks, in the next investor call. You're going to hear much more about it. So nothing more to be announced today, but watch this space.

And if I can just -- one more question here, this is Samir. Basically, if you can just give us a sense of what is going on at Haldia, Northern. Also BPCL is coming up with its own terminal. So where will you -- where are you in the volume for this year and maybe next year? And how do you see the dynamics staying out at Haldia port with BPCL coming in?

I think I answered that in a previous answer. But basically, we expect to replace BPCL's volumes, which represented around 25% of our existing throughput with growth from HPCL itself. That's what our current discussions with HPCL. So in other words, we'll at least, in the next year, we will try to maintain the throughput levels of FY '21, which have been excellent in Haldia. So the first job is to maintain -- to replace the BPCL loss volumes with additional volume from HPCL. And in future years, that means from, should we say, FY '23 onwards, then to build on further growth in volume. So step 1 in the next year is to replace BPCL's volumes with additional volumes of HPCL. And step 2, as you'll hear in coming weeks, we have got further plans, which will -- some further projects in Haldia, which we'll be announcing as well in coming quarters for further growth beyond even FY '21's high throughput levels of HPCL, which was always planned because -- but with HPCL, because we always knew that BPCL was ultimately going to go out. So BPCL with useful throughput volumes in FY '21 and FY '20, but now we aim to replace it with HPCL additional volumes.

Could you give us some steer on where will FY '21 be for Haldia? And presumably, you will do the same in FY '22 despite the 25% drop from BPCL.

Yes, I'm not going to give -- I don't give the individual forecasts for individual terminals. But you already know the -- you have enough from my earnings transcripts to know we've been -- what kind of volumes and throughput we've been operating in Haldia in FY '21. Just go and look at my transcripts and you'll get a good sense. And we will obviously have a little bit of a drop in Q4. We don't expect to replace all of that in 1 quarter with BPCL. But in FY '22, we believe that we will replace -- we will maintain the throughput levels in Haldia of FY '21. And then FY '23 onwards, we will see further growth, which I'll lay out shortly in coming weeks. So that's all I can say at the moment.

And any scale you can give us on Kandla, how FY '22 will be for Kandla?

Yes, sure. I said, again, in one of the earlier answers, our budget for the first year of Kandla, which is FY '22, is 0.7 to 1 million tons for FY '22. That is our budget, and I've said that many times. So we are currently expecting some -- that range of 0.7 to 1 million tons in the first year, FY '22 to add to our volumes in Kandla.

We'll take the last question from the line of Pranav Mehta from Valuequest.

So just a question on Kandla. So now that we are so close to commissioning the project, can you give us an update on whether we have signed up with any -- either one or even more customers from Kandla? And obviously, you mentioned the volume range. But I mean, I was under the impression it's 1 million and you just said it's 0.7 to 1. I'm just thinking whether I missed something or is there some downgrade in our expectations? Yes.

Yes, 0.7 to 1, we think it's better to have a range rather than just a single point figure. So 0.7 to 1. I hope it will be 1 million tons, but our budget is 0.7 to 1. And yes, as far as the commercial side is concerned, I would say with 1 of the 3 companies, we are very close to signing something in Kandla. And then the expectation is that we would move on to the other 2 companies who have clearly expressed an interest. Normally, what happens is we sign up with 1 and then the other 2 have the same terms and conditions as the one who signed up. So nothing is signed yet, but we are very close and hope to resolve that in the coming weeks before we commission the terminal. But we're very close, I would say. It's at an advanced stage. I mean, the parameters, broadly all agreed. It's a question of going through their bureaucracy. So we're close.

Thank you. Due to time constraints, that was the last question. I now hand the conference over to Mr. Anish Chandaria for closing comments.

Thank you. Lots of good questions today, and it was nice for me to even answer them. I would summarize like this. I think quarter 3 was a continued recovery from quarter 1 and quarter 2, but not yet back to pre-COVID levels. But quarter 4, which is the current quarter, I think we will be approaching again, the kind of pre-COVID sales levels in the retail business of LPG as well as the throughput business. That is what our expectation is, and the prospects look very good for FY '22. Obviously, I'll say more about the outlook for FY '22 in the next earnings call, but the prospects look very good because of the completion of the Chakan pipeline project; because of the completion of the Pipa railway gantry project and the commissioning of that; and the expected commissioning of the Kandla LPG project; and of course, the commissioning of the Mangalore liquid projects in Haldia. When you add up all of those 5 or 6 that I just mentioned, prospects look very good for FY '22. And none of it is really, we think, is affected by COVID. So we will no longer be really talking about COVID impacts for Aegis in the coming quarters. And last but not least, as I was giving a clear steer that we will be coming out with some very significant and we think transformational growth in Aegis, not only for the LPG acceleration of LPG business, but also in the Liquids business. I think people will be quite pleased with what we have to come forward in the coming weeks, which will really show Aegis onto a significantly higher growth path, not only over the next 5 years, but 10 years, 15 years. We're going to be answering quite a lot of those questions about what is the future of Aegis' growth profile, both in the Liquids, transformational prospects as well as for acceleration of the LPG business. And I think people should hopefully attend our next investor calls and earnings calls to hear the details of that. But I've said it several times that you should be hearing much more about the growth prospects of Aegis in the coming years, in the next earnings call or investor calls that we schedule. And very exciting developments, but not to be announced today. We will obviously wait until we are ready to announce that. Thank you very much, and I look forward to hearing all of you with your questions for the next call. Thank you very much.

Thank you. On behalf of Aegis Logistics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.