GAIL (India) Limited (GAIL.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '22 Earnings Conference Call of GAIL (India) Limited, hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Gagan Dixit from Elara Securities Private Limited. Thank you, and over to you, sir.

Yes. Thank you. A very warm welcome to everyone, and happy Diwali to all. It is our pleasure to be able to bring to you the management of GAIL led by Shri A.K. Tiwari, Director of Finance; and Shri R.K. Jain, ED FMA; Shri Sashi Menon, ED FMA; and Shri R.K. Singhal, he is an ED Business Development and E&P; and Shri [indiscernible], ED marketing. We would also would like this opportunity to congratulate the management on it's excellent set of numbers. So with these words, I would now hand over the conference to the GAIL management. Over to you, sir.

Thank you. Thank you very much. Good afternoon, Gagan from Elara Securities and my dear friends from investors and analyst community connected through con call. A very warm welcome to GAIL's earnings call for Q2 FY '22. Wish you all a very happy Dhanteras and very happy and safe Deepavali. May this season of festives, bring cheers, health and prosperity to your life and to life of your family. We are thankful to you all for showing keen interest in the performance of GAIL. The result of second quarter and half year results have been declared earlier today. And I'm sure you must be happy with the GAIL's performance. I take pleasure to state that in H1 FY '22, GAIL has achieved highest ever half yearly turnover, PBT and PAT. Now I'd like to give you a brief insight of the company's performance for the quarter and half year ending 30th September 2021. I would like to first start with physical performance. During the quarter, the physical performance of the company has improved across all business segments mainly driven by higher demand in gas segment and better plant operation in Petrochemicals segment. Gas marketing increased to 97.72 MMSCMD in Q2 FY '22 as against 95.95 MMSCMD in Q1 FY '22, increase of 2%. GAIL has entered into various long-term LNG contracts to meet increase in demand of natural gas in the country. As some of the anticipated demand did not certify in the past year, GAIL was selling some of it's volumes in the overseas market. As the demand of the gas in the country is increasing more and more of the long-term LNG is being brought to India. During the current quarter, the sale of RLNG has increased, resulting in better physical performance of Gas marketing segment. In fact, during the quarter, only 8 cargoes were sold overseas as against 14 cargoes in the previous quarter. Due to increased gas demand in the domestic market, the natural gas marketing increased to 114.32 MMSCMD in Q2 FY '22 as against 107.66 MMSCMD in Q1 FY '22, increase of 6%. The capacity utilization increased to 55% in Q2 FY '22 as against 52% in Q1 FY '22. The metrics, presented a metrics, RFCL are running on full capacity with the commissioning of HURL plant and attaining full capacity by mid-'22. The volume will further increase by approx 6 MMSCMD. Polymer production stood at 216 TMT in Q2 FY '22 as against 133 TMT in Q1 FY '22, increase of 62%. There have been apprehension in the past over the reliability of the Petrochemical plant. Last year, we achieved over 100% capacity utilization, and the plant is currently running smoothly at more than 100% capacity, and we are confident to achieve 100% production capacities this year also. Polymer sale increased to 221 TMT in Q2 FY '22 as against 130 TMT in Q1 FY '22, increase of 60%. Similarly, the LHC stood at 262 TMT in Q2 FY '22 as against 250 TMT in Q1 FY '22. The capacity utilization increased to 74% as against 69% in LHC segment. Similarly, the LPG transmission also had the sustained growth and the capacity utilization was under 10% in this quarter. Let us now move on the financial highlights. GAIL achieved gross turnover of INR 21,477 crores in the current quarter as against INR 17,352 crores in Q1 FY '22. There is an increase of 24%, mainly due to increase in the natural gas market in volume, higher natural gas prices, increase in the Petrochemical sales, electric prices, et cetera. PBT stood at INR 3,682 crores in Q2 FY '22 as against INR 2,054 crores in Q1 FY '22, increase of 79%, mainly due to all around better physical performance, improved gas marketing spreads, better prices in petrochemical and LHC, improved Petrochemical operating efficiency and increase in the other income, mainly dividend of INR 465 crores. The gas marketing segment showed a robust performance and a profit fees by around [indiscernible]. Similarly, the PAT jumped to INR 2,863 crores in Q2 FY '22 as against INR 1,530 crores in Q1 FY '22. On a half yearly basis, GAIL clocked turnover of INR 38,029 crores as against INR 25,671 crores in H1 of the last year, registering an increase of 51%. The PBT increased to -- by 201% to INR 5,763 crores as against INR 1,907 crores. PAT also jumped to INR 4,393 crores for the half year as against INR 1,495 crores mainly due to robust performance of energy marketing segment, better average price realization in PC and LHC, which is in comparison with the last H1 is INR 27,000 per metric in case of the Petrochemical and INR 17,600 per metric ton in case of the LHC. On a consolidated basis, the turnover in H1 FY '22 is INR 39,290 crores as against INR 25,926 crores, a jump of 52%. The PBT in H1 is INR 6,268 crores as against INR 2,161 crores, and the PAT is INR 5,021 crores as against INR 1,766 crores. During the quarter, GAIL received 22 LNG cargoes from U.S., 14 from Sabine Pass and 8 from BCP as per the cargo plant. Out of these, only 8 cargoes were sold in overseas market and the remaining cargoes were brought to India either directly or through destination [indiscernible]. Up to H1, 44 cargoes were sold -- were brought and in the international market, we have sold 20 cargoes up to H1. On the CGD front, GAIL is supplying gas to all CGD with infrastructure of 81 CNG stations and the cumulative DPNG connection is 148,000. And the CapEx we spent so far is more than INR 1,000 crores. I'm happy to announce that the GAIL CGD business have become profitable during the current quarter. On GAIL Gas during the Q2 FY '22, the gross turnover -- gross revenue from operations stood at INR 1,478 crores as against INR 1,212 crores and PBT is INR 105 crores as against INR 72 crores and PAT is INR 78 crores as against INR 53 crores. GAIL gas along with the JV subsidiary has infrastructure of [ 725,000 ] DPNG connections and 262 CNG stations. This year, GAIL achieved CapEx of INR 3,180 crores up to September '21, mainly on pipeline equity contribution, CGD project, Petrochemical operational CapEx, CNG, et cetera, -- We have a plan to spend approx INR 7,400 crores in current financial year and mainly in pipeline, liquidity and Petrochemical. On Pradhan Mantri Urja Ganga, the total commitment is over INR 15,400 crores and actual CapEx till date H1 FY '22 is INR 12,221 crores. We have been receiving the capital grant from the government regularly until the total capital grant received is INR 4,487 crores against the total capital grant of INR 5,176 crores. The GAIL, along with it's JV is executing pipeline project of 7,500 kilometers with a total investment of around INR 37,000 crores. GAIL is executing PP project at Pata and Usar with a total cost of INR 10,000 crores, and the EPMC contract license elections has been done and work on the project is going as per schedule. On CSR front, Gale focused on the CSR program in the area of health, sanitation, education and skill development. The total spending of GAIL on CSR project is more than minimum mandate of 2%. On safety part, 0 major reportable accident incident during the last 5 years and our SSC score is 97.3 as against the excellent target of 95. GAIL due it's presence in the natural gas play an instrumental role in transiting towards a low-carbon economy. The company places a special emphasis on environment and sustainability. Some of the key achievements during the past quarter in the area of sustainability are certificate of appreciation received from New Okhla Industrial Development Authorities. Development of the organic waste composite plant at [indiscernible] and GAIL participated in consultation and launched no-carbon and climate-resilient pathway for the Indian public sector enterprises. Various measures have been taken in the digitization and which includes all the stakeholders, management, suppliers, contractors, employees, even the retired employees. So that's the brief introduction on the financial results and the major highlights of the company. GAIL management team is present here and to clarify any points that you may have. Over to you, sir.

Hello. Hello.

Yes, sir.

I have finished, madam.

[Operator Instructions] The first question is from the line of Probal Sen from Centrum Broking.

Congrats on the great set of numbers. Two questions. One, as far as gas trading is concerned, while this quarter growth anyway is very, very strong, but looking at the kind of differentials that we are now seeing for the second half, it has only widened even further. Is it too simplistic to assume that results will get even stronger at least for this segment? Or is it that whatever even unhedged or opportunistic volumes you have, we have already sold well in advance at a certain price. And therefore, the gains could be limited to somewhere near this quarter performance? Any color you can throw on that?

So thanks very much for this question. And as I have clarified in number of calls and during discussion that we have different portfolio as well as we have different synergies to mitigate the risk. And these shows the, results shows that what action they have taken. I can only say that whatever results you are seeing in the gas study and we'll take all measures to maintain it. And to my mind, it will be better and it will be sustained. And all risk mitigation measures, including international sales, whatever the opportunity comes, that management is taking and the rest assure that this segment will go further.

Okay. The second question was with respect to the LPG segment, sir. Now is it fair to say that while international prices seem to have ramped up a little bit higher. The domestic LPG prices don't really reflect that at least in this quarter. What I'm asking is in Q3, will we likely see a much stronger realization performance, which should help offset the higher domestic gas costs to a certain extent. Is that a fair way to look at it?

Yes, yes, it will be better because our price space, as you have seen that are better are good -- And with the efficiency and with the cost which is going to increase, that will be compensated in the price which we expect will be increased further. So that way, this will be a sustained segment for realization as well as growth and financials.

So sir, despite the domestic gas cost increase that is happening from October, we don't expect any material dip in terms of profitability of this segment. Is that fair based on what we see today?

Not much, not -- it will not -- it will be insignificant, you can say.

The next question is from the line of Pinakin from JPMorgan.

Just trying to understand the gas marketing segment because, clearly, while the company sold less cargoes overseas in this quarter 8 versus 12, the EBITDA on a quarter-on-quarter basis has tripled. Now at this point of time, sir, can you tell us that -- For the remainder of the year, are there any unhedged cargoes which need to be sold because spot LNG remains stubbornly above $30 MMBtu. And if there are unhedged cargoes, then should we expect a windfall in the second half? Or is this the level of EBITDA that we can expect to maintain in the second half? How should we look at this segment?

See, as I have already explained that this segment is a volatile segment. And we have taken various measures. The result shows that. And what I can say that various measures which we have taken. The sustained EBITDA will be there. Our performance in terms of the financials for this gas marketing segment, will almost be better or we can say that it will be sustained as well as it will be improved because gas consumption in the country is increasing. So we are not selling some of the cargoes or many cargoes as we have been selling in the international market. So that way these synergies, we are evaluating. And depending upon the market, depending upon the consumption in the country and opportunity, which we are finding time and again, we are taking decisions that way.

Understood, sir. Sir, moving on to the petchem segment. This has also been a volatile segment. Now petchem end product prices have broadly inched up slightly, but the gas-based pet chem producers obviously have seen margin compression given the way gas costs have surged. Now for GAIL, given the gas mix that it uses in petchem between Brent-linked spot prices, how should the input cost inflation in the petchem business play out over the second half of the year?

I think what we expect that the whatever is our margin you have seen in the Petrochemical segment, we are going to maintain that way. With the fixed cost, with the portfolio we have for different indexation of the gas that we are going to maintain and that will be...

The next question is from the line of Nitin Tiwari from Yes Securities.

Congratulations on a very good set of numbers, really strong profitability in this quarter. Sir, my question is actually related to the news which came up a couple of days back regarding hydrogen plant that GAIL is evaluating. So just wanted your thoughts on the -- on that piece of news. So is this a part of your CSR activity or this is a serious attempt to foray into the renewable space. And yes, then what is the kind of capacity we are looking at as far as this plant is concerned, time lines, CapEx, if you can just share some thoughts on that? And how does this integrate with our entire natural gas business. So your thoughts on that, please?

First of all, thank you very much. First of all, this is not CSR business. We want to clarify and the technologies in the hydrogen that is going off, we are evaluating. We have a deep plan, and we'll share the details in the subsequent period because we have not tied up many screws in that. So give us some time and we'll share with you, and we are in the process of evaluation. So all the technicalities which are there has not been ceased. And so many what we will go, what -- where is the place, whether Bijapur or Pata or some other places, how to inject, how the technology respond all these things we are evaluating. So give us some time, we'll share with you, but definitely, this is not CSR.

The next question is from the line of S. Ramesh from Nirmal Bang.

My first thought is in terms of your current quarter's numbers, second quarter numbers, is there any inventory gain you've booked in the gas marketing business?

No, no, no inventory gain.

But in terms of your hedging strategy, you see about 30% now does it make sense to increase the proportion of engines for your U.S. gas given that prices hit us [indiscernible] high. What is your thought on that?

Can you repeat the question once again?

So I'm asking about your hedging strategy. I understand that you hedge about 30% of your U.S. LNG volumes. So does it make sense to increase the share of the volumes you hedge? And what are your thoughts on given that Brent and LNG prices are at high levels. How do you see the hedging strategy going forward?

See, hedging strategies, [indiscernible] strategy nothing can be static -- It depends upon the cargoes underlying assets, which are available to us, prices and so many other things. But going forward, we take a view on the coming 6 months, 1 year, whatever is there. And that we, depending upon the positioning of the cargoes as well as consumption, we take decision for that. So that way I cannot give any specific strategy for that. It is a dynamic, but we always build the synergy for that, whatever we do. That is the first and foremost thing.

And one last part. In terms of the current concern about the high gas prices, hurting demand, are you seeing any contraction in demand in the Indian market because of the high spot gas prices, how do you see that shaping up in the second half of the year given the current prices?

I think our demand is increasing as result has shown and I have already explained during my release that in the coming quarter or maybe 6 months or so, further consumption is increased. So demand is increasing with the CGDs with the fertilizers and all are coming. So I don't foresee at present any slash in the demand. It will increase.

The next question is from the line of Vidyadhar Ginde from ICICI Securities.

So my first question is on the gas transmission. Can you give us some color on the likely volume best transmission volumes in next year FY '23 and status of the Urja Ganga commissioning? And what kind of volumes that pipeline may do next year?

Okay. Gas volume for transmission, you ask now? So that has increased in the -- in comparison with the last quarter, 107 MMSCMD , I think, it is now 114 MMSCMD. And if you see the H1 versus H1, it is now under 111 against the 98. So that way the gas volume is increasing and with the coming of the various plants along with the Urja Ganga -- As you know, that Matix fertilizer and the HURL Sindri, Barauni. Matix fertilizer is already doing that. HURL in Sindri, Barauni, Gorakhpur. We are in the process of drawing gas. So that way, the demand will increase and the transmission volume will further increase.

So how much -- could you give us some color on 5% growth? And what kind of...

I can give the quantity, which from the present of 114, it will go to 120 around.

Average for next year. And what about the utilization of Urja Ganga commission schedule and what kind of utilization margins that pipeline may have next year?

That project, I have already said that, that project is under advanced stage of completion -- And so for first phase is already commissioned, second phase is at the process of advanced stage of commissioning. So that way, our project is going scheduled ahead. Against the 14 -- 16 MMSCMD, we are hoping that it will be further at least 50% utilization in that we are.

Next year, 50% utilization?

Obviously. It will grab up slowly and grow.

By end of next year, it will ramp up to 50%.

Yes, it will be around 80% or maybe 75%, like that.

75% utilization by end of next year?

Yes, yes.

Last question on the gas marketing side. So is this correct to assume that in the second half of the year, the winter or in the [ middle ] of winter the cargoes which you have kept untied or selling a spot, those cargoes tend to be on the higher side, and it exactly even this year that a number of cargoes you're likely to sell at spot prices are going to be much higher in the second half than they were in the past half?

See, gas marketing is a very dynamic. I think is a new state answer can be given and spot is the price, but spot is not the procurement. It also takes time to tie up the means cargoes and all these things as there. So depending upon the situation, we have already lined up many strategies. And that way, I can only say that whatever the margin we have reported, we are going to maintain it and it may further increase.

The next question is from the line of Amit Rustagi from UBS Securities.

Sir, CGDs have been asking for more allocation of gas because the demand is also increasing in the CNG and the residential, which you classify as the sector. Do you think that can be done in the coming quarters and more gas can be -- more domestic gas can be allocated to the CGDs either in the change of formula or some other sources?

See, I can't specifically answer this question because government is taking a decision on that. And surely, the growth in the CGD sector is ramping up. So definitely, there will be cut somewhere and there will be allocation of this volume in the CGD sectors. So I think that decision is under process and the government is taking a very considered glue on that. If something comes in writing, we'll say.

Okay. And sir, second question relates to the LNG procurement for power sector. So obviously, with these kind of prices, there would have been some dip in the consumption -- But do you think that because of the power shortages issue, there will be more imports by the power sector for LNG in the coming quarters?

It depends upon the prices, we say been procured, but -- and since the prices and the costs and generation costs will be higher. If the prices are high -- So I can't say that there will be more and more demand in the power sector, particularly for LNGs. So that's where we have to see the prices and consumption and the unit cost production and further selling. So all these synergies will be there. To my end higher prices are not going to attract the core demand in the power sector.

The next question is from the line of Sujit Lodha from Birla Sun Life.

Congrats for good set of numbers. First question regarding your volumes from as [indiscernible], where are we currently? I mean when that is basically all our ramp up to 2.5 million tonnes every year ramp -- So where are we currently? And when is the next uptick in the volumes expected.

We will be [indiscernible], our ED Marketing going to answer this question.

We'll be reaching the plateau level in calendar year 2023.

So the plateau of 2.5 million tonnes.

Yes.

So currently, we are at 1.5 million?

No, around 2 million.

Okay 2. So it increases every calendar. So next -- so the next revision will come in?

Next calendar year and after that '23 calendar year.

So we are at 2 million -- so this incremental so by what number it will be increased, so 2 will go in January '22?

For '22, we'll be touching [ 40 ] and actual peak is 2.8 million, not 2.5 million.

Okay. Okay. 2.8 million is the peak and not 2.5 million.

So in calendar year 2022, we'll be getting anywhere between 36 to 40.

40 what?

Cargos.

Sir, this would be what the price is in it, what would be the current prices?

The formula, so it varies.

Okay. So it's crude linked

Yes, it's crude linked.

Okay. Then secondly, regarding the transmission volume. I just wanted to clarify, you said 114 MMSCMD, that is the current rate now -- Or is it higher or lower?

No, that is the current, last quarter, 114.

So now currently, also, it would be running at similar levels or it would be higher?

It will ramp up. It will further increase we expect.

And my last is on this Qatar, [indiscernible] pending from a long time and we are fighting for getting it. Is there any scope of that cargo is coming to us, given the price scenario, I don't think there would be opportunity to do it. So is there any case which we have or it can get postponed to say for the coming years?

Yes. This is a contractual matter between us and Qatar gas. We are optics from PLL. So we have requested PLL to take it up with Qatar gas. The discussions are ongoing. So we have to wait for some more time to know the clarity.

Okay. Okay. And the current volumes of Qatar...

[Operator Instructions] The next question is from the line of Mayank Maheshwari from Morgan Stanley.

Sir, just 2 questions from my end. One was related to the Petrochemical division. If you see your ASPs have gone up quarter-on-quarter this quarter versus if you look at regionally, ASPs have been lower. Anything that you can throw light on what has caused this?

I could not get.

What is ASP?

Sorry, your prices for Petrochemicals have gone up quarter-on-quarter by about 5-odd percent if you look at in the second quarter, while regional prices had come down on a quarter-on-quarter basis. So I was just trying to understand what has happened. If you can just help us understand...

Prices, quantity and our production is around 100% plus. So that way the it has resulted in a better realization. I think if the prices are on the same range, it will be our pattern on the same.

Okay. And the second question was more on the cash flow on a consolidated basis. You had seen a significant increase. If I look at the numbers on the, I think when you look at Page 17, if you just look at that, there is a significant increase in your trade and other receivables. Is there something specific that's happened in the first half?

Trade and other receivables.

Year, under the changes in working capital, it's close to around INR 4,500 crores.

Just 1 minute.

Yes.

Mayank, we'll clarify in detail subsequently. Our IR team will clarify.

The next question is from the line of [ Abinal Diavali ] from Macquarie. As there is no response from the line, We'll move to the next question, which is from the line of Varatharajan Sivasankaran from Antique Limited.

Your LPG production has been a little inconsistent. What should be the number we should grow with a quarterly basis?

LPG production you are asking?

Production, yes, volumes.

So that way, it is around 74%, our total equity production. And that way, we are maintaining into that range.

We should use that as a benchmark for the next year or 2 or so for it to increase?

It depends upon the demand and whatever the mix are there that we I think it would be on that range

Gas availability.

And gas availability, that's the factors will be there.

Okay. And one thing on this volume growth which you are referring to an 600 MMSCMD increased in the transmission volume. That is only specific to the that particular [ Galena ] pipeline plus your LPG -- Or you're talking about the overall volume LPG only that much. You don't see any...

In the JHBDPL and fertilizer consumption as well as growth in the CGD.

How about the other pipeline, sir, like...

You want to know the other upcoming pipeline?

Yes, other pipelines, do you see any increase, sir?

No. Other pipelines are under execution that is [indiscernible] pipeline. And then you have our Mumbai [indiscernible] pipeline, these are under execution that we, but only at pipelines. So around 5,000 kilometers of the pipeline are under execution. So that way.

I was more focused on this Kochi-Mangaluru, sir, do you see some volumes going up there? completed the petchem commission? Any visibility there?

Yes, yes. It will be [Foreign Language] how much is the volume?

Complete and commissioned.

It is complete and commissioned, but I think [indiscernible] around 2.5 is there. And with the further growth, it will be ramped up. So with -- I think...

Any guidance on that.

So that pipeline is whatever the CGD and other Bangalore and Mangaluru...

Other plants also which are yet to startup. So they will start picking up. It has the potential to go on. But as of now, it will take a little while.

So we should go with around 2.5, 3...

4 to 5 maximum in the coming 1 year, but we are trying that it will utilize further.

The next question is from the line Sabri Hazarika from Emkay Global.

So the first question is actually it's a follow-up to an earlier question. So if I look into your LPG realization versus the Arab Gulf benchmark. So this quarter and in Q2, the discount to Arab Gulf has increased significantly. And -- in a similar way, the Petrochemical realization premium to South Korea benchmark and in Southeast Asia benchmark policy has actually expanded significantly. So anything particular of particular behind this?

Petrochemical usage demand. My colleague will tell you.

In Petrochemical sector, prices depends on the demand and supply at India also in addition to the prices linked with the IPP. So if in India demand is very good and production is less and availability of imported material was less. So that's why we were able to get a better realization here.

Got it. And on -- so it's the Indian premium. So -- and on LPG is it a similar dynamic because again...

On LPG linked to IPP, and we are supplying our LPG to the oil marketing companies. And that price is fixed.

Right. Because if I compare your LPG numbers with last quarter, for example, last quarter, Arab Gulf, Saudi to Arab Gulf was around 550, and you did around 530. So there is a 4% discount -- That has actually become 11% in Q2.

Actually, it always is a 1-month lag. You may be comparing with that. Otherwise, exactly follows the Arab Gulf index.

Okay. No, actually, we've taken it that way, but it has actually fluctuated in the last quarter.

The OMC is what of the IOC, which is the notalgency for working out the LPG price works out on import parity price, there is no Arab Gulf. Therefore, there is no reason that it will be at a discount. It is actually -- it follows the Arab Gulf price.

The next question is from the line of Puneet Gulati from HSBC.

Of your total transmission volume, which went up from 108 to 114. So 6 additional. Where did the 6 go, any large customers that you can ascribe this additional 6 million cubic meters.

This is mainly because Matix Fertilizers has got commissioned in the August, and it has ramped up to almost full capacity very fast. And secondly, there is...

How much is Matix taking?

Matix Fertilizer is one. Another...

There was no demand in the power sector during the summer months, and that is a permanent phenomena. Every year, we see some power demand during the summer months, which has happened this year also. And for the CGD after the lockdowns have opened, especially after June, the industrial demand and the CGD demand has risen very fast.

And the 4 fertilizer plants, which have partially started consuming, how more can they still take from the current levels?

No, they have -- currently Gorakhpur is under full commissioning and we understand it is going to get commissioned very shortly. We cannot tell the exact time. And Barauni and Sindri, they have not yet started consuming, but they will take -- start taking the...

Our pipeline is ready, and they are in the pre-commissioning state. So that way, it will ramp up.

Okay. So basically, Gorakhpur, Barauni, Sindri have still not consuming anything or are they consuming some little?

Some little they are consuming.

Sir, how much more will they consume once they reach full capacity?

It will be around 6...

All three put together about [ 1250 ].

Gorakhpur, Barauni, Sindri.

Okay. That's very helpful. And any color, can you give what percentage of your cargoes are hedged for the second half of this fiscal year?

[Foreign Language] I have already told many times that don't follow the hedging. We have different synergies. We have different opportunities. We have different risk mitigation measures. So what you look that our gas marketing spread and marketing margins would be up. That should be the benchmark and that we are trying to achieve that way. Cargo wise detail, we can't give you, and that is not possible because we have different -- if we don't know. Any opportunity comes, we'll sell if you get better price. So that market dynamics are there. Please try to understand. So don't go too much in detail about the hedging. We'll give you the better results we have been giving. I think that should be it.

The next question is from the line of Vikash Jain from CLSA.

Yes. So I wanted to specifically ask for Petrochemicals. For Petrochemicals, is it correct to understand that the volumes that are required in terms of LNG, almost all of it is coming from long-term LNG, whether it is your cargoes from Russia? Or is it the Qatar gas. You're not really posed to use any spot over there. Is that the right understanding?

Yes. We have different portfolios. We are using for our Petrochemicals.

So my question is, are you being forced to use any of spot or not required. It's either your U.S. gas or...

It is not required. We have long-term and different indications. That will be our synergizing.

Okay. And sir, beyond the U.S. gas, even this gas firm Russia, et cetera. Is there a long-term contract for that? Or that's something where you have medium-term or short one, which -- I mean, the volumes, if I understand, have they gone to the full extent, which was originally planned because it was expected to increase every year.

Yes, that strongly there. We have explained.

Vikash gas firm is still ramping up. We have another increase in the supply next year, January '22, and then thereafter finally at January '23. So January '22, it will be 2.5 and January '23, it will be 2.8 that's the maximum.

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Gagan Dikshit for closing comments.

Yes. Thanks to all the participants, and special thanks to Tiwari sir for sharing his views on the company's second quarter performance. And again, happy Diwali to all. Any closing comments, Tiwari sir?

Yes, sure. Thank you very much. First of all, again, thanks, and I'm glad discussing with you. I will be supermenting next month, as you know, -- And this was the last quarterly financial results, that I'm discussing with you as a Director, Finance of GAIL. I will be leaving GAIL at a high note and expect further better performance. I'm very thankful to each and every connected air for their support and faith and confidence on GAIL management. I'm sure that you will continue to provide similar support in times to come. I once again, thank you very much for this meeting, for this call. Thank you. Thank you very much, once again. Thanks.

Yes, you can disconnect the call now, sir.

On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.