GAIL (India) Limited (GAIL.NS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Probal Sen from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you, Palak. Welcome, everyone, to the post Q3 FY '26 conference call of GAIL India. We have with us members of the senior management headed, of course, by Shri Rakesh Kumar Jain, the Director of Finance of the company and other senior executives in his team. Without further ado, I'll hand it over to him for opening remarks, post which we'll have a detailed Q&A. Sir, over to you.

Thank you, Probal, and good morning, everyone, and a very warm welcome to our quarter 3 financial year '26 earnings conference call. And here with me, I'm joined by my senior colleagues from various sections of our departments of GAIL India Limited. With the quarter under review has been marked by continuous volatility in global energy markets due to uncertain weather conditions and evolving geopolitical dynamics, which has kept the HH and spot prices on higher side. Despite the adversities, GAIL's natural gas transmission volume has shown a recovery as compared to earlier quarters, marked by elevated consumption by fertilizer, refinery and CGD sectors. In addition, GAIL has been able to seize the first-mover advantage in preceding 9 months by securing additional tie-ups with CGD customers, which has resulted in new tie-ups of approximately 2 MMSCMD. I find it worth mentioning that during calendar year 2025, more than 15,000 capacity transactions have been booked through GAIL's open pipeline access portal, which is encouraging for us to continue to build and invest in the natural gas infrastructure of the country. Let me begin with business update for the quarter. As you are aware that PNGRB has issued an interim revision of natural gas pipeline tariff for GAIL's integrated natural gas pipeline network from INR 58.61 to INR 65.69 per MMBtu, and this is effective from 1st January 2026. This represents an increase of approximately 12.1%, leading to positive impact of approximately INR 1,200 crores per annum. GAIL has filed a review petition that is post announcement of tariff. We reviewed the tariff, and we filed a review petition on 26 December 2025, seeking an increase of INR 15 per MMBtu to the interim revision. Let me give you, we submitted approximately say INR 78. We got INR 65.69. Effectively, there was approximate INR 12 reduction. But when we filed the review petition, it became INR 15 on same principles, because as you know that the tariff is worked out on discounted cash flow methodology. Any delay in tariff approvals also results in increase in tariff ability of GAIL's -- GAIL has the ability to get more. So therefore, the INR 12 has become INR 15, and we filed a review petition for increase of INR 15 per MMBtu to the interim tariff revision. Though the petition GAIL expecting up the factors like OpEx, CapEx, transmission loss, revenue sharing in terms of the regulatory provisions, which have not been considered in the interim tariff order. With effect from October 1, 2025, GAIL has implemented state-wise [ CST ] procurement of domestic gas from ONGC Gujarat to enhance tax efficiency for CGD customers. And GAIL is continuously looking for tax optimization, how can we do it for various sections or various customers so that we can -- we have ability to give competitive prices. GAIL has been offered to set up 2 fertilizer plants along the MNJPL corridor. Apart from the -- we will seek to go into fertilizer sector. These plants will also act as an anchor load for MNJPL. The investment -- the investment for these 2 plants is INR 21,000 crores. The [ set ] proposal is having an in-principle approval of Board and the proposal is under evaluation stage now. GAIL Global IFSC Limited, which is GAIL's wholly owned subsidiary, has successfully commenced operations within the first year of its operation by extending an intercorporate loan of INR 290 crores to Bengal Gas Company Limited. GAIL sees renewable energy as a strategic growth opportunity and is undertaking a significant expansion of existing clean energy portfolio of 145 megawatts we have, that is 118 megawatt of wind and 27 megawatts of solar. Several large projects are currently in various stage of development are under progress, including 170-megawatt wind project in Maharashtra, solar project of 100 megawatt and 600 megawatt in Uttar Pradesh and approximate 30 megawatt -- 35-megawatt captive use solar plants across various GAIL locations. Compressed biogas continues to be a strategic pillar of our clean energy portfolio. Following the successful commissioning of 5 tonne per day CBG plant at Ranchi, the Board has approved investment for establishing 6 CBG plants. These projects are part of GAIL's commitment to establish around 25, 30 CBG plants across India for which the company is proactively engaging with multiple state governments to secure land. These initiatives reflects our strong commitment to strengthen India's energy security while accelerating the transition towards sustainable and clean energy solutions and enhancing long-term value creation. GAIL's retail LNG business continues to progress steadily with a plan to establish 29 LNG stations, development of LNG stations at 5 locations is presently underway. Further GAIL's CGD entities have already commissioned 13 LNG or [ LCNG ] stations, making early step towards building a cleaner long-haul transportation ecosystem in the country. As you know, this is one of the major consuming sector -- an upcoming major in LNG consuming sector. I feel happy to inform our investors that the company has declared an interim dividend at the rate of 50% of face value for the financial year '25-'26, that is INR 5 per share. GAIL's results for the quarter ended 31st December 2025 have been declared on last Saturday. I will briefly touch upon the major highlights for this quarter. Thereafter, we may open the session for queries. GAIL's turnover stood at INR 34,030 crores in Q3 financial year '26 as against INR 34,972 crores in quarter 2 financial year '26. Profit before tax in quarter 3 financial year '26 stood at INR 2,030 crores as against INR 2,823 crores in Q2 financial year '26. The profit after tax during the quarter stood at INR 1,603 crores as against INR 2,217 crores in Q2 financial year '26. Quarter 3 versus quarter 3, that is quarter 3 financial year '26 versus quarter 3 financial year '25. On a comparative quarter basis, GAIL achieved turnover of INR 34,030 crores as against INR 34,907 crore in corresponding period of last year. PBT stood at INR 2,030 crores as against INR 5,029 crores and PAT stood at INR 1,603 crores as against INR 3,867 crores. And as you know, this is mainly because of an exceptional income we got last year's quarter 3, that is INR 2,440 crores, which was recorded by the company on account of arbitration settlement with SMCS. Now I will touch upon the physical performance during the quarter vis-a-vis previous quarter. Gas marketing volume during the quarter stood at 103.98 MMSCMD as against 105.49 MMSCMD Q2 financial '26. Natural gas transmission volume improved to 125.45 MMSCMD in quarter 3 financial year '26 as against 123.59 MMSCMD in quarter 2 financial year '26. The average capacity utilization was 56%. Polymer production was almost flat at 219 TMT in Q3 financial year '26, which stood at 220 TMT in previous quarter. LHC production stood at 199 TMT as against 221 TMT in previous quarter. LPG transmission was 1,188 TMT as against 1,167 TMT in previous quarter. The capacity utilization was 103% during the quarter. Now let me take you through the consolidated financials of Q3 financial year '26 versus Q2 financial year '26. The consolidated turnover in Q3 financial year '26 stood at INR 35,253 crores as against INR 35,594 crores in Q2 financial year '26. The PBT in quarter 3 financial year '26 stood at INR 2,165 crores as against INR 2,565 crores in Q2 financial '26. The profit after tax in Q3 financial year '26 stood at INR 1,756 crores versus INR 1,972 crores in Q2 financial year '26. As you know, GAIL also is directly dealing with 6 CGDs. Just to take you through the performance of those 6 CGDs. GAIL has 6 direct -- authorization of 6 [ GA ] has an infrastructure of 215 CNG stations and 4.64 lakh DPNG connections. During the quarter, 2 new CNG stations and 15,990 new DPNG stations were added. The physical volume stood at 0.55 MMSCMD. In next 2 years, GAIL targets to add around 85 new CNG stations and around 150,000 new DPNG connections. I will also take you through the performance of our 100% subsidiary, GAIL Gas Limited. In Q3 financial year '26, turnover of GAIL Gas stood at INR 3,292 crores as against INR 3,235 crores in Q2 financial year '26. PBT stood at INR 143 crores as against INR 148 crores in Q2 financial year '26. The decrease is mainly due to increase in input gas cost and exchange rate resulted in reduction in margin. PAT stood at INR 106 crores as against INR 111 crores in Q2 financial year '26. The physical volume stood at 7.8 MMSCMD. During quarter 3 financial year '26, GAIL Gas, along with its JV subsidiaries has added 71,411 new DPNG connections and 9 CNG stations. GAIL Gas with its JV subsidiaries have added an infrastructure of -- have an infrastructure of 12,46,000 DPNG connections and 674 CNG stations. I will also take you through the status of ongoing project. As of December 2025, GAIL's operational natural gas pipeline length has crossed to 18,000 kilometers. Calendar year 2026 will be an important year for project commissioning with several major pipelines scheduled to come on stream like Mumbai-Nagpur-Jharsuguda, that is the remaining portion I'm talking about. The Jagdishpur-Haldia project, KKMBPL Phase-2, Gurdaspur-Jammu pipeline. Together, these projects will significantly enhance reach, reliability and regional balance in national gas grid. GAIL is also actively considering participating in bidding for new petroleum and petroleum product pipeline, largely LPG pipeline, petrochemicals project. As regards to petrochemical project, this calendar year will be an important from petrochemical project point of view as well. Major projects such as GAIL's 1250 KTA PTA plant at GMPL, Mangalore, 500 KTA PDH to be plant at Usar is scheduled to be commissioned during this calendar year and 60 KTA PP plant at Pata is very advanced stage of commissioning, may be commissioned in a day or so. CapEx for quarter 3 financial year '26. During the quarter, a CapEx of INR 2,186 crores was incurred out of which INR 804 crores was incurred on pipeline, INR 455 crores was incurred [Technical Difficulty] operational CapEx and other was INR 620 crores and rest was on CGD, E&P, renewable, equity contribution, et cetera. I will also take you through the segment-wise outlook for short to medium term. The PBT from gas marketing during the quarter stood at INR 779 crores. The PBT from gas marketing during the 9-year stood at INR 3,000 crores. We are expecting to achieve marketing margin from [Technical Difficulty] from Gas Marketing segment in financial year '26. In Gas Transmission segment quarter 3 financial year '26, average transmission volume improved to 125.45 MMSCMD as compared to 123.59 MMSCMD during Q2 financial year '26. Further, the volume during the month of December '25 stood at 128.65 MMSCMD. This reflects that there is now a recovery phase or there is a growth in transmission business after we have seen the quarter 1, which was not to our expectations. Further, the volume during the month of December 2025 stood -- sorry, I already covered, stood at 128.65 MMSCMD, signifying the return of volume to normal levels. Average transmission volume of 9 months financial year '26 stood at 123.23 MMSCMD. The recovery in gas transmission volume is primarily on account of elevated consumptions by fertilizer, refinery and CGD sectors and resumption of gas supply to -- on 2 sections after completion of repair job, which had got disrupted during Q2 financial year '26 due to extreme monsoon and flash floods in North India. We are hopeful of achieving our gas transmission guidance of 124 to 125 MMSCMD for financial year '25-'26. Polymer production stood at 219 TMT as against 220 TMT in previous quarter. There is a loss of INR 483 crores during quarter 3 financial year '26 due to increase in input gas, cost-rupee depreciation and decline in polymer prices. This segment is likely to be at similar level for remaining part of this financial year. However, likely softening of input gas prices, various measures being taken for cost optimization and improvement of efficiency may lead to improvement in performance of this segment in coming year. LHC production stood at 199 TMT during Q3 financial year '26 as against 221 metric tonne in previous quarter with a PBT of INR 29 crores. The PBT for LHC segment has been hit by drop in prices on account of low crude prices, coupled with reduction in allocation of new well gas from 0.32 MMSCMD to 0.2 MMSCMD. The management is actively engaging with the ministry for more allocation of domestic gas. In addition to above operational and financial performance, I would also like to highlight the progress of Project Sanchay-2, our flagship project, which is focused on maximizing profitability across core business segments through targeted improvements enabled by advanced data analytics. Phase 1 of project has been successfully completed with 30 approved use cases with an expected benefit of more than INR 600 crores on net present value basis during -- coming 5 years. This is after net of CapEx, which we are going to incur around INR 146 crores. In addition to monetary benefits, Sanchay-2 is also helping build internal capabilities. GAIL is establishing a center of excellence comprising existing Sanchay-2 team members and further strengthening a team so that analytics, optimization and value creation become embedded in the way GAIL operates across all business units. That's all from my side regarding the overview of performance and projects. Now the management is available -- management of company is available, and we will be glad to address any queries that you may have. Over to you, Probal.

Thank you, sir. Operator, can we start the Q&A?

[Operator Instructions] The first question is from the line of Vivekanand from Ambit.

I have 2 questions. The first 1 is on the transmission business. How do you see the volume ramp-up for FY '27 and '28. And what do you think the global gas supply dynamics are looking like when it comes to these assumptions of gas demand? That's question one. The second question I'll ask after you answer this one.

Thank you. With respect to volume ramp-up in financial year '26, we have been giving guidance time-to-time. And in terms of our guidance, we are expecting at least 134 to 135 MMSCMD of volume in coming financial year. We will end this financial year, in fact, around 124 to 125 MMSCMD, and we are expecting at least 10 million volume, which anyway should have been available this year because there were various factors because of which we could not achieve that. So in order to give even further details of that, almost 4 million volume we are expecting to come from natural growth of CGD. And then we lost power volume this year. Almost 2 million volume of power we lost, we expect that to come back. We expect that to come back. And with new refineries, volume and old refineries, the 3 million volumes will come from there. But neither we have seen disruptions during the year that is likely to come up. So even if that volume, which we lost during this year, including the CGD growth of 4 million to 5 million, we expect to reach 134 to 135 MMSCMD in financial year '27. Regarding global gas supply, the global gas supply is abundantly available from coming financial years. As you know, a lot of capacities are coming on stream, and that is helping the price to go down. We expect those price to soften. In fact, we have a lot of offers available at a very, very competitive price. And therefore, that will also increase the boost of gas consumption in our price-sensitive market.

Okay. Just 1 follow-up or additional question on the new gas contracts that you're signing. Are these contracts primarily Brent-linked or do you have a mix of baskets to link the price to?

Actually, when we source the volume, we have 2, 3 things in our mind. One, that it should be cheapest available volume to our country because you know that ours is a price sensitive market. We do not go based on any geography or any index. So we are evaluating those offers, which we are discussing. But currently, we are feeling that Brent-linked contracts are, because this is all dynamics. Brent-linked contracts are more competitive as compared to Henry Hub linked contract. And therefore, as a portfolio player, we always want to keep a mix of Brent-linked and Henry Hub. So we are looking immediate basis on Brent-linked contract. We are, of course, also discussing Henry Hub, but we feel that the Brent-linked contract may be available at a competitive rate as compared to Henry Hub during current market, I'm telling you because I'm not telling that we will not go for Henry Hub, it's a dynamic situation.

Right. That really helps. Last question is the current portfolio that you have of long-term sourcing, which is around 17 million metric ton, where do you want to take this to, let's say, in the next couple of years?

We have stated a statement about this. By 2030, at least, I'm using the word at least, we want to increase our portfolio to around 6 to 7 MMTPA more from current level. So -- though demand in the country will be significantly more, at least 22, 23 MMTPA we want to increase the portfolio. And when we see that more demand is coming, which is likely to come, we'll further take a call.

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

Sir, you talked about this 6 to 7 MMTPA additional LNG by 2030, when should one think that you'll start contracting these?

We will grow progressively. We are already in the market for sourcing of at least 12 cargo per annum. We are already in the market. We are having discussions with various suppliers. So such a huge volume, you cannot expect or we also do not intend to contract in one go. So progressively, we are going because we are also seeing what kind of index, what kind of supplier, what kind of flexibility is available. So progressively, we will reach to [ 22, 23, ] that is we will be adding 6 to 7.

And are you seeing early signs of price correction coming in? Or are you still waiting for the glut to really start coming and then price will see?

Actually, we believe that the -- already the competitive offers are available. So -- because when we are talking of this contracting, it is not from '26. We are talking of '27, '28. For that, the suppliers are ready to offer the competitive price. So we do not expect that the price will further crash. Of course, you cannot predict anything in oil and gas business, but still based on our analysis that the offers currently available are quite competitive, and therefore, we have really interest in going ahead.

Understood. And if you can also talk when do you think the tariff review will happen? PNGRB said 1st April 2028. Do you see a scenario where it can happen earlier?

I want to spend good time on this subject. Actually, our last tariff revision has happened from 1st April 2023. And in normal course, tariff revision, if you go law of the land, that is regulations, our -- naturally the tariff revision was due in April 2028. But when April '23, the tariff was revised, PNGRB had done moderations of around INR 10 per MMBtu largely on 2 accounts. One, on consideration of system use gas at $3.61 per MMBtu and capacity on a provisional basis. And you know that $3.61 per MMBtu was not even a domestic price. That actually -- because of that, we filed an appeal with the regulator to consider that. But the appeal was taking time because of some issues, and we were asked by PNGRB filed tariff -- regular tariff. So whenever you file the regular tariff, you file everything. So we filed everything and accordingly, our submissions in August '24 was giving us a tariff of INR 78. But when PNGRB approved the tariff, they approved INR 65.69. In fact, they only -- 2 parameters which we -- for which we went for appeal. But we believe that normally interim tariff concept is not there. So we again filed an appeal of INR 15 -- now it has become INR 15. So -- but while even doing interim relief, we believe that 2 parameters should have been considered differently than what PNGRB had done. They considered higher volume but did not give the transmission loss on higher volume. There is a regulation that if you transport the volume, you have 75% of capacity, 50% of the revenue the transporter can retain and 50% can be passed on. So PNGRB had considered a higher volume, but that has not been given. We feel apparently these are mistakes apart from other parameters. So we filed an appeal with the PNGRB, we are positive and we believe that, that appeal will be considered. But otherwise, -- the tariff was due in April '28, and they have not said anything that will be cut or this will be cut, they have considered, they have told in the order that will be considered in '28. So if it is considered in '28, about INR 15 you were asking will become INR 17 like a fixed deposit in a bank with a 15% pre-tax return.

Okay. Understood. And lastly, if you can just talk the depreciation of higher...

Sorry to interrupt you, sir. May we request you to come for a follow-up?

Yes, sure.

[Operator Instructions] The next question is from the line of Somaiah from Avendus Spark.

Sir, first question is on the fertilizer project that we plan. If you could just help us with -- in terms of -- in case if we start to invest, what will be the time line? And what is your thought on this CapEx of INR 20,000 crores. How do you compare with the brownfield? So are we -- we have an expansion option on this plus also what is the project return that we are looking at? Time lines, cash flows and project return these 3 things, if you could help us.

So we expect a time line of 3 years from the date Board approves this proposal. Principally, it is approved, but it is subject to policy on energy and the subsidies by government. So we are working on that. And regarding the returns, it's an assured return. If it is in terms of the policy guidelines of fertilizer, so it will be an assured return. That is not a concern for us. And cash flow, since it is a 3 years project, so in the 3 years, the cash flow will come maybe initial 1 year, maybe 10%, 20%, then 50%, 60% and remaining like as cash flow will happen.

So there is a capital grant of subsidy angle to this, which at a later point will...

No capital grant. No capital grant. In the subsidy, which is available to fertilizer plants.

Okay. Understood.

Fertilizer plant subsidy means the production subsidy. The -- after production, because this fertilizer is sold at a price notified and the producer gets the differential.

Understood, sir. But based on the current prevailing economics, so what do we think of -- as the project IRR for this -- what is the project IRR of this?

There is 12% equity IRR.

Okay. Got it. Sir, second question is on the marketing side. So one, in the month of Jan, Henry Hub has been quite volatile. It has spiked almost to $6, $7. How do we see this impacting us in the near term? That's the first part. Second part, sorry, I missed your initial remarks on the marketing guidance outlook. And also in the presentation, in terms of the overseas sales, this number has moved to close to 12 MMSCMD for the 9 months FY '26, which was 6, 7 MMSCMD. I mean earlier, it looked like the international volumes will continue to decline and they will be diverted to the domestic market, but the last 3 months it has gone up. If you could just clarify on this?

So marketing guidance we have been giving time-to-time. Initially, even in the year beginning, we gave INR 4,000 crores of marketing margin, we will be able to earn. But seeing the Q2 performance, we were expecting somewhere INR 4,000 to INR 4,500. But the question you raised regarding volatility, so we still maintain that we will be somewhere INR 4,000 plus of marketing margin. That's the guidance. And second question was...

Sorry, one clarification here, sir, when we say INR 4,000 crores, this is -- you're referring to FY '26 this financial year or FY '27?

This is financial year. I'm talking of this financial year.

So for FY '27, earlier, I mean we can expect a similar run rate or will be guiding at a later point?

We have been giving this guidance for '26 also. '27 also, we are not saying that we'll be having any different number than that. Because our volumes are the same, the marketing kind of the challenges are the same. So we expect next year also we earn INR 4,000 crores of marketing margin.

The second part was on the overseas sales increasing versus last 9 months this year? Well, am I missing anything?

My colleague, Mr. Satish Sinha will now our respond.

Basically, during the current year, we have taken various optimization measures. So earlier, we used to have [ discussions ] now we are doing for this basis. So due to this overseas supply has increased -- overseas sales has increased.

The next question is from the line of Amit from Axis Capital.

On petchem input gas cost, could you tell us what was the number in Q3?

Just hold on.

$11.21 -- $11.2 per MMBtu as against $10.49 in the previous quarter.

In Q2. Okay. And last year, if you have the same number for last year?

Last year, it was $9.45.

Okay. Okay. And with Henry Hub still being higher than last quarter. So this number should go up more in Q4?

Yes, you are right, with Henry have it gone higher, but we are talking with respect to 1 month settlement, that is January, right? So January -- after January, February has softened, if you see the current market of HH. March is still there because January, normally, we have seen because of the severe winter, it goes high. So February and March, we do not see any challenge. January, yes, there is a challenge. So we have a lot of options. What's the risk mitigation measure by marketing in an international market, so -- or doing some optimization measures. So we are working out it. But on the face of it, what you are thinking may be correct because today, it has gone up. So part of that, certainly, we have to bear the cost.

All right. And entire feedstock would be Henry Hub-linked energy or is there any other gas in the mix?

Not necessarily Henry Hub. Henry Hub is quite -- yes, significant amount is Henry Hub also, but we are supplying Brent and also the available spot prices, whatever -- because we have a lot of volumes available. So we see whatever possible we supply to Pata plant, but it's not necessarily Henry Hub -- largely, yes, Henry Hub, but not necessarily everything is Henry Hub.

Understood. Is it fair to say that you will continue to run the plant at 100% utilization, even like if LNG is staying high, or would you look to kind of curtail that as well?

So I will come back to again. February and March, we don't see any challenge. January prices settled. For February, yes, there is a challenge. December price settled for January, there was no challenge. It was $4.69 per MMBtu. So now coming back to your question, whether we will run 100%, now we are in the fag end of the financial year. So if you stop for a month or 2, it actually impacts the energy efficiency. And it also impacts the customer sentiment. So for a smaller period of month or so, we do not take a call for shutting down. This happens in business, cyclical business, certainly impact. But second positive thing has happened in last 1 month, the prices of polymer has gone up. This month, it has gone up by INR 2.50 per -- INR 2,400 per metric ton and before that, INR 1,000 per metric ton. INR 3,500 per metric ton price has also gone up, where once -- one way the input cost has gone up, yes, another side, that price of polymer has also increased.

Understood. Understood. And earlier, you had mentioned they were also thinking of diversifying into ethane. Any progress there?

We have not said that we are diversifying in ethane. What we are thinking -- because this is the only gas-based plant in North India. What we are working on to optimize or take various cost optimization measures to make this plant profitable on a sustainable basis, even at this price. So what we are doing, first optimization measure we have taken, we are putting one pipeline carrying C2/C3 from our Vijaipur plant to Pata. But currently, what we are doing, we are extracting C2/C3 at Vijaipur mixing in natural gas pipeline, we are expecting it. During this process, we lost 10% energy. So that one optimization measure we have already taken and this pipeline will be completed in 1, 1.5 years from now. Second, what we are working on it is quite under consideration that we lay a dedicated ethane pipeline for any of the projects and actually source ethane. Instead of using gas, we actually directly use ethane. Ethane, it has been seen that is cheaper than gas and it will give 20%, 25% more yield as compared to gas. And if we are able to do that for which we are working, this plant will become [Technical Difficulty] even at the current level of prices, whereas the price of polymer, if you see in '29 onwards, any forecast is for thing will go significantly high because today, the capacities are higher and demand is less, the situation is going to be reversed in coming 3 years.

Sure. And just a last question on the LPG and liquid hydrocarbons business. So the volume has been curtailed in this quarter, I believe, because of the APM reduction. So is this a normal run rate now, the 200 kt volume?

I think so. Right now, we are having a non-APM gas allocation around 1.12 MMSCMD and new field gas around 0.2 MMSCMD. So total gas availability for the LHC segment is around 1.32 MMSCMD. So our production will be around 2 lakhs per quarter.

The next question is from the line of Varatharajan from Antique Limited.

When you -- in your opening remarks, you highlighted that the Henry Hub price movement is adverse. Is it only adverse from the point of view of use as a feedstock in petrochem? Or has there been some kind of an impact on the trading side as well?

So first question, yes, it will certainly impact to some extent on the petrochemical project because the January price settled at higher. With respect to the natural gas marketing, we have some open volume. We have been telling that we source 21 MMSCMD from United States, almost 3 MMSCMD we have kept open. Second, there are certain take-or-pay contracts where we have signed 60%, 70% take-or-pay. So if Henry Hub prices goes higher and becomes uncompetitive as compared to the crude-linked contract, there is a consumer behavior that they restrict themselves to take-or-pay or around that level. That certainly put us in a situation to market that volume at a prevailing price. And certainly, the open volume also some time provides us arbitrage of differently -- different indexes costlier. So yes, it may, to some extent, impact us, but our guidance with respect to marketing margin, we have been maintaining of INR 4,000 crores, factoring in all likely situation or whatever is prevailing currently.

Understood. Sir, in that case, like would you be in a position to give us some kind of a split in terms of volume with regard to this oil-linked selling contract?

Can you come again?

So you were mentioning like some oil-linked contract take-or-pay is there because of which we have to curtail. So that particular volume in terms of how much of volume out of that U.S. contract is actually oil-linked that we are facing?

No, no, I have not said so. What I have said, we have 21 MMSCMD of volume we source from United States. 3 million volume we have kept open. That means it is not back-to-back basis. That is index, Henry Hub and market. So that is the only challenge what we are telling. And some customers' behavior, if the prices change the other way, they restrict themselves take-or-pay and source from other players. So that happens regularly.

Just to clarify. So the remaining 18 are all like back-to-back contracts with gas-linked contracts...

Majority is on back-to-back and some volume, we take swaps. So that's how we make it back-to-back. That is swaps crude versus Henry Hub.

Fair enough, sir. And my second question was on the CapEx cost of all these projects. Is there any project where we are seeing an escalation in the CapEx cost?

So, since most of our current projects are almost at the verge of completion and their cost has become almost kind of certain -- [indiscernible] INR 11,258 crores is almost -- we'll be completing that project within that cost. PP is already under commissioning, no likely. Mumbai-Nagur-Jharsuguda, except for some portion, we are almost complete. Srikakulam-Angul pipeline, we are completing Gurdaspur. So nothing -- because these projects are at a very significantly advanced stage of completion, and we have visibility that there is unlikely of cost escalation, except Jagdishpur-Haldia, which may see some cost escalation, not any other projects.

Minor escalation...

Minor, that's what I'm telling.

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

Two questions. Firstly, you mentioned on the Henry Hub price, which is your price. For January, you said it was $4.69 right?

January supply price. Actually, applicable price for January is price settled in December, right? So price settled in December is $4.69, which is applicable for January supply. The price settled for the January, $7.46 which is applicable for current month, that is February.

So that has gone up significantly. So that will have an impact on the petchem, right?

Yes. Yes. I admitted that. But we will take some optimization measures, can we market it instead of bringing that gas to this market, can we market it to Europe where prices are good or then we source some spot or some crude-linked contract, gas or available in our portfolio supply. So those optimization measures will take. But on face of it, it has gone up.

And a small follow-up to this, this INR 4,000 crores is -- when you say INR 4,000 crores, you mean the EBIT, right?

I mean PBT.

You mean PBT, right? So Q3, what was the PBT then? I mean, EBIT was INR 4,000 crores, but I think below EBIT...

So you reduce INR 769 crores from INR 3,000 crores, around INR 2,231 crores for half year, first half.

Okay. INR 2,231 crores was the PBT for half year versus that you are expecting INR 4,000 crores plus for the full year, right?

Yes, yes. Actually, something -- some events are taking place because of geopolitical situation. Has anybody envisaged that the exchange rate will touch to INR 92? So these factors are also making us to calibrate, but we still maintain INR 4,000 crores.

Right, sir. Sir, and second question is on your ethane sourcing. So you will set up another -- I think right now, you are setting up Vijaipur, Pata, but if you were to import ethane from U.S. and also you have to set up another pipeline, which will be set up somewhere in the Hazira-Dahej belt. Is that right?

So maybe Hazira, maybe the Dahej, maybe Dabhol to Vijaipur, we have all the options available. Because we have our own terminal as well. We are expanding the capacity of Dabhol from current level of 5 MMTPA to 6.3 MMTPA already sanctioned, and we have planned to gradually increase to 12-12.5 MMTPA. So we have all the options available, and we are working on that, which terminal we should plan for bringing ethane and utilize, because anybody will prefer that you should utilize your own terminal.

The next question is from the line of Pratyush Kamal from InCred Equities.

I have 2 questions. First is regarding your sourcing. So since you have mentioned it a couple of times that you source about 15.5 million tonne of contracts. So can I get the bifurcation of the contracts like what kind of volumes are you getting from RasGas? What kind of volumes are getting from Exxon, Chevron, et cetera? So that's the first question. And once you answer it, I'll go to the second question which I have in my mind.

So we have 16.53 MMTPA of contracts existing. Out of that, we have 5.8 million tonnes from United States on Henry Hub and 0.75 million from Middle East on Henry Hub. That makes 6.55 million tonnes, right? Then 4.5 million tonnes from again, RasGas on crude-linked, approximately 3 million tonnes again from one of the marketing company, [ SAFAY ] on crude-linked, 0.42 million tonnes again on crude-linked from -- through PLL. And we have signed one more contract from Vitol for 1 million tonne, that is crude-linked and ADNOC another 0.53 million tonne of crude-linked.

Got it, sir. Got it, sir. Sir, second question is regarding the downstream players, the fertilizer, the CGD players and other players whom you actually give the gas. So I wanted to ask regarding the marketing margins of the contracts because in the last quarterly call, you mentioned about there's a 7.8 million tonne of contract in which you have a better sort of fixed margin and which is majorly sold to fertilizer players. So does it involve that CGD companies also and this 7.8 million tonne is something which you majorly get from the RasGas? Is it something which I'm understanding correct? So that is the one point. And second is what's the typical marketing for the other 7.2 million contract in which you do not have a typical fixed kind of margin, which is there in the 7.8 million?

Actually, it's not RasGas, we are getting 7.5 or 7.8, only we are getting 4.8 as of now. At least holding 7.5 on Henry Hub. That is one question. Second, largely our volume, I have said 3 MMSCMD, you can say 0.75 MMTPA or maybe 0.8 MMTPA is open. All other volumes we have marketed either back-to-back or if not back-to-back, we are taking swaps for mitigating risk time-to-time. And when we have marketed these volumes on back-to-back or through swap, there is a fixed margin. Now fixed margin varies from contract to contract and period of contract. So that's the overall scenario. Somewhere you get maybe $1 margin or somewhere you get $0.20 margin or somewhere you get $0.10 margin, that varies from the time we market it, that varies to who we market it and that varies also based on how much volume we market it. So largely, you can consider that out of total volume, we have marketed largely on a back-to-back basis, except maybe 0.8 or 0.9.

Got it, sir. Got it, sir. And sir, over and above this, largely the back-to-back contract, you also get margins on the [ APMM, ] the STPT, right? Definitely, I think it's capped according to the government of INR 200 per 1,000 SCM, something like that. So this was regarding the RLNG part, but not about the domestic front. In domestic front, also you get some marketing margins on getting contracts through APM or STPT. Am I understanding it correct? But there is a margin which has been kept by government end about INR 200 per 1,000 SCM. Is it something like that? For the domestic gas?

Actually ther are 2 -- domestic gas also has 2 parts. One is APM gas where the margin is INR 200 for 1000 SCMs. Another is MDP gas, where marketing margin is around the line of RLNG.

The next question is from the line of Nitin Tiwari from PhillipCapital India Limited.

My question is also on the gas marketing business. So can you also help us with the guidance for volume for gas marketing in FY '27. I suppose the contract with Vitol is supposed to start in '27, right? FY '27, I mean.

It has started in '26.

It has started. So what is the volume guidance for marketing sir?

Sorry? So volume guidance, we expect actually 5% increase. We have been maintaining that 5% to 6% increase in the volume. So if we end up this year, 104, 105 because the year is to be end, so maybe 109, 110 MMSCMD on a normative basis, we should achieve.

So sir, my question is then -- I mean, incremental question is linked to that only. So if you are targeting higher volume in FY '27, so are we expecting a contraction in margin, especially in the backdrop of what you earlier commented that now crude-linked contracts are turning out to be more favorable than HH. So are we expecting any challenges with respect to marketing of HH contracts? That's why we are...

Nitin, considering those challenges, I have not revised my marketing guidance. I have maintained to INR 4,000 crores in spite of increasing volume by 5 MMSCMD.

Yes. So your volume is going up, but your PBT guidance remains the same, which tells me that like we are expecting a margin contraction. Is that the right assessment?

Yes, yes. We are not expecting, but I cannot give you a guidance, which actually may face some challenges. Like this year, in the beginning, who would have envisaged that situation will happen like this. Still we are maintaining the guidance we have given in earlier -- in the beginning of the year, that is INR 4,000 crores. So I -- whenever we give guidance, then we should give guidance, which is in even conservative or difficult scenario you are able to achieve, right? So we expect more, we expect more but let that to come actually. We want to give you something which is certain based on today's assumptions.

Understood. Fair enough. And sir, my second question was with respect to the petrochemical business. So thanks for helping us with the gas cost. I just wanted to understand the operating cost. If you can give us any ballpark number around what could be an operating cost -- operating cash cost, excluding depreciation on a per tonne basis that we can like I mean -- to help us understand that, like how that number is moving?

Basically in the process plant, particularly in the petrochemicals, we have around 70% to 75% as a gas cost. Rest is the other cost, which includes repairs and maintenance, employee cost and stores and spares and other costs. So you can consider...

Sir, the 75% number that you are saying would change when the gas cost changes, right? So I just wanted to understand a ballpark for say, operating cost per tonne that we can like consider for our understanding.

You can calculate whatever we have published figure for the petrochemical segment. So we are reporting separately for the petrochemicals, there will be another segment. So you can calculate easily from the published figure.

The next question is from the line of Bineet from Nomura.

One question on the petchem side. So I think ONGC has already announced charter contract for a couple of ethane carriers, and they also have an agreement with Petronet LNG for ethane handling. So -- and given that the Qatar gas will not be rich gas from 2028 onwards, so what is your plan in terms of sourcing gas for your ethane track? And where do you want to -- I mean, will you be using the Petronet's Dahej terminal for handling ethane or you'll be adding this capability in your Dabhol terminal?

Actually, this question I have clarified in detail that first, we are working on ethane sourcing. We are already in the midst of an laying a line from Vijaipur to Pata, which can carry ethane. We are also evaluating for putting up a pipeline up steam to Vijaipur. And for that, we have 3 terminals at least in West Coast in our mind, that is Hazira, Dahej and Dabhol. Dabhol being our own terminal, subject to viability, we will prefer to bring ethane at our own terminal.

Okay, sir. And given the current margins for petchem and the margins in next quarter will be probably worse than what you reported in the third quarter because of higher Henry Hub prices. So is it not better to just stop operating the cracker probably in the fourth quarter because you're making losses even at the EBITDA level?

Actually, we could have done it, but mind it, there are 2 consequence of stopping the plant for a very small period. Because anyway, we are expecting next year onwards, the prices are going to be soften. There we have those offers available. If we stop the plant for a period of, say, 1 or 2 months, actually, it hurts 2 ways. One, the energy efficiency or the minimum energy required to maintain the plant in preservative condition that we have to incur. Second, the customer sentiment. You see a lot of customers have signed the contract or MOUs with us. If we stop the plant in between, we will lose these customers and they will go to our competitors. So we cannot fly by night player like now we are losing, we stop it, now we are earning, we start it. So on a longer-term basis, we do not believe that this plant is going to incur losses. Last year, we were at a breakeven level. This year, unfortunately, to reverse thing happened, prices went down and the input has gone up. Next year, we are not expecting such situation to be repeated.

Okay, sir. Understood. Sir, last question, on the housekeeping question. So your staff cost is down significantly. I think its lowest in many, many years. So what was causing this very low staff cost in third quarter?

Yes, sir. Basically, during the last year, we provided PRP at 100%. Basically during the current year, no incremental leisure for the current year. So we have reduced our PRP provision.

And there is no impact of labor code in this number, right?

No, no. Right now, no.

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

Just a question around CapEx now. Considering your petrochemical projects are getting completed this year, and if you can give us a time line of when they kind of start up on each of them, how much are you thinking about CapEx for fiscal '27?

So we expect to have -- subject to addition of new projects, which I'm not factoring in, we expect to incur INR 9,000 crores to INR 10,000 crores of CapEx in financial year '27. We have 2, 3 pipelines, which are under construction. Those CapEx will come up like Vijaipur-Auraiya C2/C3 pipeline, Gurdaspur-Jammu pipeline, completion of KKMBPL and Jagdishpur-Haldia pipeline and the spur lines of SAPL. Second, we have also approved in Board the doubling the capacity of our Jamnagar-Loni pipeline. Until now, this segment appears to be very small segment, but by doubling, it will appear to be a very lucrative segment. So that will also involve the CapEx of INR 5,400 crores. So a large part of CapEx will be on pipeline in '27 and even in '28. And then we also have net zero plan, INR 35,000 crores we have planned to incur in a period of 10 years, and we are evaluating various projects like I narrated during the opening remarks that almost 700 megawatt of -- 700-plus megawatts of renewable energy projects we have in hand. We are working on it. And we are doing it on purely commercial analysis basis to replace our internal uses of power, which we are purchasing. So around INR 2,000 crores to INR 3,000 crores of CapEx will come from that side. And then maybe remaining CapEx, which project we are completing during this year will be there from petrochemical and GMPL. And then equity and CGD projects, which we are doing, LNG projects, which we are doing, CBG projects, which we are doing may involve INR 800 crores to INR 1,000 crores of CapEx. This is how we'll reach to INR 9,000 crores to INR 10,000 crores of CapEx, including equity.

Got it. So very clear, sir, the time line on the completion of the petrochemical plants this year, like when are you thinking which starts of PTA, Mangalore, PP, PDH, like when do they start up now from your time line perspective?

PTA will start during this financial year. We are very hopeful that it will be commissioned during this financial year. PP, which we are putting at Pata 60 KTA will be commissioned in a day or two. PDH-PP Usar, we expect to complete during this calendar year. That is delayed. As planned, we could not complete. But by calendar year-end, we expect it to complete.

The next question is from the line of Saurabh from Citi Group.

Sir, you had mentioned that for the tariff hike benefit, which is 12%, and the earnings benefit you're looking at is around INR 1,200 crores. Now this is what you had announced when the -- this was before the zonal tariff for shipment. Now based on the zonal tariffs, it looks like the benefit could be slightly higher than that. So are you still maintaining a 12% number? Or could you just quantify in terms of realized benefit? It could be...

Actually, we maintain 12% because this zonal distribution is subject to our risk and reward. It may be 14%, it may be 11%. So we maintain an average number of 12%.

Sure, sir. And just a last question on CapEx with all your pipelines likely to get commissioned over the next two -- I think, between March and June. How much should we look at in terms of what you will be capitalizing and the implications for depreciation?

During the current quarter, I have capitalized around INR 5,200 crores. So only balance portion of Srikakulam-Angul spur line around 300 kilometer and some portion of Jagdishpur-Haldia from Kolkata to Haldia and Dhamra to Haldia, this will be capitalized by June. And some portion of Mumbai-Nagpur-Jharsuguda, mainly Nagpur to Jabalpur and in the Maharashtra region. So this pipeline will be capitalized. And in the -- by June '26, Gurdaspur-Jammu pipeline will also capitalize. So the CapEx is around INR 500 crores. So these are the CapEx, which we will capitalize during the coming years.

Sir, and how much would this amount be if you just exclude the Gurdaspur-Jammu pipeline, is that another INR 4,000 crore to INR 5,000 crores of capitalization?

Around INR 2,500 crores to INR 3,000 crores.

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

I have 2 of them. Firstly, this staff cost, you said that there was some adjustment because you had made a higher provision earlier. So going ahead, what would be the annual or quarterly run rate that one should look at, say, from FY '27 or so? What will be the annual staff cost run rate that we should be looking at?

Vikash ji, [Foreign Language] that is linked to incremental profit. So as compared to last year, this year, we are not expecting any incremental profit. So therefore, the -- on account of incentive that has gone down. Now your question, how much you should factor in. This year, we are clear. But next year, certainly, we expect that if we are not having incremental profit, certainly, we will have next year because our base is going down. So next year, you can consider the staff cost at the level of previous year.

You add INR 100 crores around -- you can add INR 100 crores on the incremental profit on account of [indiscernible].

Okay. Understood. Understood, sir. Rakesh ji, just one more thing. So this revision of tariff -- revision of tariff that we've filed for. If it does not get a look through sometime in the next 12 months or so, then automatically, they will -- PNGRB will be like -- you are anyways going to get it from April 28. Is that how we should look at it? And I mean how is the process? So once you submit it, then it is -- do they have a time line within which they need to respond or...

Vikash ji, there is no time line for regulator. That is a fact. So at our part, we have filed the petition at our part, we will follow for that. But the concern amount time line remains.

And finally, I think just to kind of recap what you were just saying to the earlier participant was -- so INR 5,400 crores is the capitalization in this particular financial year for pipelines. And how much was -- is it likely to be in FY '27?

I think Sinha ji will respond. Vikas ji, I think this is not readily available, let us give you the right answer. Give us maybe half an hour, he will come back to you, Sinha ji will come back to you.

Thank you, sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.

Thank you, dear participants. It was always -- or it is always good to interact with you. I know you may have some more questions which you might not -- or you could not have asked because of the time constraint or there was some one question of Vikas we could not respond immediately. We appreciate your participation, and we will be answering you the questions you could not ask or we could not respond, offline and look forward to interact with you regularly. Thank you very much.

Thank you sir. On behalf of ICICI Securities Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

Thank you, everyone.

Thank you.