Mahanagar Gas Limited (MGL) Earnings Call Transcript & Summary

[Audio Gap] [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vivekanand from AMBIT Capital. And over to you, sir.

Good evening, everyone. On behalf of AMBIT Capital, I welcome all the participants to this conference call today. We have with us the senior leadership team of Mahanagar Gas Limited, Mr. Sanjib Datta, Managing Director; Mr. Sanjay Shande, Deputy Managing Director; and Mr. S.M. Ranade, Chief Financial Officer. We will start the call with a brief overview of the company's performance for 4Q FY '21, and then we can switch over to the Q&A. But before we start the proceedings, I'll hand over to Jill for the disclaimer. Thank you.

Thank you, Vivekanand, and good evening, everyone. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature, and we believe that expectations contained in the statement are reasonable. However, the nature involves a number of risks and uncertainties that may lead to different results. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in sales volumes, fluctuations in foreign exchange, other costs and our ability to manage growth. I urge you to consider that quarterly numbers are not a reflection of long-term trends or an indication of full year results, and they should not be attempted to be extrapolated or interpolated into full year numbers. With this, I'll hand it over to Mr. Datta for his opening comments. Over to you, sir.

Thank you, Jill. Good afternoon to all of you, and welcome to the earnings conference call of Mahanagar Gas Limited for the fourth quarter of the financial year 2020/2021. I would like to thank all of you who have connected for our earnings call today. The outbreak of COVID-19 pandemic in 2020 and its second wave in April 2021 have resulted in significant disturbances and slowdown of economic activity. The company's operations have also been impacted due to lockdown implemented by the states and our central governments in view of COVID-19. This has resulted in reduction of sales volume across all segments, except domestic PNG, where it is used mainly for cooking. Impact of pandemic is still not over, and as we overcome the health and economic crisis of very large proportion, let us hope that things get back to complete normalcy at the earliest. During the full and partial lockdowns, gas supplies to all our PNG customers and to the CNG stations have remained operational 24x7. Our emergency control room and customer care services have also remained operational for meeting all emergency needs and for ensuring customer support, while adhering to the required safety and social distancing guidelines. Coming to MGL's operations, I may mention that we are rapidly expanding our CGD network in the existing license areas. During the quarter, 54,688 domestic households were connected. Thus, we have established connectivity for nearly 1.6 million households. We have laid 165.69 kilometers of steel and PE pipelines, thereby taking the aggregated pipeline length to over 5,916 kilometers. We have added 6 new CNG stations. And with these, we currently have 271 stations. We also added 99 industrial and commercial consumers. And thus, as on quarter end, we have 4,192 industrial and commercial customers. In respect of our Raigarh GA, we are connected to 40,288 domestic households, and 19 CNG stations are operational. CNG sales in Raigarh has dropped the average level of 52,000 kgs per day in the month of March 2021, despite movement restrictions. It is expected to go up when more -- when some more CNG stations become operational in coming months. In Raigarh GA, we have laid 68.53 kilometers of pipeline during the quarter, thereby taking the total length of pipeline to 260.87 kilometers. In Raigarh GA, we have installed a district regulating station, or DRS, in Ulwe area and have established steel pipeline network from Belapur in GA-2 to Ulwe area, while completing major horizontal directional drilling, or HDD, crossings of Belapur Creek and Killa Junction. The downstream network of 11 kilometers will be charged after the commissioning of Ulwe DRS, which will cater to a potential of about 19,000 domestic customers in Ulwe area. Further, MGL has installed a DRS in Indiabull projects wherein about 3,000 domestic customers will be charged immediately after establishing connectivity of Roha-Panvel railway line crossing at Panvel, which is expected by January '22. Further, work is in progress to execute major crossing through HDD contracts along NH 4 to establish steel pipeline connectivity from Panvel to Khalapur. After establishing this pipeline network connectivity, we will be in a position to charge a network length of about 18 kilometers from Panvel to Khalapur along the NH 4, which will cater new -- cater to new and existing CNG stations. In FY 2021, 2022, we have plans to lay about 25 kilometers of steel lines and 14 kilometer of MDP network to achieve our GA-3's balanced minimum work program target of 399 inch kilometers. Of the 25 kilometers planned steel line, permission of 21 kilometers is available. And for the rest of the pipeline, permissions are already under process. At Sagroli, work on our first City Gate Station, or CGS, for GA-3 is in progress, and we are also planning to commission the first LNG dispensing station of MGL at Sagroli in the current financial year. Process of procurement of land for a second City Gate Station at Usargar is also in progress. During the quarter, we achieved overall average sales volume of 2.892 mmscmd, consisting of CNG volume of 2.024 mmscmd, domestic PNG volume of 0.457 mmscmd, while 0.411 mmscmd of gas was supplied to the industrial and commercial segments. There is an increase of 4% in overall sales volume compared to previous quarter. In case of CNG, sales volume increased from 1.883 mmscmd to 2.024 mmscmd, which is an increase of 7%. In case of domestic sales, volume has decreased from 0.509 mmscmd to 0.457 mmscmd, which is a decrease by 10%, while in case of industrial and commercial segments, sales volume has increased from 0.378 mmscmd to 0.411 mmscmd, an increase of 9% compared to the previous quarter. Current quarter EBITDA is INR 316.16 crore compared to previous quarter EBITDA of INR 316.72 crore. EBITDA margin is at 44% for Q4 compared to previous quarter EBITDA margin of 47.5%. Net profit after tax is INR 213 crore for the quarter as compared to INR 217 crore in the previous quarter, representing a 2% decrease. The Board of Directors has approved final dividend of INR 14 per equity share for financial year 2020/2021. Thus, with interim dividend already paid of INR 9 per equity share, total dividend for the year 2020/2021 is INR 23 per equity share. With this, I conclude and would now like to open the floor for questions. Thank you very much.

[Operator Instructions] The first question is from the line of Nafeesa Gupta from Bank of America..

Sir, my first question is on the 4Q results. The other income in the quarter is substantially low versus the previous quarter. Is there any particular reason why?

Yes. As you are aware, general returns in the industry have been dropping, so that's the primary reason, both in case of mutual funds as well as bank deposits. And last year, when the COVID pandemic had started off, we had made some change in the investment policy. Particularly from safety of principal amount point of view, we had given focus to fixed deposits in banking and other things. And in the respect of mutual funds, we are concentrated more on overnight funds and, to some extent, liquid funds. Obviously, to some extent, the investment in banking, PSU, mutual funds or arbitrage funds, these kind of funds, which there was a risk of mark-to-market application, there has been some drop in the return. Also in the initial years, whenever we had done bank deposits, those deposits were with higher returns, and some of these deposits have been maturing in last 1 or 2 quarters. That is also additional reason. You'll find a bit of lesser other income.

Got it, sir. And sir, my other question is on the current status of volumes, CNG, especially in Mumbai. What would you -- your estimate be as to the current volumes due to the second lockdown -- second wave lockdown?

It's difficult to predict exactly volume point of view. What we have observed is from Q3 to Q4, there was a good moment in CNG, when in January, February or, even to some extent, in March, when people were finding the pandemic is under control, that kind of impression was given, and some ease in lockdown was there. There was an increase in CNG volume. I mean, to be precise, the CNG volume in Q3, average basis, it was 1.883 mmscmd, whereas Q4 had clocked 2.024, which is nearly 7.5% growth over Q3, whereas if we see currently, once again, because of the second wave of COVID, the volumes of CNG have dropped. So there has been some sort of seesaw sort of moment, ups and downs. It's a bit difficult, but what we are sure, looking at Q3 and Q4 performance, the moment the lockdown eases, I think the jump in CNG will be substantial. It will be quite coming back to the normal levels. This is what is likely, but all depends on how early the ease in lockdown is granted by the state government, particularly.

Got it, sir. And sir, lastly from me just regards -- just small clarification on Raigarh GA. So you are seeking an extension up to March '22, but what is the current, I mean, time line which has been given after the 251 day extension? Till when are you -- when is it due?

So you are right. Officially, 251 days was already communicated to us by the regulator. Nothing further. We have received neither positive nor negative. But today, there were some press reports. You also might have seen that there is an indication that some further force majeure concession might be granted. So we are quite hopeful because it is not only MGL. I think the entire CGT industry is affected, and it's a very genuine reason. So we are hoping further extensions will definitely be granted.

Sir, that 251 days from -- goes from November onwards or -- so is that understanding correct?

No. It's from April 1. It ends on 7th of December 2020.

December 7, 2020. Got it, sir.

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

Can you hear me?

Yes. You can be a little louder.

Yes. Sure. I'll try to. So if you could give some indication on volume currently in April and May, how they are on a Q-o-Q basis across segments, it would be really useful.

Yes. I mean, since this specific question is asked, I'll give you some figures. We have some data as on, I think, May 22, not in a particular order. Industrial is, I think, 0.252 mmscmd. There has been up and down in Q3. If you recollect, industry was 0.244. Q4, it had gone up to 0.258. And right now, just 2, 3 days back, it was indicating 0.252. In case of restaurant category, that is commercial, it is 0.123. Domestic is 0.516. And CNG, as I have mentioned earlier, there has been definitely adverse impacts. CNG is at 1.427 mmscmd.

Sir, this is the number as of a particular day or quarter-to-date?

This is a particular day number.

Sir, we would be more interested if we could get some idea on the average for the quarter to date, even if some broad idea is 20% down Q-on-Q or whatever, something of that sort.

What we can say, basically, the serious adverse impact as such is seen only in CNG. There has been drop to the extent of 25% to 30% in CNG. That is what has been impacting us. Otherwise, domestic has been overall doing well. Industry has also shown signs. Restaurant category, yes, since the outlets were forced to close down, performance was a bit affected. Slightly improvement was only observed due to the home deliveries, which were permitted. So primarily, it is CNG, which is down from 25% to 30-odd percent and, to some extent, restaurant category.

Okay. So -- and was the recent data the worst or improved from earlier levels? So the latest data which you gave us, is it the worst data during the quarter?

All those base figures are not with us.

Sir, I'm not saying that is the smallest, but that is nearer the bottom of -- from here on, this was one of -- so are we bottoming out? Are there any indications of that?

We feel so, we feel so. I think there should be...

Even with the lockdowns being removed, I guess.

We will definitely feel that even some relaxations here and there should definitely help us further. This can be taken, as of now, almost bottoming out sort of thing.

My second question, sir, was on -- if you could give us some indications on how margins are looking in terms of -- I see this -- from domestic gas, which you have tied up with KGD. That I'm sure is helping you right now. And spot in India after going down has gone up. So how do you look at margins? How are they looking right now? And so I think, one can only probably comment on how things are looking as of now.

You are right. The only thing, the spot, which you mentioned, which had gone up, it was a temporary phenomena. This can -- March, maybe it has shot up almost to the $10 due to the specific instances worldwide, but it has once again normalized. So it will be in the range of -- I mean it is in the range of $6 MMBtu kind of thing. And hopefully, similar trend should continue hereafter. We don't see something drastically going on. If it all, probably, there could be positive movements also on the pricing front on spot gas. Margins, yes, I think it depends on multiple factors. On spot gas front, as I said already, the -- I think things seem to be positive hereafter. Even alternate fuels, that is sales -- net sales realization point of view, it should be a good thing for us going forward because these oil price levels have been going up or steady at 65, 66 kind of thing. So that is also a positive signal. APM price, as you know, no further increase has taken place, so that's also good. The only probably 2 factors need to be observed is there is that negotiation with OMCs for trade margin are still on. Those things have not been continued. And at least in theory, the -- this Uran-Trombay case, which we have already disclosed as a contingent liability, that figure is also that way substantial. I mean, of course, we have legal opinion, and we strongly feel we should get favorable judgment, but it is ultimately up to judicial authority to promulgate the thing. So these 2 figures point of view have been substantial. And though our ability to pass through costs in case of CNG, when we are talking with reference to OMC trade margin is good, but it all depends on what kind of ultimate consensus comes out. These are the only 2 real factors, which, if it all, can impact the scene adversely. Otherwise, rest of the factors, barring unforeseen circumstances, seems to be quite favorable to the company. And there was also some recent price rise we had taken in the month of February, which also should help in the full quarter impact in April, May, June and onwards, of course.

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

Am I audible?

Yes, you are.

Yes. Sir, with respect to Raigarh, so that probably will helpfully explain the progress in the various phases. But on a broad level, sir, if things go well, everything sort of normalizes in FY '23, what sort of exit rate should one work with as far as volumes is concerned from the entire Raigarh region? Is it possible to quantify?

See, Raigarh, it's a bit difficult to explain on just a year-to-year basis. Maybe we can talk medium term or long term because you must have heard MD explaining that there is one City Gate Station we have recently completed the land acquisition process and that commissioning of Sagroli City Gate Station is in process. See, one of the very major achievement, no doubt, it took a little bit of time due to land acquisition process. But finally, at least, that is completed work has also started there. Also there will be another City Gate Station, which is likely to come up. We did mention about Usargar. These are important factors. There is some other infrastructure also taking place in reference to particularly steel pipelines and all that. But ultimately, the last mile connectivity, which is very important, what we can today say, instead of just talking about immediate volume kind of thing, maybe 3 to 4 years' period, we foresee, say, approximately 0.5 million for potential Raigarh. And this is all based on -- as of now, whatever scene prevail, that is nothing major happening on this pollution point of view and other things. In the sense, this cheap liquid fuel still being continued to be burned and all that things still continuing, PNG not being mandatory for, say, for commercial vehicles. This kind of scenario continuing, still around this kind of volumes might be achieved, whereas some favorable promulgations coming up from pollution point of view, like, it has happened in other places in and around NCR. I think there is a very good potential in Raigarh also because there are no doubt industrial units also over there. We should be able to hook up as long as we are competitive with its alternate fuels. So -- but normally speaking, this 0.5 million kind of potential is there. It may take some 2, 3 years' time, but from last mile connectivity point of view.

Right. And sir, the second question was with respect to the volumes. Thanks for mentioning at least an indicative number of how much CNG volumes have dropped. And I guess, from what I could take away from your commentary was that around 20%, 25% drop is there on an average, very rough cut average basis for the quarter so far. Could be more in some days, could be less in some days. And as of now, we are building that as and when the reopening happens, hopefully by July, the CNG volumes should come back very quickly. Is that a fair way to look at it?

Yes. I think potential exists because all infrastructure is already in place in case of CNG, so there is nothing much needs to be done in Mumbai or, for that matter, even Raigarh. 19 CNG stations are operative by now. So volumes can ramp up quickly, but only needs to be seen that even after lockdowns, what kind of approach people take as regards traveling, whether still work from home continues or how is the approach being taken by different corporates and people. But otherwise, CNG can ramp up very fast the moment ease of lockdown takes place.

Got it. Sir, 2 small housekeeping questions. CapEx guidance for '22, and if you can break up the industrial and commercial volume. 0.411 was the number. If you can break it up into industrial and commercial. Those are the last 2 questions.

This is for Q4 volume, you are talking?

Yes, sir.

Yes. Industrial was 0.258 mmscmd, Q4. And commercial was 0.153. CapEx, frankly speaking, it's very difficult question right now to answer with not much of clarity when lockdown is going to ease out, whether any third wave of COVID is going to come up. So it's very difficult because, please note that our CapEx to lot extent, depends upon the permissions of municipal and other government and semi-government authorities. All these permissions are paper based. There is nothing on paperless approvals, which we get. So that is going to be definitely bottleneck. We have aggressive plans, as we have mentioned, even for 2021. I mean, we don't mind spending INR 500 crores plus. Also funds are available, and there are planning, which has been done definitely to that extent, even higher than that. But it's a bit premature to state the figure what we should really be able to achieve.

The next question is from the line of Tarun Lakhotia from Kotak Securities.

Sir, my question is related to the large cash and investment balance of over 15 billion that you are having -- you're carrying on your books. How are you planning to utilize it?

Simple answer is we will be open on all options. I think you have seen, when it comes to -- I'm not necessarily saying in particular order. But when it comes to, let us say, dividend distribution, last year, a special dividend was declared to the extent of 150%. The company has completed 25 years, that occasion we had celebrated. This year, at least some increase in the normal dividend rate you will observe. As compared to 200%, we have at least declared to 230%. So we are, of course, open on dividend distribution possibilities. We are waiting for some further clear signals to come up. I mean, this is probably not the right time to take any drastic decisions either way. Hence, we are -- the Board is a bit cautious. But once the lockdown eases, then, as we mentioned, that we have run of aggressive CapEx plans also and which definitely it will help us to utilize the cash. And there has been some talk, though, I won't say something concrete is on paper, and we may not be able to necessarily give the figures, but even some -- you must have heard MD talking, there is some even LNG station being proposed buyers. Maybe one more also is being in the -- at the planning stage. So there are some other business growth opportunities, which are also being looked into, which can be at times a bit capital-intensive also. There is also a new field. We had actually started the process, but we couldn't go through fast due to this lockdown and other restrictions. That there is definitely a need for good corporate office for the company, which should take considerable utilization of our funds. There are also multiple customer relationship offices. The -- all these are right now at higher premises. What we have thought of that since it is going to be in need of the perennial nature and, generally, the customers prefer that once you open any CRM office, ideally, that should not be changed frequently, so there is also a thought of going into some own premises for customer relationship offices also, at least 8, 10 offices kind of thing we'll have to start off. So those also -- of course, those may not be very heavy from value point of view. But still put together, it can definitely make some use of the cash available. So these are some thoughts in front of us. And as was -- as we said, I mean, Board is also conscious that the returns perspective, if it really need arises, I think we will be open for any options.

Sir, you managed to generate a free cash flow of just under a share of INR 5 billion even in a pandemic affected year, right? Whatever the thoughts that you shared in terms of whatever incremental utilization of the plans that you have, your incremental free cash generation could suffice because these things will not happen in one single year. In fact, in one of the first questions, you mentioned about the lower yields in the debt markets and how your other income yield has been lower, and that is something which is visible in the last couple of years' earnings as well. Why not consider a buyback program where your company itself is probably going to generate higher earnings yields as compared -- in a normal business scenario versus the alternate options that you are considering, assuming that incremental free cash generation will take care of all other requirements that you may have? So why not consider that at all? Can I have some thoughts on that?

What right now we can say is, as I said, I didn't specifically use the term buyback as such. But when we said we are open for all options, it indicates that including -- this option is also included in it. It's not that it can never be considered. But probably, some right timing we'll have to wait for and whether -- we'll also have to see whether that is really the last resort, which we have to take into consideration. 1 or 2 more factors also I didn't say earlier is 1 or 2 contingent liabilities are also very important to be observed in our case. The implications can be quite high. For example, this trade margin negotiation with OMCs, the demand has been substantial from the OMCs. And since our dependence on OMCs is pretty high, nearly 65% plus volume comes through co-located CNG outlets at OMC outlets. That negotiations are still pending. No doubt, our ability to pass through this cost is good. But at the same time, we will have to keep in mind that the price, whatever we will pick for CNG, needs to offer good incentives to the customers. Today, it's fine when petrol is fetching INR 100 and all those kind of things, but there are changes which keep happening even with reference to petrol prices. So there could be -- one of the important factors needs to be seen immediately is what happens to this OMC trade discount negotiation. And there is a judgment reserved on by appeal with reference Uran-Trombay case. Though we feel, legally, our side is strong, but ultimately, it's up to judicial authorities, and things can be debated from either way. So maybe things could be more clearer for management also to take a decision once these 2 figures are crystallized. That is what right now we can say.

So let's say, in the next -- sorry?

Yes. And I think probably, I'm preempting your question. Probably, in next 4 to 6 months' time, clarity should be there on both these fronts.

So after that, we can probably expect some serious consideration about buyback, assuming that the requirements are met comfortably by you.

I mean, if it really comes to that, after all these things being considered and no other developments are taking place, then yes. What I -- we can definitely say, we'll be open for that. We are not saying that, that option is altogether ruled out.

[Operator Instructions] The next question is from the line of Mayur Patel from IIFL AMC.

If you can touch upon the potential of new bus addition, anything which you are hearing from the, say, transport -- the number of buses can be added. Anything if you can share some insight about next 1 or 2 years, how many number of buses could be added, which can add to CNG growth if we look beyond the second wave bump?

Right now, there are no such concrete figures, which can be shared. But one positive factor, which we have noted, if you see 1 or 2 years back, BEST had stopped inducting CNG buses. They were only thinking additional diesel or, at the most, some electric and other things they were thinking of. What is good to know is at least they are now open. There have been some additions, which, in earlier quarters, have happened in case of change in BEST. They seem to be open at least to add further CNG buses. This is a positive step. But unfortunately, right now, there are no concrete numbers to talk about because, as you might be aware, BEST was also facing financial crunch, and this particularly COVID has impacted their financial health substantially. So even from their side, further discussions had not taken place up on concrete basis as such. So maybe we'll have to wait a little bit to get this lockdown easing, and maybe the discussions will commence once again.

Sure, sir. Another question is given that the potential, if you look at Mahanagar Gas volume, and if you look at the volume in NCR, there has been growth potential for us. Should we expect some more aggression in PNG station addition over the next 2, 3 years time? What kind of new stations should we expect in terms of addition over the next couple of years, sir?

If we talk of aggression, I mean, very accelerated growth in CNG outlet. Probably, such growth, which we will see in GA-3 area, Raigarh district. Other GA-1, GA-2, no doubt, growth will continue, but there are 2 factors. One is both these areas are pretty old, so we have set up a lot of stations already over there. And more than that, there is a scarcity of land. So accelerated number of additions happening in GA-1 and GA-2 poses certain challenge. Nonetheless, we are thinking of some other solution. It needs to be cleared by regulatory authorities. Is this mobile refueling units in this set of CNG, those units can occupy quite a less space as compared to normal typical CNG stations. If that breakthrough, which we achieve, then even in GA-1 and GA-2 area, we can see substantial additions or aggressive additions in the CNG refueling units. We will be able to see it. No doubt, compared to normal CNG station, the throughput could be a little less, but numbers will definitely be higher. And that many additions can take place, obviously, in the CNG volumes also.

Okay. So where is that -- what is the status of that mobile unit for refiling CNG?

See, we have installed one at a place called Ajivali along old Mumbai-Pune -- Mumbai-Goa highway. So that is awaiting -- the infrastructure has been put in place. That is awaiting the final regulatory clearance. We had received the initial clearance. And having put up the infrastructure, we are waiting the final clearance. But this is more of a -- because that is going to be the first of its kind mobile refueling unit, so the regulator -- we also want to have -- gather some operating experience of operating that MRU in that location and then try to bring that concept more into the -- into Mumbai and adjoining municipalities where we are -- there is a real need of opening more such stations because the vehicle population is very high here as compared to the number of outlets. Having said that, we are also working on an expression of interest document, under which we will invite interested parties to set up these installations for us and operate them in our jurisdiction. So 2 things: one, trying to get a hands-on experience on our -- on the first MRU, which is already in place in Ajivali in -- close to Panvel; and then follow it up by inviting applications to set up similar installations in Mumbai and adjoining more densely populated municipalities.

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

And congratulations on the effort to put into business going under the COVID times. So following up on the last discussion on the mobile refueling unit. Supposing things worked out well and you are able to achieve some number, so over a period of 2 to 3 years, what is the potential you're seeing in terms of the number of mobile refueling units and the kind of volumes you can achieve through these units?

See, we are -- this mobile refueling unit essentially will be -- as the name itself suggests mobile, so it will get parked in areas -- in land parcels allotted by the local authorities or maybe public places, like parking lots and things like that. So there is an element of clearances that are going to be obtained by statutory authorities. There is also an element of the civic authorities agreeing to allow us to -- because it will also lead to some queuing of vehicles. So like, for example, like the MMRDA Grounds, that is a potential area where an MRU can be parked. So we have done a survey, so there are quite a number of locations on which this can be theoretically parked. But since it has an element of approval process involved with it, both in terms of how the civic authorities take it and in terms of what the risk perception as far as the regulatory authorities are concerned, so we won't be able to kind of commit any number. And the real test will be based on the response to our EOI document that we want to come out -- we will be coming out with very shortly. We will get the first sense of it, and then we can -- probably in the next conference call, we can have a discussion on this further.

Fair enough. The second thought is on the plan to set up the LNG session, how do you see -- what is the capital cost? And what is the kind of throughput you can expect? And how the economics was in terms of the cost of LNG and the kind of margins you can earn? Can you give us some thoughts on that?

Yes. See, the capital expenditure is -- will be around INR 10 crore of the LNG station, but it's kind of a chicken and egg situation. Today, there is no -- there is only in -- on an experimental basis, there are a few vehicles, which have been made to run on LNG. But there is no -- nothing is commercially running on a large scale. So it may take time for that market to develop. We are not only MGL, but other CGD companies are also planning to create the infrastructure of fueling. And in anticipation, we are also working with OEMs, so that the vehicle manufacturers, they also -- previously, they were occupied with the BS-VI rollout. Now that it is behind them, so they should now be focusing on LNG. And they are also asking -- assuming that they would like to focus on that, what kind of infrastructure are the various CGD companies or the oil and gas companies planning. So a pan-India rollout of LNG stations are being coordinated by the Ministry of Petroleum. And a lot of CGD companies as well as Petronet, LNG, Gail, are all working towards putting up a number of stations all over the country, so that, essentially, we -- the target will be to convert the commercial fleet, not so much the passenger vehicles. So we are -- we will be starting off with Sagroli sometime in this financial year as far as the LNG station is concerned. And we are also planning another one on the Mumbai-Nashik highway. So these are the 2 stations we want to start with, one in this financial year and -- probably, the next one will be coming in end of the next financial year, beginning of the next -- next to financial year. But currently, we won't be able to project a number on how much volume or what would be the throughput through these individual stations.

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

Yes. So I wanted to check that if you look at BEST, some of the press releases, there have been a discussion that they want to invest around 600 buses in the fleet. So do we have any clarity and any discussions with them that these 600 buses would be coming in this financial year?

We are in discussion with them. We are very much interested that they actually deploy these buses. In the recent past, in last financial year, they have come out with a number of buses. And since we have to plan for the fueling of these buses, and since they will be spread out all over the city, in some places, we have to augment the capacities of our existing installations inside BEST depots and also open new -- create infrastructure in some of the -- their new depots. So we are in discussions with BEST on this, and we hope that -- from our side, we are providing them with all the comfort that we will ensure refueling. They should just simply work out on the plans to induct these buses. So there is some discussion that is going on. And we are hopeful that we would be able to -- they would see merit because the economic rationale is very strong. So we think that these things will roll out and -- to some extent.

And sir, if there is any effort, maybe in the medium term, to convert some of the interstate buses into CNG from our side, like working with MSRTC?

We are also in discussion with MSRTC. We had offered them to convert a few of their buses because MSRTC buses, fundamentally, they are different from BEST buses because they don't move in -- they are in the kind of -- they ply over longer distances. So we -- there is a combination of type 4. The composite cylinders, which can be -- which hold more -- which are very lightweight and actually extends the range of the bus, so we had given them the proposal to convert 5 of their buses and fit them -- fit those buses with type 4 cylinders, so that they can cover 700-odd kilometers in one fill, so that they can take too far away depots and then bring them back without the need for a refill. Of course, Maharashtra is having -- nowadays a lot of CGD companies have come up, and much of the state is also having CNG infrastructure. But having said that, we wanted to give them the comfort that we'll fit the composite cylinder, so that they will have the comfort of running -- having a very extended range. So that discussion is on, and we have -- our proposal is on the table. We hope that they will take a decision on it. And once they develop the confidence and then, hopefully, they will convert more number of buses because there, they have -- they run a huge fleet. So if their numbers can be tapped, I think it will be quite a substantial increase to the total number of buses that MSRTC buses -- currently, they have around 50 buses -- 50-odd buses running on CNG, and there could be the possibility of a substantial increase in that number.

Sir, who will bear the conversion cost in this case?

Conversion cost, actually, we are in discussion with a number of agencies. So the conversions, we would be sponsoring the conversion. We won't be doing it right away on our own, but it will be in double-digit lakhs.

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

So I have 2 questions. The first one relates to your conversions in the last 3 to 4 months, particularly on the private vehicle front. So I'm talking about conversions -- monthly conversions between, say, November to March, before the second wave came up. So how has been the private vehicle conversions then?

Private cars numbers, not exactly per month. But quarter-wise, figures are right now available. Say, for example, for Q4, it was around 11,300-odd figure.

11,300 got converted in Q4.

in Q4. And in Q3, it was 12,100 odd.

Okay, 12,100 and 11,300. Okay. And this is pure private vehicles. No taxi, nothing [indiscernible].

No. This is -- when we say private cars, I mean private vehicles, it includes private cars plus this Ola, Uber thing.

Okay. Ola, Uber is included in this. Okay. Okay, sir. And secondly, your FY '20...

This is only cars we talked about, 4 wheelers. Obviously, not autos included.

Right. And what would be for -- has there been any meaningful increase in autos also? Or it has...

Yes, yes. There was a good number. In case of Q4, it was almost 2,400 autos, whereas in Q3, it was almost 3,000 autos.

Okay, sir. And before moving to the next question, what was your CapEx for FY '21?

On cash flow basis, it is around INR 340 crores.

Okay. And overall CapEx, any committed CapEx inclusive?

Next year, you are talking about?

I mean -- yes, next year. Like you said, around INR 500 crores, you are planning, right? So this is cash flow CapEx that you are talking about, right?

Yes, yes. I mean, we have drawn up plans with higher CapEx, no doubt. But if you have heard me saying earlier, it all depends on this lockdown and permissions getting quickly. It's very difficult to state what kind of figure we will be in a position to achieve. But from our side, we are geared up. A lot of planning work is also there. Funds, of course, is not a problem. Substantial things depend upon how fast we get permissions and when.

Right, sir. And secondly, on inorganic acquisitions, what has been the thought process? Have you been aggressive to acquire anything? Have you done any -- any thoughts on how it has been turning out regarding inorganic acquisition?

We are open for any acquisitions, but it should be at a right price, that's number one. And probably, when we talk about the right price also, one hidden point underlying is there is a minimum work program, which must have been committed by the earlier party to PNGRB. The million-dollar question is what happens to the MWP figure. And as long as we feel that, that MWP figure is reasonable, rationale and with our expertise and many years' experience, we can do it, yes, we will be open for it.

Okay. But has there been any short listing or anything of that sort?

No. No concrete proposals as of now on the table.

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

The first one is on your gas sourcing. So how much of RIS volume did we consume in this quarter? And what is the rate going forward that we can make in [indiscernible] the same? And related to that, like, is this volume which is coming in from Reliance KG Basin, is that being used only for industrial and commercial purposes or also for domestic?

Yes. Volume, what we consumed is 0.1 mmscmd. And yes, it is meant basically for industrial and commercial.

Okay. So there will be no mixing with the domestic volumes, which are [ PNG ] like the way we saw earlier with [ PNG ] volumes. There is no such...

There is no need also. No. I mean, adequate APM gas is being promised for CNG and domestic, so there is no question of need for it, whereas Reliance offers -- I mean, that gas source offers price advantage over imported gas, our LNG.

Right. And second question is more strategic in nature, and it's around vehicle conversion and your CNG stations. So during the course of this call itself, you mentioned that you have high dependence on marketing companies for your CNG. You mentioned that the land and the first couple incremental stations are limited. And related to that, like vehicle conversion is actually dependent on availability of CNG. So how do you see this dynamic evolving forward? As a strategy, are you going to continue with your dependence on oil marketing companies for opening new stations or for CNG dispensing or you'd be like depending more on your own strategic strength? And how do you see the vehicle conversion evolving given that we are practically getting saturated in Mumbai? So what kind of potential we are looking at in terms of saturation versus where we could go from here in terms of growth of CNG?

There are 2, 3 things. One is, apart from things you mentioned, probably, you might have earlier heard us, we're talking about mobile retailing units. This is one of the solutions we are actively looking at subject to, of course, regulatory approval. So if that permission is granted to us, there could be potential of many MRUs, mobile refilling units, which can come up, particularly in GA-1 and GA-2 because scarcity of land or total dependence on OMC, this issue primarily comes up in GA-1 and GA-2. So good solution can be MRU, so that definitely we are pursuing a lot, and it can help us substantially. That's number one. Secondly, maybe earlier earnings call, you might have heard we mentioning about, apart from the new outlets, we also try to upgrade our existing outlet, capacity point of view, both compressors and [ the space ] point of view. That is continuing. And in 2021, I think 15-odd upgradation we had done apart from whatever new additions we have done, and that drive will continue. When it comes to GA-3, probably apart from OMCs, I mean, there will be -- it will be quite easier for us to get other land parcels, either on ownership basis or on lease basis. Already, 19 outlets are over there, and there is a visibility of nearly 100-odd CNG outlets depending upon, of course, a gradual rise in the demand, which we see under penetration level. So all these factors put together should help us. And nonetheless, anyway, the cooperation with OMCs continue maybe even this negotiation, which is pending for OMCs trade discount, once that is concluded, some further progress may also take place in case of CNG outlets being offered from OMCs.

So at any point in time, do you foresee that vehicle conversion could potentially slow down because of capacity constraints on CNG dispensing front? Is that a possibility we could be looking at in the near future?

GA-3 is definitely not. There is no issue because adequate station, we'll be able to put up GA-1 and GA-2. The point is good amount of capacity exists, be it compression capacity or dispensing capacity. It is only this peaking hours. That is the issue, which we need to resolve. There are some steps earlier we had taken, and we will try to reintroduce or take those things forward also, maybe offering some incentives to come up at different time lines or maybe app-based queuing, if we can say so. I mean, people can be given time slots. And if they come at specific time slot, immediately, they will be given the priority for gas. So such kind of measures, maybe on a test basis, we had tried earlier and which we'll continue to once again pursue.

Sure, sir. And if I can squeeze in just one more, sir. Past few quarters, we've seen prices running up [indiscernible] so your CapEx plan in terms of the overall costing that you will be foreseeing for your expansion and putting up your [indiscernible]? So has there been a material change in those costs and also like your blueprint for CapEx?

Your voice was a bit cracking. I haven't heard fully clearly. Are you talking about general guidance, maybe 4 years, 5 years how the CapEx will pan out, something like that?

What I was saying is that past couple of quarters have seen metal prices, especially steel prices increasing quite a bit, so has that made you redraw your CapEx plans in terms of -- like is there an increase in costs, which you have considered in your CapEx plans? And any thoughts on that?

Yes, yes. Okay. One is this inflationary pressures or whatever happening to material cost or maybe even labor costs. On the other hand, some other things also need to be considered apart from this. Steel grade -- or steel pipelines, high-pressure pipeline, substantially, we have completed. I mean, whatever is needed to reach the charge areas in GA-1, GA-2 is fully over. In GA-1, GA-2, whatever kilometers we may be required to further lay in steel pipelines is maybe from looping or security of supply point of view. So to that extent, the kind of aggressive kilometers we had seen in earlier year, those kilometer lengths may not be required. GA-3, yes, some additions will continue to happen. But in GA-1, GA-2, to that extent, the requirement will go down in case of steel pipelines. And maybe after -- maybe 3 years down the line, even in case of medium-pressure pipelines, length requirement per se can go down. So it will be a mix of whatever material and other cost increases will be there, but maybe length will be proportionately less. A combination of these will decide over a period of 5 years or so. Plans will be drawn up.

The next question is from the line of Kirtan Mehta from BOB Capital.

Am I audible now?

Yes, please.

Sir, in the mix, could you highlight what is sort of the imported LNG component as of now? And how much percentage of that...

Could you please come again? We couldn't hear you clearly.

I was asking, in the gas [indiscernible] mix currently, how much percentage comes from imported LNG? And how much proportion of that is on spot basis?

Okay. I mean, right now, due to COVID, some distorted figures are also there. But supposing we are talking a normal business scenario, this CNG and domestic account for nearly 86% of our total volumes, which is all APM domestically produced gas, which conversely means around 14% is through our LNG. And maybe within that, substantial has been from a spot basis. But maybe going forward, we may have 50%, 50%, 50% spot and 50% maybe midterm kind of thing. This is what broadly the pattern is likely to continue.

And one more question in terms of the Raigarh area. Due to the COVID situation, I just wanted to understand how much, basically, there has been a delay in implementation of the work program from your initial plan. You mentioned about some 251 days of force majeure, and there could be a possibility of further force majeure. So does that indicate that the work program is delayed by more than a year or 2? Or is there possibility to catch up?

Irrespective of whatever delay has happened, one is we are quite hopeful that, that extension will be granted. And there were 2 targets, which we are required to achieve. One was domestic connections and another was inch kilometer. You will be happy to know that the domestic connections target has already been achieved by us in time. It's only a question of inch kilometers. But there also, last 2 years, we have demonstrated good progress to the regulator. And we are quite confident, with whatever extension we might be granted, the balance inch kilometer, which is left out, we should also be able to complete on that front.

The next question is from the line of Yogesh Patil from Reliance Securities.

My first question is related to quarterly volumes. Surprisingly, we have seen a fall in the PNG domestic sales volume sequentially. Any major reason?

It's a bit difficult to judge immediately. You are right, there has been some drop. They -- probably, it's more on account of per capita consumption being less in this quarter. One of the things, which we feel is this. If you know, the Jan, Feb, March, particularly, that is Q4, there has been some impression in the general public that pandemic seems to be under control, and there was some easing down. So even the presence in offices and other establishments have increased. Probably, that's one of the reasons why maybe coffee or whatever cooking is being done at houses was comparatively low. In PNG, you are referring to only household or in general, you are talking? Because if total PNG you are talking, then it also includes commercial that is restaurant category. And probably, that you are already aware, the reason, these outlets have been -- post closure has been there and there has been some problem. Though commercial, we have done better than Q3. It's only domestic. Probably, your observation was with reference to household.

Only domestic, sir. I was talking about domestic. That's all.

We feel predominantly it is a drop in per capita consumption. Probably, people attending offices or those kind of reasons could be there.

Okay. My second question on the CNG trade margin discussions with OMCs. Can you throw some light on -- or you can give us idea about the number, how much trade margins OMCs are asking? And how much would be possible to pass on to the consumer? As you earlier mentioned that whatever will be the hike in the trade margins, CNG trade margins, that you will likely to pass on to consumer. So any number, any idea about that CNG trade margins discussions with OMCs? Any more lights on that side?

Right now, discussions are still on, so it may not be appropriate to give out the exact figures. But the demand from OMC side has been pretty substantial. There is no doubt about the substantial increase, they are talking about. One good thing is that it's going to impact the entire CGT industry. It is not just NGL, which is going to be impacted. So all the gas distribution players have pleaded with and kept PNG informed about this demand from OMC. And we hope that, including with the intervention of Ministry, soon, there should be some solution coming through.

We have been asking that -- we have been insisting that this will happen with prospective effect. So as far as your question of passing it on to the consumer, so we are trying to avoid a retrospective revision. But this, again, as Mr. Ranade said, the whole thing is now being kind of the Ministry of Petroleum has got involved. So we will, again, put it in front of the ministry and try to get a favorable dispensation in this account as well.

So for our understanding, sir, is it a lower single-digit number or higher single-digit number?

Higher single-digit, we can talk about.

Ladies and gentlemen, due to time constraints, we will be taking the last question, that is from the line of Ashutosh Chaubey from Centra Advisors LLP.

Sir, I just have one other question, which earlier participant asked. I might have just missed that. You said that in the Raigarh district, what was the margin -- what was the volumes that you were expecting going forward?

It will take definitely some time because, right now, infrastructure is being built, including City Gate Station. But when you are talking midterm to long term, approximately 0.5 million mmscmd we can talk about.

So half -- 0.5 mmscmd, correct?

Yes, yes. 0.5 mmscmd.

Okay. So how much would...

And this is business as normal, We have not taken into consideration any special advices being given by statutory authorities with reference to polluting fuels and all that. If that happens, there could be substantial jump. But otherwise, this is the business potential we are considering.

Okay. Sir, also in one of the earlier con calls, you had mentioned that in Mumbai GA, we had around 35% penetration, right? So what is -- this is -- so what would be in percentage form in Raigarh district, just 0.5?

Right now, those figures are not available. Maybe offline, we can help you out.

Okay. No problem, sir. I'll take it offline. Sir, one question more that I have is on the -- again, on the margins front. So like you mentioned, the only margin -- that only factor that can affect our margins would be the negotiation with the OMC that is happening, right? Because even on the APM price, it is still unchanged. So that is the only one thing affecting our margins. But like you said, it would be a complete pass on, right?

No. What we have said that, though our ability to pass through is good, but it all depends on what is the final conclusion taking place as regards to OMC trade margins. It all depends on what is the figure being concluded with them because, while increasing the selling price, we need to bear in mind the value proposition we offer to potential CNG customers. So it's not that it's limitless, and we can pass on each and everything or in entirety. It all will depend on what is the figure, which we concluded.

Okay. Okay, sir. Understood. Sir, one just last question. Is there any update on the 11th round of bidding that is going to happen? And are we keen on bidding for any GAs? I think, what I remember is last time, we were -- we had done a bidding for GA in Southern part of India, right? So what are we looking at? What is the future prospects regarding the 11th round of bidding?

No, not much clarity because, right now, the -- there is not much of clarity as regards to Office of PNGRB itself. So we'll see. Time only will tell us.

Ladies and gentlemen, that would be the last question for today. I now hand the conference over to the management for the closing remarks. And over to you.

So thank you very much for participating in this call. Thank you.