Mahanagar Gas Limited (MGL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Mahanagar Gas Limited Conference Call, hosted by Centrum Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Probal Sen from Centrum Broking Limited. Thank you, and over to you, sir.

Thank you very much, Vanita. First of all, thank you, everyone, for making the time to attend this Q1 FY '22 briefing by the management of Mahanagar Gas. I would like to apologize for the delay of a few minutes. There were some technical issues we were struggling with at the beginning. But thankfully, everybody is dialed in now. With us, we have senior members of Mahanagar Gas management, including Mr. Sanjib Datta, the Managing Director; Mr. Sanjay Shende, Deputy Managing Director; Mr. S. Ranade, the CFO; and Mr. Rajesh Wagle, Senior Vice President, Marketing. So before handing over to them, I would like to hand over to [ Gauri Kanitkar ] from E&Y, who handles the IR for MGL. She has a regulatory announcement, and then we will go straight to the management. Gauri, over to you.

Thank you, Probal. 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, the risks and uncertainties regarding fluctuations in sales volume, fluctuations in foreign exchange, other costs and our ability to manage growth. I urge you to consider that the 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 will hand over the call to the management for their opening remarks. Thank you and over to you, sir.

Thank you. Good afternoon to all of you, and welcome to the earnings conference call of Mahanagar Gas Limited for the first quarter of the financial year to 2021-2022. 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 activities. The company's operations were impacted due to the lockdown. This has resulted in reduction of sales volume across all segments, except domestic PNG, where it is used mainly for cooking. Impact of the pandemic is still not over. And as we overcome our health and economic crisis, a 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 customers remained operational 24/7. 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 will mention that we are continuously expanding our CGD network in the existing license areas. During the quarter, 29,162 domestic households were connected, and thus, we have established connectivity for nearly 1.63 million households. We have laid 43.12 kilometers of steel and PE pipelines, thereby taking the aggregated pipeline lengths to over 5,950 kilometers. We have also added 5 new CNG stations. And with this, we currently have a total of 274 stations. We have also added 40 industrial and commercial customers. And thus, as on quarter end, we have 4,196 industrial and commercial customers. In respect of our Raigarh GA, we are connected to 41,072 domestic households and 19 CNG stations are operational. During the quarter, in Raigarh GA, we have laid 7.94 kilometers of pipeline, thereby taking the total length of pipeline to 268.81 kilometers. We have also commissioned a mobile refueling unit in Raigarh, a first of its kind in the country. There is a reduction of 17.1% in the overall sales volumes compared to the previous quarter due to the second wave of COVID-19 at the beginning of the quarter. During the quarter, we achieved overall average sales volume of 2.398 mmscmd consisting of CNG volume of 1.551 mmscmd and domestic PNG volume of 0.468 mmscmd, while 0.380 mmscmd of gas was supplied to the industrial and commercial segments. Compared to the previous quarter, sales volume in case of CNG has decreased from 2.024 mmscmd to 1.551 mmscmd, which is a decrease of 23.4%. In case of industrial and commercial sales, volume has decreased from 0.411 mmscmd to 0.380 mmscmd, a decrease of 7.5%. However, sales for domestic PNG has increased from 0.457 mmscmd to 0.468 mmscmd, which is an increase of 2.4%. Current quarter EBITDA is INR 304 crore compared to previous quarter EBITDA of INR 316 crore. EBITDA margin is at 49.39% for quarter 1 compared to previous quarter, EBITDA margin of 44.05%. Net profit after tax is INR 204 crore for the quarter as compared to INR 213 crore in the previous quarter. 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 Anubhav Aggarwal from Credit Suisse.

Am I audible, Probal?

Yes, you are perfectly audible.

Okay. Sir, first question is on the industrial customers. There seems to be some price increase taken in this quarter over there that led to good margin. Just wanted to check that is the pricing -- the average pricing still remaining the same? Or have you taken further price increase in the industrial customers in month of July?

Are you talking with reference to industrial pricing?

Yes. Correct.

No, our pricing policy, there is no change. Whatever policy we have been following it continues, which is in -- briefly it is indexed to alternate fuels.

So -- but the outcome of the policy in this quarter was there is certainly a price increase, which has led to higher margin here. So I'm just trying to understand that from an absolute price, which was prevailing in the June quarter for us, how has the pricing changed now in July? Is it the same pricing? Or has there been any change in pricing to industrial customers?

So July, we can't talk right now. Obviously, this call is for quarter 1. But if you are talking about the rising sales realization, then that fact is true even for last quarter as compared to Q4 of financial year 2021. If that is the question, which we wish to take up then the rise has taken place basically since there was a change -- upward change in the alternate periods like LSHS, [ FO ], et cetera. And we already told you our pricing itself that it is indexed to the alternate fuels. That is the precise reason why the realization has gone up in industrial as well as commercial sales category. In commercial return category, it is fit to basically 19 kg cylinders, commercial cylinders. So that's the primary reason why realization has gone up in this quarter 1 compared to earlier quarters.

Sure. And second, sir, I wanted some clarity on this mobile refueling unit. Just trying to understand this how far are we from on the regulation front for getting approval to, let's say, use the MRUs and housing societies, office complexes, et cetera. So where does that stand right now?

See, we -- this is the first-of-its-kind that we have installed in a place called Ajivali on the old Pune, Mumbai-Pune Highway. So essentially, the utility of a of the MRU concept is more -- is for a congested city like Mumbai rather than in GST Raigarh where space is not much of a concern. But we wish to develop some operational expertise in operating that MRU. So that's the reason why we have put it up there. Secondly is that the MRU that is installed in Ajivali has secured its full set of regulatory approvals, primarily from PESO. Now we are -- we know that what kind of regulatory or statutory safety-related regulations or guidelines have to be maintained in such a location. But having said that, for individual installation that we will -- where we propose to set up these MRUs, we will have to seek an approval from PESO. So on a case-to-case basis, wherever we decide to install an MRU, whether it's in a parking lot or in a vacant space like in the cities, so we will have to undertake a localized study, secure certain permissions and then approach PESO for approval. So -- and what PESO has also done is that it has approved [Technical Difficulty]

Hello? I can't hear the management.

Yes. Malika, has the management got disconnected?

Yes, the line for the management is disconnected. [Operator Instructions] Ladies and gentlemen, the line for the management is reconnected. Thank you, and over to you, sir.

Yes. Thank you. Sorry, the call had dropped. So we were on this issue of MRU. So the other point that I wish to add is that we are in the process of formulating kind of an expression of interest. So for opening -- pursuing, inviting bids to put up this kind of MRUs in the municipal areas of MCGM, Thane, Mira-Bhayandar and Navi Mumbai. So -- for which every specific size that would be on offer, will have to secure its own regulatory approvals.

Just some clarity on this, no more question on this, but how many MRUs, let's say, to look forward in the next 2 years? You're looking for 10, 20 or 50? Or what's the number you're looking forward to?

So we -- the concept is new, and we wish to -- we probably will be able to answer it in a future call once we have the feedback from our EOI exercise that we wish to hold very soon. So maybe that will give us a better indication what is the -- what's the number that we are likely to hit in the next 2 years' time.

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

Congratulations for a wonderful result. Sir, I have 2 questions. One relating to the Maharashtra government EV policy. So what do you think would be the impact on our long-term customers in this -- because of this policy like auto rickshaws and others? Have we done any analysis on that?

Well, I think we have answered this question on almost all the earnings calls which have been having. And our view remains consistent that, yes, EVs will have some market share going forward, but not to such a large extent that it becomes a very big risk for MGL. Well, our belief is that initially to start from the smaller vehicles, the 2-wheelers, then the 3-wheelers, et cetera. But a large majority of our CNG volume comes from taxis and private car. Of course, there are a good number of auto rickshaws also there. But these auto rickshaws, 3.5 lakh of them, I mean, they have valid permits, they have invested the money. So we are sure that the government will allow them to run the course of their economic life at least. And whether in a city like Mumbai, which is a vertical city, there will be enough for electric charging infrastructure available to support a large-scale EV component program in the next 3 to 5 years, and then we will have our routes. So yes, EVs will remain a long-term development. But our belief is it not will not eliminate the CNG or for that matter even eliminate petrol or diesel. I mean these fuels are quite good for some time.

And two-wheelers anyway, it's not our market. Right now, we have almost nothing.

Okay. Got it, sir. And sir, could you comment on what is our like 3 years target in terms of stations whether including MRUs. And so -- and what is our growth strategy for the next 2 to 3 years? And if we can talk about like LNG for transportation as well if we have done some work on these items?

Okay. So on domestic front, we will be targeting to roll out 300,000 connections this year. So that is the target we have set for ourselves. We did 200,000 year before last -- before the COVID thing happened. Last year, of course, we were at 121,000. So 300,000 target is what we have set for ourselves. And on top of it, as far as CNG stations are concerned, last year, we had opened 15 stations and we had upgraded, I think, 25, around 25. So this year also, we plan to do at least 20-odd new stations and upgrade another 25, 30 existing stations. And as far as MRU is concerned, as I have just responded that with regard to MRU, we will have to wait for some more time. We just want to -- there's a new concept which is being introduced in the market. It has to cross some initial hurdles of authorization from -- by various authorities and other authorities would start feeling getting a sense of comfort with this new concept. And -- so we think that 8 to 10 should be a good number to start within this year. Because it is -- the advantage is that the lead time is very short. So once we place an order, it's only a matter of putting up a gasket and a cylinder and a compressor and a dispenser on a truck and then take it and drive it to a location and then start dispensing and get it plight between mother station and that location to get it filled up. So the gestation period of these projects or individual projects is going to be short. So we hope that 8 to 10 number is something which we should target to achieve in the short term in this year or maybe in the year -- this year and next financial year. And as far as LNG station is concerned, as you may be aware that we are planning to erect 2 stations, 1 is under construction in Sagroli near Khalapur. So there, the LNG tanks have all been installed. So we wish to commission in the second half or in the -- by the back end of this year. And the other station that we are planning to put up is on the Mumbai-Nashik Highway. The land has been shortlisted. And there, we -- it may take 1 year, 1.5 years to put up that station. But 2 stations in the proximity of 25, 30 kilometers should be good enough to serve the market for the time being.

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

So I have 3 questions. The first one pertains to the sharp quarter-on-quarter reduction in gas costs. So anything specific? Because there has been not much change in various parameters, except spot was down, but that also shouldn't have led to 11%, 12% kind of Q-o-Q drop in unit gas prices?

You have partly yourself answered. The reason is obviously spot cash. Prices have dropped from almost $10 MMBTU to $7 MMBTU. That's number one. Secondly, in case of the RIL Gas also, which we have contracted for 1 lakh SCMD, that price has also been down. And you have to remember the -- as compared to the normal business, CNG sales is substantially down. So on a weighted average base, generally industrial commercial as a percentage is at least 16% or so. But in this case, it has been relatively higher. So a combined effect of this is that whatever gas costs you are observing, which is down from 9.83 per SCM to 8.70.

And what is the current level? Are we back -- I mean what should the current run rate for that?

Sales point of view?

No, from that 8.7, so how much is it right now? What should it be any estimate, rough cut estimate?

I think we cannot directly talk to you about that, but from volumes point of view, CNG is definitely picking up fast now. So otherwise, obviously, APM, there is no change, but spot cash has gone up substantially. I think the spot is hovering around even $14 MMBTU and maybe for some time, which will continue at least $10 to $12. So it's definitely a bit costlier right now.

Okay. Second question pertains to this ONGC-GAIL pipeline. I think you have taken this recent price hike as a response. I think after the APTEL transferring it back to PNG. I was -- so it is certain that this impact would come into your financials, right?

No, I think -- okay, first of all, this is a subject matter of quarter 2, this development, whatever price rise, et cetera, we have taken, it's in quarter 2. So not too much we can talk about right now. We have to concentrate on quarter 1 results. But it is a question which you have specifically asked as well as I know many others may be interested in knowing this. So what we can briefly at least explain, though detailed explanations will be given a little later. But whatever the price rise has been taken is predominantly to take care of the transportation cost increase, which has happened in case of the Uran-Trombay pipeline with effect from 6th or 7th July this current quarter. What has happened -- so going forward, there is a change in the transportation cost for which one of the primary reasons for this price rise has been taken up performing as a team. Whereas earlier period, the court case or whatever the case, which was already going on continues, that case has not yet been decided. In fact, APTEL has remanded that case back to PNGRB to review. And this time, APTEL has even almost pointed out, what are the specific questions or matters which PNGRB should look into before giving their -- once again their verdict. So past it still continues to be a continued liability, whereas going forward, no doubt that transpiration cost has increased and MGL has also accepted it. But for this, we have already taken a price rise to cut off the cost.

Okay. Got it. And just lastly, it is in addition to this only that now you have taken this hike, which is like -- which is quite -- I mean, 2.6 is a significant hike compared to like past levels. But -- and going forward, we expect that -- there's an expectation that maybe gas prices can jump by almost like more than $1 per MMBTU, which could roughly translate into INR 6 to INR 7 per kilo kind of an increase for you in case of CNG. So are you comfortable taking such a hike at one go? Or would you be like -- more be like -- would you try to take it gradually? And whether that upcoming gas price hike, some of that has already been like taken in this recent INR 2.6 hike or not actually?

The ability to pass through the cost is definitely there with the company. But another important factor needs to be seen what is the value proposition we are offering in. Indirectly, what is the price levels of petrol and diesel? As long -- right now, the discount levels are almost 66% and something like 47% as compared to petrol and diesel. So such scenario continues or is differential even wider, we might be in a position to take the price rise even within one shot also. But any time we take any pricing decisions we make a combination of what is the cost impact for us. At the same time, our primary motto of the company is always to offer value proposition and keep encouraging new conversions and adoption of CNG by vehicle owners. So I think depending upon these 2 factors, the decision will be taken, though one line answer is ability exists.

Okay. And this INR 13 to INR 14 EBITDA per SCM is, I think, is it sustainable? Or it is like -- I mean should we assume start assuming this? Or do you think that it can be like more range bound between INR 12 to INR 14 something of that sort?

Yes, I think you have already asked 2 questions. I think let others ask.

Yes, that was the last one.

Okay. See, this is a bit complex question right now to answer. But hopefully, it should be a question in the minds of everybody. So maybe right now, I'll try to elaborate. There are at least 6, 7 factors, which we'll have to take into consideration when we are talking about this EBITDA. It's not necessarily in a particular order. If we talk about INC margins, will be dependent upon sales realization on one hand and cost of spot gas or whatever RLNG we procure. So hopefully, with the oil price levels remaining the same, whatever they are as it is, or might be even higher kind of thing, then the sales realization should be okay. From that point of view margin can continue in the sale. Whereas right now, we talked about that there has been some increase in spot gas, which we have recently seen. I mean reaching as high as even $14. So there could be some adverse impact on INC margins from spot gas point of view. But some solace to us, I think, we did some efficient action in contracting out for RIL gas and around 1 lakh standard cubic meter of gas, which will be available to industrial and commercial, which will be much cheaper than the spot gas, that's going to be one of the advantages, which will continue even the future also for us. Another important factor in case of domestic and CNG, whatever transportation cost rise or anything we are talking about, we have already taken the price rise in the month of July. So that -- though transportation cost is going to increase going forward, particularly for Uran-Trombay, the cost is already covered us. So at least status quo can be maintained, particularly from that factor point of in case of CNG and domestic margins. Another important factor could be in case of -- see, CNG volumes are picking up well now. And there is some talk of lockdown even getting lifted either fully or at least further getting relaxed by August 1 or so. So that will lead to a good jump in CNG volume which may in turn result into a drop-off per SCM OpEx, which can help us to improve to some extent EBITDA margin. But there are other factors which also need to be borne in mind in these negotiations with OMCs are still on for our trade discounts. So that could be a very important point to wait for and looking to kind of have important -- I mean, a good amount of impact on the margins of the company. So all these factors need to be taken into consideration. Saying just now one-liner answer is going to be very difficult for a margin point of view. And last but not least, I think I forgot to mention most important is ForEx rupee-dollar exchange rate because most of the gas -- I mean impact -- almost all gas is procured in dollar terms, whereas tax realization in rupee terms. So that external factor is also we need to bear in mind. Minimum all these factors need to be taken into consideration. But whatever it may be, I think what's important to see is on in absolute terms, the rupee per SCM margin is very sound. And last year also, it was somewhere around INR 11.5 if you know for 2021. So we are confident at least better than last year's margin will continue and on stand-alone basis also these are attractive margins, even if by chance we have to assume that some adverse impact is to be seen in the next quarter.

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

Can you just give some color about what is the improvement in conversion of CNG vehicle -- vehicles currently? Because now things have opened up in Bombay and per month basis, if you can share some insight, it would be helpful.

If you look at the CNG vehicles addition quarter-on-quarter, in Q1, actually, there was a small dip because of the second wave, which hit in April and a bit of May. So the numbers -- conversion numbers were lower than the Q4 numbers of last year. But now with the things improving, we are seeing a lot of -- a lot of new interest coming into the OE segment, especially where Maruti, Hyundai, Honda, Toyota, everybody and Tatas are now planning to coming on. Maruti was always there, but others are also now joining with a lot of OE-derived CNG. Tata has recently announced CNG versions of Tiago and Tigor. And Maruti recently announced CNG versions of Swift and Swift Dzire. So -- and with the price differential between CNG and petrol, which we are seeing nowadays, that -- we are seeing more private car sales than sale of these new auto rickshaws and taxis. So going forward, assuming third wave was not imminent or what, we can -- our CNG volumes have picked up to what they were at pre-COVID levels. Hopefully, going forward, there will be growth from here.

So we have already reached the pre-COVID level CNG volumes?

If you -- in the current quarter...

No, sir, I'm talking about the current month in August. Now things have -- every month, the volume pickup is better for every industry now.

I can't really comment on July. But if you want, we have not hit pre-COVID levels. And yes, I mean we are maybe at 95% to 100% of that level.

Yes, fast improving, definitely. And with this top up from first August opening up and all that, I think definitely, we should be able to achieve those levels.

Okay. And sir, in the past, the management has always given this confidence that whenever there is any increase in OMC commission or APM price hike, given that we have the pricing power and the discount to petrol and diesel is very attractive, we will go ahead and pass it on to maintain margins. So is it fair to assume that there is not much risk on these 2 factors?

So it all depends -- it's a matter of negotiation. So until final figures are out, straightaway it cannot be commented. But right now, these OMCs are trying to negotiate on pan-India basis. So it is going to be definitely a complex matter for them also that whether it could be the common price rise for each and every CGD entity, that factor also remains to be seen. There are oil marketing companies. So even ministerial interventions are possible to be seen over there. And we -- yes, from speaking purely from MGL point of view, definitely ability to pass through there because as regards value proportion we offer with respect to diesel or petrol, the discount levels are much more right now. Some amount of provisioning also whatever on estimated basis, we have taken. So we are confident we should be able to take care of whatever cost increases come up.

The next question is from the line of Aishwarya Agarwal from Nippon India Mutual Fund.

Sir, I couldn't understand. Your current volumes are -- your current CNG volumes are higher than pre-COVID or not right now?

They are approximately at pre-COVID levels.

Okay. The second is how do you see the growth in the CNG volumes? I mean, any expectation in terms of 5%, 7%, 10%? Or what are the key -- see, we understand that there is a difference in the gas and the petrol-diesel prices, which should lead to higher conversions or more buying of the CNG vehicles. But are you witnessing those kind of growth or the new vehicle or maybe the lines in your existing outlets?

Yes. We are seeing growth in new vehicles addition, especially in the passenger car segment. As I mentioned earlier, the growth is not that high in the 3-wheeler segment. Pre-COVID, usually, our equal share is to come from 3-wheelers and 4-wheeler cars. Now the ratio is more of 2:1, for every 2 cars, there will be 1 autorickshaw. But again, from 1st August or going forward, the volumes and conversion will be a function of how the unlocking progresses. But even today, as the government of Maharashtra is relatively conservative and is maintaining the level 3 kind of shutdown in Mumbai, whereas they can actually could have be a bit more liberal, but they are being conservative. So most -- given people will start moving more, CNG sales will definitely increase.

Sure. And second...

And if third wave comes up next month or 3 months down the line, the numbers will go down again. So it's very difficult to say exactly even next quarter are we having 5% growth. But if you look at it directionally, I mean, assuming COVID is some, maybe 1 year or 2 year kind of a thing, directionally, yes, we're only saying that the growth of 5% to 6% sales up is possible for many years to come. And if there are any [indiscernible] any regulatory projections regarding use of clean fuel, et cetera, like what has happened in Delhi or NCR, then the growth can easily go to double digits.

Sure. Sir, and while you anticipate the growth to come, what are your plans to increase your dispensing capacity?

There are 2, 3 things. One is, of course, we're opening new stations, wherever we can. We are upgrading the capacities of our existing stations wherever we can. We are taking new technological initiatives like we have developed a small footprint CNG station, which can come up in just 300, 400 square meters of land. Now we have got -- taken that one step further and has started getting those MRU mode, where you don't even need permanent land. So we are trying both -- and again, we are partnering with oil marketing companies, we are partnering with state transport undertakings and we are partnering with private entrepreneurs to open as many CNG stations as we can.

Sir, can you quantify? I mean this is -- the answer you gave is right directionally, but can you quantify that are your dispensing capacity or maybe the number of dispensers you are going to add in the next 6 months, 1 year, 2 years versus what it was before?

The number of CNG station additions have been mentioned sometime back.

274 today. Totally, we have 274 stations with a dispensing capacity of around 35 lakh kgs per day. And we are targeting to add around at least 20 stations this year and upgrade 25, 30 stations this year and try to set up 8 to 10 MRUs this year. So this is what is the plan for current year. And going forward, we wish to scale it up at little further.

And if you want the number of dispensers, on an average, each CNG station has got 2 dispensers, these are your own dispensers. So that's 4 billing points.

Sure, sir. So that's good. But -- so these -- I mean, the quantum of a jump in terms of capacity addition on the 270, adding 20 dispensers in a year, is not a great number, I would say. But I mean, this is what I feel, but you can indicate that this 20 dispensers addition can support what kind of volume growth in CNG?

It's not just these 20 CNG stations. You need to also keep in mind that the current 274 stations, which we have are running at an average utilization of less than 50%. So even without the addition of any stations, there is scope to increase sales volumes. But directionally, because demand is there, because we want to stimulate that demand further, we are making sure that on the supply side, make it as convenient and practically possible for the people to convert to CNG and get their vehicles filled.

So sir, just -- yes?

The upgradations, which we are going, all the upgradations involve addition of at least one more dispenser in the station. So that also had gone to the city. And every new station is giving at least 2 dispensers, which is 4 dispensing points.

4 points.

Dispense mix -- so that's actually 100. It is not our 20 or 40 or any such number.

More than 100.

Sure, sir. And in this context, also, can you help that pre-COVID, what is the utilization of these stations versus -- we are below 50% now?

Pre-COVID used to be above 50%. We are marginally below that because we have added some stations from the last year and this year, whereas sales have just about reached pre-COVID levels.

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

My first question is a bookkeeping one. Please give the CNG sales volume in kgs and a bifurcation between industrial and commercial sales.

Yes. Second question for CNG volumes in kg for this quarter were INR 10.15 crore as compared to previous quarter, if you wish to have INR 13.35 crores kgs, which is CNG in kg. Second question was about industrial-commercial sales, isn't it?

Right, sir.

So industrial sales volume is 0.260 mmscmd this quarter as compared to 0.25 in the previous quarter, that is Q4 financial year. And commercial category, it is 0.120 mmscmd Q1, whereas 0.153 in Q4 of the previous financial year.

Great, sir. And sir, my second question is regarding the upgradation you spoke about of CNG stations. So what does this upgradation actually basically is about? And what do you do in that application? And what is the kind of investment involved per station when you upgrade?

See, when we talk of upgradation, there could be 2, 3 things involved. One is if the life of the compressor is substantially over, then naturally, we replace that compressor. That's number one. Secondly, while replacing, if let us say earlier, compressor was of 750 SCMH capacity, we may think of putting of 950 or 1,200 SCMH capacity compressor also. So throughput level increases and that benefits in dispensing more gas. Upgradation can also mean rearranging the entire design in such a manner that 1 or 2 more dispensers can be put in over there. So this is what we mean when we talk about upgradation of the existing outlets.

And roughly, sir, what is the investment that is involved in upgradation? And how does that compare vis-a-vis a new station?

No, it's very difficult. It depends on station to station. But there will be marginal difference if the capacity of compressor is getting changed. It generally doesn't change in the direct proportion. That is if 750 is becoming, let us say, 1,200 or 950 SCMH, it may not proportionately change. Marginally, it can change. So a couple of crores could be involved at the most, even if there is 1 compressor, plus 2 dispensers and other things are involved. Civil-related costs are generally very minor.

Right. So staying on the topic of CapEx, what is the CapEx number for the year that you have planned?

This -- one is what we are planning and one is what is really going to happen on the ground. I think we have drawn a very aggressive plan, but one thing obviously depends upon what's going to happen to lockdown. That is number one. Secondly, even these various statutory approvals, which we are required to take, generally, all those approvals do come in, in the form, hard-copy form, not in soft form. So those challenges are also faced by us. If we get all the permissions, et cetera, and time and things start soon right from 1st August, let us say, if we assume lockdown is completely lifted, then from budgetary point of view, we are ready to spend even INR 800 crores. That kind of aggressive planning we have undertaken. But all depends on the approvals and other things, then, of course, any resurgence of pandemic-related things.

[Operator Instructions] The next question is from the line of Vidyadhar Ginde from ICICI Securities.

My first question was until December '19, you had, for CNG and PNG, used to get some small quantity of Panna-Mukta-Tapti gas, which was at a high price. And since then now I think the entire gas, which you get, is at a low price. So could this change some time in the future? Or do you expect that will continue to just get APM gas for CNG and PNG?

We get some APM gas. We also get something called non-APM gas at the same price on the APM gas. And both these put together, meet our requirement previously what used to get from APM and PMT. And PMT we used to get at Hazira. So now some of this APM and non-APM gas also they're allocating to us from Hazira. So in effect per year, our cost has come down a little bit because PMT gas was more expensive compared to APM or non-APM gas.

And PMT as a source has already...

No, no, I'm just saying that some others also -- is it a possibility that -- see, the cheap gas is scarce. So -- and there are the usage of -- during COVID, probably it is not going up. But as it starts going up, as the CGD sector, which is top priority, starts consuming more and more gas, some other sectors like power, fertilizer get less domestic gas. So could that -- could this -- is it a possibility that they will say that you start using some LNG, maybe 10% of your volumes for CNG and PNG? Or you don't see that happening at all?

Can you repeat your question, please?

No. What I was saying is that because CNG and PNG has top priority for usage of domestic gas. And therefore, as the domestic APM gas consumed by you keeps going up, the -- and that gas availability is very limited. It's actually going down. So as your volumes go up CGD sector as a whole, CNG and PNG, power fertilizers are getting less and less of domestic cheap gas. So could you -- because of that, could you see a possibility that government says that or even for CNG and PNG, you start using maybe some LNG or some of the deregulated gas, which gets auctioned, you can use any deregulated.

The fact is that PNG has been accorded top priority based on the Supreme Court decision in the matter of Dhrangadhra Prakruti Mandal Limited. This was a precursor to the ministry issuing the guideline according to top most priority to CNG, PNG. So we do not foresee any such thing happening where if...

If I'm not wrong, Supreme Court was more than happy with 80% of it being APM gas. It was only the minister, in February '14, changed it to 100%, I think over a period of 2, 3 months from December.

That continued...

Supreme Court never said 100%. It said same combination of gas for all CGD companies.

It doesn't even say that, but I'll take that point. But we don't foresee that priority getting changed in near future.

Sir, not priority. I'm only saying is that you -- just as earlier also you are getting not -- see, even then you are not getting entirely cheap gas, you are getting to Panna-Mukta-Tapti. So effectively, so that's what I'm just asking you.

No, sir. That's...

You don't see that changing. Fair enough. fair Enough.

Even if we have taken 10% RLNG or some of the expensive sort of gas, the headroom over there for us is huge to increase. Domestic PNG is a price inelastic demand. And people are -- people cook at home and will continue to do so. LPG subsidy has grown away. So currently, they are almost 30% discount to domestic LPG. And in CNG, you know the kind of headroom is available. So 10% reduction in domestic gas flow doesn't really worry us too much.

But to answer your question in short, we do not foresee the possibility of CNG, PNG sector getting allocated less gas than what they are consuming in the previous 6 months.

Okay. My last question here is that given the way Henry Hub and U.K. NBP prices are moving right now, next year, lithium gas is likely to be very sharply higher. Do you think that at some maybe $5, $6, if it moves up to which it is looking like a decent possibility, you may have a problem if it gets to that level to -- maintain these margins. Passing it on largely, I think it's a high possibility. But given the kind of lofty margins you are sitting on, do you think that you will be able to pass on if, let's say, the -- and it looks like a very good possibility that next year's ATM gas price in H1 and H2 could be well over $5, could be somewhere between $5 to $6 MMBTU?

If you look at MGL's history or by MGL CGD history, there have been years in which APM gas price has been more than $4. We were touching $5 at one point of time. They have also, I mean, flourished in that environment. We were taking good quantity of PMT gas, which was almost $6 per MMBTU. So it is not that much of a concern. Again, if you're talking like can you pass on the price in one shot or would it be over a period of time, et cetera, that is a topic that call we will be taking when we know exactly what is the kind of hike which has happened and the other various factors which the CFO mentioned affecting margins. So we'll be taking a holistic view, keeping in view everything. And of course, the prime concern is we will not do anything which can potentially impact onboarding of new customers. So we want volume growth. So we will not price our CNG or PNG out of the market.

Next question is from the line of Manikantha Garre from Axis Capital.

Just wanted to check on -- continue with the previous questioner. So in the future, there is a possibility that you may have to club compress biogas with APM. And as per the pricing, which I see, I think this compressed biogas may be available at $10 to $11 per MMBTU. So that, again -- even though we don't know the ratio of how much CBG has to be taken, but that can increase the APM gas price -- the gas pricing for CNG and -- the input gas pricing for CNG and domestic PNG. Just wanted to understand, is there any direction or talk when this could get added in your APM gas, when that can come from the government side?

See, there is already a policy in place called SATAT, which is announced by Ministry of Petroleum and Natural Gas, wherein we are promoting the uses of compressed biogas. But coming to your specific point, whether it will impact the overall basket of APM gas or non-APM gas, which is allocated for CNG, PNG, going forward, we don't even think that it will touch the percentage of 4% or 5% in the coming few years. So we do not foresee much of a impact on the overall weighted average cost of the APM, non-APM gas available for CNG, PNG.

The next question is from the line of [ Somaiah ] from Spark Capital.

So the question pertains to this INR 2.6 increase that we have taken. So we have mentioned 2 cost trends there. One is transportation, by and large, you have mentioned that it's largely because of transportation. So can you provide between this INR 2.6, what would be the roughs between transportation and other operational overheads? And what exactly is driving the increase for transportation and operation exclusive?

I think details will mention at the next call because it is not the period which we are talking about past, but, yes, major portion is with respect to the transportation cost. And there are some other provisions like this ONC related things and OpEx-related provisions are also involved. All that clubbed together right now that price rise has been taken.

The next question is from the line of Kirtan Mehta from Bank of Baroda Capital Markets.

I had a question regarding the INR 800 crore of the aggressive CapEx plan that you had mentioned. If at all, it's possible to sort of really go through the CapEx plan, what are the key elements of those plans? Could you share some more color on that plan?

Yes. It is with respect to everything. There are 4 major categories. One is these high-pressure pipelines, that steel pipeline, which we talk about. From supply security point of view, some looping we are required to do. There are some good portion of steel pipeline, which needs to be led into the Raigarh district, which is part of our minimum work program, also as undertaken with PNGRB. There is another important CapEx aspect with respect to medium pressure pipelines which are MDPE pipeline, which we call it. These are arteries for connecting domestic industrial, commercial all types of customers. Third, not necessarily in that particular order, but important CapEx will be with reference to CNG also. Because earlier, I think we did mention there is the upgradation of CNG stations as well as new stations, which we'll be talking about. There is also other element of cost, which is part of the civil cost, there could be some costs relating to our offices, either for headquartered office itself or some CRM-related offices. And there is, of course, the normal administrative as well as IT-related capital expenditure. So all put together, and this is for all GA-1, GA-2, GA-3 put together, which we have mentioned that given a choice, lockdown is lifted, all approvals come in pretty fast the way we expect, then we have ability to or we have even planned for or drawn up plans for ambitious INR 800 crore CapEx plan.

The next question is from the line of Varatharajan Sivasankaran from Antique Stock Broking.

Am I audible, sir?

Yes.

Yes, sir. Please, go ahead.

Yes. Sorry about the disturbance. I have 2 questions. One, with regard to your BEST buses and whatever updates you are Giving earlier, where are we today? And secondly, any kind of a breakup in terms of Raigad district versus the other GAs in terms of all the new stations and all the other numbers?

Mr. Varatharajan, can you be louder? And can you repeat your questions, please?

Yes, sir. So one on the BEST buses and whatever updates you were giving earlier where we are currently? And two, any kind of a breakup in terms of new stations between the Raigarh district and the GST?

As regards to GST, 500 buses were -- had added on some months back. They have come out with a fresh procurement plant for another 500. And we are expecting that those 500 buses will come on stream within the next 2 to 3 quarters. And we are upgrading our CNG infrastructure inside the BEST depots to accommodate these buses.

And I think the second question was probably something to do with CNG infrastructure or outlets in Raigarh. Currently, we have 19 CNG stations operational in GST or Raigarh.

No, that you added any breakup between Raigarh and Mumbai?

There was no hard breakup as again, the number is around somewhere we get the permissions, where we get the land, et cetera. But roughly, it could be about approximately 25% to 1/3 could be at Raigarh.

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

My questions have been answered.

The next question is from the line of Aishwarya Agarwal from Nippon India Mutual Fund.

Yes. Sir, can you share the volume which has gone because of schools are not operating and school buses are not running?

Unlike Delhi, we don't have too many school buses, which are running on CNG. So the volume impact on account of that is negligible.

Thank you. I would now like to hand the conference over to Mr. Probal Sen from Centrum Broking Limited for closing comments.

Thank you very much, Malika. I would like to thank the management for being so patient and taking. I know that there were a lot of questions. I apologize for some of the participants we had to do a hard close at this time. A question from my side, sir, if I can take the opportunity. You mentioned about the Uran-Trombay pipeline. Can I get a sense of what is the tariff now vis-a-vis what it was earlier, the transportation tariffs in rupees per MMBTU or per SCM, whatever you can share?

It's there on the regulators website -- I mean, it is number about INR 34 per MMBTU.

Approximately. This tariff we started paying from 7 July onwards.

Okay. Okay. All right. Yes.

Yes. So you can take it around figure of INR 35, just for calculation.

Okay. Okay. Fair enough. Fair enough. Thank you very much, sir, for taking the time to answer questions in such detail. I would like to thank everyone for participating. Sir, would you like to say some closing words?

No, thank you very much. And we also apologize due to these technical faults, I think we started off late, but hopefully, we have tried to compensate a little bit by extending our time. Thank you very much to all for joining the call.

And stay safe. Thank you.

Thank you.

Thank you, everyone. You may now log off from the call.

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