Ladies and gentlemen, good day and welcome to the Q3 FY2023 earnings conference call of Petronet LNG Limited, hosted by ICICI Securities. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal an operator by pressing star zero on your touch-tone phone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Probal Sen from ICICI Securities. Thank you. Over to you, sir. Thank you very much. Good evening, everyone. Thank you for making the time to attend this post-Q3 results conference call of Petronet LNG Limited. We have the top management of Petronet LNG with us, including Mr. Vinod Kumar Mishra, Director of Finance; Mr. Rakesh Chawla, GGM and President of F&A; Mr. G. K. Sharma, CGM and VP of Marketing; Mr. Vivek Mittal, CGM and VP of Marketing; Mr. Debabrata Satpathy, General Manager of F&A; and Mr. Ashwani Agarwal, Manager of F&A. I will now hand over to the management to provide a briefing on the results. After that, we will have a Q&A session. Sir, over to you. Thank you. Thank you, Probal. A very good evening to all of you. I will start with the highlights of our results. First, we achieved the highest-ever turnover, PBT, and PAT of Rs 46,025 crore, Rs 3,517 crore, and Rs 2,626 crore, respectively, in the current nine months as compared to the corresponding nine months of the previous year. We also recorded the highest-ever PBT and PAT of Rs 1,586 crore and Rs 1,181 crore, respectively, in the current Q3 for the fiscal year 2022-2023. The growth in PBT and PAT has been to the extent of 60% and 59% as compared to the PBT and PAT of the previous quarter. These are the highlights. Now, I will discuss the throughput in our plants. During Q3, the Dahej terminal processed 154 TBTU as against 182 TBTU in Q2 and 196 TBTU in the corresponding quarter of the previous year. The overall throughput of both terminals for the nine-month period has been 566 TBTU in the current nine months, as against 657 TBTU in the corresponding period of the previous year. Regarding the profitability I have just mentioned, the PBT was Rs 1,586 crore as against a PBT of Rs 994 crore in Q2 and Rs 1,633 crore in the corresponding quarter of the previous year. Apart from that, as I mentioned, the company has reported its highest-ever turnover of Rs 46,025 crore in the current nine-month period, as against Rs 32,008 crore in the corresponding period of the previous year. This represents a growth of approximately 44%. PAT has been Rs 2,626 crore as against the PAT of Rs 2,602 crore in the corresponding period of the previous year. This is the result. There has been an impact of approximately Rs 60 crore due to currency volatility. I hope we will continue to do so, even though this period has been very difficult for us. We have managed to report our highest-ever PBT in Q3. Regarding the total throughput for long-term and short-term contracts, the long-term volume processed at Dahej was 154 TBTU and Kochi was 13 TBTU, totaling 167 TBTU. You may ask the question. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star one on a touch-tone telephone. If you wish to remove yourself from the question queue, you will press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sumit Kishore from Axis Capital. Please go ahead. Yes. Thank you so much. My first question is with respect to the income that you have recorded this year for use-and-pay charges of Rs 849 crore. There was a similar number from take-or-pay, so the other half of it last year. What is the progress in terms of negotiation? Have they recognized or have they even acknowledged these outstanding dues so far or not? It has been our claim as per the contract, and we are continuously following up with the customers because this is payable as per the contract. As you know, so far, we have not received it; this is true. Still, we are pushing to get the payment as early as possible. If you look at the kind of situation which is prevailing, the volume itself is not coming to India in large quantities. That is why there is an issue, and we have to book use-and-pay charges of Rs 849 crore this year also. The situation is very difficult, but still, we are making all efforts to recover this. We are still negotiating and regularly talking to them. Whenever there is progress, we will certainly report to you how much we have recovered. This follow-up is continuous and is, in fact, being followed at a very senior level. Let us hope that a positive result will come out. Is it fair to assume that there is no issue with respect to the other long-term volumes? That is straightforward, and you are getting paid for those. Long-term volume is coming as usual. There is no issue as far as all the long-term contracts are concerned. The RasGas contract and the ExxonMobil model are there. They are all coming and are being paid on time. There is no issue. It is only the service volume, which is the capacity booked, where they must bring the cargoes and get them regasified at our terminal. That part is not being complied with; that is the only part which is lacking. In that context, can you give me the amount of receivables outstanding as of Q3 and the net cash? Are you asking how much is outstanding? Yes. Total receivables at the end of Q3 and net cash in Q3. Total receivables as of December 31 are Rs 3,530 crore. This includes everything. That includes the Rs 1,200 crore number? Yes, it includes approximately Rs 1,200 crore, apart from other long-term contract dues. Net cash? Cash we are having to the tune of almost, INR 6,000 crore. INR 6,000 exactly, I will just tell you how much is that. it is there. Just a minute. I'm telling the exact cash, how much is there. 1,327. INR 6,900 crore is the cash available as of now. 6,000. That is amazing. If you can share the numbers for service income as well for Q3. The service income is Rs 1,112 crore, compared to Rs 438 crore in Q2 and Rs 755 crore in the corresponding quarter of the previous year. Last one is an update on your CapEx plan. How is that progressing? Regarding our CapEx plan, we are continuously following up. Our two tanks are under construction, with approximately 50% progress. That involves Rs 1,246 crore. We are also proceeding with a third jetty, which will be a CapEx of Rs 1,700 crore. We have already received board approval and are proceeding with the tendering process. Apart from that, we have initiatives for the Gopalpur terminal on the East Coast. That has also been approved by the board, and we are looking forward to implementation agreements with Gopalpur Ports Limited. We will then proceed with the tendering process. Feasibility and environmental clearances are required, and that process is ongoing. Furthermore, we have planned a PDH (Propane Dehydrogenation) plant in Dahej. That involves a significant investment of approximately Rs 13,000 crore to Rs 14,000 crore. We are currently in the licensor selection process. Regarding other plans, our LNG stations are being commissioned shortly. However, high LNG prices are a concern. We have seen a silver lining recently with prices ranging between $16 and $20. If prices remain at this level, we can augment the installation of LNG stations and the conversion of trucks to LNG. Regarding CBG (Compressed Biogas), we are waiting for the state government to allot land before that process can progress further. Regarding other matters, as I have already mentioned, the CBG part was also discussed. However, that is again an issue because the state government must allot the land to us before we can consider it. It is not progressing well at this time because we are not receiving the land. Once we secure the land, we can consider those processes. I apologize for the interruption. May we ask Mr. Puneet to please rejoin the queue? We have participants waiting for their turn. Thank you. The next question is from the line of Nitin Tiwari from YES Securities. Please go ahead. Good evening, sir. Thank you for this opportunity. My first question is a bookkeeping one. How much of the Gorgon volume was processed at Kochi? At Kochi, it was 13 TBTU. The second question is regarding the regasification service volume in Q3, which is fairly low. Although there was a moderation in LNG prices progressively towards Q3, why was there this sudden drop? Is there any significant contractual volume tagged out? Related to that, does the use-and-pay income we booked as of Q3 also include non-usage of the regasification service facility in this quarter? The regasification service income is for the entire contract year, which is the calendar year. It covers the entire 12 months. Secondly, anything above $20 is not sustainable in the Indian market; that is the reason volumes were on the lower side. Since the Director of Finance mentioned that prices have now touched the $20 level, we expect an uptick in volumes. Prices were above $20 for most of 2022, but we saw a sharp drop in Q3 as prices started cooling off. I am trying to— It depends on alternate fuel prices. Propane prices were low, so some consumers decided to switch over to that. Volumes have reduced, as Vivek just mentioned, also because domestic gas was available on the IGX (Indian Gas Exchange). High-pressure, high-temperature gas is available in the market, and those volumes are being lifted by customers. This is the basic reason the volumes have been low. Right. Thank you, sir. Lastly, I am checking on the trading and inventory gains, if you have those available? The trading margin for Q3 was Rs 25 crore. There is also an inventory valuation gain of Rs 95 crore. You can add both of these to find the total figure. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. The next question is from the line of Sabri Hazarika from Emkay Global. Please go ahead. Good evening, sir. I have two questions. The first is a bookkeeping question regarding Ind AS for Debabrata. Debabrata is here. What was the run rate for the quarter in terms of cost of goods sold, other expenses, depreciation, interest, and other income? Yes, Sabri. At the gross margin level, it was Rs 161 crore positive. We had a Forex loss of Rs 60 crore. There was Rs 8 crore at the expenses level positive. Depreciation is Rs 84 crore, and interest is Rs 75 crore. Rs 54 crore negative is the amount. Are we entering a level where the lease accounting is reversing? As we have explained to you, the lease accounting will start reversing from FY2025. For FY2024, it will reach a break-even level. Right, sir. And the 5.44 was the cargo volume at Dahej, correct? What is the current utilization level right now? The utilization level is 81% as of now. It has increased compared to the 58% mentioned for Q3. Levels have picked up because prices are down. Long-term prices are around $11 to $12 and spot prices recently touched $15. If prices remain in this range, volumes will definitely come. Thank you. The next question is from the line of Pinakin Parekh from JPMorgan. Please go ahead. Thank you, sir. You mentioned utilization levels have gone up. Is it fair to say that for Q4, we can see volumes between 190 TBTU and 200 TBTU? Actually, a prediction cannot be given. It is only the beginning of Q4, and it is too early to predict volume right now. Understood. Regarding the Rs 800 crore plus of revenue booked for take-or-pay in Q3, is there a time limit beyond which the company would have to write off this amount if it is not realized? It is not a question of a legal time limit; it is a matter of the auditor's view. However, we are confident we will sort it out. We will try to do it in Q4 if possible. For the Rs 849 crore raised this year, the payment is not yet due. We are aggressively following up on the Rs 215 crore from last year and do not anticipate an issue with provisions. Thank you. The next question is from the line of Mayank from Morgan Stanley. Please go ahead. If the receivables are not recovered by March, how will that impact your dividend payout? Also, what is your thinking on long-term LNG sourcing beyond 2026? There is no link between those two things. To make a dividend payment, you need cash. Since there is no cash shortage, it will not impact the dividend. Rest assured, we are fighting for the receivables, but it will not affect the dividend part. No, there is no link there. Two things are entirely different. For making payment of dividend, you need cash. With cash, it will not impact the dividend. Rest be assured. This is something else because we are fighting for it, and we will try to get it also. At the same time, there is no cash shortage, so I do not think there is any impact on the dividend part. Mayank, just to add to the answer. after the last year, I mean, FY 22, we had booked some user pay, but after that also two dividends have been paid. This year, whatever has been booked, the due date has not yet also come. We have just recently done the billing also in a couple of days back as per the contract. As the DSR has told that there is no link between these two. No, very clear. Thank you for that. The second question was more related to a bit more long-term view. Now we have seen your peers starting to tie up long-term supplies beyond 2026, especially in countries outside India. What has been your view, and you still think it is too early to kind of go into the market? No, no, it is not too early. We are already in the market. In fact, we are already negotiating for our last year contract. That negotiation is already going on for renewal. Apart from that, we are also looking for some additional volumes to be taken. That part is going on. we have to finalize by this year only for renewal of the contract and additional volume, if at all. We are looking forward to that. There is no reason why we shouldn't. At the same time, we would not like to enter into a contract where we are, in fact, supposed to make a payment which is a little bit higher slope, rent or a higher price gas. We are trying to get a reasonably priced gas. That's why there might be some delay, because market is very hard. In such a hard market, if you go, certainly prices will be higher. it is not fair to go for higher prices, because this will take in the long term. it is better to delay it for some time till the time the prices are reasonable. Now we see that prices are coming down. Hopefully this will remain in this, the USD 16-20. If it remains in that range, then we'll get a better slope in the market, apart from our renewal of our gas volume. That is there. None of the Indian parties has entered any contract so far. Outside parties have done it. Maybe China and other countries have done it. We are treading with extreme care. We are trying to go for a contract which is reasonably priced, so that in long term that will not pinch. Perfect. Thank you. Thank you. Thank you. The next question is from the line of Vikash Jain from CLSA. Please go ahead. Thanks for taking my questions also. Just one question on this user pay income that we have booked. Now, when I look at the third party volumes that has been, booked for this calendar year versus versus last calendar year, almost roughly there's about 100 GBtu difference, or 90 to 100 over, around this ballpark. If we were to look at what you had booked in 3-2 and 4-2 of last year, assuming that all of that was for calendar year 2021, then from that perspective, that should we expect you to book more in the Q1 as this, clearly, this number is similar to what you had booked during that last year, including the two quarters. This number should be higher, right? No. Actually, this year we have booked for the entire year, for calendar year 2032. Last year what happened that in 2021, we had booked 347 crore around of user pay in the Q3 and 83 crore in the Q4. This was the segregation. That way you can say if you... That was for the calendar year 2021, both of these. This both will make it around, Four-thirty. INR 430 crores of user pay. This is the right number if you compare from number to number because last year it has been INR 849 crores. Last year it has been INR 430 crores. Mr., that's what I'm comparing. I mean from INR 430 crore versus this year being, sorry. Thank you. The next question is from the line of Avinash Karamchandani from Equirus. Please go ahead. Hi, this is Maulik Patel. Couple of questions. One, have you taken the 500 at Dahej for this calendar year, 5% per annum? 5% per annum. Yes. The revised price is what, INR 59? it is around INR 59. roughly I'm just telling you how much. INR 59 something is there. If you further revise for the year INR 37 something. . Sir, regarding this, on this take-or-pay, as you have clarified a lot, but what are the options we as in the company and the board has that? I mean, in case this continues for another year and the price of the global LNG market remain high, that can be another take-or-pay liability. I mean, what the board has discussed this matter. What are the options available to us apart from the pursuing the pending dues which you are probably doing it. Are you going to charge interest rate on the pending dues of CY 2021? Because it is more than a year and you have not received the amount from the customers. You were telling me about that, the tariff. You are telling, we are telling that Dahej regas charges. It is now INR 59.91. INR 59.91. What will be the charges at Kochi, sir? It was around INR 80. It is around 85. 81.04 is there. This will be revised for 2023, 2024 next time. It is now 81.04. My second question is that on the take-or-pay, if this amount doesn't, are you going to charge interest rates on CY 2021? That's number one. Pending amount of around INR 3 billion or so. Secondly, sorry, INR 4 billion. Secondly, sir, what the board has in an options to get the recovered amount. Are there any bank guarantees which has been with us as a part of the contract or apart from pursuing negotiation or any legal measures which we can deploy? Actually, if you look at our composition, the complete composition is that our promoter has our optical source. They are not the regular defaulter. This is an unprecedented situation which is causing this kind of problem. Certainly we still, we are following up for making the payment because ultimately this is the contract that they have to pay if they are not able to use. Issue is that, you ask for security. We, certainly from, our promoter, we do not have it right now. There has never been a need also for that. It has been a contract for the last almost, 18, 19 years, and we have not seen any default. The first time ever, this situation has come that, they are not taking payment. We hope that this will be very shortly settled because we are following up and we have taken a challenge that in this quarter we will try to resolve it. This INR 1,300 crore of amount, is it pending both from your promoter and which is like GAIL and IOC and BPCL, or it is largely from the other customers which are not your promoters, which is like GSPC and Torrent? Except GAIL, all are there in this 849. GAIL has not defaulted at all. Otherwise, IOCL, BPCL, GSPC, Torrent. You mentioned about the collection is around INR 1,300 crore, INR 13,000 crore. That was the indication amount. INR 13,000 crore. That is likely to get approved by this, the next quarter? Not next quarter I cannot commit because still we are in the process of licensor selection. Maybe within six months we can say. What kind of a time duration once you get an approval from the board, because you already have a land with you, right, in Navigition? What kind of a timescale we are looking for to start this project? it is almost four years it will take almost. As well awarding the job for the project. It will be in a staggered manner. Effect will not be in a day. It will be a span of almost four years like that. Thank you. The next question is from the line of Siddharth Chauhan from B&K Securities. Please go ahead. My question has been answered. Thank you so much. Thank you. The next question is from the line of S Ramesh from Nirmal Bang Securities. Please go ahead. Sir, good evening and thank you very much. If you have to understand the usage provision of INR 848 crores, that is entirely for April 2022, March 2023. How much should we assume is for the Q3 with the adjusted number? Well, actually this use of the charges is levied once in a year. We do not account for it in every quarter because we give an opportunity to all the offtakers and all the customers that they should utilize within this calendar year. it is calendar year. This is from 1st January 2022 to 31st December 2022. If they are able to use their capacity booked in this period, then we won't levy anything. After this date passes, means after 31st December, we levy this use of way charges. In terms of the coming financial year, what capacity utilization should we expect the company to be looking for? We are very bullish about it, and we are expecting more than 80%. 81% is what we are going on. Now volume is coming. We are hopeful that at least it will be in the range of 80%-90% in the year. I understand that. The question I'm trying to grasp here is, in future if the capacity utilization declines, how do we account for this in terms of making the estimate? because if you go by 60%, 70%, the earnings come lower than what you report. How do we know what at what capacity utilization should we, expect the Right-of-Way charges to book even on a calendar year basis? See, we do not expect any use of way charges. In fact, we do not want it should happen at all. They should come and book the capacity and use the capacity. This is the intent of all the customers. They do not want to unnecessarily get this bill for use of way charges. This is compulsion because of the high prices of LNG. It has been there. Now prices are also coming down. If you see, it has been in the range of $20 it is today, but yesterday I was seeing $17, before that $15. In that range, if price is there, then we will find more cargos coming here, and customer will use it. At this level, when it is $13, $35, $40, the consumption is very less because of the high prices. Certainly we are now very hopeful that with this kind of pricing of $15-$20, we can expect more volumes here, at least for the Q3, Q4. Our capacity utilization will be much higher. . What is the status of the two-phase expansion in Dahej? When do you see the complete closure of the project and volumes contributing to your utilization, say, in Dahej with expansion load? You're talking about Dahej expansion of 5 MTPA. We expect that by the end of 2024, we should be able to get at least 2.5 MMTPA. By March 2025, we should be able to get at least next 2.5 MTPA. By March, you can say March 2025, we should be able to get this capacity. We are hopeful that that capacity again will give us flexibility that we can book more capacity of the customers. we can also think of more volumes coming in for our own purpose also. You see, we are in fact importing some cargos on behalf of ONGC also. If we get some volume contract, then we shall have that particular advantage and we can process it, we can store it in two tanks we are constructing. There's a lot of business opportunities there because then we can also have some trading volume with us. In future if at all, there is an opportunity. That kind of flexibility will be there. Apart from that we are also looking forward to have some capacity booking for the expansion we are doing for Dahej. We are very optimistic about that. Thank you. The next question is from Somaiah V from Spark Institutional Equities. Please go ahead. Thanks for the opportunity, sir. The first question in terms of this take-or-pay, the revenues that you have booked, what will be the equivalent volumes in both the years for calendar year 2021, if you can give a number in TBTU that should be helpful, for calendar year 2021, 2022? 20 and 20, how much is the volume for Right-of-Way charges? Last year. Last year. You are talking about 2021, 2022. For both the years. For both the years. For 2021, 2022 it was 80 PBTU. For 2022 it is 155 PBTU. The second question is the FM project. What would be the IRR broadly that we'll be, looking at for this project? When do we expect it to start this project? Also you mentioned it will take a more period of time. Any, any color on that that you can give. IRR, as you said, we have a policy here that whatever project we undertake, there is a project approval policy which ensures that unless we get an equity IRR of 16%, we do not go for the project. In this case, we are getting a handsome IRR and we cannot mention right now because it is a premature thing. It is above 16% equity IRR, that is for As far as the CapEx plan is concerned, which is I have told you that it is, it will be in a staggered manner, like 4 years after approval and awarding of the job. Hopefully, we can say that INR 13,000 crore will be spent, not equally then. Initially it will be less, 2,000 and then 3,000, 4,000 like that, and 5,000. It will be like that only. 2023, 2024 it may be less, and subsequent year it may be high. Because we are expecting by 2026 end. It will be in a staggered manner, 2,000-4,000. One last question, sir. What would be the CapEx applied for the next couple... I mean, this year, what would be our CapEx amount, and then what are we looking at next year at the company level? When is, the Gopalpur expected to start? This, actually next year you are talking about 2023, 2024 or this year you are talking? means 2022, 2023. It should be in the range of INR 1,200 crores,. INR INR 1,213 crores approximately. This year or next year. Next year it will be even maybe higher than that. Maybe around INR 1,800 crore will be next year. We are likely to spend. This year INR 1,200 crore you can take safely. The last part of the question, I mean, the Gopalpur terminal, when is the basic. When it will be? When it is expected to? Actually, I just told you that we are still doing some due diligence regarding this agreement signing, and all those things are being followed up. Hopefully we will enter the agreement with the port trust, Paradip Port Trust, so that we get the right to build the terminal over there. We have, in fact, contacted the state government authorities and we are seeking some environment clearance and other clearances with the authorities. Thereafter, we will in fact, go for the awarding of job. If you look at that, we have plans to have FSRU terminal. It should not take too much time. Two years time it should take to build FSRU terminal after awarding the job. We are first trying to get the clearances so that, and the agreement signed so that everything is in place before awarding the work to the contractor for construction of the LNG terminal. It will be at least 2 years. Should not be lot more than 2 years it should be the timeframe for construction of the FSRU terminal in Gopalpur. This is after award of the job. Got it. Thank you. Thank you. The next question is from the line of Puneet from HSBC. Please go ahead. Puneet, please go ahead with the question. Your line is unmuted. Thank you so much. My questions have been answered. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Probal Sen for closing comments. Sir? Yes, yes. Probal. Yes, sir. Would you like to make the closing remarks, sir? No. In fact, I have said everything, whatever I had. Only thing is that, I want to convey my sincere thanks to all the analysts and investors because they have reposed faith in us. In fact, we are also trying hard every time that our profitability always increases from the last time. This is why that we are able to achieve even higher profit than previous, or current quarter than previous quarter. Our effort is there always to increase and augment the profitability and investors' return. The only concern was there, high price of energy, which in due course of time will be addressed, and then we will have the 100% utilization of our terminal as we used to do earlier. With this, I would like to close my remarks. Thank you so much, sir. It was a fairly insightful and a fairly detailed Q&A session. I thank all the participants and most importantly the management. This is a tough macro environment for the gas space, so obviously, it is, it is a challenging environment and the performance has to be appreciated in that context. Thank you so much for your time, everyone. You can log off now. Thanks. Thank you, Prabhat. Thank you. Thanks to all of you. Thank you. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may disconnect.