Refused to commit on tariff revision timing.

My second question is with respect to the petchem business. So, this quarter, of course, was impacted by the planned shutdown that you've undertaken. But can you give us some colour in terms of how the market is looking in terms of product placement and whether we are finding any challenges with respect to placement of our products in the market in terms of pricing etc. And when can we see a more secular trend in terms of profitability in this segment?

Yeah. In terms of product offtake there is no challenge. There is a good amount of demand available in market. We do not even carry these stocks with us. The challenge is largely on price part. We are going through a cycle, the pricing cycle where there is lot of availability of polymer in international market, that is also pushing the pricing pressure to price towards downward. And second, unfortunately, which we did not envisage last year. The Henry Hub price which we give to our Pata plant had almost doubled which was average Henry Hub price last year was $1.88 per MMBtu is on an average basis this quarter was $3.5 per MMBtu. That means the $1.7 per MMBtu and consequential taxes, the duties and implications, this is putting lot of pressure. So, though we are taking all the measures, let me tell you we are regularly doing hedging for input gas prices to reduce the prices for Pata Petrochemicals, yesterday also we took the hedging around $3 per MMBtu. So, we try to take all the measures. But in terms of guidance, we do not feel that we will be a very good in petrochemical business in this year. We may be able to reduce our losses. We may be trying to come nearer to breakeven level. But I will not be able to give you any guidance which say that we will be in black during this year as far as petrochemical business is concerned.

My first question is on your transmission guidance. While you did reduce your guidance for this year, even for next year's you've brought it down to 135-136. Why would you do that if you can share more light on that?

Every year we'll not see the monsoon like this. Every year we'll not see the tripping of fertiliser plant like this. That is two major reasons which have brought down. We have already factored that in. We have now considered the base of the revised guidance of 127-128 to give you guidance for next year. It means we have reduced the abnormality for this year and natural growth, the pipeline which are coming next year for the purpose of guidance. We give guidance which is on ground. I could have revised my guidance of FY27-28 in next quarter. But I feel I should give you guidance which is realistic as on date.

Secondly, if you can also talk about this differential tariff impact for previous year INR 133 crore. What is the nature of that?

There is a mechanism in PNGRB that there is a settlement committee which takes the input from the entities with respect to their claim of respective pipeline. Because our claim is based on our pipeline usage. So, there was a differential claim for some parts for previous year. The two previous years are involved FY23-24 and FY24-25. Those claims during settlement we did not submit when last committee meeting took place, and then we submitted our claim and PNGRB has accepted, that's what I understand. That's a claim which do not pertain to this quarter, claimed in this quarter. PNGRB has acknowledged that there was a missing link in terms of our claim. That is that difference, and which continues to happen sometimes it is on higher side, but this time this was a substantial figure. So, therefore, I thought that let us cover in our opening remarks that INR 133 crore is one-off which you should not consider that it is available always.

Could you delve a bit more Mr. Jain on the specifics of the granularity of demand, incremental demand that you expect in FY27 and FY28. FY26 seems to be lost given the first half being very weak compared to last year's base. If you could talk about specific sectors and demand sources that you may have modelled in detail so that we can jot down.

We have given our revised guidance for 128 MMSCMD. We have been experiencing that CGD is naturally growing at the rate of 12%. There may be some quarter-on-quarter difference. So, even if you consider that demand, almost 5 million on country-level basis the demand comes from CGD Gas distribution. We, being a pipeline infrastructure company, having almost 65% to 70% of pipeline network for GAIL, on a ballpark basis, 3.5 million naturally comes from this sector which has been coming, and this sector is regularly giving. Second, this quarter we lost a lot of volume. Let me tell you, last year we transported 131 million, this year we transported 120 million, and large part of it was from power sector which was not expected. So, we expect at least 1 million to 2 million on an average basis demand will be there from power sector, which has been there. Then we are commissioning new pipelines like I shared in opening remarks Kolkata section of the pipeline, we are commissioning Mumbai-Nagpur-Jharsuguda pipeline, we are commissioning Srikakulam-Angul pipeline, volume will come from there. And the refineries which I shared, the Barauni refinery, Paradip, Haldia, Bongaigaon, Guwahati. One unique thing happened during this quarter, the alternative fuel prices were down. Therefore, refineries volume also reduced. They also switched over to alternative fuel. In fact, the spot demand which used to come regularly, because of higher gas prices it was not available this time. We do not believe that such situations will always be there. We believe in normal business, and therefore all these things will give at least 8 million to 9 million volumes, 5 million to 6 million is anyway available. 2 million to 3 million volumes have gone down this year, and there will be natural growth. So, 8 million volume to 9 million volume we expect will be available next year. And this guidance is on realistic basis.

If you look at the decision to defer the PDH-PP project, can you highlight the reasons for this? Is there any concern in terms of the margins or is there any physical delay in the progress, and does it impact the capital cost for that?

Actually, there is no margin concern that for we have delayed the product. We want this project to be completed as quickly as possible. One of the civil contracts, which is causing a problem, there are delays on that part. And that becomes a base part of any project. So, we are regularly reviewing that, and that's the only reason, otherwise nothing more than that.

What is the reason for the reduction in the depreciation from more than INR 1,000 crores to INR 800 crores?

We have assets which are fully depreciated, and any major overhauling or repairs is reflected in depreciation. So, we had carried out overhauling of our compressors which is not there in this quarter. And last year, we had full shutdown at Pata. This year we had partial shutdown at Pata. So, even Pata also major overhauling and major spares were capitalized and fully depreciated. So, that is the change in the depreciation this time.

In the gas marketing segment EBIT, between standalone and consolidated there is a downside of around INR 400 crores from INR 1,071 crore to INR 660 crore. What is the reason for that decline in the gas marketing segment earnings in the consolidated entity?

Under the standalone, we are including CGD. And under the consolidated we are separately showing CGD. So, profit of CGD has been isolated from the consol e. So, if you see in the consol e figure, so we have shown CGD separately. There is a regrouping from Marketing to CGD from Standalone to consolidated.

Just one question, a broad question on the direction of crude prices, and what impact it will have on our business. On the one hand, obviously crude prices go up, term LNG prices and any other LNG linked to crude does go up. But what we have seen this peculiar situation where alternate fuel prices had gone down, because of softness which caused lower demand from downstream. So just wanted your view on what scenario you see if, let's say, crude goes up by maybe another $5 from here. How do you see the mix of demand as well as the input costs playing out for us?

The crude prices as everybody has been talking, they are largely expected to remain in the range of $60 to $70 in next few years. However, we have seen earlier also, and which cannot be ruled out is the geopolitical events which keep on happening very frequently, and which tend to push the crude prices upwards on for few months, largely there -- otherwise they are largely remaining at -- expected to remain in the $60 to $70. As far as your question is concerned, some of the alternate fuels like naphtha, furnace oil, they are, while they are correlated with the crude oil prices, they are also linked to the refining complexities, and they are consistently remaining subdued, the alternate fuel prices, especially the propane and the naphtha, which are a matter of concern. And what happened, this year, the summer got whitewashed because the spot prices of natural gas never came down. They were not very high. But the summer phenomena didn't happen in the spot gas prices, which has resulted in lower natural gas demand, which could not compete with the alternate fuels. This is slightly abnormal. Normally the natural gas prices are able to compete even with the alternate fuels. And that is why this year all these factors got combined.

If I can squeeze in one last housekeeping question. Capex guidance for FY26 and '27, if available. Break up between segments.

We have CapEx plan of around INR 12,000 crore in financial year '26-27. And that largely will be pipeline projects around INR 4,000 crore. CGD projects a very small CapEx of around INR 200 crore. Petrochemical projects INR 2,500 crore. E&P INR 500 crore. We have net-zero plan, and we are working on that, around INR 2,000 crore. Then operational CapEx INR 1,400 crore. Equity contribution INR 850 crore. And there are other projects INR 500 crore.

Regarding this transmission guidance. So, 127 MMSCMD is for the full year average, is that right?

Yes.

And what is the run rate currently, the volumes that we have lost, what you have mentioned when we fell to like say around 120 MMSCMD. So, right now fertiliser plants and all they have normalized or right now what could be the run rate?

The current run rate is hovering around the average which we expected and around 132 MMSCMD. That means 127 to 130, 131 depending on the day. If it is Sunday, it goes down to the average of 127. If it is not Sunday then it is around 130, 131. And also, it is depending on the weather conditions. So, fertiliser plants are almost now working at a normal level. But then, we are running at around 127 currently, if you talk of July, we are running at around 127, and sometime beyond that. And even some days there will be 1 million or 2 million lower. So, we have worked out how from where this volume will come, because as we are connecting pipelines also that is not factored today. When you talk July, those pipelines are getting connected, those volumes will be added. So, all these we have worked out from where these volumes come. But again, to sum up, we are currently in this month running around transmission around 126, 127, sometime 130, 131.

And this Dabhol is operating normally this monsoon, right?

Dabhol, yes, that's a positive for us.

And sir, second question is on your this PDH-PP. So right now, how are the margins of PDH-PP?

When we conceived this project, it was giving us beyond our hurdle rate. And even today, we are expecting around 13% to 14% of project IRR. And that's how we have recently also checked and let us see how it goes. That's the current expectations.

And this propane will be brought from Middle East only or do you -- are you looking at US and other things?

We have signed a long-term contract with BPCL for 15 years contract. Wherein they will bring the propane at jetty. One contract is for with respect to jetty, this is a bundle contract, and they will supply us on Saudi CP basis. So that's the benchmark, where from they source, what they do does not matter to us. But for us, index is fixed.

Rakesh-ji, just one since you mentioned that you are at 127 MMSCMD right now in terms of volumes in July as compared to less than 121 MMSCMD for Q1FY26. So, this extra roughly six on an average, is this largely from fertiliser plants now operating normally as compared to the scheduled and unscheduled shutdowns that we saw in the first quarter or is there anything else which is more noticeable?

It's primarily that. And, we were not operating our Pata Petrochemicals during first quarter, that was also on shut down. So that is also substantial. So, in terms of major volume, this is from two sectors, the fertiliser and from Pata.

And of the current volumes, what proportion is the more price sensitive sectors like refinery and maybe Petrochem, how much is of this 127 MMSCMD that you're currently doing in July. What proportion is refineries and what proportion is petrochemicals?

See that refinery petchem segment is roughly 20% of the whole basket. And going forward why we are hopeful of achieving this number is primarily because number one, Pata was shut down as sir has already conveyed. There were some scheduled shutdowns of fertiliser plants, but there were also a lot of unscheduled shutdowns. So, all these three factors will not be there going forward. The scheduled shutdowns, the unscheduled shutdowns and the Pata. And we are still hopeful of some demand coming from the power sector in the late summers like September, October, which normally comes back after the monsoon season, especially when the monsoon this year has happened very early.

Okay, sure. And just two last bookkeeping things. One is that this INR 133 crores would possibly -- would be revenues for the gas transmission segment. Just double confirming that, right?

Yes.

Just a question on the PNGRB revision. Like I believe it has been more than one and a half years since we have been talking about it. So, I just wanted to know when this revision happens, it will be prospective, right?

Yeah. Actually, regulation is like this, the month in which the tariff is approved, it is applicable from the subsequent month from the month it is approved. So, if it is approved say in July, it will be applicable in August. Only thing is that what PNGRB does first they approve the tariff, then they ask entities to submit zonal tariff. When we submit the zonal tariff, that is the approval. But that's a very, very small process. So that sometime also delays may be by 15 days. But it will be prospective.

I believe three years anyways is the regular timeline for review of pipeline tariff. So we are falling along those timelines now if let's say it getting delayed by further another six, eight months. So, just wanted to reconfirm that like will it still be interim review or how does it work?

Actually, there is nothing in regulations which is called as interim review. The periodical review happens in five years, but not before three financial years. This time they called for submission of tariff, the PNGRB called because there is a provision in the regulation that if any change in substantial parameters, then either we can approach or they can ask. So, there was substantial change in the parameter in terms of capacity or also in terms of gas prices. PNGRB, when they revised tariff last time, they considered significantly higher capacity. Later they engaged EIL and based on the recommendation of EIL, PNGRB revised the capacity which is downward. Second, they considered the APM price of $3.61 which are non-existent price, and now they have come out with the regulation that they will consider $11 as a gas price for fuel consumption. So that's of course they have come recently, but that was in their mind. So, there was the reasons -- they did not follow the regular timeline. And it is in terms of regulation only that can be called for. So, this will -- there is nothing like interim, but you can say because of change in parameter, they can revise an entry. So, in that sense, it is interim.