Transmission FY26 guide cut 138-139 (Q4) to 124-125 MMSCMD (Q3).

Yes, congratulations on good numbers. My first question is on your gas marketing business. The first part is, when I look at the consolidated piece for this quarter, there is a Rs. 1,500 crores income versus standalone of Rs. 1,200 crores. What is that Rs. 300 crores attributable to? And secondly, your guidance of about Rs. 4,500 crores, do you see any sort of risk to that given what's happening with crude and Henry Hub? Or do you think this is a locked in number for the full year?

So it's GAIL Gas which we have incorporated line by line, that's the difference. Actually, this year we have regrouped marketing and CGD business of GAIL Gas. Earlier it was getting depicted in CGD, so we have regrouped, and bulk sale we have considered in marketing. Sandeep Kumar Gupta: So, while risk were there and the risks were there in the current year also and even the previous years, but we are confident that with our portfolio, which is well diversified, both oil linked as well as HH-linked I think we are very pretty sure that we will be maintaining as per our guidance of Rs. 4,000 crores to Rs. 4,500 crores in the coming years also.

And lastly, if you can talk about where is the additional volume growth coming for your transmission business?

Chairman sir has, during his opening remarks, stated that we are expected to transmit on an average basis 138 to 139 MMSCMD, and we expect the natural growth of CGD businesses which we expect around 5 million increase will happen, on country level it will be more. But since our share is around 70%, so we expect naturally that volume will come from there. IOCL Barauni 1.38 MMSCMD, then IOCL Paradip 2.35 MMSCMD, IOCL Haldia 0.5 MMSCMD, IOCL Bongaigaon 0.2 MMSCMD, IOCL Guwahati 0.2 MMSCMD, IOCL Panipat requirement of 1.79 MMSCMD during '25-'26. Earlier there was a requirement 3.62 MMSCMD, we have decreased it to 1.79 MMSCMD. So these are the areas from where we expect that these volumes will come, apart from the commissioning of new pipeline that Chairman stated, Mumbai-Nagpur-Jharsuguda, Srikakulam-Angul, there certainly we will be having more customers.

Sir, my question is related to your transmission segment. In this quarter, we had a drop of about 5 MMSCMD versus the previous quarter, so if you can help us understand why that decline in volume was there? And then when we see the guidance for basically FY '26, you are talking about almost like an 18 MMSCMD increases where we have exited the Q4. So I mean in the backdrop of the volume decline that we have seen in this quarter, does our guidance stand? And then basically in addition to that, how is the first quarter going for us, as far as transmission volume is concerned?

Actually, I understand you are asking regarding transmission volume, we have given guidance of 129 to 130 MMSCMD during last earning call, based on our assessment that will be somewhere around 129 to 130 MMSCMD. And on yearly basis, we are less by 2.5 MMSCMD even if we consider the 130 MMSCMD. And this particular quarter you are talking about, there is certainly a drop of 5 MMSCMD, largely it has come down, 3 million volume of shippers has come down, IOCL 1.5 and BPCL 0.8. And this is coming down because they are shifted to liquid fuel, because this quarter there is a drop in price of liquid fuel so they switched over. And in our marketing volume also there is a drop. KFCL was down during January '25 and also there were unplanned shutdown by HURL Phulpur, RCF, Thal, this all totally led to volume of 4 to 5 MMSCMD if you compare with Q3 of this year. So these are the specific regions, unanticipated shutdowns by fertilizer plant, and shippers volume came down because of the reduction in the crude price. And sorry, Chairman also just reminded me, the GIGL volume also got shifted because we were supplying to Panipat refinery through our pipeline, and then PNGRB in between authorized GIGL. And from January onwards that volume also got shifted to GIGL pipeline. Sandeep Kumar Gupta: And our appeal is pending.

On the CAPEX side, what is the guidance which we are giving for FY '26? And given your couple of large projects, particularly petrochem, we are finishing the CAPEX this year almost around Rs. 18,000 crores to Rs. 20,000 crores by CAPEX which we planned a couple of years back, and previous Mumbai-Nagpur Pipeline and others are getting complete. In the future is the CAPEX is going to shift more towards net zero and renewable side?

FY '26 we expect to have capital expenditure of around Rs. 10,000 crores and largely it will be on petrochemical and pipeline around Rs. 3,000 crores each. And then net zero, as you also stated, more than Rs. 1,000 crores.. And operational CAPEX we incur every year, Rs. 1,500 crores to Rs. 1,600 crores will be around that. And then city gas distribution and other small like LNG and CBG projects. Sandeep Kumar Gupta: And you are correct that most of our petrochemical projects and pipeline projects are getting completed within this financial that is '25-'26. So, besides the CAPEX which Director (Finance) mentioned on our renewable net zero initiatives, we have sought authorizations of several pipelines which are pending along the East Coast of the country. And several others which were not completed by other entities. And hopefully, we should get those authorizations on nomination basis. And we expect that our CAPEX pipeline will be strong in executing those pipelines in future.

Sir the second question is on marketing side of LNG. See, in the country, including you, IOC, GSPC, Arcelor, HP, they have all done some around 6 million - 7 million tons of medium term long contract linked to the HH and oil, which some of them will start in this calendar year, many of them will start. In next calendar year. Now if I look at this combined volume of all these medium term contracts, can be in the range of around 25 to 27 MMSCMD. My question is that will this expand overall kitty which the country currently has? Or lot of this volume will just replace the spot in the market which is we import approximately about 7 million, 8 million tons of spot LNG in the market, will that replace lot of spot or it will actually expand the kitty?

It is a very important aspect of the gas market in the country. We believe market is actually in evolution, and this is the process where we used to have three or four importers up to 10 years ago. Today we have got about 12 importers who are importing LNG cargoes into the country. Most of these importers are actually working on new projects also, whether it is AMNS, they have already started another project in the eastern side, I think Paradip or some other place. Or Deepak Fertilizer which signed another medium term contract that you are referring to. Everybody is actually trying to invest in a new facility and for that they are sourcing some niche contracts, there are certain initiatives that they are taking. Whether they will be able to manage those volumes or not, but they have taken that plunge. And this is the way the market develops. At GAIL, we take pride in the way we have developed the systems here. We are the torch bearer in this field. Whatever we do, others follow in three months, six months, one year, three-year, five year. We did a five year transaction which you referred to. We started receiving supplies last month. Others have now come up with the similar structure. We believe this will expand the market. The consumption of gas in the country will grow on account of these new contracts. Sandeep Kumar Gupta: And to add to what Sanjay ji has just mentioned, I believe, pointedly on your question, it is both. It is replacement of spot volumes because of the volatility which has been seen in the past. So everybody wants to have a sort of certain price. And it is also to take care of the growth which is expected in the country. So it is both.

Got it. Sir, just last question, this is on the petchem side. Given that the spread has been very weak in the last one, one and a half year. And the price of most of the pet chems are at multi-year low, and our CAPEX is also getting commissioned in this financial year. Do you think that this CAPEX commissioning will probably, at the operational level do you expect to make it a breakeven on these current prices or the current spread? And second question is that how much time you require to ramp up those facilities, particularly in the PDH side which will probably commission in the next two or three quarters?

There is a difference between the Pata petrochemical and the PDHPP you are referring to. PDHPP is propane based facility. When we took the decision for putting this plant, we did this analysis for past several years and we found that there is a good correlation between the propane as input and PDHPP as output. So the spread we envisaged at the time of envisaging the project, we recently did our analysis and still it holds good. So it is not going to be severe situation which is you are experiencing in Pata when gas price goes up and petrochemical price goes down. And we expect those correlation in terms of the propane and PDHPP price will continue to happen. And in terms of our capacity expansion, first year we expect that plant to run after commissioning maybe for 60% - 70% level of capacity. And then second year maybe around the 90%, and then it may be at full capacity. That's the normal trend of any process builds. Sanjay Kumar: Specifically, you were asking about the ramp up. We believe that the production of PP in the country in this financial year would be about 7.9 million tons and the consumption would be about 8.2 million tons. So there is real scope for the plant to ramp up. Our plant will be commissioned this year. And we hope to achieve full load after the usual teething period of three to six months.

So number one is on the CGD sector. Now, the PNBRB's scenario analysis presents the CGD sector as one of the key drivers of demand growth, and they are very bullish they are projecting 2 times to 3 times demand from the CGD sector between now and 2030. My question is, how confident is the management of this demand projection, given that there has been some challenge in the increased input costs? And secondly, there's also pressure from authorities, especially in the northern part of the country to push for electrification mandates. In that light, what is your sense of the realistic volume growth rate that CGD can deliver, and therefore drive overall gas demand growth?

The market is so big that EV push that you are referring to, possibly you are referring to Delhi DTC etc., and the new registration draft rules that they have given out. We believe CGD sector is, because of the reach, because of the 307 geographical areas that we have, that PNGRB has authorized, the demand in the country in CGD sector would definitely double or more than double in next seven, eight years. The current consumption in CGD sector is about 42 million cubic meter per day, and it can easily reach 100 million cubic meter per day because the EV would not affect the market. And the market is so big, the need for transportation is there, CGD will play its own role, EVs will play its own role. LNG as a fuel would also, for heavy duty vehicles, would play its own role. So, one or two EV push in one or two would not affect the growth of CGD segment in the country, that's our view. Rakesh Kumar Jain: Let me supplement our Director Marketing. The pressure will not be on gas based vehicles, pressure will be on the other fossil fuel like petrol and diesel, in particular diesel. So that's not a concern. And second, in order to give boost to this growth, there have been lot of actions being taken place on ground like Chairman during opening remarks said that the PNGRB is also looking for reducing the tariff for city gas distribution network companies from Jon 2, Jon 3 to Jon 1. That will certainly help in input pricing. And we also expect that as we are moving forward, the gas will also come under GST.

My last question is on the volume that got shifted to the other pipeline, the GIGL pipeline that got authorized. Would it be possible for you to comment on the volume shortfall that you are facing because of that? And by when do you expect a favorable resolution on that front? And is this number part of your FY '26 guidance?

This matter is subjudice and in our recent analysis we have taken away this volume from our guidance. See, it used to be 5 million to 5.5 million cubic meter which we used to transport that to Dadri. That has now reduced to about 2.5 million to 3 million cubic meter per day, it may go down further. It's a complex contractual arrangement actually, which cannot be explained. There are some other details also in this regard.

Firstly on the petrochemical business, you did mention about the pricing weakness that has been one of the drivers of lower profitability. But if I look at the current quarter, pricing at least on a Q-o-Q basis seems to be flattish. It is more the increase in costs that has led to the decline in profitability, at least in Q4. So just wanted your perspective on how you expect things to change? Even if pricing were to remain let's say flattish, can we expect any positive delta in terms of costs given that we will have a much larger capacity to play within the next couple of years? And what impact it can have on costs? And whether are there any sourcing cost advantages also because of the additional energy volumes that we are seeing?

As you must have followed that during Q4, the Henry Hub price, which is the gas we have allocated for Pata plant, most of the volume Pata plant consumes belongs to Henry Hub category or in that space. So that Henry Hub price has gone down abnormally. If you compare this year, largely it remains around $3.5 to $4 per MMBTU, which was almost 50% last year. So we believe that the prices at this level are not going to continue, it's already started softening. So that will certainly help us in reduction or managing the cost for Pata, even if the output price remains the same. Not entirely. Most of the volume are Henry Hub linked. And we optimize time to time, but most of the volume we are giving Henry Hub volume. Sanjay Kumar: It's an operational matter actually. We look at the cargos and the optimum solution is provided for our petrochemical plant.

The second question was with respect to the gas trading business. You gave the guidance what you have mentioned of course of 138 to 139 MMSCMD in terms of transmission volumes. So should we infer that gas marketing volume should sort of grow in tandem? If I take the same sort of correlation with 127 MMSCMD being transmission, we did about 101 MMSCCMD in trading. Is that a similar sort of volume we should look at for FY '26? Sir, with this kind of a growth, I understand that you are reluctant to give more specific guidance, but Rs. 4,500 crores, can we just assume that on the line of what has happened in the last couple of years, this is an absolute bear case or a very conservative guidance in terms of profitability from this segment?

Marketing guidance we have given separately. In transmission, our guidance is 138 million, 148 million, 159 million cubic meter per day in next three years. In gas marketing, we expect to do volume of 108 million, 114 million, that is 113.7 million and 120.3 million. These are our marketing projections. Rakesh Kumar Jain: Let me take this question, Prabal. We have been given the guidance what is possible as a minimum. If you have followed last three years guidance, we gave Rs. 3,000 crores, we surpassed that. Then we gave Rs. 4,500 crores, we achieved almost Rs. 6,000 crores. Last year we gave guidance initially Rs. 4,000 crores to Rs. 4,500 crores, and again we surpassed that guidance to Rs. 4,800 crores. And that's the history and we continue to give you guidance which is possible. So, Chairman in opening remarks at Rs. 4,000 crores to Rs. 4,500 crores and we expect that to be achieved.

Sir if you can provide the GAIL Gas and the six GA volumes, and the breakup in terms of CLG and other gas, please.

The Gas volume stood at 7.31 MMSCMD during last year in GAIL Gas. And if you are interested in breakup, the bulk trading was 4.37 MMSCMD, supplies to Taj Trapezium Zone on unified price basis 1.27 MMSCMD, and then PNG and CNG 1.67 MMSCMD put together. These are the three segments PNG-CNG 1.67 MMSCMD, Taj Trapezium Zone 1.27 MMSCMD and 4.37 MMSCMD bulk trading. So Q4, the PNG and CNG were 1.81 MMSCMD, Taj Trapezium was 1.34 MMSCMD, and bulk trading 4.18 MMSCMD, and total 7.33 MMSCMD. It is almost in the same range. This is not including six GAs, six GAs are still with GAIL, so that volume will be added as and when it is actually part of GAIL Gas, today it is not. Sanjay Kumar: So presently 6 GAs of GAIL, we are marketing about 0.4 to 0.45 MMSCMD of gas there. During Kumbh we had the opportunity of marketing 0.5 million cubic meter also in many days. And our outlook is that these particular geographical areas would grow by about 25% volume every year, these six GAs. CNG is about 0.31 MMSCMD, between 0.3 to 0.35 MMSCMD is CNG.

My second question was on the trading business, one is that like, the shift to gas linked contract from oil linked contract last time you had highlighted like it is going on, what would be the proportion now and are we really targeting 100% complete shift?

We have very good balance of different kind of contracts. We are having Brent used to be our main LNG index, presently as Indian crude basket some sort of proxy or Brent is being used in the country also. And about more than 20 million - 22 million cubic meter per day of gas that we receive is based on Henry Hub index. We have also done some additional contracts on Henry Hub index. We believe in maintaining balance between HH index and the crude oil index. We do not plan to shift completely to gas based index. Rakesh Kumar Jain: Varatharajan, this question we have been answering in almost every earnings call. We have portfolio of almost 21 MMSCMD linked to Henry Hub. This had been a concern not today, maybe three years back. Now, almost 19 MMSCMD of volume, either we have marketed on back-to-back basis or allocated to Pata. So that volume does not have any risk with respect to the change in prices with respect to crude. 2 MMSCMD volume certainly we have open available with us, and we have good risk managing capability. Recently, when the Henry Hub price went up and crude price went down, we took swaps. That's how we locked our margins. So, even for the volumes we market on index different than this, we have an ability to lock the margins. And in terms of the question you asked, what is the percentage, we have almost 43% - 44% based on Henry Hub.

And second thought is on the Dabhol LNG terminal, with the breakwater coming in, can you share what will be the ramp up in volumes and the impact on profitability for Konkan LNG?

Last financial year, about 21 cargoes were regasification there. This year we expect, as my CMD informed you that we are hopeful that the certificate will come within one week. So we expect to do about 34 to 36 cargoes this financial year in this terminal. Current year we did not have positive profit certainly because we regasification only 21 cargoes. But as we move to 34 to 36 cargos, almost 15 cargoes, if added, then it adds to the bottom line almost Rs. 300 crores. So this year certainly we were not in positive because of the breakwater issue. But going forward, we will have positive bottom line from KLL.

So if I look into your tariff outlook, so we have this upcoming tariff hike, but beyond that also there are certain events like probably some of the new pipelines getting connected to the integrated network, and also volumes flowing through the bid out pipelines where I think the tariff levels are much higher. So do you see blended tariff trajectory also to continue growing for the next three, four years? Or do you see it more to be stable in the current scenario? Integrated tariff for GAIL. I think I am not sure if the Barauni-Guwahati line has been like included there. and also Kochi-Bangalore line once it gets commissioned, I think that will also form part of integrated tariffs. So net-net, do we see the blended tariff going up by these events? And also, some color on the bid-out pipelines, yes.

Barauni-Guwahati is part of integrated tariff, but it does not include the KKMBPL pipeline because it is not yet connected with Bangalore. So once it gets connected, it will form part of integrated tariff. And it will certainly significantly add to the bottom line for GAIL, that is one part. And second, you are asking what are other factors, so our tariff already we have submitted and that is under revision. And once the tariff is revised, we expect the integrated tariff to go up from, say, current level of Rs. 58, we have submitted Rs. 77, even on conservative side we consider Rs. 70 - Rs. 72, that's also another increase which is available. Third increase is that, and now we are actually moving from utilization of this pipeline from the level around 70%. As we move from 70% to 75%, we expect this to be available during Financial Year '25-'26, then we have ability to recoup our lost volume from December '22. Because regulatory provision is that whatever volume we have not, whatever pipeline capacity we have not utilized for last past years from the regulatory change which has happened in December, we will have ability to recover those losses in future years. So as we are growing in transmission, so our ability to have more than regulatory rate of 12% will increase, and that we expect that this will happen from at least financially '26-'27.

Sir, I broadly want to know, sir, the reason for the normalization of the marketing EBITDA quarter-on-quarter. Because I recall this December quarter you said that if I remove the exceptional, so there around Rs. 6 billion is the EBITDA. And you broadly said three, four reasons at that time like higher Henry Hub prices, crude LNG sourcing was nine months average versus the selling price of three months average, and you served more than the contracted amount. So, I think what are the changes that happen that lead to, I mean, you have done some repricing or done more hedging or something changes the customers, something broadly if you can explain the reason for the quarter-on-quarter normalization?

We shared that why our marketing margin had gone down and you have covered all those regions that, one, we were overcommitted in the market. Normally we expect the customer not to take at 100% level, but sometimes we experience that. And last quarter had seen those, we experienced those things, and that led to reduction in marketing margins. Second, you also covered the nine months average versus three months average. And third, we also had some Henry Hub exposure when crude goes down those were also impacting. But this situation reversed during this quarter. The crude prices have recently gone down, but were almost in Q4 that drop was not there. So whatever significant amount we lost in Q3, this was not the case. And the volume which we actually committed, over committed, those experiences also we did not see in this quarter. Therefore, we arrived at a normative level of marketing margin which is around Rs. 1,000 crores to Rs. 1,200 crores. That's what we have seen in this quarter.