Aegis Vopak Terminals Limited analyst Q&A

Thank you. We will now begin the question and answer session. The first question comes from the line of Anil Sarin with K16 Advisors. Please go ahead.

Good afternoon, everybody on the call. Congratulations on this superb performance. I just have one small question. You have referenced capacity increase in Kochi, Mangalore, Pipavav, etc. This capacity increase is done by Aegis Vopak directly, or is it done by Aegis Logistics?

So, these are lands which are under lease with Aegis Vopak Terminals Limited, and the infrastructure is being constructed by its parent, Aegis Logistics Limited, because of the in-house capability and efficiencies that they bring. So, the construction will be under the supervision of Aegis Logistics Limited for the terminals that will be owned and operated by Aegis Vopak Terminals Limited.

Okay, great. So, all this capex, which is like $5 billion going from here till the end of fiscal '30, all that will be first developed by Aegis Logistics and then transferred to Aegis Vopak?

Yes, that in-house capability is with the parent, and the cost efficiencies are also with the parent. So, it makes sense for Aegis Vopak to construct it at the least cost through the efficiencies of its parent.

Fair enough. That's a very good explanation. Thank you. Just one more thing, sir. $5 billion to be invested within that is '27, '28, '29, '30, that is quite a massive outlay. What gives you the confidence that, you know, so far you have invested only $1.2 billion over the past three, four years? Now in the coming four years, it is $5 billion. So, if you can just at a high level elaborate what do you see that merits such a big investment?

Yes, yes, of course. So, we have said in the past, and if you look historically, we started in '22, 2022. We have tripled in three years from '22 to '25 by the time we came out with the IPO. So, we had tripled our capex. And from there onwards, from '25 and now we will be in '27, we would have doubled from that point of view. So, $200 million went to $600 million, $600 million to $1.2 billion. The pace of capex increases as we grow stronger and the opportunities present themselves. We always follow demand, we are not somebody who will do flag planting and do anything prematurely. We don't let demand follow us. So, you see, this capex going forward will gain pace as we progress. So, you will see a lot of big capex coming in the last two years of this five- year period. Now we are doing it at a pace of, let's say, INR4,000 crores or INR5,000 crores a year. This may continue for the next two years, then as we would have grown our EBITDA and as we would have done and finished our second phase QIP, that is equity dilution, and we have money by way of equity with us, then you will see what follows will be larger capex, and we expect to reach $5 billion by end of 2030.

Thank you so much and wish you all the best, sir.

Thank you.

Thank you. Next question comes from the line of Raj Patel with SK Finance. Please go ahead.

Yes, hi. Am I audible?

Yes, please.

Yes, thank you for the opportunity. So, my questions were more with regards to the revenue side. So, just wanted to understand that can you describe your current revenue structure with your major customers? And what will be the percentage revenue which are under long-term versus spot agreement?

We do not track such statistics, that is, we normally like to operate as an open-source terminal. We are not product-dependent, therefore not customer-dependent, in fact, we are not even trade- dependent. We can handle a number of products, and therefore there is no dependency on any one product that we may need long-term contracts. We can handle exports, imports, and also coastal movement. So, therefore, we are well-diversified, and we have a number of units, you know. Currently, we are operating close to 25 units all over India, liquid, LPG, and now ammonia is coming in. But that does not mean we don't have long-term contracts, but they are not normal. Normal is being open-source. India is a developing country, there is a huge demand, and it makes no sense to get into long-term contracts and be dependent on one product or one customer.

Got it, sir. My next question was with regards to the port side. So, just wanted to understand that are we expecting any lease to be expire getting -- expire to be soon? And secondly, what specific ports which are being closer to peak capacity utilization on liquid and the gas line?

So, lease -- most of our leases are not very old. So, we have still long time to go before the lease maturity happens. But as you are aware, under the land policy, the lessee has got a last look. So, we are not -- I mean, we don't have to be unduly worried when the lease is mature. There is only one lease of Pipavav Port which is dependent on the concessionaire, which is in 2029. Otherwise, I think it's a long time to go for most of our other leases.

Got it, sir. And sir, in the future, in let's say next three years, how do we expect the business mix to evolve, let's say between liquid, gas, and ammonia?

I think gas will be more dominant going forward, but it will usually be 55-45 or 60-40. The higher, of course, would be gas.

Thank you.

Thank you. Next question comes from the line of Neelotpal Sahu with JM Financial. Please go ahead.

Hi, good afternoon, sir. Thank you for the opportunity. Am I audible?

Yes, please. Go ahead.

So, I had three questions. Firstly, can you give a high-level view on how is the LPG import situation in the country and how has India diversified its sources of these imports?

Yes, so of course, in LPG, the national oil companies had a supply source problem when the ships were stranded in Strait of Hormuz since the war began in March. Volumes were affected from March where it was generally a 50% down. But from May onwards, I think things are getting much better. Now it's no more 50%, but 30% to 35% as far as May is concerned. We expect the things to get normalized soon. However, in case of Aegis Vopak, we have a situation where again the parent, Aegis Logistics, being in distribution, and as you would have seen in the presentation of the parent, the distribution volumes have grown substantially in the Q4 has helped utilization of Aegis Vopak LPG terminal. So, being vertically integrated in LPG business helps Aegis Vopak as well as Aegis Logistics and the Group as a whole to get over this situation. So, therefore, we have done good, we have done 3.9 million tons for the year, of course counting Haldia together. And I think from Q2 of the current year, things should be back on track.

Any guidance you would like to highlight for the current year?

No, we don't give guidance, but I think what we have always said, generally we do a 30% to 40% growth as far as throughput is concerned year-on-year. We continue to say so. So, I think we should do between 30% to 40% growth as far as throughput is concerned in this year also.

Got it, sir. Thank you. And two bookkeeping questions. Can you quantify our capex plans for the next two years, that is FY27 and '28?

FY27, of course, we have already said we'll reach USD1.2 billion capex. '28, there are still some things to be summed up. We will soon come up with the numbers for FY28, but I think it will definitely be generally in the range of close to INR5,000 crores.

Got it, sir. And in your opening remarks, you mentioned that JNPT Phase 1 of liquid is expected to be commissioned in FY27. How much would this capacity be out of the 318,000 CBM expansion?

I think we will do most of it in H1 of the FY27. Most of it will be up and running in H1.

Yes, maybe some of it would start in October, but yes, generally speaking, 318,000 should be running for six months in the current year.

Got it, sir. Thank you. Those were my questions.

Thank you.

Thank you. Next question comes from the line of Vinit Agarwal with Bajaj Alternates. Please go ahead.

Thank you. Good afternoon, sir, and thank you for the opportunity. Couple of questions from my side. Like, how much is your future capex of around USD5 billion is committed to, let's say, ammonia, LPG, and other green molecules versus traditional LPG and liquid? And also, what visibility do you have on long-term offtake contracts for the ammonia terminal at Pipavav?

So, ammonia terminal Pipavav, we have already said we have given on long-term contract to Hindustan Zinc almost one-third of our capacity for a 15-year time period. As far as USD5 billion capex is concerned, we have said it in the past that we are only in seven ports. We expect to go to 12 ports by end of 2030, so that is more presence in more ports. We also expect to do more of ammonia terminal, putting up more of ammonia terminals going forward. We expect also to get into newer products, maybe Ethane and Propylene, as well as natural gas infrastructure. We are at port; we also intend to go inroads into inland depots, also backward into jetties. So, there are a number of things that we intend to do, maybe strategic storage, industrial terminals, there is a lot to do, and that is what a great an opportunity India is.

Understood. And like, we know like we are seeing increased interest in chemical gas storage from both domestic as well as global players. What is Aegis Vopak’s key differentiator in winning new long-term contracts versus our competitors?

So, the best is that as a group, we construct in-house our own infrastructure cheapest, quickest. We have technical skill of our parent Vopak, who is a AAA ESG company, has been doing this business last 400 years, present in 23 countries, have long relationships with who's who of the world, all big multinationals. So, and they have done all of these new infrastructure for new energy elsewhere in the world. So, we have an edge by having a skill set for constructing infrastructure quickly, cheaply, and for new products, as well as being funded and structured very well with a disciplined balance sheet, and history is a proof on the execution ability of the group. So, I think we are well-poised, focused. We do nothing else except this. So, there is a lot of focus and ownership in this business which gives us an edge.

And Murad, if I can just add to your comments here. I would say that the safety and environmental standards that Vopak brings to the table, which are global standards of course, and of course in conformity with Indian standards, I mean, these are very important considerations when it comes to dealing with global multinational customers because, and of course, Indian customers as well, but definitely for, so our ability to leverage that capability that Vopak brings to the table is definitely winning us a lot of business.

Understood that. Thank you so much. Thank you.

Yes.

Thank you. Next question comes from the line of Kunal Mehta with Incred Equities. Please go ahead.

Yes, hello. Hi, sir. Very good afternoon. So, I have two questions.

Mr. Mehta sorry for interrupting we cannot hear you can you speak a little louder?

Hello.

Can you speak a little louder?

Yes.

Thank you.

Am I audible now?

Yes. Please go ahead.

Yes. So, I have two questions. One is on the liquid capacity utilization. So, what is the current liquid capacity utilization that we have in FY26?

Oh, so liquid terminals are always earning 100% of the capacity. Physical occupancy is not very important here because we also hire out capacities rather than contract on volume. So, liquid business has to be generally seen as what is the earning per CBM of the capacity that the company has. So, that is what one has to look at. It's not important whether the tank has product or not. It should earn, and INR3,000 generally per CBM is what is regarded as a very good blended earning from liquid terminals.

Okay. And sir, one question is on that multiple modes of evacuation lines are going live. I think Kandla-Gorakhpur, which has a capacity of 8.25, Jamnagar-Loni which has already gone live. What about the other two which you have mentioned in the presentation? What are the capacities for that and have they already gone live or is it expected to go live, the Bengaluru-Hassan- Cherlapalli?

Yes, so Bangalore-Hassan-Cherlapalli is still some time away. So, when we connect, we will share more details. We are also building a liquid rail gantry, we are building an LPG rail gantry in Mangalore and a liquid rail gantry in Pipavav. So, this is something we do on a regular basis. We keep enhancing the efficiency of our terminal with multi-modal evacuation capabilities that we keep adding where we see an opportunity to do so. But for now, I think Kandla-Gorakhpur at Pipavav and Kandla, and Jamnagar-Loni at Kandla is what will bring throughput, more throughput and efficiencies in our LPG terminal. Of course, getting jetty also VLGC-compliant makes a difference, and the VLGC-capable jetty that is coming up probably mid of this FY at Pipavav should also be commissioned. So, that also will bring more efficiency and throughput in the time ahead. So, yes, a lot of things happening.

And sir, what is the capacity of Mangalore-Hassan and Uran-Chakan both of them if you can give some flavour on that?

Uran-Chakan it depends because it is Mumbai to Chakan should be a million tons, and Mangalore-Hassan-Cherlapalli we will let you know when we are ready to be doing the project. It keeps changing; they are extending Mangalore-Hassan-Cherlapalli, they are extending Uran- Chakan, they are extending a lot of pipeline grids. So, by the time we are done, the capacities would be something else only, should be even more.

Will it be there in FY27 or will it be FY28 if you can just comment?

FY28 Mangalore-Hassan-Cherlapalli should be operative in FY28.

Okay thank you I will fall back in the queue.

LPG Mangalore rail gantry should be earlier.

Okay. Okay, thanks, sir.

Thank you. Next question comes from the line of Vishal Mehta with IIFL Capital. Please go ahead.

Yes, hi. I have only one question. Sir, you mentioned about the JNPT expansion, 3,18,000 cbm. So, last time usually, when we have our liquid expansions, we probably see it, starting with somewhat moderate realizations and then ramping up on realizations. Would it be similar for this particular capacity? How should we assume?

No, full. I think JNPA, unlike other ports, has more demand. So, we don't expect it to gradually increase realization; it will be quite a good realization from the time it commissions. It will start commissioning from probably next month onwards, and you will see by H1 most of the capacity operative. Probably by October, we should finish.

Okay. Sure, sir. All the best. Thanks.

Yes.

Good afternoon, Mr. Raj. Good afternoon, Murad bhai. Am I audible?

Yes, you are.

So, sir, my question was regarding this -- there is this lot of shortage of DAP, diammonium phosphate, which is being imported. And would that act as a good import substitute? And since we support -- we are providing ammonia and we have lot of ports at our locations, there are lot of ports, and there are a lot of this -- in your presentation, you shown that lot of these fertilizer factories are near ports. So, will that help more ammonia sales or more ammonia in our company?

You are talking about DME, right.

No DAP, Diammonium phosphate?

Yes, yes. So, ammonia is not just, of course, DAP. We already have contracted with Hindustan Zinc for their DAP plant. But in addition, there is a lot of requirements of ammonia for industrial customers, specialty chemicals. So, we are seeing a very robust scope for ammonia business to grow. And mind you, in ammonia, like LPG, we will be sourcing, storing, and distributing ammonia. So, it's -- we are going to be vertically integrated in ammonia business also. And the same infrastructure we will be able to use for green ammonia when the time comes also. So, it's a very exciting diversification that we are doing. Maybe next month, we would see the commissioning of the largest cryogenic third-party ammonia terminal in the country, and the journey starts now. So, in addition to liquid, in addition to LPG, now ammonia will also be an important play in the business that we conduct.

Yes, I just want to add to that, and thank you for asking that question, Dr. Vora. The prospects for the ammonia business are bright. We believe that to go gradually, and carefully with this first ammonia terminal. But I suspect that we would be expanding our ammonia footprint, the moment that we have digested this current one. We will definitely be expanding our ammonia footprint, and that's one of the reasons why Itochu Corporation decided to join hands with us in this journey as well.

Thank you so much. Thank you.

Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question- and-answer session. I now hand the conference over to management for closing comments.

Okay, so can I just say thank you again. Just to summarize, really, it's been a great start to our journey as a listed company, and we are very excited and bullish on the prospects as we move forward as we've said over the next few years. There will always be temporary ups and downs like we saw with the situation with the Middle East conflict, but in fact, we believe that, that has opened up enormous opportunities for infrastructure business like ours. And we hope that all the investors and stakeholders see it that way as well, and we look forward to going on this exciting journey. Thank you so much.

Thank you.

Thank you. On behalf of Aegis Vopak Terminals Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.