Adani Total Gas Limited analyst Q&A

Thank you so much. My first question is on the sourcing mix. How are you thinking about increasing your sourcing of gas from sources outside of the APM, and is there a plan to do a long-term energy tie-up as well?

Thank you, Puneet. Yes, I think as we are seeing now realignment of policy on APM allocation, but the good part is that CGD remains to be part of a very strong vision of government of India as well as the state government. So, we are seeing that APM gas re duction is being offsetted significantly by priority on new well gas allocation. Now, new well gas allocation also has become part of a pro -rata allocation, which otherwise earlier used to be on the auction basis allocation. So, we have been assured now that whatever volume we grow, we will get the new well gas allocation, which is again a significant volume as we stated 37% versus we are now getting 65%. And the third is government decision to also give priority to HPHT gas. The first priority remains on CNG and home PNG. So, these three sources, we see a significant support coming in terms of, of course, the average cost is going up, which as we stated th at we are trying to navigate, minimize, because our focus certainly is growth. Focus is ensuring that we maintain affordability of a price for good -- saving for a consumer to still opt for a CNG. Having said that, of course, as the, you know, company which has 34 geographical area, 95 districts, we have this responsibility to service for a pretty long time on both PNG and CNG side. We are looking forward always the opportunities to not only source gas on short term and midterm as well as on the longer term basis to make sure that we remain, we develop, prepare ourselves very well on the portfolio which we build to mitigate the downf all which declined, which is happening on APM side. And the weighted average cost is still we make in a manner that we are able to provide both PNG and CNG to our homes and in the transport consumer, but also our main anchor customer industrial commercial for all four together will bring the volume. So we are building -- Puneet, as you stated, we are building a portfolio, we are having a strategy in place to make sure that we build our portfolio on longer term, midterm and short term. And we will be considering all this plus and we'll have some portion keeping open, very small portion open for the spot buying as well. So it will be a good mix which will be doing it. And you have seen our track record that despite such a serious decline in 37%, our profitability track record is in front of you all. So I think that we'll try as best that we maintain the good portfolio on the gas sourcing side.

So you said 68% is APM plus New well gas. So balance 32 %, is it possible to get a breakup between HPHT and LNG?

Yes, we'll give it to you. 65% What we get is today, from April onwards. This is what I stated. So we are getting 37 plus remaining Ne w well gas till 15th of May. That's what the current notification and it may get realigned upward downward that we'll come to know have a clarity. And HPHT is how much? Entire volume of remaining 35%. We have been able to secure through HPHT. So 100% is being matched through APM, New well gas as well as HPHT volume. Good question, Puneet. Thank you.

Second is if you can talk a bit about the e -mobility business. Now you have almost 3,400 installed and 2,300 plus energized. What kind of utilization rates are you seeing there? And what is the unit economics and also what is the revenue contribution and E BITDA if at all on this business?

So again, a very good question, Puneet, actually. This is the one business driver we decided both on sustainable fuel side e-mobility and the CBG side. CBG is coming up in the one plant bio on the Barsana side and you will see our further growth on the CBG side as well. As on e-mobility side, yes, we have been continuously growing on. As I said, last year itself we have set up five EV charge points every day. I'm very happy to say that it is an EBITDA positive business today for us. Utilization, the two, three segment. One is we have committed segment where we have minimum guaranteed monthly charges for many fleet operators we do it. So that is fully assured on the returns basis is a very good utilization which is coming. Secondly, we set up on B2B basis. Again, reasonably a good utilization is happening. Airport, of course, we are 21 airport. We are the only charge point operator as per the airport authority of India. They do the very competitive bids and we have won all those bidding. So we are having a very high utilization there as the intensification is increasing at airport. We are getting benefit of that part. On the B2C side, current utilization is relatively very low. Some places it could be around 3%, some places 1.5% to 2% and some places maybe 5% on an average 2.5 %, 3% kind of a thing. Of course, we can see the exact numbers, but my sense is around 2.5 %, 3% or less 1.5 %, 2%, 1.5%, 2% on a B2C side. But remember, I think we are very optimistic on the policy front development which is happening on the EV side. So we are not building for today EV charging points. If you see, we are trying to make sure that all strategic location, whether on B2C side, wh ether B2B side or tourist places, we should build for the future. So we are very optimistic that given the e -mobility business ecosystem is getting developed, utilization significantly will go on B2C side. But overall on a net basis, we have EBITDA positive business.

And how much have you invested so far in this?

Today, so I think Puneet, this is still -- we are still seeding these businesses, so relatively very low. Today at this juncture, we would have invested a little over INR 100 crores. So that's really the investment as far as the EV business is concerned. And as we just mentioned, I think it is still early stage ideas to seed the ecosystem. Likewise, how we were doing it in the CNG side, when you are getting into a newer geography, you are building the ecosystem of CNG stations across our geographical area. Similarly, the current intent is to seed the EV ecosystem. And at the same hand, at least keep an eye to ensure that we continue to remain EBITDA positive. It's a mixture of both B2B, B2C, and intent would be to continue to build that momentum over the coming year.

And lastly, just two things. One is, is it possible to tell what is the investment plan for current year? And what is the breakup of this 3400 charge points between B2B, B2C and the other part?

As far as investments are concerned, we will continue to have a similar momentum. So we would continue to invest about INR70 crores to INR80 crores as far as the coming year is concerned. 100-110, what I mentioned is cumulative. We started about 17-18 months back really in terms of the EV business. So intent is to look at around INR70 crores, INR80 crores as far as the coming year is concerned. As far as charging stations, as we said, 2300 plus are already operationalized. The others are closer towards operations of close to another 1000 charging points. We would want to similarly capability of building almost close to around 1500 to 2000 over the next year, including the ones which are in the commissioning phase. So that's, as I said, as far as the investment and as far as the charging stations are concerned. You had one more question, am I correct, Puneet?

Yes, the breakup between the B2B and B2C?

The breakup, as I said, is slightly, I would say the B2B, B2C breakup is slightly different out this juncture because one is a core dedicated B2B stations, but the emerging model is usually getting a minimum guaranteed usage on some of the more public retail charging stations. So one may not be able to break it up into B2B, B2C, but all will boil down to the locations. As we said, now, for example, we have one of the largest charging airport point operator. We have now close to 21 airports. These are both on the airside as well as on the outside. Now, airside, for example, there is no minimum guaranteed, but the fact that you are on the airside itself allows you to have a dedicated usage. Same way, when you're looking at outside the airports, it allows a better usage because the Ubers and the Olas do not have to pay car parking charges if they were to charge. So there are nuances around this and not exactly, I will say B2B B2C in its own strict sense, but even in a normal public retail charging station, we try and work towards getting some minimum guaranteed usage on some of the stations, which allows us to keep, as I said, at EBITDA levels positive.

Sir, as you mentioned, the clarity on APM allocation is till 16th May and further clarity will emerge later. But sir, as per our reading of government circulars, it is that CGDs will have clarity on APM allocation two quarters prior. So can you give us some clarity how this APM allocation will work going forward?

So, Yogesh, first of all , I thank you for being a consistent participant for our investor call and look forward that you will do the same thing in the future. I think you saw the recent notification which has been published by the Government of India that going forward, they would be giving clarity to us. Today, it's a quarterly clarity, which I stated to you that is a 37 %, which has been allocated to us now. And if you see the better growth, maybe we get a little better also. That two quarter clarity, now we'll be able to see that this will be implemented now. Currently, we are clear that for us, 37 % is the APM allocation. But till 15th May, new well gas allocation is extremely good. We have combined 65%. We need to certainly, Yogesh, wait for the clarity which we receive on two quarter basis once it is implemented.

Second question is related to your volume growth guidance for the next year. We have reported closer to 3 MMSCMD volume in a Q4. And so, if you could provide some volume guidance for the next one to two years in terms of the CNG and the PNG, that would be helpful?

So, Yogesh, again, very good and penetrated questions you are asking. You know, our exact volume is almost closer to 3 million now. The March 31st, we close with roughly 2.93 or 2.95, 2.93, I think. So, that is very close to 3 million. We, of course, wish that it should have gone across 3 million. But you understand the CGD sector, you are, you know, holding it very well. And we hope that this will happen. On the guidance, as we stated in the past also, that we have been maintaining largely a double -digit volume growth. And given our trajectory of new geographical areas, particularly now 11th round, which are going to be connected with the transmission pipeline in expected in this financial year by December or so we are expecting. And intensification of Jalandhar geographical area, which we recently got, we have started laying our pipelines, setting up CNG station. We hope to give you similar track record of maintaining double-digit volume growth in the future as well.

I think pertinent point, Yogesh, pertinent point, you know, is quarter 4, our exit volume is 2.93, annualized is 2.72. So, I think that itself will give you a directional comfort and a view on, you know, how we are seeing the volume trajectory.

Yes, and sir, CNG vehicle additions in your geographical areas during FY '25, any ballpark numbers, if you are started tracking on your geographical area side, it would be helpful?

So, Yogesh, actually, if you see even the OEMs numbers, ultimately, what has happened, Yogesh, the whole CGD ecosystem has now shifted from localization to universalization. What used to be the phenomena that CNG used to be a local fuel of a particular cit y or a town. Now, the way vehicles have grown over the last couple of years, it has become like a transition volume is also coming up as a significant. I'll give you an example o f, you know, Udaipur, for example. Local number of vehicles will be very limited. Of course, the ecosystem is getting developed. More of the tourist vehicle will be there because city being smaller, people may be transiting with lesser kilometers per day. Two-wheeler is better, there. But the tourist vehicle which comes to Udaipur or pass via Udaipur to Nathdwara, etc, volume is very, very good. So, I'm sure, I think we are now looking at how India is transiting on ecosystem on CNG. And the good part is you are able to see that even the last quarter, the number of CNG vehicles sold are higher than the diesel vehicles. So, we are still, and when we talk to OEMs like Maruti, they appear to be still very bullish. They are having a very good record, this order booking, almost 25% to 30% between. I don't have the exact number, but I think I am getting the sense that it is around 25%-30% of the quarter sale is the CNG vehicles. So, it is giving us a good sense that t he key is that how do we keep growing and developing ecosystem and maintain the affordability for the country.

So, sir, I'm just again going back to my question number one, APM allocation. So, touching to again, is that a correct understanding that more clarity will take a time or it will emerge for the two-quarter prior allocation clarification? It will take a little bit more time for you?

No, sorry, Yogesh, please complete, sorry.

So, my question is again on the APM allocation side, is that a correct understanding that more clarity on this APM allocation, where you will get a clarity that two-quarters prior, you will have an idea of what quantity of gas you will receive? It will take time to get more clarity on that side or this is applicable and you have clarity of next two quarters, you will get that much of quantity of gas?

So, Yogesh, a couple of things, one, there is now clarity that government has decided that CGDs, because it is a part of their strong vision, they would like to see the way we all want to see as an investor to grow this CGD business or CGD ecosystem in the country. The clarity is now given by the government very clearly with the notification which they issued that CGD companies will have clarity on APM allocation two weeks, two quarters in advance, because so that we could make our plan of procuring gas on either fro m export market or from auctions or from various other sources. So, I think this policy decision is very helpful and we must appreciate that government is giving continuous support and clarity. Second is, so I think now it is a part of an implementation, it could happen anytime. I do not think so we should say long time or some more time. Clarity has just come, decision has just come and since we have clarity on this quarter, 37% is already been given. So, that quarter is still continuing, April, May, June. I think this quarter is still there, 37% and the remaining is the new well gas. I think prior to the next quarter, we certainly will have clarity and sooner I think it will happen on the implementation side. As we stated to you, just see how overall ecosystem is playing. We have APM gas, 37%. We combined with new well gas become 65% and rest of the 35% has come from HPHT. So, overall basis, if you see, it has still moderated our cost because government has given priority on new well gas, government has given priority on HPHT gas and we believe since this is the priority of a government, we would continuously getting support in one or other way to make sure that our portfolio cost remains moderated.

Okay. Sir, last question. In your presentation provided details on the gas sourcing breakup. So, just one question on that side, 22% to 25% of RLNG gas is coming from the multiple linkages or multiple sources. So, can you give us some idea in terms of how much portion is coming from the crude link and how much portion is the Henry hub link for this RLNG part?

So, Yogesh, definitely we will give you the clarity. But just to give you on while my team is taking out the details to give you. Basically, we see largely our focus is to build, as I said, and you have seen our track record on the portfolio part. So, we d efinitely on 25%, we have Henry hub, we have Brent and as well as we may -- Soumil, anything else you have?

WIM link.

West India marker link. Can you just give them a break up? Break up?

If you talk of see -- so, if you talk of the different indices, so we can say around 20% to 25% is oil link and similar percentage would be around 20% would be Henry hub link and minimum percentage on the WIM link, West India Marker link.

Overall 25% you have, right?

Yes.

Of that you are saying 20%?

Yes.

And 25% Henry hub?

Henry hub.

And WIM link?

WIM link.

Remaining 5% around WIM link. So, overall from the total value, 25% will be Brent link, 20% will be Henry hub link and the balance 5% will be West India Marker link.

Thank you. Next question is from the line of Varatharajan Sivasankaran from Antique Limited. Please go ahead.

Thank you for the opportunity, sir. Sir, one point in time, there was discussion about potentially some relief on the excise duty front or possibly some kind of any other scope for relief for CGDs. Are those discussions are now not happening or do we see any scope for this kind of discussions happening in any kind of result in the near future?

Vartarajan, as long as we run the business, we continue to do advocacy as an entity, as the CGD as a sector, through CII, through ASSOCHAM, through the Chamber of Commerces, as well as we see even MoPNG also supporting. So I think advocacy on multiple front continues , as any investors would be looking forward for the improvement in the performance. And more important here as an Adani group, you know that our main focus is affordability for the consumer. And even the APM prices, when it has gone down, you have seen our calibrated approach of passing through very, very moderately. So coming back to your question on excise duty, of course, this advocacy has been there on the forefront from our side. We have been requesting government and we have been expecting that this would happen sooner than later. Similarly, on the GST side, and we see from all sides support coming. Finally, we need to see there would be certainly some consideration at the government level on the revenue side, etcetera. So today we are passing on the excise duty impact of 14% to the consumer. We hope once our voice is heard, excise duty is exempted or moderated down, GST comes on natural gas. This will really significantly bring very, very different perspective for the CGD or as a gas sector as a whole actually.

Fair enough, sir. The other question was about this, as an analyst, we try to assess what is effectively the decline in the APM volume on the part of the producer. And accordingly, what is effectively the cut actually implemented on the CGD sector? So this last cut has left us a little baffled. So is it an annual kind of a volume we are looking at, or is it more like a six -monthly kind of a number? So I am sure, just to get your feedback on it, does it look like a six -monthly thing or an annual number to look at?

No, Varatharajan. I think one thing we should take while you and all of us, we felt that 37% is now a very lower side allocation, but immediately we saw support coming significantly on the new well gas side. So I think we need to see on a calibrated manner . This is the one nominated field which has been depleting for a very long time. We were expecting that this may continue, the higher allocation may continue a little longer time. But when we saw that this allocation APM is coming down, at the same time, support came on a new well gas side and third, immediately support came on HPHT side. Also, the government made sure that if anybody is taking HP HT higher than what it requires, the resale will be only on a market margin basis. Just see the kind of policy support which government has put in place that you get APM lower, but it is still $6.75 today. Then you get new well gas, 12% Indian basket, crude basket. Then you get HP HT gas, again, a controlled price, the way it is worked out, combined with the coal, naphtha, etcetera. And then on HP HT restriction, if you resale, you sell only on a marketing margin. I think combined reading of this should all give you a sense that there is a support which is there for a secondary sector. There is a collaborative efforts of investors, sector as a whole, as well as the authorities, the government, that we must grow this collaboratively. And I think we are seeing that happening. We are working always, as advocacy, we are doing it that it should come more and more in APM. But let's see, as government has now notified that this will be two quarters in advance, so I think you will have a good visibility, we will have good visibility on APM. We hope, combined with the new well gas, still, and government has written in the same notification, around 54% - 55% allocation should continue. So that is also clarity from government side. They have maintained above 50%. Hopefully, they will maintain it. We, of course, hope that it will go up and up as a business house, as an investor. But I think we need to wait for the clarity which comes from -- on the two quarters in advance clarity.

And on the new well gas allocation, my understanding is that it was 125% of the deallocated APM volume. So once again, was this a one -off kind of thing you expect or do you expect this trend to continue? Obviously, it is a function of the production growth from the APM fields by ONGC. But then there can be some visibility given on that.

See, one of the things which government has now done, that they have said new well gas, earlier it used to be given on an auction basis. It means we were not knowing whether we will get it or not. We did not know who will be able to secure the new well gas actually. Today, government has now stated that now new well gas also like an APM, there will be an allocation process. So that has brought a huge clarity that now if we sell more, we push volume growth, we are assured to get APM allocated on pro-rata basis, we will be getting new well gas on a pro-rata basis. So that's very good. Second, investment by ONGC is continuing on new well gas. So it will depend upon how much more new well gas is being able to recover or be explored. We hope this will keep growing while APM field is depleting. So our ratio of above 50% -55% or more will be maintained by the government.

One question on the volume set. Would you be able to give us a broad breakup of the CNG volumes in terms of the different categories of vehicle like cars, three wheelers, taxis, commercial vehicles, LCVs and buses?

So, Kirtan, first of all, I think like Yogesh, I have been always hearing your sweet voice every time in an investor call. And thank you very much for taking out time and participating consistently. And I hope you will continue to do the same. I think the question is very good on the breakup side. I don't know what purpose it would serve you, but largely two-wheeler is not on a CNG except recently launched Bajaj Freedom bike that is still picking up in a very small proportion because it anyway takes a very small gas. Largely, it is public transport, four-wheeler. And we also see, Ravindra, would you like to give more details? Why don't you give him?

So, if you look at segment -wise overall CNG growth, Auto is around 26.4% is the growth per quarter. And if you look at HPV, this is 0.1% growth. MPV, around 0.3% , LMV 46.6%, LGV 6.5%, LPV 15.1%, HGV 0.5%, Two-wheeler 4% growth, and MGV 0.4% growth. So, this is the share of CNG vehicles of the total CNG sold.

So, I think, Kirtan bhai, actually, we can definitely provide you more penetrated details as it is available in the public domain. At the station-wise, we are across all the stations in the country or our geographical area, we are not capturing a type of vehicle -wise. We may actually do the interpretation on how much is the per fill and we make some -- so that kind of analysis we could do. But I think there are public sources available, as Ravindra was reading to you. Suffice to say that, you know, 4-wheeler definitely is consistently growing. Now we are seeing the segment on the diesel side, the 407, etcetera small trucks, they are also significantly taking on CNG side. So, the growth is coming up from that side.

Right, sir. This is useful. One more question was on the E -Mobility side. You talked about around 20, we are covering 21 airports where we have the chargers available. What is the average utilization rate there and how do we see utiliz e developing over 1 or 2 years, particularly at the airport charger?

So, I think, firstly, these airports have been awarded to us. In some of them, we are yet to, you know, install commission as far as our charge points are concerned. Having said that, some of the existing ones which are already in operation are giving us good utilization. Like I said, there are two sort of utilization. One is which is on the airside and one is on the outside. On the outside, we do see, you know, utilization, you know, to be better compared to a pure public retail charging station, simply from the fact that, you know, it has a locational advantage. We have seen, you know, in a pure B2C sort of utilization at around 1.5% to 2%, whilst, you know, the more sort of concentrated utilizations have even gone and crossed double digits. So, it is a very wide variety, actually, you know, of the utilization that we have seen between, you know, pure public retail charge points to, you know, some which are more concentrated in terms of locations. Going forward, like as I said, we do see pickup, you know, both in terms of the EV mobility space and therefore the utilization of these charging points, you know, going up. So, we do see at both the sides the utilization going up . And it will take a little while, if I may say, but our intention is to, you know, continue to ensure that, you know, this 1.5 to 2% keeps getting pushed up on a year-on-year basis.

Right, sir. One last question, probably on the LNG, long-haul LNG, would you be able to update in terms of where are we and how do we plan to develop it over the next couple of years?

No, I think, again, LNG for transport, as we call it LTM, LNG for transport and mining. Again, we are seeing policies part getting developed. We have already started setting up LNG stations. We have now two stations and some more are under construction. One, Tirupur is operational, and Dahej, is coming up very shortly. And other many places, our stations are under construction at various stages right now. And we have also taken a view that wherever we are setting up LCNG plant, small -scale LNG plant for feeding the CGD volume, even there, depending upon the how close we are with the market or the highways, we would set up the LNG station. So what we are now looking at is that some sort of a policy development on LNG for transport and mining side. On the other side, our business development team is working with a lot of transporters and associations to see the interest and depending upon we get this, you know, clarity, we will further boost the investment on LTM side. But currently, we are continuou sly working and currently, we are actually developing some of these good location LNG stations also.

Right. At the Tiruppur, what would be the current throughput?

Current throughput will not be very high , I think it must be around 1,500 to 2,000 kgs per day, 1.5 to 2 tons per day . We are expecting up to 3.5 to 4 tons because it is an ecosystem development, as you must have seen since you follow this sector very intensively. When we started new geographical area, there was no volume. Now, today you see proportion of volume in our basket, it is very good. I think same thing will happen LNG, chicken and egg, whether on E-Mobility side, CBG station side, LNG station side, that who blinks the first. So I think as an investor, we are investing and we are now continuously developing the market on that side. We hope very soon it will be 3.5-4 tons because we are seeing a lot of interest coming from the truck operators or the long-haul vehicles operators.

I think you are seeing the volatility of the sector and any sector volatility on things like APM could emerge as possibilities as far as consolidation of the sector is concerned. So, I would say a lot will depend on how APM as one area unfolds. ATGL in tha t sense has been a more fuel operator across different fuels. So, we are talking about LTM, EV, CBG, CNG, while some players may be pure play CGD players. So, we do see some of that therefore turning out into opportunities. I would say as far as consolidation is concerned, slightly away. I would say good about 18 to 24 months minimum before we see some consolidation. So in a 2 to 4 year space, you may see some consolidation in the sector.

Thank you, sir, for sharing your detailed views. Thank you.

Thank you.

Thank you. Next question is from the line of Harshraj Aggarwal from Yes Securities. Please proceed.

Hello. Hi, sir. Thank you for taking my question. There are a few questions. Firstly, sir, could you help us with the volume breakup of the PNG segment in the quarter and for the year?

Sure. So, I think if you were to go by the quarter breakup, about two-thirds, as we said, is really constituting CNG. Within the other one -third, or if I were to look at from an absolute overall number, close to about 20% -- 22% is on the industrial side, about 3% to 4% is on the commercial side and the balance 8% is on the domestic. So, that's really the breakup as far as the volume of the PNG is concerned. It is similar, if I were to say, if you were to look at it from an annual basis to a quarter basis. In the meanwhile, one of the interesting developments has been in terms of contribution of the newer geographies over the existing geographies. So, newer geographies used to contribute about 27%. Now, they are almost a third of the overall contribution of volume.

So, sir, apart from this, now we have seen the propane prices correcting. So, obviously, how do you see the growth happening from the industrial segment?

Yes, definitely. With the softer crude prices, there is some correction in the propane prices. But you might also see that the different indices are also varying accordingly. We have seen that the Henry Hub prices have rolled back from around $4 to around $3 recently. So, the diversification has probably helped us to average out the prices and compete with the alternate fuels like propane and all.

You see, this cyclic changes we have seen in the past. We have been a long-term player and we will be a long-term player. That's the reason I have been emphasizing that as a prudent operator where customers are expecting some stability of the prices and they want us to be as current as possible. So, that's where the responsibility is on us to build a good portfolio with the various diversified indices. When you said propane is coming down, brent also is co ming down. We have good linked brent contracts. And we are also prudent to see how do we build our future portfolio to take these kinds of cyclic pressures. So, I think we will be able to still build our volume on I&C side. In fact, our pressure, our priority is on building I&C volume now, significantly.

Sir one further question on this in terms of the gas pricing. Do you think that the long-term prices which is crude linked or Henry Hub linked would be cheaper than the spot LNG or you see the spot LNG falling to a larger extent? Given the scenario in the last couple of years, the spot LNG has been on the higher side and we have the long-term contracts in place which is cheaper than the spot LNG. So, how you see that scenario changing or what is your view on that?

I wish I could predict these things actually. But having said that, I think spot plays with the events which are happening. Some event here and there happening internationally on S wiss Canal or any other thing geopolitical. Suddenly, you see spot playing its own play, but we have seen that part and that's the reason when I stated in the beginning, we said why we will build this significant or a majority of would be our short -term, mid-term and long-term contracting part. Some portion will keep on a spot so that we can exploit our spot if the market is cheaper. Our view is that, you know as we are looking at the market currently from 2027-2028 onwards, market is moderating down in the prices. And from that point until 2032 kind of a thing, we are seeing there is a supply side excess happening and that we could al ways seize the opportunity. On beyond that, again we see some sort of a demand growing. So, that is the kind of a thing we can suggest. Henry Hub forward curve, of course, today if you look at it, it looks like a bit of a growing higher, but our expectation is that it will moderate down in the future. Brent is the way it is playing since it is mu lti-country, multi-size issue. We feel it will play in the range bound, you know, price range.

So, last question I have is on the capex. If you could help us, the target for FY26 and where are we going to majorly spend this number?

So, I think as far as capex is concerned, we will continue to look at capex which allows us to generate, commercialize and monetize our assets. So, that is where our focu s will be as far as rollout of capex is concerned. As you may be aware, we have mentioned it earlier in the past, some of the newer geographies that are awarded to us are yet to get the national grid connectivity. And therefore, we will do a measured c apex as far as the newer 11th round geographies are concerned. And selectively continue to monetize on the 9th, 10th round of the geographies that were awarded. As a number, you know, we did a capex this year of close to about INR900 odd crores and next year, we will continue to do similarly in that range.

Thank you. That is all, sir, from my side.

Thanks for taking my question, sir. So, first question is on the newer GAs. Just wanted to understand this allocation of APM and newer gas. Is there any differential treatment for newer GAs where things are kind of really starting off with an established GA like up in an inflection point, we will get a higher allocation and then it kind of comes down or is it the same, whether it's a new or established GAs?

So, Somaiah, actually the way you see the clarity is that now new well gas would be given on allocation basis, not an auction basis. Depending upon how much new well gas is going to be produced and what is a kind of a volume growth, each CG D comes up. Depending upon that, the pro-rata allocation will happen. So, this time while the APM declined to 37 %, th e o ffset was done through new well gas allocation. Of course, you know the differential is that APM, we have fixed price now from 1st April. It is $6.75 per MMBTU, whereas new well gas will vary depending upon the crude prices. So, India crude basket, ICB, 12% on a monthly basis. So, depending upon how that the ICB will keep behaving, our prices will vary, but it still remains a moderated one. So, that is what would happen, that more new well gas coming up, more allocation will happen. Tomorrow, if that production is a little lesser or allocation is lesser, then we get lesser allocation. But currently, it looks like that we will be able to get a good offset from the new well gas. And then there is an HPHT, which comes again, there is a priority for first priority when HPHT is on a CNG and home PNG and then only it can be sold to other sectors. So, again, we are ring - fenced there also that if APM is down, new well gas is down, we get HPHT gas.

Got it, sir. So, I was just trying to understand, let's say 37% of APM allocation. So, this is whether we do it in our established GA or let's say, for example, Jalandhar, that we are starting. So, it will be that 37% which is fixed for both. It is not that something that we are starting because we lack a bit of an operational leverage or something, you get a bit of support in the initial period, higher allocation and later it kind of goes down?

So, this is a good question you asked, actually. I should have clarified in the beginning and I am sorry that there may be some sort of a confusion, but let me clarify. Another tweak of this policy, which was there that since beginning the initial GAs, whe n you start the development like Jalandhar we started or any other company starting new GA, you get the full support up to 6,000 MMBTU. There is no allocation. You get first priority SCM D, sorry, 6,000 SCM D, not MMBTU, sorry. 6,000 SCMD is a good amount to allow the GA to run on a full APM. So, if it goes beyond 6,000 SCMD, then you get to come into the allocation process. So, barring that part, if your geographical areas, which are below 6,000 they get a full 100% allocation. Once you are out of this threshold, yo u come under the normal pro rata allocation, depending upon how much growth you bring, you get a volume. So, let us say today 37%. Next quarter when it starts, we will sum up, everybody will sum up to the government how much has been the sales of a CGD and how much each CGD has done it and then how much is available on APM. They will allocate pro-rata basis. So, it could be 37, it could be more, it could be less depending upon how the sector will perform. And then there is an offset. Similar allocation is now going to happen in new well gas. There is no 6,000 here because 6,000 is supported by APM. So, I hope I clarified that. Other than that, there is no other differentiation that newer GAs, which are virgin, which are coming up, 6,000 SCMD full up to that 100% allocation, beyond that pro rata allocation as any other GA happens across the country.

This is not a new regulation. This has always been in existence in the past. I hope it clarifies to you.

Yes, sir. It does. Thank you. So, the second question is on the newer GAs. I mean, i n general, what would be a capex that would be required to develop a GA? I understand it is different depending on what is th e potential population density square kilometer they are addressing. Everything would be different, but let us say a 0.3, 0.4 MMSCMD potential target GA, what is the capex entailment to get it to that level? That is one. And second, what is the kind of return expectation given where things are today in terms of margins for a new entrant or someone who wants to develop a new GA?

So, Somaiah, again, while we could guess in a generic way that what should be the capex for 0.3, but unfortunately, the way GA geographical areas are now spread, if you see, we have in Ahmedabad, where we are sitting, we have Mumbai, those are the towns which used to be the originally the city gas distribution. And today, a geographical area has a four districts, five districts, six districts, spread at 20,000 square kilometers. So, bringing 0.3 there could be very easy as well as very difficult. There could be one very industrial good part and suddenly you get 0.5 million. You have a Morbi an example, in one place you get a 7 million volume. So, what is the investment? Very small. So, tomorrow we will be supplying in Mundra, for example. What is the investment? So, I think difficult to give you generically this answer that how much would be the investment for a 0.3. Suffice would be say that if you see our track record, every CGD, every prudent investor would invest calibrately, initial some money INR50 crores, INR60 crores, INR70 crore s, maybe depending upon how far is the connectivity transmission pipeline. They will invest in the initial investment to start and launch the geographical area and thereafter, you calibrate your investment. You start investing as you start growing the market. And you have seen our track record that all newer geographical area investment has been calibra ted, volumes have been growing. Many geographical areas now more than 0.1, they are crossing, they will be now coming closer to 0.15. That is the way ecosystem happens in CGD. You can see if you have been tracking this sector, all geographical area, whether originally you take from Gujarat, Maharashtra and other, all have grown that way. It is an ecosystem development. It takes some time to build and once you build, it goes on sustainably.

Got it. Sir, one clarification on the HPHT part. You said one -third is HPHT. So, these are contracts, medium -term contracts, they end up and they come up for renewal. Just want to understand on that?

Yes. HPHT contract, originally the way it used to happen, they used to, depending upon the operator as well, largely it is coming from Reliance BP field currently. So, it used to be put on the auction side and every CGD, depending upon how much is the portfolio bid and how much is the gap, they used to bid for the volume for CNG and home PNG. So, this is our case. I am not telling you as a policy. Our case is for currently the gap is being filled through HPHT and as you rightly said, if there is a contract which expires, the gap may come shorter. It may be instead of 35% may come down. But what has happened, new phenomena that almost all HPHT gas now which is waiting to produce other than what has been supplied under the original contracts to all the CGDs, remaining is coming on the Indian gas exchange (IGX). For again, there IGX also the same thing. First priority is for CGDs to bid on IGX like on a spot market but we will get the same HPHT prices and if there is a residual gas available, anybody can bid and take away. So, that is the way there. Do not take it in the sense that one -third is for everybody, HPHT. This is current scenario of ATGL that one-third gap is being bridged through HPHT.

Just wanted to check if I got this right. So, in case if there is a term contract for us that is ending, because CGDs get a priority, there is not much of a risk. If we choose to continue with HPHT, we can get that quantity? So, is that the right way?

Absolutely. Originally, when we signed the 5 year contracts, for example, that was also to be bidded by the CGD entity. Somebody bidded for 5 years, somebody we have bid for 3 years, some for other year. Whatever contract we have signed, that is getting honored by the respective operator and by us as well.

Understood. Thank you.

Thank you. Next follow-up question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.

Thanks a lot, sir, for taking my question again. Sir, I need some data points on the industry level. What is the total APM and NWG allocation to CGD industry? And if you could provide us break-up in terms of CNG and the PNG domestic side, it would be helpful?

So, Yogesh, one thing is that I was expecting that you will definitely ask supplementary question and you asked it. Very good. I think that shows us that how much interest you are taking in the CGD sector. Parag, would you like to give a break-up?

Okay. Sir, one more question, policy -related. Is it mandatory for biogas producers to sell that biogas to CNG only or CNG consumers or CNG stations? Or the same molecule can be sold to the PNG industrial commercial customers?

No, CBG, it is outside authorization of a CGD. It governs under biofuel policy. MoPNG has been encouraging and promoting development of a CBG in India. So, if let us say a producer or a developer brings the CBG on the plant, it has a complete freedom. It has a complete freedom to sell through its own CBG station, give it to the -- CBG nodal agencies like Gail and other oil marketing companies, or supply it to industrial and commercial consumers. There is a complete freedom on CBG side.

Okay. Thanks a lot, sir. That was really helpful.

Thank you, Yogesh.

Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Priyansh for the closing comments.

Thank you, everyone, for participating on the call. And I would also like to thank the management who have shared the insights of the company. And in case of any further additional questions, please do write to us. Thank you. And have a great year. Thank you.

Thank you. On behalf of Adani Total Gas Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your line.