Aegis Logistics Ltd (AEGISCHEM) Q3 FY23 Earnings Concall Transcript

Aegis Logistics Ltd (NSE:AEGISCHEM) Q3 FY23 Earnings Concall dated Feb. 03, 2023.

 

Corporate Participants:

Raj Chandaria — Chairman and Managing Director

Murad Moledina — Chief Financial Officer

Unidentified Speaker —

Analysts:

Rasika Sawant — Orient Capital — Analyst

Digant Haria — GreenEdge Wealth Services — Analyst

Priyankar Biswas — Nomura — Analyst

Lavanya — UBS Group — Analyst

Unidentified Participant — — Analyst

Chirag Vekaria — Budhrani Group — Analyst

Parth Kotak — Alpha Plus Capital — Analyst

Suman Kawatra — Techfin Consultants — Analyst

Priyankar Biswas — Nomura Financial — Analyst

Amit Vora — Homeopathic Clinic — Analyst

Presentation:

 

Operator

Ladies and gentlemen, good day and welcome to Q3 FY ’23 Earnings Conference Call of Aegis Logistics Limited. As a reminder, all participant lines [Technical Issues]. Please note that this conference is being recorded.

I now hand the conference over to Mr. Rasika Sawant from Orient Capital. Thank you, and over to you, ma’am.

Rasika Sawant — Orient Capital — Analyst

Welcome to the Q3 and Nine-Months FY ’23 Earnings Conference Call of Aegis Logistics Limited. Today on this call, we have Mr. Raj Chandaria, Chairman and Managing Director; and Mr. Murad Moledina, Chief Financial Officer. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations as of today. Actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is given on Page Number 2 of the company’s investor presentation, which has been uploaded on the stock exchange as well as company’s website.

With this, I hand over the call to Mr. Raj Chandaria for his opening remarks. Over to you, sir.

Raj Chandaria — Chairman and Managing Director

Thank you very much and good afternoon. I’m joined by our Chief Financial Officer, Mr. Murad Moledina, and we will be presenting the FY ’22-’23 third quarter results as well as the outlook for the FY ’22 — the rest of FY ’22-’23 and various business updates.

So while we strive to deliver good financial performance, which, of course, I will turn to shortly, let me start by reminding everyone that our vision at Aegis is to be the leading provider of logistics and supply chain services to India’s oil, gas and chemical industry, which carries with it a duty of care and responsibility to environmental sustainability. And I’m really proud to state that every new terminal that we have built whether it would be liquid or gas has improved on energy efficiency and environmental sustainability through better engineering and design, including the new Kandla LPG Terminal. And this will be the case as we expand further — further expand our footprint around the coast line of India, and indeed England as well.

Now turning to our third quarter financial results. I’d like I’d like to refer you to my concluding remarks on November 10th at the last earnings call, November 10, 2022, when we presented our Q2 results, where I stated that we had good visibility for the balance of the year and that we were confident that we are going to have an excellent year. And I’m pleased to report that our third quarter performance indicates that that confidence was indeed justified. The revenues during the third quarter increased to INR2,087 crores versus INR1,214 crores during the year-on-year, primarily as a result of higher sourcing volumes. Normalized EBITDA for the group increased to INR239 crores in the third quarter versus INR159 crores in the previous year, a rise of 50% over the previous year and the lifetime high. And profit before-tax rose to INR173 crores as compared to INR132 crores previous year, representing a 31% rise over the same period last year. And the profit after-tax for the group was INR142 crores versus INR109 crores for the same quarter last year. That’s a rise of 31%. So the second half of the financial year is off to a good start. And generally speaking, H2 is stronger than H1. And we, therefore, believe that this sets us up for robust profits growth during the rest of this fiscal year. So in summary, FY ’22-’23 is tracking well to deliver another strong performance to build further on the profits growth that we saw in FY ’21/’22.

And for a more detailed sort of understanding of the underlying segment numbers and financial detail, I’d now like to hand over to Mr. Murad Moledina, our Chief Financial Officer. Can I just hand it over to you?

Murad Moledina — Chief Financial Officer

Yeah. Thank you. So now to take you through the segment results, we’ll first take up Liquid Terminal division. The revenues for Q3 FY ’23 were INR114 crores, again a lifetime high versus INR68 crores year-on-year. That is an increase of 68%. The EBITDA for Liquid Terminal for this quarter rose to INR77 crores versus INR46 crores in the previous year, which is, again, an increase of 66%. Now coming for Gas Terminal segment, revenues were INR1,973 crores for Q3 versus INR1,146 crores year-on-year. The EBITDA for Gas division was INR163 crores for this quarter versus INR113 crore year-on-year, again, a rise of 45%. We continue to see growth for Gas division with sourcing, throughput and distribution volumes improving.

Let me now take you through volume analysis of Gas division. Starting with throughput volumes, the LPG volumes for the quarter handed — handled at all our four terminals, Mumbai, Haldia, Kandla and Pipavav, were 9.88 lakh metric tons versus 7.53 lakh metric tons year-on-year, an increase of 31%. The company had good volumes at Mumbai as well as it continues to operate at full capacity with IOC, HPCL and BPCL, all bringing imports at Mumbai. The LPG gantry at Pipavav continues to perform well and is delivering considerable cost savings to our customers, which is again driving improved volumes at Pipavav. Kandla and Haldia too performed well.

The Bulk Industrial segment delivered 1.32 lakh metric tons in Q3 versus 0.3 metric tons year-on-year, representing a 433% growth over the previous year and a lifetime high and margins also improved. With Kandla LPG terminal operationally stabilized, we believe that the distribution business will continue to register impressive growth. The Commercial and Domestic Cylinder segment, which sells to hotels, restaurants and small scale industries under the Pure gas brand and to the domestic household segment under the Chota Sikander brand, were higher with Q3 sales of 19,143 metric tons versus 6,414 metric tons year-on-year, registering a 198% increase. Auto gas sales were a tad lower at 5,061 metric tons in Q3 versus 5,961 tons a year earlier. Margins though remained stable and healthy. The sales volume of sourcing business was 199,622 metric tons versus 125,858 metric tons year-on-year.

With that, I complete my segment analysis. And with that, I would now like to hand over back to Mr. Raj Chandaria.

Raj Chandaria — Chairman and Managing Director

Okay. Thanks, Murad. Now, let me just turn to the business update for the quarter and the outlook for the rest of the year, and a quick update on the capital expenditure plan.

So during the year, the Pipavav port has completed its work on making the LPG gantry compliant for handling VLGCs with commissioning now expected once the permits have finally been received. I understand that’s on the way, which will further improve the competitiveness of Pipavav as an LPG logistics hub. Work on the IHBL pipeline, that’s the — on the KGPL LPG pipeline, to which — if I can remind everyone, both Kandla and Pipavav will be connected, that work continues. All of these key developments are positioning both our Kandla and Pipavav terminals to be the leading gateways for feeding the key LPG pipelines of India going north and into Central India.

The outlook for the second half of this year, we already into one quarter and one more quarter left, both Liquids and Gas segments continue to perform well. And this is our expectation that this year’s profits will continue to grow robustly. We expect our liquids business with its leading position in the key ports of India to perform well for the rest of the year, especially in light of the good economic growth in the country. And this applies to —

Operator

Sir, sorry to interrupt you. We lost your audio over here.

Raj Chandaria — Chairman and Managing Director

Hello. Hello.

Operator

Yes, sir.

Raj Chandaria — Chairman and Managing Director

Can you hear me?

Operator

Yes.

Raj Chandaria — Chairman and Managing Director

Okay. So I’m just saying that both the Gas and Liquids segments continue to perform well and it is our expectation that this year’s profit will continue to grow robustly. We expect our Liquids business with its leading position in the key ports of India to perform well for the rest of the year, especially in light of the good economic growth in the country. And this applies to the LPG segment as well. And as I’ve said in previous earnings calls, we are confident that the Distribution business is going to flourish and add to our base throughput business.

As far as new projects are concerned, I’m pleased to confirm that the project work has commenced — now commenced full swing on the expansion projects announced last year. We expect an additional liquids capacity of 50,000 cubic meters to be fully commissioned by the end of this financial year and will continue to give updates in the ensuing quarters as and when the projects progress. As far as our Aegis Vopak joint venture is concerned, as informed previously, the joint venture achieved a successful closure and is performing well in line with expectations. We are constantly evaluating business — new business opportunities and proposals and are confident that the combination of our strength will lead to some interesting projects in the future.

So that concludes our formal presentation and we can now take questions. Thank you.

Questions and Answers:

 

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Digant Haria from GreenEdge Wealth. Please go ahead.

Digant Haria — GreenEdge Wealth Services — Analyst

Hey, guys. It’s good to see the volume uptick even sustain and even grow. So my first question is on — you put a macro side, where we are trying to project the demand scenario for LPG 2035. So in that Slide, I see that, you have kept the domestic production of LPG more or less at the same levels as it is today. So what is it that you are seeing that domestic LPG production will not cease in any meaningful way in the next 10 years also, if you can just elaborate the reason that will — just help us understand the macro dynamics better?

Operator

Digant, sorry, but we lost your audio. Your voice is not coming very clear.

Digant Haria — GreenEdge Wealth Services — Analyst

Can I — am I audible now?

Raj Chandaria — Chairman and Managing Director

Yeah. Go ahead. I think we have more than understood.

Digant Haria — GreenEdge Wealth Services — Analyst

Yeah. So my question was that what makes us think that for the next 10 years, the domestic production of LPG is going to remain very negligible and the imports will be the bigger contributor to sustaining LPG demand?

Raj Chandaria — Chairman and Managing Director

Actually, the LPG is produced from two main sources. One is from refining — oil refining, and number two is from natural gas fields as a byproduct when you extract natural gas. Our contention is that no new major refineries are going to be built in India, in light of the changing scenario of to move away slowly from fossil fuels. Refinery is a very large investment, and normally, it has a time horizon of 30, 40 years, possibly even 50 years. And while the existing refineries may get small bottleneck — [Technical Issues]

Operator

Sorry to interrupt. There’s a lot of airy sound coming from line, sir.

Raj Chandaria — Chairman and Managing Director

Can you hear us? Hello.

Operator

Sir, one moment, let me disconnect and reconnect your line. Participants, please stay connected while we rejoin the management back to the call.

[Music]

Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.

Raj Chandaria — Chairman and Managing Director

Yeah. So the question was on why we expect domestic LPG production to remain fairly static? And I would say, I was answering that, basically, LPG comes from two sources. One is refining from a refinery and number two from a natural gas field when you’re extracting natural gas. In the case of refineries, we believe that there are no new major refineries being built. And in fact, other than small debottlenecking that is going on in the existing India refineries, no new capacity is coming on stream. Furthermore, a number of important refineries in India, for example, the Bhatinda refinery in the North, one that the — I think [Technical Issues] refinery, will be converting their LPG production into higher value petrochemicals. So, in fact, there will be a decrease in the supply of LPG for domestic fuel. And that goes behind our reason why we feel that LPG production in India will be static.

Digant Haria — GreenEdge Wealth Services — Analyst

All right. Okay. Thank you so much for clearing. The second is, last time you updated that on the macro front, there is LPG surplus in the world because the rich countries are not really wanting LPG, they are — they want the natural gas. Does the macro situation still continue where LPG is abundantly available and much cheaper? And for us, we can replicate success stories like the one you have in Gujarat elsewhere also?

Raj Chandaria — Chairman and Managing Director

Sorry. Again the line was a little muffled. But if your question is on the supply side of LPG, the global supply scenario, we at the moment don’t appear to see a huge problem in the international supply of LPG. Indeed, I think you alluded to the fact that LPG — in foreign countries, natural gas is more in demand than LPG. And that is in fact correct that LPG comes out from natural gas fields and natural gas is in big demand, so LPG automatically will come out. We don’t see a major problem in the supply of — global supply of LPG.

Digant Haria — GreenEdge Wealth Services — Analyst

Okay. Perfect. Thank you so much. Last question is on the distribution part of our business. So, what we saw in Morbi last quarter, like increased volumes, you can just give some light on — could we get more customers there, mid-customers start taking more and more gas every month? Or any —

Operator

Digant, sorry to interrupt. Your voice is not coming clear at all.

Digant Haria — GreenEdge Wealth Services — Analyst

Okay. I think I will join back.

Raj Chandaria — Chairman and Managing Director

Yeah. Perhaps, we can move to another question, and then come back to your question.

Digant Haria — GreenEdge Wealth Services — Analyst

Sure. Thank you.

Operator

Thank you. The next question is from the line of Priyankar Biswas from Nomura. Please go ahead.

Priyankar Biswas — Nomura — Analyst

Good afternoon, sir. Congratulations. I think it’s echoing. Can you hear me?

Raj Chandaria — Chairman and Managing Director

Yeah. We can. We can hear you.

Priyankar Biswas — Nomura — Analyst

Yes. Sir, on the Morbi question, so we had seen a very significant distribution volume growth. But what we are hearing of late is that probably Gujarat gas is effectively cutting their prices sometime from March. And then again, the propane prices are also moving up. So can you just explain the dynamics, how the supply situation works here? And what can be the new outlook for distribution on that basis for maybe even FY ’24?

Murad Moledina — Chief Financial Officer

Yes. Can I answer that? Now, Morbi pricing in Gujarat Gas, they have already come — I would rather say, bottomed out. If you look at your prices, currently, it’s 48 SCM or cubic meters. And if you convert that, so that price — because India for NG is also tied up with Qatar, where for 25 years, you have to take supply from Qatar, which is linked to crude. And that is 12.66% of the crude price — 12.60%. So that’s the kind of agreement, which somehow limits them for — because their cost as such. So their 48 SCM is a bottomed price, which propane can compete very easily. In fact, till last — till this month, January, we were cheaper by around 15% — 10% to 15%, than the NG bottomed out price.

Now if you — your other question was the distribution volumes going forward, we believe Morbi is just one of the markets. There is another market just nearby called Himatnagar in Gujarat and — so on and so forth. We are pitching in various industrial clusters, where we see a lot of opportunity for propane as a fuel. It’s — we believe that it’s clean fuel versus dirty fuel. So those partners who — diesel, all of those have to be replaced. At what speed? How soon? Only time we tell. So the market is huge, we believe. This is apart from the 7%, 10% growth in demand on account of cooking gas. So this is going to be a top-up where laws — where agencies, they are going to come on hard. This budget itself has actually reason the coal duty by 150% from, I think, 1% to 2.5%. So these things are going to have a lot in the conversion, now both NG and propane are going to benefit out of that. These are the clean fuels. And we would — we are definitely very bullish on distribution business going forward. Can you imagine the whole of last year, we had done 150,000 tons. And now we are doing that a quarter. So that’s the kind of growth we have seen this year. Of course, we may not be able to repeat the 4x growth year-on-year. But definitely, a very healthy growth is there, which we believe is going to happen.

Priyankar Biswas — Nomura — Analyst

So at least next year on a quarterly basis, can we do a run rate of 120 to 150 broadly, so around this level?

Murad Moledina — Chief Financial Officer

I think distribution, we have always said 30% to 40% growth year-on-year is what is normal. Now if such kind of step-ups come, where industrial clusters convert. Now if you look at Morbi, I think, 70%, 80% of them have converted to propane. So if those kind of step-ups happen, they would be over and above the healthy 30%, 40% growth, which we always believe distribution will give year-on-year.

Raj Chandaria — Chairman and Managing Director

Yeah, I think —

Priyankar Biswas — Nomura — Analyst

At least this level is sustainable, right. This current level.

Raj Chandaria — Chairman and Managing Director

We remain quite bullish.

Murad Moledina — Chief Financial Officer

Yes. Yes. Absolutely. The — presently, whatever has increased, looks to be sustainable.

Raj Chandaria — Chairman and Managing Director

Yeah. We remain quite bullish, but — I would just reiterate what Murad said that we can’t just extrapolate 400% going forward every quarter, obviously. But we think there is a sustainability to this momentum that has taken place as far as the industrial distribution side.

Murad Moledina — Chief Financial Officer

Yeah, yeah. Absolutely.

Priyankar Biswas — Nomura — Analyst

Sir, now, my next question is like, you had mentioned that there was volumes in Pipavav witnessing traction. And the VLGC GPA has just got commissioned, is that what I heard from you. So does this mean that going forward, we should be doing broadly sustainably over one million tons every quarter having logistics volumes give and take a few —

Murad Moledina — Chief Financial Officer

I think the 9,88,000 tonnes, which have happened in this quarter, one million should be a safe bet going forward for quarter.

Priyankar Biswas — Nomura — Analyst

Okay, sir. And just squeezing in a last question. So you had mentioned in the presentation that some large land was acquired in Mangalore and that there was a land acquisition at Haldia as well. So what are the CapEx — sorry, so what are the kind of facilities that you are trying to put on there, so Bangalore and Haldia?

Murad Moledina — Chief Financial Officer

We have already mentioned in the past that what we are going to execute is 100,000 metric ton of gas and 175,000 CBM of liquid facilities new at Haldia, Mangalore and Pipavav. So these land parcels are at Haldia and Mangalore are where these facilities are going to come up. These are going to be executed at an aggregate cost of INR1,250 crores as announced earlier.

Priyankar Biswas — Nomura — Analyst

Okay. Okay. So now understood. So that was all the questions I had.

Operator

Thank you very much. [Operator Instructions] The next question is from the line of Lavanya from UBS Group. Please go ahead.

Lavanya — UBS Group — Analyst

Hi. Thank you for the opportunity sir, and congrats on a good set of numbers. So I just wanted to understand the capacity that you have highlighted now. Out of that, how much will be coming in — I mean, in the near term, like FY ’24? And if you can help the split between the gas and the liquid capacity that is going to come?

Murad Moledina — Chief Financial Officer

Lavanya, we are yet working on the same. What we have come out and said is that 50,000 CBM of liquid capacity is going to be commissioned in FY ’23 itself. So that is how far we can go as yet. But in the ensuing quarters, as and when things like permits, et cetera, are finalized, design is finalized, then we will come out with some more specific data on what is going to come up where, and in what time horizon. But what we have said is that in 24 months, when we announced the last time, these facilities would be up and commissioned.

Lavanya — UBS Group — Analyst

Okay. Got it. So this liquid facility is in which locations, sir?

Murad Moledina — Chief Financial Officer

Liquid is in Haldia, which is going to be commissioned by March ’23.

Lavanya — UBS Group — Analyst

Okay. Got it. And on the distribution volume, I just wanted to check what is the contribution of this only Morbi segment in this, like 150 — sorry, 160 ton which — I mean, ton we have made?

Murad Moledina — Chief Financial Officer

We do not give that. It is quite sensitive.

Raj Chandaria — Chairman and Managing Director

Confidential.

Murad Moledina — Chief Financial Officer

So we do not give that number.

Lavanya — UBS Group — Analyst

Okay. Okay. I just wanted to check on the sustainability because with Gujarat gas cutting down its prices and, if both propane and NG is at a similar level, so despite the conversion of the units to propane, they will still be able to use natural gas if my understanding is right, right?

Murad Moledina — Chief Financial Officer

Yes. But the price which you are comparing, where you’re saying it is same as propane, is the price where for NG you have to commit for three months. And month-on-month, the price of propane is expected to go down with the wintered receding. So we still are very competitive in that sense. And we will keep selling hopefully. Okay. Got it. So any seasonality in this pricing? So there is some seasonality in the price difference, which usually natural gas and propane has right, sir. So what is the — can you help us understand that?

Raj Chandaria — Chairman and Managing Director

Yes. I mean there’s always seasonality. Obviously, there is a winter heating season in the Northern Hemisphere. So prices are always a little more elevated leading up to the winter and then start receding as the winter progresses. And as we enter spring, generally prices come down. So it’s not absolutely clear cut, but there is an element of seasonality.

Lavanya — UBS Group — Analyst

Okay. Okay. Got it. Got it. Thank you so much, sir.

Operator

Thank you. Next question is from the line of Himanshu Yadav from [Indecipherable]. Please go ahead.

Unidentified Participant — — Analyst

Thank you, sir, for the opportunity. Congratulations on the good set of numbers. First question is continuation with Morbi, what I understand is, I mean, you’re saying that we have a good fighting chance given the power situation and how it will pan out. So would it be fair to assume that quarter-on-quarter basis, will it be able to continue at a similar rate? Or do you see some normalization happening in the next quarter or to the coming year? I understand you don’t want to spill-out numbers, but we wanted to get an understanding to the point that there should not be — not like big negative surprises in the quarter. I mean, the way you see the trend, I understand there’s a big opportunity. But I mean such healthy volumes in Q3, I mean, do you think this run rate would kind of continue in Q4 and FY ’24? That’s first question.

Raj Chandaria — Chairman and Managing Director

As I mentioned earlier, I don’t think one should extrapolate fully just from Q3. That is going to be huge 100% what is it — how many percent?

Murad Moledina — Chief Financial Officer

400%.

Raj Chandaria — Chairman and Managing Director

400% increase every quarter clearly. But — Murad, you want to just —

Murad Moledina — Chief Financial Officer

Yes. I think what you are trying to say is that the volumes which we have achieved in Q3 sustainable. So answer to that is we believe it is — like we have said earlier, it is not just Morbi. The distribution sales do not — all of that — all of it is from Morbi. There are areas other than Morbi, where we sell. And we expect the areas to expand. Like we have said, the — more and more industrial clusters as the law will tighten and NGTs will come on hard like it done on Morbi. Morbi was actually forced into the conversion to clean fuel. So that is how I think — we think that more and more industrial clusters will come. So to answer your sense, we feel that whatever volumes have been achieved are sustainable and we’ll have a healthy growth rate, which we have just said earlier. Right. The second question, the 50,000 cubic meter capacity, which I think will come by FY ’23. How should one think in terms of the economics of that facility and the ramp-up over, say, two to three years? Will it be the usual way in which liquid separated has done in the past and should be at similar economics?

Raj Chandaria — Chairman and Managing Director

I think, liquids — generally, speaking, we — it’s — I would confidently say that it’s basically been sold out already. And it’s a pretty simple business model that we have. So you can assume more or less 90% to 100% capacity utilization in FY ’24 for that 50,000 cubic meters.

Unidentified Participant — — Analyst

[Technical Issues] I mean, in the last call, you mentioned that they were operating at a slightly lower base as, I mean, they have recently come under our operations. So they’ll take some time to reach the efficiency levels, which are other companies are showing. So some color on utilization and margins for those two terminals?

Raj Chandaria — Chairman and Managing Director

So you — what — I think we lost you sometime back. So are you referring to Friends terminals, which we have acquired?

Unidentified Participant — — Analyst

Friends and CRL Kandla, I want to know the —

Raj Chandaria — Chairman and Managing Director

Friends and CRL, Kandla, yes, they are doing well. And they are progressing as we would have wished for. So, it’s healthy — healthy growth out there for both the terminals.

Unidentified Participant — — Analyst

Right. Sir, Kandla LPG terminal, we are just doing distribution volumes as of now, right? There is no off-take by the PSUs, as of now.

Raj Chandaria — Chairman and Managing Director

Yes. I think in this quarter, oil companies have also started through-putting yet conductor.

Unidentified Participant — — Analyst

Okay, sir. That’s helpful. Thank you. That is it from my end.

Operator

Thank you. [Operator Instructions] The next question is from the line of Chirag from Budhrani Group. Please go ahead.

Chirag Vekaria — Budhrani Group — Analyst

Yes, sir. I just wanted to know, so where is this liquid facility coming up?

Raj Chandaria — Chairman and Managing Director

Haldia.

Chirag Vekaria — Budhrani Group — Analyst

Haldia. Any sense on profitability or something? Will it be similar or better than the virtual capacity?

Raj Chandaria — Chairman and Managing Director

Similar. Similar. Similar to what we have as an average realization. So you just have to add the capacity to our existing 1.6 million. And it is — we — as we have always guided.

Chirag Vekaria — Budhrani Group — Analyst

Got it. Got it. Okay, sir. Thank you. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Parth Kotak from Alpha Plus Capital. Please go ahead.

Parth Kotak — Alpha Plus Capital — Analyst

Hi. Thanks for taking my question and congratulations for a great set of numbers. I think you alluded towards the CapEx of INR1,250 crores. Capacities that we are talking about — is the understanding correct that the return on these capacities would be, say, mid to low or high single-digits?

Raj Chandaria — Chairman and Managing Director

Are you talking about return on capital employed?

Parth Kotak — Alpha Plus Capital — Analyst

Yes, that’s correct.

Raj Chandaria — Chairman and Managing Director

We — see this new CapEx, as we have said earlier, will be geared at 0.6. So the cost of debt is lower post-tax 5% that would actually put the return on capital double digit, not single digit.

Parth Kotak — Alpha Plus Capital — Analyst

Okay. Okay. Fair enough. And also if you could help me with the current debt and cash position for the standalone entity and the consolidated that would —

Raj Chandaria — Chairman and Managing Director

This is not at all the right way to look at it. But on consolidated level, we are having net debt negative. So we still have INR1,200 crores as cash on hand. And the debts have actually fallen down to somewhere around INR650 crores for December end.

Parth Kotak — Alpha Plus Capital — Analyst

Sure. Sure. That’s helpful. And lastly, sir, when do you expect these 175 kilo liters and 100,000 metric tons of gas capacity to be on stream?

Raj Chandaria — Chairman and Managing Director

We have said 24 months, right.

Parth Kotak — Alpha Plus Capital — Analyst

Okay. Perfect. Perfect. That’s it from my side. Thank you for taking my questions.

Operator

Thank you. The next question is from the line of Suman from Techfin Consultants. Please go ahead.

Suman Kawatra — Techfin Consultants — Analyst

Yes. Hello. Am I audible?

Raj Chandaria — Chairman and Managing Director

Yes.

Suman Kawatra — Techfin Consultants — Analyst

Yes. I want to go to the green energy side. How about your hydro — how do you foresee your hydrogen things coming in? What kind of turnover you expect and when? What kind of market size you expect then start?

Raj Chandaria — Chairman and Managing Director

Yes. I think, look, green energy is something that is definitely on our horizon. We are exploring, of course, with our joint venture partners Vopak, how to move into green energy. In fact, we were in Europe last September, touring all their facilities and all their initiatives on green energy, whether it would be hydrogen, ammonia and so on. And I can confidently say that we are — at least as far as ammonia is concerned, it’s definitely on our horizon and on our radar, and we are quite confident that, at some point, we will be announcing a couple of ammonia projects. And hydrogen is — ammonia is like a hydrogen carrier. It’s the ability to move hydrogen, which is a very complex and difficult molecule. It’s better to do it with ammonia in the form of NH3, and then use it as hydrogen and so on. So it’s a bit of a technical issue. But — so if your question is, is Aegis looking at green energy? Absolutely, we are looking at green energy. But remember that we are not in the business of producing green energy. We’re not in the — we’re in the process of in the business of facilitating the storage and transportation of that — of green energy — and — in whatever shape or form it comes. So I think that’s what I’d like to convey on green energy.

Suman Kawatra — Techfin Consultants — Analyst

Do you expect some kind of business to emanate in the next financial year?

Raj Chandaria — Chairman and Managing Director

No. In the next financial year — in ’23-’24?

Suman Kawatra — Techfin Consultants — Analyst

Yes.

Raj Chandaria — Chairman and Managing Director

I mean, quite possible we’ll have an announcement whether we will — we won’t be in a position to commission anything, but we will have announcements.

Suman Kawatra — Techfin Consultants — Analyst

Okay. Okay. And any indication — are there some more players who are planning to enter this field?

Raj Chandaria — Chairman and Managing Director

You mean the field of energy — green energy?

Suman Kawatra — Techfin Consultants — Analyst

Green energy. Yes.

Raj Chandaria — Chairman and Managing Director

Well, I think, Adani Group has made major announcements. I think they’re going to invest $75 billion in green energy and producing green energy and so on. So, I know they’re very serious and credible player. Of course, Reliance also has indicated. So these two big groups are — have already.

Unidentified Participant — — Analyst

Some more players are planning to enter this field?

Unidentified Speaker —

You mean the field of energy, green energy?

Unidentified Participant — — Analyst

Green energy, yeah?

Unidentified Speaker —

Well, I think Adani Group has made major announcements, I think they’re going to invest USD75 billion in green energy and producing green energy and so on. So I know they’re very serious and credible player. Of course, Reliance also has indicated, so these two big groups have already made major announcements. Now, of course, we are in the logistics space and anything that anybody does in green energy production, whether it’s hydrogen, ammonia or any other fuels will be there to help in terms of the logistics, that’s what our businesses.

Unidentified Participant — — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Priyankar Biswas from Nomura Financial. Please go ahead.

Priyankar Biswas — Nomura Financial — Analyst

Thanks again for the opportunity. This question is in relation to Kandla. So sir last time, I recall that you were highlighting that probably December you would be seeing the first LPG ship docking at the Kandla from a logistic standpoint of view. So has that taken place, the first LPG shipment by the OMCs?

Unidentified Speaker —

Yes, absolutely. It has happened.

Priyankar Biswas — Nomura Financial — Analyst

And can you give us some volume trajectory for FY24, ’25, what sort of ramp up you see at Kandla?

Unidentified Speaker —

I think that is a difficult question. We always try our best to see that there is a maximum growth, but yet Kandla and Pipavav will see most of the growth because Mumbai as you know has already reached its maximum limits, and Haldia the natural growth is going to continue. So all the healthy growth which one can say will come from the Gujarat two terminals, Pipavav as well as Kandla, Kandla because of national oil companies stepping it and starting their logistics and more be continuing and the pipeline connections which are going to happen in Kandla, and Pipavav because of the real gantry, because of the VGC compliant GT, because of the pipeline connections. So these two are going to drive the growth of logistics the next three, four years, definitely, and quite a healthy growth, it should be.

Priyankar Biswas — Nomura Financial — Analyst

So for the next year, at least the minimum growth that we are relatively confident of, so that was what I wanted to ask?

Unidentified Speaker —

I think you should — whatever run rate we are going to achieve in Q4. I think that run rate, if you multiply it by four for the next year, should be a quite nice indicator of what is the growth that would happen the next year or you may, in all probability, take the Q3 one with a little more upside for Q4 and then multiply by that. So 4 million plus is that — some time back also we said should be possible in FY24.

Unidentified Speaker —

Yeah, I think we will have more visibility as we move towards the end of the year. And I know you’ll be there on our annual earnings call in the month of May, and I think we will have a better feel of how the year is shaping out and we’ll be probably able to give you a little better feel at that time.

Priyankar Biswas — Nomura Financial — Analyst

And this green energy announcements ideally, when can we expect like you said FY20 also, is it something like already currently in works or is it like you’re planning to do something in FY24?

Unidentified Speaker —

Yes, I think we are — the management team is actively involved in discussions with potential users and so on. And so I think probably, let’s target Q2 as a target, Q2, so keep stay tuned.

Priyankar Biswas — Nomura Financial — Analyst

Thank you so much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Dr. Amit Vora from the Homeopathic Clinic. Please go ahead.

Amit Vora — Homeopathic Clinic — Analyst

Hello.

Unidentified Speaker —

Yeah, go ahead.

Amit Vora — Homeopathic Clinic — Analyst

Yeah. So as I saw the last quarter as compared to last quarter, I think the margins are better in the gas and you want the liquid sector?

Unidentified Speaker —

Yes.

Amit Vora — Homeopathic Clinic — Analyst

So are these margins sustainable or you see margins improving little furthermore for this financial year and the next financial year?

Unidentified Speaker —

We have always said the blended margin rate for distribution business would be somewhere around INR3,000. We have done a lot better in Q3, we open wish we continue doing that going forward also. But I think safely INR3,000 as a margin for distribution blended rate [Technical Issues] to be considered. As far as liquid is concerned [Technical Issues] stabilized, and therefore, they have come back to the levels which we have always been talking about, which is INR3,000 a year for revenue and 65% EBITDA margins there on. So, that is — I think somewhere we are close to that and we expect to remain so.

Amit Vora — Homeopathic Clinic — Analyst

The maximum that we can see for now?

Unidentified Speaker —

Yes.

Amit Vora — Homeopathic Clinic — Analyst

That is the maximum we can see for now?

Unidentified Speaker —

Yeah, depending on the additional capacities which are going to come in liquid so you will see a growth on that count also.

Amit Vora — Homeopathic Clinic — Analyst

Okay, thank you so much. That’s it from my side.

Operator

Thank you. [Operator Instructions] The next question is from line of question [Indecipherable] from InCred Asset Management. Please go ahead.

Unidentified Participant — — Analyst

Hello, sir. Hope I’m audible?

Unidentified Speaker —

Yeah, you are. Go ahead.

Unidentified Participant — — Analyst

Thank you for the opportunity and congratulations for a good set of numbers. I just wanted to ask what will be the segmentation of the INR1,250 crores capex between cash and equipment, has been decided as of now?

Unidentified Speaker —

No, the work is still on. So like I said very soon, we’ll come out with more details.

Unidentified Participant — — Analyst

Sure, sir. And in terms of just one more question, how much time does it take to jetty to reach an optimal capacity utilization?

Unidentified Speaker —

Jetty?

Unidentified Participant — — Analyst

Or port sorry? So let’s say in Kandla how much time would it take for us to reach an optimum utilization?

Raj Chandaria — Chairman and Managing Director

You mean at the terminal?

Unidentified Speaker —

Terminal is always constructed for long-term. So, it has to satisfy the customers growth and need for five to seven years, once it starts. So, accordingly you can safely assume that, let’s say, you start somewhere at 20% 25% capacity utilization and grow 15% 20% every year there on, so that five seven years of growth trajectory of the customer is taken care of.

Unidentified Participant — — Analyst

Okay, sure. And in terms of DoD signing contracts there?

Unidentified Speaker —

There is nothing like signing, the contracts are always in place to use the terminal and it depends on the growth the customer has in this business which is LPG growth and that is the macro picture which has already been discussed many times over the past, and also our presentation carries that. So, as the LPG demand increases 7% to 10% overall and imports if you look at is 15%. So, that is the growth which translates into your terminal logistics volumes.

Unidentified Participant — — Analyst

And this growth would be increasing because the refining capacity is not increasing in India?

Unidentified Speaker —

Yes, absolutely.

Unidentified Participant — — Analyst

As the demand grows, right?

Unidentified Speaker —

Right. Demand keeps growing and the local production is stagnated.

Unidentified Participant — — Analyst

Thank you for the opportunity. All the best.

Operator

Thank you. [Operator Instructions] As there are no further questions, I will now like to hand the conference over to Mr. Raj Chandaria for closing comments.

Raj Chandaria — Chairman and Managing Director

Great, thank you very much. As I said, we are of course pleased to present a good set of results. I would like to say that the management team has performed exceptionally well during this last few months to really deliver sustainable trajectory for the company, we’re really proud of them. And we expect at least to finish off this financial year ’21-’23 on a similar high note. And I know a lot of you are eagerly awaiting an update on the next — the outlook for the next year, so please stay tuned. And thank you.

With that, I’ll close the call. Thank you.

Operator

[Operator Closing Remarks].