Gujarat Gas Ltd (NSE: GUJGASLTD) Q2 2025 Earnings Call dated Nov. 07, 2024
Corporate Participants:
Sandeep Dave — Company Secretary
Dipen Chauhan — Head of Business Development – Industrial and CNG Segment
Rajesh Sivadasan — Finance, Accounts and Investor Relations
Analysts:
Probal Sen — Analyst
Amit Murarka — Analyst
Yogesh Patil — Analyst
Varatha Rajan — Analyst
Maulik Patel — Analyst
Tarang Agrawal — Analyst
Sabri Hazarika — Analyst
S. Ramesh — Analyst
Hardik Solanki — Analyst
Sanjay Kumar — Analyst
Mayank Maheshwari — Analyst
Kirtan Mehta — Analyst
Somaiah V — Analyst
Vikas Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Gujarat Gas Limited Q2 FY25 Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to the Company Secretary of Gujarat Gas, Mr. Sandeep Dave. Thank you, and over to you, sir.
Sandeep Dave — Company Secretary
Good evening, everyone. A very warm welcome to Q2 earnings call of Gujarat Gas Limited. I’m Sandeep Dave, Company Secretary and Head of Corporate Communication Department at GGL.
Just to give an update, since our last earnings — last call, on 30th August 2024, we have announced scheme of arrangement among GSPC Group of companies. The proposed scheme will eliminate layered structure of GSPC Group, promote business synergies and unlock value for its stakeholders. The scheme is subject to various statutory and regulatory approvals. We have filed the scheme with BSE and NSE, and we expect to get clearance from stock exchanges during November 2024, followed by submission of scheme with SEBI. After obtaining SEBI clearance, the scheme will be filed with MCA.
Coming back to GGL, to give a brief background about GGL. GGL is the largest city gas distribution company in India. GGL is operating in 27 geographical areas spread across six states and one union territory. We have a good mix of mature and emerging CGD areas. We have developed a pipeline network of more than 41,700 kilometers, which provide natural gas to close to 22 lakh households, 4,410 industrial customers and 15,470 commercial customers. We also operate 820 CNG stations serving approximately 4 lakh vehicles per day.
GGL aims to deliver affordable, reliable and cleaner energy by operating responsibly and performing with excellence while considering environment, social and governance factors. As part of our commitment to ESG initiatives, we have taken various measures, which include hydrogen blending pilot project, which we have completed with 8% blending recently. Now we are planning to increase blending level after obtaining necessary regulatory approvals. We are aggressively setting up CNG infrastructure as well as upgrading CNG infrastructure to promote use of clean and green fuel. We have also started injecting biogas into GGL system.
We have embarked on major digitization drive across various business operations and processes. Our major contribution to the environment is by virtue of promoting use of gas for industrial customers. In Q2 we have reduced burning of approximately 14,482 metric ton of coal per day. Further, through our CNG sales on various outlets, we have reduced combustion of approximately 2,924 kiloliter of petrol per day during this Q2.
At Gujarat Gas, we adhere to highest standards of safety and a strong culture of safety. GGL is an ISO-certified organization for integrated quality, occupational health, safety and environment management system. We build, operate, and maintain a safe and reliable gas network in our areas of operation.
With this brief background on GGL, I now request Mr. Dipen Chauhan to share business updates. Over to you, Dipen.
Dipen Chauhan — Head of Business Development – Industrial and CNG Segment
Thank you very much, Sandeep. Good evening, everyone. First, I’ll update on domestic and commercial segment. We are seeing a positive growth in the domestic segment. Gujarat Gas customer base is now more than 21.90 lakhs domestic customers. Despite the monsoon season where construction is a bit challenging, GGL has still managed to maintain the growth rate and have been able to add 0.4 lakh customers in the current quarter. The Commercial segment is showing a steady growth in connection members. We expect the numbers in the domestic and commercial segment to increase over a period of time as the new areas mature. GGL at present has a customer base of 15,400 commissioned commercial customers across its GAs.
Now let me update on the Industrial segment. In the Industrial segment, sales volumes were 4.91 mmscmd for the quarter ended 30th September 2024, whereas the sales volume during the same period in the previous financial year was 5.86 mmscmd. The average Morbi volume during the quarter was 2.86 mmscmd. And non-Morbi volume was 2.05 mmscmd. As stated during the last call, the Morbi volume were expected to be lower due to Janmashtami festivals in August.
Additionally, the ceramic market was also adversely affected by the geopolitical factors, which led to overall reduction in capacity utilization. The non-Morbi volume of 2.05 mmscmd for quarter ended 30th September 2024 has grown from 1.9 mmscmd during the same period in the previous financial year.
During the quarter, we had to increase the industrial prices by approximately INR2 per SCM. The increase was mainly on account of significant increase in LNG prices. The spot LNG prices were around $9.50 per MMBtu in April 2024 and the current prices is approximately $13 per MMBtu. Further, the prices under the LT contract were also impacted due to the lagging effect of higher crude prices. We continue to monitor the price movements of LNG and alternate fuel across all our operating areas. In Q3, there may be some impact on non-Morbi sales due to Diwali festival. However, we are hopeful that volume will recover during Q3 FY ’25.
Finally, let me update on the CNG segment. In Q2 FY25, CNG sales in Gujarat increased by 12% year-over-year, while outside Gujarat sales surged by 25% year-on-year basis. Overall, CNG sales across region grew by 12% annually. CNG maintains significant price advantages, being approximately 47% cheaper than petrol and 15% cheaper than diesel. During this quarter, we have added nine new CNG stations, enhancing accessibility. Overall, we have achieved CNG sales volume of 2.93 mmscmd in this quarter. This performance underscores a positive investment outlook driven by increasing consumer adoption and strategic infrastructure development, positioning CNG favorably in the energy market.
Now I would like to request our CFO, Rajesh Sivadasan, to take this introduction forward. Mr. Rajesh.
Rajesh Sivadasan — Finance, Accounts and Investor Relations
Thanks, Dipen. Good evening, ladies and gentlemen. I’m Rajesh Sivadasan, Chief Financial Officer and the Head of Investment Relationship at Gujarat Gas Limited. At the outset, on behalf of the entire team of Gujarat Gas, let me wish you a very happy Diwali and a prosperous New Year. I welcome you all to the earnings call of Gujarat Gas Limited for the second quarter for the financial year 2024-25.
I’d like to thank all of you for attending this call today. I trust you have gone through the financial results of the quarter ended 30th September ’24, along with the investor presentation, which we have uploaded on 6th of November ’24. We believe that expanding geographical coverage and expansion of the gas network would eventually lead to increase in volumes and profitability. As a result, we have been able to grow CNG volumes at 12 percentage from 2.62 mmscmd in the corresponding quarter of financial year ’23-’24 to 2.93 mmscmd in the second quarter of financial year ’24-’25.
The volume of the company for the quarter ended 30th September stood at around 8.75 mmscmd compared to 9.32 mmscmd in the corresponding quarter of the previous year. During the quarter, the company connected close to 38,500 new domestic customers, making the PNG domestic connections of more than 2,191,000 domestic customers. During the quarter, the company invested close to INR130 crores into the gas infrastructure, aggregating to INR330 crores up to the half year of this financial year. The company is presently having PE and steel network of more than 41,700 kilometers, along with close to 820 CNG stations, which is a key driver for our growth going forward.
In terms of revenue, the company has registered a revenue from operations of INR3,949 crores during the second quarter against INR3,991 crores for the corresponding quarter in the previous year. The company reported a profit before tax of INR415 crores during the second quarter of this financial year ’24-’25 compared to INR401 crores in the corresponding quarter of the previous year, an increase of approximately 3 percentage.
The EBITDA for the second quarter stands at around INR553 crores as compared to INR526 crores in the corresponding quarter, an increase of close to 5 percentage. In terms of EBITDA per scmd, it stands at close to INR6.86 against INR6.14 in the previous quarter of the previous year. We are closely monitoring the propane future trajectory. And in the near term, we accordingly stick to our strategy of to calibrate and strike a balance between the volumes and the margins going forward.
Further, our focus on digital drive, we are happy to state that more than 98% of our collections are coming through digital mode for which we would like to thank our customers. After the recent corporate announcement, Gujarat Gas continues to have a credit rating of AAA stable and a short-term rating of A1+, which has been reaffirmed by CARE and India Ratings. CRISIL has maintained the AAA rating and under the developing watch category. We have uploaded the investor presentation on the GGL website. I hope you have gone through the same.
With this, we open the floor for the Q&A session.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Probal Sen
Thank you for the opportunity. Good evening, sir. Just with respect to the CNG segment, you mentioned about Gujarat growth being at 12%, outside Gujarat being at 25%. Is it possible to therefore get a mix of volumes as of now in terms of our overall volumes how much is coming from Gujarat and how much from outside.
Dipen Chauhan
So generally in percentage-wise, 87% is coming from Gujarat and 13% is coming outside Gujarat.
Probal Sen
Got it, sir. That’s very helpful. The second question was, sir, that in terms of quarter three, have we seen any uptick in terms of Morbi volumes? And if so, is it possible to share a rough number in terms of what the range is as of now?
Rajesh Sivadasan
I think in quarter three we are looking at a growth of around — volume should be around 3.5 to 4.
Probal Sen
3.5 to 4 from Morbi, right, sir?
Rajesh Sivadasan
Yes.
Probal Sen
Okay. And the third question was, sir, with respect to the APM gas reallocation, we have taken a price increase in the Industrial segment. But just wanted to get a sense that given the kind of growth we are seeing in CNG and the differential that is there, are we looking right now at a price increase to pass through? I mean, what is the blended percentage of priority gas we are getting right now for the CNG and domestic segment?
Dipen Chauhan
So for the quarter ended September ’24, we were getting — I mean, the shortfall was approximately 12% which was being fulfilled through a spot. So — and after that, there has been a further reduction in APM gas. The reduction is now approximately 50%. We have basically able to get a good chunk of new well gas as they call it and so the entire reduction has been compensated by the new well gas that we have been able to get.
Probal Sen
New well meaning sir, the HPHT price base gas, so at around $10.
Dipen Chauhan
So new well gas is basically the APM gas without any cap. APM gas price without any cap. So APM gas price is basically 10% of crude with a cap of $65 per barrel. So that’s how it’s coming to $6.5. Now the new well gas is basically 20% premium without the $65 cap. So basically 12% kind of crude.
Probal Sen
Okay, effectively then it is about 12% of crude. So that is what we are getting to compensate for the short fall.
Dipen Chauhan
Correct.
Probal Sen
So are we looking at a price increase therefore to pass on this additional cost, sir? Any color you can give on the thought process?
Dipen Chauhan
Yeah, we are evaluating options to increase the CNG prices in near future for — to basically offset the increased cost of gas procurement.
Probal Sen
So one last question, if I may, sir. The CapEx run rate seems to be a bit lower at least for H1 than our earlier annual guidance. So are we still hoping to sort of manage our around INR800 crore INR900 crore kind of capex annualized or are we looking to be a little bit short of that this year?
Dipen Chauhan
No, we’ll be — the CapEx will be around INR800 crores to INR1,000 crores
Probal Sen
Okay. Thank you very much for your time, sir. I’ll come back if I have other questions. Thanks.
Operator
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead. Mr. Amit, I would request you to unmute your line.
Amit Murarka
Yes. Hi, thanks for the opportunity. Yeah. So the first question is on Morbi. Like, what would be the total Morbi market size now in terms of the overall potential volume that can be done from there? Earlier I remember it used to be I think closer to 10 mmscmd.
Dipen Chauhan
The market size would be around 7.5 mmscmd to 8 mmscmd. Right now I think because of various issues in Middle East and all, I think the consumption would be close to 6.5 mmscmd including propane consumption.
Amit Murarka
Okay. And you’re saying that current run rate is about 3.5% out of that?
Dipen Chauhan
Correct.
Amit Murarka
Okay. Sure. Got it. And I didn’t get the question on the data point on the APM properly. Did you say that 88% was APM for you in Q2?
Dipen Chauhan
26 pecentage shortfall was there.
Amit Murarka
26. 74% was APM, which is now 50%.
Dipen Chauhan
Yeah, right.
Amit Murarka
Okay, got it. And lastly, like can you provide the GSPC results also for Q2 or H1?
Dipen Chauhan
We are yet to go to the board of GSPC.
Amit Murarka
Okay, sure. I’ll come back in the queue.
Operator
Thank you. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Yogesh Patil
Thanks for taking my question. Sir, the company reported a sequential decline in the CNG volume. Is it mainly because of CNG price hike in the month of August or some other reasons of volume cost?
Dipen Chauhan
I think the volume decline is because of the monsoon which was there.
Yogesh Patil
Okay. And sir, could you please provide the volume guidance for the CNG Industrial FY25-26?
Dipen Chauhan
CNG industrial volume?
Yogesh Patil
Yeah.
Dipen Chauhan
I think we have these — see, ultimately there is a competition between propane and the natural gas. So as per the present prices of propane and natural gas, we are looking at a volume of close to up to from 3.5% to 4% mmscmd we are looking at Morbi. So based on the propane prices going forward, the volumes will keep on fluctuating.
Yogesh Patil
Okay. Sir, could you please also share the gas sourcing detail for the CNG industrial and the commercial. And if you could provide us that the spot LNG blending during the quarter and the average prices of spot LNG you have procured during the quarter?
Dipen Chauhan
Yeah. We have — you are talking about the spot LNG which was procured?
Yogesh Patil
Sir, question is related to gas sourcing overall for the CNG industrial and the commercial side. If you could share the details on that side current basis? And what was the portion of spot LNG blending during the Q2 FY25 and average prices of spot LNG you have procured during the quarter second.
Dipen Chauhan
Yeah, I will tell you that overall picture that is basically we procured the volume of close to 8.9 mmscmd was there. Of that close to — the APM was close to 31 percentage and the long-term which we have, that’s close to 35 percentage and the spot LNG was close to 34 percentage. So if you look at the average price of spot, that’s around INR37.4 per scm. That’s the average price which you have.
Yogesh Patil
Okay. And sir, as per our understanding, you have one LNG supply contract from the BG side, British Gas and that is around 2 mmscmd, 2.5 mmscmd, which is expected to expire in next few months or the quarter. What is the update on that side? Are we going to renew this contract or any other LNG sourcing arrangement for that side?
Rajesh Sivadasan
So that LNG contract will expire somewhere in middle of 2025 and we are right now in discussions for a new LNG contract to replace those volumes.
Yogesh Patil
Okay. Thanks a lot, sir.
Operator
Thank you. The next question is from the line of Varatha Rajan from Antique Stock Broking. Please go ahead.
Varatha Rajan
Thank you for the opportunity, sir. Can you give us the current gas price versus propane price at Morbi? What is that you are charging and what is the comparable price of propane?
Dipen Chauhan
The current price of propane is close to INR43.6 and the price of gas is close to INR44.7.
Varatha Rajan
Okay. And what is the proportion of propane linked contract volumes these days with you and how much of contracts have been signed in terms of volume?
Dipen Chauhan
We have not signed any contract.
Rajesh Sivadasan
We don’t have any propane linked contract, it’s only oil linked contract that we have right now.
Varatha Rajan
Okay. Because I remember you were highlighting like incrementally for Morbi customers you are trying to roll out a propane linked contract.
Dipen Chauhan
We tried that. However, that is — I mean, we are still in discussions with suppliers for offering propane linked volumes so that we can sell it on a back-to-back basis to Morbi customers.
Varatha Rajan
Okay. So as of now like we are not doing any volume?
Dipen Chauhan
Sorry.
Varatha Rajan
As of now, we are not doing any volume, which is propane-linked?
Dipen Chauhan
No. It’s at discussion stage only.
Varatha Rajan
Yeah, thanks. And finally, sir, on the price increase which you said you have done for — the INR2, when was that effected? Was it only in the current month or was it done in the previous month?
Dipen Chauhan
No. It was the old one. I think it was in July.
Varatha Rajan
It was in July. Subsequently, we’ve not raised any prices.
Dipen Chauhan
No, no, subsequently we have not raised any.
Varatha Rajan
Fair enough, sir. Thanks a lot. I’ll come back in the queue.
Operator
Thank you. The next question is from the line of Maulik Patel from Equirus Securities. Please go-ahead.
Maulik Patel
Yeah, hi. Thanks for the opportunity. Two questions. One on this BG contract which will expire in middle of 2025 and the new contract which you would like to sign, so any — will there be any time gap between these two contracts?
Dipen Chauhan
No, there will be no time gap.
Maulik Patel
Okay. And the one which you intend to sign it is Henry Hub based, right?
Dipen Chauhan
Pardon. Henry Hub. So we are exploring opportunities. I think what you are referring to is the publication is — the news that has been published that is pertaining to GSPC, but we are in discussions with various suppliers for volumes linked to various indices including Henry Hub and oil.
Maulik Patel
Okay. So currently, you are getting approximately 2.5 mmscmd in BG contract, right, that will entirely be replaced and by that time you will have a new contract?
Dipen Chauhan
Yes.
Maulik Patel
Okay. Second question is on that, the discussion that there is going to be significant cash flow generation for the merge entity, both GSPC trading business and CGD business of Gujarat Gas. So is there anything plan or strategies being formed where to deploy this operating cash flow going forward? Because earlier we had mentioned that there will be some thought about diversifying into the renewables, hydrogen and others.
Dipen Chauhan
Yes, we are evaluating all the options. All the options are open to us. So we will come back to it at around an appropriate time what decisions we are going to take.
Maulik Patel
Okay. And just last question on that recent APM gas cut, what’s your thought process that because APM allocations to the CNG, which was almost 100% two, three years back has now cut down to 50% in a few quarters, right? Will it go to zero in next three to four years? Is that what you think about that government will reduce further APM gas allocation and this CNG has to compete with the petrol or diesel on the market-driven gas prices.
Dipen Chauhan
So that’s what we hear from the market that APM gas would gradually be replaced by maybe new well gas as they call it, so basically gradually there will be a gradual abolishment of — or there will be gradual reduction of APM gas and that gas would ultimately be replaced by new well gas. Basically it’s a price thing. So gas would be available, but probably at a more marketing price going forward.
Maulik Patel
So essentially there will be an APM which you get at 6.5, which is at GCV, right? And this one will be at 9.5 also at the GCV or it’s an NCV, new from the ONGC?
Dipen Chauhan
All at GCV.
Maulik Patel
All at GCV. So essentially you will have a $3 increase in the price for whatever the 65% of the APM gas allocation which you had in the previous quarter or 75% previous quarter and that you will have an approximately $2 kind of increase on a blended basis.
Dipen Chauhan
That is $2. You are calculating basis the current crude levels. The crude levels are — crude prices can basically fall. If we have to go through — go by the reports of various agencies, international agencies, crude could actually go below 70%. If that happens the differential will not be that much.
Maulik Patel
So currently it’s $80 at the Indian Brent grant basket, approximately. This $9.6 of the new gas well is around 12% of that oil price, right?
Dipen Chauhan
12% of oil, yes.
Maulik Patel
Okay. Great. Thanks.
Operator
Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead. Mr. Kirtan, I would request you to unmute your line and speak, please. Due to no response from the current participant, we will move on to the next participant. The next question is from the line of Tarang from Old Bridge Capital. Please go ahead.
Tarang Agrawal
Hi, two questions from my side. The first is basically on GSPC. Once the results are published or discussed with the board, are they going to be published from here on?
Dipen Chauhan
No. See, ultimately, until the merger is happening, each company will be functioning independently.
Tarang Agrawal
Okay.
Dipen Chauhan
GSPC is not listed today.
Tarang Agrawal
Okay. But the reason why I ask is because of the structure of the scheme now, it indirectly also leads to an exposure in GSPC, correct? Assuming that the scheme will be consummated?
Rajesh Sivadasan
I think it’s unfair on our part to comment on what GSPC will do. I think GSPC will be cognizant of the fact that it’s being tracked by a lot of listed analysts and investors. So their Board will take appropriate call on this.
Tarang Agrawal
Okay. Second question, sir was — hello?
Dipen Chauhan
Yeah, we can hear you.
Rajesh Sivadasan
Yeah, we can hear you.
Operator
Sir, we lost the connection of the current participant. The next question is from the line of Sabri from Emkay Global Financial Services. Please go ahead.
Sabri Hazarika
Yeah. Good evening, sir. Sir, this CNG station addition, so this includes FDODO scheme or it’s like a normal increase actually?
Dipen Chauhan
This is a normal addition. FDODO stations will be commissioned, I think, in the third — maximum fourth quarter of this year.
Sabri Hazarika
Fourth quarter of this financial year, right?
Dipen Chauhan
This financial year.
Sabri Hazarika
Okay. Fair enough. And secondly, Morbi volumes, you said 2.86 mmscmd. Is that right?
Dipen Chauhan
Yes.
Sabri Hazarika
Okay, sir. Okay. Thank you so much. That’s all for me.
Operator
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
S. Ramesh
Thank you and good evening. So when you talk about increasing the Morbi volumes from 2.86 mmscmd to 3.5 mmscmd to 4 mmscmd, is there an increase in the overall energy consumption, including propane or are you able to increase your market share based on the current price differential of that whatever INR1.1 premium for PNG? How is it working now in this quarter, third quarter?
Dipen Chauhan
It’s purely based on the premium difference, which is there.
S. Ramesh
So, no, in terms of the market share, so what was the energy consumption, including propane in second quarter? And what is the current run rate on which you are expecting the Morbi sales to go up from 2.8 mmscmd to 3.5 mmscmd to 4 mmscmd?
Dipen Chauhan
So last quarter, we understand Morbi market total consumption was gas equivalent of almost 6.8 million to 7 million. So we expect to gain a share out of propane consuming customers.
S. Ramesh
So how do you plan to achieve that? How would it happen? Because you have not changed the price. So as the LPG price or propane price gone up, why are customers shifting to PNG, if I may ask?
Dipen Chauhan
The propane prices have actually gone up. The differential is now INR1 to INR1.5 per scm.
S. Ramesh
So are you saying propane prices have gone up from INR43.6 to higher than your PNG price?
Dipen Chauhan
No, propane prices are — gas pricing — gas prices are now at a premium of only INR1.5 per scm. And next month also, the propane prices are expected to go up.
S. Ramesh
Okay. So you mentioned INR43.6 for propane and INR44.7 for PNG. What was it in the second quarter?
Rajesh Sivadasan
Second quarter, it was INR44 and it was close to INR44 and INR41. The gas prices were close to INR44 and the propane prices were close to INR41.
S. Ramesh
Okay. So about INR3 premium has come down to INR1.1 to INR1.5. So we expect…
Dipen Chauhan
Yes.
S. Ramesh
Okay. So as on date, you are seeing this sort of conversion and you are able to see this run rate, right, 3.5?
Dipen Chauhan
Yeah.
S. Ramesh
Okay. So how do you see — now what happens when your propane and LPG market kind of enters a weak season, say, from April, what will be your strategy there when you see the propane and LPG prices go down? How do you plan to maintain your volumes?
Dipen Chauhan
No, so we have to have a fine balance between the margins and the volumes which I need to get. So that has been our strategy for the last few years. We are going with that same thing.
S. Ramesh
Okay. So if you look at your EBITDA per scm, you’ve been able to pass on the cost, but your Morbi volumes are down, so where has the incremental growth in per scm EBITDA come from? Is it because of the growth in CNG? Can you explain that?
Dipen Chauhan
See, I think if you look at the last few years, the growth of CNG and the domestic has increased in our portfolio from close to less than 20%, it is more than now 40 percentage. So that’s like playing a part in our margins going forward.
S. Ramesh
Okay. So if you look at your growth outside Gujarat, how do you see the share of the sales outside Gujarat overall and that of CNG moving? You said 13% of CNG is outside Gujarat, right? How would that be, say, in the next one, two years? And in terms of the overall share of the GAs outside Gujarat, for the new GAs, what would be the share of those GAs over the overall volumes?
Dipen Chauhan
Yeah, I think the ecosystem with respect to gas is being developed over there. So gradually, this growth which we are seeing in Gujarat, they are definitely going to happen over there. So in terms of volume, see, ultimately, the infrastructure has to be in place before the volume jumps up. So basically, I think we are at the right place to again put up on the infrastructure, including the pipeline and the CNG stations over there. And now we are focusing on conversions, etc over there.
Operator
Thank you. [Operator Instructions] The next question is from the line of Hardik Solanki from ICICI Securities. Please go ahead.
Hardik Solanki
Yeah. My question is already answered.
Operator
Thank you. The next question is from the line of Sanjay Kumar from ithoughtpms. Please go ahead.
Sanjay Kumar
Hi, thank you for the opportunity. So this is my first time on the call. So just a basic question. PNGRB issued a notice of classifying 20 GAs as common contract carriers. Is this a new development? And there was a committee meeting on November 4, and there’s one more scheduled on November 20. What can be the impact for us on these 20 GAs?
Dipen Chauhan
PNGRB has issued the first regulation for declaring common carrier in 2020. In January 2021, we approached Delhi High Court and obtained a stay order. The stay order, the interim protection order was continuing until recently, until the time PNGRB came up with 2024 regulation. So the 2024 regulation probably was one of the ways of getting out of the stay order, favorable order, which Gujarat Gas has obtained. What we have done as GGL management is we have immediately moved Delhi High Court again and obtained a protection order, a favorable order from Delhi High Court. So this prevents PNGRB from taking any coercive action against GGL. So as of now this order we obtained, this on July 2024, the same is continuing. So we do not expect what PNGRB currently doing is more of a consultative process, but they cannot take any coercive action against GGL management. And GGL to that extent is protected from open access regime.
Sanjay Kumar
Okay. And roughly, what would be the volume from these 20 GAs?
Dipen Chauhan
It will be difficult to comment on that because we have not thought it through. We believe that we have made out a good case in Delhi High Court, and this open access regulations are a little premature. And we’ll deal with it as and when it comes.
Sanjay Kumar
Got it. Thank you, sir. And second question on the APM gas allocation cut of 20%. So any revision in EBITDA margin guidance. I think you had given 4.5% to 5.5%. Now we are already at, I think, close to 6%. So any new margin guidance for second half of FY25 and FY26?
Dipen Chauhan
I think our EBITDA margins would be in the range of 5% to 6% now going forward.
Sanjay Kumar
Okay. That’s it from my side, sir. Thank you.
Operator
Thank you. The next question is from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead.
Mayank Maheshwari
Sir, so my first question was more regarding LNG trucking. You did mention in a few earlier calls about it. A lot of your peers have talked about it as well. Can we just get an update from you on what’s going on from your side on LNG trucking?
Dipen Chauhan
We are already supplying LCNG at four of our stations where we are converting LNG into CNG and supplying to the customer. So we are in the process of setting up a dispenser at these four stations. So we can start LNG dispensing also at these stations. Apart from that, we are in the process of surveying all our routes, basically, which are connected to the major ports in Gujarat and Expressway, which are coming up in and around Gujarat. So it looks like we will be in this business very soon.
Mayank Maheshwari
Got it, sir. And I think the second question is more related to the industrial customers and reach. You had earlier talked about Vapi, Valsad and ability to kind of grow your customer base there and diversify your volume mix away from Morbi. Any thought process because your absolute numbers of customers, if you look at the charts you’re showing has been not growing that much still. So what’s been the reason for a slower growth around that strategy?
Dipen Chauhan
So basically, we are targeting new markets in Ahmedabad rural, Silvassa, Dahej and Surat, Ankleshwar, Bharuch, which are basically two-wheeler markets. We are basically in touch with all the consumers. And I think we are flowing close to 2 million volumes in Surat, Ankleshwar, Bharuch and Vapi, Valsad markets. And we expect these volumes to grow substantially in the next few years. I think these areas have a potential to increase to almost 3 million to 3.5 million. We are putting up networks in Ahmedabad rural and Dahej and Silvassa. I think in times to come, these volumes can grow substantially from the current level of 2 million.
Operator
Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Kirtan Mehta
Thank you, sir, for the opportunity. In terms of the FDODO scheme that you have rolled out, could you talk us through the physical progress that they are seeing in implementation of this FDODO scheme? What kind of orders for the equipment have been placed?
Dipen Chauhan
We have issued nearly 400 LoIs, out of which 125 have been accepted by the applicants. And apart from that, they have already submitted the bank guarantee of INR10 lakhs from those 125 locations. The way things are going, I think we will start or the action will start sometime in the first week or maximum second week of December for the construction of the stations.
Mayank Maheshwari
And how do we see the ramp up of this station? How many stations by what time frame?
Dipen Chauhan
Time frame, generally as per our agreement or terms and condition of the franchisee agreement, I think, the applicant has to complete the station within one year. And with the proper support and handholding from the company, I think we’ll manage to achieve that.
Mayank Maheshwari
And are there also any condition on the volume ramp up under the agreement?
Dipen Chauhan
No.
Mayank Maheshwari
Right, sir. The second question was about the new industrial areas that we are developing, Ahmedabad rural, Silvassa and others. Could you share the infrastructure pipeline implementation target for this year and next year in those areas? And how much of capex we are committing to those geographic areas to develop the network?
Dipen Chauhan
I think our major capex, which is going into the steel and the CNG stations are with respect to these places only. The Ahmedabad rural, I think, of the nine stations which we implemented three stations are in these areas. Even Thane etc also the new stations which are coming in have come in the areas which have been mentioned.
Mayank Maheshwari
Is this mainly targeting the sort of CNG and industrial together in the same area? Or are we focusing to get more industrial? Are we focusing on particular areas for more industrial volume?
Dipen Chauhan
No, it was a combination of two, because when the steel pipeline is put, basically, we also have to ensure that the CNG stations are online. So basically, then only we get the maximum benefit of it.
Mayank Maheshwari
Right, sir. Thank you.
Operator
Thank you. The next question is from the line of Somaiah from Avendus Spark. Please go ahead.
Somaiah V
Yeah, thanks for the opportunity, sir. Few clarifications. Sir, one, in terms of EBITDA outlook, so you have mentioned INR5 to INR6 versus INR4.5 to INR5.5 earlier. Just want to understand your thought process. So is it because of higher share of CNG mix we expect this to be slightly higher compared to earlier periods or any other drivers that you are thinking of, that will help us.
Dipen Chauhan
One is CNG is definitely there because we are growing at close to 12 percentage in CNG. And the other thing is basically the portfolio of gas, which we are sourcing, that is also giving us a benefit advantage to the rest of the people over here. So basically, that will help us just aggregating the industrial volumes as well as getting better margins from CNG.
Somaiah V
Okay, sir. Sir, also in terms of your long-term contracts, you did mention about the BG. So the other two contracts, which are the ones? And what is the quantum and what is the term period for that?
Rajesh Sivadasan
So the other contract is similar to the BG contract, and it is also valid till middle of 2025. So that is close to 1 million. And the other one, the third one is basically the domestic gas from Reliance-BP fields in Kakinada, and that is valid till December end 2024.
Somaiah V
Got it, sir. So now you had mentioned about taking — we are working on replacing the BG volumes. So is it the same for the other two contracts as well?
Dipen Chauhan
That’s right.
Somaiah V
Got it, sir. So generally, your preference would be, given that these are oil linked, so you would try to replace it with oil linked or you will prefer taking a Henry Hub exposure this time around?
Dipen Chauhan
It’s going to be primarily oil because it competes well with propane. That is again oil-linked product, but we would have some share of Henry Hub as well as Henry Hub prices are not very volatile and it provides a good amount of stability as far as pricing is concerned.
Somaiah V
Sir, this time around, will we try to increase the quantum? So this 2.5 plus 1 plus 0.7 leaves with 4.2. So when we are coming up with the new contracts, so will we try for a higher quantum or we’ll try and maintain the same 4-odd mmscmd?
Dipen Chauhan
No, the effort would be to convert as much as Morbi demand as possible. So if the prices that we get from the market are good enough to compete with propane, we would basically go for a higher quantity.
Somaiah V
Understood, sir. Sir, also, you mentioned last quarter, roughly around 30% you sourced of your total volumes, 9 mmscmd from the long-term contracts, which comes to around 2.5, given that you have a 4-odd mmscmd. So it’s a conscious choice because your pricing compared to spot was on the higher side, you probably chose more spot last quarter. That’s how we should read it?
Dipen Chauhan
Yes, the spot was lower than the long term. So that’s the reason.
Somaiah V
Understood, sir. Sir, also, you gave a spot LNG price around INR33-odd last quarter. What is it currently?
Dipen Chauhan
The spot, I think last quarter, it was close to INR34, INR35.
Somaiah V
And currently?
Dipen Chauhan
And currently, it is around INR42.
Somaiah V
INR42. Understood, sir. Sir, also, would it be possible in terms of these long-term contracts, these volumes, I mean, who would we be procuring it from, which entities? As a marketer who would be transferring this volume to us? Between GAIL and GSPC?
Dipen Chauhan
So generally, we buy from GSPC as we get the flexibilities in the sense that if there is a variation in demand, then GSPC is better placed to either divert those volumes or provide additional volumes whenever required. So basically, we will be sourcing these volumes from GSPC. And if there is an opportunity to source domestic volumes, then probably, depending on the terms and conditions of domestic gas being offered, Gujarat Gas can source it directly as well.
Somaiah V
So our existing long-term contracts, also the spot procurement that we have been making is, by and large, via GSPC. Is that the right understanding?
Dipen Chauhan
That’s right.
Somaiah V
And going forward also after this renewal or new contracts coming in, it will be via GSPC?
Dipen Chauhan
Yes. And anyway, both are going to be single entities after some time.
Somaiah V
Got it, sir. Helpful, sir. Thank you.
Operator
Thank you. The next question is from the line of Vikas Jain from CLSA. Please go ahead.
Vikas Jain
Hi, sir. Thanks for taking my questions. I just want to understand this bit that since the premium has become lesser versus propane, why will customers really shift? It’s still — propane is still at a discount? Is there an extra handling cost, which makes the effective cost of propane more expensive than PNG? I mean, I realize that it has become less — the discount has become lesser, but that itself should not change someone who’s using propane to move to natural gas. So what am I missing over here, if I can understand that, please?
Dipen Chauhan
So when the customer procures propane, they have to pay in advance for the propane cost. Whereas in case of gas, they get a credit of close to 20 days, so that is one thing. The other thing is that logistics involved in transporting propane from may be the port up to their plant. The third thing is that they have to incur additional cost for loading, unloading of propane and there is an additional element of risk, which is already there once you handle a product, for which there are different kind of risks involved in handling propane and all. And especially during monsoons because of water logging and all, it becomes difficult to handle propane. So these are some of the reasons why whenever the differential is less, people trying to shift to gas rather than propane.
Vikas Jain
So basically, what you’re saying is that while the price of gas that you are talking about is landed to the customers’ facility, the price of propane is not exactly what you’re comparing with is not landed to, it’s basically at the port. So landed price will be higher. And therefore, effectively, on a landed basis, at this price for certain customers, it might become more — I mean, CNG might PNG might become more attractive.
Dipen Chauhan
Yes. And there are many customers who know where the cost of making advance payment is more, and they would generally like to take advantage of reduced working capital because of credit, which is there in gas.
Vikas Jain
Sure. That’s about 1% for a lot of people roughly. I mean, a little less than 1%.
Dipen Chauhan
Yes.
Vikas Jain
So the other thing was, so you did give — raise your guidance on margins about volume growth, say, I mean, for this year and next year, I mean, if you — where do you expect that you’re going to average for this year? I’m not asking an exit rate because there is an element of seasonality in your volumes, which is pretty clear. But on an average, where do you see FY25 ending just as compared to your overall volume of 9.35 mmscmd in FY24? And then what is the kind of growth that we should take in on a YoY basis for ’26 and ’27? Any guidance over there, please?
Dipen Chauhan
See, I think there are two, three elements. As you told, there are two, three elements, which practically play a part in our volumes, especially the industrial volumes, which we have. So basically, there is a fluctuation which happens on a seasonal basis as well as the price of the propane, etc plays a role. So basically, I think, see, we cannot tell you clearly how much the volumes would be, but it will be around the same range. I think last time also, we gave a guidance of around 5 percentage to 7 percentage. We stick to that guidance, subject to the price volatility and the demand increase, which is going to happen based on that.
Vikas Jain
Okay. So I mean, YoY guidance would remain around 5% to 7%.
Dipen Chauhan
Yeah.
Vikas Jain
And the recent changes of this basically raw material costs becoming more expensive for CNG and residential PNG, that would obviously have an impact until you decide on price action for the third quarter margins, right?
Dipen Chauhan
Yes, you’re right.
Vikas Jain
Because that’s pretty significant for the time being.
Dipen Chauhan
Yeah.
Vikas Jain
Okay. And you hope to kind of pass that on largely? I mean, why I’m asking is, in your opening remarks, you mentioned that diesel is at a 15% discount to diesel. So do you see that you have room to pass on a large part of the price hike on CNG? I mean, wouldn’t the discount fall to very low levels and would not — isn’t there a worry that, that will impact volume conversions?
Rajesh Sivadasan
I don’t think so because we have a huge headroom in petrol compared to petrol, we are 47% cheaper. And we — from the experience, we can say that most of the customers who are converting to CNG are petrol users.
Vikas Jain
Okay. Thank you so much.
Operator
Thank you. [Operator Instructions] The next follow-up question is from the line of Tarang from Old Bridge Capital. Please go ahead.
Tarang Agrawal
Hi, thank you again. Sorry, I got dropped off. Sir, just one request and a couple of clarifications. The request is, sir, as a minority holder of GGL and GSPL, pursuant to the announcement of scheme, one has an indirect exposure on GSPC until officially it gets consummated. So if you could reconsider publishing GSPC’s financials or at least critical information at regular intervals, it would be helpful. The second, two clarifications. The shortfall that was witnessed in APM sourcing, was it met with new well gas or was it met with spot purchases?
Dipen Chauhan
It was a combination of both the things. This was HPHT gas as well as spot. So basically, we had procured some HPHT gas as well as in the last round in October, we procured new well gas as well since we got the news that APM gas is going to be curtailed. So we could manage a good share of new well gas as well. So partly, it has been met through HPHT and new well gas and some spot gas.
Rajesh Sivadasan
Your first question, GSPC management is cognizant of the fact that investors are curious to know about performance of GSPC and track it on a regular base. So they will take a conscious call on that and we’ll keep investors informed about major events. We’ll also put up this request to GSPC’s management.
Tarang Agrawal
Thank you. And sir, last question. What is calorific value on a per scm basis? Is it 10,000 or 8,350 or something else?
Dipen Chauhan
Could you repeat the question?
Rajesh Sivadasan
9,200.
Tarang Agrawal
9,200. Correct. Okay, perfect. Thanks.
Operator
Thank you. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Yogesh Patil
Thanks for giving me an opportunity again. Sir, as you mentioned, the spot LNG cost of INR37 per scm for the quarter second FY25, and now the cost of spot LNG is INR42 per scm. Do we have any plans to pass on the gas cost to the PNG industrial customers in the near term? Because the PNG industrial sales volume also increased due to the improvement in the Morbi side. So any plans?
Dipen Chauhan
I think we will take an appropriate cost based on the volume increase and the incremental volumes, which we get by the reduction in the prices or increase in the prices. That’s the call which we’ll be taking going forward.
Yogesh Patil
Okay. Thanks a lot, sir.
Operator
Thank you. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Sandeep Dave, Company Secretary, for closing comments.
Sandeep Dave
GGL management has been focusing on increasing volumes while maintaining a fine balance between volumes and margin, and we will continue to do so. It’s just festive time has just ended in Gujarat, and I wish all of you a very happy, healthy and blissful New Year. Thank you.
Operator
[Operator Closing Remarks]