Indraprastha Gas Limited (NSE: IGL) Q2 2025 Earnings Call dated Oct. 29, 2024
Corporate Participants:
Mohit Bhatia — Director, Commercial
Sanjay Kumar — Chief Financial Officer
Kamal Kishore Chatiwal — Managing Director
Analysts:
Nitin Tiwari — Analyst
Probal Sen — Analyst
Yogesh Patil — Analyst
Sabri Hazarika — Analyst
Kirtan Mehta — Analyst
E A Sundaram — Analyst
Amit Murarka — Analyst
Nirmal Gore — Analyst
Vishnu Kumar S — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Indraprastha Gas Limited Q2 FY ’25 Earnings Conference Call hosted by PhillipCapital India Private Limited. [Operator Instructions]
I now hand the conference over to Mr. Nitin Tiwari from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Nitin Tiwari — Analyst
Thanks, Nikita. Good day, ladies and gentlemen. Best wishes in advance for Deepawali to everyone. On behalf of PhillipCapital India Limited, I welcome everyone to Indraprastha Gas Limited’s second quarter FY ’25 earnings call. Today, we have the pleasure of having with us from the management team of IGL, Director, Commercial, Mr. Mohit Bhatia; CFO, Mr. Sanjay Kumar; and VP, Finance, Mr. Manjeet Gulati.
I will now hand over the floor to the management for their opening remarks, which shall be followed by a question-and-answer session. Over to you, sir.
Mohit Bhatia — Director, Commercial
Good afternoon. So first of all, in advance, best wishes and Happy Diwali and a Happy Prosperous New Year to all of you, ladies and gentlemen. So I’m Mohit Bhatia, Director Commercial of Indraprastha Gas and I welcome you on behalf of IGL management for taking out time and attending the Q2 earnings call for FY ’25. Our Managing Director is not in the office as some preoccupation also. So mostly he may join later on.
As you know, IGL is one of the leading CGD companies in India and is present in four states and 11 geographical areas. We have a good mix of now matured and emerging CGD geographical areas, which has been provided as — providing us both the challenges as well as the opportunities. In the terms of infrastructure development, I’m pleased to inform that our now steel network is almost 2,200 plus kilometers and the MDP network is almost touching 26,000 kilometers, which provides natural gas to more than 28 lakh households as well as around 5,000 industrial customers and around 6,300 commercial customers.
So now IGL is operating for more than 884 CNG stations and serving to 2 million vehicles per day. In fact, at this time — first time we have crossed the landmark of 2 million vehicles per day also. Secondly, during this festive season, once again, before I proceed, I wish you all a very happy and prosperous Diwali.
Now I’d like to appraise you about some of the major business and financial updates for the quarter two. We have recently yesterday only declared our financial results for quarter two yesterday on 28th of October. So first and foremost, I would like to inform that IGL has in first time, they have crossed the landmark of 9 million sales per day. And in the last quarter, we have averaged out around 9.03 million of standard meter cube of sales per day.
CNG volumes have grown year-on-year basis by 9% from 6.25 million per day to say to 6.78 million and the total sales during Q2 was 623 million metrics cubic meters of the sales. There has been an average addition of around 15,740 new and retrofitted CNG vehicles on month-over-month basis on an average over around 14,350, resulting an increase of almost 10% in the CNG vehicle population. As far as PNG volumes are concerned, PNG gas volumes other than the natural gas sales to some of the entities, we have also delivered a PNG growth of 12% year-on-year basis and breaking it down, if we see, so 12% is on the domestic front, whereas 13% increase in the commercial front and a very healthy 11% growth, particularly in the industrial segment also, demonstrating the increase in adoption of PNG across all the segments, whether now it is PNG or CNG.
We are also focusing on volume growth in sales volume and are planning to achieve our sales target of 9.5 million per day for this year and already clocked 9.03 million during the current financial year. The company is putting lot of efforts in new GAs for increasing the sales and now the volumes have started coming up good in other GAs also.
Regarding the financial highlights for the Q2, year-on-year are summarized as there has been an increase in 7% in the turnover and now in — during this quarter two, we have achieved all-time highest — the turnover crossing INR4,000 crores landmark, it is now INR4,070 crores. The EBITDA is INR536 crores and profit before tax was INR564 crores. There has been a reduction in EBITDA and PAT, mainly due to increase in the input cost of the gas as compared to the same quarter of the last year.
Recently, during the month of October, there has been almost a reduction of almost 20% in the allocation of the APM gas by the authorities. And this will have an impact on the profitability during the year and has already been informed to all the investors through a filing in the stock exchange, but we are looking at very positively through various options, particularly for our gas sourcing and have made some arrangements by tying up for some of the near gas in the near future. So company is exploring all the gas sourcing options and are in discussions with various gas suppliers to meet our short-term as well as medium-term and the long-term demand. In addition to that, company is also focusing on LNG and CBG to improve the volumes as well as the profitability.
The company will keep on exploring strategic inorganic opportunities across India in CGD industry to accelerate our expansion, focusing on our core business as well as we have some other areas for investments under its — our diversification initiative. So this will not only enable us in strengthening our market position while delivering sustainable returns for our shareholders.
Now I would like and request to invite our Sanjay Kumar — Mr. Sanjay Kumar, our CFO, IGL to give his opening remarks. Thank you.
Sanjay Kumar — Chief Financial Officer
Good afternoon, everybody. I’m Sanjay Kumar, CFO, IGL. Very warm welcome to all of you. We are happy to hold this earnings call on very auspicious day of Dhanteras. So hopefully, the next year augurs well for everybody.
Director commercial has already elaborated on the various parameters. I would like to briefly tell you about the performance during the quarter as compared to Q1. So we had a growth of 6% quarter on quarter. Our sale during the current quarter stood at 9.03 million cubic meters per day, which was 8.64 million cubic meter per day during the Q1 of the current financial year. Gross turnover saw an increase of — growth of 5% and EBITDA was down mainly because of the increased gas cost by 9% — approximately 9%. It was INR582 crores in Q1. This quarter we closed at INR530 crores.
And in terms of PAT, INR431 crore is the number for the current quarter. Last quarter, it was INR401 crores. So slight increase on a quarter-on-quarter basis. I would like — also like to highlight that the company has achieved highest-ever sales per day during the quarter just gone by 52.94 lakh [Phonetic] kg per day and in the month of October also, we are seeing this increasing spend continuing. And happy to inform you that one, a single day sale of 55 lakh kg has also been achieved during this month. So going forward, we hope that the sales volume continue to grow.
Further, I’d like to highlight that the overall sales over the last year, there was an increase of 9%, mainly contributed by 7% growth in Delhi NCR and 29% growth in the newer geographical areas. As far as our associates are concerned, they are — particularly MNGL is doing pretty well. Their volume growth is around 16%, 17% year-on-year and now they are selling 1.68 million cubic meters of gas per day.
Our other associate CUGL, Central U. P. Gas Limited is having a flat volume. And during the quarter, we have accounted for income from — income of approximately INR80 crores from MNGL and around INR8 crores from CUGL. So that is as far as the associates are concerned. So now we would also like to advise that we have declared a dividend of INR5.5 each per share, which is based on our payout of approximately 45%.
So with this, I will close the opening remarks and open the floor for 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, sir. A very Happy Diwali and prosperous New Year in advance to all of you. I had a couple of questions. One, you mentioned in the initial briefing that 9.5 MMSCMD is the target for this year. When we say that, do we mean that we hope to reach an exit rate of 9.5 MMSCMD for FY ’25? And if so, what can we build in as an average volume target for FY ’26 on this run rate? That’s my first question.
Mohit Bhatia
Okay. So question by question we go, is it okay?
Probal Sen
Yes, sir, absolutely.
Mohit Bhatia
So absolutely right. We have a target of 9.5 million per day. And if we see the Q2 average, we have — we have attained around 9.03 million. So we are hopeful of touching in the balance period of the half year of around 9.5 million. There are certain reasons for that. The way our — in particularly CNG sales is growing and not only in Delhi, Delhi barring DTC, it is growing at 8%, whereas the best part is the Noida, Ghaziabad as well as the outside GA, they are growing at around 17% to 18%. So we are very confident that things will go in our favor.
And secondly, on the industrial front also, you’ll appreciate that now we are clogging almost 1.1 million of industrial and commercial sales per day, so growing at an average of 10% to 11%. And PNG domestic is also because we have almost done around 1 lakh plus connections in last six months and we have a goal of around 2 lakhs in the balance part of the year. So we are very positive to touch and maybe average of also 9.5.
Probal Sen
Okay. Sir, if I may expand a bit on the question, what is — I mean, given the reality of this APM allocation reduction, is it fair to assume that there will be some price correction upwards needed? And if so, will it dent our volume momentum to any extent? So how are we looking to basically balance this over the next 12 months to 18 months?
Mohit Bhatia
Okay. So we were anticipating this, this would have — this would have come up. See, first of all, we are into very, very serious thoughts about the price hike. We had some discussions also and based on the — during the festive season, Diwali time and all just on the viewing of the sentiment of the customers and all. So at this juncture, we have not increased, but sooner, I think there will be some hike in the prices as we anticipate.
But nevertheless, I think there is a growing demand and the trend on the natural gas. And if we compare particularly with diesel or petrol, we have a good elbow room still to enhance and keep the motivation level of the existing and the prospective customer to continue with the CNG volumes.
Probal Sen
Okay. And sir, the second question was with respect to capex plans for the next year or so, if we can get a sense broken down into what we are looking to spend on Delhi NCR and what we are looking to spend in the other areas, whatever breakup you can give us.
Mohit Bhatia
Yeah, yeah. So we have a target of around INR1,700 crores of capex for this financial year and almost during the first half, we have incurred around INR500 crores already incurred. First half is a little bit slow because the finalization of some CNG stations and all and other — the other things get a little bit lag over during the first Q — Q1. So now we are really geared up and taking it. So we have plans for INR1,700 crores to capex for this year. It will happen. Primarily, it will be like maybe around 45% to 55% in Delhi NCR and around 45% in the other GAs.
Probal Sen
Understood, sir. Last question if I may. Any changes you want to make? You had earlier informally, I think given a rough EBITDA guidance that you would want to stay in the INR7 to INR7.5 per SCM kind of a range. In view of the changing cost mix and everything else, are we still confident that we can maintain in this range going forward?
Sanjay Kumar
So tough call, but we are definitely — our aspiration is to maintain between INR6 to INR7 and for H1, it is already in that line, almost INR6.7. But there is a stress definitely on the EBITDA because of the — because of the APM cuts and the price revisions and all. But we are really looking into very, very positively on identifying some better gas sourcing measures and look forward to maintaining this range, particularly around INR6 to INR7 per SCM.
Probal Sen
Thank you so much for the extremely pointed answer, sir. Very useful and Happy Diwali again. Thank you.
Sanjay Kumar
Thank you.
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 questions, sir. What one can assume the total volume for the next year FY ’26 period, any guidance from your side?
Mohit Bhatia
See, if we tell about this year, particularly ’24-’25, so we have a target of 3,400 MMSCMD for the entire year and we had some plans for coming year. So I think at an average of around 8% to 10% will be growing year-on-year basis, in terms of absolute volumes of all these segments.
Yogesh Patil
So basically, our guidance is mostly on the 9.5 MMSCMD exit for FY ’25. So can we build the 8% to 10% growth for the FY ’26 exit?
Mohit Bhatia
So we look forward for that, we look forward for that.
Yogesh Patil
Okay. So sir, second question is, what is the share of new well gas in the overall gas mix now? And if possible, if you could share the gas sourcing mix mostly on the non-APM side, it would be helpful.
Mohit Bhatia
So first, I’ll respond to your second query. The thing is like now the non-APM share is like we have some long-term contracts. So almost 2.5 million we have the RLNG, in particularly around 1.4 to 1.5 is Henry Hub and the balance around one — around 0.85 to 1 is on the Brent link. So as such as on that APM and RLNG market driven is around 50%-50%.
So now coming to the new well things, so as and when the ONGC and from the GAIL, it is coming up the opportunity. So we are also participating and let’s see how we get it. You want to respond?
Sanjay Kumar
So in addition to what Director Commercial just informed, we have a total contracted quantity of 3.12 million, out of which 2.5 million is RLNG and around 5.6 million is HPHT gas. So that is the overall contracted quantity. And with the reduction in APM, which is around 1 million cubic meter per day for us, that is the additional quantity which we are trying to source from different alternatives and a best possible way we are trying to manage.
So for the month of November, we have arranged and for a longer tender basis, we’ll have to work out the further modalities and whether we want to go for term LNG or not, that call we are in the process of evaluating and taking a decision on that. So that will also will have — that factor will also have to be taken into the pricing decision, which we will have to make. So that is as far as the sourcing is concerned. Given that all the CGD companies, there is a cut. So the demand, of course, is going to be high in the market, but we are trying our level best to achieve the best or the least possible cost for sourcing the remaining one year.
Yogesh Patil
Sir, last question related to recent changes in the APM allocation and related policy. So as per our understanding, the Ministry of Petroleum and Natural Gas has recognized ONGC’s core MMSCMD gas as a new well gas. Is there any application from the side of Oil India Limited to BGH or MOPNG, which is seeking to recognize existing APM gas as a new well gas. Basically, we are just taking the possibility of any big size incremental cuts in the APM allocation. The same happened with ONGC. Any replica can happen with the Oil India Limited also?
Mohit Bhatia
New well gas is something where for the present situation, I’ll say that there is a very miniscule quantity which has come into the — for probably bidding or for allocation. We would also be representing that new well gas should be allocated in the same ratio as APM because it is the same domestically produced gas. As far as the conversion of existing wells to new well is concerned, it’s difficult to say what is transpiring between the producers, but I think next two, three months, we’ll have to wait and watch how much quantity move towards that.
At this moment, as you are already aware, 4 million — 4 million quantity is something which is — which has moved from APM to a new well gas. So, I think it is already a booth, right?
Sanjay Kumar
Okay. So just wanted to add this HPHT gas is also likely to come maybe in couple of months by February, we believe that from February onwards, it will be available, additional.
Yogesh Patil
Thanks a lot, sir, and wish you a Happy Diwali.
Sanjay Kumar
Thank you. Same to you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Sabri Hazarika
Yeah, Good afternoon and congratulations on good volume numbers. So firstly a clarification you mentioned 54.92 lakh kg. So that was the highest sale recorded during that during the Q2, right? Or was it the — or was it some sort of average?
Mohit Bhatia
52.94 was the highest one day sale which we achieved during Q2, 55 lakh kg is what we achieved during October. So I was just giving a sense of how the sales volumes are moving.
Sabri Hazarika
Okay. And in terms of average sales for Q2, how much was it during —
Mohit Bhatia
Basically highlighting that we have received that highest sales. So the average was 48.12 lakhs per day.
Sabri Hazarika
48.12 lakhs. Right. Okay. So that was the average for Q2.
Mohit Bhatia
Average for the Q2.
Sabri Hazarika
Right. Secondly, regarding your LNG business, so what is the — what is the outlook? I mean currently you have one station, right? So this volume is from that just one station alone, is that right?
Mohit Bhatia
Yeah, yeah, absolutely. So exactly — so we have one station at Ajmer. So currently we are selling around 10,000 kgs from that per day. And we are going ahead with three LNG stations. We plan to commission it by the end of this financial year. Maybe one at Badri and Noida and one at Rewari. So the construction is also going on and we are hopefully to commission it by end of this financial year. So at that Badri, that one is at the concourse [Phonetic].
Sabri Hazarika
Right. And this is like the EBITDA per se is same only, right versus CNG business.
Mohit Bhatia
Yes. Considering the cost, the transportation cost and the taxes which the different structure, excise duty is not there on LNG. So considering all these factors, profitability remains.
Sabri Hazarika
Okay. And what is the final price for that, for the LNG in that area?
Mohit Bhatia
As of now we are selling both at the same price.
Sabri Hazarika
Okay. But there is no excise, so definitely the margin structure is not there —
Sanjay Kumar
Yes, 82.94.
Mohit Bhatia
So excise is not there, you are absolutely correct. So that we have certain enhanced margins on that.
Sabri Hazarika
INR82.94 per kg. That’s the rate, right?
Mohit Bhatia
Yes, correct.
Sabri Hazarika
Okay, sir. And —
Mohit Bhatia
Probably is offset by the transportation cost which we have to incur for transporting it through time.
Sabri Hazarika
Right, sir. Regarding a 34-year plan on this LNG business, what is your outlook? I mean 3 you said by the end of this fiscal. But say in the next three years how much you are planning to aim? Because I think in some media reports, I think it was quoted that you’ve got a very aggressive plan for LNG.
Mohit Bhatia
We have aggressive plans. We aspire for around 50 LNG stations in next three to five years. And because you must be aware that government has also given a boost. They are planning to allocate around 0.5 million of gas on LNG from the APM listing. So government is also looking from that angle. And we also aspire to take it forward in next three to five years.
Sabri Hazarika
Okay, great. Thank you so much.
Sanjay Kumar
Yeah. Just to add, the pace of the investment in LNG will be as when we are increasing the station, we’ll see the ecosystem already developing. And based on that we will pace our number of stations.
Sabri Hazarika
And this is like INR8 crores to INR10 crores per station, assuming that 10,000 to 20,000 kilograms, you are able to sell?
Sanjay Kumar
Approximately 10 crores.
Sabri Hazarika
10 crores. Okay, thank you so much and all the best.
Mohit Bhatia
Thank you.
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 and congratulations on very strong growth numbers. You mentioned that we have a good differential to diesel and petrol. Would you highlight current differential since Delhi as well as the current differential to diesel in the new GA?
Mohit Bhatia
Yeah. So presently diesel is at INR86. I’m talking about Delhi and we are selling at INR75 per kg. So there is a difference of approximately INR11. And if we compare it with petrol it is INR96 — INR95, INR96 per liter. And if we talk about operational efficiency, put together operational efficiency and pricing, it gives a benefit, economic benefit of operating a CNG vehicle at around 40%, 45%.
Kirtan Mehta
And how does this change outside Delhi?
Mohit Bhatia
Outside Delhi for our GA, it still remains around 35% to 40%.
Kirtan Mehta
35% to 40% is in case of petrol. Correct? What would be in case of diesel?
Mohit Bhatia
Diesel is something, I think it’s more or less the same, but diesel generally our vehicles are in Delhi. Basically commercial vehicles are not allowed to be registered in diesel at this point unless it is a BS VI and the upfront cost is more. So from that perspective for outside GA, if we see the penetration also vis-a-vis diesel, it is PNG which is taking the lead.
Sanjay Kumar
If you want I can share you the prizes of UP as well as Haryana, just for your comfort. See petrol is UP INR94.65, and diesel is INR87.82 and whereas CNG is 79.70. So barring that this mileage advantage is also there, so turns out to be around 40% in terms of petrol and around 20%, 22% in terms of diesel.
Kirtan Mehta
Thank you, sir. Second question was last time you had shared the growth numbers across different states, how the [Indecipherable] growth is doing. Would you be able to share the similar numbers this quarter as well?
Mohit Bhatia
Sure. See as I mentioned in my opening remarks, see UP if we bifurcate particularly into NCR, Gautam Budh Nagar, we are growing at around 11%. Ghaziabad, Hapur side we are growing at around 20%. Whereas other parts of the UP, it is almost around 40% also the volumes are also that way. So at an average it is around 40%. Haryana in particular, Rewari we are growing at around 21% and Gurugram around 12% and Kaithal and Karnal also at the range of around 29% to 30% and Ajmer because of the less volumes and all it’s growing at around 95%.
Kirtan Mehta
Thank you sir. And in terms of INR6 to INR7 for maintaining that sort of a price range probably will have to take price hike of at least INR2 to INR3 per kg. So would that then impact the growth?
Mohit Bhatia
So I think somebody asked earlier also. So we don’t anticipate that there will be much deceleration in terms of growth, because still there is a lot of elbow room as well as compared to diesel petrol reserve is PNG. So around INR2 to INR3 hike will not put any deceleration on the growth of the CNG in particular.
Sanjay Kumar
Just to add more, if you’re talking about the reduction how much price increase it warrants that is around INR5 in Delhi and around INR5.5 to INR6 in other states. That’s the kind of impact it warrants to maintain the same level of EBITDA that price increase is required. So we are evaluating and we’ll take a call based on the decisions which we take on longer term basis for sourcing.
Kirtan Mehta
When we calculate this price impact, this is by assuming that it will be replaced with HPST or are we assuming the replacement with the RLNG?
Sanjay Kumar
For the time being. We have basically sourced for November that is through RLNG short-term, RLNG tendering which we had done. We are in the process of finalizing and some quantity we have bought through IGX. For longer tenure, we are still evaluating all the options and we’ll take a call on that. HPST as and when it comes will of course be taking that. But I think at this point of time in short term, there is nothing which is going to come probably next January or February. Something is about to come along with new well gas also. So we’ll evaluate at that point of time and we’ll take a suitable call.
Kirtan Mehta
Is there any possibility of reduction in excise duty rate to offset some of the impact? Would government be open to consider it?
Mohit Bhatia
So government we had in fact given some suggestions and had some meetings also government has called so they are looking into all possibilities for the reduction in the excise duty as well as putting into the GST regime also. So things are going on because government is also very keen from putting the energy basket natural gas to 6,000 to 15,000. So hopefully things will be positive. It will happen. Something should happen.
Sanjay Kumar
Our wish is that it is removed or reduced and hopefully I think immediately even if nothing comes immediately, I think the budget is also only two, three months away. So probably something might come during that budget. That’s our hope.
Kirtan Mehta
Thank you, sir. Thanks for the pledge.
Operator
Thank you. The next question is from the line of E A Sundaram from BugleRock Capital. Please go ahead.
E A Sundaram
Yeah, good afternoon gentlemen. I have two questions. First is actually a request as a long-term shareholder, you definitely would have observed that there’s recently been another round of apprehension around IGL stock price. And this is regarding the reduced APM gas allocation. And the real fear is that the rising gas prices would adversely affect the company’s profitability prospects.
Now, I know that it’s difficult for you to give projections about the future, how the margins would move and all that. But my suggestion is we can talk of the past and how such situations have been handled by IGL. This is not the first time gas prices are sharply going up. It has been done many times in the past and I am sure it will happen in the future also. For example, I remember in 2010 your APM gas cost went up from $1.79 per MMBtu to $4.2 per MMBtu, a sharp more than doubling of price.
So at that time also, IGL was able to pass on the price increase and the volumes did not suffer much. So my suggestion gentlemen is that you please put in a presentation in your own website giving past data. You don’t have to give any future projections. You just give past data of how the gas prices have moved in the past, how you supported, how you protected your spreads and how the volumes did not fall. If such a presentation is put in your website, it will ease the apprehension of the investment community. That is my first question.
Mohit Bhatia
So I appreciate your concern and your suggestion, well taken and noted. I think it’s a wonderful suggestion to give a comfort to the investors. So very rightly you said that in the past also similar situations have occurred during 2010 also. And then this geopolitical issues, the war issues and all. And current also, it is like that. So good thing is that IGL has a very, very diversified and a large basket of gas sourcing portfolios. So our dependency is not there on one particular contract or so. So we have a diversified listing and we are quite mindful of this. And I agree and appreciate that these type of situations do occur.
So for that we have certain plans and we are aggressively looking after in some long-term sourcing fresh ones also. Secondly, on the price hike, I have already mentioned that due to some sentiment, festive and all, we are into strong discussions at appropriate levels for increase the price and passing on to the customer. But that is not going to impact our expansions or the volumetric growth because still vis-a-vis alternate fuels, we have a good elbow room and the convergence are happening very aggressively whether it is on the CNG front, whether it is on the domestic front or whether it is on the industrial and commercial front also. So I think we will be able to navigate through well.
E A Sundaram
Yeah, I am sure you will. I am just requesting that in order to make your position clear. One additional slide in your presentation giving the history of gas costs for SEM and your selling price per SEM. If you can give that, that will ease some of the apprehensions that the investment community has.
Sanjay Kumar
Sure. So we will look into it. Your suggestion will take in and noted.
E A Sundaram
My second question sir is, I would like to know what steps the company is taking to develop the geographical area of Gurugram which has been partially allocated to IGL already. I know that the other parts of Gurugram are disputed and therefore subjugates and you may not wish to comment on that. But my question is what development steps are you taking to develop the CNG and PNG infrastructure in the areas of Gurugram already allocated to IGL and not under dispute?
Mohit Bhatia
So very well. I think you have already mentioned in your answer — in your question also that it is subjugates and then [Technical Issues] so difficult to comment at this stage. We are looking at on some of the options, how to proceed on that.
E A Sundaram
No, no, no sir, I am not talking of the ones that are under dispute. I am talking of the one-third area which is not under dispute. So I want to know what the company is doing to develop that particular area.
Mohit Bhatia
So that we are already into it and we are developing. That is not an issue and maybe some here and there, but it is very much in the radar and taking it forward.
Sanjay Kumar
I would also like to add that if you see our volume number, sales volumes, Gurugram has shown a growth of 20% year on year. So that basically tells you about our expansion plans which are already taking place in that geographical area. Whatever best is possible that we are already doing.
E A Sundaram
Yeah, and I hope — I hope the steps are being taken from both party sides to solve this dispute as early as possible because it is too important for the company.
Mohit Bhatia
Yeah, yeah, sure noted. So I just pause at this juncture, see our Managing Director also joined. So welcome — on behalf of IGL management, welcome Mr. Chatiwal. So he has also joined just now.
Kamal Kishore Chatiwal
Yeah. Good afternoon sir. Good afternoon. Good afternoon to everybody. Yeah, let’s go ahead and take the next question please. Thank you.
Operator
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Amit Murarka
Yeah, good afternoon. Thanks for the opportunity. So first I wanted to understand about daily mandatory that EV norm for cab fleets. So I believe the registration has been made mandatory and the policy has been rolled out. So just wanted to get a sense about what is your feeler that you’re getting like I think it’s been four or five months since the registration has started. Could you just speak on that a bit?
Mohit Bhatia
You were asking about registration of EVs.
Amit Murarka
Yeah, the mandatory registration of all cap fleet operators.
Mohit Bhatia
So this policy is already there for almost a year and we have not seen any significant fall in our penetration, rather it has gone up. Last year I think the penetration for CNG vehicles across four wheelers and three wheelers was approximately 24%, 25%. Now it is around 27%, 28%. So there is no meaningful impact of that policy which we can — which is visible at this point of time. The timeline is ’25, that 5% of the fleet has to be converted and gradually it goes up to 200%. But at this point of time we have not seen any adverse impact on CNG assets. So we’ll have to wait and watch.
Amit Murarka
So this is the overall data I believe that you’re sharing. Could you speak more specifically about the cab fleet operators segment? I mean how are you seeing that segment behave in response to the policy? Because I believe that registration has been mandatory and even fines are being levied for those who have not registered under the policy.
Mohit Bhatia
Yes, you are right that registration is not mandatory. But this policy is for new vehicle addition. Already the vehicles which are flying on the roads, they have still some years to go before they are expiring. So they will continue and in case of new additions. So that will be like that. So that’s why we are not seeing too much of conversion to electricity at this moment. Other than the Delhi Transport Corporation. The private vehicles additions are definitely there, but the existing numbers continue to be with us.
Amit Murarka
Sure. And any hiccup in the implementation or any issues that you’re seeing on this — on this policy front?
Mohit Bhatia
We are not seeing. But there’s not much enthusiasm about this policy among the cab aggregators and others.
Amit Murarka
Do they have an alternative way out? And because when you say that there’s no enthusiasm, I mean, do they have an option to kind of not be part of this policy. I mean maybe it’s the first year, which is why I think it’s like that. But is there any option out of the policy?
Mohit Bhatia
Because charging infra is not there. So that is one constraint that they are seeing. And of course the upfront cost is also there. Now if you see the number of petrol, diesel, CNG EV vehicle additions in the January to August, the six, seven months of the calendar year, the CNG vehicles have shown a growth of around 46% whereas EV is around 7%. So that’s the All India picture. So we are seeing good numbers of vehicle addition with CNG also. Yes, there will definitely be additions of EV 6% to 7%, 10% new vehicles would come in EV but the other segments continue to grow.
In addition, if you see there are two, three factors which will impact the growth of EV vehicles. One is that this policy is specifically brought by the Government of Delhi and NPR region has a much wider vehicle population which contributes to the aggregator fleet overall. So that is one which might have their — which might have its own impact on the conversion numbers.
Another is if you see the model of the — operating model of these cab aggregators, Ola and Uber. Mainly these vehicles are owned by the driver. And if you ask a driver to buy a vehicle which costs 12 lakh or 11 lakh versus a CNG vehicle which he buys for maybe 6 lakh or 7 lakh, that’s too much an ask for a driver to take it on, take that burden on himself. So unless they change the model, it will be from financial perspective or from economic perspective it will be difficult for anyone.
Sanjay Kumar
From the company’s perspective we are not seeing a huge impact, rather we are not able to see any impact of that policy on our existing sales. Maybe the future growth that was there 10%, 11% that may be slightly factored.
Amit Murarka
Okay. Okay, sure. And also just on the Henry Hub contract you mentioned that you have a Henry Hub link contract. So beyond like what is really the formula of that contract like Henry Hub plus what, what is the content?
Mohit Bhatia
Actually that is the commercial agreement between two mutually agreed. So we will not be able to share that.
Amit Murarka
Got it. Sure. Thanks. Thanks a lot.
Operator
Thank you. The next question is from the line of Nirmal Gore from Aditya Birla Sun Life AMC. Please go ahead.
Nirmal Gore
Hello, thank you. Thanks for the opportunity. First of all, wishing you all very Happy Diwali. Well, I have two questions. First is on the line of the APN Gas relocation and second one is on line of Price Act. So you mentioned about interactions going on with The Ministry of Petroleum and Natural Gas. So just wanted to understand what’s the government’s rationale behind the sudden decline of 20% towards CGDs? That’s my first question.
And the second one is, so historically after the price hikes, how —
Operator
Sorry for interrupting you, sir. I may request that you return to the question queue for follow-up question as there are several participants waiting for their turn. You can ask only one question.
Nirmal Gore
Sure.
Mohit Bhatia
To clarify, we never said that we are in discussion with MoPNG. Actually I will clarify on the issue. You know the domestic fields they are depleting every year at the rate of 6% to 7%. For the past couple of years, the Ministry has not passed on that decrease to the CGD entities being the priority, first priority sector. Now there has been a think thinking that whatever the accumulation of the past has been there. So slight allocation can be passed on to other players also in addition to CG. So that’s why the cut was there. That from 3 million to 4 million cut was there. So that is basically you can say it happened all of a sudden because it was an accumulation of the past few percentages here and there. So those got accumulated and the result was this.
Going forward, we don’t see such drastic cuts. And gradually we are preparing ourselves for maybe going forward the allocation going down further but at a slower pace. Within the sector, there is structurally, there is no issue in the sense that growth continues to be very, very strong. And yes, sourcing at this point is an issue. But in another two to three months, we see it easing out. And as soon as we get some favorable contracts, softening of global contracts so all of us can tie up the long-term contracts and then and we are hopeful that that will be near to the whatever is the APM price at that time. So structurally we don’t see any problem in the sector.
Nirmal Gore
Okay, okay, understood. And just so you mentioned about historically such prices have been — the volumes have been absorbed. I just wanted to know get a sense of how the industrial customers and non-industrial customers have reacted to such price hikes historically. If you can give us a sense of that.
Mohit Bhatia
Industrial and commercial segment in any case is 100% RLNG dependent. It is not — there is no APM allocation for those two sectors. They were anyway linked to the market and the pricing there is very very competitive as compared to the alternate fuels. As far as domestic PNG is concerned, we continue to get 105% of our allocation so that there is no change in that, only change has been in the CNG segment where this reduction has been there. So going forward, we see that all the states as well as the center is also rationalizing. There is a discussion about excise duty rationalization. States are acting on the VAT part. So all the state governments are very active on that one. So we see that going forward, taxation would also be favorable. Any impact of reduction of these APM allocation would be offset by rationalization of taxes.
Nirmal Gore
Okay, sir, thank you so much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Vishnu Kumar S from Avendus Spark. Please go ahead.
Vishnu Kumar S
Thanks for time. Directionally we seem to have multiple concerns either. I mean as we highlighted in the call that either gas from the gas side we are seeing structural problems and EV also seems to be some sort of a threat. So for the survivability or the long-term prospects of the industry, what is it that we are currently in dialogue with the government in terms of, let’s say, either the gas supply or I mean taxation or in terms of the investments or just on this aspect, if you could help us understand what can government realistically help us over the next year, year and a half where we can which will be a support for the industry.
We’ve heard about GST coming, but it’s not really played out. What can realistically something that we can expect from the government?
Mohit Bhatia
You see, we are in discussion with government for rationalization of taxes only. GST is a difficult thing that we understand. If it is happening, that is very good for the sector. But in case that is a little distant away then we see rationalization of excise duty which we see on the higher side. Then VAT of certain states are very, very high. So we see rationalization in those states. Third is GST on the LNG fleet vehicles or CNG vehicles or the equipment used for CNG and LNG, PNG. All these presently attract around 28% GST. So that rationalization of that maybe EV is at 5%, so maybe in between some values 12%, 14%, something like that.
So these are the issues on which we are in discussion with government. As far as the sourcing of gas is concerned, that is individual companies doing that. And that is where because our portfolio we are able to source some of the good quality gas at a reasonable price. Second is with respect to product pricing, there again the competition is with the alternate fuel. So we have to remain competitive to increase conversion. So that is also not dependent on the government.
So with the government only there are few issues of taxation we are in discussion, as well as — because allocation in any case is a given thing that if the fields are going down, if the APM fields are going down, so that is going to go down. But the consumption in the country is going up. So we have to find new ways of sourcing gas, maybe some and we have linked or Brent linked or other indexes linked gases. So that is for the company to decide.
As far as the threat of EV is concerned, yes, we agree that EV numbers will go up. But there is no existential threat in the sense that CNG is growing at a much faster pace as compared to all other fumes. In fact we see degrowth in petrol and diesel segment and good amount of growth in CNG. EV is also growing no doubt. But the growth in this sector is there. And if we see the growth of the country or the segment or the transportation segment, particularly the private vehicle segment, there is huge growth we see going forward in four wheeler segments especially.
And now with two wheeler also, there is a CNG variant, one OEM has already — Bajaj has already come out and others are also coming out shortly with two-wheeler segment. So rather there is a threat of CNG in two-wheeler also now. We don’t see that it has an existential threat. Yes, they will also continue to grow and we will also continue to grow.
Vishnu Kumar S
One connected question on the same. Until the government cuts any taxation for us, will we settle for a lower margin per unit? Because if we raise prices and at least in newer areas the absolute spread has come down for us. Rather it is only INR10 which is not really the normal of INR20 plus. So will we settle for a lower margin until you get something from the government or you will aspire margin over volume?
Mohit Bhatia
You see, we are on the lookout for some long-term contracts. In case we are able to source gas at a cheaper price or closer to the APM then the margins again will go back to those levels. In addition to that, the price tweaks are also always on the cards. So depending on the sentiment we will take a call.
Operator
Hello, Vishnu Kumar, are you on the line? Okay. Ladies and gentlemen, due to time constraint that was the last question. I now hand the conference over to Mr. Nitin Tiwari for closing comment. Please go ahead, sir.
Nitin Tiwari
Thanks Nikita. And thank you everyone for being on this call. Due to paucity of time, that was the last question. So if you couldn’t ask the questions, we are really sorry for that. Please send across your questions to us to the management directly and they’ll be answering the same and wish you all a very Happy Diwali once again.
Mohit Bhatia
Thank you, and wish all of you a Happy Dhanteras and Happy Diwali. Thank you, all.
Sanjay Kumar
Thank you so much. Thank you, Nitin. Thank you, PhillipCapital. Thank you.
Operator
[Operator Closing Remarks]