Petronet LNG Limited (PETRONET) Q3 FY23 Earnings Concall Transcript

Petronet LNG Limited (NSE: PETRONET) Q3 FY23 Earnings Concall dated Jan. 20, 2023

Corporate Participants:

Vinod Kumar Mishra — Director Finance

Vivek Mittal — Chief General Manager and Vice President, Marketing

Debabrata Satpathy — General Manager, Finance and Accounts

Analysts:

Probal Sen — ICICI Securities — Analyst

Puneet Gulati — HSBC — Analyst

Nitin Tiwari — YES Securities — Analyst

Sabri Hazarika — Emkay Global — Analyst

Pinakin Parekh — JPMorgan — Analyst

Mayank — Morgan Stanley — Analyst

Vikash Jain — CLSA — Analyst

Maulik Patel — Equirus — Analyst

Siddharth Chauhan — B&K Securities — Analyst

Sankaranarayanan Ramesh — Nirmal Bang Securities — Analyst

Somaiah V — Spark Institutional Equities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY ’23 Earnings Conference Call of Petronet LNG Limited, hosted by ICICI Securities. [Operator Instructions]

I now hand the conference over to Mr. Probal Sen from ICICI Securities. Thank you and over to you, sir.

Probal Sen — ICICI Securities — Analyst

Thank you so much. Good evening, everyone. Thank you for making the time to attend this post Q3 result con-call of Petronet LNG Limited. We have the top management of Petronet LNG with us including Mr. Vinod Kumar Mishra, Director Finance; Mr. Rakesh Chawla, GGM and President F&A; Mr. GK Sharma CGM and VP, Marketing; Mr. Vivek Mittal, CGM and VP, Marketing; Mr. Debabrata Satpathy, General Manager F&A; and Mr. Ashwini Agarwal, Manager F&A.

I will now hand over to the management to give a brief review on the results, and after that we’ll have a Q&A on the same. Sir, over to you.

Vinod Kumar Mishra — Director Finance

Thank you. Thank you Probal. A very good evening to all of you. And I’ll start with the highlights of our results. So, first is that the highest-ever turnover, PBT and PAT of INR46,025 crores, fee INR1,517 crores and INR2,626 crores respectively in the current nine months, as compared to the corresponding nine months of the previous year. And the highest-ever PBT and PAT of INR1,586 crores and INR1,181 crores respectively in the current Q3 for financial year 2022-2023. And the growth in PBT and PAT has been to the extent of 60% and 59%, as compared to the profit — PBT and PAT of the previous quarter. So, this is the highlights.

Now I’ll begin with the throughput in our plants. So basically Dahej has suffered in this quarter 154 TBTU as against 182 TBTU in the previous quarter, and 196 TBTU in the corresponding quarters. As far as Kochi is concerned, it has suffered 13 TBTU in the current quarter, 10 TBTU in the previous quarter, and 12 TBTU in the corresponding quarter. So this is the throughput in the plant and if you look at nine-month period during which how much this TBTU has been suffered, so during this current nine months, Dahej Terminal has processed 532 TBTU, as against 615 TBTU in the corresponding nine months of the previous year. And overall throughput of both the terminals for the nine-month has been 567 TBTU in the current nine months, as against 657 TBTU in the corresponding period of the previous years.

And if you look at the profitability, I have just mentioned, the PBT has been INR1,586 crores as against PBT of INR994 crore in the previous quarter and INR1,533 crores during the corresponding quarter. And PAT has been INR1,118 crores in the current quarter as against INR744 crores in the previous quarter and INR1,144 crore in the corresponding quarter. So this is the PBT and PAT result, and apart from that, as I mentioned, the company has been reported highest-ever turnover of INR46,025 crores in the current nine months as against INR32,008 crore in the corresponding period of the previous year, and there is a growth of around 44%, but this is largely due to the price which has been higher in this period as compared to the corresponding period.

And if you look at the PAT and PBT of this particular period of nine months, PBT has been INR3,517 crores as against PBT of INR3,489 crore in the corresponding period of the previous year. PAT has been INR2,626 crores as against the PAT of INR2,602 crores in the corresponding period of the previous year. So if we look at this as a result, and as you see, there has been Impact of IndAS to the extent of INR60 crores due to foreign exchange volatility and as per the provision of IndAS, we have recognized that, because you know that exchange rate of a dollar versus rupee has gone upside, and therefore there is a loss to us also, because we are reporting in dollar terms. So you have to convert and we have — you reach INR50 crore in this quarter.

So this is all, and perhaps, this robust results has been due to optimization in our operations and hope we’ll continue to do, even in this period, which has been very difficult for us, but somehow we are able to manage it and itself we have reported highest-ever PAT and PBT in the current quarter. If you look at the total throughput, long-term contract and spot, short-term service, you find that in Q3 long-term contracts, which we have processed is 104 TBTU and Kochi has been 13 TBTU, total 117 TBTU. Spot and short-term, we have processed 3 TBTU in Dahej and then service part, we have processed 47 TBTU in Dahej. So total makes it to 167 TBTU in this quarter as compared to 192 TBTU in the previous quarter and 208 TBTU in the corresponding quarter.

So this is the results, now you may ask the questions.

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 Puneet from HSBC. Please go-ahead.

Puneet Gulati — HSBC — Analyst

Yes, thank you so much. My first question is with respect to the income that you have recorded this year for use and pay charges of almost INR849 crore and there was a similar number, INR415 crore, the other half of it last year. What is the progress in terms of negotiations has — have they recognized and have they even acknowledged this outstanding dues so-far or not?

Vinod Kumar Mishra — Director Finance

See, it has been our claim as per the contract and continuously we are following-up with the customers that they should pay it, because this is payable as per the contract. But as you know that, so-far we have not received, this is true, that is still we are focusing on getting the payment as early as possible, but if you look at the kind of situation which is prevailing, what’s happening that volumes itself is not coming too much to India, and that’s why there is the issue and we have to book use and pay charge of INR849 crore this year also. So the situation is difficult, but still we are making all efforts to recover this and perhaps we are still negotiating, continuously talking to them and making some — whenever there is a progress, we will certainly report to you that how much we have recovered that this follow up is continuous and it is being in fact followed at a very senior-level and let us hope that positive results should come out.

Puneet Gulati — HSBC — Analyst

And is it fair to assume that there is no issue with respect to the other long-term volumes? That’s a state forward and you’re getting paid-for that?

Vinod Kumar Mishra — Director Finance

Long-term volume, I think that is coming as usual, there is no issue as far as on the long-term contracts are concerned, Ras Gas contract or Exxon Mobil is there, they are all coming and they are being paid in time, there is no issue. It’s only the service volume, which basically is the capacity booked. They have to bring some cargoes and get them re-gasified at our terminals, so that part is not being supplied, so that is the only part which is lacking.

Puneet Gulati — HSBC — Analyst

Okay, So in that context, can you give me the amount of receivables outstanding as of Q3, and net cash?

Vinod Kumar Mishra — Director Finance

You are asking, how much is outstanding?

Puneet Gulati — HSBC — Analyst

Yes. Total receivables end of Q3, and net cash end of Q3.

Vinod Kumar Mishra — Director Finance

Total receivable is around INR1,327 crore, total receivable, I’ll tell you. It is there, I’m telling you, just a minute, it is there. It is to the tune of, as on 31st December, this is receivables, INR3,513 crore, but this includes servicing.

Puneet Gulati — HSBC — Analyst

Yes, understood. And includes the INR1200 crore kind of number as well?

Vinod Kumar Mishra — Director Finance

Yes, yes, it is this INR1,200 crore something and apart from other long-term contract, these are also there.

Puneet Gulati — HSBC — Analyst

And net cash?

Vinod Kumar Mishra — Director Finance

[Indecipherable].

Puneet Gulati — HSBC — Analyst

And net cash number?

Vinod Kumar Mishra — Director Finance

Cash, we are having to the tune of almost INR6,000 crore, exactly I’ll just tell you how much is that, just a minute, I’m telling you the exact cash, how much is there. [Speech Overlap] INR6,900 crore is the cash available as of now.

Puneet Gulati — HSBC — Analyst

And if you can share the numbers for service income as well for the current quarter?

Vinod Kumar Mishra — Director Finance

Service volume?

Puneet Gulati — HSBC — Analyst

No, volume you shared, you also report income from services that you recorded.

Vinod Kumar Mishra — Director Finance

INR1,112 crores as against INR438 crore in the previous quarter and INR755 crore in the corresponding quarter.

Puneet Gulati — HSBC — Analyst

And last one is an update on your capex plan, how is that going and what have you spent so-far?

Vinod Kumar Mishra — Director Finance

Capex plan, as I have mentioned, we have continuously following-up — our two tanks are under-construction, approximately 50% progress is there. The INR1,247 crores, whatever is there, INR1,246 crore is there, there we are going for jetty also. So that will be a capex of INR1,700 crores and we have already got the approval of both and we are now going for tendering process, regarding that job.

And apart from that, we have initiated to have one terminal in the East Coast, Gopalpur Terminal, so that part also is progressing and in fact, it has been approved by the Board also. So now we are looking-forward to have other agreements and implementation agreement and the other agreements with the Gopalpur Port Trust and perhaps if that is done, thereafter we will go-ahead with the tendering process for that.

So all feasibility environment clearance, all those things are required, so that process is going on. So that is also capex of around INR2,300 crores, and apart from that as you know that we have already plan to have one PDHPP plant in Dahej. With that part is still going on and that is a capex, a huge capex, intensive capex item and involve around INR13,00 crore, INR14,000 crore investment, but that is initially approved because we are now looking-forward to go for license and selection process. And after selection of the licensor, we will go-ahead with the — this approval from the Board for the plant. So like this, we are progressing.

And other capex plan, if you look at LNG efficiency is there, but that is as we have mentioned, for efficiency we are establishing and we very shortly commissioned, I think, and they are under-construction and more will come, but again issue is that LNG high price is there, so that is causing a worry, but there is silver lining that we are getting from price resumed, and in this current last few days, I’ve seen the price as we went in from $16 to $20 in-between. So if that remains the price, well bigger than, we can think of some momentum and augmentation in the process of installation of LNG stations and conversion of trucks to LNG floaters.

So all those things are there, and other things are, I have already mentioned I think CBD plant is also there, but that is again an issue because state government has allotted the land to us and we can think of it, but that is not progressing too well right now, because we are not getting the land. Once we get the land, then we can perhaps think of those process.

Operator

Sorry to interrupt, may we ask — request Mr. Puneet to please rejoin the queue, we have participants waiting for their turn.

Puneet Gulati — HSBC — Analyst

Yes, okay.

Operator

Thank you. The next question is from the line of Nitin Tiwari from YES Securities. Please go-ahead.

Nitin Tiwari — YES Securities — Analyst

Good evening, sir, thank you for the opportunity. Sir, first question is a bookkeeping one. How much of the Gorgon volume was at Dahej this quarter?

Vinod Kumar Mishra — Director Finance

5.44 TBTU internal and 13 TBTU exit.

Nitin Tiwari — YES Securities — Analyst

Thank you, sir. The second question is regarding the re-gas service volumes that we have in this quarter. So they’re fairly low, although like you know there was a moderation in LNG prices which was seen progressively over the third-quarter. So why this sudden drop? I mean, is there any significant contractors who has backed out and related to that, the user pay that we have booked as of this quarter, does that also include non-usage of the re-gas service facility in this quarter and because the volumes are pretty low. So if you can just help me understand that?

Vinod Kumar Mishra — Director Finance

The re-gas service is for the entire contract year, this is the calendar year, so it is for the entire 12 month per se as a payments, these are measured — because I think it’s not that there was very much softening prices, anything above $20 is not sustainable in Indian market. So that’s the reason the volumes are on the lower side, since that’s now is the — of the information that the prices are north of $20, would we expect some update keeping the volume.

Nitin Tiwari — YES Securities — Analyst

So prices were above $20 for most of the year. I mean most of our CY ’22, but we saw a sharp drop in the third-quarter and actually the prices started cooling off. So I’m just trying to like —

Vivek Mittal — Chief General Manager & Vice Presiden, Marketingt

Comparing to some alternative prices because that’s — and propane tankers volume for some consumers [Indecipherable].

Vinod Kumar Mishra — Director Finance

Volumes have reduced, as what Vivek has just told you, also because of some domestic gas was available on IGX, so some of the customer has bought the volumes from there also, so high-pressure, high-temperature gas is available in the market, those volumes are being lifted by the customer. So the number of cargoes have not come for that, as far as the spot cargoes are concerned. So that is the basic reason, two, three reasons we may say, after volumes have been low. But the reason is very obvious, prices is still high almost, but we hope that now prices will come down because we see that there is less demand in the market at least in the European market and because of that the prices are lower. And we hope that this continues in the fourth-quarter when more volumes will come, because I’m sure that if prices remain at this level, $15 to $20, then certainly spot cargoes will come to India in this quarter. So we are hoping and in fact much happy on this particular theory that prices are down, people will buy and more cargoes will come and we’ll get the volume for re-gasification.

Nitin Tiwari — YES Securities — Analyst

Right, thank you, sir. Lastly, sir, just if I’ve missed, like on the trading gain and inventory gain, if you have already shared, if you can please —

Vinod Kumar Mishra — Director Finance

Trading gain, if you look at this quarter, it has been only INR24 crores, INR25 crores; INR25 crores has been the quarter.

Nitin Tiwari — YES Securities — Analyst

And any inventory gains?

Vinod Kumar Mishra — Director Finance

And not too much in this quarter, trading gains. But it has been earlier substantial. But right now, it is not there, trading volume I’m just telling you, in fact INR25 crore.

Nitin Tiwari — YES Securities — Analyst

And any inventory –?

Vinod Kumar Mishra — Director Finance

Inventory valuation is INR97 crores and this is INR25 crores. So this is how we have performed.

Nitin Tiwari — YES Securities — Analyst

I didn’t get the last part, sir, you said INR35 crore is –?

Vinod Kumar Mishra — Director Finance

INR25 crore is the trading margin.

Nitin Tiwari — YES Securities — Analyst

Right, sir.

Vinod Kumar Mishra — Director Finance

And there is a inventory valuation also, which is INR95 crores inventory valuation.

Nitin Tiwari — YES Securities — Analyst

INR95 crores, all right, thank you so much, sir. Sure sir, I’ll get back-in.

Vinod Kumar Mishra — Director Finance

You can add both of these and you can find the figure.

Nitin Tiwari — YES Securities — Analyst

Sure sir, thank you. I’ll get back-in the queue, sir. Thanks for the answer.

Vinod Kumar Mishra — Director Finance

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sabri Hazarika from Emkay Global. Please go-ahead.

Sabri Hazarika — Emkay Global — Analyst

Yes, good evening, sir. So. I have two question. One is basically the IndAS book keeping question so from Debabrata.

Vinod Kumar Mishra — Director Finance

Debabrata is here.

Sabri Hazarika — Emkay Global — Analyst

Yes, yes, so what was run rate for the quarter in terms of cost-of-goods-sold, other expense, depreciation, interest and other income?

Debabrata Satpathy — General Manager, Finance and Accounts

Yes, Sabri, INR151 crores at the gross margin level positive.

Sabri Hazarika — Emkay Global — Analyst

Yes.

Debabrata Satpathy — General Manager, Finance and Accounts

Then INR60 crores Forex loss.

Sabri Hazarika — Emkay Global — Analyst

Forex loss of INR60 crores, okay.

Debabrata Satpathy — General Manager, Finance and Accounts

INR60 crores, and INR8 crores at expenses level, positive.

Sabri Hazarika — Emkay Global — Analyst

Right.

Debabrata Satpathy — General Manager, Finance and Accounts

And the depreciation is INR84 crores.

Sabri Hazarika — Emkay Global — Analyst

Yes.

Debabrata Satpathy — General Manager, Finance and Accounts

And express is INR79 crores.

Sabri Hazarika — Emkay Global — Analyst

Okay, so INR54 crores negative is the amount.

Debabrata Satpathy — General Manager, Finance and Accounts

INR54 crore is negative.

Sabri Hazarika — Emkay Global — Analyst

So just to follow-up on this, so are we entering a level where I think this will — lease accounting is reversing now or –?

Debabrata Satpathy — General Manager, Finance and Accounts

As we had been explained to you, these accounting will start reversing from FY ’25.

Sabri Hazarika — Emkay Global — Analyst

That’s from FY ’25, sorry, yes.

Debabrata Satpathy — General Manager, Finance and Accounts

For FY ’24, it will come to a level of a break-even.

Sabri Hazarika — Emkay Global — Analyst

Right, sir. And 5.44 was the Gorgon volumes right in the Dahej?

Debabrata Satpathy — General Manager, Finance and Accounts

That’s Right.

Sabri Hazarika — Emkay Global — Analyst

Right. And second question is on the current scenario, so I mean, I don’t know whether you’ll be able to share it or not, so what is the current utilization levels right now, so we have seen the prices come down, but maybe the —

Debabrata Satpathy — General Manager, Finance and Accounts

Yes, yes, the utilization level is 81% as of now.

Sabri Hazarika — Emkay Global — Analyst

81%.

Debabrata Satpathy — General Manager, Finance and Accounts

This has increased as compared to this current quarter of the year, we just mentioned 58%. So now the level has picked up. As we rightly said, I have said that that is a doubt, and even long-term prices are also very less nowadays, so long-term it is terminated, in between it is there. And even this power prices have come down, two days back it was $16 something.

Vinod Kumar Mishra — Director Finance

So I think if prices are at this range, volume will definitely come and we will be able to process it, the utilization level is 81% as of now.

Sabri Hazarika — Emkay Global — Analyst

Okay, okay sir, that’s all from my side. Thank you so much.

Debabrata Satpathy — General Manager, Finance and Accounts

Thank you.

Operator

Thank you. The next question is from the line of Pinakin Parekh from JPMorgan. Please go-ahead.

Pinakin Parekh — JPMorgan — Analyst

Thank you, sir, for the opportunity. Sir, my first question is, you mentioned that utilization levels have gone up. So is it fair to say at this point of time fourth quarter, we can see volumes of between 190 TBTU to 200 TBTU?

Vinod Kumar Mishra — Director Finance

Actually prediction cannot be given, because as of now it is looking good, but let some more time pass, it is only beginning of the quarter, fourth-quarter, so it is too early to predict any volume right now, but you can see that 81% is how much.

Pinakin Parekh — JPMorgan — Analyst

Okay, so to that extent, sir —

Vinod Kumar Mishra — Director Finance

If anything, this will not be fair.

Pinakin Parekh — JPMorgan — Analyst

Understood. Right. Sure sir, my second point question is, given that the INR800 crores plus of revenue booked for this take or pay in this quarter. So if you take that out, then the profitability picture looks different. Sir, is there — now I understand that you mentioned that the company is in talks with the counterparties. But is there a time limit beyond which if it’s not realized then the — Petronet would have to write-off this amount? What is the legal time limit, where you can continue to show it as dues receivable?

Vinod Kumar Mishra — Director Finance

See, it’s not a legal — question of legal limit. It is auditor’s view, but in fact, we are confident that we will be able to sort it out. And we will try to do it in the next quarter itself if possible, at least for the last year, INR413 crore, which is outstanding. This year only we have just raised the bill and even date of payment is not due. So it is still not due, we have raised the bill only for INR849 crores, but they have been shows as there aren’t any, but and there is enough time to see how they react, but last year we are following a INR413 crores. And we’ve definitely try to recover the entire amount and then of course there should not be any issue of a provision and this time, we have not had made the provision, but we are going to aggressively follow it up in this quarter, fourth quarter.

Pinakin Parekh — JPMorgan — Analyst

Understood. Thank you very much, sir.

Vinod Kumar Mishra — Director Finance

Thank you.

Operator

Thank you. The next question is from the line of Mayank [Phonetic] from Morgan Stanley. Please go-ahead.

Mayank — Morgan Stanley — Analyst

Sir, two questions from my side, first was in terms of this receivables. Is there something that you will consider if you can’t recover the entire amount by March in terms of the dividend, how will it impact your dividend payout? And the second question was related to long-term LNG sourcing. We have seen some of your — some of peers in China and Thailand actually starting to kind of look at long-term gas supplies beyond 2026. What is the thinking process at your end?

Operator

Ladies and gentlemen, please stay connected. The line of the management got disconnected. Ladies and gentlemen, thank you for patiently holding the line, the management line is reconnected back, thank you and over to you, sir.

Vinod Kumar Mishra — Director Finance

So, please start from the first line, who was asking the question, I just forgot the name.

Operator

Mr. Mayank.

Vinod Kumar Mishra — Director Finance

Mayank from Morgan Stanley. Please —

Mayank — Morgan Stanley — Analyst

Sir, I’ll repeat the questions. The first one was, sir, related to the dividends. This was regarding, if the receivables, the entire amount you are not able to recover, especially for fiscal ’23, how are you thinking about that impacting your dividend payout?

Vinod Kumar Mishra — Director Finance

There is no link here. This is only — two things are entirely different, because for making payment of dividend you need cash and cash surplus we have. So it will not impact the dividend, and rest be assured. This is something else, because we are fighting for it and we’ll try to get it also, but at the same time, there is no cash shortage. So I don’t think there is any impact on the dividend part.

Debabrata Satpathy — General Manager, Finance and Accounts

Mayank, just to add to the answer. Basically, after the last year, I mean FY ’22, we had booked some user pay, but after that also two dividends have been paid. And this year, whatever has been booked the due date has not yet also come. We have just recently done the billing also in — I mean couple of days back, as per the contract. So as DF sir has told, that there is no link between these two.

Mayank — Morgan Stanley — Analyst

Very clear. Thank you for that. The second question was more related to a bit more long-term view. Now, we have seen your peers starting to tie-up long-term suppliers beyond 2026. Especially in countries outside India, so what has been your view and you — or you still think it’s too early to kind of go into the market?

Vinod Kumar Mishra — Director Finance

No, no, no, it’s not too early, we are already in the market and in fact we are already negotiating for our Ras Gas contract. That negotiation is already going on for renewable. And apart from that, we are also looking for some additional volume to be taken. So that part is going on and perhaps we have to finalize by this year only for the renewal of the contract and additional volume if at all. We are looking-forward to that, so there is no reason why we shouldn’t, but at the same time, we would not like to enter into a contract where we are, in fact, supposed to make a payment, which is a little bit higher slope of the Brent or higher sized gas. So we are trying to get a reasonably priced gas, so that’s why there might be some delay, because market is very hard and it’s such a hard market if you go, certainly prices will be higher.

So it’s not fair to go for higher prices, because this will pitch in the long-term. So it’s better to delayed for some time till the time the prices are reasonable. And now we see that prices are coming down, hopefully, this will remain in it’s range, $15 to $20, so if this remains in that range, then we’ll get a better slope in the market, apart from our renewal of Ras Gas volume. So that is there, but none of the Indian parties has entered any contract so far, but outside parties have done it, maybe China and other countries have done it, but we are trading with extreme care and we are trying to go for a contract which is reasonably priced so that in long-term that will not pitch.

Mayank — Morgan Stanley — Analyst

Got it, thank you.

Vinod Kumar Mishra — Director Finance

Thank you.

Operator

Thank you. The next question is from the line of Vikash Jain from CLSA. Please go-ahead.

Vikash Jain — CLSA — Analyst

Hi, thanks for taking my questions also. Just one question on this user pay income that we have booked, now when I look at the third-party volumes that has been booked for this calendar year versus last calendar year, almost roughly there about a 100 TBTU difference, 90 TBTU to 100 TBTU or whatever, around that ballpark. But if we were to look at what you had booked in 3Q and 4Q of last year, assuming that all of that was for calendar year 2021. Then from that perspective, again, should we expect you to book more in the first quarter, as clearly this number is similar to what you had book during the last year, including the two quarters. So this number should be higher, right?

Vinod Kumar Mishra — Director Finance

No, actually, this year we have booked for the entire year for calendar year 2022, last year what happened that in 2021 we had booked INR347 crores around of user pay in the third quarter and INR83 crores in the fourth quarter. So this was the segregation, so that’s why you can say, if you — and that was for the calendar year 2021, both of these, but this both will make it around for INR430 crores of user pay. So I think this is the right number if you compare from number to numbers, because this year it has been INR849 crore, last year it has been INR430 crore.

Vikash Jain — CLSA — Analyst

Mishra ji, that’s what I’m comparing, so I mean, from INR430 crores versus this year being — INR849 crore, okay, okay, then it’s fine, sorry, sorry, my mistake. Okay, understood. Thank you.

Operator

Thank you. The next question is from the line of Avinash Karumanchi from Equirus. Please go-ahead.

Maulik Patel — Equirus — Analyst

Yes, this is Maulik Patel. Sir, a couple of questions. One, have you taken the price hike at Dahej for this calendar year, 5% per annum hike?

Vinod Kumar Mishra — Director Finance

5% per annum.

Maulik Patel — Equirus — Analyst

Yes, that has been taken right?

Vinod Kumar Mishra — Director Finance

Yes, yes, it is taken as per contract.

Maulik Patel — Equirus — Analyst

Okay. The revised price is what INR59?

Vinod Kumar Mishra — Director Finance

It’s around INR59 and paisa, I’m just telling you how much the paisa, INR59 something is there. Exit price hike, it was earlier INR57 something.

Maulik Patel — Equirus — Analyst

And sir, regarding this — on the take or pay, as you have clarified a lot, but what are the options we as in the company and the Board has there and in case this continues for another year and the price of the global LNG market remain high, there can be another take or pay liability. How are we going to — what the Board has discussed this matter, or what are the options available to us, apart from pursuing the pending dues, which you are doing — which you are probably doing it? And are you going to charge interest rate on the pending dues of CY ’21, because it’s more than a year and you have not received the amount from the customers? Hello?

Operator

Ladies and gentlemen, please stay connected. The line of the management is disconnected.

Ladies and gentlemen, thank you for patiently holding your line. The management line is reconnected. Thank you and over to you, sir.

We had Mr. Avinash in the queue. Please go-ahead with your question, sir.

Maulik Patel — Equirus — Analyst

Hi sir, this is Maulik Patel, you were telling me about that the tariff —

Vinod Kumar Mishra — Director Finance

You are telling — we are telling that Dahej re-gas charges. So it is now INR59.91.

Maulik Patel — Equirus — Analyst

INR59.91 right, and what will be the charges at the Kochi, sir? It was around INR80.

Vinod Kumar Mishra — Director Finance

It is around INR85 — INR81.04 is there, and it will be revised for ’23-’24 exchange.

Maulik Patel — Equirus — Analyst

Okay, got it.

Vinod Kumar Mishra — Director Finance

But it is now INR81.04.

Maulik Patel — Equirus — Analyst

Sir, my second question is that on the take or pay, if this amount doesn’t get, are you going to charge interest-rate on the CY ’21, that’s number one, the pending amount of around INR3.2 billion or so? And the second is — sorry INR4.2 billion. And second is that, what the — as in an options to get the required amount, are there any bank guarantees, which has been with us as a part of the contract or apart from pursuing the negotiation or any legal measures, which we can deploy?

Vinod Kumar Mishra — Director Finance

So actually if you look at the — our composition, the company’s composition, is that our promoters as our uptakers also.

Maulik Patel — Equirus — Analyst

Sure sir.

Vinod Kumar Mishra — Director Finance

But they are not the regular defaulter. This is an unprecedented situation, which is causing this kind of problem. But certainly we — still we are following-up for making the payment, because ultimately this is the contract that they have to say they are not able to use. And perhaps issue is that, if you ask for security, we certainly, as a promoter, we don’t have it right now, but there has never been a need also for that.

It has been a contact for the last almost 18, 19 years. And we have not seen any default. The first time ever this situation has come that they are not making payment, and perhaps we hope that this will be very short and strategical [phonetic], we are following up and we have taken a challenge that in this quarter we will try to resolve it.

Maulik Patel — Equirus — Analyst

Sure, sir. Sir, this INR1,300 crore of amount, is it pending, both from your promoter and, which is like GAIL and IOC and BPCL, or it is largely from these other customers, which are not your promoters, which is like GSPC and Torrent Power?

Vinod Kumar Mishra — Director Finance

It is all, it is all, except GAIL, all are there in this INR849 crore, so GAIL has not defaulted at all, otherwise IOCL, BPCL, GSPC, Torrent, ATPL, all are there.

Maulik Patel — Equirus — Analyst

And sir, you mentioned about the capex for the Petchem is around INR1,300 crore, INR13,000 crore, that was the indication amount?

Vinod Kumar Mishra — Director Finance

INR13,000 crore, 1-3.

Debabrata Satpathy — General Manager, Finance and Accounts

INR13,000 crore. – 1-3

Maulik Patel — Equirus — Analyst

INR13,000 crore, and that is likely to get approved by this — the next quarter?

Vinod Kumar Mishra — Director Finance

Not next quarter, I cannot commit, because it’s still in the process of license and selection. Maybe within six months we can say, we should do.

Maulik Patel — Equirus — Analyst

Sure. And what kind of in a time duration, once you get an approval from the Board, because you already have a land which you write in the possession. What kind of a timescale we’re looking for to set up this project?

Vinod Kumar Mishra — Director Finance

It’s — almost four years, it will take almost. Well, then awarding the job for the project.

Maulik Patel — Equirus — Analyst

Sure, sir. Great, thank you.

Vinod Kumar Mishra — Director Finance

So it will be in a staggered manner, capex will not be in a day, it will sort of pan of almost four years like that.

Maulik Patel — Equirus — Analyst

Got it sir, thank you.

Vinod Kumar Mishra — Director Finance

Thanks.

Operator

Thank you. The next question is from the line of Siddharth Chauhan from B&K Securities. Please go-ahead.

Siddharth Chauhan — B&K Securities — Analyst

Hi, yes, my question has been answered. Well, thank you so much.

Operator

Thank you. The next question is from the line of S Ramesh from Nirmal Bang Securities. Please go-ahead.

Sankaranarayanan Ramesh — Nirmal Bang Securities — Analyst

Hello, good evening and thank you very much. So I’d like to understand the user pay provision of INR848 crores. That is entirely for April ’22 to March ’23. So out of that how much should we assume is for the third quarter, we have to adjust those number?

Vinod Kumar Mishra — Director Finance

So actually this user pay changes is slightly advance in a year. We don’t account for it in every quarter, because we give an opportunity to all the uptakers and all the customers that they should utilized within this calendar year. This basically calendar year, from 1st January, 2022 to 31st December, 2022. So if they are able to use their quantities booked in this period then they don’t have anything. But after this date passes, means after 31st December, we levy this user pay charges.

Sankaranarayanan Ramesh — Nirmal Bang Securities — Analyst

Sir, in terms of the coming financial years, at what capacity utilization should we expect the company to be looking for —

Vinod Kumar Mishra — Director Finance

We are very bullish about it and we are expecting more than 80%, and 81% is still we are going on. So, now the volume is coming, so we are hopeful that, at least it will be in the range of 80% to 90% in-between.

Sankaranarayanan Ramesh — Nirmal Bang Securities — Analyst

Yes, I understand that, so the question I’m trying to grapple with is, in future if the capacity utilization declines, how do we account for this in terms of making the estimate, because if you go by 60% or 70%, the earning come lower than what you report. So how do we — at what capacity utilizations should we expect the user pay changes be booked even on a calendar year basis?

Vinod Kumar Mishra — Director Finance

See, we don’t expect any user pay changes, in fact, we don’t want it should happen at all. They should come and book the custody and use their capacity, and this is the intent of all the customers, they don’t want to unnecessarily again get this bill for user pay charges. But this is compulsion because of the high prices of LNG, it has been there, but now prices are also coming down. If you see, it has been in the range of $20, it is today, but yesterday I was seeing $17, before that $16. So, in that range if price is there, then perhaps we will find the — more cargoes coming here and customer will use it.

But at this level, when it is $30, $35, $40 or if the consumption is very less, because of the high prices. And certainly, we are now very hopeful that this kind of pricing of $15 to $20, we can expect more volumes at least in the third-quarter, fourth-quarter and our capacity utilization will be much, much higher.

Sankaranarayanan Ramesh — Nirmal Bang Securities — Analyst

Okay and then what is the status of the, we’ll face expansion in Dahej, or when do you see the complete rollover of the projects and volumes contributing to your utilization say in Dahej once it finds the floor?

Vinod Kumar Mishra — Director Finance

You are talking about Dahej expansion of 5 MTPA. So, we expect that by the end of 2024 we should be able to get at least 2.5 MMTPA and by March ’25, we should be able to get at least next 2.5 MTPA. So by March you can say March 2025 we should be able to get this capacity and we are hopeful that that capacity again will give us flexibility so that we can book more capacity of the customers and perhaps, we can also think of more volumes coming in for our own purposes also, because if you see, we are in fact importing some cargoes on behalf of ONGC also.

So if we get some volume contract, then we shall have that particular advantage and we can process it, we can store it in two tanks we are constructing. So there is a lot of business opportunities there, because then we can also have some trading volume with us, in future, if at all there is an opportunity. So that kind of flexibility will be there and apart from that, we are also looking-forward to have some capacity booking for the expansion we are doing for Dahej, so we are very optimistic about this.

Operator

Thank you. The next question is from the line of Somaiah V [Phonetic] from Spark Institutional Equities. Please go-ahead.

Somaiah V — Spark Institutional Equities — Analyst

Thanks for the opportunity, sir. Sir, the first question in terms of this take or pay, the revenues that we have booked, what would be the equal volumes in both the years, for calendar year ’21, if you can give a number on TBTU that should be helpful, for calendar year ’21 completed?

Vinod Kumar Mishra — Director Finance

’21, how much is the volume?

Somaiah V — Spark Institutional Equities — Analyst

The user pay charges?

Vinod Kumar Mishra — Director Finance

You were talking about ’21, ’22?

Somaiah V — Spark Institutional Equities — Analyst

For both the year, sir, for the calendar year ’21 and ’22.

Vinod Kumar Mishra — Director Finance

’21, ’22, it was 80 TBTU. And for ’22, it is 155 TBTU.

Somaiah V — Spark Institutional Equities — Analyst

Helpful sir. And second question is with respect to the Petchem project. So what would be the IRRs broadly, that we will be looking in for this project? And when do we expect capex to start for this project and also you mentioned it will happen over a period of time. So any color on that, that will be helpful.

Vinod Kumar Mishra — Director Finance

Okay, IRR. As you know that we have a policy here that whatever projects we undertake, there is a project appraisal team, which ensures that unless we get some equity IRR15%, we don’t go for the project. So, in this case, we are getting handsome IRR and we cannot mention right now, all these are premature things, so — but it is above 15% equity IRR. So that is for sure.

And as far as the CapEx plan is concerned, this is basically — I have told you that it will be in the staggered manner in the next four years after approval, and awarding of the job. So, hopefully you can say that INR13,000 crores will be spent not equally then certainly initially, it may be less INR2000 crore, and then INR3,000 crore, INR4,000 crore, like that and INR5,000 crore. So it will be like that only and ’23, ’24, it may be less, but in subsequent years it maybe be high. Because we are expecting by ’26 end. So it will be in a staggered manner INR2,000 crores to INR4,000 crores, you can say.

Somaiah V — Spark Institutional Equities — Analyst

One last question, sir, what would be the capex profile for the next couple — I mean, for this year, what would be your capex amount and then what are we looking at next year, at a company-level. And when is the Gopalpur expected to complete?

Vinod Kumar Mishra — Director Finance

This — actually next year, you talking about ’23-’24 or this year you are talking? Means ’22-’23? So it will be in the range of INR1,200 crores I think, INR1,250 crores rough — guesstimately.

Somaiah V — Spark Institutional Equities — Analyst

So, this you are referring to FY’23?

Vinod Kumar Mishra — Director Finance

Given, maybe you’ve had in that, maybe around INR1,800 crore will be next year, we are likely to spend. But this year INR1,200 crore you can take safely.

Somaiah V — Spark Institutional Equities — Analyst

Okay. And the last part of the question. I mean the Gopalpur terminal, when is it expected to start?

Vinod Kumar Mishra — Director Finance

When it would be –?

Somaiah V — Spark Institutional Equities — Analyst

When it is expected to start contributing?

Vinod Kumar Mishra — Director Finance

Yes, see, I’ve just told you that we are itself doing some due-diligence regarding this agreement signing and all those things are being followed up. And certainly we will enter the agreement with the Port Trust, Gopalpur Port Trust, so that we get the right to build a terminal over there. We have in fact contacted the state government authorities and we are seeking some environment clearance and other clearances from the authorities and thereafter we will in fact go for the awarding of job.

So if you look at, at present we have plan to have FSRU terminal, so it should not take too much time, two years’ time it should take if it is FSRU terminal, after awarding the job. So we are first getting the — trying to get the clearances, so that — and agreement signed, so that everything is in place before awarding the work to the contractor for the construction of the LNG terminal. So it will be leased — two years should not be — not more than two years, it should be the timeframe for construction of the FSRU terminals Gopalpur, but this is after award of the job.

Somaiah V — Spark Institutional Equities — Analyst

Got it, sir, thank you.

Vinod Kumar Mishra — Director Finance

Thanks.

Operator

Thank you. The next question is from the line of Puneet from HSBC. Please go-ahead. Puneet, please go-ahead with your question, your line is unmuted.

Puneet Gulati — HSBC — Analyst

Yes, thank you so much. My questions have been answered.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Probal Sen for closing comments.

Probal Sen — ICICI Securities — Analyst

Hello.

Vinod Kumar Mishra — Director Finance

Yes, yes, Probal.

Probal Sen — ICICI Securities — Analyst

Yes, sir, would you like to make any closing remarks, sir?

Vinod Kumar Mishra — Director Finance

No, in fact, I have said everything whatever I had. The only thing is that, I wanted to convey my sincere thanks to all analyst and investors, because they have really put faith in us and in fact, we are also trying hard every time that our profitability always increases from the last time. So this is why that we are able to achieve even higher profit than previous corresponding quarter and previous quarters.

So our effort is always to increase and augment the profitability as far as possible. And the only concern was there, high-price of LNG, which I think in due course of time will be addressed, and then we will have that 100% utilization of our terminal as we used to do earlier.

So with this, I would like to close my remarks.

Probal Sen — ICICI Securities — Analyst

Thank you so much sir, it was a fairly insightful and a fairly detailed Q&A session. I thank all the participants and most importantly, the management. This is a tough macro-environment for the gas space. So obviously, it’s a challenging environment, and I think the performance has to be appreciated in that context. Thank you so much for your time everyone. You can log off now.

Vinod Kumar Mishra — Director Finance

Thank you, Probal, thanks to all of you.

Debabrata Satpathy — General Manager, Finance and Accounts

Thanks a lot.

Operator

[Operator Closing Remarks]