MGL — earnings call

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Prepared remarks

“Mahanagar Gas Limited Q1 FY '24 Earnings Call Conference Call” August 04, 2023

Moderator · Conference Operator

MR. Probal Sen – ICICI Securities Mahanagar Gas Limited August 04, 2023

Ladies and gentlemen, good day, and welcome to Mahanagar Gas Limited Q1 FY '24 Earnings Call hosted by ICICI Securities.

As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone.

Please note that this conference is being recorded I now hand the conference over to Mr. Probal Sen from ICICI Securities.

Thank you.

And over to you, sir.

Probal Sen

Thanks, Yusef.

Thank you, everyone, for making the time to attend this post-Q1 FY '24 results call of Mahanagar Gas Limited.

With us from the management, we have the senior leadership team represented by Mr. Ashu Shinghal, the Managing director of MGL; Mr. Rajesh Patel, the Chief Financial Officer; as well as Mr. Rajesh Wagle, the Senior Vice President of Marketing.

I will first handover to the E&Y IR team of MGL to make their disclaimer remarks, and then we can go to the management for their pre-summit remarks.

Runjhun, over to you.

Runjhun

Thank you, Probal.

Welcome to the participants on this call.

Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and we believe that the expectations contained in the statements are reasonable.

However, these statements involve a number of risks and uncertainties and may lead to different results.

The risks and the uncertainties related to these statements are included, but not limited to fluctuations of sales volume, foreign exchange or the cost and ability to manage growth.

I urge you to consider the quarterly numbers as not a reflection of long-term trends or indication of full year results.

They should not be attempted to be extrapolated or interpolated into a full-year number.

With that said, I would now hand over the call to the management.

Thank you.

And over to you, sir.

Managment: · In fact, just to add to what Rajesh is saying, the kg number has slightly improved over the last

In fact, just to add to what Rajesh is saying, the kg number has slightly improved over the last Q versus Q comparison, whereas in SCMD there is a shortfall of around 2.3%.

So as there are few reasons, one that although their numbers have been added by the vehicles, but the volume has not grown because the prices were higher in the last quarter, this quarter Q1 versus Q1 comparison.

The other part is that maybe the price differential with the adjoining state.

Amit Rustagi: · Okay, sir. Got it and sir, with respect to the developments with the MSRTC, I think you have

Okay, sir.

Got it and sir, with respect to the developments with the MSRTC, I think you have been highlighting that you have asuccessful agreement with them on getting some buses.

So, could you give some progress on that?

And what could be the target for this year and next year

Sir, just to add on this, when our commissioning will be over in the bus depots?

And second is, what is the average consumption of 1 bus because it could be significantly higher than the average of other buses maybe?

Okay.

And when you will complete the stations at these depots?

Moderator · Conference Operator

Next question is from the line of Kunal Thanvi from Banyan Tree Advisors Private Limited.

Kunal Thanvi

My question was largely on our pricing strategy, especially on the CNG side.

So, as you alluded to the fact that our sourcing costs have come down significantly, and we have got benefited out of it in terms of our profitability.

But when I look at the pricing differential between, say, diesel and CNG continues to be much lower than our historical averages.

So what is our strategy in terms of pricing?

Are we looking like in order to improve volumes, does it make sense to take a price cut?

Or how do management look at it from a longer-term perspective?

Moderator · Conference Operator

Next question is from the line of Yogesh Patil from Dolat Capital.

Yogesh Patil

Congratulations on the good set of numbers.

Sir, can you please share APM share in the priority segment for the quarter 1?

And if possible, can you please provide a detailed breakup of your gas or LNG contracts?

Moderator · Conference Operator

Next question is from the line of Niharika from Aequitas Investments.

Niharika

So my question is based on the biogas plant.

What kind of investments are we looking for this?

And what kind of revenue do you see getting generated?

Moderator · Conference Operator

Next question is from the line of S Ramesh from Nirmal Bang Equities.

S. Ramesh

So if you look at the numbers you're talking about for vehicle additions and the addition of the MSRTC buses, is it fair to assume that once they are all in operation on an annual basis in full potential, should be able to increase your CNG volumes by about 1 million to 1.5 million cubic meters a day.

And that means you will possibly talk about 5 million cubic meters a day in the next 1 or 2 years.

Is that a fair assessment?

Because buses itself will firstly add about 9 to 10 lakh kgs.

So is that a fair calculation?

Moderator · Conference Operator

Next question is from the line of Sabri Hazarika from Emkay Global.

Sabri Hazarika

Yes, sir.

Firstly, so how much of the volume in kg terms in CNG?

Moderator · Conference Operator

Next question is from the line of Somaiah V from Avendus Spark.

Mahanagar Gas Limited August 04, 2023

Vishnu

Yes.

Sir, Vishnu from Avendus Spark.

So just wanted to understand this LNG, what will be the rough costing?

I mean I understand gas is a component that keeps moving up and down.

But let's say you get the gas and what will be the additional cost involved if we need to keep, let's say, for 15-day inventory, there's a boil-off there’s electricity.

What will be the additional load in terms of costs that you expect in terms of dispensing the LNG apart from the gas cost, any rough idea, if you can help us.

Moderator · Conference Operator

Next question is from the line of Hemang Khanna from Nomura.

Hemang Khanna

Sir, I just wanted to check with if you can please help with what is the realization for the I&C consumers in this quarter?

And post the quarter, have you -- has there been any downward Mahanagar Gas Limited August 04, 2023 revision for realizations for the segment?

And secondly, on the sourcing, could you please just repeat how much was the total gas from RIL HPHT for the I&C sector?

Moderator · Conference Operator

Next question is from the line of Nitin Sharma from M.C.

Pro Research.

Nitin Sharma

Two small questions.

First of all, can you please provide a breakup between the volume in commercial and industrial?

And then I have a follow-up.

Moderator · Conference Operator

Thank you.

Next question is from the line of Vikash from CLSA.

Please go ahead.

Vikash

This is regarding volumes.

If you could tell me, firstly, you said that on a kg basis, this particular quarter was 1.84 million kgs of CNG and last year, 1Q was what number, the same number, is it?

Moderator · Conference Operator

Thank you.

Next question is from the line of Sameer Deshpande from Fairdeal Investment.

Please go ahead.

Sameer Deshpande

Congratulations for the excellent numbers.

And I would like to know now we have the margins which we fix after our per kg cost for the gas, which we are getting suppose it is INR 100, and we have a margin of about INR 10 after that.

So, if the prices go down or if your prices go up, we keep our INR 10 at the same level or we keep on changing it?

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, due to time constraint, this was the last question for the day.

I now hand the conference over to the management for the closing comments.

Thank you very much.

On behalf of ICICI Securities, that concludes this conference.

Thank you for joining us.

And you may now disconnect your lines.

(This document has been edited for improving readability)

Registered Address

MGL House, G-33 Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400051, Maharashtra

on that front? · Management:

[identifier removed]

Website

www.mahanagargas.com

CIN

L40200MH1995PLC088133

Questions and answers

Moderator · Conference Operator

First question is from the line of Amit Rustagi from UBS.

Amit Rustagi: · Okay, sir. Got it and sir, with respect to the developments with the MSRTC, I think you have

First is on the volume.

Sir, what could be the reason for a Y-o-Y drop, the volumes in CNG this year?