PETRONET — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

MR. HEMANG KHANNA – NOMURA.

NOA\URA

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Petronet LNG Limited November 10, 2022

Moderator · Conference Operator

Ladies and gentlemen, good day and welcome to Petronet LNG Limited Q2 FY23 Earnings Call.

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

Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touchtone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Hemang Khanna from Nomura.

Thank you and over to you.

Maulik Patel: · Okay. So, probably by the end of this financial year, do you expect to get an approval from the

So, this is compared to close to around 139 crore in the previous quarter of Q1 FY23?

Okay, got it.

The second question is that, there is a significant jump in our inventory as compared to March.

Does this indicate that there’s a lot of volumes lying in on your store and off takers are not taking that?

Okay.

Sir, last question GAIL has mentioned in the con call that next year monsoon onwards the Dabhol terminal will be fully available.

So, in your assessment, what could be the potential loss to Petronet because GAILs had brought some volume or some cargoes during the monsoon to Dahej and possibly at Kochi also.

And what in your assessment could be the loss to the volume?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022 get affected because we have long term contract, which are tied up with Dahej.

So, it’s not a challenge.

Maulik Patel: · Okay. So, probably by the end of this financial year, do you expect to get an approval from the

Okay.

Sir if you allow me the last question, sir any update on the potential investment we’re planning in biogas and Petchem side?

Okay.

So, probably by the end of this financial year, do you expect to get an approval from the

Moderator · Conference Operator

Thank you.

We have our next question from the line of Varatharajan Sivasankaran from Antique Limited.

Please go ahead.

V. Sivasankaran: · And with this rupee depreciation how do you expect this to change?

Yes, the lease related charges and impact on EBITDA?

And with this rupee depreciation how do you expect this to change?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

V. Sivasankaran: · And with this rupee depreciation how do you expect this to change?

Is this 100 or something which we have to assume going forward, would it depreciate further ?

Yes.

No, you can predict this numbers.

I am just saying if I assume Rs.82 as a number would this 100 crore become 105, 110 or we stay at closer to 100?

Great.

Last question on your East Coast terminal.

Great sir, but I just wanted to check the Rs 2300 odd crore that includes everything ?

And the capacity would be how much sir?

Moderator · Conference Operator

Thank you.

We have our next question from the line of Somaiya V from Spark Capital.

Please go ahead.

Somaiya V

My first question is on the utilization.

Last quarter our overall utilization in Dahej was around 82%.Obviously one impact could have been the highest LNG prices, any other color that you’d

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022 like to add?

Any impact on the long-term contracts, anything from the Gazprom supply issue that impacted, and do you see, things getting better during the rest of the year? or take or pay could probably compensate for this? that’s first part and second part is, if you could share what is the current level of utilization at Dahej that would be helpful.

Petronet LNG Limited November 10, 2022 So, there has been some default by GAIL also because they could not bring the Gazprom cargoes, which were scheduled for our Dahej terminal.

So, there has been an impact, but we are trying to compensate through trading and through other things.

So, it has impacted but GAIL is more impacted by Gazprom shortfall.

Somaiya V

For us, would this be under a take or pay clause?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

Moderator · Conference Operator

Thank you.

We have our next question from the line of Sabri Hazarika from Emkay Global Financial Services.

Please go ahead.

Sabri Hazarika

So, I have three questions.

The first one is on this East Coast terminal.

Have you booked any capacity or do you have any visibility of capacity booking for this?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

Moderator · Conference Operator

Thank you.

We have our next question from the line of Puneet from HSBC.

Please go ahead.

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

Puneet

My first question is on the FSRU terminal, would you start the construction before tying up with the off takers or after tying up with the off taker and similarly on the other side, from the sources of gas?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

Moderator · Conference Operator

Thank you.

We have our next question from the line of Rakesh from HDFC Mutual Fund.

Please go ahead.

Rakesh

I have three questions.

One is short term and slightly toward long term, Short term if I look at your Dahej volumes, for the first nine months of the calendar year you probably could have done about 10.5 or 10.7 million tonne of LNG assuming fourth quarter is also ballpark in the similar range, probably you will end up about 14 maybe 15 million tonne.

So, does it mean about a million tonne so maybe 1.5 million tonnes of take or pay revenues in the coming quarter would that be the ballpark right match?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

Moderator · Conference Operator

Thank you.

We have our next question from the line of S Ramesh from Nirmal Bang Equities.

Please go ahead.

S Ramesh

So, on the FSRU project, if you can help us understand what is the kind of volume required to generate the IRR expectation and what is the tariff assumption there?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

S Ramesh

So, just to understand the timeline for the Dahej brownfield expansion, when do you think the first two and a half and the next two and a half billion tonnes will be?

Moderator · Conference Operator

Thank you.

We have our next question from the line of Varatharajan Sivasankaran from Antique Limited.

Please go ahead.

V. Sivasankaran: · And with this rupee depreciation how do you expect this to change?

Sir, in this case of Gazprom volumes is there scope for GAIL to pull up a force majeure kind of clause, does something like that exist in our contracts which can provide a escape route?

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

V. Sivasankaran: · And with this rupee depreciation how do you expect this to change?

No. I’m talking about the contract with the off taker.

So, if GAIL to pull up saying that this is a force majeure kind of a situation and hence compulsory take or pay may not apply on this volume, is there scope for them to do that?

Fair enough sir.

And everything else actually happening on this LNG outlet which you had originally entered into arrangement with the IOC and a couple of other players.

So, is that something that you’re still progressing or is it on hold at this point in time given the economics?

We understand that.

Moderator · Conference Operator

Thank you.

We have our next question from the line of Manikantha Garre from Franklin Templeton India.

Please go ahead.

Manikantha Garre

So, wanted to check now that you have taken the decision to go ahead with the Gopalpur FSRU and you’re doing other investments at Dahej and Kochi, or your on international scouting that you are doing earlier is off the radar now.

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, that was the last question for the day due to time constraints.

I now hand over the call to Mr. Hemang Khanna for closing comments.

Over to you.

Hemang Khanna

We would like to thank the management of Petronet LNG for taking time to answer all of the questions that were posed today.

Thank you so much sir, and thank you all to the participants, which you a very Happy New Year ahead.

Moderator · Conference Operator

Thank you.

On behalf of Petronet LNG and Nomura, that concludes this conference.

Thank you for joining us and you may now disconnect your lines.

Questions and answers

Hemang Khanna

Thank you Yashashree.

Good afternoon and thank you everyone for taking the time to attend the Post Results Conference Call of Petronet LNG.

We are privileged to have with us the senior management of Petronet LNG today led by Mr. Vinod Mishra – Director (Finance), Mr. Rakesh Chawla – Group General Manager and President (Finance and Accounts), Mr. Gyanendra Kumar Sharma – Chief General Manager and Vice President (Marketing), Mr. Vivek Mittal – Chief General Manager and Vice President (Marketing), Mr. Debabrata Satpathy – General Manager (Finance and Accounts), and Mr. Ashwani Agarwal – Manager (Finance and Accounts).

We now hand over the floor to the management to make their opening remarks, post which we will open the floor for questions.

Thank you and over to you sir.

Vinod K Mishra

Thank you very much.

Very good morning to all of you and first I will just read out the highlights and then we can take the questions.

So, there has been highest ever turnover in this Q2 as compared to previous year turnover of same period or in the previous quarter.

And the growth has been as compared to Q2 of the previous year, it has grown by 48% and as compared to previous quarter it has grown by 12%.

And PAT and PBT has also increased in the current quarter as compared to the previous quarter by 6%.

So, now, just I cover the highlights, for this quarter, During the quarter ended 30th September, Dahej terminal process total 182 TBTU as against 196 TBTU in the previous quarter and 225 TBTU in the corresponding quarter.

And Kochi has in fact has processed 10 TBTU in the current quarter as compared to 12 TBTU in the previous quarter and 15 TBTU in the corresponding quarter.

So, total throughput in both the terminals has been 192 TBTU in this quarter as against 208 TBTU in the previous quarter and 240 TBTU in the corresponding quarter.PBT has been Rs 994 in the current quarter as against Rs 937 crore in the previous quarter and Rs 1105 crore in the corresponding quarter.

And PAT has been Rs 744 crore in the current quarter as against the Rs.701 crore in the previous quarter and Rs 823 crore in the corresponding quarter.

Company has registered highest ever turnover of Rs 15,986 crore as against Rs 14,264 crore in the previous quarter and Rs 10,813 crore in the corresponding quarter.

The company reported highest ever turnover of Rs.30,250 crore in the first half of this financial year as against Rs 19,411 crore in the corresponding first half of 2021-22 registering a growth of 56%.

Due to foreign exchange volatility, lease liability has an accounting impact of foreign exchange loss

LIMIT£0 · Management

Petronet LNG Limited November 10, 2022 amounting to Rs.98 crore as per the provision of relevant Indian accounting standards IndAS.

Considering the performance, the Board of Director of company has approved a special interim dividend of Rs.7 per share.

The company was able to achieve robust financial performance despite high energy prices due to optimization in the operations.

Now, floor is open for question.

Thank you very much.

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

We have our first question from the line of Maulik Patel from Equirus.

Please go ahead.

Maulik Patel: · Okay. So, probably by the end of this financial year, do you expect to get an approval from the

Can you just quantify your trading or inventory gain in this quarter?