PETRONETNSEQ2 FY23November 10, 2022

Petronet LNG Limited

7,636words

114turns

10analyst exchanges

7executives

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Management on call

Vinod Mishra

DIRECTOR FINANCE.

Rakesh Chawla

GROUP GENERAL MANAGER

Gyanendra Kumar Sharma

CHIEF GENERAL

Vivek Mittal

CHIEF GENERAL MANAGER

Debabrata Satpathy

GENERAL MANAGER

Ashwani Agarwal

MANAGER (FINANCE AND

Hemang Khanna

NOMURA. PETRONET

Key numbers — 40 extracted

48%

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 th

12%

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

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,

Rs 994

s 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 co

Rs 937 crore

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 c

Rs 1105 crore

er.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 744 crore

37 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 th

Rs.701 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 h

Rs 823 crore

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

Rs 15,986 crore

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 quart

Rs 14,264 crore

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

Rs 10,813 crore

d 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 th

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Guidance — 20 items

Maulik Patel

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

Management

“So, it doesn’t matter whether, Dabhol terminal will be in operation for the entire year.”

Management

“After completion of that process, we will come to know about the exact CAPEX which will be incurred and then we will be taking a approval of the board.”

Maulik Patel

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

V. Sivasankaran

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

V. Sivasankaran

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

Management

“So, Total CAPEX will be 2300 crores and we are going ahead with this Gopalpur East Coast terminal.”

Management

“So, now all the term sheets will be signed with Gopalpur Port Limited and then we will work out all the packages for project .Basically three packages will be there in the project which will be, considered, that is, jetty package will be there, then pipeline will be there because Gopalpur port is roughly 36 kilometers away from the trunk lines of GAIL which is Jagdishpur- Haldia-Dhamra-Bokaro pipeline it is 36 kilometers from that pipeline which is basically a srikakulam angul pipeline.”

Management

“Then topside facilities for LNG jetty will be there.”

Management

“Likewise we are proceeding with this project.”

Risks & concerns — 5 flagged

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

— Vinod K Mishra

But right now, of course it’s difficult situation because not much spot LNG is coming to India.

— Management

Just one follow up on that, any impact of the Gazprom supply is not being there to us?

— Somaiya V

So, do we see a possibility where availability of FSRU itself might be a challenge in the coming years or that’s not an issue at all?

— Rakesh

So, there is no challenge to us as such, because if you look at all those things, it is not there with any other terminal Long term capacity booking is not there with other terminals and long term volume tied up back-to- back is not there.

— Management

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Q&A — 10 exchanges

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

Management

Well, trading gain in this quarter has been Rs 273 crore and inventory valuation impact has been Rs 118 crore. So, this is compared to close to around 139 crore in the previous quarter of Q1 FY23? In previous quarter Rs 103 crore was trading margin and Rs 110 crore inventory valuation so, total Rs 213 crore was there. 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? It’s not that they are not taking it, they are taking it. But

Yes, the lease related charges and impact on EBITDA?

Management

You are asking about lease impact, IndAS impact? Yes, that’s right. So, forex loss to the extent of Rs 98 crore in this quarter and it was Rs 124 crore in the previous quarter. And with this rupee depreciation how do you expect this to change? Actually, if you see there has been upward rise of this dollar against rupee. It was somewhere around Rs 79, 80 in the last quarter and it has gone to Rs 82 in current quarter. So, it has impacted definitely That’s why there is a loss to the extent of almost Rs100 crores. PETRONET ._ .... «;. L IM IT£0 Is this 100 or something which we have to assume goi

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 PETRONET ._ .... «;. L IM IT£0 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.

Management

Okay. So, first is the utilization level, This time utilization of Dahej has been 80% in the second quarter, and a little bit lower than 87% in the previous quarter and 99% in the corresponding quarter. So, utilization is low and reason is very obvious that price of spot LNG is very high. So, spot cargoes which used to come earlier are not coming. That is the basic reason of course the long term LNG is coming. It’s still good as compared to other terminals where not much gas is coming. But for the rest of the year there’s a good news that prices of spot LNG have come down. Now, it is in the ra

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?

Management

For capacity booking already we are talking to so many people including off takers and we will be able to do at least 30%, 40% What’s happening that there is a mechanism of gas swapping.In fact GAIL has already laid pipelines in this Haldia-Dhamra-Bokaro pipeline. So, through this pipeline, we can optimize the utilization of terminals. And perhaps if somebody say GAIL or ICL has a customer for Odisha region, and they can take gas from our Gopalpur terminal through swapping the gas then we can directly bill to that customer from Dahej or Dabhol to Orissa on CST sale basis. And by taking volume

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?

Management

Construction will take off because it cannot wait. But in the meantime before it is completed, we will work out all these issues and we will book some capacity at least. And at least we will mitigate those risks that is sure. And perhaps there are lot many customers coming up over there, the gas demand is in fact is there and perhaps we will be able to tie up before the completion of the terminal. So, it’s not always possible to have 100% booking like we had in Dahej terminal, but at least to some extent 30% to 40% we’ll try to tie up so that there is assurance that capacity to that extent wil

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?

Management

Right now I’m not confirming anything, but whatever default is there in long term tolling volumes. That will be of course, accounted for in third quarter. The default is there to some extent so it’s not that it is not there. But everything will be known in the third quarter and capacity utilization, I have told you it is around 80% only. So, that way, you can just assume that whatever shortfall is there that will be booked as a user pay charges. Got it. And sir two more questions on the East coast terminal. Would we be competing with the Dhamra terminal which probably would be in the vicinity

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?

Management

So you are asking very internal thing but of course, I’m telling you that we are having handsome IRR and this IRR is good enough as per our project appraisal and investment policy. We are having adequate IRR coming in this project and capacity utilization we are taking almost 50%, 60% and that way we are working it out and maybe after five years it will be almost 70%, 80%. So, this is how we are proceeding and we hope that it will be utilized to the maximum percentage but at least it will go to 80%. Okay. And on the capital costs for the FSRU when you talk about FSRU rentals of $70,000, $80,00

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?

Management

This is for the GSP they’ve entered with the customer. You are talking about contract with Gazprom itself. PETRONET ._ .... «;. L IM IT£0 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? Yes, it is, I’ve not seen the contract, but it is there, they can invoke the force majeure clause. Because there is a disruption in the supply facility, then force majeure is involved. And the Ukraine Russia war is one of the eve

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. PETRONET ._ .... «;. L IM IT£0

Management

There is no opportunity as such now, as and when something comes up then we will discuss it and see the merit of the case. But right now nothing is going on, as far as the International acquisition or kind of investment is concerned that is not there right now. Understood. No, I’m also asking in the context that Europe is looking to add a lot of LNG import capacity. So, if you are finding any opportunities there, and if it is something that you’ll be thinking about in the future? Europe is doing only for their own consumption for FSRU type of setup they are seeking. In fact, their objectives i

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.

Management

Thank you very much, thanks to all of you. Thank you.

Speaking time

Management

V. Sivasankaran

Moderator

Puneet

Maulik Patel

S Ramesh

Sabri Hazarika

Somaiya V

Rakesh

Manikantha Garre

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Opening remarks

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

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