U.S. Markets closed

Edited Transcript of AEGISCHEM.NSE earnings conference call or presentation 15-Nov-19 10:00am GMT

Q2 2020 Aegis Logistics Ltd Earnings Call

MUMBAI Dec 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Aegis Logistics Ltd earnings conference call or presentation Friday, November 15, 2019 at 10:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Anish K. Chandaria

Aegis Logistics Limited - Vice Chairman, CEO & MD

* Murad M. Moledina

Aegis Logistics Limited - CFO

================================================================================

Conference Call Participants

================================================================================

* Chirag Vakharia;Budhrani Finance;Analyst

* Pritesh Chheda

Lucky Investment Managers Private Limited - Analyst

* Rajesh Kothari

AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director

* Ronak Vora;AUM Fund Advisors;Analyst

* Sandeep Mathew

SBICAP Securities Ltd., Research Division - Analyst

* Shaleen Kumar

UBS Investment Bank, Research Division - Associate Director and Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, good day, and welcome to the Aegis Logistics Limited Q2 FY '20 Earnings Conference Call.

This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Anish K. Chandaria, Vice Chairman and Managing Director Aegis Logistics Limited. Thank you, and over to you, sir.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [2]

--------------------------------------------------------------------------------

Thank you. I'll be presenting the quarter 2 results for FY '20. I'm pleased to report that this was an excellent set of results for the quarter and also that the outlook for the rest of the financial year is also looking excellent. So business on all fronts is really strong.

I'll be presenting first the underlying profits for the quarter, and then I will separately present the accounting treatment of our new Employee Stock Purchase Plan, or ESPP, which is a noncash accounting entry.

So first, the underlying profits for the quarter. Total revenues for quarter 2 were INR 1,817 crores versus INR 1,425 crores a year earlier. The total segment EBITDA for quarter 2 was a record high of INR 132 crores versus INR 100 crores a year earlier. That's a rise of 32% year-on-year. And the underlying or normalized profit before tax, that is before accounting for the Employee Stock Purchase Plan, was INR 104.3 crores for quarter 2 versus INR 70.88 crores year earlier. That's a rise of 47% year-on-year in the underlying profit before tax.

And I would like to highlight that this is the first time in the history of Aegis that we have crossed INR 100 crores pretax profit in a quarter, so this is a very significant milestone that I think we should recognize.

The underlying profit after tax, that is again before taking into account the Employee Stock Purchase Plan, was INR 120 crores versus INR 57.4 crores a year earlier. That's a rise of 109% year-on-year. And the underlying profit after tax after minority interest was INR 112.8 crores versus INR 48.7 crores a year earlier. That's a rise of 132% -- year. So as I said, overall, a very good excellent set of results for quarter 2 as far as the underlying profit position is concerned.

Now let me go through the segment results, starting with the Liquid Terminal Division. The revenues for the first time in quarter 2 hit INR 50 crores in the quarter, again, that's a very significant milestone that first half, quarterly revenues for Liquid Terminal Division hit INR 50 crores, versus a year earlier to INR 44 crores earlier, so that's a rise of 13% year-on-year.

EBITDA was also excellent for quarter 2 in Liquid Terminal Division. It was INR 32.5 crores versus INR 20.8 crores year earlier. That's a strong rise of 56% year-on-year in the EBITDA for the Liquid Terminal Division. And this is evidence that the new capacity built in Kandla project, the Haldia projects, Mangalore projects is now generating good profits for the group.

And I'm also pleased to confirm that the new expansion in Mangalore port, which is the new project of 50,000 kiloliters, which we announced in the last earning call, INR 35 crores CapEx. We have now started the project because we received the consent to start this just a few days ago, and we have now about -- we are about to start the project. And we expect to complete this by quarter 1 of FY '21, the next financial year quarter 1. And this will take our total liquid capacity in Mangalore to 75,000 kiloliters, that is the existing 25,000 and we're adding another 50,000 kiloliters in Mangalore, which is a very strategic location.

And I'm also pleased to say that the 140,000 kiloliter terminal in Kandla is working well, and we have 100% capacity utilization over there. So overall, Liquid Terminal Division is going well, and it was an excellent quarter.

Now as far as the Gas Terminal Division is concerned, which represents 75% of operating profits, the Gas Terminal Division revenue for quarter 2 was INR 1,768 crores versus INR 1,381 crores year earlier. And EBITDA for quarter 2 for the Gas division was INR 99.5 crores versus INR 79.8 crores year earlier. That's a rise of 25% for the division.

And it's the first time that the quarterly EBITDA in the Gas division almost hit INR 100 crores. I would have liked to say INR 100 crores, but it was INR 99.5 crores. But it's almost the first time that we almost hit INR 100 crores in that division for 1 quarter as well. So it's a good achievement there as well.

Now let me go through the volume analysis for the sales volumes for the Gas division, which I normally do. The LPG throughput volumes in our 3 terminals of Mumbai, Haldia and Pipa was a record 751,025 metric tons, so 7-5-1-0-2-5 metric ton versus 663,168 metric tons year-on-year. That's a rise of 13%. All the terminals saw good growth in volumes, especially Haldia and Mumbai. In Mumbai, something to highlight that we saw high growth in quarter 2 because BPCL, Bharat Petroleum, has now been added as a customer through IOC and HPCL, as they decided to piggyback on industry ships which were coming, which were organized by IOC and HPCL. So BPCL decided to piggyback on those ships, and that, obviously, generated big great savings for them.

But the good news for us is that, that has resulted in good volume growth because of the addition of BPCL into our Mumbai terminal. And this is going to be sustained now in future quarters, so that's very good. And we're already seeing it, obviously, in quarter 3, and this is going to result in good volume growth in Mumbai. But it already was reflected in Q2.

Now let me come to the LPG retail cylinder volumes for the commercial market segment under the Aegis pure gas brand as well as the domestic market segment under the Aegis Chhota CIKANDER brand. Very good figures for quarter 2. It was 6,253 metric tons for the quarter versus 4,238 metric tons a year earlier. That's a big rise of 47.5% in sales volume year-on-year.

We are really pleased to see this big push in building the dealer network in the South and the Northeast. It's now paying off in sales volumes and profits. And again, just like in terms of LPG throughput volumes, we expect this to continue in future quarters as well. So it's not just a one-off, but this big rise in the dealer network is going to see a big rise in sales volumes, not only in quarter 2, but -- as we've just seen, but also in future quarters. So that's really good news.

Autogas sales also hit a record in quarter 2, 7,400 metric tons in the quarter versus 6,566 metric tons a year earlier. That's a rise of 12.7%. Three important points I would like you to note as far as the Autogas segment is concerned. Profit margins. EBITDA profit margins have increased to around -- close to around INR 10,000 per metric ton from an earlier INR 6,000 per metric ton over the last year. I'm reporting this now because this is not -- this has been sustained over a year. It's not just 1 quarter. So we are now confirming that, actually, profit margins have risen from INR 6,000 per metric ton in the Autogas segment to around INR 10,000 a tonne. And this is because the oil marketing companies are keeping auto LPG prices around 40% cheaper than petrol. And right now, with the way that the international LPG price are, this translates to around INR 10,000 per tonne margin. So that's really a high margin.

Second thing I would like you to note is we have now confirmed that, except for the cities of Mumbai and Delhi, Auto LPG is now cheaper than CNG in all other markets in India, except for the cities of Mumbai and Delhi, on a rupees per kilometer basis. First time this has happened, and this is a result of increased CNG prices due to the steady withdrawal of the subsidy on natural gas. Every 6 months, they're revising the price. And basically, also less subsidized, not only the withdrawal of the subsidy on natural gas, but less domestic APM gas available at more imported LNG price the free market means that the price of natural gas for CNG has been rising. And this is very important for the future market for Auto LPG, particularly in the 3-wheeler auto rickshaw market that, today, Auto LPG is the cheapest fuel in India. And this is good news for the future.

And third thing to note on Autogas is we are on track to take the number of operational Autogas stations to around 120 stations by the end of this financial year. And we are currently at 114 stations, so we expect to hit around 120 stations by the end of FY '20 under the end of the current financial year. And there is a good pipeline for future network expansion as we are offering dealers to sell 3 products: petrol, diesel, as well as Auto LPG. And we are expanding our footprint into the Northeast territory. Along with our Haldia LPG terminal, we are now able to expand our dealer network as far as Autogas stations into the North. So we're at the early stages of that, but this will result in greater sales volumes, and obviously, I mentioned high margins that we have in this segment.

Now industrial bulk LPG sales. This is the industrial LPG distribution. Sales were 20,000 -- 27,790 metric tons, sorry, for the quarter versus 17,651 metric tons year earlier. That's a big rise of 57% in sales volume in this segment. As we add new customers, but especially in the Northeast, this is adding to our sales volumes, so 57% rise in sales volumes.

And as far as gas sourcing volumes are concerned for the quarter, it was 541,800 metric tons versus 269,829 metric tons a year earlier. That's a rise of 100% in sales volumes as we continue to service the contract of IndianOil and other customers. So in other words, we've already saw just under 1 million tonnes of gas in the first half of the financial year.

So the conclusion is all segments of the gas division are going very strong. LPG consumption in India this year is growing at around a rate of 7% to 8%, and Aegis is certainly benefiting hugely from this demand growth. In fact, I can state that the throughput volumes for the second half of this financial year, that means Q3 and Q4, are looking really good going forward. So not only Q2 has been excellent, but I can confirm that we believe and expect that the second half of the financial year are also looking really good in all 3 terminals: Mumbai, Pipa and Haldia.

Now let me finally cover the outlook for the financial -- the rest of the financial year FY '20 and the projects update. So as I was saying, the outlook for Q3 and Q4 is good -- very good. It's going to be driven mainly by 2 factors, what I just said, LPG throughput volumes in Mumbai, Haldia, and Pipa terminals. And do look out for the next earnings call for the reported quarterly volumes for Q3. We are already in the middle of November, so I think I'm stating that this will be a very good figure that we will be reporting the next earnings call, almost certainly. Also do look out for continued growth in sales in our retail division, which is becoming an important contributor to the bottom line. So the outlook for the second half year, Q3 and Q4, is strong.

As far as the project update is concerned, let me go through one-by-one. Our biggest project is the new Kandla LPG terminal project, which we are building in Kandla, 45,000 tonne, 4 million tonne capacity LPG terminal. The project is in full swing, and we remain on track for completion in FY '21. And therefore, we expect to generate profits in full year FY '22.

Secondly, the Pipa railway gantry project -- railway connectivity project in Pipa is ongoing, and we expect to complete that in the first half of FY '21 and generate profits in that year -- in the second half of that year, FY '21. That's next year. And this really is strategic, as I've maintained many, many times. This is really strategic because this railway connectivity secures a big increase in volumes in Pipa for the future because the railway -- the cost of transporting LPG by rail versus road is so much significantly cheaper and that it really benefits the customers to -- in terms of landed cost of LPG at the bottling plant if you move by rail. And that really secures a big increase in volumes in Pipa for the future.

Thirdly, I'm very pleased to officially announce for the first time that the Chakan -- Uran-Chakan pipeline, which is -- was being built by HPCL, we have now got it confirmed that it is complete. This has been a long, long pending item. I think I've been talking about it for the last 3 years and saying I don't know when it will be complete. But I can now confirm, and this is actually confirmed by HPCL that it is now complete. And in fact, we will -- I will say more about the volumes and all that in the next earnings call. But we expect it's too premature because, obviously, the project is just complete. But we'll have more indications from HPCL as to the volumes.

But as investors know, when this starts -- it's not yet operational, but it's mechanically complete. When this starts, this is going to give another big boost to volumes and profits in our Mumbai LPG terminal. And just like the Pipa railway gantry, this pipeline connection, all the way to Chakan on the outskirts of Pune, will secure long-term volumes for Mumbai over the coming years. So I think we will see and be able to give a little bit more feedback as to the kind of incremental volumes in the next earnings call in January, but we can now expect this to happen. And then it will result in incremental sales volumes in Mumbai.

I can also -- I think I already talked about the Mangalore 50,000-kiloliter project that, that is now -- liquid project that, that is now already received consent to establish last week. And so we are starting construction, and we'll target the completion of that in FY '21.

So a summary of the outlook and the projects update that the business outlook for the rest of the financial year -- current financial year is very strong. And the good news is that, because of the new LPG capacity and the imminent railway connectivity and pipeline connectivity in Pipa and Mumbai, respectively, the outlook for profit is really looking very positive in the medium term to not only the prior financial year FY '20. But in the medium term, the outlook for profit because of those 2 projects, connectivity projects, railway in Pipa and pipeline, the Chakan pipeline in Mumbai, the outlook for profits is good going forward in the medium term as well.

I would like to finally announce a new project, an expansion of 12,000 kiloliters in Haldia, which is good the CapEx was approved yesterday by the Board of Directors. It will be a INR 10 crores project. It is an ongoing increased expansion in Haldia, another 12,000 kiloliters. Our current capacity is 144,000 kiloliters in Haldia, and this is going to add -- yes, it's really more for specialty chemicals and all that. It was a sign that business is strong in Haldia as well.

And I -- just summarizing the medium-term outlook. I'd like to say a couple of last comments on this, the medium-term outlook, not just for the current financial year. I remind investors that, with all these projects that I just mentioned on LPG that Aegis is planning to increase our LPG handling capacity to 9 million tonnes by FY '21, our current 5 million tonnes and then, obviously, adding another 4 million tonnes with the Kandla LPG project.

And I want to say that our LPG actual sales volume -- LPG throughput volumes was 2.5 million tonnes last year in FY '19. So with the addition of the railway gantry in Pipa and this Chakan pipeline project being -- is now ready, this is going to drive our LPG volumes for years to come. So from 2.5 million up to the 9 million tonne capacity figure, that is a lot of growth that we envisage to build up to that capacity figure. So we're building this capacity, but we have a very clear plan of how to take up the sales volume to meet this kind of capacity. And that, obviously, has very positive outlook for earnings growth in the medium term.

I am going to say one last thing, which is that I -- which we have not discussed before, but I think it's -- I'm not going to go into the detail, but I would like investors and analysts to also note this one very important last thing. We are investigating at one more evacuation option. I have been talking for our LPG business. I've been talking for a number of years about evacuating by road and by pipeline and by rail. We are now seriously investigating and have been for some months movements of LPG by barges. And this is being done all over Europe, moving LPG by barges in Europe, in China, in the United States, in Argentina. But right now, there is 0 movement of LPG in India by barges that is river traffic moving in the rivers. And we are now early stages. I would not like to say that we are anywhere near the -- but we're early stages where Aegis is taking this lead in investigating the possibility of moving LPG by barge traffic in rivers. And this is going to add ability to move LPG into areas of India which have not been adequately serviced so far. So it can have an impact on future sales volumes.

I'll have more detail to say when we're ready. It's, obviously, premature. But I'd just like to give this indication officially to investors that it shows the way we are working is to make these LPG terminals truly multimodal: rail, pipeline, road and now we are investigating -- still in investigation stage, but we're investigating seriously moving by barges through rivers. And India has lots of rivers, as you know. So this is a positive development. More details will be forthcoming as we get closer to conclusion there.

Now I will conclude by going through the accounting treatment for our new Employee Stock Purchase Plan. I have concentrated so far on the operating profit and underlying profit, but I said that we will -- I'll go through the accounting treatment.

I announced this in the last earnings call that we were implementing an ESPP, and we actually, therefore, have introduced this in quarter 2. And the -- we are required to make the accounting disclosures in the quarter 2 profit and loss statement, which has been shown.

And let me just step back before going through the figures. I said last time -- I'm really repeating it for -- to remind people that the company's management has overseen huge growth over the last 5 years in profitability and sales growth and building this nexus of LPG in liquid terminals around (inaudible). That's the last 5 years.

But for the next 5-year plan, we have directed the management to focus on further capacity increases, especially in new LPG terminals, increases in LPG evacuation through rail, pipeline and now -- a road, of course, and now as I said, barge. These are the things that we told them to focus on so that we can increase the LPG sales throughput volumes, which can then, obviously, generate profits.

And thirdly, we've told our management to massively increase our retail LPG distribution network and go and really target a national distribution network. So that, in essence, is the next 5-year plan that we have tasked the management.

Now in order to align and motivate the employees with the shareholder goal in this 5-year plan, like many companies, the Board has decided to introduce this Employee Stock Option Plan or stock purchase plan, which we have implemented in quarter 2 of FY '20. And the accounting for this plan is as follows, which we are required to, under the accounting policies of India, we're required to treat it as follows: so 5.66 million new Aegis shares have been granted under this employee plan to employees in quarter 2 in FY '20 at face value, and we've taken a large part of that entry -- accounting entry in quarter 2.

In the next financial year, FY '21, another 5.66 million shares, and in FY '22, the following year, another 5.66 million shares will be granted. So this is the 3-year plan, a total of 17 million new shares, therefore, in these 3 years, this year, next year and the year after. A total 17 million new shares will be issued, which I mentioned in the last earnings call. And this will take our number of shares outstanding from the current 334 million, and we add 17 million new shares over the next 3 years.

Now as per the accounting rules, the company has taken a noncash charge of INR 154 crores in the profit-loss statement of quarter 2 with a corresponding credit to the reserves. So there'll be no impact on the net worth of the company because, on the one hand, you have to take an item in the profit and loss statement of INR 154 crores, I repeat, which is a noncash charge; and on the other part of the balance sheet here, you have to take a corresponding credit to the reserves. So the network does not change.

And it has no impact on cash flow, but this is the way that -- and as for the accounting policy, although these shares are issued over a period of 3 years, the bulk of a lot of the accounting process is taken in the quarter that it was granted. In other words, quarter 2.

So there will be some smaller accounting entries for the next 2 quarters in this financial year for Q3 and Q4. But as per the accounting policy, you have to take upfront most of the entry in -- but people should still appreciate that this is not a cash expense or -- which has an impact on cash flow. This is a noncash accounting entry. So that's why I concentrated on the underlying profits or what we said in our presentation, normalized profit before the Employee Stock Purchase Plan, and then we take this accounting entry. And we'll be pleased to answer any questions in Q&A, which we have now.

And one more time to repeat that -- please note that the promoters are not eligible for this employee stock purchase scheme. It is for senior employees only of the company. And we think it's very, very -- a great motivational tool, as many companies have to align the employees -- the senior employees of the company to align with the shareholder's growth in this 5 -- next 5-year plan that we have.

That completes my presentation. I think we can take questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question is from the line of Rajesh Kothari from AlfAccurate Advisors.

--------------------------------------------------------------------------------

Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [2]

--------------------------------------------------------------------------------

Congratulations, sir, for a great set of numbers. I just have 2 important questions on my side. One here, like last time, this time also, you have mentioned separately about LPG retail performance cylinder and industrial. But I think I'm not able to see that in presentation, so if possible, if you can put it from next quarter in presentation itself because we don't have that separate data here.

So is it possible for you to just do the -- what is the otherwise volume growth of Gas division if I take out LPG retail performance?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [3]

--------------------------------------------------------------------------------

Well, I think I quoted the figures, and we'll certainly -- can help you do that in the next presentation. But I think I quoted the exact figures for every segment, including the LPG throughput volumes, which you have the figures right and quoted again. And I've even broke up the cylinder volumes from the bulk industrial. So all the figures, I've broken up. Even though in the presentation, it was not broken up, I've given you even more detail. So I don't think I can break it down further.

--------------------------------------------------------------------------------

Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [4]

--------------------------------------------------------------------------------

Mainly my question was on that. My question is on the Gas division, what kind of ramp-up we ought to witness in 2Q in volume terms?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [5]

--------------------------------------------------------------------------------

Yes. So throughput volumes for -- LPG throughput volumes, this is not the cylinders or the retailing. This is the nonretailing part. So 7 -- this is the record figure of 751,025 metric tons for the quarter.

--------------------------------------------------------------------------------

Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [6]

--------------------------------------------------------------------------------

Okay. Okay. Okay. And the second question was with reference to your presentation slide where you're going the port-wise traffic and the red circles where we are present, Haldia, Kandla, Mumbai and new Mangalore. Have you seen any change in trends in these 5 ports where you're present, whether they're able to gain more market share or less market share, something like that?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [7]

--------------------------------------------------------------------------------

No real change in trend. I think Kandla is a very busy port, and we are doing very well in Kandla. Mumbai remains a very busy port. But they're all thriving. Haldia is thriving. Mangalore is thriving. Listen, we're all present at these major ports. So I think no change in traffic. I think they just continue.

I think that the key has been that we've built in the right locations, which is why these are not 1 quarter's trend. These are multiyear trends that may continue to be busy because we built in the right locations. So that's been always our approach, not to just build a terminal in the middle of nowhere but to build in a key location. So there remains very strong traffic in all the ports.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

The next question is from the line of Ronak Vora from AUM Fund Advisors.

--------------------------------------------------------------------------------

Ronak Vora;AUM Fund Advisors;Analyst, [9]

--------------------------------------------------------------------------------

Anish, congratulations on a good set of numbers. Two questions. One is on the Gas division, LPG throughput division, basically. If you can just directionally tell us what would the Chakan-Uran pipeline, now getting commission -- what sort of volume impacts do you see this year and next year? And Haldia, if you can directionally tell us what was the Q-on-Q growth in Haldia throughput volumes, if you can't give us the exact number, but at least the Q-on-Q. Directionally, how is Haldia ramping up and on Kandla, if you've been able to sign up any anchor customers? Or is it too early for that?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [10]

--------------------------------------------------------------------------------

Yes. So as far as the Chakan volumes are concerned, I said I'll give -- I'd be able to give a better update in the next earnings call in January, so please be present. Because we've just heard that the Chakan pipeline is mechanically complete just now. So obviously, we are in discussions with the customers there, too.

But look, let me tell you, it'll be good news. It's going to be -- we know the capacity of that pipeline is 1.2 million tonnes. So that's good news. And -- but I think it will be premature to give more precise guidance. The only thing I can say today -- and we will wait until January -- end of January when we have our next earnings call. But it's going to be positive development. I've been saying it for 3 years, so nobody should be surprised. But I'll give -- I'll be able to get a better feel for it because we are, obviously, in discussions with how many tonnes per day and all that with the customer, so we'll have a better feel. But that is kind of going on right now. But it'll be very positive, that's why I explained that.

As far as Haldia is concerned, Haldia LPG, I don't give the breakup of every tonne in every quarter of every terminal. But I can tell you, you asked what directionally is as far as given quarter-on-quarter Q2 versus Q1, Q2 was massively up on Q1. When I say massively, I'm saying as much as 50% up on Q1 quarter-on-quarter because there were some particular special factors in Q1 why BPCL, for example, did not have permission, so they brought 0 cargoes in Q1. So obviously, Q2 was going to be a big bounce back.

But I can add one more thing, which our marketing people told me that, if you remember that -- one of the big plants that -- one of the big HPCL bottling plants that Haldia -- this Haldia terminal is feeding is a plant called Panagarh, which is -- which can -- which is the largest bottling plant in Asia, and that was commissioned last year by HPCL. So the capacity of that plant, total consumption of LPG is 0.5 million tonne; 1 plant, 0.5 million tonne. But last year, they were only operating -- because they just commissioned it, they were operating at 25% capacity utilization. But I'm pleased to say that, by this financial year, in quarter 2, they're now in quarter 2, which is one of the reasons why there's been also a big increase in volumes in Haldia, which is going to be sustained. They are now bringing it to 50% capacity utilization. In other words, annualized 250,000 out of that 500,000. But there is room to go up to the 100% capacity utilization. But that is the result of -- that's why Haldia volumes have been so much of a big increase in quarter 2 compared to quarter 1. And we think that's sustainable going forward into the next 2 quarters as well and then next year, obviously, as well. So Panagarh is a very important factor.

Kandla commercial is too early. We are still about a year away from commissioning that terminal. All I can say is a great amount of work is going in as far as tying up the commercial side of Kandla. So nothing more to say. It's too premature. But...

--------------------------------------------------------------------------------

Ronak Vora;AUM Fund Advisors;Analyst, [11]

--------------------------------------------------------------------------------

If I can interfere, Anish, sir, what could be the pipeline evacuation? Even the presentation mentions about that, one pipeline already there and one potential pipeline to be built. Do you expect that to sync in with your commercial operations?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [12]

--------------------------------------------------------------------------------

It's a very crucial part of the reason why we're putting up this large project in Kandla. So what I have said publicly, and I'll repeat, is that the pipeline connectivity of Kandla is a very crucial part. So one pipeline, which is there already, has been there for a long time. It's called the Jamnagar-Loni pipeline, which is operated and -- by GAIL, Gas Authority of India. They are currently expanding that to 3.5 million tonnes per year capacity. It was 2.5 million tonne. So they're putting more booster pumps and all of that. That process will unfold during this year. So by the time we commission our Kandla terminal, we feel that, that will be a 3.5 million tonne capacity pipeline.

And the next pipeline, which is not yet built but is being planned by the public sector, is called the Kandla to Gorakhpur pipeline, which is a 2,700-kilometer pipeline going past 45 of their bottling plants, which would be a 6.5 million tonne capacity pipeline. So 6.5 million tonnes plus 3.5 million tonnes means that Kandla, in principle, could be connected to 10 million tonne capacities of pipeline. Now that my friend has not yet started. The construction has not yet started. That will take a number of years, at least, that's what we envisage. But at least the first step is connectivity into the existing Loni pipeline that I just mentioned, 3.5 million tonne capacity. So it's not secret. I've mentioned it many times that this is a key part of the commercials that we're working on. But it's too bad they're taking all that, but we're making good progress. That's all I'll say for now.

--------------------------------------------------------------------------------

Ronak Vora;AUM Fund Advisors;Analyst, [13]

--------------------------------------------------------------------------------

Sir, will you make enough capacity on this existing pipeline even if it is expanded to 3.5 million tonnes? Because I'm presuming it's already being used for their imports currently.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [14]

--------------------------------------------------------------------------------

Yes, it is being used, but we will be able to -- I mean if we solve these issues of connectivity, then we will -- it won't be enough. There will be other modes of traffic beyond that pipeline, but it's a key part of it. And there'll be other uses of that pipeline as well. It's a commonly used pipeline. But we will have -- if the commercials work out, that's the important part of -- because it won't be enough. That's why there will be further modes of transport, which will be there. But it's obviously one part of our throughput from Kandla in the future. That's something which I've said publicly.

And in the years ahead, if they're able to build this Kandla-Gorakhpur line, obviously, 6.5 million tonnes it'll add. But from day 1, when we commissioned this top job, it'll add to connectivity is, I repeat, one important part of the commercial part of this Kandla opportunity.

--------------------------------------------------------------------------------

Operator [15]

--------------------------------------------------------------------------------

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [16]

--------------------------------------------------------------------------------

Yes. Sir, I have 3 questions, 2 on LPG. First, the higher unit margins in LPG which we are seeing, sir, if you could explain the reason? Second, within LPG, we're seeing some slowdown in volume growth for you. So what were you growing at and the run rate that we're going now despite the huge capacity that we have -- has come in and that we are planning. Sir, if you could give some comments there.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [17]

--------------------------------------------------------------------------------

I thought you had one more question?

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [18]

--------------------------------------------------------------------------------

Yes, that's for liquids. I will ask after you have given the LPG question.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [19]

--------------------------------------------------------------------------------

Okay. So Autogas margins, which I have been able to give a very positive thing that they have risen over the last year from INR 6,000 a tonne to close to INR 10,000 a tonne. This is a factual situation that I'm reporting, not projection. I didn't mention it here before because I said let's keep it sustained. It's as a result of the price period in this obviously are the oil national companies, IOC, HPCL and BPCL, And they have basically followed a pricing formula, which is that there will be -- the Auto LPG price in rupees per liter will be 40% cheaper than petrol, whatever the petrol price, which fluctuates, I think, daily now, but the Autogas price is changed only once a month, and it is 40% cheaper than petrol price. So that's one part.

Now on the cost side. As you know, international LPG prices -- gas prices have fallen last -- over the last few years. So when you fix the price and market the lower cost, that's why the margin is practically INR 10,000 a tonne. So that's -- and we can't forecast every year from now to the future as to what the market will be. I'm just telling you the fact that actually we're now making more margins. And we, at the moment, expect that to be sustained because we're not changing that forecast for quite some time now. And we don't expect -- so the pricing, I think, will remain stable. That means 40% cheaper than petrol. And we believe that international LPG prices are not going to rise because there's such amount of supply from American shale gas as well and American LPG export, therefore, and the amount of LPG that's available in the world. Let me say, the world is awash in LPG. This is a structural change which has taken place over the last few years.

So I think margins are very positive, and that means the more we can sell in our retail Autogas division, the more we can sell even in our cylinder division, the more profits we make. I think this is -- it's important for me to highlight that this is an important practice that we believe will be driving earnings growth in Aegis in the years ahead, not just the next few quarters.

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [20]

--------------------------------------------------------------------------------

Sir, I'll just ask here. There is no unit margin increase in the logistics side, right? Whatever unit margin increase that we're seeing is in the distribution?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [21]

--------------------------------------------------------------------------------

A little. As you know, there is throughput charge. Is that what you're talking about, right?

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [22]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [23]

--------------------------------------------------------------------------------

Yes. I mean depending on which customer, we are able to negotiate a little bit here and there, so -- but no major change. But yes there has been some increase in that. We -- for example, because of Haldia, we had a higher charge, some of the older charge on this, et cetera, so obviously, the basic average will increase because of more volumes in Haldia at a higher rate. So there has been some increase in that, yes.

Now your next question I'm puzzled because, in my whole presentation, where did I talk about slowdown in LPG? Everything you said is in fact opposite in total growth out there. Can you explain to me?

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [24]

--------------------------------------------------------------------------------

No, so the growth that we're seeing in the first half is about 8% in throughput or logistics and about 13% for the quarter. We are growing much faster than this...

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [25]

--------------------------------------------------------------------------------

All right. Look, first half, what I said there are 3 factors in Q1. But if you look at Q2 where there was a bigger growth, and let me assure you that Q3 and Q4 are looking very, very promising. So if you look at the trend, it's going to be extended here for LPG throughput. Don't get too tangled to just 1 quarter or 3 months. But this Q2 is just a taste of what's to come. And I think, look, we already -- we're in the middle of November, we know. So the order book is very, very strong for LPG throughput, and you will see the results, but it's looking very good. I can't say anymore. But please banish the word "slowdown." This is not a slowdown as far as Aegis is concerned. I've done my best to try and explain that things are looking very bullish.

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [26]

--------------------------------------------------------------------------------

Okay. My question is on liquids. Your -- we were operating at a certain EBITDA for quite long, and since the last 2 quarters, we're seeing the margins improving, and your EBITDA run rates are about INR 30 crores, INR 33 crores. So it's been long that we were at about INR 100 crores annually, so about INR 25 crores per quarter. So first of all, is this sustainable now? Because if you recall, we've added a lot of capacity in the last 4, 5 years. We were waiting for these EBITDAs to improve. So if you could give some highlight here and the sustainability and the growth here.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [27]

--------------------------------------------------------------------------------

Okay. I'm glad you raised it because I wanted somebody to raise it, so I'm glad you raised it. Look, I said in my presentation that finally this quarter 2, where we achieved INR 32.5 crores, that you're right. It's a much higher EBITDA margin compared to the run rate of INR 25 crores despite building over there. So I said this is the first evidence that this new capacity that we built in Kandla, Haldia, Mangalore is now actually generating this greater return. And what I have explained too in many investor meetings is that, when you start these terminals, the first objective is to get that to 80%, 90% capacity utilization and so the products that you handle at the start are not necessarily the higher-value chemical products or revenues. So you just start the first product. But as time goes on and as the terminals become established in the particular location, you start handling higher-value and, therefore, higher-margin chemicals.

Now let me give an example out of Kandla. In fact, I had the same question to my own marketing team when we had a review last -- a few days ago at (inaudible) and I'm really pleased they gave a summary of what kind of products we're handling in Kandla. They are much different to when we started about a year ago. They are much higher-value chemicals. The rates that we charge are higher for those chemicals, actually those products than what we -- but that -- that's the reason why now -- and that's not bad just 1 year after commissioning Kandla so that we have these higher-value chemicals. So I think, I believe -- I will not, of course, make exact forecast quarter-by-quarter, but I will -- I believe that these higher EBITDA rates and margins that we're seeing in liquid terminals is sustainable. And I think this is the long-awaited kind of return that we would expect to see.

And look, we have more capacity coming onstream in Mangalore, the new 50,000-kiloliter project, which is about to start, and the new 12,000-kiloliter project in Haldia that I just mentioned that the Board approved yesterday. These are all going to add to the EBITDA in this division.

So at long last, we are now seeing the first evidence as quarter 2 was there. You can always see -- you'll be able to see in quarter 3, quarter 4 and going forward as to whether these figures are -- at the moment, our expectation is that we'll be able to sustain this type of profitability in the liquid terminal division going forward.

--------------------------------------------------------------------------------

Pritesh Chheda, Lucky Investment Managers Private Limited - Analyst [28]

--------------------------------------------------------------------------------

Just asking, is it the...

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

I'm sorry to interrupt, but maybe request you to return to the question queue for follow-up questions as there are several participants waiting. (Operator Instructions) The next question is from the line of Shaleen Kumar from UBS.

--------------------------------------------------------------------------------

Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [30]

--------------------------------------------------------------------------------

Congratulations, sir, on a very good set of numbers. Just on the ESOP bit, do you want to -- I want to ask you how many employees are going to -- could benefit because of this ESOP scheme?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [31]

--------------------------------------------------------------------------------

That has to be decided by us, the managing director, depending on performance. So obviously, we will select that, but it'll be the senior staff at a certain level. So they will be senior staff. It won't be obviously all the employees of the company. So they'll be senior staff. But I think it -- obviously, it does depend on who deserves it, who doesn't. So those decisions will be made by us and -- accordingly. But it'll be a small number of senior staff, let me say. It won't be like 100 people or whatever it is. But it will be senior staff who we really feel are the key people who are driving the execution of the strategies that we've outlined. We will reward accordingly.

--------------------------------------------------------------------------------

Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [32]

--------------------------------------------------------------------------------

All right. Great. So we are planning to give 17 million -- around 17 million ESOPs, right, at face value. That is a noncash expense of around INR 280 crores at the current share price value.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [33]

--------------------------------------------------------------------------------

Which will be spread out over the 3 years. Obviously, we've taken INR 154 crores of that in quarter 2 that accounting entry, and there will be some in quarter 3, some in quarter 4. And then in -- obviously, the rest of it. But the bulk of it would actually be in this financial year, and then there will be smaller amounts in the next 2 financials. But the bulk of it, (inaudible) we are apparently supposed to take most of it upfront rather than -- it's our approach. It's not equal division over the 3 years. So bulk of it will be -- but yes, your calculation is correct.

--------------------------------------------------------------------------------

Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [34]

--------------------------------------------------------------------------------

Yes. No, I appreciate that you're really taking care of your employees. Considering your annual employee cost is around INR 50 crores and sudden INR 280 crores, it's pretty good. I appreciate your -- I just want to understand like what happened -- this is like a pretty big jump considering the current employee cost you have. So is it more of a retainer thing you think, competition is coming in?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [35]

--------------------------------------------------------------------------------

It's a good point, and I would like to actually explain this. Actually, we should have done it earlier, to be very honest with you. Many companies have done the employee stock purchase plan, obviously, for many years. So we've been considering it, but we never did it. We should have actually done -- so top of it, to be fair, we should have done that because productive performance over the last 5 years has been so good, but people were just getting a normal salary. So I think there is some element of the reward for last 5 years. But really, the bulk of it is going forward. Because we do want to retain these key staff, key managers, senior managers because they are the ones who are executing on the ground every day. And what we're asking them for the next 5 years is far better than what they did in the previous 5 years.

Let me explain. I mean you get sight of the work all over India. I think, actually, it's positive not just as a reward for senior employees who are delivering it, but as I said, it's very, very key that, to incentivize the senior management to actually achieve it because shareholders will benefit. If we have -- if we are able to achieve this next 5-year plan, what we have in detail, then I think people will -- the shareholders will be very happy in terms of impact on capital gains and market capital and all the rest of it.

But the reward can also be to the key management who is delivering this, and therefore, they're incentivized also. In fact, it's quite interesting that, for the first time since we announced it in quarter 2, I can see that people already working hard for that. I mean people are even paying attention to the share price. So I think it's good that shareholders and key management are looking at the same, similar goals. But as I said, I think (inaudible) is give a strong portion, strong incentive to key management who are delivering this 5-year plan to actually achieving our (inaudible) plan. And that part is very crucial because the more that they achieve in a faster way, it's good for shareholders, and it's good for them as well. And of course, there's a standard locking period. You know that. So retention is important that, look, you stay with the company and you'll keep these rewards. That's obviously important because some of these key staff that we have in Aegis, they're very, very, let's say, how should I put this? They're very key. We do not want to lose them.

--------------------------------------------------------------------------------

Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [36]

--------------------------------------------------------------------------------

Sure. No, no, fair point. I just wanted to understand the rationale behind it. One last question, if I can squeeze in, is with -- is for Murad, sir. In terms of CWIP plus asset, I could see that it's a decent jump, and I believe a lot of it will be put in to Kandla, so how much of the CapEx is left? Or what kind of CapEx is there for next 3 years in terms of quantum or cash also will happen?

--------------------------------------------------------------------------------

Murad M. Moledina, Aegis Logistics Limited - CFO [37]

--------------------------------------------------------------------------------

For the CapEx are you saying?

--------------------------------------------------------------------------------

Shaleen Kumar, UBS Investment Bank, Research Division - Associate Director and Analyst [38]

--------------------------------------------------------------------------------

Yes. Yes. Yes. Yes.

--------------------------------------------------------------------------------

Murad M. Moledina, Aegis Logistics Limited - CFO [39]

--------------------------------------------------------------------------------

Yes, we've announced close to, I think, around INR 500 crore of CapEx, out of which, I think, INR 400 crore will still come into the books in this year and the next year.

--------------------------------------------------------------------------------

Operator [40]

--------------------------------------------------------------------------------

The next question is from the line of Sandeep Mathew from SBICAP Securities.

--------------------------------------------------------------------------------

Sandeep Mathew, SBICAP Securities Ltd., Research Division - Analyst [41]

--------------------------------------------------------------------------------

Sir, just based on the numbers you mentioned on the retail -- I believe, retail distribution of 10,000 per metric ton, would it be fair to say that about 42% of our LPG EBITDA this quarter was from this segment alone and this subdivision alone?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [42]

--------------------------------------------------------------------------------

No, no, no. You're mixing up things. I said INR 10,000 a tonne was Autogas, okay?

--------------------------------------------------------------------------------

Sandeep Mathew, SBICAP Securities Ltd., Research Division - Analyst [43]

--------------------------------------------------------------------------------

Only for Autogas, is it?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [44]

--------------------------------------------------------------------------------

Only for Autogas. The other one that stays the same, around INR 2,500, INR 3,000 a ton for the cylinder business and for the bulk industrial. So (inaudible) in the market where you seem to work out what contributed -- each segment contributed to EBITDA.

--------------------------------------------------------------------------------

Sandeep Mathew, SBICAP Securities Ltd., Research Division - Analyst [45]

--------------------------------------------------------------------------------

No. Perfect. That's helpful. Sir, the second thing was there's been talk about, obviously, BPCL privatization. Considering that they're one of the largest importers of LPG in the country, do you see any change in dynamics longer term in risk to commercials that we have ongoing with them? Should there be a change in management?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [46]

--------------------------------------------------------------------------------

There are many ways of answering this. Let me put it in -- first of all, your guess is as good as mine when this so-called privatization will happen. I think it'll take a little longer than people expect. People think it'll happen by March 2020.

But anyway, look, main thing is whoever is the owner of BPCL, they would like to sell more LPG because it seems to be growing very well, et cetera. So I think they will want to deliver -- they'll want to have the cheapest delivered LPG. In other words, the owner of BPCL doesn't really matter. This is really a commercial matter. Whoever is the owner wants to make as much profit as possible. Therefore, they want the cheapest LPG as possible. What we have been trying to explain over the last 5 years, I think, that -- is that Aegis now is the cost leader of LPG imports because of all the infrastructure we've built vis-à-vis the large capital, the VLGCs and the evaluation of that.

So it's not because a change of ownership will change that. Whoever is the owner will want to make as much profit as possible, and it's not because they like our face, but it's because we will -- we have the infrastructure to give them the cheapest LPG delivered. That's what makes the difference. I don't think that changes. In fact, if you want me to be positive about it, I'm always optimistic, perhaps it will mean more expansion and faster decision making. The public sector is a little slow. So I think that's the best way to do business. That doesn't depend on the owner but depends on maximizing the customer profits, and that's what Aegis is here to do as far as logistics is concerned.

--------------------------------------------------------------------------------

Sandeep Mathew, SBICAP Securities Ltd., Research Division - Analyst [47]

--------------------------------------------------------------------------------

Sure. And just on ITOCHU ROFR expiry, when I -- if I remember correctly, the date was sometime in 2020. Have you heard back from them on any ROFR proposal for any of the other IPG terminals?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [48]

--------------------------------------------------------------------------------

Well, interesting you mentioned that. I had a 3-hour dinner with them last night before taking the first flight out. The question didn't even come up at that dinner. So at the moment, we are completely focused on enjoying, if I can say that, the excellent performance of the Haldia LPG terminal where they have a 19.7% stake. They're very excited that we are double the budget. And their senior management in Tokyo is saying that this is the most successful venture they've done in India. So that's what happens when you joint venture with Aegis.

But at the moment, no further decision from them on any -- taking any other stakes because I think their management is -- ITOCHU management is basically saying, "Let's see how the Haldia performance performs for some more time" before they take any other decision. I believe the date is 2022 for the expiry of that right at first refusal as far as the option is concerned, which is another 2.5 years or something like that. And so they're in no hurry at the moment. And quite frankly, I can just say that we're happy to keep more of the earnings rather than diluted (inaudible).

--------------------------------------------------------------------------------

Sandeep Mathew, SBICAP Securities Ltd., Research Division - Analyst [49]

--------------------------------------------------------------------------------

No, but again, understandable, sir. And just one final question. Did we bid for the KGPL tender that was floated by BPCL last year? And do we know anything at all, if at all, on what is the status of that tender? Because that will be a very, very important part of demand visibility for us for the Kandla terminal.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [50]

--------------------------------------------------------------------------------

Answer is no.

--------------------------------------------------------------------------------

Sandeep Mathew, SBICAP Securities Ltd., Research Division - Analyst [51]

--------------------------------------------------------------------------------

We did not bid, is it?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [52]

--------------------------------------------------------------------------------

No.

--------------------------------------------------------------------------------

Operator [53]

--------------------------------------------------------------------------------

The next question is from the line of Chirag Vakharia from Budhrani Finance.

--------------------------------------------------------------------------------

Chirag Vakharia;Budhrani Finance;Analyst, [54]

--------------------------------------------------------------------------------

I just wanted to understand, since you launched the expansion of Haldia liquid terminal, what is the current utilization for the current facility?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [55]

--------------------------------------------------------------------------------

Oh, it's 100%. We've run out of capacity, which is why we're building another 12,000 kiloliters. So it's full utilization and has been for some time. And that's what triggered the next expansion, and the beauty of our position is that we can have a modular approach in terms of number of times we can actually increase it like this. So its business is strong.

--------------------------------------------------------------------------------

Chirag Vakharia;Budhrani Finance;Analyst, [56]

--------------------------------------------------------------------------------

If you were to expand to another 10,000, is that space enough to expand there?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [57]

--------------------------------------------------------------------------------

Yes, there is. But right now, we are only looking to expand it by 12,000, but there is more space.

--------------------------------------------------------------------------------

Chirag Vakharia;Budhrani Finance;Analyst, [58]

--------------------------------------------------------------------------------

Okay. And sir, what is the utilization of Pipa liquids?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [59]

--------------------------------------------------------------------------------

It remains exactly pretty much as it was last earnings call, which is around 25% utilization. No change.

--------------------------------------------------------------------------------

Chirag Vakharia;Budhrani Finance;Analyst, [60]

--------------------------------------------------------------------------------

Okay. And sir, one last question on accounting. There is a jump in other financial liabilities to INR 300 crore -- INR 307 crores from INR 20 crores. So what is that on account of?

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [61]

--------------------------------------------------------------------------------

I'll give it to the CFO.

--------------------------------------------------------------------------------

Murad M. Moledina, Aegis Logistics Limited - CFO [62]

--------------------------------------------------------------------------------

That is account of -- on account of change in accounting for lease or AS 116.

--------------------------------------------------------------------------------

Operator [63]

--------------------------------------------------------------------------------

Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments.

--------------------------------------------------------------------------------

Anish K. Chandaria, Aegis Logistics Limited - Vice Chairman, CEO & MD [64]

--------------------------------------------------------------------------------

Thank you all and interesting questions as ever. I hope I have been able to really indicate to investors that, not only have we had an excellent set of results for quarter 2, but the outlook is looking strong for the next 2 quarters and also in the medium term as a result of the projects that we've undertaken all seem to be coming onstream now. And even for this -- that we have been waiting for, which (inaudible) the Chakan pipeline is ready. So I think outlook is very good. And I hope that you'll be able to see that quarter-by-quarter in all the earnings results. Thank you very much for attending. Bye.

--------------------------------------------------------------------------------

Operator [65]

--------------------------------------------------------------------------------

Thank you very much. On behalf of Aegis Logistics Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.