Ladies and gentlemen, good day and welcome to Mangalore Refinery and Petrochemicals Limited Q1 FY26 results call hosted by Prabhudas Leeladhar Private Limited. 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 star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Swarnendu Bhushan. Thank you, and over to you.
Thanks, Bhavya. On behalf of PL Capital, we would like to welcome all the participants to Quarter One conference call of MRPL. From the management, we have Managing Director Mr. M. Shyamprasad Kamath. We have Director of Finance and CFO Mr. Devendra Kumar. We have Director of Refinery Mr. Ananth Kumar. We have ED Projects Mr. B.H.V. Prasad, ED Marketing Mr. Deepak Prabhakar, and Group General Manager Finance Mr. Suhas Chandra Pai. I would now like to invite the management to share their opening remarks on the results, post which we will follow the session with Q&A. Over to you, sir.
Yeah. Good afternoon, everyone. And thank you for joining us on this first quarter earnings call. I'm M. Shyamprasad Kamath, Managing Director and CEO of MRPL. Along with my leadership team, I will walk you through our Q1 performance, the operating environment we faced, and our near-term priorities. First, on the operating highlights, throughput. We processed 3.52 million metric tons of crude and other feedstocks. Although the volumes were lower year on year, primarily because of the plant turnaround, on April alone, the company set a record processing of 1.51 million metric tons, underscoring the inherent capacity of the refinery once all units are online. On fuel and loss and product yields, the distillate yield for the quarter was 80.97%, in line with what we have achieved in our previous quarters. The company posted a fuel and loss of 11.41%.
However, our adjusted F&L, due to the turnaround, the number would be somewhere around 10.1% for the quarter. Financial performance, revenue from operations came in at INR 20,983 crores, reflecting both the lower throughput and almost a 20% drop in the benchmark crude prices compared to last year's Q1, and an 8% drop sequentially. Gross refining margin averaged at $3.88 per barrel, down from $4.70 per barrel in Q1 previous year and $6.23 per barrel in Q4 FY25. Our EBITDA was at INR 218 crores and a PAT loss of INR 272 crores. Roughly, that loss is attributable to the plant shutdowns and the inventory loss. Both are transient effects. On the market context, global refining margins were better during the quarter due to supply disruptions and normal demand growth. Refinery closures in FY26 are expected to support the cracks going forward.
However, crude price shocks impacted the bottom line in the last quarter. On the domestic front, the diesel demand grew at almost an average of 2% year, while the gasoline remained resilient at around 7% growth. Both these trends support our marketing focus in the southern and western part of the country. All our major units are back in service now, and we expect the throughput in Quarter Two to be above 4.3 million metric tons, with GRMs already showing a stronger in July. If the crude prices do not fluctuate too much, we should be able to post good numbers going ahead in the rest of the remaining quarters this fiscal. In short, Q1 was operationally challenging but strategically necessary quarter. The refinery is now positioned to run at historically high levels.
Now, I hand over the call to our Director of Finance and CFO to talk about the financial details.
Good afternoon, everyone. This is Devendra Kumar. I will briefly let you know the key numbers and reasons behind them. The top line contracted largely because of, first, about 0.8 MMT reduction in throughput versus the previous year, Quarter One, due to plant phase two shutdown. Point two, about 20% year on year in fall in benchmark crude prices. Lower volumes, especially at the time of good cracks in June, resulted in lower EBITDA, while depreciation at INR 363 crores and finance costs at INR 255 crores also rose slightly during the quarter. Roughly, the loss is attributable to shutdown turnaround and inventory valuation due to the impact of crude price slide. The refinery returned to full service in late June. July cracks are already above the Q1 average. There are some points which I would like to highlight.
Operating expenses came in at INR 601 crore, which is slightly lower than the previous quarter due to shutdown effect. The fuel and loss impact for the quarter is transient, as MD sir has already explained in his talk. Finance costs at INR 257 crores rose 6% quarter on quarter due to short-term debt, which was raised to fund the turnaround and related activities. Gross debt stands at INR 13,608 crores. Net worth is INR 12,657 crores, giving a debt equity of 1.08. The ratio is expected to improve as earnings rebound in the coming quarter. Q1 CAPEX was INR 537 crores, primarily due to the shutdown expense. Total annual CAPEX is expected to be around INR 1,000 crores, including the shutdown expenses, which have already been incurred. With all units back, we are targeting GRMs in the high single-digit range for Q2, supported by stronger middle distillate cracks and internal fuel loss reduction initiatives.
There are specific tasks assigned to the team to bring up cost leadership in the organization. We are also very selective on the CapEx spending, and the objective is to reduce the debt as far as possible. Despite a deliberately compressed quarter, our financial foundation remains resilient, and the refinery is now positioned to deliver materially higher throughput. We remain committed to prudent capital allocation, disciplined cost management, and value-accretive growth. Thank you for your time. We are happy to take your questions now.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ramesh from Nirmal Bang Equities Private Limited. Please go ahead.
Thank you very much for the call. So my first question is, how much was the inventory loss in $ per barrel in the first quarter? And if you didn't have the shutdown, what would have been the GRM in the first quarter? Hello?
Yeah, yeah. The GRM, if the shutdown was not there, we would have been somewhere around $8. So the impact of the inventory loss is around $2. And with no shutdown, it would have been another $2. So overall, it could have been closer to around $8 would have been our GRM.
Okay. So if you're looking at the current cracks, since you mentioned high single digits, would it be similar to this $8 higher or lower? What is the kind of current run rate in terms of the cracks price and GRM?
It could be slightly higher than $8 per barrel.
Okay. So yeah, if you look at your paraxylene plant, what is the kind of operating rate you had? How much of sales you had in paraxylene? And how much of the profit or loss from paraxylene is included in the first quarter result?
We are not operating the complex on a reformate mode. And we continue to operate the complex on reformate mode only. And the margins from the PX complex, while we have operated on the refining margin, was around almost $0.50 per barrel.
The reported margin about $0.50 is from the reformate to paraxylene. Okay, fine. How do you see the paraxylene prospects? Because right now, if you see paraxylene, PTA, polyester chain under pressure, so do you see any plant closures like in refining? Do you see any signs of recovery? Or should we count on just the refining business to do well, say, in the next nine years?
In the short term, the PX outlook appears to be not coming up, as you mentioned. And we do look at the kind of economics on which mode of operation and then take a call.
Understood. So one final thought. In terms of marketing, how many retail outlets do you have? And what is the kind of retail margin that you have included in the first quarter result? And obviously, there's been some reduction in that. So what is the kind of number of retail stations you have planned to add? And the growth in retail volumes you can expect in FY 2026 and 2027?
As of date, we have about 170 retail outlets which we have commissioned, and during the year, we plan to add probably another 100 retail outlets, and our target is to go closer to 300, but yes, our target immediate short term is to achieve another 100 in this financial year. On the margin front from the retail, we brought in about INR 60 crores during the quarter.
60 crores. And how would have been the retail sales volume? If I can get that information.
About 68,000 KL.
68,000 KL. This is for the quarter, right?
Yes.
And how do you see that increase by the end of the year? And what can you do, say, in FY 27 once these 270 retail outlets are in place?
We did about 230 KL, TKL last financial year. Our target is to reach at least to go to around 300 to 325 TKL this year.
Okay. And how much would that increase, say, in FY 2027, so on the 270 outlets by the end of the year?
Can you come back on the question, please?
So based on the 325,000 liters you would do by the end of FY 26, what is the kind of growth you can expect in the retail sales volume in FY 27 once you have the 270 retail outlets by the end of FY 26?
We target to achieve about 500 TKL.
500 TKL. Okay, sir. Thank you very much. I will come back in the queue.
Thank you. Before we take the next question, we would like to remind participants to press star and one to ask question. The next question is from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Yeah. So I have a few questions. Firstly, you mentioned the net debt number as how much? 12,600 crore?
Yeah, yeah. Correct.
So it was INR 12,800 crore, which has come down to INR 12,600 crore QOQ, right?
Yeah.
Okay. Second is on your, I mean, how is the polypropylene plant doing currently? What kind of deltas are you realizing? Is it generating any profit, or still it is under pressure given that broader margins are not good?
Polypropylene plant at 100% capacity. Even during the quarter one also, we could manage to run that plant because the feeding unit was operational, and then we were managing it. On the margin front, since the PTA is produced, if I can say, through the crude directly, and it's not from the Naphtha, the margins are better compared to looking from an ethylene cracker.
So it's like crude-propylene-polypropylene, right? That is the change, right?
Yes.
Versus propylene versus polypropylene, the margins are okay, or that is not that great?
That is okay. That is okay.
Okay, so standalone, if I take that, assuming that your refinery supplying propylene is a third party, then how is the plant doing?
You mean to say somebody buying propylene and then producing polypropylene?
Yeah. I mean, if I separate this plant into a different unit, and I assume that it is buying from your refinery the propylene, then what is the economics?
That could be. We don't look at that kind of bifurcation because ultimately, when we look at an overall economics, we look at all these things put together.
And last question is on this OMPL. I mean, your aromatic complex. So this GAIL PTA plant should be ready, I think, in the next one year. So right now, still the PX economics, if that plant comes, still the PX economics are not great to produce PX and continue with reformate, or there is a case for shifting the mode to PX then if that GMPL plant comes?
It is again subject to economics. If we are able to strike a deal with GMPL, definitely we would like to give it to the next door. But it is all subject to economics and what kind of deal we are able to strike between the two companies.
Okay. So right now, it will continue on that reformate mode. And you are saying you are getting something like $0.05 per barrel from there, right?
Yeah.
Okay. Okay. Thank you so much.
Thank you. If I heard you correctly, the debt stands at 13,608.
Yeah. That is gross. Net debt would be?
Same.
Net debt is also same, 13,608?
Yes.
Okay. Okay. Thanks. Yeah.
Thank you. Participants, to ask a question, you may press star and one. The next question is from the line of Pratyush Kamal from InCred Equities. Please go ahead.
Hello, sir. Am I audible?
Yeah, you're audible.
Yeah. So I just wanted to understand this mathematics of $0.05 per barrel whenever you are getting this benefit through the petrochemical integration. So what is this about? And second was regarding this reformate mode. So when you're saying that you're running this on a reformate mode, what does it actually mean?
See, the complex we can operate. We have shut down the paraxylene part of the complex. And what we do is we operate it to a phase where we make this reformate, which is the base blend stock for either making paraxylene or it can go for an MS blender. So we are operating only part of the complex where we are selling this reformate, and we are extracting some benzene also and adding value to it.
How is this reformate? Yeah. How is this reformer made? Is it a factor or something else?
I will explain. I'm Nandakumar, Director of Refinery. This aromatic reformate is actually the intermediate formed first. Then it is further converted to produce paraxylene. So what we are presently doing is we produce the reformate at a basic first converter unit, and then we pack it as a blend stock and sell it. If PX margins were good, hypothetically, then we would have processed further the same reformate and made PX, which is presently that market is not that great. You are asking where the reformate is made. So reformate is made in intermediate produced in this complex.
Understood. This reformate is ultimately made from the naphtha or through the reformer? How do you actually make the reformate?
It's made from Naphtha, actually.
Understood. And this again, so what are the different products other than PX to which you can use this reformate? You can use first in the PX production, other in this MS production or MS blending. So is there anything else also which you can do through this reformate, and you can ultimately get the benefit whenever the margins are high in that product?
Presently, yes, your understanding is right. Basically, it can be made for MS blending. PX and other components, like basically benzene, which is a byproduct to use PX. So these are the main ones. We have also started some amount of toluene extraction from the complex, and that also we are selling as a product now. Yeah. We just started last year.
Understood. What is this $0.05 per barrel addition to the petrochemical all about?
This is that margin which we have estimated coming from the paraxylene complex.
Understood. No issues. Thank you so much. That's it.
Thank you. The next question is from the line of Krishan Mundra from DAM Capital. Please go ahead.
Hi, sir. Thanks for taking my questions. Two sets of questions. Firstly, the first one, sir. Could you share what is your current or what was your Russian crude blending during the quarter, and what was the discount that you realized on this crude?
See, the kind of Russian barrels that we are currently getting is something similar to an average, whatever the Indian as a country as we are importing. There is no much difference in that. And the discounts also are in the same range what the Indian other counterparts are getting. Even though the discounts have come down slightly, but yes, it is more or less we are in the same lines at what the other Indian refineries are getting.
Which would be like $2.5-$3 range delivered in India. Would that be a correct assumption?
You can say plus minus something there.
Okay. Okay. Understood. And sir, the second question, I mean, I know it's early days, but still, if you could share your assessment of the impact of the recent sanctions on the Russian crude that has been imposed by EU? So I mean, what is your assessment as far as your financials are concerned, your business is concerned, and the broader market in general?
We are still trying to assess because we need to look at the fine print. Yes, as of now, one of the country's refiners' names have come up, but we are still assessing it. It is not just to what extent the price caps are there, how the other things are going to be, how there is impact on the fleet. We are looking at still and trying to assess that thing now. But as we speak, we have not seen any challenges getting the crude, at least for the balance month of July part, whatever are going to come.
Okay. Okay. Understood, sir. Thank you.
Thank you. A reminder to the participants. You may press star and one to ask a question. The next question is from the line of Naresh Kataria from MoneyCurves Analytics. Please go ahead.
Hi, sir. Just one question. What is the share of diesel in your product rate? And I believe diesel cracks are higher. Any thoughts if these higher cracks are sustainable due to anything going on globally?
See, our middle distillate, when I say middle distillate, it is ATF plus diesel. We are at around almost 50%. And again, if I have to further split, if I have the diesel, it is somewhere anyway between 38%-40%. So we have this flexibility of trying to swing some amount between the two products. I can go up to say, stretch it up to around 42% as middle distillate. As diesel, sorry.
Sure. So my second question on the sustainability of higher diesel cracks. Are diesel cracks higher currently? And what do you think would sustain? I've seen at least predicting higher cracks based on futures traded on U.S. that diesel is going to sustain higher for some time. Any thoughts and what is the situation?
Currently, the diesel cracks are high compared to what it was even in Q1 also. They are comparatively higher. It all depends on how the recent sanctions are going to turn around. We need to really, that is why I said, we need to really look at those fine prints, and going forward, currently, as if the real sanctions come in, we expect that the diesel cracks are going to be further higher, and it all further depends on how the U.S. is also going to look at this particular aspect, so it is going to be we have to do a watchful on this particular aspect.
Understood. The last question is, I've seen over the years you've reduced your fuel and loss, though it is higher compared to other refineries, but the trend is down. So if the fuel and loss drops by 1%, does it mean you get 1% extra output for the same barrel of crude? Is that a fair understanding?
Yes. You are right.
That adds to margin, right? Because we paid for the brand, we paid for operations, but you are losing and wasting less.
It adds to your bottom line.
Got it. Got it. Thank you so much.
Thank you. The next question is from the line of Ramesh from Nirmal Bang Equities Private Limited. Please go ahead.
Thank you for the follow-up. So you mentioned at the beginning that you are expecting refinery closures. Is there some number you can share in terms of how much of the Asian and global capacities are expected to close this year? And what is the trend you expect between 2026, 2027 in terms of refinery closures?
While we don't expect any closures in the Asian market, there is a closure that has been declared, one in the U.K. and one in the California region.
What is the kind of capacity in barrels per day or per annum that's being closed down?
I am sorry, I'm not having the numbers right now, but we can share it to you subsequently.
That's okay. So just dwelling on this refining margin, you are over 10% which is in the bottom product, right? And if you see VLSFO margins are about $10 positive. And the interesting thing is compared to the long-term negative margins of $15, HSFO discount is now about $3- $5. So in the bottom of the barrel, how do you see your own ability to increase the VLSFO component? These are going to be an incremental upside to your GRMs?
First of all, the bottom 7% or 8%. It is not 10% now. We are at around 7%-8% on the bottoms. This entire 7%-8% is not coming from VLSFO. It also includes whatever coke and sulfur also that is produced. Currently, our strategy is not to make VLSFO rather than make more distillates.
Okay. Fair. And lastly, if I can just ask you on the polypropylene business, can you share the $ per barrel that is included in your margins from the polypropylene sales from your FCC unit?
You are asking the sales value of the PP? Margins. Margins. So I don't think we have separately no separate margins we have done for the polypropylene.
Okay. So going forward, how do you see the economics of this polypropylene business from the FCC cracker? Because globally, the propylene-polypropylene chain is bleeding. You see whether it is PDHPP or the traditional crackers. So is there any rationale in running this unit, or do you expect the recovery in the overall polypropylene spreads and margins going forward in terms of the economics? How do you see that?
What we understand is the polypropylene market is pretty stable. It is the polyethylenes which are bleeding.
Okay. Okay. Right. So thanks a lot. Appreciate it. Thank you.
Thank you. The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go ahead.
Thank you, sir, for the opportunity. A couple of questions. We mentioned that we have a Fuel and Loss of 10.6% in the quarter. How much reduction we can achieve on this Fuel and Loss when the plant operation normalizes?
See, we were quarter one, our fuel and loss was around 11.4%, and our normalized thing was around 10%, so we will be back to around 10% range. That is what we are outlooking in quarter two, and we have certain other projects which have lined up for reducing the fuel and loss, so that is where we are targeting another almost 1% reduction in the overall fuel and loss going forward.
Thank you. Another question was about the export. We have the export significant share of diesel. So how much of our diesel is currently placed in the European market?
See, our diesel is typically we don't directly sell our diesel into the, as I can say, the end customer. It is all picked up through a tendering process by a trader. So we don't foresee as of now any of our products coming into that kind of a situation. And mostly, our diesel, what we understand, is not been going into the European market.
Right, sir. And one last question was about the isobutyl benzene project that we have undertaken.
Isobutyl benzene?
Yeah, isobutyl benzene. Yeah. Could you update us on the project and what could be the benefit of that plant?
Yeah. We have completed the factory acceptance test of the project. Now, as we speak, after the test, the system has been dismantled from the factory, and it has been brought in, and the erection is in process. We are expecting by end of August to have a mechanical completion and probably start the trial runs, say, by third week of September or end of September.
Thank you, and could you also remind us about the capacity CapEx and what could be sort of the operational margin from this project?
Sorry, it is a pilot plant. It is not a full-scale plant. It is a pilot plant, demo plant, pilot come demo plant. It's not a commercial plant. It is a demo plant based on our technology. So once we are able to establish the product quality and get the customer satisfaction, then we will get into the full-scale to a commercial scale.
Right, sir. Thank you.
Thank you. The next question is from the line of Rao Thakur from NVS Brokerage. Please go ahead.
Sir, just wanted to know what are the days of shutdown in this quarter, sir?
In this quarter, there is no shutdown, please. We have completed our turnaround, and the complex right now is operating at full capacity.
Okay. Okay, boss. That's it. Thank you.
Participants, to ask a question, you may press star and one. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for the closing remarks.
Yeah. So having said that, thanks for attending the call on behalf of the management of MRPL. If you have further certain queries, you can contact via mail, and we'll try to answer that as soon as possible. Thank you.
On behalf of Prabhudas Leeladhar Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you all. Thank you.