Ladies and gentlemen, good day, and welcome to the Mangalore Refinery and Petrochemicals Q4 FY 2025 earnings conference call hosted by Dolat Capital Markets Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Yogesh Patil from Dolat Capital Markets Private Limited. Thank you, and over to you, sir.
Thank you, Rwik. A very good morning to everyone. I would like to extend a very warm welcome to all the participants and the top management of MRPL. We have with us Mr. M. Shyamp rasad Kamath, Managing Director, Mr. Devendra Kumar, Director of Finance and CFO, Mr. Nandakumar V, Director of Refinery, Mr. B.H.V. Prasad, PD Projects, Mr. B. Sudarshan, PD Refinery, and Mr. T. Subhash Chandra Pai, CGM Finance. I will now hand over the call to Managing Director, Mr. Kamath sir. Over to you, sir.
Thank you, Yogesh. A very good morning to all for joining Mangalore Refinery and Petrochemicals Limited's earnings call to discuss our fourth quarter and full year results for FY 2024-2025. The results release was uploaded to the exchanges and are also available on our website. Just to recap the major highlights, for the quarter four, the gross refining margin was $6.23 per barrel. Our PBT for quarter four was 584 Cr, which is 25% above our Q3 performance. For the financial year, our GRM was $4.45 per barrel, and PBT was INR 113 crores. Our net debt to equity stands at 0.99, and the total debt as of 31st March is INR 13,227 crores. On the operational highlights, crude throughput hit at 18 million tons per year, which is 120% of our nameplate capacity, which is a new record for us.
The fuel loss was at 10.09% for the Q4, and with the ongoing grid infrastructure project, we are expecting that this will be further coming down to by around another 0.3% or 0.4% in the next 18- 24 months. The distillate yield for quarter four was almost 83% and 82% for the full year, which reflects on our focus on value-added barrels and not just volumes. On the product flexibility, our aviation turbine fuel output has increased by 31% year-on-year basis. The reformate from the aromatic complex has improved by 50%, and benzene and other value-added products by 65% year-on-year basis. During the year, we have processed six new crudes, including three heavy grades from Brazil and Venezuela and another three new grades from Russia.
In terms of milestones, we have commissioned our new bitumen train, wet gas scrubber in the PFCC unit, and our marketing terminal at Devangonthi, Bangalore, has already been commissioned and are already adding to the higher margins and reliability. Our isobutyl benzene pilot plant is on track, and we are targeting to commission by August, September this year. Our focus is on operational de-risking through our desalination plant, energy-saving retrofits, and reliability upgrades, with which we are targeting to operate more than 100% capacity utilization again. Our target is around 17 million tons this year. Marketing and downstream expansions on the retail network. As of 31st March, we have 167 retail outlets, and we have set a target of 150 retail outlets addition in this year. We have added three retail outlets which are commissioned in Tamil Nadu already, so we are now present in three states.
On direct sales, our diesel volumes have grown very sharply, and our polypropylene sales have hit an all-time high of 473,000 metric tons. In short, our Q4 delivered sequential margin recovery, and our medium-term strategy is aimed at margin uplift and feedstock agility. We remain confident of sustaining more than 100% utilization while de-risking margin through agile crude optimization. With that overview, we are happy to take your questions. Thank you.
Thank you, sir. We will now begin with 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 comes from the line of Kishan Mundhra from DAM Capital. Please go ahead.
Hi, sir. Thank you for taking my question. So I have two questions. So firstly, if you could highlight if there was any inventory gain during the quarter in your GRM?
Yes. During the quarter, there was an inventory gain of around $0.42 per barrel.
Okay. And sir, as a follow-up to this, I mean, the benchmark Singapore GRMs were weaker, actually, and your performance was relatively much better. So were there any other factors that play a part apart from inventory gains which led to you reporting a better GRM compared to the benchmark?
As I mentioned, our focus has been on improving on value-added products, and we have tried to manage our value addition through maximization on an economic basis, whichever products are bringing more economics, like the aviation turbine fuel or the benzene molecules we have tried to maximize.
Okay, and sir, the second question is, can you give us a number of what is the total throughput or sales that you are doing from your retail outlets currently? The exit run rate for the quarter.
On an annual basis, I have the number. It is about 230 TKL we have done during the financial year 2024-2025.
Okay, and any tentative target for FY 2026?
FY 2025-2026, we are targeting our target is to cross 300 TKL.
Okay. Understood. Thank you, sir. And this is the last question, if I may, sir. Is there any CapEx target that you have for FY 2026-2027?
You're targeting 2026-2027 or 2025-2026?
FY 2026 and FY 2027, two years.
FY 2026, our target is going to be in the range of around INR 1,000 crores, and FY 2027 also, it could be in a similar range.
Understood. Thank you, sir. Thank you.
Thank you. The next question comes from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Yeah. So sir, firstly, just I was not able to fully get it. So you mentioned 0.34% reduction in fuel and loss, right, from infrastructure project at your opening remarks?
Yes.
What infra project is it?
It's a power infrastructure project, power import infrastructure project.
Okay. So it will be like external power, which you will be replacing from infrastructure.
Yes. Yes.
Okay. Anything on the green hydrogen tender that you released a few years back?
It is under evaluation now. There are two projects which we are doing. The first one is on a build, own, and operate basis. For that, bids we have received, and that is under evaluation. The second one was trying to set up a smaller unit within the refinery of 500 tons per year. That is being re-tendered now. It is under re-tendering now.
Okay. 500 tons, right?
Yeah, 500 tons per year. That is a much smaller capacity within the refinery.
This is re-tendered. Okay. Okay. Fair enough. Secondly, on the marketing side, you mentioned 150 retail outlet addition this year.
Yes.
So that will take it to, say, 330, 340. That will be the network by the end of.
Yes. Yes. Yes.
And that will be 3,000 TKL you mentioned. So basically.
300. I said 300.
300,000 kiloliters. That's the number, right?
Yes. Yes. Yes.
Okay. Okay. Fair enough. And secondly, in terms of your Russian crude and Russian discounts, what were the levels in Q4, and what is the run rate currently?
See, our sourcing of our Russian crudes is more or less in line with what the Indian industry is today sourcing, and the discounts are also in similar ranges. Discounts have come down, but whatever we are getting is on par with what the industry is getting.
That's the case in Q4, and currently, sir, that's only the case, right?
Yes. Yes. You're right. Your understanding is right.
So industry number is something around 30% and $1.5-$2. So that's what it is, right?
Yeah. It is something similar to the industry numbers only.
Okay, sir. Fair enough. And last question is, I mean, this quarter, you are almost at a $6 kind of core GRM. So in terms of optimization, are we in a normalized rate right now? I mean, assuming that I know Singapore GRM is not the exact right benchmark, but if we compare with, say, $14 diesel cracks and $8-$9 petrol cracks, then $6 could be it, or it could even have been better under certain circumstances.
If the cracks what you mentioned are going to be there, then probably it is going to be slightly better than $6.
Slightly better than $6, right? Okay. Fair enough. Thank you so much and all the best.
Thank you.
Thank you. The next question comes from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Hello. Thank you very much. So in terms of your petrochemical business, there is an increase in your daily sales. So how is the petrochemical business doing now? What do you see as the output of the petrochemical business going forward?
Ramesh, sorry to interrupt you. There was some cracking. There is some disturbance in the line. If you can put your question again, please.
Hello. I will switch you down. Hello.
Yeah, please.
Hello.
Please use your handset if possible. Yes, please go ahead.
Can you hear me now?
No, you're breaking up, Ramesh. Yes. Yes. Go ahead. Go ahead.
Hello. Can you hear me?
Yeah. Yeah.
Yeah. So just wanted to understand your thoughts on how the paraxylene business is performing and how you read your prospects for that.
I'm sorry, Ramesh. There's a lot of disturbance, and there is some cracking in the voice. You mentioned something in passing, but you cannot be able to get. One question still.
Could you get to a quieter location, Ramesh?
I'm sorry. Hello. Yeah. I'm speaking on the phone. Sorry about that. So I was just asking about your performance in the petrochemical business and how do you see the outcome going forward?
We are still not making the paraxylene. We are operating and moving the product as reformate. During the last financial year, we increased our reformate production by almost 30%. We sold about 1.2 million tons of reformate, and we also improved our benzene production from the complex from 130 TMT to 200 TMT during the last financial year.
Okay. So in benzene and the reformate, are you getting margins comparable to your refining margins, or are you taking some sacrifice there?
It is better. There are better margins for that.
Okay. Now, on the marketing side, what would be the share of EBITDA from the retail sales of petrol and diesel based on the numbers you have shared?
Share of marketing in the EBITDA? See, right now, we are not reporting in a separate segment. We are reporting it as a combined one entity. We are not splitting out as how much is from the marketing.
But the refining margin is just ex-refinery, right? It doesn't include the marketing margin, right?
It is including that.
Okay. So the GRM you have reported is including marketing. All right. So if you're looking at your outlook for 2026-2027, based on the expansion in the retail outlets and assuming stable refining margins, what are the kind of delta one can expect in terms of your gross refining margin per barrel, including your marketing margins on integrated basis?
For 2025-2026, with the kind of current cracks which are going on and the crude prices which are there, we are expecting the GRMs to be in the range of around $6-$6.5, which is what is currently, which is what we saw in Q4. From the retail businesses, we are on a long-term basis; we expect that the margins from the retail should be at around INR 3 on petrol and INR 3 on diesel.
Thank you very much. I'll join the queue to wish you all the best.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Mr. Yogesh Patil from Dolat Capital Markets. Please go ahead.
Congratulations for the good set of GRM numbers, sir. And sir, I have received a few questions from the investor side. Sir, we also wanted to know the MRPL product swing ability, like ATF to diesel and the MS to reformate. Did that play any role on the higher GRM side during this quarter?
Sorry, Yogesh, the last part, I could not catch you fully. Please, if you can repeat the question.
Yeah. So, sir, we wanted to understand for the MRPL product swing ability, like ATF to diesel and MS to reformate, did that play any role on the higher GRM during the quarter four FY 2025?
Between ATF and diesel, yes, there is a play, but if you really see in quarter four, the ATF cracks were not that attractive compared to diesel in quarter four. But between MS and reformate, our first objective is to meet the domestic MS demand, where we supply to our retail outlets, our oil marketing companies, and whatever is the excess, we try to maximize from the aromatic complex.
Okay. Sir, what was our distillate yield and how it has improved over the last two to three years, and what would be the diesel and the MS yield?
Our distillate yield, say, over the, if you look at, say, 2021-2022, we were at around 77.25%, and we have now come to around 81.9% during 2024-2025, so there has been a steady increase in our distillate yields, and basically, we have been trying to now maximize on the middle distillates, where our light distillates are kind of stabilizing at around 29% to 30%.
Okay. In the next two years, sir, we see the HPCL Rajasthan Refinery and the IOCL additional refining capacities will come in the market. Then how it will impact on the domestic price realization of the oil products? And considering the one of the lowest net refining capacity, I mean, going to be added in 2025, how the cracks will pan out in FY 2026? I mean, these are the two separate questions. Mostly, one first one is on the domestic side, and the second one is on the side of global net refining capacity addition in 2025, and how the cracks, do you believe, will pan out in FY 2026?
On the domestic front, the commissioning of HRRL and the IOC refinery, yes, definitely, there is going to be a supply increase. Product supply sources will increase. However, the recent projections or the reports which have come out from PPAC indicate a robust growth in terms of both MS and diesel, where they have indicated an MS growth in the range of around 6.5% and diesel to grow around 3%. So with that kind of growth numbers happening, we are very confident that we will be able to improve our domestic sales. That is on the domestic front. On the international market, the cracks, as we speak, are around $10-$12 for diesel and ATF, and MS in the last couple of weeks or so has started strengthening.
So our outlook is that our understanding is that the cracks on the middle distillate is going to be in that range. And with the crude prices, with the over-supply of the crude, we don't expect the crude prices to further increase. So with a crack of around $10-$12, I think we will be reasonably in a better position in the next financial year.
Thanks a lot, sir. I'll come back in the queue for further questions.
Thank you. The next question comes from the line of Kishan Mundhra from DAM Capital. Please go ahead.
Hi, sir. Thanks for taking my question again. So sir, this $3-$ 5 per liter kind of a margin that you are targeting for a retail outlet, sir, if you could clarify if this is gross margin or is it net margin, net of your freight and other marketing expenses?
It's the net of everything.
Okay. Net of everything. And sir, what drives this assumption of this $3-$4 per liter? I mean, is there a formula to drive this, or is there a cost buildup kind of a thing? What is the logic of this $3-$4 per liter? I mean, I want to ask, can it be $4-$5 per liter?
As we speak, it is much higher. Okay? On a long-term basis, we expect the prices to be adjusted out, and this is the kind of margin which has been there historically also, and we expect the same thing to continue.
Okay. Any Iran oil assumption that goes behind this $3-$5 per liter kind of a margin?
Yeah. Each retail outlet, when we select, each one of them will undergo economic analysis, and if there is IRR, then we move forward on each of the retail outlet.
We carry out a detailed market study, the potential sales that is possible, and then an IRR economic evaluation is carried out before we decide a retail outlet.
Okay. Understood, sir. Thank you. Thanks a lot.
Thank you. The next question comes from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Hello. Thank you very much for the follow-up. So you mentioned healthy production in polypropylene. So given the global pressure on the margins, have you included this margin in your gross refining margin? How much would be the delta in the GRM from the polypropylene business?
See, as I mentioned, we are not separately reporting on a segment-wise, and currently, the gross margin includes everything. So we have not separated out any of the specific or petrochemicals or any marketing segments in that.
So in terms of the future outlook for your polypropylene business, what is the growth you expect in terms of your sales volume in polypropylene, given that there is a lot of competition? So how do you see that in the next one to two years?
Competition is expected because there are newer units which are expected to get commissioned. But the kind of presence and the brand image that we have established in the market, we are not forcing any reduction in the sales, forcing us to look at an export market. Our brand has been very well accepted in the markets where we are operating.
Okay. So in terms of the CapEx numbers you shared, can you give us an idea about where the CapEx is going?
It is almost 50% going in for the refinery CapEx and 50% for the new marketing kind of activities.
Okay. So going back to the previous question on the refinery capacity additions in Asia and globally, what is your sense in terms of capacity closures and the net refinery capacity addition in Asia and the global capacity, say, in the next one year?
Yeah. Basically, as far as India is concerned, the capacity growth is expected from present to 250 or 260 to 450 by 2045. So there is going to be an increase in capacity based on the demand assessment because at present, India's primary energy, the oil contribution is much, much lower than the international. I think we are just about 1/3 of the global average, let alone countries like China or U.S. So we have some margin. So till then, expansion won't be a challenge, and demand will be there. As far as international, the global scenario is concerned, there are refineries getting closed down in Europe and Australia, where there are some standalone refineries. So globally, also, there could be a kind of sustenance in the cracks for at least next medium term. That's the present outlook we are thinking.
Okay. Thank you very much, and wish you all the best.
Thank you.
The next question comes from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Yes. Thank you for the opportunity. So two questions. Firstly, so your exports would be something like 30%-35% as of now, right? That's the normalized export, right? It was higher in Q4, but on an average, that should be the run rate, right?
Yes.
And which other products and to which countries are you exporting?
See, we don't typically have a B2B agreement with any specific country. Our products are typically on a spot cargo. And in the recent past, we also have been entering into a term with the traders. So the traders ultimately will be moving the cargoes to their destination where they have back-to-back arrangements.
Okay. Got it. And which are the items which are most exported?
It is basically diesel, then we have the reformate from the aromatic complex, and ATF. Benzene.
Okay. Fair enough. And is there any expansion plans, very preliminary stage, anything which you are thinking about, or any kind of petrochemical plants where you want to raise the intensity, something of that sort?
Yeah. We are planning for some value addition to our couple of streams which are there in the refinery. The feasibility studies are going on for that.
These will be like major CapEx or should be minor?
See, it is basically some C2, C3 molecules which we have, C2, C3, C4 molecules. So we can look at it in smaller CapExs and take it out. So it is not going to be a CapEx of a mega CapEx. It's a very medium or a very smaller range CapEx, spread probably over a period of two and a half years to three years.
So this will be part of the INR 1,000 crore only that you have reported, right?
As of now, yes.
Okay, sir. Thank you so much. Yeah. Thanks a lot.
Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Somya from Avendus. Please go ahead.
This is Somya. Thanks for the opportunity, sir. So first question, within this INR 1,000 crore of CapEx, what would be the maintenance CapEx on the refinery side?
It is almost 50%.
INR 500 crores on marketing, INR 500 crores on refining, and the refining entire is almost.
No, no, no. INR 500 crores, it is not entire refinery is on marketing. Marketing is one part of it, and the balance we are looking for are some ongoing projects which are there, like isobutyl benzene, power import projects. So they are all part of that.
Can we get a rough split, sir? Just want to understand on the refinery side, what would be a maintenance CapEx within this number?
See, we have a shutdown CapEx. We have some catalyst replacements also coming. So these are the two main components of that: turnaround CapEx and the catalyst replacements.
Okay. Got it. Sir, this $6 of GRM, any broad idea would you be able to give how much petrochemicals would be contributing within this, and how much is marketing, and how much is the core refining part?
At this point of time, see, as I mentioned to you, we have not done a segmental analysis while arriving at our GRMs. So I will not be having that information right now.
Okay, sir. And also, directionally, between Q3 to Q4, would Petchem have been slightly supportive? Directionally, would we be able to say that?
It was. We did not see any difference between Q3 and Q4 in terms of Petchem marketing realizations.
Understood. Sir, also, on your crude sourcing part, can you give a color on you did mention about Russia, but in general, the crude sourcing basket, how much from Middle East, and very, very broad numbers if you can just give?
You can say almost 1/3 came from the Middle East, and the domestic was also in the range of around, we can say almost 1/3, 1/3, 1/3. Hello. Somya?
Does that answer your question, Somya? We'll move on to the next participant as the participant has disconnected the line. The next question comes from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you very much for the follow-up. So there was this discussion about MRPL being merged with HPCL. So is there any progress or timeline on that, and what is the thought process on that?
Ramesh, thank you for that question. See, as MRPL, first of all, we are not aware of any such developments. And even if there are any such developments, it is the two promoters who have to ultimately take the call.
Okay.
Does that answer your question?
Yeah. Yeah. Thank you very much.
Thank you. A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Yogesh Patil from Dolat Capital Markets. Please go ahead.
Sir, capital expenditure plan of INR 1,000 crore per annum for the next two years, then what would be the peak debt levels or debt-to-equity ratios one can expect from these capital expenditures?
We are expecting the debt-to-equity to be maintained at around the current levels. We are at around close to one. So our current projections are at the same levels only.
Okay. And sir, as per our understanding, MRPL is processing Barmer crude. Can you share the percentage of Barmer crude processed in FY 2025 and typical discounts on the Barmer crude relative to the Indian crude baskets you are receiving? And sir, lastly, what is the alternate plan once the Barmer crude is shifted to HPCL Rajasthan Refinery?
Last year, the Barmer crude volumes have come down because the output from Barmer itself has come down. Our number last year was, if I remember correctly, almost around 3% to 4% of our total basket. The discounts were in something similar line which they have been offering to the other players also.
Okay. Sir, separately, I wanted to understand the loss of tax offsets in case the MRPL undergoes another merger. Would you be knowing the tax provisions that drive this?
Sir, this is Avin Desai. So in case any further development on any merger and acquisition further, we have till financial year 2027, we need to have that carry forward of losses still in place. Then after five years of completion of the older merger, then only we can go forward with this.
Okay. And sir, lastly, just wanted to on your placement of oil products on the domestic side and the export side, what kind of an advantage of selling the oil products into the domestic market compared to the export market in terms of dollar per barrel, if you could give us a little bit of understanding on the realization side?
Yeah. Avin Desai, so basically, selling domestic is always better for us in general. Export market is targeted only when we have exhausted our domestic market fully for every product.
Okay. Thanks a lot.
Thank you. The next question comes from the line of a reminder to all participants, please press star and one to ask a question. The next question comes from the line of Yogesh Patil from Dolat Capital Markets. Please go ahead.
Sir, considering the gas consumption at Mangalore Refinery and one grid power upgradation is also going on, JT upgradation is also going on, can you throw some lights on the kind of gas consumption, one thing? Secondly, the grid power upgradation, and thirdly, on the JT upgradation?
Last year, we have a gas consumption of close to around 0.55 MMSCMD, which we are targeting to take it to around 0.65-0.7 this year. The grid infrastructure project, the target date for completion is by December, and we are hopeful that we will be able to complete and start drawing the power from there. The jetty infrastructure project, the engineering activities have been completed, the long lead item orders have been placed, and the tenders for the execution are in the final stages of just ordered. It has just been ordered.
Thanks. Thanks a lot, sir.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.
So thank you, everyone, for this interaction. And I hope we could clarify the questions asked about the last year's performance as well as some of the outlook for the coming year. So thank you once again for the coordinators and the participants.
Thank you, sir. Ladies and gentlemen, on behalf of Dolat Capital Private Limited, that concludes this conference. You may now disconnect your lines.
Thank you.