Ladies and gentlemen, good day, and welcome to the Chennai Petroleum Corporation Limited Q4 FY 2026 earnings conference call hosted by Elara Securities. 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. Gagan Dixit from Elara Securities. Thank you, and over to you, sir.
Yeah, thank you.
Sir, please go ahead.
Hello.
Yeah. Thank you. A very warm welcome to everyone to discuss Chennai Petroleum Q4 FY 2026 results. It is our pleasure to be able to bring to you the management of Chennai Petroleum, led by Sri Rohit Kumar Agrawala, Director, Finance, and other senior executives of the company. With these words, I would now hand over the conference to the Chennai Petroleum management. Over to you, sir.
Thank you. Good afternoon, everyone. I'm Rohit Agrawala, Director, Finance, Chennai Petroleum Corporation Limited, and with me are my colleagues, Mr. Anil Sahni, CGM, Technical Services, Mr. Dharmaraj, CGM, Finance, Mr. Rajkumar, CGM, Technical. They're part of this investor conference. They'll be happy to reply to any of your specific queries. First of all, let me thank you again for joining this call today. On behalf of the CPCL team, I welcome you all to this post quarter four results conference call. Before we begin, I would like to mention that some of the statements that we'll be making during this conference call are based on our assessment of the matter, and we believe that these statements are reasonable. However, the results would be different depending on the number of events and uncertainties.
Further, this con call is on Q4 annual results and we'll be limiting our discussion on the results. Any other queries shall be taken separately by our team. Our results of quarter four 2025-2026 are with you now for a few hours. I hope some of you would have analyzed them, and if you have any specific query on that, we'll take up this during the conference call. Again, to give my brief on the matter, our refinery's continued its stellar performance on both physical and financial parameters during this quarter and the full financial year 2025-2026. Let me start with the physical performance. CPCL achieved the highest ever crude throughput of 11.71 MMT, million metric ton, which is equivalent to 112% of installed capacity, breaking records of our previous best of 11.64 MMT achieved in financial year 2023-2024.
In quarter four of the current financial year, CPCL achieved a crude throughput of 2.93 MMT, which is also 111% of installed capacity. This reflects our agility to continue performing at the highest level, tackling global challenges. The highest ever throughput has been achieved despite a planned shutdown of one of our three crude units for about a month during the year. CPCL achieved the best Fuel & Loss of 7.73%, best MBN of 69.8% and best EII of 84% in the current financial year, FY 2025-2026, surpassing our previous best records achieved in the last financial year, driven by the effective implementation of energy conservation initiatives and significantly improved operational reliability. CPCL concluded the financial year on a high note, achieving the highest ever production level of 5.139 MMT for diesel HSD and 1.318 MMT of petrol, that is MS, an impressive testament of the refinery's outstanding operational performance.
Further, highest ever distillate yield of 79.1%, beating our previous record of 77.6% set in 2019-2020, was also achieved during this year only. CPCL achieved highest ever LPG production of 447 TMT, overcoming previous record of 404 set in 2023-2024. With global uncertainties affecting the availability of LPG all over the world, CPCL is happy to step up the requirement when the nation needed it. This once again reiterates our unwavering commitment to serve the nation and increase our efficiencies. CPCL achieved the highest ever annual production and dispatch of value-added niche products like LS Naphtha, pharma-grade hexane, MTO. All these again have reached peak production and dispatches. CPCL, again, had a good RNG consumption, again, to look forward to economics, to bring in more economics and bring in more sustainability, and environmental commitments.
During the financial year, we processed 52% high-sulfur . Due to our flexible crude sourcing mechanism, we have strategically secured 55%-60% through long-term agreements, the remaining on short-term basis from diverse sources, allowing us to enhance flexibility and capitalize on price economies irrespective of what situation we are in. Further, we have launched trial runs of two new products. One is pentane, the other is textile-grade MTO. CPCL achieved the quartile one position in seven indices of International Solomon Benchmarking Study, which includes energy intensity and operational availability. In the country, this was only the second refinery, where we moved to first quartile in energy parameter. CPCL is committed to develop new schemes on energy efficiency, further Fuel & Loss reduction, and develop and enhance product of value-added products. Now I move to financial performance.
The gross refining margin, GRM, for financial year 2025-2026 was $9.2 per barrel as compared to Singapore benchmark of $5.83 per barrel. Our current GRMs have been at a premium to Singapore GRMs consistently over the past five, six years, mainly on account of continuous optimization of refinery production, product distribution, optimized group procurement, and efficient handling of processing capability. If I move to quarter four, the GRM for quarter four was $13.75 per barrel as compared to Singapore benchmark of $8.70 per barrel, which again reiterates that all these efficiencies are constant, continuous, and are being sustained over each period. All these have been achieved through optimized crude mix, selection of grades based on benchmark, and then we have compared the premium discount with respect to our efficiencies that we can arrive out of them. Our leverage position stands at 0.18x.
Our debt equity stands at 0.18x at a gross level as compared to 0.39x last year. That tells us that our borrowings have subsided significantly, and then for our future projects, the company possesses significant capacity to borrow and implement profitable schemes. On a gross basis, the borrowings are INR 1,900 crore, but on a net basis it is less than INR 1,000 crore, to be precise, INR 973 crore. If I take the net borrowing, that hardly is 0.09x. The DER is only 0.09x, less than 0.1x. Further, the above performance, our discipline, and consistent dividend payments. We also take care of the investors, all investors, including minority investor.
During the year, for the first time, CPCL paid interim dividend, and we are happy to announce that in addition to the interim dividend of INR 8 per equity share of INR 10 each, the board has recommended a final dividend of INR 54 per share, taking the total dividend for the year to INR 62 per share, which again, is highest ever. Now I'll move to future CapEx and development program. During the current year, the CapEx was INR 856 crore as compared to INR 673 crores in the previous year. Some of the important projects that we'll be taking up is Group II/ Group III LOBS, for which all approvals are in place and the project execution has started in full swing.
Even our retail outlet endeavor, for which we had taken 300 licenses, has started, and this year, that is FY 2026, FY 2027, we'll see a lot of commissioning out of them. Few more governance issues I would like to highlight here, and I hope the investors will be happy to note them. On the ESG parameters, CPCL achieved a S&P Global ESG score of 60 for the year 2025. In their yearly corporate sustainability assessment, we achieved the second highest S&P Global ESG score in oil and gas in India. This can be seen along with the Solomon Index. From a technical side as well as on a sustainability side, we are striving and our progresses year-on-year are pretty significant.
All this also led, CPCL was conferred the Gold Shield, an a ward from ICA on Excellence in Financial Reporting in H2, and this is one of the prestigious awards by ICA. Now with all this, I would like to say the uncertainties due to logistical constraints, volatility of crude oil prices, do pose challenges. While these are broader factors that may drive volatility, we remain at CPCL focused on things we can control, and that is operating our refinery efficiently in a safe, reliable, and environmentally responsible manner, and continue to focus on key metrics of controlling the operating costs as well as maintaining capital discipline by adhering to optimum return on value added in growth projects, and thereby honoring our commitment to create long-term value for our shareholders.
To summarize, we continue to deliver resilient operational and financial performance and see the momentum to continue in the new financial year as well. Thank you, all of you, once again, and we are now open for questions.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first line is from Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, sir, and congratulations for the good set of numbers. Sir, the question is related to the challenges CPCL is facing at the time of purchasing the real barrels or the physical barrels from the international market. That's one. Second question is related to crude purchasing contracts in the current context, mostly focusing on the March month and the April month. Are you still purchasing all the crude quantity on the spot or dated basis? Or some portion of the crude is still contracted basis you are taking from the countries? I'll take a pause here.
Thank you. I'll reply to the first question first. As far as crude purchases are concerned, you can see from our performance that not only for the whole year our capacity utilization is 112%, even in quarter four, which was influenced by geopolitical events, our performance is 111%. We do agree there were challenges, there were uncertainties, but we overcome them through continuous collaboration, multiple sources, keeping our channels open and then resolving obstacles. That is how we could process all those crude. Now, on your issue on March and April, if you want to ask us, are we doing everything on spot? No. Our term contracts are intact and barrels are flowing out of our term contracts. Yes, there have been some impact, which has been made good by spot.
When we look forward, all our term contract suppliers are reassuring ourselves that all the commitments will be honored by them.
Okay. Let me quickly reframe the same questions. If you could give us an idea of what is a spot or dated crude purchase and what is the portion of term contracts volume you are getting? That's one. Secondly, are you still paying a premium on the term contracts also? I mean, the market is aware that on a spot or a dated basis, the refiners are paying premiums, but on the term contracts also, you are paying a premium also?
Yeah. Again, I told normally our term is 55%-60%. There is not a major variation now. One or two barrels plus, minus is happening, but no significant change has happened there in the past or looking forward also, we don't see a major change. One or two shipment cargos maybe here and there, which will be made good going forward. As far as term or spot premium, see, the term cargo, they're based on OSPs. The OSPs are fixed for a tenure, and we procure. There is no change in that formula. Only thing month to month, depending on spot and other criteria, these companies declare their OSP. Still, if you ask me, our agreement is to purchase at OSP, the term. We continue to purchase at OSP.
Okay. Sir, my next question is related to export duties on the diesel and the ATF. In the current context for this current fortnight, export duties are much, much higher than the cracks on the same product, diesel and ATF. For the current fortnight, are we in the positive on the diesel and the ATF cracks? Or you can correct me on this side.
I will reply like this. Export is not a compulsion to me. Export is one of the options available to me to optimize my margins and realization. Main products like HSD, MS, everything, I see all my markets, I look at all my realization, and then whatever mix and combination is best profitable for the company, those kind of things we do.
Okay
For compulsion, we are not booking anything on export.
Okay. The question was quite simple, sir, from my side. I would be happy to take your answer on that very simple note that the cracks we are realizing on the diesel and ATF in the current context of the export duties, which are higher, are we in the positive range or in a negative range?
There, I didn't knowingly know because what you are asking and what is my knowledge is very different. See, to my understanding, the export duty or that [crack] is part of the realization, part of the broad cracks, and it is not higher than the cracks. That doesn't make a difference for CPCL, because when I have multiple options and I have the option of both selling domestic as well as export, and till the time I'm able to take a commercial decision based on merit. I think intermittent abnormal indication in the market doesn't impact me and my profitability.
Fair enough, sir. Sir, LPG maximization in output, how much it has impacted to our GRM during the March month and what kind of impact we will see in the Q1 FY 2027?
I told instead of INR 404 crore, we have gone to INR 447 crore. That's about 10%. This has not impacted our margins.
Okay. The last one, sir, CapEx guidelines for the next year and the guidance on the debt levels, if you could provide, that would be helpful.
I told the debt positions are very comfortable on a net basis. It is hardly 0.1x DER and less than INR 1,000 crore borrowing. We are very comfortable there. As I said, LOBS have been approved. All clearances are available with us. LOBS project, Group II/ Group III LOBS project is INR 1,600 crores. The retail outlet project is INR 400 crores, so that makes it INR 2,000 crores. This INR 2,000 crores will happen over two to three years. Besides, every year, you can assume another INR 500 crores as our normal CapEx.
Okay. Thanks a lot, sir. This was really helpful.
Thank you. The next question is from the line of Nilesh Ghuge from HDFC Securities. Please go ahead.
Yeah. Good afternoon, sir. Sir, firstly, my question is on this throughput again. You mentioned that you have done the highest ever throughput for FY 2026, but are you confident that this throughput level will remain at 110%-111% in FY 2027, at least for first half, or will there be any challenge in maintaining that elevated utilization?
We all have to understand what are the parameters or why a company can perform more than 100%, or why a company cannot perform more than 100%. See, these capacities are built on certain days of operation, to my understanding, 330 standard days. What is happening is, if my upkeep is good, if unplanned interruptions are not happening, if day-to-day operational bottlenecks are solved immediately, then I have additional leeways where I'm able to operate this. Because the fixed costs are pretty high in a refinery kind of a situation, if I'm able to take this leverage, it is not only adding to throughput, it is also adding to the divisor effect. My performances, my metrics, my profitabilities are pretty good. What I am saying, if it is one off year, we can analyze.
What we are saying, consistently for the last four to five years, we have been exceeding our 10.5 installed capacity. It means what? The operational philosophy has become very stronger. Some of these issues, the excellence has come in. Now you will ask me the projection. First, just to reply you, in the first six months, we don't see any M&I. It may not be there, but yes, maybe close to September, October, we have a scheduled M&I of one of our refinery units. These throughputs will be dependent on that. We also told in the last year that in spite of one of the crude unit M&I for one month, this was achieved. I must tell you, the investor forum, this company is also trying to look into some of the possibilities, low-cost debottlenecking, and we are talking to EIL.
Idea is what, when we are consistently able to perform this, can we do some debottlenecking or some enhancement in our secondary processes on a systematic basis with a low-cost CapEx, and can we sustain even higher margins than this?
Okay. Thanks for this elaboration, sir. My second question is on the refinery transfer price. Are you selling our petrol and diesel at the refinery transfer price to the oil marketing companies, or are you selling at any discount?
No, our agreement, as you would be aware, close to about 90% of our product, mostly HSD, MS, it goes to IndianOil. We have a tie-up with them, a long-term agreement with them for selling, and the agreement is [audio distortion] . Refinery transfer price.
Oh, thanks. Thanks a lot. Thanks for answering my question. Thank you, sir.
Thank you. The next question is from Sabri Hazarika from Emkay Global Finance Service. Please go ahead.
Yeah, good afternoon, sir. Firstly, on a few bookkeeping questions, you mentioned $13.75 was your reported GRM for Q4, right?
Mm-hmm.
What would be the core GRM?
$10.3
$10.3 would be core GRM.
$10 point? Three eight?
Three.
$10.3. Okay.
Yes.
Okay. Secondly, what could be the Forex loss for the quarter and for the year?
For the quarter, [crosstalk] it is about INR 200 crore, approximately about INR 200 crore. For the whole year, it will be around INR 600 crore.
About INR 340 crore.
Okay, sir.
Sorry, that annual figure you can correct to approximately INR 350 crores.
INR 350 crore now. Okay, sir. Second is basically in the current scenario only. I think the previous participant also asked you. Ideally, what our understanding was that, when the government comes up with the Arab Gulf numbers, we take the Arab Gulf, then we minus it with the Indian basket or say Brent, if we assume it, that's to be the benchmark. Then what happens is that whenever the export duty is imposed, the domestic RTP also gets adjusted by that amount. Right now, I think it is too early, I guess, two times only it has been changed, but right now the cracks are the netback after the export duty adjusted in domestic RTP is negative. Is it what is right or you are saying that you are still getting good GRMs even after this export duty and current cracks?
I'll tell you what is running now today, as I am speaking to you. As I am speaking to you, the net GRM, based on realized RTP, is pretty close to long-term average.
Okay. Because there was some news regarding the OMCs also asking additional discounts on RTP, I think INR 60 per liter, some number was quoted in the media.
I think you will agree with me. I can tell what I know and what I observe.
Right.
About reacting to media reports, I am as good or may not be as good as you.
Right, sir. Right now you are near the long term average GRM. That is what is the current.
Yeah. When I'm speaking, that is today, when I compare today's net GRM or net cracks to that way, I find it is to be close to long-term average.
Got it, sir. In diesel and ATF both, right?
Yes.
Okay. Currently, what is the crude mix of the company? How much you are getting from where and what could be the average price at which you are getting?
See, the price, whatever I tell will be wrong, because what is happening, what we have witnessed, we have never seen. We never thought [VDU] will be -20, then [VDU] will be +20. There is a wild fluctuation that is happening. I think, for a company to operate, the present one-day, two-day scenario is not a scenario to discuss. I can tell you my mix. As I said, this refinery is capable of up to 70% high sulfur. Depending on the [VDU], whether sweet crude is cheaper or sour crude is cheaper, I source. Like in the current year, I told we source 52% HS. Instead of 30%, I source 48% LS, because I found LS is cheaper than HS.
If I'm able to process cheaper, low sulfur crude, then I am getting more yield, I'm getting less Fuel & Loss, my profitability are increasing. I'm harnessing these opportunities available in the market. I'm checking what is my optimum potential, and then I'm doing best to increase the margins and the profits.
No, geographically. I wanted to know geographically, if I divide it between, say, Middle East, Russia and others, then what would be the mix?
I will say, let me start with India. Maybe India would be around 10%, Bombay High and others.
Okay.
25%, 30% maybe Russia.
[audio distortion]
Yes. The rest would be mostly Middle East countries, barring 5%-10% Africa and U.S. groups.
This Middle East is basically that Saudi, West Coast, I mean, Red Sea, volumes that could be coming in.
No. It also includes Iraq.
Iraq is flowing currently?
No, not immediately. See, I told on an immediate basis, any judgment or any call from my side has no relevance because every day it is changing. I told how I am designed and how I'm processing.
All right, sir. Sir, just a last small question. How much would be your current crude and product inventory days?
See, typically, I think, if I don't take into ullage and operation kind, normally my inventory days are 20-odd days. Because the situations are a little difficult, I operate with the flexibility from five, seven, 10 days to 15 days, 18 days. I operate depending on day-to-day basis. When a cargo arrives, suddenly it comes to my comfort, and by the time next cargo comes, I keep minimum distance so that my operations are not interrupted.
This is crude plus product both?
No, I talked only about crude. See, product, the dispatches are happening to IndianOil. The facilities are nearby, close to my facility.
Okay.
There is no change from earlier, and those days are pretty normal. Hardly few days.
Okay, few days of product inventory you generally keep because you are anyways embedded with IOCL.
Yes.
Okay. Thank you so much. Thanks a lot, and all the best. Thanks.
Thank you.
Thank you. The next question is from Abhijit Nadkarni from UTI AMC. Please go ahead.
Yes, sir. Sir, my question is, even though for Q4, the GRM is around $13, the situation.
Sorry to interrupt, sir. Sir, your voice is too low.
Yeah. Am I audible?
Yeah, now you're audible, sir. Please go ahead, sir. Thank you.
Yeah. Sir, my question is, till February, the overall geopolitical situation was normal, and in the month of March, the actual events started reacting to the overall elevated crude oil prices and even higher cracks. Even though the GRM have improved, is it reasonable to estimate, can you provide any quantitative figure how cracks have increased in the month of March as compared to January and February?
For CPCL.
Yes. What I can tell you is the quarter four GRM I gave is an indication which includes January to March. quarter four GRMs were little better than quarter three. Quarter three GRMs were little better than quarter two. Quarter two, quarter three, all these last three quarters were much above quarter one. That's the sequence the whole year has gone. If you talk about any particular part of March or any particular part of April, the volatility is very high on a daily basis.
Okay.
Still in these months, the cracks are reasonable enough and closer to our long-term averages. That is how we are striving to maximize our throughput, even in this situation.
Okay. Fine, sir. Okay, that answers my question. Thanks.
The next question is from the line of Dhaval Popat from Choice International Limited. Please go ahead.
Yeah. Congratulations on good sets of numbers and thank you for the opportunity to ask a question. First question I had was on the residual upgradation facility r ecently, and CPCL had done it way back in 2018. Is it possible for the management to comment on how the CPCL RUF was different in terms of bottom destruction, vacuum treatment of vacuum gas oil or vacuum gas as compared to what HPCL will do now? The second question I have particularly is from the perspective of the flexibility between the diesel and jet fuel. How comfortable is CPCL moving to jet fuel or the proportion of jet fuel being higher in the current quarter as compared to diesel, provided the European cracks are going to be much higher and influencing the Asian cracks as well? I'll stop here for the answers.
On the first part of your question, see, each refinery, the unit name may look similar, but the configurations are altogether different. My bottoms upgrading project and HPCL's bottoms upgrading project may not be same in all parameters. I can tell you what I achieved through my upgrading project. The last part, the DCU, Delayed Coker Unit. Till now, I was operating at a capacity of 70%-odd. This time I'm close to 100%. Because this time I felt how the blends can come from other units, so I can process in DCU, I can further improve the yields. That is how you find my yield to be 80%. If you see last three, four years of CPCL, the yield has gone up significantly, not marginally up.
Got you.
Certainly these kind of projects play a large role over a period of time.
Yeah.
On the other part, diesel versus jet fuel. See, based on the license I have, based on the configuration I have, I have certain percentage of product that is fixed. My swing capabilities are minor for converting one to the other. Only thing, this kind of debottlenecking, blend transfer, rerouting, mixing, these can be done, but there is a limitation. CPCL, because it operates three crude units, it is a lot of flexibility in that way. Certainly our operation plan, we run our RBO plan thrice a month. Thrice a month, we look at what is the broad trend, what modification can happen, how can you optimize profit. That is how we tweak our plant. Even if we have a long-term plan, we have annual plan, we have a monthly plan. We tweak to the extent possible, depending on all these parameters.
Okay, that is helpful, sir. Just a follow-up on this. As you said, of course, I've been following the CPCL, and it has increased from 75% onwards, almost now 80%. Over the next three years, how can we expect the distillate yield to be going forward, let's say by 2029? In 2027, 2028, 2029, will we be able to see similar improvement or will be some slower improvement, or how can we see that?
I'll reply this like this. See, there are some gradual small improvement which happens through operational measures based on experience, blend transfer and all that. That's a continuous process. That small incremental impact will continue. A lot of some more things happen through schemes, CapEx, low CapEx schemes. Our people work on both sides. Parallelly also, we are working on so many CapEx, small CapEx projects, which can give a significant impact. Parallelly also, we are running on our ENCON schemes and all, which at all times gives impact on Fuel & Loss. At times it also gives us benefit in terms of yield. The third point is crude mix. We are forgetting crude mix is a big factor in improving yield. That is where we go on exploring more and more crude.
We look at blends, what kind of blends can be done, and at times, this also gives a lot of additional benefits without significant corresponding increase in cost.
Okay. Agreed.
All these are working together.
Okay.
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. I have a follow-up question on the statement that you made that the current net GRM is closer to the longer-term average, both in case of diesel and ATF. Is this somewhere around $15 per barrel? Is that the average that we are looking at? Because typically over seven to 10 years, the diesel cracks have averaged around $15 per barrel.
It seems you and me are reading two different books. [crosstalk]
It was a good.
Yeah. When I look at five-year average in MS, I also find a negative crack. Though we are not talking on MS, so if I stick to diesel, I found $11-$13 is a long-term average.
$30 per barrel?
$11-$13 . One one, $11 to one three, $13.
Understood, sir. Second question was about the situation. We had seen a situation, something similar, during the Russian invasion. At which point of time, I think, within the OMCs, there was a mechanism adopted where government announced the export duty, and there was a commercial discussion between the OMCs and the independent refiners, and the domestic purchase price for the OMC was set, adjusting for the export duty. Even for the domestic purchases, OMC enjoyed the discount. Is the same mechanism being implemented even under this crisis, or the mechanism is something different?
What I will tell is RTP is a very transparent pricing mechanism which is available at an industry level, and is available to everyone. I think it will not be appropriate for me to deliberate on RTP pricing. As I talk today, even those gross margins, the other impacts are changing drastically day to day. Only thing I can tell you is what I'm able to see over a 15-day period or a month period. When I look for a month average kind of a period, I feel I'll be able to sustain the long-term averages.
Sure, sir. One more question was a follow-up on the crude basket. We said that we have a 55%-60% coming through the long-term agreements.
Yeah.
Could you also sort of highlight how much of this long-term agreements are with the Middle East partners, and what portion of those long-term agreements has been impacted by this closure of the Strait of Hormuz for more than 50 days now?
I will tell you, maybe you can consider almost all are Middle East. Almost all of the long-term agreements are Middle East. Even within these difficult situations, cargoes are still flowing to us. What is impacted is maybe 30%, 40% would have impacted on a very short period. All have assured us that depending on the situation, they will make up all the cargoes.
Understood. Probably one more question about the Russian cargoes. You have said that it's around 25%-30% in the mix. In the previous quarter, we had seen some sort of level of discounts of around $3 or so. At this point of time, when we compare with the Brent, is it coming at a discount or is it coming at a premium?
See, again, as you see, we evaluate crude not based on where from it is coming, what is the premium or discount. We try to evaluate what is my landed cost. What is my landed cost, LSHS, what is the combination I want? Based on that, even if I am procuring Russian crude, I am comparing the landed cost or whenever, because it is part of the spot. When I take a Russian cargo, I compare with other available spot cargoes. I take based on the least landed cost basis.
Right, sir. Just one last question. In terms of you have spoken about the INR 1,600 crore Group II and Group III LOBS project.
Yes.
Could you sort of highlight some economic details in terms of what would be the sort of yield, the improvement that we expect out of it, what kind of margin it can make?
I'll tell you that. See, first, it is an IRR-based project. We expect a good IRR out of this. This is not a compliance-based project. This is an economics-based project that we are doing. The products will be Group II and Group III LOBS, which will go to lubes formation because you will find the lube manufacturer, a significant portion has moved from LOBS I, one-grade feed to second and third for value-added products. A lot of LOBS II, III will give me realization. Third is maybe a small part of my HSD will also get converted into LOBS. Basically it's a value-added product scheme where I'll be moving from lower value addition, a lower realization product to higher realization product.
Sure, sir. Thank you.
Thank you. The next question is from the line of Nirav Jimudia from Anvil Wealth. Please go ahead.
Yeah, sir. Thanks for the opportunity. Sir, I have two questions. Sir, first is on the low-cost debottlenecking, which you just mentioned in one of the remarks. If you can just throw some more light on this, like how much we are contemplating in terms of this low-cost debottlenecking of our existing refinery and if you can give some sense in terms of what should be the CapEx for this low-cost debottlenecking, which we are currently undertaking.
Right. I will repeat what I said about CapEx. I said there are two new projects with me. One is LOBS II and III , which is INR 600 crore. INR 400 crore is on my retail outlet. CPCL has ventured into retail outlet, 300 numbers retail outlet, and both these are new products. Those are economical projects. Both will give me first on expanding my margin, my value chain from only refinery to refinery plus marketing, and the LOBS will give me value-added product. Besides this, I said about another INR 500 crore, my normal maintenance CapEx. Part of this maintenance CapEx is always used by our team to look into the opportunities of small, low-value CapEx, which can either result into efficiency in terms of energy and reducing my Fuel & Loss or value-added product, or some mix, and other things where my overall bottom line improves.
That happens on a day-to-day basis, regular basis, which will continue.
Got it. I understand that fact about the expansion and the newer products, what you mentioned. I was more talking about the debottlenecking part, like currently-
No. I hope you are referring to some debottlenecking that I told, there I have said the CapEx is not frozen. We are doing a study because what I said is my capacity is $ 10.5.
Yes.
If you go back three, four years, I was not able to achieve $10.5. For the last three, four years, I'm consistently exceeding $10.5 and achieving $11.6, $11.7, even with or without the shutdowns. I felt there is this sustainable capacity, additional capacity. If you want to sustain and realize high value, you need commensurate secondary with primary.
Correct.
In the meantime, we are doing a study. The study is not yet complete, but in the coming year, 2026, 2027, we hope that ongoing study will get completed, and if we find out some low-cost CapEx to date that is not part of our plan, that will be in addition to whatever I have told.
Correct. Perfect. Got it. Second question is on the value-added products, like three, four value-added products. One is N-Paraffin, second is pharma-grade hexane, then Naphtha also fetches currently now some premiums in the international market when we export that, and fourth one is MTO. If you can just help us in terms of how much these products have achieved volumes in FY 2026 and, let's say, out of the GRMs, what we have achieved in FY 2026, how much would be the contribution from these four products put together?
At this point, I may not have detailed breakup for these four product, but I'll tell you very definitely the same question that you're asking on a directional level. See, 90% of my product is sold to IndianOil, 90%, 92%. 7%, 8% constitute these kind of main products, and this 7%, 8% till now is giving me 15% of my margin. If you take one product like, say MTO, it has more than doubled in the last financial that we're talking. If you talk about hexane, I have doubled my capacity. Again, in the coming year, I may ramp up this production. Similarly, I told two more products they are discussing. These are small niche products, but if you take them as a group, there is some good potential that we can increase margin.
Correct. Sir, just a follow-up. Like you mentioned that hexane, we have doubled our capacity. If you can help us, how much it was and how much currently we have in terms of?
It was 30,000 tons per annum, now the capacity is 60,000 tons per annum.
Got it. Second follow-up is on the expansion or the newer project of LOBS. What would be the capacity enhancement or the capacities which we would be looking at with this newer project of Group II/ III LOBS?
See, today what is happening is, as you would be knowing, CPCL is the only refinery which has liquid fuel, which has wax, and which has lubes potential. This is the only refinery in India which has all three potential. Today, part of our lubes potential, we only are doing Grade 1. Today, we don't have Grade 2, Grade 3. All the people who are dealing here in India, most of them import. I don't have this capacity. Now I am moving this, my new unit will take me to a 250,000 TPA in Group II/ Group III capacity, and that will be a fresh addition. That will replace a lot of import, and it will give me value addition.
Got it. Sir, lastly, your thoughts on N-Paraffin. How is this product in terms of our overall refinery mix? How much we were in terms of the production of N-Paraffin, let's say, three, four years back, and where are we currently in terms of the N-Paraffin?
What I will suggest is on this N-Paraffin, we can take this question offline because I'm not finding this to be very significant. If you want a directional answer, I talked about two products, pentane and textile-grade MTO. These are, again, something on that direction. Idea is what? Whatever we find in our periphery, where because of our technical skill, the margin can be increased, and plus we operate three units, so our flexibility is more. We have taken advantage in the past. Going forward, also, our technical team is competent, and they look out for these opportunities.
Perfect, sir. Thank you so much, and wish you all the best.
Thank you.
Thank you. The next question is from Akash Mehta from Canara HSBC Life. Please go ahead.
Hi, sir. Thanks for having me call. My first question is in regards to the mention that you're purchasing the crude on OSP basis. Can you just help us understand the long-term contracts? How long are these long-term contracts? And basically, what's the difference, if you were to purchase from spot versus a long-term contract? Is this the same, or how much advantage we have? That's my first question.
Yeah. I'll tell you. See, these contracts are one-year contracts. Before end of every year, the terms are renewed almost on similar basis and similar terms. What is the difference between long-term contract or spot is, in case of a term contract, the supplier binds himself, except unforeseen force majeure cases or otherwise, he commits to us volumes of the specific grade that is entered into by us at an OSP. The price basis is agreed, the volumes are agreed, and some of the flexibilities for both supplier and the consumer are agreed. In case of a spot, I give the requirement to the market for one parcel, for two parcel, whatever I want. From parcel to parcel, those changes. My specification as well as the pricing terms.
Sure, sir. That's helpful. Secondly, you have mentioned the crude breakdown in terms of sourcing historically or in a normalized situation, but can you just help us understand how things are going into the April month in terms of the region-wise or country-wise sourcing?
I think there also, I replied to one of the queries where I said, specifically if you talk about the Middle East, 30%-40%, if you look for a very short period, this is the disturbance that has happened. All the suppliers have assured us that they are committed to their annual commitments, and they are committed to supply those barrels. That intermittent short period gaps, we had no difficulty in filling up from spot.
In general, the purchases are coming majorly from Russia and Africa or any other region? If you could just help us understand.
Mostly there, but in between, few cargos are otherwise also available. Again, what will come to us depends on what is the delivered price that has come to me. Suppose 10 people might have quoted, but I'll be taking the lowest cost on delivered basis. I'll be knowing what I have taken.
Sure, sir. That helps. Yeah. That's it from my side. Thank you.
Thank you. A reminder to all participants, please restrict yourself to two questions. The next question is from the line of Nalin Shah from NVS Brokerage. Please go ahead.
At the outset, sir, let me congratulate the entire team of CPCL, for I would say probably it is the lifetime best performance from CPCL if I'm not wrong. That is my first congratulations to the team. Sir, my question is that all the other technical questions have been answered. What I want to say and add is that your top line, which is now at a significantly high levels, something like INR 50,000 crores, INR 70,000 crores, INR 90,000 crores, your share capital has remained, sir, at a very small level, INR 148 crores. Are we not wanting to reflect correctly our share capital by capitalizing the bonus shares and giving out to these investors? That is, I think, one question which remains in my mind when we have a significant reserves of almost INR 11,000 crores.
First of all, I must thank you for complimenting the team.
Yes.
On the performance, I will tell, in terms of number, certainly this is one of the best performance that we have done. I'll still rate this as the best, because if you see on all parameter w e are exceeding year- by- year. What that gives me a confidence that given a good market, given a conducive atmosphere, we can repeat or exceed these kind of performances.
Absolutely.
When everything else falls in place.
Absolutely, you are right.
Now, with respect to reward.
Right.
See, that is another aspect we are very keen, and we have been demonstrating all these over the past two, three years.
Yes.
If you see 2023-2024, one of the highest ever dividend of INR 55 was given against INR 10.
Correct.
Even though the company was looking for CapEx, there were good growth projects are there, but we felt no, reward to shareholder is also an important part.
Correct.
If you see the current year, again, for the first time, interim dividend was given.
Correct.
Now if you include the interim dividend, the dividend is INR 62. Overall dividend is INR 62.
Correct.
That may be one of the highest dividend paid by this company to shareholders.
Absolutely.
As far as we are concerned, the shareholder is in our focus.
Correct.
You would also appreciate some of the decisions are taken at the right time.
Right.
We feel at a right appropriate time, even the bonus issue will also be considered by the Board and a right decision will be taken.
Thank you very much, sir. Thank you. Once again, congratulations for an outstanding performance and the best wishes for the current year. Thank you.
Thank you.
Thank you. The next question is from the line of Umang Aditya, an individual investor. Please go ahead.
Sir, am I audible?
Yes, please.
Yes, we hear you.
Sir, I have one question on my part. Sir, in March quarter, crude was around $110-$115. Our blended margin, GRMs, came around $9.2. I want to ask, can you just quantify any profit forgone in terms of selling of oil to IOCL in absolute numbers?
Okay. Two things I will tell, first on crude price and GRM. Actually, and literally, scientifically also, there is no one-to-one relationship between crude price and GRM.
Okay.
See, it is the crack, the difference between crude and product, which is called the crack, that determines GRM based on my efficiency. The crack, gross crack, defined by Fuel & Loss and my operation capabilities, decides what kind of GRM I will have. At times, even a low crude might have a low GRM period, and a high crude might have a high GRM period, and vice versa. There is no one-to-one correlation between the two. On the second part. Can you repeat the second part?
My second part is, can you just quantify an absolute number which profit forgone by CPCL by selling oil to IOCL?
Yeah. What I told is, though I sell about 99%-100% oil to IOCL, but I have entered into a long-term agreement with them.
Okay.
The long-term terms are RTP, refinery transfer price. This is the price where everyone sells to an OMC.
Okay.
Basically what I sell is at the price at which industry sells to marketing company. I will not assign anything as a profit forgone, because I'm selling at market price, which everyone else is selling.
Actually, the purpose of asking the question was that, no doubt it was a very good result, I know, but the purpose was because we can see clearly GRMs have fallen due to RTP cap and all. There would be an absolute impact. I would expect any rough number from your part.
No, I'll not be able to allocate a rough number at this place because whatever you are saying is also maybe at max a fortnight or maybe less than that, which will not impact the results that we're discussing, either the quarter or the annual, very significantly. Yes. As far as I am concerned, and when I look at my business, when I'm realizing something close to my long-term averages, I will not put a lot of effort into the day-to-day movement because I'm not a trader. My objective is not to take advantage or get bogged down by short-term, few days abnormal situation. My idea is whether my business model is intact, whether my margins are in the path of long-term averages, whether I'm able to create efficiencies within my system from what I have done last.
If I'm on the growth trajectory, I'm able to bring in new projects, I'm able to improve my material balance, and I'm on the margin front, I'm on my long-term average. That is where I'll put my focus and my efforts.
Thank you. The next question is from the line of N.M. Modi, an individual investor. Please go ahead.
Yes, sir. Good afternoon. Thank you for giving me the opportunity. Sir, my first question is regarding other expenses. During this quarter, the other expenses is INR 634 crore, whereas last year it was INR 344 crore. There is a steep increase. At the same time, in whole year, last year it was INR 1,465 crore, and this year it is INR 2,100 crore. What would be the reason?
Yes, Mr. Modi, you are right. As we talked, because the rupee movement is significant during the quarter as well as year, that is what is accounting significantly. We gave a rough number of about INR 200 crore towards the quarter and about close to what, INR 350 crore, INR 400 crore towards the annual. That constitutes a significant part of this, and this is booked in other expenses.
Oh, that is included into other expenses?
Yes.
Sir, one note could have been helpful in that regard. If you would have given the one note below the accounts.
No. We normally do that, but as you know, there are classification of percentage of the item, and based on that, it has not been, but your point is well taken.
Yes, sir. Other thing, sir, this GRM you have pointed out during conversation, $13.75 during this quarter.
Yeah.
Sir, in notes to the accounts, you have mentioned $9.28. It is not clear to me.
What you are seeing in annual accounts is full year.
No, sir. That is written in the last quarter only. In the accounts, it is written that $9.28 is in the last quarter.
No, full year, sir.
It is full year.
April to March.
You see the corresponding figure will also be full year.
Okay.
Mm-hmm.
Far, I remember, sir, it is given that.
Let me read out what I have written. This is note number seven.
Yes, sir.
Average gross refining margin for the period April to March 2026 is $9.28 per barrel within April-March 2025, $4.22 per barrel.
Okay, clear, sir. That is for whole of the year. Right. Clear.
Right.
This $13.75 stands for the last quarter of the year.
Yes, please.
Okay, sir.
Yes, please.
Thank you. The next question is from the line of Yogesh Patil.
We'll be taking one or two more.
Okay, sir.
Okay.
From Yogesh Patil, from Dolat Capital. Please go ahead.
Thanks for taking my question again. Let me take again this earlier question. I need a small clarification. To the net GRM or cracks on a diesel, you guided that $11 per barrel-$13 per barrel range. This average net diesel cracks for the last one month, since the export duties are imposed from 26th March. Is this the correct understanding?
I do not evaluate, or my management information system doesn't do it on a daily basis. I see over a period. Normally, I see over a period, either a month or a fortnight. Normally my period will be a full month, 1 to 30th, or a first fortnight, second fortnight. On a day-to-day basis, we don't monitor this.
Okay. The month would be the appropriate to take last one month, correct?
Yes. That is how we plan our operation. That is how we monitor the performance also. There we felt the long-term trend is intact.
The understanding would be correct, net GRM on a cracks or a diesel would be around $11-$13 per barrel for the last one. That is the appropriate one.
Last one year, including the last quarter.
Yeah. Last question from my side, sir. Previous participants asked what the Russian oil and the Brent oil price purchase difference. Let me rephrase, on the landed basis, considering the best value product outcome from the crude, whether it be the Russian or the Brent, Russian crude is cheaper than Brent or in line or a premium to Brent?
Okay. I'll tell you like this. Suppose I say I have purchased 20% Russian. This 20% Russian were cheaper than other available crude for the grade that I asked for. Suppose I have purchased another 10 other crudes. Those were cheaper compared to any other crude during that time, based on the specification I wanted. Whatever Russian I have procured, that was on delivered basis was cheaper. If some Russian I have not procured, that means it was not on delivered basis cheaper, or during that time something else was cheaper.
Thank you. Ladies and gentlemen, we take this as the last question and conclude the question- and- answer session. I now hand the conference over to the management for closing comment.
Yes. Thank you again, all of the participants. CPCL is committed for stellar operational performance. We take each of the feedback pretty seriously. For us, the investor conference is a system of two-way communication, and we are committed to continue with our excellent performance year- after- year. Whatever challenges come, we put our best foot forward, and we see that how it can be resolved within our capacity and constraint. Over the last few years, CPCL has demonstrated that irrespective of situation we are in, we are able to navigate stronger and in a better manner. We hope we continue the same going forward. Thank you all once again.
On behalf of Elara Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thank you.