Ladies and gentlemen, good day, and welcome to Q2 FY 2025 E arnings Conference Call of Bharat Petroleum Corporation Limited, hosted by Antique Stock Broking. 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 and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stock Broking. Please go ahead, sir.
Thank you, Shifa. Good morning, everyone, and I would like to extend a very warm welcome to all the participants to this call and the management of BPCL, led by Mr. Vetsa Gupta, Director, Finance. I will now request Rahul from BPCL to introduce the management and make the disclosures before we start our initial remarks. Rahul, please.
Thank you, Mr. Varatharajan. Good morning. On behalf of the BPCL team, welcome you all to this post Q2 Results Con Call. Before we begin, I would like to mention that some of the statements that we would be making during this con call are based on our assessment of the matter, and we believe that these statements are reasonable. However, their nature involves number of risks and uncertainties that may lead to different results. Since this is a quarterly results review, please restrict your questions to the future results. I now request our Director, Finance, Mr. Vetsa Gupta, who is leading the BPCL team for this call, to make his opening remarks. Thank you, and over to you, sir.
Good morning, everyone. Wish you all a very happy Diwali in advance. Welcome to the fourth Q2 Results Con Call. Thank you for joining us today. I hope you are able to go through our results for the quarter. On the macro side, the global economy is expected to maintain an annual growth of 3.2% through 2024 and 2025. However, geopolitical and trade tensions pose risks to inflation. Indian economy continues to be the world's fastest- growing major economy and is likely to maintain an annual growth of 3.2% through 2024 and 2025. However, geopolitical and trade tensions pose risks to inflation. Indian economy continues to be the world's fastest growing major economy, and is likely to grow in the range of 6.5%-7.2% in FY 2025, as per various forecasts.
The geopolitical situation remains complex and presents significant challenges to global economic stability. As conflicts evolve, they not only impact oil prices, but also create uncertainty in trade routes and investment climate. Oil prices have remained volatile given the geopolitical risk, uncertain demand from China, and macroeconomic factors like low inventories and easing inflation. These factors are expected to keep prices sensitive to further developments in the near term. Consumption of petroleum products in India has continued to grow with an overall growth of 4% during H1. Major products such as petrol, diesel, and LPG have grown 7.2%, 0.9%, and 10.4% respectively. BPCL registered market share gain of 0.1% in MS retail and 0.12% in HSD retail amongst PSUs during first half of current financial year.
Retail volume for MS has grown by 6.5%, however, HSD saw a degrowth of 0.64% during H1 FY24. We estimate that retail demand will grow by about 6% for MS and 1.5% for HSD during financial year 2024-25. HSD demand in the urban market is likely to witness relatively slower demand than rural and highway markets due to largely transition to CNG. Performance in Q2 2024-25. On operation side, our refineries continued their strong performance and achieved a throughput of 10.28 MMTPA. That is almost 114% of the nameplate capacity. Our distillate yield was 84.33% in this quarter, which is one of the highest among Indian refineries. This quarter evidenced a significant fall in international products crack as compared to previous quarters.
Gasoline Singapore crack fell to $6.83 in Q2 from $8.58 in Q1, and gas oil crack fell to $13.69 in Q2 from $14.76 in Q1. Despite this, our refineries recorded a GRM of $4.41 per barrel in the current quarter and $6.12 per barrel for half year, which is a premium to Singapore GRM. Singapore GRM is at $3.58 per barrel for the quarter and $3.56 per barrel for H1. The PDPP plant at Kochi achieved operating capacity of 80.2% in H1, against 68.3% in previous year. GRM for Petchem was INR 421 crores.
It's almost equal to $0.79 per barrel for H1 2025, compared to INR 235 crore, $0.46 per barrel during the previous year. On the marketing side, our domestic market share grew at about 1.6% year- on- year during the quarter to 12.39 MMT. We continue to generate the highest throughput per retail outlet amongst our peers, with a throughput of 151 KL per month versus 132 KL per month PSU average, driven by access to strategic markets and strong network along highways. We commissioned about 540+ new retail outlets in H1 FY 2025, and plan to take our retail network to 23+ by year-end.
We have added about 90 CNG retail outlets during the first half, taking the total count to 2120 stations, and plan to add another 300 outlets for FY 2025. We have achieved highest ever 14.97% of ethanol blending during this quarter. We also provide E20 blended fuels at around 4400 retail outlets. During the quarter, BPCL has entered into future fuel segment with commissioning of our first LNG station at one of the company-owned, company-operated outlets at BP Avinashi, Coimbatore. We will shortly commission another LNG station at Paravoor, Kerala. We have commissioned 16 Be Cafes during first half of 2024-25, taking the total Be Cafe network to 22. At Be Cafe, we aspire to provide state-of-the-art cafe experience at very value-for-money price range, with a world-class product inside our retail outlets.
We are also participating in NHAI's wayside amenities plan. BPCL has commissioned two wayside amenities during H1 2024-25, at Vadodara and in Haryana on Western Peripheral Expressway. About new projects, BPCL board has recently approved to enter into JV agreement with M/s Sembcorp Green Hydrogen India Private Limited, in the domain of renewable energy and green hydrogen, subject to regulatory approval. M/s Sembcorp Green Hydrogen India Private Limited is part of the Sembcorp Group headquartered in Singapore, one of leading urban solutions provider and renewable player in Asia. Groundbreaking ceremony for Kochi and Bina CBG plant was conducted virtually by Honorable Prime Minister on 2 October 2024. BPCL plans to set up 26 such CBG plants in the near future. BPCL board has approved to enter into JV agreement with M/s GPS Renewables Private Limited, for setting up of compressed biogas plants across India.
Without further ado, let me guide you through the financial highlights. The revenue from operations stood at one lakh seventeen thousand nine hundred fifty-two crores for this quarter. The profit after tax stood at two thousand three hundred ninety-seven crores, which is after absorbing LPG losses of around two thousand one hundred and four crores, and marketing losses of around two hundred seventy crores. Against the estimated CapEx of sixteen thousand four hundred crores for the financial year 2024, 2025, we have spent about five thousand six hundred sixty-two crores during April to September. Our standalone net worth as on thirtieth September is seventy-six thousand four hundred forty-five crores. We have distributed around four thousand four hundred and forty-seven crores of dividend during this quarter. The earnings per share for the quarter is five point six one rupees per share.
As of September 2024, we are at fairly low levels of debt. The debt equity at standalone gross borrowing level is 0.28. Overall standalone gross borrowings is INR 21,529 crores as on thirtieth September. Against these borrowings, we have current investments, including oil bonds, of about INR 11,719 crores. At group level, the debt equity is 0.64, with gross borrowings of INR 49,187 crores. This concludes my comments, and I will be happy to take your questions. Thank you.
Thank you very, very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone 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 Probal Sen, from ICICI Securities. Please go ahead.
Thank you very much. Thanks for the opportunity, sir. So I have two questions. One, in terms of the inventory impact, is it possible to quantify the inventory impact in the refining margin for this quarter?
Actually, we don't calculate what is the impact of the inventory losses on refining side. Even earlier also in the calls, we have clarified.
Our average inventory is less than 30 days. Our pricing will be on an average of monthly average of prices. So generally, there won't be any much impact. Even if there is an impact, insignificant impact, that is the reason we don't generally calculate any inventory losses for refining side. However, we have marketing inventory losses. In current quarter, the marketing inventory losses is 1,113 crore. For six months, it is 706 crore.
Understood, sir. So, with respect to this LNG negative buffer, you mentioned that INR 22,000-odd crore losses for this quarter. Assuming that, the prices stay at similar levels, is it then fair to assume that we should be building this loss every quarter for the remaining part of the year?
No, what we are expecting is during the winter period, the Saudi CP will be on a higher side, even if we assume the Saudi CP is $620-$630 level per metric ton, we are estimating our absorption of losses will be per month around 900-1,000 crore.
So it will increase to about 3,000 crore per quarter?
3,000 crore per quarter. But anyhow, we have approached the Government of India for providing necessary budgets in the RE exercise. Let us hope.
Sir, in terms of the increase in debt that has happened, if I look at your reported, I mean, the analyst information from about INR 25,000 crore, it's gone to about INR 31,000 crore, this is purely on account of the CapEx, the losses of LPG and all will get captured in the working capital borrowings, I would believe. Right? Right.
No, actually, the main what happened is that we have distributed around INR 450 crore of dividend in the month of September. That is the major. And, some sort of advance cash we have paid subsequent to that. That is the major reason and a little bit of changes in the inventory, inventory levels have gone up by around INR 3,000 crore. So otherwise, they're more or less same only. There is no major CapEx. It is as per the plan, only INR 560 crore is spent. And we have internal generation also, much more than the CapEx spending. So whatever increase in the little bit borrowing is mainly on account of dividend distribution and, change of small working capital, inventories have gone up a little bit.
One last question, if I may. With the kind of CapEx plans that we have, do we have any peak debt or peak leverage number in mind over, let's say, FY 2026 or 2027? What kind of peak debt and peak leverage we are targeting?
...In the next couple of years, we are not forcing any debt levels will be significantly increase. Maybe in FY 2027, 2028 onwards, we are forcing the borrowings to increase. But the CapEx the next one or two years, we are expecting around INR 18,000-20,000 crore CapEx plan. So within the estimated internal generation, we are not forcing any big jump of the borrowing. But 2027, 2028 onwards, the peak CapEx will happen for both the major projects of Bina and Kochi. That point of time, our project financing requirement will go up and borrowings will go up.
All right, sir. Thank you. Appreciate it. Have a very Happy Diwali and Happy New Year. Thank you.
Thank you so much, sir. We have the next question from the line of Sabri Hazarika from Emkay Global. Please go ahead.
G ood morning, sir. So firstly, on your, I mean, GRMs, you mentioned that inventory is not a significant impact, but there is like a lot of volatility. I mean, the crack spreads have said they have fallen, but not that much, say, sequentially, but your GRM was down from $7, almost like $8 to $4.4. So it's like, so still inventory or are there some other adjustments also? Because your GRMs have been, like, much higher than your peers for the, previous, like, few quarters. So anything specific on this?
No, a couple of things. One is our Russian product throughput percentage, like, it has come down slightly. Earlier quarters, it is almost 39%-40%. This quarter, due to some shutdowns of our Bina units and Kochi. So our Russian throughput has come down from 39% level to around 34%. That is one reason, small impact. There's an inventory impact will be there. I'm not saying inventory will not be there, but it is not a very significant jump. But, the fact is that the spreads have come down during this quarter, even on a sequential basis. Significant reduction for gas, gasoline. Gasoline, around $1.5 has come down, but gasoline has come down drastically.
This Russian discount levels have also come down, so it has remained same only?
No, more or less same only. No major change around. Same level on first quarter and second quarter. There is no major change. Only volumes different. Volumes only different.
$2-$3, that's the number or?
Some cargoes, some cargoes you will get 3, 3+, some cargos maybe three that range only .
$3. Secondly, I mean, given the petrol diesel marketing margins now and LPG losses, on the contrary, going up, so your working capital right now will remain more or less stable or do you see this going up, I mean, short-term debt and working capital?
Working capital, we are not forcing any major changes. Maybe inventory, for example, one or two, say, additional inventory if we keep it because the prices are lower side, slightly the working capital may go up. Otherwise, working capital, we are not forcing any significant jump of the working capital. Once we get the LPG subsidy from the government of India, then it helps a lot in the working capital.
Right. And one small question, you mentioned CapEx was around INR 5,600 crore, right? Each one.
Right.
Full year, you are still, like, maintaining INR 16,000-17,000 crore or?
Our plan is 16. Maybe somewhere around we will end up around 15-16 range.
Fifteen to sixteen, that's your overall budget. F air enough. Thank you so much.
Thank you so much, sir. We have the next question from the line of Amit Murarka from Axis Capital. Please go ahead, sir.
Hi, thanks for the opportunity. So my first question is on CapEx. So I think you mentioned INR 15,000-16,000 crore this year.
Yes.
Next year will go up to 20, and then after that, could you just at least give a broad range of how CapEx will escalate till 2027, 2028 ?
So we are expecting this year will be around 15-16. Next year, we have a plan of around 18 thousand crore. Subsequently, we are expecting 20-22 thousand crore. And 28, 29, we have not worked out exactly, maybe somewhere in the range, around 25 thousand crore. Exactly, we have not worked out, but, we are expecting at that range, 28, 27, 28.
Y ou would still fall short of your five-year plan, right? I thought it was one point five lakh or crore.
No, our plan is one point five lakh crore, but we have to see how much CGD, how much we are going to spend, what is the minimum required for minimum work program. Maybe there, we may not have 100% CapEx investment. Maybe there may be shortfall in CGD network. Otherwise, major projects we are going to spend, except CGD. CGD, we have approved around forty-eight thousand crore of CapEx, but the actual CapEx may not be that extent, maybe around 80% or 90% CapEx will be there.
Understood. Also, a question on marketing margins, like, where LPG losses is understandable, but even otherwise, if you calculate the marketing margins, actually seems to have dropped, like, auto sales margins were very strong in Q2. So it seems margins on other products have actually dropped in the quarter. So could you just help understand that a bit better?
No, margin loss mainly on account of only the inventory losses of around INR 1,100 crore during this quarter. Otherwise, that is, there is no inventory losses. We're not seeing any reduction in the marketing margins, only the volumes of diesel is not grown this quarter. Otherwise, margins are stable. Better only.
And a last question from me. So, I mean, we've generally seen the product cracks have been quite weak in the last few months, and LNG has gone to $30 +. So even though you have bottom upgradation at some of the refinery now, is it making more sense to use refinery fuel rather than LNG now at these kind of prices and lower cracks?
No, actually, every month we compare whether LNG or alternative naphtha, which is the better. Every month this thing happens, naphtha to LNG. But fuel oil, generally we avoid, because it have larger emission, so we prefer either naphtha or LNG as a alternative.
I understand that, but currently, is it making more sense to use alternative fuels than carbon take LNG?
We can use a little bit, but at the same time, we have a long-term agreement for the LNG offtake, no? That also we have to take that LNG offtakes. So in case of any good market for LNG, slightly some consignment we shift to the market, and we use naphtha. But otherwise, long-term commitments we have LNG, and that will continue.
That's all from my side. Thank you.
Thank you so much, sir. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you very much for the call. So, the first part is in terms of the potential growth for, say, FY 2026, 2027. Do you have any visibility on the capitalization of the CGD assets? How much would that be, and what is the kind of upside we can expect on volumes and EBITDA per SCM, and broadly in terms of profitability?
Let me explain about the CapEx first. CGD from this year onwards, we are targeting around 3,000-3,500 crore CapEx target for CGD business. That includes for our CNG stations, our last- mile connectivity for PNG connections, and the networks of the CGD. In terms of the volumes, this year, we are expecting around 120 TMT volume from the CGD sales retail. Maybe this growth will continue. Maybe we are expecting 15%-16% CAGR will continue for the CGD side, because the network we are expanding every year, we are creating 300+ of CNG outlets extra we are adding to our network. These volumes will grow around 15%-16% of growth subsequent year.
In terms of the number of CNG stations in your standalone GAs, can you give us a number, and how do you see that you know grow in the next two years?
We are expecting 150 CNG stations this year. Next year, 160 is our plan. 2026, 2027, 182 we are going to add, and 2027, 2028, around 200. Maybe around 800 CNG stations in the next two, three years we are going to add.
How many do you have now as on date, which are in commercial operation?
600+ we have in our own retail GAs.
S econd part is, if you look at the refining business, what is your reading in terms of any potential growth levers, like capacity reduction or improvement in petrol and diesel demand globally in India? So where do you see the outlook for spreads? I understand it's volatile, but in terms of the fundamentals of demand and supply, is there any visibility on supply reduction through capacity rationalization? What is your take on that?
Supply side what we are at least estimating is that this, whatever spreads have been moderated in the last couple of quarters, this will continue for another couple of quarters. Because in case of supply chain, actually we are expecting from the demand side. Once the cleaner demand picks up, the entire demand supply gaps will be corrected in terms of gasoline and diesel both. We are expecting at least after the winter, maybe next year, beginning of the quarter, the spreads will improve.
O ne last thought on petrochemicals. How do you see the outlook for Kochi petrochemicals? And, how do you see the, outlook for your, Bina cracker? Because right now, margins are at multi-year trough, so there's an expectation that may not improve till CY 2027 or 2028, according to global consultants. So would that have any impact in the term of the timing of your, Bina petrochemical project? What is your reading on that?
No, couple of things. One is PDPP, if you see our operating capacity has gone up to 80.2%. This is almost nothing but again, the world average, plants for petrochemical, this at least on the operating, reliability side, we have achieved 80.2% in PDPP. On the profitability side, anyhow, it is international price, dependent. So due to the Chinese demand, the prices on, are moderated, but still we have made a good amount of 0.79, GRM barrel for PDPP. In terms of Bina, anyhow, the commissioning will happen in FY 2028-2029. So by that time, the additional supplies or whatever price corrections, it is going to, continue, but by that time it will correct it. Long-term analysis, if you see, it is a good spread for, petrochemical for Bina also.
But anyhow, that we commission the first consignment will come only in FY 2028, 2029. By that time, the prices will correct.
Thank you very much, sir. I wish you a Happy Diwali. Thank you very much.
Thank you so much, sir. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead.
Thank you, sir, for the opportunity. I had a question on the auto fuel margin. They are currently at quite high level, and oil price has corrected. Would we be passing this to the consumers in the near future, or is it sort of being held at the current level because of the lower refining margin to keep the overall margin in a healthy bucket?
On the pricing side, actually, we cannot comment exactly at this point of time, at what point of time we can pass on the benefit. Still, we have to wait and see how the crude prices will stabilize, because any small geopolitical tensions or else, the prices will shoot up again. We have to wait and see for a longer period of time. Once the crude price stability comes, then we can look at it on the pricing side.
... So is it primarily linked to the crude price stability, or is it also linked to the lower refining margin as well?
No, both. You have also to look at it, no? Crude price as well as also.
Sure. And what would be sort of the longer- term comfortable auto fuel margin that we can look at? Is it three and a half per liter, four and a half per liter, which allows us to sort of meet a sustainable margin in the system?
I feel around three point-
Ladies and gentlemen, the line from the management has been disconnected. Just give me a moment while I reconnect them. Please stay connected while we reconnect the management.
Hello? Hello.
Ladies and gentlemen, we have the management on line. Please go ahead, sir.
Can you repeat the question? I think line was disconnected.
B asically, I think I was asking what we consider as a sort of a sustainable good fuel within auto fuel margin. Would it be in the range of INR 3-INR 3.5 per liter, or would we require higher?
We are expecting around INR 3.5 per liter marketing margins. It is sufficient for our needs. Whatever capacity we have announced, for the internal generation requirement, up to INR 3.5 per KL margin required.
Right. In terms of the new refinery plan, there has been several media articles in terms of finalizing the location and other stuff. Would you be able to share more details or comments around it? At what stage of the selection we are in?
Still work in progress only because if you see, we are short in refining, and we want to enter a big way into petrochemicals. We are continuously exploring opportunities. Wherever opportunities are available, we want to put to bridge the shortfall, whatever refining side, and little bit investments more on the petrochemicals, but still work in progress. So once we conclude on that proposal, then we can explain the details.
Would it be 100% equity owned by us, or would we be also looking at some of the strategic partnerships as well on the refinery?
All options we are looking at it.
Last question was on the CGD side. You mentioned that we will be doing less than our planned allocation of INR 48,000 crores. So what results into the change in the plan?
No, this is, this is required for the minimum work program over a period of eight years. Now, only thing, when to invest is the question, whether immediately in the next two, three years we have to invest or a little bit gap we have to take and subsequently, after seeing the volume, we have to invest. That is where we want to take a call. T he volumes have started picking up, and number of CNG stations are going up. Mainly in terms of the CNG connections, there actually we have to wait and see how the required capacity requirement is there.
Right. And with the recent deallocation of the gas for the CNG, the purchase price and in that sense, the margin would have gone down for the CNG. So does that sort of alter the thinking or we think that the margin will still remain reasonable?
No, if you see long term, finally, it's a deregulated product. Even the margins are thinner for a short period of time, some point of time, the pricing is correct and, prices will revise. So long term, if you see whatever cost take off, it will probably pass under the margin. It's a completely deregulated market. In the short term, there may be squeezing of margin, but we are not foreseeing any bad situation for a longer period of time.
Thank you, sir, for all this clarifications, and Happy Diwali to you.
Thank you so much, sir. The next question is from the line of Sumeet Rohra from Smart sun. Please go ahead.
H i, sir. Very good morning to you and your entire team, and wish you a very happy Diwali. You are more as an investor, rather than an analyst. So to see. I would request you to be patient and please hear us out, sir. So firstly, numbers have gone up, like LPG-
I'm sorry to interrupt, sir. Sumeet sir, your voice is not clear.
Just... Is it okay now, madam? Is it okay now?
Yes.
Thank you, sir. F irstly, I would like to touch upon a couple of things from a clarity point of view. A bout INR 2,400 crore of impact in the LPG headwinds. You also mentioned that you had some refining loss, which is not quantified by management. So, sir, if I understand it, the numbers would be about INR 5,000 crore of profitability. Am I correct on that?
Not clear your question, because we actually disconnected. But however, let me clarify. Our profit after tax, after observing LPG losses, INR 2,397 crore. During this quarter, our LPG underrecovery we have around INR 2,100 crore.
You observe the LPG loss of INR 2,100 crore. Am I right?
2,100. Right, right. And the marketing inventory losses of around INR 1,100 crore.
... I'm sorry, sir. The line from Mr. Sumeet has been disconnected. We will proceed with the next question. The next question is from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead, sir.
Good morning, sir. Two questions from my end. One, in terms of the Bina Petrochemical expansion, can you just give us an idea of where we are in terms of the FID, in terms of the equipment ordering, et cetera, as well?
And the second question was more in terms of the marketing side. I think on the diesel front, I suppose, in the second quarter specifically, we have seen your competition actually grow market share. You have been largely flat. So anything that you're doing on that, and to your earlier comment, in terms of on the CNG side, you're seeing slower growth in, I think, the metros and the Tier One cities versus rural. Can you just, talk to us about what's going on on those? Thank you.
First question about Bina Petrochemical project. Actually, the works are progressing well. The cumulative progress is 6.3% in physical terms, with a schedule of 7.6%. And all licenses for Bina Petchem and the current expansion units are onboarded, like units, HDPE, LDPE, swing units, PP units, all units. The licensor selection are completed and awarded. And BEP, the basic engineering package received for PP, and Butene-1 unit, and work on process packages of ECU, HDPE, LDPE are in progress. All EPCMs and PMCs for BPCL have been onboarded. All PMC consultants, everyone has been onboarded.
All contractors for site enabling works have been onboarded, and site enabling works, such as construction for boundary walls, site grading, including rock blasting, have to start, already started in the month of July and, progressing well in terms of the Bina. Second, in terms of detail, if you see still, we are getting a good market share growth comparative within the PSU framework. But overall, including PSU and private, we are losing a little bit of volume in terms of diesel. But we are pushing at least for the next couple of months, we are fighting in the market, definitely we'll go back and get the volumes.
Anything on CNG side?
CNG, we are expanding our retail network, CNG retail network. Earlier we said in the next couple of years, by 2027, 2028, we are expecting around 700 new stations, CNG stations, we are going to add in our own BP network, currently around 600. With this, the volume growth we are predicting every year, 15% to 16% every year CNG will be there for CGD at beginning.
Thank you.
Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchtone phone. We have the next question from Sumeet Rohra, from Smart sun. Please go ahead, sir.
I'm sorry, sorry about that. My call disconnected. Sir, coming back to my point so you said that you reported a INR 2,400 crore profit 2,400 LPG and petrol marketing loss. So effectively, our core number is about INR 5,000 crore. Am I right, sir?
You can, you can take that assumption, because if you add that, these two numbers to the PBT, and the profits will come around this level, around four point seven, something.
Sir, now my second point is that on the LPG point of view, now, since it is a regulated product and controlled by the government, and it's mentioned in the buffer account, so, sir, what is the, I mean, the communication or the dialogue you're having with the government? Because clearly one thing is everything that today, oil marketing companies and BPCL being the pioneer, is not being valued the way its true potential is. I mean, come to think of it, right? I mean, it could use our fuel outlets on a daily basis, but the way this company is being valued is a stark contrast to what its potential is.
Clarity on the LPG point of view with the government, would not only build market cap, but give visibility, and overall it would lead to value creation for all stakeholders, right? I f you can pursue this with the governmen,t get them to figure this out, that ultimately clarity on this is basically the withholding step on building value, because we are a consumer company, sir. Today, which consumer company in India makes INR 5,000 crores of profit on a quarterly basis? And, in spite of that, you see the market cap where it is .
So if you can pursue this matter very strongly, it would be very, very beneficial for all stakeholders, with the Government of India being the primary owner of this company . So, that's something, sir, if you can look after it could be best for all stakeholders. Secondly, sir, there was a recent development on some news basically, which The Wire was talking about Saudi Aramco and BPCL. Now, sir today, it's a matter of prestige and honor for us to partner with such a big giant. So, sir these things should be outwardly spoken about, right?
Because even today, BPCL also clearly says that all PSUs should build market cap and value. And clearly, sir such news is not being spoken about it's absolutely eye-popping that tie up with a company like Saudi Aramco it is a matter of honor and prestige. So if you can please share some insight and more into this, of what we are planning to do exactly, et cetera, et cetera, it will benefit everybody ? And sir, lastly, I mean, I wanted to understand is that, what are the steps we are taking for building shareholder value?
B ecause I mean, I get to understand that when people are also on roadshow with PSC, they always say that weightage is given to market cap creation. And today what are the steps that we are taking for building market cap, sir?
A couple of things. One is about the project. W e continuously look for opportunities, and the discussions are at a very nascent stage. Once we come out with a certain plan, definitely we'll come and brief, that is on the new project side. And the second on the market capital improvement, what we as a company, what we are doing is, to raise investments, so that to get a better capital employed, return on capital employed. And we have started, this, communicating with all investors. Regularly, we are interacting with investors, and, we are briefing what is our plans, what is the future plans, how the company strategic aspirations.
Those things we have continuously started explaining to the major investors, not only in India, when we are going outside India, Singapore, Hong Kong, major investors we are meeting and we are explaining what is our strategic aspiration for the company. What is the industry, how it is going to be evolved in the next couple of maybe five years or 10 years period, and what is our major ambitions. Many things, what are our initiatives we are taking, we are briefing to the entire investor community. Now it is up to the investors how much they can allocate for investment for this year.
I think the line from Mr. Sumeet has been disconnected once again. We will proceed with the next question from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
I f you're looking at your capitalization schedule in terms of your CapEx, how much should we assume you will capitalize in your first half of this year and over the next two years to assess the impact on depreciation? And to what extent will you be able to generate the return on capital employed, say, over the next two years?
No, CapEx. We currently are. Our internal target is around INR 16,000 crore, but we will be ending up around INR 15,000-16,000 range. We will end up the CapEx plan. The depreciation, anyhow, whatever current quarter depreciation is there, maybe slightly another INR 100 crore it will add up. The major CapEx depreciation will have only once Bina project commissioning, that is 2028, 2029. After that only, the significant depreciation will jump. Otherwise, all small projects, whatever capitalization is happening, there will be around INR 100 crore per quarter depreciation incremental will continue. Next year, we are expecting around INR 18,000 crore of CapEx plan. This is the CapEx plan for this year and next year.
No, no. How would the capitalization CGD in the standalone entity, wouldn't that add to your cost?
Around 3,000 crore we are investing every year. This year also, our target is around 3,000 crore. Out of 3,000 crore, maybe 75%-80% capitalization will happen, and the other 20% work in progress will continue. Next year also, similar levels, we are expecting around 3,000 to 3,500 for CGD.
On this capitalization CGD, when do you think you'll be able to get normally return of maybe 10, 12, 15%?
We already returns have started from CGD side. On the PNG side, the volumes are not picking up, but otherwise, PNG returns are coming. The volumes already this year, we are expecting around 120 TMT. Next year also, it will have a good growth of 15% we are expecting. Only PNG side, the volumes have not been picked up.
Okay, sir. Thank you very much.
Thank you, sir. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question. Sir, question is related to Mozambique asset. What is the update or the project status of Mozambique LNG project? That's one. Secondly, how much amount we have invested till date in this project? And as a part, lastly, as you have mentioned the CapEx plans for the next two to three years, the Mozambique commitments are included in it or not?
When it comes to Mozambique, whatever information we got from the main operator, the ground level work has started, but officially they have not lifted the force majeure. We are expecting maybe in the month of January or February, officially they may announce force majeure. But otherwise, the contractors have started coming back to the field, and the security situation has improved a lot compared to previous months. We are expecting hopefully by January, February, they may uplift the force majeure and the project can progress further. Second, in terms of the investments in Mozambique, as on 30th September, we have invested around $2.15 billion. That is almost 18,000 crore in our books. We are expecting another 20,000 crore investment in the next five years for the project.
Is that, is that already considered into the next upcoming CapEx plans of the next 2-3 years? That is a part?
That is a part. Whatever we have, 1.5 lakh crore CapEx plan, it includes for Mozambique as well as Brazil also.
And if there is further delay in the Mozambique investment or project, then our CapEx can come down by that amount?
CapEx can defer. In case if there is any delay, CapEx can defer. But otherwise, based on the current plans, the lifting of Force Majeure can happen January, February, then project will be as per schedule.
L astly, sir, considering the current cracks on the middle distillate, mostly on the petrol and diesel, can we assume that GRMs will rebound more than $6 a barrel in Q3, Q4, or more than that in the next quarter?
I t depends. It depends how the spreads will move, because otherwise, whatever current demand supply of the products, we are not expecting any big jump of spread, increase in the next couple of quarters. Only in case if there is any slight improvement in chemical demand side, then definitely the cracks will improve from the current levels. But otherwise, we are expecting similar levels of cracks only for the next couple of quarters. Maybe after the winter, a slight improvement will be there, but otherwise moderated refined especially moderated now.
Oh, thanks. Thanks a lot, sir, and I wish you Happy Diwali .
Thank you so much, sir. As there are no further questions, I would now like to hand the conference over to Mr. Varadarajan, sir, for closing comments. Please go ahead.
Thanks. Thanks, Shifa. So I have a couple of questions or points. One is about this market share variation we have seen this time around, we have had a market share gain. Is the source of the market share gain entirely the retail network expansion, or like is there any other reason why we have had improvement in the shares?
No, mainly retail outlet network expansion only, mainly because if you see the market share growth, it's representing from all the market. It's not that only one specific market it is represented. Otherwise, majority of market share represented small growth. So mainly for network expansion, actually, we are adding continuously every year, six hundred, seven hundred outlets, so definitely that.
On the CGD front, like, are we in a position now to give quarter-to-quarter basis earnings and profitability separately, or do you think it is still growing?
No, but profitability, we are not disclosing anything. Still, it is a very small amount compared to the overall profitability of the company. So once we reach the scale, from the CGD volume, because today the CGD volumes are only 120 TMT. Again, almost our sale is almost 10 MMT. So very small, insignificant at this point of time.
When you spoke about the number of outlets, so like you said, five hundred or six hundred on outlets.
That includes the outlets which we have given to the CBGs to operate, as well as-
In our own years. These are our own in our years.
These are our own years. That is a pretty large number on a standalone basis. Very much. S ure. So thanks a lot to all the participants for taking time out to join the call. I wish to specifically thank the BPCL management for giving detailed explanations as to the entire question and answer as well as briefing and the plans as well. Thanks everyone, and have a nice holiday and have a nice day. Thank you.
Thank you.
On behalf of Antique Stock Broking, this concludes the call. Please, the participant may disconnect your line. Thank you.