Ladies and gentlemen, good day and welcome to Bharat Petroleum Corporation Limited Q3 FY25 earnings conference call hosted by Antique Stock Broking 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 the star, then zero on a touch-tone phone. I now hand the conference over to Mr. Varatharajan from Antique Stock Broking Limited. Thank you, and over to you, sir.
Thank you, Sri. Very good morning to everyone. I would like to extend a very, very warm welcome to all the participants and the top management of BPCL. We have with us Mr. V.R.K. Gupta, Director of Finance; Mr. Pankaj Kumar, ED Corporate Finance; Mr. Srividya, ED Corporate Treasury; Mr. Chandan Negi, GM Pricing and Insurance; and Mr. Rahul Agarwal, Chief Manager, Pricing and Insurance. I'll now hand over the call to Mr. Rahul Agarwal for the initial disclosure and then for the initial report. Rahul?
Thank you, sir. Good morning. On behalf of VTCL team, I welcome you all to this Post-Q3 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 assessments of the matter, and we believe that these statements are reasonable. However, their nature involves a number of risks and uncertainties that may lead to different results. Since this is a quarterly results review, please restrict your questions to Q3 results. I now request our Director of Finance, Mr. V.R.K. Gupta, who is leading the VTCL 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 New Year. Welcome to the Post-Q 3 Results Con Call. Thank you for joining us today. I hope you were able to go through our results for the quarter. On the macro side, global economic growth is projected to stabilize at modest levels over the coming years. The World Bank forecasts flat growth of 2.7% for 2024 to 2026, while the IMF projects slightly higher growth of 3.3% for the same period. India remains as the fastest-growing major economy among emerging markets and developing economies.
The World Bank has retained its growth forecast for India at 6.7% for FY 2025 and 26, reaffirming its steady growth trajectory over the next two years. The Indian rupee hit an all-time low of 86.71 against the U.S. dollar in January, raising concerns about the inflationary pressures within the economy due to significant reliance on imports.
It remains to be seen whether the RBI will opt for interest rate cuts to boost economic growth while addressing the challenges of inflation and currency depreciation. In terms of crude, the market is expected to remain adequately supplied this year. Global oil demand is projected to rise by about 1.2 to 1.3 million barrels per day, underpinned by the expectations of the rate cuts in the U.S. and Europe and more stimulus from China. Oil supply, on the other hand, is expected to increase by 2 to 2.1 million barrel per day. The anticipated supply is expected to keep the prices in check in 2025. U.S. Energy Information Administration projects crude price to average $74 during Q3. Major products such as petrol, diesel, and ATF have grown by 9.6%, 4.8%, and 8.9% respectively.
Performance in Q3 2024-25: On the operations side, our refinery has achieved a throughput of 9.54 million metric tons per annum during the quarter, which is 107% of the nameplate capacity, in spite of shutdown at Kochi Refinery and Mumbai Refinery during the quarter. Our distillate yield was 84.86% in this quarter, which is one of the highest among Indian refineries. The product cracks for gas oil in Singapore fell slightly to $6.44 per barrel in Q3 from $6.83 per barrel in Q2, whereas the cracks for gas oil in Singapore have improved to $per 15.04 barrel in Q3 from $13.69 per barrel in Q2. Accordingly, our refinery has recorded a GRM of $5.60 per barrel during this quarter. On the marketing side, our domestic market share grew at about 4% year-on-year during the quarter to 13.43 million metric tons.
We continue to generate the highest throughput per retail outlet among our peers with a throughput of 154 KL per month, which is 140 KL per month on PSU average, driven by access to strategic markets and strong network along highways. We commissioned 108 new retail outlets in the nine-month period FY 2025, taking our total network strength to 22,921 retail outlets. To increase penetration of CNG in the overall energy basket, VTCL is aggressively expanding its CNG fueling infrastructure with mechanical completion of 183 CNG stations during April to December 2024 to 2025. We have achieved the highest-ever 15.56% ethanol blending during this quarter. We have commissioned two LNG stations at our company-owned and company-controlled retail outlets during the quarter and identified another 10 locations on strategic highways for installing LNG facilities.
We are expanding our foray into non-fuel services at our ROs through our in-house state-of-the-art café brand, Bee Café, where customers can experience gourmet coffee and snacks at the epicenter of EV charging gathering momentum. Bee Café would offer customers an upgraded convenience during their waiting time. We have commissioned 44 Bee Cafés during nine months 24 to 25, taking total Bee Café network to 15. Updates and new projects: The Ethylene Cracker project at Bina is a crucial initiative for VTCL, driven by the growing demand for petrochemicals. The project is progressing as scheduled with technology licenses on board for all critical packages, detailed engineering completed for a few fueling and other engineering completions. A significant milestone has been achieved in this project with the successful completion of financial closure.
VTCL secured a loan facility of INR 31,800 crores from a consortium of six banks, one of the largest single-loan arrangements of a corporate entity in India. The agreement was finalized on January 16, 2025. The Board has approved INR 6,100 crores towards pre-project activities, including land identification, feasibility studies, and environmental assessment for Greenfield Refinery Petrochemical Complex in Andhra Pradesh. During the previous quarter, VTCL Board has approved to enter into a JV agreement with Sembcorp Green Hydrogen India Pvt. Ltd. in the domain of renewable energy and green hydrogen, and joint venture with GPS Renewables Pvt. Ltd. for setting up compressed biogas plants across India. We have received necessary government approvals for forming these joint ventures during this quarter. The Board has also approved the formation of a JV with Praj Industries for setting up CBG plants.
The company aims to set up 26 CBG plants across India in the near future. VTCL has taken major strides in renewable energy by emerging as the lowest bidder in NTPC tender for a 1,200 MW solar PV project to develop, generate, and supply 150 MW to NTPC. This project, with a capital investment of around INR 750 crores, will produce 400 million units of clean energy.
Further, VTCL also secured a 30 MW NHPC solar PV project tender concluded on January 24. Without further ado, let me guide you through the financial highlights for the quarter. The revenue from operations today is INR 127,521 crores. The profit after tax today is INR 4,649 crores. Again, at an estimated CAPEX of INR 16,400 crores for the financial year, we have spent about INR 11,899 crores during April to December. Our standalone net worth as of 31st December is INR 80,305 crores.
The earnings per share for this quarter is 10.88 per share. As of December 24, we are at a fairly very low level of debt. The debt/EBITDA standalone gross borrowing level is 0.24. Overall, standalone gross borrowing is at INR 19,600 crores as of 31st December 2024. A gain, at these borrowings, we have current investments, including oil bonds, about INR 16,098 crores. At group level, the debt/EBITDA is 0.58 with gross borrowings of INR 46,500 crores. In order to reward our shareholders for their continued support, the company has declared an interim dividend of ₹5 per share. This concludes my comments, and we'll be happy to take your questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir. Very good morning. I have three questions. One, with respect to the Russian crude as part of our sourcing portfolio, with all that is going on in terms of the sanctions, what is the mitigation strategy we have in place in terms of securing supplies in case Russian crude is disrupted? How much was it as a percentage of our sourcing in nine months by 25? And if assuming that the discount on crude will no longer be there, what is the kind of impact on crude cost effectively? That's my first question.
Yeah. You see, historically, we are in a position to process around 34% to 35% of crude, which is coming from Russia. In fact, Q3 itself, the percentage of Russian crude processing has come down to 31%. A fter the recent U.S. sanctions, the supplies are coming down. We have finalized the Russian cargoes for the month of January and February, but in the month of March, we are yet to conclude on the Russian supplies. We are not getting sufficient cargoes for the month of March at this point of time. As a risk mitigation policy, crude availability is not an issue. Only the commercial benefits of Russian crude generally they need to offer around $3. So that commercial benefit may not be available in case Russian cargoes are not coming to India.
We are facing at least a 20% cut of Russian cargoes for the month of March, where these cargoes we can source from Middle East or WTI. In case of low sulfur requirement, we can take it from WTA, or any other grade, we can take it from Middle East on a spot basis.
Understood, sir. I s it fair to say that at 30% with the benefit of $3, that's around $0.90 impact on the overall crude cost on a blended basis that we have to sort of live with in the absence of Russian crude?
We are not getting any Russian cargo, but still we get some cargoes. There may be a reduction of Russian cargoes. It is not at zero. We'll reach zero level. We have to wait and see. It takes a little bit of time to rebalance the supply side.
Right. S econdly, on the CAPEX project, you mentioned the Bina Petrochemical and the Greenfield Refinery in Andhra Pradesh. I just wanted a little bit more granularity in terms of the petrochemical fleet of Bina. What is the timeline we are looking at? What is the investment done till date, and what is the overall investment for Bina, if I can get some sense?
For Bina, we have approved INR 49,000 crores at a gross level of total CAPEX investment. This is an integrated brownfield refinery, refinery CAPEX expansion of 3 million metric tons with around 3 million metric tons of petrochemicals. The project schedule will be May 28 2027 is our project schedule, completion schedule. As of date, as per the schedule, around 7.5% of milestones we have achieved. In terms of the financial closure, already INR 1,000 crores we have spent during this year, and most of the licenses we have finalized, and most of the units already the build-up and basic design engineering packages have been completed. Some units are pending. W ork is going on with speed, and we are expecting May 28 2027, the project coming in schedule, we will be in a position to achieve.
Sir, in terms of phasing, the bulk of the CAPEX will happen maybe starting FY 2026 or 2027?
FY 2026, 2027.
FY 27 is when we will see the bulk of the CAPEX beginning now.
Right, right.
Sir, in terms of the yield from the additional refining capacity, you said 3 million tons of capacity in refining and 3 million tons of petrochemical capacity. Is that correct?
No, no. Out of 3 million tons of refining capacity, the intermediates will go to petrochemicals. Overall, the net refining capacity will be added by 3 million metric tons. From the current 7.8, it will reach 11 refining capacity. But most of the intermediates will go for petrochemicals.
7.8, the complex capacity will be 11 million, out of which around 3 million tons would be essentially petrochemical output. Is that the understanding?
No, it's not like that. Out of 11, only I think 1.8 or 2 will go as an intermediary. That intermediary will do 3 MMTPA of petrochemicals.
Okay. One last question, sir, a housekeeping one. This quarter saw a sudden jump in terms of the staff cost. Can we just get a sense of what happened in terms of because the quarterly run rate was INR 7-INR 7.5 billion. This quarter, we've seen INR 1,200 crores plus in staff cost.
This is only one time. Actually, there are certain dues performance-related paid to the employees, which were pending since last two years. This particular quarter, it has been settled. That was the only reason this sudden hike. It is not a repetitive nature. For the year 2022 and 2023, and earlier years, there were some dues which are pending to be distributed. This quarter, we have distributed that.
How much was that, sir? Was it about INR 400-INR 500 crores? The entire difference?
370 crores.
Around INR 370 crores. Thank you so much, sir. I'll come back if I have more questions. Thank you a lot.
Thank you. The next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go ahead.
Thank you, sir, for giving this opportunity. I wanted to understand about the BPRL loan repayment, which is due this year. We have around INR 8,300 crores of repayment due. What's our plan? Are we planning to roll over this loan, or are we planning to pay this? H ow are we going to arrange the funds for the same in BPRL?
BPRL, whatever existing loans, mostly we are refinancing only, rollovers only, because we are not getting any cash generation on BPRL venture. W hatever loan repayments, we are repaying the loans, and we are refinancing. Mostly, all our refinancing is better terms. We are refinancing maybe 10 to 15 basis points. We are getting benefit only at the time of refinancing. But our plan is rollover only because we don't have any sufficient cash flow generation at BPRL venture. Whatever loans, the loans have to be rolled over.
I n terms of the Mozambique assets, would you also sort of run us through the time outlook in terms of the restart?
Mozambique, we are still waiting for the official announcement of lifting of the force majeure. What we are getting indications, any time they may look at it and lift the force majeure. Then, accordingly, the work will start. But expected completion of this particular project will be 2028 to 2029. The first gas we can see from Mozambique will be in FY 2028 and 2029.
Sure, sir. Thanks.
The next question is from the line of Vivekanand from Ambit Capital. Please go ahead.
Hi. Thank you for the opportunity. Recently, we saw that you won a tender to supply RE power to NTPC. Just trying to understand, what is the business model that you are envisaging in renewable energy? Initially, we thought that it was decarbonization of your own operations, but now it seems that you are pursuing projects where you will supply externally as well. Also, could you help us understand whether you will reach the two gigawatt target for renewable capacity setup by FY 26? Currently, you would be much less than that, right? Thank you.
Yeah. Our renewable aspirations mainly through three areas of business we want to do. One is, how do we make it Net Zero for our own internal operations, internal consumption? Second is, we want to create a separate business revenue stream by catering the services to the utilities. T he third one is to create the renewable assets for our own Green Hydrogen requirements, as well as to supply our cater to the market requirement for the Green Hydrogen. A ll these three areas we want to put capital allocation for renewables. Particularly, this particular tender is for the utility business. Around 150 megawatts, we are the lowest bidder in the NTPC tender. W e have one more option of going for opting another 150 megawatts under greenfield option. A nother tender recently we have one is 30 megawatts in NHPC tender.
W ith these, already we are going to create around 300 to 350 megawatt of renewable assets, mainly to cater for the utility business.
Okay. Thanks for this. Just to understand the targets that you have outlined, the long-term targets for renewable capacity, these would include all three combined, right?
Right, right, right. We have a very short-term target of two gigawatts we want to achieve, either on our own or through our JV companies. For that, already we have announced one JV incorporation with Sembcorp India Private Limited. This is a Singapore entity, 50/50 JV we are going to incorporate. We got all the statutory approvals and Ministry and Government of India approvals. We want to create this renewable asset through this particular JV wherever business opportunities are there. I n a couple of years, we want to reach two gigawatts. B y 2030, at least we want to create 10 gigawatts of renewable assets.
Okay, and would you be able to comment on the CAPEX outlay for FY 2026 and 2027 for the renewable aspirations you have?
For renewables, overall CAPEX for the next two years, we are allocating INR 10,000 crores. If you ask me split between 2025 and 2026, it will be around INR 3,000 crores, and between 2026 and 2027, another INR 3,000 crores. In the meanwhile, if we get any tenders, then accordingly, we can allocate more capital.
Understood. Thank you very much and all the best.
Thank you. The next question is from the line of Yogesh Patil from Dolat Capital. Please go ahead.
Thanks for taking my question, sir. Sir, our reported GRM of $5.6 per barrel was hardly $0.6 per barrel premium to Singapore benchmark. A part from refinery shutdowns in Mumbai and the Kochi side, is there anything which impacted the BPCL reported GRM?
Major impact, you see, there are a couple of reasons. One is definitely both refineries are shut down. The planned shutdown for 30 days for Mumbai refinery and 25 days for Kochi refinery. Kochi is 30 days and Mumbai is for 25 days. B eyond planned shutdown, our Russian throughput during this quarter is a little bit on the downside. Maybe 31% we have processed compared to earlier quarters of 34, 35%. T he second is this quarter, if you see, slightly the refining spreads are on lower side. Slightly. It is not major. But major impact is on account of shutdowns. Where our energy consumption is in a higher share, the throughput is on the lower side.
Sir, our marketing inventory losses were closer to INR 722 crores. Any particular reason? I just wanted to know how many days of product inventory do we maintain on general basis?
Only marketing, we keep around 25 to 27 days of inventory. This is a normal phenomenon whenever during any particular period if the prices are coming down, the fortnight to fortnightly differential of the RTP is the main reason inventory losses. If price goes up, definitely the inventory gain losses will be reversed. It happens every quarter, depends on the price trend. It is in tandem with the price trends only. There is no abnormal inventory positioning happened during this quarter. But when our price trends are on the downside, there will be inventory losses. When the price trend is on the upside, there may be inventory gains.
Sir, one more. Do we have any long-term contracts with the Russian crude supplier? I f you could provide some details on the crude sourcing side for the calendar 2025, how much long-term crude sourcing do we have and how much is the short-term? That would be really helpful.
Generally, we are following a principle of around 55% as a long-term imported crude, and balance 30% to 35% we keep it for spot. T his year also, broadly along the same lines, we are keeping around 55% of our requirement of imports through long-term. Mainly the sources are from Saudi Arabia, Abu Dhabi, U.S., Iraq, whatever normal sources of crude, we are allocating around 55% for long-term, and we are keeping for short-term spot basis for 30% to 35%. But Russian, we don't have any long-term contracts. Month-to-month, generally we go to the market and we procure crude, Russian crude. There is no long-term Russian crude.
Sir, last question. Sir, considering very weak GRM as of now, $ per barrel or even less than that, if the situation continues for a month again, and on top of that, we have to procure sour crude a little bit costlier expense to $2 to 3 per barrel premium, so don't you think this will create a little bit negativity on the refining profitability within a near- to medium-term? Please correct me if I'm wrong.
Current trends, if you see, the gas oil cracks have come down to almost zero or negative levels that come. But fortunately, still the gas oil cracks are still being maintained at $13 to 14 level. With this background, definitely there will be a small impact on the GRM side. But in terms of the crude sourcing impact on the GRMs, yes, Russian crude, if the weightage comes down in terms of the processing, there will be an impact. But impact is not much. Today also, the Russian crude is available only $3 to3.2 dollar discount. The overall impact, in case if the throughput comes down from 35% of Russian processing, there will be an impact. But crude is available. It is not that crude there is any tightness of crude. Crude is sufficient, c rude is available, and the o nly thing the different sources were to find out.
There may be an impact, small impact, in case Russian crude if we are not in a position to process fully.
Sir, do you think in the long run, will you get Russian crude supplies at a discounted rate after six months, 12 months down the line? What is your in-house assessment on this?
What we are facing, it is only a temporary phenomenon because Russian crude, they have not cut down their production. Some point of time, again, the Russian crude had to come to the market. Now, only thing because since so many vessels are on sanctions and some insurance companies are also on sanctions, so some time it required to rebalance the market. The supply chain had to be resettled. Maybe another 2 to 3 months, this resettlement can happen. New trader community can come into the market. T he flows will continue after some point of time.
Thanks. Thanks a lot, sir. This was really helpful.
Thank you. The next question is from the line of Iqbal Khan from ICICI Prudential Life. Please go ahead.
Yeah. Hi. Sir, just on the Russian discount, like you said, in Q3, it was around 3 to 3.5. L ately, I've been reading a couple of news that Russian discount, Russian prices have fallen down. I mean, and you said for the month of January and February, we are going to source with Russian crude. A re we enjoying this? I mean, I believe the Russian discount will have increased. A re we enjoying this benefit for these two months? Or I mean, can you just throw a light on what is the current discount and are we availing the benefit of this fall in Russian crude lately?
Generally, our spot procurement deals happens M-2, means two months in advance we complete the deals. F or January and February, we have completed the deals in the month of November and December itself. W e are getting sufficient cargoes for these two months. Only we have to wait and see for the month of March, how many cargoes we can get from the market. D iscount levels are similar. We are expecting similar level of discount will continue. But the volumes, we are not expecting the way we used to get the volumes in earlier months.
Understood. Understood. Thank you, sir. That's it. That's all I have.
The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. M y question was again on the CAPEX side. Y ou said that on Bina expansion, most of the CAPEX will start in 2026 and 2027. Are you providing any absolute guidance for 2026 as well as 2027 now?
Guidance. Just we are forming up the CAPEX numbers for 2025 and 2026. We have the initial indication. We have received numbers from all the units around INR 18,500 to 19,000 crores of CAPEX for 2025, 2026. We are to form up, but it will be indicatively the CAPEX numbers for FY 2025 and 2026 will be 19,000 crores around.
Okay. T hen 27, could it go up to maybe 25,000 odd?
Yeah. That is what we can take and expand INR 22-23,000 crores. But we are to firm up the number for 26 to 27.
All right, and the five-year CAPEX plan was about, what, 1.5 odd lakh crores, right?
Right. Right.
T hen that is still on, right? I mean, so in that case, you're saying that 28, 29 could maybe go up to a much higher number than to meet that target?
Our CAPEX aspiration based on our Project Aspire numbers are INR 1.7 lakh crores. We would like to achieve CAPEX number. Out of which, already the Board has approved for the projects around INR 1.3 lakh crores already committed, mainstream. The Board has approved the projects. Mainly around INR 25,000 crores, it will be coming from exploration sites from Mozambique and Brazil. A round INR 50,000 crores for Bina. A round INR 5,000 crores for our Kochi refinery petrochemical project. I NR 20,000-25,000 crores we are going to spend on CGD network expansion. These are the major components of our CAPEX. Yes, definitely next year onwards, next year will be around INR 19,000 to 20,000 crores. After that, 2026 and 2027 onwards, every year we may have to see around INR 25,000 or 30,000 crores of CAPEX.
All right. O n the GRMs, you mentioned that the GRMs were a bit weaker because of shutdown and lower Russian crude sourcing. Was there some inventory loss as well?
No. Generally, we don't calculate any inventory losses for refining sites because our average inventory is much less than 10 days. O ur average procurement cycle is one month. A verage inventory processing cycle for refining is only 10 days or 11 days. I t won't give any impact in terms of inventory gain losses. When you are keeping a 10-day inventory, your purchase cycle is one month average prices. Only sometimes some cargoes, very old cargoes, if it is there in the inventory where the actual manufacturing or processing is not happening in the same fortnight, there may be a small impact, but that is again we avoid any calculating of inventory gain losses for our BPCL refineries.
Understood. J ust the last question on the fuels. T he marketing volumes generally, I think, have been growing lesser than the industry growth, I believe, because of some gains by private refiners, private marketing companies. R ecently, there was some article as well that those outlets who are getting impacted are basically demanding better margins since their volumes are going down. I s there any discussion going on on that front to raise dealer margins?
Look, dealer margins already have been implemented. Revised dealer commission has been implemented during last quarter itself, I think. T here is no separate discussion. Yes, I agree. This quarter, we are not number one in terms of market growth point of view. But surely short-term, we'll come back and we'll get back our position.
Okay. Sure. Thank you. That's all.
The next question is from the line of Sumit Arora from Smart Sun Capital. Please go ahead.
Yeah. Hi, sir. A very good morning to you and your entire team. S ir, firstly, I mean, I would like to talk to you as an investor. S ir, see, I clearly see that you have done exceptionally well. You have made a profit of INR 10,000 crores after absorbing INR 7,100 crores of LPG under recovery. Now, sir, it is, of course, we all know that LPG we also understand, sir, that LPG under recovery is borne by the government. But, sir, clearly, I mean, one thing which you clearly must appreciate from our point of view is that this LPG under recovery is basically clouding the earnings overall for the earnings outlook or the earnings visibility basically for investors, for us.
I mean, sir, I would just like to highlight to you a few important things which I really think are very important from an investor angle because, I mean, we spend a lot of time on metrics, on GRMs, but the thing is that these things need to be priced by markets, right, which clearly is not being priced. Now, sir, I would just say I would like to highlight this to you that today, the market cap, I mean, the price of Bharat Petroleum or whatever you may say, the market cap is exactly what it was back in 2017. Now, sir, back in 2017, we used to make about 9,000 crores of profit. But today, sir, we are well making 20,000 crores of profit.
C learly, when public sector enterprises in India are going through a massive de-rating, okay, companies like ours, which are the highest quality companies in terms of ROEs and ROICs, are getting derated. Now, sir, I mean, it is something for which you should take significant importance is that today we make INR 20,000 crores and tomorrow by Project Aspire, we make INR 30,000 crores. But if the market doesn't get confidence on earnings and visibility, then how does it help an investor, right? I mean, because today, ultimately, investors also want to make return. T oday, if you see that if markets are not going to value earnings and we are going to trade at seven, eight-year kind of low prices, it is clearly saying that there is a disconnect between the reality of what you're doing versus the perception, right?
I mean, it clearly goes to show, right, because on ground level, you are delivering superb results. T here is no question on that front, right? But obviously, sir, the market needs to take cognizance of that. Y our PEs and your price-to-book ratios also need to adjust accordingly, right? I mean, this is something which I really think that you, the ministry, and everyone should really give it a very serious thought because the right communication basically from you, or the minister, or the ministry to basically investors will go a long way in re-rating these companies because you are doing exceptionally well on financial performance. But, sir, also, it is of significant importance that markets realize this.
I really would much think if you can take a serious look at this and please consider what I've said very seriously because it is in the best interest of all stakeholders. Now, sir, coming to your one question on this Russian thing, which has been exaggerated beyond imagination, is in fact, you see, today also Mr. Trump has commented on Russia to end the war. S ir, if the war to be end, then it would be safe to assume that nothing on the Russian oil gets impacted and everything remains status quo. Thank you, sir.
Yeah. One first question related to LPG, just I want to clarify. For the period April to December, we have a net negative buffer of INR 7,228 crores, which we have taken a debit to P&L. L PG is a controlled product. The pricing is being controlled by the government of India. Even earlier year also, government has supported around INR 22,000 crores for the industry . We are hopeful by end of the year, definitely government will support the LPG subsidy because this particular LPG pricing is completely controlled by the government of India. B ased on that, that advisory, we market the product. We are hopeful government will support for this particular under-recovery of LPG. Comes to Russian crude side, today, very short-term, there may be shortage of supplies of Russian cargo. If Russia-Ukraine war, if it ends, it is a good thing.
More supplies will come to the market. At the same time, if they remove the sanctions, then it is well and good. Complete supplies will come to every market, and there will be a good amount of supply compared to the demand growth, so if Russia-Ukraine war ends, it is good for the industry.
Okay. Thank you, sir.
The next question is from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Yeah. Good morning, sir. I have a few questions. The first one is basically in the current scenario, if I assume that diesel cracks remain, let's say, around $11 to 12, and petrol, say, let's assume around $5 to 6, and assuming that Russian crude share goes down to, say, around 10% to 15% with possibly no discount, then based on your configuration, what kind of GRMs your company can report?
We cannot predict the GRM because if you have a very complex working, not only the Russian supplies and crack, it depends on the yield, what sourcing of crude we take, and what premiums we pay at the time of crude procurement. But on an average, we are at least expecting the refining margins will continue at the similar levels because as long as the gas oil cracks are there. Gas oil cracks are $13 to 14 because our total processing capacity, the gas oil is the maximum quantity we process. A s long as the refining spreads are comfortable at $13 to 14 at gas oil, we can foresee the similar level of GRM. There won't be much impact.
T hen $6 to 7 GRM at the $13 to 14 diesel cracks is something which can be expected?
Yeah. We cannot give any guidance, but we can safely assume in case gas oil cracks are at $13 to 14 and gas oil is at $5 to 6. I t can give that much of GRM. Everything depends on what spreads internationally it commands for the next two months.
Right. S econd is basically on your this CAPEX plan. W hat is the peak debt that you envisage which you find comfortable for the company once you are at the peak of the CAPEX cycle?
We are not expecting the peak of debt will go beyond 1.1 to 1, is a comfortable zone we are expecting. On a standalone basis, when the projects are completing by 2028 and 2029, maybe our CAPEX will reach at that level max 1, which is what we are targeting.
1.10 debt equity will be the peak level that you have. Okay. Fine. L astly on this LPG thing only. R ight now, I mean, Q4, I think there has been some reversals. We have seen oil prices go up. LPG prices also seasonally have been up. I n near term, do you have any? O n top of that, the excise duty payments and all which also comes at the end of the year. A re you comfortable in terms of working capital or there could be a spurt in short-term debt and all?
I think when I begin in December also, when I see our debt equity at gross value 0.24. But at the same time, we have almost INR 15,000 crore of investment, either in oil bonds or these that you have investment. On net net, if you see the debt equity, very small, 0.1 or less than 0.1. When we reach by March and if there is no major spike of crude oil prices, at least we are not forcing any big jump of working capital requirements because our CAPEX also, we are ending up with the CAPEX estimated will be around INR 16,000 crores for this year. We are forcing whatever internal generation that is sufficient to meet our CAPEX requirement.
Excise duty payment?
Excise duty payment, yes. Every year, excise duty payment we have to pay before 31st of March. The next time, we have to take additional borrowings, working capital requirements.
Got it. J ust a small bookkeeping question here. ATF volume seems to have declined by a mile. A nything specific on this?
We have lost one customer in tendering process. That is the only reason, but anyhow, we got back some other customers. Maybe in the subsequent quarters, we can make up that volume.
Okay. Okay. Fair enough. Thank you so much and all the best.
The next question is from the line of Nitin Tiwari from Phillip Capital. Please go ahead.
Morning, sir. Thanks for the opportunity. Sir, my question is related to the Andhra refinery. If you can throw some more light in terms of what is the estimated size of this project and what is the total CAPEX? Y ou mentioned something around INR 6,000 crores that you've allocated. What is that for? B asically, what is the incremental CAPEX and timeline we are looking at in this project? T hat would be the first one.
We have already approved INR 6,100 crore of CAPEX for pre-project activity. This is mainly for land acquisition. We are looking for around 6,000 acres of land. There are a couple of components in INR 6,100 crore. One major component is for land acquisition and land development, and after that, there are certain DPR studies we have to carry out, certain field studies we have to carry out. It takes time, maybe another six months to nine months period, we will complete the DPR and field studies, so it requires a significant amount of pre-investment before taking any financial decision and the final decision in the configuration. Broadly, we are looking at it at 9 million metric tons or 12 million metric tons crude oil input. We are looking at it, which will have a very large integration of petrochemicals.
For example, if we are going for a 9 million metric ton of refining capacity, we are expecting at least 3.8 to 4 million metric tons of petrochemicals. That is where broadly we are looking for a configuration around 3 to 3.5 million metric tons of petroleum products and around 4 million metric tons of petrochemicals. Roughly, the initial indication of CAPEX requirement should be around INR 95,000 crores at gross level, and Government of Andhra Pradesh also, they have indicated a good amount of capital subsidy incentive. Maybe we have to wait and see. Once the DPR and field studies are over, the final numbers, we can firm up and reach the FID level. By the end of December, we can expect the final number.
Sure, sir. Sorry, sir. I missed on the total investment number that you mentioned.
Around 95,000 crores gross level.
95,000 crores. All right. S ir, the location is confirmed or you yet to decide on the location? I s it going to be a coastal refinery or inland refinery?
It will be coastal refinery. It will be definitely a coastal refinery. The location we have identified. Now, the execution process we have to start. We have a project. Government of AP also for land acquisition.
Understood, sir. Sir, my second question is related to a news item which was published around, I mean, excise duty exemption that Supreme Court has given to you for MOU sales of product between the Oil Marketing Companies. I f you can just elaborate a little bit on that and would that in any way be accretive on the margin side for us?
Sir, referring to the recent Supreme Court judgment on one of the old case of excise duty and excise duty calculation?
Yes, sir. I suppose that is the one. There was this news item which said that I think it was related to the sales which happened between the oil marketing companies on. Yeah.
Yeah. There is a valuation dispute because at tribunal level, we have not got favorable order. They have raised second demand. It went up to Supreme Court because when we purchase and sell any product between the OMCs, the transaction value is based on the purchase price. Whereas your department contention is that it should not be at purchase price. It should be based on some other method we have to derive because the RSP is different than the purchase price. Because this dispute is going on since a long time. It went to Supreme Court, and Supreme Court has sent back to the tribunal to reassess the assessable value. But we are going to put a review petition and try to wait and see how the tribunal recalculates that assessable value.
Okay. Because I think the news item mentioned something like that, that excise would be exempted on this sale and purchase. T herefore, I thought there's any benefit accruing to us because of that exemption.
There is no exemption of excise duty. There is no exemption of excise duty. It is a dispute on the valuation rules. It's a dispute on the valuation.
Understood, sir. Thanks, sir. That is all from me.
The next question is from the line of Hardik from ICICI Securities. Please go ahead.
Hello.
Yeah.
Hi, sir. A s we have seen, the crude oil prices have taken a sharp rally, and it has in recent weeks crossed $80. A ny thought on if price again crosses $80, any thought on price side to be taken? Any initial sense on that?
No. If you see the demand-supply of crude market, if you see, at least we are expecting a good amount of supply of crude there in the market. Only very short-term reaction in terms of Russian crude supplies. There is a little. But we are not forecasting the crude prices will come in at this level. [They'll] try to come back to $75 to 80 dollar range only. It's only very short-term reaction, crude prices are at this level. Okay. Okay. S ir, one more thing. We have reported a marketing inventory loss, right? But at the end of the quarter, there was a spike in the diesel or petrol international product prices. I just want to understand what led the inventory loss? I f it's a real inventory loss, would it get reversed in the Q4?
Generally, how we calculate inventory losses, the inventory loss gains are in tandem with the price trends. During any particular quarter, if the prices are in the downtrend, definitely there will be inventory losses. If the price trend is on the higher side, there will be inventory gains. T his will continue every quarter. It all depends on the price trend. The Q3, there is a reduction in the price trend. That is, there is an inventory losses. In case if the crude prices continuously hovering at this level, $80, maybe you may see the reversal of this one.
Okay. Okay. Sure. Thanks. That's helpful.
The next question is from the line of Somaiah V from Avendus Spark. Please go ahead.
Yeah. Thanks for the opportunity, sir. I have a few questions. F irst thing is on the Russian crude source, you did mention M-2. F or January, you would have booked by, say, November. Average price, the discount, that's how it will work? Or it will be a November price less discount?
No. We finance the deals only on the discounts. The price is always on the date of delivery month. For example, if the crude we are receiving in the month of January, the January month prices are applicable. If we are receiving the crude in the month of February, the February prices will be applicable. Only the discount and other terms, credit terms are fixed. Otherwise, the price, the base price of crude is variable.
Understood, sir. S econd question on the crude sourcing. W hat would be on a blended basis or non-Russian crude sourcing cost on a premium? What would the premium Russian crude that we will be paying?
No. We cannot compare actually every grade to grade because every grade of crude will have a different CAV. Means what the crude will give a value of output. I t is very difficult to compare which crude is better, which crude is cheaper. Every crude is cheaper or costlier depending on the refinery configuration, what type of products it can give. Depending on that, every crude will have a different value. W e cannot compare every crude, what is the cost, whether it is good or bad. Everything we have to see in terms of refinery configuration and what is the value of output this crude gives to the refinery. F rom there, we compare and we accordingly source the crude.
Understood, sir. I was just trying to understand for the same quality of crude that we were to replace the Russian crude via the other crudes. W ould it be in the current prevailing rates, whether it would be on par to Brent or we have to pay a premium to Brent? I just want to understand that.
No. Russian crude, generally, they offer a discount. Whereas other crude, they don't offer a discount. That is the only differential.
Okay, sir. T his is on long-term basis. W hat would be the tenure of this long-term basis?
Long-term crude generally go for one year only. Every crude term contract we sign for one year.
W e have a one-year volume of take and then every year.
Yeah. Yeah. Not for Russian cargoes, but other cargoes, around 55% of our import requirement, generally we sign off for one year term contract.
Got it, sir. Sir, also on this AP refinery , so how are we generally looking at it? O nce we are almost close to completion of Bina, we will start work on this. How are we just trying to understand the CAPEX cycle?
Broadly, we will come to a conclusion only in the month of December. By December, we will have the DPR, the configuration studies. The field studies will be over. There we will come to know what would be the CAPEX size. Then we are parallelly exploring to form a JV partner. After that, only we'll come to know what would be the broad schedule. But otherwise, the commissioning period we are expecting around approximately 48 months from the date of FID. We may have to start parallelly along with Bina. By the time Bina we reach at the mid stage, maybe AP refinery project will kick start.
Okay, sir. Sir, also Bina, the petchem, can you give the product slates of the 3 million ton output? Can you give a rough cut?
Yeah. I t's P is 1.2, 0.45 is PP, and the remaining is BTX.
The remaining is PP. Okay. Sir, also for the FY26, you kind of roughly said around 19,000 crores of CAPEX. Any split that you can give on this number across segments?
We will share. Broadly, mainly, it will go for CGD expansion and Bina expansion. A little bit of amount will go for exploration activity. We will share separately again later.
Okay, sir. Sir, also this LPG under-recovery number that we are reporting includes the normal marketing margin that we would have made that is also considered as part of under-recovery or that is over and above?
This is, for example, if we get this entire amount, that means we are ensured our normal marketing margin.
Okay. Okay. Sir, also on the CGD performance, can you give any update in terms of what are the current volumes like? A lso any thoughts on given that the recent gas allocation cuts? A nything changes for us in terms of how we are looking at it in terms of investments in this part of the business?
Yeah. CGD, CGD, we are on track in terms of MWP program. Mainly in terms of CNG stations, we have achieved 739 stations, almost 200% of our MWP. In terms of pipeline laying, we have almost completed 21,555 kilometers each kilometer of pipeline we have achieved. This is almost 137% of MWP. We are a little bit short in terms of PNG domestic connection. Our target is 1 crore 11 lakh, whereas our achievement is only 463, only 20% only we have achieved in terms of MWP in PNG connections. In terms of the sale, this quarter, CNG almost we have achieved 96 TMT for nine months period. T he volume growth is good. We are expecting a good amount of EBITDA incremental growth from the next year onwards from this particular CGD business. C NG stations, 24 and 25, our target is 150 stations.
S ubsequent years, every year around 200 CNG stations. That is where our broader target. W e spent around INR 1,200 crore of CAPEX in terms of CGD expansion during this nine-month period.
Hello. Mr. Somaiya, does that answer your question?
Yeah, it does. Thank you.
The next question is from the line of Vikas Jain from CLSA. Please go ahead.
Hi. Morning, sir. Thanks for taking my question. I have just one on this Russian discount. You're talking of a number like $3 per barrel. I'm sure this is mandated to us in India. How has this number changed over the last few months or say through this calendar year? What was the broad range that it has moved at?
During this year, nine months period, there is no much change. We have started beginning of the year around $3.5 to 4 range of discount. Now it has come down to $3 to 3.2 of discount. During this year, there is no major change. But compared to previous year, earlier we used to get around $8.5 discount during FY23 and 24. But during this year, it is almost at the similar levels of $3 to 3.5 in the beginning of the year.
Sir, just for the sake of clarification and confirmation, this is when you negotiate with them, this is the discount that you negotiate for, and this is for crude that they will deliver to India. We obviously do not take any responsibility on shipping, insurance, etc., etc., right?
Deliver, deliver, deliver, and it is preconditioned that they should not move the product in any of the sanctioned nations.
Okay. S ir, when you come to the point of maybe your guess that it will fall from 30% of sweep to 20%, is that because roughly if you look at the fleet that has become more challenging for them to use, that is somewhere around 20 to 25% of the fleet that, if I remember the numbers correctly, is? I s that how you're guessing? Or that's just a kind of a very guesstimate number that you're saying that it can fall from 30% to 20% or something?
In January, February, we have sufficient cargoes, Russian cargoes.
Thanks. I'm talking about.
Market window, we have not received any offer, but our guesstimate may be around 20% reduction. That means for the month of March, we may get around 20% of our requirement. Maybe instead of 30% processing, we may end up with 20%. But these are all only guesstimate numbers. Once we go to the market, when the window opens, then we have to wait and see how many cargoes are available.
Okay. Thank you so much, sir. Thank you.
The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Hello.
Yeah. Thank you very much for taking the question. If you look at the CGD business, my calculation shows that you're doing about 3.5 million kgs per day. Is that correct on this 96 TMT of done year to date? Yeah. 96 TMT, so per day I have to work out. Yeah.
Yeah. I f you look at the peaking of the CAPEX in the CNG business, your standalone GAs, how do you see the CAPEX in FY26, 27, and 28?
Yeah. We are allocating around INR 3,025 crore of CAPEX for CGD business for 2025 and 2026, and around INR 3,050 crore for 2026 and 2027. That is our broader capital allocation for CGD business.
W hen you say you are expecting EBITDA positive in FY26, so on the current infrastructure and the addition you expect in FY26 and this CAPEX, you will be able to generate positive EBITDA based on the current gas cost because especially reduction in the APM gas.
Yeah. W e are expecting 2025 and 2026 onwards the CGD business will have a positive EBITDA margin, and even the gas allocation has come down significantly from the APM gas to market gas, but temporary basis, we are not passing on the burden to the customer, but long-term definitely the burden has to be passed on the customers, so by 2025 and 2026, we are expecting a good amount of EBITDA margin from CGD.
I s it possible to share what kind of gas sourcing you are planning for the CGD business based on the current APM gas allocation between APM gas and market price gas and LNG?
No. Today, even for the latest quarter, if you see around 49% we are getting allocation and 50% is deficit CNG. We are getting it from markets only. Mostly on spot basis, we are buying RLNG. But we are exploring certain long-term contracts. Anyhow, it's a long-term trend. APM gas we may not get 100%. Whatever shortfall of APM gas, we have to make up through open market. W e are exploring some long-term deals, either Henry Hub based or some other index-based cargoes we are planning.
Yeah. J ust two more thoughts. One is if you look at your LNG and biogas plants and the overall CNG business, how do you see your rollout of LNG retail outlets in terms of CAPEX and the volumes you are targeting? S imilarly in biogas, what is the kind of volume we expect?
LNG, we have started commissioning, I think, two LNG stations already we have commissioned and 10 are in pipeline. Initially, we may not get a good amount of volume, but we are creating an infrastructure so that whenever the vehicle movement happens, definitely we are there in the particular business vertical. The CAPEX requirement is very small compared to the overall CAPEX size. Around 10 RLNG stations, maybe it will be around INR 150-200 crores. CAPEX is not a big thing for RLNG fueling station. In terms of biofuels, our plan is we want to complete at least 26 CBG plants either on our own or through JVs. We have already announced for incorporation of two JVs. One is with GPS Renewables and one more JV we are in the process of getting approvals that is with the Praj Industries.
The capital outlay for 26 CBG plants will be around INR 2,500 crore. Maybe another two years or three years time frame this project will be completed. The size of the volume will be around 100 TMT. If you take maybe 200 to 300 TMT of gas, we'll get from the CBG.
Okay. I n your renewable energy plants, ONGC is planning a listing. HPCL may also go for a listing. A re you planning to hive off your renewable energy business into a separate entity? Is there any thoughts in terms of value unlocking in the renewable energy business?
No. We are very initial stages of creating the renewable asset. Once we reach a particular scale, then we can look at it whether hiving off is a better option or keeping within the balance sheet is a better option because certain tax advantages we'll have if we keep with the assets within the balance sheet. W e have to wait and see. Once we reach a scaling up, then we have to wait. We have to see listing gives a better shareholder value or keeping in the same balance sheet gives a better value.
O ne last question, if I may squeeze in. I n terms of the refining capacity in the globe and Asia, do you see any capacity closures that you expect based on the data you are getting from consultants? And what is the trend you expect in terms of refining capacity, say, over the next one, two years? Is there any closure you're expecting?
Whatever information we are receiving from the consultants, there will be definitely there will be closures of refining capacity outside India, not in India, outside India, and if you are meeting the Net Zero ambition, so many people are expecting there will be closures. We don't know exactly what quantum of refinery closures will happen, but as a trend wave, everyone is expecting outside India, there will be some capacity closure.
Thank you very much and wish you all the best.
Thank you. Ladies and gentlemen, this was the last question for today's conference call. I now hand the conference over to the management for their closing comments.
Thank you, everyone, for participating in the call, and thank you, Mr. Varatharajan.
Thank you. Thank you, Mr. Varatharajan.
On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.