Good morning and greetings. On behalf of IAF and Securities, I welcome you all for the Q3 earnings call of VPCL. To help us understand the quarter gone by and share for Aman's outlook for the subsequent quarters. We have the senior management team of BPCL represented by Mr. Vijay Gopal, Director of Finance Mrs.
Theresa Naidu, ED, Corporate Treasury Mr. Z. R. K. Gupta, CGN Corporate Finance Ms.
Jenny, CFM Pricing and Insurance Dhirur Bhatar, Senior Manager of Pricing and Insurance and Piyush Bornea, Senior Manager of Pricing and Insurance. I first hand over the line to Piyush, who will make the opening remarks and hand the call to Director of Finance, who will share his perspective, after which the session will be open for Q and A. Over to you, Piyush.
Thanks Harsh. On behalf of the BPCL team, I welcome you 1 and all to this post Q3 results con call. Before we begin, I would like to mention that some of the statements that we would make during this conference call may be forward looking in nature, and we believe that the expectations contained in such statements are reasonable. However, their nature involves number of risks and uncertainties that may lead to different results. These forward looking statements represent only the current expectations and beliefs, and we do not provide any assurance that such expectation will prove correct.
Since this is a quarterly result review, Please restrict your questions to Q3 results only. I now request our Director of Finance, Mr. N Vijay Gopal, who is leading the BPCL to the IPL team for this call to make his opening remarks. Thank you and over to you, sir.
Yes. Thank you. Good morning, everyone. Welcome once again to the Q3 process sales conference call. You would have got handout leaving the quarter results.
I would like to touch upon a few points on the quarter gone by. The easing of COVID restrictions, Roll out of vaccination and festival season has helped us to boost demand towards the end of the last calendar year. The aggregator sector is now on a growth trajectory after a good monsoon. Credit growth has turned positive in real terms for the first time in the fiscal year. Our demand is up by 14% and all major states had improved GST collection in December as compared to last year.
VPC has recorded 24% growth in domestic sales volume from 8,940,000 metric tons in Q2 to 11,100,000 metric tons in Q3 of the current financial year. MSR has grown up by 15%, HSE by over 31% as LPG by 9% in Q3 over the Q2 of the fiscal year. Apart from the urban centers and major towns where we are traditionally strong, We have started registering better growth from rural and small town areas due to the aggressive retail outlet expansion during the year. We registered a growth in market share in MS and HSE of 0.62% and 1.05% in Q3 as against bond 1, 2 and bond Q3 percent in Q2 of the current fiscal year. In highway market during Q3, We secured highest growth among PSUs in view of the faster recovery of volumes due to transport movements and acquiring high volume customers through continuous engagement.
I'm happy to tell you that we recorded the best performance for HSD and MS in market sales among PSUs in Q3 of 2021. Particularly in a month, we grew by 6.76% and SSE by 2% for Q3 as compared to the Q3 of the previous year. However, public transport is not back to normal level yet. Schools and education institutions continue to remain shut in most parts of the country. Further due to the steep decline in tourism, entertainment, etcetera, slow recovery in services sector still remains a concern in case of demand for transportation fuels.
As scheduled international flights are yet to commence and with various restrictions still in place around the world. Our ATO sales is at around 54% less as compared to Q3 sales for the previous year. However, There is a 34% increase in the Q3 as compared to Q2 of the current fiscal year. With multiple Virus trends still posing a threat and lockdowns continuing in various parts of the globe, the product tax remains subdued. MSNAP declined from an average of about $8.19 per barrel in Q3 of the previous year to just about $2.97 per barrel in to Q3 of the current financial year.
HSE tax declined from $15.41 to just over $4.34 per barrel. When we compare Q3 to Q3 of the previous fiscal year, the Indian basket of food has declined from $63 to $45 The rupee has depreciated from INR 71.23 to INR73.74. BPCL GRM stood at $2.47 to a barrel in Q3 of the current fiscal year as compared to the $3.23 per barrel in Q3 of the previous year. However, BP sales has the highest amongst the oil CPUS. Product tax have slightly improved further in the month of Jan 21 over the Q3 numbers.
Our refinery throughput, which was around 76% during the quarter too, has increased to 105 as compared to over 5,630,000 meter tons during the Q2. Refinery throughput, which was moderated earlier due to low demand, has considerably improved. Our display yield has improved to 86% as compared to the Q3 of the previous year at 84%. Our EBITDA has improved by over 68% from INR 3,221 crores to INR 5,401 crores for the Q3 when compared to the year on year. Profit under tax has more than doubled from INR 1261 crores INR61 crores for the quarter 3 of the previous fiscal year to INR 2,778 crores for the Q3 of the current year.
Profit after tax for the 9 months has increased from INR 4,044 crores to INR 7,102 crores year on year. We see software taking into account expenditure on ESPR scheme amounting INR 5.44 crores and cost of the VRS scheme in morning to INR706 crores. With the easing of lockdowns, we have revised our CapEx target to INR 9,000 crores from the earlier target of INR 8,000 crores. We already spent INR 5,688 crores during the 9 month as we close the year. During the quarter passed by, we have added 7 30 retail outlets.
During the current fiscal year, we have already added to 692 new retail outlets. Last year, we had 1447 new outlets. And we hope to have 2,000 more outlets in this financial year overall. A new Jetty JD 5 has been commissioned in Jan 2021 for receipt of crude oil by Mumbai refinery. This will enable MR to receive fully loaded U.
S. MAX vessels, leading to considerable savings in crude freight costs. Our borrowings at 31st December 2020 was at INR 24,674 crores. With the further ease from INR 27,849 crores at loss of Q2 and a peak level of about INR 41,800 to the end of March 2020. These are excluding the risk obligations amounting to about INR 6,228 crores at the end of the Q3 of current financial The debt equity ratio as of the end of Q3 is 0.60 as compared to 0.63 when compared on year on year.
The debt equity ratio has thus come down substantially from the level of 1.26 at the end of the financial year 2020. As on 31st March 2020, we had around INR 6,200 crores outstanding receivables from the Government of India for our condo subsidies, which has been steadily coming down. As on date, the dues amount to about INR 2,200 crores. There is no under the quality on SQ PDS and minimal subsidy on LPG. I now invite questions and for clarifications.
Thank you.
Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question co assembles. The first question is from the line of Vijay Sarda from CHRISTISA Investment. Please go ahead.
Good morning, sir. So just two questions. One is on how is the progress on divestment happening? We have got this interim dividend of 16 now and we were expected news on Nimaligar Refinery high off or basically sell off to some company. So what is the progress there?
And last, what is going to be a status on the investment, which is lying on our books? So will that we separated or cut out as a one vehicle and this year we'll be distributing the proportion. So this is the one question. 2nd, just wanted to understand, sir, we have declared interim dividend of INR 16. So, I think declare date for the same into dividend date.
And secondly, sir, if the date is before like this expiry, I think many of our investor in the business, to invest through these futures also. So if the due date is within this month, then they will get affected by this kind of dividend outflow, dividend investment. So if it can be kept after this expiry that will be quite helpful for the investor who invest through the to future notes. Yes. You are asking too many questions in one question.
To answer your last question, The record date for IntraNuvent is 17th February. I don't want to answer other connected questions because I don't understand that kind. As far as the numerical divestment is concerned, BP7 has a 61.65% stake in Enawel, which will be divested to a consortium led by Oil India in which Engineers India is also a member. And out of the 61.65%, 13.65% of the stake will be given to the government of Assam, who has a right of first refusal. And they have actually taken that right and the toll that they are prepared to take at the price at which the deal is closed with the whole India.
So we are on the job and we are very serious about it. The sale purchase agreement for this deal has been approved by the BPC Board yesterday. We have shared that with Cowal India and we are also doing the valuation exercise to our transaction advisor, which is Deloitte and the legal advisor and asset valuer. We are very confident that barring unforeseen circumstances, If the government approvals are coming in time, we should be able to close this deal as we close the financial year. For the BPCL divestment, we Avaya's data room is ready for from our side, the digital data room is ready.
We are waiting for the transaction adviser and ZVAM to advise to whom this facility should be made available.
Yes. Thank you. The next question is from the line of Avdud Samnis from INGRED Capital. Please go ahead.
So my first question relates to your ENT operations and I'm sure you're going to accuse me of quite a bit of suspicion there as well. So in the last 6 months, you have impaired around 9 ENT blocks. Firstly, I want to know whatever is impaired at the moment all those blocks will be relinquished. Secondly, the extent of impairment, which is around RMB 15,800,000,000 in broadly around half of the network as on March of BPRL. So would it imply any additional has there been any additional equity inclusion into DPL at this point of time and a related question on that is, if you could share what are the consolidated debt number including lease as on end of December.
Then in terms of the actual accounting of the SEK 15,800,000,000 which hedge is it going to be because there are some part, which we just said is exceptional. If you could share out of the RMB15.8 billion, how has it accounted, which line item in the account? And lastly, in terms of the interest of cleanup over, I mean, I just specifically wanted to ask less on Wahoo, because this covers 80 5. Is there still letters standing in the books at Bookbaldy?
Okay. Can I answer E and P questions first and then we'll take that exceptional items? On the E and P side, if you see the world oil measures have all impaired substantial amounts. Chevron, Exxon, Shell, anyone have done that and we have followed the best practices in our exploration subsidiary, BPRN. The major impairment has happened in investment we have and I said in Brazil, SEAL, where we saw the prospects and the recoverable results and they have taken a certain crude oil price assumptions, which required an impairment portion to be created.
Nothing to worry about that. It is in BPL books, it has not spread to BPCL because overall BPC investment continues to remain intact at this stage. And this environment will be probably reversed if the We have taken a very conservative approach to creating the impairment following the best global practices. The other 9 small blocks where we have impaired engine blocks mainly are all very insignificant for BPRL. I do not know the exact details of write off where the environment has been made because these are 9 small blocks.
We can share the data with you subsequently. Yes. On the effect of this impairment to some portion, we have presented an exception item around INR266 crores because that is the impairment rooted to the subsidiaries and some other cases of impairment, it is rooted through Equity Accounted Investies. The consolidated.
And last part of your question, our total debt asset in December is INR 24,674 crores. This is excluding the lease liability, which is amounting to INR 6,228 crores.
Thank you so much. And has there been any additional equity inclusion in BPRL in the 1st 9 months?
In this year, we have introduced the 6 And we are committed to invest in BPRL further because as per the CCA approval for the Mozambique development. We have taken the permission from CCEA, the Governor of India to increase the equity capital of BRL from 5,000 crores to 15,000 crores. So we are committed to standby BPRL during the period when they developed the Mazarvik Kias, which is a market project.
Yes, but this 650 is not related to Mozambique expansion, right?
Sorry. Yes, it is because that is where they need money. They have a project where they need to spend about $2,000,000,000 So they have a seventy-thirty equity the equity ratio, the equity has to come from BPCL, right. So it is linked to Matamika essentially. And as the Brazil development happens, we may need to go to CCA again and there will be further NPT infusion is required.
Great. So if I misplease, 2 more separate questions. One is, given the extent of DRAs that has taken place, could you give us some sense of what is the normal for us, the staff course that would be in standalone accounts in FY 2022. And second question is any update on the in the in Cauchy Refinery. I think you have said in the last call that it will be done by March 21.
Is that still that? Thank you.
Yes. Actually, our strategy has been to reduce the manpower numbers. It is not only the VRS announcement of the year 2020, which has evoked very good response. As an organization, we believe in optimizing the number of manpower. We have reduced steadily over the years.
If you take the last 10 years, In spite of massive expansion of BPCL, the manpower numbers has come down considerably over the last 10 years. It is our policy to continue to do that. We are not recruiting people only for the purpose of providing employment. That is the first part. And if you say the employee expenditure for the year, it is about 869 almost for the quarter.
And overall last year, the total was about
9 months.
Yes, 9 months, it is INR 3,344 crores and the whole year is INR 3,691 crores. So, mine power constitutes a significant part of our total operating expenditure and therefore we are committed to continue to rationalize the mine power going forward. That is the first part of your question. And second was number of employees is today around 9,600. I don't have the number of HPCS.
Yes, then there was another question? No. Okay.
Thank you. The next question is from the line of Nafisa Gupta from BofA Securities. Please go ahead.
Thank you. Good morning, sir. So my first question is regarding the other income in the Q3. Is it possible to build the split of the other income Because it was substantially higher.
Yes. The other income has gone up substantially because of dividends from NRL, which amounts to around INR 612 crores.
All right. And the second question is regarding the deal with BRL. Any updates on that And the timeline is difficult.
Yes. As far as BRL, Omani stake, we have been negotiating. Think we have reached the first understanding with them already. And we are reached the stage where we can confidently say that Disclosure and regulatory filing is expected anytime soon, maybe in the next 10 days of today.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, The next question is from the line of Anupam Agarwal from Credit Suisse. Please go ahead.
Yes, good morning. My question is on other expenses. This quarter and rate of INR 3,900 crores. Would you say this had some COVID related benefit in terms of lesser, etcetera, travel, etcetera? Or know this is the new base for us.
Can you just explain if this is a new base or this had some savings? Actually, it is not holiday related. The other expenditure mainly was higher because of 2 specific reasons. We are a VRS debit and BRS was announced and that's actually the entire amount was debited, which is about INR 700 plus crores and about INR 5.40 crores, I will call it ESPs, which is the discount which we give to the employees, the total amount of discount will be around INR 1,000 crores. And as per the accounting convention, we have done it in phases, 1st quarter and second quarter together has second and third quarter together have taken about INR 544 crores.
These are not going to continue. These are one off events. No, sir. Actually, I was asking, adjusted for all this is our other expenses were INR3900 in this quarter, which is lower than what our usual run rate has been. So I'm asking this adjusted number of INR 3900 crores, if this has some Some amount of savings because of lesser travel during the COVID period or is this a new phase for us?
No, actually, you see the particular quarter, the throughput is also lower at refinery side and there is a small savings in respect of operating expenditures. The savings may not be repeated in the subsequent years because this year on account of travel and various to low initiatives that expenditure is low. The one time expenditure this quarter is only ESPF around INR 4.40 crores. But otherwise, this may not be the new normal, a little bit lower expenditure this year, but it may not be good in the subsequent years. And my second question was on the personal cost.
So INR 800 crores this quarter, what is the extent, right? For example, you mentioned about reducing manpower and future also, but We are today the leanest organization in the oil space in the country. There is always hope for improvement as also you must understand that we are expanding very rapidly. We have actually added about 1500 outlets last year, 2,000 outlets will go up next this year. Our spectrum is getting expanded.
We, on an average, spend about 10,000 gross CapEx. So therefore, it is difficult to put a number as to how much number will come down on absolute terms. But if you see our track record of the last 10 years Manpower reduction, it's an indication that we are very serious about Manpower cost. So I will not be able to tell you how many more numbers will go away in this But ideally, we are trying to reduce the manpower by not recruiting and replacing people who are retiring on a normal basis. But it is impossible for us to reduce Manpower just for the sake of it.
Our idea is to optimize Manpower to ensure that Whoever is available is the best available in the country.
Thank you. The next question is from the line of Panakan from JPMorgan. Please go ahead.
Yes, thank you very much. So my question
is on the Mozambique
LNG project. We saw LNG On the Mozambique LNG project, we saw LNG prices surge and even though now while they are coming off, they still are at elevated levels. Now, sir, two questions related to Mozambique LNG. One is that can you give us a sense of when is the first gas expected at this point of time? We have seen external consultants talk about 2026.
2nd is, sir, can you give us an update as to how PPCL has tied up to its share of the Mozambique LNG. Has it kept it open to consume it internally or has it entered into contracts to set it down? Yes. The Mozambique LNG project is expected to provide the first gas to the consumers in the second half of calendar year twenty twenty four. That is an announcement from the operator side and Total is a very renowned operator.
They are known to actually deliver on their promises. We have no reason to doubt their conviction and the confidence that the first gas will come out in the second half of the year twenty twenty four. Regarding our commitment, it's 1,000,000 tonnes of gas per year coming from Madam Bik, starting from the year 2026. We have already a 2,000,000 base of customers and we have certain commitments to the Qatar Gas and also the Raft Gas. Apart from our commitment to go for spot gases to fill the demand.
We are very confident of absorbing this gap and our ambition in the gas in the next 5 years is to go up from 2,000,000 tons to 5,000,000 tons. So we find a huge opportunity for expanding the gas space in the country and we are committed to ensure that we will capture the gas market as it increases in this country from 6% of the energy basket to 15% as per the government's desire.
Thank you. The next question From the line of Shabri Hazarika from MK Global. Please go ahead.
Yes, good morning, sir. I have two questions. The first one is relating to your CapEx guidance for FY 2022 and there have been some reports that in media reports that certain projects like Poliolanol has been deferred or maybe canceled. So any comment on that and the CapEx guidance? For the year 2021, we have actually enhanced our number from INR 8,000 to INR 9,000 crores.
We have actually delivered INR 5,600 crores in spite of a pressing number of only 900 crores in the Q1. We are going to exceed 900 crores as we close year 2021. For 20 1, 2022, we have a target of INR10,000 CapEx roughly, and we are Not coming out of any of the commitments, we are actually conscious of the need to take a relook at our some of our expansion and plans like, for example, MRF had a residap creation project, so which we are now taking a look at it because especially because of the lease investment in the horizon, but all the approved projects by BPCL, we are seriously pursuing as it is. Okay. And second question is on BORL and NRL Q3 GRM and profits.
BRL GRM is around $2 and NRL GRM is $37
in profits.
Profit NRL is around INR 8.30 crores and the overall is a loss of INR 2.10 crores.
For Q3. For Q3. Right. Thank you so much.
Thank you. The next question is from the line of S. Ramesh from Nirmal Bank. Please go ahead.
Thank you and good morning. The first thought is now in your margins, we have seen that you are able to to increase your marketing margins, whether you take it in absolute numbers or per ton margins. And overall, if you see the total EBITDA coming to about $4 a barrel or 2,000 rubles a ton. So in terms of your own commentary in the past that you are looking at it on an integrated basis, Is there any scope in future to improve on this margin per unit or per tonne? Or would you depend on volume growth for your earnings growth in Q4 specifically and going forward in FY 2022?
That's the first question. Yes. Our marketing margins has to be seen on a long term basis. If you see the marketing margins of the last in the 3 quarters. Our margins were higher in the Q1, but it has moderated slightly to Q2 and the marketing margin between 2nd and third Okay.
So in terms of the upstream business, now you mentioned that you are for the environment in Bharat Petro Resources. So what is the current network in Bharat Petro Resources in your consolidated balance sheet? And how do you see this moving, say, in the next couple of years?
We can take that question offline. You can yes, we'll answer that or get back.
Okay. Yes. So just one last thought now in terms of your petrochemical project is on the implementation for your of the OXOLL COLL's project. So what is the latest timeline in terms of when you'll be able to get it commissioned and started? 2 of the units of PDPP is slated to be commissioned in March and one unit will take some more time.
It is essentially because of the licenses first to come down to India to actually be part of this commission exercise. So we have been trying to do our level best to see how far it is possible to do a remote inspection and presence by the licensure's representatives. So we are taking all the efforts possible to see how fast we can take these units on stream. As of now, we are fairly confident of coming to 2 of the 3 units by March of this year and the 3rd unit by May. Thank you very much.
That's helpful. I'll join the queue. Thank you. Thank you.
Thank you. The next question is from the line of Rina Shaft of Mashika Stock Broking.
Please go ahead. Hello? Yes, can you hear me?
Yes, please.
Yes. Thank you, sir. Thank you for the opportunity. Sir, my first question is on the debt that you have commissioned in Mumbai Refinery. You're saying that you are expected to save a lot of crude spread cost.
So I just wanted to understand where you are targeting your design operating expenses going forward and how much this particular unit will add to the benefit?
Crude and freight costs are not accounted as part of the operating expenditure. It's almost part of the crude cost. It is one of the elements of the land at cost of crude oil. And the benefit which we are getting is that we will be able to use a fully loaded SUS MAX for the purpose of transportation of crude oil into Mumbai, which is expected to have a huge benefit for MR's operations.
So can you just to satisfy how much can it be like? Because ultimately, I believe, freight cost would be not related to the crude cost and it would be somewhere fixed. So just wanted to understand how much it can improve your year end?
Yes, freight cost is not Definitely not straightforward. The correlation is not there with the crude cost. Freight has its own logics of moving up and coming down politic index based. So freight is again a matter of changing very drastically because it is also not a static thing. And we expect a substantial reduction, it can be about $1 to a barrel, what to the latest course coming down in terms of transportation, roughly at the current level, it can change.
Okay. Thank you, sir. That's helpful. And another question is, how much crude and production inventory and at what cost do you have at the end of the Q3?
Can you repeat that?
Crude and production inventory and crude cost at the end of those verticals.
Crude, We had 1,800,000 metric tons of crude. And product, we had around 3,000,000 metric tons as at the end of December 2020.
Okay. And crude cost?
Crude cost average rate was $53 per barrel.
Okay. Okay. That helps. Thank you so much.
Thank you. The next question is from the line of Idhya Darginde from ICICI Securities. Please go ahead.
Yes, thank you. Some of my questions have been answered. So one is on if you could share your petroleum diesel volume growth in January?
January? Yes, Jan 21, how is it, YOY, petroleum leasing?
So the growth for MS is for January 21 versus January 2020 is 6.83 percent, While for diesel, it is a negative of 1.05%. And also I'd like to state that in petrol, we are the highest among all the peers.
This is for January, isn't it?
Yes, yes.
And the second question was on What is your subsidiary move from government as of December?
INR 2,200 is the current outstanding.
And what was your remarks?
RMB 6,600. Okay.
One last thing, I Just want to confirm in response to one of your earlier questions, you appear to have stated that though the marketing margins may not be very relatively low In the current quarter, you expect it to be next year and the full period like FY 2020. In one of the earlier calls, you have stated INR 2 to INR 2.5 rupees. So is that what you said that next year you expect marketing margins to be in line with that?
Okay. We have not stated any specific numbers of marketing margins. What we said was that marketing margin has to be to the team on a long term basis. And what we stated was that Q2 and Q3 of this financial year represents normalized marketing margins. And we also stated that this trend is expected to continue on a long term basis.
Okay. Yes. Thank you.
Thank you. The next question is from the line of Wirtharajan from Systematics. Please go ahead.
Thank you. So can you give
us some breakups on the CapEx, which division and what end use for current year and next year and maybe if possible for the following year as well?
Yes. So, We have a plan of spending around INR 9,000 crores in the current year. So out of that around INR 2,000 crores will be spending in refinery, around INR 800 crores in petchem. Then marketing, which includes RO expansions and depot expansions and renovations is around INR 3,600 crores. And the other portion goes to our gas, DTR and Equity Investments and the pipeline.
For the next year, the plan is of INR 10,000 crores and this is a broad breakup which you are giving. So, refineries will be spending around INR 2,600 crores, but again around INR 9.70 crores and marketing would be around INR 3,200 crores.
Thanks, sir.
Thank you. The next question is from the line of Amit from UBS Securities. Please go ahead.
Yes, thanks for taking my question. Sir, why there has been so much delay in deciding the interested parties and opening up the books for due diligence because 2017 November, I remember, was the last day for expression of interest. So what has holded up this kind of delay? We really do not know. Okay.
And Asaf, what will be the process from here going forward. Like you mentioned that in the current financial year, we were looking to complete this deal. But now I think it seems very clear that it will be pushed to next financial year. Like how much sure we are that with these kind of delays on the government part or the transaction advisor part as the deal will be completed in the next financial year and what are the steps involved from there? No, this is a national note.
In our role, we are trying to aggressively pursue and complete the course rule by the end of this financial year studies before 31st March 2021. We see this investment, this BPM processes are to be fully complied with. It is driven by the Finance Ministry and Department of Investment and Public Asset Management. We are only facilitating the completion of for the formalities and opening the data room and providing clarifications to investors doubts and clarifications. Beyond that, our role is very limited.
So it is not possible for us to answer your questions about when it is going to be completed. I also have read like you the budget speech in which Honorable Finance Minister has mentioned for the deal to be completed and money to be paid to the shareholders. It's NREL or sir, BPCL. BPCL will not require a CCI approval. It is because it is 2 government companies transacting this business.
As far as I understand, it does not require a competition commission approval. It will require approvals at the government levels and as far as we understand that the government level at the top level is what is called an alternate mechanism, which consists of the Honorable Finance Minister or Petroleum Minister and Road and Transport Minister. Okay. Thank you. Thanks for your help.
Thank you. The next question is from the line of Maheshwari from Morgan Stanley. Please go ahead.
Thanks for the call, sir. Two questions from my end. The first was regarding PDP project you talked about 2 units starting up by March. So can you just talk to us about the entire process of ramping up this project and how you're kind of thinking up in terms of positive EBITDA contribution from this coming through now?
No ramping up is in this test. This is actually a capacity which is already signed and we are confident of using this capacity's full potential. Our industrial and commercial section of our BP has only test smart cut to these products. These are in both substitutes and the prices fluctuate because like in the case of petroleum products and therefore it will be difficult for me to put a value into the EBITDA. We don't expect a huge benefit which going to come in the year 2021 or even 2021, 2022 in terms of profit before tax.
It's a long way to think about it. Okay, sir. But the exports that
you were doing of propylene, will that come down and that should help at least reduce the losses?
Propylene, we are not exporting and we have a production capacity of 500 the TMT of propylene cochin, which is petroglyde and half of it will be consumed in the PDPP, other half will continue to be sold as propylene in the western part of the country. And we have a project for the folios, which Jawas mentioned in one of the questions, which is going to take the other to 250 TMT of toppling, which comes out of our FCCU in Cochin. Got it. And And so
the second question was more related to the refining itself. I think your jet fuel sales are still obviously lower compared to the normal levels while refinery utilization rates have ramped up. Can you just talk to us about your products slate now in terms of how much has that still getting converted to diesel or gasoline?
No, aviation, we will basically because we are predominantly catering to the global International flights is our major customer base because of the sale legacy. So about 60% of our customers are international flights And that's Raveelow. International sites are not opened yet. Domestic has almost reached about 80% of the pre COVID level. International sites are very, very few and a lot of restrictions are there.
That is the reason why our aviation turbine fuel sales staff not picked up as much as it was in the case of UMS or HSE. So we have a flexibility to use to aviation fuel or convert that into diesel. Just recently, our subsidiary by BORL has also completed the K-three years. So we are very worried about aviation fuel sales not happening because it is not going to affect our throughput at all. And our MSHS production will not be impacted by the reduction in the sales volume of aviation fuel.
Got it. Very clear. Thank you, sir.
Thank you. The next question is from the line of the Upulsha from Sumangal Investment. Please go ahead. Mr. Vipul Shah, may we request you to please go ahead with your question.
Mr. Shamir, we request you to unmute yourself if muted from your handset. As there is no response, we'll move to the next Question which is from the line of Sumit Rohara from Matthan Private Limited. Please go ahead.
Yes. Hi, sir. Good morning. My SmartSun Capital Private Limited. Sir, just a couple of points.
As an investor, I wanted to ask you, First, sir, you mentioned that in the Maligar, we hope to complete it by March. So, sir, can you give a broad sense of valuation? I mean, the kind of reports sir, which the media talked about is about INR 7,000 crores. Is that, I mean, something which is correct? Secondly, sir, you mentioned that you added about 1500 outlets.
So what's our total outlets currently? The other point that I wanted to check with you is on the government bonds. So do we have any government bonds and are those bonds going to be repaid before the strategic stake sale and investors can expect a big dividend payout because, sir, the point I'm trying to highlight here is that, as an investor, The more clarity there is, the higher the valuation of BPCL, the government will realize. But one thing which I'm noticing Is that after 2017 from November when the special interest date has closed, there's been no official communication. So that kind of It's keeping a very big cap on the share price of VPCL.
I mean, just to highlight this to you, sir, the share price of VPCL was 4.80 when the Nifty was 10,000. Today, we are at 15,000 and the share price of BPCL in spite of strategic sales is at 425. So it's completely absurd, right, because we know that the intrinsic value for as well, apart of the 4 figure mark. So sir, if there is clarity on the various verticals, there can be huge value unlocking for all stakeholders and frankly the biggest benefit of this will be the government of India. So, sir, it's my humble request, if the more clarity we can give, You know the higher value the company will command, which in turn will result in the government of India maximizing its potential of revenue.
So that's my request to you, sir. Thank you so much. I agree with you. Thanks for the comments. And the easiest question to answer is number of to the 3rd end.
As of December, we had 17,841 rated outlets. To your questions, some of them were statements. We also feel as management of BPCL that the current share prices of BPCL do not reflect to. It is based on various factors because if you see this on BPC alone, all the oil companies and why oil companies, all the PSU has not gone up the way other companies have gone up. So I don't know about the fair market, but we are very confident that the potential of VTCL is Not fully reflected in the current share prices, that much I know.
Then your lack of priority on the disinvestment process is a question that can be answered only by the government officials because we don't handle the sale of BPCL. It is handled by the government of India by the Department of to Public Investment Asset Management. For the NRR, I already mentioned that it is our intention to complete this date if possible subject to government approvals coming in time by the 31st March this year. Sure, sir. So on the valuation of Namalika, can we assume that about No, we are in the purpose of So, we have engaged a transaction adviser and an asset valuer for the purpose of valuation of NREL.
It's a growing concern, an operating company and having a steady profits growth and also they get a substantial amount of Infantiv in the form of access to the concessions. So valuation will be done using the known methods for valuation like DCF, asset valuation, So just too premature for me to comment on evaluation of a novel at these states. It will be made once deal is completely. Wait for about another one, 1.5 months, please. Okay.
Sure, sir. And just one follow-up on the strategic sales. So Mr. Tuohin Kante Pandey has basically categorically said that on Sunday that he expects the process to be completed. I use the word completed by June by Q1 FY 2022.
So effectively that means 30 June. So that for that to happen, the data room window would have to be given for how much period? Would it be 60 days? Would it be 45 days? Or I mean, would it be 90 days?
Just as a process to understand because This is what he's categorically stated. So my only point is that the more clarity we get, the better it is for all stakeholders. That's the only point I'm driving at. And so just one feedback, which I've shared with the company secretary as well. This process of giving dividend in the period when the settlement is on because so many hedge funds, so many investors come through the route of that the future segment and after highlighting this also to the company's activity last week, if this is ignored then sir, it's not a very good from an investor angle, right, that we share honest feedback to the company and it's completely ignored and not looked at.
I mean, it's not very professional for them to not look at our feedback. So it's my humble request to you to please have a look at it and in future such things will only assuming that you
are back.
Can I just request you to repeat the questions, Nigel? Because you are And the second thing is that as well as Mr. Pandit's statements are concerned, I am not privy to that. I am not in a position to either contradictory statements or risk confidence. We are ready with the datarom today.
It is for the debunker teller when to open and how many days it should be kept open. There is a vessel to tell them available. How much time it takes to see all that we have is a matter of opinion of the potential bidders and that decision We are ready for today. We are ready for the last 2 weeks as a matter of fact. So therefore, we are also eager and we are also equally supportive of our requirement of your suggestion that more clarity on this disinvestment can possibly increase the share price of CPCI.
Now about the dividend deterioration, dividend declaration is a broad call. We don't play the market. It is not our intention to help or harm the interest of for people who invest in deeply stressed about the timing of it. We have a consistent declaration of dividend policy. We are a very high dividend paying company.
And if you have seen the Deepgram guidelines, now the Deepgram is expecting us to declare a dividend or completion of every quarter. So it is not a private information, it is available in the public domain and it is our intention and it has been our consistent fact We have closed the accounts of this quarter ended 31st December with the highest profits in the quarter in the financial year and we found it fit to be rewarding our investors who have been patiently waiting for this BPCR to pay for consistently. We are interested in long term investors of BPCR. So we are actually committed with them and we will continue to do that.
Thank you. The next question is from the line of Pinakanth from JPMorgan. Please go ahead.
Yes, I'm sorry, just missed. What were the BORL GRM for the quarter, sir?
We got a DRM for the quarter $2.14
And NRN was $37 right?
Correct, correct.
Thank you, ma'am.
Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.
Then I was for the opportunity. Firstly, about this numerical refinery disinvestment, sir, is it going to be a disinvestment type or that we will see the interest from other PSUs also, it's categorically, Engineers India have also highlighted, if I'm not wrong, about participating in the sale. So is it going to be purely professionally bidding system or it's an arrangement that is going to 55 going forward? Okay. Can I answer this?
Enala disinvestment is actually placed on the cabinet decision that before the BPCS stake is sold to a strategic investor, and Nava should be divested. And government also has decided that the stake here is to be offered to a government company in the oil sector. And Indus has come from OID India. It is a consortium in which OID India and Engineers India are partners. Engineers India and OID India will jointly actually acquired the shares accepting about 13.65%, which will go to government of Assam because they have a right of first refusal and I have Evans' interest in acquiring this 13.65 percent to make its share to 26%.
It will be a professional valuation, I can assure you of that. And the valuation success is now undergoing. It is done by very reputed transaction and it will be an announcements basis. There is no arrangement for this. It's a commercial transaction.
Okay. And what is the kind of valuation, sir, we can look? Have you discussed it in the con call or I missed the part there? No, we will not be in a position to disclose our valuation because valuation is a matter of opinion from the sellers and buyers perspective. It requires somewhat time to get this disclosed.
Two payments will require the valuation at this stage.
Thank you. The next question is from the line of S Ramesh from Nirmal Bank. Please go ahead.
Yes, I just had a follow-up question on your refining performance. So your This slate has improved to see Y o Y, but your margins are lower and your high sulfur crude has come down. So Can you explain why your margins are now? Is it only because of the spreads going down or what exactly is happening on the refining side? Yes.
In this world today, there is no much difference between losses of high sulfur. So it makes no sense to buy high sulfur because Prophesying high sulphur requires more energy, right. So therefore, it is better to reduce our dependence on very, very high sulphur because it does not make sense Because unless the Brent Dubai Differential brings us $2.5 or around that, we have the facility to use the heavier store to roll in Kochi refinery, but the timing of the pricing is not supporting that. This late yield is not going to make much of a difference in a scenario where our diesel packs are less than $5 and MS packs of around 3 dollars. So the best of the product is only these cracks.
So this is not a normal time. So we are expecting and believing that the cracks will improve to normal level as soon as it is happening, it will be actually reflected in our better
Thank you. The next question is from the line of Manikanth Garif from Axis Capital. Please go ahead.
Good afternoon, sir. Thank you for giving me the opportunity. Just a couple of questions. Can you please provide an update on the gas business terms of how many CM stations were added in Q3 and specifically if you can give the CapEx that we are spending towards the gas business in FY 'twenty one and 'twenty two? That's the first question.
And the second question is post the spectrum project that we are targeting to complete at Kochi refinery, just want to understand our to 5 years perspective. If we have any target to targeted crude to chemicals conversion ratio for the refineries, because it looks like all the other refiners in India including your peers in OMCs also are targeting some crude to chemicals conversion ratio. I will answer the gas through to chemicals. We have no intention to go from crude to chemicals for the liquid fuels to remain here in this country at least for the next 15 years. And though the growth rate may favorably favor, There is enough potential for us to make money out of CECL and Petrocell and therefore, it is not our intention to convert as a tool into Telkom.
Let me make that very clear. And secondly, we also have clients ahead for increasing the in the basket Petrochemical share from about level 1 person to almost about maybe 10% in the next 10 years. So that's the spectrum side. Because petchem again is a product which has got fluctuating fortunes because the prices vary widely. There is a risk inherent in this.
And it has got environmental impact also much more than what is caused by the petroleum products. So we are very conscious of the to the potential of pet care, but we are not hungry, no worry about converting all the food 100% to chemicals.
Yes. And
Sorry, if you can supplementary, please.
To answer the gas question, so as on 31 December, in 527, ARO's CNG facility was there. And about the CapEx in gas business, so our BGRF, which is 100% subsidiary, we have a total of 13 GAs. 4th years is in our book. So total CapEx of around INR 8,300 crores is planned over a period of 8 years.
Thank you. The next question is from the line of Vedadarkinde from ICICI Securities. Please go ahead.
Yes, thank you. My question was on this PDP project. Can you give us some idea on what kind of current margins at what kind of utilization level will you start making money?
No, we won't be able to give the answer to this at this stage. We can give an online and offline answer to you subsequently.
But so basically when you said 22, you don't expect much contribution, is it got to do with the utilization?
It has nothing to do with the utilization. I'm saying that we are having a profit About 8,000 crores on a consistent basis. On an 8% gross profit basis, any amount of PDPP in 2022 cannot make a significant impact. It is not a problem with the PDPP plan in our risk market. The sheer price of our profits are very huge And PDP is a very small segment in it for BPCL Ocean.
So please don't be under the impression that PDP is going to change the fortunes of BPCL. VPCL is a consistently performing company with a profit after tax of more than $1,000,000,000 a year. So on that number, PDP profitability cannot add a significant impact, but it will improve the Coccidifier's profitability in a significant way, especially because of the soft pressing crack spreads which the refineries business has experienced.
Okay. Thank you. My second question was on Nomali Verde. Earlier you had been suggesting that you would like to The Malika deal also to happen parallelly along with us at the same time as the BCCL privatization. So why this change?
Is it because of your own decision or is it because of government decision to finish it, trying to finish it before 31st March.
No, actually speaking, annual deal ideally should have happened almost simultaneously. It is not possible to And then because a new owner is not expected to get anything out of NREL, right? Ideally, that deals would have been having a gap of 1 or 2 or 3 months time. But then since BPCL deal is This is an indication that the BPCL is actually progressing, and that is 1. And second, that we are also at the BPCL.
From our side, we can say that We are actually ensured that we have entered into a product offtake agreement with NRL. The real estate agreement is there for 15 years for us to take the products of NRL on a best end of our basis for 3,000,000 tons of production capacity and VPC will not be affected at all in terms of product availability in spite of the
Thank you. The next question is from the line of Sridhar Tand from Goodwill. Please go ahead.
Yes, sir, you mentioned in one of the previous questions that even you find the share price of the company quite low. So why not consider a buyback instead of so much dividend, where the government can also participate and get their share of revenue and investors can also be happy? Yes. It's a good suggestion. I said because I am the Director of Finance of Bharat Victorium and therefore I feel personally that the share price today does not reflect the potential of BP sales.
It's an investor's call and it is for the market to decide at the price at which BP sales should be traded. Now to answer your specific suggestion as a buyback as a matter to increase the share prices, difficulty is that the government of India holds only If I buyback, the government shareholding will further come down. And we are anyway a place for this investment soon, and it will not be possible for us to change the capital structure at this stage. Okay, okay. But that would be a much because other PSUs have done a buyback recently and it worked very well for then and then our shareholders are much happier.
It is true.
Okay. Please, thank you.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to Mr. Harshvardandhuri for closing
Thank you. On behalf of IAFIL Securities, I'd like to thank the management for giving us an opportunity to host the call. And I'd also like to thank all the participants for joining and asking active questions. Thank you very much. And urge you sir for any last comments.
We would like to thank IIFL Securities for organizing the conference. I would also like to thank all the investors and analysts for their active participation. Thank you. Thank you from management's