Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Hindustan Petroleum Corporation Limited, 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 your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vethirajan Shankaran from Antique Stock Broking. Thank you, and over to you, sir.
Thank you, Steve. Very good morning to everyone. It's my pleasure to welcome all the participants to this fourth quarter HPCL business call. I would like to extend a special welcome to the Chairman, Managing Director, Mr. Vikas Kaushal, Mr. Rajneesh Narang, Director of Finance, Mr. S. Bharathan, Director of Refineries, and Mr. K. Vinod, Executive Director, Corporate Finance. I also take the liberty of representing the investing community in extending a special welcome as well as extending best wishes for a successful stint at HPCL to Mr. Vikas Kaushal. I'd like to hand over the call to Mr. Kaushal for his opening remarks, and then we can move on to Q&A. The floor is yours.
Thank you. Thank you, and good morning, everybody. Thanks for joining the call. It's my first time I'm speaking to you in my role as HPCL's Chairman and Managing Director. As you might be aware, I've joined mid-March, and it's been an exciting time working with my great colleagues here. Just to start off with, we all know HPCL has worked hard to create a strong business with a great momentum, and it's my privilege to work with the team at HPCL to take this business forward. As is the pattern on these calls, we'll start with some opening comments, which I will share on behalf of my team, and then open it up for questions. We published our annual results yesterday. The board of directors approved it, and we then released it to you all and the media and the stock markets.
As you are aware by now, HPCL had a strong quarter four with an 18% increase in Q4 PAT on a year-on-year basis. The numbers speak for themselves, but behind these numbers is a strong physical performance. Let me first talk of that because the numbers are outcomes of these performances. HPCL achieved a record performance in refining throughput last year, 25.27 million tons. I'll start off with the Visakh refinery. It has a throughput of about 15.3 million tons, thus capturing the volume benefits of VMRP. Those of you who've been following us for a long time recognize that we took the volume increase in Visakh and took it to about 15 million tons, and we have now realized the full volume benefits. We'll talk of the ongoing projects in the second half of this opening statement. Mumbai refinery also almost touched 10 million.
We plan a few thousands below that or a few hundreds below that, but that gives us a chance for the next year's goals. If you just look at our numbers, and I wanted to bring out one fact, we have structurally altered the refinery throughput. Just looking at the last two years, in the first quarter of FY2024, we had a throughput of 5.4 MT. This was 6.74 in Q4 of 2025. Just do the maths behind it. It represents close to 24.8%, to be precise, increase in the throughput. That is the structural change we have made in the last eight quarters, which places us well in terms of balancing our production and sales. Talking of sales, let me quickly move to the marketing side.
Our marketing volumes for FY25 were a record number, 49.82 MT, just marginally short of 50, which we were hoping to touch internally. You need to leave some goals for the next time also. On the domestic front, our market sales grew by 5.5%, outperforming the industry growth at 4.2%. We registered a market share gain of 0.25% amongst our peers. Almost all of our business units and marketing achieved record volume numbers last year. I will not go into the specific details here, but just wanted to inform you all that we continue to expand our customer base, our retail network, and even our direct sales business and some of our B2B sales business. Quickly pivoting onto the third part of our business pipelines, we achieved the highest-ever pipeline throughput of 26.9 MT, which again allows us to save a lot on transportation costs.
I'm sure you all want to know about the projects. We have been making significant progress on our projects. In February 2025, we commissioned our state-of-the-art 5 MTPA terminal at Chhara. We have started gas supplies initially through spot cargoes, and those of you who have been catching on news would know in April we signed our first major mid-term gas deal, and this goes towards the strengthen our we're going to strengthen our gas play in the gas business. You will see more action on that in the coming months. Another significant project, which is very close to commissioning, is the LPG cavern in Mangalore. Those of you who have had a chance to know more about the project will realize it's one of the marquee projects which is being done, underground cavern for storing LPG. It's a fascinating asset.
I would almost, I would say, it's a great national asset which is being done, and it's a testimony to HPCL's project capabilities. We have completed the cavern, and now we are in the process of stitching up the compression units, etc., and this will go into commissioning very shortly. Talking of other projects, which I'm sure are of interest to all of you, we do a lot of other small projects. In the interest of time, I'll not go on to those details, but many of them are inching towards progress and starting to give results. On the two big projects which are open, VMRP, the bottom upgradation or the rough, as we call it, we have started pre-commissioning activities. Very recently, we got the PESO approval for commissioning, which is one major step in that direction.
Post these approvals, the assets stitching up, the tying up of the loose ends that start happening, we expect feed-in, as we call it, to the unit in quarter two. On HRRL, the project is progressing steadily. We are starting to gradually bring out units on stream. Just last month, we got a couple of parts of the whole complex on stream, and we expect to cut crude in this refinery this calendar year. That was on the project progress. Let me quickly come to the financials. You might have all seen it in the results. We achieved a PAT of INR 7,365 crore, but if you look at your journey in the first quarter, HPCL had a PAT of INR 987 crore, or under INR 1,000 crore. Since then, it has been a very strong upward trajectory with quarter three at INR 3,023 crore and quarter four at INR 3,355 crore.
On an average, in the last quarter, we have been earning over INR 1,100 crore a month as PAT, which obviously bodes well. Our run rate on that is quite good, and bodes well for our momentum. The Board of Directors has recommended a dividend of INR 10.5 per share. Before I close, let me just talk briefly about our future, and then we'll open up for our questions. We are entering a very exciting phase of our journey. Our large, long-drawn, and, dare I say, challenging CapEx cycle is coming to an end, and this would start impacting our financials positively. I gave some timelines on some of the important projects. Once our current wave of projects is over, we would be embarking on the next wave of our growth journey.
For the time being, our focus is to make sure we are starting to get the returns from this CapEx. Before I close, I wanted to thank you all for your coverage and interest in HPCL. The management team looks at the future very excitedly, and we look forward to continued engagement with you all. I wanted to thank you all for participating in the call, and the floor is open for the questions. Moderator, are we?
Oh, yes, sir. 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 your touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Please be gentlemen. We will wait for a moment while the question queue assembles. The first question is from the line of Vivekananda from Ambit Capital. Please go ahead.
Thank you so much for the opportunity. Congrats on a great set of numbers. My first question is on the CapEx outlook. You have done INR 145 billion of the INR 770 billion CapEx target from FY2024 to FY2028. What are you budgeting for 2026 and 2027? That's question one. Second, there are some questions that I would like on the financial front. What is the leverage position at HMEL HRRL? And also, if you could share the crude processing GRM, EBITDA, and PAT of HMEL. Thank you.
Yeah, during the current year, the CapEx was around INR 14,500 crore. The current year, again, would be in the range of INR 13,000-14,000 crore because this would primarily be the completion of the projects which we are already being undertaken. Definitely, the next phase of CapEx would be after we consolidate the current projects which are getting completed, and as said by our Chairman, that we will be embarking on a fresh wave of investments after that to fulfill the total planned capital outlay which we have planned. Now, coming to the performance of HMEL, the HMEL, if you see the GRMs were around $9.3 per barrel, and the debt level is around INR 35,000 crore. Or if I say net of cash, it is around INR 33,000 crore over there.
As regard HRRL is concerned, the current debt is around INR 35,000 crore, but the project is still under progress. The total debt of the authentication which we have done is around INR 48,000 crore, but that is yet to be availed, the balance amount.
Okay. Sir, just a couple of follow-ups on HMEL. What was the EBITDA and PAT for the full year? And was the GRM that you mentioned for this quarter or the full year?
Full year. The Q4 was more than $12 a barrel.
Okay. Could you answer my question on the EBITDA and PAT, please?
At the PAT level, it was negative. That is primarily because of the depressed prices on the petroleum front. At the EBITDA level, it was around more than INR 4,000 crore.
Okay. Thank you very much.
Thank you. The next question is from the line of Nitin Tewari from Philip Capital. Please go ahead.
Good morning, sir. Thanks for the opportunity. Sir, my first question would be on Barmer refineries. As you mentioned that we are looking for and getting clear in this year, what is the time frame when we are looking to commission the refinery fully? If you can give us some incremental color about by when we can expect some stabilization and introduction of products from Barmer refinery in the market. Also, if you can help us understand what kind of margins or operating cash flow we are expecting from the refinery when the going this way. That would be my first question.
Yeah. The refinery concept completion, some of the key utilities required for commissioning have been commissioned, like compressed air, cooling water, etc. The crude distillation unit will be taking in crude most probably by the first of October. Along with the crude distillation unit, it will also be commissioning the hydrotreaters so that MS and HSD production will start along with the crude distillation. This all will take place starting from October first. With respect to your other questions, like how the financials will look like, it will be more or less in line with the other refineries depending on the market conditions. Once we start the Petcom units, then we will get the full intended benefits.
Yeah. What is the timeline for Petcom units?
Petchem units start from early next year, from January 1.
I mean, that's what my question was, that once refineries fully commission and stabilize, I mean, what kind of margins can we expect from the refineries?
See, after the full, if HRRL is operating at full capacity, the refinery and the Petchem, the evaluation which has been done is around $20 a barrel GRM. That would be what the refinery is capable of. It has a very high Petchem intensity and capability to upgrade the product. There is no bottoms over there at all. Only what comes out will be only gasoline and diesel, and the Petchem is the barrier.
This $20 that we're talking about, is keeping the current margin environment in perspective or?
These are mid-cycle GRMs which are being considered.
Understood. Sir, my second question was with respect to our diesel sales. There is a slowdown which is being observed in diesel sales in the fourth quarter as well as on an annual basis. The growth was just about 2% as far as diesel consumption or diesel sales are concerned. Any particular reason for that, that's why the sale of diesel is rather tepid?
Yeah. I think just let me attempt a question and answer and know this specific number that's required. See, year-on-year comparisons often get fraught because you recall quarter four of last year was leading towards elections, which obviously increases the movement activity. Quarter-on-quarter comparisons sometimes get clouded by these kinds of things. This year, there was no election, and there was no spike in the diesel thing. That's one. Our diesel sales have continued to grow, and we can give you the specific details if you are interested in those numbers. Till now, we've not had a challenge on evacuation of diesel as yet. Of course, when new refineries come in, we would expect and hope that the demand picks up from the current levels further.
Understood, sir. I mean, I was coming more from the perspective that overall, I mean, sales of diesel in the industry itself, I mean, in this quarter, has been on the slower side. If we look at the data which is coming out of IPAC, there was just a 1% growth on a YOI basis in this quarter. Any particular reason that why there is such a tepid growth in diesel sales?
There are structural changes which keep on happening over a period of time, which we expect. Electrification has impacted demand segment. Similarly, if you look at even vehicular segments over a period of time, we have started going more towards MS vehicles, especially the larger ones, the passenger vehicles. Whereas a few years ago, the demand because of the price differentials was much higher on the. There are a lot of structural, I would say, reasons behind this. In a large industry, a large consumption market like this, these come out over a period of time. We are quite aware that EPAC has lower forecasts for growth on diesel as compared to some of the other products. I'm sure all of us in the industry are working our strategies around it.
Yeah. Nitin, I just add on.
Yes.
What has been?
Yes. You are right that as regard to growth in HSD has been muted, but in terms of HPCL performance, HPCL performance has been far better than the years. We had grown by 2.2% against the 0.3% of the entire, I'll say, the retail industry is concerned.
Understood, sir. I'll get back in the queue for more questions. Thank you for answering my queries.
Thank you. The next question is from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Yeah. Good morning and congratulations on a good set of numbers. I have two sets of questions. Firstly, that you've given some guidance with respect to the profitability run rate, maybe like INR 1,000-1,100 crore per month. If we assume around INR 13,000-14,000 crore of, say, normalized profit for the company, another INR 6,000 crore of depreciation, somehow we are at a free cash flow generation territory. Given the fact that our debt is still elevated compared to, say, some of the peers at, say, INR 56,000-57,000 crore, 10 million I'm talking about, do you have a debt reduction target in mind in terms of absolute numbers, or do you think that the EBITDA itself will go up so that EBITDA could be like a better metric?
I think two parts to it. One, I want to be very clear. The 1,100 I talked was the last run rate. It is not a guidance from our side. We as an organization do not give guidances. Of course, you guys are free to draw your conjectures. 1,100 is just 3,355 divided by 3. That was the run rate we have achieved in the recent past. Now, extrapolating the run rate like you have done, yes, we would see inner cash generation thing, which should come in because, as I said earlier, we are ending a large CapEx cycle, and that should show us results. We have already achieved some reduction in the debt equity, and I request Director Finance to probably give some more details on the numbers.
See, if you see on a standalone basis, last year our debt equity was 1.4 something, and the current year we have ended at 1.38. Now, we are expecting that the internal generation would be good enough, and we would be able to, if not add any debt to it, but definitely the net worth part would be increasing, and you will see a reduction as regard to debt equity is concerned. Next year, we may end the debt equity between 1-1.1.
Thanks. And second set of questions.
It would be both short-term and long-term, but if you look at long-term, it would be significantly lower. It would be around 0.7.
Yeah. Anyways, like Q4 also has that excise duty adjustment, right? That is also there in Q4.
I have not done that. Right now, what numbers I have given is glass half of all that.
Right. Second question is on Barmer refineries. You have given that $20 guidance. Given that it is a very complex refinery with significant petchem intensity, this $20 GRM could basically translate into what kind of ballpark, a tight INR 9,000 crore, and whether that is enough to cover for the interest depreciation, or you would be maybe not at a very high ROE, at least in the initial years.
Yeah. Yeah. What numbers you are giving, it could be around those numbers, and it would cover the interest and other obligations.
Do you need to infuse more funds there in terms of cutting down the debt a bit or something? Even now, I think the debt is quite not as high against the INR 60,000 crore, I think, in CapEx. Your debt, you have mentioned INR 33,000 crore. So that is less than 70-30. Do you see that there could be fund requirement to reduce debt in case we are at, say, INR 70,000 crore of EBITDA only?
See, right now, the committed project cost is around INR 73,000 crore. I do not think the debt would be lesser. Yes, what we will make out is out of the revenue generation from this facility, from this project, is what will be used for bringing down the debt in the near future. As you rightly said, these are very complex assets. This will be the most complex greenfield done in India from scratch or from breaking ground to getting it fully ready. It will take some months and all.
Sorry to interrupt. The line for the management has been disconnected. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go ahead.
Yes. No, I was just—when we got disconnected, I was saying these are complex assets to bring up to stream. They are great engineering challenges, which, of course, we have a great team which can get on top of all of these. It will take a few months to stabilize, maybe a quarter or two, whatever time it takes. As a management team, we are fully geared up for that. If it needs some short-term support in stabilizing the unit in terms of financials also, that's quite okay. We are creating an asset for a long time.
Thank you so much for the clarification. I wish you all the best.
Thank you.
The next question is from the line of Samith Rohra from SMARTSUN CAPITAL. Please go ahead.
Yeah. Hi, sir. I mean, a very good morning, Chairman Sir, to you, and welcome to your first call. And good morning, Peter, to Team HPCL. Sir, you've done a commendable performance in a very challenging environment. You've reported actually INR 7,300 crore of profit after absorbing INR 10,000 crore, which is truly commendable. And you've actually surpassed your FY 2024 profit. It is actually heartening to see such a strong core performance by you and your team. Sir, I have a few questions. Firstly, on the LPG part, I mean, what is your thought on the LPG under recovery? What's the way forward? Because today, I mean, your under recovery is already at INR 10,500 crore. Any thought on the compensation aspect from the government, and when do you expect to receive anything on that? My second question, sir, is basically on the theme of lubricant.
Because today, sir, I mean, the matter of fact is that HPCL's market cap truly does not reflect its true intrinsic value because it is at about $10 billion. And $10 billion is just the cost to set up one refinery in India today. Whereas HPCL giant is available at this market cap. Sir, any thought on value unlocking on the lubricant part? Because today, our nearest competitor, Castrol, who is one-third our size, has got a market cap of about INR 25,000. There can be huge value unlocking for us on the lubricant part. My third question would be on the Visakh residue appreciation project. If I heard you correctly, sir, you said that should basically start maybe in the next quarter. If my understanding is correct, you get about a $3-$4 benefit on the GRMs for the whole refinery, sir?
Sure. Thanks, sir. Yeah. The incremental would be because of the low-value product will get upgraded to higher distillates. So that additional GRM of product would be coming to your LPG under recovery. Yes, we had absorbed almost INR 10,900 crore of LPG under recovery. Subsequent to that, you have seen that the government has increased the purchase of LPG while the RSP was increased by INR 50. That would bring down. Currently, there is an under recovery of around INR 165-170 per cylinder. The government had also in the press briefing stated that the excise duty, which has been increased on the motor fuel, would be used for the payment of the LPG under recovery. Let us wait and see how it develops over a period of time.
In the current year, the mechanism, I'm sure some mechanism would be made out as to how to compensate the oil market. Coming to your value unlocking, yes, we are actively pursuing the same with the government. As and when we get the approval, definitely we will have a look at it.
Sure, sir. Thank you so much.
Thank you. The next question is from the line of Achal Shar from Ambit Capital. Please go ahead.
Hi sir. Am I audible?
Yes.
I just wanted to confirm, sir, what is the proportion in LPG sales from domestic versus commercial? A follow-up question is, we understand this INR 170 under recovery is in case of a domestic cylinder. Am I correct on this? If I'm correct, what will be the under or over recovery in case of a commercial cylinder?
Yeah. Do you have the ratios of the?
90% is domestic.
Yeah. So 90% of LPG roughly is domestic. Yes, the under recovery is on domestic cylinders. On the commercial, as you can hear, a lot of it is B2B sales. I will not say that there is a set pattern of over recovery or those things. They will vary from deal to deal. Obviously, we are selling them with right margins and whatever. It is a typical marketing term. Wherever we can get the right margins, we will do the deal. There is not a set pattern that X percentage over recovery on commercial. All I would say is that 10%, which is sold to commercial or non-domestic, as we call it, is like any other B2B sale where when we are selling, we are protecting our margins or building our margins. Of course, wherever required, doing the marketing, discounting, etc., to catch customers. That is the commercial business.
Okay, sir. Thank you.
Thank you. The next question is from the line of Kirtan Mehta from Baroda P&P. Please go ahead.
Thank you, sir, for the opportunity. In a refinery, to earn the cost of capital, what is the improvement in petrochemicals that is needed? That's the first question. The second question was about the Barmer refinery. In our guidance or mid-cycle margin of $20 per barrel, what is the crude discount that we are building on Barmer crude? And what is the quantum of Barmer crude that we are including?
Barmer crude will be about 20% of the overall diet. What's the?
How much improvement in Petcom is required for the margin?
Petchem, when we did the financial, these were all done in 2017 period. So when $200 overlaps, right?
Correct.
When it is, as already explained during the earlier answer, when the financials were built, it was built based on the actual existed at that point of time. When the cycle upturns, you will get the full benefit. Till then, you will get whatever the market price is there, you will realize that for the plan. Just to add, this year was a gradual build-up on the Petcom operating performance. If I look at the run rate, which they have towards the end of the year, the technical things of getting losses down and all those things, they are close to the cycle. The operating performance at the end of the year is significantly different from the beginning part of the year, which says that operationally, we are able to extract almost close to what is feasible from the refinery complex.
The prices are market determined, and all Petcom players right now are challenged in terms of market prices. We also have to sort of face that challenge.
Sir, on Q4, can you indicate the EBITDA run rate for Q4 as well as the gross margin that we earned on the petrochemical?
For HMEL?
Yes.
HMEL, the EBITDA is for the entire both Petcom and refineries around INR 1,800 crore. Q4, Q4 number.
1,800 crore in Q4. Right. On the Barmer crude also, you indicated 20% is the quantum of this. What is the discount that we are assuming to the benchmark in our guidance for $20?
Those are commercial terms. We cannot be disclosing that. Yes, definitely, there is a discount.
Sure, sir. Thank you.
Thank you. The next question is from the line of R.S. Ramesh from Nirmal Bang. Please go ahead.
Thank you. Congratulations from Sarkav Sher. Welcome, sir. If you look at your guidance of $20 a barrel for the Rajasthan Petrochemicals, if you were to just take the refinery part, what would be the margin?
We gave you the integrated one. We will do this, and we will share it separately.
Yeah. Secondly, if you look at your gas business, can you share the details of your standalone CGDs in terms of how many GAs are operational? What are the number of CNG stations you have added and the cumulative number of CNG stations? What is the plan going forward in terms of ramp up in the operations here? Some indication of when you will be able to achieve addition to your EBITDA from the CGD business?
See, if you see the gas business, we are doing more than 1 million metric tons of sales, both in CGD as well as in our gas business put together. In terms of number of CNG stations in our GS, there are more than 600 outlets, which we are having in our GS. In terms of total numbers, the total CNG stations in HPCL outlets is around 2,100 outlets.
If you look at the outlook for 2026-2027, in your standalone case, how many GAs do you expect to be profitable? What would be the volume you can achieve, say, over the next two years? And some indication of the unit EBITDA or the profitability you expect?
Currently, the GS which HPCL is operating under HPCL is the GINS, Onifat, and we have in UP and this. All are profitable for us right now. For volume, we expect 20-25% incremental growth as regards volume success. Last year, we got around 40%, but minimum would be 25-30% growth this year.
Okay. Finally, in terms of the CapEx numbers, how much would you have spent in CGD? 25?
Every year, we are spending around INR 1,000-1,100 crore we are spending, and that trend would continue.
Okay. Thank you very much. I'll join the team.
Thanks.
The next question is from the line of Mayank Maheshwari from Morgan Stanley. Please go ahead.
Hi, sir. Thank you for doing the call. The first question was related to marketing. Can you just talk a bit about the strategy on marketing, considering you are seeing private players getting more aggressive and bringing in a reasonable amount of transport fuel in the market over the next six to nine months from your own production or from the refineries? Can you just talk to us about how the competition intensity looks at you? How are you trying to kind of manage that from a strategic perspective over the next few years? Thank you. That's my first question.
Do you want to ask the second one also, or do you want to go step back? Okay. Let me answer that first. I think, as you would have seen over the last few years, HPCL has expanded the foothold in marketing, both in terms of volumes, the footprint, and our market share. Some of that is in anticipation and preparation of our expected volumes, which are going to come in the foreseeable future. We continue to look at two, three levers we are using in marketing. On the retail side, network expansion continues. Wherever we think we are going to get additional volumes, we are continuing to do the network expansion. Second, we are focused a lot more now on increasing throughput through our existing retail outlets, through, you can say, micro marketing, through very targeted efforts, through improvement of our retail outlets.
That's the second key thing which we are aiming. This would give us an uplift on the volumes from our existing and expanded retail network. We also have detailed evacuation plans on when Barmer comes in, where are we going to do the product, how is it going to move, etc. We do think Barmer, which comes up initially, and that, of course, is a landlocked refinery. We are very well placed with the pipeline connectivity. If you studied that project, you will recall most of the liquid product actually evacuated through pipeline, which gives us good competitive advantage in the catchment area we are going to target. Of course, more diesel would come up through Visakh post-rough commissioning. Visakh, of course, has the flexibility of doing coastal movements and targeting markets. There are plans around all of those efforts.
In addition to our retail footprint, we have also a bulk sales business, not only on fuels, but also other products. They achieved record numbers last year. We are further pushing on bulk sales, and you can say B2B sales across all our products. One of the other things is, just to add, to balance out our requirement, we always have the option of purchasing less from outside, which we were totally dependent on in the past. Because you would have recalled that our numbers are slowly sort of catching up. The refining capacity is reducing, and we have the option of purchasing less from standalone refineries as we go forward. We do not anticipate a problem on marketing of the expanded fuels.
Just an extension to that, can you just talk to us about, on the industrial fuel, how the margins have moved in overall bulk? Whether it is on the fuel oil, sulfur, whether it is diesel, all put together, can you just talk through how the margins have kind of shaped up for fiscal 2025 versus the pre-COVID levels?
Yeah. My colleagues also on the pre-COVID levels, I won't go that far. On the whole, I think, since this is a B2B business, this runs differently from retail in the sense in retail, we have normative margins, and then how close to the normative margins can you get there. Here, every deal could potentially have different margins. These are competitive deals. There are times when you get low margins or you have to pick business or volumes at lower margins. At the same time, if we are able to, in some cases, bundle the services, which we are increasingly doing for our customers on an aggregate basis, we are able to get more margins or more returns for us. It is a complicated business.
Very hard to give a generic assessment on whether the margins are up or down because this is the real—and you can say closest to the—I would say trading is the wrong word to use, but it's as close to a commercial market as anything else could be.
Yeah. If you look at those margins, yes, during COVID time, the margins had gone up a bit. Subsequent to that, the margins as the INC products or the diesel and all these concerns, they are all mid-cycle margins which we have been looking at. Even currently, if you see it to a change, the F4 is positive.
Yeah. That's true.
Okay. That's fair. I think the second question, I think this will directly lead to the Chairman itself. When you think about, over the last month, that you have kind of looked at HPCL now, how do you think about managing the objectives of the majority shareholder, and how do you see that kind of panning out in terms of where HPCL would look like in the next five years?
I think the majority shareholder, of course, there are national objectives. As a national oil company, we have to meet. The shareholder does not ask me to run the business differently from if I was running it in a private sector. The business is run for efficiency, for growth, run for improvement. That's how it's been done in the past. That's what has been my message to the team here. We are going to run business for growth. We are going to run the business for efficiency, improvement. Yes, there are national objectives which have to be met at times there, and there are some constraints we operate in. Beyond the constraints, it would be business will run like any other business, and I view this as something with great potential. Now, we, in our case, have two roles to play.
One, of course, as a government entity, and then second, our association with ONGC. Both of our organizations are working on what synergies we could draw from each other. These are complicated topics to work on, but we are hopeful that some of the synergies we will—or we will increasingly capture the synergies, which is benefit for both the organizations. Actions happening on those fronts also. As you can imagine and appreciate, these are long-drawn things, never easy. We are moving on those fronts. To step back, I think this is a fantastic business we have. Our teams over the years have created a great thing. You commented on the fact that I've been here a month and a half now. I was always in awe of the technical and marketing powers HPCL had.
Now, being in my chair, filled with the technical and marketing powers we have, I can say our refinery teams are second to none in this business. We have an extremely talented and competent team. If you go through the details of what has been created over the years, it tells you the wonders which have been done. How a small refinery in Mumbai is where it is right now, close to 10 million tons here. Oh, why do not you share a visit? We are onto our fourth crude distillation unit. Over the years, it has been brought to 15 million tons, and with that increase, so that requires technical powers. Similarly, if you look at marketing, we have been creating record volumes every year, which means our field force are doing something well. Do we have improvement opportunities? Absolutely. That is the reason I am here.
Collectively with the team, we are all working and capturing the improvement opportunities. I'm sure in the subsequent calls and in other occasions, we will have chances to meet. You will see. We will also unveil some of our plans on what we are doing to make this business fundamentally and structurally even more efficient than what it is right now, so that we gain, we grow, and our shareholders, whether government or the large entities which hold our share or individuals which hold our share, large shareholding, they all benefit. That's how I look at the situation, my reflections on one and a half months. Thank you for asking that question.
Thank you. And best of luck and congratulations on the new one.
Thank you. The next question is from the line of Amit Mularka from Axis Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Sorry, I joined the call a bit late. I just wanted to check if you've already shared the numbers on refining and the marketing inventory teams.
Sorry, could you be a bit louder? We could not hear your voice, please.
I was asking, have you given the numbers on refining inventory gains and marketing inventory gains losses in the quarter and full year? If you could share that once, please.
Yeah. Refinery in the Q4, the inventory gain was around INR 600 crore. And the full year, there was a loss of around INR 550 crore.
Okay. For marketing?
Marketing, it was, again, in Q4, INR 550 crore gain and around INR 900 crore loss for the full year.
Sure. Also, in terms of the CapEx, you mentioned INR 14,000-15,000 crore. Could you kind of break it up as well between the various subsegments, including equity investments into large refinery?
The equity investment would be around INR 4,000 crore. The investor in refinery would be INR 5,000 crore, and balance would be plus.
Sure. Lastly, what's the update on the Chhara terminal?
Charra terminal has been commissioned already, and we have already got around four parcels over there. One more update, which our Chairman also in his speech stated, is that we have also signed a mid-term deal with one of the clients for a long-term gas. If you have customers who want natural gas, refer them to us. We are actively selling natural gas, LNG, or regasified LNG from Charra terminals. We are already, February onwards, we are already into that business.
Sure. Sure. So it's fully commissioned and nothing is pending, and you're just waiting for more contracts?
Yeah. Yeah. Only the breakwater is under construction, which will get completed in this spare weather season. Out of 1,900 sq m, around 1,300 sq m is already completed. The balance will be completed.
Got it. And lastly, on the Visakh refinery upgradation, how much benefit you would have received in Q4 from that?
Nothing. We have got the incremental volume. That's almost 2 million metric tons of additional volume per quarter is what is accruing to HPCL. The more benefit would come once the residue upgradation unit will get commissioned, which is likely to happen in this Q2 of the current financial year. That would be.
Okay. That's all. Thank you.
Around $2-$3 per barrel for the increased distillates, which the Naphtha unit is going to churn out.
Sure. Got it. Thank you very much.
Thank you. The next question is from the line of Rikae Chen from CLSA. Please go ahead.
Thanks for taking my questions. I'll have a couple of small micro questions and then maybe a more bigger strategy question since this is the first time you're speaking to Mr. Kaushal. Firstly, on the Q4 numbers, the annual forex change number that you've given implies that Q4 had a forex gain of about INR 75 crore. Is that correct? Because that's a bit odd given that Rupee had actually end of period, Rupee had depreciated. Is that the correct number, that there is a forex gain of INR 75 crore, or is there any adjustment over there?
No. In Q4, we had a forex gain. You are right.
Okay. There is no real adjustment or anything like that?
Oh, no. No adjustment.
Okay.
You would have seen that rupee had depreciated, but in the last month, especially in March, all of a sudden, it appreciated significantly.
Sure. Thanks, Mr. Mularge. Just one more thing. Since we discussed about the Rajasthan refinery and you said that $20 a barrel is how we should think about the integrated margin, since this is not a normal pure refinery, OpEx would also not be as low as $2-$3 that you are talking of refinery plus petrochemicals. Where should we be imagining the OpEx to be? Is it more like $6-$7 kind of range, including everything, since we're talking of $20? The comparative OpEx number should be how much?
Yeah. It would be around $5-$7 a barrel, between that.
Okay. Okay. And 73,000 crore is the planned project cost. I believe we are on track on that one. No real big deviation on that. If that is the cost, about 5% should be the depreciation on that. Is that roughly broadly how it should be?
Yeah.
Very broadly. At peak, when all is spent, we would go up till INR 48,000 crore kind of debt, and roughly 9-10% will be the cost of that debt, right?
That is lower.
Slightly lower. Okay. Sure. Thank you. That's all very useful numbers, numerical answers. Just one more on the strategy thing, since we have the new CMD with us. You did mention that once there is consolidation, after these projects come in, then we will look at the next leg of growth for HPCL. Now, how should we think of when the company will start believing that consolidation will be over? What is the key metric to watch out for over there? Would it be looking at debt to equity falling to, say, around 50-60%, or some kind of net debt to EBITDA number? That's one. Secondly, once that is over, since we will be getting by the time the next set of expansions get planned and they come in, we will most likely start getting into the next decade.
How would we be thinking about what is the next leg of growth, since there is also the talk of perhaps some kind of peak demand, or we already have surplus capacity in India in terms of refining, etc.? Would a lot of that be focused on petrochemicals, or is it a lot of it will be also thinking through new energy? I mean, of course, a lot of this is going to be more guidances at this point of time. As the world changes and we update ourselves, this might change. Sitting right now, how do you see these things kind of moving ahead?
Sure. Let me take that question. To pass to your question, what would be the metrics? We have not fixated those metrics right now. As Director of Finance mentioned earlier, we are continuing to do CapEx even right now. It is not that we have stopped. Yes, we are very prudent in what we are doing right now, given our overhang of the previous projects in terms of huge capital expenditure, which is coming through crucial right now. We are very prudent right now, but we gave some numbers on City Gas, how much we are expanding. We are putting up other areas also. There is the continuous capital expansion, which is happening, but not in form of two huge projects which we had talked of.
Now, looking at the numbers, we have not yet, as a management team, put a marker which says, "Oh, at this level, I'll open the gate for stream A or stream B." Directionally, you are thinking in the right direction that we want to get our debt equity and serviceability in a level where we are comfortable with standing all kinds of challenges which dealing in oil industry presents. At that stage, we will probably take a call on those. It also needs a bit.
Sorry to interrupt. The line for the management has been disconnected. Please wait while we reconnect them. Thank you. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir. Please go ahead.
Sorry. Thank you. Sorry for the disruption and the wait you all had to do. I was talking on the strategic direction. Peak oil, nobody knows when it is. As many of you know, I've been a consultant in this domain in my previous avatar, and I used to talk a lot about this. My personal view is peak oil in India is much down the line. It will be the last of the major economies to go to the peak oil. There is potential in oil also for a foreseeable future. There are other opportunities for growth, and not everything we do should come in the next decade because there could be inorganic opportunities we look at. There could be other lines of businesses, as many of you might be aware. We have a very strong R&D also, and that could give us new opportunities.
As and when we do come out with our revised growth plan, sometime in the course of this year, we will take the opportunity in one of the subsequent calls to share the nuggets with you. I can certainly foresee that would be a much more broad-based plan as compared to the last five years, where we went heavy on refinery investments because we needed to cover the gap between the product we sell and the product we refine. Now that gap is reasonably well covered for us between our own increased refineries and the joint venture partnerships we have. Now, our next five years, I would see much more broad-based investments, including responding to new energies and taking on areas where we think HPCL could be a leader in the market. That is how I think about it. Beyond that, we do not have any detailed plan.
As I said at the beginning of the call, our primary focus right now is to make sure our large capital comes up to stream and our big projects are completed, and big and small oil projects are completed so that we start getting returns from those projects, which allows the company to be in a very strong position for a future growth wave.
Thanks, sir. Thanks a lot.
Thank you. The next question is from the line of Akash Mehta from Canara HSBC Life. Please go ahead.
Yeah. Hi. Just if you could just on numbers, I mean, if we just share the market share for petrol and diesel for Q4 and for fiscal 2025 as well. Yeah.
We are just pulling out the right number. Give us a second. The question was for Q4, but we have the full year number. You can share that.
I think to my, if I recollect correctly, we are having a market share of 24.76% for motor fuel for full year. All products put together is around 20.5%.
Okay. And then for Q4, I mean, that would be?
24.07.
P4.2.
Okay. Okay. Thank you.
Yeah. That's it from my side.
Thank you. The next question is from the line of Yogesh Patil from Dollars Capital. Please go ahead.
Thanks for taking my question, sir. Sir, post fully commissioning of bottom upgradation unit at Visakh Refinery, how much time it will take to get the full benefits of $3-$4 per barrel into the GRM?
See, these are huge, complicated processes, and this technology is a path-breaking technology. We have to give our clients around three months for full stabilization, etc. Now, we might reach that faster. It might take a couple of weeks here and there. As a management team, we are very much focused on making sure there is a safe operation when you run a plant like this. If any of you have visited Visakh, you could understand how complex that truck unit is. It is a refinery within a refinery, as we say. It will take a few weeks, you can say, for full stabilization to come in. We are focused on it.
It would be fair to assume that $3-$4 per barrel kind of benefits will fully reflect into the FY27?
Yes. Yes. We are very hopeful of even starting to reflect in some of the later quarters of this year. That is what our internal view is. We will start getting those benefits in the later quarter of this year.
Okay. Sir, next question related to Russian crude process in the Q4 FY25. Is the current levels of Russian crude, is it improved compared to the Q4 FY25?
Yeah. We have been getting about five to six parcels of crude every month. This is continuing. There was a dip only in one month in the last quarter. Otherwise, it is continuing as is.
In terms of a %, if you could share the number, you generally share.
Overall, as HPCL, we are at 35% Russian crude.
That was the Q4 FY25 number, sir?
It was the full year. Q4 is close to that, 32-33%.
Okay. Sir, on the HPCL and ADNOC trading, you have signed the LNG trading supply contract with ADNOC. Can you provide some details on the pricing, whether it is linked to the crude or Henry Hub, and the quantity of LNG import under this contract?
It is linked to Henry Hub. I don't think beyond this, I can say anything.
Okay. Lastly, generally, you share the pipeline segment throughputs every quarter and annual decisions. Can you provide some revenue and the EBITDA details of the same segment for FY25 and Q4 FY25?
I can share with you the volume. It is 24.9 million metric tons.
26.9.
26.9 million metric tons for opening stage. 6.61 million metric tons for the quarter.
Any details on the revenue and the EBITDA side of the pipeline segment, if you could share?
We are moving our own products only in the pipeline. We don't account any revenue for this.
Okay. Thanks a lot, sir. This was really helpful.
Thank you. The next question is from the line of Maneek Anand from Franklin Templeton, India. Please go ahead.
Yeah. Yeah. Thank you so much for providing me the opportunity. Copper and Audible.
Yes.
Yeah. Yeah. Hi, sir. Because it's an interesting move that you have done from being a consultant to heading HPCL, I just wanted to understand what's the motivation and upside for you. That's the first question. The second question is more on HMEL. Is it possible for you guys to give me the gross margin that your model is throwing if current pricing or spreads are taken into account for the revenue and sector? Those are the two questions from my side. Thank you.
Since this call is about HPCL's numbers, I will not talk about myself. The only thing I would say is the reason I work here is we have a fantastic opportunity and a fantastic team which can take this place to be it is already one of the leading companies in India, and we will be even more powerful in times to come. That's my motivation. Beyond that, I think we should just focus on the numbers, and I'll request my colleagues to talk about the HMEL numbers which are around.
I can broadly say the EBITDA margin in HMEL for Q4 is around 7%.
Understood. Just to follow up on the first question, Aakash, can I check on the compensation size and with the historical same deals? Or has there been any change in the compensation structure?
Read the press. You just need to read the press. Yes, it is absolutely in line with what was done historically.
Sure. Thank you. Thank you so much. That's from my side.
Thank you. Ladies and gentlemen, due to time constraint, this was the last question for today's conference call. I now hand the conference over to Mr. Vethirajan for closing comments.
Thank you, Steve. I see 11 people in the queue as of now. Please address it to the management, or you can send your questions to me. I can get it addressed. I would like to thank all the participants for taking time out to join this call and the management for addressing all the questions in a very detailed manner. I wish the management all the very best for the next financial year as well. Hope the current momentum continues. Thank you, everyone, and have a nice day. In case, sir, you have any closing comments to add, please go ahead.
Thank you all for participating and listening to our thoughts. Thank you for your interest. In HPCL, if you have ideas for us, keep feeding them to us. On behalf of the management team and our entire team, I'll say we are all geared up to making sure the time you spend on reading about this talk is well rewarded in many different ways. Thank you all, and look forward to some subsequent conversations.
Thank you, everyone, and have a nice day.
Thank you. Thank you very much, sir.
Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.