Good morning, ladies and gentlemen. I'm Pavitra, moderator for the conference call. Welcome to the Indian Oil Corporation Limited 1Q FY 'twenty Post Results Conference Call hosted by Bataliwala and Karani Securities India Private Limited. At this moment, all participants are in listen only mode. Later, we will conduct a question and answer session.
At that time, if you have a question, please press star and one on your telephone keypad. Please note this conference is recorded. I would now like to hand over the floor to mister Bhavin Gandhi from Bativala and Karani Securities. Thank you. Over to you, sir.
Thank you. Good morning, ladies and gentlemen. On behalf of Bhaktiwala and Karani, gives me great pleasure to host the management of Indian Oil Corporation for this post result conference call. I would now like to hand over the call to the management for the initial remarks, and then we'll open the floor for a Q and A session.
Over to you, sir.
Yes. Thank you, Mr. Bhavin. This is Matthew, Chief General Manager, Corporate Treasury of Indian Oil. I welcome all of you for this conference with respect to the first quarter results of twenty nineteen-twenty twenty.
Along with us in the management team is Mr. Sandeep Kumar Gupta, Director of Finance Designate and the CFO of the company And along with him is Mr. Rohit Agarwal, the General Manager, Corporate Finance and Mr. Prabhat Himat Singhal, the Deputy General Manager, Corporate Treasury and Mr. Avinash Singhal, Corporate Treasury and Investor Relations.
So just to set the tone, let me just remind you that while we speak about the accounts and the numbers that are there, which has been circulated to you, we would request you that we'll keep our questions restricted to the accounts that has been put forward. And the other related questions can be taken separately as and when the time permits us. Thank you very much. And I give I ask I request Mr. Sandeep Kumar Gupta to give his initial remarks on these accounts.
Dear investors and analysts, a very good afternoon to all of you. I take this opportunity to welcome you all to this conference call post announcement of the first quarterly results of financial year twenty nineteentwenty twenty. We have uploaded the results yesterday on the website, and you must have gone through that. And you have also perhaps you would have definitely received the updates from our side also. Still, I will like to provide some additional clarity and insights on our results.
Coming to highlights. First of all, the Global Fortune 500 list for 2019 has been announced, And we are pleased to inform that Indian Oil has improved its position to $117,000,000 that is 117,000,000 with a relevant turnover of $77,600,000,000 And this is a jump of 20 spots from the previous year's rank. As regards to crude price, because of various geopolitical factors, which counterbalance each other, the crude prices remained range bound and are expected to be so in the near future also. Petroleum product consumption in the country for this quarter saw a drop of 0.2% as compared to the same period last year. And except for MS and HSD, every other product registered a negative growth.
With respect to the crack spreads of the products, the MS cracks witnessed an upside during this quarter at $5.3 per barrel as compared to the preceding quarter where it was $1.9 per barrel. However, if we compare with quarter one of financial year 2019, then it is lower by 40%. The MS crack at that time in the corresponding quarter was $8.9 per barrel. Similarly for HSD, the crack spreads during this quarter was 10.4 per barrel and which is lower by about 10% as compared to preceding quarter where it was $11.5 per barrel and 18% lower than the corresponding quarter of financial year 2019 where it was $12.5 per barrel. In the petrochemical space also, these spreads in dollar per metric tons have witnessed a declining trend in the last one year.
And spreads for polymers in this quarter were about $556 per metric ton lower, which is 2% less than the previous quarter and 18% less than the corresponding quarter of financial year twenty eighteen, nineteen. Similarly, in the case of glycols also, where the pricing of MEG of IOCL is priced, the decline has been sharper, and it came down by almost 88% in this quarter as compared to the corresponding quarter of last year. Despite the above negating factors, which does play a crucial role in the profitability of our business, this quarter, we have registered a profit after tax of INR3596 crores. Though it is 47% lower than the corresponding quarter of financial year 2019, but this better performance in the corresponding quarter of financial twenty nineteen was primarily because of very high inventory gains of almost INR 7,800 crores. The revenue from operations during this quarter has registered an increase of about 3.9% as compared to previous quarter, which translated to INR 150,135 crore as well as INR 144,472 crore and is also slightly higher than the corresponding quarter of financial year 2019, which was INR 149,747 crores.
Let me touch briefly on the major verticals. Coming to refineries vertical first, the throughput during the quarter was 17,300,000 metric tonne, which is though marginally lower than the preceding quarter of 17,400,000 metric ton as well as the corresponding quarter of financial year 2019 where it was 17,700,000 metric ton, the capacity utilization was more than 100% and this is we believe is commendable considering that there was a major shutdown at our Gujarat refinery owing to our BS VI preparedness. The distillate yield was at 80.2% during this quarter, which is also in line with our clients. Consequently, the refineries have registered a GRM of $4.69 per barrel during this quarter as compared to $4.09 per barrel during the previous quarter. As per practice followed during the earlier quarters also, we have continued to work out the GRMs where the inventory impacts are stripped off and the price lags are factored in to arrive at the normalized GRMs for comparison with Singapore benchmark margins.
Accordingly, our normalized margins for this quarter is $2.27 per barrel as against the Singapore benchmark margins of $3.5 per barrel. And we mentioned that the higher Singapore margins are basically because of the movement of cracks, which favored Singapore benchmark margins, considering that the MS proportion in the Singapore benchmark margins is more than our product slate. Coming to pipelines. Our pipelines continue to generate stable returns, giving an EBITDA of about crores during this quarter, which is about 2% higher than the preceding quarter. The capacity utilization was about 92.8% during this quarter as against 90.2% in the previous quarter.
And pipeline capacity utilization, as you would know, most of our these pipelines are captive, so they are utilized in accordance with the refinery requirements and refinery production. Coming to marketing. The domestic petroleum product sales during this quarter have been flattish. That is they have maintained the same levels as that of the previous quarter, 20,521,000 metric ton. As we stated earlier, though the industry there's an overall drop in consumption by about 0.2% as compared to the corresponding quarter of last year.
Indian oil per se has registered an increase of 0.3% as compared to the corresponding quarter of financial year 2019. So that way, we have sort of battered as compared to the industry performance as regards sales are concerned. Accordingly, the marketing EBITDA for this period for this quarter stood at INR4565 crore as against INR6848 crore in the previous quarter. The marketing EBITDA for the corresponding quarter of financial year 2019 was INR4369 crore. On the petrochemical front, the petrochemical vertical is very important vertical for Indian oil and does contribute in some way to our profits.
However, this quarter, because of abnormally low cracks of petrochemical product, our margins were lower. And also one of our clients that is PT at Panipat location remained under shutdown because of an NGT issue, though we are glad to inform that it has now since now it has commenced operations recently. Coming to the borrowings, with respect to the borrowing levels, our borrowing as on thirtieth June twenty nineteen have decreased by about INR14000 crore and stands at INR7227 crore as compared to INR86359 crore as on March 31. It may also be noted that this borrowing of INR7227 crore is inclusive of about INR4000 crore, which is because of accounting of lease obligations pursuant to India's 116. And correspondingly, if we exclude this and also an investment of INR1600 crores, which stands in our balance sheet as on thirtieth June twenty nineteen, then the comparable borrowings work out to INR6627 crores as compared to INR86359 crores as on March 31, which is a drop of about INR20000 crore.
And this has been possible only because of settlement of our government dues. So I end my briefing here, and we will be glad to take your questions. Thank you very much.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. First question comes from Nilesh Gurgae from HDFC Securities. Sir,
as you are aware that P and G RB is in the process of determining network charges for those years where marketing exclusivity is already over. So OMCs has been had shown the interest in CGD business through their JV and through various bidding rounds. They're participating in the various bidding round and are on the better footing. That is what I feel with the they already have because they already have outlets. So in that case, what are your plans?
I mean will you enter into these areas where you have to compete with the incumbents? Or it is more prudent to go into new areas through upcoming bidding rounds? Your thought on that, sir?
No, we definitely want to be a player in these GAs also. However, we understand that one of the participant that is IGL perhaps has gone into court challenging this end of exclusivity. So this is one factor. And another factor is that assurance on the availability of gas at the domestic prices to other players after this exclusivity ends is also not very clear. So once these things get cleared out, we are definitely very interested in these GAs also.
But just let's assume that government allocate gas to the new entrant as well. That's a hypothetical case. Notification is still not yet to come or there is no clarity, as I understand. But if that clarification comes, will you are you interested or are you interested in increasing your commission rather than entering into the fighting with the incumbent?
No, no, definitely, we will be interested in these GAs also, which were awarded to other players, because being OMC, we are positioned well to have our significant presence through presence of our ROs, we can have CNG dispensing, etcetera. So we will be interested. However, it is premature to say because these issues are yet to be settled.
Okay. And my second question on Ennore LNG terminal utilization, sir. Can you put some light on that? And who are the anchor customers as of now?
As of now, we are supplying to CPCL and Madras Fertilizers and Tamil Nadu PetroPet products because the complete pipeline is not yet commissioned. So that complete commissioning will take time up to maybe February 2021, after which we will be sort of increasing our capacity utilization of terminal.
So how much it is now and what it will be after February 21? Any number?
We are expected to do about, I think, point seven five, maybe 750,000 metric ton by the end of this year and say about 1.3 to 1.4 by the end of next year. And once this pipeline gets commissioned, then we believe there should be substantial ramp up of capacity utilization of this
terminal. Next
question comes from Sujit Lodha from Birla Sun Life Insurance.
What am I missing here?
No. As you may be aware, Singapore benchmark margins are theoretical margins only, which are reported by Reuters based upon 100 high sulfur crude processing and the fixed product is late. This all is theoretical And it comes based upon daily prices in the international market that is at Singapore, okay? So since these are on real time prices, daily prices, they do not take into account any inventory gains, losses. So that is why we strip off our reported GRMs with such inventory gains, losses, price lags, etcetera, to make it comparable Singapore benchmark.
So there I'm there I'm aware that it's a theoretical completion, but what I'm saying is that, let's say, the moment one three year. What is the component? What what is the pipeline? Shouldn't the inventory gain be taken from the pipeline impact? Or what is that which you strip off and, say, normalize your current margins?
No. That while daily pricing has been implemented for market, as far as the transfer pricing from refinery to marketing is concerned, that continues on fortnightly basis. So our reported DRM considered this RTP, refinery transfer price based upon fortnightly pricing. So this price lag is due price lag is for shipping this also off to make it comparable to daily price.
So basically, what you're saying is that the the marketing the end marketing, which takes care of the RTP prices in your calculations, that is a fifteen day lag, and that is what you're stripping off of.
But this does not include marketing. This is only refining.
Right. Right. Only the RCT.
Price, but assuming that these refinery transfer prices also change on a daily basis.
Okay. So so we we assume that it will have a negative impact moving forward? So in the rising scenario, what will be the impact of the lag? Will it be a negative impact or will it be a positive In impact
the in the rising scenario, we will be pricing the refinery transfer price will be based upon a lag.
So it will
be a loss, but we will strip it off. In the rising scenario, there will be inventory gains, but there will be a negative because of price lag. When we strip both off, it will be comparable with the daily.
Are the shutdown?
One told in February for a planned shutdown, and it was to come up in March, but it did not come up because we got a notice from NGT. So since March, practically, it is done.
So the whole quarter is not there?
In August, it has been in July, it has been restarted.
So the whole of the quarter is not there?
All of the quarter, it was not operational.
Okay. Okay. Thank you so much.
Thank you, sir. Next question comes from Aishwarya Agarwal from Reliance Mutual Fund. Please go ahead.
Hey. Yeah. Thank you. I just want to know this marketing income, which we see on a very high level versus the earlier regulated one. So how we should see it the future?
I mean, should we see it elevated or should we see it at regulated level, which used to be nine months before?
Last quarter, you can refer. Last quarter was high, and we did say that it will there will be some corrections, and it will be to be considered these quarter margins to be near normal levels.
Okay. And then how about current quarter, sir? This 1Q FY 'twenty?
It is what I am saying. The first quarter financial in 'nineteen-'twenty can be considered at normal levels.
So effectively, is 4,200 crores for the quarter, and we should multiply it by four, some 16,000 plus.
That is for you to assume. The numbers are.
Okay. Sure. Thank you, sir. Best of luck.
Thank you, sir. Next question comes from Aditya Suresh from Macquarie. Please go ahead.
Thank you. Just a follow-up on the same question. In marketing, what is the price lag impact which is booked in the quarter, if any? And the second question is into IMO, what sort of operational kind of changes are you all making at the refineries? Is there any like yield enhancement projects which you all are thinking about?
Any maintenance which you should be aware of? Thank you.
First question, I am not clear. You repeat the question?
Yes, the first question was that in refining, presumably the performance has been dragged by these price lag impacts. Conversely, in marketing, the opposite holds true, right? So has marketing performance been kind of enhanced by these price lag impacts, which was happening in the refining business?
Yes, there will be a corresponding impact corresponding to refinery. There will be an impact in marketing.
Exactly. So if you Can you help us understand what that underlying marketing performance was ex that price tag impact?
Mr. Suresh here, I mean, would just like to intervene and say that probably you can leave that calculations to us, to the company to deal with that because we would not like to dwell into the nitty gritty of things here. You need to excuse us for this because you have to see the margins from an, I mean, long term perspective. And you see that on an overall basis, on a year to year basis, how this is panning out. Yes, there are impacts, probably we may not be able
to REPRESENTATIVE:]
delve much into that.
As regards IMO, I will not be able to tell you the technical aspects of the changes which we are making in our plant. But what I can share is that our Gujarat refinery has the will be ready to produce 1,000,000 metric tonne of IMO compliant F4 and the Haldir refinery is also being prepared to supply 500,000 metric ton of IMO compliant F4.
Thank you.
Thank you, sir. Next question comes from Divyadar from ICIC Securities. Please go ahead.
Thank you. Good afternoon. So a couple of questions. One is what is the status of the polypropylene plant and any guidance on production ramp up and utilization for the current year and next?
Yes. The plant has been commissioned in July, though it was mechanically completed long back, but it has been commissioned finally in July. And July production though was low at 2,900 tonnes. But then now that the plant is commissioned, we expect it to produce at the desired levels in the coming months.
So any guidance you could give on current year or next year or some guidance, some idea on what kind of ramp up?
And we assume that 50% utilization for the rest of the year or
somewhat higher and what about next year?
We will come back on this. We do not have the exact guidance.
Is it too early to basically
Because it was commissioned recently So in the of July we need to have this input from technicals.
Sure. Second question is on what's your LPG Kerusin subsidy outstanding from the government right now or as of June and what is it as of now? Yeah. The total GY outstandings around June is 9,700, and it remains at that level. Okay.
Thank you.
Thank you, sir. Next question comes from Sabri Hazarika from MK Global. Please go ahead.
Yeah. Good afternoon, sir. My question is regarding your group sourcing on the back of, like, changes in the global market. So we have got the light heavy differentials shrinking. So what what have noticed is that your distillate your high sulfur crude intake has also fallen to around 49%.
Is So it because are you going for more light crude and what are the economics there and especially U. S. Crude, what kind of economics you are seeing there?
Definitely, while sourcing crude oil, we do take the differentials into account and necessarily it's not necessary that always high sulfur processing or heavy crude processing may give us better results. So we do optimize on that based upon the differentials.
So do you think the market has become difficult now or it is like more or less stable in terms of the margins that you have in the refining business?
The margins refining margins are definitely suppressed as it can be seen from Singapore benchmark margins also. The margins are definitely suppressed, and it is really difficult for the refiners. It's a period it's a difficult period for the refiners.
So broadly speaking, what kind of guidance would you give if we assume Singapore to be around $5 So what kind of margins could you be targeting under such a scenario?
As you would have also seen, our margins are around Singapore benchmark margins. So if you're assuming that Singapore benchmark margins will be $5 then we should also be very near to that.
Okay. Thank you so much.
You, sir. Next question comes from Sinatkan Parekh from JPMorgan. Please go ahead.
Yes. Thank you very much, sir. Sir, my first question is on diesel and MS market share. If you look at the trend of the last few quarters, ICL volume growth on a year on year basis has lagged the industry volume growth, but the difference has narrowed. So sir, do you see the market share stabilizing in diesel and petrol?
Or do you think that this trend of IOCL growing at a rate lower than the industry could continue for the next few quarters?
Look, with any entry of a private player, we being the market largest market holders, there is going to be some shrinkage in the market share. But for MS, at least I can say in Q1 'nineteen-'twenty versus Q1 'eighteen-'nineteen, our growth has been 8.8%, whereas the industry growth was only 8.5%. The PSU growth was 8.7. However, industry wise, you are correct, that there has been lower growth as compared to industry. So we do lose if the private players are very aggressive, but this may not sustain for a very long time.
We have ambitious expansion plans in the retail sector. Plus, we are doing a lot of improvements in service factors and other product differentiator factors also. So let us see how the things proceed.
Sir, my second question is on the BetCam. While you would come and give a more detailed guidance on the polypropylene plant later through the year. Sir, the ongoing projects of the MEG plant at Baradip and the Naphtha cracker at Panipat, sir, what are the timelines we should look at in terms of commissioning?
Yes, yes, sir.
The MEG project at Paradeep, the progress is around 12% right now. And the scheduled completion is by October 21. This is a three fifty seven Kt capacity plant. And if you're talking about the Paliput Naphtha cracker, it has just gone to the first stage clearance and it will take maybe around another three years down the line.
Understood. And sir, just two more quick questions, sir. Given where the net debt is on underlying basis of INR66000 crores, the visibility that you have over the course of the year, do you think that this will go up sharply, stay flat, come down? How do you how are you looking at the debt situation, sir?
That largely depends upon the GY borrowing positions, GY dues position, actually. If, say, presently, GY dues are down to 218,700 levels. So if we get, say, claims settled on regular basis, then definitely borrowings will be at this level. But if the GUI dues go up at the end of the year, then definitely there will be an increase to that extent.
And, sir, 10,000 $910,000 crore is basically what a run rate due will always be. Right, sir? I mean, steady state, say?
Yeah. Yes.
Understood. And, lastly, just a quick comment on Singapore Complex. I mean, the last couple of weeks, fuel oil has seen very strong strength. So, sir, the the IOCL refining margins to the benchmark, if we have a strength in FO and given where the, you know, other product cracks are, should IOCL report still report in line with Singapore complex? Or you think at that point of time, there could be material variance if you have a fuel oil driven higher refining margin?
No. Our fuel oil production is very low as of now. With Haldea, the FO production will further go down. So we do not see any impact, any material impact on our DRMs because of the FO cracks. Thank Our you very
FO yield is only 3.8%,
2,700,000 metric ton only
Next for this
question comes from Amit Rasthogi from UBS Securities.
Yes, sir. Good afternoon. Sir, could you explain that how much was outstanding from the government at the beginning of this financial year? How much has come through till date, like up to July in the last four months? And you have already mentioned that around INR 9,000 crores is still outstanding from the government at this moment.
Is that correct? Yes.
Opening dues were as of March 31, the dues were INR1921 crores, and they are down to INR9772 crores to be precise on June 30.
Yes. So we received around 9,300 crores from the government. Sir, I'm saying in the last one month, in the month of July, have we received anything from the government? And what is outstanding now?
Yeah. Outstanding, I said 9,772 as on June 30. The receipt I am
amount received July 1.
You want July 31? Do we have Same. Same. Same. Did not receive anything further.
At the July, the position remains the same.
Okay. And just a second thing, what was our parity defining margins for the current quarter? And how do we see pending them out in maybe next one year or so?
Paragit margins also in line with other margins was not good because the refinery performance remained suppressed because of the lower cracks. So again, it's profitability like any other refinery will depend upon the cracks which remain in the future period also at the price levels. If the price levels are high, naturally, failure loss impact, etcetera, will be fixed.
Understood. Are we like are we trying to do something different with respect to Paradeep, because it's given its complexity that we can recoup better than, you know, Singapore margins because Singapore margins right now is $7 averaging $7 in last one month. Can we expect that you're going forward, the performance of Paragi refinery will be beating Singapore GRMs?
As I explained, if the Singapore margins are will if Singapore margins go up, then our refinery margins will also go up. That has been the trend in the past also for last several quarters. So all our refinery margins will move accordingly in line with Singapore margins because that our margins are impacted by the international cracks. Further, the profitability of Faraday Professionally will improve now that the polypropylene unit is now commissioned. So that will also give some additional yields based upon polypropylene cracks.
Sure, sir. Okay, good. Thanks a lot, sir.
Thank you, sir. Next question comes from Nitin Diwari from Antik Stock Broking. Please go ahead.
Hi, sir. Good afternoon. Thanks for taking my questions. So now one is what was the CapEx in this quarter? And if you can give us basically a breakup of where the money was spent in what are segments?
And also a CapEx guidance for the year? And then I'll ask the second question.
We have a plan of about INR25000 crores for this year, and we spent about INR4250 crores in this quarter. And we have a lot of whole list of projects where the CapEx is going on. They range from all verticals, refinery, pipeline, marketing, but can, E and P. So everything is there. Maybe you can separately take down the details.
But the total CapEx, I told you, INR25000 is the plan for the year, and we did about INR450 crores in this quarter.
So you don't have the breakup with you right now?
Okay. If you are interested, then refineries the yearly plan is INR7300 crores approximately, pipeline INR56600 crores, marketing INR6400 crores. E and P is opportunity based, but we have capped about INR1000 crores, pet chem about INR1500 crores, gas, etcetera, about INR230 crores and other balances of the projects, okay?
Right. And sir, what is the refinery CapEx largely around? You're spending INR7300 crores, like so what's the CapEx next We
have BS VI, as mentioned, we
have BS VI projects. So out of INR7300 crores, practically INR4200 crores is for BS VI quality of the production projects itself. Plus we have INMAX project going on at Bongaigarh Refinery and some brownfield expansions at Varuni, Alipak, Gujarat, etcetera.
Great, sir. Sir, my second question is around calculation of inventory gains. So if you can just help us understand the basic, like, modalities of how we arrive at inventory gain or loss. Can you help us understand?
Whenever the prices rise, you recover based upon the latest price while processing the raw material, which was procured at the old price. This gives you the gains. This is accumulated as margin, and we term this gain as inventory gain.
So what is the time frame in which, like, basically, the prices are compared for, like, calculation?
Opening versus closing?
Yeah.
We compare opening versus closing.
Closing would be March and June is would be the closing or, like, you know
Yes. Yes.
Yeah. So that that's where, like, you know, the my question actually stems from because a broader sense was that given that crude corrected very sharply over June as compared to the March. So most of the correction happened over the month of June. So prices should have been actually been lower in the month of June compared to what they were at March. So couldn't we be looking at it's not like that?
No. We based upon our crude slate, our closing inventory valuation rate was higher than the opening.
Right. Okay. So June, actually, we had basically a higher sort of a pricing compared to March, and that's why, like, you know, we ended up with the inventory gain. That's what you're saying. Both on the food and the marketing oh, sorry.
On the refining and the marketing side. Yes. Okay. Okay, sir. Thanks.
Thanks a lot.
Thank you, sir. Next, we have a follow-up question from Sujit Ruda from Birla Sun Life Insurance. Please go ahead.
As I mentioned earlier, it is INR25000 crore for the year. For this quarter, we spent about INR4200 crores.
No, Sir, I'm talking about BS VI CapEx. You must have spent the day. BS VI
CapEx, totally about INR17000 crores we are spending total CapEx, different years. Put together, it will be about INR17000 crores on quality of the relation.
Sir, and is there any monetization of this? I mean, would you be charging extra on the weekly fuel, on weekly testing or there's no sort of synergy on that?
As of now, not because, let the projects decommission. Maybe around, February and March, we will have more clarity on this.
February and March. So we have to start by April Right?
We have to start by first April twenty, BS six.
Sorry. Got it. So so is will it be available for first April twenty, or would you be starting it from your in your terms much earlier than that?
We have to because there is some requirements of dilution at marketing terminals, etcetera. So we will be sort of ready perhaps a month in advance.
A month in advance. Okay.
You know that in the entire NCR region, we are already providing BS experience in the NCT from 01:40 and in the extended NCR region some months back.
So this will be exactly same price that what your nominal
Presently same price.
Yes. Exactly, sir. Okay. Perfect. Thank
you, sir. Next question comes from Rohit Ahuja from Bank of Baroda Capital Markets. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, I have a question on refining. So I know this was mentioned earlier, but you can clarify what are the steps you're taking to maximize the GRI potential at your refineries and especially at Paradeep in run up to IMO? And second question, your marketing business performance was good, and we see the granular details of the sales trend.
We are seeing here you're losing market share in petrol diesel, but you're making up market share in ATS and other industrial products. So that's is are these products that are you improvement in marketing margins?
Voice was not very audible. It was very low.
Ujjar, can you just repeat the first question? We'll take it one at a time.
Yes, sir. So my first question was on refining. How are we ensuring that we maximize the GRM potential for IOCs, refineries and also Paradi in run up to the IMO regulations?
How do we maximize the remaining budget in run up to IMO?
The TRM potential of the refinery.
I don't know how to answer this, but then you are aware that we run a LP model of optimization, taking our refinery configuration and the crude available. And accordingly, source the crude. I do not know beyond that what you are seeking. It's not very clear.
Are we intending to increase the diesel output in our refineries?
Any distillate for that matter, whether it is diesel or whether it is MS, definitely it gives more margin to refiners and we do intend to increase our distillate yields at all our refineries.
And Parathi, we've seen that it's not yet running up to the potential in terms of DRM contribution. Could you help us that would it be at optimal potential by Jan twenty twenty as IMO kicks in?
Definitely, we expect so. But then it lot depends upon the international prices. If the prices remain depressed, Paradeep can only do a physical performance. The financial numbers will depend upon the international prices.
Sir, so we were talking about increasing the heavy oil utilization at our refineries. Where are we that in that trajectory of using high sulfur fuel?
No. Actually, as I said earlier also, the economics of processing, heavy sulfur or heavy crude should be there, then only it makes any sense to increase that. So it all depends upon the differentials which are prevailing, and those all are factored in while sourcing the crude for these refineries.
Secondly, marketing, I just would like to repeat that you have if I look at the trend product wise, you have lost market share in petrol and diesel, while gaining in ABS and other industrial products. So is reason this why our margins have been strong in marketing?
No. On one side, you are comparing with industry. I do not know whether you are comparing marketing EBITDA also with industry. So we do not have industry marketing EBITDA, we have our own. So our own has increased because our market share has our basically the volumes have increased.
So it's specifically driven by ATS and industrial products where that's where the products you have gained margins?
No, I'm saying even for MS and HST, our volumes have increased.
So if the increase in volume in percentage terms is lower than the industry.
So in that how does it matter? We are not comparing our EBITDA with other industry EBITDA. No, so we are comparing our EBITDA with our previous EBITDA. So the market share does not play any role in it. The volumes play a role.
Right. So this EBITDA you're saying is sustainable is what you reported this quarter?
We believe so.
Yes.
Next question comes from Vishnu Kumar from Spark Capital. Please go ahead.
Good afternoon. Thanks for your time, sir. If you could just give us the average Very loud, ma'am. Of two. Sir, if you could just give me the average crude inventory days that you carry at in terms of number of days.
Our average inventory holding for crude is about forty six days.
Forty six days,
if you could just give a closing dollar carrying rate as of June, if you have the number.
Dollar carrying rate means what? Whatever is the in
terms of dollar terms in Brent or how much or whatever crude we are carrying as on June 30, what is the value in dollar terms
per batch?
We do not have that at present. We will inform you later.
Yes. I'll take it offline, sir. And just one final question on the once you move to BS VI, currently, is there any crack difference in terms of the international pricing between the current diesel petrol between BS4 to BS6? And if what is the delta that is there?
Have not been tracking this because this is too premature. The pricing has to be effective one for 2020. So we are not presently tracking.
Okay. Would that be very negligible or I'm not sure.
I am not sure.
Got it, sir. And one final question on CPCL is talking about making a greenfield investment in their Karakal their Karalur facility. Any thoughts on that? Karakalur?
Sorry? It's Kaviri basin refinery.
Okay. Are we making any difference there? And would and how much would be the investments in terms of from IOCL side?
There are plans to increase the capacity to 9,000,000 tonne and the project can be perhaps around crores to INR27000 crores. Now since then, there is investment by NICO also, NICO also. So it will have to be seen what will be our contribution in that.
It So likely to take an FID on this? Sorry.
No. Go ahead, please.
No. I was asking, when are we likely to take a final decision on final investment? Because I understand it's currently in pre FID stage. When are we likely to finalize on this CapEx or plans? I
think CPCL would have been a better question to answer this question. Being a listed company, they would be certainly aware of this plans they have got. But from our perspective, it has to go through some stage of clearances and due diligence from our side. And probably we are working upon it. It's already on our working table.
Thank you, sir. Last question for the day comes from mister Anubhav Agarwal from Credit Suisse. Please go ahead.
Yeah. Hi. Good afternoon. Clarity on two questions. One is, you say, this quarter, there's a lease change And because Please allow
a little louder, please.
Yeah. The other expenses in this quarter are lower by $1.87 crore because of the lease accounting change. Just wanted to check-in which division this benefit would have flown in, like, going to marketing, refining, petrochemicals, where where the impact was more predominant?
Right. Marketing. Yeah.
We are looking at q one versus q one or other expenses? No. I'm saying, see, effectively, other expenses are lower by $1.87 crore just because of lease changes lease accounting changes this quarter. Right? I'm just to what?
No. You know, what has happened is the deposition and finance costs have gone up because of lease accounting, other expenses have gone down. So as you will be aware that the rent expenses comes down. It's largely marketing. That that's how we take it?
Yeah. Yeah. Yeah. 26.
And the reversal that we've done on the provision side, which is $6.26 crore, that would have also flown direct completely to the trading division?
Yeah.
Okay. Okay. Sure. Thank you.
Thank you, sir. That would be the last question for the day. Now I hand over the floor to mister Bhavan Gandhi for closing comments. Please go
ahead, sir. Thank you. On behalf of Bartleby and Karami, I would like to thank all the participants for taking time out for the call. Thank you to the management of IOC as well. Thank you, sir.
Thank you very much. We thank you all for participating in this conference call. Thank you.
Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Dusseba's conference call service. You may disconnect your lines now. Thank you and have a pleasant day.
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