Ladies and gentlemen, good day and welcome to Indian Oil Corporation Limited's 2Q Results Conference Call hosted by Antique Stock Broking Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varatharajan Sivasankaran. Thank you, and over to you, sir.
Thank you, Swapnali. Very good afternoon, everyone. At the outset, I would like to welcome all the participants and the top management of Indian Oil Corporation Limited to this 2Q Results Call. We have with us Mr. Anuj Jain, Director of Finance; Mr. Nitin Kumar, Chief General Manager, Corporate Finance and Treasury; Mr. Pramod Jain, Chief General Manager, Treasury; and Mr. Prabhat Himatsingka, Chief General Manager, Finance and Treasury. I'd like to hand over the call to Mr. Anuj Jain for his opening remarks, and we'll then move on to the Q&A.
Thank you, Mr. Rajan. Dear investors and analysts, a very good afternoon to all of you and warm greetings for the festival season. I take this opportunity to welcome all of you to the conference call organized by us, post-announcement of the second quarterly results of financial year 2025-2026. I thank each one of you for joining the call. I trust you have had an opportunity to review the results we have posted on our website, exchanges, and the updates that have been shared with most of you. In today's call, we would like to walk you through our performance for the quarter gone by, provide some insights on the broader macroeconomic context, and also share with you the strategic initiatives we are pursuing to strengthen our position as India's largest energy company. Let me start with our quarterly performance.
This quarter, we have registered a profit after tax of INR 7,610 crore, higher than the preceding quarter, which was INR 5,689 crore. From a half-year perspective, the profit after tax is INR 13,299 crore, as against INR 2,823 crore in H1 financial year 2025. Revenue from operations during this quarter stood at INR 202,992 crore, as against INR 218,608 crore in the preceding quarter of this year. The above-normal rainfall in the country has impacted the sales volume for the quarter. The revenues for the corresponding quarter of financial year 2025 were INR 195,149 crore. On 8 August 2025, the Union Cabinet approved compensation of INR 30,000 crore to the three public sector OMCs for under-recoveries incurred on sale of domestic LPG. As per communication received from MOPNG, Indian Oil Corporation Ltd share in the compensation is INR 14,486 crore.
The compensation amount will be disbursed in 12 monthly installments of INR 1,207 crore, starting November 2025. Accordingly, revenue to the extent of equivalent on a monthly basis will be recognized in the relevant periods. The strategic initiative of Project Sprint has started showing improvements with green shoots visible in operational and financial performances. Now, for the operational and financial highlights, I will request my colleague, Nitin Kumar, Chief General Manager, Corporate Finance and Treasury, to brief you. Thank you.
Thank you, sir. Kindly note that today's discussion may include forward-looking statements, which are based on currently available information, assumptions, and expectations, and are subject to uncertainties that could cause actual results, performance, or achievements to differ materially from those expressed or implied. Participants are advised to refer to the company's latest filings with regulatory authorities for a more detailed discussion on the risks and uncertainties. The past quarter has witnessed important developments both globally and domestically. On the global monetary front, the U.S. Federal Reserve delivered its first rate cut of 25 basis points for the year, bringing the rate down to the range of 4% to 4.25%. The Fed's updated projections signal the possibility of further reductions in 2025, underscoring a shift from a primarily inflation-fighting stance to growth and labor market support.
In India, the Reserve Bank of India held its policy repo rate steady at 5.5%, maintaining a neutral stance as the impact of earlier cuts continued to play out. On the growth front, IMF raised India's 2025/2026 GDP growth forecast to 6.6% from 6.4%, following a strong 7.8% growth in Q1 of financial year 2026. For Indian Oil Corporation Ltd, the past few months have been particularly significant. On 20 September 2025, Prime Minister Narendra Modi inaugurated Indian Oil Corporation Ltd's acrylics and oxoalcohol plant at Vadodara's Gujarat refinery, boosting India's drive for petrochemical self-reliance using propylene to make high-value products. We started trials of INDICOP2F technology at Digboi refinery, converting waste plastics like PP, PE, PP, and multi-layer packaging into fuels, showcasing our sustainable and scalable innovation. Our Paradip refinery commissioned a new hydrogen generation unit, announcing cleaner fuel production and supporting energy efficiency and sustainability goals.
S&P Global Ratings has assigned Indian Oil Corporation Ltd a BBB long-term rating, equivalent to India's sovereign rating. This follows S&P Global Ratings' recent upgrade of India's sovereign rating and reflects our strong financial fundamentals, disciplined capital management, and resilient performance amid a volatile global environment. Now, let me briefly touch upon the quarterly performance highlight. Talking about the numbers, the average price of crude Indian basket during this quarter witnessed an increase of about 4.2% from the immediately preceding quarter, that is, Q1 of financial year 2025/2026. The increase in crude oil prices quarter on quarter is largely due to geopolitical risks and stockpiling by China. Accelerated unwinding of production cuts by OPEC Plus helped in keeping the increments in limits. With respect to the CRECS spreads, while HSD CRECS improved during Q2 of 2025/2026, MS CRECS were lower than the previous quarter.
In the petrochemical space, the spreads of key products continue to remain at subdued levels due to weak global demand growth, new capacity additions, and volatile feedstock prices. Now, let me briefly touch upon the major verticals. Refineries, the reported GRM of $10.66 per barrel during this quarter is higher than the previous quarter. The normalized GRM for this quarter at $8.90 per barrel has also outperformed the previous quarter of $6.91 per barrel. The increase in GRM is attributable to higher product track spread of HSD during the quarter. The throughput during the quarter was at 17.6 MMT with a capacity utilization of 99.5% in comparison to throughput of 18.7 MMT and capacity utilization of 106.7% during Q1 of financial year 2025/2026. Pipeline, the capacity utilization was about 67% during this quarter as compared to 74% in the previous quarter.
Pipeline throughput during Q2 of 2025/2026 is 24.1 MMT, vis-à-vis 26.3 million metric tonnes during Q1 of 2025/2026. The Gujarat refinery shutdown has impacted the refinery and pipeline throughput for this quarter. Marketing, total product sales during the quarter were 24.262 MMT as compared to the sale of 26.32 MMT during the previous quarter, that is, Q1 of 2025/2026. The oil and gas sector is sensitive to seasonality, and the above-normal rainfall during this monsoon in India has impacted the volumes of major products in the quarter. However, with the strong and sustained demand for petroleum products across the country, we expect a significant improvement in our performance in Q3 and Q4, positioning us for a stronger finish to the year. On a half-yearly basis, sales have improved, that is, 50.590 MMT in H1 of 2025/2026, vis-à-vis 48.213 MMT in H1 of financial year 2024/2025.
During Q2 of financial year 2025/2026, 597 retail outlets were commissioned, taking the total number to 41,263. Our lube business achieved 21% growth in total lube sales and 11% growth in automotive lubes. During H1 of financial year 2025/2026, our lube market share achieved 9% growth among PSUs and 5% growth among industry. Petrochemicals, the sale of petrochemical products, including exports, during this quarter was 0.77 MMT as compared to 0.83 MMT in the preceding quarter. Sales for Q2 of financial year 2024/2025 were 0.77 MMT. On a half-yearly basis, petrochemical sales in H1 of 2025/2026 were 1.602 MMT, more than the sales recorded in H1 of 2024/2025, which was at 1.517 MMT. Gas, during the year, we registered highest quarterly gas sales of 1.840 MMT, which includes CNG sales of 44 TMT as compared to total gas sales of 1,685 TMT.
It includes CNG sales of 41 TMT during the preceding quarter, that is, Q1 of financial year 2025/2026. On 1st August 2025, Indian Oil Corporation Ltd and Trafigura Private Limited signed a confirmation memorandum for the supply of approximately 0.4 MMT per annum LNG from July 2025 to December 2029 under Indian Oil's first Henry Hub Link mid-term contract, with the first LNG cargo delivered on 10th August 2025 at the Hague. Biofuels and renewable energy, during April to September 2025, we have achieved ethanol blending percentage of 19.85% on an all-India basis, which is slightly higher than the industry blending percentage of 19.83%. The company is working to develop 31 gigawatts of renewable energy by 2030. The same will be achieved through wholly owned green subsidiary Tera Queen Ltd and JV company with NTPC Green Energy Ltd.
We are setting up the country's largest clean hydrogen plant of 10 KTA at Panipat refinery. To promote hydrogen mobility, we have set up India's first hydrogen dispensing station at our R&D center in Faridabad, followed by a station in Gujarat refinery, where field trials on fuel cell buses are being undertaken. Indian Oil Corporation Ltd has introduced 15 hydrogen fuel cell buses along with Tata Motors Ltd for operational testing in Delhi and NCR and Gujarat regions. Indian Oil will develop two new hydrogen dispensing stations along Mumbai-Pune and Jamshedpur-Balasore corridors. We are also undertaking a viability study for Hyundai Nexo hydrogen fuel cell electric vehicle, FCEV, through a two-year real-world test. Indian Oil and Air India have signed a memorandum of understanding for the supply of SAF, that is, sustainable aviation fuel, from December 2025.
Further, with Indian Oil being the only certified company to produce SAF from used cooking oil, a rate contract has been finalized for the supply of treated used cooking oil to enhance SAF blending. Capex, during April to September 2025, the company incurred a total capex of INR 15,890 crore, encompassing investment across all verticals. The vested capex target for the financial year 2025/2026 is INR 33,494 crore. These investments are aligned with our long-term strategic roadmap and national energy priorities. Borrowings, with respect to the borrowing levels, the borrowings as on 30 September 2025 have increased by about INR 6,692 crore and is at INR 1,28,239 crore level as compared to INR 1,21,547 crore as on 30 June 2025. The increase in the borrowing was mainly on account of working capital changes and foreign exchange translation.
With the current debt-to-equity ratio of 0.68 as on 30 September 2025, Indian Oil Corporation Ltd is comfortably placed to fund the ongoing capex plans. Let me take a pause here and request Dr. Finance for his further remarks.
Thank you, Nitin. Despite global water treaty uncertainties and arising market challenges, Indian Oil stands resilient and future-ready. Guided by our unwavering commitment to the nation's energy security and supported by strong operational capabilities, integrated value chain, and an agile workforce, we will continue to power India's growth story. As the country's energy needs expand, we remain firmly focused on ensuring reliable, sustainable, and uninterrupted energy supply while advancing our vision of building a cleaner and more self-reliant energy future for India. I extend my sincere gratitude to our shareholders, employees, partners, and all stakeholders for their unwavering trust and support. With this strong foundation, we are confident in our ability to deliver sustainable value and long-term growth, even in the face of a dynamic and challenging external environment. Jai Hind, Jai Indian Oil. I will end my briefing here. We will now take your questions. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Thank you, and good afternoon, gentlemen. Thank you for the opportunity. I have a couple of questions. First was with respect to the LPG recognition. I believe the CFO, sir, mentioned that this will be recognized on an accrual basis in revenue. I just wanted to reconfirm that it will not be shown as other income, but it will be recognized as revenue. Is that correct?
Yes.
Every month, the proportionate installment will be basically booked as revenue, sir, on the LPG front, right?
Yes.
Just another follow-up on the same thing. What is the loss per cylinder that we saw in Q2, and what is the loss per cylinder right now, if you can get a sense?
As of date, the loss is around INR 40 per cylinder.
Okay. In Q2, sir, what was the number?
Q2, almost it was INR 100 per cylinder.
Q2 was INR 100, and it has dropped drastically to about INR 40 per cylinder right now.
Yes.
Okay. Third question, sir, was on the refining margins, the kind of outperformance that we have seen. Is there a significant amount of Russian crude that is still there in percentage terms with possible share? How much of Russian crude was there in Q2?
In Q2, we have been maintaining somewhere around 18% to 19% in that range in Q2.
The discount is down to somewhere around $2 to $3. Is that understanding correct?
Discount has been consistent over the past five, six months. There's no major change in the discount to whatever was in the past five, six months.
That's around $2 to $3 a barrel?
Yes, yes, yes.
Okay. Sir, I just wanted to understand if we look at the benchmark margins, if you can indulge me for a minute. The calculated margins seem to be a bit lower. I mean, just the diesel CRECS is actually helping offset negative discounts for all the other products. Is that what we are really seeing, or is it refinery efficiency also that's playing out in terms of such a robust GRM performance for this quarter?
See, if we talk about the refining performance, the CRECS of HSD has been quite good. If I talk about the HSD CRECS, you know, the CRECS is more than it was around 10 last year, which has been 14 this year. The MS also, last year it was 4. Now it is almost 6. The CRECS of both MS, HSD, which are the significant portion of our product, they have very high margins. Coupled with, we have a very good operational performance also. In all the parameters, I think they were good margins for the refining sector.
Thanks. One last question, again, a clarification, sir. I couldn't catch the commentary. How much is the LNG supply agreement with Trafigura, and what are the terms of that in terms of pricing?
Yeah, just a minute.
Sure.
Yeah. The term is supply of approximately 0.4 MMT, 0.4 MMTPA per annum, right, of LNG from July 2025 onwards through December 2029.
July 25 to December 29. Thank you so much, sir. I'll come back if I have more questions.
Yeah.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference call, we request you to kindly limit the questions to per participant. Should you have a follow-up question, please rejoin the queue. The next question is from the line of Sumit Rara from Samsung Capital. Please go ahead.
Yeah. Thank you, Madam. Sir, firstly, I would like to congratulate you and your entire team at Indian Oil Corporation Ltd for posting a superb set of results and also season's greetings for you, though it's a bit too late. Sir, now, firstly, I would like to just touch upon a few things to you as thank you, sir, as an investor. Sir, today, it is very heartening to see your presentation Project Sprint. In that, Indian Oil Corporation Ltd is about 3% of India's GDP. Now, sir, 3% of India's GDP is nearly INR 12 trillion. Okay. Today, if you look at it from an investor angle, our market cap is around INR 2.5 trillion. I mean, INR 2 trillion, rather, in spite of having an asset base of nearly INR 5.5 trillion.
Today, sir, it is a proud fact for India that about 35 million Indians use the Indian Oil Corporation Ltd fuel pump on a daily basis. Very clearly, on one side of the equation, you're doing a fantastic role on energy. Security of India, the consumers of India are using. As an investor or as being India's national asset, the company is not being valued. I mean, today, having a market cap of barely INR 2.1 trillion is clearly not in the right spectrum of things because today our valuation is being valued like a commodity company. The matter of fact is that you are a consumer company, right, because 35 million Indians use it. You are 2% of India's corporate profit. Sir, today India makes about INR 15 trillion, and Indian Oil Corporation Ltd makes about INR 35 billion.
The matter of fact is that there is some disconnect somewhere where Indian Oil Corporation Ltd and rather the oil marketing companies are not getting the valuation which they should get. The matter of fact is that the Government of India has also now paid the LPG money, of the INR 300 billion, which you highlighted monthly is going to come. Sir, the fact of the matter is that these are very valuable companies, but somehow the market is not getting the confidence in the earnings. I would, sir, request you to please give the market some confidence on the earnings aspect because otherwise, a market which trades at 22P, there should be absolutely no reason why not only Indian Oil, but all the oil marketing companies trade at sub-6P with ROEs of 22%.
I would really request you that the management should explicitly give the market more confidence on earnings because even the refining cycle is in your favor, crude is in your favor, Government of India is in your favor, the company is doing very well. Somehow the investors are not getting the confidence. I would only humbly request you to please give some confidence because you guys are doing a superb job. There's nothing I have to ask you because Russian crude, sir, whether it's 15%, 20%, it's all optics, right, because it's going to move the needle hardly a few crores here or there. Please give the market confidence is all I request you. I wish you all the best. Good luck, and God bless you also. Thank you.
Thank you. I think you have given my answer. It shows that the four factors, crude is, you know, in the favor, refining margins are quite good, government has been quite supportive, overall ecosystem is quite supportive of the oil and gas sector today. I think, Sumit, you have already given the positive news, what I wanted to give to the people. I feel that, given the performance we had in Q2 and the other sectors, what you mentioned, we should have a good profitability for this year. Thank you.
Thank you, sir. Thank you.
Thank you. The next question is from the line of Vivekanand from Ambit Capital. Please go ahead.
Yeah. Thanks for the opportunity. I have two questions. The first one is, an update on Project Sprint, especially with respect to the cost-saving initiative that you highlighted. If I remember correctly, you had said that you would be able to optimize your costs by around 20%, and you had given some timelines as well. If you could give us an update on that and more granular details of where these cost savings have come and how we should think about the operating costs, say, for FY 2026 overall and 2027, that is question one. My second question is on the Panipat refinery expansion progress. Where does it stand currently, and what is the refinery throughput on a standalone basis that we should assume for fiscal 2026 and 2027? Thank you very much.
See, I think Project Sprint is not only for the revenue expenditure, it is for the capital expenditure as well. What we are doing is to optimize wherever there is capex or revenue. Both sides we are trying to optimize. As far as the specific numbers are concerned, I think we are still, we started our journey from April, and it is a three-year project. It will not be possible for me to give you specific numbers because many expenses in the initial months would have got deferred, which might come in the second half. I would be sharing that, what we are assuming is that it should be a very, very positive way of reducing our cost. As on date, it will be difficult for me to share any specific number because it's an ongoing year.
The things have been, we are discussing with the teams, and teams are working to optimize. I will say the cost is being optimized not only on retail, it is on LPG, it is on aviation, operations. All the major verticals of Indian Oil, refining, pipelines, marketing, are working to reduce the cost. The target has been given to reduce the cost by 20% of the budgeted numbers. That target has been given, but you all, we all have our budgets which are on the higher side. All in all, I would say maybe by third quarter end, we will be able to give you some specific figures. As far as the Panipat is concerned, we are expecting that the refinery should come on commissioning by June 2026. The basic capacity is 10 million metric tons per annum.
The first year, generally, we assume that it should give me a 60% throughput of the total capacity. Today, almost 90% physical progress we have already obtained. In other words, as I said, June 2026, for that, already 90% of the work has been done. In the next seven, eight months, balance 10%, other activities will be done. In the first year, we should expect 60% of the installed capacity.
Great. Thank you so much. Just one follow-up. If you could perhaps give us some sort of guidance on the refinery throughput that we should be budgeting for FY 2026 and 2027. Last year, it was 71.6 MMTPA. Do you have any rough cut sense in mind given that there are multiple refinery projects with varying stages of progress? It would be easy for us to track you and under-assess the company's performance thereof.
Okay, just give me one minute. I will be able to give you these numbers.
The extra subjects of those extra 10% of capacity.
Basically, what we are seeing, just one minute.
Yeah, let's go.
See, normally, our capacity utilization remains more than 100%. If my installed capacity as far as 2025/2026 is concerned, which is going on because all the commissionings are coming next year, if I talk about Indian Oil alone, it should be around 72, 73 something.
60% caps there.
My installed capacity is around 72.
72 or 72.
Yeah, I'm talking about only Indian Oil as a standalone, not including CPCS.
Right. Right. Sir, do you have any thought process in mind as to what the throughput will be for 2026 and 2027? You can perhaps discuss and maybe revert on this later. No problem. Okay. 2026, 2027 should be higher than that 4 to 5 MMTPA.
Okay. Understood. Thank you so much and all the best.
Yeah.
Thank you. The next question is from the line of Nitin Kumar from HSBC. Please go ahead.
Yeah. Thank you so much for the opportunity. My first question is on the petrochemical side. We haven't seen any material increase in petrochemical margins per se, but you've been able to demonstrate a nice uptake and return to profitability at the EBIT side. Can you talk about the reasons for the same?
Sir, I feel we had some units under shutdown last year, which are now working this year. As such, our quantum has gone up. On the whole, I think the petrochemical margins still remain constrained. We are still seeing that the margins have not improved much, but we hope that in times to come, the petrochemical margins will also go up.
Okay. You should think that for the rest of the year, you should be on a positive number for petrochemicals as well.
Yeah. Positive numbers are positive. In any case, we have a positive contribution to our EBITDA. The only thing is the type of margins we have seen in the past, we are not seeing it today. We earned more than INR 2,000 crore petrochemical margin during the six months.
Right. Understood.
Which was almost 25%, 33% higher than the last year because of the improved margins this year.
Okay. Can you also give us a breakup for your CapEx plan for this year?
See, CapEx, we have always been sharing that ours will be approximately INR 33,000 crore for FY 2025/2026. If you want the major projects, I can share with you.
Yeah.
You want the major projects?
Yeah. Major projects and also your CapEx towards renewables, if you can talk about that.
See, you can notice refining would be almost INR 14,000 crore.
Okay.
Marketing and pipelines put together would be another INR 10,000 crore. My PetCam should be around INR 2,500 crore. Now, coming to specifically what you were asking for my renewables, a lot of renewables are going through a joint venture and subsidiary mechanism in our system. We do equity contribution in that, and we expect to contribute almost INR 2,000 crore in those JVs and subsidiaries this year. In any way, once we give the money to them, there is a JV partner who brings the additional money. There would be debt funding also. For my Indian Oil books, it should be around INR 2,000 crore for the financial year 2025/2026.
Understood. There is only one JV, right, with NTPC, or is there more that you formed?
Oh, we have a subsidiary company called Tera Queen Ltd, which is 100% like NTPC Green Energy Ltd. We have also opened a company.
Correct. Correct.
We are having a big target for that company.
There is no specific CapEx for Tera Queen?
Terra Queen itself has a target of 30 gigawatt by 2030. If you break up each year, they should be commissioning 4 to 5 gigawatt of power. Their targets are very, very different. Since we have started the journey, maybe one or two years, the activities will go on, but the outcome will not come. Our equity funding will go from our side.
Understood. That's very helpful. Thank you so much. Lastly, if you can just elaborate a bit more on the GRM side, other than the better diesel CRECS, what else would you attribute your expansion of margin to?
See, predominantly, if this quarter is concerned, it has been a better operational performance also. It is also due to my better gross refining margins. Refining margins have been quite good this year. I would also share with you if I have some other things. We have also had more of a, you know, because we sometimes gain on the freight side also because we are taking both on a DAP and FOB basis. Sometimes if we are taking it on DAP basis, that also gives me a positive margin, which was also positive for this quarter.
Is that sustainable?
See, I told you, it is all shipping freight market is quite volatile.
Okay.
Because we also have our time charter vessels, it all depends upon the situation. When we do a tender, we give an open offer whether you want to give us on an FOB basis or a delivered basis. Depending upon the optimization of the seller, we get the benefit.
Understood. Lastly, if you can tell what is the crude from Russia for the current quarter so far?
I just shared with you in the beginning itself that it is around 19%.
Okay. The same run rate continues from the previous quarter.
Quarter one was higher.
Yeah.
Now quarter two is slightly down because overall throughput is down. Normally, the quarter two throughput is always down because of the rainfalls.
The quarter three, I mean the October one.
October it just started. We are still continuing to procure the Russian crude.
Payment. Okay. Fine. That's helpful. Thank you so much and all the best.
Okay.
Thank you. The next question is from the line of Yogesh Patil from Dollard Capital. Please go ahead.
Thanks, sir, taking my question, sir. Questions are mostly related to the understanding of the LPG under-recoveries and the over-recoveries. In our result note, categorically mentioned that LPG compensation will cover the losses till the end of FY 2026. Whatever under-recoveries in the first half FY 2026 will be the part of that compensation, and we will not get any separate compensation for the first half FY 2026 amount. Is that a correct understanding?
See, what we have been informed is that the government has, as of now, given INR 30,000 crore under-recovery for the under-recoveries on LPG. We are still, LPG is a controlled product. Okay. As of now, they have given INR 30,000 crore, but we continue to get engaged with the government, and we will definitely pursue the under-recoveries of the balance amount. MOPNG is also maintaining always that it's a continuous account because now the Saudi CP has come down. We may not have a huge under-recovery in the next few months. In the past also, we have seen in some months we get an over-recovery also. The government will take a situation on a cumulative basis at the end of the financial year 2025/2026, and then we will see what will be the situation.
We will have a window to ask them for the FY 2026 under-recoveries if it is increasing.
Yes, it would be there.
The windows will be open. Okay.
Yes, sir.
Sir, quickly, the second question is related to what exactly you mentioned. The Saudi CP has come down, and from the next month, it is declining 6%. Definitely, LPG under-recoveries will be nil. Is that a correct understanding from the next month?
No, it won't be nil. It won't be nil.
It would be hardly INR 10.00, 12.00, correct?
No, no. It should be more than that. I think it should be around INR 25 to INR 30.
Okay. Lastly, suppose from here, from November onwards, if it falls below 10%, 20% again, then the over-recoveries would be there. In that case, that same over-recoveries can be settled against the under-recoveries of the first half FY 2026. Can you just clarify?
Continuous account. I just said they will see on a cumulative basis. They don't see on a month-to-month basis. At the end of the financial year 2025/2026, they will take a total position, what has been the under-recovery of 2024/2025, 2025/2026, what has been given to us. They will take a call.
Okay. Sir, lastly, just let me reframe my question. Suppose, after December 2025, we start earning the over-recoveries on the sale of domestic LPG, and that over-recoveries or kind of a profit will be transferred to the buffer account. As you mentioned, this is a running account, buffer account is a running account, and the settlement will be a continuous process. Do we need any kind of permission from the government to take out that profits or over-recoveries from that buffer account and settle on our historical under-recoveries? Do we need any kind of MOPNG permissions or the government permissions to settle this account?
This is the account which we submit, all the oil marketing companies submit our figures to the MOPNG. In any case, everything is decided on LPG. We understand LPG is a controlled product even today, so everything we have to submit. Based on our submission, they will take a decision.
Okay. The ministry and the petroleum ministry and the government will take a decision on that side. Okay. Thanks. Thanks a lot, sir.
Okay.
Thank you. The next question is from the line of Nitin Tewari from Philip Capital India Limited. Please go ahead.
Hi, sir. Good afternoon. Thanks for the opportunity. Sir, my question, first question is, with respect to your lubricant division. Can you give us the sales number for the entire first half, your lubricant sales, and what % of that was auto sales, and the same for FY 2025 as well?
Look, basically, normally, we give the total numbers. If you want, I can share with you. See, as far as within the PHU segment, Indian Oil commands 48% market share. Okay?
Okay.
You want exact numbers?
Yes, sir. Exact number would be good if we can have the number for first half and FY 2025 in terms of what was the total lubricant sale and also what was the automotive component out of it.
I will get it.
The automotive component.
I will get it emailed to you.
Fine.
I will get it emailed to you.
Sure.
I can share the market share of Indian Oil amongst the PHUs. We are almost 48%.
Among PHUs, you have 48% you mentioned.
Yeah, normally in the range of 360 metric ton to 1,000, to 430. That is the range we do. I will give it to you, Anuj. I will send it to you.
Sure, sir. My second question, sir, I'll connect back with you for the details on email, sir, certainly. On the CapEx guidance front, as you indicated that, like, you know, your annual CapEx is INR 34,000 crore, INR 33,000 to 34,000 crore. In light of Project Sprint, would it be reasonable for us to assume that, like, you know, once you have realized the gains of Project Sprint, your CapEx should actually come down by 20%? Would that be a right assessment?
See, there are two parts of the CapEx. One is the budget, big budget. In any case, we don't. That is independent. That is a returns-based what we have to spend. We have also a lot of maintenance CapEx what we do. We have 30,000 retail outlets in India. We continuously invest money in upgradations and those things. We have so many other refineries, nine refineries, 20,000 kilometers. You see the existing size itself demands a lot of maintenance CapEx on them or investment CapEx.
Right.
What we are trying to do is maximize our capex on the new investments but try to optimize on our existing capex history. This is what the strategy is.
I understood, sir. What percentage of your CapEx is actually the maintenance CapEx, if we can have a rough ballpark around that?
This will be very difficult. See, now if you talk today, a lot of big projects are going on. That means CapEx percentage would be down. It may be 10% to 15% today. When the project gets commissioned, this percentage may go up. It all depends how much CapEx we are incurring on the new expansions and those things.
I'm just trying to get an understanding around what kind of a CapEx saving we can, perhaps, see on an ongoing regular basis once your Project Sprint, like, you know, optimization, like, you know, materializes.
See, generally, we should be spending INR 30,000 to 40,000 crore going forward together, ourselves or with our JVs and subsidiaries where we put some of the investments. Together, we should be in the range of INR 30,000 to 40,000 crore.
All right, sir. Understood. Thank you, sir.
Okay.
Thank you. The next question is from the line of Vikas Jain from CLSA. Please go ahead.
Hi, Anuj. Sir, thanks for taking my questions. Two, three questions. First is accounting for this LPG reimbursement.
Yes.
The government has already promised, given us a schedule of this is how the money is going to come. Doesn't it mean that it gets accrued to us? Shouldn't it be accounted for immediately itself that it is just getting paid in a delayed way? This is exactly how it used to happen at the time of oil bonds also. There was a promise, and then they were paid. Is there any particular reason why we have chosen a different kind of accounting, more or less, like cash accounting instead of when it gets accrued?
Vikasi, see, LPG is a controlled product, and we are guided by the communication received from the ministry. As of now, it has been conveyed to us that the income will be accrued to the company on a monthly basis. Based on the communication we have received, we have to account for whenever the accrual happens to the oil marketing companies.
Okay. Basically, the payment will be whatever your amount is, INR 14,500 roughly divided by 12. That's equally paid every month starting November. Is that how you expect it to happen? Is that how it is promised to be paid out?
See, the interpretation is the government will communicate, on accrual basis, whatever is to be given to us. Accordingly, we will be doing the accounting. The way we see that, it should be coming to us on a monthly basis, the amount which has been informed to oil marketing companies.
It's equally divided through 12 months. That's what you think.
I don't have an exact, but yes, it should be like that.
Okay. We will only come to know the exact amount for November when it is communicated, right?
See, as of now, you can consider the amount in equal installment. If it changes, we have to change our accounting thereafter. As of now, we have also estimated the same amount in our cash flow.
Okay. Understood. In terms of the other two refinery expansions that you have in Gujarat and Barauni, you gave an update on Panipat. Could you just provide a similar kind of an update on them? When is it expected? By when do you think you can, you know, how the ramp-up would be to get to full capacity both for the main CDU as well as the upgrader units for there?
See, as far as the expansion in Gujarat is concerned, that is also expected to come in the month of June 2026.
Okay.
Baroni expansion will start commissioning in stages with effect from August 2026. Both the commissionings are falling in the next financial year.
Okay.
The physical progress, if I see, generally, in our companies, we see how much progress has been made. In Gujarat refinery, we almost touch 84% physical progress, and in Baroni, 88%. For us, these numbers are very important to see how much % physical progress has been done on the site. Once it reaches 100%, the commissioning activities will commence. Here and there, a few months, it gets commissioned.
Should we, as a thumb rule, assume that the first 12 months after commissioning, the utilization of the incremental capacity will be about 60%?
Yeah. This is a standard what most of the we have been following: 60% first year. Depending upon the successful, I think sometimes 80%, sometimes 100% also. Because these are expansions of brown field. Generally, on a green field, we consider 60%, 80%, 100%. Since these are expansions, we are expecting 60% first year and trying to improve beyond 80% in the second year.
Okay. Sir, although you know that we typically, it gets talked about in terms of CDU utilization, refining margins only come when upgrader units also ramp up. For each of these refineries, by when do you think after commissioning would the real gains on refining margins be visible? Would it be almost like four or five quarters plus from the?
It should be a month before that because these are all expansions of our existing refineries. The way we are configuring it, the moment the primary units are running, because these are all going to be connected with many of our existing units and utilities, the ramp-up should be quite, that is a strategy also to have a brownfield expansion.
Okay.
That is the idea behind the exact, that we should have a quicker, you know, upgradation.
Okay. Sir, other than these three very clear volume expansions that the company is doing in refining, are there any other projects which are in advanced stages at this juncture, either in petrochemicals or in refining, and if you could give an update on that in terms of where we are?
Yeah. See, now we have a major PX PTA contract at Paradip Refinery, which is costing me almost INR 14,000 crore, and the commissioning is expected in the third quarter of 2026-2027. We have another plant in Panipat, Polybutadiene rubber plant. That is a INR 3,000 crore plant. Here also, we are expecting by June 2026 that it should get commissioned.
Okay.
Even in PXPTA, the physical progress is almost 90% now. In the PBR plant at Panipat, the physical progress is now almost 70%. Apart from that, since we have a refining system coming, we are spending on the pipelines from Mundra to Panipat. That is an INR 10,000 crore project. We are upgrading new refinery, new pipelines. Many other CapEx projects are going on.
Sure, sir. Finally, if I could.
Sorry to interrupt. In between, Mr. Vikas, you may rejoin the queue for the following questions.
Sure. Okay.
Thank you.
Thanks. Thanks.
A reminder to all the participants that you may restrict the questions to one per participant due to time constraint. Moving further, the next question comes from the line of Sabri Hazaraki from MK Global Finance Service. Please go ahead.
Yeah, just two questions, one small one. Firstly, this acrylic plant, you said when was it commissioned?
It was commissioned in the month of July.
Can you give the unit economics of this plant in terms of how much was the CapEx and what revenue and EBITDA you are building it? Also, a realistic revenue and EBITDA given the current cycle.
Okay, just give me one minute. Since it got commissioned, I have not kept the figures. Give me one minute, sir.
Yeah.
Okay. Have you any other question by the time I?
The second question is this Ennore, Tuticorin, Bangalore pipeline. Is this pipeline completely ready or is there anything pending here? Has it been connected to the national grid?
As per my information, not as of now, it has not been connected.
Bangalore part is not connected. It is still stranded only towards Tamil Nadu, right?
Yes.
Okay. And.
As far as the Oxo Alcoy project is concerned, it has costed me INR 6,000 crore.
6,000 crore. Okay.
Yeah.
How much revenue are you thinking of earning from this?
Normally, if you see any project, it should give me a return of around 11%. For your, you know, workings, whenever we commission based on my CapEx, you can build in the revenue of 11% in your workings. Generally, the ramp-up is around 60% in the first year. PetCam should come to around 80% next year and third year, 100%.
11 to 12% project IRR. Is that right?
You can keep it at 11% as of now because the margins are quite subdued in all the petrochemical cycle.
Right. Sir, just one small follow-up, which I think the previous participant asked. Right now, if I see the buffer, your buffer is, say, INR 26,000 crore, but negative buffer is INR 26,000 crore. In Q1, you have made INR 3,700 crore loss. In Q2, it was down to INR 2,100 crore. Suppose in Q3 you make a profit of, say, INR 500 crore. That INR 500 crore will directly accrue to your P&L or it will be zero?
It will be adjusted against the under-recoveries incurred in the past quarter.
That INR 500 crore will directly come to your P&L, right?
I would say, suppose, as I said, suppose two quarters we have an under-recovery and third quarter we have an over-recovery. When we see the total in cumulative end of March 2026, everything will be clumped together.
Yeah, whatever is pending will get accounted in the books at the end of March.
That will be asked from the government to give us the compensation.
Right. I'm just wondering if there could be a positive impact from that, since the negative impact has been.
As soon as the positive comes, it will get adjusted against the past under-recoveries suffered by.
Yeah, for that quarter, it will be positive only.
It will not be taken in my P&L.
It will not be taken in your P&L, right?
Yes.
It will be zero or negative. If the compensation comes, then it will come as a separate thing only, not from here.
Yeah, suppose the over-recovery happens, it will be shown as a payable.
Okay. It will be shown as a payable despite the fact that you have got outstanding. Okay.
Yes. Yes.
Okay. Thank you so much. Yeah.
Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Yeah. Hi, all. Good afternoon. Just on inventory loss, could you give the total loss number in the quarter? Or was it a gain if it was a gain? See, as I have said, in this quarter two, we had a gain. In quarter one, we had a loss. On a cumulative basis, we still have an inventory loss.
Could you quantify that? I think Q1, you had mentioned INR 6,500 crore of loss.
2,300. Basically, excuse me. My colleague will be answering this query to you or we will send it to you through your email. Can you go to the second question because we have to just finish in a few minutes? We will send it across to you.
Sure. Also, on the Russian crude, I think there was a comment made that you would be complying with the sanctions. I believe you buy from the spot market, which does not have a designated source when you buy it like that. Does it mean that you would be avoiding Russian crude completely, given that the spot market does not distinguish between the source of the crude?
No. We are absolutely not going to discontinue as long as we are doing the compliance of the sanctions. Today, from Russia, Russian crude is not sanctioned. It is the entities and the shipping lines which have got sanctioned. Today, if somebody comes to me with a non-sanctioned entity, and the cap is being complied with and shipping is okay, then I will continue to buy it.
Do you know the source of the crude when you're buying from the spot markets?
Yes, yes. Certificate of origin is a part of the standard documents being taken for the banking when you, whenever you make the payments.
Okay. Got it. Fine. As of now, there's no, I mean, avoidance of Russian crude. It's just that those two entities you would avoid from, essentially.
Apart from these two entities, there have been entities in the past also. We maintain all the data bank, and when we purchase, we ensure that we comply with all the international sanctions, whatever are replicated on that date.
Okay. Okay. That's all from my side. Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Malik Patel from Equities. Please go ahead.
Yeah. Thanks for the opportunity. Just one question. In the last three years, you have bought approximately 2.4 million tons of, and in a medium-term LNG. Two deals, I think you have done on an oil link, one with ADNOC and I think it's with Total. I'm not sure. Third, which you have signed recently with 0.4, with Trafigura on a HS basis. This 2.4 million tons of LNG, which you are going to get, you're going to use it internally on your refineries. What's basically you are going to market in a market?
See, we have both the portfolios. We sell it internally also. We sell it to our customers also. We have a multiple source of buying, and we have a multiple source of selling our LNG.
Is there any strategy that you want to use more of the gas internally? Because there's the contract which you have signed is significantly lower than the current spot price. Spot is currently at $11. You are getting at around $12.5 for those crude-linked volumes. The price will be at around $9 somewhere on a DEA basis. Will you use more of the gas internally for refinery and the cracking of utilities?
See, for everything, we have optimization. Suppose in our refinery, we have a demand, and we have a demand from the customer. I will see what is the alternate cost of my fuel if I use it in my own fuel in that system. If I'm using my own fuel, I can sell it outside. Why not? If I have a cost, you know, it is all depending upon the cost of your own fuel also in the refining system. That is a day-to-day work, what our teams do. They will always see whether it is more beneficial to sell or it is more beneficial to consume it internally.
Okay. Thanks.
Okay, thank you. I think we can finish it now.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Varatharajan Sivasankaran for closing comments.
Thank you, Sukmani. Sir, if you have any closing remarks, please go ahead.
Thank you all.
Sure.
Thank you all for your time and insightful questions. On behalf of the entire Indian Oil team, I appreciate your continued trust, confidence, and support. We value our engagement and look forward to future interactions and keeping you updated on our progress. Stay safe and take care. Thank you.
Thank you, sir. I wish to thank the IOCL management for giving us the opportunity to host the call, and thank all the participants for taking out time to attend this call. Thanks, everyone. Have a nice day.
Thank you very much.
Thank you. On behalf of Indian Oil Corporation Limited, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines.